Oriental Insurance Co. Ltd. vs MAYUR RESTAURANT

FIRST Appeal No. 320 of 1994 has been filed against the order dated 10.2.1994 of the Maharashtra State Consumer Disputes Redressal Commission in Complaint No. 602 of 1992. The opposite party is the appellant before us.

FACTS of the case are as follows : The complainant who is a proprietor of M/s. Mayur Restaurant & Bar at Chandrapur had taken an insurance policy ''A'' bearing No. 16221 /10/91 / 00421 from the Oriental Insurance Company for Rs. 18,65,000/- valid for 12 months from 3.8.1990 to 2.8.1991. The property insured pertained to the building - the Mayur Restaurant and the Bar located at the basement and included certain other items as well, as listed in the statement forming part of the policy. The complainant alleged that due to heavy rains in Chandrapur District, there was inundation and floods around the area of the premises where the Mayur Bar is situated causing extensive damage to the insured property. The complainant noticed the damage on 7th August, 1990 and informed the Branch Office of the opposite party-Insurance Company (appellant herein) on 10th August, 1990. The complainant stated that he could not immediately inform the opposite party as he was busy in salvage operations of the Bar. On 11.8.1990, the opposite party appointed Sri V.S. Daoo, a Surveyor from Nagpur to survey the damage and assess the loss suffered by the complainant. The Surveyor observed that even during his visits, it rained heavily on 21st night and the fury continued upto 24th, August and water entered into the premises of the basement which remained inundated between 21st and 28th August. According to the Surveyor''s report, continuous presence of acidic and corrosive water from the Macchi Nala basically carrying refuse/ effluent of the city and residential outlets caused damage to the basement where the Bar is situated. The Surveyor assessed the loss payable to the insurer under the policy at Rs. 2,26,819.49 and communicated the same on 17.4.1991. The opposite party, however, repudiated the complainant''s claim on 2.8.1991. On this, the complainant represented to the Grievance Cell of the opposite party with copy to the Ministry of Finance. The opposite party confirmed their repudiation on 12.12.1991. Aggrieved by this, the complainant preferred his complaint before the Maharashtra State Commission alleging deficiency in the service of the opposite party and claiming an amount of Rs. 2,26,819.49 together with interest @ 18% per annum alongwith Rs. 35,000/- towards loss due to delay and Rs. 7,500/- as costs.

The objections raised by the opposite party before the State Commission were that; (i) the complaint was time barred since it was filed on 14.10.1992 i.e. after a lapse of one year period from the date of repudiation of claim on2.8.1991, (ii) the complainant failed to disclose to the opposite party in respect of hotel bar at the time of taking policy with them. They contested the fact of occurrence of floods at the time of the said event and also the structure as a Class-1 construction. The State Commission examined these objections as also the reasons given by the opposite party in their letters dated 2.8.1991 and 12.12.1991 for repudiating the claim of the complainant. The State Commission, inter alia, observed that the complainant was aggrieved by the opposite party''s perfunctory repudiation on 2.8.1991 and continued to agitate his claim by representing to higher authorities following which the Divisional Office informed the Regional Office through their letter of 12.12.1991 with copy to the Additional Private Secretary to Minister of State for Finance, New Delhi, about the reasons for which the claim had to be rejected. According to the State Commission, this amounted to pendency of action on the claim and showed that the complainant had not abandoned his claim. The State Commission dismissed as meaningless the objection regarding non- inclusion of the basement of restaurant in the policy taken by the complainant with M/s. New India Insurance Co. Ltd. The Commission have also not found the reasons advanced by the opposite party for repudiation as convincing and concluded that the repudiation was done without proper application of mind. Referring to the ground for repudiation that the insured had taken the policy after the damage was caused to it, the Commission held that such an objection in fact, casts aspersions on the work of the Insurance Company itself inasmuch as it implies that there was gross negligence on their part to have issued that policy without proper verification of facts. On the basis of affidavit of the complainant and documents placed in support of the damage caused and the Surveyor''s report, the Commission concluded that there was deficiency of service on the part of the opposite party on two counts i.e., (i) delay in settlement of claim, and (ii) unreasonable and unmaintainable reasons for repudiating the claim of the complainant. The Commission therefore directed the opposite party to settle the complainant''s claim for an amount of Rs. 2,26,819/- and pay to the complainant by way of compensation interest at the rate of 18% p.a. on the above amount and costs of Rs.500/-.

THE appeal by the opposite party against the order came up before us earlier for stay of enforcement of the order; an interim stay was granted on 2nd May, 1994 subject to the condition that the appellant pays to the complainant one half of the amount payable by it under the impugned order of State Commission within a period of one month from the date of the order and in default of compliance the stay will stand automatically cancelled. THE appeal was finally heard on 28th May, 1998. THE points made in the appeal are that, (i) the respondent/complainant has taken the policy by misrepresentation and concealment of material facts since he had not disclosed the existence of a Nalla by the side of the insured property and that the location of the property is prone to floods; (ii) the policy was taken after the occurrence of loss; and (iii) the claim was time barred in terms of Clause 14 of the Insurance Act. THEse are not different from the submissions already made by the appellant herein before the State Commission in the original complaint. In their reply to the appeal, the respondent has stated that June, July and August are the months of the rainy season. Chandrapur District is surrounded by forest and there is always heavy rain in these months. Hence, the question of taking policy after the occurrence of loss does not arise. Chandrapur District is surrounded by coal fields; Chandrapur city itself is situated on coal field areas and there are underground mines, miles together. Due to underground mines, the problem of inundation is there throughout the District. THE agent of the appellant had visited the spot and verified the location of bar and restaurant before giving the policy. THE repudiation letter did not say that the policy was obtained fraudulently or by misrepresentation and the complaint was not barred by time. After the Divisional Office of the appellant repudiated the claim on 2.8.1991, the respondent-complainant approached the Grievance Cell with a copy of the letter to the Minister of Finance. THE Grievance Cell finally repudiated the claim on 12.12.1991. THE complaint was filed on 14.10.1992 which was well within the period of limitation of one calendar year. We have heard the Counsel on both sides and carefully perused the papers. The Surveyor''s report has extensively discussed the heavy rains in Chandrapur District in July and August, 1990 and that the rains of August, 1990 have become notorious for the loss they have caused to the property and the disruption of traffic and all modes of communication for the relevant period. The report refers to the certificate dated 28.8.1990 issued by the office of the Tehsildar, Chandrapur according to which there were heavy rains at Chandrapur on the 7th of August and from 14th August continuing for the following four days. Rain water level in Macchi Nala area and surrounding areas was from one foot to one and half feet above the road level. The rain water entered in some residences and other buildings causing damages". From the above, it is clear that there were heavy rains in July and August. The policy was admittedly issued by the appellant on 3.8.1990 and it was for the appellant-Company to have verified the flood-proneness of the insured property before issuance of the same. Another reason given for repudiation is that the information of loss was given only on 10th August when the loss had taken place on the 7th August. This is also not a new point. The respondent has submitted in his complaint before the State Commission that he was busy salvaging the loss, which seems to be plausible. The appellant has also referred to the observation of one Shri B.B. Yadoo, Investigator appointed by them, that at the time the insurance policy was issued, the complainant had got the unauthorised liquor insured for a value of Rs. 1 lakh which is fraudulent. Observations have also been made about the ownership of the Bar and Restaurant. The respondent/complainant has mentioned that this document viz. the Investigator''s report was brought up only at the time of hearing of the complaint. The Surveyor''s report has already covered these aspects.

WE have given careful consideration to all the aspects of the case and are of the view that the reasons given by the appellant for repudiation are not sustainable. The State Commission''s finding of delay and negligence leading to deficiency of service on the part of the appellant is just and fair. WE, therefore, confirm the order of the State Commission and dismiss the appeal. No costs. Appeal dismissed.