State Consumer Disputes Redressal Commission
M/S Shital International vs United India Insurance Company Ltd., on 21 November, 2011
2nd Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB,
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH
Consumer Complaint No. 9 of 2008
Date of institution : 13.2.2008
Date of Decision : 21.11.2011
M/s Shital International, having its office at:- S 8-9, Industrial Area, Jallandhar -
144 004 through its Sole Proprietor Mr. Shital Kumar Vij.
.....Complainant
Versus
United India Insurance Company Ltd., BO-II, S-9, Industrial Area, Jalandhar,
through its Managing Director.
...Opposite Party.
Consumer Complaint under Section 12 of the
Consumer Protection Act, 1986.
Before:-
Shri Piare Lal Garg, Presiding Member.
Shri Baldev Singh Sekhon, Member.
Present:-
For the complainant : Sh. Vikas Jain, Advocate
For the opposite party: Sh. Munish Goel, Advocate
PIARE LAL GARG, PRESIDING MEMBER:
This is an consumer complaint filed by the complainant under Consumer Protection Act, 1986(hereinafter called 'the Act') against the United India Insurance Company Limited(hereinafter called the 'opposite party').
2. Brief facts of the case are that M/s Shital International is doing its business from the year, 1978 and Mr. Shital Kumar Vij is sole proprietor of the firm. The firm is doing the business of manufacturing artificial fur lining, hosiery cloth/ fabrics, allied products manufactured from fibres and yarn and thereafter, the finished products are exported to the abroad. The primary raw material is used in manufacturing the products like fabrics are acrylic fibre, polyester fibre, yarn and other packaging material etc. It is Consumer Complaint No. 9 of 2008 2 pleaded by the complainant that his firm was in sound condition and was earning profits on year to year basis. The sale figures for the period of 1.4.2006 to 2.6.2006 reflect the profit to the tune of Rs. 2,92,55,996/-.
3. The firm had usually insured its building, plant, machinery, furniture, fixtures within the building and all kinds of stock and electrical installations but no claim was claimed for the earlier policies. The firm had purchased Standard Fire and Perils Policy, Extension of Earthquake (Fire and Shock) No. 201302/11/05/11/00000124 for the period from 31.8.2005 to midnight of 30.8.2006 from the opposite party and the below items were insured:-
Sl. No. Description of the Property Sum Insured
1. Plant/ Machinery and Accessories 1,50,00,000 On entire plant & machinery with its standard accessories such as control panels, electric motors,, Gen. sets, boilers, transformers & or other machinery whilst fitted & or installed & or stored & or Indl.
Cables situated at given above address, covered under reinstatement value basis.
2. Electrical Installations
i) To cover AC with stablizers fitted Rs. 2,50,000 & or installed at given address above factory premises covered under reinstatement value basis.
ii) On all type of electrical wiring Rs. 3,50,000 cables, MCB's, OCB's, electrical motors, fitted at above address covered under reinstatement value basis.
3. Category 1 stocks On stocks of all kinds of raw Rs. 63,77,000 material, packing material, finished, semi-finished & or goods under process used for the mfg. of mink blankets, fur cloths, textile goods & or other hosiery goods & or such goods pertaining to insured trade whilst stored & or lying & or anywhere in the factory premises built of a class const.
Consumer Complaint No. 9 of 2008 3
4. Complainant had also insured the factory premises No. S-9, Industrial Area, Jallandhar vide policy No. 401112/11/05/3100000584 for the period of 25.1.2006 to 24.1.2007 from the National Insurance Co. Ltd. and insured the items mentioned below:-
Sl. No. Description of the Property Sum Insured
1. Factory premises situated at S-9, Rs. 35,00,000 Industrial Area, Jallandhar Entire building above plinth level
2. Plant and Machinery Rs. 29,57,000
3. Furniture and fittings Rs. 10,00,000 The firm's plant, machinery and accessories were insured for total sum of Rs. 1,79,57,000/- vide the above mentioned two policies.
5. It was pleaded that at 3.50 a.m. on 23.6.2006, a major fire broke out in the factory premises situated at S-9, Industrial Area, Jallandhar. Mr. Dhanji, Machine Operator and Mr. Ram Nath noticed the fire and tried to extinguish the same by sprinkling the water available at the site but they failed. The fire was rapidly spreading and gutted the articles lying in the factory. The abovesaid employees informed the complainant, who immediately informed the Fire Brigade Office, Jallandhar. Fire Tenders immediately arrived at the spot but as the fire was forceful and had spread largely, as such, could not be controlled immediately. Fire tenders from the adjoining areas i.e. Kapurthala and Hoshiarpur were also called. The fire was controlled after almost five hours. As per certificate of the Fire Department, the fire was as shown as 'A' category i.e. major fire.
6. Due to the fire incident, extensive damage was caused to the building, plant, machinery, fixtures, fittings and the stocks lying within the factory premises. The stock lying in the premises was mainly comprising of acrylic and polyester material, which was highly flammable so the same was immediately gutted in the fire and was completely burnt. The incident Consumer Complaint No. 9 of 2008 4 of fire was reported to opposite party, S.H.O., P.S. Division No. 1, Distt. Jallandhar and Fire Brigade Office, Jallandhar as well as to the other concerned authorities. The news was also published in the newspapers regarding the same. The senior officials of the opposite party alongwith Sh. C.S. Arora personally visited the premises of the firm on 23.6.2006 after receiving the information from the complainant. The officials of the opposite party assured to the complainant for the release of interim payment of claim immediately to provide the financial help to the complainant so that functioning of the firm did not disturb.
7. On the same day, the complainant had also requested the opposite party to appoint Surveyor to ascertain/assess the damage/loss caused to the plant, machinery, electrical installations and stocks, which were duly insured under the policy with the opposite party. The opposite party had appointed Mr. D.K. Taneja & Associates for the Survey and to assess the loss suffered by the complainant. Sh. D.K. Taneja, Surveyor as well as Surveyor appointed by National Insurance Co. Ltd. had visited the factory and had conducted detailed investigations after making enquiries and samples were also taken by them. Thereafter, again on various dates, Surveyors conducted physical inspection/ verification of the spot and verify the account books, stock registers, ledger books, purchase registers and all other account books maintained by the complainant firm to ascertain the value of the plant, machinery and stock lying in the premises at the time of fire and also to assess the loss suffered by the complainant. The fire was occurred due to short-circuit in one electrical motor of carding machine and flare into acrylic fibre lying near the said machine, which was highly combustible. The complainant also furnished the report of the Fire Authorities to the opposite party.
Consumer Complaint No. 9 of 2008 5
8. The Surveyors conducted detailed inspection and physically verified the purchases made by the complainant firm, excise challans, stock lying in other shed. The complainant had furnished all the challans, invoices, production books and all other details to the Surveyors. As per records maintained by the complainant, the approximate loss of Rs. 50,00,000/- of stock was suffered by him.
9. It is pleaded that the Surveyors on one hand inspected the accounts books, stock register, statutory record to ascertain the stock lying in the factory premises at the time of fire and its value and on the other hand had undertaken weighment of ash of the completely burnt stock, which is a universally recognized method to ascertain and calculate the quantum of loss. The Surveyors in order to ascertain the stock lying in the shed carried out detailed inspection of the other premises situated at Canal Colony and prepared a detailed inventory of the stock lying in the said shed. It was further pleaded that on the one hand the Surveyor had taken into account the total purchases made by the firm and on the other hand, also taken detailed inventory of the stock, which was lying in the Canal Colony.
10. As per the complainant, he has a modernized plant and machinery installed in the same was sophisticated, automated and semi- automated and was of state of the art. As per his version following machinery was installed in the factory at the time of occurrence of fire incident:-
a. Circular Knitting Machine 16 b. Carding Machine 5 c. Shearing Machine 2 d. Willow machine 1 e. Packing and inspection machine 1 f. Tumbler Machines 4 g. Folding Machine 1 h. Winder Machine 1 i. Generator 2 Consumer Complaint No. 9 of 2008 6
11. It is also pleaded by the complainant that in the fire incident, plant, machinery was also badly damaged not only due to direct fire but due to severe heat generated inside the shed. As per his version, severe damage was caused to the following machines in fire incident:-
a. Carding Machine Texport Italy
b. Packing and Inspection Machine procured from
polymech System, New Delhi
c. Circular Knitting Machine Texport Italy
d. Circular Knitting Machine Benelli Machine Tessill
USA
e. Circular Knitting Machine procured from Calcutta
Commercial Corporation
f. Folding Machine procured from Calcutta
Commercial Corporation
g. Winder Machine procured from Calcutta
Commercial Corporation
12. It is also pleaded that severely damaged machines were useless for the firm as the machines which had been imported from outside India could not repaired for the reasons that the spare parts are not available and if the parts are imported from the countries from where the machines were imported, no technical knowledge persons/mechanics are available in India to replace the said spare parts and put the machines in working condition. The loss caused in the fire to the machinery was approximately of Rs. 30,00,000/-. The plant, machinery was insured under the Policy on reinstatement value basis.
13. The grouse of the complainant is that inspite number of requests, neither the opposite party settle the claim nor released any interim amount to the complainant so that he could run the factory. It is pleaded that due to extensive damage caused to the factory shed, the entire activities of the firm had come to a complete halt resulting non- utilization of raw material, stock, wastage of labour, manpower resulting in accumulation of losses. It is pleaded that the opposite party postponing the issue without any rhyme or reason and also not supplied the report Consumer Complaint No. 9 of 2008 7 submitted by the Surveyor appointed by the opposite party to assess the loss. The complainant had served legal notice dated 20.6.2007 upon the opposite party and requested to supply the report of the Surveyor but of no use. Non-settlement of his claim by the opposite party amounts to unfair trade practice and gross deficiency in service on its part. It is pleaded that due to non-settlement of his claim, the complainant is not able to restore the activities of his firm till date. The complainant is compelled by the opposite party for the payment of interest on the loan, which was obtained by the firm to run its business. It is pleaded that the firm had suffered a loss of Rs. 50,00,000/- on account of material/stocks and Rs. 30,00,000/- due to damage of the machinery. Complaint is filed alleging that the opposite party is deficient in service and prayed that opposite party may be directed to pay Rs. 96,69,655/- with interest @ 18% per annum as per details mentioned below:-
Claim Amount (Rs.)
1. Loss of stock comprising of 50,00,000.00
finished and semi-finished goods,
raw-material including yarn, fiber
as per the self assessment of the
complainant
2. Interest @ 18% per annum from 975,000.00
the date of fire till date 23.6.2006
upto 23.07.2007 along with future
and pendelite interest till
realization of the amount
3. Proportionate share under the 25,05,987.00
Policy for the loss suffered in (less depreciation)
respect of plant and machinery
severely damaged due to fire
since the plant & machinery is
also insured by National
Insurance Co. Ltd. vide Policy No.
201303/11/05/11/00000124
4. Interest @ 18% per annum from 4,88,668.00
the date of fire i.e. 23.6.2007 upto
23.07.2007 along with future and
pendelite interest till realization of
the amount
5. Consequential losses in business 5,00,000.00
with respect to the interest paid
on loan amount taken from
financial institution, loss of profit
Consumer Complaint No. 9 of 2008 8
for non-settlement of claim and
perpetually delaying the same,
harassment, mental agony to its
owners who personally as well as
their representatives regularly
visited the office of the opposite
party to enquire about the status
of the claim lodged by the
complainant.
6. Cost of the legal proceedings 2,00,000.00
TOTAL 96,69,655.00
14. Upon notice, the opposite party appeared and filed the reply by taking preliminary objections that the complaint is not maintainable, the Commission has no jurisdiction to try and decide the complaint, the complainant had purchased insurance policy for commercial purpose, as such, does not fall within the definition of 'consumer', the complaint involves complicated questions of law and facts, as such, the Commission is not competent to decide the same and the complainant has concealed the material facts and does not come to the Commission with the clean hands. On merits, contents of paras No. 1 to 6 are admitted. It is pleaded that insurance policy alongwith terms and conditions was duly supplied to the complainant. In reply to para No. 7 of the complaint, it is pleaded that perusal of the investigation report shows that the incident of fire was not a natural incident but concocted one. It is denied that fire broke out in the factory at 3.50 a.m.. It is denied that Mr. Dhanji, Machine Operator and Mr. Ram Nath was on duty at the time of fire. It is also denied that both the employees tried to extinguish the fire by putting water on it. It is pleaded that fire was managed and further denied that the fire was rapidly spread and valuable property/stock of the complainant was burnt in the same. It is also denied that employees of the firm immediately informed the owner of the firm, who further immediately informed the Fire Brigade office. It is denied that the material lying in the factory was highly combustible and also denied that the fire incident was happened at high level and was Consumer Complaint No. 9 of 2008 9 controlled after five hours. Contents of para No. 8 of the complaint are denied as wrong. It is denied that due to devastating fire, extensive damage was caused to the building, plant-machinery, fixture, fittings and the stocks lying in the factory premises, which was highly combustible. The contents of para No. 9 of the complaint also denied as wrong. The fire was caused intentionally as such, no assurance was given to the complainant for the release of interim payment. In reply to the contents of para No. 10 of the complaint, it is pleaded that firstly, Mr. D.K. Taneja & Associates was appointed as a Surveyor to investigate and to assess the loss suffered by the complainant. Opposite party received the complaint from Sh. K.K. Kharbanda in which it was alleged that fire incident had been engineered by burning rags and manipulation of records etc.. The Surveyor had acted in collusion with the complainant. So thereafter, Sh. Harjit Singh, retired IPS was appointed as investigator to investigate the matter, who submitted his detailed report to the opposite party. The complainant had informed Mr. Rajesh Gupta, Surveyor and Branch Manager of the Company, who reached the factory on 23.6.2006, where they were informed that the factory was closed at night and security personnel was posted at the factory premises. It was mentioned that Mr. Dhanji informed the complainant on telephone at his residence and thereafter he rang up to the Fire Stations at Jalandhar, Kapurthala and Hoshiarpur at 3.55 a.m. but this fact was proved as incorrect from the reports of the Fire Offices. The Fire Office at Phagwara was informed at 4.40 a.m., Kapurthal at 4.45 a.m. and Hoshiarpur at 5.10 a.m. It was also proved that these Fire Stations were not called by Mr. Vij or any of his employees but called by some Mr. Rana, who gave his bogus number of the telephone. Further mentioned that Mr. Ram Nath denied that he was on duty with Mr. Dhanji. Sh. D.K. Taneja, also not collected any evidence regarding short circuit from any of the six Consumer Complaint No. 9 of 2008 10 machines fitted with the Carding Machine and also not identify that motor affected by the said short circuit. It was not clarified as to how the fire was not skipped in the generator room nearest to the alleged place of fire but it reached in other sheds and ultimately climbed at the fist storey situated at the farthest end. Sh. D.K. Taneja also did not provide information regarding the stock available on 22.6.2006 by saying that the insured/complainant did not maintain such record. He has not informed that how the panel and its cables including paint remained safe in the devastating fire or did the fire had beaten the panel or it was beaten by some interested person. According to the electrical expert circumstances and the evidence available at the site, do not support the version of short circuit on 23.6.2006 at Shital International Ltd., Jallandhar. In the absence of above mentioned evidence, the report of Sh. D.K. Taneja was not accepted. Copy of the report is annexed as Annexure R-2 with the reply. The contents of para No. 11 of the complaint are denied as wrong. It is denied that the complainant had shown record to Harjit Singh, Investigator and furnished all the requisite information, which was in his possession. Para No. 12 of the complaint is denied as wrong. It is submitted that after the receipt of the complaint against the Surveyors, the Investigator was appointed, who investigated the matter in detail and made his report to the opposite party, which is annexed as Annexure R-3 with the reply to the complaint. Para No. 13 of the complaint is denied as wrong. It is denied that the industrial shed was damaged due to fire and the complainant firm had suffered any loss as alleged in this para. Para No. 14 of the complaint is denied as wrong. It is pleaded that the fire was managed and intentional as such, the opposite party is not liable to pay any claim. The investigator had reported the collusion of the Surveyor with the owner of the complainant firm. The complaints received from Sh. K.K. Kharbanda are Consumer Complaint No. 9 of 2008 11 annexed as Annexure R-4 and R-5 with the reply. Paras No. 15 & 16 of the complaint are also denied as wrong. It is denied that the complainant had suffered a loss of Rs. 50,00,000/- of the stock in the said fire. The claim of the complainant is rightly repudiated vide letter dated 5.3.2008, the copy of the same is annexed as Annexure R-6 with the reply. Para No. 17 of the complaint is also denied as wrong. It is pleaded that the Surveyors had not made any proper assessment of the loss. It is also denied that the Surveyors had adopted the universal recognized method to ascertain and calculate the amount of loss. The record is manipulated and forged one by the complainant. The loss is not covered by any term of the policy as the deliberate acts are not covered under the terms of policy. Para No. 18 of the complaint is not denied as it relates to the record. Para no. 19 of the complaint is also denied as wrong. It is pleaded that the plant and machinery of the complainant firm was not severally damaged due to fire, de-shaping and jamming of the machinery was the result of five hours fire. No oil in machinery was over-heating and spilled out and had caught the fire. Para No. 20 is also denied as wrong. It is pleaded that no damage was caused to machines as alleged by the complainant. It is also denied that the machines were imported and were not repairable. As per its information, the machines are working and running properly and not suffered any damage. Para No. 21 of the complaint is also denied as wrong. It is also pleaded that the complainant had not suffered loss of Rs. 30,00,000/- due to damage of plant and machinery as alleged. Para No. 22 of the complaint is also denied as wrong. The report of the Surveyor cannot be relied upon as the same was made with the collusion of the complainant. Para No. 23 of the complaint is also denied as wrong. It is pleaded that no assurance was given by the opposite party to the complainant. Paras No. 24, 25 & 26 are also denied as wrong. The fire Consumer Complaint No. 9 of 2008 12 was managed by the complainant only to get the claim from the opposite party. The fire was not accidental and as such, no claim or any interim amount is payable to the complainant. In para No. 27 of the complaint, it is submitted that as per report of the Investigator, no amount is payable to the complainant. Para No. 28 is denied as wrong. Para No. 29 of the complaint is also denied as wrong. The complainant was informed that the claim was not payable as per the report of the Investigator. Para No. 30 is denied. Para No. 31 is denied as wrong. It is pleaded that the opposite party had not intentionally, deliberately caused any loss to the complainant. The claim was rightly repudiated and the complainant is not entitled for any amount. The prayer of the complainant for the claim pleaded in para No. 31 of the complaint is vehemently denied as the complainant is fraudulent and has filed the complaint malafide to extract money from the opposite party. Para No. 32 of the complaint is denied. It is pleaded that the Commission has no jurisdiction to hear and decide the complaint as per the provisions of the Consumer Protection Act. Para No. 33 of the complaint is admitted as a matter of record. It is prayed that the complaint of the complainant may be dismissed with exemplary costs.
15. Complainant has filed replication to the reply filed by the opposite party and pleaded that the averments made in the complaint are correct and the versions/pleadings pleaded in the reply to the complaint by the opposite party are wrong and incorrect.
16. We have perused the complaint, reply to the complaint, replication, affidavits, documents produced/annexed by the complainant as well as the documents produced and annexed by the opposite party with the reply to the complaint. The arguments were heard and have gone through the written arguments filed by counsel for the parties. During the Consumer Complaint No. 9 of 2008 13 pendency of the complaint, the claim of the complainant is repudiated by the opposite party vide letter dated 5.3.2008.
17. It is the admitted facts between the parties that the complainant firm had taken Standard Fire and Perils Policy, Extension of Earthquake (Fire and Shock) bearing No. 201302/11/05/11/00000124 from the opposite party for the period from 31.8.2005 to midnight of 30.8.2006 and insured the plant-machinery, accessories, electrical installations and stocks as pleaded in para No. 5 of the complaint.
18. It is also admitted case of the opposite party that M/s D.K. Taneja & Associates, New Delhi was appointed as Surveyor to investigate and to assess the loss suffered by the complainant due to fire incident. The Surveyor inspected and assessed the loss but his report was not accepted due to the complaints received by the opposite party from one K.K. Kharbanda, who leveled the allegations that the fire was result of manipulation and the report regarding the assessment of loss was made by the Surveyor in collusion with the owner of the firm.
19. It is also not disputed that Sh. Harjit Singh, IPS (Retd.) Investigator was appointed by the opposite party on receipt of the complaints, who had also investigated the incident and submitted his report to the opposite party. He had reported that the incident was not natural but it was managed. On the other hand, the version of the complainant is that he had suffered the loss due to short-circuit in the electric motor of carding machine and fire flared into acrylic fibre lying near the machine, which was highly combustible. The fire was of 'A' class category as per the certificate of the Fire Department, Jallandar. The report, which was submitted by the Surveyor to the opposite party was a result of full investigations, spot inspection as well as verification of the whole record pertaining to the stock etc. of the complainant firm and the Consumer Complaint No. 9 of 2008 14 investigation report of the Investigator Sh. Harjit Singh is wrong and not binding upon the complainant. The report of the Investigator is against the actual occurrence as well as he made the same as per the wishes of the opposite party. His appointment was also challenged by the complainant on the ground that the same was against the law and his appointment was made at a belated stage, as such, his report cannot be relied upon.
20. Now the disputes between the parties, which we have to decide; are that:-
(i) whether the complainant comes under the definition of 'consumer' and complaint is maintainable or not?
(ii) whether the Commission has the jurisdiction to try and decide the complaint?
(iii) whether any complicated question of law and facts are involved in the present complaint?
(iv) whether any material facts are concealed by the complainant?
(v) whether the fire was natural and was occurred due to short-circuit in the electric motor of carding machine and flare into acrylic fibre lying near the machine, which was highly combustible or the same was managed by the complainant to extract money from the opposite party?
(vi) If, the complainant is entitled for any claim then to what extent?
21. The opposite party has taken the preliminary objection that the complaint of the complainant is not maintainable as the insurance policy was taken by the complainant for commercial use and he had hired the services of the opposite party for commercial purposes and thereby excluded from the purview of the Consumer Protection Act, 1986, as such, Consumer Complaint No. 9 of 2008 15 the complaint is liable to be dismissed. But this preliminary objection is not correct and maintainable.
22. There is a wide definition of the 'consumer' given in the Consumer Protection Act and there are exclusions also in the definition of 'consumer'.
(i) It excludes a consumer who obtains such goods for resale or for any commercial purpose;
(ii) It also excludes a person who avails of services of any description ----
(i) free of charge; or
(ii) under a contract of personal service; and
(iii) for any commercial purposes
23. The Hon'ble National Commission in case "Harosila Motors versus National Insurance Co. Ltd.", I (2005) CPJ 27 (NC) has explained the distinction between availing of services and hiring of the services in paras No. 6 to 8 of the judgment. Para Nos. 6, 7 & 8 of the judgment are as follows:-
"6. Learned Counsel Mr. Sharma, appearing on behalf of the appellants drew further distinction in the use of phraseology in exclusion clause by contending that Legislature has provided exclusion with regard to availing of the services and not for hiring of the services. He pointed out that meaning of the words 'avail' and 'hire' is different. For this purpose, he referred to the meaning giving to these words which are as under:
"AVAIL - (Fr. Valoir, La. Valere, to be worth), profit of land (see Earl Jowitt's the Dictionary) 'avail oneself of' is stated to mean 'to take advantage of utilise'. The meaning given in Oxform Dictionary is also to the same effect.
In Webster's Dictionary makes, 'avail' synonymous with 'benefit', 'profit', 'use' and have availed himself of something only if he had taken advantage of profited by that thing or utilized it to his benefit. HIRE - In Collins English Dictionary, 'hire' has been defined as 'to acquire the temporary use of a thing or the services of a person in exchange for payment' or 'to provide something or the services of oneself or others for an agreed payment usually for an agreed period'."Consumer Complaint No. 9 of 2008 16
7. In support of his submission, learned Counsel Shri Sharma, referred to the judicial dictionary meaning of the words 'commercial purpose' which is as under:
"The word 'commercial' according to the Oxford Dictionary means viewed as a matter of profit and loss. The word 'purpose' means 'object which is in view or for which is made' : 'aim' 'amend'. The word 'commercial purposes' would, therefore, cover an undertaking the object of which is to make a profit out of the undertakings. (Municipal Board, Unnao v. The State of U.P., 1957 All. L.J. 469 at 498)."
8. According to Oxford dictionary, it means "viewed as a matter of profit or loss".
The word "commercial" is defined in the Concise Oxford Dictionary, New Edition of the 1990, at page 227, the word "commercial" is defined as 'having profit as a primary aim rather than artistic etc. value' (vide Dena Bank, Ahmednagar v. Prakash Birbhan Katariya, AIR 1994 Bom 343 at
345)."
24. The contract of insurance is contract of indemnity and therefore, there is no question of commerce in obtaining insurance coverage. It is discussed by Sh. Brij Nandan Singh on 'Contract of Indemnity', in paras No. 9 & 10 in New Insurance Law; as follows:-
"9. He submitted that the contract of insurance is contract of indemnity and, therefore, there is no question of 'commerce' in obtaining insurance coverage. For this purpose, he has referred to discussion on 'Contract of Indemnity' in New Insurance Law, by Brij Nandan Singh, which is as under:
Para 19 : "Contract of indemnity - The very foundation in my opinion of every rule which has been applied to the insurance law is that the contract of insurance contained in a fire or marine policy is a contract of indemnity and of indemnity only and that this means that the assured in the case of loss against which the policy has been made, shall be fully indemnified but never more than fully indemnified. That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say which either will prevent the assured from obtaining a full indemnity, that proposition must certainly be wrong "(Castellain v. Preston (1883) 11 QBD 380). Under such contracts the insurers undertake to indemnify the insured for the actual loss suffered by him as a result of the event insured against. "The principle that a contract of assurance (except life assurance and insurance against accident) is a contract of indemnity, leads the insured to be interested in the preservation of the thing insured and the desire for the happening of the event insured against becomes remote" (Mathey v. Curling (1922) 2 AC 180).Consumer Complaint No. 9 of 2008 17
10. On the basis of the aforesaid purpose of the insurance policy, he contends that availing of the insurance policy is for indemnifying the loss which may be suffered by the assured; it is for protection and not for making any profit.
Therefore, it would be totally unjustified to arrive at a conclusion that as the Complainants are carrying on business/trading activity and as they have taken the insurance policy, they are not entitled to approach the consumer fora or that they are excluded as per Section 2(1)(d) of the Act."
25. It was held in para No. 13 as follows:-
"13. In Halsbury's laws of England, Vol. 24, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers' liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
26. In para No. 12 it was also held as follows:-
"12. Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coverage is taken for commercial activity carried out by the insured."
27. As per the above discussion, we are of the view that a person who takes insurance policy to cover the envisaged risk does not take the policy for 'commercial purpose'. Policies obtained only for indemnification and actual loss. It is not intended to generate profit. The version of the opposite party that the complainant does not fall under the definition of 'consumer' is without any merit and we are of the opinion that the complaint is maintainable.
Consumer Complaint No. 9 of 2008 18
28. The dispute in the present complaint is more than the value of Rs. 20 lacs but less than Rs. 1 Crore and as per Section 17(a)(i) of the Consumer Protection Act, 1986, the State Commission have the jurisdiction to try and decide the present complaint. Section 17(a)(i) of the C.P. Act, 1986 is reproduced:-
"17. Jurisdiction of the State Commission. - [(1)] Subject to the other provisions of this Act, the State Commission shall have jurisdiction -
(a) to entertain -
(i) complaints where the value of the goods or services and compensation, if
any, claimed [exceeds rupees twenty lakhs but does not exceed rupees one crore];....."
29. The occurrence was took place at Jalandhar and the policy was also purchased at Jalandhar. As such, the State Commission has also the territorial jurisdiction to try and decide the present complaint.
30. It is held by the Hon'ble Supreme Court in the case of "Dr. J.J. Merchant and others Vs. Shrinath Chaturvedi", 2002(6) SCC 635 that 'the State Commission and District Forum are headed by retired High Court Judges and officers of District Judge level and in our view, this is not such a case which cannot be decided by the 'Consumer Fora' after obtaining evidence and if need be after getting an expert opinion', as such, the objection of the opposite party is baseless and the State Commission has the jurisdiction to try and decide the present complaint.
31. The opposite party had not produced any evidence nor any fact mentioned in the reply to the complaint which real facts were concealed by the complainant from the State Commission.
32. The complainant has pleaded the whole version regarding the claim, policies, incident of fire, appointment of the Surveyor as well as the appointment of the Investigator in the complaint, as such, there is no Consumer Complaint No. 9 of 2008 19 material before us that the complainant has concealed any material fact from the State Commission.
33. The version of the complainant is that on 23.6.2006 at about 3.50 a.m. a major fire broke in the factory premises of the insured and at that time one Mr. Dhanji working as Machine Operator was on duty alongwith Mr. Ram Nath, who tried their best to extinguish the fire by using the water which was available in the factory premises but they failed to control the same. Then the employees of the complainant contacted the complainant, who immediately informed the fire brigade at Jalandhar and the fire tenders arrived in the premises of the complainant immediately. But at the same time, the fire was spread substantially and was intensive, which could not controlled by the Fire Tenders available in Jallandhar City. Then the Fire Tenders from Kapurthala and Hoshiarpur were called. The fire was finally controlled after five hours of the occurrence.
34. It is the version of the complainant that due to fire extensive damage was caused to the building, plot and machinery, fixtures, fittings and the stocks lying in the premises of the factory. The stock was comprising of acrylic and polyester which was highly inflammable and the same was completely burnt.
35. The incident was reported by the complainant to the opposite party as well as to the National Insurance Co. from whom the insurance policy was also purchased by the complainant for the period of 25.1.2006 to 24.1.2007.
36. The matter was also reported by the complainant to the S.H.O., P.S. No. 1, District Jallandhar, Fire Officer of Municipal Corporation, Fire Service, Jallandhar. The fire report is Annexure C-9 at page No. 60 of the complaint file. As per the nature of fire mentioned in column No. 8 of the report "major fire, heavy loss" and in column No. 12 Consumer Complaint No. 9 of 2008 20 "type of unit turn out ----- 11 Tenders" mentioned by the Fire Officer of the Municipal Corporation, Jallandhar.
37. DDR No. 22 dated 23.6.2006 was entered in the Roznamcha of Police Station No.1, Jallandhar on the statement of Sh. Ajit Kumar, Manager of the complainant firm. The copy of the same is Annexure C-11 at page No. 62 of the complaint file.
38. It is also the version of the complainant that Sh. C.S. Arora, Senior Official of the opposite party also visited the premises of the complainant on the same day i.e. 23.6.2006. This fact was not denied by the opposite party in its reply to the complaint. No report of Sh. C.S. Arora also produced by the opposite party, which was sent by him to the opposite party and what was observation regarding the reason of fire.
39. On information regarding the fire from the complainant, the opposite party appointed one Mr. D.K. Taneja and Associates as Surveyor to investigate and to assess the loss suffered by the complainant. The National Insurance Co. also appointed the Surveyor for the investigation and for the assessment of the loss suffered by the complainant due to fire in his factory premises.
40. This fact was also not denied by the opposite party but it is pleaded that the opposite party received a complaint against the Surveyor that he was acting in collusion with the complainant and as such, Sh. Harjit Singh, I.P.S. was appointed to investigate the matter.
41. Sh. D.K. Taneja, Surveyor and Investigator had arrived the spot on the same day i.e. 23.6.2006 and who investigated and inspected the premises of the factory for the assessment of the loss. He also inquired from the complainant as well as from employees of the complainant, who were present at the time of occurrence of the fire. The requisite record i.e. account books, stock registers, ledger books, purchase registers and all Consumer Complaint No. 9 of 2008 21 other books of accounts maintained by the complainant to run his business were submitted by the complainant to the Surveyor for the assessment of the loss. The complainant also furnished all the requisite information, which was available and called by the Surveyor from the complainant. After detailed investigation and perusal of relevant record, the Surveyor furnished the report to the opposite party but copy of the same was not supplied by the Surveyor to the complainant nor by the opposite party. But the same is annexed as Annexure R-2 by the opposite party with its reply of the complaint. No reason is pleaded in the reply for not furnishing the same to the complainant.
42. We have perused the same, which is very exhaustive. We have gone through the same in details.
43. In his report, in the head of occurrence, it is mentioned by the Surveyor and Investigator as under:-
"CAUSE OF FIRE:-
On the basis of our enquiries, from the workers on duty, the fire appears to have originated, due to short circuiting, in one of the electrical motors of Carding Machine. The sparking produced, during electrical short circuiting could have ignited Acrylic Fibre, lying near the Carding Machine. Since, acrylic fibre is highly combustible, being a petro-chemical product, the fire spread in the entire shed, in which the stocks of fabric, were also stored. Adjacent to the shed were the other sheds, meant for storage of finished goods, raw materials, such as Fibre, and yard. Within no time, the fire engulfed these godowns also. Although, workers on duty, took immediate action, and informed the Prop., but fire had already spread, when the fire brigade arrived. Thus the fire brigade could succeed in containing the fire to the sheds on the rear side of the building. Unfortunately, the buildings of the sheds could not withstand the fire heat and collapsed. The Machinery came in contact with water used during the fire fighting and as well as high temperature in the range of 1000 Degree C, which caused extensive damages in the machinery. In view of the foregoing, we have treated the fire as accidental in nature, which is held covered under the scope of fire policy.
44. In the head of "EXTENT OF DAMAGE AND OUR OBSERVATIONS", the Surveyor had described the procedure, record as well as the relevant documents, how he had assessed the loss suffered by Consumer Complaint No. 9 of 2008 22 the complainant. Under the head of assessment of loss, he had given the details for the assessment of the loss suffered by the complainant, which are as under:-
"ASSESSMENT OF LOSS The Insured produced before us their claim bill of Rs. 80 lacs, Rs. 50 lacs for Stocks and Rs. 30 lacs for Machinery. Due to paucity of funds, the Insured requested to settle the claim on Depreciated Value Basis, although the policy has been availed by the Insured on Reinstatement Value Basis. The following documents have been submitted by the Insured, in support of his claim:-
1. Balance sheet of the company for the last 3 years, and Trading & Manufacturing Account as on the date of loss, duly certified by CA.
2. Copies of the sale bills, in support of the sale cost of the finished goods, destroyed in the fire.
3. Copies of the purchase bills, in support of the cost of raw materials.
4. Excise records, along with evidence of the reversal of the excise duty on finished goods and raw materials, destroyed during the fire.
5. Copies of the monthly statement of stocks submitted to the Bankers from Jan. to May 2006. We have however ignored the bank statements, as the statements have been submitted, keeping in view the limit availed by the Insured, and do not provide realistic figures of the stocks in hand.
6. Estimate of repair of machinery from M/s STM Knitting Machine Manufacturers, Ludhiana.
7. Certificate of irreparability of machines from M/s Bedi Textile India Ludhiana.
8. Copies of the purchase bills of fire damaged machinery.
Now on the basis of the verification of the above documents, our enquiries from the market, and physical verification of the damages, we have assessed the loss for this claim, as detailed hereunder:-
A. MACHINERY The loss on machinery has been assessed on the basis of the estimates of the repairers, M/s STM Knitting Machine Manufacturers, Ludhiana. Depreciation @ 5% per year has been applied by us, while assessing the loss on depreciated Consumer Complaint No. 9 of 2008 23 value basis, and maximum depreciation has been confined to 75%. In our opinion, depreciation upto 75% is quite fair and reasonable, inspite of the old machines. The Insured had been spending money on repair and maintenance of the machinery, since inception, and the machines were giving optimum production, at the time of fire. The present cost of totally damaged imported machinery has been arrived at, on the basis of purchase cost, escalation in the international market, current exchange rate, & current custom duty on such machinery. For local machinery, present cost has been worked out after applying RBI Index. While assessing the loss, on repairable machinery, we have allowed reasonable repair cost, although the estimates of repairer were on the higher side. The assessment of loss on Machinery has been discussed with Mr. Rajesh Gupta, surveyor appointed by National Ins. Co. Ltd., Jalandhar. The detail of assessment is as under:-
S. No. Description Assessed Amt.
(Rs.)
1. 1 no. Carding Machine, Italy make (on total loss basis) Purchase cost : 18000 USD Add 34% towards escalation @ 2% per yr for 17 years 6120 USD 24120 USD or Rs. 10,85,400 (1 USD = Rs. 45) Add 27.83% towards custom duty 3,02,067 3,46,867 Present cost 13,87,467 (applied 75% towards depreciation)
2. 1 no. Packing and Inspection machine, local 12,202 make (applied 75% (On total loss basis) depreciation) Purchase cost: 23,135 Present cost (Escalated cost as per RBI index) 48,808
3. Repair cost of 1 no. Circular knitting Machine, Italy make as per estimate of STM Knitting Machine Manufacturers dated 18.11.2006
a) Cylinder & Chappni 90,000
b) Cams set cylinder and dial 80,000
c) Electric stop motion & Bobbin Stand 40,000
d) Electric motors 15,220
e) Panel Box 30,000
f) Needles 60,000 Sub-total 3,15,220 Add 4% VAT 12,609 Repair cost 3,27,829 81,957.00 (applied 75% depreciation)
4. Repair cost of 1 no. Circular knitting machine, USA, 1996 make as per estimate of STM Knitting Machine Manufacturers dated Consumer Complaint No. 9 of 2008 24 18.11.2006
a) Cylinder & sinker ring 125000
b) Cams set cylinder & dial 100000
c) Panel box 50000
d) Motor 15220
e) Storage yarn feeder 30000
f) Stopmotion box 6500
g) Take down rollers 30000
h) Needles 25000
i) Sinkers 5000
j) Paint & Polishing 5000 Sub-total 391720 Add 4% VAT 15669 Repair cost 407389 2,03,695.00 (applied 50% depreciation for 10 years)
5. 4 no. Circular knitting Machine, local make as per estimate of STM Knitting Machine Manufacturers dated 18.11.2006
a) Cylinder & Chappni 100000
b) Came set cylinder & dial 56000
c) Paint & Polishing 15000
d) Stopmotion box 5000
f) Dropper 4000 Sub-total 180000 Add 4% VAT 7200 Total 187200 46,800.00 (applied 75% depreciation)
6. 1 no. Folding machine, local make (replacement cost) Purchase cost: 45,760 Present cost (Escalated cost as Per RBI Index) 1,32,254
7. 1 no. Winder, local make 4,509.00 (Replacement cost) (applied 75% Purchase cost : 6,240 depreciation) Present cost (Escalated cost as per RBI Index) 18,035 Sub-total 7,29,093.00 Less salvage value of damaged 67,500.00 Machines weighing around 4500 Kg. @ Rs. 15 per kg.
(Carding Machine : 3000 kg.
Other 3 machines : 1500 kg.) & Damaged parts Loss assessed 6,61,593.00 The above loss will be shared by UIC & NIC, and based on the sum insured in each policy, the respective share of each company, works out as under:-
Amount (Rs.) Share of United India Ins. Co. Ltd. 5,52,648.00 Share of National Insurance Co. Ltd. 1,08,945.00 B. STOCKS While working out the loss on Stocks gross profit has been deducted from the sale cost of finished goods, which has been verified from the recent purchase Consumer Complaint No. 9 of 2008 25 bills. Regarding raw materials, cost as per the recent purchase bills, has been allowed by us. While assessing the loss, average clause has been applied, and appropriate salvage value has been deducted. The detail of the assessment is as under:-
S. No. Description Assessed Amt
(Rs.)
FINISHED GOODS
Zebra 19615 Rmt @ Rs. 120 per rmt. 23,53,800
Shital Expo 14530 rmt @ Rs. 85 12,35,050
Shital super 6719 rmt @ Rs. 230 15,45,370
Sale value 51,34,220
Less G P 6,67,449
Cost price 44,66,771
Cloth 171 kg. @ Rs. 100 17,100
Raw materials
Fibre 2500 @ Rs. 109 2,72,500
Yarn 1500 @ Rs. 85 1,27,500
Sub-total 48,83,871
Less 5% towards dead stocks 2,44,194
Less salvage value of semi-burnt goods 86,600
weighing 8660 kg @ Rs. 10 per kg.
Loss assessed 45,53,077
Applying average clause 4553077 x 6377000 41,78,767
6948215
Loss adjusted 41,78,767
In view of the above the total loss assessed, for this claim, works out as under:-
S. N. Description Loss assessed
(Rs.)
1. Loss on Machinery 5,52,648.00
(shares of United India Ins. Co. Ltd.)
2. Loss on Stocks 41,78,767,00
Loss assessed 47,31,415.00
Less deductible excess as per policy 10,000.00
Net assessment 47,21,415.00
In our opinion, the above is a far and reasonable assessment of loss suffered by the Insured. The above assessment of loss has been discussed with the insured and agreed by them verbally.
SALVAGE :-
While assessing the loss aspect of salvage value was discussed with the Insured Enquiries were made from the market while assessing the salvage value. It was found that the totally damaged machinery could be sold at scrap rates only as models had become obsolete, and repairs were not technically feasible.
Regarding semi-burnt and water damaged stocks also, the same could be sold as waste only. Keeping this in view, we have deducted the salvage value on Consumer Complaint No. 9 of 2008 26 weight basis in our assessment of loss, which is quite fair and reasonable.
However, the insurers may take over the salvage in case they so desire.
WARRANTEIS Apparently complied with.
This report is issued without prejudice and is strictly as per the terms, conditions and exceptions of the relevant Insurance Policy reserving the right to alter/amend for unintended error, if any."
45. There is no dispute between the parties that the complainant is also owner of another factory i.e. M/s Shital Fabrics Pvt. Ltd., Focal Point, Ext. Jallandhar, which is also insured with the opposite party and the incident of fire was also occurred in the said factory on 12.6.2006. The complainant had also suffered loss, due to the fire, the loss of building and stock lying in the same. Sh. D.K. Taneja also investigated and assessed the loss for both the factories, as appointed by the opposite party.
46. The version of the opposite party that on receipt of the complaints against the Surveyor as well as the complainant, Sh. Harjit Singh, I.P.S. was appointed for the investigation of the occurrence on 18.12.2006 by the opposite party. Sh. Harjit Singh, IPS inspected both the premises of the complainant and submitted his report Ex. R-3 after observing that "fire at both the factories were stage managed to get claim fraudulently" vide his report dated 21.3.2007.
47. We have perused the investigation report of Sh. Harjit Singh, IPS, who had mentioned the facts which he found after investigation regarding Shital International Ltd. i.e. complainant firm, which are as under:-
"1. Mr. Rajesh Gupta Spot Surveyor and Branch Manager United India Insurance Co. Ltd. Jalandhar were the first to reach the factory on 23.6.06 immediately after the fire was extinguished. They were told by the insured that their factory was closed at night and security personnel posted thee had observed the fire near the Carding Machine and informed the fire brigade, Jalandhar immediately. Record of the fire brigade proved that fact is false.Consumer Complaint No. 9 of 2008 27
2. Mr. D.K. Taneja arrived the spot the same day (23.6.06) and was told by the insured that Dhanji was on duty at the Carding machine who observed fire and informed him on telephone at his residence. In his turn, he rang up fire stations Jalandhar, Kapurthala, Hoshiarpur etc. at 3.55 AM on 23.06.06. This fact was also proved false on the basis of record of fire stations, Hoshiarpur, Phagwara and Kapurthala. These were called much later as under:
Phagwara 4.40 am.
Kapurthala 4.45 am.
Hoshiarpur 5.10 am.
3. These stations were also not called by Mr. Vij on any of his employee.
Even in the case of Jalandhar proper call was not made by any security personnel, Dhanji machine operator Ram Nath, Mr. Vij or any of his employee. He was some Rana who made the call by giving bogus no. of telephone.
4. Dhanji says he had rung up Mr. Vij and that Ram Nath was on duty with him at the same carding machine which is denied by Ram Nath who says he had come to see Dhanji. Even otherwise night shift consisting of just two persons in place of dozens, is false.
5. Sh. D.K. Taneja who investigated this case also has not provided any evidence about:-
a. Short circuit from any of the six machines fitted with the Carding machine was not established by Mr. Taneja. He does not even identify the motor affected by the said short circuit. b. He has not clarified as to how the fire skipped the generator room nearest to the alleged place of fire but it reached in other sheds and ultimately climbed at the first storey situated at the farthest end.
c. He has not supplied information about stock available on 22.06.06, saying that insured did not maintain such record.
d. He has also not clarified how the panel and its cables including paint remained safe in the devastating fire. Did the fire had beaten the panel or it was beaten by some interested person?
6. According to the electrical expert circumstances and the evidence available at the site do not support the version of short circuit on 23.06.06 at Shital International Ltd. Jalandhar."
48. But the facts recorded by the Investigator in his report are not corroborated with any evidence. How the investigator Sh. Harjit Singh, come to the conclusion that the fire was managed. Consumer Complaint No. 9 of 2008 28
49. In para No. 1 of his findings, it is mentioned that Mr. Rajesh Gupta, Spot Surveyor and Branch Manager, United India Insurance Co. Ltd., Jallandhar were the first to reach the factory on 23.6.2006 immediately after the fire was existing and they were told by the insured that the factory was closed at night and the fire was observed by the Security Personnel posted near the Carding Machine, who informed the Fire Brigade, Jallandhar immediately. But no report of the Fire Brigade, Jallandhar is attached by the Investigator with his report.
50. We have also perused the report of the Fire Brigade, Jallandhar but no name of the person is mentioned, who had informed the Fire Brigade of Municipal Corporation, Jallandhar regarding the fire but the time is mentioned as 3.55 a.m. dated 23.6.2006 and only the number of telephone i.e. 2291676 is mentioned. So the findings of the Investigator that the Security Personnel has informed the Fire Brigade, Jallandhar are without any basis. Even the name of the Security Personnel is also not mentioned by the investigator in his report. The finding of the Investigator regarding the information given to the Fire Brigades of Phagwara at 4.40 a.m., Kapurthala at 4.45 a.m. and Hoshiarpur at 5.10 a.m. that some Mr. Rana made the calls giving the bogus telephone number are also not correct. No reason is mentioned by the Investigator from whom he inquired that Mr. Rana had called the Fire Brigades and what is the basis of the such findings.
51. We have perused the report of the Fire Station Officer, Fire Station, Kapurthala, which is Annexure C-10 and it is mentioned in the report at Serial No. 3 - Call by Telephone No. : 233768 Police Control Room, Kapurthala and against the time of fire call & Date is mentioned as :
0445 dt. 23.06.06. So from the above reports, it is proved beyond doubt that the call was given by the Police Control Room, Kapurthala and not Consumer Complaint No. 9 of 2008 29 from Mr. Rana and as such, the findings of the Investigator are not correct that Mr. Rana had called the Fire Brigades from other cities. So this finding of the Investigator is also against the record of the Fire Brigades of Jalandhar, Hoshiarpur and Kapurthala.
52. We have also perused the certificate issued by the Fire Station, Hoshiarpur, which is Annexure C-12. In the said certificate, no name and telephone number is mentioned, who made the call to the Fire Brigade, Hoshiarpur regarding the fire, which was occurred/exhausted in the factory of the complainant.
53. In finding No. 4, the Investigator has mentioned that Sh. Ram Nath not corroborated the version of Mr. Dhanji, who informed Mr. Vij regarding the incident that Ram Nath was also with him on duty. But Sh. Ram Nath told the Investigator that he had come to Sh. Dhanji only. From this finding of the Investigator, it is proved beyond doubt that Ram Nath and Dhanji were present when the incident of fire was occurred in the premises. Even it is not mentioned by the Investigator, whether Sh. Ram Nath stated this fact orally or he recorded the statement of Mr. Ram Nath but no such statement is annexed by the opposite party with the reply and report of the Investigator.
54. The findings of the Investigator Sh. Harjit Singh that Sh. D.K. Taneja had not provided any evidence to come to the conclusion that the fire was occurred due to short circuit; are also not correct.
55. We have perused the report of Mr. D.K. Taneja, which is detailed one and had given the findings to come to the conclusion that the fire was occurred due to short circuit. It is mentioned in the findings by the Investigator that Sh. D.K. Taneja had not clarified how the panels and its cables remained safe in the devastating fire but no panel was installed in the entire premises and as such, Sh. D.K. Taneja had not clarified the Consumer Complaint No. 9 of 2008 30 condition of the panel as well as its paint. He has also not assessed the loss of any panel in his report. The findings of the Investigator Harjit Singh, regarding skipping of Generator Room is also against the findings of the report of Mr. D.K. Taneja as well as the actual position at the spot. From the photographs, version of the complainant, from the report of Surveyor Sh. D.K. Taneja and other Surveyor appointed by National Insurance Co., the cooling tower was installed on the top of the generator room and the same was also destroyed with the fire upto the level of water and the water had prevented fire in the Generator Room. The report of Sh. D.K. Taneja is also accepted by the other co-insurer beyond any doubt.
56. The version of the investigator that as per the electrical expert, circumstances and the evidence available at the site; do not prove the version of short circuit on 23.6.2006 in the complainant firm. But no report of any electrical expert is annexed or tendered into evidence by the opposite party to corroborate the findings of the Investigator Harjit Singh regarding the reason of the fire. If there was any written report of any electrical expert then what was the reason the same was concealed and not produced in evidence in support of the findings of the Investigator Harjit Singh.
57. The Investigator had mentioned the names of several persons from whom he had enquired regarding the incidents of fire on 12.6.2006 and 23.6.2006. But no statement of any person is annexed by the opposite party with the reply nor with the investigation report to prove the findings of the Investigator. The whole report is not based on documentary evidence rather on surmises and conjectures. The findings of the Investigator are based on hear-say evidence, which has no value as per the Evidence Act.
58. It is also admitted case of both the parties that Sh. Harjit Singh was also appointed as Investigator by National Insurance Co. Ltd. But the Consumer Complaint No. 9 of 2008 31 said company not agreed with the report of Sh. Harjit Singh, Investigator and had settled the claim with the complainant.
59. On receipt of the investigation report from Sh. Harjit Singh, the National Ins. Co. Ltd. wrote two letters to Sh. Harjit Singh dated 11.4.2007(page No. 190) and dated 8.5.2007. The relevant portion of letter dated 8.5.2007 is reproduced:-
"As communicated to you earlier vide our said letter we again emphasize on the following points :
1. That we still feel there is no mention in your report about the genuineness of value of stock before fire as well as safe stock after fire incident. While in view of the specific complaint about the same by Mr. Kharbanda we had an intention to get it investigated and accordingly it was mentioned in our letter dated 19.1.2007 as well as in our subsequent letter dated 6.2.2007.
2. That in regard to the 2 complaint letters, we have to inform you that both letters were received by us along with your investigation report.
However, in our letter dated 11.4.2007 we intended to state that copy of 2nd complaint letter was not received by our office directly since the same is originally addressed to United India Insurance Co. Ltd. and copy of our Vigilance Deptt., Head Office, Kolkata.
Further kindly note that in the above referred complaint of Mr. K.K. Kharbanda he has no where doubted about the genuineness of occurrence of fire in stock of M/s Sheetal Fibres Ltd.. He has, however, only highlighted about the manipulations in regard to the quantity of the stock involved in fire, which requires to be investigated. Therefore, while entrusting you for this job it was our basic intention to extensively investigate the same and submit your report accordingly. But instead of thoroughly investigating the said aspect of complaint and submit your report with concrete evidence of manipulations, if any, in stock, you have tried to prove that fire in M/s Sheetal Fibers was not accidental but manipulated one, which is not subject matter of complaint as far as the fire loss of M/s Sheetal Fibres Ltd. is concerned.
As regard to your recommendations for taking expert opinion about the inflammability of the "Grey Cloth" we had taken up the matter with our Head Office. They have advised us that it should be done at your level through any agency / authority to whom you feel competent to do this job. In the light of our above clarifications / observations as well as said advice of our Head Office, we would request you to kindly comply to our requirement at the earliest possible and submit your report for our dealing with this claim further." Consumer Complaint No. 9 of 2008 32
60. But the Investigator had not complied with the instructions/request of the Insurance Company, rather requested the Insurance Co. that his report dated 21.3.2007 be treated "as withdrawn"
and he dis-associate from any further development about these claims and refused to correspond regarding the claims in dispute.
61. The complainant also produced the investigation report of Sh. S. Arunachalam of Mehta and Padamsey Surveyors Pvt. Ltd., Kolkata. The said investigator was appointed by National Ins. Co. Ltd. for the examination of the claim of Shital Industries Ltd. and he carried out the inquiries between 9th and 14th July, 2008. The findings of S. Arunachalam's report are as under:-
"20. I examined the Survey Report submitted by Mehta and Padamsey Surveyors Private Limited, Delhi. I find that both Sri D.K. Taneja and Sri Rajiv Gupta had carried out physical verification of the entire stock of Raw Materials and Work-in-Progress and Finished Goods held in 16 blocks, (not affected by the fire) spread over several acres as evident from the inventory drawn up and signed by both the Surveyors and obtained by me from the insured during my enquiries. The stocks held in fire damaged Block No. C-79 was balanced and also the weighment of fire damaged materials. Carrying out physical verification in 16 blocks in one go would not be an easy task. Moreover, this could not be achieved but for the willing cooperation of the Insured, I find my colleague Sri Rajiv Gupta was diligent in applying himself to examine the claim and assess the loss. I had, while commenting on the Investigation Report, brought out the evidence obtained by the Investigator himself that there was no substance in the allegation that the damaged stocks were rags and also the allegation that Sri Shital K. Vij making huge loss due to fire every three or four years. There is no need for me to go into this matter any further."
62. So from the report of Shri S. Arunachalam, it is also proved that the findings of the Investigator were without any substance.
63. Shri S. Arunachalam had given the observations on the investigation report of Investigator Harjit Singh, I.P.S. dated 21.3.2007. In Consumer Complaint No. 9 of 2008 33 para No. 3 of the said letter, it is mentioned that on receipt of report submitted by Mr. D.K. Taneja and Associates, New Delhi, Reliance General Insurance Co. Ltd. settled their share of claim in full in respect of loss of stocks regarding the loss of Shital Fibres Ltd.. The National Insurance Co. Ltd. also on receipt of the interim report dated 30.6.2006 from Mehta and Padamsey Surveyors Private Limited made "on account payment of Rs. 30 lacs only to Shital Industries Ltd. against its share of the claim" i.e. amount of stocks pending receipt of final assessment report.
64. We have also perused the report of A.S. Sodhi & Co. Annexure C-20. Sh. A.S. Sodhi was appointed by the National Ins. Co. Ltd. to assess the loss suffered by the complainant firm Shital International due to fire in its factory on 23.6.2006 at about 3.45 a.m. and the findings of Sh. A.S. Sodhi are reproduced as under:-
"FINDINGS:-
1. It has been established that there was no power cut on the intervening night of Dt. 22.06.2006 and 23.06.2006 and insured factory was running and consuming power around 36 - 37 KW.
2. It has been established that there were total 6 nos. of persons - 5 workers and 1 Gateman cut Tel. Attendant - in the factory.
3. It has been established that Machines were stopped little after 4.00 A.M. when the fire went out of control and caused damage to the Elec. Cables. Till 4.00 A.M. Machines were very much running.
4. It has been established that fire was noticed at initial stage by two workers under the m/c on which they were working it ruled out possibility of any sabotage.
5. It has been established that there was no abnormal delay in intimating the Fire to Fire Brigade. Fire Brigade was informed by Mr. Naurang Bahadur alias Rana from Factory's Phone. However there was a mismatching of one digit with the number provided by Rana to Fire officer on duty. This error has no convincible effect of the claim.Consumer Complaint No. 9 of 2008 34
6. It has been established that fire was not due to short-circuiting of elect.
Cables as the machines were found duly working even after noticing the fire. It could have been due to throwing of match stick or ignited Beeri Cigrette or another un-known reason. But certainly it was neither engineered nor an act of sabotage. It was accidental in nature."
65. The claim of the complainant firm was repudiated by the opposite party vide letter dated 5.3.2008 Annexure R-6. It is alleged in the repudiation letter that two complaints were received from Sh. K.K. Kharbanda. Sh. Harjit Singh was appointed for the investigation of the claims and on the basis of the investigation the claim of the complainant was repudiated.
66. We have gone through the complaints made by Sh. K.K. Kharbanda as Annexures R-4 and R-5, which are reproduced:-
"REGIONAL MANAGER UNITED INDIA INSURANCE CO. LTD.
FEROZE GANDHI MARKET FEROZEPUR ROAD, LUDHIANA.
SIR, I wish to draw your kind attention to a big fraud being played with your Company by Sheetal Vij and the Surveyors appointed by you to assess the loss caused due to fire in his factory. It is a well known fact that the value of safe stocks after the fire incident has to be less by an amount equal to the value of stock burnt and destroyed in the fire but in case of fire at factory of Sheetal Vij of safe stock after the fire is much more than the value of stock insured. Your Surveyors in collaboration with Sheetal Vij and his CA who is also his insurance agent is manipulating the Accounts Books to show that stocks after the fire are less than stocks before fire. Any one from your Company can Physically see and verify the records and see for himself that what is being brought to your notice is 100% correct. As if this was not sufficient, another fire was engineered and same Surveyors were appointed by you to find out the loss. It appears that it has been done purposely so that any other Surveyor does not interfere in his working. You may not be aware of this but if even now no action is taken to safeguard public money it will be presumed that you and your bosses also are getting a share out of this loot and the matter shall be brought to the notice of other agencies to safeguard public money. Hope you will take necessary action at your end. Yours Truly Sd/- K.K. Kharbanda 1036, Focal Point Jalandhar Consumer Complaint No. 9 of 2008 35 CC : Regional Manager, National Insurance Company Ltd., SCO 332-334, Sector 34A, Chandigarh for information and action."
"REGIONAL MANAGER UNITED INDIA INSURANCE COMPANY FEROZE GANDHI MARKET LUDHIANA.
SIR, This is in continuation of my previous letter bringing to your notice the big fraud being committed by Sheetal Vij and the Surveyor whom your company had deputed to assess the loss caused due to fire in the factory of Sheetal Vij. It is well known fact that every 3-4 years Sheetal Vij Manages to claim huge amount running into Lacs/Crores by setting fire in his factory. It is my duty to caution you this time and save company's money. I to stop Sheetal Vij and the Surveyor from lotting company money, I am giving you internal information that value of safe stock was much more than the stock insured. If that is so then any one with common sense can conclude that there is so then any one with common sense can conclude that there is no loss and even if stock got burnt that was which was not insured or only rags got burnt in the fire.
Yours Sincerely Sd/- K.K. Kharbanda 1036, Focal Point Jalandhar CC : Vigilance Department, Head Office, United India Insurance Company, 24 Whites Road, Chennai.
CC : Vigilance Department, Head Office, National Insurance Company, Middleton Street, Kolkata."
67. The complaints did not dispute the incidents of fire dated 12.6.2006 and 23.6.2006. It is not alleged by Sh. K.K. Kharbanda in his complaint that the fire was managed by the complainant and the same was not occurred due to short circuit. He only referred the value of the stocks more than the sum insured meaning thereby that there was under
insurance and as such, the quantum of liability should be in terms of pro- data average clause. It was alleged by him that Sh. Sheetal Vij had reduced the pre-fire sound value of the stocks to save him from the penalty as per the condition of average under the policy.Consumer Complaint No. 9 of 2008 36
68. Sh. Harjit Singh, Investigator tried his best to contact Sh. K.K. Kharbanda and his findings regarding the identity of the complainant-Sh.
K.K. Kharbanda are reproduced:-
"IDENTITY OF COMPLAINANT Mr. K.K. Kharbanda, the complainant had given his address 1036, Focal Point Jalandhar. Inquiries made revealed that there is no such house in the Focal Point. Almost door to door search made by my team proved abortive. Letter addressed to K.K. Kharbanda was returned back, undelivered. In order to give finalde to the issue of contact with the complainant; public NOTICE was got published; in daily Tribune dated 5.1.07, asking Kharbanda to contact me within 10 days after the publication; failing which it shall be presumed that the complaints were baseless and allegations were leveled to harass all concerned..
In response to the above said notice; I received a call at my residence on 14.1.07. Person on the other end introduced himself as K.K. Kharbanda. He was requested to fix date and place, where I could contact and collect whatever evidence is available with him. He refused to do so saying that he cannot risk his life. He however assured of contacting me occasionally of his own on phone to clarify any point.................."
69. Even no telephone number of Mr. Kharbanda is mentioned in the report vide which he contacted the Investigator.
70. So from the findings of the Investigator, it is proved beyond doubt that the complaints made by Sh. K.K. Kharbanda were false. He had not produced any document to prove that Sh. Shital Vij had taken any false claim prior to incidents of fire dated 12.6.2006 and 23.6.2006 to prove his allegations made in the complaint.
71. The Investigator had not assessed the loss even after written request made by the National Insurance Co., which was also liable to pay the claim due to fire in the factory of the complainant as per its share. Even the Investigator had not mentioned in his report regarding the genuineness of value of the stock which was burnt in the fire and what was the value of the stock before the occurrence of fire. Moreover, Harjit Singh, Investigator is not a recognized Surveyor and Investigator. He was appointed by the opposite party only to get the report of fire incidents as per its wishes, Consumer Complaint No. 9 of 2008 37 where there was no material or evidence was available after such a belated stage of his appointment. As per Section 64UM, sub-section (5) of the Insurance Act, 1938, the insurance company is estopped from paying any fee or remuneration to a person, who was not an approved Surveyor or Loss Assessors. Section 64UM, sub-section (5) of the Insurance Act, 1938 is reproduced as under:-
"64UM. Licensing of surveyors and loss assessors.-- (5) No insurer shall, after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, pay to any person any fee or remuneration for surveying, verifying or reporting on a claim of loss under a policy of insurance unless the person making such survey, verification or report is an approved surveyor or loss assessor."
72. Sh. Harjit Singh was appointed by the opposite party on 18.12.2006 i.e. after six months from the incident of fire at very belated stage and we find no justification or good reason in appointing the Investigator at a such belated stage.
73. It is also held by our own Commission in First Appeal No. 160 of 2006 titled as "National Insurance Company Limited and others versus Godsons Spinners Limited" decided on 25.7.2011, in paras No. 18 and 19 as follows:-
"18. There may be a little variation in the timings of fire but the fact remains that the fire incident had taken place in the premises of the respondent. The fire brigade was called. The information was given to the police. Even the Surveyor had seen the fire incident. As per the report of the fire brigade Ex. C3, the fire was extinguished and the fire brigade had reached back the Municipal Council, Batala at 16.35 hours means 4.35 p.m.
19. It may be that the fire again erupted from some other part on the same day after the fire brigade had left the place. It could not believed if the respondent had not taken any steps for extinguishing the fire. If the respondent had called the fire brigade, there is no reason to believe if the fire brigade had left the place without extinguishing the fire. The re-eruption of the fire may be small. If the Consumer Complaint No. 9 of 2008 38 version of the Surveyor/appellants is believed, the entire Mill could have been reduced into ashes if the fire continued for 2 hours from 6 p.m. to 8 p.m. in a cotton factory as cotton is exposed to fire instantly. It means, therefore, that the fire incident had taken place on 5.10.2002 and extensive damage was caused and information was given to the insurer immediately."
74. As per the above discussions, it is proved beyond doubt that fire was occurred due to short circuit.
75. It is also held by the Hon'ble National Commission in complaint No. 47 of 2007 filed by the complainant titled as "M/s Shital Fabrics Ltd. Versus United India Insurance Co. Ltd." in its order dated 8.7.2009:-
"......It is not in dispute that other two insurance companies have paid the amount of Rs. 1,09,92,097.66p each to the complainant. It is only the opposite party insurance company, who has not paid the said to the complainant....."
76. So from the above order of the Hon'ble National Commission, it is proved that the other two insurance companies i.e. National Ins. Co. Ltd. and Reliance General Ins. Co. Ltd. had made the payments to the complainant regarding the loss suffered by the complainant in the incident of fire occurred in his factory on 12.6.2006 after accepting the reports of the Surveyors appointed by the said companies and ignoring the findings of investigation of Sh. Harjit Singh, IPS.
77. All the three insurance companies from whom the policies were purchased by the complainant to insure his factories also appointed the Surveyor and Investigator for the assessment of the loss of fire incidents dated 12.6.2006 and 23.6.2006 and except the opposite party had paid the claim after accepting the reports of Surveyor and Investigators. As such, the appointment of Sh. Harjit Singh as Investigator at a very belated stage was not justified. It was held by the Hon'ble National Commission in case "The Oriental Insurance Co. Ltd. versus Consumer Complaint No. 9 of 2008 39 M/s Khemani Electronics", III (1993) CPJ 394 (NC) in para No. 7 as follows:-
"7. We entirely agree with the State Commission that there was no good reason for the Insurance Co. to reject the earlier two reports and relying on the third report which was hopelessly belated........."
78. Insurance Regulatory and Development Authority (Protection of Policy Holder's Interests) Regulations, 2002 in consultation with the Insurance Advisory Committee, has issued following regulations to protect the interests of the policy holders, which come into force on 1.10.2002. Regulation No. 9 relates to the claim procedure in respect of a General Insurance Policy, which is applicable to the present dispute; is as under:-
"9. Claim procedure in respect of a general insurance policy.
(1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.
(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.Consumer Complaint No. 9 of 2008 40
(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report.
Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be. (6) Upon acceptance of an offer of settlement as stated in sub-
regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."
79. It is the admitted case of the opposite party that Sh. D.K. Taneja has submitted his final Survey Report dated 28.11.2006 to the opposite party, which was received on 29.11.2006 by the opposite party as per their Dak Receipt Stamp.
80. The opposite party on receipt of the Survey Report has not found the said report incomplete from any point and not intimated to the Surveyor to furnish any additional report on any certain specific issues which were required by the opposite party/insurer.
81. The opposite party after the receipt of the report of the Surveyor; has not offered any settlement of the claim to the insured / complainant within 30 days which is mandatory as per the above Consumer Complaint No. 9 of 2008 41 regulation. Even no copy of the Surveyor's report was sent to the insured by the insurer/opposite party within 30 days from the receipt of the same. The copy of the same is only annexed by the opposite party with its written reply to the complaint. No communication was given by the insurer in writing and communicated to the insured till the filing of the written reply that the opposite party had decided to reject the claim under the policy, which was mandatory to inform the insured within 30 days from the receipt of the Survey Report.
82. As per the above discussion, it is also proved beyond doubt that the opposite party has also violated the Regulation No. 9 of the Insurance Regulatory and Development Authority (Protection of Policy Holder's Interests) Regulations, 2002.
83. It is not the case of the opposite party that the factories of the complainant were in loss and he was failed in the business and to take the claim, he himself managed the fire in his factories on 12.6.2006 and 23.6.2006. It is quite improbable that a person would deliberately set a fire in his factories, which was running in huge profits as per the statement of accounts annexed with the complaint simply to seek the insurance claim, which itself was not ascertained.
84. It is held by the Hon'ble Supreme Court in case "New India Assurance Co. Ltd. versus Protection Manufacturers Pvt. Ltd.", III (2010) CPJ 40 (SC) in para No. 33 as follows:-
"33. Without any material to support the theory of arson projected by M/s J. Basheer & Associates and sufficient material to hold otherwise, it would be entirely unjust and inequitable to accept such a theory without any evidence whatsoever in support thereof. Reference can be made in this context to the submission made by the Counsel for the Insurance Company before the National Commission and quoted in para 17 above. Accordingly, we endorse the views expressed by the National Commission that the cause of fire was accidental and Consumer Complaint No. 9 of 2008 42 that the attempt made by M/s J. Basheer & Associates to show that the fire had been caused by an act of arson, was motivated and intended to benefit the Appellant Insurance Company. The decisions cited by the parties were rendered in their own particular fact situations in accordance with law which is not disputed. The fact situations are, however, distinguishable."
85. The reply to the complaint as well as affidavit in support of the written reply is filed by O.P. Kanav, Deputy Manager, Regional Office, 136, Feroze Gandhi Market, Ludhiana but he has not produced or annexed any authority letter or minutes of any meeting by which he was authorized by the company i.e. opposite party to file the reply/affidavit and documents in the State Commission on behalf of the company. So the documents also cannot be read into evidence and the complaint is liable to be accepted only on this score.
86. In view of the above discussion, the complaint of the complainant is accepted. The opposite party is directed to pay the claim to the complainant as assessed by Sh. D.K. Taneja, Surveyor vide his Final Assessment Report dated 28.11.2006. As per Regulation No. 9 reproduced above, the opposite party is liable to pay interest at the rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it. But no party had produced any evidence regarding the rate of interest which was prevalent in the year 2006 when the fire incident took place. So the opposite party is directed to pay interest @ 9% per annum from 29.12.2006 i.e. after one month from the receipt of Final Survey Report from Sh. D.K. Taneja, Surveyor and also pay Rs. 25,000/- as litigation expenses to the complainant; within 30 days from the receipt of the copy of the order.
87. The arguments in this complaint were heard on 9.11.2011 and the order was reserved. Now the order be communicated to the parties. Consumer Complaint No. 9 of 2008 43
88. The complaint could not be decided within the statutory period due to heavy pendency of Court cases.
(Piare Lal Garg)
Presiding Member
November 21, 2011. (Baldev Singh Sekhon)
as Member
Consumer Complaint No. 9 of 2008 44