The complainant Punjeet Garg (here-in-after referred to as complainant) has filed this complaint U/s 12 of Consumer Protection Act, 1986 (Now C.P. Act, 2019, here-in after referred to as 'Act') before this Forum (Now Commission) against Bajaj Allianz General Insurance Co. Ltd, and another (here-in-after referred to as opposite parties).
Briefly stated the case of the complainant is that she is Sole Prop. of M/s Garg Industries, Raman and running business of small Oil Mill for her livelihood.
It is alleged that all the stocks were duly hypothecated with opposite party No. 2 and Insured with opposite party No.1 vide Insurance Policy No. OG-18-4027-4001-00000176 w.e.f. 24.09.2017 to 23.09.2018 for Rs.86,00,000/- (Standard Fire and Special Perils and Burglary etc.) through opposite party No. 2. The said insurance was purchased by opposite party No. 2 directly under their agency agreement with opposite party No.l. The opposite parties No. 1 & 2 issued Fire Insurance and Burglary Insurance separately. The Bank (opposite party No. 2) deducted the amount of Insurance premium from the account of complainant itself. The said Insurance is continuous Insurance for the last 5-6 years. At the time of effecting Insurance, Loan Officer and Branch Manager of opposite party No.2 after checking and verifying the stocks, got issued insurance by opposite party No. 1. The opposite parties never issued any insurance policy to complainant and the same is in possession of the opposite parties.
The complainant alleged that on 08.06.2018, all of a sudden in finished goods godown in factory premises of the complainant, the mustard Cake (Khal Sarson) caught fire. One labourer observed burning smell and smoke in the stock of Mustard Cake. The complainant approached the bank official and intimated on the same day regarding this fire loss as the Insurance particulars and policy was in possession of opposite parties The opposite party No. 1 appointed Surveyor Mr. Rahul Kaundal of Puri Crawford Insurance Surveyors and Loss India Pvt. Ltd., The said surveyor visited the spot on the very next day i.e. 09.06.2018. The said surveyor never sent any spot or final survey report to the complainant till date, although the same is mandatory.
It is alleged that opposite party No.1 appointed final surveyor from Chandigarh from their panel. The said surveyor of opposite party No.1 demanded documents from the complainant vide letter dated 13.06.2018. i.e. set of photographs/Video CD if any, copy of DDR if any, with English translation, Note on the chemical and physical properties of Mustard Cake, copy of audit Balance Sheet and Profit & Loss Account for the financial Year 2017-18 of the Firm with breakup of schedules, manufacturing and trading account for the period 01.04.2018 till date of reported loss i.e. 08.06.2018 duly certified by the charted accountant, copy of ledger accounts pertaining to above manufacturing and trading account, copy of GST returns submitted to the department for the period April 2018 to May 2018, copy of monthly stock statements submitted to banker and duly acknowledged by them for the period 01.01.2018 till last statement submitted to the bank, total quantity, rate and value of stocks (containing separate details for saved affected damaged stocks) as on the date of loss along with supporting documents for the total quantity and rate mentioned therein such as tally records stock register purchase bills costing etc., valuation and saved stocks as per joint inventory carried out alongwith supported documents for rates such as purchase invoice costs sheets etc., Salvage offers for the available affected/damaged items from at least two salvage buyers, Claim Form duly filled and completed along with claim bill for affected quantities and rates. The surveyor also directed the complainant to keep the damaged item in safe custody till further advise from Insurers.
The complainant has pleaded that she provided all the papers which were in possession of the complainant. However, certain demands were unnecessary but the complainant submitted all the papers i.e. photographs duly handed over to surveyor and the said surveyor also made video and stills through his camera phone on 09.06.2018 at spot. There was no DDR and this fact was in the knowledge of surveyor. Physical and chemical properties duly provided to the surveyor through internet online system of Mustard Cake. (Although the same is available online for general public). Copy of provisional Balance Sheet 2017-18 provided to the surveyor with detail Stock Statement duly verified by CA (at that time Final Balance Sheet was not prepared). Manufacturing and Trading Account duly verified by CA w.e.f. 01.04.2018 to 08.06.2018 was handed over to Mr. Rahul Kaundal, surveyor. Copy of Ledger Account was also given wherein details of Khal Sarson was given and verified by the said surveyor. Copy of GST Returns April and May 2018 given. Copy of Monthly Stock Statements given and the same were duly verified by the Bank and surveyor also verified the same from Bank, Copy of the Stock Statements dated 28.02.2018, 31.03.2018, 05.05.2018 and 02.06.2018 are Ex C-13 to C-16, Total quantity rate and value of stocks (containing separate details for saved affected damaged stocks) as on the date of loss along with supporting documents for the total quantity and rate mentioned therein such as tally records stock register purchase bills costing handed over to Surveyor. Purchase invoice costs sheets and transfer vouchers given to the Surveyor.
It is alleged that no person was ready to purchase this salvage and in this regard a letter was given to the surveyor. However the complainant gave her consent to hand over the Salvage to the Insurance Co.
It is further alleged that on 25.07.2017 in the presence of Mr. Rahul Kaundal the said damaged mustard cake was got checked in the Lab and the lab issued certificate that the same is not edible for feed and not fit for sale or for further use. Claim Form duly filled and signed handed over to surveyor and the same is in possession of opposite party No. 1.
The complainant has pleaded that the damaged stocks still lying with the complainant but since the burnt Mustard Cake was smelly it was stored at rented place.
It is alleged that the complainant lodged total claim of Rs.16,20,000/- as per stock statement. After calculating the stocks in presence of the surveyor and as per Books the Total Damaged Stocks of Mustard Cake came to 804.57 Qt. and the final loss came to Rs.16,00,434/-. As per last stock statement dated 02.06.18 which was submitted to the bank prior to the fire loss, 780 QTS (78062Kgs) Mustard Cake was lying with the complainant which were duly verified by opposite party No. 2 who is agent of opposite party No. 1.
The complainant further alleged that Mr. Rahul Kaundal Surveyor inspected the damaged stocks on 09.06.2018, 11.07.2018 and 25.07.2018 by weighing the same. The surveyor firstly sorted the damaged Mustard Cake in 9 Heaps and weighed the 1st heap i.e. 8998 Kg. He noted the diamtere i.e. Length, width and height. Thereafter, he again weighed the other 8 heaps which came 37694 Kgs. The surveyor also weighed the damaged material in the Bags in Tractor Trolley which came to 11215 KG. Thus total weight came to 55907 Kgs i.e. 559.07 Qtls. The said surveyor, at the spot burnt 300 Gms of Khal Sarson and found that 20% of the material weight was lost in the burning process. As such, he calculated 20% of the 55907 Kgs which came to 11181 Kgs and thus total damaged stock came 67088Kgs. (670.8.8 Qtls.). This figure came after thorough checking by Mr. Rahul Kaundal, surveyor, whereas the stock 80400 Kgs (804Qtls.) were damaged in the Fire as per stocks and books.
It is also alleged that Mr. Rahul Kaundal, surveyor also visited factory premises on 25.07.2018 for preparing the final loss sheet. The said surveyor prepared the final loss sheet with the verdict mind as he already declared no claim vide his letter dated 9.6.2018 which itself speaks that he is not doing independent job.
It is further alleged that complainant received one letter dated 07.09.2018 from the office of opposite party No. 1 vide which they illegally rejected the claim of the complainant on flimsy grounds. No Insurance policy or its terms and conditions attached with the said no claim letter. The alleged exclusion clause neither conveyed at the time of insurance by the opposite parties nor even attached with this No Claim Letter. Moreover, bank, (opposite party No. 2) duly verified the stocks under hypothecation agreement and agency arrangement with opposite party No.1. The complainant demanded the claim payment of Rs.16,00,434/- as per record and also demanded copy of survey report but the opposite parties did not release the single penny to complainant till date. Due to non-payment of claim amount, the complainant is suffering mental agony and pains for which he claims compensation to the tune of Rs. 1,50,000/-.
On this backdrop of facts, the complainant has prayed for directions to the opposite parties to make payment of claim amount of Rs.16,00,434/- as per law along with interest @ 18% P.A. and also pay Rs.1,50,000/- as compensation besides Rs. 50,000/- as litigation expenses.
Upon notice, the opposite parties appeared through their respective counsel and contested the complaint by filing written reply. The opposite party No. 1 in its written reply raised legal objections that intricate questions of law and facts are involved in the present complaint which require voluminous documents and evidence for determination which is not possible in the summary procedure under the 'Act'. That the complainant has concealed material facts and documents from this Commission as well as opposite party No. 1.
It has been pleaded that the complainant has concealed the fact that after going through the survey report, the opposite party No. 1 observed that (i) the reported loss to stocks/raw materials has taken place because of natural heating and/or spontaneous combustion and not due to any fire. (ii) the said natural heating/spontaneous combustion is specifically excluded under the policy terms and conditions. Policy condition No.1 (a) specifically refers to as under:-"Policy shall exclude any loss/damage caused to the property insured by its own fermentation, natural heating or spontaneous combustion".
It has been further pleaded that in view of above said facts the claim in question is not tenable under the policy contract. Therefore, the claim was closed as no claim vide letter dated 07.09.2018. There was no fire at all as claimed by the complainant. During inspection and discussion with complainant,s it was gathered that no fire hydrant was installed in the factory premises at the time of loss, which is breach of warranty under the policy.
It has also been pleaded that as it is clear from the survey report that probable cause of loss due to reason : "Pyrolysis is a thermo chemical decomposition of organic - material at elevated temperature without presence of oxygen. It involves simultaneous change of chemical composition and physical phase and is irreversible. It appears that in the lower part of the heap of mustard feed/cake; due to moisture and generation of gases like Methane/Ethane; fuel might have got dried due to high temperature, when oxygen is not available." However, there is no visible flame of fire and entire single heap got spoiled due to smoldering.
Further legal objections are that there is no cause of action in favour of the complainant. That the complainant is not consumer. That the complainant has no locus standi or cause of action to file the present complaint and that the complaint is not maintainable in the present form and is liable to be dismissed.
On merits, it has been pleaded that the value of stocks as on the date of alleged loss of 08.06.2018 was Rs.1,82,15,900/- whereas the value of stocks insured was Rs.86,00,000/-. Thus there was under insurance to the extent of 50.30%. Even otherwise the coverage and extent thereof was strictly subject to terms and conditions of the policy. It is denied that total stocks were insured with opposite party No. 1. It has been pleaded that complainant was having stocks of much more value than the value of stocks insured with opposite party No. 1 against Standard Fire and Special Perils Policy. The cause of alleged loss claimed by the complainant was not covered under the terms and conditions of the policy. It is also denied that the total stocks and factory premises were inspected by opposite party before issuance of insurance policy in 2017. Even otherwise the stocks keep on changing i.e, increasing and decreasing with every sale and purchase. The opposite party No. 1 has also denied that it never issued any insurance policy to the complainant rather the same was duly supplied to opposite party No. 2 and in turn to complainant as well. The complainant has levelled false allegations only to get wrongful gains. It has also been denied that on 08.06.2018 mustard cake in the factory premises finished goods godown of complainant caught fire rather there was no fire at all and the alleged loss to the stocks was due to natural heating/spontaneous combustion and not due to fire, which was specifically excluded. It has been pleaded that the complainant failed to store the stocks properly to avoid natural and/or spontaneous combustion keeping in view the nature of stocks dealt with by it.
The opposite party No. 1 has admitted that the opposite party No. 1 appointed surveyor who conducted survey on 09.06.2018 and also on subsequent dates. It has been pleaded that the complainant earlier lodged a claim by estimating the loss of Rs.10,00,000/- in its statement of loss but later on, in order to get wrongful gain revised its claim to Rs.16,20,000/-. Although the claim was not payable but the surveyor in order to put maximum limit to the alleged liability assessed the loss at Rs.4,77,053/- after considering various facts and under insurance to the extent of 50.30%. The opposite party No. 1 has denied that the stock statement was verified by opposite parties every month or the complainant was having stocks of only 780 quintals at the time of loss. The opposite party No. 1 admitted that Mr. Rahul Kaundal conducted survey of damaged stock and found the total effected stocks at 583.54 quintals valuing Rs.10,63,641/-.
It has been pleaded that the survey report clearly mentions that there was prerequisite condition/warranty that fire hydrant will be kept in the factory premises for coverage but there was no such fire hydrant at the time of alleged loss which is a breach of warranty condition. There was no incident of fire/flames in the case rather the loss took place due to natural and spontaneous combustion. There were no marks of fire/heat/smoke etc. on walls, roof and floor. No fire tender was called. Only one big stack containing mustard cake/feed was seen turned into black in colour. The cause of alleged loss was not at all covered under the policy. As there is a pre-requisite condition of ignition under a valid claim to be tenable under the definition of fire within the standard fire and special perils policy. Ignition means the fire should be actual. There should be ignition which means the presence of flames is a pre-requisite. The damage by smoke, heating, scorching and charring without actual burning is not considered as fire. Thus the claim was rightly repudiated. After controverting all other averments of the complainant, the opposite party No. 1 prayed for dismissed of complaint.
The opposite party No. 2 filed separate written reply raising legal objections that intricate questions of law and facts are involved in the present complaint which require voluminous documents and evidence for determination which is not possible in the summary procedure under the Act. That the complainant has concealed material facts and documents from this Commission as well as opposite party. That the complainant is not consumer of opposite party No.2 qua the policy in question. The liability, if any, is of the opposite party No.1, being the insurer of stock against payment of premium. That the complainant has no locus standi or cause of action to file the present complaint. That the complaint is not maintainable and that the complaint is false, frivulous & vaxious.
On merits, the opposite party No. 2 has denied that opposite party No.2 has any agency agreement with opposite party No.1. It has been pleaded that complainant firm used to submit stock statements from time to time to the opposite party and accordingly the insurance of said stocks, as per stock statement, was got done by the complainant from opposite party No.1 and opposite party No.1 insured the stock after duly verifying it.
The opposite party No. 2 has pleaded that the premium of the insurance policies, issued from time to time, were paid with the consent of the complainant through its account with the opposite party No. 2. The complainant firm never raised any objection at any time to the opposite party No.2 that the amount of the insurance premiums has been debited without its permission or cheque, as alleged. Further as per the terms & condition of the loan agreement, it is the responsibility of the complainant (borrower) to get insured the stock of hypothecated goods against fire risk with some insurance company in the name and for the sole benefit of the Bank. In case the borrower fails to insure or failed to deliver the policies, the Bank shall be at liberty, though not bound, to effect such insurance at the expense of the borrower. It is denied that total stocks and factory premises were inspected by opposite party before issuance of Insurance policy in 2017. Even otherwise the stocks keep on changing i.e. increasing and decreasing with every sale and purchase from time to time. It has been denied that opposite party never issued any insurance policy to the complainant, rather the same was duly supplied by opposite party No.1 to the complainant as well. It has also been denied that the stock statement was verified by opposite parties every month or the complainant was having stocks of only 780 quintals at the time of loss as alleged. The opposite party No. 2 has admitted that Mr. Rahul Kaundal conducted survey of damaged stock and found the total effected stocks at 583.54 quintals valuing Rs.10,63,641/-. After controverting all other averments of the complainant, the opposite party No. 2 also prayed for dismissal of complaint.
In support of his complaint, the complainant has tendered into evidence his affidavit dated 4-10-2018 (Ex. C-1) and documents (Ex. C-2 to Ex. C-67).
In order to rebut the evidence of complainant, opposite party No. 1 tendered into evidence two affidavits i.e. Jai Singh (Ex OP-1/6), Sukrat Bhardwaj (Ex. OP-1/8) and documents (Ex. OP-1/1 to Ex. OP-1/5 and Ex. OP-1/7).
The opposite party No. 2 tendered into evidence affidavit of Bijay Kumar Tiwari (Ex. OP-2/1) and documents (Ex. OP-2/2 to Ex. 2/4).
The learned counsel for the parties reiterated their stand as taken in their respective pleadings and detailed.
These are undisputed facts between the parties that stocks of complainant was hypothecated with opposite party No. 2 and opposite party No. 2 purchased Standard Fire and Special Perils Policy (Ex. C-2) in question on behalf of complainant from opposite party No. 1. On 8-6-2018 insured stocks of Mustard feed/cake damaged. The complainant intimated the loss to the opposite parties. The opposite party No. 1 appointed Puri Carwford Insurance Surveyors & Loss Assessors India Pvt. Ltd., who surveyed the loss and report of said surveyor is on the file as Ex. OP-1/1. The opposite party No. 1 repudiated the claim of the complainant vide letter dated 7-9-2018 (Ex. OP-1/2).
The learned counsel for the complainant submitted that insurance of stocks of complainant was got done by opposite party No. 2 on behalf of the complainant as there is agency arrangement between both the opposite parties. The opposite parties never issued any terms and conditions to the complainant. Since no terms and conditions were supplied to complainant, she was not aware of any exclusion clause. No terms and conditions were got signed from complainant. Thus, complainant is not bound by such terms and conditions which were never supplied to her. If complainant was made aware of such exclusion clause, she must have got risk of own fermentation, natural heating or spontaneious combustion covered by paying additional premium, if any, keeping in view the nature of stocks dealt with firm/complainant.
On the other hand, the submission of learned counsel for the opposite party No. 1 is that policy alongwith terms and conditions was duly sent to the complainant. Claim of the complainant is not payable and this fact has been duly cleared/mentioned by the surveyor in survey report.
We have heard learned counsel for the parties and gone through the record.
Ex. OP-1/2 is the repudiation letter vide which opposite party No. 1 closed the file of complainant as 'No Claim'. The relevant portion of this letter reads as under :-
“That the reported loss to stocks/raw material has taken place because of natural heating &/or spontaneous combustion and not due to any fire.
That the said natural heating/spontaneous combustion is specifically excluded under the policy terms and conditions.
You may refer to the below specific policy condition No. 1 (a)
“Policy shall exclude any loss or damage caused to the property insured by its own fermentation, natural heating or spontaneous combustion.”
In view of the aforesaid facts, the subject claim is not tenable under the policy contract. As such, we are constrained to repudiate our liability in this case and hence, the subject claim is being closed as 'No Claim” which please note.”
A perusal of above said repudiation letter reveals that opposite party No. 1 has closed the file of complainant as no claim on the ground that claim is not tenable under policy contract. The contract is the document which takes place between the parties after signing/executing the same. In the case in hand, the opposite parties have not furnished any document on file to prove that even the policy alongwith terms and conditions was supplied to the complainant what to talk about execution of contract. No policy or any terms and conditions were got signed from complainant. Moreover, opposite party No. 1 in its written reply has pleaded that policy was duly supplied to opposite party No. 2 and in turn to complainant as well, whereas the plea of opposite party No. 2 in written reply is that rather the policy was duly supplied by opposite party No.1 to the complainant as well. No evidence is placed on file by either of the opposite parties to prove that insurance policy alongwith terms and conditions was duly supplied to complainant.
In First Appeal No.1717/2003 Decided on 27.05.2009 titled Gurlal Singh Vs. O.I.C. in Para No.6 (c) at Page No.5, Hon'ble State Commission, Punjab, has held that the Only terms and Conditions which can be applicable under any insurance agreement are those which are communicated at the time of agreement.
Hon'ble State Commission, Punjab, in the case First Appeal No. 1579 of 2004 decided on 5-3-2010 case titled OIC Vs Puneet Pasricha, has held that if the terms and conditions had been explained to insured at the time of issuance of insurance cover, these could have been given to them at the same time or at least these could have been got signed from them. Therefore, the oral version of the appellants that these terms and conditions were duly explained to the insured cannot be believed.
Hon'ble Supreme Court in the case titled Anju Kalsi Versus HDFC Ergo General Insurance Company Limited and Another : 2022(2) R.C.R.(Civil) 334 has observed that :-
Repudiation of Insurance claim - Unless Bank and Insurance Company able to establish on cogent basis that special conditions of policy issued by Insurance company to bank were drawn to notice of account holder for whose benefit insurance cover extended, claim cannot be rejected.
Consumer Protection Act, 1986, Sections 2(1)(g) and 23 - Repudiation of Insurance claim on ground that mandatory condition of insurance policy that there has to be non-ATM swipe transaction within stipulated period prior to date of event not fulfilled - Deficiency of service - Appellant's son died in road accident - Held, terms of insurance cover to be specifically communicated to account holder - In absence of such course of action being adopted, case of appellant as set out in complaint remained uncontroverted - Unless respondents were able to establish on cogent basis that special conditions of policy which issued by Insurance company to bank were drawn to notice of account holder for whose benefit insurance cover extended, claim ought not to be rejected - Therefore, appellant entitled to award of basic claim in amount of Rs 5 lakhs together with interest.”
Thus, keeping in view the facts, circumstances, evidence placed on file by the parties and aforesaid law, this Commission is of the considered opinion that complainant is not bound by such terms and conditions which were never supplied to her. Hence, there is deficiency in service on the part of opposite party No. 1 in rejecting the genuine claim of the complainant.
Now, question is regarding amount for which the complainant is held entitled to. The complainant has claimed that she has suffered loss to the tune of Rs. 16,00,434/-. A perusal of insurance policy (Ex. C-2) reveals that sum insured of stock was Rs.86,00,000/-. Ex. OP-1/1 is the Survey report. This document shows that Value at Risk of stocks was Rs. 1,73,05,105 whereas Sum Insured was Rs. 86,00,000/-. Hence, there was under insurance to the tune of Rs. 87,05,105 i.e. 50.30%. The surveyor has arrived at this figure after verifiying the record duly certified by chartered accountant and after phyiscal verification of stocks. There is no challenge to this report.
Although, the complainant has alleged that the surveyor appointed by opposite party No.1 is not independent surveyor, but this fact cannot be accepted only on the basis of mere allegations. There is nothing to show that the surveyor was bias or his report is not correct.
Hon'ble National Commission in case of Narinder Kumar Joshi Vs. Reliance General Insurance Company Limited IV 2017 CPJ 366 (NC) has observed that the insurance claim is to be settled on the basis of surveyor report unless legitimate reasons are pointed out for not accepting the surveyor report.
Similarly, in case of Sri Venkatshwar Sindikat Vs. Oriental Insurance Company and Anr., II (2010) CPJ 1 (SC), Hon'ble Supreme Court of India has observed that the surveyors were appointed under statutory provisions and they are linked between insurer and insured when question of settlement of loss or damage arises. The report of the surveyor could become base for settlement of claim by the insurer in respect of loss suffered by the insured.
With utmost regard and humility to the authorities cited by the learned counsel for opposite party No. 1, these are distinguishable on facts.
Therefore, keeping in view the aforesaid law also, the surveyor report is to be accepted. The surveyor has assessed the loss to the tune of Rs.4,77,053/-. The complainant is held entitled to claim to this extent. Opposite party No.1 has repudiated the claim illegally. Therefore, complainant is also entitled to interest @ 8% p.a. from the date of repudiation i.e. 7-9-2018 till date of payment.
For the reasons recorded above, the complaint is partly accepted with Rs.10,000/- as cost and compensation against opposite party No.1 and stands dismissed qua opposite party No. 2. Opposite party No.1 is directed to pay Rs.4,77,053/- alongwith interest @ 8% p.a. from the date of repudiation i.e. 7.9.2018 till date of payment, to the complainant.
The compliance of this order be made by opposite party No. 1 within 45 days from the date of receipt of copy of this order.
The complaint could not be decided within the statutory period due to covid pandemic and heavy pendency of cases.
Copy of order be sent to the parties concerned free of cost and file be consigned to the record.
