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

Brief facts of the case are as under:That the Original Petition was filed by the Complainant M/s Polymat India Pvt. Ltd. & Anr. as a consequence of its claim under 2 fire policies bearing No. 101600/3101669/0 in respect of Building, machinery and accessories and furniture and other contents and the other bearing No. 101600/3101670/0 regarding stocks and used/burn lubricating oil and refined oil in its factory premises consequent upon a fire being repudiated by the Insurance Company, Opposite Party No. 1. The insured Polymat India Pvt. Ltd. is a factory measuring 251x 150 and is bounded by 7 high brick wall on South andfencing on the North, East and West Sides. Inside the factory premises the Complainant had a shed measuring 101 x 41 constructed of brick wall with asbestos sheets louvers at upper and asbestos sheets roofing on tubular frame structure. Attached to the South side of the shed was astructure measuring about 85 x 25 and constructed of brick walls and roofing on tubular frame. The construction was divided into several rooms housing the office, quality control laboratory,room and store room for tools and equipment. These rooms had their opening inside the shed. In the said factory abatch type acid and clay treatment process for refining the used/burnt lubricating oil was undertaken. The raw material for the process was the burnt and used lubricating oil which was received in barrels and stored in the open yard. Apart from that, oil was also brought in and unloaded into used oil pits. The finished product i.e. refined lubricating oil was either being loaded into oil tankers or being filled in drums. In the part of the plant which was in open the centrifugation, settling and decantation, dehydration, condensation of lighter volatile impurities, acid treatment and condensation of volatile matters were being conducted. The part of the operation which was carried on inside the shed were the less hazardous process like clay treatment and neutralization, filtration and centrifugation, oil blending etc. In that shed two Thermic Fluid Heaters, one oil fired boiler and one water softening plant were also installed. At the material time, all these plants and machinery and materials were covered by the two fire insurance policies. In the said policies the banker of the claimant was also one of the beneficiaries. The said two policies were of dated 19th and 20th March, 1992. It was alleged that in 1992 the bankers were changed by the Complainant from Grindlays Bank, Chowringhee Branch, Calcutta to Allahabad Bank, Camac Street Branch, Calcutta and all the fixed assets were mortgaged by the Complainant in favour of the West Bengal Financial Corporation to secure the loans received by the Complainant No. 1. All the fixed assets, stocks andof the Complainant remained insured with the New India Assurance Co. upto 19th/20th March, 1992. But after the change of the bankers from Grindlays Bank to Allahabad Bank the Complainant also changed their insurer from the New India Assurance Co. Ltd. to National Insurance Co. Ltd.. It is also pointed out that the Development Officer of the National Insurance Co. Ltd. one Mr. Sandip Guha brought two proposal forms for fire insurance on or about 17th March, 1992 and got those signed by the Complainant in blank. He also took with him photocopies of the previous policies issued by New India Assurance Co. Ltd. It is further alleged that the premises of the Complainant were inspected by the said Development Officer and after inspection, the rates of premium were fixed. The premium which was demanded by the Opposite Party No. 1 being Rs. 12,012/and Rs. 3,890/respectively which was paid by the Complainant. In the said policies the location of the property was mentioned asand office premises", though there was no godown in the factory premises. Thereafter on 13th January 1993 the said factory premises and the entire building, furniture, fixtures and fittings, stocks in process and other material lying outside factory shed were completely destroyed in fire. The insurance company appointed one Shri S.N.M. Consultants as the Surveyors. The Surveyors visited the premises and conducted an inspection. The complainant supplied all information sought by the surveyors. The complainant was informed by the surveyors that they had been instructed by the opposite parties not to assess loss to the plant and machinery, furniture, fixtures and fittings and civil structure outside the covered shed and building and all that plant and machinery which were lying installed in the open part of the factory premises were not allowed to be covered by the insurance. Therefore, the Surveyors only assessed the losses inside the covered area. The Surveyors were also informed that they were supposed to assess the loss inside the covered area only. The complainant from the very beginning requested the Insurer to amend the policies as there was no godown within the precincts of the factory premises and all goods lying inside the plant and outside the plant should be insured. But no response was received from the Insurance Company. Even the Surveyors report was not made available to the complainant despite repeated requests. Therefore, the present claim was filed before the National Consumer Disputes Redressal Commission. It was also alleged that Insurance Company did not decide despite the insured complainant continued to incur losses of interest on the out standings of Allahabad Bank and the West Bengal Financial Corporation. It is alleged that release of part payment on account of payment of atleast 75% of whatever had been assessed by the Surveyors was also not released. Ultimately on July, 1994, Complainant received a letter dated 1st July, 1994 claiming the two fire policies for a sum of Rs. 19,95,432.75 and Rs.9,242.28 respectively i.e. Rs. 20,04,675/after deduction therefrom a sum of Rs. 19,224/as penal premium being the difference of premium betweenand Class II construction for three years and two vouchers for signatures of the Complainant with the direction to send further cheque for a sum of Rswhich was also paid. It was alleged that these two vouchers were signed by the complainant without prejudice to its claim for the balance and returned to theParties. The complainant demanded the details of deduction from its claim and received a statement of accounts but no reasons were given for this deduction. The Surveyors assessed the loss at Rs. 48,73,095/only but the reasons for reducing this amount to Rs. 20,23,899/which was not even 50% of the loss assessed by the Surveyors. The complainant claimed a sum of Rs. 58,20,161/under the said two policies . But the surveyors assessed the loss at Rs.It is alleged that inspite of this, the opposite parties even upto the date of filing of the complaint had not paid even the reduced amount of Rs. 20,04,675/minus Rs. 19,224/which they had originally offered under the two policies. When the matter could not be sorted out then the complainant filed the present claim before the National Forum. Respondents filed a response to the present complaint that they had settled the claim at a little over Rs. 20 lakhs as aclaim because under the policy the premises was described as of 1st class construction. The Insurance Company refuted the other allegations and explained that they disallowed the claim relating to plant and machinery outside the covered area installed outside the building and had also not considered the claim of the goods i.e. the drums of oil lying in the open within the factory precincts. It is also contended that the complainant was not kept in dark about the basis of settlement. It was also urged that regarding queries of the Complainant, a letter dated 12th August, 1994 was sent giving details to the complainant, which was received by the complainant on 31st August, 1994. In this background., National Commission examined that whether the claim of complainant is justified or not.The Commission after considering the matter took view that the factory premises includes the plant & machinery and goods inside the shed and outside the shed are covered under both fire policies. The commission relied on the definition of the factory as given in the Factory Act 1948.It was also observed that as per the guidelines in settling the claims 75% of loss should have been settled. No basis or reasons were given as to why original claim was not settled at 75% of loss as determined by the Surveyor which was not disputed. It was also observed that dilatory approach adopted by Insurance Company resulted in harassment to complainant and he had to suffer additional interest liability from time to time by the financial institutions and it was also observed that the assessee is entitled to 75% of the claim assessed by the surveyors i.e. 75% of Rs. 48,73,095.75, which comes to Rs. 36,54,821.25 and interest was levied @ 18% per annum commencing from two months after the receipt of the Surveyors report till the date of payment and also imposed the cost of Rs.Aggrieved against this order, both these appeals were filed, one by Insurance Company and the other by M/s Polymat India, hence both are disposed of by the common order.

Reasoning:
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.