IMPORTANT POINTS
(1) Concealment of a material fact - It is apparent that the change in the coverage of risk had not been conveyed to the opposite party by the complainant. This was a concealment of a material fact since the premium to be paid would have been revised and the coverage of risk changed as per the risk for “storage”.
(2) Change of business - The onus was on the complainant to inform the opposite party for change of his business and therefore, the risk to be covered.

ORDER

Subhash Chandra, Presiding Member—This complaint is filed under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) alleging deficiency in service on account of repudiation of his claim under the Standard Fire and Special Perils Policy issued by the opposite party.

2. The facts, in brief, of the case are that the complainant which is a partnership firm had obtained Standard Fire and Special Perils Policy no.360300/11/11/01/00000205 for the period 29.07.2011 to 28.07.2012. It is contended that this policy had been initially obtained by it in 2008 as the complainant is engaged in the business of exporting stainless steel houseware and cookware products. The policy was categorised as Engineering Workshop including plant and machinery and stocks, furniture, fixtures and fittings uptill 2011. In 2011-2012 the complainant did not include the plant and machinery in the policy related to its trade. The word ‘Stainless Steel Kitchenware and Packing Material’ has been included in the description of risk. The policy was paid by way of premium for a sum of Rs.2,54,00,000/-. On 25.10.2011 at around 10.00 pm there was fire on the insured premises due to short circuiting. The opposite party was informed on 26.10.2011 as a consequence of which M/s Sanjay Dwivedi and Associates, Surveyors and Loss Assessors were appointed by the opposite party. The surveyor assessed the loss between 27.10.2011 and 30.05.2012 when the final survey and assessment report was submitted.

3. The loss assessed by the complainant was initially valued at Rs.1,80,00,000/-. However the loss assessed and submitted to the surveyor was Rs.1,00,48,385.83 which included the following:

The surveyor after providing for disposing the salvage and auction netted the salvage disposal at Rs.8,70,202/- which was deducted from the total loss assessed by him. The surveyor reported the loss at Rs.73,43,353.18.

4. The complainant pursued the claim filed with the opposite party through letters dated 19.06.2013, 31.07.2012 and 02.08.2012. The opposite party sent a letter repudiating the claim on the grounds that the complainant was guilty of material non-disclosure while obtaining the policy since he had not conveyed the change in the nature of his business from manufacturing activity to trading activity. Consequently the policy was wrongly issued covering risks for an ‘Engineering Workshop’ while it should have been issued for covering storage risks for trading entity. As per condition no.1 of the policy, the repudiation was also done on the grounds that packing material was not covered under the policy as it was not relevant to an engineering workshop.

5. Following discussions between the two parties, it was submitted by the complainant that an offer was made by the opposite party to settle the claim on sub-standard basis, i.e., to settle the claim at a lesser amount than assessed by the surveyor without assigning any reasons for the same and that a consent letter was obtained without indicating the settlement amount. This was contested by the complainant through an e-mail dated 14.09.2012.

6. As per the surveyor’s final report dated 30.05.2012, the net loss was assessed at Rs.73,43,353,18. As per this document no breach of any policy condition or violation by the complainant was mentioned. There was no dispute about the cause of fire which was short circuiting which was peril covered under the policy. The complainant appears to have made several efforts with t