National Consumer Disputes Redressal
New India Assurance Co. Ltd. vs Kohinoor Sizing Factory on 19 May, 2005
Equivalent citations: II(2006)CPJ237(NC)
ORDER
Rajyalakshmi Rao, Member
1. This is the first appeal filed by the appellant, New India Assurance Company, aggrieved by the order dated 6th May, 1999 of Gujarat Consumer Disputes Redressal Commission in Complaint No. 283 of 1993 whereby the appellants are directed to pay Rs. 5,64,696/- with interest @ 18% p.a. from the date of the complaint till realization and cost of Rs. 2,000/- to the complainant, M/s. Kohinoor Sizing Factory. Brief facts of the case are:
2. The respondent, a partnership firm, in the business of cotton sizing has filed the complaint in the State Commission for reimbursement of the loss suffered to the factory and the stock during communal riots, from the petitioner, New India Assurance Company Ltd. The respondent had taken three Insurance Policies from the petitioner which were valid for the period from June 12, 1992 to June 11, 1993. Under two fire policies "C", stocks of raw materials and semi-finished goods lying in their factory were insured for Rs. 1,45,000/- and stocks of cotton, cotton yarn, stock in process, raw materials and goods lying in the factory were insured for Rs. 3,50,000/-. The building of the factory was insured for Rs. 2 lakh and machinery, etc. for Rs. 3 lakh under the Fire Insurance Policy "A". Thus, the respondent had taken total insurance for Rs. 10 lakhs from the petitioner.
3. It is the case of the respondent in the complaint that on December 8, 1992, a mob of nearby 500 persons came to his factory and set it on fire. As a result, the factory along with stock, machinery and building was totally destroyed. FIR was lodged and the petitioner was informed accordingly. The petitioner appointed Kirj Consultants to survey and assess the loss suffered by the respondent. Since the books of accounts were destroyed in fire, the stock position was reconstructed on the basis of sales tax returns and bills of purchase and other relevant documents for making assessment of the loss. The Surveyor assessed the loss of building and machinery at Rs. 1,14,696/-and loss of stock at Rs. 1,44,387/- in total Rs. 2,59,083/-. The respondent accepted the assessment of loss of Rs. 1,14,696/- for the building and machinery but contested regarding the assessment of loss due to destruction of stock. According to the respondent this was for Rs.4,83,147/- whereas the petitioner contended that this loss was Rs. 1,44,387/-. It is contended by the respondent that the stock lying in the factory was hypothecated with Bank of India and that he had to submit statement of stock to the bank every month for availing credit facilities with the Bank. The last statement of stock which was sent to the bank was on November 30,1992 and Chief Manager of Bank of India, Shahibaug Branch has issued certificate dated October 1, 1994 wherein it is stated as follows:
This is to certify that we have granted a Cash Credit loan facility of Rs. 2,50,000/- to M/s. Kohinoor Sizing Factory, GIDC, Dholka, against hypothecation of stock. The limit was allowed against stock statement, to be submitted monthly and it was being verified by periodical inspections at sight. It was generally found that stock was being maintained as per statement/stock register. Last stock statement was submitted to us on 2.12.1992 and stock maintained as on 30.11.1992 was Rs. 3,98,000/-. The entire stock was insured with the New India Assurance Company with bank's hypothecation clause.
It was subsequently reported to and verified by us that entire stock with machineries was damaged/ destructed by fire/riot. We understand that insurance claim is yet to be settled and this certificate is being issued to substantiate and expedite the claim payment, due to the company/bank.
4. The petitioner had also produced evidence of bills on affidavit for the goods purchased from the Royal Traders and P.K. Textiles after November 30, 1992 which came to Rs. 2,12,260/-. Considering all these facts, the closing stock was estimated to be Rs. 4,83,147/-. The State Commission has gone into all evidence placed on record and concluded that Surveyor had acted arbitrarily in assessing the respondent's stock at Rs. 1,44,387/- although the stock was insured for Rs. 5 lakh. The State Commission accepted the loss as estimated by Surveyor for the buildings and machineries at Rs. 1,14,696/-which was not contested by the respondent along with the loss of Rs. 4,50,000/- as estimated on the basis of the bank statement and other bills. The State Commission had allowed the complaint and directed to pay to the respondent Rs. 5,64,696/- along with interest @ 18% p.a.
5. On the other hand, learned Counsel for the appellant argued that the State Commission relied on the certificate dated 1.10.1994 of Bank of India certifying that the stock of the respondent on 30.11.1992 was of Rs. 3,98,000/- as per the statement submitted to the Bank. Although the Surveyor had prepared the report after obtaining Sales Tax Returns and purchase figures as submitted by the respondent as on the date of insurance i.e. 8.12.1992, the learned State Commission has ignored the Surveyor's report and after cross-examining the Surveyor, without any reason concluded that the Surveyor acted arbitrarily.
6. It is also contended that the respondent showed the closing stock as Rs. 4,83,147/- for the period of 1.4.1992 to 7.12.1992 whereas the closing stock as shown to the Bank was Rs. 3,73,170/-. This discrepancy in the stock figures as given by the respondent raises a doubt as to the genuineness of the declaration of stock by the respondent and should not be relied upon. They vehemently argued that the certificate dated 1.10.1994 of Bank of India certifying the stock on 30.11.1992 was Rs. 3,98,000/-, was not filed along with the complaint and was produced only on 3.10.1994. This certificate was never produced before the Surveyor and had it been the true picture, the respondent would have given it earlier to the Surveyor which he did not do so. The respondent himself provided the sales tax returns and purchase figures to the Surveyor which was not necessary if the certificate of Bank of India is available. Appellants contested that the appeal should be allowed in view of the doubt created about the certificate and contended that the said certificate was manipulated one and was obtained with a view to exaggerate the stock position.
7. It is further contended by the appellants that the figure of stock at Rs. 4,83,147/- was arrived at without giving any reasons and further to grant interest @ 18% p.a. is high. It is also stated that the respondent was willing to settle the matter for Rs. 2,59,083/- at one time and that the exaggerated amount of stock in the bank certificate is an after thought and that it is procured by manipulation by the respondent.
8. We heard both the parties carefully and perused the record. It is a well known act that post-Babri Masjid incident, many people's lives were devastated due to the riots and violence. The loss caused to many people who were victimized during that period is undoubtedly beyond mere words as it was not only economic loss but was a matter of life and death. In a situation where the respondent lost every thing due to the action by a mob of 500 persons who set the factory on fire, after running helter-skelter, the respondent with great difficulty somehow got together whatever bills, sales-tax returns of previous years and letters/affidavits from the people he made purchases in absence of the originals which were destroyed in the fire.
9. We are surprised to note that the letter of certificate of the stocks from the Manager of Bank of India, a responsible officer, has been treated as a manipulated one without any plausible explanation to do so. The only doubt cast upon the respondent and the Bank Manager is that this letter was not given to the Surveyor. The State Commission has noted this submission made by the appellant in their order in para 7 as to whether this Bank's letter was given to the Surveyor and it has come to the conclusion that this particular document is part of the annexure of the letter dated February 13, 1993 given by the respondent to the Surveyor. In view of the above finding, it does not lie in the mouth of the appellant to keep on repeating the same story. This clearly shows callousness on the part of the appellant almost to the extent of harming the respondent who is already devastated and is unable to feed his family, The letters written by him to the Surveyor to give him quick relief were ignored by the appellant which shows their deplorable attitude towards genuine loss incurred by the respondent.
10. Instead of giving quick relief, the Surveyor and the appellants have tried their best to coerce the respondent to accept the amount, arbitrarily arrived at by the Surveyor. Even though the respondent has taken insurance in the past years but for this post-riot claim, he never approached appellants with any other claim. It is a ease of a genuine consumer who got stranded with nothing suddenly due to the riots which were beyond his control and imagination, to put him through so much agony and stress by apathetic attitude of the appellants is pathetic.
State Commission has very rightly accepted Bank's statements and the partners affidavits and arrived at the reasonable order and we agree with it.
11. The State Commission has scrutinized the bills produced by the respondent which were submitted separately as they relate to the stock purchased after submission of bank stock statement. The total comes to Rs. 4,83,147/- which amount was reduced to Rs. 4,50,000/- as loss of stock by the State Commission. State Commission has arrived at this figure after concluding that Surveyor arbitrarily estimated the loss of stock without considering Bank's stock statements and the affidavit of the Bank Manager. The loss of buildings and machinery assessed by the Surveyor as Rs. 1,14,696/- was not disputed. As for the contention that 18% interest is very high we see some merit in it and reduce it to 12%. For the amount of harassment the respondent has gone through, it is difficult to compensate but a small amount of cost is to be paid by the appellant to the respondent, With this modification, the appeal is partly allowed. Thus the order of the State Commission is confirmed with a modification of interest reduced to 12% and cost of Rs. 10,000/-. We have no reason to interfere with the same which does not suffer from any infirmity or jurisdictional error. With the aforementioned modification, appeal is partly allowed.
12. Accordingly, the respondent/ complainant shall get Rs. 4,50,000/- as loss of stock, Rs. l,14,696/- as loss of machinery and building along with interest @ 12% on the said amount p.a w.e.f. 8.10.1993 till realization and cost of Rs. 10,000/-.