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Judgment
Ram Surat Ram Maurya, Presiding Member
Heard Mr. Abhishek Gola, Advocate, for the appellant and Mr. Nikhil Swami, Advocate, for the respondent.
Above appeal has been filed against the order of State Consumer Disputes Redressal Commission, Karnataka, dated 10.11.2016, partly allowing CC/102/2012 and holding that the complainant was entitled to Rs.6872186/- with interest @8% per annum from the date of complaint till the date of realisation, as the insurance claim.
M/s Buildmet Fibres Private Limited (the respondent) filed CC/102/2012, for directing the appellant to make the payment of (i) Rs.7287520/- under Policy No.423101/11/2010/484 dated 11/01/2010 as insurance claims; (ii) Rs.1000/- for each day as compensation for inconvenience, frustration and mental agony suffered by the complainant; and (iii) any other relief deemed fit and proper.
The complainant stated that the complainant was a company, engaged in manufacturing Polypropylene Oven Sacks Bags and like products. The complainant does all trading transaction from its registered office, situated at No.41-42, KIADB Industrial Area, Doddaballapur and all the books of accounts are maintained at its registered office. The complainant has its Unit II at Plot No.14-15 at KIADB Industrial Area, Antharasanahalli, II Phase, near Sairam Rice Mill, Tumkur-572106, where they manufacture finished goods and sent back to its registered office for further process trading. The complainant obtained Standard Fire and Special Perils Policy No.423101/11/2010/484, for the period of 11.01.2010 to 10.01.2011, from Oriental Insurance Company Limited covering the risk of raw materials, stock, semi-finished and finished goods worth Rs.5/- crores at 7 different locations of the complainant. The complainant paid a premium of Rs.131383/-. The complainant has closed its Unit, namely, Transpac Asia Private Limited, situated at 489, 14th Cross, 7th Main, 4th Phase, Peenya, Bangalore on 31.03.2010, which was also covered under the policy for a sum of Rs.25/- lacs. The complainant, vide letter dated 02.04.2010 intimated the opposite party about closure of above unit with the request to shift the fire coverage of Rs.25/- lacs to other units located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, near Sri Sai Ram Rice Mills, Tumkur-572106. The opposite party accepted the request of the complainant and made endorsement on 03.04.2010, in the same letter and shifted the fire insurance coverage of Rs.25/- lacs to Buildmet Firbres (P) Ltd Unit II industries. The complainant, vide letter dated 07.06.2010 also requested the opposite party for further enhancement of insurance coverage for Rs.75/- lacs on the stock located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur under above policy to its M/s Ind Auto Filters, who was its job worker. Earlier insurance coverage was for Rs.25/- on the stock located at 14-15, KIADB Industrial Area, Antharasanahalli, Tumkur to be covered for Rs.100/- lacs. The raw materials of the complainant was a Central Excise goods, which was a valid document to prove the value of the stock stored at this place of M/s. Ind Auto Filter, belonged to the complainant. This location was insured for a sum of Rs.25/- lacs. After request for enhancement of sum insured it had become for Rs.125/- lacs. The fire occurred due to electrical short circuit at Unit II situated at 14-15, KIADB Industrial Area, Antharasanahalli II Phase, Tumkur on 06.06.2010, wherein stock of raw material, semi-finished goods were burnt into ashes, causing loss of Rs.1168700/- and also on 10.06.2010, wherein stock of raw material, semi-finished goods were burnt into ashes causing loss of Rs.5838000/-. The complainant intimated the incident and the loss to the opposite party who appointed Dr. K. Amarnath, as the surveyor, who inspected the spot, verified the burnt materials. The complainant supplied the documents to the surveyor as demanded by him. The complainant submitted a claim for Rs.1168000/- for loss occurred on 06.06.2010 and for Rs.5838000/- for loss occurred on 10.06.2010. The Surveyor permitted the complainant to submit a revised claim for the loss caused on 10.06.2010 and the complainant submitted a revised claim of Rs.6119520/-. The Surveyor assessed the loss of both the fire incidents, adopting average method for calculating as assessed loss of Rs.178778/- for the claim of Rs.1168000/- and Rs.182256/- for the claim of Rs.6119520/-. The opposite party accordingly proceeded to settle claim of Rs.1168000/- and Rs.182256/- and also issued discharge voucher dated 17.01.2012 and asked the complainant to accept the claim in full and final settlement and sign the discharge voucher. The Surveyor as well as the opposite party considered the endorsement made in the policy vide the letter dated 02.04.2010, but ignored the letter dated 07.06.2010, whereby the complainant had requested the opposite party for amendment in the fire policy and further enhancement of coverage for Rs. 1/- crores for the stock of the complainant and M/s Transpac Asia Private Ltd. at Unit II situated at 14-15, KIADB Industrial Area, Antharasanahalli II Phase, Tumkur. The average method is applied to calculate the claim only in case there is no sum assured mentioned in the policy. The opposite party also did not supply the copy of the survey report in time and it was supplied on 17.02.2012 after making repeated requests. The Surveyor has hired the services of M/s K.M. & Co. who claims to be an auditor and tax consultant although M/s K.M. & Co. was not an unauthorised auditor. After receipt of the survey report, the complainant sent a legal notice dated 29.06.2012, calling upon them to settle the claim for full amount which was untenably replied by the opposite party vide letter dated 17.07.2012. Then, the complainant filed the complaint with State Commission.
The appellant filed its written version and admitted that the complainant had taken Standard Fire & Special Perils Policy No.423101/11/2010/484 valid from 11.01.2010 to 10.01.2011 covering the risk of raw material, semi-finished goods and finished goods at 7 different locations and shifting of the insurance coverage of the stocks from Transpac Asia Private Limited, situated at 489, 14th Cross, 7th Main, 4th Phase, Peenya, Bangalore to 14-15, KIADB Industrial Area, Anthrasanahalli, Tumkur. The opposite party asked the complainant to furnish certain information and documents. But the opposite party stated that fire took place at the location 14-15, KIADB Industrial Area, Anthrasanahalli, Tumkur on 06.06.2010. The complainant made request for enhancement of sum insured to Rs.1/- cores i.e. for Rs.75/- lacs for the stock of M/s Ind Auto Filters, the alleged job worker of the complainant at location at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur on 07.06.2010. The same was not accepted because the fire had occurred at this location, as such the sum insured was for Rs.25/- lacs on the stock at this location. In this regard, the opposite party also intimated the complainant. On the information of fire and loss at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur, the opposite party appointed Dr. K. Amarnath, as a preliminary surveyor, who inspected the spot on 07.06.2010 and submitted his Preliminary Survey Report on 07.06.2010, confirming fire and loss. The opposite party appointed Sri Surveyors, Bangalore as the surveyor, who also inspected the fire affected premises on 07.06.2010. In the meantime, the complainant informed that on 10.06.2010, again fire took place at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur. Then the opposite party appoint Shyamravi Associates as an Investigator, who after investigation submitted his report dated 11.10.2011, confirming fire incident dated 10.06.2010 but stating that the building at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur, belonged to M/s. Indauto Filters and Factory Licence was also in its name which was valid till 31.12.2011. The Insured alleged that a portion of this premises was taken on lease by it. The surveyor submitted Final Survey Report dated 16.03.2011, assessing the Gross Loss to Rs.1189160/- and Net Loss to Rs.1119160/- for the loss occurred on 06.06.2010. However, the surveyor found that value of total stock at this place on the date of fire incident on 06.06.2010 was of Rs.14748795/- therefore applying underinsurance, adjusted loss was assessed to Rs.189704/- and after deduction of Rs.10000/- as excess clause adjusted loss was assessed to Rs.179704/-. The surveyor submitted Addendum to the Final Survey Report dated 09.11.2011, and assessed adjusted loss to Rs.178778/-. Applying underinsurance, the surveyor assessed the adjusted loss of Rs.182256/- for the loss as occurred on 10.06.2010. The opposite party accordingly proceeded to settle claim for Rs.178778/- and Rs.182256/- and issued discharge voucher dated 17.01.2012 and asked the complainant to accept the claim in full and final settlement and sign the discharge voucher. But the complainant did not sign and returned the discharge voucher. The opposite party gave several reminders and final letter dated 03.04.2012. The complainant gave legal notice dated 29.06.2012, demanding Rs.1183700/- for the incident dated 06.06.2010 and Rs.6154295/- for the incident dated 10.06.2010. The opposite party replied the legal notice on 17.07.2012. As request of the complainant dated 07.06.2010 for enhancement of sum insured to Rs.1/- cores i.e. for Rs.75/- lacs on the stock of M/s Ind Auto Filters, the alleged job worker and Rs.25/- for the complainant of location at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur was not accepted as such underinsurance is applicable as per clause-10 of General Condition of the Standard Fire and Special Perils Policy. The value of total stock at this place on the date of fire incident on 06.06.2010 was of Rs.14748795/- therefore underinsurance was applied, while assessing adjusted loss. There is no illegality in it. The complaint has no merit and is liable to be dismissed.
After hearing the counsel for the parties, the State Commission found that as the letter of the complainant dated 07.06.2010 for enhancement of sum insured to Rs.1/- cores i.e. for Rs.75/- lacs on the stock of M/s Ind Auto Filters, the job worker and Rs.25/- for the complainant of location at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur was received in the office of the opposite party on 07.06.2010 and total sum insured did not exceed to Rs.5/- crore therefore communication of the opposite party rejecting the request for enhancement of sum insured was arbitrary and unreasonable. The surveyor, the Investigator and the Insurer have not disbelieved or doubted the incident of fire dated 06.06.2010 and 10.06.2010 as such the claims of both the incidents were payable. On these findings the complaint was partly allowed with the direction to the opposite parties as stated above. Hence, the opposite party has filed the present appeal.
I have considered the arguments of the parties and examined the record. The complainant has taken Standard Fire and Special Perils Policy No.423101/11/2010/484 dated 11/01/2010 valid from 11.01.2010 to 10.01.2011 for 7 different units. The appellant has filed copy of the Insurance Policy, which shows that it Unit II located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur was not initially covered in it. The complainant has stated in its complaint that the complainant has closed its Unit, namely, Transpac Asia Private Limited, situated at 489, 14th Cross, 7th Main, 4th Phase, Peenya, Bangalore on 31.03.2010, which was also covered under the policy for a sum of Rs.25/- lacs and vide letter dated 02.04.2010 intimated the opposite party about closure of above unit with the request to shift the fire coverage of Rs.25/- lacs to other units located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, near Sri Sai Ram Rice Mills, Tumkur-572106. The opposite party accepted the request of the complainant and made endorsement on 03.04.2010, in the same letter. A perusal of original insurance policy shows that the Unit, namely, Transpac Asia Private Limited, situated at 489, 14th Cross, 7th Main, 4th Phase, Peenya, Bangalore was mentioned as Location No.5 of the policy. Endorsement Schedule was issued on 08.06.2010 covering risk from 04.06.2010 for the shed located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Tumkur.
The complainant in paragraph-6 of the complaint has stated that vide letter dated 07.06.2010 also it requested the opposite party for further enhancement of insurance coverage for Rs.75/- lacs on the stock located at 14-15, KIADB Industrial Area, II Phase, Antharasanahlli, Taumkur under above policy to its M/s Ind Auto Filters, who was its job worker. State Commission found that the appellant in this letter of enhancement of the coverage endorsed that “since the claim was reported on 06.06.2010, endorsement is not possible”, and said endorsement was also communicated to the complainant through fax on 11.06.2010 at 14:29 hours.
The letter dated 07.06.2010 was not for shifting any insured location rather it was for enhancement of coverage by including the stock of M/s. Ind Auto Filters, the job worker of the complainant. State Commission found that total sum insured in the Policy, which was for Rs.5/- crores would not be enhanced. This finding of State Commission is incorrect. The Letter dated 07.06.2010 was for enhancement of the coverage for Rs.75/- lacs. Such enhancement requires additional premium. Section 64VB of the Insurance Act, 1938, the insurance company cannot be made liable for any risk without payment of premium. This letter dated 07.06.2010 requires a fresh contract between the parties. Admittedly the opposite party has out-rightly rejected this letter on 07.06.2010 itself making endorsement in this letter. Therefore sum insured was never enhanced and remained to Rs.25/- lacs. The surveyor found that value of total stock at this place on the date of fire incident on 06.06.2010 was of Rs.14748795/- therefore underinsurance was applied, while assessing adjusted loss as per clause-10 of the General Condition of the Standard Fire and Special Perils Policy. The surveyor has not committed any negligence in applying the under insurance and ignoring the stock of M/s Ind. Auto Filters. The order of State Commission is illegal and liable to be set aside.
ORDER
In view of aforesaid discussions, the appeal is partly allowed. The order of State Consumer Disputes Redressal Commission, Karnataka, dated 10.11.2016, passed in CC/102/2012 is set aside. The appellant is directed to pay Rs.178778/- and Rs.182256/- respectively for the loss occurred on 06.06.2010 and 10.06.2010 with interest @6% per annum from January, 2012 till the date of payment, within a period of two months from the date of the judgment.