Wilhelm Textiles India Pvt. Ltd vs Oriental Insurance Co. Ltd

Heard Mr. Nishant Datta, Advocate, for the complainant and Mr. K. K. Bhat, Advocate, for the opposite party.

Wilhelm Textiles India Pvt. Ltd. (the Insured) has filed above complaint, for directing Oriental Insurance Company Limited (the Insurer) to pay (i) Rs.29227908/- with pendent lite and future interest, as the part insurance claim, (ii) cost of litigation and (iii) any other relief which is deemed fit and proper in the facts and circumstances of the case.

The facts as stated in the complaint and emerged from the documents attached with it are as follows:-

(a) Wilhelm Textiles India Pvt. Ltd. was a Joint Venture company, registered under Indian Companies Act, 1956, in which Werner GmbH had 75% share and Indian Promoters had 25% share. The company was engaged in manufacture of Fusible interlinking’s, Linking, Hi-Pile Fabrics, Strobes Materials, Water-proof Membrane Laminates, Seam Sealing Tapes, various Laminated Fabrics (Form/Polyester Wool/ Nonwoven/Fabrics/ Stiffener Sheets/Insole Sheets), Upper Materials and Upholstery Materials used primarily in Footwear Industry. The Insured had its factory and godowns at Plot No.34, village Khandsa, Behrampur Road, Gurgaon.

(b) Oriental Insurance Company Limited (the opposite party) (the insurer) was a public insurance company and engaged in the business of providing insurance services. The Insured obtained three policies from the Insurer i.e. (i) Standard Fire and Special Perils Policy No.215300/11/2012/385 for the period of 26.10.2011 to 25.10.2012, for sum insured of Rs.2.30/- crores on Plant & Machinery, (ii) Standard Fire and Special Perils Policy No. 215300/11/2013/9, for the period of 03.04.2012 to 02.04.2013, for sum insured of Rs.9/- crores on Stock, Rs.80/- lacs on Other Contents, Rs.3.5/- crores on Building and Rs.7.7 crores on Plant & Machinery and (iii) Standard Fire and Special Perils Floater Policy No.215300/11/2013/33 for period of 02.04.2012 to 01.04.2013, for sum insured of Rs.one crore on Stock at different locations.

(c) On 10.04.2012 around 13:30 hours, Security Guard of the Insured, posted at the main gate noticed fire and smoke emanating from first floor, Store Block located at the front side of factory building, who immediately pushed emergency alarm. He also informed Fire Service Station about the fire incident on telephone. The fire took devastating nature and all the stock stored in that building was gutted into fire. Plant & Machinery, electronic equipment, electrical fitting etc. and the building were damaged. Several fire tenders were deputed on the spot, which doused the fire till 9:30 hours on the next day.

(d) The Insured informed the Insurer about fire incident on 10.04.2012 on telephone. The Insurer appointed Sandeep Bharti Insurance Surveyor, New Delhi as the surveyor on 10.04.2012. The surveyor inspected the premises on 10.04.2012 and 11.04.2012 and took photographs. He also examined and verified the accounts as maintained by the banker of the Insured. The Insured submitted claim for Rs.99487573/- and gave all the papers as required by the surveyor till 20.11.2013. The surveyor submitted Final Survey Report dated 22.03.2014, finding that cause of loss was accidental due to electric short circuit and there were under-insurance of 32.85% on Building, 47.19% on Other Contents and 29.22% on Stock. He assessed Net Loss Adjusted as Rs.67597500/-.

(e) The Insured vide emails dated 14.07.2014, 16.09.2014, 18.09.2014, 25.09.2014 and 01.10.2014 requested for a meeting with Managing Director of the Insurer as there was inordinate delay in settlement of the claim. The Insurer sent a discharge voucher for Rs.675/- lacs as full and final settlement of the claim and “No Objection Certificate” for payment of the said amount directly in the bank on 15.12.2014. Mr. Alok Gupta, from the Insured talked with Mr. Nagendra Rai, Deputy General Manager, Regional Office, Gurgaon, in respect of signing of the discharge voucher, who informed that in case discharge voucher is signed “under protest” then no payment would be made. The Insured, left with no option, executed the discharge voucher on 15.12.2014 and submitted in the Regional Office of the Insurer. Thereafter Rs.67475708/- was transferred to the account of the Insured on 29.12.2014.

(f) Chief Executive Officer of the Insured was on leave during this period. On joining the duties after leave, he wrote a letter dated 13.01.2015 that discharge voucher was signed due to financial pressure as after fire, entire business of the Insured was disturbed and the Insurer had caused inordinate delay in settlement of the claim. In this letter, he pointed out that there was discrepancy in Final Survey Report in respect of assessment of loss and on his own calculation, there was a shortfall of Rs.14759463/-, which was an error in calculation. Further there was no under-insurance. The Insured was entitled for interest due to delay in settlement of the claim under the Regulation of IRDA and was entitled to Rs.25088333/- more. The Insurer, however, did not respond to above letter. The Insured gave a reminder dated 20.02.2015. The Insurer, vide letter dated 06.03.2015, replied that on the settlement of the claim, the matter had been finally closed. The Insured filed this complaint on 11.02.2016, alleging deficiency in service and stating that on the basis of discharge voucher, the legal claim cannot be foreclosed.

The opposite party filed its written reply on 08.04.2016, in which, material facts have not been disputed. It has been stated that as soon as information of fire incident at the factory premises of the Insured was received, the Insurer appointed Sandeep Bharti, Insurance Surveyor, New Delhi as the surveyor on 10.04.2012. The surveyor inspected the premises on 10.04.2012 and 11.04.2012 and took photographs. He, vide letter dated 12.04.2012, called upon the Insured to furnish requisite documents for assessing the loss. However, the Insured miserably failed to provide requisite documents in time. The surveyor was seeking for clarifications from the Insurer time to time, which were duly replied. The claim form and documents were finally submitted on 20.11.2013. As various account registers etc. were gutted in fire, as such, the documents submitted by the Insured required verification from various offices, which took time. The surveyor submitted Final Survey Report dated 22.03.2014, stating that cause of loss was accidental and assessing the loss. After receiving Final Survey Report, the papers were examined by the competent authority of the Insurer, who by email dated 14.12.2014, approved the claim as assessed by the surveyor. The Insured was required to sign discharge voucher and issue ‘no objection certificate’ for payment of the amount directly to the bank. The Insured voluntarily signed discharge voucher and issued ‘no objection certificate’ for payment of the amount directly to the bank. As soon as these documents were received, the amount of Rs.67475708/- was transferred in the account of the Insured as maintained by the bank on 29.12.2014. The Insured wrote letter dated 13.01.2015, challenging clubbing of the insurance policies and determination of under-insurance. Under the terms of the insurance policy, if there were more than one policy then liability has to be proportionately divided in all policy. The surveyor found that the value of the Building, Other Contents and Stock on the date of loss was much more than the risk coverage of the policies as such under insurance has been applied. There was no deficiency in service on the part of the Insurer.

The Insured filed Rejoinder Reply on 05.07.2016, in which, the facts stated in the complaint were re-iterated. The Insured filed Affidavit of Evidence of Alok Gupta and various documentary evidence. Affidavit of Admission and Denial of Documents of Alok Gupta and Additional Affidavit of Evidence of Alok Gupta. The Insurer filed Affidavit of Evidence of Praveen Kumar Gupta, Senior Divisional Manager and Affidavit of Evidence of Sandeep Bharti, the surveyor. Both the parties filed their written synopsis.

We have considered the arguments of the counsel for the parties and examined the record. So far as preliminary objection of the Insurer regarding maintainability of the complaint is concerned, Insurance Regulatory and Development Authority of India has issued a Circular dated 24.09.2015, directing the Insurance Companies not to insist to sign discharge voucher, if the claim was legally payable. If for payment of legal claim under the Insurance Policy, the Insurer insists for execution of ‘discharge voucher’ and making it a condition precedent for payment, then it itself is coercion. As such by signing ‘discharge voucher’ the Insured is not debarred from challenging the inadequacy of settlement.

Clauses-10 and 11 of Standard Fire and Special Policy are quoted below:-

“10. If the property hereby Insured shall at the breaking out of any fire or at the commencement of any destruction of or damage to the property by any other peril hereby Insured against be collectively of greater value than the sum Insured thereon, then the Insured shall be considered as being his own Insurer for the difference and shall bear a rateable proportion of the loss accordingly. Every item, if more than one, of the policy shall be separately subject to this condition.

If at the time of any loss or damage happening to any property hereby Insured there be any other subsisting insurance or insurances, whether effected by the Insured or by any other person or persons covering the same property, this Company shall not be liable to pay or contribute more than its rateable proportion of such loss or damage.”

Under Clause-10 the Insurer is entitled to apply under-insurance clause. For the purposes of applying under-insurance clause, value of all the property of the Insured on the date of loss has to be taken into consideration. The Insured has not challenged under-insurance as applied on the Building and Other Contents. The Insured has challenged the under-insurance as applied on the Stock and has stated that Stock stored at other rented accommodation and lying with the job worker could not be taken into consideration. But ownership of these stocks have not been denied. As such the surveyor/Insurer has not committed any illegality in considering the value of the Stock lying at other location or with job workers on the date of incident and on its basis recording findings of under-insurance.

The Insurer can club all the policies for determination of proportionate liability under Clause-11, above. As such clubbing of the policy is permissible. Under Proviso to Section 64UM (4) of Insurance Act, 1938, the Insurer can settle the claim for an amount other than assessed by the surveyor. However, in discharge voucher, amount of Rs.675/- lacs has been mentioned for final settlement but Rs.67475708/- was paid. Further reduction of the claim without assigning any reason is arbitrary. The Insured is entitled to Rs.24292/- also.

So far as delay in settlement of the claim is concerned, the Insured submitted claim form and documents lastly on 20.11.2013. As various account registers etc. were gutted in fire, as such, the documents submitted by the Insured required verification from various offices, which took time in submitting the survey report. The surveyor submitted Final Survey Report on 22.03.2014. After receiving Final Survey Report, the papers were examined by the competent authority of the Insurer, who by email dated 14.12.2014, approved the claim as assessed by the surveyor and amount of Rs.67475708/- was transferred in the account of the Insured on 29.12.2014. As such the Insurer took unreasonable time in settlement of the claim after, receiving Survey Report. Under Regulation-9 of The Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations, 2002, the Insurer was liable to take decision with 30 days after receipt of Survey Report. As such the Insurer is liable to pay interest @9% per annum on Rs.675/- lacs from 22.04.2014 to 28.12.2014. The Insurer is liable to be further interest @9% per annum on the amount of the interest so calculated from 30.12.2014 till its payment.

ORDER

In view of the aforesaid discussion, the complaint is partly allowed. The opposite party is directed to pay Rs.24292/- and interest @9% per annum on Rs.675/- lacs from 22.04.2014 to 28.12.2014 and further interest @9% per annum on the amount of the interest so calculated from 30.12.2014 till its payment, within a period of two months from the date of this judgment.