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Judgment
Heard Mr. Navdeep Singh, Advocate, for the complainant and Mr. V.S. Chopra, Advocate, for the opposite party, through video conferencing.
Golden Terry Towels Pvt. Ltd. (the complainant) (hereinafter referred to as the Insured) filed aforementioned complaint, for directing United India Insurance Company Ltd. (the opposite party) (hereinafter referred to as the Insurer) to pay (i) Rs.14859691/- as balance insurance claim, under Insurance Policy Nos. 112001/11/1578/2K, 112001/11/1579/2K and 112001/11/1326, (ii) interest at the rate of 18% per annum on the said amount, (iii) pendente lite interest, (iv) Rs.200000/- as compensation for mental agony and harassment,(v) Rs.20000/- as cost of litigation and (vi) any other relief, deems fit and proper in the circumstances of the case.
The facts as been stated in the complaint and emerged from the documents attached with the complaint are as follows:-
(a) The Insured was a private limited company and engaged in the business of manufacture and trade of terry towels in its factory situated at village Jhattipur, G.T. Road, Panipat, Haryana. First phase, section-I, i.e. two buildings, one housing weaving department and other housing finishing department were constructed in 1997. In this weaving department, second hand weaving machines and other allied machineries were installed. Second phase i.e. one building was constructed in 1999-2000, in which new weaving machines were installed in 2000-2001. The Insurer was a Public Insurance Company and engaged in business of providing insurance services. The Insured used to obtain Standard Fire Policy from the Insurer of the stocks and machineries. The Insured obtained Standard Fire Policies, i.e. (i) Policy No. 112001/11/1578/2K, valid from 30.03.2001 to 29.03.2002, for a sum assured of Rs.1/- crore, on stock of all kinds of yarn terry towels whilst stored, finished, unfinished in process in attached and detached godown in the factory construction 1 st class. (ii) Policy No. 112001/11/1579/2K, valid from 30.03.2001 to 29.03.2002, for a sum assured of Rs.4.25/- crore, on machineries and accessories whilst installed and lying in the factory and electric fitting used for manufacturing of terry towels construction 1 st class. (iii) Policy No. 112001/11/1326, valid from 16.01.2002 to 15.01.2003, for a sum assured of Rs.1/-crore, on stock of all kinds of yarn and/or terry towel whilst stored, finished or unfinished in process and godown in the factory construction 1 st class.
(b) On 20.02.2002, at about 8:30 p.m., Raj Kishor, the operator working on machine No. 33 of Section-1, noticed the fire in machine due to short circuit. Raj Kishor immediately rushed to cabin of Production Manager and informed him. By the time, they could reach the spot; the fire was spread to nearby machines. The workers tried to control the fire with the help of Fire extinguisher, water pipe etc. but the fire soon took serious nature. Nearest Fire Service Station was informed, from where fire tenders were sent on the spot, which could control and took about 40 minutes in extinguishing the fire. The incident was reported to Police Station Samalkha, on 21.02.2002, who later on recorded Panchnama.
(c) The Insured informed the Insurer about the fire incident, on which, the Insurer appointed M/s. Duggal Gupta & Associates, Surveyors, Chandigarh, for preliminary survey and assessment of the loss. M/s. Duggal Gupta & Associates inspected the spot and submitted his report dated 08.04.2002, finding that the fire was caused due to electric short circuit. Senior Divisional Manager and other officers of the Insurer also inspected the factory premises. The Insurer appointed Vinod Sharma, Surveyor and Loss Assessor, New Delhi, for survey and assessment of loss. The Surveyor visited the spot on 23.02.2002 and inspected the factory premises. He verified the damages and prepared inventories. The Surveyor again inspected the spot on several times. The Surveyor collected necessary papers from the Insured, for assessing the loss. The Insured provided detailed information regarding value, age, makes and models of the machineries destroyed in fire. The Insured also provided estimates of repair and replacement of the items damaged in fire, quotations, books of accounts, past records, details of stock and machineries and all other information as required by the Surveyor. The Insured had Cash Credit facilities for the stocks, term loan for the machineries and P.C. Loan from State Bank of India, G.T. Road, Panipat and all the stock and machineries were hypothecated with the Bank.
(d) The Insured submitted his claim of Rs.17874942/-to the Insurer, i.e. Rs.16550539/ for the machineries and Rs.1324403/- for stock. The Surveyor collected all the requisite papers from the Insured and thereafter did not provide any information to the Insured about his report. Later on, the Surveyor submitted his report dated 07.08.2002 to the Insurer, without supplying its copy to the Insured. Divisional Manager called the Insured for settlement of the claim, on which, the representative of the Insured visited the office of Divisional Manager on 18.11.2002. Divisional Manager informed that he had worked out the total loss for Rs.3015251/- and offered for settlement of the claim for that amount.
(e) The Insured asked for supply of the report of the Surveyor but it was denied on the pretext of a confidential document. Divisional Manager also threatened that in case, settlement for this amount was not accepted then he would refer the matter to Regional Office, where the matter would be further delayed for uncertain period. Due to fire incident, the business of the Insured was badly affected and he was in need of money for restarting his business. Therefore, the Insured accepted settlement of the claim for Rs.3015251/- on 18.11.2002.
(f) Later on, the Insured get examined the loss from other insurance professional, who informed that settlement of the claim was against the tariff rules and deductions were against the terms and conditions of the policies. Thereafter, he gave a legal notice dated 02.12.2002, for payment of difference amount and interest for delayed payment. The Insured took ground that the claim was for Rs.17874942/-, i.e. Rs.1324403/- for stock and Rs.16550539/ for the machineries, which was proved from the documentary evidence and verified by the Surveyor, it was not liable to be reduced. The settlement of the claim for Rs.3015251/- was based on misrepresentation as report of the Surveyor was not provided nor at that time the representative of the Insured was in position to examine the correctness of loss as worked out by the Insurer. Even the Surveyor in his report assessed the loss of Rs.834570/- for stock and Rs.4784246/- for machineries but loss was substantially reduced to Rs.3015251/-. On these allegations, complaint was filed on 21.03.2003.
The Insurer filed its written reply and contested the complaint, in which the material facts have not been denied. It has been stated that as the Insured had voluntarily accepted the settlement of the claim as such the present complaint was not maintainable. In case, the Insured had demanded for copy of the Surveyor's report, it would have been supplied to him. The complicated questions of law and facts are involved which cannot be decided in summary jurisdiction of this Commission. The assessment of loss made by the Surveyor in his Report and his opinion in respect of terms of policy is not binding upon the Insurer. 12 machineries of Wamatex were found uninsured and 12 machineries were found as insured with Oriental Insurance Company of the same section. The Insured has wrongly included cost of these machineries in his claim and there was false representation in this respect on his part. Costs of these machineries have been reduced from the loss as assessed by the Surveyor in his report. When the Insured was confronted with the aforesaid facts, then, he accepted the full and final settlement on 18.11.2002. The cover note of the policy did not contain, list of the machineries rather it had mentioned whole machineries installed in the premises. On examination of survey report, it was found that the Surveyor had not applied his mind to the fact relating to policy obtained by the Insured from Oriental Insurance Company and the machineries which were not covered under policy, then by a letter dated 30.09.2002, the Surveyor was called to clarify the position. Then he, vide letter dated 03.10.2002, struck his own interpretation and then the Insurer reduced the loss to Rs.3023584/-. Delay was caused due to reason that the Insured took time in supplying the papers as demanded by the Surveyor as well as they took time in verifying the records. It has been denied that Divisional Manager has made any misrepresentation or forced the Insured for settlement of the claim for lessor amount or the Insured was hoodwinked.
The Insured filed Rejoinder Reply on 20.07.2011, in which, the facts stated in the complaint have been reiterated. The Insured filed documentary evidence, i.e. Policy No. 112001/11/1578/2K, dated 30.03.2001, Policy No. 112001/11/1326, dated 16.01.2002, Policy No. 112001/11/1579/2K, dated 30.03.2001, List machineries, accessories and electrical equipment damaged in fire, List of stock of yarn, finished/semi-finished as damaged in fire, copy of full and final settlement dated 18.11.2002, Legal notice dated 02.12.2002, Insurance Regulatory and Development Authority (Protection of Policyholder's Interests) Regulations, 2002, Terms and Conditions of Standard Fire and Special Perils Policy and Layout plan of factory building of the Insured along with the complaint. Valuation of the machineries and accessories whilst installed and/or lying in the factory and electrical fittings used for manufacturing at the factory as maintained by State Bank of India and Policy dated 14.09.2001, issued by Oriental Insurance Company Ltd., typed copies of the policies. Affidavit of Evidence of Narain Dass.
The Insurer filed Insurance Policy dated 30.03.2002, issued by United India Insurance Company Ltd., Insurance Policy dated 14.09.2001, issued by Oriental Insurance Company Ltd., Survey Report dated 07.08.2002, Letter dated 30.09.2002 written by Divisional Office to Vinod Kumar Sharma, Surveyor, Reply of Vinod Kumar Sharma, Surveyor dated 03.10.2002, Report of the Committee looking the matter relating to the claim of the Insured dated 13.09.2002, Discharge Voucher dated 18.11.2002, relating to full and final settlement of the claim, copy of full and final settlement dated 18.11.2002. Affidavit of Evidence of Satish Sharma, Deputy Manager and Affidavit of Evidence of Sanjay Sharma, Divisional Manager. Both the parties filed their written submissions.
We have considered the arguments of the counsel for the parties and examined the record. Supreme Court in United India Insurance Company Ltd. Vs. Ajmer Singh Cotton and General Mills, (1996) 6 SCC 400 and National Insurance Company Ltd. Vs. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267, has held that execution of discharge voucher and acceptance of the claim would not stop the Insured from making further claim. As such, the complaint is not liable to be dismissed on preliminary objection.
The Insured claimed Rs.1324403/- for stock and Rs.16550539/- for the machineries (total Rs.17874942/-) as damages. The Surveyor, in his report dated 07.08.2002 mentioned that entire materials i.e. yarn and finished product on 14 machines were completely burnt and damaged due to fire and water, which were physically inspected and verified in presence of the Insured. Each machine was having 3 beams out of which 2 beams were of yarn and third was of finished product. Total value of finished goods was Rs.267637/-, raw material was Rs.1635440/-, WIP was Rs.29885881/- and waste Rs.700000/-. (total Rs.32488958/-) Sum insured in Policy No. 112001/11/1578/2K, dated 30.03.2001 and Policy No. 112001/11/1326, dated 16.01.2002 was Rs.2 crores, as such, under insurance of 38.44% was estimated. The Surveyor further found that the Insured had intimated loss of 9800 kg. of semi-finished stock in fire to the Surveyor and Excise department but excise duty was not paid on the that stock, as such, loss of 9000 kg. yarn was assessed. Its value in semi-finished stage, less salvage and less under insurance was assessed as Rs.513762/-. In full and final settlement letter dated 18.11.2002, Rs.10000/- was deducted under "less excess clause as per policy" and Rs.503761/- was paid. The Insured could not contradict the calculation made by the Surveyor or showed that assessment was incorrect.
The Insured claimed Rs.16550539/ for the machineries. The Surveyor, in his report dated 07.08.2002 mentioned that the Insured had asked for the costs of 45 machines. Fire damaged 18 Jacquard Machines out of which 14 were working and 4 were in gaiting process i.e. programming. Since the machines were second hand purchased machines, as such, its deprecated value was assessed on its 10 years life, adding 2% inflation factor. Cost of one Jacquard Machines was assessed to Rs.318347/- and 18 machines as Rs.5730246/-. Its salvage value was assessed to Rs.945000/- and total loss was assessed to Rs.4784246/-. The complainant has not shown as to how this calculation was incorrect.
Real dispute between the parties is in respect of deduction made of the Insurer in the final settlement letter dated 18.11.2002, for loss of machineries, on two counts i.e. (i) under insurance and (ii) sharing of loss by Oriental Insurance Company Ltd. under Policy dated 14.09.2001. From the record maintained by the Insured as well as by State Bank of India (to whom the machineries were hypothecated), it was found that total value of (i) old machineries was Rs.254.07 lacs, (ii) new machineries purchased in 2000-2001 was Rs.276.12 lacs and (iii) new machineries purchased in 2001-2002 was Rs.277.43 lacs (total Rs.887.62 lacs, while sum insured under Policy No. 112001/11/1579/2K, dated 30.03.2001 was Rs.425 lacs and policy dated 14.09.2001 was Rs.240 lacs. Therefore there was under insurance.
The Insurer found that Policy No. 112001/11/1579/2K was for "on machineries and accessories whilst installed and lying in the factory and electric fitting used for manufacturing of terry towels construction 1 st class". The Insured obtained Insurance Policy dated 14.09.2001, from Oriental Insurance Company Ltd. for a sum assured of Rs.2.4 crores on "complete textiles machineries along with accessories complete set 12 new Wamatex Machinery along with basic parts and/or furniture and/or fittings and wrapping machine and/or similar machinery pertain to the insured trade whilst lying and/or installed in the insured Factory building of 1 st class construction, situated at above address". Both these policies were covering risk of all the machineries and accessories of the factory. The Surveyor has wrongly confined to Insurance Policy dated 14.09.2001, for 12 new Wamatex Machinery installed in section-II, building. Although in these policies there was no such specification. Therefore, share on the risk, taking total coverage as Rs.4.25 crores and Rs.2.4 crores has to be done. Due to under insurance, liability under both these policies was found to Rs.3939443/- on the total loss of Rs.4784246/-. On account of sharing the liability among two policies, the liability of Insurer was calculated as Rs.25111490/-
We have examined Policy No.112001/11/1579/2K and Insurance Policy dated 14.09.2001, of Oriental Insurance Company Ltd. and found that both the policies were in respect of total machineries and accessories in the factory of the Insured. The Surveyor has wrongly confined Insurance Policy dated 14.09.2001 in respect of 12 new Wamatex Machinery installed in section-II, building. The complainant has not challenged total cost of machineries installed in his factory to Rs.807.61 lacs. There is no illegality in the full and final settlement.
ORDER
In view of aforementioned discussions, the complaint has no merit and it is dismissed.