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Judgment
ALLEGING deficiency in service on the part of the opposite party/Insurance Company, the HP. State Forest Corporation Limited, a public limited company incorporated under the Companies Act, has filed the present complaint seeking a direction to the opposite party/Insurance Company to pay insurance claim of Rs. 22,26,800 and also to pay interest amounting to Rs. 27,61,232 calculated @ 24% per annum.
IN nutshell, the case of the complainant is that in order to cover the risk of their timber and other fuel wood they had taken an insurance policy bearing No. 421205/3300003/93-94 dated 31.10.1993 for a period from 31.10.1993 to 30.10.1994 in the sum of Rs. 7,49,51,602 covering the loss/damage by fire, lightening, explosion/implosion and flood, etc., to their stocks of timber and fuel wood at various locations, by paying a premium of Rs. 7,04,030. During the currency of the said insurance, a fire broke out at Jhaulla Timber Depot in the intervening night of 18.11.1993 and 19.11.1993 thereby destroying the stocks of timber stacked for roping down timber from the forest to road side depot, as a result of which, the complainant suffered a loss to the extent of Rs. 22,26,800. An FIR No. 135/93 dated 19.11.1993 was lodged at Police Station, Tissa and copy of the same was forwarded to the opposite party/Insurance Company and the concerned higher authorities were also informed. Insurance Company appointed a first surveyor Mr. Preet Sharma for assessment of loss caused to the stock of wood of the complainant and he visited the site of loss. However, later the Insurance Company appointed M/s. Purisons, Surveyors and loss assessors, who after taking into account all the relevant factors, assessed the net loss at Rs. 17,08,607 and recommended the payment of the said amount subject to the liability of the Insurance Company going by the terms and conditions of the policy. It would appear that despite the surveyor having assessed the loss, the opposite party sat over the matter and did not settle the claim. Accordingly the complaint was filed. On being noticed, the opposite party/Insurance Company resisted the complaint and filed a detailed reply to the complaint raising preliminary objections about the maintainability of the complaint because the requisite permission was not obtained from the Cabinet Secretariat as matter was between the two Corporations of the Government could be settled through a Committee of Secretaries. On merits, the factum of issuance of the insurance policy as also the factum of peril and loss and damage to the stock of timber on the alleged date and place is not disputed. It is also not disputed that the Purisons Surveyors has assessed the total net loss at Rs. 17,08,607 but the liability to pay the said amount is denied on the premise that the complainant was requested to pay a sum of Rs. 4,60,477 plus service charges towards the extra premium before the disbursement of the assessed amount but the complainant vide letter dated 6.3.1998 declined to pay the same for the reasons that the premium was calculated by the company and not by the complainant. It was also pleaded that in the earlier policy also taken by the complainant from the United India Insurance Company, it had not demanded any floating charges and had settled the fire claim in respect of the fire, which took place at Bharmour by making the payment of the insurance claim. It is stated that the opposite party had always been ready and willing to pay a sum of Rs. 12,01,161 to the complainant after deducting a sum of Rs. 5,07,446 towards the deficient premium and service charge. It is denied that the opposite party is liable to pay any further amount.
IN the rejoinder, the complainant has controverted the objections and pleas raised by the Insurance Company in its reply and have generally reiterated the averments made in the complaint. It is denied that the opposite party/Insurance Company had demanded any additional premium towards floating charge or could make such a demand, once the policy was issued by the opposite party/Insurance Company after consideration of all the relevant aspects and the stocks sought to be covered under the policy. It is denied that opposite party is entitled to deduct a sum of Rs. 05,07,446 from the net assessed loss of Rs. 17,08,607.
TO substantiate their respective pleas, parties have relied upon the policy document and correspondence exchanged between the parties. That apart, parties have filed supporting affidavits. From the side of the complainant, affidavit of one Mr. Pankaj Khullar, IFS, Managing Director of the complainant company has been filed while from the opposite party, affidavit of Mr. N.S. Dhillon, Manager of the Insurance Company has been filed. We have carefully perused the same and have heard the Counsel for the parties. Before we advert to the question as to whether the opposite party/Insurance Company was entitled to deduct of sum of Rs. 5,07,446 from the assessed amount of Rs. 17,08,607, we must notice that during the pendency of the complaint and under the order dated 19th July, 2006, the opposite party has made payment of Rs. 12,01,161 to the complainant. Now the question is as to whether this amount can be treated as the amount paid by the opposite party in full and final satisfaction of the claim of the complainant. For this we must look to the terms and conditions of the policy document showing the nature and extent of the coverage. From the perusal of the policy dated 31.10.1993, there is no denial of the position that the opposite party/Insurance Company had received a total premium of Rs. 7,04,030 for coverage of the stocks of timber and fuel wood of the complainant upto Rs. 7,49,51,602. The said premium has been calculated in the following manner: ...[VERNACULAR TEXT OMMITED]... The Sum(s) Insured are as under: ï¿ 1/2 S.I. 1. Description of Property Timber in various locations on the forest produce of all Species i.e. converted timber and for un-converted timber 7, 23,19774 2. Machinery and accessories Bilates, logs, bundles extracted from lots areas by the HPSFC Ltd. and lying in/and/stored, scattered open in forest 3. Stocks and Stocks in process And is under process of carriage lying at various transit Depots, ropeway heads, launching depots, river stream 4. Stocks in Godown Depots, central depots, retail sale depots of Chamba Forest Division, detail as per list. 5. Furniture and other contents On Charcoal and Fuel wood stored and is lying in various Locations detail as per list attached including road retail ...[VERNACULAR TEXT OMMITED]... The insurance under this policy is subject to warranties and clauses (as per form attached) and extend to cover risks of seven crore forty nine lakh fifty one thousand six hundred and two only. In witness whereof the undersigned being duly authorised by and on behalf of the Company has/have set their hands. Name of the Insurance Company Duly Constituted Attorney
ALONG with this schedule a list of locations where the timber and other wood of the complainant was stored is annexed to the Insurance Policy. The perusal of the said list would show that it contains the quantity of various lots of timber and other wood lying at different depots/different locations along with value of the said timber and wood.
ACCORDING to Halsbury ''s Law of England, a floating policy is one which describes the insurance in general terms, and leaves the other particulars to be defined by subsequent declaration (s). The plea of the opposite party that the insurance policy issued in this case, was a floater policy and less premium had been charged does not cut much ice in view of the facts and circumstances of the case in hand and the material available on record. Once the opposite party/Insurance Company had agreed to cover the stock of timber lying at different specific locations as appear in the list, can it be said that the policy issued by the opposite party was a floater policy and they had charged the insurance premium payable on floater policy and is entitled to deduct the same from the payable claim as per the assessment of the surveyor. In our view, the answer is a plain ''NO '' because once the complainant had taken coverage for the timber of specified quantity and valuation lying at specified locations as would be evident from the list, it can by no stretch be said that the complainant wanted a floater policy to be issued or the Insurance Company had in fact issued a floater policy and had charged the premium, which is due and payable on a floater policy. The calculation of premium (supra) should not leave any doubt that all these factors were taken into account while issuing the policy in the sum of Rs. 7,49,51,692 and by charging a net premium of Rs. 7,04,030. Consequently we hold that the demand of the opposite party for a payment of Rs. 4,60,477 plus service charges towards the deficient premium was not a legitimate demand in any case even if it is assumed that short premium was charged, no demand was raised by the opposite party uptil the filing of the written version to the complaint. We are therefore, of the view that the opposite party was not justified in deducting any amount towards the deficient premium from the amount of net loss assessed by the surveyor.
ALTHOUGH the complainant claim that loss of Rs. 22,26,800 was occasioned due to the fire but in our view it would be quite just and proper to accept the net loss as assessed by the surveyor i.e. Rs. 17,08,607 as the amount of insurance claim payable by the opposite party to the complainant. Since a sum of Rs. 12,01,161 stands paid to the complainant under the directions of this Commission pursuant to the order dated 19.7.2006, the opposite party/Insurance Company is liable to pay the balance amount of Rs. 5,07,446 as principal amount.
ORDINARILY the Insurance Company ought to have settled the insurance claim of the complainant within a reasonable period say about six months from the date of peril but it was not so done. In view of the background of the case that the assessment of loss was made by the Surveyor on 24.10.1996, as a special case, we would like to restrict the award interest on the insurance claim with effect from the date of the report of surveyor i.e. 24.10.1996. In view of the foregoing discussions, we partly allow the complaint with the direction to the opposite party/Insurance Company to pay the balance sum of Rs. 5,07,446 along with the interest on the said amount @ 6% per annum with effect from 24.10.1996 uptil the date of payment. We further direct the Insurance Company to pay interest @ 6% per annum on the amount of Rs. 17,08,607 from 24.10.1996 till the date of the payment of the said amount. Cost made easy. The awarded amount shall be paid within a period of six weeks from the date of this order, failing which the rate of interest shall stand enhanced to 12% per annum from the date of the default. Complaint partly allowed.