Vikram Greentech India Limited And Another v. New India Assurance Company Limited .

R.M Lodha, J.— This appeal under Section 23 of the Consumer Protection Act, 1986 (for short “the Act”) is directed against the judgment and order dated 30-10-2001 passed by the National Consumer Disputes Redressal Commission, New Delhi (for short “the National Commission”) whereby the complaint filed by the appellant for direction to the respondent to settle the insurance claim along with interest @ 18% per annum and compensation of Rs 25 lakhs on account of mental agony, harassment and monetary loss came to be dismissed.

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 “the Insurance Company”) for a comprehensive floriculture insurance policy. On 18-1-1996, the Company (hereinafter referred to as “the insured”) submitted a proposal to the Insurance Company for a comprehensive floriculture insurance of polyhouses (Rs 1.25 crores), irrigation system (Rs 25 lakhs), cost of cultivation of flowers (Rs 25 lakhs) and input cost from first flowering to the harvest (Rs 25 lakhs).

3. The Insurance Company issued a comprehensive floriculture insurance policy (“the policy”, in short) on 23-1-1996, the period of insurance being from 18-1-1996 to 17-1-1997 and charged a premium of Rs 2,31,000.

4. On 23-5-1996, 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 polyhouses. On 18-6-1996/19-6-1996 there was another storm/cyclone, as a result of which the floriculture project of the insured and the polyclothes and the roofs as well as the walls of the polyhouses were extensively damaged; certain polyhouses even collapsed completely.

5. 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 the second storm/cyclone that occurred on 18-6-1996/19-6-1996.

6. The Insurance Company appointed M/s Standard Surveyors (P) Ltd. as their surveyors for assessing the loss claimed by the insured. The surveyors submitted their report on 24-10-1996 and assessed the loss suffered by the insured at Rs 28,85,243 in respect of the first storm. On 28-10-1996, the surveyors submitted their second report in respect of the second storm/cyclone and assessed the loss at Rs 34,81,214.

7. On 28-11-1996 the Insurance Company informed the surveyors that their report included loss to Polyhouses 7, 8-A and 8-B whereas the policy covered only Polyhouses 1 to 6. The surveyors were, accordingly, asked to reassess the loss. On 19-12-1996 the surveyors gave their clarification to the Insurance Company that all the polyhouses were covered under the policy and their assessment was correct and fair.

8. 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 12-9-1997 stating therein that they were not able to submit their certification as regards the cost of Polyhouses 1 to 6 and other related matters categorically for the sum insured and claim thereof.

9. On 6-11-1997 the surveyors submitted their addendum to the earlier report dated 24-10-1996 with regard to the first storm and reduced the assessment of loss to Rs 4,77,355. The surveyors submitted another addendum on 16-2-1998 to the report dated 28-10-1996 with regard to the second storm and reduced the assessment of loss to Rs 95,443. 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.

10. The Insurance Company contested the claim and set up the plea that the claim on account of damages to Polyhouses 7, 8-A and 8-B was not admissible as these polyhouses were not covered under the policy. As regards Polyhouses 1 to 6, the Insurance Company admitted that the policy covered those polyhouses. They stated before the National Commission that the 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 the first storm and Rs 95,443 on account of loss caused by the second storm. 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 ha and the entire area was covered by the Insurance Company and it was not limited to the area of 2.8 ha as contended by the Insurance Company.

11. The National Commission heard the arguments of both the parties and held that at the time of taking policy only six polyhouses were in existence and there was no evidence or proof to substantiate that the insurance was covered for Polyhouses 7, 8-A and 8-B. The National Commission recorded the admitted position that Polyhouses 7, 8-A and 8-B were not in existence at the time of taking insurance policy.

12. The National Commission held that the policy clearly mentioned the number of polyhouses as “six” and in view thereof the complainant is entitled to an amount of Rs 5,72,798 on account of damages to these Polyhouses 1-6 during the storm/cyclone that hit on 23-5-1996 and 18-6-1996/19-6-1996 along with interest @ 12% from the date of the surveyors' first report i.e 6-11-1997 up to the date of payment, failing which the rate of interest shall be @ 18% per annum.

13. Aggrieved by the dismissal of the complaint with regard to the claim for loss to Polyhouses 7, 8-A and 8-B, the insured, as stated, is in appeal.

14. We have heard Mr Vijay Hansaria, learned Senior Counsel for the appellant and Mr P.K Seth, learned counsel for the Insurance Company.

15. The question that arises for our consideration is: whether the comprehensive floriculture insurance policy issued by the Insurance Company to the insured covered Polyhouses 7, 8-A and 8-B?

16. 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 uberrima 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.

17. 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 the insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.

18. The endeavour of the court must always be to interpret the words in which the contract is expressed by the parties. The court while construing the terms of policy is not expected to venture into extra liberalism that may result in rewriting 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. v. Chandmull Jain AIR 1966 SC 1644, Oriental Insurance Co. Ltd. v. Sony Cheriyan (1999) 6 SCC 451 and United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644)

19. A document like proposal form is a commercial document and being an integral part of policy, reference to the 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.

20. That the insured submitted a proposal to the Insurance Company for comprehensive floriculture insurance on 18-1-1996 is not in dispute. The insured furnished particulars for the following components which were to be covered:

“Polyhouse 1 2 3 4 Total (A) Value of (Rs in crores) (1) Steel structure 0.25 (2) Fabrication 0.15 (3) Plastic grippers 0.10 (4) Plastic and fittings charges 0.50 (5) Cost of construction for polyhouses, gutters and 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 and 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 1 No. with pumps, pipes and valves 01.00 (2) DG set 2 Nos., Powerica (Kirloskar), 140 kVA and 1.25 kVA transformer, starters MCL-CTCL and others accessories 04.00 25.00

(C) Details of flowers planted in greenhouse or open cultivation Greenhouse cultivation (i) No. of greenhouses : 6 polyhouses (ii) Area under greenhouses : 2.8 ha (iii) Area under open cultivation : No (D) Details of flower plants under cultivation (i) Total area under floriculture : 2.8 ha (ii) Survey/Gat/Hissa Nos. : 163, 158, 157, 156, 148, 149, 147, 164 (iii) Name of the flower plants under cultivation : Dutch Roses (iv) Variety : Vivaldi, Texas, Konfetti, First Red, Vanilla, Kiss, Tiamo, Lambada (v) No. of flowers : 1,95,500 (vi) Distance between flower plants : 14 cm (vii) (viii) Expected date of harvest Input cost (from planting to first flowering i.e 4 months) : : September 1995 Rs 25 lakhs (ix) Cost of saplings : Rs 70 per plant (E) Cost of cultivation for flowers : 25 lakhs (i) No. of flowers : 19,55,500.00 (ii) Input cost from first flowering to harvest : 25 lakhs (iii) Area under open cultivation : No”

Based on the said proposal, the Insurance Company issued a comprehensive floriculture insurance policy on 23-1-1996.

21. The schedule attached to the said insurance policy is thus:

“Schedule

Insured (Name and address) : M/s Vikram Greentech (I) Ltd. Plot No. 99, Sector 24, Rigdi Pradhikaran, Pune 411 044 Policy No. : 47/221200/00940 Insured at : Surat Proposal date : 18-1-1996 Name of the crop offered for insurance : Floriculture Period of insurance : 18-1-1996 to 17-1-1997 Address of the site of the proposal to be insured : Village Sanghise, Near Kamshet Railway Station, Taluk Maval, District Pune Total sum insured : Rs 2 crores Total premium : Rs 2,20,000 + 11,000 (s.o)

Inventory of the Property Insured

(Sections I and II)

Description of the item with sum insured details Rs Excess Rs Rate Rs Premium 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) Plasto make system 15,00,000 (b) Agricon Associates (valves and pipes) 50,000 (c) Fitting charges 50,000 (d) Reservoir 4,00,000 III Electric motor (a) Electric motor hp 1,00,000 (b) Starter MCL-CTCL (c) Other assessories, DG set 2 Nos. and transformers 4,00,000”

22. That the aforesaid policy covered the insured for the loss 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.

23. Although Mr Vijay Hansaria, learned Senior Counsel for the insured strenuously submitted that the proposal form did not specify the number of polyhouses and, therefore, all polyhouses including 7, 8-A and 8-B were covered under the policy as they were in existence at the time of the calamity that occurred on 23-5-1996 and 18-6-1996/19-6-1996, we are afraid, the submission of the Senior Counsel does not merit acceptance.

24. Admittedly, at the time the policy was taken (i.e proposal made on 18-1-1996 and insurance policy issued on 23-1-1996), Polyhouses 1 to 6 were in existence and Polyhouses 7, 8-A and 8-B were not in existence. These Polyhouses (7, 8-A and 8-B) were completed in March 1996.

25. Moreover it is not correct to say that the proposal form does not specify the number of polyhouses. It does. It clearly mentions six polyhouses. It is true that six polyhouses are mentioned in Clause (C) of the proposal form which is with regard to greenhouse cultivation but what is mentioned in respect of polyhouses in Clause (C) is necessarily referable to the number of polyhouses in Clause (A) of the proposal form as well.

26. The learned Senior Counsel for the insured submitted that the entire material for Polyhouses 7, 8-A and 8-B had already been received at the time of making the proposal and issuance of the insurance policy and the intention was also to cover the material lying at the site for erection of polyhouses. In this regard, the learned Senior Counsel sought to refer to the correspondence between the parties and the surveyors' reports dated 24-10-1996 and 28-10-1996.

27. Mr Hansaria would submit that cost of the six constructed polyhouses on the date of making the proposal was around Rs 65-70 lakhs and for the insurance cover of these six polyhouses, the insured would not have valued their cost at Rs 1.25 crores and paid a premium of Rs 2,31,000.

28. 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 the existing polyhouses 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 polyhouses covering an area of 2.8 ha were covered by the policy.

29. It may be mentioned that Clauses (C)(ii), (D)(i) and (ii) of the proposal form mention Survey/Gat/Hissa Nos. 163, 158, 157, 156, 148, 149, 147 and 164 and total area of 2.8 ha. It is on this area that six polyhouses were existing on the date the proposal was made and policy issued. These six polyhouses were only covered by the policy.

30. The National Commission concluded thus:

“ … we are unable to accept the contention of the complainant that only Polyhouses 7, 8-A or 8-B 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 polyhouses as ‘six’. In our view the complainant has failed to prove a case based on the material on record….”

We do not find any error in the conclusion of the National Commission.

31. In what we have discussed above, the appeal is liable to be dismissed and is dismissed with no order as to costs.