AI Structured Summary
Not yet generated for this judgment
Judgment
A. P. Sahi, President Member
Heard learned counsel for the parties.
This is a complaint arising of an alleged deficiency in service on the part of the Insurance Company with regard to indemnification under a Standard Fire and Special Perils Policy. The policy is at page 35 of the paper-book where the address of the location of the premises where the stocks were to be stored is “OPP. CHOICE RESORTS, ZIRAKPUR BALTANA ROAD, VILL. PABHAT, ZIRAKPUR”. There is no dispute that the goods stocked inside a godown in the premises at the said address were insured and the policy was of the duration 27.07.2012 to 26.07.2013. The fire incident in which the stocks were lost is dated 13.11.2012.
A surveyor was appointed on the intimation given by the complainant who submitted a report on 25.03.2013. A copy of the survey report is at page 234 of the paper-book, and to be précise with regard to the description of the premises and the location thereof, clause (v) of the report at page 242 is extracted hereunder:
“V. PREMISES
The Insured is having godown which is affected by fire, located at Opp. Choice Resorts, Zirakpur. As per investigator, the godown is occupied the insured last 1½ years back since it was purchased by them. Earlier they were having one godown in the same area which was just two godowns away from the present godown in the same line. The earlier godown was taken on rent.
The construction of the godown is pucca with Beamed/Pillared structure as walls are of burnt bricks with cement plaster, roof of RCC with concrete flooring. The godown is having approx.. area of 80’x30’. It is covered by 2 Nos. steel rolling shutters. The building in which the insured godown is situated is a two storeyed building. The insured’s godown is situated on the ground floor whereas the first floor is occupied by other business firms.
The godown is located on the Ground Floor of a 2 storeyed Building with pucca constructions.”
While recording his observations about the loss under clause (C) at page 254 in clause (7) it has been observed as follows:
“7. Premises not covered in the Policy
As per Investigator’s findings, the present premises Opp. Choice Resort has been occupied by the Insured 1½ years back. Prior to that Insured was having godown which is just 2 Godowns away in the same line in the same area. In support of the above, the Investigator has obtained 2 written statements one from Mr. Sonu Goyal and second from Mr. Mohan Singh who have confirmed that Insured was having earlier one Godown.
We have gone through the Insurance Policies of the Insured for the last 3 years and found that Insured has not informed the change of premises and no endorsement has been passed regarding change of location. In the Insurance Policy coverage is continued for the previous Godown which the Insured has vacated 1½ years back. As such the Insured premises is not covered in the Policy.”
The surveyor therefore reported that there was no information given to the Insurance Company about the change of the premises nor any endorsement has been made with regard to the change of the location risk.
The surveyor’s report also went on to assess the losses and came to the conclusion that the claim was exaggerated and recommended repudiation of the claim.
The repudiation letter is annexure 26 dated 27.05.2013 which is extracted hereunder:
“420102/CLAIMS/2013
WITHOUT PREJUDICE
Dated : 27th May 2013
M/s Kohinoor Marketing associates,
Opposite Choice Resorts, Zirakpur, Baltana Road,
Village Pabhat, Zirakpur, Distt. Mohali
Kind attn.: Sh. Parvesh Sarin 184, sec 9,Panchkula
Sub.:Fire loss dt. 13.11.2012 under Policy No.42010211123100000030
Claim No. 42010211123190000002
Dear Sir,
This has reference to the claim reported on account of fire stated to have taken place on 13.11.2012 evening in your godown at Baltana. A preliminary surveyor was immediately deputed on receipt of your intimation who along with our officials visited your premises on 14.11.2012 to take stock of the incident and photographs of loss affected site were also taken. It was reported that affected premises were open without locks and none of your representative/employees was present for giving statements, claim forms and comply with the requirements. It was also noticed that some of the stocks had already outlived the life of the product and hence unfit for human consumption. You could also not be contacted on phone which was found to be switched off. Similar were the observations of our Engineer who visited location of loss on 16th November 12.
Final surveyor visited the location of loss on 15th November 12 with prior intimation, took photographs and noted approximate loss. Two representatives who attended to surveyor informed that they were not aware of insured's business nor they were having any information about stocks, records etc. They told him that you will be available for inventorisation of stocks in next 2/3 days but you did not contact the surveyor for the same. Surveyor advised your representatives to get the stocks segregated so that necessary quantification/ inventorization of damaged and saved stocks could be done. They were also advised to submit books of accounts and other records for verification and immediately appoint a watchman since the affected premises was found unattended after the loss. Despite that the premises were found still unattended without any watch and ward staff for many days thereafter too, as observed in subsequent visits by our officials, which must have caused pilferage of safe stocks. Thus you failed to take steps to safeguard the stocks after the loss despite our advices. Our officials also visited your residence to request you to comply with requirements of claim settlement. This clearly indicate that we sincerely wanted to give you timely assistance in assessment and minimisation of your loss and settle the claim on merits at the earliest possible.
Surveyor reminded you for compliance of requirements vide his letters dated 22.11.2012, 03/12/2012 and 20/12/2012. He also categorically informed you that physical verification can be done only when your claim bill is received with details of loss. In your letter 01/12/2012 to the surveyor you promised to complete the papers within a week but that was not done. Our officials as well as final surveyor tried to contact you on your mobile but either your phone was found switched off or you did not respond to the calls. Surveyor on his initial visit itself was not convinced about cause of loss in view of nature of damages and also observed that loss intimated is highly inflated compared to what was observed on physical inspection of stocks. In view of his initial observation and also due to your non-cooperation he recommended for getting the matter investigated. Accordingly M/s Royal Associates, investigators were appointed to investigate the matter and submit their findings. Investigator wrote letters, contacted you on telephone and at your residence but you avoided meeting. He sent reminders for submitting various accounts records, stock statements submitted to the bank, income tax returns for the last three years, purchase and sales bills for the current year, details of stocks in the godown at the time of loss, names and addresses of your employees etc and requested for a meeting with you so that your statement could be recorded. In response you sent your statement and details of your employees but avoided meeting with the investigator on one pretext or the other. The investigator tried to contact your employees who informed that they had been instructed by you not to give any statement regarding the loss. We tried to fix your meeting with the surveyor on 2nd Jan 2013 for which you verbally agreed but avoided the meeting citing flimsy grounds at the last moment. We showed our concern about your non compliance vide our letter dated 02/01/2013 and specifically pointed out that your non-cooperation and non-submission of required documents are leading to violation of condition no 6(i)(a) of the policy and again requested you to cooperate with surveyor to get the loss assessed within 15 days failing which the surveyor will be advised to release his independent report. Surveyor in his registered letter dated 04/01/2013 clearly mentioned that you have not submitted the required documents and that he was not satisfied about your explanation of illness being the reason for non compliance of requirements vide your letter dt 29th December 12 and 12/0l/13 as in case of illness your family members/staff members/chartered accountants could have definitely made arrangement for physical inspection, inventorisation and submission of details and it appears that you were intentionally delaying the submission of documents and deliberately avoided the scheduled meeting of 02/01/2013. You were again reminded vide our letter dated 17th Jan 13 and 31 Jan 13 to submit the required documents and complete the formalities within 7 days else we will advise our surveyor to issue the independent survey report. In response to above letter we received the following documents in February 13: i.e Balance sheet of the firm for last 3 years, Trading account for the half year ending 30th Sept 12, VAT/CST returns and Income tax returns. But the same could not be verified in the absence of supporting books of accounts and other records like ledgers and purchase / sale vouchers which were required. Even Trading account on date of loss, tax audit reports, tax details, bank statements, comments on CC limits, details of accounting records maintained and stock details for the last 3 years, detailed itemwise claim bill etc were not submitted by you. Trading account was submitted only till 30th September 12 and not till date of loss. Since you didn't respond to our various reminders and hence did not cooperate to comply with requirements of claim assessment, the surveyor was thus denied an opportunity to get the stocks inventorised and he also could not verify loss from accounts due to non submission of supporting details and records, thus surveyor issued his independent survey report based on his physical inspection, findings of preliminary survey report and investigation report.
Since you didn't submit complete record in support of your claim for verification and to calculate the value of stocks involved in the fire. You have thus not cooperated and deliberately avoided submission with malafide intentions. Hence you have violated Condition No. 6(i)(a) & (b) of the policy which is reproduced here below:
Condition No. 6 (1)(a and (b)): On happening of any loss or damage the insured shall within 15 days after the loss or such further time as the Company may in writing allow in that behalf, deliver to the Company "A claim in writing for the loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items of property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage not including profit of any kind. The Insured shall also at all times at his own expense produce, procure and give to the Company all such further particulars, plans, specification books, vouchers, invoices, duplicates or copies thereof, documents, investigation reports (internal/external), proofs and information with respect to the claim and the origin and cause of the loss and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonably required by or on behalf of the Company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith". No claim under the policy shall be payable unless the terms and conditions have been complied
As observed from survey report, Balance Sheets submitted by you show unusually high value of purchases, Stock Turnover ratio and Purchase/sales ratio for the period April-Sept 12 in order to show and claim highly inflated closing stocks as on date of loss compared to much declining trend in sales. Your firm has regularly changed bankers and in the three policy periods three different bankers have been engaged for working capital limits. There are also contradictions in your statements regarding cause and origin of fire contrasting to newspaper reports. As per statement of your father when you opened the godown shutter fire was noticed in the godown. However, as per newspaper reports when you were performing Diwali Pooja suddenly fire originated from the stocks lying nearby.
Looking at the circumstances of loss, extent of damages and contradictions in your statement about description of loss, cause of fire appears to be suspicious. You have made false declaration regarding loss and did not give us opportunity to physically verify/inventorize the loss. Since there was huge difference between stocks as per books and actual stocks seen by the surveyor it is inferred that you have fraudulently misrepresented quantum and cause of loss and also mislead and misguided during the investigation which is clearly breach of Condition no. 8 of the Policy which is reproduced here below:
Condition No. 8: "If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the Insured, all benefits under this policy shall be forfeited".
As per investigators findings and careful perusal of the policy, the insured firm has changed his premises but the same was never notified to the insurance company. Earlier the insured was having a godown in the same locality in fact just 2 godowns away but about 1½ years back he shifted to the present premises but the same was never informed to the insurance company and as such claim is not admissible as per policy condition No. 3 (b) of the policy.
Condition No.3(b): "Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the Insured, before the occurrence of any loss or damage, obtains the sanction of the Company signified by endorsement upon the policy by or on behalf of the Company :-
b) If the building insured or containing the insured property becomes unoccupied and so remains for a period of more than 30 days".
In view of the aforesaid your claim stands repudiated for violation of policy condition Nos. 3(b), 6(i) (a)and (b) and 8.
Sd/-
(Authorised Signatory)
… …. …”
The concluding part of the repudiation letter records that as per the findings of the investigator, the insured firm had changed the premises and consequently this change having not been informed to the Insurance Company even though it was in the same locality, the claim was not admissible in terms of condition no. 3(b) of the policy.
Even though the learned counsel has advanced arguments on the merits of the claim, including the loss having been incorrectly assessed by the surveyor, followed by denial of the claim by the Insurance Company, but the core issue, on which the aforesaid contingency can be assessed, is if at all the premises location was altered or not to the knowledge of the insurer. The finding recorded by the surveyor upon investigation and as concluded in the repudiation letter on this issue does not appear to have been challenged by raising any plea in the entire complaint which runs into 19 paragraphs. Learned counsel through oral submissions attempted to point out that the previous rented godown and the subsequent purchased godown where the accident occurred are in the same campus and therefore the policy of the previous year and the policy of the subsequent year under consideration mention the same address. Thus the stocks in the godown at the same address were insured and covered under the policy. Since there was no change in address, there was no change of location to be intimated to the Insurance Company. The repudiation therefore is based on an incorrect appreciation of the location of the premises.
A perusal of the two policies of 2011-12 and 2012-13 recites the same address with a slight difference in the description. The policy of 2012-13 recites as follows:
“Description of Risk : BUILDING BEING USED AS GODOWN.”
“The property is situated at :- NEAR CHOICE RESORT, OLD BALTAN ROAD, ZIRAKPUR.”
and in one of the policies of 2011-12 quoted herein-below does not contain any additional recital as in the subsequent year’s policy as heighted above”:
“Situation: OPP. CHOICE RESORTS, ZIRAK PUR BALTAN ROAD, VILLAGE PABHAT, ZIRAKPUR”
Note : The premises shall not include any yard, garden, open space or out-building not communicating with the main building.”
There is no godown number indicated and the learned counsel urges that there are other godowns in the same campus but there are no separate numberings or identifiable property numbers as the campus remains the same. The godowns are identifiable with boards identifying the occupants who negotiate their activities accordingly as such there is no dispute of any identity.
The issue is not about the address of the premises which is of the same locality that is also reflected in the surveyor’s report. The repudiation is on the ground of altered premises without intimation, even if it is at the same address and in the same locality. Clause 3(b), as invoked for repudiation, requires intimation of change of status of occupation of a premises to enable the insurer to be aware about the existence of a secured premises housing the stocks as also the existence of stocks. If a premises mentioned in the policy remains unoccupied for more than 30 days, it reflects on the existence of stocks for an assessment of loss in the event of any damage. The insurer therefore has to be kept informed about the stocks being shifted or utilized for an assessment of the quantum of damage that may give rise to a possible claim.
Thus, a change of premises without intimation can alter risk conditions. Even if the address remains the same, the structure or any enclosure, its weaknesses or strength are to be within the knowledge of the insurer as it can continue or disengage the policy or add conditions for safety of the insured stocks or even alter the premium or other policy conditions accordingly for continuing the contract of insurance. An insurance contract is bilateral and based on faith. The change of a premises, its status of occupancy and shifting of stocks are essential information for sustaining an insurance contract of Fire and Special Perils Policy. It is important for the insurer to be informed about the safe custody and quantum of stocks. Thus, merely because the address or the locality is the same, it is the premises intended to house the stocks which should also be the same unless the insurer is duly informed followed by an endorsement to that effect.
In the instant case, it is not disputed that the complainant had left the rented accommodation/premises about 1½ years before the incident and had shifted the stocks to another godown at the same address that was purchased by it. There is nothing on record to establish that this alteration of godown was informed to be insurer. Thus, even though there is no effective challenge as observed hereinabove, the submissions on merits are also untenable for the reasons above.
Mr. Mehra, learned counsel for the Insurance Company, submits that in the absence of any pleadings, much less a proof on record, questioning the correctness of the aforesaid conclusion drawn by the surveyor as well as by the Insurance Company, no relief can be granted as the aforesaid finding remains unchallenged.
Having considered these submissions and having perused the documents on record as well as the pleadings and evidence, the question of the change of the premises has been categorically mentioned by the surveyor as well as by the Insurance Company in the repudiation letter. The repudiation letter is also based on the violation of condition no.3(b) extracted hereinabove. Consequently, once the said finding remains unchallenged or undisputed, a violation of the terms of the policy therefore disentitles the complainant from any relief. The terms and conditions of an insurance policy which is a bilateral contract have to be strictly construed as it is not permissible to re-write the contract while interpreting the terms of the policy and the same are binding on the parties. Reference be had to the decision of the Apex Court in the case of Life Insurance Corporation of India and Anr. Vs. Sunita, (2022) 1 SCC 68, Para-9 extracted hereunder:
“9. It is well-settled legal position that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the assured. The Supreme Court in Vikram Greentech (India) Ltd. v. New India Assurance Co. Ltd. [Vikram Greentech (India) Ltd. v. New India Assurance Co. Ltd., (2009) 5 SCC 599 : (2009) 2 SCC (Civ) 590] , while dealing with the contract of insurance held as under : (SCC pp. 603-04, paras 16-18)
“16. An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.
The four essentials of a contract of insurance are : (i) the definition of the risk, (ii) the duration of the risk, (iii) the premium, and (iv) the amount of insurance. Since upon issuance of the insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.
The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in rewriting the contract or substituting the terms which were not intended by the parties. The insured cannot claim anything more than what is covered by the insurance policy. (General Assurance Society Ltd. v. Chandumull Jain [General Assurance Society Ltd. v. Chandumull Jain, (1966) 3 SCR 500 : AIR 1966 SC 1644] , Oriental Insurance Co. Ltd. v. Sony Cheriyan [Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCC 451] and United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal [United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal, (2004) 8 SCC 644] .)”
This forum has been unable to locate any challenge either in the complaint or in the pleadings regarding the said finding of change of premises and violation of condition no.3(b). Learned counsel for the complainant was unable to offer any argument or plausible explanation as to why no challenge was raised to the alteration of the risk location with no intimation to or any endorsement by the Insurance Company. This complete omission of pleadings and proof in respect thereof disables the Commission to undertake any further inquisitorial exercise to appreciate the controversy as no attempt to seek any further amendment or addition seems to have been made during the past eleven years of the pendency of the complaint. In the absence of any such challenge, pleadings or proof in support thereof, any further exercise to investigate the incorrect assessment of the loss as alleged by the complainant therefore does not arise.
The complaint is dismissed.