Vikram Greentech (I) Ltd. & Anr vs New India Assurance Co. Ltd

Vikram Greentech (I) Ltd. & Anr. ... Appellants

Versus

New India Assurance Co. Ltd. ..Respondent

JUDGEMENT

R.M. Lodha, J.

This appeal under Section 23 of the Consumer

Protection Act, 1996 (for short, `The Act') is directed against the

judgment and order dated October 30, 2001 passed by

National Consumer Disputes Redressal Commission, New

Delhi ( for short, ` National Commission') whereby the

complaint filed by the appellant for direction to the respondent

to settle the insurance claim alongwith interest @ 18% per

annum and compensation of Rs.25 lakh on account of mental

agony, harassment and monetary loss came to be dismissed.

1

2. The sequence of facts may be noticed first.

Vikram Greentech (I) Ltd. came to be incorporated in 1993 with

an object of setting up a floriculture project in the State of

Maharashtra. In 1995, the company started negotiations with

the respondent (hereinafter referred to as `Insurance

Company') for a comprehensive floriculture insurance policy.

On January 18,1996, the company (hereinafter referred to as

`insured') submitted a proposal to the Insurance Company for

a comprehensive floriculture insurance of poly-house (Rs.1.25

crore), irrigation system (Rs.25 lakh), cost of cultivation of

flowers (Rs.25 lakh) and input cost from first flowering to the

harvest (Rs.25 lakh). The Insurance Company issued a

comprehensive Floriculture Insurance Policy (`Policy', in short)

on January 23,1996, period of insurance being from January

18,1996 to January 17,1997 and charged premium of Rs.

2,31,000/-. On May 23,1996, according to the insured there

was a severe storm/cyclone, which damaged the floriculture

extensively and substantial damage was caused to the roofs

and walls of the poly-houses. On June 18/19,1996, there was

another storm/cyclone. As a result of which the floriculture

project of the insured and the poly clothes and the roofs as

2 well as walls of the poly-houses were extensively damaged;

certain poly-houses even collapsed completely. For the loss

suffered in the first storm/cyclone, a claim for Rs.31,17,140/-

was submitted by the insured with the Insurance Company.

The insured submitted another claim for Rs.38,97,906/- in

respect of loss suffered due to second storm/cyclone that

occurred on June 18/19,1996.

3. The Insurance Company appointed M/s Standard

Surveyors Private Limited as their Surveyors for assessing the

loss claimed by the insured. The Surveyors submitted their

report on October 24,1996 and assessed the loss suffered by

the insured at Rs. 28,85,243/- in respect of the first storm. On

October 28,1996, the Surveyors submitted its second report

in respect of the second storm/cyclone and assessed the loss

at Rs.34,81,214/-.

4. On November 28,1996, the Insurance Company

informed the Surveyors that their report included loss to poly-

houses Nos. 7, 8A and 8B whereas the policy covered only

poly-houses 1 to 6. The Surveyors were, accordingly, asked to

reassess the loss.

3

5. On December 19,1996, the Surveyors gave their

clarification to the Insurance Company that all the poly-houses

were covered under the policy and their assessment was

correct and fair.

6. The Insurance Company, then, appointed M/s

Jupiter Claim Consultants as investigators for verification of

the claim. The insured was also asked to furnish necessary

documents to the said investigators. The investigators are

said to have submitted their report on September 12,1997

stating therein that they were not able to submit their

certification as regard the cost of poly-houses Nos. 1 to 6 and

other related matters categorically for sum insured and claim

thereof.

7. On November 6,1997, the Surveyors submitted

their addendum to the earlier report dated October 24,1996

with regard to the first storm and reduced the assessment of

loss to Rs.4,77,355/-. The Surveyors submitted another

addendum on February 16,1998 to the report dated October

28,1996 with regard to the second storm and reduced the

assessment of loss to Rs.95,443/-.

4

8. The insured then approached the National

Commission alleging therein deficiency of service by the

Insurance Company in not settling the claim and sought

direction to the Insurance Company to settle the claim of the

insured in full and pay interest on due amount.

9. The Insurance Company contested the claim and

set up the plea that the claim on account of damages to poly-

houses 7, 8A and 8B was not admissible as these poly-houses

were not covered under the policy. As regards the poly-

houses nos. 1 to 6, the Insurance Company admitted that the

policy covered those poly-houses. They stated before the

National Commission that insured has already been informed

that the loss finally assessed by the Surveyors is to the tune of

Rs.4,77,355/- in respect of first storm and Rs.95,443/- on

account of loss caused by second storm.

10. A rejoinder came to be filed by the insured and it

was stated therein that at the relevant point of time, the size of

the farm was 6.3 hectares and the entire area was covered

by the Insurance Company and it was not limited to the area to

2.8 hectares as contended by the Insurance Company.

5

11. The National Commission heard the arguments of

both the parties and held that at the time of taking policy only

six poly-houses were in existence and there was no evidence

or proof to substantiate that the insurance was covered for

poly- houses 7, 8A and 8B. The National Commission

recorded the admitted position that poly-houses 7, 8A and 8B

were not in existence at the time of taking insurance policy.

The National Commission held that the policy clearly mentioned

the number of poly-houses as "six" and in view thereof the

complainant is entitled to an amount of Rs.5,72,798/- on

account of damages to these poly-houses (nos.1-6) during

the storm/cyclone that hit on May 23,1996 and June

18/19,1996 alongwith interest @ 12% from the date of the

first Surveyors report i.e. November 6,1997 upto the date of

payment, failing which the rate of interest shall be @ 18% per

annum.

12. Aggrieved by the dismissal of the complaint with

regard to the claim for loss to poly-houses 7, 8A and 8B, the

insured, as stated, is in appeal.

6

13. We have heard Mr. Vijay Hansaria, learned senior

counsel for the appellant and Mr. P.K. Seth, learned counsel

for the Insurance Company.

14. The question that arises for our consideration is:

whether comprehensive floriculture insurance policy issued by

the Insurance Company to the insured covered poly-houses 7,

8A and 8B?

15. An insurance contract, is a species of commercial

transactions and must be construed like any other contract to

its own terms and by itself. In a contract of insurance, there is

requirement of uberimma fides i.e. good faith on the part of the

insured. Except that, in other respects, there is no difference

between a contract of insurance and any other contract. The

four essentials of a contract of insurance are, (i) the definition

of the risk, (ii) the duration of the risk, (iii) the premium and (iv)

the amount of insurance. Since upon issuance of insurance

policy, the insurer undertakes to indemnify the loss suffered by

the insured on account of risks covered by the insurance

policy, its terms have to be strictly construed to determine the

extent of liability of the insurer. The endeavour of the court

must always be to interpret the words in which the contract is

7 expressed by the parties. The court while construing the terms

of policy is not expected to venture into extra liberalism that

may result in re-writing the contract or substituting the terms

which were not intended by the parties. The insured cannot

claim anything more than what is covered by the insurance

policy. [General Assurance Society Ltd. Vs. Chandumull Jain

and another 1, Oriental Insurance Co. Ltd. Vs. Sony Cheriyan2

and United India Insurance Co. Ltd. Vs. Harchand Rai

Chandan Lal3]

16. Document like proposal form is a commercial

document and being an integral part of policy, reference to

proposal form may not only be appropriate but rather essential.

However, the surveyors' report cannot be taken aid of nor can

it furnish the basis for construction of a policy. Such outside

aid for construction of insurance policy is impermissible.

17. That the insured submitted proposal to the

Insurance Company for comprehensive floriculture insurance

on January 18,1996 is not in dispute. The insured furnished

1 AIR 1966 SC 1644 2 (1999) 6 SCC 451 3 (2004) 8 SCC 644

8 particulars for the following components which were to be

covered:

"A)

Polyhouse 1 2 3 4 _ Total Value of (Rs. in Crores)

1) Steel structure 0.25

2) Fabrication 0.15

3) Plastic Grippers 0.10

4) Plastic & Fittings charges 0.50

5) Cost of constr. For polyhouses, Gutters & other accessories 0.25 ______ 1.25

B) Irrigation System (Capacities value and specifications for the following) In lakhs

1) Plasto make system 15.00

2) Agricon Associates (Valves & Pipes) 00.50

3) Fitting charges 00.50

4) Reservoir 04.00

ELECTRIC MOTOR

1) Electric Motor, 15 HP 3 nos., 2 HP 20 nos., 20 HP 1no. with pumps, pipes & valves. 01.00

2) D.G. set, 2 nos., POWERICA (Kirloskar), 140 KVA & 1.25 KVA Transformer, Starters MCL -CTCL & others access 04.00 _____ 25.00

C) Details of flowers planted in Green house or Open Cultivation : Green House Cultivation

i) No. of Green Houses : 6 Polyhouses

ii) Area under Green Houses: 2.8 hectares

iii) Area under Open Cultivation : No

9 D) Details of Flowers plants under cultivation

i) Total area under Floriculture : 2.8 hectares

ii) Survey/Gat/Hissa No. : 163, 158, 157, 156 148, 149, 147, 164

iii) Name of the flower plants : Dutch Roses under cultivation

iv) Variety : Vivaldi,Texas, Konfetti, First Red, Vanilla, Kiss, Tiamo, Lambada

v) No. of flowers : 195500

vi) Distance between flower plants : 14 cm.

vii) Expected date of harvest : September 1995 Input cost (From planting to : Rs. 25 lacs to first flowering i.e. 4 months)

ix) Cost of saplings : Rs. 70 per plant

E) Cost of cultivation for flowers : 25 lacs.

i) No. of flowers : 19,55,500.00 ii) Input cost from first flowering to harvest : 25 lacs. iii) Area under Open Cultivation : No"

18. Based on the said proposal, the Insurance

Company issued comprehensive floriculture

insurance policy on January 23, 1996 The

schedule attached to the said insurance policy is

thus:

`SCHEDULE'

Insured : M/s VIKRAM GREENTECH (i) Ltd.

(Name and address) Plot No. 99, Sector 24, Rigdi-Pradhikaran

10 PUNE- 411 044 Policy No. : 47/221200/00940

Insured at : Surat Proposal Date : 18th January, 1996 Name of the Crop : Floriculture offered for insurance Period of Insurance : 18/01/96 to 17/01/97 Address of the Site of : Village : Sanghise, the proposal to be Near Kamshet Railway Station Insured Tal.: Maval, District: PUNE Total sum Insured : Rs. 2 crore Total Premium : Rs. 2,20,000/- + 11,000/-(s.o.)

__________________________________________________________ _ INVENTORY OF THE PROPERTY INSURED (Sections I & II) __________________________________________________________ _ Description of the item with sum Insured Rs. Excess Rate Premium Details Rs. Rs. Rs.

__________________________________________________________ _

I POLYHOUSE:

a) Steel Structure 25,00,000/- b) Fabrication 15,00,000/- c) Gripper 10,00,000/- d) Plastic Fitting Charges 50,00,000/- e) Cutter | f) Plastic | 25,00,000/- -----------------

1,25,00,000/-

II IRRIGATION : A a) Plasto Make System 15,00,000/- b) Agricon Associates 50,000/- (Valves & Pipes) c) Fitting Charges 50,000/- d) Reservoir 4,00,000/-

III ELECTRIC MOTOR

a) Electric Motor HP 1,00,000/-

11 b) Starter-MCL-CICL } c) Other Assessories, } DG set 2 nos.,and } Transformers } 4,00,000/-

19. That the aforesaid policy covered the insured for

the loss and and/or damage caused by storm/hailstorm/cyclone

over the insured area is not in dispute. The Insurance

Company under the policy also agreed that the sum insured

would be equal to the costs of placement of the insured

property by new property of the same kind and same capacity;

in other words replacement cost.

20. Although, Mr.Vijay Hansaria, learned senior counsel

for the insured strenuously submitted that the Proposal Form

did not specify the number of poly-houses and, therefore, all

poly-houses including 7, 8A and 8B were covered under the

policy as they were in existence at the time of calamity that

occurred on May 23,1996 and June 18/19,1996, we are afraid,

the submission of the senior counsel does not merit

acceptance. Admittedly, at the time, the policy was taken ( i.e.

proposal made on January 18,1996 and insurance policy

issued on January 23,1996), poly-houses 1 to 6 were in

12 existence and poly-houses 7, 8A and 8B were not in existence.

These poly-houses (7, 8A and 8B) were completed in March

1996. Moreover it is not correct to say that the Proposal Form

does not specify the number of poly-houses. It does. It clearly

mentions six poly-houses. It is true that six poly-houses are

mentioned in Clause(C) of the Proposal Form which is with

regard to green house cultivation but what is mentioned in

respect of poly-houses in Clause(C) is necessarily referable to

the number of poly-houses in Clause(A) of the Proposal Form

as well.

21. The learned senior counsel for the insured

submitted that the entire material for poly-houses 7, 8A and 8B

had already been received at the time of making proposal and

issuance of insurance policy and the intention was also to

cover the material lying at the site for erection of poly-houses.

In this regard, the learned senior counsel sought to refer to the

correspondence between the parties and the Surveyors'

reports dated October 24,1996 and October 28,1996. He

would submit that cost of six constructed poly-houses on the

date of making proposal was around Rs.65-70 lakhs and for the

insurance cover of these six poly-houses, the insured would not

13 have valued their cost at Rs.1.25 crores and paid premium of

Rs.2,31,000/-.

22. A careful consideration of the Proposal Form that

sets out the particulars of the components which were to be

covered and the inventory of the property insured (Sections I

and II), mentioned in the policy leaves no manner of doubt that

what was insured was existing poly-houses on the date of the

issuance of policy. It is clear from the proposal and the policy.

The two documents admit of no ambiguity and it is clear that six

poly-houses covering an area of 2.8 hectares was covered by

the policy. It may be mentioned that Clauses (C)(ii), (D)(i) and

(ii) of the Proposal Form mentions Survey/Gat/Hissa no.163,

158,157,156,148,149,147 and 164 and total area 2.6 hectares.

It is on this area that six poly-houses were existing on the date

the proposal was made and policy issued. These six poly-

houses were only covered by the policy.

23. The National Commission concluded thus:

" ..... we are unable to accept the contention of the complainant that only houses 7,8A or 8B were covered under the Insurance Policy in question especially when admittedly, they were non-existent on the date, the policy was taken and policy clearly mentioned the number of poly houses as "Six". In our view the complainant has failed to prove a case based on the material on record......"

14 We do not find any error in the conclusion of the National

Commission.

24. In what we have discussed above, the appeal is

liable to be dismissed and is dismissed with no order as to

costs.

..........................J (D.K. Jain)

..........................J (R.M. Lodha) New Delhi, April 1, 2009.

15 16