M/s Aksh Optifibre Ltd vs IFFCO Tokio General Insurance Company Ltd

Heard Mr. Bhaskar Tiwari, Advocate, for the complainant and Mr. S. M. Tripathi, Advocate, for the opposite party.

M/s. Aksh Optifibre Limited (the Insured) has filed above complaint, for setting aside the repudiation letter dated 11.02.2009 passed by IFFCO-TOKIO General Insurance Company Limited (the Insurer) and for directing the Insurer to pay (i) Rs.20154650.02/- with interest @18% per annum, from the date of filing of the complaint till the date of payment; and any other relief, which is deemed fit and proper, in the facts and circumstances of the case.

The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-

(a) Andhra Pradesh Technical Services, on behalf of Information Technology & Communications Department invited tenders for “Andhra Pradesh Broadband Communications Project” to create a state telecommunications network, linking districts, mandals and villages government offices and providing cost effective, reliable, secure, high-bandwidth connectivity by arriving at a single consolidated network called as “AP Broadband Network Project”. In which, bid of M/s. Aksh Broadband Limited was accepted. The project included designing, engineering, construction and commissioning of about 72075 km of underground and aerial fibre network, providing broadband access to 40000 Government Offices and high speed connectivity to the public. For implementing the Project, a Special Purpose Vehicle namely M/s. Apaksh Broadband Limited was incorporated and registered under the Companies Act, 1956. A contract dated 22.04.2005 was executed between Andhra Pradesh Technical Services, M/s. Aksh Broadband Limited and M/s. Apaksh Broadband Limited, in respect of said project. M/s. Aksh Optifibre Limited was supplier of the material to the principal company. The promoters of Apaksh Broadband Limited, namely M/s. In cable Net & others filed a petition under the Companies Act, 1956, alleging mismanagement and oppression of the affairs, due to which, execution of the work was stopped. In this proceeding, M/s. Aksh Broadband Limited was amalgamated with M/s. Aksh Optifibre Limited (the Insured) and Apaksh Broadband Limited has become its subsidiary company.

(b) In order to store the materials, M/s. Aksh Broadband Limited took the premises on rent, i.e. (i) Sy. No.198 & 199, Plot No.-2-A (area 0.30 Guntas), village Anmangal Hayatnagar, district Rangareddy through lease deed dated 15.04.2006 from G. Siva Prasad, (ii) Two shed of AC roofing, admeasuring 0.30 Guntas, Sy. No.198 & 199, Plot No.-2-B, village Anmangal Hayatnagar, district Rangareddy through lease deed dated 15.04.2006 from Smt. G. Karuna and (iii) Sy. No.198 & 199, Plot No.-2-C (area 1 Acre-30 Guntas), village Anmangal Hayatnagar, and district Rangareddy through lease deed dated 15.04.2006 from Smt. G. Padma. This location is also known as Information colony, besides Mallikarjuna Rice Mills, Anajpur Road, Hayatnagar, Hyderabad. These leases were renewed time to time.

(c) The Insured obtained Standard Fire and Special Perils Policy (Material Damage- Schedule) No. 11216569, from the opposite party, for a period of 01.09.2007 to 31.08.2008, on the materials of Optical Fibre cable, Plastic Duct, Electronic And Telecommunication Equipment & Accessories & Any other Items related to the Insured business, for a sum insured of Rs.23/- crores, at godowns C/O Shiv Prasad besides Mallikarjuna Rice Mills, Anajpur Road, Hayatnagar, Hyderabad. The Insured obtained Burglary & Housebreaking Policy Schedule No.44053671, from the opposite party, for a period of 01.09.2007 to 31.08.2008 on the materials of Optical Fibre cable, Plastic Duct, Electronic And Telecommunication Equipment & Accessories & Any other Items related to the Insured business, for a sum insured of Rs.23/- crores, at godown C/O Shiv Prasad besides Mallikarjuna Rice Mills, Anajpur Road, Hayatnagar, Hyderabad.

(d) On 27.02.2008 around 12:00 hours, fire occurred in the backside of the aforesaid godown. The fire was first noticed by Rajesh Kumar Mandal, Security Guard, who immediately reported to Mohan, Godown In-charge. They tried to control the fire but it had become out of their control and began to spread. They immediately informed the incident of fire to nearest Fire Service Station, from where fire tenders were deputed on the spot, which could control the fire. The Insured informed the incident to concerned police station, where it was registered as FIR No.91/2008 on 27.02.2008 at 14:00 hours. The police could not find involvement of any person, after investigation and submitted final report dated 27.06.2008.

(e) The Insured informed the Insurer about the fire on telephone and also sent a letter on 27.02.2008. The Insurer appointed Mr. P. Sowjanya Kumar, for survey and assessment of the loss. The surveyor inspected the premises on 27.02.2008, 28.02.2008, 29.02.2008 and 01.03.2008 and took photographs. The surveyor, vide letter dated 01.03.2008, demanded various papers. The Insured took some time in collection of the required papers and supplied the papers/information on 10.06.2008 through letter dated 05.05.2008. The surveyor vide letter dated 22.07.2008 sought for some clarifications, which was replied on 09.08.2008.

(f) The surveyor submitted Survey Report dated 03.11.2008, holding that the burnt materials were returned materials as the work was stopped. He assessed the loss to Rs.7265115/-. After deducting salvage value, under insurance and less policy excess, he assessed the Net loss to Rs.6627906/-. However, he made remark that as per the policy, the location was “Occupied as godown storage Category-1” but the Insured had stored the goods in the shed and also in open. The goods, which were affected in the fire incident, were stored in an open place. The Insurer repudiated the claim, vide letter dated 11.02.2009, on the ground that the fire occurred at the open place storage, which was not covered under the policy. The complaint was filed on 25.05.2009, claiming deficiency in service. It has been further stated that the Rules of Tariff Advisory Committee provides incidental open storage up to 2% of the insured stock. As insurance coverage was for Rs.23/- crores as such at least loss of Rs.46/- lacs was admissible.

The Insurer filed its written reply on 26.10.2009 and contested the complaint. The fact of obtaining Standard Fire and Special Perils Policy (Material Damage- Schedule) No. 11216569 and Burglary & Housebreaking Policy Schedule No.44053671, from the Insurer, for a period of 01.09.2007 to 31.08.2008 on the materials of Optical Fibre cable, Plastic Duct, Electronic And Telecommunication Equipment & Accessories & Any other Items related to the Insured business, each for a sum insured of Rs.23/- crores, at godowns C/O Shiv Prasad besides Mallikarjuna Rice Mills, Anajpur Road, Hayatnagar, Hyderabad, fire incident dated 27.02.2008 and consequent loss, have not been denied. It has been stated that risk perception in the two policies are different, as such, descriptions mentioned in it cannot be compared. Said descriptions in two policies were due to different printed wording in the policy, intended to apply to all and every Burglary & Housebreaking risk undertaken by the Insurer. So for as Standard Fire and Special Perils Policy is concerned, the risk covered is the goods stored only in any Storage Godown of category-I, at the location specified in the policy. While the fire took place in the materials stored/lying in an open compound and damaged those materials, which was not an insured place. As such, the claim was not payable. As soon as the Insurer received information of fire, the surveyor was appointed. After receiving the Survey Report dated 03.11.2008, the papers were submitted to the competent authority, who after examining all the papers, repudiated the claim vide letter dated 11.02.2009. The alleged Rules of Tariff Advisory Committee, does not appear in the policy. The storage in open place was not incidental and it is not shown that the rating of the risk is under caption “material stored in godowns” as per fire tariff.  There was no deficiency in service on the part of the Insurer.

The Insured filed Rejoinder Reply on 30.04.2010, in which, the facts stated in the complaint were re-iterated. The Insured filed  Affidavit of Evidence of Deves Mishra. The Insurer filed Affidavit of Evidence of S.K. Chhabra, Vice-President and Affidavit of Evidence of P. Sowjanya Kumar, the surveyor. Both the parties filed their documentary evidence and written synopsis.

The counsel for the complainant submitted that “godown storage category-1” has not been defined in the policy document issued by the opposite party.  The term “godown storage category-1” connotes the category of goods to be stored in the godown and not the category of the godown. The complainant obtained Burglary & Housebreaking Policy and Standard Fire & Special Peril Policy on the same day. In the Burglary & Housebreaking Policy, it has been specifically mentioned that “premises” shall not include any yard, garden, open space or outbuilding, which is not part of insured building, but the Standard Fire & Special Peril Policy does not contain any such term. From the fact that the Insurer has charged Rs.340156/- as premium for Standard Fire & Special Peril Policy while for Burglary and Housebreaking Policy premium of Rs.51686/- was charged and risk coverage in both policies were Rs.23 crores, it is fully proved that Standard Fire & Special Peril Policy, in which higher premium was charged covers the storage in open space also. The repudiation letter was illegal. The complainant is entitled for full amount of insurance claim of Rs.13820624/-.  He relied upon the judgment of this Commission in National Insurance Company Ltd. Vs. Hari Om Marketing, IV (2011) CPJ 519 (NC) in which it has been held that the word “godown” in common parlance unless a different meaning is indicated specifically, does not exclude open godown.

The counsel for the opposite party submitted that for obtaining Standard Fire and Special Perils Policy, the complainant had submitted a proposal form, which mentioned “stock at various covered godown in the State of Andhra Pradesh”.  On the basis of this proposal form, the cheque relating to premium was obtained and Cover Note (Annexure R-1) was issued on 31.08.2007, in which “Covered Godown” has been mentioned. Subsequently, the Insurance Policy No.11216569 was issued in which “Occupied as godown storage Category-1” was mentioned.  The complainant did not raise any protest against the use of word “Covered godown” in Cover Note dated 31.08.2007 and use of word “godown storage category -1” in the policy document. From the use of “godown storage category-1” in the policy document, it is proved that godown must be a category-1 construction i.e. pakka wall with RCC roof.  The case law relied upon by the counsel for the complainant in National Insurance Company Ltd. Vs. Hari om Marketing (supra) has no application in the present case inasmuch as in that case only the word “godown” has been used. In the present policy the words “godown storage category-1” have been mentioned.

We have considered the arguments of the counsel for the parties and examined the record. The surveyor in his report dated 03.11.2008 has made a diagram of the storage of the complainant.  In this diagram two sheds of RC roof and open place on both northern and southern side of the sheds were shown to have been occupied for storage of the goods. The fire affected place situated in south-west corner and was an open place. This fact has not been disputed by the complainant as such the fire affected place was not “godown storage category-1” rather it was an open place. The huge quantity of storage in open place was not incidental. In Cover Note dated 30.01.2007 the words “Covered godown” and in the policy document words “godown storage category -1” have been used.  From the use of “godown storage category-1” in the policy document, it is proved that storage at an open place was not insured. In such circumstances, the repudiation letter dated 11.02.2019 holding that the fire affected place was not covered under the insurance policy does not suffer from any illegality.

ORDER

In view of the aforesaid discussions, the complaint has no merit and is dismissed.