Appellants/Opposite Parties have preferred this appeal against impugned order dated 06.12.2013, passed by State Consumer Disputes Redressal Commission, Uttar Pradesh, Lucknow (for short, ‘State Commission’) in Consumer Complaint No.30 of 2008.
2. Briefly stated facts are that Respondent/Complainant’s Company which deals with conservation of potatoes, has taken 'Deterioration of Stock (Potatoes) Insurance Policy' (short as 'DOS Policy') with effect from 10.4.2007 to 9.11.2007. Respondent also took policy for machinery break down with effect from12.3.2007 to 11.3.2008 from the appellants. It is stated, that on 13.10.2007 when respondent came to know about sprouting of the stock of potatoes, it immediately intimated the appellants about such happening on 19.10.2007. A surveyor was appointed by the appellants on 24.10.2007. On instructions of surveyor, deteriorated stock of potatoes was removed. Intimation of same was given to the appellants on 30.10.2007. The surveyor had asked for some documents which were supplied. Regarding machinery breakdown, respondent wrote to the appellants that all machinery were under warranty. All bills regarding repair of machinery were given to the appellants.
3. It is also stated, that District Horticulture Officer, Hardoi, issued a certificate dated 19.12.2007 to the effect, that around 40% of potatoes kept in respondent’s cold storage were deteriorated. The respondent had stored and conserved the potatoes in the cold storage properly but appellants did not conduct periodical inspections. Respondent suffered loss to the tune of Rs.1,40,77,197/-, while surveyor assessed the loss of Rs.59,10,000/- only. Thus, appellants have committed gross deficiency in service by not making payment of insured amount to the respondent. Hence, consumer complaint was filed seeking following reliefs;
'a To direct the Insurance Company to pay Rs.90 lacs for damage of stock of potatoes along with interest @ 6% p.a. from the date of surveyor’s report dated 08.02.2008 till payment.
b To direct the insurance Company to pay Rupees one Lac towards mental pain and agony.
c. To pay Rupees 50,000/- towards the cost of litigation.'
4. Appellants in their written statement have stated, that as per respondent’s own admission, respondent had started running the cold storage much before obtaining 'DOS Policy' for the period from 10.4.2007 to 09.11.2007. Intimation to the effect, that sprouting of potatoes was discovered on 13.10.2007 was given only on 19.10.2007 to the appellants. Thus, information was not given immediately. There being unexplained delay in giving the intimation about sprouting of potatoes on 13.10.2007, it was breach of warranty no. 6 of the policy. If respondent had started removal of deteriorated stocks of potatoes on 24.10.2007, then why intimation was given to the appellant on 30.10.2007, that is, after delay of 6 days of removal. Further, the story of breakdown of machinery on 16.09.2007, 2.10.2007 and 12.10.2007 in the cold storage, are after thought and fictitious. The non-intimation of alleged breakdown of machinery, is gross breach of warranty no. 9 of 'DOS Policy'. The claim was repudiated only after detailed local inspection, verification of books of accounts and physical measurement. The record confirmed, that insured had suffered loss due to the deterioration of Stock (potatoes), which was caused due to following acts and omissions of the respondent and it amounts to breach of terms and conditions of the policy;
(i) Loading of Potatoes continued after 15th April, 2007, without written permission of the company in clear breach of warranty no. 2
(ii) Turning of bags of potatoes had not been undertaken as per requirement of the Policy.
(iii) Log books are not reflecting correct temperatures of chambers.
(iv) The alleged machinery break down were not reported to the insurer.
5. It is further stated that potatoes kept in different chambers of the cold storage were overturned periodically, is false. As per report of Surveyor, stems of sprouted potatoes were found to be from 7 ' to 9 '. This could only happen if sprouting had started much before 13.10.2007. Further, as report of Surveyor, entries of temperature in the log book were after thought and were manipulated afterwards, when loss due to deterioration of Stock (Potatoes) had been noticed by the respondent. Since, there was breach of terms and conditions of the policy by the insurer, the claim was rightly repudiated.
6. The State Commission after considering the evidence on record, partially allowed the complaint and passed following directions;
'Consumer complaint is partially allowed and Opposite Parties are directed to pay Rs.59,10,000/-(Rupees fifty nine Lac Ten Thousand only) to the complainant within two months towards compensation for damage to potatoes. Complainant is liable to receive interest @ 6% p.a. from the date of 08.02.2008 till realization and if the Insurance Company fail to pay within two months then complainant shall be entitled to interest @ 10% p.a.
Complainant is liable to liable to receive Rs.1,00,000/-(Rupees One Lac only) towards mental pain and agony from the Opposite Parties and also entitled to Rs.50,000/-(Rupees Fifty Thousand) towards cost of the case.'
7. Aggrieved by the impugned order, the appellants have filed this appeal.
8. We have heard the learned counsel for parties and gone through the record.
9. It is submitted by learned counsel for the appellants, that there was material violation of the terms and conditions of the 'DOS Policy' by the insured. Clause No.2 of the Warranties of 'DOS Policy' provide that;
' the insured shall not accept any crop of potatoes after 15th April without written permission of the Company.'
Thus, there was material violation of this clause. Further, surveyor in its report has stated;
'the log book is in confirmation that loading kept on going till 1.5.2007.'
10.It is also submitted, that Clause 4(f) of the Warranties of 'DOS Policy' provide;
'the bags shall be turned at least once in the season after loading but not later than 15th July of the year'
However, turning of bags was not undertaken by the respondent.
11. It is further contended, that under ‘DOS Policy’, insured was required to maintain specific temperature as per Clause 6 of the Warranties which state;
'The insured shall take care to see that;
i. The temperatures inside the Cold cambers are brought down to 34 degree F (1.1 degree C) in all the floors of all the chambers before the loading commences and
ii. Further, ensure that the temperature in all the Chambers does not exceeds 50 degree F(10 degree (C) during the entire period of loading and 40 degree f(4.4 degree C) during the subsequent period of storage.'
12. The surveyor has returned a clear finding, that;
'log books are not reflecting correct temperatures of chamber'.
The surveyor also observed, that frequent breakdown of the machinery as one of reason for deterioration of the potatoes, was never intimated to the insurer. Thus, there has been violation of terms and conditions of the policy. In support, learned counsel relied upon the decision of Supreme Court, in Sri Ventakeswara Syndicate Vs. Oriental Insurance Company Limited, (2009) 8 Supreme Court Cases, 507.
13. On the other hand, learned counsel for respondent submits, that all through the terms and conditions of the ‘DOS Policy’ were duly observed by the respondent. After the machinery brokedown, the potatoes kept in different chambers of the cold storage, were over turned periodically, proof of which was furnished to the surveyor. At that time no sprouting in stored potatoes had been defected. Not only this, temperature was duly maintained as per requirements and due observance of terms and conditions of the insurance policy. The log book of temperature so recorded, was also provided to the surveyor
14. Further, it was duty and responsibility of the appellants to make periodical inspections. However, appellants failed to make any such inspection of the insured premises. Thus, there has been no breach of Warranties in this case.
15. In support, learned counsel has relied upon a decision of this Commission, M/s Hundi Lal Jain Cold Storage and Ice Factory Pvt. Ltd. Vs. Oriental Insurance Co. Ltd, (Original Petition No. 122 of 1995) decided on 24th May, 2004.
16. It is respondent’s own case, that it came to know about sprouting of Stocks of (Potatoes) on 13.10.2007 and intimated about the said happening to the appellant only on 19.10.2007. Thereafter, later on 20.10.2007 and 23.10.2007. Thus, admittedly there was delay of 6 days in intimating the appellant. It is also respondent’s case, that on 24.10.2007 surveyor had conducted the inspection, and on his instructions, removal of deteriorated stocks of potatoes were started, but However, intimation in this regard was given by the respondent to the appellants only 30.10.2007 vide letter dated 30.10.2007.
17. Relevant conditions of ‘DOS Policy’, that is, Warranties are reproduced as under;
1. The insured shall not accept for storage any stocks, which have been declared unfit for storage by appropriate authorities.
2. The insured shall not accept for storage any crop of potatoes after 15th April, without written permission of the Company.
3. The insured shall pre-cool the stocks meant for storage for 24 hours before loading into the chambers.
4. The insured shall store the stocks in the manner specified below so as to ensure an efficient distribution and circulation of air and for facility of loading and unloading operations.
(a) Leave a clearance at least 90 cms. surrounding the diffuser. This clearance shall be maintained on all floors so that no goods are stored on the racks above the diffuser.
(b) Leave a space of not less than 30 inches/76 cms. width between 2 adjacent rows of racks.
(c) The racks should be at least 20 cms. away from the floor and 76 cms. from the wall.
(d) A gap of at least 60 cms. shall be maintained between the celling and the top level of the stack in top most shelf of each rack.
(e) The stacking on each shelf of the rack should be done in such a manner that the top most bags leave a gap of at least 7.5 cms. between the bottom of the upper shelf and top level of the bags in the bottom shelf.
(f) The bags shall be turned at least once in the seasons after loading but not later than 15th July of the year.
5. Each Chamber shall be provided with thermometer reading dry bulb and wet bulb temperatures on all floors.
6. The insured shall take care to see that:
(i) The temperatures inside the Cold Chambers are brought down to 34oF (1.1oC) in all the floors of all the chambers before the loading commences and
(ii) Further ensure that the temperature in all the Chambers does not exceed 50o F(10oC) during the entire period of loading and 40’ F (4.4oC) during the subsequent period of storage.
The insured shall insure that the Diffuser or direct expansion pipes are so arranged in the Cold Storage Chambers as to maintain a maximum allowable variations of plus or minus 5% temperature in degrees centigrade required at any one location inside the chamber.8. In the event of a deterioration, of any shelf or floor space where damaged deteriorated stocks have been stored or temporarily occupied shall be cleaned and disinfected immediately after removal or disposal of the damaged stock.
9. The insured shall forthwith notify the Company in writing any abnormal operating conditions of the Refrigeration Plant and Machinery or stoppage of the function of the Cold storage causing rise or fall in temperatures or any circumstances which may give rise to a claim under this Policy and shall at his own expense diligently comply with all the directions that may be given by the Engineer or the Company or any other technical personnel appointed by the Company for bringing back the operation of the Cold storage to its normal working conditions.'
18. It is an admitted fact, that respondent came to know on 13.07.2007, about sprouting of the stocks of the potatoes. Thereafter, admittedly respondent intimated the Appellants’ Company about the said happenings only on 19.10.2007. Thus, there was delay of 6 days in informing the Appellants’ Company. As per Clause 9 of the Warranties as quoted above, the insured, i.e, respondent had to forthwith notify the insurance company about any abnormal operating conditions of the refrigeration plant and machinery or stoppage of the function of the cold storage etc. Respondent did not intimate the insurance company with regard to the sprouting of the potatoes forthwith, but there was delay of 6 days in informing the appellants’ Company.
19. It is well settled, that terms of the policy have to be construed as it is and we cannot add or subtract something. Policy contract is between the parties and both parties are bound by terms of contract. This view was taken by Hon’ble Supreme Court in United India Insurance Co. Ltd. Vs. M/s. Harchand Rai Chandan Lal, (2004) CPJ 15(SC)=JT 2004(8) SC 8. Thus, there is a clear cut violation of mandatory conditions of the insurance policy in the instant case.
20. Now coming to the surveyor’s report, in which he has stated;
'OBSERVANCE OF POLICY CONDITIONS AND WARRANTIES
1. Apparently insured has not accepted any material which was not fit to store. However the log book is in confirmation that loading kept on going till 1.5.2007 and at that time the atmospheric temperature is quite high and proper pre-cooling might have not been done before loading.
2. Insured has accepted material even after 15.4.2007 which is breach of policy terms and conditions.
3. Insured is having adequate space and arrangements for pre cooling.
4. Warranty No.6 Pre acceptance inspection report(refer enclosure no. 26-32) specifies that temperature in the chamber were 42/40 degree Fahrenheit chamber no.1 and Chamber no. 2/48/46 degree Fahrenheit, which is in order subject to that pre cooling continues till the last loading.
5. Warranty No. 7 temperature inside the chamber remained within 40 degree Fahrenheit (-/+) degree variance till mid of first half of October 2007.
6. No breach of warranty was observed so far as warranty No.9 is concerned. Insured came to know about the sprouting on 13.10.2007 and accordingly he intimated the insurance company on 19.10.2007.
7. The log book shows that the temperature inside the chamber was 35.5 degree and 32 degree F. on 15.10.07 the temperature was 38.5 and 37.5 degree F. We do not agree with observations of log book and are of the opinion that temperatures appearing in the log book are not the actual temperature.
8. Warranty No. 10. Insured immediately took all necessary steps in reducing the liability as soon as he came to know about the heavy sp[routing on 13.10.2007 but it was too late.
OBSERVATIONS OF POLICY TERMS AND CONDITIONS
Branch has been founding policy conditions as insured has accepted loading later 15.4.2007.
Insured has not arranged intimation to the insurers about the breakdowns.
Insured must have not arranged the turning of bags otherwise he must have came to know about the sprouting much earlier.
In the mid-term inspection the Relative Humidity must have been 90% minimum.
At the time of inspection it was found that 50% of the stock has been cleared through the farmers.
40% has been thrown out by the insured as useless waste.
Only 10% stock was found in both the chambers in badly damaged and loose condition.
At the time of visit
1. Compressors 2. Generators, Condenser and bunker machines were found strictly in order.
If the insured had turned the bags in time he must have seen the damages in the month of July itself.
21. In its conclusion, Surveyor state;
Detailed inspection, verification of books of accounts, physical measurement are in confirmation that insured has genuinely suffered a loss on account of deterioration of stock because of following reasons;
A. Loading continued till 1st May.
B. Turning of bags has not undertaken.
C. Log books are not reflecting correct temperatures of chambers, and
(D) Frequent machinery breakdowns.
(E) All the four reasons mentioned above are the breach of policy terms, conditions and warranties which are specifically stated in the report. Hence claim is not found tenable at all.
After giving all due considerations to all important aspects, the loss has been finally adjusted to Rs. 59,10,000/- only.
Hence the claim is not found payable the report is being released without prejudice.'
22. In Sri Venkateswara Syndicate case (Supra), Apex Court observed;
'31.The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed und
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er the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or 17damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. 32. There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report.' 23. Decision of M/s. Hundi Lal Jain (Supra) as relied upon by learned counsel for respondent, is not applicable at all to the facts of the present case. 24. Thus, as there was delay in informing the insurance company by the respondent, with regard to sprouting of the potatoes, it is a violation of mandatory conditions of the insurance policy. Moreover, we do not find any reason to disbelieve the surveyor report which goes against the respondent. 25. Accordingly, we hold that State Commission has committed grave error in ignoring the basic fact, that there was delay in informing the insurance company about the sprouting of the potatoes. Further, no reason whatsoever has been given by the State Commission, as to why it disbelieved the surveyor report, who is an independent person. Therefore, the impugned order passed by the State Commission is set aside and the present appeal stand allowed. Consequently, the consumer complaint filed by the respondent before the State Commission, stand dismissed. 26. No order as to cost.