Mohan Lal Jain vs Oriental Insurance Co. Ltd.

THIS complaint under Section 17 read with Section 12 of the Consumer Protection Act, 1986 (hereinafter called as ''Act'' for short) has been preferred as the respondents/insurers repudiated the complainant''s claim under the Shop Keepers Policy and Fire Policy ''A'' obtained by the complainant.

INDISPUTABLY, the complainant has a General Stores and carries on his wholesale business of food grains, vegetable oil and Kirana. His shop is situated at Darri Raod, Korba. He obtained a Shop Keepers Policy from the opposite parties covering risk from 19.5.1999 to 18.5.2000 for a total assured amount of Rs. 20,62,000/-. He had aslo obtained Fire Policy ''A'' by which risk for the period from 16.8.1999 to 15.8.2000 was undertaken to be covered by the opposite parties and the assured amount of Rs. 17,00,000/- was payable under the said policy. According to the averments in the complaint on the intervening night between 6.4.2000 and 7.4.2000 at about 2. a.m. fire broke out in his shop. The complainant made all possible efforts to control the fire by calling the fire brigade from M.P.E.B. and Balco. However, his shop was badly damaged and stock of food grains and Kirana goods kept therein was burnt. According to the complainant, he suffered loss to the extent of Rs. 7,42,500/- on account of damage by fire to the stock of food grains, vegetable oil and Kirana and also Rs. 1,44,000/- on account of damage to the building. Thus, according to the complainant, the total loss on account of said incident of fire amounted to Rs. 8,86,500/-. The complainant intimated about the incident to the police as well as to the opposite parties/insurers. The opposite parties also appointed Surveyor and Investigator for assessing the loss as above. However, the claim was repudiated by the opposite parties on 8.1.2002 on the ground that the fire occurred in the godown and not in the shop, hence the claim under the policies was not payable. Aggrieved by the repudiation of his claim as above, the complainant, served the opposite parties with legal notice dated 13.3.2002. However, as the opposite parties failed to pay the amount under the policies, claimed by the complainant, this complaint was filed.

The opposite parties have filed their written version resisting the claim of the complainant. It was averred by them that the shop of the complainant did not catch fire, but it was in fact the godown of the complainant, which was affected by fire. It was averred that the Shop Keepers Policy issued by the opposite parties/insurers was only for the shop and not for the godown. It was also averred that the Surveyor had assessed the loss at Rs. 5,85,000/- and considering the value of the stock assessed the opposite parties were only liable to pay to the extent of 50% of the value of the damaged stock. It was also averred that the Surveyor assessed the loss regarding damage to the building on account of fire to the extent of Rs. 1,03,578/- including the expenses incurred by the complainant in calling the fire brigade. It was further averred that as the policy only covered the shop and not the godown which was gutted in fire, the opposite parties are not liable to make good the loss caused to the complainant, as per terms of the policy.

LEARNED Counsel for the parties were heard. The complainant''s learned Counsel submitted that undisputably, the complainant had obtained two policies; one is Shop Keepers Policy and the other is Fire Policy ''A''. It was submitted that under the terms of Shop Keepers Insurance Policy, his stock was duly covered for peril of fire. It was further averred that the loss to the building in which his shop was located was covered by the other policy namely Fire Policy ''A''. Thus, under the said policy he was also entitled for the reimbursement of the loss caused to the building. Learned Counsel for the opposite parties, however, reiterated the stand taken by the opposite parties in the written version that the policies issued by them only covered stock kept in the shop; and as the fire did not occur in the building in which shop was located, but the fire affected the godown and stocks kept therein, the complainant was not entitled to reimbursement for the loss, under the said policies. Learned Counsel for the opposite parties also raised an objection about the maintainability of this complaint. Though there are no averments in that regard in the complaint; but an application for amendment in the above context was filed, in which it was averred that since the policy was for the shop of the complainant, hence the complainant could not approach the Consumer Commission and the complaint before it is incompetent. Learned Counsel for the opposite parties in the above context relied upon the decision of National Commission in Mediview Diagnostics v. Philips Medical Systems, IV (2003) CPJ 149 (NC)=(2004) NCJ 391 (NC). It was held by the National Commission in the said decision that a purchaser of goods for use in manufacture of commodities on a large scale, to make profit would not be consumer. Learned Counsel also relied upon the decision of Delhi State Commission in S.U.V.L. Projects v. New India Assurance Co. Ltd., II (2004) CPJ 17.

IN view of the preliminary objection as above, raised on behalf of the opposite parties, we will proceed to consider as to whether the complaint could be filed in this Commission? According to the submission of the learned Counsel for the opposite parties, the complainant would not be covered under the definition of consumer under Section 2(1)(d)(ii) of the Act as he obtained both the insurance policies for his shop i.e., for commercial purpose. To appreciate the submissions as above, it would be useful to reproduce the relevant portion of the definition of ''Consumer'' as given in Section 2(1)(d)(ii) of the Act, which reads : "2(d)(ii) "Consumer" means any person who- Hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes an beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person [but does not include a person who avails of such services for any commercial purpose]. [Explanation.-For the purposes of this clause, "commercial purpose'' does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;]"

IT may be noticed that prior to amendment by Act No. 62 of 2002 which came into force from 15.3.2003; a person who hired or availed of services for any commercial purpose was not excluded from the definition of consumer. However, a rider in the said definition was added by the said amendment incorporated by Act of 62 of 2002 by adding the clause : "but does not include a person who avails of such service for any commercial purpose." By the said amendment an explanation was also added to the said clause which as quoted above clarifies that commercial purpose would not include availing of service by a person exclusively for the purposes of earning his livelihood by means of self-employment. As noticed earlier, said amendment came into effect from 15.3.2003. Clearly, therefore, the addition of the clause excluding person availing of service for commercial purpose had put an embargo on the right of such a person. In other words, prior to amendment by amending Act No. 62 of 2002, a person availing of service for commercial purpose was also covered under the definition of Section 2(1)(d)(ii) of the Act. Therefore, prior to amendment a person had the right as a ''consumer'' to file the complaint under the Act even if service was availed of or hired by him, for commercial purpose. Such a right has however, now been taken away by the said amendment. The amendment, therefore, takes away substantive right of such a person to file a complaint under the Act. The question for consideration, therefore, would be as to whether the complainant would also be prejudiced and his right would be adversely affected by the said amendment, in Section 2(1)(d)(ii) of the Act?

IN the above context, it may be reiterated that the incident of fire occurred in the intervening night between 6th and 7th of April, 2000 and the claim of the complainant was repudiated by the opposite parties by their letter dated 8.1.2002. Clearly, therefore, the cause of action arose either on 7th of April, 2000 i.e., on the day of occurrence of incident of fire or on 8.1.2002 when the complainant''s claim was repudiated by the opposite parties. The complaint was filed on 25.9.2002 i.e., prior to the coming into force of the amending Act. IN view of the above, the question is as to whether the substantive right under the Act sought to be vindicated by the complainant, can be taken away retrospectively by the said amending Act No. 62 of 2002? In the above context, the Supreme Court in Keshavan Madhavan Menon v. State of Bombay, AIR 1951 SC 128, laid down that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. Similarly, the Supreme Court in Municipal Corporation, Poona & Another v. Bijlee Products (India) Ltd. etc., AIR 1979 SC 304, laid down that amendment to a statute affecting legal rights of the individual must be presumed to be prospective, unless it is made expressly or by implication retrospective.

In Income-tax Officer, Tuticorin v. T.S. Devinatha, AIR 1968 SC 623, the Apex Court laid down that the General rule is that all statutes, other than those which are merely declaratory, or which relate only to matters of procedure or of evidence, are prima facie prospective; and retrospective effect is not to be given to them unless, by express words or necessary implications, it appears that this was the intention of the Legislature. Similar view was reiterated in Ahmedabad Manufacturing and Calicloth Printing Co. Ltd. v. S.G. Mehta, AIR 1963 SC 1436. It was observed therein that under ordinary circumstances, an Act does not have retrospective operation on substantial rights which have become fixed before the date of commencement of the Act. However, the Legislature may effect substantial rights by enacting laws which are expressly retrospective or by using language which has that necessary result.

AGAIN in Katikara Chintamani Dora v. G. Annamanaidu, AIR 1974 SC 1069, the Supreme Court expressed a similar view and it was laid down therein that ordinarily, when the substantive law is altered during the pendency of an action, rights of the parties are decided according to law, as it existed when the action began, unless the new statute shows a clear intention to vary such rights. Thus the Apex Court consistently has laid down that the normal effect of statute is that it does not have retrospective operation, but that it has prospective operation. In the instant case, as noted above, there is nothing to read in the amendment incorporated by amending Act 62 of 2002, in the definition of ''consumer'' as given in Section 2(1)(d)(ii) thereof, that the said amendment was intended either expressly or implicitly, to be retrospective in operation. In view of the above, in the absence of any intendment of the Parliament in making amendment as above retrospective, it shall have to be held to have prospective operation. That being so, as the cause of action arose prior to the coming into force of the amendment on 15.3.2003, the complainant''s right to proceed with the complaint cannot be said to be taken away by the said amendment.

THERE is yet another aspect of the matter, which we shall now proceed to consider. As noticed, earlier, explanation to Section 2(1)(d) was also added by the said amending Act 62 of 2002. The said explanation is to the effect that for the purposes of this clause i.e., 2(1)(d) of the Act, commercial purpose would not include availing of services by a person exclusively for the purposes of earning his livelihood. It may be noticed that in the instant case, the complainant in Para 1 of the complaint, categorically averred that he carries on business for self employment and owns a shop. The said averment is supported by his affidavit. The opposite parties have not speficially denied the said averments. THEREfore, it is clear that averments of the complainant that he is carrying on his business by way of self employment, is deemed to be admitted by the opposite parties. THEREfore, the complainant would also be covered by the explanation clause as above, and would be a consumer, notwithstanding the amendment in the definition of consumer in Section 2(1)(d)(ii) of the Act. It may further be noticed that the opposite parties have nowhere raised the said objection in the written version, and have only sought to raise it by way of an application for amendment, which appears only to be an after thought. We have, therefore, no doubt that the complaint is maintainable. In view of the above, the application for amendment filed at a belated stage in the complaint, does not deserve to be allowed. Further, as discussed above, even if the application was allowed, the contention raised thereby would not prejudice the right of the complainant to file and proceed with the complaint. Now we shall proceed to consider the complaint on merits.

IT appears from the pleadings of the parties that the opposite parties have not denied that the fire occurred in the night intervening between 6th and 7th of April, 2000. The contention in substance of the opposite parties in the above context, was to the effect that the fire did not take place in the shop of the complainant but it affected his godown and, therefore, the complainant was not entitled to the benefits under the policies. We, will, therefore, proceed to consider as to whether the objection as above of the opposite parties deserves to be accepted?

IN the above context, it may be reiterated that undisputably, the complainant had obtained two policies. One of the said policies was Shop Keepers INsurance Policy. The said policy is marked as Annexure A-3. The relevant Clause 1B of the said policy shows that risk of loss to stock of foodgrains, vegetable oils and all kinds of Kirana and general goods by fire and allied perils was covered by the said policy. The said policy mentions that the nature of business of the complainant/insured was General Stores. The address of the complainant given in the policy is M/s. Mohanlal Jain, Darri Road, Korba. It has nowhere been mentioned in the said policy as to where the goods of business were to be kept. Presumably, therefore, the risk of the stock of Foodgrains, Vegetable Oils and all kinds of Kirana and general goods of the complainant insured. M/s. Mohanlal Jain, carrying on his business of general stores at Darri Road, Korba, was covered by the said policy. Since, admittedly, the foodgrains and stocks of the said business of the complainant was gutted in fire, it appears that the said shopkeepers policy covers the risk.

It may be noticed in the above context that the repudiation of the complainant''s claim by the opposite parties is based on the report of Investigator, M.P. Tiwari, Annexure B-6 whose conclusions are as below : "Conclusion : Thus I found that if the map of building is examined which is at flag ''A'' then the fourth portion mentioned was courtyard having pipe structure with G.I. Tin sheets on top to cover was definitely a godown and does not come under the category of the shop in any way. Prior to this godown there were two rooms connected with the shop and the Company had issued the Shop Keepers policy where the shop keeper sits for sale of his items so there is no question of godwon coverage in this policy. Besides the items claimed to have been burnt was not in order as all stock tea claimed to have been burnt or damaged was all found by spot Surveyor in another room and the same is of oil tins. Moreover, if 30 quintals chilly as claimed to have been burnt means, it would not have been possible for the persons of the entire locality to stay for the night in their houses and so also the case of oil and dalda ghee. Surprising was that the family members and insured himself stayed and did not leave the premises during fire means the loss of items as claimed was not true to his claim. In all newspapers information was published that fire broke out in godown and not in shop. Thus, in my opinion the place where fire broke out is not covered under the policy as the insured obtained only shop keepers policy."

It may be noticed that map of the shop has not been filed with the report which is mentioned in the Investigator''s conclusion. Moreover, even the Investigator does not state that the stock of goods affected by fire was not in regard to the business of the complainant.

IT may also be noticed that Manmall Kasliwal & Sons, Surveyors & Assessors & Valuers in his report dated 27.1.2001 has stated that : "Stocks lying inside Tine shed in rear side of the building was extensively involved in above occurrence and fire had spreaded to stocks inside building in rear side storage area, communicating to Tin shed portion."

IT would thus appear that the stock in the shop of the complainant was kept in the rear side of the building as also under a Tin shed and the fire had affected the stock kept in Tin shed as well as in the building. IT may be noticed that the M.P. State Commission in The New India Assurance Co. Ltd. v. Shravan Kumar, I (2000) CPJ 441=1999 (2) CPR 64 while considering substantially similar objection regarding the extent of risk covered under the shopkeeper''s policy observed that : "The Shopkeepers Insurance Policy in question covers the risk of ''Stock in Trade'' consisting of general goods and medicine items of the value of Rs. 1,25,000/- kept for sale by the insured. Therefore, it cannot be contended that the Stock in Trade of goods and medicine items kept for sale in the adjoining shop was not insured or the risk was not covered and the risk of ''stock kept for sale only in Shop No. 49 was covered. More particularly, when shop where the goods and medicine items are kept as Stock in Trade is not specified nor the property is described where the risk of goods and medicine items kept are covered under the policy. In the circumstances, repudiation of the claim merely on the basis that it was kept in the adjoing shop in the absence of evidence that it was not the ''stock in trade'' of the insured and was not kept by him for sale is illegal and unjustified. The appellant could not have escaped its liability as repudiation of the claim was arbitrary, unjustifiable amounting to ''deficiency in service''."

In the instant case also the factual situation is substantially similar. The goods kept in the shop as also in the godown at the back side of the shop would be covered under the shopkeepers policy. The assessor Manmall Kasliwal assessed the loss of the stock to the extent of Rs. 5,85,000/- and recommended that insured''s shares of loss to the extent of 50% be deducted and the loss payable under the policy as recommended by the assessor was to the extent of Rs. 2,92,500/-. It would, therefore, be clear that the stock of the shop of the complainant was damaged. The risk of said stock appears to be fully covered under shopkeepers insurance policy. Thus, the resistance and repudiation of the complainant''s claim under the shopkeepers policy by the opposite parties on the ground that the stock was kept in the godown and not in the shop does not appear to be well founded and is not sustainable.

NOW the claim of the complainant under the fire policy ''A'', will have to be considered. From the report of the loss assessor Manmall Kasliwal, it is clear that the loss to the building was to the extent of Rs. 97,683/- besides fire fighting charges of Rs. 5,895/- which were proved by the complainant to the satisfaction of Assessor. Therefore, it appears that the said loss was covered by fire Policy ''A'', as it covered the property of the complainant Mohanlal Jain situated at Darri Road, Korba. It was stated in the said policy that the risk was covered for building as stated in the policy document Ann. A-4. The policy covered the risk of the building RCA construction which does not exceed 22 metres in height occupied as dwelling and shop. In view of the above, the said policy clearly covered the risk by fire of building at Darri Road, Korba used as a dwelling and shop. The height of the building as described in the policy did not exceed 22 metres. There is nothing on record to show that the building of the complainant which was affected by fire as noted by the Surveyor Manmall, was not covered by the said fire policy. In view of the above, it is clear that the complainant was entitled to recover the loss under the shop keppers insurance policy Ann. A-3 as well as Fire Policy Ann. A-4.

SO far as quantum of compensation is concerned, the Surveyor Manmall has estimated that the loss of stock was to the tune of Rs. 5,85,000/- after deduction of salvage value. It was also stated in the said report that the total stock was much beyond the insured value and thus the stock was under insured to the extent of 50%. Therefore, the assessor Manmall has observed and recommended that insured share of loss to the extent of 50% i.e., 2,92,500/- should be deducted and that loss to the extent of Rs. 2,92,500/- only for the stock deserves to be reimbursed. Similarly, the loss on account of damage to the building to the extent of Rs. 1,03,578/- was recommended to be reimbursed. There is no reason not to accept the assessment of the Surveyor as above.

ACCORDINGLY, we hold that the opposite parties are liable to pay to the complainant Rs. 2,92,500/- towards loss of his stock due to fire under shop keepers insurance policy while Rs. 1,03,578/- deserves to be paid to him towards fire policy ''A''. Thus, a total amount of Rs. 3,96,078.00 rounded to Rs. 3,96,000/- is payable to the complainant. Accordingly, the complaint is allowed. It is directed that the opposite parties shall pay to the complainant Rs. 2,92,500/- towards the shop keepers insurance policy and Rs. 1,03,578/- towards Fire Policy ''A''. Thus a total amount of Rs. 3,96,000/- (Rupees three lakhs ninety six thousand) only shall be payable to the complainant by the opposite parties. It is also directed that the opposite parties shall also pay interest @ 9% per annum on the above amount from the date of repudiation i.e., 8.1.2002. The amount as above shall be paid/deposited by the opposite parties within two months from the date of this order, failing which interest @ 12% per annum shall be payable by the opposite parties to the complainant. The opposite parties shall also pay to the complainant, the costs of this complaint which is quantified at Rs. 5,000/- (Rupees five thousand) only. Complaint allowed.