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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
C. Viswanath, Presiding Member and
Subhash Chandra, Member
M/s. Nirani Sugars Ltd. – Complainant
versus
New India Insurance Co. Ltd. – Opp. Party
Consumer Case No.133 of 2015
Decided on 18.4.2023
Consumer Protection Act, 1986 – S.21(1)(a)(i)[Consumer Protection Act, 2019 – S.58(1)(a)(i)] – Services - Insurance – Repudiation of Claim – when justified - Fire Policy - In condition No.6 above, it is specifically and specially mentioned that the term “by fire only” must not be omitted under any circumstances, meaning thereby that the Insurance Company shall be liable when the loss or damage was caused by fire only – Thus, Court has to simply apply the terms and conditions of the contract and cannot rewrite or create a new contract between the Parties - Opposite Party repudiated the claim also on the ground that the location of the risk was not covered under the Policy. According to the Complainant they provided sufficient evidence to the Surveyor to prove that the sugar factory also included the distillery where the incident took place. On the other hand, the Opposite Party claimed that the loss was caused in the RCC Tank situated at R.S. No.19, which was different from the location mentioned in the Policy. Before submitting the Final Survey Report, the Surveyor sent letter dated 24.09.2013 and email dated 10.11.2013 requesting the Complainant to prove that the location of risk was covered under the Policy, but the Complainant failed to provide any evidence in this regard. The Surveyor, therefore, in the Final Survey Report, observed that the location of risk was not covered under the Policy - The Opposite Party was, therefore, justified in repudiating the claim on the ground that the place of incident i.e. Survey No.19 was not covered under the Policy - In the instant case, there is no dispute relating to the address mentioned in the proposal form or the Insurance Policy. Repudiation of insurance claim on the ground that location where loss occurred was not insured, was justified. The Opposite Party cannot be said to be deficient in service – Complaint dismissed. [Paras 8 to 19].
Result: Complaint dismissed.
ORDER
The Complainant is a Public Limited Company engaged in the business of manufacturing of sugar at its unit located at Mudhol Taluq, District Balakot, Karnataka. The Complainant had taken Standard Fire and Special Perils Policies covering (i) the stock of baggase/bagas, etc kept in the factory premises (ii) stocks of sugars in godowns/in process/in yards and stocks of spares/packing materials/firewood, etc, and (iii) stocks of molasses kept in the factory/compound. The Policies did not cover spontaneous combustion. The Complainant had taken another Standard Fire and Special Perils Policy No.67070011120100000982 for the period 31.03.2013 to 30.03.2014 covering the stocks of Rs.10 crores due to spontaneous combustion, for which the Complainant paid additional premium. The Opposite Party made additional endorsement in the Policy regarding perils of spontaneous combustion.
2. Case of the Complainant is that on 20.04.2013 at about 11.30 pm it was observed that the molasses stored in the RCC storage tanks suffered spontaneous combustion followed by foaming and frothing and overflowing out of the tanks. The quantity of the affected molasses was 15,332.98 MT. The fire brigade was called and the Police was also informed of the incident. The Opposite Party was intimated of the loss, who deputed Surveyors M/s Integral Assessors, Hyderabad. The Complainant submitted all documents sought by the Surveyor and filed a claim on 28.05.2013 for Rs.919.98 lakhs towards loss of molasses and Rs.93 lakhs for damage of RCC tank. The Surveyor submitted Final Survey Report on 05.12.2013. On the basis of the Survey Report, the Opposite Party, vide letter dated 25.07.2014, repudiated the claim on the ground that (i) the location of the damaged molasses not being covered under the subject Policy and (ii) the spontaneous combustion not having led to ignition/fire does not fasten any liability upon the Insurer.
3. Alleging deficiency in service, the Complainant filed the instant Consumer Complaint seeking direction to the Opposite Party to pay the following:—
“(1) the aggregate principal sum of Rs.9.1998 crores,
(2) the interest amounting to a sum of Rs.1,93,19,580/- till the date of the filing of the instant Complaint calculated at the prevailing commercial rate of 12% per annum from the d ate of the raising of the first Claim, namely 28.05.2013 and further interest at the same rate till the date of payment by the Opposite Party,
(3) the cost of the instant proceedings and
(4) the legal expense in the sum of Rs.22 lac incurred prior to and upon the institution of the instant proceedings.
Any other or further relief deemed fit and proper in the facts and circumstances of the instant case may also be granted in favour of the Complainant Company.”
4. The Opposite Party resisted the Complaint by filing written statement on the ground that this Commission did not have jurisdiction to adjudicate as it involved complicated questions of facts and law and was triable by a Civil Court. The Complainant did not implead the Bank in the Complaint though it was a necessary Party. The Complaint was bad for non-joinder of necessary and proper party. It was also submitted that the Complainant was a commercial entity and the Insurance Policy purchased by the Complainant was for commercial purpose. The Complainant was, thus, not a Consumer under Section 2 (1) (d) of the Consumer Protection Act, 1986.
5. On merits, it was stated that the Complainant had taken Standard Fire and Special Perils Policy No.67070011110100001343, which was renewed with the same terms and conditions. After renewal, Policy No.67070011120100000982 was issued to the Complainant. On receiving the intimation of loss, the Opposite Party deputed Mr. B.S. Murthy to conduct the preliminary Survey and M/s Integral Assessors to conduct Final Survey. The Surveyor in its Final Report dated 05.12.2013 opined that the loss did not pertain to the molasses in the tank situated at R.S. No.165:1 and 165:2 l
New contract - Court has to simply apply the terms and conditions of the contract and cannot rewrite or create a new contract between the Parties.
Insurance policies must be interpreted strictly as written, with no liability for claims that fall outside defined coverage parameters.
Insurance coverage for spontaneous combustion includes claims despite absence of visible fire if an additional premium was paid for coverage.
“In a claim for loss by fire, origin of fire could be quite immaterial, so long as the factum of fire and factum of damage established.”
Insurance policies cover specified perils, and claims should not be repudiated without clear exclusion clauses.
The court enforced the principle that ambiguities in insurance policies favor the insured, ruling against the insurer for failing to adequately disclose exclusions.
“Repudiation of insurance claim on ground of exclusion clause in the policy, since not expressly conveyed to the insured, amounts to deficiency in service.”
An insurance claim can be repudiated if the loss is caused by a peril explicitly excluded in the insurance policy; the burden of proof rests on the insured to demonstrate coverage.
Assessment - The Complainant, therefore, cannot be allowed the amount beyond the assessment of the Surveyor.
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