The Oriental Insurance Co. Ltd. vs Nita Industries

AGGRIEVED by the order dated 10.07.2008 passed by State Consumer Disputes Redressal Commission, Delhi (for short "the State Commission") in First Appeal No. 235 of 2006, the Oriental Insurance Company Limited preferred this Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act").

BY its impugned order dated 10.07.2008, the State Commission has concurred with the finding of the District Consumer Disputes Redressal Forum, Tis Hazari, Delhi (for short the ''District Forum'') in CC No. 461 of 2005, by which order, the District Forum allowed the Complaint and directed the Insurance Company to pay the claim amount of 5,11,315/ - with compensation of 20,000/ - and costs of 5,000/ -. The brief facts as stated in the Complaint are: that the Complainant, a Sole Proprietorship business concern, insured its factory premises for an amount of 25 lakhs covering the period 19.08.2004 to 18.08.2005. While so, on 1.1.2005, at about 1.15 p.m., a fire broke out at the factory premises, destroying the oil pipeline insulation, boiler, jalli, coils etc. amounting to 5,11,315/ -. On the very same day, the Complainant informed the Insurance Company vide letter dated 1.1.2005. The Surveyor visited the site on 4.1.2005 and on 5.1.2005 for assessing the loss. Thereafter, the Complainant requested the Insurance Company to settle their claim, but there was no response. On 16.5.2005, the Complainant had written a letter to the second Opposite Party seeking status of its claim, for which it had received a reply dated 25.5.2005 repudiating its claim on the ground that inspite of two letters sent to the Complainant herein, it had failed to deposit the salvage with the Surveyor. Thereafter, the Complainant was informed that the communication was inadvertently sent to the wrong address. Once again, the Complainant requested the second Respondent vide its letter dated 13.6.2005 to re -open the case and provided them with photographs of the damage done alongwith bills of material used for re -construction and repair of the unit. Inspite of repeated requests, the Opposite Parties did not settle the claim. Vexed with their attitude, the Complainant approached the District Forum seeking directions to the Opposite Parties to pay the claim amount of 5,11,315/ - with interest @ 18% per annum, compensation of 2 lakhs and costs.

THE Opposite Parties 1 and 2 filed their written version stating that they had received the intimation of the said fire accident only vide letter on 4.1.2005. They denied that the Complainant had intimated them on 1.1.2005 and pleaded that the copy of the alleged intimation letter dated 1.1.2005 is different from the actual intimation letter given to them on 4.1.2005. A Surveyor was deputed on 4.1.2005 to assess the loss and he had reported that only some damaged insulation material was shown to him and that only a portion of the insulation of pipes was damaged in the reported fire incident. The factory was in perfect running condition and the damage caused was minimal. It is averred by the Opposite Parties that their Surveyor reminded the Complainant on 15.1.2005 and again on 21.2.2005, but there was no response. The Opposite Parties pleaded in their written version that their repudiation is justified as the Complainant had breached Policy Condition No. 6(b) of the Policy which reads as under: "The insured shall also at all times at his own expense produce, procure and give to the Company all such further particulars, plans, specification, books, vouchers, invoices, duplicates or copies thereof, documents, investigation reports(internal/external), proofs and information with respect to the claim and the origin and cause of the loss and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonable required by or on behalf of the Company......

No claim under this policy shall be payable unless the terms of this condition have been complied with."

IT was contended that the Surveyor was unable to assess the loss as the Complainant did not furnish all the relevant information. The Surveyor had observed in his letter dated 18.3.2005 that the cause of fire was a case of machinery breakdown loss and therefore, the claim was not payable under the Fire Policy. It is further stated that the Complainant had failed to produce the damaged parts or documentary evidence of repairs effected and, therefore, their claim was not settled. The District Forum allowed the Complaint directing the Opposite Parties to pay the claim amount of 5,11,315/ - together with compensation of 20,000/ - and costs of 5,000/ -. The State Commission concurred with the finding of the District Forum and dismissed the Appeal observing as follows: "7. There is no dispute that the appellant appointed a Surveyor on 5.1.2005 for assessment of loss by fire. The impugned order also shows that the respondent got replaced all the Jalli of boiler which were destroyed due to fire and was shown to the Surveyor by way of bill to the tune of Rs. 5,11,315/ -. The receipts for purchase of articles were produced by the respondent which are on record and were relied upon by the District Forum. So much so the Surveyor did not even try to assess the loss in respect of those items which were shown to him having been destroyed by way of fire.

The respondent states that the salvage is still lying with him. If there was any suspicion or doubt in the mind of the Surveyors about the incident of fire and destruction of items in the factory the Surveyor could have and rather should have recorded the statement of neighbours or other persons living in the vicinity. No person would file such a claim particularly after informing the Fire Department as well as lodging the claim immediately or a day or two after the incident with the Insurance company and put the premises in perfect condition. May be due to heavy loss a person may not preserve the site destroyed in fire for many days and once the Surveyor visits and inspects the premises he is free to purchase and replace the burnt machinery or equipment so as to continue with the business and livelihood.

The report of the Surveyor is completely wanting in details and particulars".

AGGRIEVED by this Order, the Insurance Company preferred this Revision Petition.

THE contentions of the learned counsel for the Petitioner are three fold: - (1) that the intimation of the fire incident was given to them orally only on 3.1.2005 and vide letter on 4.1.2005; (2) that by the time the Surveyor had visited the site on 4.1.2005, the repairs had already been done and surveyor was not given the required documents; (3) that the factory was in a working condition and also that the salvage was not made available to the Surveyor to help him in assessing the loss. The learned counsel admitted that the Surveyor''s letter was sent to the wrong address i.e. B -3, Red Cross Road instead of V -3, Red Cross Road. The learned counsel for the Respondent/Complainant submitted that the intimation was given on 1.1.2005 itself and that only a reminder letter was sent on 4.1.2005, based on which, a Surveyor was deputed to assess the loss and all the relevant repair bills were given to the Surveyor.

THE repudiation letter dated 3.6.2005 reads as follows: "THE ORIENTAL INSURANCE COMPANY LIMITEDDivisional office 11 (CODE 271400)CFF -2 ANSAL BUILDING,DILKHUSH INDL. AREA, G.T. KARNAL ROADAZADPUR, DELHI 110033PHONE: 27115054, 27121784, 27244103

Deptt. Misc. Date: 03/06/2005

BY REGD. POST

M/s. NITA INDUSTIRES,V -3, RED CROSS ROAD,M.I.E. BAHADUR GARH,HARYANA.

Dear Sirs,

Re. Fire Loss dated 01.01.2005

Policy No. 11/2005/530, CP No. 11/2005/9

This has reference to your representatives, Mr. Nitin and Mr. Jain visited our office today in connection with the subject claim and the position of claim was explained to them by the undersigned and Dr. G.R. Chawla, A.M. As you had arranged repairs prior to surveyor, visit to inspect the loss and from photograph arranged by surveyor no sign of fire, smoke or even water damage are visible.

In view of the above, the claim was repudiated by us as per recommendation if survey report.

Thanking you,

Yours faithfully,Sd/ -Divisional Manager"

THE fire accident and the policy coverage are not in dispute. There is a concurrent finding of fact by the District Forum and the State Commission that there was damage to some of the machinery and the accessories of the insured factory and based on the repair bills, the entire claim amount of 5,11,315/ - was awarded. We observe from the record that the claim letter with item -wise details of damage had not been filed. At the same time, the Survey Report dated 17.01.2009, filed before this Commission, is with respect to the Inspection done in December, 2008 and as considerable time had elapsed since the loss occurred, the actual damage and loss occurred could not be assessed accurately. The contention of the Appellant herein that photographs which are enclosed with the Survey Report, do not show any damage to the thermopac coil, cannot be sustained as more than three years have elapsed since the occurrence of the fire incident. The Surveyor had observed that the loss to the pipelines and to the insulation of the boiler, on account of the fire was payable and after deducting depreciation of 15%, an amount of 60,450/ - was paid to the Respondent on 12.3.2009. The learned counsel for the Respondent/Complainant submitted that all the bills amounting to 5,11,315/ - was payable to them. But we observe from the record that the claim letter with the detailed item -wise list to the extent of damage claimed, was not made available to the Surveyor. Having regard to the fact that depreciation was not considered by the Fora below and also that the salvage was not made available for the Surveyor to correctly assess the damage, we are of the view that the Respondent is entitled to 75% of the claim amount less 60,000/ - which has already been paid. Compensation of 20,000/ - and also costs of 5,000/ - awarded by the lower Fora stand confirmed.

IN the result, this Revision Petition is allowed in part and the order of the State Commission is modified to the extent indicated above. This direction is to be complied within four weeks from the date of receipt of the order, failing which the amount will attract an interest at 9% per annum.