SINDHU FLOWERS PRIVATE LIMITED vs NEW INDIA ASSURANCE COMPANY LIMITED

M/s. Sindhu Flowers Private Limited have invoked the original jurisdiction of this Commission by filing the present complaint against the New India Assurance Company, alleging deficiency in service in releasing the amount claimed by way of compensation for the loss suffered by the complainant on the basis of the insurance policy issued by the opposite party for covering various risks including hail-storm etc.

ACCORDING to the complainant a Private Limited Company, engaged in the cultivation of various types of flowers in consonance with the natural climatic conditions, nature of land and other related conditions in different farms situated at different places and one such farm being in Village Mallan, Distt. Kangra, the Company had taken the financial assistance of Punjab National Bank from their Branch Office at Chandi Mandir for the smooth running of their business. The Bank sanctioned a Cash Credit (H) Limit of Rs. 15 lacs which the complainant has been availing from time to time. The complainant got their flori-culture crop insured with the opposite party against the risk of fire, hail-storm, cyclone, floods and natural calamities etc. The policy was taken on 15th November, 1995 and the same was valid upto 14th November, 1996 and it was renewed from time to time making the total coverage limit to the tune of Rs. 21 lacs. On 28th May, 1997 while the flowering crop of the complainant was under cultivation there was severe hail-storm in the area around Village Mallan, which completely destroyed the flowering crop of the complainant about which immediate information was sent to the Assurance Company-opposite party telegraphically on 2nd June, 1997 as under : "To the New India Assurance Company, Kalka (Haryana) crop damage of gladiolus flowers to the extent of Rs. 4.00 lacs due to hail and cyclone at our farm near Allan, Kangra. Arrange spot survey to settle our claim. Sindhu Flowers Private Limited." Despite this telegram, when there was no response from the Company-opposite party upto 5th June, 1997, the complainant requested Dr. A.P.S. Gill, Advisor on Flori-culture of APEDA - Government of India organisation for promotion of export of agricultural produce based at Ludhiana, to visit the affected farm area and also to advise the complainant to further course of action to minimise the damage to the flori-crop as also to assess the loss due to damage done due to hail-storm. Dr. A.P.S. Gill assessed the loss to the tune of Rs. 4 lacs and apprehended further damage to the crop also, keeping in mind the severe injury on the plants and foliage to the crop. On the other hand, the Assurance Company instead of releasing the payment keeping in view the assessment of loss made by Dr. A.P.S. Gill, cancelled the insurance policy by their letter dated 20th May, 1997 even though the policy had been in force for the past 18 months. Aggrieved by this deficiency in service on the part of Assurance Company by canceling the insurance policy retrospectively and unilaterally and repudiating the claim of the complainant, the present complaint has been filed for claiming refund of the amount of Rs. 5.5 lacs as loss on account of damages to the crop along with interest @ 18%.

In their reply, even though the Assurance Company has admitted the factual position regarding issuance of policy, payment of premium, occurrence of the hail-storm etc., yet repudiation of the claim and cancellation of the policy are sought to be justified on the ground, that the complainant did not fall within the definition of "consumer" and that there was no deficiency in service on the part of the opposite party.

IN support of the allegations made in the complaint has produced evidence documentary as well as oral and has examined Dr. A.P.S. Gill, specialist and expert witness in the science of flori-culture. He has been cross-examined by the opposite party. According to the evidence produced by the complainant loss alleged to have been suffered by the complainant and the assessment made by Dr. Gill stands fully corroborated. On the other hand, justification given by the opposite party for the cancellation of the policy and the refund of the prorata premium to the complainant are only in the nature of an apology for their action i.e. the higher Authorities in consultation with the experts had refused to endorse the policy and had directed the Assurance Company to cancel the same and refund the amount received towards premium. After hearing the learned Counsel for the parties and having gone through the record we are of the considered view that complainant has successfully established on record deficiency in service as well as unfair trade practice on the part of the opposite party-Assurance Company. It is a settled proposition of law in the field of insurance that once contract has come into existence between the parties, subsequently it cannot be rescinded unilaterally, much less retrospectively to harm the interest of the other party. In the present case, it is the admitted position of the parties that the insurance policy remained in force for full 18 months when it was abruptly, unilaterally and retrospectively cancelled, without even issuing a prior notice to the complainant. This act on the par t of Assurance Company squarely amounts to deficiency in sender on their part for which complainant has to be adequately and suitably compensated.

IT is again a settled proposition of law that contract of insurance is a contract of indemnification of loss suffered by the insured and the insurance policy issued by the insurer Assurance Company is for the purpose of compensating the insured for the risk covered. In the present case, loss suffered by the complainant has been minutely assessed by an expert and specialist of flori-culture Dr. A.P.S. Gill attached with the Agricultural University, Ludhiana and well-recognised by the Government of India. Therefore, there is no difficulty in awarding compensation on the basis of the assessment made by Dr. A.P.S. Gill. In view of the aforesaid factual and legal position we allow the complaint and direct the opposite party-Assurance Company to pay to the complainant the amount of Rs. 5.5 lacs as claimed by the complainant, which includes the amount of loss assessed and the compensation for the monetary loss and mental agony suffered by the complainant. The complainant shall also be entitled to costs of litigation which are quantified as Rs. 2,000/-. The Assurance Company is directed to comply with this order by making the aforesaid payment within a month from the date of the receipt of the copy of the order. Complaint allowed.