NEW INDIA ASSURANCE CO. LTD. vs Ktc Kedia Chemicals Pvt. Ltd.

M /s. KTC Kedia Chemicals Pvt. Ltd., the complainant transacts the business of production of mosquito coils. It obtained a fire and special perils policy for a sum of Rs. 24,00,000/ - covering the risk of buildings, stocks, machinery etc. from M/s. New India Assurance Co. Ltd. -OP. Unfortunately, on 04.12.2005, fire broke out in the drier room, wherein drier room, trolleys, 16 fans, 2 exhaust fans, etc. were damaged. The Insurance Company deputed a spot surveyor Mr. G. Rama Murthy. The Insurance Company wanted to settle the claim at Rs. 72,774/ - as per the Surveyor''s report but the complainant refused to agree. The complaint was filed before the District Forum claiming Rs. 6,54,000/ - with interest @18% p.a. from the date of incident till the date of payment besides compensation in the sum of Rs. 2,00,000/ - and costs in the sum of Rs. 10,000/ -. The Insurance Company -OP. contested the present case.

THE District Forum discarded the report of the surveyor and awarded a sum of Rs. 3,97,086/ - with interest @ 6% per annum from the date of complaint upto 08.08.2007 and costs in the sum of Rs. 2,000/ -.

THE State Commission dismissed the appeal. I have heard the counsel for the parties. For the first time, the counsel for the complainant/respondent raised the contention that the Insurance Company did not supply the conditions and guidelines of the policy to the insured KTC Kedia Chemicals Pvt. Ltd., while issuing the schedule of the policy. In order to buttress his case, he has also cited an authority reported in the case of Modern Insulators Vs. Oriental Insurance Co. : (2000) 2 SCC 734 and another authority of this Commission reported in New India Insurance Co. Ltd. Vs. CS. Anand : (2006) 4 CPJ 325 N.C.

COUNSEL for the OP raised the objection that it is an after -thought. This ground does not find any place in the complaint itself. I have no hesitation to reject this contention as being afterthought. It appears that the complainant was influenced by the authorities cited above, accordingly, he changed his averment in his written arguments filed before me for the first time. Consequently, this objection has to be eschewed out of consideration.

AGAIN , my attention was invited towards the policy. Counsel for the complainant/respondent placed reliance on the policy, which at the very start mentions: - "STANDARD FIRE AND SPECIAL PERILS POLICY(MATERIAL DAMAGE) IN CONSIDERATION OF the Insured named in the Schedule hereto having paid to the New India Assurance Company Limited (hereinafter called the Company) the full premium mentioned in the said schedule, THE COMPANY AGREES, (Subject to the Conditions and Exclusions contained herein or endorsed or otherwise expressed hereon) that if after payment of the premium the Property insured described in the said Schedule or any part of such Property be destroyed or damaged by any of the perils specified hereunder during the period of insurance named in the said schedule or of any subsequent period in respect of which the Insured shall have paid and the Company shall have accepted the premium required for the renewal of the policy, the Company shall pay to the Insured the value of the Property at the time of the happening of its destruction or the amount of such damage or at its option reinstate or replace such property or any part thereof."

COUNSEL for the complainant/respondent contended that under these circumstances, the petitioner is bound to pay the amount within the ambit of IDV. Counsel for the complainant also contended that the State Commission has rightly relied upon the decision of the Supreme Court of India in Dharmendra Goel Vs. Oriental Insurance in SLP Civil No. 14054/2006 decided on 30.07.2008. The Hon''ble Supreme Court held in Para 6: - 6. xxxx that when the company itself had accepted the value of the vehicle at Rs. 3,54,000/ - on 13th February, 2002, it could not claim that the value of the vehicle on total loss basis on 10th September, 2002 i.e., on the date of the accident was only Rs. 1,80,000/ - Counsel for the complaint contended that The Hon''ble Apex Court did not accept the company''s contention that within a period of 7 months from the date of insurance to the date of accident, the value of the vehicle had depreciated to such an extent. In this case the surveyor had taken the depreciation of the building at 30% and that of the machinery at 50% from the date of insurance i.e. 16.09.2005 to the date of fire i.e. 04.12.2005.

IT was argued that when the petitioner has admitted the value of the building in the sum of Rs. 3,00,000/ -, it must pay the amount in the sum of Rs. 3,00,000/ - in respect of the building and likewise in respect of the stocks and machinery.

IT was also argued on behalf of the complainant that the contention of the Insurance Company for entitlement of the claim on pro -rara basis in case if the Standard Fire and Special Perils Policy is not acceptable, since as a matter of fact such policies are issued on principle of indemnity. As per the policy, the special matter of the case is to allow the re -instatement value of the property damaged. Under the policy the insured is entitled to get claim on the basis of the reinstatement of damage property irrespective of its market value at the time of incident of fire, no depreciation is deducted because the cost of reinstatement or replacement of the damaged property is made. The clause of pro -rata basis claim pertains to the Average Policies and not to the Standard Fire Policies such as the policy in question.

ALL these arguments have left no impression upon me. Policy has to be read holistically and not in vacuo to the benefit of the one and to the detriment of another. Clause 10, 11, 14 and 15 of the policy are relevant. These are reproduced here as under: - "10. If the Property hereby insured shall at the breaking out of any fire or at the commencement of any destruction of or damage to the property by any other peril hereby insured against be collectively of greater value than the sum insured thereon, then the Insured shall be considered as being his own insurer for the difference and shall bear a rateable proportion of the loss accordingly. Every item, if more than one, of the policy shall be separately subject to this condition.

IF at the time of any loss or damage happening to any property hereby insured there be any other subsisting insurance or insurances, whether effected by the Insured or by any other person or persons covering the same property, this Company shall not be liable to pay or contribute more than its rateable proportion of such loss or damage. 14. Every notice and other communication to the Company required by these conditions must be written or printed. 15. At all times during the period of insurance of the policy the insurance cover will be maintained to the full extent of the respective sum insured in consideration of which upon the settlement of any loss under this policy, pro -rata premium for the unexpired period from the date of such loss to the expiry of period of insurance for the amount of such loss shall be payable by the insured to the Company. The additional premium referred above shall be deducted from the net claim amount payable under the policy. This continuous cover to the full extent will be available notwithstanding any previous loss for which the company may have paid hereunder and irrespective of the fact whether the additional premium as mentioned above has been actually paid or not following such loss. The intention of this condition is to ensure continuity of the cover to the insured subject only to the right of the company for deduction from the claim amount, when settled, of pro -rata premium to be calculated from the date of loss till expiry of the policy. Notwithstanding what is stated above, the Sum Insured shall stand reduced by the amount of loss in case the insured immediately on occurrence of the loss exercises his option not to reinstate the sum insured as above".

THE construction of contract/insurance policy entered into between the parties assumes importance. It is a settled law that court should refrain from any interpretation which would result in injustice and absurdity,, AIR 1963 SC 25. The question to be considered is not what was intended, but what has been said. We cannot amend or substitute anything in the contract, as per law laid down in Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd. and Anr., : (2010) 10 SCC 567, General Assurance Society Ltd. Vs. Chandmull Jain, : 1966 ACJ 267 (SC), Harchand Rai Chandan Lal''s case, 2005 ACJ 570 (SC).

UNDER these circumstances, I accept the Revision Petition and the payment be made as per the Surveyor''s report in the sum of Rs. 84101/ - with interest @9% per annum from the date of incident i.e. 04.12.2005 till the date of realization. The amount which has already been paid shall stand adjusted.