Utpal Kumar Bhattacharya, Member
Instant complaint petition has been filed u/s 17(1)(a)(i) of the C.P Act, 1986.
The brief fact of the complaint was that the Complainant No. 1 Company got a contract for laying and installing 18” dia 0.438 wt, APL 5LGr.X70Ms 3LPe Pipe and 89 MM Steel Conduit Pipe by HDD method of 585 Meters at Kandala River on 20.05.2013 from one company named as Trenchless Engineering Services Pvt. Ltd.
The Complainant Company had to purchase one machine named as Vermeer Navigator D130X150 equipped with some other engineering equipments viz. High Strength Vermeer Drill Rods 3.5”X20’ etc. The Complainant Company had the said machine insured with the National Insurance Company under Policy No. 150100/45/12/9500003724 of sum assured of Rs. 4,13,10,000/- having a period of validity from 01.11.2012 to the midnight of 31.10.2013, on payment of a policy premium of Rs. 3,24,911/-.
On 09.09.2013, at the time of drilling, the drilling rod got struck and damaged to a great extent rendering itself unfit for usage leading to loss of money. The estimated replacement of the same was assessed at Rs. 60,00,000/- approximately. The estimated amount for the proposed replacement was conveyed to the OP Insurance Company by the Complainant through its letter dated 11.09.2013 which was received by the said OP Insurance Company on the same day.
The Complainant, thereafter, filed a claim on 12.09.2013 submitting the duly filled in claim form to OP Insurance Company which received the said claim form on the same day.
The claim, however, was not considered by the OP Insurance Company on the ground that subject loss fell under special exclusion clause of the policy which it communicated through its letter dated 12.09.2013 expressing therein its inability to provide any financial support for the loss/damage.
The Complainant subsequently got a correspondence dated 23.09.2013 from the OP Insurance Company conveying therein an information of engagement of a surveyor for assessing the loss. The surveyor, during holding enquiry, was given all necessary assistance and was supplied with required documents demanded by him from time to time by the Complainant. The Complainant, meanwhile, had rendered the policy for a further period from 03.12.2013 to midnight of 02.12.2014 for a sum insured of Rs.4,00,06,500/- against payment of a premium amount of Rs.31,40,659/-.
The OP Insurance Company made a further correspondence repudiating the previous claim with the observation than the claim was not maintainable through its letter dated 21.09.2015 narrating therein the point wise reasons justifying their observation on non-maintainability. Said points mentioned in the subject letter were also referred to in the complaint petition under para 16.
The Complaint Case was filed by the aggrieved Complainant against the above repudiation.
Heard the Ld. Advocates appearing on behalf of both sides.
Ld. Advocate for the Complainant submitted that the OP Insurance Company conveyed refusal to accept the claim through its letter dated 12.09.2013 but engaged surveyor on 21.09.2013 for assessing loss and thereafter finally conveyed repudiation of the claim on the ground of non-maintainability through its communication dated 21.09.2015 which, in fact, was the actual date of initiation of the cause of action. The complaint, as he continued, since filed in the month of October, 2015, it appeared to have been filed well within the statutory period of limitation and there should not be any question of the same being barred by limitation.
As he continued, the claim was rejected on the ground that the policy covering the period of incident, in its “special condition”, mentioned that “damage of drilling Head” was not under coverage of the policy. The instant claim, as he submitted, since was related to the damage of drilling rod which was not beyond the purview of the policy coverage, the reason assigned for repudiation of the claim appeared to be imaginary and fabricated.
He drew the notice of the Bench to the papers related to the renewed policy where specific exclusions from coverage were recorded in respect of both drilling Heads and rods. This, as the Ld. Advocate went on to point out, made evident that the drilling rods were very much under coverage of the policy when the subject incident had taken place and the said items were included under the exclusion clause in the renewed policy for the next year.
As he continued, the report of the surveyor appointed for the first time was not communicated to the Complainant. The OP Insurance Company got the survey done for the second time engaging another surveyor. The report of the said second surveyor was also not communicated to the Complainant.
The survey report which was attached to the W.V furnished by the OP Insurance Company revealed on perusal that the surveyor appointed by them, in its preliminary survey report, observed the loss as accidental in nature and recommended an amount of Rs. 65,00,000/- as a loss reserve against the claim. Same surveyor, in its final survey report also gave a positive observation towards reimbursement quoting expressly that he did not find breach of any of the conditions or warranties imposed by the policy of the insurance issued to and held by the insured. The same observation appeared to be more revealing when he recommended filing of purchase invoice and related payment particulars prior to the settlement of the claim by the Complainant.
The OP Insurance Company, as he continued, was not happy with the report of their appointed surveyor and engaged one independent surveyor as per their choice and gladly accepted his recommendation for repudiation of the claim as the observation protected their interest absolutely.
With the submission, as above, the Ld. Advocate prayed for the complaint to be allowed.
Ld. Advocate appearing on behalf of the Complainant, per contra, submitted that the repudiation of the claim was made on 12.09.2013 but the complaint was filed on 25.10.2016, that is, long three years after an initiation of the cause of action. The Complainant did not prefer any prayer for condonation of delay in filing the Appeal u/s 24A of the C.P Act, 1986. The letter of repudiation dated 21.09.2015, subsequently communicated by the OP Insurance Company, did not and could not initiate any fresh cause of action. The complaint, in the above perspective, was barred by limitation as per statutory provision leaving for the Ld. District Forum no jurisdiction to adjudicate on the issue.
As he continued the recommendation of the surveyor in any report was not sacrosanct if, prima facie it appeared to have been made out of sheer ignorance. The report, in such cases, does not warrant any obligation for the insurer towards its acceptance. In this context, the Ld. Advocate relied on the decision of the Hon’ble National Commission in FA No. 915 of 2015 [Jagruti Securities Ltd.—Vs—United India Insurance Company] reported in II (2017) CPJ 11 (NC) wherein the Hon’ble Commission was pleased to observe that mere assessment of loss did not mean the acceptance of liberty by insurance company. Accordingly, as maintained, the insurer was having liability to engage other surveyors to ascertain the fact in issue and the actual liability on the part of the insurer against any claim. In the above context, the Ld. Advocate referred further to the decision of the Hon’ble National Commission in First Appeal No. 238 of 2007 [New India Assurance Company Ltd.—Vs—RP Oil Industry] reported in IV (2016) CPJ 627 (NC) wherein, at para 8, the Hon’ble National Commission observed, “It is trite law that although there is no prohibition under the Insurance Act, 1938 for appointment of a second surveyor by the Insurance Company but while doing so, the Insurance Company has to give cogent and sufficient reasons for disagreeing with the findings of the first surveyor. The second surveyor cannot be appointed as a matter of course.” The insurer in the present case, as submitted, had sufficient reasons to disagree with the findings of the first surveyor.
Referring to running page 21, the Ld. Advocate pointed out that the Complainant submitted in part while drawing attention of the Bench to the fact that the policy bond, as recorded on its body, would not cover the drilling head of the machine and accordingly there was no restriction in giving coverage to the drilling rods. Referring to Clause ‘C’ under the Head “exceptions” of the policy documents attached with the W.V at running page 8, the Ld. Advocate continued that the said clause was unambiguous about not giving coverage to the replaceable part and the drills were seen to have been figured in the list of such replaceable parts. Expectedly, the company management did not enter into policy without going through the terms narrated in it and even if they did so, they, at present, were legally barred to backtrack as the terms were binding on the parties under the Agreement.
As submitted further, the drilling rods before getting damaged, must have hit some solid object like rock and the transmitter fitted to the pilot drill must have sent a signal to the operator about the presence of rock which the operator had ignored and thereby committed a willful negligence. Any loss or damage directly or indirectly caused by or arising out of or aggravated by the willful act of negligence of the insured, as contended, was not under coverage as per policy clause ‘O’ under the Head “exception” of the policy.
In support of his above contention, the Ld. Advocate drew the attention to the replies to questionnaire emphasizing especially on the question Nos. 9 and 12 where the Complainant admitted that the relevant portions of the terms and conditions of the policy were known to him and the rest of the contractual work was done by the Complainant by replacement of rods which only went to establish the claim that the rods were the replaceable items and thereby out of coverage of the policy.
As submitted, the Complainant had attached the policy with its complaint but cleverly abstained from attaching the policy terms lest the lapses on its part under the veil of its innocence came out. There being a conspicuous motive allegedly designed with the intention of unlawful gain, the Ld. Advocate prayed for the complaint to be dismissed.
Perused the papers on record and considered submissions of the Ld. Advocate appearing on behalf of both sides.
It was a fact that the OP insurance Company had denied its liability to compensate for the subject loss, immediately after filing the claim, on 12/09/2013 but, it had engaged a surveyor thereafter for making an assessment for the loss and the surveyor made the survey in two phases and submitted its preliminary and final reports. The OP Company got the matter surveyed by engaging a second surveyor and decided to finally repudiate the claim based on the recommendation of the said second surveyor. The repudiation was once again communicated to the complainant through a correspondence made by the OP Insurance Company on 21/09/2015. The above activities on the part of the OP insurance Company, one contradicting the other, left reasons to consider that the denial of its liability communicated through its correspondence dated 12/09/2013 was not a final repudiation, rather, the communication dated 21/09/2015, since conveyed the final repudiation of the claim, led the complainant, for obvious reason, to consider the date of the said correspondence as the date of initiation of the cause of action. The Complaint Petition, as it revealed from the record, was filed on 25/10/2015, that is, after slightly exceeding a month from 21/09/2015, being the date of initiation of the cause of action. There was, therefore, no reason to consider that the complaint was filed beyond the statutory period of limitation. The Complaint, in view of the above perspective was not barred by limitation.
We perused the first policy bond covering the machine from 01/11/2012 to 31/10/2013. It appeared that the said policy had a special condition, distinctly recorded on the body of the bond about not giving any coverage on drilling head. This left for the complainant apparently a right reason to consider that the drilling rods, which the claim was actually related to, were not restricted from providing coverage under the policy. Complainant’s interpretation had a corroboration in the renewed policy for the period from 03/12/2013 to 02/12/2014 of the same machine with the same Insurance Company where drilling rods were also included in the special exclusion clause in the policy bond in addition to ‘head’, the only item recorded beyond coverage in the previous one. The very inclusion of the drilling rods in the exclusion clause in the same policy, for the same machine, in the next year, appeared to be a corrective step of the OP Insurance Company against the lacuna in the policy, taking lesson from the subject claim.
We had taken into consideration the clause ‘c’ under the Head ‘exclusion’ in the policy terms which revealed that replaceable items, which included ‘drills’, were excluded from coverage under the policy. The policy document narrating terms which were attached to the WV, were seen to be having no date. We are afraid, we are unable to draw any conclusion as to whether it was the same policy which was prevalent at the time of initiation of the first policy, since chances were there that the policy condition might have been redrafted subsequently on revisiting the earlier decision as it was done in case of policy bonds as pointed out earlier. The OP Insurance Company should have been much careful so as to ensure that the policy papers were not having any chance for being misinterpreted. The dissimilarities of the terms recorded on the bond in the first policy with that of the renewed one, made the doubt deeper that the policy, the first and relevant one on the instant issue, had enough reason to be misinterpreted by the complainant which, in fact, had happened in this case.
The surveyor was engaged for making an assessment about the loss sustained by the complainant. In the preliminary survey report, the surveyor observed that the cause of the loss to the HDD drilling machine was accidental in nature and the same was well within the purview of the policy and did not fall under the exclusion clause of the policy. A loss reserve for an amount of Rs. 65,00,000/-was recommended to be kept in the same report.
The same surveyor observed in the final report that there was no breach of conditions or warranties imposed by the policy of insurance issued to and held by the insured. The final report, in its remarks, recommended for asking the complainant to furnish invoice and other related payment particulars prior to settlement of the claim. The OP insurance company, however, was not satisfied with the report of the surveyor and engaged another surveyor of its choice and based on his recommendation, repudiated the claim.
The OP Insurance Company appeared prima-facie, to be protective of self interest but indifferent to the interest of the complainant. It, with that designed motive, refused to accept the recommendation of the first surveyor as it went against its interest. It rather preferred to adopt a debatable action of obtaining a recommendation of repudiation from a surveyor, appointed for the second time and accepted the said repudiation.
The Complainant, in reply to the Question No. 9, put to him by the Insurance Company confessed to his knowledge about the terms and conditions of the policy. Therefore, the OP Insurance Company’s contention as to the receipt of the terms and conditions of the policy by the Complainant and his having knowledge about the same went uncontroverted. We had gone through the policy terms and conditions. As regards negligent handling of the machine, as envisaged under ‘o’ of the exclusion clause, we intended to disregard the same as the allegation was made out of mere speculation without any material value to substantiate it, but, the clause ‘c’ which was seen to be speaking about the exclusion from coverage about the separable items and where ‘drills’ was seen to be figuring in, amply clarified that the drilling rods which fell under the said category of the equipments were excluded from coverage. The policy terms and conditions are no less than an Agreement where the terms and conditions are the binding force between the parties. On the instant issue, the complainant should not plead ignorance about the exclusion from coverage of the subject item after entering into the Agreement and especially, after having knowledge about the policy terms and conditions. So, there was negligence on the part of the Complainant also.
Being guided by the decision of the Hon’ble Natio
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nal Commission in[New India Assurance Company Ltd.—Vs—RP Oil Industry] (supra), we were of the view that the OP Insurance Company made no mistake by engaging the second surveyor for the reason which it considered justified. In consideration of the scenario narrated hereinabove, we arrived at a decision that there was contributory negligence on the part of both sides of which the negligence on the part of the OP Insurance Company outweighed the same on the part of the Complainant. Above being the view of the Bench, we allow the OP Insurance Company 60% of the claim on nonstandard basis together with reasonable amount of cost and compensation. It appeared from the question Nos. 13 and 14 put to the complainant by the OP Insurance Company that the machine was hypothecated to L&T Finance Ltd. The Complainant, admitting the fact of the said hypothecation, replied that the entire loan was cleared by it. The Ld. Advocate on behalf of the OP Insurance Company, however, during his submission, refused to accept the reply as, what was stated by him, the loan amount was yet to be cleared by the Complainant. Hence, Ordered that the Complaint be and the same is allowed in part. OP No. 2 is hereby directed to pay to the Complainant an amount of Rs. 36,00,000/-,being 60% of the claimed amount of Rs. 60,00,000/-together with cost and compensation of Rs. 5,000/-and Rs.50,000/-respectively. The payment has to be made after verification and adjustment of the dues, if any, with his Financier. Entire order has to be carried out within 45 days from the date of the instant order. Failing which, simple interest @ 9% p.a. shall accrue 36,50,000/-, being the total of the payable amount and compensation, from the date of default till the entire amount is fully realized. Let a copy of this order be handed over to the parties concerned.