This consumer complaint has been filed by the complainant M/s. Shri Durga Khandsari Sugar Mills alleging deficiency of service on the part of the opposite party/Insurance Company.
2. The facts of the case are that on 06.03.2014, the complainant involved in the business of manufacturing of sugar, purchased 3 nos. of Standard Fire and Special Perils Insurance Policies from the opposite party. As per its practice for the previous 40 years, the opposite party deputed its representatives to inspect the building and the plant machinery and the nature of goods stored in order to prescribe the most appropriate fire policy that the insured should take. The opposite party issued cover notes without furnishing any other documents delineating the terms and conditions with regard to risk against fire. On 03.07.2014, there was an explosion in the complainant’s molasses tank resulting in a short duration fire and an exothermic reaction raising the temperature of the molasses to such high levels that it foamed and frothed and overflowed out of the tank burning into charcoal solid material resulting in a loss of 2032.90 M.T. priced at Rs.7,200/- per M.T. of total value Rs.1,46,36,880/-. The complainant filed claim with the opposite party contending that in the first place fire has occurred and the said peril is well covered under the fire policies and in the second place it was obligatory on the part of the insurer to have advised the covering of spontaneous combustion as a peril under the Fire policy because the Insurer had the expert knowledge of the kind of policy suitable for the complainant. It is alleged by the complainant that it was only after the event that the Insurer flashed its terms and conditions of policy to contend that spontaneous combustion was not an insured peril even though it fell within the definition of “fire”. On 18.03.2015, the opposite party’s surveyor submitted its final report opining that a loss of 2032.90 M.T. of molasses has indeed taken place but the loss is not covered under the policies issued by the opposite party. On 31.03.2015, the opposite party repudiated the claim. The complainant has filed the instant complaint submitting that the loss in question is very well covered under the fire policies having fire alone as the covered peril without the reference to spontaneous combustion that may or may not be leading to fire. Hence the instant complaint of the deficiency of service on the part of the opposite party in as much as it could not have in the first place issued a policy by hiding the terms and conditions knowing fully well that the only peril by which molasses can perish is spontaneous combustion and then in the second place turn around upon the happening of an accident to contend that the same peril is not covered.
3. Notice was issued to the opposite party. The complaint has been resisted by the opposite party by filing the written statement. It has been stated therein that the complainant has not paid any premium for the peril of spontaneous combustion, therefore, the case of the complainant cannot be covered under the policy as the fire occurred due to spontaneous combustion in the tank where the molasses were stored. Both the parties led their evidence by way of affidavits which have been taken on record.
4. Heard the learned counsel for the parties and perused the record. Learned counsel for the complainant stated that there was pre-inspection of the factory before issuing the insurance policies by the Insurance Company. However, neither the inspecting surveyor nor the Insurance Company suggested that the complainant should pay the additional premium for spontaneous combustion when they very well knew that the molasses are prone to fire due to spontaneous combustion. Thus, the Insurance Company tried to sell the policies from which real benefit cannot be derived. Hence, there is a clear deficiency in service on the part of the insurance company and the complainant is entitled to get the insurance claim. Learned counsel for the complainant referred to the case of this Commission in National Insurance Co. Ltd. Vs. Krishna Devi & 4 Ors, decided on 27.02.2015 (NC), wherein it has been observed:-
“11. …… In the instant case, while obtaining the policy, the Complainant disclosed her date of birth, which is recorded on the policy cover, extracted above. Thus, while issuing the policy, the Insurance Company as well as its agent (O.P No.4) were fully aware of the age of the Complainant and, if because of age factor the assured cover for Medical expenses etc. could not exceed US$25000, it was incumbent upon the Insurance Company to apprise her about it. But regretfully, the Insurance Company collected higher premium on coverage assured amount of US$250000. It is not the case of the Insurance Company that the insured had concealed her age at the time of filling up the proposal form. Unfortunately, even their Agent (O.P.No.4) who had been authorized by the Complainant to obtain policy on her behalf from the Insurance Company did not bother to explain to her that because of her age, her medical insurance cover would not exceed US$25000. Obviously, had this condition been disclosed to her, the agent would have also lost some amount of commission on account of lesser premium. It needs little emphasis that if an insured is expected to read and understand the terms and conditions mentioned in a policy, in fine print, before entering into the insurance contract, the insurer and its agent is equally obliged to carefully go through the information furnished in the proposal form and advise the insured accordingly before accepting the proposal and issuing the policy. In our view, being aware of the date of birth of the insured, it was incumbent upon the Insurance Company to apprise her about its limited liability under the policy before accepting the proposal and the premium. We are convinced that collection of excess premium from the Complainant on coverage assured amount of US$250000 and earning of higher commission by its Agent, not only tantamounts to unfair trade practice, it is equally unethical. It may not be out of place to observe at this juncture that it is high time that in a consumer oriented market, the rule of Caveat Emptor (Let the buyer beware) must give way to the rule Caveat Venditor (Let the seller beware).”
5. It was pointed out by the learned counsel for the complainant that from the above observation of this Commission, the advisory role of the surveyor or agent or the Insurance Company is very clear. Thus, the claim of loss due to fire caused by spontaneous combustion in the present case would also be covered under the policy. In support of his argument, learned counsel for the complainant referred to the judgment of this Commission in The New India Assurance Co. Ltd. Vs. Taj Sugar Works and Anr., decided on 13.08.2001 (NC) wherein this Commission has treated the spontaneous combustion as under the peril of fire and had allowed the claim of Taj Sugar Factory. This decision clearly covers the present complaint and similar order can be passed.
6. On the other hand, learned counsel for the respondent/Insurance Company emphasised that complainant has admitted in the complaint that fire occurred due to spontaneous combustion in the tank of molasses. Therefore, the fact of fire due to spontaneous combustion in the molasses is not disputed. Clearly fire has been caused due to spontaneous combustion and loss due to such fire is not covered under the policy. The allegation of the complainant is that the Insurance Company did not suggest to take the cover for spontaneous combustion also, cannot be justified because every customer takes the policy which suits him best. Insurance Company is only a seller of the policy. If special policy is required by anybody, the Insurance Company gives the same. The complainant is a sugar factory and must be knowing what kind of policy is best suited to the Sugar Factory. If the Insurance Company starts giving advice to the customers then allegation can be made against the officer of the Insurance Company for recommending a particular policy. Thus, no deficiency can be attributed to the Insurance Company for not advising the complainant to take policy for spontaneous combustion also.
7. The learned counsel stated that if complainant was taking policy for 40 years, the complainant should have realised that terms and conditions of the policy are very important and if the same was not received by the complainant then they should have tried to get the same as quickly as possible. The terms and conditions were duly supplied to the complainant. Learned counsel further argued that the assessment of loss by the surveyor does not mean that the complainant deserves indemnification of that loss. In fact, it is the duty of the surveyor to assess the loss. However, it is for the Insurance Company to see whether loss is payable to the insured or not. In the present case, loss was not covered under the policy and therefore, the claim was rightly repudiated. The surveyor has also observed in his report that actually there was no fire and the temperature in molasses tank went on increasing causing overflow and damage to the molasses. If there was no fire, then there can be no claim under the peril of fire.
8. Learned counsel for the Insurance Company stated that the decision of this Commission in The New India Assurance Co. Ltd. Vs. Taj Sugar Works and Anr. (supra) is not applicable in the present case as there was no fire in the present case, whereas in the case of The New India Assurance Co. Ltd. Vs. Taj Sugar Works and Anr. (supra), there was a fire and therefore, this Commission has treated as covered under policy.
9. It was further stated by the learned counsel for the Insurance Company that the terms and conditions of the policy are to be construed in the same terms as they are written in the policy. Courts cannot interpret the terms on their own and cannot rewrite the contract. The policy clearly states that the fire due to spontaneous combustion is not covered under the policy. No separate cover is taken for spontaneous combustion as no additional premium has been paid for this. Thus, it is not open to the court to allow the loss suffered by the complainant on account of fire due to spontaneous combustion under the policy. In respect of his argument, learned counsel referred to the decision of Hon’ble Supreme Court in General Assurance Society Ltd. Vs. Chandumull Jain and Anr., AIR 1966 SC 1644, wherein the following has been observed:-
“11. …………In interpreting documents relating to a contract of Insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however, reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being.”
10. I have carefully considered the arguments advanced by the learned counsel for the parties and have examined the record. It has been admitted by the complainant that the damage to molasses has occurred due to spontaneous combustion which is mentioned as an exception in the policy, that the fire caused by the spontaneous combustion is not covered under the policy. The main thrust of the complainant is that the Insurance Company or the inspecting surveyor should have advised the complainant to take the insurance cover for spontaneous combustion also. Clearly, there was no such instructions for the Insurance Company or the surveyor for giving advice to the persons interested in taking insurance on the type of policy to be taken. It is only recently that such a provision has been made under IRDA (Protection of Policyholders’ Interests) Regulations, 2017 which reads as under:-
“6. Point of Sale
2. An insurer or its agent or other intermediary shall provide all material information in respect of a proposed cover to the prospect to enable the prospect to decide on the best cover that would be in his or her interest.
3. Where the prospect depends upon the advice of the insurer or his agent or an insurance intermediary, such a person must advise the prospect dispassionately.
4. Where for any reason, the proposal and other connected papers are not filled in by the prospect, the insurer or the distribution channel shall explain the contents of the form, and a certificate shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form and connected documents have been fully explained to him and he has fully understood the significance of the proposed contract.”
11. As per the above Regulations, now the Insurance Company and their agents and intermediaries are required to furnish advice also to the insured to provide all the information about the products which may be applicable for the insured.
12. There were no such directions given in the earlier Regulations which were made by the IRDA for protection of rights of policy holders. Learned counsel for the complainant has not shown any other provision either in the Insurance Act, 1938 or Rules made thereunder or any other document, which provides for such directions to the Insurance Company. Thus, the deficiency in service on the part of the Insurance Company for not suggesting the complainant to take insurance cover for spontaneous combustion is not proved.
13. Moreover, It is clear that the contract of the policy is to be interpreted as it is and in terms which are expressly provided in the contract. The learned counsel for the opposite party has rightly relied upon the judgment of General Assurance Society Ltd. Vs. Chandumull Jain and Anr. (supra).
14. Hon’ble Supreme Court in Oriental Insurance Co. Ltd. Vs. Sony Cherian II (1999 )CPJ 13 (SC ), has observed as follows:-
“16. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein.”
15. In United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal, (2004) 8 SCC 644, the Hon’ble Apex Court held as follows:-
“6. ….The terms of the policy have to be construed as it is and we cannot add or subtract something: Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.
9. …It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment.
14. Therefore, it is settled law that the terms
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of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous.” 16. The argument of complainant is that the terms and conditions of the policy were not supplied by the insurer. As the complainant was taking policy from the same insurer for a long time, the terms and conditions of the policy must have been known to the complainant. Moreover, it has been denied by the opposite party that the terms and conditions were not supplied to the complainant. A party who wants to take insurance for any kind of risk must try to know the details of the policy and the terms and conditions of the policy so, that insured is clear as to what kinds of risks are covered and under what conditions, in the policy. Thus, this argument of the complainant is not tenable. 17. On the basis of the above examination, it is clear that the allegation of the complainant that the terms and conditions were not given by the Insurance Company cannot be accepted. The contract of policy has to be construed in the same terms in which the contract is expressed. From these two findings, it is clear that the insurance claim of the complainant is not covered under the policy. It has also been found that no deficiency in service can be attributed to the opposite party for not advising the complainant on the issue of insurance cover for spontaneous combustion. 18. Based on the above discussion, it is seen that the complainant has not been able to prove his allegation against the opposite party and the insurance claim is not payable under the insurance policy. No deficiency of service is found against the opposite party. Accordingly CC No.1899 of 2016 is dismissed.