Fayaz Bukhari
SRINAGAR, Sept 26: In a land mark judgment that will give a sigh of relief to business community of the flood hit State, Jammu and Kashmir High Court today directed Insurance Companies to provide at least 50 percent interim relief to business men who have suffered losses due to floods.
The Division Bench, comprising Chief Justice MM Kumar and Justice Ali Mohammad Magrey, directed the Insurance Companies to provide 95 percent and 50 percent of insured amount as an interim relief to the businessman whose insurance is upto Rs 25 lakhs and above Rs 25 lakhs respectively.
“We feel that policy, in respect of shopkeepers, need to be effectively implemented. Under the caption, Stock Loss, it has been contemplated that cases with sum insured is upto Rs 25 lakhs, then after making 5 percent deduction towards dead and obsolete stocks is to be considered as the basis of settlement. The insured is to be given an option to accept sum insured less by 5 percent”, directed the Bench in response to an application moved by Kashmir Chamber of Commerce and Industries (KCCI).
To make its direction clear the court further added: “In other words, 95 per cent of the sum insured has to be disbursed in case of policy involving Rs 25.00 laks or less.”
The bench directed: “In case of the policies with sum insured up to Rs 25 lakh, the shopkeepers policy should be strictly followed as observed. In respect of the policies with sum insured above 25 lakhs, 50 percent of the assured amount shall be released after receiving undertaking from the insured and also filing of the undertaking by the officer concerned Insurance Company that at the time of final settlement the deficiency shall be made up by either of the parties.”
Court further directed that policy decision of General Insurers Public Sector Association (GIPSA) should be strictly complied with. “The policy decision taken by GIPSA in its meeting held on September 17 should be strictly complied with and all the four Insurance Companies may file compliance reports before the next date of hearing”, the court directed.
The Insurance Companies told the court with respect to the policy where sum insured is above Rs 25 lakhs, it has been stated that 50 percent of the assessed and estimated loss will be released after receipt of preliminary survey report.
“We feel that further categorization is required to be kept in view while implementing the policy which involves a sum insured beyond Rs 25 lakhs. This clause may not be applicable to shopkeepers who have stocks of eatables, food, items, cloths, shoes, readymade garments, hosiery, cosmetics, chemists and the provision stores”, observed the bench.
This observation was made by the bench for the reason that a catastrophic of such a magnitude as has been confronted by the insured in Srinagar as well as other parts of the State like Poonch, Rajouri, such type of literal construction need to be avoided. “Therefore a humanistic approach is required to be followed”, the bench observed.
“For example, if a building has collapsed which has a stock and the flood water enters the building then literally speaking it may be not said that contents were totally washed yet it would be a case of complete loss of stock”, says the order.
Court observed that linguistic approach would be avoided and humanistic approach is required to be adopted. “In such a situation, the linguistic approach by the company would require to be avoided and humanistic approach is required to be adopted and policy requires to be implemented in its letter and spirit. We believe and trust that this policy of GIPSA would take care of number of claims made by small shopkeepers who have sum insured upto Rs 25.00 lakhs”, said the bench.
The Court observed: “The public at large is also required to be informed that if they had any insurance policy, they have to contact the Nodal Officers for any insurance claims. A common advertisement is required to be published in English, Hindi and Urdu on behalf of the all four companies and banners in this regard were required to be placed at prominent places.”
Court further directed that in case of 90 percent loss, the companies shall not treat any case as a case of partial loss. “The Insurance Company shall not treat any case as a case of partial loss merely because 5-10 percent of the stock could have been salvaged whereas 90 percent of the same was in water”
Court also directed for holding of joint meeting between Insurance Companies and KCCI for amicable solution of claims. “All the Insurance Companies shall hold a joint meeting with the office bearers of Kashmir Chamber of Commerce and Industries in order to reach an amicable solution of claims and the result of the aforesaid meeting be placed before the court on next hearing”, directed the bench.
Court further directed that where water has gone up to a level leaving the 2/3 of shelves of the shops like provision stores untouched but no citizen would like to consume the eatable as the advisory already issued by Director Health Services Kashmir.
“Therefore, we direct that in such like case, the case should be treated as a total loss rather than bringing it under the caption of partial losses, even the articles other than food, eatable and medicine may not be of any use and it would and the payment should be accordingly made”, reads the order.
Court also warned against false claims and said in case it is found that someone has filed a false claim the criminal prosecution shall follow against him.
Court also expressed its dis-satisfaction over the pace of work of the Insurance Companies and said it defeats the policy decision of GIPSA as the court was informed by one of the companies that till date out of 1700 claims only five cases of claims have been settled by it.
“The policy stipulates that it is the social responsibility of all the insurers to settle all the claims arising out of the floods and natural calamity in the State at the earliest and the norms require to be relaxed”, said Court.
Court directed for filing of compliance report with regard to all these direction by September 29 and hold the next hearing of the matter on September 30.
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