NAKODA DYEING & WEAVING MILLS LTD & ORS Vs

The complainant no. 1 company obtained a Standard Fire and Special Perils Policy from the opposite party Oriental Insurance Company Limited, for a sum of 12.65 crores in respect of its plants and machinery, stock of goods etc., for the year 2004-05. While getting the said policy renewed for the year 2005-2006, the sum insured was reduced by the complainant to 10.65 crores. Vide letter dated 22.07.2005, the complainant expressed its desire to obtain a Loss of Profit policy, in respect of its business of manufacturing cotton shirtings at Shed No. B-1, Sainath Industrial Complex, Village Khone, Bhiwandi, District Thane. The balance sheets of last three years were submitted to the insurance company which was requested to convey the premium and other terms and conditions to the complainant. Vide its letter dated 25.07.2005, the insurance company, acknowledging the aforesaid letter of the complainant, informed it that the premium for the Loss of Profit policy worked out to 72,418/- and that it looked forward to receive the remittance of that amount. A cheque of 72,418/- was then sent to the insurer on 26.07.2005. However, neither the cheque sent by the complainant was encashed by the insurance company nor was any Loss of Profit policy issued by it.

The stock of raw material kept in the above referred factory of the complainant as well as the manufacturing equipments installed therein got sub-merged during the heavy rainfall in Mumbai on 27.06.2005. On intimation being given to the insurance company, a surveyor was appointed to assess the loss to the complainant. The insurer made a part payment of 74,94,548/- to the complainant on 30.11.2005 followed by a final payment of 98,07,805/- on 20.12.2006, thereby raising the total payment of 1,73,02,352/-. The aforesaid amount was in consonance with the assessment made by the surveyor who had assessed the loss to the complainant at 1,74,17,36/-. The complainant however is not satisfied with the assessment made by the surveyor and it is alleged in the complaint that the said assessment is improper besides being perverse. This is also the case of the complainants that despite its having written several letters to the insurance company the Loss of Profit policy was not sent to it by the insurer, as a result of which they could not lodge their claim under the said policy. The complainants have assessed their loss of profit at 1,57,90,125/-. The complainants are therefore before this Commission seeking balance amount of 2,10,63,617.18 along with interest on that amount. They are also claimed 1,57,90,125/- under the Loss of Profit policy.

The complaint has been contested by the opposite party. A preliminary objection has been taken that the complainant having accepted the sum offered by the insurance company and having agreed to the assessment made by the surveyor, the complaint for further payment is not maintainable. As regards the Loss of Profit policy, it is alleged that though the cheque for the premium was received on 26.07.2005 no policy was issued since peril had already operated i.e. flood like conditions on 26.07.2005 and therefore the question of covering the risk did not arise. This, according to the opposite party, was also conveyed to the complainant, which being conscious of this fact had never filed the claim under the aforesaid policy. It is also alleged that the letters purporting to have been written to the insurance company on 16.08.05, 26.9.05, 7.11.05 and 2.12.05 are fabricated documents and were never received by the insurer.

The following three issues arise for consideration in this case:- (i) Whether the insurance company is liable to reimburse the complainant in respect of loss of profit alleged to have sustained by it.

(ii) Whether the complainant had accepted payment of 1,74,17,367/- in full and final settlement of its claim and therefore is estopped from claiming any further amount.

(iii) Whether the assessment made by the surveyor calls for interference by this Commission.

It is an admitted position that no Loss of Profit policy was issued to the complainant despite receipt of cheque of 72418/-. It is also an admitted position that the aforesaid cheque was never encashed by the insurance company. The contention of the learned counsel for the complainant in this regard was that since the offer made by the insurance company vide its letter dated 25.07.2005 was duly accepted by the complainant and the acceptance was also conveyed to the insurer vide letter dated 26.07.2005 along with a cheque representing the amount of the premium, a complete contract in terms of the Section 4 of the Indian Contract Act came into force. It is pointed out that as per Section 4 of the Contract Act, the communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor though in the present case the acceptance was expressly conveyed to the opposite party. The learned counsel for the opposite party on the other hand submitted that as far as a contract of insurance is concerned, it comes into force only on issue of a cover note or insurance policy and mere receipt of the proposal along with the cheque representing the amount of the premium does not result into a complete contract of insurance. In my view, it is the letter of the complainant dated 26.07.2005 and not the letter of the insurance company dated 25.07.2005 which can be said to be a proposal for taking an insurance policy. The proposal in insurance parlance comes from the insured and it does not emanate from the insurer. The letter of the complainant dated 22.07.2005, in my opinion, was in the nature of an exploratory communication and not a proposal since it was not accompanied by the requisite premium. The insurance company conveyed the amount of the requisite premium to the complainant vide its letter dated 25.07.2005. On receipt of the information with respect to applicable premium, the complainant vide its letter dated 26.07.2005 proposed to take a Loss of Profit policy, but the said proposal never came to be accepted by the insurer. This is evident from the two facts firstly, the cheque of 72418/- was never presented by the insurer to the banker of the complainant and consequently neither any cover note nor any insurance policy was issued by the opposite party.

As noted earlier, the case of the opposite party is that since the peril had already operated i.e. flood like conditions on 26.07.2005 and there was no question of their covering the risk and it was duly communicated to the complainant. Though there is no letter sent by the insurance company to the complainant informing that the proposal submitted by it for taking a loss of profit policy had not been accepted nor is there any documentary proof of the cheque of 72,418/- having been returned to the complainants, the facts and circumstances of the case clear indicate that the complainant knew that the proposal sent by it in this regard had not been accepted. Though the complainant claims to have written letters dated 16.08.05, 26.9.05 and 7.11.05 to the insurance company, admittedly the said letters were neither delivered to the insurance company nor sent to its office by post or through courier. The endorsement appearing on the copies of these letters shows that the original letters were accepted by the insurance company but no acknowledgment was given. In our view, a Public Sector Insurance Company was not likely to accept a letter and refuse to give its acknowledgment. Moreover in case the insurance company had refused to give acknowledgment despite receiving the letters, the complainant would have at least sent a copy of that letter by registered post or through courier to the office of the insurance company. That admittedly was not done. Therefore, I have no hesitation in holding that the said aforesaid letters were not sent to the insurance company. A letter dated 02.12.2005 is alleged to have been sent to the insurance company through a courier, namely, Vichare on 15.12.2005. The complainant has filed a document return memo dated 16.12.2005 noting that the letter had not been accepted by the consignee. No affidavit from the aforesaid courier has been filed by the complainant to prove the aforesaid endorsement. In view of the opposite party having denied receipt the said letter, it was obligatory for the complainant to examine the official of the courier company who allegedly tendered the letter to the insurance company on 16.12.2015. No such affidavit having been filed, an adverse inference needs to be drawn against the complainant that had it produced the courier agency they would not have supported the case set out by it. Moreover, an insurance company receives several letters in a day in the course of its business. Therefore without opening the envelop, it would not have refused to accept the envelope which allegedly contained the letter of the complainant dated 02.12.2005. Thus, I am not inclined to accept the case of the complainant as regards refusal of the letter dated 02.12.2005 by the insurance company. Admittedly, the complainant had sent a Registered Letter dated 03.02.2007 to the insurance company. In the aforesaid letter, there is absolutely no reference to any previous letters in respect of the loss of profit policy. Had the complainant actually sent the previous letters dated 16.08.05, 26.9.05,

11.05 and 2.12.2005 to the insurance company, all those letters would have been referred in this letter dated 03.02.2007. This is yet another indicator that the aforesaid previous letters were never sent to the insurance company. Thus, reference to the loss of profit policy was made by the complainant for the first time vide its letter dated 03.02.2007. Had the insurance company not told the complainant that its proposal for issue of loss of profit policy had not been accepted, there could be no reason for the complainant not to lodge a claim under the loss profit policy when it had lodged a claim under the standard fire and peril policy taken from the opposite party. Even if the policy had not been received by it, the complainant would have written to the opposite party, immediately after 27.07.2005 that its proposal for issue of Loss of Profit policy having been accepted by the insurance policy the requisite policy should immediately be sent to it in order to enable it to submit its claim under the said policy. Therefore, I have no hesitation in holding that the complainants knew it very well that its proposal for issue of loss of profit policy had not been accepted by the insurance company and that is why no claim on account of loss of profit would lodge b it and in fact no reference to any such policy was made it at any time before 03.02.2007. In fact, the complainant would have come to know, in July-August, 2005 itself that its proposal for issue of loss of profit policy had not been accepted by the insurance company. Had the said proposal been accepted, the cheque of 72,418/- would have been presented to the bank of the complainant. That having not been done, the complainant had it not been told that the said proposal had not been accepted by the insurance company, would have taken up the matter with the insurer and asked it as to why the said cheque had not been accepted despite acceptance of the proposal.

Even otherwise, the claim in respect of loss of profit is clearly barred by limitation prescribed in Section 24 A of the Consumer Protection Act. The complainant would have come to know in July-August, 2005 itself that since the cheque of 72,418/- had not been encashed, the insurance company was not inclined to issue the said policy to it. Therefore, the cause of action in respect of the alleged loss of profit accrued to the complainant in July-August 2005 itself. Having been filed on 26.05.2008, the complaint is clearly barred by limitation and no application seeking condonation of delay in filing the complaint has been filed. Therefore, I hold that the claim in respect of alleged loss of profit is not maintainable besides being barred by limitation.

Coming to the claim under the standard fire and special perils policy, the learned counsel for the opposite party drew my attention to the letter dated 7.08.2006 written by the complainant to the surveyor Shri O.P. Aggarwal of R.L. Agarwal Surveyors Pvt. Ltd. In the aforesaid letter, the complainant expressly agreed to the assessment of loss at 1,74,17,367/- after deduction of depreciation under insurance salvage and excess. Having agreed to the assessment of the loss at 1,74,17,367/-, the complainant is now precluded from disputing the said assessment and claiming a higher amount. In the complaint, there is no allegation of any fraud, misrepresentation, coercion or undue influence either on the part of the insurance company or on the part of the surveyor. In any case, the surveyor to whom the aforesaid letter was given was not in a position to exercise any kind of fraud, misrepresentation, coercion etc. on the complainant company. The aforesaid letter dated 07.08.2006 was followed by a full and final payment voucher dated 18.12.2006. This document was executed about four months after the above referred letter to the surveyor. Vide a authority letter dated 19.12.2006 the Director of the complainant company authorized one Shri Suresh V. Pawar to collect the cheque of 98,07,805/- in full and final settlement of its claim dated 27.07.2005. Having accepted the assessment made by the surveyor and having taken payment of 98,07,805/- in full and final settlement of its claim the complainant is estopped from claiming any further amount from the insurance company under the standard fire and special perils policy.

On merits also, the assessment made by the surveyor is not shown to be arbitrary, unreasonable or perverse in nature. It was contended by the learned counsel for the complainant that though the policy taken by the complainant was on reinstatement basis the surveyor made assessment on depreciation basis and therefore the assessment made by him was not in consonance with the insurance policy. The learned counsel for the insurance company however drew my attention to the letter written by the complainant to Shri O.P. Aggarwal of R.L. Agarwal Surveyors Pvt. Ltd. stating therein that they were unable to repair of the machines due to financial constraints and requesting the surveyor that only the part claim of six repaired machines be assessed on reinstatement value basis and the rest on unrepaired settlement basis, as full and final settlement. The surveyor having made assessment accordingly, the complainant is precluded from disputing the said assessment on the ground that the entire plant and machinery was not assessed on reinstatement above.

For the reasons stated hereinabove, I find no merit in the complaint and the same is accordingly dismissed, with no order as to costs.