Fine Print vs New India Assurance Co. Ltd. & others

This appeal has been filed by the appellant against order dated 24.9.2014 passed by State Commission in Complaint No. 169 of 2008 - M/s. Fine Print v. New.India Assurance Co. Ltd & Ors.; by which complaint was partly allowed.

Brief facts of the case are that the complainant subscribed insurance policy with total sum insured of Rs. 1,90,00,000/- to provide insurance cover to plant and machinery with other items of property/ stock included in the policy. Out of the total sum insured, plant and machinery was insured for Rs. 70,00,000/-. The proposal form submitted to the opponent/respondent - insurer specifically mentioned RIV clause for incorporation in the policy document. However, the policy document was issued without such a provision of Re-instatement Value Clause. The policy document was directly dispatched to the State Bank of India as a mortgagee against the loan advanced to the complainant firm, so, they had no opportunity to verify policy details (term and conditions) and only when the calamity occurred on 26th July, 2005, they came to know that the policy did not contain RIV clause much in contravention of the policy proposal submitted prior to issuance of policy. Complainant firm was diligent to inform the insurer about the loss to insured property including plant and machinery instantly. The first appointed surveyor (''B'' grade category) M/s. J.H. Parekh quickly visited insured premises and carried out the preliminary survey on 03/08/2005. The said surveyor sought guidance from the opponent/insurer to carry out final survey/ assessment as they were (''B'' category) surveyor. Opponent insurer directed the said surveyor to go ahead and submit final survey report on/or before 22/09/2005. In obedience of this direction, detailed survey report was submitted by M/s. Parikh quantifying loss of Rs. 18,00,000/- to the plant and machinery besides loss incurred to other injured properties and estimated the total loss to Rs. 49,41,671/-. Instead of acting on the said report, the opponent/ insurer had appointed M/s. A.P. Phadke and company second surveyor to carry out the survey and submit report without knowledge of the complainant. Second survey was carried out and report was submitted in August, 2006, i.e. almost after 13 months from the date of occurrence of the incidence. The loss quantified in respect of plant and machinery was Rs. 11,99,400/ and the net payable was worked out to Rs. 4,24,989/-. Presuming that the policy was not bearing RIV clause, the opponent offered the amount of Rs. 4,24,898/- as a full and final settlement of the claim. Complainant refused to accept the said offer. Alleging deficiency on the part of opposite party, complainant filed complaint before State Commission. Opposite Party resisted complaint and submitted that on reinstatement basis the loss was assessed to the extent of Rs. 18,00,000/- by M/s. J.H. Parekh Associates, the first appointed (''B'' grade) surveyors. The complainant wrongfully insisted for total loss/ price of the machinery, though, the machineries were repairable. It was further stated that even if RIV clause was applicable, it was incumbent upon the complainant to have performed their duty to repair machines expeditiously within 12 months form the date of occurrence of the incidence. Complainant neglected and failed to act according to terms and conditions of the RIV clause, therefore, not entitled to claim and take benefit under the RIV clause. The complainant cannot have any grievance since admittedly they have accepted the assessment vis-a-vis valuation of Rs. 32,233,91/- on market basis in respect of other properties excluding plant and machinery assessed and finalised by M/s. A..R. Phadke and company. The complaint (sic) from infirmity as it is not filed within the limitation, since the cause of action arose on 01/1/2006 i.e. offer of claim of Rs. 4,24,898/- which was wrongfully rejected by the complainant, whereas this consumer complaint has been filed on 11/11/2008 which is clearly time barred. The claim stands abandoned and or waived in view of not preferring within the 12 months as per disclaimer under the terms of the policy and prayed for dismissal of complaint. Learned State Commission after hearing both the parties allowed complaint partly and directed opposite party to pay Rs. 18.00 lakhs against which this appeal has been filed by complainant along with application for condonation of delay.

Heard Learned Counsel for the parties finally at admission stage and perused record.

Appellant has filed application for condonation of delay of 68 days and submitted that after receiving copy of impugned order on 30.10.2014 by counsel for the appellant, opinion was sought whether to file review application or appeal and ultimately in January, 2015 engaged lawyer in Delhi and filed this appeal on 5.2.2015, so, delay of 68 days may be condoned. No doubt, no reasonable explanation has been given from first week of Nov., 2015 to January, 2015 but as important factual and legal aspect is involved in the matter, I deem it appropriate to condone delay subject to depositing Rs. 10,000/- as cost with Legal-Aid Account of this Commission within four weeks from the order failing which appeal shall stands dismissed as barred by limitation.

Learned Counsel for appellant submitted that in spite of negligence on the part of respondent in issuing policy with RIV clause, Learned State Commission has committed error in ignoring RIV clause and allowing complaint partly, hence, appeal be allowed and impugned order be modified. On the other hand, Learned Counsel for respondent submitted that as complainant failed to carry out repairs within 12 months from the date of loss, order passed by Learned State Commission is in accordance with law, hence, appeal be dismissed.

It is not disputed that complainant submitted proposal form for obtaining insurance policy from opposite party with RIV clause. It is also not disputed that earlier policy obtained by complainant from Oriental Insurance Co. was also having RIV clause excluding stock. It is also not disputed that policy issued by opposite party did not contain RIV clause. As per complaint, policy document was sent by opposite party to the financier - State Bank of India, so, there was no opportunity for the complainant to see terms & conditions of the policy and only after the alleged incident, complainant came to know about terms & conditions of the policy which did not contain RIV clause. Learned State Commission was not right in observing that there was no justifiable reason as to why complainant failed to exercise option during the free look period and it was further observed that it is far from convincing that complainant did not come to know about non - incorporation of RIV clause as policy was directly sent to the Bank. When policy was sent directly to the Bank, there was no occasion for the complainant to go through policy document and ask opposite party about incorporation of RIV clause. Letter dated 9.3.2006 sent by Divisional Manager of opposite party to complainant clearly reveals that on account of oversight fire policy has been erroneously issued without Re-instatement value clause, even though insured proposed the basis for insurance on Re-instatement Value Basis. Thus, it becomes clear that on account of negligence on the part of opposite party, RIV clause was not inserted in the policy and for mistake of opposite party, the complainant cannot be blamed and he could not be deprived from benefits of RIV clause which are to be treated as part & parcel of insursance policy.

Learned Counsel for respondents submitted that if policy is treated having RIV clause, complainant was under obligation to carry out repairs within 12 months from the alleged loss. Till mistake by opposite party is accepted, complainant could not have proceeded for repairs under RIV clause and claim cannot be repudiated on the ground that complainant failed to get machinery repaired within 12 months from the alleged loss. Complainant got his two machines repaired within 12 months after receiving confirmation of RIV clause from opposite party and in such circumstances, complainant is entitled to get claim of RIV clause.

Perusal of record reveals that complainant incurred expenditure of Rs. 15,90,000/-on replacement of two machines and it cannot be denied that had these been replaced earlier, replacement might have been on lesser amount. As per first surveyor''s report, while assessing loss, he deducted 30% depreciation i.e. 13,25,682/ - out of the total claim payable whereas depreciation cannot be allowed when there was RIV clause in the policy. In such circumstance, complainant is entitled to at least aforesaid amount of Rs. 13,25,682/- in addition to claim allowed by Learned State Commission.

In the light of above discussion, Learned State Commission has committed error in allowing claim of only Rs. 18,00,000/- and disallowing Rs. 13,25,682/- and complainant is certainly entitled to aforesaid amount and to this extent, appeal is to be allowed.

Consequently, appeal filed by appellant is partly allowed and impugned order dated 24.9.2014 passed by Learned State Commission in Complaint No. 169 of 2008 - M/s. Fine Print v. New India Assurance Co. Ltd Ors.; is modified and in addition to Rs. 18,00,000/- awarded by Learned State Commission, complainant is further entitled to Rs. 13,25,682/- from the respondent.

Parties to bear their costs. Appeal partly allowed.