SMT. RAVI SUSHA: PRESIDENT
Complainant has filed this complaint U/s 12 of Consumer Protection Act 1986, seeking to get an order against opposite parties to pay Rs.19,70,820/- to the complainant towards policy benefit for the damage caused to the building, plant and machinery and to the stock of the complainant’s Industrial unit namely Raj Briequetting Kuppol, Peringom, due to heavy flood, alleging deficiency of service on the part of opposite parties.
Complainant’s case is that he is a small scale entrepreneur running an industrial unit by the name and style ‘Raj Bricketing’. He availed a loan from Syndicate Bank, Peringome and according to the terms of loan agreement, the 2nd OP facilitated and Insurance policy through OP No.1. The building machineries and stocks were hypothecated with OP No.2, the policy No.1008031117P118361583. The complainant regularly paid the loan dues and insurance bills without any default. On 02/04/2018 due to natural disaster like strong wind, thunder and lightening the factory building, electrical wiring and stock were damaged. The complainant has duly intimated the loss to the 1st OP insurer and the surveyor appointed by OP 1 inspected the spot and had taken note of the losses sustained to the building, machineries, electrical apparatus and raw materials. He has also taken the photographs of the building, machineries and raw materials. On 14/05/2018, a notice was issued to the complainant intimating the stock register was not produced. But all the documents required and directed to be produced by the OP already produced before the surveyor and the administrative officer. The complainant had obtained receipt for such payment from them. But disregarding these aspects again a notice was issued stating misleading the facts. OP No.1 repudiated the claim on the ground of falsely and its assessment was based on Surveyor’s report. The insurance benefit deprived off to the complainant due to the deficiency of service on the part of OPs. It appears that the OP No.1 and 2 colluded together and insurance benefits denied to this complainant. The functioning of the industrial unit is stalled and the technicians from Tamilnadu inspected the machinery and assessed the loss to the tune Rs.4,35,320. The entire raw materials were made out of sow dust sub merged in rain water and became useless. According to the stock register the value of the raw materials is Rs.4,25,500/-. The loss assessed to the building is Rs.3,00,000/- and total loss due to was Rs.17,70,820/- to the complainant. The complainant is entitled to get Rs.19,70,820/- including Rs.2,00,000/- as compensation. Hence the complainant.
OP1 filed version stating that after getting claim form from the complainant a surveyor was appointed to assess the loss and damages to the insured items. As per the report of the surveyor it is clear that there was damage to the building. It is submitted that complainant had failed to convince the surveyor about the loss happened to the machinery and stock. Further submitted that complainant has not produced the stock register and other records requested by the surveyor, to prove presence of stocks in the building up to that period and assess the quantum of loss to the stock. OP1 submitted that as per policy, the building is not covered under the policy. Further the surveyor could not inspect the damaged stock or machineries as the complainant has not shown those damaged items to the surveyor. Hence the surveyor reported that complainant is not eligible to get policy benefit. According to OP1, surveyor has visited the premises for three times as requested by the complainant, but complainant failed to show the damaged machinery and stock to him. OP1 pleaded that the report of the surveyor being a detailed and credible report, there is no merit in the present complaint which deserves to be dismissed.
After receiving notices OP2 not appeared and remained absent. Hence OP2 was declared as ex-parte and proceeded the case against OP2.
While pending of this complaint, surveyor expired.
At the evidence stage complainant and OP1 led their evidence. After that the learned counsel of both parties complainant and OP1 made oral argument and learned counsel of the complainant filed written argument note with judgment of Hon’ble Supreme Court of India.
Learned counsel of complainant has submitted that due to flood, substantial damages happened to the building, the machineries and raw materials. Complainant has duly intimated the loss to the 1st OP. Insurer and the surveyor appointed by OP1 inspected the site and assessed the losses sustained to the building machineries, electrical apparatus and raw materials. He had also taken the photographs. Further submitted that though all the documents required and directed to be produced by the OP has already produced before the surveyor and the administrative officer, notices were issued to the complainant unnecessarily demanding to produce documents including stock register. Complainant submitted he had obtained receipt from them on submitting those documents. Complainant alleged that repudiation of his claim by OP1 amounts to deficiency in service on his part. Complainant further submitted that a total loss due to flood was Rs.17,70,820/- to him and hence this complaint.
On the other hand the learned counsel of OP 1 contended that as per surveyor’s report, there was no actual damage caused to the insured items ie plant and machinery and stock. OP1 contended that as per policy, the building of industrial unit was not covered under the policy. It is further submitted that complainant has failed to show the damage caused to the plant and machinery and to the stock in the premises. Hence the surveyor reported that as per his inspection he could inspect only damage caused to the building, which is not insured with OP1. He has submitted photographs also and the surveyor observed that as the building is not covered under the policy, complainant has not eligible to get policy benefit. OP 1 contended that since it is finding of surveyor, the present complaint is not maintainable.
Here the question to be decided is that the repudiation of complainant’s claim by OP is justifiable or not?
It is the evident that OP1 has repudiated the claim only on the basis of expert opinion. On perusal of survey report and photographs submitted in the record, the surveyor’s observation that details of damages reported (a) damages to building (b) damages to electrical wiring of the building and (c) stock. Cause of damages:- on 02/04/2018 there was strong wind, thunder and lightening. In the incident the factory building, electrical wiring and stock were damaged. The opinion of surveyor is that though he visited the 3 times to the site, he could not see the damaged item/stock to except the damaged building, which is not covered as per the terms and condition of the policy. So the surveyor opinioned that complainant is not eligible to get policy benefit. With regard to damaged stock, surveyor reported that, when he visited to inspect the stock which was damaged, complainant said that bank people have seen it and after their inspection it was thrown out/destroyed. Further with regard to furnace, surveyor reported that the surveyor asked the insured to call the furnace repairer for joint inspection of the furnace but complainant had not done it. The surveyor finally reported that the insured has not co-operated for settling the claim. So he could not assess the damage to the furnace and further reported that since the complainant had not produced the stock damaged or stock records, in spite of letters, the surveyor could not assess the damage to stock.
In the instant case, in support of its claim, complainant had adduced evident submitting documents Ext.A5 which reveals that complainant had submitted stock register to OP1, Ext.A11 Quotation, submitted by Bhavani Hydro Engineering works ie manufactures of Briquetting machine and spares to complainant’s company with respect to re-work of drier unit and accessories damaged due to heavy rain and storm, photos, Ext.C1 report prepared by an expert to the damage to the building appointed by the commission. Complainant heavily relied upon the above said documents and the statement of Pw2 the expert who prepared Ext.C1 and Dw1 the Senior Divisional Manager of OP1 who deposed that in page No.3 “stock ന് damage ഉണ്ടെങ്കിൽ മാത്രമേ stock register ഹാജരാക്കേണ്ടുന്ന ആവശ്യമുള്ളൂ? അതെ. Ext.A5 stock register ഹാജരാക്കാനും അത് കിട്ടി ബോധിച്ചു എന്നും കാണും? ശരിയാണ്. Stock register പരിശോധിച്ചാൽ 4,55,000/- രൂപ നഷ്ടം വന്നതായി കാണും എന്നു പറയുന്നു? ശരിയാണ്”. During re-examination Dw1 deposed that “ഞാൻ stock register കണ്ടിട്ടില്ല” Further deposed that stock register ഹാജരാക്കിയാൽ എത്രയാണ് stock ഉള്ളത് എന്ന് കാണും”. But OP1 had not produced the stock register before the commission, which was submitted before them by the complainant. According to complainant his industrial unit is a compressed block used for fueling and kindling to start fire in the factories and industrial units manufacturing various items required heat energy. Since such materials are made out of husk and dust, it would be easily dissolved if it is exposed to rain water. It is evident from the photographs submitted that the tin roof of the building was broken in the heavy storm. Raw materials are seen piled upon the floor. The surveyor/loss assessor inspected the site reported that the damaged stocks were not shown to him. The surveyor who prepared the report is no more. So the complainant didn’t get opportunity to examine him to point out the discrepancies in his report and the visible aspects evident in the photographs. The machines and electrical apparatus were also damaged in the incident. It is reported by the surveyor that the complainant has not made the arrangements for joint inspection with the technicians repairing the machineries. Ext.A11 issued by the technicians of Bhavani Hydro Engineering Works dated 06/04/2018. The complainant submits that he personally informed the surveyor about the inspection of technicians from Erode on 06/04/2018. But, the surveyor assessor didn’t attend the relevant time, even though the matter of inspection informed to him well in advance. It appears that the surveyor has deliberately refrain from joint inspection which has caused deprival of insurance benefit to the complainant. Further submitted that it is of a common knowledge that losses would happen to such a unit if the rain water enters inside. The finished products are easily dissolvable if the same are exposed to rain water.
Admittedly, the damage to the complainant’s industrial unit, building, electrical wiring and stock were caused due to heavy wind/storm and the truss and top sheets were damaged. It is seen that the surveyor has not assessed the loss of damage caused to the building in detail. In Ext.C1 report, the damage report in detail. Though the expert was examined as Pw2, nothing arised to disbelieve or discard Ext.C1 report. Thus the report of the expert Engineer Mahesh chartered Engineered approved valuer relating to damage to building remained unimpeached.
From Ext.C1 report the sheet roof were lost due to storm. Then automatically rain water enters inside. Surveyor also reported that the insured unit are the manufacturer of Briquettes/ white coal used in industrial boiler, brick kiln of Ceramic Industrier, milk plants, spinning mills etc. Since such materials are made out of husk and dust, it would be easily dissolved if it is exposed in rain water as submitted by the complainant. Here, since the surveyor who prepared Ext.B1 to B3 report is no more, complainant did not get opportunity to cross examine the surveyor and we cannot come to a conclusion that the observation of the surveyor was genuine or not. In the instant case Ext.C1 and Ext.A11 are the corroborating evidence of complainant’s claim. Further deposition of Dw1 about loss of stock is also evidence to support complainant’s allegation. In the circumstances, we find that the repudiation of the claim by the insurance company cannot be said to be justifiable. Thus there is deficiency in service on the part of the Insurance Company as alleged.
As per the policy terms and condition, the building does not come under the purview of industrial item. Hence insurance company only liable to indemnity to the damage happened to plant, machinery and stock kept in the industrial unit.
Further in Ext.B1 to B3 and Ext.C1, the surveyor and expert commissioner reported about the damage to the building of the industrial unit. The admitted fact is that the complainant had availed a loan from Syndicate Bank, Peringome (OP.2) and OP2 processed an insurance policy with OP No.1. Further there is no dispute that the complainant regularly paid the loan dues and Insurance premium without any fault. Complainant submitted that the asset of the unit were hypothecated to the OP No.2. In the Ext.A1 policy, the name of the agent mentioned as Syndicate Bank, Peringome (OP No.2). Complainant alleged that the omission to insure the building with the OP No.1 Insurance Company, which was hypothecated with them amounts to deficiency of service on the part of OP2 bank.
Here even after received notice of this case, OP2 did not appear and contest the case. They remained absent and was declared as ex-parte. Complainant has submitted judgment of Hon’ble Supreme Court reported in 2020ICO960. Canara Bank Vs. Leatheroid Plastics Pvt. Ltd. in which the Hon’ble State Commission held that if the bank had exercised liberty to effect insurance, it was their duty to take out policies covering the entire set of hypothecated assets. It would constitute part of services the bank was rendering to the borrower.
In the instant case the complainant’s (borrower) grievance is that though the bank effected insurance, part of the hypothecated securities was left out from the coverage. Complainant has produced Ext.A4 to show that complainant has submitted the insurance claim before OP No.2 bank manager for sending to OP1. OP 2 had not contest the case and submit why they had not included all the hypothecated securities to OP NO.1 as insured items and about the submission of documents as demanded by OP1 and surveyor. That being the position, as per the decision of Hon’ble Supreme court in the above mentioned case, there is deficiency in service on the part of OP NO.2 Bank. Any loss arising out of such deficiency was compensable by OP2 under the provisions of Consumer Protection Act 1986. Here Ext.C1 shows that the grand total value of damages (loss) caused due to storm for the industrial building in the property is Rs.3,87,815/-. The said amount shall be compensated by OP No.2 to complainant as there was deficiency in service on the part of OPO No.2 as discussed above.
With regard to other loss/damages Dw1 admitted that loss of stock to the complainant amounts to Rs. 4,55,000/- and as per Ext.A11 the amount for re-work of drier unit and accessories due to heavy rain and storm amounts Rs.3,69,000/-
In the result, complaint is allowed in part. Opposite party No.1 the Insurance Company is directed to pay Rs.4,55,000/-(loss happened to stock) and Rs.3,69,000/- (re-work of drier unit and accessories) to the complainant and OP No.2 is directed to pay Rs.3,87,815/- (loss happened to building) to the complainant. Opposite parties are further directed to pay Rs.50,000/- towards compensation and Rs.20,000/- towards cost of proceedings of the complainant. Opposite parties 1 and 2 are directed to comply the order within one month after receiving copies of this order. Failing which the awarded amount [Rs.12,11,815 (4,55,000+3,69,000+3,87,815)] except cost carries interest @7% per annum from the date of order till realization. Complainant is at liberty to execute the order as per the provisions in Consumer Protection Act 2019.
Exts.
A1- Policy
A2- Claim form
A3-Letter sent by P S Rahib to OP1 (subject to proof)
A4- Letter of Syndicate bank manager dated 18/04/2018
A5- Letter dated 14/05/2018
A6- Letter dated 07/06/2018 sent by OP1
A7-Advocate notice
A8- Reply notice
A9- Photos
A10-CD
A11-Quotation dated marked subject to proof
C1- Expert commission report
B1 to B3- Survey report
Pw1- Complainant
Pw2- Engineer Mahesh A- Expert commissioner
Dw1-Subrahmanian K N- Witness of OP
Sd/ Sd/ Sd/
PRESIDENT MEMBER MEMBER
Ravi Susha Molykutty Mathew Sajeesh K.P
(mnp)
/Forward by order/
Assistant Registrar
