NATIONAL INSURANCE CO. LTD. vs SAFARI INDUSTRIES (INDIA) LTD.

THIS First Appeal is directed against the Order dated 6.4.94 passed by the Maharashtra State Commission at Bombay allowing the complaint of M/s. Safari Industries (India) Ltd., the complainant and directing M/s. National Insurance Co. Ltd., opposite party, Appellant herein, to settle the complainant''s insurance claim for Rs. 8,92,824/- with interest @ 18% per annum w.e.f. 1.7.1991 till realisation as compensation for the loss suffered besides costs of Rs. 1,000/-.

THE facts which are not in dispute, in the nutshell, are these. It is unnecessary to refer to the insurance cover taken by M/s. Safari Sales Pvt. Ltd. the sister concern of the complainant, or the details of loss suffered by it as its claim has beer settled for Rs. 7,22,782/-" in full and final settlement of the claim. The complainant had beer insuring all its properties, stocks, trade items etc with the opposite party on the basis of fixed sum policy till 1984. Thereafter, the complainant expressed its desire to have a declaration policy depending on the value of s tocks month by month as per declarations. The declaration policy means that the complainant had to declare the stocks at its various locations every month, and accordingly the premium payable is varied depending upon the value of the risk covered. The opposite party issued sanction for a declaration policy which was in force on 13th July, 1986 when the fire broke out and destroyed the stocks of the complainant. The Policy No. is 620/3300136 for a sum insured up to Rs. 120 lakhs for the period 1.5.85 to 1.5,86 which was subsequently extended by endorsement upto 1.11.86 covering risk of raw materials stocks, semi-finished goods and finished goods etc. The complainant lodged a claim for the loss suffered claiming Rs, 8,92,824/-. The claim was rejected by the opposite party in its communication dated 1.7.91 reading as follows : "As per Head Office instructions, we regret to inform you that the above claim has been rejected, since your letter dated 10.7.86 was received in our office on 16.7.86 i.e. 3 days after the loss,,. The complainant alleged deficiency in service of the opposite party and filed the complaint before the State Commission. The complaint was allowed ex-parte by an order dated 3.8.93 which was set aside by this Commission on 10.12.1993 and the case was remanded to the State Commission for fresh disposal after giving full and fair opportunity to both the parties.

On remand, the State Commission gave the opportunity to the parties to substantiate their versions. After referring to the material on record, the State Commission adverted to the technical objection raised by the opposite party to the effect that the claim having been rejected by letter dated 1.7.91, the complaint filed on 11.6.92 is barred by limitation in view of clause 19 attached to the said policy. Factually the objection was not accepted as the complaint has been filed by the complainant with 12 months period from the date of the letter of disclaim dated 1.7.91. The State Commission then referred to the two reports of the M/s. Merit Detective and Security Services, one dated 7.12.87 and the other dated 10.5.88 who according to the State Commission establish that the complainant suffered loss and, therefore, having fully proved the loss for the amount of Rs. 8,92,824/-, the rejection by the opposite party in one line communication dated 1.7.91 was not bonafide and valid as it did not disclose any other reasons whatsoever except that the letter dated 10.7.86 was received after three days of the loss. It was held that the rejection of the complainant''s claim vide communication dated 1.7.91 is not only frivolous but conveys false reasons to the complainant. The complaint was allowed and the National Insurance Company was directed to settle the claim as already noticed.

THE main submission of Mr. P.P. Malhotra, Senior Advocate for the appellant herein, is that letter dated 10th of July, 1986 alleged to have been sent under Postal Certificate by the complainant on 10.7.86 sought to transfer the risk insured under the said policy to the extent of Rs. 25/- lakhs to the stocks and goods lying at Amit Ware Housing Company, Gala No. 20 at 106/7, Khetani Industries Compound, Bazarward, Kurla, Bombay and this letter was received by the Insurance Company on 16th of July, 1986, three days after the fire broke, Reference is made to the report dated 15.2.90 of Mr. Desh Raj Gakhar who came to the conclusion on the basis of his investigation that the letter dated 10.7.86 was written and posted after the fire on 13.7.86 obviously to prefer a claim for the uncovered stocks burnt in fire. This report in our vie w does not inspire confidence. The Insurance Company had appointed M/s. Merit Detective and Security Service which gave its first report dated 7.12.87 and they were asked to re-investigate on which it submitted the second report dated 10.5.88. Both these reports which have been relied upon by the State Commission, record the results of investigation that the letter dated 10.7.86 was definitely posted on the relevant date claimed by the insured and no deceitful intention to manipulate the records as an afterthought is observed. It is significant to note that the Insurance Company suppressed the two reports obtained by it from M/s. Merit Detective and Security Service when it filed its version before the State Commission. Based on these reports the Insurance Company sought legal opinion from M/s. Motiwala and Co. who opined : "Since the application/proposal made by Safari Industries on 30th August 1984 for declaration policy was accepted by the Insurance Company''s letter dated 11th September, 1985 there was a binding contract between the Insurance Company and the assured and that the investigators and surveyors had stated that the reference to godown situated nearby in the same compound refers to Gala No. 20 of Amit Ware Housing Company, and the assured did not have any other godown and hence it was clear beyond doubt that the assured intended to insure Gala No. 20 vide their application for declaration policy and that although the Insurance Company had not issued a declaration policy in favour of the assured the latter was entitled to assume that the goods lying in the assured premises described in the proposal form dated 30th August 1984 were covered from the date of the sanction i.e. 11th September 1985."

This opinion was also suppressed in the written version before the State Commission. In the face of the said two reports and legal opinion, the reasons for appointment of Mr. Desh Raj had to be brought out on record but this was not done. His appointment was obviously because M/s. Merit Detective & Security Service did not give reports which were favourable to the Insurance Company and it wanted some report to base the repudiation of the claim. The repudiation is not bonafide and thus there is deficiency in service. The State Commission, therefore, rightly came to the conclusion that there has been deficiency in service of the opposite party inasmuch as there has been inordinate delay in rejecting the complainant''s claim on false reasons.

THE next submission that there was no acceptance on the part of the Insurance Company to transfer insurance cover of Rs. 25/-lakhs to the stocks lying at Amit Ware Housing Co. is also without merit. Admittedly the Insurance Company in its letter dated 11.9,85 communicated its acceptance to the complainant''s proposal for issue of declaration policy reading as follows : "Re: Sanction for issuing Declaration Policies A/c M/s. Safari Industries (India) Pvt. Ltd..... We have pleasure in advising you that declaration facility in respect of your stocks of raw materials, semi-finished and finished products lying in storage premises and forming part of your (STC) premises, located at Kurla, Bombay 400 O/c and Halol factory in Gujarat, have been sanctioned by us. Please note that the basis of declaration is "as value,'' of stocks of the last day of each month". The application form for declaration policy gave the situation of risk as Gala No. 1, 2, 2A and 7 of Industrial Estate at 107/O, Khetani Textile Compound, Kurla, Bombay and one godown in the same compound located nearby.

The complainant had only to declare the stocks at its various locations and to intimate to the Insurance Company declaring stocks of raw materials, semi-finished goods and finished goods at various locations within the total value of Rs. 120 lakhs and the risk would be covered. There came into existence a binding contract between the Insurance Company and the complainant on the complainant making a declaration and intimating it to the Insurance Company. The two cases, General Assurance Society Ltd. v. Chandmull Jain and Another, AIR 1966 SC 1644, and Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and Ors., 1984 (2) SCC 719, relied upon the Counsel were not concerned with "Declaration Policy,7 and therefore do not decide any question of law relating to declaration policy. The Appellant had appointed M/s. C.P. Mehta and Co. Surveyors, Assessors and Valuers to survey and assess the loss and damage caused by the fire which occurred on Sunday the 13th July, 1986 to stocks belonging to the complainant while lying in their godown situated at No. 20, Khetani Industrial Premises Co-operative Society Ltd., 106/7 Bazarward, Magan Nathuram Road, Kurla, Bombay 400070 and they submitted their report dated 22nd December, 1986. On investigation the Surveyor reported that the complainant had various branches, depots and godowns situated at various places all over India. In addition to storage of stocks in their Kurla factory premises (i.e. 107/0 Khetani Textile Compound) they also had stocks lying in the premises rented since 1984 from M/s. Amit Warehousing Company which they used as a godown. This godown was in a compound adjoining the Kurla factory and was in Gala No. 20, Khetani Industrial Premises Cooperative Society Ltd. 106/7 Bazarward, Magan Nathuram Road, Kurla, Bombay. The Insurance Company had already accepted that the said Amit Ware Housing Company was also a situation of risk under the said declaration policy and all that was required of the insured was making a declaration which they did on 10.7.86 enhancing the assured value of the stocks of Rs. 25/- lakhs. The Appellant had sought legal opinion from M/s. Motiwala and Cc. referred to above in which it was opined that there was a binding contract between the Insurance Company and the assured based on the proposal made by the assured on 30th August 1984 for declaration policy and the acceptance by the Insurance Company, in the letter dated 11th September, 1985.

THERE is no dispute about the quantum. The Insurance Company had appointed M/s. C.P. Mehta and Co. Surveyors, Bombay to assess the loss caused to the complainant''s stock and the Surveyor assessed the loss as Rs. 8,92,824/-which has only been allowed by the State Commission.

FOR the above reasons the appeal fails and is dismissed. The findings and the order of the State Commission are upheld. The appellant is also burdened with costs assessed at Rs.2500/-