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HIMACHAL PRADESH STATE CONSUMER DISPUTES REDRESSAL COMMISSION
SURJIT SINGH, PRESIDENT, CHANDER SHEKHAR SHARMA, MEMBER
Athens Labs Limited — Appellant
Versus
Oriental insurance company ltd. And ors. — Respondent
Consumer Complaint No. 07 of 2011
Decided on : 02-08-2013
For the Appellant :Mr. Peeyush Verma, Advocate
For the Respondent:Mr. V. Ramswaroop and Mr. Ameet S. Kanwar, Advocates
An insurance company cannot repudiate a claim based on mere allegations of suppression of material facts or deception without substantial evidence.
Headnote:
CONSUMER PROTECTION ACT - INSURANCE - SECTION 2(1)(d) - INSURANCE POLICY - INTERPRETATION - REPUDIATION OF CLAIM - VALIDITY - CONSUMER COMPLAINT - ALLOWANCE - INSURANCE COMPANY LIABLE TO PAY CLAIM AMOUNT WITH INTEREST AND COMPENSATION.
Fact of the Case:
Complainant, a pharmaceutical company, insured its factory building with the opposite parties, an insurance company and its functionary. Due to heavy rains, cracks developed in the building, and the complainant lodged a claim. The insurance company repudiated the claim, alleging suppression of material facts and deception. The complainant filed a consumer complaint seeking payment of the insurance money, compensation, and litigation expenses.
Finding of the Court:
The court held that the complainant was a consumer as the insurance services were not availed for any commercial purpose. The court found that the complainant had not suppressed any material facts and that the damage to the building was not due to pre-existing cracks or deception. The court also found that the insurance company's surveyor had assessed the loss at Rs. 79,07,909/-.
Issues: 1. Whether the complainant is a consumer under the Consumer Protection Act? 2. Whether the insurance company was justified in repudiating the claim? 3. Whether the complainant is entitled to the insurance money, compensation, and litigation expenses?
Ratio Decidendi: 1. The court held that the complainant was a consumer as the insurance services were not availed for any commercial purpose. 2. The court found that the complainant had not suppressed any material facts and that the damage to the building was not due to pre-existing cracks or deception. The court also found that the insurance company's surveyor had assessed the loss at Rs. 79,07,909/-. 3. The court held that the complainant was entitled to the insurance money, compensation, and litigation expenses.
Final Decision: The court allowed the complaint and directed the insurance company to pay Rs. 79,07,909/- with interest at 9% per annum from the date of filing of the complaint, Rs. 1,00,000/- as compensation, and Rs. 20,000/- as litigation expenses.
ORDER :
(Retd.) Surjit Singh, President (Oral)
Complainant, in this case, is a Private Limited Company and has filed the present complaint against the opposite parties, who are Insurance Company and one of its functionaries, seeking issuance of a direction to them to pay insurance money for the damage caused to its insured building and boundary wall, besides seeking compensation and litigation expenses.
2. Complainant is engaged in manufacture of pharmaceutical products at Kala Amb. It has constructed a building for its factory, which was insured with the opposite parties for the period from 18.10.2007 to 17.10.2008 in the sum of Rs. 2,00,00,000/- ( Rs. 1,70,00,000/- for factory building and Rs. 30,00,000/- for boundary wall).
3. According to complainant in the months of July and August 2008, there were continuous heavy rains in the area, where factory building is located and because of such rains, cracks developed in the building, causing huge loss. Opposite parties were apprised of the damage telephonically, on 26.8.2008. But when there was no response, a communication was addressed on 1.9.2008 in response to which a surveyor deputed by opposite parties visited the spot on 3.9.2008. The name of that surveyor was Pankaj Goel. Thereafter a regular Surveyor-cum-Loss Assessor was deputed on 12.1.2009. He sought some information from the complainant, vide letter dated 20.1.2009, which was made available on 17.02.2009 together with various documents, which are marked Annexures A-4 to A-9. The documents included estimate, indicating the amount of money that was required for reconstruction of the building and the money so required, as per that estimate was Rs. 3,02,78,000/-. The said Surveyor-cum-Loss Assessor then asked for estimated loss on repair basis. Accordingly, Annexure A-11 repair-based estimate was submitted.
4. According to the complainant, the Surveyor-cum-Loss Assessor informed its functionaries that the loss had been assessed at Rs. 86,00,000/-, when nothing was heard from the opposite parties for quite some time, the complainant addressed a couple of letters to the opposite parties, calling upon them to settle the claim and to pay the insurance money, without loss of further time.
5. Opposite parties repudiated the claim, vide communication dated 12.1.2010. Complainant made a representation to the opposite parties, explaining that the repudiation was not justified and explanation with respect to every ground of repudiation was submitted, in writing, through letter dated 3.12.2010, copy Annexure A-14. Opposite parties did not respond to the aforesaid representation. Complainant then filed the present complaint on 6.7.2011, seeking issuance of a direction to the opposite parties to pay a sum of Rs. 86,00,000/- with interest at the rate of 18% per annum from the date of filing of the complaint, Rs. 10,00,000/- as compensation for mental torture, harassment etc. and Rs. 75,000/- as litigation expenses.
6. Opposite parties have contested the complaint. Their plea is that complainant being a Company and as such engaged in commercial activity, is not a consumer. On merits, it is stated that while filling in proposal form, the complainant suppressed material fact with regard to previous insurance claim, which it (the complainant) had lodged with another Insurance Company, who had insured the building earlier and thus it had committed breach of a condition of policy, which says that the policy would be voidable, in case some material information is suppressed. Also, it is alleged that building was already damaged and cracks etc. had been filled by cosmetic repairs at the time, when pre-insurance inspection was carried out and this amounted to an act of deception, on the part of complainant. They have justified the repudiation of claim.
7. Parties have tendered in evidence a number of documents, besides tendering affidavits of seve
