D.K. Jain, J. (President)
1. This First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short 'the Act') has been filed by the Complainant, questioning the correctness of order dated 24.12.2007 passed by the State Consumer Disputes Redressal Commission, West Bengal (for short 'the State Commission') in S.C. Case No. 27/0/2004. By the impugned order the State Commission has dismissed the Complaint, inter alia, holding that the Respondent - Oriental Insurance Company Ltd. (for short 'the Insurance Company') had not committed any deficiency in service in repudiating the insurance claim preferred by the Complainant.
2. The Complainant, a body corporate, is the owner of a cold storage, which was used for storing potatoes for preservation. In order to secure loss on account of any kind of deterioration of stocks of potatoes stored in the cold storage, the Complainant was taking ‘Deterioration of Stock Policy’ (DOS) right from the year 1993-1994. The full storage capacity of the cold store, consisting of four Chambers, was 2.42 lac quintals. The Policy was issued by the Insurance Company to indemnify the Complainant against the losses due to any accident resulting in deterioration of the stocks of potatoes to the extent of Rs. 5,80,80,000/-. The policy was valid during the relevant period i.e. 09.04.1999 to 08.04.2000.
3. On 03.07.1999, there was a leakage of Ammonia gas in the cold storage, resulting in heavy damage to the potatoes stored in Chambers No. 3 & 4. The accident was duly reported to the Insurance Company, which appointed a Surveyor - M/s J.B. Boda Surveyors Pvt. Ltd. The Surveyor assessed the loss on account of damage to the potatoes stored in Chambers No. 3 & 4 respectively at Rs. 68,69,974/- and Rs. 26,00,000/- in October 2000. The Insurance Company settled the claim of the Complainant in respect of Chamber No. 3 and paid a sum of Rs. 68,69,974/-, the loss assessed by the Surveyor. However, vide letter dated 17.10.2000, the Complainant’s claim in respect of Chamber No. 4 was repudiated on the sole ground that the Complainant had constructed an intermediate window (Architrave) in the common wall of Chambers No. 3 and 4, which amounted to deviation from the original lay-out plan. For the sake of ready reference, the letter repudiating the claim is extracted below:
'In regard to the captioned claim, it is observed from the Survey Report that an intermediate partition wall opening had been constructed by you between Chambers-3 and 4. The ammonia leakage which originally occurred at Chamber-3 had subsequently spread to Chamber-4 when the above mentioned partition window was opened by your Cold Storage personnel. The construction of the intermediate window constituted a deviation from the original Layout Plan, where the intervening window has not been shown and the partition wall is described as a 'common wall with insulation.' We had made a reference to the concerned authorities (Directorate of Agricultural Marketing) for their confirmation as to whether this deviation is permissible. In reply, they have issued their letter dt. 30.08.2000 addressed to you with copy endorsed to us wherein they have stated that the partition window has been constructed without their approval or permission and is a deviation from the original plan. They have also stated that the construction is in contravention of the provisions of West Bengal Cold Storage Act and Rules.
Under the above circumstances, we are unable to consider your claim pertaining to Chamber-4 since this has occurred solely on account of the opening the above mentioned partition window. The Competent Authority has accordingly approved settlement of your claim for Rs. 68,69,974/- which pertains to the loss in Chamber-3 only. We enclose our Loss Voucher for the above mentioned amount and would request you to return the same to us duly discharged in duplicate to enable us to release the claim cheque in your favour.'
4. It appears that even thereafter some correspondence was exchanged between the Complainant, the Directorate of Agriculture Marketing and the Insurance Company. However, it seems that the said Correspondence did not evoke any positive response. Consequently, the Complainant filed the Complaint in the State Commission, praying for direction to the Insurance Company to settle their claim in respect of Chamber No. 4 and disburse a sum of Rs. 26,00,000/-, the loss assessed by their own surveyor, along with interest @ 18% p.a., with adequate compensation for delay in release of the said amount.
5. The complaint was contested by the Insurance Company. Besides raising two preliminary objections to the maintainability of the Complaint, viz. (i) the Insurance Policy having been taken for a commercial purpose, namely, storing potatoes, etc., the Complainant did not fall within the preview of definition of the term 'Consumer' under Section 2(1)(d) of the Act and (ii) the Complaint was barred by limitation as it was not filed within a period of two years of the date of repudiation of claim i.e. 17.10.2000. The allegation of deficiency in service on the part of the Insurance Company was refuted mainly on the ground that the Architrave in the partition wall between Chambers No. 3 and 4 was never brought to notice of the Licensing Authority, which had verified and approved the lay-out plan, under the West Bengal Cold Storage (Licensing and Regulation) Act, 1966 (for short 'the WB Act') and the same was discovered during the course of survey by the Surveyor. It was pleaded that had such a window or opening been not made, the potatoes stored in Chamber No. 4 would not have been damaged.
6. On appraisal of evidence led by the parties in support of their respective claims, the State Commission rejected both the said preliminary objections. However, on merits, the State Commission concluded that there was no deficiency in service on the part of the Insurance Company in rejecting claim in respect of Chamber No. 4 as the Complainant had failed to produce the lay-out plans or approval/clearance from the Directorate of Agricultural Marketing in respect of any change in the original lay-out plans. According to the State Commission, renewal of policy on several occasions, was of no consequence. For the sake of ready reference, the operative part of the impugned order is extracted below:-
'From the letter of the Ops written to the complainant dt. 22.12.2000 it is clear that the Insurance Co. advised the complainant to procure order of approval/clearance from the Directorate of Agricultural Marketing in respect of such change because such approval was to be granted by that Directorate under the provisions of West Bengal Cold Storage Act and unless such approval was obtained, the construction of the window would be treated as illegal. But in spite thereof the complainant failed to obtain such clearance from this Directorate and, therefore, the Insurance Co. could not be in a position to accept such construction of a window in the common wall between Chamber Nos. 3 & 4 of the cold storage in dispute as legal or proper. On the other hand, from the letter of the Superintendent of Agricultural Marketing, Hooghly, written to the Director of Marketing and Ex-officio Additional Director of Agricultural Marketing, West Bengal, dt. 10.2.01 (vide page-47 of the complaint) it appears that this Directorate inspected the Chamber Nos. 3 & 4 and found that one door measuring 4’X3’ had been opened in between the Chamber Nos. 3 & 4, which appeared to be an insulated door. From the letter dt. 14.7.78 of the Directorate of Agricultural Marketing we get its opinion as to why the plan could not be approved.'
Hence the present Appeal.
7. Mr. Sukumar Pattjoshi, Ld. Senior Counsel appearing for the Complainant strenuously urged that the State Commission erred in law as well as on facts in upholding the action of the Insurance Company repudiating the claim on the ground that the Complainant had failed to substantiate from the lay-out plan that the said Architrave between Chambers No. 3 & 4 had existed at the time of renewal of the Policy in question. It was argued that the Policy in question was a continuing Policy, which was initially issued as far back as in the year 1993-94, renewed from year to year after due inspection and continued as it is even after the incident. Thus, the Insurance Company was well aware of the existence of Architrave. It was also argued that the said Architrave was a minor permissible functional adjustment, which did not require prior permission under the W.B. Act. Ld. Counsel submitted that in so far as letter dated 22.12.2000, referred to in the impugned order, written by the Insurance Company to the Complainant, is concerned, the claim having been repudiated by the Insurance Company vide their letter dated 17.10.2000, the said letter was of no consequence in so far as the repudiation was concerned. It was also contended that in light of letter dated 30.08.2000, issued by the Directorate of Agriculture & Marketing, West Bengal, asking the Complainant to explain under what circumstances construction of the said Architrave was undertaken, the Insurance Company should have waited for the final response from the said Directorate before repudiating the claim on 17.10.2000. It was also pointed out that the Surveyor had not made any adverse comment on the existence of the Architrave while assessing loss in respect of Chamber No. 4. Relying on the decisions of the Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited & Anr. (2009) 8 SCC 507 and United India Insurance Co. Ltd. & Ors. Vs. Roshan Lal Oil Mills Ltd. & Ors. (2000) 10 SCC 19, it was argued that since no adverse inference was drawn by the Surveyor on the existence of the said Architrave, the Insurance Company was bound to process the claim in terms of the report.
8. Per contra, Mr. Mohan Babu Aggarwal, Ld. Counsel appearing for the Insurance Company, while supporting the decision of the State Commission, submitted that despite letter dated 22.12.2000, advising the Complainant to resolve the matter relating to the permissibility of opening between Chambers No. 3 & 4, with the Directorate of Agriculture Marketing, the Complainant failed to adduce any evidence to show that the said construction had been carried out with the approval/permission of the said Licensing Authority and, therefore, the Insurance Company was fully justified in repudiating the claim.
9. The question for consideration is as to whether the Insurance Company was justified in repudiating the claim in respect of Chamber No. 4 on the ground that the construction of Architrave by the Complainant was without the permission/approval of the Licensing Authority, and thus, the terms and conditions of the Insurance policy stood violated?
10. Having perused the documents brought on record by both the parties, we are of the opinion that the order of the State Commission is unsustainable.
11. It is manifest from the afore-extracted portion of the impugned order that the conclusion of the State Commission that the Insurance Company had acted fairly and that there was no deficiency on their part, is based mainly on three factors, viz. (i) despite advice, the Complainant had failed to procure approval/clearance from the Directorate of Agricultural Marketing; (ii) letter dated 10.02.2001 of the Superintendent of Agricultural Marketing indicated that an insulated door measuring 4’ x 3’ for the wall between Chambers No. 3 & 4 was noticed during inspection by them and (iii) the reason for non-approval of the plan was clear from Directorate’s letter dated 14.07.1978.
12. It is evident from letter of repudiation dated 17.10.2000 that it proceeds on the premise that letter dated 30.08.2000 issued by the Directorate of Agricultural Marketing, a copy whereof was forwarded to the Insurance Company, records, their final opinion to the effect that the partition window was constructed in contravention of the WB Act and the Rules, whereas the said letter is in the nature of a questionnaire asking the Complainant to explain the consequences under which the construction was undertaken. The said letter, issued pursuant to the query raised by the Insurance Company from the Licensing Authority viz. the Directorate of Agriculture Marketing reads as follows:
' It has been reported that you have constructed an Architrave with Airtight Pannel Window in the partition wall between cooling chamber No. 3 & 4. This has been done without any approval and permission from the Licensing Authority as required under the provision of the West Bengal Cold Storage Act & Rules, 1967. This is also a deviation from the original plan.
You are therefore directed to explain under what circumstances you had undertaken the construction in contravention of the provision of the West Bengal Cold Storage Act & Rules. Your reply should reach this office within 30 days from the date of receipt of this letter.'
13. However, without waiting for the final report from the Licensing Authority, the Insurance Company chose to repudiate the claim by taking letter dated 30.08.2008 as the final opinion of the Licensing Authority, which was not so. On a pointed query, Ld. Counsel for the Insurance Company was not able to show any other document whereby final opinion on this aspect was expressed by the said Directorate. A reference, however, was made to a letter, dated 20.08.2001, addressed by the Superintendent of Agriculture Marketing, Hooghly to the Director of Marketing & Ex-Officer Additional Director of Agriculture (Marketing), West Bengal. Relevant portion of the letter reads as follows:-
Inspected the chamber No. 3 and No. 4 and it was found that the door measuring 4’x3’ sq. ft. had been opened in between the chamber-3 and 4 which appears to be an insulated door.
An explanation has been given under section 10(1)(b) of the West Bengal Cold Storage (Licensing and Regulation) Act, 1966 regarding major/minor functional adjustment.
This is for your kind information and necessary action in this respect.'
14. We are of the opinion that the said communication does not advance the case of the Insurance Company that the Licensing Authority had found construction of such an Architrave to be impermissible under the W.B Act, which was the whole edifice of rejection of the Complainant’s claim.
15. As regards letter dated 14.07.1978, referred to in the impugned order, it appears to have been issued to the Complainant by the Addl. Director Agriculture (Marketing) West Bengal, at the time when the Complainant had applied for permission for extension of the Cold Storage. Besides, other objections, not relevant for the present case, one of the objections raised in para (5) of the letter was 'a door in the common wall at each floor has to be provided.' In the light of the said requirement, it can safely be inferred that approval for extension of the cold storage sought for in the year 1978 would not have been granted without complying with the said condition. It was nobody’s case that the Cold Storage was running unauthorizedly. Therefore, the observation of the State Commission that letter dated 14.07.1978 indicates the reason for non-approval of the plan is entirely misplaced.
16. Pursuant to order dated 19.05.2008 passed by this Commission, two reports dated 25.03.2000 and 24.05.2000 submitted by the Surveyor to the Insurance Company, have been placed on record. It appears from report dated 24.05.2000 that after the submission of the final report dated 25.03.2000 discussion took place between the Manager of the Insurance Company and the Surveyor on certain points and the Surveyor was asked to furnish clarification thereon. One of the queries and answer thereto by the Surveyor was as follows:-
4. Whether the window on the partition wall between the two chambers is as per the plan sanctioned by the authorities concerned or it has been made by the Insured at their own?
We had a look at the xeros copy of the sanctioned plan wherein no such opening was shown on the partition wall. When questioned by us as to how such an opening was made the Insuredvehemently reacted on this saying that the minor things are never shown in the plan. It only shows the main components/assemblies of a cold storage. Such openings made on the partition walls are never shown in the sanctioned plan of any cold storage whereas these are existing practically in almost all cold storages. Furthermore, the Licensing Authority not only issue new Licenses but also renew the old Licenses for the cold storages with these openings. They have never raised any objections as these openings have been accepted as common and usual feature in the cold storages. Panels of these openings are also provided with identical insulations as that on the partition wall and also onthe main door. The photographs, one showing the main doors and the other showing the common window are enclosed herewith. As regards the constructional authenticity of such an opening on the partition wall of a building the Insured’s representatives referred the relevant code viz. IS: 7564 (Part III) – 1974 on Recommendations for Co-ordination of Dimensions in Buildings – Arrangements of Building Components and Assemblies – PART –III FUNCTIONAL GROUP 3 – INTERNAL SUB-DIVISON.
Clause 3 of this part defines Grading of Components and Assemblies as:
Grading A: Components or assemblies for which dimensional co-ordination is essential.
Grading B: Components or assemblies which in some situations need to be dimensionally co-ordinated.
Grading C: Components or assemblies which do not require to be dimensionally co-ordinated.
While studying the above Gradings on Dimensional Co-ordination a Table has been referred in the very next Clause No. 4. It shows that the COMPONENT – Architraves (means a collective name for the various parts, jambs, lintels etc. that surround a door or window) of ASSEMBLY – Openings for door sets under ELEMENT OF CONSTRUCTION – Partition has been graded as 'C' i.e. the architraves do not require to be dimensionally co-ordinated. A copy of the relevant pages of the respective IS code is enclosed herewith as ANNEXURE – ‘b’.
From the terminology of the above I.S. code it is absolutely clear that an opening on the partition wall has a legal support of the Indian Standard. Insured’s this argument cannot be totally disregarded.
In order to verify Insured’s above argument we visited the office of the department of Agricultural Marketing and contacted Mr. Manojit Ghosh (Executive Engineer). In detailed discussions with him we gathered that each individual chamber should be self sufficient in every way particularly in its cooling efficiency. Therefore, in ideal condition of refrigeration, an opening on the partition wall in between two cooling chambers does not play any effective role (positive or negative) in the matter of cooling of the chambers. It is insignificant as far as cooling efficiency is concerned.
As regards the deviation in construction from the sanctioned plan is concerned he made it very clear that renewal, of an existing licence or issuance of new licence to a cold storage is granted only after the authorities are satisfied that the construction of the building and also the refrigeration plant meet with the requirements of W.B. Cold Storage (L&R) Act, on the basis of which the plan was sanctioned. No major deviation (except for minor functional adjustment) is allowed without the permission of their department.
We observe that his above informations to us are true, genuine and in conforming with the wordings of para (b) of Clause No. 10 under heading Due Maintenance of Cold Storage of West Bengal Cold Storage Act which reads as under:
No licensee shall effect any improvement, renovation or addition to a cold storage without the previous permission of the Licensing Officer in such manner as may be prescribed.
Hence we further observed that the expression 'Improvement' means any major work involving a basic change in the refrigeration system, but does not include minor functional adjustment.
A copy of the relevant pages of W.B. Cold Storage Act is enclosed herewith as ANNEXURE –'C'.
What is the purpose of having such an openings in the partition wall between two cooling chambers? And what are its overall pros & cons?
In reply to above Insured informed us that besides providing a common passage for movement of the operators in both the chambers without opening the main door again and again these openings also act as an emergency escape.
As regards the pros and cons of having a window on the partition wall between two cooling chambers, Insured have furnished us a copy of report (No. P:A- 5/27 dtd. 12.05.2000) of a reputed civil Engineering firm, M/s Yokel Engineering Services, Calcutta vide which an expert’s opinion in the matter has been given.
A copy of the said Report is enclosed herewith as ANNEXURE ‘d’. Our observations on various points of the Report are as under:
a) A partition wall is a non-load bearing member.
We affirm this.
b) An access on a partition wall is a common phenomena in the cold storage.
We confirm this based on our experience of inspection of numerous cold storages in West Bengal.
c) An access is a passage for movement of the operators without using the main entrance.
This is in conformity with the Insured’s statement.
d) An access is basically an alternate means of escape/approach.
In the event of an accident or malfunctioning of the main door this access can definitely serve the purpose of an Emergency escape as the panels can be opened or closed from both sides.
e) An access helps to maintain temperature equilibrium in both chambers during loading period.
From the cooling point of view each chamber should be self sufficient in ideal storage conditions. Since both the chambers of the Insured’s cold storage are volumetrically identical, their cooling system is also identical. During the period of loading (simultaneously in both the chambers) the said window remains open. Since the refrigeration compressors (of adequate cooling capacity) continuously run, the heat evolved by the potatoes keeps on getting absorbed. That is how the chamber temperature (despite being of rising tendency) is kept under control. Therefore, in an ideal condition it does not serve any fruitful purpose by maintaining temperature equilibrium between the two chambers.
It has been concluded in the Report that an access on the partition wall between two refrigerated chambers is a minor functional adjustment and it does not violate/hamper the normal operational condition in any way.
In our observation the above conclusion/inference drawn by the said civil engineer is technically logical and genuine.'
(Emphasis supplied by us)
17. We are constrained to observe that the Insurance Company chose to ignore report of the Surveyor dated 24.05.2000 wherein a specific query raised by them in relation to the subject Architrave was answered, accepting the explanation furnished by the Insured/Complainant. Curiously, the Insurance Company relied on letter dated 30.08.2000 which, as observed above, was only a questionnaire issued to the Complainant and not a concluded opinion by the Directorate of Agricultural Marketing on the question of approval/sanction of plans of the Cold Stora
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ge. In our opinion, non-consideration of the two survey reports of their own Surveyor, the latter one specifically dealing with the point at issue, vitiates the decision of the Insurance Company repudiating the claim of the Complainant in respect of Chamber No. 4 and tantamounts to deficiency in service on their part. It is trite law that in the absence of any plausible ground and valid reasons, an insurance company is not expected to reject the report prepared by a Surveyor on cogent material and with due application of mind. In the present case, no material has been placed on record to show any error, factual or legal in the reports submitted by the Surveyor, elaborately dealing with the points raised by the Insurance Company and accepting the stand of the insured that the construction of Architrave in question was not unauthorized in terms of Section 10(1) (b) of the WB Act. We are convinced that in the instant case, there was no justifiable reason for the insurance company to reject the reports submitted by the Surveyor and repudiate the said claim of the insured on the ground that on account of construction of the Architrave in the partition wall between Chambers No. 3 and 4 of the Cold Storage, the terms and conditions of the policy stood breached. It is little strange that if the said opening in wall between the two Chambers was a breach of condition of the policy qua Chamber No. 4, by the same analogy, why it was not a breach of condition in respect of Chamber No. 3, for which loss assessed by the Surveyor was duly paid by the Insurance Company. Be that as it may, we are of the view that repudiation of claim in respect of Chamber No. 4 on the stated ground was arbitrary and illegal. 18. The next question requiring consideration is what should be the quantification of the loss suffered by the Complainant in respect of the said Chamber. In our opinion the Insurance Company having accepted the report of the same Surveyor assessing the loss for damage to the same item i.e. potatoes stored in Chamber No. 3, on account of release of Ammonia Gas without any variation, assessment of loss by the Surveyor in respect of Chamber No. 4 deserves to be accepted. 19. In the result, the appeal is allowed; the impugned order is set aside and the Insurance Company is directed to pay to the Complainant the amount of loss assessed by the Surveyor vide report dated 24.05.2000 with interest @ 9% p.a. from the date of the Complaint till the date of payment, within four weeks from the date of receipt of a copy of the order. The Insurance Company shall also be liable to pay costs to the Complainant quantified at Rs.25,000/-.