BOUTIQUE INTERNATIONAL vs NEW INDIA ASSURANCE CO. LTD.

THIS is an appeal against the order dated 29th March, 1993 of the State Consumer Disputes Redressal Commission, Delhi passed in Case No. C-253/91 by which the State Commission partly accepted the claim of the present Appellant (who was complainant before the State Commission and hereinafter referred to as such) and directed the respondent� M/s. New India Assurance Company Ltd. (hereinafter referred to as opposite party) to pay an amount of Rs. 51,737/- with interest at the rate of 15% per annum from 21st August, 1989 till payment within three months. The complainant''s claim for the loss in respect of the machines installed in his factory was dismissed. Briefly the facts are that the complainant is running a business of manufacturing garments. In the factory premises machines were installed and raw material was also stored for manufacturing garments. The complainant had taken insurance policy in the sum of Rs. 10.00 lakhs for the period from 17th November, 1988 to 16th November, 1989. On 16th June, 1989 amendment was made in the policy and it was clarified that the insurance covered firstly the stock of the value of Rs. 6.50 lakhs and secondly the machinery of the value of Rs. 3.50 lakhs.

IT was further pleaded by the complainant that bifurcation/clarification was asked in December, 1988 but the same was issued on 16th June, 1989. Before the said clarification could be issued, theft had taken place in the factory premises on the night intervening 7th and 8th June, 1989. Some machinery and stocks were stolen. The Insurance Co. appointed Surveyors but in spite of repeated requests the claim was not settled. According to the complainant, they suffered a loss of Us. 1,35,000/- on account of theft. The claim was contested by the opposite party. They inter alia pleaded that the insurance policy was only for the stocks lying in the factory and not for the machinery. It was after the theft that insurance was got bifurcated and the machinery of the value of Rs. 3.50 lakhs was got covered by it. The claim was lodged on 21st June, 1989 i.e. after bifurcation. Thus fraud has been played on the Insurance Company.

THE State Commission fixed the case for argument on 21st January, 1993. On that date a request was made on behalf of the opposite party to adjourn the case to 9th February, 1993. This request was acceeded to by the State Commission. On 9th February, 1993 nobody appeared on behalf of the opposite party and the case was adjourned to 16th February, 1993 for arguments. On that date the State Commission was busy in hearing arguments in some other case and the case was adjoined to 16th March, 1993. On that date again nobody appeared on behalf of the opposite party. The State Commission directed the parties to give brief arguments. The complained filed written arguments. Written arguments were not filed on behalf of the opposite party. The State Commission held that it appeared that the complainant wrote to the opposite party for bifurcation of the policy after the theft but ante-dated the letter and in such circumstances the complainant cannot take benefit of the bifurcation of the policy and only stocks were insured and the assessor assessed the price of the stock at Rs. 51,787/-. The State Commission awarded the said amount to the complainant. As noticed above the complainant''s claim for Rs. 48,860/- in respect of the machinery was rejected. Feeling aggrieved of that order the complainant has filed this appeal before this Commission.

WE arc of the opinion that the present appeal is liable to be allowed. Complainant''s case is that the insurance in the sum of Rs. 10.00 lakhs who for all goods and other allied items lying in the factory. According to the memorandum of appeal, in the insurance policy the risk was described as: "Property Insured: On stock of raw material, finished, semi-finished goods and all allied items pertaining to the trade, whilst stored and/or lying and/or kept in the insured''s factory mfg. of garments, built of first calls construction, situated at B-86, Sector 11, Noida."

According to the complainant he had obtained medium term loan of Rs. 3.00 lakhs on 27.4.87 from the State Bank of India, local Head Office, Sansad Marg, New Delhi for the purchase of machinery. Clause 10 of the agreement of loan required that the machinery be insured by the borrower against the risk of fire, break down and damage in the joint names of the borrower and the Bank with some Insurance Company approved by the Bank for its full market value and the insurance polcies, cover notes, etc. be delivered to the Bank. The case of the complainant is that the original policy which was issued for the period from 17th November, 1988 to 16th November, 1993 was assigned to the Bank and was retained by them. The State Bank of India wanted the policy to be got clarified and the amount bifurcated to indicate as to for how much the stock of raw material and other items were insured. The complainant wrote a letter in December, 1988 requesting the opposite party to bifurcate the same and accordingly the Insurance Company issued an endorsement bifurcating in the following manner: (a) stock of raw-material, finished, semi-finished goods and allied items pertaining to the same for Rs. 6,50,000/-. (b) machinery value Rs. 3.50 lakhs

It was submitted on behalf of the Complainant-Appellant that though the said bifurcation/clarification was asked for in December, 1988 but the same was issued in June, 1989 after theft had taken place in the factory premises. It was further submitted that the State Commission presumed that the complainant had written to the Insurance Company for bifurcation of the policy after the theft had taken place and had ante-dated the letter, but there is no evidence on record for raising such a presumption. We are of the opinion that this argument had force. Usually whatever letters are received in the office of Insurance Co., date of receipt is given. The Insurance Co. could have easily produced on the record that the latter for bifurcation was received in the office of the Company after the theft had taken place. It is the further case of the complainant that the bifurcation of the amount of the policy in respect of stock and machinery was sought for at the instance of the Bank who had granted the loan for the purchase of machinery otherwise the policy already issued covered the risk in respect of the machinery as well because in addition to the raw material etc. all items pertaining to the trade while stored and/or lying and/or kept in the insured''s factory for manufacturing of garments were described as "property insured". Thus according to the complainant as far as he was concerned there was no need to play fraud upon the Insurance Company so as to include in the item "property insured" the machinery stored or lying in the factory. This argument has force. The Insurance Company has not controverted the allegation of the complainant-appellant that the property insured has not been properly described in the memorandum of appeal. The insured could not produce the insurance policy as it is lying with the Bank. As noticed earlier nobody appeared on behalf of the Insurance Company before the State Commission to seriously contest the complaint. Inspite of the order of the State Commission even written arguments were not filed on behalf of the Insurance Company. Therefore, there are no grounds before us for disbelieving the submissions made on behalf of the insured.

ACCORDING to the insured the loss in respect of machinery caused on account of theft has been evaluated at Rs. 48,860/-. We are of the opinion that the complainant-appellant is entitled to this amount also in addition to the amount awarded by the State Commission.

THE complainant has also claimed Rs. 83,263/- but that amount appears to include damages /compensation for the delay in the settlement of the claim. We think that the complainant will be sufficiently compensated for the delay by awarding interest at 15% per annum also on Rs. 48,860/-. Hence we partly accept the present appeal and modify the order of the State Commission and direct the Insurance Co. to pay Rs. 51,737/- as directed by the State Commission plus Rs. 48,860/-. Both the above amounts will carry interest at the rate of 15% per annum from 21st August, 1989 till the date of payment. If any amount has been paid under the order of the State Commission, the Insurance Co. shall be entitled to adjust it against the sums awarded under this order and the remaining amount otherwise the whole amount shall be paid within three months from the date of receipt of this order. The complainant shall be entitled to the cost of present proceedings which we assess at Rs. 2000/-.