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M/s. Shanti Sugar Industries, Uttar Pradesh & Another v/s New India Assurance Co. Ltd., Branch Manager, Branch Office, Uttar Pradesh & Another

    Consumer Case No. 87 of 2008

    Decided On, 24 September 2021

    At, National Consumer Disputes Redressal Commission NCDRC

    By, MEMBER

    For the Complainants: Sukumar Pattjoshi, Vikas Nautiyal, Advocates. For the Opposite Parties: Amit Kumar Singh, Advocate.

Judgment Text

1. The present case is filed under Section-21 of the Consumer Protection Act, 1986.

2. Case of the Complainants is that the Complainant No.1, namely, M/s Shanti Sugar Industries is a proprietorship which is engaged in manufacturing of Khandsari sugar, under the licence, dated 23.09.1997. Complainant No.-2 is the proprietor of Complainant No.-1. Complainant No.-1 initially was a conventional Khandsari unit and Complainant No.-2 decided to upgrade it for better sugar extraction. The Complainants in order to insure the risk in respect of the plant, machinery and stocks availed the service of Insurance from Opposite Party No.1 i.e., New India Assurance Co. Ltd on payment of premium since the year 2005 . Credit facility was provided by Opposite Party No.-2 in order to upgrade the Unit. It was contended that Opposite Party No.1 took a blank signed proposal form without any details and issued Special Peril Policy No. 421804/11/04/01171, Policy No. 421804/11/04/01172, Policy No. 421804/46/04/00503 & Policy No. 421804/46/04/00504 all dated 21.03.2005 and Policy No. 421804/11/05/00564 & Policy No. 421804/46/05/00244 both dated 03.10.2005. Thereafter, on 6.10.2006, the Complainants submitted duly filled Proposal Form for year 2006-2007 to Opposite Party No.1 for securing Standard Fire & Special Perils Policy for total cover of Rs. 2.5 crores, along with premium amount of Rs. 61,732/- as demanded on verification of the proposal. On the same day i.e., on 06.10.2006 Opposite Party No.1 issued Standard Fire & Special Perils Policy 421804/11/06/13/00000504 in favour of the Complainants. Though the sum assured was Rs. 2.5 crores, it was wrongly mentioned as Rs. 2 crores. As the Policy was to be given on the same day, no receipt showing submission of Proposal Form was given. Spontaneous Combustion was not included as an add on cover though sought in the Proposal form. The Complainants, vide letter dated 06.10.2006 , requested Opposite Party No.-1 to amend the Policy in accordance with the Proposal Form so that it could cover "Spontaneous Combustion" also.

3. On 10.09.2007 the Complainants after noticing frothing and evolution of gas in the 'Rab' stored in the thirteenth underground tank, approached the National Sugar Institute at Kanpur, through letter dated 15.09.2007 seeking their indulgence and expert suggestion for curbing the loss of sugar. The National Sugar Institute, Kanpur, vide letter dated 27.09.2007, on the basis of analysis of affected 'Rab' sample declared that the indicated residual mass did not contain economically enough sugar to be fit for use by alcohol and allied industries. The Institute opined that the incident was due to chain of reactions involving bio-chemical and chemical reactions at the bottom of the tanks where microbial population was more. The released energy due to bio-chemical reaction might have initiated Maillard reaction and due to exothermic reaction between reducing sugars and amino acids caused charring of the stored mass, in other words ‘Self-Spontaneous Combustion’. Thereafter, Complainants, vide letter dated 28.09.2007, informed Opposite Party No.1 about the occurrence of Spontaneous Combustion which destroyed the entire 'Rab' stored in 17 tanks. The Complainants, vide letter dated 29.09.2007, also intimated about the above loss to the Khandsari Inspector and Tax assessing officer, Bijnore who inspected the Unit on 30.09.2007. In the Inspection report the Inspector mentioned about the damaged 'Rab' as per the Stock recorded in stock register. The Complainants in furtherance to the letter dated 28.9.2007, submitted a Claim Bill dated 30.09.2007to Opposite Party No.1 for an amount of Rs.1,10,24,000/- . Opposite Party No.1 appointed Mr. Prem Ratan Sud as Surveyor to assess damages in respect of loss covered under Policy No. 421804/11/06/13/00000504. The Surveyor after conducting survey furnished a preliminary survey report dated 03.10.2007 stating that as the loss was more than Rs.70 lakhs it was beyond his limits. Opposite Party No.1 without appointing a Final Surveyor, vide letter dated 11.10.2007, concluded that the loss was caused due to occurrence of Spontaneous Combustion and decided the claim of the Complainant as “No Claim” as the Policy excluded Spontaneous Combustion peril. Their Original Proposal Form dated 06.10.2006 for the year 2006-07 had been replaced with a forged Proposal Form, only for rendering the Complainants claim as "No Claim". Opposite Party No.1 thereupon, only as an eye wash, appointed another Surveyor M/s A.K.Govil & Associates to assess the damages of 'Rab' covered under the Policy. Complainants held that the Opposite Parties were duty bound to indemnify the Complainants for the loss, which Opposite Party No.1 evaded on false, concocted and unsustainable premise, thereby rendering deficient service by adopting unfair trade practice. Aggrieved by the acts of Opposite Party No.1 & 2 the Complainant filed Complaint No. 87 of 2008 before this Commission with the following prayer-

“In the premises, it is most respectfully prayed that this Hon'ble Commission may graciously be pleased to: -

(a) Allow the present Original Petition/Complaint; and

(b) Set aside the rejection of claim conveyed vide letter dated 11.10.2007 of the Insurance OP deciding the claim of the Complainants as 'No Claim'; and

(c) pass an order awarding the reliefs under Section 22 r/w 14 of the Consumer Protection Act, 1986 for a total sum of Rs. 1,80,53,445/- ^ (One crore eighty lakhs fifty three thousand four hundred and forty five only) along with interest @ 18 % per annum from the date of filing of the Complaint till the date of realization; and

(d) Pass such other and further order or orders as this Hon'ble Commission may deem fit and proper in the facts and circumstances of the case.”

4. The Complaint was resisted by Opposite Parties by filing Written Statement. It was stated by Opposite Party No.-1 that the Policy which was issued to the Complainants was not covering the peril of Spontaneous Combustion. The Compliant involved complicated questions of fact and fraud, interpolation and tempering of records etc. by the Complainants which required detailed and elaborate enquiry and could only be done in a regular trial before Civil Court, thus, barring the jurisdiction of this Commission to entertain the Complaint.

5. Opposite Party No.-2 in their written statement pleaded that it operated within the financial discipline and guidelines of RBI and was wrongly made a party in this Complaint. It was further stated by Opposite Party No.-2 that the Complaint filed was abuse of the process of law and Complainants failed to operate their account within the financial discipline of the Bank. Thereafter, vide

6. Heard the Learned Counsel for both the Parties and carefully perused the record. Learned Counsel for the Complainants stated that the Complainants in order to insure the risk in respect of their plant, machinery and stocks took Insurance from Opposite Parties No.-1 and duly submitted filled proposal form on 6.10.2006 for Standard Fire & Special Perils Policy, covering damage due to "Spontaneous Combustion” for insurance coverage of an amount of Rs.2.5 crores. It was stated that Spontaneous Combustion was not included as an add on Cover as proposed in the Proposal Form and the Complainants for the same purpose, vide letter dated 06.10.2006,requested Opposite Part No.-1 to amend the Policy to cover "Spontaneous Combustion”. Opposite Party No.-1 took blank signed Proposal Form without any details of the previous Proposal and mischievously used the said blank signed proposal form to show that the Complainants had not requested for the coverage of “Spontaneous Combustion” for the relevant period. It was averred that fabrication of the "Proposal Form" by Opposite Party No.-1 is evidenced from the mere fact that Proposal Form for year 2006-2007 submitted by the Opposite Party No.-1 showed different premium amount in the Insurance Policy. This showed that the Proposal Form submitted by the Opposite Party No.-1 was fabricated and forged.

7. It was further averred that after the Complainants submitted the Claim Form, Opposite Party No.-1, without appointing a Final Surveyor, vide a letter dated 11.10.2007, erroneously and arbitrarily decided the claim of the Complainant as 'No Claim' holding that the Policy did not include Spontaneous Combustion peril. The exclusion clause, along with terms & condition, were not provided to the Complainants by Opposite Party No.1. Hence, Opposite Party No.-1 cannot rely on that exclusion clause for repudiating the claim. It was averred that the Complainants thereby suffered a huge loss besides mental agony and inconvenience, as the service promised for a consideration by way of premium had not been rendered and honored by Opposite Party No.-1, amounting to deficiency in service and unfair trade practice.

8. The Learned Counsel for Opposite Party No.-1 stated that Complainant's claim for damage on account of Spontaneous Combustion was based on a Policy which did not cover risk for damage on account of Spontaneous Combustion. It is admitted in paragraph 9 of the Complaint that duly filled proposal form for securing Standard Fire And Special Perils Policy was submitted on 6.10.2006, along with payment of premium of Rs.61,732/- as demanded on verification of the proposal. Accordingly, Standard Fire Policy No. 421804/11/06/13/00000504 was issued without Add on Cover (Spontaneous Combustion) against stock, covering a risk of 2.5 crores. No additional premium was paid against risk of Spontaneous Combustion. As such, the claim was closed as "No Claim". Relief claimed, therefore, is not maintainable.

9. The Learned Counsel for Opposite Party No.-1 further stated that documents brought on record, including Policies and Proposal Form by the Complainants were tampered, forged and fabricated. Opposite Party No.-1 never received any letter from the insured to cover loss against Spontaneous Combustion. The letter of the insured, dated 6.10.2006, as enclosed by the Complainant, was forged and fabricated. The Surveyor was given a photocopy of the letter dated 6.10.2006 and the same was replied by Opposite Party No.-1 vide letter dated 9.09.2008. It was submitted that the Complainant never objected to non-inclusion of add on risk against spontaneous combustion in the previous Policies. It is patently false that the Complainant submitted blank proposal form. The Policy is issued on the basis of Proposal Form only. If the form is blank, the Policy cannot be issued. The allegation of the Complainant is false and in the interest of justice this Complaint should be dismissed with heavy cost.

10. Opposite Party No.-1 contested that the Complaint involved complicated question of fact requiring detailed and elaborate enquiry and could only be addressed in a regular trial before civil court. This contention of the Opposite Party No.-1 cannot be accepted as the mere the fact that Complaint contains complicated facts cannot shut the doors of this Commission in taking up the Complaint. Reliance is placed on the observation made by Hon’ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd. where while concluding Shri R.C. Lahoti, C.J., (as His Lordship then was), in paragraph 6 of the aforesaid case in page No. 236 observed as follows:

“It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved.”

From the above settled principle and law this Commission is competent to adjudicate this Complaint filed for deficiency in service. It has been held by this Commission in Harsolia Motors v. National Insurance Co. Ltd. I, (2005) CPJ 27 (NC) decided on 03.12.2004 that since an Insurance Policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose. This Commission does possess the requisite jurisdiction to entertain a Consumer Complaint wherever a defect or deficiency in the services rendered by an insurer is made out. In view of the above, the Complaint is held maintainable.

11. The Complainants contended that duly filled proposal form was submitted to Opposite Party No.1 on 6.10.2006 for securing Standard Fire & Special Perils Policy. As in the Policy issued on 06.10.2006 “Spontaneous Combustion”, was not specifically mentioned as an add on cover, they immediately made an application dated 06.10.2006 to Opposite Party No.1 for amending the Policy in accordance with the proposal to cover "Spontaneous Combustion”, which was not duly complied by Opposite Party No.-1. The Photocopy of the Proposal Form submitted by the Complainants for the year 2006-2007 included add on risk against Spontaneous Combustion. Opposite Party No.-1 held that the Policy was exclusive of “Spontaneous Combustion” and separate premium was required for availing the same. Opposite Party No.-1, however, failed to satisfy this Commission with any documentary evidence that the exclusion clause regarding “Spontaneous Combustion” was duly conveyed to the Insured while issuing Policy even after the request was made by the insured to include “Spontaneous Combustion” in the Policy issued. It is only after the incident of Fire in the Insured property that Opposite Party No.-1 whispered about the non-inclusion of “Spontaneous Combustion” and held it as exclusion in the Fire and Standard Peril Policy.

12. Opposite Party No.1 contended that the Proposal Form filed by the Complainants was forged. However, though Opposite Party No.-1 was put to strict proof and several opportunities were given to Opposite Party No.-1 to file the original Proposal Form, as it was its custodian, it failed to comply and contended that the Original Proposal Form was not traceable. It is expected on the part of Opposite Party No.-1 to preserve the Original Proposal Form on which they are relying. Opposite Party No.-1 only filed photocopy of the Proposal form. Complainants cannot be expected to produce original Proposal Form which they submitted to Opposite Party No.-1. Proposal form submitted by the Complainants clearly shows under Clause-10 that Spontaneous Combustion was opted for inclusion in the Policy but the same was not done by Opposite Party No.1.

13. It was also alleged by Opposite Party No.-1 that it never received any letter dated 06.10.2006 from the Complainants to cover the loss against Spontaneous Combustion and also that the letter dated 06.10.2006 filed by the Complainant was forged and fabricated. The Complainants, however, contended that Endorsement No. 421804/11/06/13/82000015 with respect to Policy No. 421804/11/06/13/00000504 admittedly mentioned about the Insured's “request/Reference” dated 06.10.2006, whereby the Complainants requested for modifying the insured amount to 2.5 crore instead of 2 crore and include “Spontaneous Combustion”. Though the insured amount was modified by Opposite Party No.-1, there was no inclusion of “Spontaneous Combustion” in the Policy. Relevant Paragraph of letter dated 06.10.2006 reads as –

“In reference your fire Policy No.-421804/11/06/13/00000504 dated 06.10.2006 valid up to 5/10/2007 has not been prepared according to my proposal submitted to you along with my cheque dated 04.10.2006 of Rs. 61732.

It is to be submitted that my policy has not been covered under serial No. 10(Ten) of the proposal. So you are kindly requested to amend the policy according to my proposal so that tit could be covered under SPONTANEOUS COMBUSTION.

It is to be submitted that my policy has not been issued according to my proposal serial No.22 (Twenty two) but at the bottom of the policy you mentioned wrongly number of underground Tank 18 instead 17 at factory premise and at village Akbarpur Tigari you mentioned number of tank 18 instead of 19.Kindly amend the same.

It is to be submitted that my policy has been issued according to my proposal serial No.23 (Twenty Three) for Rs.2.5 crore sum insured but at th

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e bottom of the policy you mentioned wrongly Rs. 2 crore for both the locations instead of 2.5 crores. Kindly amend the same.” Opposite Party No.-1 failed to produce any documentary evidence to show from where “Request/Reference dated 06.10.2006” referred in Endorsement No.-421804/11/06/13/82000015 originated. Opposite Party No.-1 has referred to the letter, dated 06.10.2006, in Endorsement No.- 421804/11/06/13/82000015 but failed to produce any other letter, dated 06.10.2006, filed by the Complainants. Furthermore, the Surveyor’s report filed by Opposite Party No.-1 also mentions about the receipt of the letter, dated 06.10.2006 sent by the Complainant. In the absence of any documentary evidence on behalf of Opposite Party No.-1 there is no reason to disbelieve the Complainant that he had sought inclusion of Spontaneous Combustion on that very day the Policy was issued. Opposite Party No.-1 failed to produce necessary evidence and on the basis of their inaction the Complainant cannot be penalized for the admitted loss caused due to Spontaneous Combustion. 14. It is an admitted fact that the cause of damage, supported by the Surveyor i.e. A.K.Govil & Associate, was exothermic chemical reaction and the Surveyor assessed the loss at Rs.90,95,158/- 15. Repudiation of the claim on grounds of non-inclusion of “Spontaneous Combustion” which was proposed and requested by the insured, amounts to deficiency of service and unfair trade practice. that the Opposite Party No.-1 16. In view of the above, this Complaint is partly allowed. Opposite Party No.-1 is directed to pay the Complainants a sum of Rs.90,95,158/- with interest @ 6% per annum from the date of filing of this Complaint to the date of this order . Rs.20,000/- be paid to the Complainants by the Opposite Party towards litigation cost. Order be complied within a period of eight weeks.