A P M Industries vs NATIONAL INSURANCE CO LTD

THE complainant has filed this complaint under Section 12 read with Sec. 17(a)(1) of the Consumer Protection Act (''the Act'' herein) before the State Commission on 17.6.91. The material facts for the disposal of the complaint are these: -

THE complainant was then having its name as M/s. Ajay Paper Mills Ltd. It had taken Marine Cargo Inland Transport Insurance Policy in the name of its Spinning Mills (Orient Syntex) from opposite party (M/s. National Insurance Co. Ltd.) covering rail/road risk from anywhere in India to anywhere in India in respect of: - (i) Yarns of all kinds packed in card board, cartoons and bags. (ii) Cotton, man made fibre NCSW and like raw materials packed in FPIB bales. (iii) Cotton raw material, man made fibre (NCSW) packed in loose bags.

In respect of item No.1, risk covered was upto Rs.12 crores. For item No. 2, risk covered was upto Rs.6 crores and for item No. 3 risk covered was for Rs. 1 crore. Thus all risk covered in respect of item Nos. 1, 2 and 3 was for Rs. 19 crores. This was Special Declaration Policy covering the period 16.4.1988 to 15.4.1989. The premium of Rs. 2,50,001/ - was deposited against the premium amount vide policy No. 352003/ 4400139 (Prov.) issued on 6.10.1988. The complainant used to despatch goods to self for sale in the course of Inter -State by transfering documents of title. The goods despatched were meant for disposal outside the State/Sale in course of Inter -State trade. The goods mentioned in para 3 of the complaint were despatched from Bhiwadi (Rajasthan) to Bhiwandi (Maharashtra) through M/s. Jainsons Roadways. The complainant has alleged that during the currency of the insurance policy, fire broke out in the godown of the transporter M/s. Jainsons Roadways on 15.10.1988 and there was loss due to fire which was calculated as under : - GR No. Date Quality No. of Bags Kgs. Rate Rs. Value Rs. 2880 4.10.88 32sNCSW/V. 48/52Slub dyed. 9 450/ - 100/ - 45,000/ - 2881 '' -do - 6/15 300 100/ - 30,000/ - 75,000/ - 2882 32sPV 48/52 Grasibow 6 300 110/ - 33,000/ - 2883 '' -do - 6 300 110/ - 33,000/ - 2884 '' -do - 9 450 110/ - 49,500/ - 2885 '' -do - 3 163 110/ - 17,930/ - 2886 '' -do - 7/15 110 110/ - 34,430/ - 1,67,860/ - 2887 '' 32sPV 48/52 Olympic 9 450 105/ - 47,250/ - 2888 '' -do - 6/15 300/750 105/ - 31,500/ - 78,750/ - 2889 '' 32s SF100% Slub Grey 5 250 60/ - 15,000/ - 2890 '' -do - 5 250 60/ - 15,000/ - 2891 '' -do - 5 250 60/ - 15,000/ - 2892 '' -do - 3/18 157/907 60/ - 9,420/ - 54,420/ - 2893 '' 15s VSF 100% 5 250 50/ - 12,500/ - 2984 '' -do - 5 250 50/ - 12,500/ - 2895 '' -do - 5 250 50/ - 12,500/ - 2896 '' -do - 3 150 50/ - 7,500/ - 2897 '' -do - 3 131 50/ - 6,550/ - 2898 '' -do - 5 250 50/ - . 12,500/ - Gr No. Date Quality No. of Bags Kgs. Rate Rs. Value Rs. 2899 4.10.88 -do - 5 250 50/ - 12,500/ - 2900 '' -do - 5 250 50/ - 12,500/ - 2902 '' -do - 5 250 50/ - 12,500/ - 2903 '' -do - 3 150 50/ - 7,500/ - 2904 '' -do - 3/47 148/2329 50/ - 7,400/ - 1,16,45/ - Grand Total: 126 6262 4,92,480

According to the complainant the goods at S. Nos. 1 to 7 had reached Bhiwandi at transporters place on 9.10.88 and goods at S. No. 8 on 12.10.88. In respect of item Nos. 1 to 8 the complainant lodged a claim for Rs. 2,74,280/ - . The Insurance Companys Western Regional Office, Bombay was intimated about loss vide letter dated 26.10.88. M/s. Mehta & Padamsy Pvt. Ltd., Bombay were deputed as Surveyor for survey of consignments in question. The complainant provided all the relevant information vide letter dated 27.10.88 and 9.2.89 to the Surveyor and Alwar Office of the Insurance Company was also apprised of the loss vide letter dated 29.11.88. Survey report dated 10.2.1989 was produced in which loss assessed was Rs. 2,74,280/ - and after adding share of fire fighting expenses amounting to Rs. 115/ - and deducting the cost of salvage, the net loss was assessed at Rs. 2,72,940/ - . The survey fee was assessed at Rs. 2,090/ - and share of expenses Rs. 50/ - thus the total expenses were Rs. 2,140/ - . The carriers granted damage/loss certificate dated 10.11.1988. The Insurance Co. was requested to make payment of the claim amounting to Rs. 2,73,280/ - vide claim dated 22.2.89. The Insurance Company asked for some clarifications from time to time. With the letter dated 22.12.89, Transporters Certificate dated 15.12.89, and letters dated 3.3.89 and 25.5.89 were enclosed. The opposite parties repudiated the claim vide letter dated 3.8.1990 for the reasons mentioned in the Annexure to the repudiation letter. According to the complainant the Opposite Parties were liable under the terms of the policy to compensate the complainant for loss as the liability of the Opposite Parties continued until delivery at the final warehouse at the destination named in the policy or in respect of transit by rail/road until expiry of 7 days after arrival of railway wagon/vehicle at the destination town and until expiry, of 7 days thereafter. According to the complainant as per terms of the policy the liability of the opposite parties subsisted and they are liable to reimburse the claim amount of Rs.2,74,280/ - . Several reminders were given for the settlement of the claim vide letters dated 30.11.89, and 30.1.90. But as the claim was not settled, the complainant filed the complaint for the recovery of the amounts as detailed below : (i) Claim for loss of goods as assessed by the Surveyor. Rs.2,72,940/ - (ii) Survey fees and expenses. Rs. 2,140/ - (iii) Compensation in the form of interest by way of damages on the claim amount of Rs. 2,72,940/ - @ 18% per annum from the date of submission of the claim to Insurance Co. and after expiry of one month allowing reasonable period for settlement of claim (1.4.89 to 10.6.91 -2 years 2 months 10 days) Rs.1,07,809/ - Total: Rs. 3,82,889/ - Besides the aforesaid amount of Rs. 3,82,889/ - , the complainant has also claimed interest @ 18% p.a. by way of compensation. With the complaint the complainant enclosed a list of 36 documents. The relevant documents will be referred hereinafter as and when necessary.

THE opposite parties submitted the version of the case dated 27.11.91. which was taken on record as the learned Counsel for the complainant had no objection on 27.11.91. The opposite parties admitted that the survey report dated 10.2.89 submitted by the surveyor. According to the opposite parties the report was confidential report and this was subject to the admissibility of the claim with a note ''issued without prejudice and is subject to terms and conditions of the policy and as per the report the question of liability was left to be decided by insurer as they deem fit.'' It was pleaded that vide letter dated 3.8.1990 the claim of the complainant was repudiated. It was submitted that the claim was processed at various levels of the administrative department of the opposite parties and thereafter it was finally repudiated by the competent authority giving full details and reasons for repudiation. It was said that the opposite parties have rightly repudiated the claim after application of mind and considering the entire material in good faith. The final decision was taken by the Head Office at Calcutta by the competent authority. The decision was taken within reasonable time and therefore it cannot be termed as deficiency in service within the meaning of Section 2(g) of the Act. It was submitted that the goods regarding which the claim was lodged reached the godown of the transporter well before the fire and that the insurance cover terminated on the date the goods reached the final warehouse at the destination as mentioned in the policy. This implies to the termination of the cover note abovementioned regarding which the claim was lodged. It terminated on 4.10.88 and 12.10.88 and there was no insurance cover under the marine policy available to the complainant insured of the said consignments on 15.10.88, the date on which the fire broke out.

A rejoinder was submitted by the learned Counsel for the complainant. The rejoinder was taken on record vide proceedings dated 24.1.91. Vide order dated 24.1.92 the decision on the preliminary objections raised by the opposite parties was deferred stating that they will be decided at the time of the final orders in the complaint. The opposite parties relied on in support of the reply on the following documents: - (1) Surveyors report dated 10.2.89. (2) Letter dated 3.8.90 and (3) Note of the Head Office repudiating the claim.

The complainant submitted affidavit of Shri C.S. Vijay and Shri H.R. Sharma in support of the complaint alongwith the application dated 26.2.92. On behalf of the opposite parties affidavit of Shri B.L. Agarwal, Dy. Manager was submitted in support of the version of the case. An application was submitted by the learned Counsel for the opposite parties on 30.3.92 that for the reasons mentioned in the application permission to file reply to the affidavit of Shri H.R. Sharma may be granted. On behalf of the complainant written arguments were submitted on 18.7.92 after delivering a copy to the learned Counsel for the opposite parties. No written arguments were submitted on behalf of the opposite parties.

WE have carefully considered the complaint, the version of the case, affidavits of the parties, documents submitted by the parties and the written arguments of the complainant. The sheet -anchor of the defence of the opposite parties is that after the repudiation of the claim in the facts and circumstances of this case it will not be proper to entertain and decide the claim of the complainant. Marine Cargo/Inland Transit Policy Special Declaration Policy was produced by the complainant marked as Ex.9. In the policy there were special conditions and warranties. It is written therein that the insurance is subject to the following clauses and conditions as printed therein or attached thereto. The clauses mentioned are 18, 22 strike riots and civil commotions clause and memorandum attached with the policy. There is a tick on item No. 18 which is to the effect ''Inland Transit (Rail or Road) all Risks. Inland Transit (Rail or Road) A -All Risks have been appended to the policy. Under the head Duration Transit Clauses have been mentioned which are as under: - ''This insurance attaches, from the time the goods, leave the warehouse and/or the store at the place named in the policy for the commencement of transit and continues during the ordinary course of transit including customary transhipment, if any,'' (i) until delivery to the final warehouse at the destination named in the policy, or (ii) in respect of transit by rail only or rail and road until expiry of 7 days after arrival of the railway wagon at the final destination railway station or (iii) in respect of transits by road only until expiry of 7 days after arrival of the vehicle at the destination town named in the policy. N.B. 1. The period of 7 days referred to above shall be reckoned from the mid night of the day of arrival of railway wagons at the destination railway station or vehicle at the destination town named in the policy. 2. Transit by rail only shall include incidental transit by road performed by railway authorities to or from railway out agency.''

BY letter dated 3.8.90 the complainant (insured) M/s. Orient Syntex, SP 147, Industrial Area, Bhiwadi was informed that the competent authority has instructed the Branch Manager to repudiate their liability for the claim and an extract from the Note of the competent authority mentioning reasons for repudiation was enclosed. It reads as under : - ''According to the information furnished by insured 136 bags viz. 6240 kgs. of yarn was restored in the godown on the date the fire took place i.e. 15.10.88. However, surveyors have only considered those goods which arrived as per GRS dated 4.10.88 and 12.10.88. In their view, only these goods would come under the purview of the Marine Policy as they fall within the period of 7 days from the date of arrival of goods at Bhiwadi. However, Surveyors are not clear on this point and they have left this question of liability to be decided by us. The dates of arrival of goods at Bhiwadi godown vide different GRS has been confirmed by the carriers.

The relevant GRS (those considered by the Surveyors Nos. 2882 to 2887, 2892 to 2807) are marked as ''Orient Syntex Bhiwadi''. In addition it is clear that M/s. Jainsons Roadways were acting as warehousing agents of the insured. Therefore, the policy cover would terminate as soon as the goods arrived at Bhiwadi godown of M/s. Jainsons Roadways. The duration clause (No. 5/CF the inland rail/road risk clause A (all risks) states that: - ''This insurance attaches from the time the goods leave the warehouse and /or the store at the place named in the policy for the commencement of transit and continues during the ordinary course of transit including customary transhipment, if any: - (i) until delivery to the final warehouse at the destination named in the policy or, (ii) in respect of transits by rail only or rail or road, until expiry of 7 days after arrival of the railway wagon at the final destination railway station or (iii) in respect of transits by road only until expiry of 7 days after arrival of the vehicle at the destination town named in the policy, whichever shall first occur.''

Therefore, in this case, the cover would terminate on date the goods reached the final warehouse at the destination mentioned in the policy, this implies that cover in respect of above mentioned consignments terminated on 4.10.88 and 12.10.88 and, therefore, no insurance cover under this Marine Policy was available to these consignments on 15.10.88 viz. the date on which fire took place. In view of these facts, the loss/ damage to the goods due to the fire is not tenable under the policy.

THE fire took place on 15.10.88. According to the information given by the complainant 136 bags viz. 6240 kgs. of yarn was stored in the godown on that day. The Surveyor considered these goods which had arrived as per G Rs dated 4.10.88 and 12.10.88. The opposite parties took into consideration that according to the views of the Surveyors only those goods could be covered by the Marine Policy which are within the period of 7 days from the date of arrival of goods at Bhiwadi. The relevant GRs which were taken note of by the Surveyors are Nos. 2882 to 2887, 2892 and 2807. M/s. Jainsons Roadways were acting as Warehousing agents of the insured and so according to the opposite parties the policy cover terminated as soon as the goods arrived at Bhiwandi godown of M/s. Jainsons Roadways. According to Clause 5 of the Inland Rai/Road Risk Clause A, the cover note would terminate on the date the goods reached the final warehouse at the destination mentioned in the policy. Thus, it terminated on 4.10.88 and 12.10.88 and as such no insurance cover under the marine policy was available on these consignments on 15.10.88 viz. the date when the fire took place. It is thus clear that the repudiation was done after considering the relevant facts and circumstances and it cannot be said that the repudiation was unnecessarily delayed.

IN M/s. Janta Machine Tools v. Oriental Insurance Co., it was held as under : ''From the facts disclosed by the record and particularly the averments contained in the counter affidavit filed by the first respondent it is seen that the Insurance Company had fully investigated into the claim put forward by the complainant, got surveys conducted and had finally come to the conclusion that the claim put forward by the complainant was false and accordingly informed the complainant that his claim was rejected. Thus this is not a case where the Insurance Company did not take prompt and necessary steps for deciding the claim under the policies of insurance. It may be that the complainant is not satisfied with the said rejection of his claim by the Insurance Company. Having regard to the facts and circumstances of this case and the nature of the controversy between the parties we consider that this is a matter that should be adjudicated before a Civil Court where the complainant as well as the respondent will have ample opportunities to examine witnesses at length, take out Commission for local inspections etc. and have an elaborate trial of the case. Without prejudice to the right of the complainant to take resort to the remedy by way of civil suit before the proper Court, we dismiss this petition.''

In New Jaipur Dyeing and Tent Works v. Oriental Insurance Co. Ltd., the National Commission has observed: ''As the upshot of the facts recorded above is that the appellant has reasonable grounds to doubt the genuineness of the claim, as such the non -payment of the insurance amount under the policies cannot be deemed to be a deficiency in service arising from negligence. Under Section 14 of the Consumer Protection Act, 1986 compensation can be granted to a consumer for loss or injury arising from deficiency in goods supplied or services rendered provided the same is due to negligence. Such a presumption or negligence cannot normally arise where the factum of deficiency is established on the basis of balance of evidence or preponderance of probabilities. Hence the order of the State Commission is set aside and the parties are left to pursue their claims through States Investigating Agencies and the Courts of Law.''

THE State Consumer Disputes Redressal Commission, Delhi while following M/s. Janta Machine Tools case (supra) dismissed the complaint. It was observed in Continental Chemical Ltd. v. Oriental Insurance Co. and Another, as under: ''The question that arises for determination is as to whether the State Commission constituted under the Consumer Protection Act has got the jurisdiction to decide the present complaint. The facts of the case as pleaded by the parties have been given in detail above. From the perusal of the pleas, it is evident that respondent No. 1 after making investigations through Surveyor, rejected the claim of the complainant. In order to determine as to whether in view of the aforesaid situation, the com plainant still can recover the amount from respondent No.1, it requires leading of detailed evidence and examination and crossexamination of the witnesses. In the circumstances, it is appropriate that the matter should be decided by the Civil Court. In the said view, we are fortified by a decision of the National Commission in M/s Janta Machine Tools v. Oriental Insurance Co. Ltd. (Original Petition No. 12/ 1900 - I (1991) CPJ 234 (NC), decided on August 21,1990).''

THE same view was taken by SCDRC, Delhi in M/s. Krishan Chand and Ors. v. The Oriental Insurance Co. The National Commission in S. Bhagat Singh v. Oriental Insurance Co. Ltd., took note of Janta Machine Tools case as well as S.K. Abdul Sukurs case. In M/s. Rajdeep Leasing and Finance Pvt. Ltd., New Delhi v. New India Assurance Co. and Another, the National Commission observed as follows :

''It is not necessary for us to express any opinion on the merits of this contention in view of the conclusion reached by us that the State Commission was right in holding that on the facts and circumstances of the present case, it cannot be said that the Insurance Company had repudiated the claim without proper application of its mind after holding an investigation and hence if the complainant feels aggrieved by the decision of the Insurance Company that the claim was false and fabricated the proper remedy to be resorted to is only the institution of a civil suit. As value of the final report made by the police is one of the aspects which will fall for consideration by the Court. All that need be stated for our present purpose is that the rejection by the Insurance Company of the claim put forward by the complainant after obtaining and considering two separate Survey reports from qualified surveyors and three legal opinions from different eminent Counsel cannot be said to constitute a deficiency in service so as to give rise to a cause of action for a complaint under the Consumer Protection Act. The present case is directly governed by the dictum laid down by this Commission in M/s. Janta Machine Tools v. Oriental Insurance Company Ltd.''

It is clear that the Opposite Parties have considered the matter in all these aspects and the decision to repudiate the claim was taken in good, faith after application of mind to the relevant facts and circumstances.

HAVING perused the letter of repudiation and the note appended to it, terms of the policy and the other relevant facts, we are of opinion that the rejection by the insurers of the claim cannot be said to constitute deficiency in service on the part of the opposite parties in relation to performance of the duties under the contract of insurance so as to rise to a cause of action for a complaint under the Act. The case is covered by the principles laid down by the National Commission in M/s. Janta Machines case (supra). In view of the principles laid down by the National Commission and having regard to the facts and circumstances of the case and the nature of controversy between the parties we are of opinion that this is a matter that should be adjudicated before the Civil Court. The complainant may seek redressal in a Civil Court.

THE complaint is dismissed subject to observations that the complainant may file a civil suit for recovery of the disputed amount, if so advised. In the circumstances of the case the parties are left to bear their own costs. Complaint dismissed.