SATYAM ISPAT LTD Vs. NATIONAL INSURANCE CO LTD

JUDGEMENT

(1.) Complainants were involved in the manufacture of M.S. Billets and TMT Bars with an installed capacity of 74400 M.T. and 67200 M.T. per annum respectively. The Complainant in C.C. NO. 10 of 2010 had taken two Standard Fire and Special Perils Insurance Policies from the Opposite Party (i.e. National Insurance Company Ltd.). The first Policy was for its Rolling Unit vide Policy No. 200110/11/08/3300000073 from 01.07.2008 till 30.06.2009. It covered Building plinth and foundation, Building superstructure, Furniture fixture and fittings, Plant and machinery, Finished and raw materials worth Rs.4,50,000/-, Rs.21,50,000/-, Rs.20,00,000/-, Rs.79,00,000/- and Rs.1,30,00,000/- respectively. The Second Policy was taken by the Complainant in respect of its Ingot Unit vide Policy No. 200100/11/08/3100000078 from 02.07.2008 till 01.07.2009. The Policy covered Building including Plinth, Plant and machinery, Stock and Furniture, Fixtures and Fittings worth : Rs.27,00,000/-, Rs.93,00,000/-, Rs.1,30,00,000/-and Rs.5,00,000/- respectively. In C.C. No. 11 of 2010, Complainant had taken a Standard Fire and Special Perils (Material Damage) Insurance Policy from the Opposite Party (i.e. National insurance Company Ltd.)for its Factory building and stocks for Rs.69,46,16,000/- as the total sum insured vide Policy No. 200110/11/08/33000000111 from 10.04.2008 till 09.04.2009. The said Policy covered the Boundary wall, Factory Building, Fixed Assets (Misc.), Office Building, Plant and Machinery and Stock of raw materials worth Rs.9,01,000/-, Rs.6,59,39,000/-, Rs.1,03,94,000/-, Rs.40,38,000/-, Rs.31,71,49,000/-and Rs.28,71,95,000/-. The Complainant also stated that the entire stocks/raw materials were hypothecated as security with the State Bank of India, Commercial Branch, Guwahati. The Bank had also sanctioned credit facilities to the Complainant against pledged stocks/raw materials. On 14th/15th August, 2008, due to unprecedented rainfall, floods occurred breaching the boundary wall on the back side of the induction Furnace of the Complainant and near the Induction Furnace of Satyam Ispat (North East) Ltd. The boundary wall also breached on another common side of both the units in which large quantities of raw material were washed away causing huge loss to both the units. On 16.08.2008 and 19.08.2008 respectively, the Complainants telephonically informed the Branch Manager of National Insurance Co. Ltd., Beltola, Guwahati about the incident and obtained various certificates as evidence of occurrence of heavy flood and washing away of raw materials of the unit. None of these Statements/Reports quantified the loss except mentioning that it was a huge loss.Thereafter, written intimation was also given to the State Bank of India. The Preliminary Surveyor appointed by the Opposite Party in his Report accepted the fact that it was difficult to assess the extent of damage caused by the floods, as almost a week had passed since its occurrence. Thus, the said delay in appointment of Surveyor led to loss of crucial evidence showing the massive losses incurred by the Complainant and also in violation of the Insurance Regulatory and Development Authority (protection of Policy holders Interests) Regulations, 2002. The Final Surveyor in his Report dated 15.07.2009 stated that the boundary wall of the Unit was very weak and in a dilapidated condition. To this the Complainants states that if the condition of the wall was so dilapidated, then the Opposite Party would not have insured the same. The Opposite Party vide letter dated 30.11.2009 offered Rs.4,93,075/-, towards their claim of Rs.2,20,19,266/- and Rs.18,79,58,172/- respectively.

(2.) Alleging deficiency on the part of the Opposite Party, Complaints were filed before this Commission under Section 21 of the Consumer Protection Act, 1986, praying relief as under:-

(3.) Written arguments have been filed by the Opposite Party in both the Complaints in which they contended that the claims of the Complainants were not payable both for damage to the boundary wall and alleged loss of raw material. It was contended that the Photographs/VCD of the so called floods, taken by the Complainant, revealed that water was just ankle deep and flow was also slow. Heavy iron scraps weighing five times more than water could not have been washed away. The Photographs and video taken by the Complainant further does not show any metal piece of the said raw material entangled in the paddy fields or found embedded in the path of the flow of water. The Photographs during the flood incident also show that drums, wheels/tyres, scooter frame and even the metal scrap did not shift their position. HDPS bags containing sponge iron were found stacked and not even a single bag could be traced throughout the route of water outflow from the boundary wall to the river. TheSurveyors rejected a major part of the claim of raw material consisting of M.S. Scrap alleged to have been washed away in the flood water and for the same detailed reasons were given in the final Survey report.