HYDERABAD: The Telangana State Consumer Disputes Redressal Commission has directed an insurance company to pay Rs 26.76 lakh along with 12% annual interest, besides compensation and litigation costs, to a seed company after holding that rejection of its insurance claims for rain-damaged consignments amounted to deficiency in service.
The complainant, JK Agri Genetics Ltd., a Hyderabad-based seed company, had sought directions to settle insurance claims of Rs 37.33 lakh with interest and compensation.
According to the complaint, the company had obtained a marine cargo open policy to cover transportation of seeds. During July and August 2015, it transported consignments of paddy, cotton, maize and bajra seeds in trucks covered with tarpaulin through logistics companies. However, heavy rain during transit caused seepage of water through the tarpaulin, damaging several cartons containing the seeds.
The company stated that in one instance 132 cartons of paddy seeds were damaged due to rainwater ingress while being transported from Hyderabad. In other incidents, 92 cartons of cotton seeds, 30 of maize seeds and several bags of maize, bajra seeds were also affected. The losses were assessed by surveyors appointed by the insurer after considering salvage value and other policy conditions.
Despite the survey reports, the insurance company rejected the claims in 2016, arguing that the seeds were not directly damaged by rainwater but had absorbed moisture from wet outer layers, leading to loss of germination quality. The insurer also contended that moisture-related damage was not covered under the policy and that other discrepancies existed in the documentation submitted by the company.
The commission, however, rejected the arguments, observing that the damage occurred due to seepage of rainwater into the consignments. It noted that the policy excluded losses caused by natural accumulation of moisture due to climatic conditions but did not exclude damage resulting from rainwater entering the goods during transit.
The bench further held that the presence of rainwater inside the cartons indicated that the goods were affected by external seepage through the tarpaulin covering. It also observed that the insurer had not produced evidence regarding the intensity of rainfall or other factors to support its claim that the damage was purely due to internal moisture or climatic conditions.
Based on the survey reports, the commission accepted the assessed losses of Rs 14.67 lakh, Rs 8.2 lakh, Rs 2.03 lakh and Rs 1.84 lakh in four separate consignments. The total payable amount comes to Rs 26.76 lakh, which the insurer has been directed to pay along with 12% interest from the respective dates of the claims until realisation.
In addition, the commission ordered the insurer to pay Rs 2 lakh as compensation for mental agony and Rs 25,000 towards litigation costs to the complainant company. The insurer has been given 30 days to comply with the order.