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Judgment
A. P. Sahi, President Member
Heard learned counsel for the complainant and the learned counsel for the opposite party/Insurance company.
This is an insurance claim which was filed in respect of a claim under a Standard Fire and Special Perils Policy the duration whereof was from 15.04.2011 to 14.04.2012. On 15.07.2011 a fire is alleged to have taken place in which the goods stored within the premises as mentioned in the policy are said to have been gutted and destroyed.
The claim form was submitted with an endorsement that there was no other previous claim and was in respect of the incident in which the goods were destroyed on 15.07.2011.
The Insurance company was duly informed who engaged a surveyor for a report. The surveyor’s report has been filed by both the parties on record and is dated 20.11.2012. The same is annexure C8 to the complaint.
It is on the strength of the said surveyor’s report that the claim of the complainant came to be partially allowed and an offer was made to pay a sum of Rs.3,89,69,389/- towards full and final settlement. A discharge voucher was also offered to the complainant to be signed after receipt of such payment which is placed on record and which remains undisputed.
The complainant declined the said offer and rather filed this complaint stating therein that the denial of the claim in respect of the goods that were held in trust is unjustified.
It appears that when the complaint proceeded for hearing the following order was passed on 17.12.2014:-
“The learned counsel for the complainant seeks some time to take instructions from the complainant as to whether the complainant is agreeable to keep the scope of this complaint confined to the question as to whether the ‘goods held in trust’ are covered under the Insurance Policy or not.
Re notify on 08.01.2015.”
It appears that the learned counsel for the complainant on instructions made a statement that the scope of this complaint would stand confined to the question with regard to the claim in respect of the goods held in trust by the complainant. The order dated 04.02.2015 is extracted hereunder:
“The learned counsel for the complainant states on instructions that the complainant is agreeable to confine the scope of this complaint to the question as to whether the goods held in trust are covered in the insurance policy or not.
Issue limited notice to the opposite party in the complaint as well as on I.A.s. for 16-03-2015.”
Thus the scope of dispute stands narrowed down only to the claim in so far as it relates to the goods stated to be held in trust by the complainant which were also destroyed in the fire on the date of the incident, that is 15.07.2011.
This part of the claim, which only survives for adjudication in this complaint, was examined by the surveyor who opined as follows paragraphs 7.44 to 7.51:
“07.44 Goods held in trust (claim Rs.7,84,31,656/-)
07.45 At the outset, we may state that as per the policy schedule, this item is not insured. However, as per mail dt.28th September 2011, the branch office of the insurers requested us to assess the loss under “held covered” while the matter is being referred to the Head Office. Initially, Insured had indicated the amount of loss under this head as Rs.6.89crores. this was subsequently revised to Rs.7,84,31,656/-. The breakup of the claim is as under:
Particulars
Quantity
Amount
Plastic granule
4,91,134 kgs.
5,33,46,883/-
Cooler components
40,71,458/-
Imported materials for coolers
2,10,13,315/-
Total
7,84,31,656/-
07.46 Statements of claim and the summary statement are enclosed and marked as ANNEXURE XIII of this report.
07.47 Insured would be on claim in respect of these goods held in trust only when both criteria mentioned below are fulfilled.
a. They have reimbursed the cost of the damaged materials to the owner of the goods and
b. They have reimbursed interest in the goods in their custody.
07.48 In the light of these issues, we first requested Insured to produce proof of payment made to Maharaja Whiteline Industries Ltd. insured submitted copy of their ledger a/c as appearing in the books of account of Maharaja. The same is enclosed and marked ANNEXURE XIV of this report. Scrutiny of the same would reveal that Insured owe a lot of money to Maharaja which is evident by the opening debit balance as well as the debit entries in the ledger account. On the credit side, one can see a few receipts of cheques. An amount of Rs.8,00,00,000/- received by Maharaja from insured has been treated as reimbursement of amount of claim of Rs.7,84,31,656/- debited on 15th July 2011. It can this be inferred that insure have fulfilled the first criterion.
07.49 Now, we would like to touch upon the issue about the insurable interest. It is well established that insurable interest is required to support the contract of insurance in order to make it enforceable at law. In the absence of the same, no contract of insurance can come into existence. Its simple definition is “the legal rights to insure arising out of financial relationship under law, between the Insured and the subject matter of insurance”.
07.50 Last but not the least, the essentials of insurable interest are as under:
o The subject matter of insurance is the property, right, interest etc.
o The Insured must stand in relationship with the subject matter of insurance whereby he benefits from its safety, or freedom from liability and would be prejudiced by its loss or the creation of liability.
07.51 With this background, we now give our comments/ observations on the insurable interest of the Insured in respect of each of the items forming part of the claim. The first item under the claim is plastic granules. It is to be noted that Insured have moulding unit. The associate concern i.e. Maharaja send their granules to Insured’s factory for moulding into various components which are used by them in their finished products like grinder, mixers, juicers, toasters etc. Post 01.04.2011, it was also observed that components of coolers were also moulded. Thus, Insured have a legal right to insure arising out of financial relationship and hence, would be prejudiced by its loss. We are therefore of the opinion that Insured have insurable interest in the granules and hence, we have assessed the loss in respect of the same. Details of the assessment are available in subsequent paragraphs.”
An analysis of the same on facts as well as quantum was made further in the surveyor’s report which is not being extracted, as the contention as to whether the goods held in trust could be treated to be covered under the policy has to be decided at the outset.
Learned counsel for the complainant submits that the policy was not a simple policy taken as a fresh insurance coverage but it was in essence a continuance and renewal of the earlier policy which existed from 15.04.2010 to 14.04.2011. Inviting the attention of the Bench to the said policy, learned counsel submits that there is a clear endorsement under the heading “Description of the Risk” that the coverage includes goods held in trust whilst lying/stored anywhere in the insured premises. This endorsement which is at page 21 of the complaint is extracted hereunder:-
“Rs. 4,00,00,000/- STOCK OF ALL KINDS OF FINISHED SEMI FINISHED GOODS IN PROCESS AND OTHER ALLIED GOODS PERTAINING TO INSURED’S TRADE INCL. PACKING MATERIAL & GOODS HELD IN TRUST WHILST LYING/STORED IN ANYWHERE IN INSURED’S PREMISES.”
On the strength of this endorsement learned counsel contends, that with the same terms and conditions, the policy under question for the period between 15.04.2011 to 14.04.2012 was negotiated through a broker namely Astro Brokers Limited represented by one Mr. Suresh Sharma. The contention is that the policy which was taken may have the description of a new number but the same was according to the complainant a continuance and renewal of the earlier policy with the same terms and conditions. The new policy according to the learned counsel for the complainant bears the following endorsement on the terms and conditions attached to the new policy which is extracted hereunder:-
“ ENDORSEMENT WORDING:
It is hereby agreed & declared that complete address of the property issued under the within mentioned policy is Khasra No. 532 & 533, village Malkumajra Industrial Area-Tehsil Nalagarh, Distt. Solan, Baddi, Himachal Pradesh.
All other terms, conditions, exceptions & limitations of the policy would remain unchanged.”
Learned counsel submits that this endorsement according to him conveys that all other terms and conditions of the previous policy would be presumed to be continuing under the aforesaid endorsement.
Learned counsel then submits that in order to substantiate the same an extract of the information that was tendered by the broker to the complainant, and which is at page 24 of the complaint, also indicates that goods held in trust were also covered under the new policy. To further supplement the same, learned counsel has invited the attention of the Bench to the statement of Mr. Suresh Sharma who was representing the broker referred to above, having admitted this position that the goods held in trust were also covered under the policy.
Learned counsel then urged that as a matter of fact when the claim was lodged a reference to the phrase “held in trust” was referred to the headquarters and as a matter of fact admitted by the Insurance company to have substance, and hence it should be presumed that the language used in the e-mail dated 28.09.2011 should be construed accordingly.
Learned counsel has then contended that the e-mail that followed thereafter with the surveyor Mr. Anil Phadke is also relevant which is dated 20.06.2011 and taking a cue there-from learned counsel submits that this clearly indicates the intention and the nature of the policy which continued the coverage of goods held in trust.
Learned counsel has then urged that such renewal should be presumed to have taken place, inasmuch as the Insurance company cannot deny the fact that the said renewal was in continuity and he places reliance on the judgment of the Apex Court in the case of Biman Krishna Bose Vs. United India Insurance Co. Ltd. & Anr. (2001) 6 SCC 477 to support his contention.
An additional argument that emerged during the course of the hearing was with regard to the nature of the premium of the policy and the learned counsel submitted that keeping in view the status of the coverage and the premium already paid, there is no doubt that intentionally the premium also covered the risk of goods held in trust. However learned counsel could not point out any pleadings to that effect on record but this argument was advanced only on the basis of the amount of premium separately mentioned in both the said policies.
Mr. Malhotra, learned counsel for the Insurance company, submitted that firstly there is no proposal for renewal and he invited the attention of the Bench to the proposal form which was sought to be disputed by the other side. It may be mentioned that no other proposal form has been submitted in evidence by the complainant and therefore since the proposal form indicates the same policy number which has been issued and is under question, there is no reason to presume that there is any other proposal form except the one that has been filed by the Insurance company on record. This proposal form in the claims column categorically states “No” nor is there any indication in the proposal seeking endorsement to the effect that goods held in trust should also be insured.
Mr. Malhotra therefore submits that neither there was any proposal nor there is any question of renewal of the earlier policy. He contends that the subsequent policy was a fresh contract without any endorsement or coverage of goods held in trust. He contends that the endorsement wordings quoted hereinabove in the subsequent policy is with regard to the change of address and then to reassert that all other conditions of the subsequent policy will remain the same. He submits that the argument that all other terms and conditions means the continuance of the previous policy is completely misplaced and has no connection with the previous policy at all.
Coming to the document filed at page 24 which is said to be an information tendered by the broker to the complainant, he submits that the same bears an erased endorsement of the original name of the company mentioned therein, which underneath the cutting is clearly decipherable as M/s Maharaja Appliances. Even though no such pleadings have been made but the said document has been denied in the affidavit of denial. Mr. Malhotra submits that this clearly indicates that M/s Maharaja Appliances was sought to be informed in the said information and then it was scratched out and then the name of the complainant was endorsed by superimposition. He submits that this was presumably done because the owner of both the companies is the same, and granules and other items of M/s Maharaja Appliances are said to have been held in trust in the godown of the complainant company. He contends that this was clearly a paper transaction which was prepared for the purpose of lodging this claim and hence he submits that the endorsement on the said document that it is covered for the goods held in trust is a clear manipulation of records and therefore it has been denied and deserves to be disbelieved.
He then submits that the reliance placed by the learned counsel for the complainant on the statement of Mr. Suresh Sharma is also very peculiar both in content and in intention. He has analysed the same to contend that the date of the policy referred in the date of the earlier policy whereas the references are being made to the subsequent policy. Undoubtedly the broker was engaged for the subsequent policy and not for the earlier policy. He then submits that as a matter of fact if the earlier policy was known or had been known, the said statement would have mentioned something about the status or would have explained the proposal form which was filled up without any reference to the earlier policy. Mr. Malhotra points out that the statement is self-contradictory inasmuch if he was mentioning about the earlier policy, then in paragraph 4 to state that the previous claim was not informed to him by the National Insurance Co. Ltd. is completely incongruous to the facts as disclosed. Such statement, according to Mr. Malhotra, cannot be relied on and therefore the same should be discredited outright.
He then contends that a mere mail to the Head Office for seeking clarification as to whether the goods were held in trust cannot be an admission and such an argument deserves to be noted only for being rejected.
He has then invited the attention of the Bench to the mail that was referred to by the learned counsel for the complainant to urge that even if the Head Office had not rendered any decision thereon, the entire claim was dependent upon the terms and conditions of the policy which does not include implicitly or explicitly the coverage of goods held in trust. He however submits that since the final decision has been taken in the matter, the same has been done by the Head Office whereafter the complainant was offered a discharge voucher to settle the claim for the amount of Rs.3,89,69,389/- which was refused by the complainant.
Mr. Malhotra then submits that all these documents and the indication of any intention of the coverage of the policy cannot be inferred to construe goods held in trust inasmuch as the subsequent policy is a fresh policy and the terms of the coverage of the previous policy have nowhere been carried forward. For this, he has invited the attention of the Bench to the description in both the policies stating that the first policy was issued from the office of the Insurance company located at Laxmi Tower Commercial Complex, Azadpur, New Delhi whereas the subsequent policy has been taken by the complainant from Palika Bhawan, R.K Puram, New Delhi. He then submits that the first policy was taken directly whereas the subsequent policy was taken through a broker who feigns ignorance of the earlier policy in his own statement. Mr. Malhotra submits that this modality adopted by the complainant indicates that when the unit is located somewhere in Solan, Himachal Pradesh, and if the complainant intended a renewal of the policy, then the complainant should have approached the very same office where the earlier policy had been issued. This conduct on the part of the complainant therefore categorically indicates that there were two separate policies from two separate places and having different coverage as indicated therein.
Coming to the issue of premium, he explains that at the time of seeking coverage several negotiations are made and in consideration thereof the premium is fixed and paid. Hence any reduction in the premium in the subsequent policy, even though there is higher coverage, can also be attributable clearly to the fact that goods held in trust were not covered in this policy. He therefore counters the argument of the learned counsel for the complainant on this issue urging that this variation in the premium as well as the coverage nowhere indicate any continuity either of the intent or the purpose of the earlier policy.
Responding to the submission of the citation tendered by the learned counsel for the complainant, he has invited the attention of the Bench to paragraph 26 of Shree Ambica Medical Stores and Ors. Vs. Surat People’s Cooperative Bank Ltd. & Ors. (2020) 13 SCC 564 to urge that situation in the present case is clearly distinguishable and the said judgment is totally inapplicable on the facts of the present case.
Having considered the submissions of the learned counsel for the parties, the prime issue as stands confined to the issue that was recorded earlier and noted above, is as to whether the policy in question covers the risk of goods held in trust while lying/stored anywhere in the insured premises or not. The contention as raised by the learned counsel for the complainant is that the policy which was taken subsequently was in continuation and was in effect a renewal of the earlier policy. To examine the same, the terminology used in both the policies has to be comparatively analysed. The endorsements have already been extracted hereinabove while noticing the arguments of the learned counsel for the complainant. It is clear that the policy which was taken in the year 2010-11 did indicate a clear coverage of goods held in trust whether lying or stored anywhere in the insured premises. This endorsement is nowhere indicated in the policy for the year 2011-12. There is no indication or endorsement to demonstrate that the policy for 2011-12 was a policy for renewal and was in continuity of the earlier policy. The contents of the risk coverage appear to be similar but the endorsement with regard to any goods held in trust are clearly absent in the subsequent policy. The argument of the learned counsel for the complainant that all the terms and conditions had been endorsed for being continued, is an argument which is contrary to record, inasmuch as the terms and conditions in the subsequent policy as endorsed are in relation to the same policy and not the previous policy. Consequently there being no continuity of contract by way of renewal as established on record, the argument that the subsequent policy was a renewal with the earlier terms and conditions is clearly unacceptable. Apart from this, the statement on which reliance has been placed of the broker who had negotiated the subsequent policy is clearly incongruous as pointed out by the learned counsel for the Insurance company. The statement begins by mentioning the dates of the earlier policy and ends up by stating that the said agent had no knowledge of any previous claim of any policy. This clearly establishes that the statement of the said agent namely Mr. Suresh Sharma cannot be relied on.
The observations recorded by the surveyor from paragraphs 7.44 onwards as extracted hereinabove clearly indicate the analysis made with regard to the stake of the complainant and whatever material was adduced by the complainant has been taken into consideration while recommending that the policy does not cover the risk of goods held in trust.
The said report has been accepted by the Insurance company and there does not appear to be any legal or factual error so as to accept the contention raised on behalf of the complainant.
Once it is found that the policy does not cover the goods held in trust, then there is no occasion for this Forum to probe anything further inasmuch as any entitlement would raise only if the complainant’s contention is accepted on that score.
In the absence of any such material to gather that the subsequent policy was a renewal or continuance of the earlier policy, there is no occasion to allow the claim which is limited in the present case now to the extent of goods held in trust as claimed by the complainant.
The judgment in the case of Biman Krishna Bose (Supra) as relied on by the learned counsel for the complainant was a case with regard to the refusal of the Insurance company to renew a policy. Neither the facts nor the law in that case are applicable to the controversy involved in the present case which is a clear case of two separate policies.
It has been pointed out by Mr. Malhotra that insofar as the offer of Rs.3,89,69,389/- made by the Insurance company to the complainant which was not accepted, came to be deposited under the orders of this Commission with the SBI A/C Empire Home Appliances Pvt. Ltd. The said payment therefore seems to have been paid over to the Bank as against the claim in question.
Consequently for all the reasons above, there being no coverage of goods held in trust, the complaint fails and is hereby dismissed as no deficiency in service is established.