CORE ORGANICS LTD. vs National Insurance Co. Ltd.

THE complainant is a joint sector Company alongwith Punjab State Industrial Development Corporation. Its factory is situate at Focal Point, Dera Bassi, Patiala. It manufactures chemicals. On 28.9.1995, a fire broke out in the aforesaid factory resulting in tremendous loss. THE National Insurance Company with whom the complainant concern was insured by means of two policies - one commencing on 30.6.1995 and the second on 8.8.1995. THE respondent was informed telephonically immediately and thereafter by means of a letter dated 29.9.1995 about the fire. THE complainant Company was insured for a sum of Rs. 3,52,55,000/-. THE respondent Insurance Company deputed a team of Surveyors and the survey was completed by end of November, 1995. THE respondent-Insurance Companies made a payment of Rs. 1.50 crore on 4.3.1996 after a period of five months from the date of occurrence. THE complainant had been requesting the respondents that they were able to reconstruct the plant and machinery upto 40% and more funds were required. It has further been alleged that the settlement of the claim has been delayed without any fault on the part of the complainant. THE two insurance policies detailed in para 2 of the complaint were purchased from Chandigarh office of the respondents. THE claim put forward here in para 11 of the complaint is briefly reproduced as under : "(1) 18% interest on delayed payment of the claim as Rs. 1,50,00,000/- (Rs. one crore fifty lacs) paid after 5 months of the accident; (2) 18% interest on delayed payment of claim of Rs. 86,47,737/- paid after 1 year of accident; (3) loss suffered by the complainant Company by paying interest to Financial Institutions and Banks due to delay in settling the claim; (4) wrong deduction of premium of Rs. 86,617/- while settling the claim; (5) wrong deduction of Rs. 30,315/- as electronic discount; (6) loss of Rs. 4,70,683/- due to non- settlement of claim on reinstatement basis as provided by the insurance policy; (7) any other amount found due in the facts and circumstances of the case."

IN a reply filed on behalf of the respondents, it has been averred that the claim of the complainant was expeditiously processed; a sum of Rs. 1.50 crores was paid on 4.3.1996 within six months of the intimation under the policy. Besides this a sum of Rs. 85,61,120/- was paid on 8.10.1996 and the present complaint is an abuse of the process of law. The complainant has purposely concealed the material facts. The matter in dispute and issues involved were complicated and the record is voluminous; the dispute cannot be tried in summary proceedings here. The complainant vide its letter dated 23.7.1996 had agreed to accept a sum of Rs. 2,36,47,737/-. A consent letter in this regard was given by the complainant voluntarily. The complainant is not competent to retract from its own documents. This Commission had no jurisdiction to try the present complaint as jurisdictional value exceeded Rs. 20.00 lacs not withstanding that the relief claimed is restricted to Rs. 20.00 lacs. The fire Policy No. 6000/11/13/95/166 was in lieu of cover note which was got issued by the Punjab & Sind Bank, Chandigarh and the complainant is not a party to the policy. The second Policy No. 420/01/11/95/33/73 was issued to the IDBI and Punjab & Sind Bank. IN view of the details contained under the policy, the complainant could not seek any relief. On merits, it has been averred that as soon as the intimation regarding loss was received, M/s. S.P. Goel and Company, Insurance Surveyors and Loss Assessors and M/s. M.P. Bakshi Surveyors Private Limited, were deputed. A joint survey report was received. As a consequence of the survey report, a sum of Rs. 1.50 crore was released against the abovesaid claim. It was ultimately settled at a total sum of Rs. 2,36,477.37 and intimation in this regard was conveyed on 7.10.1996. The voucher dated 7.10.1996 was sent to the complainant and the sum of Rs. 86,47,037/- was in full and final settlement of the claim for loss and damage as a consequence of fire in question. It was received duly signed by the IDBI and a copy thereof is Annexure D-18. A copy of the letter received from the complainant is Annexure D-19. A cheque for Rs. 85,61,120/- was sent to M/s. Core Organics on 8.10.1996. A copy of this letter is Annexure D-20 and a copy of the cheque is Annexure D-21. The complainant in fact wrote to the respondents on 8.10.1996 that a sum of Rs. 86,617/- was to be deducted towards premium (Annexure D-19). The complainant conveyed its consent vide letter dated 23.7.1996 accepting the compensation of Rs. 2,36,47,737/- in full and final settlement of the claim. It has further been averred that the complaint is liable to be dismissed and the respondents are not liable to pay any amount of interest as there was no inaction or wrong on their part.

The learned Counsel for the complainant has pointed out that the fire broke out on 28.9.1995. The occurrence and the magnitude of loss was not denied in this case from the very beginning. A sum of Rs. 1.50 crore was released on 4.3.1996 Annexure D-II by means of a cheque drawn on United Commercial Bank, Chandigarh. There was delay in releasing the remaining sum of Rs. 86,47,737/- and the complainant has claimed interest @ 18%. A letter dated 23.7.1996 is Annexure D-16 and is reproduced as under : CORE ORGANICS LTD. (A Joint Venture of PSIDC) SCO 120-121, Sec. 8C, Chandigarh-I Ph. 540396 Fax : 091-0172-45928 COL/4831/748/07/96 23rd July, 1996 CONSENT LETTER Re: Claim for loss by fire on 28.9.1995 to stock, plant and machinery and building whilst stored and/or lying/and/or installed in the factory premises situated at Focal Point Plot No. B-2, B-3, Dera Bassi, Chandigarh, covered under Policy Nos. 420101/11/95/33/78 and 6000/II/13/95/ 166 issued by National Insurance Co. Ltd. DO - II Chandigarh (Leading Insurers). Dear Sir, We are agreeable to accept an amount of Rs. 2,36,47,737/ - as full and final settlement of the above claim as jointly assessed by M/s. S.P. Goel & Company and M/s. M.P. Bakshi Surveyors Pvt. Ltd., New Delhi. We understand that the settlement of our claim will be made subject to terms, conditions, exceptions and limitations of the policy issued to us. For CORE ORGANICS LTD., Sd/- Avtar Singh, Managing Director" Sh. Anil Kheterpal, the learned Counsel for the complainant has specifically referred to the second part of this letter which indicates that the sum of Rs. 2,36,47,737/- was not in full and final settlement because as contained in this part, the payment received was subject to terms, conditions, exceptions and limitations of the policy. It was a reinstatement policy and the Insurance Company had been receiving the premium at an extraordinary rate. The first payment of Rs. 1.50 crore as compensation was made on 4.3.1996 and thereafter a sum of Rs. 85,61,120/- was released by means of a cheque on 8.10.1996 Annexure D-20. The learned Counsel for the complainant has also pointed out that according to the interim report of the Surveyors dated 22.11.1995 Annexure D-8 a sum of Rs. 1.50 crore was assessed as the loss within two months of the occurrence. This sum finds mention in the preliminary survey report. The respondent was not justified in releasing the payment late to the claimant where occurrence and the loss was not denied or opposed. There were two joint Surveyors appointed by the respondents in this case and they presented a kind of unanimous report.

A plea raised by Mr. Ravinder Mohan Suri, the learned Counsel for the respondents that only Bank could institute a complaint, if any, is not acceptable inasmuch as the respondents had been dealing with the complaints, as is evident from letter dated 4.3.1996 addressed to the complainant (Annexure D-10). Besides, it was a reinstatement policy. The complainant Company was to be reinstated in respect of plant, machinery and building after the peril and not the Bank. In Ginni Filaments v. New India Assurance Co. Ltd. & Anr., I (1998) CPJ 54 (NC)=1996 (2) CON.LT 638, referred to by the learned Counsel for the complainant, the National Commission observed that even after giving discharge in full and final settlement of a claim, the complainant could claim compensation under the Actin case of delayed settlement for deficiency of service due to negligence. In the present case before us, two joint Surveyors of the choice of the respondent-Insurance Company were appointed and they furnished a kind of a ''joint interim report'' dated 22.11.1995, wherein the loss was in the region of 2.45 crores on reinstatement value basis and Rs. 2.40 crore on depreciated value basis and on account of payment of Rs. 1.50 crore was recommended. This report was ultimately made absolute on 24.7.1996. However, the actual payment was made on 8.10.1996. In this case, when the Insurance Company took more than six months in making the interim report dated 22.11.1995 as final on 24.7.1996, it was expected and required to release the payment there and then. There was no justification for releasing the payment of Rs. 86,47,737/- on 7.10.1996 and not on 23.7.1996. Even if we allow the last week of July in processing the actual payment, even then the respondents are hereby held liable to pay interest w.e.f. 1.8.1996 to 7.10.1996 @ 12% per annum in respect of the sum of Rs. 86,47,737/- and it comes to Rs. 1,93,133/-. This amount shall be payable to the complainant within one month of this order failing which they will also be liable to pay interest @ 12% p.a. from the date of this order till the date of payment. The complainant is also entitled to costs Rs. 2,000/-. With these directions, this complaint stands disposed of. Complaint allowed with costs.