KALA EMPORIUM PVT. LTD. vs ORIENTAL INSURANCE COMPANY LIMITED

THE complainant seeks issuance of direction to the Opposite Party-THE Oriental Insurance Company Limited, Chandigarh to settle its claim to the tune of Rs. 13,97,550/- and to pay interest @ 24% per annum from 4.3.1999 till the date of realization of that amount. THE complainant has also prayed for compensation to the tune of Rs. 5,00,000/- for harassment and mental discomfort. A sum of Rs. 35,000/- has been claimed towards the cost of this complaint. THE facts giving rise to this complaint may briefly be narrated as under :

THE complainant - M/s. Kala Emporium Pvt. Ltd. is engaged in the business of trading of cloth and is carrying out its business from S.C.O. 22-23, Sector 11-D Chandigarh. It took Insurance Policy from the Oriental Insurance Company Ltd. for various risks including burglary, damage to stocks, shopkeepers policy of total value of Rs. 25 lakhs. Copies of the Insurance Policies have been placed on record as Annexures C-1 to C-3. It was alleged that the stocks lying in the premises got damaged on account of water seepage/inundation on 4.3.1999, which resulted from the dripping of the water from roof where water tank had been placed. THEre was massive water logging on the first floor, which percolated to the ground floor of the shop through supply lines/walls. THE seepage of water dripping in the shop was on account of cracks in the walls/stairs and floor. THE complainant sent intimation of the loss to the Opposite Party through letter dated 4.3.89 copy Annexure C-4. THE total loss of stock due to the flooding of water was assessed in the range of Rs. 15 lakhs to Rs. 20 lakhs. Apart from this, a sum of Rs. 3.50 lakhs was alleged to be the quantum of damage due to the destruction of furniture and fixtures. The Opposite Party appointed M/s Duggal Gupta and Associates, SCO No. 169, Sector 37-C, Chandigarh as its Surveyors and Loss Assessors. The Surveyor visited the spot on 4th and 5th of March, 1999 and sent a letter copy Annexure C-5 vide which demand of certain details regarding the claim forms, copies of policy, copy of police reports, purchase/sale bills, statement of stock and number of other documents was called for. The information was duly supplied vide Copy Annexure C-6. The Surveyor sought further clarification vide letter dated 3.4.99 Annexure C-7 which was furnished by the complainant vide letter dated 20.4.1999 copy Annexure C-8. It has been alleged that though the entire formalities and all the informations were furnished by the complainant in April, 1999 but the claim was not settled by the opposite party. It is further alleged that the Surveyor-cum-Loss Assessor, namely, Mr. S. Duggal summoned the complainant on 11.6.1999 and tried to impress upon the complainant the need for some negotiated settlement. The Surveyor also told the complainant that the process of settlement of claim was cumbersome, arduous and ridden with large number of formalities. It has been contended that the complainant was virtually coerced to agree for a sum of Rs. 6,51,908/- as gross amount in respect of total claim. The details of the same amount was not supplied by the Surveyor to the complainant despite request. Annexure C-9 is the copy of the statement sent by the Surveyor to the complainant which is dated 11.6.1999. Since the opposite party failed to settle the claim of the complainant, this complaint has been filed before this Commission under Section 17 of the Consumer Protection Act, 1986 (for brevity to be referred as the C.P. Act) on 21.3.2000.

The opposite party-Insurance Company filed written statement. It was alleged by way of preliminary objections that there was no resolution from the Board of Directors of the complainant company authorising Mr. I.C. Bansal to file the present complaint case which deserves to be dismissed on this ground. It was also contended that the complainant did not disclose any damage due to the insured peril under the terms and policy of the company. It was contended that the claim of the complainant had been repudiated vide letter dated 2.6.2000 sent under Registered A.D. Post which was not placed on record by the complainant. The Opposite Party repudiated the claim on the ground that the loss claimed did not fall under Section 1(b) and (f) of the policy nor it was fortuitous and accidental in nature. It has been contended that there is no deficiency on the part of the Insurance Company. It was, however, admitted that the loss was properly surveyed by M/s. Duggal and Associates and they submitted the report to the opposite party. It was contended that the opposite party took the final decision in the matter of claim after receiving the final advice from the Head Office at Delhi. It was alleged that in case the Commission came to the conclusion that the company is liable then the liability of the company could not exceed the quantum of loss assessed by the Surveyor which is of a sum of Rs. 1,60,477/- copy Annexure R-1. On merit, it was denied that the loss of stock of cloth was due to flood and inundation and at any rate under the terms and conditions of the policy regarding the flooding/inundation of the shop. The opposite party- Insurance Company placed on record the report of the Surveyor as Annexure R-1 and also filed copy of Insurance Policy dated 25.9.1998 as Annexure R-2, copy of cover note dated 25.9.98 as Annexure R-3 and copies of terms and conditions of Insurance Policy as Annexure R-4.

THE complainant led evidence in the shape of the affidavit of Mr. I.C. Bansal, Director, M/s. Kala Emporium Pvt. Ltd. who also filed additional affidavit dated 9.8.2001. THE complainant placed on record the photocopies of the policies taken by the complainant as Annexures C-1 to C-3, copy of the claim letter as Annexure C-4, copy of the letter issued by the Surveyor-cum-Loss Assessor as Annexure C-5, copy of the letter of the complainant to the Surveyor as Annexure C-6, copy of the letter dated 11.3.1999 as Annexure C-7, copy of letter dated 20.4.99 of complainant addressed to the surveyor as Annexure C-8, another copy of letter of the complainant dated 11.6.99 as Annexure C-9 and copy of letter to the Branch Manager of the Opposite Party Insurance Company dated 25.11.1999 as Annexure C-10. THE opposite party filed evidence in the shape of affidavit of Mr. Harbans Lal, Dy. Manager, the Oriental Insurance Company Ltd., Sector 17, Chandigarh. We have heard the learned Counsel for the complainant and the learned Counsel for the opposite party-Insurance Company and have carefully perused the record of the case.

THE learned Counsel for the complainant contended that the cause of damage to the stock of cloth kept in the shop is due to the seepage of the water which resulted from the flooding of the water from the roof of the 1st Floor which in turn leaked form the water tank and percolated down to the ground floor in the shop through supply lines/walls. It was contended that this was squarely covered by the terms and conditions of the policy and as such the respondent could not validly and legally repudiate the claim of the company. THE Surveyor-cum-Loss Assessor appointed by the opposite party Company gave its report and assess the loss for a sum of Rs. 1,60,477/-. It is not disputed that the Insurance Policy was in force at the time of the said damage due to flooding of water which is said to have taken place on 4.3.1999. The period of the policy was from 1.10.1998 to 30.11.1999 under Cover Note No. 463801 dated 25.9.1998 and the policy referred to above. It will be relevant to point out that the opposite party had taken a plea in Para 1 of the reply on merit in the written statement that the water had dripped from the roof/sealing and it came to the ground floor in the shop on account of cracks in the walls/stairs/floor. It was alleged that in view of these admissions in the complaint itself, the alleged loss was not due to inundation and hence the complaint deserves to be dismissed. It was alleged that the building was owned by Mr. Ajay Bansal and the complainant company had taken the same on rent. The company was a family concern of Bansal''s and the said defects in the building/fixation of AC, cracks etc. through which the water seepage took place cannot be said to have arisen accidentally. There was no sudden appearance of the cracks in the building resulting in the dripping/seepage of water. It was further alleged that it had been apparently due to steady deterioration of building and hence it was not accidental. The cracks clearly spoke of deliberate and intentional non-maintenance by the owner/tenant which was infact the cause of dripping and seepage of water and such a cause was not covered under the terms and policy issued by the complainant. It was further alleged that there was no deficiency on the part of the complainant in rendering service under the terms and conditions of the policy. These averments made in Para 1 of the reply on merit would go to show that the opposite party- Insurance Company mainly relied on the loss caused due to the seepage of the water on account of cracks in the building which in turn was due to the fact that there was no proper maintenance of the building by the owner/tenant. It, however, remains a fact that despite this condition of the building having cracks and other defects which include seepage of water from the upper floor was not duly taken into consideration by the opposite party-Insurance Company when the Insurance Policy was issued to the complainant covering the risk on account of inundation of the accommodation due to flooding of water, etc. Now, if the opposite party-Insurance Company issued the policy by not taking into consideration the defects in the building such as the cracks mentioned above, the opposite party cannot now take a plea to the contrary that such a risk was not intended to be covered under the policy. These facts clearly show that the opposite party- Insurance Company did not attach any significance or relevance to the cracks which developed in the building which was the subject-matter of Insurance against inundation and flooding of the accommodation. In our considered view, the plea taken by the Opposite Party in this regard is factually not sustainable and the claim of the complainant-company could not be repudiated on that ground. The learned Counsel for the complainant further contended that the Surveyor-cum-Loss Assessor inspected the building in question and assessed the losses without associating the complainant and consequently the complainant was not in a position to place any relevant material in record to its case for claiming a particular compensation under the policy aforesaid, before the Surveyor-cum-Loss Assessor. It is also not disputed that the complainant was not supplied with the copy of the report of the Surveyor-cum-Loss Assessor and thus had no opportunity of making any submissions before the opposite party against the said report. In our considered view, the principles of natural justice require that the opposite party-Insurance Company ought to have instructed its Surveyor-cum-Loss Assessor to associate a duly authorised representative of the complainant-company while assessing the loss of the stock and to take into consideration any relevant material placed before the Surveyor-cum-Loss Assessor. If the authorised representative of the complainant had been so associated, then the case of the complainant and any material placed by it before the Surveyor-cum-Loss Assessor could have been taken note of at the time of preparing the report and submitting the same to the opposite party-Insurance Company for consideration and settlement of the claim of the complainant.

UNDER these circumstances, we are of the considered opinion that it would be just, proper and appropriate that this complaint be disposed of by issuing a direction to the opposite party- Oriental Insurance Company Ltd. to re-assess the compensation claimed by the complainant under the terms and conditions of the relevant policy placed on records by duly associating the authorised representative of the complainant company and permit the complainant to place before the Surveyor-cum-Loss Assessor any relevant material in support of its claim under the policy in question and then assess the loss suffered by the complainant and submit the report of the opposite party- Oriental Insurance Co. Ltd. for settlement of the claim. In case, the amount settled by the opposite party- Insurance Company satisfies the complainant, it would be the end of the matter but in case the complainant still felt aggrieved, the complainant would be at liberty to challenge the same by filing an appropriate petition before the Competent Authority.

RESULTANTLY, the repudiation of the claim of the complainant by the opposite party- Insurance Company is set aside and the opposite party is directed to assess the compensation payable under the terms and conditions of the policy by directing its Surveyor-cum-Loss Assessor to give due notice of a reasonable period to the complainant and associate the authorised representative of the complainant in assessment of the loss suffered by the complainant company under the relevant policy and permit the complainant to place relevant material in that regard and prepare a report within a period of three months from the date of communication of this order and submit the same to the opposite party-Insurance Company which shall on its part finalize the claim of the complainant in further one month time and duly communicate the same to the complainant. Copies of this judgment be supplied to the parties free of charges. Complaint disposed of.