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Judgment
The present Complaint has been filed for a claim of Rs.3,74,55,798/- as insurance claim along with interest @ 18.25% p.a. from 17.11.2010 till the filing of the Complaint and further interest on the said sum at the same rate till the date of realization.
Damages @ Rs.50,00,000/- are also claimed along with litigation costs.
The contention of the Complainant is that it is a Company, engaged in the business of international import and export of commodities having its registered office at RNM Centre 68/2, Janpath, New Delhi and Corporate Office at 8th Floor, Tower-5A, DLF Cyber City, DLF, Phase-III, Gurgaon. The complainant had instructed the Broker K.M. Dastur Reinsurance Brokers Private Limited (hereinafter called as 'broker') to canvass the insurance market for placing its insurance policy on a floater basis to cover risks to its stock of pressed cotton bales stored at various location. They received a communication dated 09.11.2010 from the broker. Accordingly, on 09.11.2010, the broker wrote to the Opposite Party asking for the quotes. The quotes were called for the insurance of the cotton bales in the conditions of pressed cotton bales waiting to be loaded in vessel at the port premises or waiting to be stuffed in containers at CFS premises.
Stuffed containers could be in the open anywhere in the port premises or CFS premises. On the same day, the response was received from the Opposite Party whereby they offered the rates for the insurance of the said material covering the fire risk. The complainant accepted the quotations of the policy coverage and communicated its decision to the Opposite Party and also tendered a cheque of Rs.44,75,423/- as net premium payable towards the insurance policy along with its letter dated 12.11.2010. The Opposite Party accepted the cheque and issued Standard Fire Special Peril Policy (herenafter called the peril policy) in favour of the complainant on 12.11.2010. No proposal form, however, was asked to be filled from the Complainant by Opposite Party. The sum assured under that policy was Rs.250 Crores and it was taken for the period of two months starting from 12.11.2010. On or about 17.11.2010, the Complainant had stored 4700 cotton bales at the Containers Freight Station - Logix Park, Pipavav Port. Out of these 4700 cotton bales, 300 cotton bales were exported on 06.11.2010 and 1600 bales were kept in the godown and 2100 bales were stuffed in 14 containers of 150 bales each within the CFS premises and the 700 bales were kept in open plot outside the godown. On 17.11.2010, at about 1550 hrs., a major fire broke out in the cotton bales lying in open yard.
The fire was so great that despite the local fire fighting authorities' prompt response, they were able to control it only by the next date i.e. 18.11.2010 and by that time, all the 700 cotton bales kept in the open plot as well as those stuffed in 13 containers having 150 bales each were destroyed. The complainant's stock of cotton bales stored at CFS premises was covered under two policies. The Complainant had obtained a marine turnover policy from 1.1.2010 to 31.12.2010 issued by New India Assurance Company Limited. Under this policy, the pressed cotton bales which were kept in storage for a period in excess of 8 weeks were not covered. Stock of 1950 bales stuffed in 13 containers which were destroyed in the fire, had been under storage for more than 8 weeks and therefore, the Complainant had filed its claim with the Opposite Party for 1950 bales which were stuffed in 13 containers. For 700 cotton bales, which were lying in open and were also destroyed, the claim was put before New India Assurance Company Limited. The surveyor was appointed by the Opposite Party who after extensive enquiry and investigation preparped the report.
Copy of the surveyor's report was not supplied to the Complainant and the Complainant had filed an application on 17.06.2013 under RTI Act for obtaining the copy of the Surveyor's report. The Surveyor's report was supplied thereafter. The claim of the Complainant was repudiated on 30.05.2014 despite the fact that the Surveyor had given its report in favour of the Complainant and assessed the loss at Rs.3,74,55,798/-. It is submitted that the repudiation has been done in violation of terms and conditions of the policy, that too, after a period of four years and therefore, is illegal. It is further submitted that the conduct of the Opposite Party also shows that despite receiving the Surveyor's report in 2012, the Opposite Party did not take any action on this Surveyor's report for almost two years. On these facts, it is submitted that there is deficiency in service on the part of the Opposite Party and the claim as prayed be allowed.
The claim is contested by the Opposite Party. The preliminary objection is that the Complainant is not a "Consumer" as defined under the Consumer Protection Act, 1986. Secondly, it is submitted that under the policy any goods stuffed in a container is not covered. Another contention is that there was earlier a fire in the same area and this fact had been concealed by the Complainant at the time of taking the said policy.
Parties have led their evidence.
I have heard the arguments and perused the relevant record.
It is admitted fact that the Complainant had asked vide their e-mail dated 09.11.2010 for the policy from the Opposite Party. They informed the Opposite Party the subject matter, the location and the period for which they sought to purchase a policy from the Opposite Party. The letter reads as under:
"Dear Sir,
Please let us have our Quote as per the following details:
Subject Matter Insured: Pressed Cotton bales in Container waiting to be loaded in vessel at the Port Premises or waiting to be stuffed in containers at CS premises (custom bonded area).Stuffed containers would be in open in the anywhere in the Port Premises or CFS premises.Cost of Container include in Sum Insurance wherever applicable.
Policy: STd Fire and Sp Perils Policy on Floater Basis with Spontaneous Combustion, Earthquake and Terrorism.
Location: Lying anywhere in Port Premises or CFS premises (custom bonded are) either in Open or in close
Floater Sum Insurance : Rs.250 Crores
Policy Period: Short period not ;exceeding 2 Months, 3 Months and 4 Months (Three options)
List of Port Locations; will be provided (only Eq rate will vary)
Please arrange to provide your Quotes with rates and Discount at your earliest, latest by today evening.
Best Regards."
On the same day, the Complainant received the response from the Opposite Party in the following form:
"We respond to your query as per the following:
Fire & allied perils @10.50%0less 60% disc=4.20%0
Spontaneous combustion @ 0.25% less 60%=0.10%
EQ rate will depend upon location
Terrorism @0.20%0 no disc as pool premium
Floater will be 10% on overall rate with EQ highest applicable rate Since you want cover on short period basis, the rates chargeable will be as under:
not exceeding 2 months 30% of the annual rate
not exceeding 3 months 40% of annual rate
not exceeding 4 months 50% of annual rate
This communication from the Opposite Party shows that they accepted the offer of the Complainant for purchase of the policy for the stuffed containers lying anywhere in the port premises or CFS premises and submitted their quote which included the rates chargeable for such policy. On receiving the quotes/rates for insuring their stuffed containers lying in the open, besides other several matters for which the insurance policy was sought, the Complainant wrote to the Opposite Party letter dated 12.11.2010 which is reproduced as under:
Dated 12.11.2010
To
The Sr. Divisional Manager
Divisional Office XVI
United India Insurance Co.Ltd.
A-1, Tagore Market, Kirti Place
Kirti Nagar, New Delhi-15
Subject Matter: Issuance of Standard Fire Special Perils Policy for Pressed Cotton Bales in open
We are pleased to inform you that based on your quotation submitted to M/s K M Dastur Reinsurance Broker Pvt. Ltd. On our behalf, we have decided to place the Standard Fire Special Perils Policy to cover the risk of our Pressed Cotton Bales Storage in Open with your company. The complete description is as follows:
Subject Matter Insured:Pressed Cotton bales in Container saiting to be loaded in vessel at the Port Premises or pressed cotton bales stored in open to be stuffed in containers at Container Freight Station (CFS) premises or any custom notified area or any transporter location or any warehouse as intimated time to time.Stuffed Containers would be in open at any premises as mentioned above.Cost of Container included in Sum Insurance wherever applicable.
Sum Insured : Rs.250 Crs on Floater Basis
Coverage : as per STd. Fire and Sp. Perils Policy on Floater Basis with Spontaneous Combustion.Earthquake and Terrorism Cover.
Location : Lying anywhere in Port Premises CFS
Locations are as follows:
Port - Mundhra Port - Post Box No.1 Mundra Kutch Gujrata 370421
CFS - Mundhra CFS Bharat CFS Zone - I Gujarat Adani Port Ltd., Mundra Kutch
Port - Pipavav Port - Port of Pipavav Post - Uchaiya via Rajula Dist. - Amreli Gujarat
CFS - Contrans Logistics Survey No.216, Taluka, Rajula, Dist. Amreli, Gujarat Pipavav port - 365560
CFSA - Logix Park (LCL logistics) Pipavav Port 4 - way road Rajula Dist. Amreli Gujarat
Port - Nhava Sheva Port (GTI, JNPT, NSIT Jetty) Administrative Building Sheva Navi, Maharashtra 400707
CFS Navkar Vill Bhokarpada, Bombay Pune Road, Near L&T, Taluka Panvel, Distt. Raigad Maharastra - 410207
CFS DHaramtar - PNP (Dharamtar) Port, Shahabaj, Poinad, Taluka - Alibag, District
Chennai Port Trust Rajaji Salai, Chennai Tamil Nadu - 600001
With this letter, the Complainant also enclosed the cheque amount towards the premium. It is apparent that thereafter, the Opposite Party issued the policy. It did not make any enquiry or sought clarification of any nature from the Complainant, instead issued the policy on 12.11.2010 itself. The policy covers the following risks:
Risks covered : Pressed Cotton Bales in container waiting to be loaded in vessel at the port premises or waiting to be stuffed in containers at CFS premises (custom bonded area), stuffed containers would be in open in the anywhere in the port premises or CFS premises.
The bare reading of the Clause covering the risk in the Policy shows that the policy covers loss of cotton bales in the condition of stuffed containers lying in the open "anywhere" in the "port premises" or "CFS premises". The policy, therefore, clearly covers the risk of cotton bales which is stuffed in a container and lying in the open within any port premises or CFS premises. One of the reasons for repudiation of the claim of the Complainant is that the bales were already stuffed and lying inside a container, is therefore in violation of the terms of the policy.
The argument of learned counsel for the Opposite Party that the Complainant concealed the fact of an earlier fire in the same area and that they had another policy for 700 pressed cotton bales lying in the open area and therefore, they have obtained the insurance policy illegally and fraudulently is also contrary to the facts proved on record. This argument of learned Counsel has no merit. In terms of Insurance Recovery and Development Authority Regulations, 2002, Clause 4(4) where a proposal form is not used, it is the duty and also onus of proof is rested on the insurer to prove that any information was suppressed or not provided to the insurer. Here in this case it is apparent that no proposal form was filled up and there was no occasion for the Complainant to disclose the facts of earlier fire or marine policy regarding 700 cotton bales lying in the open. The Opposite Party before issuing the insurance policy did not make any enquiries of any nature from the Complainant. It therefore cannot be said that the Complainant had suppressed any material fact or had obtained the policy fraudulently. Therefore, the repudiation of the policy on these counts is wrong. The preliminary argument that the Complainant is not a Consumer because he has indulged in the business, has no merit in it. Qua the Complainant, it is a consumer because it has obtained the services of the Opposite Party to secure its personal loss. It relies upon the judgment of Hon'ble Supreme Court in "Harsolia Motors vs. National Insurance Co. Ltd., I (2005) CPJ 27 (NC)", wherein it has been held that a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification of actual loss. It is not intended to generate profit. He has further relied upon the judgment of this Commission in "M/s Chambal Fertilisers and Chemicals Ltd., vs. M/s IFFCO-TOKIO General Insurance Co. Ltd., wherein it has been held:
"Hitherto the Commission has been of the consistent view that even when a company or firm engaged in the commercial and industrial activity files a complaint alleging deficiency in service on the part of the insurance company for not settling an insurance claim, such a partnership firm or company or individual can approach this Commission for redressal of his grievance because the insurance coverage taken by such a person is not for any commercial purpose, i.e., with a view to earn profit and is only to safeguard its interest arising out of the risk to his buildings, plant and machinery and stocks in trade etc. We must therefore reject this contention of the Opposite Party/applicant."
Learned Counsel for the Opposite Party has argued that the presence of hydrocarbon was detected in some samples and has relied for this purpose on the report of their surveyor.
I have perused the relevant clause 6.5 of the report of the surveyor. I have given thoughtful consideration to this contention.
The relevant clause of report of the surveyor is reproduced as under:
"The FSL certificate submitted by the Insured states that out of four samples collected, one was good cotton for comparing the parameters and the other three (partially burnt cotton with moisture content) for testing. Whereas presence of hydrocarbon was detected in sample 'B' there was no such presence detected in the other samples. The method of chemical testing was by using gas chromatograph. It is however not known as to the spots from where the samples were taken but it is learnt from the CFS personnel that the samples were obtained from the burning bales in the open and not from inside any of the containers.
From this report itself, it is clear that the presence of hydrocarbon was found only in the samples which were lifted from the burnt bales lying in the open and not from inside from any container. This fact clearly shows that if there was any presence of hydrocarbon, it was found in the bales lying in the open for which no claim has been forwarded by the Complainant. Moreover, in the Written Statement, there is no contention of any arson on the part of the Complainant. Learned Counsel for the Complainant has drawn my attention to clause 6.3 of the surveyor report and has argued that there cannot be any question of arson on their part because it was not their goods which were destroyed in the fire but the goods of three other parties were also destroyed and the loss suffered by one ABC godown has been larger. This argument of the Opposite Party therefore also has no merits.
From the above it is apparent that the Opposite Party has wrongly repudiated the claim of the Complainant. They have therefore, failed to discharge their liability under the contract of insurance. There is deficiency in service on their part. The Complaint is allowed. The Opposite Party is directed to refund a sum of Rs.3,74,55,789/- (the loss assessed by the surveyor of the Opposite Party) along with interest @ 9% p.a. from the date the claim was submitted till its realization.
From the above discussion, it is also apparent that the claim of the complainant has been denied for so long by distorting the clause of insurance policy just to deny the claim. In view of this, I award a sum of Rs.20 Lakh as damages and Rs.15,000/- towards costs of litigation.
With these directions, the Complaint stands disposed of.