PANIPAT SPINNING MILLS Vs. NATIONAL INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) The complainant / petitioner company obtained two insurance covers from the respondent company, one against cover note No.687556 and the other against cover note No.687557 for Rs.1,00,00,000/- and Rs. 40,00,000/- respectively. The cover under the first policy comprised Rs.15,00,000/- for the building, Rs. 40,00,000/- for the plant and machinery and Rs.45,00,000/- for the stock in process. The cover under the second policy comprised only plant and machinery for Rs.40,00,000/-. The covers were taken for the period from 27.10.1999 to 26.10.2000. Both the above referred insurance covers were renewed by the respondent company for the period from 25.10.2000 to 24.10.2001. Cover Note No.31180 was issued while renewing the insurance cover against previous cover note No.687556, whereas cover note 31121 was issued while renewing insurance against cover note No.687557. Both the insurance covers were issued on reinstatement basis. The obvious inference therefore is that the renewal was also granted on the same basis.

(2.) A fire broke down in the factory of the complainant on 17.8.2001, and Thapar, Srinivasan and Kapoor Pvt. Ltd. were appointed as the surveyors. The insurance company sent policy schedules to the surveyor, stating therein that the machinery, except card clothing had been insured on reinstatement value basis, meaning thereby that the card clothing machinery had not been insured on reinstatement value and had rather been insured on depreciated value. The surveyor however, assessed the loss to the complainant at Rs.28,35,518/- on reinstatement value. The insurance company, vide letter dated 05.3.2002, directed the surveyor to reassess the loss on depreciated value basis, on the ground that the cover notes 31120 and 31121 were not issued on reinstatement value basis. Vide letter dated 08.3.2002, the surveyor reiterated that the policies had been issued on reinstatement value. The insurance company however, insisted on the surveyor reassessing the loss to the complainant on the depreciated value. Thereupon, the surveyor asked the complainant to submit document regarding age of the machine, last overhaul, replacement of parts etc. The petitioner however, insisted that the policies had been issued on reinstatement value basis.

(3.) Since the complainant owed money to Haryana Financial Corporation, the said Corporation asked the complainant to pay a sum of Rs.3,11,815/- to it. Thereupon the complainant, referring to the communication received from the surveyor, stating therein that the entire machinery, except card clothing had been insured on reinstatement value basis, informed to the insurance company that the card clothing was approx. three years old and requested it to advise the surveyor to finalize the report at the earliest. On receipt of the letter of the complainant dated 29.5.2002 in this regard, the insurance company advised the surveyor to issue the revised assessment. Thereupon, the surveyor issued a revised assessment, assessing the loss to the complainant at Rs.18,53,815/-. The insurance company released part payment of Rs.10,00,000/- (5,00,000/- + 5,00,000/-) to the complainant. The complainant received yet another demand letter from Haryana Financial Corporation on 27.8.2002 and thereupon submitted a full and final discharge voucher to the insurance company for payment of the balance amount of Rs.9,81,086/-. It also made an endorsement receiving the aforesaid amount without prejudice. The complainant after receiving the balance payment, wrote a protest letter to the insurance company on 16.9.2002 and then filed a complaint before the District Forum, seeking payment of Rs.13,18,914/-, along with interest, compensation etc. The surveyor was also impleaded as a party to the complaint.