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Judgment
Avm J. Rajendra, Avsm Vsm (Retd.), Presiding Member
The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred as “the Act”) against the Order dated 14.01.2019 passed by the State Consumer Disputes Redressal Commission, Punjab at Chandigarh, (hereinafter referred as “the State Commission”), in Consumer Complaint No. CC/47/2018, wherein the Complaint filed by the Complainant (Appellant herein) was dismissed.
There was 55 days delay in filing the instant appeal. For the reason stated in IA No. 7213/2019, the delay is condoned.
For convenience, the parties involved in this Appeal will be referenced as per their identification in the Complaint originally filed before the learned State Commission. The Complainant/Appellant, "M/s. Avleen Motors is a two wheelers agency of TVS Motors and deals in sales, spares and service of all kinds of Motorcycles, Scooters, Mopeds and its spare parts and accessories as manufactured by the said TVS Motors. While the "The New India Assurance Company Ltd. and Anr." will be addressed as the Opposite Parties/Respondents or the insurer (OPs) in this matter.
The brief relevant facts of the case as per the Complainant are that he had obtained a “Shopkeepers Insurance Policy” from OPs vide policy No.36060348150600000144 valid from 19.02.2016 to 18.02.2017. On the night of 31.01.2017, around 11:15 PM a fire erupted due to an electrical short circuit within the premises of the Complainant's firm, where vehicle spare parts and accessories were stored. The fire brigade was summoned to extinguish the fire. Subsequently, a detailed report on the fire accident was made to police station, Mukatsar, through DDR No. 32 dated 31.01.2017. The loss of spare parts and engine oil was assessed to be Rs.21,31,636.61. In response to the report, the OPs appointed M/s Mittal Independent Surveyor to evaluate the loss. The surveyor visited the site on 31.01.2017 and 09.02.2017 and the Complainant provided all required documents, except electronically maintained stock register from storeroom's computer, which was damaged in the fire. Instead, a stock statement procured from the parts supplier was submitted. But the Complainant's claim was rejected by the OPs, deeming it a "no claim" situation as the policy covered only motorcycles and accessories and that the spare parts affected by the fire were not insured. The formal repudiation letter dated 09.06.2017 elaborated on the grounds for rejecting the claim, citing incomplete formalities and non-submission of claim documents.
The Complainant thereafter obtained information under the RTI Act that the surveyor assessed the loss of Rs.13,49,966/- even after deducting 5% stock claimed as dead, 10% deductions due to variations in stocks, 15% deductions due to recovery of saved components, Rs.15,000/- for salvage, deduction of 7.37% towards under insured stocks and 5% towards excess clause. The OPs insurer claimed that he failed to segregate the stock for physical verification, while the photographs by surveyor indicated that small-sized spare parts were mixed and certain destroyed items, rendering segregation impossible. Being aggrieved by the repudiation of insurance claim, the Complainant filed a consumer complaint no. 47 of 2018 on 22.01.2018, before the learned State Commission claiming Rs.13,49,966/- as assessed by the surveyor along with interest @ 18% p.a. from the date of loss i.e., 31.01.2017 till actual payment. He claimed Rs5,00,000/- for harassment compensation and Rs.1,50,000/- as costs of litigation.
The written submission by the OPs/Insurer contested the maintainability of the claim, asserting that the matter involved disputed facts that couldn't be summarily decided by the consumer forum. Additionally, they highlighted that the claimed amount fell below the jurisdictional threshold of 20 lakh and that the Commission had no jurisdiction to adjudicate the matter.
Regarding the merits of the case, the OPs acknowledged the issuance of the insurance policy to the Complainant upon payment of the premium. The OPs denied receiving documents from the Complainant, essential for the surveyor's loss assessment, and pointed out the Complainant's alleged failure to segregate the stock for physical verification despite email sent to him on 17.05.2017. The insurer further contended that the claim repudiation was justified because the affected spare parts were not covered under the policy. They reiterated that only motorcycles and accessories were insured and not spare parts. They dismissed the report from the Complainant's self-appointed surveyor M/s Mittal and Garg Chartered Accountant, dated 20.04.2017, as an afterthought, asserting its insignificance. Emphasizing the absence of coverage for spare parts, they concluded that the repudiation of the Complainant's claim was valid.
The State Commission dismissed the complaint with the following Order: -
“8. As a result of our above discussion, we have not come across any illegality in the repudiation letter of the claim of the complainant by OPs contained in Ex.C-9. The insurance company is not bound to pay to complainant for uninsured loss of the material. Finding no merit in the complaint, same is hereby dismissed.”
Being aggrieved by the impugned order dated 14.01.2019, the Appellant /Complainant filed this present Appeal no. 799 of 2019 with the following prayer:
“a) allow the instant appeal filed by the Appellant against the respondents and set aside the judgment dated. 14.01.2019 passed by Ld. State Consumer Disputes Redressal Commission, Punjab, at Chandigarh in C.C. No. 47 of 2018;
b) Direct the Respondents to pay the claim amount of Rs. 13,49,966/- along with interest at 18% p.a. from the date of loss till the realization of money, to the Appellant as assessed by the surveyor appointed by the Appellant. And/ or;
c) To remand back the matter to the Learned State Commission for proper adjudication in accordance with law;
d) Direct the Respondents to pay a compensation of Rs. 7,00,000/- being compensation for mental agony to the Appellant;
e) Direct the Respondents to pay a litigation expenses to the tune of Rs. 2,00,000/- to the Appellant;
f) Any other and further order, which this Hon'ble Commission may deem fit and proper in the circumstances of the case, may also be passed
In the Appeal, the Appellant mainly raised the following issues:
a. The State Commission was silent on calculation of compensation. The spare parts and engine oil constitute the vital stock in trade for their dealership. The Commission failed to recognize this fact.
b. The State Commission incorrectly determined that the policy covered solely motorcycles and accessories. The policy in fact inherently covers the entirety of stock in trade present at the time of the incident, encompassing all.
c. The State Commission made a legal error by overlooking the policy's history. The policy was initially issued by the Respondent for 2015-2016 and renewed for 2016-17, during which the description was altered from "STOCK" to "MOTORCYCLE and ACCESSORIES."
d. The Appellant further argues that even if the policy's description was changed, it doesn't negate the fact that spare parts and engine oil remain integral components of the dealership's stock in trade. The policy's intended coverage was purportedly for the entirety of the stock in trade, encompassing these vital components essential for the Appellant's dealership operations.
Upon the notice on the memo of Appeal, the Respondents / OPs-Insurance Company have not filed any reply/objections. However, the Respondents/OPs Insurance Company have submitted a written submission appreciating the Impugned Order passed by the State Commission.
The learned Counsel for the Appellant/Complainant reiterated key grounds of appeal while emphasizing distinctive features of the Shopkeeper policy, highlighting its comprehensive protection against potential risks and perils. Stressing the policy's purpose to safeguard property and contents within a building, the Counsel argued that the learned State Commission failed to acknowledge crucial aspects. They contended that upon seeking renewal, the Respondent unilaterally altered the policy description from "STOCKS" to "STOCK OF MOTORCYCLE AND ACCESSORIES" without valid grounds. Despite the submission of necessary documents, the Respondent allegedly attempted to delay the legitimate claim by raising impractical objections, such as segregating burned parts that were intermingled with rubber and plastic, rendering segregation impossible.
The Counsel underscored the criticality of spare parts and engine oil as fundamental components of the dealership's stock in trade. They insisted that the policy should cover the complete inventory present during the incident, including spare parts and engine oil. They argued that irrespective of the policy description alteration, the intention was to cover the entire stock in trade, which includes these essential components. In essence, he emphasized that the change in policy description doesn't negate the fact that spare parts and engine oil are integral components of the dealership's stock in trade, a fundamental aspect intended for coverage under the insurance policy. The learned Counsel placed reliance upon the judgment of Supreme Court in Jacob Punnen and Anr. Vs. United India Insurance Company Limited, (2022) 3 SCC 655 to support his arguments.
The learned Counsel for the Respondents/OPs Insurance Company highlighted that the State Commission rightly accepted the contention that the policy in question specifically covered stocks of motorcycles and accessories and excluded others, including spare parts. He asserted that while the spare parts may be the components required for functioning of the systems and operation of vehicles, these are distinct from accessories, which are additional features, which not crucial for vehicle operation. He argued that since spare parts and consumables were not covered under the policy, the claim for such loss is not payable. He contested the Appellant's attempt to alter the scope of the insurance contract and policy description, which was not raised in the initial complaint and appeared as an afterthought. He asserted that even if there was an error in the policy description as claimed, it was incumbent upon them to resolve the same at the time of policy issue or renewal. He further argued that a discrepancy in the report presented by the Chartered Accountant, that it did not qualify as an assessment report and it was procured much later than the loss incident, thereby lacking credibility. He even for the sake of argument, if the Respondent is held liable, it would be confined to the amount assessed by the surveyor. He urged that no grounds existed for challenging the State Commission's reasoned order.
I have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels for both the Parties.
The primary issue for consideration is the scope of cover of the insurance policy obtained by the Complainant and whether it covered the loss to spare parts and consumables in the premises. In this regard the contentions primarily revolve around the categorization and coverage of items, particularly spare parts and consumables, within the context of the insurance policy's coverage of "stocks of motorcycles and accessories." The main dispute is whether the spare parts and consumables affected by the fire fall within the ambit of coverage provided by the policy, considering their significance to the dealership's operations or whether they are distinct from the category of accessories covered by the said policy. This leads to the question ass to whether the insurer is liable to compensate for the loss of spare parts and consumables, which were not explicitly listed as covered items under the insurance policy's description of "stocks of motorcycles and accessories.
It is in common knowledge that various types of insurance products are available in the market for providing insurance cover on life, health, motor vehicles, immoveable properties, crops, trees, furniture, goods, stocks, precious metals, cash etc by insurance service providers. It is also in common knowledge that each of these insurance products has specific scope of cover as per the requirement of an insurance seeker, with prescribed disclosures and terms and conditions stipulated in the insurance contract. It is an established legal position that any contract, including an insurance contract, entered into between the parties shall be as per the terms and conditions prescribed thereat and the scope of contract is required to be interpreted as per the specific terms stipulated in the contract. There is no scope for interpretation of the terms of contract entered into, beyond the terms so stipulated and such expansion beyond the terms may tantamount to reframing the terms and conditions, which is impermissible in law.
in the present case, it is undisputed that the Complainant had obtained a “Shopkeepers Insurance Policy” from OPs vide policy No.36060348150600000144. The said insurance policy cover is for motorcycles and accessories and the duration is from 19.02.2016 to 18.02.2017. On the night of 31.01.2017, around 11:15 PM a fire erupted due to an electrical short circuit within the premises of the Complainant's firm, where vehicle spare parts and accessories were also stored. The loss of spare parts and engine oil was assessed to be Rs.21,31,636.61. The surveyor visited the site on 31.01.2017 and 09.02.2017 finalised the report and determined the loss as Rs.14,41,005/-. The Complainant's claim was rejected by the OPs, as the policy covered only motorcycles and accessories, not the spare parts affected by the fire, which were not insured. The formal repudiation letter dated 09.06.2017 elaborated the grounds for rejecting the claim, citing incomplete formalities and non-submission of claim documents.
It is clear from the material evidence that the Complainant pleaded loss on account of spare parts and engine oil, as reported by Complainant to the OPs. Even the estimate relied upon by Complainant establishes this fact that Complainant estimated loss of spare parts and engine oil as Rs.21,31,636.61. In any case, there is no loss of vehicles or accessories in the said fire accident. The Complainant restricted the loss of spare parts and engine oil caused by fire and asserted that these constitute integral part of the motorcycles and, therefore, within the scope of the policy.
On the other hand, it is the consistent stand of the OPs that Complainant insured only stock of motorcycles and accessories and, therefore, there is no insurance cover to the rest. The accessory is an additional item primarily intended to adorn the vehicle and these cannot be said to be its essential component. The engine oil, which is separately stored, is not covered under the category of stock of motorcycles and accessories. Clearly, the stock of motorcycles means the motorcycles parked in the shop of the Complainant for sale. Accessory items are those extra items meant to give further features to the vehicle for the purpose of convenience and adoration. In the contract of insurance, neither the spare parts were insured with OPs nor the engine oil was insured, under the category of spare parts which were separately to be insured with OPs. Consequently, the loss suffered by Complainant is clearly of spare parts and engine oil only and these items were not insured with OPs under the said insurance contract. As such, OPs rightly repudiated the Complainant’s claim.
In view of the above discussions, I am of the considered view that the Order of the State Commission dated 14.01.2019 does not suffer from any illegality. The FA No. 799 of 2019 in, therefore, dismissed.
There shall be no order as to costs. All pending Applications, if any, stand disposed of accordingly.