The National Consumer Disputes Redressal Commission has overruled the Karnataka State commission’s decision directing the New India Assurance Company to settle the claim filed by an old tile factory in Mangalore that suffered losses.

The case related to losses suffered by Raj Tile Works, a factory set up in Vamanjoor near Mangalore in 1960.The factory had obtained a policy for Rs. 52.6 lakh that was valid till April 2001. The factory was covered for several perils, including losses on account of accidental impact by any rail/road vehicle or animal. On the factory premises there is a kiln for firing the raw mud tiles and a storage space for drying the tiles. The storage structure of the factory was built on pillars of laterite stones.

On March 18, 2000, a truck entered the factory with a load of sawdust used to fire the tiles. In the process of reversing, the truck driver reportedly hit a pillar resulting in the collapse of three compartments of the storage structure. The factory estimated the loss at Rs. 11.19 lakh and filed a claim.

The insurance company deputed retired police officer P. Krishna Rao to verify the claims of the factory. This was followed by a visit by two surveyors, M.J. Mallayya and M.K. Vazhunnavar. Based on the findings of the three persons, the insurance company repudiated the claim of the factory on the grounds that the structure had collapsed on its own.

The Karnataka State commission refused to agree with this decision and ordered the insurance company to pay Rs. 11.19 lakh with 12 per cent interest in June 2004. The insurance company went on appeal before the national commission.

The national commission found that the Karnataka State commission had not appreciated the observations made by the investigator and the two surveyors properly. It found that the State Commission had not considered the investigator’s point that there were witnesses when the pillars collapsed. Several observations of the two surveyors, including the presence of a 6-inch high platform in front of the storage space, were not considered.

The national commission said that the insurance company had produced enough evidence and material to show that the losses incurred by the factory was not on account of accidental impact of the vehicle but was owing to the age of the structure.

On September 4, Justice R.C. Jain and Anupam Dasgupta set aside the State commission’s order for lack of proper appreciation of evidence and material.