NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION
Police Bazar,Shillong – 1.
Meghalaya
Through its partner
Shri Vishnu Chokhani … Complainant
1. National
Insurance Co. Ltd.
Shillong Divisional Office
Shillong – 793
001.
2. National
Insurance Co. Ltd.
Guwahati Regional Office
Bhangagarh,
Guwahati – 781
005.
3. National
Insurance Co. Ltd.
No.3,
BEFORE :
HON’BLE MR.
JUSTICE M.B. SHAH, PRESIDENT
MRS.
RAJYALAKSHMI RAO, MEMBER
For the Complainant : Ms.Aparna Bhat, Advocate
For the Opp.
Parties : Mr.Vishnu Mehra
and Ms.Sakshi
Mittal,
Advocates
Dated :
This Original Petition is filed by M/s. Satayanarayan Jiwanram, a
partnership firm, having its godown premises at
Police Bazar, Shillong, Meghalaya, against
M/s. National Insurance Co. Ltd. (hereinafter referred to as Insurance
Company) for unjustifiably repudiating the claim arising due to the damage by
fire and water. The complainant has
claimed a sum of Rs.20 lakhs for the loss suffered by it with interest at the
rate of 24% p.a. and Rs.5 lakhs as damages with costs of Rs.50,000/-.
FACTS:
It is the say of the
complainant that in May 1996, an agent of the insurance company approached the
complainant and consequent thereupon the complainant took two policies of ‘Fire Policy C’ bearing Nos.
201000/11/97/31/04848 and 201000/11/97/31/04849 for a sum of Rs.10 lakhs each
for the period between 9.5.1996 and 8.5.1997 covering its godown
located at Police Bazar, Shillong,
Meghalaya and
paid a premium of Rs.2205/- for
each policy. The aforesaid policies
being were renewed from time to time.
The godowns were used for storing clothings
and other fabrics. The premium for
relevant period commencing from 12.5.1997 to 11.5.1998 was paid on 13.5.1997.
On
20.9.1997, at about
As
the complainant had not received the fire policies from the insurance company,
it sent a letter dated 20.3.1998 to the insurance company reminding them to
forward the copies of policies. On
1.4.1998, the complainant received another letter from the surveyor asking for
more documents. The complainant was
shocked to receive the said letter after a lapse of 8 months. Despite this, as there was no alternative,
under cover of a letter dated 7.4.1998, those documents were supplied to the
surveyor. Thereafter, on 15.9.1998, the
policies were supplied to the complainant.
Meantime, complainant addressed a number of letters requesting the
insurance company to settle the claim.
As there was no response, the complainant sent a Legal Notice dated
12.4.2001. Subsequently, he came to know
that a second surveyor was appointed to assess and determine the loss suffered
by the complainant. Despite indulgence and
assurances by the Head Office of the insurance company, the insurance company
failed to process the claim. Therefore,
second Notice dated 21.5.2001 was issued to the insurance company.
Thereafter,
by its letter dated 3.7.2001, the insurance company repudiated the claim on the
ground that the subject claim preferred
under the policies of different premises
as per the description of the building for which the cover was granted.. Hence,
the complainant has approached this Commission by filing the aforesaid
complaint in December 2001.
Undisputedly,
the insurance company has repudiated the claim solely on the ground that “the subject claim preferred under the
policies of different premises as per the description of the building for which
the cover was granted”. It is contended that the godowns
which were affected by fire were not in double storey building as mentioned in
proposal form but were in a building which was having 7 storeys. In the written version, it was also
contended that the claim was time-barred.
There is no dispute with regard to insurance policies.
Survey Reports
For
appreciating the contention, we would refer to the surveyor’s report – one
dated 4.5.1998 given by Mr. G.R. Das and second dated 22.5.2000 given by Mr.
B.R. Poddar, Chartered Accountant.
We
would first refer to the relevant part of the second report dated 22.5.2000
given by B.R. Poddar, Chartered Accountant, wherein
he has stated that under the instructions vide Appointment Letter dated
10.8.1999, he visited Shillong on 27.8.1999 and
subsequently on 18.9.1999 and 11.12.1999 for the purpose of investigation,
re-survey and re-assessment of the loss suffered by M/s.Satya
Narayan Jiwan Ram in their godowns at Police Bazar, Shillong, due to a major fire on 20.9.1997. After thorough investigation, survey and
study of the survey report of Sri G.R.Das and
scrutiny of the papers/documents available in the file and obtaining the
clarification of the insured, he submitted his final findings. He has further stated that during discussions
with Sri D.R.Saikia, Dy.Manager,
NIC, RO, while handing-over the claim file, he was apprised of the following :
i)
There are anomalies in the
underwriting aspects.
ii)
The surveyor Sri G.R.Das
had expressed doubt about the admission of liability.
iii) The insured is unwilling to accept the settlement as recommended by the surveyor.
It
was under these circumstances that he was entrusted with the job of
Re-survey/Investigation and review of the assessment if warranted.
He
has also stated that the godown is situated at J.B.
Textiles premises and the subject godowns form part
of the two basements of the building owned by Jiwan
Ram Chokhani, popularly known as J.B. Textiles
premises, a sister concern of the complainant.
These basements are negotiable by a staircase leading from the first
floor occupied by M/s.J.B. Textiles as their shop
premises. The main building above the ground
level is having 5 floors built of pacca walls, all through
having RCC roofs and having intermediate floors. He has also noted that the insured has taken
three policies – two for godowns and the third policy
for a shop and a godown in a
different premises which was at a distance approx. 50 ft. from J.B.
Textiles premises. He has also stated
that Complainants partnership firm accounts were subject to compulsory
audit. He has, thereafter, discussed the
report submitted by Mr.G.R.Das and thereafter assessed the loss as per the finding
given by surveyor G.R. Das. Finally, he
has assessed the loss under the two policies at Rs.14,21,204/-.
In
the special remarks, he has stated as under:
“The insured had suffered a loss in their godown at Police Bazar on
26.04.96. The said loss had been surveyed and assessed by Sri A.K.Modi and the claim is said to have been settled by the
Insurers. It is ascertained during
enquiry and investigation that there had been a fire in the basement godown of the premises known as J.B. Textiles. It is established from my enquiry that in the
year 1996 M/s. Satyanarayan Jiwanram
had their godown in the basement of J.B. Textiles
premises. Sri Das had offered certain
comments on the assessment of Sri A.K. Modi based on
the Xerox copy of the survey report he had procured but the Xerox copy of the
same is not enclosed
to the Report of Sri G.R. Das. I have
requested Shillong D.O.in person, in writing and over phone once
again to provide me with a copy of the Survey Report of Sri A.K. Modi, Inspite of my earnest endavours no copy of the survey report had been supplied to
me.
Under the circumstances I am unable
to offer any comments on the submissions of Sri G.R. Das on the survey report
of Sri A.K.Modi.
With this I conclude my Re-survey
cum Re-assessment Report alongwith enclosures subject
to admission of the liability by the insurers.”
Without
considering this aspect, the Insurance Company relied upon the first survey
report and repudiated the claim.
In
our view, this repudiation is apparently unjustifiable for the following
reasons:
1) Firstly, till the incident of fire took place, the insurance company had
not issued the policies.
2) Secondly, in the insurance policy which was issued after the incident,
it is specifically mentioned that the property is situated at “Police Bazar, Shillong -
(i)
being owned by (not mentioned in the
Proposal Form) ;
(ii)
it is specifically stated that property is required to be insured as stock
in godown (risk covered for all kinds of cloth in the
godown).
It
is true that with regard to the construction of premises, it is stated : walls –
SUBMISSIONS:
However,
the learned counsel for the insurance company submitted that the first surveyor
has visited the site and also has verified the Proposal Form. In the Proposal Form, address is mentioned as
Police Bazar, Shillong. Premises used by the proposer is mentioned as “godown”. But, in the description of the premises, for
the walls of the building, it is mentioned “
Contra,
it is contended by the learned counsel for the Complainant that this proposal form is filled in by the
insurance agent and the agent has taken signature on the blank form. Apart from this, she contended that the
premises which were used by the complainant as godowns
were insured and the complainant is having godowns as
per the survey report in the premises where fire took place
and that is the report of the second surveyor. She further submitted that on the basis of
the report submitted by the first surveyor, the insurance company was prepared
to settle the dispute as per the assessment made by Mr.G.R.
Das. However, as the complainant was
unwilling to accept the settlement as recommended by the said surveyor, the
insurance company has taken this ground to defeat the claim. For this purpose, she has relied upon the
introductory remark quoted above by the second surveyor, Mr.B.R.Poddar.
Findings:
In our view, it is apparent that for
one or other unjustifiable reason, the insurance company has delayed the
settlement of the claim. Undisputedly,
the fire took place on 20.9.1997. After
receipt of the report, it appears that insurance company was prepared to settle
the claim as assessed by the first surveyor.
As the same was not accepted, the insurance company appointed the second
surveyor. The second surveyor assessed the loss at more than Rs.14 lakhs and
thereafter on 3.7.2001,
the insurance company repudiated the claim.
First
surveyor assessed the loss at Rs.10,49,726/-. However, he has stated that
:
“LIABILITY
On the basis of the aforesaid
remarks the claim is repudiated.
The
first surveyor arrived at the conclusion that the premises were different solely on the basis of the
previous report given by Shri A.K.Modi, wherein with
regard to the previous fire which occurred on 26th April, 1996 it is
stated that the insured’s godown was situated at
Police Bazar, Shillong,
which is situated in the ground floor of 2nd storeyed
building and the building was owned by Mohd. Wahed.
The present godowns are situated in the premises
owned at JB Textiles owned by one of the partners of the complainants. It is
also stated in his report that the insured was occupying two buildings in that
locality – one is their own seven-story building and the other one is occupied
as clothes shop being style under name of M/s. Satyanarain
Jiwanram away from the insured own building. As such,
this surveyor has not referred to the 3rd policy which is referred
to by the second surveyor, namely, Poddar, a
Chartered Accountant. Two policies
pertain to godown and the third policy pertains to a godown and a shop. It is quite possible that the third
policy is with regard to the shop wherein the fire took place in 1996.
Admittedly, the godowns where the fire took place
there is no shop of the complainant. In our view, the entire basis of
repudiating the claim on the said ground is totally unjustified.
Further,
in our view, there is no justifiable reason not to accept the second survey
report. The policy issued by the
insurance company only mentions that godowns which
belong to the complainant are covered by the insurance policies. Further, even if there is any vagueness in
issuance of the policies, complainant should not suffer. It was for the insurance company to mention
it clearly as to which premises are covered under the insurance policies. In case
of ambiguity, in the terms of the policy, they are required to be interpreted
in favour of the insured. The law on
this subject is
settled. Further, even in cases where
two reasonable interpretations of the terms of the policy are possible, the
Court in the case of Shashi Gupta (Smt.) Vs. Life Insurance Corporation & Anr., (1995) Suppl. 1 SCC 754,
held that “…we would accept the one which favours the
policy-holder, as the same advances the purpose for which the policy is taken
and would be in consonance with the object to be achieved for getting the lives
assured [relied in Life Insurance Corporation of India Vs. Raj
Kumar Rajgarhia & Anr.
(1999) 3 SCC 465]
To
the same effect law on
the subject is succinctly stated in Skandia Insurance Co. Ltd. vs. Kokilaben
Chandravadan & Ors. (1987) 2 SCC 654, wherein the
“… It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not turned to the purpose and philosophy of the legislation without being informed of the ture goals sought to be achieved.”
……
“…….In fact it
appears that the former view is more plausible apart from the fact that it is
more desirable. When the option is between opting for a view which will relieve
the distress and misery of the victims of accidents or their dependants on the
one hand and the equally plausible view which will reduce the profitability of
the insurer in regard to the occupational hazard undertaken by him by way of
business activity, there is hardly any choice. The Court cannot but opt for the
former view. Even if one were to make a strictly doctrinaire approach, the very
same conclusion would emerge in obeisance to the doctrine of “reading down” the
exclusion clause in the light of the “main purpose” of the
provision so that the “exclusion clause” does not cross swords with the “main
purpose” highlighted earlier. The effort must be to
harmonize the two instead of allowing the exclusion clause to snipe
successfully at the main purpose.”
In
United India Insurance Co. Ltd. Vs. Pushpalaya
Printers (2004) 3 SCC 694, the Apex Court has held that: “… it is also settled
position in law that if there is any ambiguity or a term is capable of two
possible interpretations, one beneficial to the insured should be accepted
consistent with the purpose for which the policy is taken, namely, to cover the
risk on the happening of certain event.
Although there is no ambiguity in the expression “impact”, even
otherwise applying the rule of contra preferentem,
the use of the word “impact” in Clause 5 in the instant policy must be
construed against the appellant. Where
the words of a document are ambiguous, they shall be construed against the
party who prepared the document. This
rule applies to contracts of insurance and clause 5 of the insurance policy
even after reading the entire policy in the present case should be construed
against the insurer. A Constitution
Bench of the this
Court in
General Assurance Society Ltd. Vs. Chandumull
Jain [AIR 1966 SC 1644: (1966) 3 SCR
500], has expressed that “in a contract of insurance, there is requirement of uberrima fides, i.e., good faith on the part of the assured
and the contract is likely to be construed contra proferentem,
i.e., against the company in case of ambiguity or doubt.”
At this stage, learned counsel for the
complainant relied upon the decision of the
However,
the learned counsel for the insurance company. In the Proposal Form, the
building is mentioned to be two storeyed and as the
building was 5/7 storeyed, it cannot be said that
insurance policies were taken for the said premises. In our view, this submission is without any
substance. If the property in the godown is insured
and if there is some mistake in describing the premises, it cannot be said that
insurance coverage is not there. Even if
we take into consideration the Proposal Form, it is clear that the address of
the godown is that of Police Bazar,
Shillong.
Again it is mentioned that part of the other premises are used as shop
by others. In any case, Insurance Co.
is required to
be more vigilant before accepting the
premium and issuing the policy.
In
the result complaint is allowed. The
Insurance Company is directed to reimburse the complainant on the basis of
assessment made by the second surveyor,
namely, B.R. Poddar, Chartered Accountant and pay a
sum of Rs.14,21,204/- with interest @ 10% per annum after three months from 20.9.1997 (the date of fire), that is to say, from 1st January,
1998. The Insurance Company is directed
to pay costs of Rs.50,000/- to the complainant. This
is required because there was unusual delay in settling the claim. The
Insurance Company is directed to pay the above referred amounts to the Complainant within a period of eights
weeks from
the date of receipt
of a copy of this order.
Sd/
……………………………J.
(M.B.SHAH)
PRESIDENT
Sd/
……………………………
(RAJYALAKSHMI
RAO)
MEMBER