1. Complainant is a registered partnership firm engaged in the business of manufacturing different grades of Whole Tyre Reclaim Rubber Sheet, Natural Tube Reclaim Rubber Sheet, Buty Tube Reclaim Rubber Sheet, EPDM Rubber Sheet Rubber Powder, Plastic Granules etc. It was enjoying cash credit facilities from M/s. Dena Bank. Per the plaint, clause 2 of the terms and conditions of the bank’s sanction letter dated 24.09.2010, required the goods to be fully insured against the risk fire, theft, burglary, SRCC with bank clause. M/s. Dena Bank was taking insurance on behalf of the complainant from the insurance company of its choice by acting as an agent of opposite party no.2 (M/s. United India Insurance Company Limited). It used to get signatures on blank proposal form of the insurance company and get the insurance accordingly. The copy of the insurance policy was also retained by the bank itself and it was never handed over to the complainant as the complainant was assured that its risk is always covered as it bank is also covered equally (para 8 of the amended complaint).2. On 22.04.2011, a fire took place in the factory premises of the complainant. A claim of Rs.3,85,12,069/- was lodged with the opposite party through the bank. Surveyor was appointed and the gross loss was assessed at Rs.3,04,90,808/-. However, the amount recommended by the surveyor to the OP was Rs.99,80,959/-; this was further reduced to Rs.94,91,411/-, after taking into account Rs.10,000/- deductible as per clause 1 (b) of the general exclusions of the policy and the excess of 5% of claim amount to the tune of Rs.4,99,548. This amount, Rs.94,91,411/-, was paid into the cash credit account of the complainant directly under the bank clause without any information/ consent of the complainant. Hence, a consumer complaint, amended subsequently, was filed with the following prayer:“a) Direct the opposite party no. 1 to pay a sum of Rs.2,90,30,777.00 along with interest @18% p.a. on the aforesaid grounds in the interest of justice orb) In the alternative direct the opposite party no. 2 to pay a sum of Rs.2,90,30,777.00 along with interest @18% p.a. on the aforesaid grounds in the interest of justice,(c) Direct the opposite party no. 2 additional 1% of the claim amount for removing/shifting the debris against the policy conditions.d) Direct the opposite party no. 2 to pay a sum of Rs.12,16,484.00 as the difference of salvage as the salvage value has been taken at the same rate for all the items though there is no value of salvage of rubber parts and chemicals.e) Grant pendentlite and future interest @18% per annum on the sum of Rs. 2,90,30,777/- against the opposite party against whom the award is passed and against the opposite party no. 2 on sum of Rs. 12,16,484.00f) Award of cost of Rs. 10,00,000/- against the opposite party against who the award is passed may also be passed in favour of the complainant and against the opposite parties.f) Any other or further relief which this Hon'ble Court may deem fit and proper may also be passed in favour of the complainant and against the opposite parties may also be passed.”3. This complaint was resisted through a written version/reply by the opposite party (OP hereafter). Rejoinder to the reply along with affidavit of evidence was filed by the complainant. OP also filed affidavit by way of evidence. Short written synopsis of arguments were filed by the parties. Arguments were heard on 02.02.2021 and order was reserved.4. Learned counsel for the complaint drew attention to the fact that the cash credit extended by the M/s.Dena Bank was against hypothecation of stocks of raw materials, semi finished goods, finished goods, stores spares, packing materials used for manufacturing. In the insurance policy, mistakenly, the same had been shown to be against ‘building’ whereas it ought to have been against stocks of all manner. This error was rectified after the incident of fire by the bank through letter dated 9.5.2011 seeking correction of policy number 040602/11/10/0000968: admitting its oversight in the proposal form, it had declared that its intention was to renew the policy of Oriental Insurance Company (OIC) covering stocks of Rs. 5 crore but the same had been shown in the proposal form as being against building; it had requested the opposite party to “Please make the correction and pass necessary endorsement to make it similar to the expired OIC policy” (page 39 of part 1). OP2, the insurance company, obliged and did so but only against stock of raw material and finished products, leaving out other items of stock such as scrap, spares, unfinished goods or goods in process.5. Counsel then drew attention to Annexure-A of the surveyor report viz. summary of assessment of loss for stocks (page 62 of part 1). He argued that it would be seen from the assessment that losses assessed against stocks in process (Rs.51,04,998/-), scrap (Rs.65,70,209/-) were not allowed, on the ground that they were not covered in the policy, at the instance of the opposite party. After accounting for above, the surveyor had assessed the loss at Rs.99,90,959/-. However, even this amount, by application of excess clause of 5% of the claim amount, was reduced to Rs.94,91,411/- by the opposite party which was then credited to the bank account of the complainant. Learned counsel for the complainant argued that it would be thus clear that transactions between the bank and the opposite party were carried out behind the complainant’s back: after the fire, policy had been changed and after survey and assessment of loss, the final amount had been paid to the bank directly. He further argued that the main argument of the opposite party that terms and condition of an insurance policy cannot be changed did not explain how or why the opposite party readily changed the insurance policy, from insuring building for Rs. 5 crore to insuring stocks for Rs.5 crore. He invoked, in support, an order of the Hon’ble Supreme Court (ii) (2020) SLT 200, Canara Bank versus M/s. United India Insurance Company Limited and other in Civil Appeal number 1042 of 2020 with other civil appeals decided on 6.2.2020: inviting attention to para 21 thereof, he made the point that the insurance policy has to be interpreted holistically rather than narrowly in a case such as the instant complaint. Para 21 of the order of the Hon’ble Supreme Court reads as below:“21. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation becomes a commercially sensible interpretation. As far as the present case is concerned, if we read the tripartite agreement along with the terms of the policy it is obvious that the Bank insisted that the stock be insured. The farmers were told that they would pay the premium. The cold store while fixing the rent obviously factored the premium into the rent. It was obvious that the intention of the parties was that they would be compensated by the Insurance Company in case of any untoward loss.”6. He then drew attention to para 17.02 of the survey report wherein the surveyor has recorded as below:“17.02 Insured stated that all types of their stocks were intended to be covered under the subject policy because of the following:a) The subject fire policy had been reportedly taken by Dena Bank, who vide their Sanction Letter No. DB/NP/ADV/CC-LCIMVE/2010 Dated 24.09.2010, had sanctioned working capital limit of Rs. 250 lacs against hypothecation of stocks of raw materials, semi- finished goods, finished goods, stores & spares, packing materials used for manufacturing and the monthly stock statements submitted by the Insured to the Dena Bank also reflected such stocks.b) Similarly another Sanction Letter dated 23.10.2010 of Bank of India shows additional working capital of Rs. 250 lacs, against hypothecation of stocks of the Insured, as & along with Dena Bank.”His argument was that this should clearly reveal that the surveyor had taken note of the intention of the insurance policy and had acknowledged that it was for covering stocks of all kinds held by the complainant. He further argued that the citation of the Apex Court above made it clear that if there was any ambiguity, the same would be resolved in favour of the complainant. As such, he argued that as transactions qua policy was done by the bank and opposite party behind the complainant’s back, clearly the complainant could not be faulted for any mistake in the policy wordings and therefore, the complainant should not be penalized. He submitted that it was clear that loss as assessed by the surveyor was not disputed; however, the full loss assessed had been denied because of terms and conditions of the policy which excluded stock in process etc., as already argued earlier.7. He further drew attention to the insurance policy. Referring to excess clause contained in the terms and conditions of the policy, he argued that it was provided as “5% of each and every claim subject to minimum of Rs.10,000/-“. He argued that 5% was deductible only on the policy with the opposite party and not on aggregate of the two insurance policies held by the complainant, one of which was with another insurance company. Further, he also sought Rs.12,16,484/-, on account of salvage, arguing that this was the difference that would emerge if the mistake of valuing all salvage uniformly, was rectified. He argued that rubber parts and chemicals have no salvage value after being burnt. Finally, he also laid claim to 1% on the claim amount paid towards expenses for removal of debris/salvage from the spot as provided in clause 2 of the terms and conditions of the policy.8. He further submitted that this matter was taken up with the opposite party for redressal; however, vide it's letter dated 14.6.2012, the request had been declined, citing various grounds (page 93-94 of Part 1).9. Learned counsel for the opposite party first dwelt on some essential facts submitting that it was not disputed that the policy taken by the bank was initially for insurance of the building for a sum insured of Rs.5 crore. He drew attention to the policy schedule filed with the consumer complaint at page 34 of part-1. On left hand side, description of risk for stock was shown as “Nil” whereas, on right hand side, under ‘Description of Property’, sum insured of Rs.5 crore had been shown “ON STOCK OF RAW MATERIAL CONSISTING OF USED TYRES/TUBES/CHEMICALS & FINISHED PRODUCTS OF RUBBER SHEETS/POWDERS”. The sum insured against building had been shown as “zero”. His point was that this was the policy issued on 10.02.2011 which clearly showed variation in description of risk and description of property. So, when the bank, after the incident of fire, vide its letter dated 9.5.2011 (supra), sought “necessary endorsement to make it similar to the expired OIC policy”, it was clear that this was not a request for issuance of a fresh policy; rather, it was only for an endorsement to “make it similar to the expired OIC policy”. This was done by the OP.10. Counsel then drew attention to part-1 volume-II of the paper book containing OP’s written version and documents filed on behalf of the opposite party. Drawing attention to Annexure-R1, the proposal form for fire insurance, he pointed out that herein, it was clearly indicated that the property to be insured for Rs.5 crore was ‘Building’. Drawing attention then to the letter dated 9.5.2011 of the bank seeking correction of the insurance policy (supra), he pointed out that the policy schedule of OIC (Oriental Insurance Company) at Annexure-R2 would clearly show that insurance had been taken for Rs.5 crore “ON STOCK OF RAW MATERIAL CONSISTING OF USED TYRES/TUBES/ CHEMICALS & FINISHED PRODUCTS OF RUBBER SHEETS/POWDERS”. He explained therefore that in compliance to the request made by the bank, the opposite party had proceeded to endorse the policy with precisely the item insured in the earlier policy of OIC. This could be seen at Annexure-R4 vide which opposite party had issued endorsement wording which reads as below:“AT THE WRITTEN REQUEST OF THE FINANCER VIDE DB/NP/INSU/MV/968/2011-12, POST CLAIM LODGED BY THE INSURED AND APPROVAL FOR POST LOSS ENDORSEMENT RECEIVED FROM RO VIDE DRO-I: TECH: FIRECL:MS:078:2011 DATED 10/02/2012, IT IS HEREBY AGREED AND DECLARED THAT THE CORRECT DESRIPTION OF THE RISK IS STOCKS OF RAW MATERIALS CONSISTING OF USED TYRES/TUBES/CHEMICALS & FINISHED PRODUCTS OF RUBBER SHEETS/POWDERS AND IN CONSEQUENCE THEREOF, THE DESCRIPTION OF RISK AS BUILDING STANDS VOID.ALL OTHER TERMS AND CONDITIONS REMAINS THE SAME.”11. Counsel for OP argued therefore that it would be clear that OP had merely complied with the request of the bank and had adhered faithfully to the policy issued by the OIC. OP had nothing to hide and the suggestion of the counsel of the complainant that the bank and the OP had colluded has no basis whatsoever. Responding to the argument of the counsel for the complainant that complainant was never aware of what policy was issued as the same was handled by the bank and the OP behind it's back, he drew attention to letter dated 24.04.2011 from the complainant to the Branch Manager of the OP, Nehru Place, New Delhi intimating that fire had occurred in their plant in Dehradun, policy number 040602/11/10/11/00000968, and that fire tender had been called immediately. Further, he pointed out to an email from Gaurav Agarwal on behalf of the complainant dated 22.04.2011 wherein it has been stated that they were trying to fax the intimation letter to the OP, Nehru Place, Delhi office at fax number 2641301 as mentioned on OP’s website and the policy document but the same was not working (Ann. R-6). The point made by the learned counsel was that this laid bare the hollowness of the claim of the complainants that they were never aware of the insurance policy, this being a matter between the bank and the OP. If so, argued the counsel, how is it that the complainants had the policy number as well as knew that the policy issuing office was at Nehru Place, New Delhi. Inescapable conclusion therefore is that the complainant was aware of the policy document all along.12. Responding to another argument of the counsel for the complainant that the bank was an agent of OP, counsel argued that this was a baseless allegation. He further submitted that the record would show that initially, the complaint had been filed against the bank (OP-1) as well as the Insurance Co. (OP-2). All the allegations of deficiency in service were, in fact, against the bank who were aware of the stocks that were hypothecated against the cash credit facility it was extending to the complainant. Drawing attention to para 8 of the original consumer complaint, it was submitted that therein, it was stated that Dena Bank had been taking insurance on behalf of the complainant from the insurance company of its choice by acting as agent of the opposite party. He argued that if the bank was taking insurance with an insurance company of its choice how then could the bank be an agent of opposite party? He further submitted that for reasons best known to the complainant, after filing of the original complaint, an application for deletion of the name of Dena Bank from the array of the parties was made on behalf of the complainant and since then the Insurance Co. is the only opposite party in this case. Deletion of the bank from the array of parties was allowed by the National Commission vide its order dated 25.02.2013. He then referred to the amended complaint filed by the complainant, para 8 thereof, to point out that therein it has been stated that bank had acted as agent of opposite party once again. The curious thing was that this was after an amendment application had already been moved to amend para 8 to add that bank was acting as an “implied agent” of the opposite party. Counsel argued that this itself would reveal that the complainant was quite unsure as to what it held to be the relationship between the bank and the opposite party. It was certainly not the case that the bank was an agent of opposite party; if anything, it was the opposite party who was an agent of the bank and not the other way around. As such, he argued that such an argument of the complainant had no basis at all.13. Referring to the issue of salvage argued by the counsel for the complainant, he drew attention to surveyor’s letter dated 15.12.2011 : vide this, the surveyor had informed the complainant that the list of salvage consisted of mixed retrieved items from raw material, finished goods as well as stocks-in-process, stores/spares etc., making it difficult to determine exact salvage of raw materials and finished goods, and therefore, the salvage value would be apportioned in the ratio of different types of stocks involved in the fire; for disposal of salvage, advertisement was being issued; offers for salvage would be opened in presence of the complainant’s representative and the complainant would be fully responsible for collection of payment and handing over of salvage to the successful bidder; the salvage value will be retained by the complainant and would be adjustable in the final claim amount. Learned counsel argued that quotes were received from the different bidders (Annexure-R13) and highest bid of Rs.24,91,217/- was accepted. The complainant was advised about this vide letter dated 9.01.2012 (Annexure-R14) intimating that EMD of Rs.1,00,000/- was enclosed and that the remaining amount may be collected directly from the bidder by the complainant. Learned Counsel submitted that this would show that the entire exercise qua salvage was done transparently keeping the complainant in the loop and arguments that salvage was wrongly assessed were bereft of any merit.14. Drawing attention to the surveyor’s report, para 17.02 thereof mentioned by the learned counsel for the complainant to suggest that even the surveyor had noted the intent of the insurance policy, he argued that the question of intent of what was to be covered under the insurance policy was between the complainant and the bank and had nothing to do with the opposite party, and that the opposite party acted strictly on the instructions of the bank when it had endorsed the policy as per policy held earlier with OIC. He drew attention to para 17.03: it has also been clearly stated by the surveyor that “However since the wording of stocks in the policy specifically covered stocks of Raw Materials consisting of used Tyres/Tubes/Chemicals & Finished products of Rubber Sheets/Powders only, so we have assessed the loss to such specific stocks covered under the subject policy, as per Annexure A”. Therefore, the counsel for OP argued that surveyor had spoken of both intent which was highlighted by the counsel for the complainant as also of the need to go by the exact wording in the policy. Regarding salvage, he drew attention to para 16.07 of the surveyor’s report to point out that the surveyor had apportioned the salvage value against each type of stock and that he had not deducted the entire salvage value of Rs.24,91,217/-. Clearly, this showed the surveyor to have been very fair and transparent. Further, regarding 1% permissible claim on account of cost of debris removal, learned counsel drew attention to the claim form at page 109 to 111 of Part II-Vol I, to point out that in this statement of claim, debris had not even been mentioned. Since there no claim was filed for debris, there was no question of allowing any amount on this account. Regarding the excess clause, counsel argued that a plain reading would show that what this meant was that either Rs.10,000/-, the minimum, or 5% of the claim amount would be deducted from the claim. Thus, there was no mistake in deduction of 5% the loss assessed in this regard.15. Summing up, counsel for the OP argued that prior to the extant insurance policy, OIC had issued an insurance policy favouring the complainant. So, if some mistake had occurred in that original policy of OIC, that could not be held to be any deficiency on the part of the OP who had merely acted upon instructions given by the bank. Bank clause was applicable and therefore the loss assessed and decided to be paid by the OP had been paid to the bank in the complainant’s cash credit account. In fact, it was the bank which could be held to be culpable of deficiency; however, for reasons best known to the complainant, the bank had been deleted from the array of the parties.16. After hearing the learned and carefully appraising the record, the following observations are in order.One, it is hard not to conclude that the complainant has been rather negligent and careless. Admittedly, there is no remedy for the follies of carelessness and the complainant has to bear the consequences. The complainant has made baseless allegations of mal-intent and foul play by the OP and the bank, without a shred of evidence. It has miserably failed to explain its own conduct as reflected in the fact that OP1-Bank was deleted from the memo of parties even as allegations continued to be maintained against OP1 even in the amended consumer complaint. Resultantly, the complaint was never very clear on who it held responsible for it’s loss not having been indemnified as it ought to have been. On the face of it, the complainant seemed happy enough to enjoy cash credit facilities, leaving it to the bank to take insurance on it’s behalf, a situation of having one’s cake and eating it too. When the loss occurred, the complainant could only claim what was in the insurance contract. It’s pleas of reasonableness and intent of insurance clearly had no place in what is a strict contract of insurance.Two, during arguments as well as in its pleadings, complainant has understandably been seeking a favourable consideration of its insurance claim. However, this cannot alter the fact that the complainant’s request is quite a far cry from the accepted law of insurance viz. the policy with all it’s terms and conditions has to be read as it is. It is not permissible to construe meanings to words and expressions used in the policy. The complainant however would want that even as policy wordings did not mention semi-finished goods, stock in process, the same should be included on the argument that the same was obvious. It is precisely the case of the OP that there is no scope for any such “obviousness” and that the policy wordings have to be strictly read, understood and applied.Three, on the face of record, it is difficult to see any deficiency in service of insurance by the OP. The dates are relevant. Fire occurred on 22.4.2011, intimation was received by the OP on 22.4.2011 but without any estimate of loss furnished by the complainant, leading therefore to the appointment by the OP of a preliminary surveyor; the appointment itself however was as prompt as could be;no deficiency in service here. Upon receipt of estimate of loss on 2.5.2011 of Rs.4 crore, final surveyor was appointed, again promptly on 5.5.2011. Survey took place from 9.5.2011 to 11.11.2011. None of the facts so far shows any deficiency in response of the OP to the claim for insurance. It is however seen from the record that all the documents sought were submitted to the surveyor by 15.11.2011, and the survey report was thereafter finally submitted on 27.1.2012. Again, no glaring deficiency or delay is noticed on the part of the OP.Four, learned counsel for the OP has also pointed out that certain actions of the complainant remained unexplained. In particular, soon after filing of this consumer complaint, complainant made a request for amendment of the complaint. This request related to, essentially, para 8 of the consumer complaint. On 16.10.2012, an application for amendment, IA/1/2012, was allowed by the Commission. Vide this, para 8 of the complaint, line no.3 thereof was permitted to be amended by adding the following words after choice: “by acting as agent of the OP No.2 (insurance company)”. The argument advanced by the counsel for the OP is this: the original para 8 of the consumer complaint read as “That in order to secure its loan, Dena Bank, Nehru Place, New Delhi, who has been taking insurance on behalf of the complainant from the insurance company of its choice by acting as agent of the opposite party”; the amendment sought to add the word ‘implied’ before ‘agent’, so the complainant would be now saying that Dena Bank was acting not as an agent but ‘impliedly as an agent’; inexplicably, the amended complaint which was filed subsequently, para 8 thereof, read the same as before. In other words, the complainant was rather confused and unsure of how it was to deal with its financier, Dena Bank, agent or implied agent? It therefore focussed entirely on the OP. However, undeniably, the fact of the matter was that the fault in the wording of the insurance policy lay squarely with Dena Bank. It was the bank that was extending credit facilities to the complai
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nant against hypothecation of the complainant’s building, goods, stocks etc.; it was the bank that was insuring the hypothecated goods against any peril by obtaining a standard Fire and Special Perils Policy; it was the Bank that had wrongly filled up the proposal form which sought insurance for building; it was the Bank that had requested the OP to endorse the policy on the same lines as the previous policy with OIC. The OP had done precisely as requested. Indeed, OP could not have done otherwise. So, allegations of deficiency in service by the OP on the main ground that the OP had not appreciated the intent of the policy by not permitting claim against all manner of stocks rather than as mentioned in the policy cannot sustain.17. Upon an overall consideration, I am of the considered view that the complainant has not been able to make out its case against the OP. Insurance contracts are contracts of utmost good faith and its provisions are read strictly as they are leaving little scope for any interpretation or any addition by way of other considerations. The complainant ought to have been aware of this. If it was not so aware then it only has itself to blame. The complainant arguably was a going concern and it was it’s business to have kept track of it’s insurance also. The citation relied upon viz. Canara Bank versus United India Insurance Co. & Ors (supra) does not really come to the rescue of the complainant: the facts of the case and the parties therein, notably farmers whose goods stored in the cold storage were affected, were quite different from the case in hand where the complainant is a company in business with cash credit facilities from bank. It has been fairly clearly established that the OP had merely endorsed the insurance policy at the instance of the Bank who had taken out the insurance policy against goods of the complainant hypothecated with it. At no stage had the complainant shown any interest in the contents of the policy, the wording thereof or any other aspect nor has the complainant claimed that it had done so. It is only when fire occurred and loss was caused that these issues came up. At this time, the complainant realized that the insurance policy in existence was not what it ought to have been and hence it, not able to blame the bank for reasons which seem obvious, filed this consumer complaint against the OP. The OP has been able to establish that by having acted, strictly in terms of the policy, it cannot be faulted with any deficiency in service. In the facts of this case, therefore, it has to be held that the OP did not commit any deficiency in service, either in process of admitting and processing of the claim or in settlement of the claim.18. In view of the discussion above, this consumer complaint, after consideration, is dismissed. There shall be no orders as to costs.