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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
V.K. Jain, Presiding Member, Dr. B.C. Gupta, Member
M/s. East India Cotton Manufacturing Co. Ltd. —Complainant
versus
M/s. New India Assurance Co. Ltd. —Opp.Party
Consumer Case No.229 of 2006
Decided on 11.9.2015
Held: The surveyor, on inspection, of the site found that there was no tell-tale mark on the wall of the premises to indicate flooding / inundation, except water seepage / stains on the floor. Only slight water stagnation due to choking of drain / gutters was found in the premises number 22-B, New Industrial Township. Had there been inundation of the entire factory of the complainant, to the extent claimed by the complainant, the surveyor at the time of inspection by him, would certainly have found stains on the walls of the building, indicating accumulation and stagnation of water inside the building. This is another indication that there was no abrupt and sudden inflow of water inside the factory of the complainant on 17.8.2000 as is claimed by the complainant. A reference in this regard may be made to the statement of the Shivraj Singh, Security Personnel of the insured. In his statement to the surveyor, he expressly stated that since the roof and the glasses of the building had got broken, water used to regularly enter through windows and roofs thereby, rendering the cloth wet. He further stated that the cloth was getting spoilt for many years due to seepage of water through the roof and windows. The above referred statement coupled with the other facts and circumstances as discussed herein before clearly show that the claim made by the complainant is not genuine and the alleged loss to the complainant did not occur in the manner stated in the complaint. [Para 16]
Result: Complaint dismissed
Based on the provided legal document, the key points are as follows:
Terms of Insurance Policy are Binding: The terms specified in the insurance policy are binding on both parties. The court or tribunal cannot disregard or ignore these terms, especially those that are mandatory, such as the obligation to give immediate notice of a loss (!) (!) .
Mandatory Nature of Notice of Loss: The policy explicitly requires the insured to notify the insurer of any loss or damage immediately and within a stipulated time frame, typically 15 days. Failure to do so constitutes a breach of the contractual obligation, which can lead to the forfeiture of benefits under the policy (!) (!) .
Strict Construction of Policy Terms: The legal principle mandates that the terms of an insurance contract be strictly interpreted and enforced as written. No exceptions are generally made based on equity or circumstances, emphasizing the importance of compliance with contractual conditions (!) (!) .
Consequences of Delay in Notification: The delay in notifying the insurer about the alleged loss—here, nineteen days after the incident—without a plausible explanation, is a significant breach. Such delay deprives the insurer of the opportunity to investigate promptly, which can absolve the insurer of liability (!) (!) .
Verification and Evidence of Loss: The insurer’s investigation, including inspection and verification of the circumstances, revealed inconsistencies with the insured’s claims. For example, the absence of tell-tale signs of flooding or inundation, and evidence suggesting water ingress due to structural damage over time rather than sudden flooding, undermines the claim (!) (!) .
Fraudulent Practices and Forged Documentation: The surveyor’s investigation uncovered that certain letters purportedly sent by the insured to municipal authorities lacked proper acknowledgment or receipt, and some letters were found to be forged or falsely claimed. This fraudulent conduct led to the forfeiture of benefits under the policy (!) (!) .
No Evidence of Severe Weather Conditions: The weather data and official reports did not support the insured’s claim of a severe rainstorm or cyclone causing the damage. The absence of evidence from weather authorities or expert testimony weakens the insured’s case that the loss was due to natural calamities (!) (!) .
Inconsistencies in Communication and Evidence: The insured’s failure to produce receipt evidence for the letters sent, and the absence of acknowledgment from the insurer regarding previous correspondence, further supports the conclusion that the insured did not comply with the policy’s notification requirements (!) (!) .
Rejection of the Claim: Due to non-compliance with policy conditions, including delayed notification and fraudulent conduct, the claim was dismissed. The insurer was found not liable to reimburse the insured for the alleged losses (!) (!) .
In summary, the case emphasizes the importance of strict adherence to contractual obligations in insurance policies, especially regarding timely notification and honest communication. Breach of these conditions, particularly through fraudulent means, can lead to forfeiture of claims and benefits.
V.K. Jain, Presiding Member—The complainant company was engaged in the manufacture and processing of yarn and fabrics in its factory at Faridabad (Haryana). A lock out in the factory of the complainant was declared in the year 1996. Since then, the complainant company had been obtaining insurance policies, excluding the loss due to flood and inundation, from the opposite party New India Assurance Company Ltd. However, while obtaining renewal with effect from 01.5.2000, risk due to flood and inundation was also got covered by the complainant. The complainant obtained as many as seven insurance policies from the opposite party for the year 2000-2001, covering damage inundation on account of storm, cyclone, typhoon, tempest, flood and inundation. The case of the complainant is that on 15/16.08.2000, there was a severe rainstorm in the area where the processing unit of the complainant was located in Faridabad, which damaged the roof and windows of the building and water broke into the processing facility, which got inundated and flooded with rainfall, causing severe damage to the building, plant and machinery and the stock lying in the factory. This is also the case of the complainant that vide letter dated 06.09.2000; they had requested the opposite party to appoint surveyor for assessing the loss. The said letter is alleged to have been followed by reminders dated 13.10.2000, 22.01.2001, 19.03.2001 and 25.5.2001. In the meanwhile, the insurance policies issued by the opposite party were duly renewed in March, 2001. It is further alleged that another rainstorm caused severe rains in Faridabad on 26.5.2001, further perpetrating the loss to the complainant and an enhanced claim of Rs.10-12 crore was lodged with the insurance company vide letter dated 28.5.2001. It is also alleged that yet another severe rainstorm struck on 29.5.2001 and the estimate of the loss was revised to Rs.12-13 crore, vide letter dated 30.5.2001 sent to the insurance company. In June, 2001, the insurance company appointed M/s. J. Basheer & Associates to assess the damage to the factory, stores and stocks of the complainant. Since no payment was made to the complainant, the company is before this Commission, seeking the following reliefs:
S. No.
Description
Amount
1.
Towards the plant and machinery
Rs. 3,08,58,150/-
2.
Towards the building
Rs. 19,00,080/-
3.
Towards the stock including raw material, finished and unfinished stock, stock in progress and stock of colour and chemicals (own and held in trust)
Rs. 4,88,35,219/-
4.
Towards colour and chemicals Rs.39,23,263/-
Rs. 8,55,17,712/-
5.
Interest w.e.f. August, 2000 at 18% p.a. on Rs. 8,55,17,712/- for six years
Rs. 9,62,07,426/-
6.
Compensation for harassment
Rs.3,00,00,000/-
7.
Costs
Rs. 2,00,000/-
2. The complaint has been resisted by the insurance company on several grounds. It is inter-alia stated in the reply that the intimation of the alleged loss was received by the concerned Divisional office for the first time on 02.06.2001 vide letter of the complainant dated 28.5.2001 and M/s. J. Basheer & Associates Surveyors Pvt. Ltd. was appointed to carry out the survey and also investigate into the cause of the loss. Due to non-cooperation from the complainant, the surveyor could complete their survey and investigations only by 14.1.2004. It was reported by the surveyors that the damage to the material would have occurred due to seepage of rain water over a period of time directly onto the cloth through cracked/broken Asbestos Corrugated Cement sheets of the roof and transparent plastic sheets on the roof, meant for lighting, ventilator glasses and window glasses and the choking of drains / shutters of the plant due to poor maintenance with the compounding factor of aging of the cloth, which was lying on the machine
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