Case: Polymat India P.Ltd.  Vs. National Insurance Co.Ltd.&amp;Ors

complainant wanted some amendments in both policies i.e. coverage of goods lying outside plant including the expression factory ‘cum- godown as there was no godown in existence but those amendments were not agreed to by the insurance company, they only agreed to make amendment of incorporation of name of the Bank, i.e., Allahabad Bank in the Policy. When the terms of the contract have been reduced in writing it cannot be changed without the mutual agreement by way of both the parties. In the present case, they did not agree for amendment of the policies, if the complainant was vigilant and wanted this expression to be deleted he should have prosecuted the matter seriously or repudiated the Policy. The only defence pleaded was that they were assured orally but no evidence was led by complainant. On the contrary, suggestion was denied by single witness produced by the Insurance Company before National Forum. In this connection, our attention was invited to decision of this Court in the case of United India Insurance Co. Ltd. Vs. M. K. J. Corporation reported in (1996) 6 SCC 428 wherein it was observed as under: "..After the completion of the contract, no material alteration can be made in its terms except by mutual consent." 15. Therefore, in the present case when the proposal was sought to be amended and it was only agreed to by the Insurance Company to the extent substituting the Bank i.e. Allahabad Bank and the other amendments were not agreed by the Insurance Company, the complainant had a choice to repudiate the insurance policy or to obtain a proper declaration. But the complainant did not pursue the matter further, it is to be blamed itself for this. 16. Therefore, after construing the terms of the contract it transpires that the intention between the parties was to cover the plant and machinery which were lying in the factory, i.e., in the covered area and in the shed and not the goods which were lying outside the covered area. Therefore the order of the Commission directing the payment of 75% of the assessment made by the Surveyor of the goods which were lying inside and outside the factory was not correct approach on the part of the Commission. The Commission should have examined the matter in detail in terms of the policy and the relevant documents bearing on the subject. This was not done. Therefore, we have no hesitation to say that what was sought to be covered by both the Policies was only plant and machinery in shed and not the goods which were lying outside the plant and shed. 17. Next question is whether the reduction of the amount by insurance company under various heads is justified or not? We have gone through the reasons given by the Insurance Company for reducing the amount and we are of the opinion that the reasons given by the Insurance Company appear to be reasonable and justified which read as under:- "1. Though surveyor assessed the total loss on building as Rs. 5,52,049/- but while computing we only accepted Rs. 4,97,049/- as the balance amount of Rs. 55,000/- is assessment relating to the portion which is not inside the building.2. Regarding plant and machinery though the surveyor assessed Rs. 24,61,757/- but we considered Rs. 14,97,651/- and rest Rs. 9,64,106/- was related to the assessment of the plant and machinery installed outside the building.3. Regarding assessment of furniture, fixture and fittings though you mentioned that the surveyor assessed Rs. 1,76,820/- but it did not appear true according to the survey report the surveyor assessed only Rs. 1,55,820/-. But we could consider to the tune of Rs. 87,320/- as the business amount of Rs. 68,500/- was related to the portion kept outside the building.Under SSP Policy though the surveyor assessed Rs. 16,17,212/- but we could consider only (i) Hydraulic Oil (630 litres) amounting to Rs.11,100/- and (ii) H.S.D. in barrel (1081 litres) amounting to Rs. 2624/- aggregating to Rs. 13,724/- and rest of the items assessed by surveyor were beyond the scope of cover and not within the purview of the policy." Therefore, on this account also we do not find any merit to interfere in the matter. 18. The next question is with regard to award of interest. As per the guidelines laid down, the Insurance Company had to settle the claim within two months of the Surveyors Report. The reason for delay has been explained. Since the fire took place on 13th January, 1993, the Insurance Company appointed the Surveyor and Surveyor sent his report. dated November 5, 1993 which was received by the appellant on November 9, 1993. Since there was some discrepancies in the survey report, the Insurance Company vide their letter dated December 14, 1993 sought clarification from the surveyors which was replied on 22.4.94 by the Surveyors. The Insurance Company after that took the decision and informed the claimant vide their letter dated 1.7.94 for approval of the claim for Rs. 20,23,899/- under both the polices. Therefore, it was submitted that almost within stipulated time the intimation was sent to them, as such the levy of interest @ 18% by the Commission is not justified. 19. We are satisfied that the action taken by the Insurance Co. was within reasonable time. Therefore, it cannot be saddled with a high rate of interest @ 18%. However Insurance Companies should have speed up disposal of claims in order to inspire greater confidence in them. Be that as it may, since the amount was received by the claimant in 1994, therefore, levy of interest @ 18% does not appear to be justified. Hence, we set aside the order awarding interest @ 18% per annum. Similarly a levy of cost of litigation of Rs. 10,000/- also does not appear to be justified in the present case as in view of our finding above. Hence, we allow the C.A. No. 6063/1999 filed by National Insurance Company and set aside the order of the Commission. 20.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The Insurance Company by the communication dated 23rd April, 1992 agreed to only amendement to the extent of the name of the Bank, namely, Allahabad Bank as maortgagee and no further amendment was made in the original Policies. This was also confirmed by the evidence of sole witness Shri Samaresh Sarkar, Divisional Manager produced by the Insurance Company in evidence before the National Forum. No evidence was led by the complainant before the National Forum. Therefore, the question is how the correspondence and documents produced by both the parties are to be construed. But unfortunately the National Commission did not consider all these aspects and immediately rushed to direct to pay 75% of the loss assessed by thethe present case, they did not agree for amendment of the policies, if the complainant was vigilant and wanted this expression to be deleted he should have prosecuted the matter seriously or repudiated the Policy. The only defence pleaded was that they were assured orally but no evidence was led by complainant. On the contrary, suggestion was denied by single witness produced by the Insurance Company before Nationalin the present case when the proposal was sought to be amended and it was only agreed to by the Insurance Company to the extent substituting the Bank i.e. Allahabad Bank and the other amendments were not agreed by the Insurance Company, the complainant had a choice to repudiate the insurance policy or to obtain a proper declaration. But the complainant did not pursue the matter further, it is to be blamed itself forafter construing the terms of the contract it transpires that the intention between the parties was to cover the plant and machinery which were lying in the factory, i.e., in the covered area and in the shed and not the goods which were lying outside the covered area. Therefore the order of the Commission directing the payment of 75% of the assessment made by the Surveyor of the goods which were lying inside and outside the factory was not correct approach on the part of the Commission. The Commission should have examined the matter in detail in terms of the policy and the relevant documents bearing on the subject. This was not done. Therefore, we have no hesitation to say that what was sought to be covered by both the Policies was only plant and machinery in shed and not the goods which were lying outside the plant andnext question is with regard to award of interest. As per the guidelines laid down, the Insurance Company had to settle the claim within two months of the Surveyors Report. The reason for delay has been explained. Since the fire took place on 13th January, 1993, the Insurance Company appointed the Surveyor and Surveyor sent his report. dated November 5, 1993 which was received by the appellant on November 9, 1993. Since there was some discrepancies in the survey report, the Insurance Company vide their letter dated December 14, 1993 sought clarification from the surveyors which was replied on 22.4.94 by the Surveyors. The Insurance Company after that took the decision and informed the claimant vide their letter dated 1.7.94 for approval of the claim for Rs. 20,23,899/under both the polices. Therefore, it was submitted that almost within stipulated time the intimation was sent to them, as such the levy of interest @ 18% by the Commission is not justified.We are satisfied that the action taken by the Insurance Co. was within reasonable time. Therefore, it cannot be saddled with a high rate of interest @ 18%. However Insurance Companies should have speed up disposal of claims in order to inspire greater confidence in them. Be that as it may, since the amount was received by the claimant in 1994, therefore, levy of interest @ 18% does not appear to be justified. Hence, we set aside the order awarding interest @ 18% per annum. Similarly a levy of cost of litigation of Rs. 10,000/also does not appear to be justified in the present case as in view of our finding above. Hence, we allow the C.A. No. 6063/1999 filed by National Insurance Company and set aside the order of the Commission.