New India Assurance Co. Ltd. vs SINDHU FLOWERS PVT. LTD.

APPELLANT was the opposite party before the State Consumer Disputes Redressal Commission, Haryana (hereinafter referred to as State Commission), where the respondent/ complainant, M/s. Sindhu Flowers Pvt. Ltd., had filed a complaint alleging deficiency in service on the part of the appellant, the New India Assurance Co. Ltd. (hereinafter referred to as Insurance Company).

VERY briefly, facts leading to filing this complaint were that the respondent / complainant, who was engaged in the business of cultivation of various types of flowers, had obtained a policy from the appellant Insurance Company covering the risk of loss on account of fire, storm, lightning, hailstorm, cyclone, flood, natural calamities, riot and strike, malicious damage, unseasonal rains with exclusions from damage by diseases and insects, pests, rats, birds and animals. First Policy was valid for a period from 15.11.1995 to 14.11.1996. This Policy was renewed for the period from 15.11.1996 to 14.11.1997 with some modification, in which the sum insured was increased from Rs. 10.5 lakh to Rs. 21 lakh. It is the case of the complainant that he had obtained the risk cover for the floriculture activities in the villages of Kona, Bhankarpur, Mallan, District Kangra. There was an episode of hail-storm on 28.5.1997 in his floriculture area in the Mallan village causing extensive loss to the floriculture crop. The matter was reported to the appellant and in the meantime since no action was being taken by the appellant they themselves appointed Floriculture Expert, one Mr. A.P.S. Gill, who had been a Professor, Horticulture and Floriculture in Punjab and at the time when he carried out the survey, he was a UNDP Consultant of Floriculture APED A, Ministry of Commerce, Government of India, New Delhi. He assessed the loss and the claim was preferred with the Insurance Company. But when the claim was repudiated on the ground that the Policy already stand cancelled from 28.5.1997, a complaint was filed before the State Commission, who after hearing the parties and perusal of material on record allowed the complaint and directed the appellant Insurance Company to pay Rs. 5.5 lakh as claimed by the complainant along with cost of Rs. 2,000 . Aggrieved by this order, this appeal has been filed before us. We heard the learned Counsel for both the parties at considerable length.

In the first instance, we like to deal with the occurrence of hail-storm. As per the version of the complainant, the crop was damaged in Mallan village on 28.5.1997 on account of hail-storm (para 11 of the complaint). We have seen the meteorological report brought on record which clearly states that as on 28.5.1997 there was thunder with rain from 17.25 hrs. to 17.30 hrs. IST, i.e., for five minutes. The report further goes on to state that there was no rain on that day in the concerned area and further goes on to add, "no hail-storm observed at the station during the above days." The dates mentioned in the report are from 27.5.1997 to 30.5.1997. In the light of this we are unable to appreciate and accept the contention of the learned Counsel for the complainant that there was any hail-storm on that date.

IN this, we are further strengthened by the fact that the matter was reported to the insurers only on 3.6.1997 through a telegram. As per para 12 of the complaint, the Director of the complainant had allegedly come to know of the damage to the farm at village Mallan on 29.5.1997 but why this matter was not reported immediately and report with delay of 4 days, remains unexplained? This report and the time taken in reporting the matter to the appellant punctures the very hypothesis of any hail-storm on 28.5.1997 at the site, in Mallan. The second question we like to discuss is about the validity of the policy on the alleged date of incident. There is no dispute that the cover note as per record was valid from 15.11.1996 to 14.11.1997. Para 10 of the conditions of the policy reads as under: "The company may cancel this policy by sending seven days'' notice by Registered Letter to the insured at his/her last known address and in such event will return to the insured the premium paid, less the pro-rata portion thereof for the period the policy has been in force or the policy may be cancelled at any time by the insured on seven days'' notice and (provided no claim has arisen during the current period of insurance) the insured shall be entitled to a return of premium at the company''s short period rates for the time the policy has been in force."

A plain reading of this condition leaves no doubt that the appellant had the right to cancel the Policy by sending seven days notice. As per material on record, the notice was sent on 20.5.1997 to the manager, Punjab National Bank, Chandi Mandir, who had obtained the policy; along with that the appellant had also made a pro-rata refund of the premium amount. Bank acknowledged receipts of this letter but protested the mid-season cancellation and also about non-refund of the total premium amount. If this is to be treated as seven days notice then the cancellation should have been effective from 28.5.1997 and not from 20.5.97. Learned Counsel for the appellant admits this discrepancy and concedes that cancellation shall be valid from 28.5.1997. There is no material brought on record by the respondent/complainant as to when did he report the loss by damage to the crop to the bank? We are not helped in this regard, i.e., date of hail-storm on 28.5.1997, for the simple reason that letter dated 29.5.1997 from the bank to the appellant Insurance Company does not mention even remotely any loss caused to the crop on 28.5.1997. We have already discussed earlier, that we are not satisfied, based on material on record, that any loss occurred on 28.5.1997, in view of which even while taking the cancellation of policy effective from 28.5.1997 and loss, if any, after the date of cancellation of the policy, i.e., from 28.5.1997 would not cover the risk. As already discussed earlier, we see that no loss occurred on 28.5.1997 or before that date, making the complainant eligible for any relief. It is interesting to note that the bank, who had obtained the policy cover from the appellant, was neither made the party before the State Commission nor before us. It was the case of the complainant before the State Commission as well as before us that the loss in village Mallan was assessed by an eminent horticulturist. We have seen his affidavit which leaves us in no doubt that the respondent/complainant had known Dr. Gill for quite some time and this report was obtained without concurrence of the appellant Insurer. He also states that, "there was a hail-storm in the month of May, 1997 and he visited for some time on 6.6.1997 and made the assessment. Even though, he is not qualified to do so. We have already seen that there is no hail-storm not only on 28.5.1997 but also a day before and two days after this date. In the cross-examination, he admits, "I have submitted my report here regarding the loss caused to the farm of the complainant because the complainant is known to me ......". In view of above we are not inclined to place any credence to the report of Dr. Gill.

COMING to the main issue on which the appellant relies is that the loss admittedly was caused in the village Mallan whereas the risk to crop was covered only in village Kona. The brief particulars of the risk of the cover note making the risk effective from 7.11.1996 reads as follows: "Floriculture Insurance taking the crop Gradin Pus Bulbs, cultivated at village - Kona. Risk covered fire, storm, lightening, hailstorm, cyclone, flood, natural calamities, riot and strike including storage risk (whilst in cold store at Parwanoo). Exclusion: Damage by disease and insects, pests, rats, birds and animals. Franchise : 10% 8%, of S.I. or Rs. 1,000 whichever is less. *Kona Bhankarpur Mallan Distt. Kangra"

WHILE the contention of the learned Counsel for the appellant is that as far as cultivation is concerned, the risk covered only the cultivation in village Kona. It has been the effort of the learned Counsel for the respondent/complainant to state that beside Kona the crop in Mallan area was also covered and it was added later on, as would appear from the cover note, extract of which has been reproduced above. We have also gone through the Policy terms. Risk covered in the previous year admittedly was limited to village Kona; however, the storage risk (while in cold storage) is also covered at Parvanoo after taking the crop. If we read the particular risk covered in both the policies, we find that a plain reading of the Policy at issue, will make it quite clear that, what was covered were Bulbs cultivated at village Kona against several natural risks like lightning etc., whereas the risk, while in cold storage which in the previous year was only for the village of Parwanoo, now was extended to cover the risk of storage in Kona, Bhankarpur, Mallan, Distt. Kangra, whichever way we read the ''Policy'' and the ''cover note'' for the two years on record, we cannot but arrive at the conclusion that the crop covered by the risk was relatable to only the crop at Kona village and nowhere else, whereas the risk in storage was covered for the villages of Parwanoo, Kona, Bhankarpur, Mallan, Distt. Kangra for the year 1996-1997.

We also see on record that admittedly, as per complaint the complainant had taken the land in village Mallan in District Kangra near Palampur on lease (para 7 of the complaint) and goes on to state that this was an oral lease. This so-called oral lease was taken in the year 1996 and 1997. No evidence of any cultivator, from whom the land was taken on lease, is on record that land in Mallan was leased out to the complainant company for the year 1996-1997. Nothing has been brought on record by the complainant that they at any time informed the Bank about land having been taken for starting cultivation in areas other than Kona. In view of these ''set of conditions'', we are inclined to agree with the Counsel for the appellant that the risk covered was limited to village Kona as far as cultivation of flowers/floriculture is concerned, which did not extend to Mallan whereas whole fabric is being woven by the complainant on the loss in Mallan village.

IN the aforementioned circumstances we find that there was no risk to the crop in question in Mallan; the cancellation of the Policy was in order, and based on material on record, the complainant has not been able to satisfy us that there was hail-storm on 28.5.1997 causing damage to the floriculture crop. In the aforementioned circumstances, we are unable to sustain the order passed by the State Commission, which is set aside. Complaint is dismissed and the appeal is allowed.

KEEPING in view the peculiar facts and circumstances of the case, not order as to cost. Appeal allowed.