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2025 Supreme(Online)(NCDRC) 3614
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AVM J. RAJENDRA, MEMBER, Mr. Subhash Chandra, PRESIDING MEMBER
Cholamandalam MS General Insurance Co. Ltd. – Appellant
Versus
Shri Padma Rice Mill – Respondent
First Appeal No. 1103 of 2016 | Complaint No. 29 of 2015 | IA/8451/2016
For the Appellants/Petitioners: Mr. N K Chauhan
For the Respondents: Mr. R K Bhawnani, Mr. Mishra Raj Shekhar
Insurance claims must strictly adhere to policy terms; under-insurance affects liability, and insurers are obligated to honor contracts within defined limits.
Headnote:(A) Consumer Protection Act, 1986 - Section 19 - Insurance policy - Dispute over insurance coverage for stock held in trust - Claim for loss due to natural calamity partially allowed by State Commission - Insurer denied claim based on policy exclusion clauses, asserting reduced liability. (Paras 7, 9, 17, 23)
(B) Under-insurance principles - Assessment of loss must adhere to terms of the policy; insurer not liable beyond agreed cover; courts must strictly interpret insurance contracts and related exclusions. (Paras 17, 18, 20)
(C) Deficiency in service - Failure to reconsider claim based on adequate supporting evidence constitutes deficiency on part of insurance provider, thus affecting consumers' rights to compensation. (Paras 9, 10, 21)
Facts of the case:
Complainant operates a rice mill and sought compensation for losses inflicted by storm on insured stock. The insurer denied the claim citing exclusions regarding goods held in trust, settling for a minimal amount.
Findings of Court:
The court ruled that the insurer’s reliance on the exclusions was inadequate, ordering payment based on the surveyor's detailed evaluation, emphasizing the importance of the insurance contract's terms.
Issues: The primary issue addressed was whether the insurer is liable under the policy for the damaged stock classified as goods held in trust.
Ratio Decidendi: The court determined that while the insurer is obligated to pay for losses up to the insured amount, the insured must comply with policy conditions, including provisions regarding under-insurance.
Result: Appeal allowed with the insurer ordered to pay the complainant Rs.1,66,059 plus interest.
| Table of Content |
|---|
| 1. insurance coverage and incident details (Para 3 , 4 , 12) |
| 2. maintainability and jurisdiction of complaints (Para 5 , 6) |
| 3. assessment of damage and importance of surveyor's report (Para 7 , 14 , 19) |
| 4. contract terms and under-insurance principles (Para 9 , 10 , 18) |
| 5. final assessment and appeal outcome (Para 22 , 23 , 24) |
JUDGMENT
AVM J. RAJENDRA, AVSM VSM (Retd.), MEMBER
1. This Appeal is filed by OP under Section 19 of the Consumer Protection Act , 1986 (“the Act”), against the Order dated 07.07.2016 passed by the State Consumer Disputes Redressal Commission, Chhattisgarh (“State Commission”) in CC No. 29 of 2015, wherein the State Commission partly allowed the complaint.
2. As per the Registry report, there 20 days delay in filing this First Appeal and in the interest of justice, the delay is condoned.
3. Brief facts of the case, as per the complainant, are that the complainant is in the business of processing, purchasing and selling of the various variety of rice and paddy and other connected product for livelihood in the name of Shri Padma Rice Mill. The Rice Mill is situated at Village Tarsiwa, District Dhamtari, where the processing, storage and purchase sale of various variety of paddy is carried out. The Rice Mill of the complainant is construed in about 50,620 sq. ft. Out of which, in 10,984 sq. ft. one mill shed and office of two floor and labour quarter has been constructed. The complainant installed various machines in the Rice Mill for production of rice is carried out. The complainant is also doing work of storage of rice in the godown of the C.G. Government by taking paddy and its milling. The complainant started to lift the paddy from the C.G. Government from November, 2013, under which the Government is provides three types of paddy in mota, patla and sarana to the complainant and its milling is done by the complainant and they prepare common rice of Grade 2 and also "A" Grade rice and is returning the same to the Govt. The complainant has Current Account in OP-2 Bank through which the transactions relating to Rice Mill are done.
4. Towards protection of his assets the complainant had obtained Insurance Policy No.2130/00031553/000/02 from the OP-1 from 28.09.2013 to 27.09.2014 for a sum assured Rs.82,00,000. The said insurance policy was issued on 27.09.2013. On 02.06.2014, the complainant was having stock of paddy and stock of rice process 35.435.09 Quintals valued at Rs.5,31,52,635 and besides it kanki, kodha valuing Rs.2,75,000, thus total stock of Rs. 5,34,27,635 was stored in which stock of Rs.1,11,88,200 was also included and information regarding which was sent to OP-2 on 02.06.2014. On 02.06.2014 the rice mill of the complainant was properly running. All of a sudden about 2.10 P.M. the weather changed and storm and rain started. Due to which the shed of the mill had flown away. The rain continued for about one hour due to which in a very short time, 6-7 inches of water was stored in the shed of the mill and due to rainy water the bags of paddy, loose rice, kanki, kodha and nakkhi, resulting in the stock being badly damaged. Due to natural calamity i.e. storm and heavy rain, the 1400 Quintals Paddy which was stored in the Rice Mill was damaged resulting in the complainant suffering loss and 150 Quintals of loose rice valued Rs. 3,15,000 was badly damaged and it was not suitable for human consumption and the same could be sold for Rs.250/- per Quintal. Besides it, 540 Quintals of rice which was kept in the bags also got damaged due to rain. The above rice was given by the complainant to the Government through FCI Dhamtari and was returned being rejected, due to which the complainant suffered loss 11 per kg to the tune of Rs. 5,94,000. Besides it, due to heavy rain and storm, the shed, factory, building and office building of the complainant, suffered loss to the tune of Rs2,50,000. The complainant immediately informed OP-1 regarding the incident and submitted claim before OP-1. OP-1 appoin
