JAYBHARAT FABRICS MILLS LTD. vs National Insurance Co. Ltd.

-BY way of this complaint the complainant has prayed for following relief: (a) Hon''ble Commission direct the opponents to pay claim amount of Rs. 9,66,199/- along with 18 per cent interest from 1.2.1999 after giving six months reasonable time for the settlement of claim till realisation and further to pay 18 per cent interest from 1.2.1999 to 18.3.1999 on Rs. 40,68,203/- being the amount released after long delay.

(b) Complainant submitted to the Hon''ble Commission that as per the facts and circumstances narrated in the complaint and the negligence and unfair trade practice adopted by the opponent have put complainant under mental torture, pain, shock and suffering as well as monetary loss which cannot be assessed in terms of money but complainant is claiming an amount of Rs. 1,00,000/- only for such mental agony, inconvenience caused to him by the negligence of the opponents.

BROAD allegations of facts for claiming above reliefs may briefly be stated: The complainant had taken Erection All Risks Insurance Policy under Policy No. 44/52/2001/97-98 for the period from 1.6.1998 to 31.8.1998 for the sum insured at Rs. 1,16,19,000/-. During the period of insurance, there was incident of fire in the complainant''s factory premises described in the complaint on 25.6.1998 resulting in damage to the machinery in the sum of around Rs. 60,02,392/-. Complainant intimated the opponent Insurance Company about the loss on 26.6.1998 and requested to process and sanction the claim. Opponent Insurance Company appointed M/s. R.D. Engineers & Co. as the Surveyors who assessed net loss in the sum of Rs. 50,85,254/- after deducting salvage, which was confirmed by the opponent Insurance Company by letter dated 6.5.1999. First payment of Rs. 25,00,000/- was released on 18.3.1999 and second payment of Rs. 15,68,203/- was released thereafter making total payment of Rs. 40,68,203/-. The complainant''s auditor called upon the complainant to send copy of the survey report and state bifurcation of claim lodged by the complainant. Complainant requested opponent Insurance Company to send such copy with bifuraction of the sanctioned claim and sent reminder dated 18.4.1999. Opponent Insurance Company gave reply dated 6.5.1999 giving out bifurcation which inter alia showed deduction of 20 per cent of claim amount as per policy condition leaving net amount payable at Rs. 40,68,203/- which was paid. Complainant protested against such deduction as per letter dated 21.5.1999 since as per the terms and conditions of the policy in question 1 per cent or Rs. 1,500/- whichever is higher was deductible leaving the true and correct deductible amount of Rs. 50,852. The complainant has, thus, alleged to be entitled to further claim of Rs. 9,66,199/- for withholding of which there was no reason. Alleging deficiency in service and unfair trade practice both in respect of the unauthorized deduction of 20 per cent and delay in making payment, the complainant has prayed for above relief. The opponent Insurance Company has resisted the complaint as per its written statement Exh. 8, saying that the policy in question styled ''EAR'' is a Tariff Policy meaning thereby that its premium rates, terms and conditions, excess applicable, applicable warranties are according to the rules framed by Tariff Advisory Committee. The Committee is a statutory body formed under the Indian Insurance Act. The rules have been quoted and they include Rule 10(B) which has been quoted at page 6 of the written statement. That being the relevant clause needs be reproduced : "10(B) : Excess for claims arising out of the Fire/Explosion : The maximum excess for claim arising out of Fire/Explosion shall be as under, both for Normal and Testing Period: Excess for Fire/Explosion 5% of the claim amount Perils for risks in receipt of subject to a minimum of the 2.5% discount referred Testing Period Excess with under 10.A.11 an upper limit of Rs. 2 crores e.g. if the excess for Normal and Testing periods are Rs. 10,000/- and Rs. 40,000/- respectively, then the Excess for claims arising out of Fire/Explosion shall be 5% of the claim amount subject to minimum of Rs. 40,000/- with an upper limit of Rs. 2 crores Excess for Fire/Explosion Perils for all 10% of the claim amount subject to a minimum of the other risks (conditions as per 10.A1) Testing Period excess with an upper limit of Rs. 2 crores Excess for Fire/Explosion Perils for all 20% of the claim amount subject to a minimum of other risks which do not comply with testing period excess with an upper limit of Rs. 7.5. Regulations under 10.A.1. requirements crores. for qualifying for the discount."

According to the opponent Insurance Company aforesaid last part of the clause would apply as at the site of installation of machinery of the complainant fire fighting arrangements were not provided as per the above mentioned Tariff Rules and hence 20 per cent of the claim amount assessed as aforesaid is to be deducted as ''Excess''. Thus, the opponent Insurance Company finally and fully paid Rs. 40,68,208/- by two cheques.

It has been asserted that the excess clause typed in the schedule of the policy in question is typed by mistake and the complainant cannot take advantage of the same de hors the Tariff Rules. The policy is subject to the said rules which govern the terms and conditions of the policy concerned and accordingly 20 per cent as excess amount has been deducted. The claim in the complaint and the allegations in respect thereof have accordingly been denied. The complainant has filed rejoinder at Exh. 9 which along with above pleadings we have gone through. We have also gone through the correspondence placed on record and the portion of the relevant tariff rules. We have also gone through the decision which has been referred to on behalf of the complainant. We have heard the learned Advocates for the parties.

SHORT question for our decision is whether the relevant tariff rule will apply or whether the condition regarding excess in the policy in question will apply. It is not in dispute that the condition in the policy provides for deduction of 1 per cent or Rs. 1,500/- which we have seen in the Xerox page of the schedule of the policy produced by the complainant. It is also not in dispute that the condition so appearing in the policy in question will apply if there were no contrary tariff rule. The opponent Insurance Company has not presented any clause of term or condition in the policy which might be said to be a ''non obstante clause'' or ''subject to tariff rules clause''. Hence, only question is whether the relevant tariff rule would override the admitted condition in the policy.

IT is in this connection that reference has been made to a decision of Hon''ble National Commission in the case of M.K.J. Corpn. v. United India Insurance Co. Ltd., II (1995) CPJ 112 (NC), where it has been held that instructions of the Insurance Tariff Advisory Committee are not binding on the insured so long they are not incorporated in the contract of insurance. In our considered opinion the decision is on all fours so far as the facts of the present case are concerned. In that view of the matter the complainant would be entitled to main part of the relief. We would, therefore, proceed to take up the claim for interest and compensation. This is not a case where the opponent Insurance Company has proceeded to negative the claim on the head of excess to be deducted without any basis worth the name. Besides, the complainant also proceeded to accept the breakup payments without any protest regarding delayed payment. IT was only on audit query that the complainant was required to call for the survey report and bifurcation and that is how the complainant also could work out the error in the deduction on the head of ''Excess''. Complainant is a limited company having corporate soul and not a living soul. There is no question of mental agony or the like to it. Besides in the matters arising from contracts no compensation on the head of mental agony and hardship is claimable - Ghaziabad Development Authority v. Union of India, II (2000) CPJ 1 (SC)=IV (2000) SLT 654=(2000) 6 SCC 113. Bearing in mind all these circumstances of the case what the complainant might legitimately claim is interest at the rate of 9 per cent from the date of complaint which is filed in the year 1999 itself. We, therefore, pass following order : The opponent Insurance Company is directed to pay to the complainant Rs. 9,66,199/- with interest at the rate of 9 per cent per annum from the date of the complaint till payment within eight weeks from today. There shall be no order as to cost. Complaint disposed of.