New India Assurance CO. LTD vs M/S. Durga Bricks Industries & Anr

V.K. Jain, Presiding Member

The complainant/respondent was running a brick kiln at Bhashara Ghat in District Medinapur of West Bengal. An insurance policy in the name of the complainant was issued by the petitioner new India Assurance Company, whereby the plant and machinery was insured to the extent of Rs.2 lacs whereas the stock in process was insured to the extent of Rs.6 lacs, for the period from 16.11.2007 to 15.11.2008. The complainant had also taken credit facility from State bank of India, Belda Branch in District Medinapur of West Bengal, for running the aforesaid brick kiln. The case of the complainant is that due to flooding from 17.06.2008 to 19.06.2008, the brick kiln got submerged with water causing him loss to the extent of Rs. 6,60,000/-. This is also his case that he was not aware of the above insurance policy till he approached the bank for extension of the loan limit and was informed of the said policy. A claim was then lodged by the complainant with the petitioner company for re-imbursement in terms of the aforesaid insurance policy. The claim was closed by the insurer primarily on the grounds that the intimation of the alleged loss had been given to them at a belated stage on 27.08.2008, as a result of which, they were not in a position to appoint a surveyor to assess the loss and in any case, the complainant had failed to substantiate the loss alleged to have been suffered by him.

The District Forum having allowed the complaint, the petitioner approached the concerned State Commission by way of an appeal. Though the order passed by the District Forum was also directed against the bank, no appeal by the bank was preferred against the order of the District Forum.

Vide impugned order dated 28.11.2011, the State Commission dismissed the appeal filed by the insurer. Being aggrieved, the insurer is before this Commission by way of this Revision Petition.

Clause 6 (i) of the terms and conditions of the Standard Fire and Special Perils Policy reads as under:

6.(i) On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company.

a) A claim in writing for the loss or damage containing as particular on account as may be reasonably practicable of all the several articles or items or 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.

b) Particulars of all other insurances, if any.

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 herewith.

It would thus be seen that the complainant was under an obligation to intimate his loss to the insurer by giving a notice. Thereafter, he was also required to lodge a claim with the insurer within 15 days of the loss or within such further time as the insurer might extend for this purpose for the loss or damage. He was also required to provide to the insurer all such particulars, accounts, documents etc. as might be required by it for verifying and assessing the loss.

The case of the complainant is that he was not aware of the insurance policy till he approached the Branch Manager for extension of the credit facility and was informed of the said policy. This claim of the complainant was disputed by the bank in its reply filed before the District Forum and it was inter-alia stated in the said reply that the complainant all along knew of the insurance policy.

In my opinion, it would be difficult to accept that the complainant was not aware of the insurance policy at the time the alleged loss took place. The policy bears the name and address of the complainant. It does not bear the name and address of the bank. Therefore, in the ordinary course of events, the insurer would have sent the policy directly to the complainant. Moreover, even if the policy is taken by a bank on behalf of the borrower, the premium paid to the insurer is debited to the account of the borrower and the moment statement of account is received by him, the borrower would come to know of the insurance coverage merely by looking at the debit made from his account towards payment of the premium to the insurer. Therefore, it cannot be accepted that the complainant was not aware of the insurance policy at the time the alleged loss took place.

Admittedly, the intimation of the loss was given to the insurer after a delay of more than 2½ months. The claim of the complainant being for the loss suffered by him on account of flooding of the brick kiln, physical verification of the claim, on the spot, through a surveyor was absolutely necessary. Section 64UM(2) of the Insurance Act, 1938 expressly provides that no claim in respect of loss which has occurred in India and which is equal to or exceeds Rs.20,000/- in value, shall be paid unless the insurer has obtained a report on the loss that has occurred, from a person who holds a license issued under the said Section to act as a surveyor or loss assessor. Since the claim of the complainant was for more than Rs.20,000/-, appointment of a surveyor would be an essential requirement so that the claim could be verified by the said surveyor. Since intimation of the alleged loss was not given to the insurer soon after the alleged flooding, the insurer lost an opportunity to appoint a surveyor to visit the brick kiln of the complainant at the time when the evidence of the alleged flooding would still be available on the spot. Appointment of a surveyor after a delay of more than 2½ months would be futile and no actual verification of the alleged loss due to flood would be possible since the evidence of the flooding would no more be available after 2 ½ months of the incident. Therefore, failure of the complainant to intimate the loss to the insurer soon after the alleged flooding is fatal to his claim and the insurer is not bound to reimburse him for the alleged loss in terms of the insurance policy issued by it.

In Civil Appeal No.1217-1218 of 2017, decided on 21.08.2018 M/s Sonell Clocks and Gifts Ltd. Vs. The New India Assurance Co. Ltd., the complainant before this Commission, had intimated the loss to the insurer after a gap of three months and 25 days. A surveyor was appointed by the insurer to assess the loss alleged to have been caused to the factory of the complainant due to flooding. The surveyor reported that the claim was not payable since the complainant had failed to comply with the mandate of clause 6 of the General Conditions of the policy which required him to intimate the loss to the insurer immediately after the said loss had happened. The claim having been rejected, the complainant approached this Commission by way of a Consumer Complaint. The complaint having been dismissed by this Commission, the complainant approached the Hon'ble Supreme Court by way of an appeal. Rejecting the appeal, the Hon'ble Supreme Court interalia held as under:

In the present case, it is common ground that the letter of repudiation dated 18th February, 2005 elucidates that the claim of the appellant was rejected on the ground that neither the intimation of the loss had been given to it immediately after the loss nor were the requisite particulars of the loss conveyed within stipulated period and there was breach of terms and conditions of Clause 6 of the general conditions of the policy. Additionally, the surveyor report predicates that it was very difficult to estimate the damages for the reasons mentioned therein and that the claim of the appellant was not payable on account of breach of Clause 6 of the general conditions of the policy. That recommendation commended to 15the respondent. It has been so incorporated in the letter of repudiation dated 18th February, 2005.

The expression "duration" is of some significance which is reflective of the existence or otherwise of the policy itself. In the present case, there is no dispute about the subsistence of the policy but is one of violation of condition No.6 of the policy. Furthermore, in the present case the controversy will have to be answered on the basis of Standard Fire and Special Perils Policy relatable to condition No.6 obligating the insured to give forthwith intimation of the loss to the insurer. The two clauses are materially different and relate to two different and distinct insurance policies. In other words, Clause 5 of the Marine 17Insurance Policy and Clause 6 of the present policy are incomparable being qualitatively different.

Thus, the appointment of a surveyor by the respondent after receipt of intimation of the loss from the appellant, in the context of the present insurance policy, coupled with the 2000 Regulations and in particular an express stand taken in the repudiation letter dated 18th February, 2005 sent by the respondent to the appellant after consideration of the surveyor's report, it cannot be construed to be a case of waiver on the part of the respondent.

The appellant has also placed reliance on the decision in Om Prakash Versus Reliance General Insurance and Another,6 to contend that the genuine claim of the appellant ought not to be rejected on technical ground, keeping in mind that the Consumer Protection Act is a beneficial legislation warranting liberal construction. That contention cannot be taken forward at the instance of the appellant who has failed to fulfill the threshold stipulation contained in Clause 6 of the general conditions of the policy and for which reason must suffer the consequence. It is not a technical matter but sine qua non for a valid claim to be pursued by the insured, as agreed upon between the parties.

Recently, a Three-Members Bench of the Hon'ble Supreme Court, in Gurshinder Singh Vs. Shriram General Insurance Co. Ltd. & Anr. Civil Appeal No.653 of 2020 decided on 24.01.2020, had an occasion to examine the consequences of the delay in intimating the theft of a vehicle to the insurer. In the case before the Hon'ble Supreme Court, a tractor came to be stolen on 28.10.2010. Though an FIR with the concerned Police Station was promptly lodged, the intimation to the insurer was given after 52 days. The insurer having rejected the claim on account of delay in intimating the theft to them, the complainant approached the concerned District Forum by way of a Consumer Complaint. The complaint was allowed by the District Forum and the appeal against its order was dismissed by the State Commission. However, this Commission allowed the Revision Petition preferred by the insurer and dismissed the Consumer Complaint. Being aggrieved, the complainant approached the Hon'ble Supreme Court by way of an appeal. Noticing the conflict between its two earlier decisions, Om Prakash Vs. Reliance General Insurance & Anr. and Oriental Insurance Company Ltd. Vs. Parvesh Chander Chadha, a Two-Judges Bench of the Hon'ble Supreme Court referred the matter to the larger Bench. Answering the reference the larger Bench of the Hon'ble Supreme Court interalia held as under:

We find, that the second part of Condition No. 1 deals with the 'theft or criminal act other than the accident'. It provides, that in case of theft or criminal act which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and co¬operate with the company in securing the conviction of the offender. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limited role. It is the police, who acting on the FIR of the insured, will be required to take immediate steps for tracing and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the factum regarding the theft of the vehicle.

It is further to be noted that, in the event, after the registration of an FIR, the police successfully recovering the vehicle and returning the same to the insured, there would be no occasion to lodge a claim for compensation on account of the policy. It is only when the police are not in a position to trace and recover the vehicle and the final report is lodged by the police after the vehicle is not traced, the insured would be in a position to lodge his claim for compensation. As observed by the bench of two learned Judges in the case of Om Prakash (supra), after the vehicle is stolen, a person, who lost his vehicle, would immediately lodge an FIR and the immediate conduct that would be expected of such a person would be to assist the police in search of the vehicle. The registration of the FIR regarding the theft of the vehicle and the final report of the police after the vehicle is not traced would substantiate the claim of the claimant that the vehicle is stolen. Not only that, but the surveyors appointed by the insurance company are also required to enquire whether the claim of the claimant regarding the theft is genuine or not. If the surveyor appointed by the insurance company, upon inquiry, finds that the claim of theft is genuine then coupled with the immediate registration of the FIR, in our view, would be conclusive proof of the vehicle being stolen.

We concur with the view taken in the case of Om Prakash (supra), that in such a situation if the claimant is denied the claim merely on the ground that there is some delay in intimating the insurance company about the occurrence of the theft, it would be taking a hyper technical view. We find, that this Court in Om Prakash (supra) has rightly held that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the investigator.

We find, that this Court in Om Prakash (supra) has rightly held that the Consumer Protection Act aims at protecting the interest of the consumers and it being a beneficial legislation deserves pragmatic construction. We find, that in Om Prakash (supra) this Court has rightly held that mere delay in intimating the insurance company about the theft of the vehicle should not be a shelter to repudiate the insurance claim which has been otherwise proved to be genuine.

We, therefore, hold that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.

However, the above referred decision of the Hon'ble Supreme Court, in my opinion, is not applicable to this case. Firstly, this is not a case of theft of a vehicle. A theft is required to be reported to a Police Station, but there was no requirement in the insurance policy issued to the complainant, to report the incident of flooding to a Police Station. Secondly, in a case where a report with the police is lodged, the allegation of theft is verified by the concerned Police Officer during the course of investigation and either a Chargesheet is filed or a Final Report is submitted. Thirdly, in the above referred case, the surveyor having been actually appointed, he had investigated the alleged theft and had verified the same. Thus, in Gurshinder Singh (supra), firstly, there was a prompt report of the theft to the concerned Police Station. Secondly, the theft was verified by the Police Officer who submitted a Final Report verifying the theft and thirdly, the theft was verified by the surveyor who also reported that the insured vehicle had actually been stolen. In the present case, there is no report to the police, no investigation by the police and even a surveyor could not be appointed, on account of delay on the part of the complainant in intimating the loss to the insurer. In fact, this case is better even than M/s Sonell Clocks and Gifts Ltd. (supra) from the point of view of the insurer. In M/s Sonell Clocks and Gifts Ltd. (supra), a surveyor had been appointed and therefore, it was contended on behalf of the complainants that the insurer had waived its right to repudiate the claim on account of delayed intimation of the loss, by appointing a surveyor to assess the loss. In the present case, the surveyor having not been appointed, even such a plea is not open to the complainant.

For the reasons stated hereinabove, the impugned orders, in my opinion, cannot be sustained and the same are accordingly set aside as far as the said orders are directed against the petitioner New India Assurance Company Limited. The Revision Petition stands disposed of. Fee of the Amicus Curiae be paid as per rules.