1. Heard Mr. Nitin S. Tambwekar,, Advocate, for the complainant and Mr. Vishnu Mehra, Advocate, for the opposite party.
2. M/s. Manshu Comtel Private Limited (the Insured) has filed aforementioned complaint for directing The New India Assurance Company Limited (the Insurer) to pay (i) Rs.9162971/- (i.e. cost of the insured machinery), with interest @18% per annum, from the date of receipt of the claim till its payment, (ii) Rs.1027523/-, as the business loss, (iii) Rs.50000/- as compensation for mental pain and harassment and (iv) any other relief, which is deemed fit and proper, in the facts and circumstances of the case.
3. The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-
(a) The Insured was a company, incorporated under Companies Act, 1956 and engaged in the business of manufacture and sale of Electrical Control Panels and Cabinets for Control Panels. The Insured had its factory at Plot No. K-11/6 and Standard Fire and Special Peril Policy i.e. Policy No.111400/11/04/11/00002038 was obtained, from the Insurer, for Building, Plant & Machineries, Accessories and Stock, for a sum of Rs.80/- lacs, for the period of 22.03.2005 to 21.03.2006. The Insured shifted his factory at B-27, MIDC, Satara and started production there from 30.03.2005, then the Insured got changed the location, in the policy on 27.06.2005. The Insured imported one set of “CNC AC Servo Turret Punch Press MOTORUM 2044EZ”, with tooling software and accessories from M/s. Murata Machinery Ltd., Japan, vide Invoice No.04KX237660 dated 30.10.2004, which was financed by Thane Janta Sahakari Bank Ltd. This machinery was voyaged from Japan to Nhava Sheva port on 22.12.2004 and transported to factory premises on 25.12.2004. The Insured constructed a new building in an area of 5000 sq.ft. at B-27, MIDC, Satara, for installing the machine “CNC AC Servo Turret Punch Press MOTORUM 2044EZ”. The machine was installed on its foundation in new building on 03/04.08.2005, while electrical connection and levelling had to be done after plastering the floor.
(b) New India Assurance Company Limited is a public insurance company, engaged in the business of providing different types of insurance services. The Insured obtained Standard Fire and Special Peril Policy (Material Damage) i.e. Policy No.111400/11/04/01813, from the Insurer, for aforesaid machinery, for a sum of Rs.85/- lacs, for the period of 11.02.2005 to 10.02.2006.
(c) On 05.08.2005, since morning, heavy rain with gusty wind started in the locality of factory at B-27, MIDC, Satara. Due to which, the roof of new building collapsed on 05.08.2005 at 12:45 PM and damaged the new machinery of the Insured. The Insured informed the Insurer about the aforesaid damage on 05.08.2005. The Insurer appointed Gandalia Associates, Mumbai, for preliminary survey. Gandalia Associates surveyed the factory building on 12.08.2005 and found that the roof with truss had collapsed on the machine. Gandalia Associates got the debris removed and checked the machine by Machine Tools (India) Limited, an Indian representative of M/s. Murata Machinery Ltd., Japan, who examined took photographs of the machine from various angles and submitted his report dated 21.08.2005. Gandalia Associates submitted Preliminary Survey Report dated 22.10.2005, mentioning that Ram motor, Servo motor, Carriage frame, Pressure switch, electrical panel cabinet & door, guard gear box, oil fuel nipple, pinion were damaged.
(d) The Insurer appointed Ashok Chopra & Company, Mumbai for final survey and assessment of loss, who inspected the factory and damaged machine on 02.10.2005. The Surveyor demanded various papers. The Insured, vide letter dated 06.10.2005 (Annexure-G, page-32), supplied those papers to the Surveyor. The Surveyor again inspected the factory and damaged machine on 17.11.2005 and vide letter dated 19.11.2005, demanded various papers. The Insured, vide letter dated 18.02.2006 (Annexure-G, page-35), supplied those papers to the Surveyor. The Surveyor, again vide letter dated 02.06.2006, demanded various papers. The Insured, vide letter dated 05.10.2006 (Annexure-I, page-44), supplied those papers to the Surveyor. The Surveyor, again vide letter dated 20.12.2006, demanded various papers from the Insured. The Insured vide letter dated 19.01.2007 (Annexure-L, page-57), supplied those papers to the Surveyor. The Surveyor, again vide letter dated 31.01.2007, demanded various papers from the Insured. The Insured, vide letter dated 05.02.2007 (Annexure-N, page-65), supplied the papers.
(e) The Surveyor wrote a letter dated 02.06.2006 to M/s. Machine Tools (India) Limited, demanding various papers from them. M/s. Machine Tools (India) Limited, vide letter dated 29.08.2006 (Annexure-I, page-42) supplied the required papers. The Surveyor, vide letters dated 19.12.2006, sought some clarification from Murata Machinery Ltd., Japan. Murata Machinery Ltd., Japan, vide letters dated 15.01.2007 (Annexure-L, page-55 and 56) replied the queries of the Surveyor. The Surveyor, vide letters dated 06.03.2007, sought for some more clarification from Murata Machinery.
(f) The Surveyor wrote a letter dated 31.01.2007 to Mr. Nilesh Mali, the Architect of the building and sought for various information from him. Mr. Nilesh Mali, the Architect, vide letter dated 10.02.2007, replied the Surveyor. The Surveyor wrote another letter dated 13.02.2007 to Mr. Nilesh Mali, for some information from him, which was replied by Mr. Nilesh Mali on 03.03.2007. The Surveyor wrote another letter dated 06.03.2007 to Mr. Nilesh Mali, for some more information from him, which was replied by Mr. Nilesh Mali, vide letter dated 16.03.2007 (Annexure-Q).
(g) The Insured wrote a letter dated 30.08.2007 and thereafter a legal notice dated 11.10.2007 to the Insurer for settlement of the claim. The Surveyor submitted his Final Survey Report dated 29.06.2007, without supplying its copy to the Insured. Then the Insurer repudiated the claim on 07.11.2007. This complaint was filed on 29.04.2008, complaining deficiency in service.
(h) Mr. Abhay Nikum, the Engineer of Machine Tools (India) Limited, an Indian representative of M/s. Murata Machinery Ltd., Japan, after examining and taking photographs from various angles, submitted his report dated 23.08.2005. His report and photographs were sent to M/s. Murata Machinery Ltd., Japan (the manufacturer), for their examination and opinion. After examination of the report, photographs and discussion with Mr. Abhay Nikum, M/s. Murata Machinery Ltd., Japan submitted their report dated 23.09.2005 that the machinery was not repairable. The Insured, then, purchased new machinery “CNC AC Servo Turret Punch Press MOTORUM 2044EZ”, from M/s. Murata Machinery Ltd., Japan, which was installed and commissioned in March, 2006.
4. The insurer filed its written reply on 03.09.2008 and contested the matter. The material facts, as stated in the complaint, have not been denied. It has been stated that as soon as the Insurer was informed, about the incident, Gandalia Associates, Mumbai was appointed for preliminary survey and Ashok Chopra & Company, Mumbai was appointed for final survey and assessment of loss. Gandalia Associates, Mumbai submitted Preliminary Survey Report dated 22.10.2005. In spite of repeated reminders, the requisite papers were not supplied to Ashok Chopra & Company, Mumbai. Therefore, he took time in submitting Final Survey Report dated 29.06.2007, in which, following conclusions were noted:
(i) Material contradiction in the report dated 23.08.2005 prepared by the Engineer of the Indian representative of the manufacturer of the machine and the letter dated 23.09.05 issued by the manufacturer: The Engineer in his repot has clearly stated that “Checked turret alignment and found with-in-10 u (top face w.r.t.frame) main frame not damaged” whereas the letter records that “the main punching drive, AC servo motor and the gear drive is fully damaged with frame distortion making it beyond repair.” The surveyor has opined that the engineer who had inspected the machine was a technical expert who was trained in the manufacturer’s factory at Japan and was capable of carrying out the inspection of the manufacturer’s machines as also to determine whether the machines have been affected in any manner. The surveyor has further opined that there could not have been any distortion of the frame without there being any physical manifestation of the same.
(ii) Investigations cast a doubt upon the fact that the machine was damaged due to collapse of whole roof of the factory on the machine- The machine’s was designed to absorb 220 Hits Per Minute Up to 20 MT without any deflection. Assuming even if the whole roof which weighed less than 20 MT had directly fallen on the frame, it could not have distorted the frame.
(iii) Investigations revealed that the whole roof did not hit the machine: The roof of the factory had broken into several parts evidenced from the photographs which showed that some parts of the roof were hanging.
(iv) Conduct of the manufacturer of the machine is dubious: The outright refusal of the manufacturer to provide the numbers and prices of the parts which were actually damaged probablizes that the machine could have been repaired.
(v) Conduct of the owner of the insured machine is dubious: The fact that the owner of the machine who were technocrats had tamely accepted the manufacturer’s finding that the machine was beyond repair and have not bothered to re-use the undamaged tools, punches, dies, strippers and accessories probablizes that the machine could have been repaired.
(vi) The owner of the insured machine violated a material condition of the policy: It was condition of the policy that the machine was to be kept in only completed buildings of pucca construction which condition had been violated as the investigation and surrounding circumstances suggested that the factory was still under construction at the time of issuance of policy as also on the date of the loss.
(vii) Pre-condition under the policy for liability of insurance company to indemnify the loss was not fulfilled: The policy stipulated that the insurance company was liable to indemnify only such loss which was directly caused due to occurrence of a storm which was not the case in the present claim. The investigation and the surrounding circumstances probablises that the roof had not collapsed due to occurrence of a storm but because it was not fully constructed on the date of the loss.
5. The Insurer after examining entire papers and the reports, found that (a) Contradiction in damage report and manufacturer’s letter main frame damage; (b) Whole roof did not hit the machine. Not capable of distort it up; (c) As per the meterological report there was no storm (peril) on day of loss; it was heavily raining; (d) Uninstalled machine in an incomplete building (kucha construction) increased the hazard; (e) There was no other damage in the same plot, and repudiated the claim vide letter dated 07.11.2007. There is no deficiency in service and the complaint is not maintainable. The complainant is a commercial unit and the machine was purchased for commercial purpose and the complainant does not fall within the definition of ‘consumer’.
6. The Insured filed his Rejoinder Reply on 28.01.2009, in which, the material facts as stated in the complaint were reiterated. The Insured filed Affidavit of Evidence of Rajendra Madhukar Manerikar. The Insurer filed Affidavit of Evidence of Anil Gupta, the Manager. As directed vide order dated 27.04.2017, the Insured filed an Affidavit of Mahendra Madhukar Manerikar, annexing the photographs of the roof before its collapsing and after collapsing and roof structure designed by the Architect, on 24.11.2017. Both the parties filed their short synopsis.
7. We have considered the arguments of the counsel for the parties and examined the record. Policy No.111400/11/04/01813 is a Standard Fire and Special Peril Policy (Material Damage) policy, which provides that the Insurer shall pay to the Insured the value of the property at the time of happening of its destruction of the amount of such damage or at its option reinstate or replace such property or any part thereof. Mr. Abhay Nikum, the Engineer of Machine Tools (India) Limited, an Indian representative of M/s. Murata Machinery Ltd., Japan, after examining and taking photographs from various angles submitted his report dated 23.08.2005. Thereafter, his report and photographs were sent to M/s. Murata Machinery Ltd., Japan (the manufacturer), for their examination and opinion. After examination of the report, photographs and discussion with Mr. Abhay Nikum, M/s. Murata Machinery Ltd., Japan submitted their report dated 23.09.2005 that the machinery was not repairable. As according to the manufacturer, the machinery was not reparable, as such, it has to be taken as totally damaged and the Insured was entitled for its value. The Insurer did not give their option for reinstate or replace the damaged machine nor is there any expert report to show that the machine is repairable. The Insured, in his letter dated 05.02.2007 (Annexure-N, page-65) has disclosed the value of the damaged machinery as Rs.5961938/-. The building was not insured, as such, the claim is confined to the value of the machinery.
8. The Insurer, in the repudiation letter dated 07.11.2007, took a ground i.e. “uninstalled machine in an incomplete building (kuchcha construction) increased the hazard”. In Preliminary Survey Report dated 22.10.2005, Gandalia Associates has mentioned as “The new building block was of RCC frame structure with hollow block walls and steel frame-supported composite roof made of wooden insulating board and concrete layer”. He has further mentioned that whole roof with truss had collapsed covering the machine. When the roof had collapsed, the Insured covered the whole debris with the tarpaulin to prevent further damage due to rain water. The Insured took photographs of the collapsed roof on 08.08.2005, which have been filed along with Affidavit on 24.11.2017. The Surveyor wrote a letter dated 31.01.2007 to Mr. Nilesh Mali, the Architect of the building and sought for information from him. Mr. Nilesh Mali, the Architect, vide letter dated 10.02.2007, replied the Surveyor. The Surveyor wrote another letter dated 13.02.2007 to Mr. Nilesh Mali, for information from him, which was replied by Mr. Nilesh Mali on 03.03.2007. In both these letters, Mr. Nilesh Mali mentioned that the bay of new building, where the MURATA machine was shifted was ready in the beginning of July, 2005. The work of windows and ventilators were completed along with the roof in the beginning of July, 2005. Finding of the Surveyor, in Final Survey Report dated 29.06.2007 and the Insurer, in the repudiation letter dated 07.11.2007, in respect of the nature of building, is incorrect and based upon conjectures and surmises.
9. Other objection, in the repudiation letter dated 07.11.2007, was “as per meteorological report, there was no storm (peril) on the day of loss; it was heavily raining.” The Surveyor, in Final Survey Report dated 29.06.2007, noted that Meteorological Report indicates that the wind speed has been 27-37 Kmph with gust up to 46 Kmph. A storm is associated with severe weather, strong wind, thunder, lightning and heavy precipitation. Heavy rain at that time of incident is not disputed. The roof with steel truss had collapsed upon the machinery. The wind gust must have created excessive pressure on the roof. There can be no other reason except storm for collapsing the roof. The observation that whole roof did not hit the machine. Not capable to distort up it. This observation is made ignoring the fact that steel truss along with roof had fallen down on the machinery. There was gust in wind, as such, it may cause damage to particular building and not to any other building at the nearby place.
10. In the repudiation letter dated 07.11.2007, it is observed that there was contradiction between the reports of Mr. Abhay Nikum and M/s. Murata Machinery Ltd. Mr. Abhay Nikum, in report dated 23.08.2005, has mentioned that Ram motor was broken in 3 pieces. Ram motor guard frame & guard needed to be replaced. Main frame is not damaged. M/s. Murata Machinery Ltd., Japan (the manufacturer), in their report dated 23.09.2005 mentioned that the main punching drive, AC s
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ervo motor and the gear drive are fully damaged with frame distortion, making it beyond repair. There is no contradiction between the two reports. As stated above, under the policy, the Insurer had right to give option, either to repair it or to reimburse the damage. The Insurer did not give option to repair the damaged machinery. According to the manufacturer’s report, the machinery was not repairable as such it can be treated as totally damaged. The Insurer was entitled to reimbursement of the loss. 11. Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within 45 days, from the date of his appointment. The Insurer has been directed to make settlement within 30 days of receipt of Surveyor’s report. Regulation 9 (6) provides as follows: Regulation-9(6). Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer of by the insured. In case of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2 per cent, above the bank rate prevalent at the beginning of the financial year, in which the claim is reviewed by it. In view of this statutory provision, the Insured is entitled to interest @ 9% per annum after six months of the loss. ORDER In view of the aforesaid discussions, the complaint is allowed. The opposite party is directed to pay Rs.5961938/- deducting 5% excess clause amount and salvage value of Rs.2500/- along with interest @9% per annum from 05.02.2006 till the date of payment to the complainant, within two months from the date of delivery of this judgment.