HEMA ELECTRONICS vs National Insurance Company Ltd.

THE brief facts as set out in the complaint are that the complainant, Hema Electronics, is a registered sole proprietrix firm dealing in the business of electronic goods, with its place of business at Plot No. 9, Old Air-Port Road, Balanagar, Hyderabad-42. Subsequently from 1.7.1999 the said firm was shifted to 4-208, Geethanagar, Ferozguda, Ranga Reddy District. THE complainant submits that she opened a cash credit account No. 330027 in November, 1995 with opposite party No. 2 and obtained financial assistance by hypothecating the goods. Opposite party No. 2 insured the goods of the complainant for a sum of Rs. 4,55,000/- and was regularly paying the premium and renewing the policy from time-to-time directly with opposite party No. 1 and the premium amount was being deducted from the account of the complainant. It is also submitted that at the time of initial payment of the premium for insurance of the goods in November, 1995 the address of the complainant was given as: M/s. Hema Electronics, Plot No. 9, Old Air-Port Road, Balanagar, Ranga Reddy District. THEreafter the complainant shifted her place of business to: M/s. Hema Electronics, 4-208, Geetha Nagar, Ferozguda, Ranga Reddy District. She informed the following agencies about the change in address: (a) Opposite Party No. 2. (b) District Industries Centre, Balanagar, Ranga Reddy District. (c) Department of Telecommunications (d) THE National Small Industries Corporation Ltd. (e) THE Commercial Tax Officer, Balanagar. (f) Income Tax Department.

It is also submitted by the complainant that by letter dated 1.7.1999 she requested opposite party No. 2 to inform opposite party No. 1 about the change of premises. Opposite party No. 2 acknowledged the said letter on 5.7.1999 and the complainant shifted the premises in July, 1999 and the insurance premium fell due for the period from 27.11.1999 to 26.11.2000. Opposite party No. mechanically received the premium and renewed the policy without even verifying at the time of renewing as to when its client is situated. THE premium was deducted from the account of the complainant and the same was remitted to opposite party No. 1 by opposite party No. 2 directly for the period from 27.11.1999 to 26.11.2000.

ON 23rd and 24th of August, 2000 there were heavy floods in and around twin cities particularly in the low lying areas and Balanagar area was the worst affected and the entire stock worth Rs. 4,76,505/- kept in the premises of the complainant was washed away. Opposite party No. 1 appointed an appraiser and he along with the staff of Divisional Office of opposite party No. 1 carried out inspection and assessed the loss at more than Rs. 4.1 lakhs without objecting to the difference of the address. Thereafter opposite party No. 1 repudiated the claim on the ground that the fact of shifting of the premises was not intimated either by the Bank i.e., opposite party No. 2 or by the complainant. Opposite party No. 2 by their letter dated 23.9.2000 admitted that the complainant informed them about the change of address by letter dated 1.7.1999 but while renewing the policy during November, 1999, the change of address was not informed to their agent. In spite of opposite party No. 2 requesting opposite party No. 1 to settle the claim of the complainant, opposite party No. 1 refused to settle. Thereafter the complainant got issued a legal notice dated 12.2.2001 to both the opposite parties and on 12.3.2001 opposite party No. 1 replied and epudiated the claim of the complainant and opposite party No. 2 stated that it was for the Insurance Company, opposite party No. 1 to settle the claim. Vexed with their attitude the complainant approached this Commission seeking a direction to the opposite parties to jointly and severally pay the claim amount of Rs. 4,55,000/- together with interest at 12% p.a. from the date of claim, Rs. 1,00,000/- towards damages and other costs. Opposite party No. 1 filed counter submitting that at any point of time were they informed by the complainant or by the Bank about shifting of the said premises to 4-208, Geeta Nagar, Ferozguda, Ranga Reddy District. They deny the conmplainant opened cash credit account with opposite party No. 2 and that opposite party No. 2 insured the goods for a sum of Rs. 4,55,000/-. They contend that in the absence of specific communication about the shifting and any indorsement under the concerned policy, the coverage cannot be extended to any location as per ''exclusion Clause "G" of Fire Policy which is as follows: "Property insured if removed to any building or place other than in which it is herein stated to be insured except machinery, equipment temporarily removed for repairs, cleaning, etc., for a period not exceeding 60 days."

Therefore, there is clear violation of this clause and hence in repudiating the claim, there is no deficiency of service. They also contend that intimation of shifting is mandatory because then they would find out whether such premises is suitable or not so as to insure, renew or continue the policy, otherwise the very purpose of the said exclusion clause in the said policy stands frustrated. Therefore, in the light of the above, opposite party No. 1 sought dismissal of the complaint.

Opposite party No. 2 filed counter submitting that they did not receive any benefit out of the premium paid to opposite party No. 1 on behalf of the complainant. They also contend that they are not liable to pay compensation jointly and severally since they did not receive any amount for them to bear the risk along with the Insurance Company.

COMPLAINANT filed affidavit by way of evidence and got marked Exs. A1 to A23. Opposite party No. 1 filed affidavit by way of evidence. The point for consideration is whether there is deficiency of service on behalf of the opposite parties and if the complainant is entitled to the relief sought for in the complaint?

THE complainant filed a detailed affidavit reiterating the facts of the complaint. Ex. A1 is the copy of the Fire Policy "A" dated 18.11.1999 which is in existence from 27.11.1999 to 26.11.2000. The insured amount is Rs. 4,55,000/- and the premium paid is Rs. 477/-. This policy is given in the name of Bank of India, Balanagar Branch and M/s. Hema Electronics, Account No. 330027, Plot No. 9, Old Airport Road, Balanagar, Hyderabad. Ex. A2 is the letter dated 1.7.1999 written by the complainant to the Manager of second opposite party informing about the shifting of the factory to the new address 4-208, Geeta Nagar, Secunderabad. Ex. A3 is the approval accorded by District Industries Centre for shifting of address. Exs. A4, A5, A6 and A7 are letters issued by Telecom Department, National Small Industries Corporation Limited, APGST, and Income Tax Clearance Certificate about the shifting of address. Ex. A8 is the Fire Claim Form wherein the articles destroyed were assessed at Rs. 3,52,900/-. Ex. A9 is the Bank of India statement of stocks hypothecated which totals to Rs. 4,75,505/-. Ex. A10 is the letter written by the complainant to the Insurance Company requesting settlement of the claim. Ex. A11 is the stock statement. Ex. A12 is the legal notice dated 12.2.2001 issued by the complainant to Insurance Company calling upon them to settle the claim. Ex. A13 is the reply dated 12.3.2001 issued by the Insurance Company in which they contend that it is incumbent upon the complainant to verify the correctness of the policy and intimate if they are discrepancies to the Insurance Company. Ex. A14 is the letter dated 2.9.2000 addressed by Bank of India to the Manager of Insurance Company informing about the change of address. On 23.9.2000 another letter was addressed by Bank of India to National Insurance Company admitting that the complainant informed them about the change of address to M/s. Hema Electronics, 4-208, Geetha Nagar, Ferozguda, Ranga Reddy District by their letter which was received by them on 5.7.1999 but while renewing the policy during November, 1999, the change of address was not informed to the insured agent. Ex. A16 is the repudiation letter dated 6.2.2001 wherein the claim was repudiated on the ground that the claim was under the purview of Clause ''G'' of Fire Policy. Exs. A17 to A22 are the Bank statements of M/s. Hema Electronics from 1.1.2001 to 31.1.2001, 1.11.1999 to 30.11.1999, 1.11.1998 to 30.11.1998, 1.11.1997 to 29.11.1997, 1.11.1996 to 30.11.1996, 1.11.1995 to 30.11.1995. Ex. A23 is the award given by the Insurance Ombudsmen. In this award the Insurance Ombudsmen observed that it is lack of communication on the part of the Bank and inadvertence on the part of the insurance agent in not mentioning the location of the policy. Therefore, the insurer was directed to rectify their records and dispose of the claim after proper assessment of the loss caused to the unit at this location by flood. It is the case of opposite party No. 1 that shifting of address to the new premises was not informed to them by opposite party No. 2 and had they been informed prior to the renewal of the policy, they would have ascertained the risks taking into consideration the locations and stocks. It is also their case that the claim falls under the purview of Clause ''G'' of the fire policy'' "Property insured if removed to any building or place other than in which it is herein stated to be insured except machinery, equipment temporarily removed for repairs, cleaning, etc., for a period not exceeding 60 days."

COUNSEL for opposite party No. 1 relied on the decision reported in AIR 1998 Delhi 84 in State Bank of India v. M/s. Agents and Manufacturers and Others, wherein it was held that the Insurance Company is not liable for compensation. Premises where goods should be stored as given in the policy were godowns of the building and the goods were lying outside the godown. Hence such goods were not covered by the policy. The facts of the instant case is different from the case cited and in the present case, the location was shifted and the change in address was not informed by the Bank at the time of renewal. The case of the complainant is that the policy was taken right since the hypothecation of the goods to the Bank i.e., 1995 and renewed from time-to-time.

WE are of the view that it was open to the insurance agent prior to the renewal of the policy to inspect the premises before accepting the renewal in a light and routine manner. It is also his primary responsibility to inspect the premises and ascertain the risks prior to renewal. Therefore, the entire blame cannot be shifted on the complainant or the Bank, i.e., opposite party No. 2 who admittedly did not inform the Insurance Company about the change of address prior to the renewal of the policy. It is not in dispute that the insured has paid the premium and has suffered a loss on account of floods and loss was also assessed by the Appraiser, appointed by opposite party No. 1, who assessed the loss at Rs. 4.1 lakhs. WE do not see sufficient grounds for the opposite party No. 1 to repudiate the claim. Taking the facts and circumstances of the case in its entirety, we partly allow this complaint directing opposite party No. 1 to pay a sum of Rs. 4.1 lakhs as assessed by the Appraiser with interest at 9% p.a. from the date of reudiation till the date of realisation together with costs of Rs. 2,000/-. Since opposite party No. 2 is bound to inform the Insurance Company which they did not do, we feel it a fit case to award costs against them quantifying to a sum of Rs. 5,000/-. In the result, this complaint is partly allowed directing opposite party No. 1 to pay a sum of Rs. 4.1 lakhs as assessed by the Appraiser with interest at 9% p.a. from the date of repudiation till the date of realisation together with costs of Rs. 2,000/-. Opposite party No. 2 is bound to inform the Insurance Company which they did not do, we feel it a fit case to award costs against them quantifying to a sum of Rs. 5,000/-. Time for compliance six weeks. Complaint partly allowed.