New India Assurance Company Ltd. vs BALOOCH GRAMODYOG SEWA SANSTHAN VILLAGE UMRAHOO

THIS is an appeal under Section 15 of the consumer Protection Act (hereinafter called the ''Act'') against the judgment and order dated 15.7.2002 passed by District Consumer Forum, Saharanpur in Complaint Case No. 74/2001.

INITIALLY a complaint was filed by the complainant with the allegations that the complainant is a cottage industry, manu-facturing pickle, etc. for which loan was obtained from opposite party No. 1 in the complaint. The complainant''s firm was insured with the opposite party No. 2, the New India Assurance Company Ltd. for Rs. 8 lacs, out of which Rs. 5,00,000/- was towards insurance of the building and Rs. 3 lacs was for the entire stock of the complainant. Due to heavy rains on 22.7.2000 one tank full of pickles was destroyed and in other tanks water was filled. The complainant incurred a loss of Rs. 2,94,902/-. The Insurance Company, on being informed of the incidence, appointed a Surveyor on 2.8.2000. When the claim was not settled complainant wrote several letters but with no result. Later on 2.2.2001 the complainant received a communication from the Insurance Company informing about repudiation of the claim. It was also alleged that the complainant was not made available the insurance policy and copy of its term and conditions which, according to the complainant, is deficiency in service. Ultimately a complaint was lodged for compensation of Rs. 1,50,000/- and a further sum of Rs. 30,000/- for mental pain and Rs. 5,000/- towards cost. Opposite party No. 1, UCO Bank, in its written statement alleged that the complaint has been filed without any reason against opposite party No. 1 stating that the opposite party No. 2 is liable for any compensation.

Opposite party No. 2, appellant, filed the written statement in which it was admitted that the insurance policy was in existence. It further averred that the claim of the complainant was repudiated because the claim was not admissible as per terms nd conditions of the policy clause. It further stated that the complainant is to be blamed for the losses incurred by him.

AFTER hearing both the parties and perusing the records available in the file, the learned District Forum passed the impugned order directing the opposite party to pay Rs. 1,81,225.80 along with 12% per annum interest from 22.7.2000 till the date of judgment. Opposite party No. 2, UCO Bank, was also directed to pay Rs. 1,000/- as cost to the complainant. In the case the order is not complied with within the time allowed, the interest payable on the decreed amount was 15% per annum. Aggrieved, the Insurance Company has come into his appeal.

WE have heard learned Counsel for the appellant Mr. M.S. Kothwal and learned Counsel for respondent, Mrs. Shubhra Kumar. The argument of Mr. Kothwal is that the learned District Forum wrongly and illegally held that the loss of the complainant was covered by the insurance policy whereas on a plain reading of the terms and conditions of the insurance policy, whose copy has been filed along with the Surveyor''s report, it will occur that the loss so claimed was not covered. Even it is argued that the reasonings opined that it was a non-coverage of loss under the said policy, is well reasoned and should not have been ignored by the learned District Forum. It was further argued that only cracks in tanks were found and the loss was due to the respondent and no indemnification was possible. On the other hand, Mrs. Umar while supporting the impugned order argued that the contrary arguments are not sustainable on the whole although during the course of arguments Mrs. Kumar orally stated that loss was not covered in the insurance. This implied admissions in the course of arguments will not make the case of the Insurance Company on a better footing and that way the argument of Mr. Kothwal of awarding a certain amount by way of compensation in view of the concession granted by Mrs. Kumar does not hold any water. Each case will be seen and viewed on merits. The Appellate Court is under obligation to decide as to whether the impugned judgment is just and proper or not or it needs modification and is bad and is liable to be set aside. In the instant case the point which survives for active consideration is as to whether the loss occasioned was covered to be indemnified in view of the currency of the policy of insurance existing between the parties or the alleged loss could be refused on the ground that there was no breach of terms and conditions and the loss occasioned to the complainant was on account of his own misconduct with the business work. In the impugned judgment and order, there is a valid description about such aspect of the matter. In the written statement the case of the Insurance Company, appellant, is that since the loss occasioned is due to the mistakes committed by the complainant, there is no case for indemnification of the loss. While the argument placed before the learned District Forum orally has been that in view Clause 8 as given in the overleaf of the contract, the liability for indemnification could come up only when the loss is due to "Subsidence and Landslide (including Rockslide) damage (Hindi Matter omitted)". For appreciating the respective arguments, it will be better to refer to certain observations made by the Surveyor Sri S.K. Agarwal in the Surveyor report dated 5.1.2001, which are reproduced below: "We looked into the cause of damage as well. The insured''s work is located at the outskirts of the village. On three sides of the unit, there is a low lying ground which remains usually filled with rain harvested water. As a result of this permanent presence of water, the soil of factory site is rich in moisture/water. The careful examination of the tank masonry work showed some cracks on the wall of the masonry tanks. It seemed that moisture/water from the soil in the bottom area entered into the stock compartment and caused gradual spoilage of the stocks. The insured has stated the cause of loss due to subsidence but during our inspection, we did not notice any sign of subsidence as covered in the policy. If the policy coverage is referred, the insured peril is subsidence and landslide (including rockslide) resulting in collapse of the entire building or part thereof. The peril of subsidence is not triggered as there is no collapsing of any structure".

IT is presumed that when a contract of insurance is entered into, the Insurance Company will look into all necessary facts and figures. IT was clear that when the contract was entered into, it was for covering the loss occasioned to the pickles in the insured''s factory. Pickles are perishable articles, subject to decay and damage. IT is clear that the factory, whose manufacturing items were subject of insurance, was surrounded by low lying ground on three sides which remain usually filled with rain harvested water and road on one side. IT has been further found that the mansonry tank in which pickle is stored, are well built deep into the floor by about 12-13 feet. IT was further found that due to sinking of soil, the rain water seeped into the masonry tanks which caused cracks in the masonry tank and due to entry of rain water into the tanks, the contents got spoiled. There is no clause that if any lapse is committed by the insured and loss occasioned, the liability of indemnification will not be of the insurer or the insured. In such a case where the insured''s works is located at the outskirts of the village and three sides of the unit is surrounded by low lying ground which remains usually filled with rain harvested water, and in view of this matter there is permanent presence of water, the soil of factory site is rich in moisture/water, this may be the cause why the contents got spoiled. This is obviously a case of subsidence. The liability of Insurance Company for indemnification is there. That being so the finding so recorded by the learned District Forum, in our considered view, does not suffer from any irregularity either on law or on merits. The repudiation was without any justification. Contrary argument so raised by the learned Counsel for the appellant obviously are not sustainable in the eyes of law and even the implied admission so made during the course of arguments by the learned Counsel for the respondent has not strengthened the case of the appellant.

AS regards the rate of interest it has been argued by the learned Counsel for the appellant that the interest awarded by the learned District Forum is highly excessive. However, the learned Counsel for the respondent has argued that the rate of interest awarded by the learned District Forum is proper and just. In our view, after having a global look of the situation, the rate of interest should have been 6% per annum. Hence the appeal is liable to be modified to the extent that the rate of interest shall be 6% per annum instead of 12% per annum. In view of the above discussion the appeal is liable to be allowed in part. ORDER The appeal is allowed in part to the extent that the rate of interest awarded by the learned District Forum is reduced to 6% per annum from 12% per annum. In the circumstances of the case, there will be no order as to the costs. Let copy as per rules be made available to the parties. Appeal partly allowed.