State Consumer Disputes Redressal Commission
M/S. Shri Shyam Food Products vs The Oriental Insurance Co. Ltd. on 22 March, 2024
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
AFR / NAFR
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Date of Institution: 24/12/2019
Date of Final Hearing: 26/02/2024
Date of Pronouncement: 22/03/2024
Complaint Case No.- CC/19/67
IN THE MATTER OF :
M/s. Shri Shyam Food Products,
Through: Proprietor Shri Abhishek Sultania (Agrawal),
Village: Banari, (Naila)
Dist. JANJGIR CHAMPA (C.G.) ... Complainant.
Through: Shri Mukesh Sharma & Shri Swayam Tehanguria, Advocates
Vs.
The Oriental Insurance Company Ltd.,
Through: Branch Manager,
Branch Office: Shanti Nagar, Opp. Railway Station, Champa,
Dist. JANJGIR CHAMPA (C.G.) ... Opposite Party.
Through: Shri Raj Awasthi, Advocate
CORAM: -
HON'BLE SHRI JUSTICE GAUTAM CHOURDIYA, PRESIDENT
HON'BLE SHRI PRAMOD KUMAR VARMA, MEMBER
PRESENT IN BOTH CASES: -
Shri Mukesh Sharma, Advocate for the complainant.
Shri GVK Rao, Advocate for the opposite party.
J U DGE M E NT PER: - JUSTICE GAUTAM CHOURDIYA, PRESIDENT This complaint, under Section 12 read with Section 17 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act" for short), has been filed by the complainant alleging restrictive trade practice on the part of the opposite party insurance company in repudiating its insurance claim with the prayer of direction to the opposite party to pay the complainant total amount of Rs.90,71,271/- (Ninety Lacs Seventy One Thousand Two Hundred Seventy One) including the amount of loss assessed by the surveyor Rohit Kumar & Co. who conducted final survey to the tune of Rs.85,71,271/- (Eighty Five Lacs Seventy One Thousand Two Hundred Seventy One) and compensation of Rs.5,00,000/- (Five Lacs) for mental agony and harassment in making attempts for settlement of claim. Cost of litigation, as this Commission deems fit to award in the facts and circumstances of the case, has also been sought.Partly Allowed. Page 1 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
2. Briefly stated the facts of the case necessary for its disposal are that the complainant is a firm engaged in manufacturing rice and allied products. The complainant obtained insurance policy No.192405/11/2017/7 for sum assured of Rs.1,20,00,000/- (One Crore Twenty Lacs) for the period between 08.04.2016 to 07.04.2017 covering risk cover of the stock maintained by the complainant during the course of its business operation. On 04.05.2016 an incident of fire occurred in the premises of the complainant, in which the stock maintained by the complainant was damaged. The opposite party insurance company was intimated about the incident of fire and in turn they appointed surveyor Mr. Tavinderpal Singh Arora for preliminary survey of loss, who assessed the loss to the tune of Rs.1,13,13,675/- (One Crore Thirteen Lacs Thirteen Thousand Six Hundred Seventy Five). Thereafter, Rohit Kumar & Company was appointed as surveyor for final assessment of loss, who assessed the loss to the tune of Rs.85,71,271/- (Eighty Five Lacs Seventy One Thousand Two Hundred Seventy One) as net liability for compensation under the terms and conditions of the policy, which revealed from the investigation report of Shri Ajay Nigam, investigator appointed by the opposite party. A pre-repudiation letter dated 22.03.2019 was issued by the opposite party seeking explanation on certain points and as to why the claim of complainant be not repudiated, which was replied vide letter 25.03.2019 but even then the claim was repudiated vide letter dated 09.07.2019.
3. As per allegations leveled by the complainant the insurance company has unilaterally and unfairly drawn its conclusion on grounds which were not part of policy schedule provided to the complainant and has adopted restrictive trade practice in settlement of claim. It is also alleged that the grounds raised in the repudiation letter were not based on the proposal for insurance submitted by the complainant. It is further alleged that the opposite party insurance company has failed to follow the rules and regulations issued Partly Allowed. Page 2 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 by the Insurance Regulatory and Development Authority of India (hereinafter called „IRDA‟ for short) in settlement of claim of the complainant. The opposite party insurance company ought to have settled the claim within 30 days in accordance with the process setup by the IRDA under regulation No.15 of the Insurance Regulatory and Development Authority of India (Protection of Policy Holders Interests) Regulation 2017 (hereinafter called „Regulation 2017‟ for short), failing which the regulation 15 (10) provides for payment of interest @ 2% above the Bank interest rate. The insurance company opposite party has also failed to supply terms and conditions of the policy except policy schedule comprising of 4 pages which is another violation of regulations issued by the IRDA. Had the insurance company supplied the detailed terms and conditions of the policy the complainant would have pointed out discrepancies between the proposal form and the policy issued by the insurance company. It is further averred that the grounds taken in repudiation letter were enquired into or pointed out by the insurance company prior to issuance of the insurance policy, as such the complainant is entitled to satisfaction of loss as per the final survey report of surveyor Rohit Kumar & Company who assessed the loss to the tune of Rs.85,71,271/- (Eighty Five Lacs Seventy One Thousand Two Hundred Seventy One) along with interest as provided under Regulation 15 of the Regulation 2017. Compensation for mental agony and harassment in making efforts for settlement of claim Rs.5,00,000/- (Five Lacs) along with cost of litigation as this Commission deems fit to award in the facts and circumstances of the case. It is prayed that the complaint be allowed with the above reliefs.
4. The opposite party in its written version admitted the fact of issuance of Standard Fire and Special Perils Policy for sum assured of Rs.1,20,00,000/- for the period between 08.04.2016 to 07.04.2017. It is further averred that an endorsement No.192405/11/2017/7/001 dated 08.04.2016 has also been Partly Allowed. Page 3 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 issued in favour of the complainant which indicates that complainant insured took finance from SBI Janjgir. The opposite party further stated that on intimation of fire claim the opposite party insurance company immediately deputed Mr. Tavinder Pal Singh Arora and Rohit Kumar and Company for conducting preliminary fire survey they conducted preliminary survey and submitted their report. It is denied that in preliminary survey report the loss was assessed/ declared to the tune of Rs.1,13,13,675/-. It is submitted that the said amount is based on preliminary survey based on the information provided by the complainant to the surveyors. It is further averred that after receiving the preliminary survey the opposite party insurance company deputed surveyor Rohit Kumar & Co. to conduct final survey and submit final survey and assessment report, which was submitted as final survey report dated 21.02.2017. After receiving the preliminary survey report and the final survey report the technical department Head Office of the insurance company deputed J. Basheer & Associates Insurance Surveyors and Loss Assessors Pvt. Ltd. to conduct investigation in respect of alleged fire claim, who submitted their investigation report on 04.11.2017. Thereafter one Mr. Ajay Nigam was also appointed for collecting / verifying the documents which were raised by the investigator Mr. J. Basheer in his investigation report dated 04.11.2017. Mr. Ajay Nigam also submitted his investigation report dated 29.06.2018. Thereafter, a Fire Claim Note Sheet dated 31.12.2018 was prepared.
5. It is prayed that above all the reports and notesheet have been brought on record and may be treated as part and parcel of this reply/ written statement. It is further averred that after receiving the preliminary survey report, final survey report, investigation report and fire claim note sheet the opposite party insurance company took decision to repudiate the claim and accordingly intimated the decision through pre-repudiation letter dated Partly Allowed. Page 4 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 05.03.2019 and certain explanations were called. In fact the reply was given on 25.03.2019 but prior to that the claim was repudiated vide letter 22.03.2019 which was challenged by the complainant before the Hon‟ble High Court which was quashed with the direction to take decision on the claim afresh after consideration of reply of the complainant dated 25.03.2019. Thereafter, on consideration of reply of the complainant it was found that the reply was not acceptable and ultimately the claim was repudiated vide repudiation letter dated 09.07.2019 on cogent grounds. It is specifically denied that repudiation of claim was made baselessly. It is further averred that whatever time was taken in deciding the claim was spent in preliminary survey, final survey and investigation of claim as per the procedure and in doing so no restrictive trade practice was adopted. The allegation of non-supply of terms and condition of the policy has also been denied on the saying that policy schedule, terms and conditions are part and parcel of the insurance policy. It is further stated that even otherwise all type of general insurance policies along with schedule and terms and conditions are available on website of the insurance company. As the complainant is running M/s. Shyam Food Products since so long, he is well aware of the insurance contract as well as its schedule and terms and conditions. By accepting the proposal form Annexure NA-1 whatever coverage sought therein by the complainant for his premises the policy was issued.
6. It is denied that the complainant is entitled for getting any relief from the opposite party insurance company simply because the surveyor has made an assessment. All the facts and circumstances pertaining to the insurance claim are needed to be taken care of for taking decision on settlement of claim. The final assessment report dated 21.02.2017 of Rohit Kumar and Company has been referred and stated that the insured M/s. Shri Shyam Food Products was situated within 15.98 acres compound of Shyam Group of Partly Allowed. Page 5 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 Industries out of which as per the layout plan provided by the insured they only occupy 0.50 acres. The fire affected godowns of M/s. Shri Shyam Food Products are not the risk locations as per the insurance policy. The insured did not declare storage of their stock in a godown, which is separate and independent in the insured‟s Rice Mill compound as indicated in the proposal form at Sl. No.14. In fact these godowns were taken on lease from their sister concern namely M/s. Shri Shyam Warehousing Pvt. Ltd, which is not disclosed to the insurer and the godowns are not insured by the opposite party insurance company. Certain documents regarding approval from the concerned authorities were also sought and it was found that the unit is supposed to be having factory layout plan, duly approved by Factory Inspector as per rule 3A (1) of CG Factory Rule 1962 (MP Factory Rule 1962), which was not complied with. The opposite party insurance company further stated that on basis of investigation report of Shri J. Basheer and recommendation therein it was found that the claim is not tenable, hence the same was repudiated and in doing so the opposite party insurance company has not committed any unfair trade practice with the complainant. The complaint is not maintainable, hence the same be dismissed with cost.
7. In support of the complaint the complainant has filed affidavit of Abhishek Sultania (Agrawal) and documents as per list marked at Annexure 1 to 6 including photocopy of policy schedule, policy endorsement schedule, preliminary fire survey report dated 16.05.2016 Annexure-2, copy of investigation report dated 26.09.2018 of Mr. Ajay Nigam Annexure-3, Copy of pre-repudiation show cause letter dated 22.03.2019 and its reply as Annexure- 4 & 5 and copy of final repudiation of claim dated 09.07.2019. Whereas the opposite party insurance company has filed affidavit of Sandeep Kumar Sinha in support of written version and documents as per list marked as Annexure NA-1 to NA-16 including copy of proposal form, insurance policy, Partly Allowed. Page 6 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 endorsement in respect of hypothecation, copy of intimation letter dated 06.05.2016, claim form dated 07.05.2016, copy of preliminary survey report, Annexure NA-7, copy of preliminary surveyor report of Rohit Kumar & Co. Annexure NA-8 and his final survey report Annexure NA-9, copy of investigation report of J. Basheer dated 04.11.2017, Annexure NA-10, copy of investigation report of Ajay Nigam dated 04.11.2017 Annexure NA-11, copy of fire claim note dated 31.12.2018 Annexure NA-12, pre-repudiation letter dated 05.03.2019, repudiation letter dated 09.07.2019 etc.
8. We have heard final arguments advanced by both parties and minutely perused the record as well as written arguments submitted by both parties along with the citations relied by them.
9. Learned counsel for the complainant has argued that the opposite party insurance company appointed surveyor Mr. Tajinder Pal Singh Arora for preliminary survey who assessed the loss to the tune of Rs.1,13,13,675/- and submitted his report dated 16.05.2016. After submission of his report the insurance company appointed surveyor Rohit Kumar & Company for final survey who gave his report dated 21.02.2017 with final assessment of loss of Rs.85,71,271/-. Thereafter, the insurance company appointed investigator Mr. Ajay Nigam, who submitted his investigation report dated 29.06.2018 which is filed as Annexure A-3. He has argued that as per the rules of IRDA the surveyor is required to submit his report within 30 days and the period can be extended up to 90 days as given in Rule 15 (5) (1) of the Regulation 2017. If the insurer finds any deficiency in the report given by the surveyor, then he will inform the surveyor while giving information to the insured. Such information can be given only once to the surveyor, but in the instant case the insurer after receiving report from the Rohit Kumar & Company appointed J. Basheer & Associates and Shri Ajay Nigam as investigator. At the place of seeking additional report or comment from Rohit Kumar & Partly Allowed. Page 7 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 Company on his report the insurer opted to appointed investigators one after another, which clearly shows restrictive trade practice of the opposite party insurance company. The investigator Mr. Ajay Nigam appointed by the insurance company has clearly stated in his report that just to extend benefit to the insurer M/s. J. Basheer Associates has prepare their report. The report of Mr. Ajay Nigam has also been relied by the insurer. It is further argued that the insurer opposite party has brought on record the copy of insurance proposal in which it clearly appears that the declaration was given by the State Bank of India and later on the insurance company has amended the bank clause, which clearly shows that discrepancies in the proposal form could have brought to the notice of the complainant also and if any information was not given by the Bank in the proposal form, then it cannot be said that same was concealed by the complainant insured. It is further argued that stock of the complainant which was kept in the Mill at the time of incident was got insured by the Bank in which building and machinery was not included, hence Surveyor Rohit Kumar & Co. has not assessed the loss to the building and machinery. M/s. J. Basheer & Associates in their report has made joint statement regarding M/s. Shyam Oil Extraction Pvt. Ltd and M/s. Shyam Food that they run Rice Mill and the provision stated in the report are not effective, hence the report of M/s. J. Basheer and Associates appears prejudiced. He prayed that the complaint be allowed with directions for payment of compensation as mentioned in paragraph No.03 herein above.
10. The opposite party has reiterated the defence taken in the written version and argued that the claim has been repudiated on genuine reasons mentioned in the final repudiation letter dated 09.07.2019, Annexure NA-15. Learned counsel for the opposite party has argued that fire affected godowns of M/s. Shri Shyam Food Products and M/s. Shri Shyam Oil Extraction Pvt. Ltd. are not the risk locations as reflected in the respective insurance policies.
Partly Allowed. Page 8 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
He has further argued that insured M/s. Shri Shyam Food Products, declared to be operating Rice Mill and the related stocks of Rice Mill is mentioned in the policy to be stored within the mill compound. However, the stock said to be have been stored in a godown, away from the rice mill adjacent to the godown of another sister concern, namely M/s. Shri Shyam Oil Extraction Pvt. Ltd., which are interconnected and communicated. He has argued that the policy is a contract entered between the insured and insurer in utmost good faith and compliance of all statutory and mandatory rules and regulations as stipulated under law for setting up and operating of any industry, is an implied warranty condition, under an insurance policy, therefore in absence of credible evidence on the cause of fire by the statutory authorities and also violation of various statutory compliances by the insured the insurance company would have no liability. In support of his arguments learned counsel for the opposite party has placed reliance upon judgement of Hon‟ble National Commission in The New India Assurance Co. Ltd. Vs. M/s. Yadav Builders, 2021 NCJ 176 (NC); Mahindra & Mahindra Ltd. Vs. Shri Sai Industries & 2 Ors., 2017 NCJ 380 (NC); M/s. Bedrock Ltd. Vs. New India Assurance Co. Ltd., 2016 NCJ 390 (NC); Reliance Nippon Life Insurance Co. Ltd. Vs. Manoj Kumar Tiwary, 2018 NCJ 879 (NC); Beena Rajesh Raika Vs. Birla Sun Life Insurance Co. Ltd. & Ors., 2019 NCJ 860 (NC); Oriental Insurance Co. Ltd. Vs. M/s. Dangi Financial & Management Consultancy Pvt. Ltd., 2022 NCJ 551 (NC) and judgement of Hon‟ble Supreme Court in Sonell Clocks and Gifts Ltd. Vs. New India Assurance Co. Ltd., (2018) 9 SCC 784. Learned counsel for the opposite party submitted that the complainant has failed to establish that the opposite party has committed any unfair trade practice with the complainant he prayed that the complaint be dismissed with cost.
11. We have considered the above arguments advanced by learned counsel for both parties and minutely gone through the record. Considering Partly Allowed. Page 9 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 the entire facts of the case and the above arguments advanced by learned counsel for both the parties in our opinion the following issues are necessary to be determined for appropriate adjudication of the disputes involved in this case : -
(i). Whether the appointment of J. Basheer & Associates Insurance Surveyors and Loss Assessors Private Limited for giving investigation cum expert opinion after submission of preliminary fire survey report by Tavinderpal Singh Arora, preliminary survey report and thereafter final survey report by Rohit Kumar & Co. was lawful and valid as per rules and regulations of the IRDA?
(ii). Whether the opposite party has committed restrictive trade practice and deficiency in service in repudiating the claim of the complainant ?
(iii). Whether the complainant is entitled to get the amount of the insurance claim in question if yes then quantum of compensation against the loss suffered by the complainant in the incident of fire ?
12. Issue No.(i):- In this regard learned counsel for the complainant has referred the claim procedure in respect of a general insurance policy envisaged in Regulation 15 of the Insurance Regulatory and Development Authority of India (Protection of Policyholders‟ Interests) Regulation, 2017 and drawn our attention towards regulation 15 (5) (i) and 15 (6) which are as under : -
"(5) (i) The surveyor shall, subject to sub-regulation 4 above, submit his final report to the insurer within 30 days of his appointment. A copy of the surveyor‟s report shall be furnished by the insurer to the insured/claimant, if he so desires.
Notwithstanding anything mentioned herein, in case of claims made in respect of commercial and large risks the surveyor shall submit the final report to the insurer within 90 days of his appointment. However, such claims shall be settled by the insurer within 30 days of receipt of final survey report and/or the last relevant and necessary document as the case may be." (6) 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/claimant; 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 final survey report."
In the present case the opposite party insurance company on receipt of intimation of incident of appointed surveyor Er. Tavinderpal Singh Arora for preliminary survey, who submitted his preliminary survey report dated 16.05.2016, Annexure NA-7. Then surveyor Rohit Kumar & Company was Partly Allowed. Page 10 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 appointed on 17.05.2016 who submitted his preliminary survey report dated 20.05.2016, Annexure NA-8. Thereafter, the surveyor Rohit Kumar & Company submitted their detailed final survey and assessment report dated 21.02.2017, Annexure NA-9. After having above three reports i.e. two preliminary report and one detailed final survey report, the opposite party insurance company sent the claim file to the J. Basheer & Associates Insurance Surveyors and Loss Assessors Private Limited along with two files containing fire claim documents of M/s. Shri Shyam Oil Extraction Pvt. Ltd. and M/s. Shyam Food Products for their observation and comments, who only on the basis of documents sent to them gave their report without visit and physically verifying the place of incident or any other relevant materials. J. Basheer & Associates Insurance Surveyors and Loss Assessors Private Limited submitted their report on 04.11.2017 which is Annexure NA-10. Thereafter insurance consultants and insurance claim investigator Ajay Nigam was appointed, who gave his claim note dated 29.06.2018, Annexure NA-11.
13. The above provision of the regulation 15 (6) in very clear terms envisages that if an insurer, on receipt of a survey report, finds that it is incomplete in any manner, he shall require the surveyor, under intimation to the insured/claimant; 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 final survey report. In this case if the opposite party insurance company was dissatisfied with the final survey report of Rohit Kumar & Company, which is the only final survey report with regard to the claim in question in this matter, they ought to have follow the procedure envisaged in the Regulation 2017 but nothing of that sort has been done on the contrary they kept appointing different surveyors and investigators one after another without being bothered about the provisions of Regulation 2017.
Partly Allowed. Page 11 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
14. At this juncture it is quite pertinent to refer Section 64- UM(2), (3) & (4) of the Insurance Act 1938 which are as under: -
"64-UM. (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as „approved surveyor or loss assessor‟):
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.
(3) The Authority may, at any time, in respect of any claim of the nature referred to in sub-section (2), call for an independent report from any other approved surveyor or loss assessor specified by him and such surveyor or loss assessor shall furnish such report to the Authority within such time as may be specified by the Authority or if no time-limit has been specified by him within a reasonable time and the cost of, or incidental to, such report shall be borne by the insurer.
(4) The Authority may, on receipt of a report referred to in subsection (3), issue such directions as he may consider necessary with regard to the settlement of the claim including any direction to settle a claim at a figure less than, or more than, that at which it is proposed to settle it or it was settled and the insurer shall be bound to comply with such directions:
Provided that where the Authority issues a direction for settling a claim at a figure lower than that at which it has already been settled, the insurer shall be deemed to comply with such direction if he satisfies the Authority that all reasonable steps, with due regard to the question whether the expenditure involved is not disproportionate to the amount required to be recovered, have been taken with due dispatch by him:
Provided further that no direction for the payment of a lesser sum shall be made where the amount of the claim has already been paid and the Authority is of opinion that the recovery of the amount paid in excess would cause undue hardship to the insured:
Provided also that nothing in this section shall relieve the insurer from any liability, civil or criminal, to which he would have been subject but for the provisions of this sub-section."
The term "Authority" is defined under section 2 (1A) of the Insurance Act 1938 as : -
Partly Allowed. Page 12 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
"Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999."
This issue was earlier discussed and decided by the Hon‟ble Apex Court in the case of New India Assurance Company Limited Vs. M/s.
Protection Manufacturers Private Limited, 2010 7 SCC 386. In that case the interpretation of Section 64 UM of the Insurance Act, 1938 by the Hon‟ble Apex Court in paragraph 35 was as under : -
"35. The submissions of Mr. Piyush Gupta in regard to Section 64 UM of the Insurance Act, 1938, are also of substance, as the Appellant Insurance Company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing M/s. J. Basheer & Associates for the said purpose unilaterally. The reports submitted by M/s. J. Basheer & Associates are liable to be discarded on such ground as well."
The facts of the above case were identical with the facts of the present case so far as appointment of surveyors and investigator one after another is concerned. In the above similar set of events of appointment of surveyors and investigators, the Hon‟ble Apex Court was of the view that the insurer should have moved an application before the IRDA for appointment of an independent second surveyor under the Insurance Act instead of appointing another surveyor unilaterally and ultimately discarded the report of such surveyor/investigator who was appointed unilaterally without following the procedure. In the instant case also the opposite party insurance company appointed surveyor / investigator unilaterally one after another without following the procedure.
15. However, the report of investigator Mr. Ajay Nigam has been brought on record by both the parties as Annexure-3 by the complainant and Annexure NA-11 by the opposite party insurance company, whereas surprisingly the last investigator Mr. Ajay Nigam, appointed by the opposite party insurance company itself, has condemned the conduct and report of the investigator M/s. J. Basheer & Associates in the following words :- Partly Allowed. Page 13 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 "Thereafter the, the Higher Authority of the Insurance Company appointed M/s. J. Basheer & Associates as investigator to conduct an investigation into the cause of fire and to assess the loss. As independent investigation reports were filed by M/s. J. Basheer & Associates on 04- 11-2017. I, the undersigned severely criticised the report filed by M/s. J. Basheer & Associates and even went to the extent of observing that they had failed to measure up to the faith and responsibility reposed on them by the insurer. The report seemed to suggest that the same had been tailor-made in order to fit the loss, which uncannily tallied with the Surveyor's Report.
In my opinion: after receipt of the views expressed by the joint surveyors, the Insurance Company decided to obtain the views that: on the question as to the cause of fire, we arrived at the conclusion that the report of M/s. J. Basheer & Associates was unfounded and speculative while that of the joint surveyors contained a careful analysis of the events and castigated the same in no uncertain terms. We observed that M/s. J. Basheer & Associates had not gone into the roots of documentation and had not even bothered to verify the original documents. On the other hand, they had gone around creating confusion and controversies and to create an air of suspicion, which was a classic example of tabletop investigation. It was submitted that the specific issues made in respect thereof were not seriously considerable.
He further says in the report that : -
"---------------. That; on a further investigation, found that; it was an accidental causing a fire; that the loss was highly exaggerated since the godown concerned have the capacity to take in the quantity allegedly stored and lost; that it was a case of a Geneuine Insurance Claim; that the claim Clearly Seems to Tenable.
Similarly, the discrepancy in the capacity of the godown and the possibility that what was lost was only or mainly (stock of Rice, Paddy Rice, Broken Rice & Khanda, Bardana (Gunny Bags) etc. (stored in the Manufacturing Compound) to accept the Surveyor's report in this Claim. That the claim was genuine and sustainable. In this situation we are satisfied & no interference is called for in this Claim.
Thereafter his final recommendations are as under : -
"I' the undersigned found that; the Insured did not suppress any material facts from the Insurer. The Surveyor therefore was constrained to consider the quantity on the basis of the physical verification by volumetric measurement; and assessed the loss; which is not exaggerated as the assessment done by the qualified and licensed surveyor. The intimation was given in time and then required documents were submitted by the Insured in time to the Surveyor or the company despite repeated reminders. No any breach of policy condition on part of the Insured has been found.
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The competent authority of Insurance Company in good gesture, considered the claim settlement on the basis of Surveyor's Assessment Report of M/s. Rohit Kumar & Co., Delhi."
16. From the entire chronology of events of appointing surveyors and investigators one after another it appears that the opposite party insurance company was trying to get a report in their favour which suggests for Partly Allowed. Page 14 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 disowning liability under the insurance policy and ultimately they had such opinion from M/s. J. Basheer & Associates Insurance Surveyors and Loss Assessors Private Limited and ultimately acted upon the report of that firm. In the above set of facts of the case we do not find appointment of J. Basheer & Associates Insurance Surveyors and Loss Assessors Private Limited as lawful, valid and in consonance with the procedure envisaged in regulation 15 (6) of Regulation 2017 of the IRDA as well as provisions of Section 64UM of the Insurance Act 1938.
17. Along with report of the investigator Mr. Ajay Nigam copy of fire claim note sheet of the Technical (Fire) department of the opposite party insurance company, has also been filed by the opposite party as Annexure N.A.-12. Both these documents appears to have been received under the Right to Information Act. In the said note sheet at Serial No.19 Our recommendation/ observations as to liability it is mentioned as :-
"Based on investigation cum expert opinion report of M/s. J. Basheer & Associates Pvt. Ltd. Dated 20/12/2018 "there would be no Liability of the Underwriter in the absence of credible evidence" on the Cause of Fire by the Statutory Authorities and also Violation of various Statutory Compliances by the Insured as brought out in his report dated 20/12/2018, which could have been material to the loss. Accordingly claim is recommended for repudiation."
Department observation is mentioned at the end of the note sheet as under : -
"Department Observation: Looking to the investigation cum expert opinion report of Ms. J. Basheer & Associates "there is no Liability, in the absence of credible evidence, the site of loss being out of scope of risk location, absence of certification of Cause of Fire by the Statutory Authorities and for violation of various Statutory Compliances by the Insured as brought out in the report of Ms. J. Basheer & Associates dated 20/12/2018, which is material to the Loss. Accordingly, the preferred claim is recommended for repudiation."
On the basis of above recommendation based on the investigation cum expert opinion report of M/s. J. Basheer & Associates Pvt. Ltd. ultimately the claim was repudiated vide final repudiation letter dated 09.07.2019 keeping aside preliminary survey report of Er. Tavinderpal Singh Arora, that of Rohit Kumar & Co. and Final Survey & Assessment Report of Rohit Kumar & Co. If Partly Allowed. Page 15 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 the opposite party insurance company was of the view that there was any discrepancy in the report of the Final Surveyor they could have required additional report or comment from the said surveyor or could have initiated for appointment of another surveyor following the procedure envisaged in regulation 15 (6) of Regulation 2017 of the IRDA as well as provisions of Section 64UM of the Insurance Act 1938. But they chose to appoint another surveyor for submission of investigation cum expert opinion who without visiting the site of incident of loss only on the basis of perusal of documents gave his report, which has been acted upon by the insurance company. This action of the insurance company does not appear just and proper and amounts to unfair trade practice. Thus the issue No.(i) is decided in favour of the complainant.
18. So far as issue Nos.(ii) & (iii) are concerned we have gone through the preliminary fire survey report of Er. Tavinderpal Singh Arora, Annexure - NA-7. As per his report the fire loss occurred on 04.05.2016 early morning at 3:30 am approximately. Intimation was given to him on the same day and he visited the site on the same day at 4:30 pm. On visit he found as under : -
1. Near the insured's premises, few Rice Mills, an Oil Extraction Plant, a Husk based Power Plant are also operating, situated at different locations: -
a. A shed with building, a part of Shri Shyam Food Products, the insured was under fire. The Stock of Rice, Paddy Rice, Broken Rice and Khanda etc and Bardana (Gunny Bags) etc. were stored and stocked there. The fire was very huge and spreading inside the godown. Many Fire Fighting Vehicles (Damkals) were engaged in fighting fire. Damkals were obtained from Prakash Industries Ltd., Office of Nagar Palika Parishad, Janjgir Naila, Janjgir-Champa, Office of Nagar Palika Parishad, Akaltara, Janjgir-Champa and Office of Nagar Panchayat, Baloda, Janjgir-Champa etc. b. Police Officials were also seen at the site. A police report lodged.
Details of police report and statements of two persons who witnessed the fire at the spot were also obtained and mentioned in the report. Details findings were given as Rice, Broken Rice are Fire and water damaged. The extent of damage and relevance and coverage in the policy is to be ascertained at the time of final survey.
Partly Allowed. Page 16 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
19. The Rohit Kumar & Company also submitted its preliminary survey report dated 20.05.2016, Annexure NA-8, who was appointed after submission of first preliminary report and estimated the loss to the tune of Rs.115 Lacs and liability at Rs.100 Lacs. Thereafter on 21.02.2017 detailed Final Survey & Assessment Report was submitted, Annexure N.A.9. In which location, construction and occupation of affected premises is mentioned at Sr. No.5.01 that "the affected factory premises having plot area 0.50 Acre (21800 Sqft.) were located at Village Banari, Tehsil Janjgir, Dist. Janjgir - Champa (CG.), whose land was occupied on lease basis, vide lease deed dated 10.04.1999 for a period of 30 years which formed a part of Khasra No.1860/1 (Gha) & 1861/(Kha) having total area 3.98 Acres owned by Mr. Liladhar Agrawal". Occurance, Fire Brigade Report and cause of loss are mentioned in detail. The cause of loss is mentioned as the loss appeared to had occurred due to electric short circuit at godown of Shri Shyam Oil Extractions Ltd.
resulting in ignition of nearby stocks followed by eruption of fire flames and as their stocks comprised a large quantum of de-oiled cake, rice bran, empty bags etc. so the aforesaid goods caught fire which spread & engulfed the whole of their godown. Further the fire also spread to adjoining godown of M/s. Shri Shyam Food Products and burnt all stocks of rice broken rice, empty bags kept therein, resulting in heavy loss to the Insured". For adequacy of insurance cover the surveyor analyzed monthly stock statements for 08 (eight) months submitted to the Bank, as the insured availed Cash Credit Limit of Rs.85,00,000/-. Thereafter, extent & nature and assessment & adjustment of loss has been done on the basis of volumetric analysis and net liability after deducting policy excess @ 5% was assessed to the tune of Rs.85,71,271/-. At the last the surveyor has recommended about the insurer‟s liability as "In view of the cause of loss being unforeseen & accidental fire, we are of the opinion that the underwriters are liable".
Partly Allowed. Page 17 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
20. The investigator Mr. Ajay Nigam whose claim note is filed and relied by the opposite party insurance company itself, has given his final findings that the intimation was given in time and then required documents were submitted by the insured in time to the Surveyor or the company despite repeated reminders. No any breach of policy condition on the part of the Insured has been found". He has also mentioned that "the competent authority of Insurance Company in good gesture, considered the claim settlement on the basis of Surveyor‟s Assessment Report of M/s. Rohit Kumar & Co., Delhi."
21. There appears no impropriety or illegality in preliminary survey report or the Final Survey Report of Rohit Kumar & Co. Even in the entire written version or during the arguments also the opposite party insurance company has not alleged any inadequacy, adhosism or arbitrariness in the report of Rohit Kumar & Co. except mere pleading that assessment of final surveyor does not amounts to the fact that the same is payable by the insurance company and it has to be considered under the terms and conditions of the policy. Regarding report of a duly IRDA licensed surveyor Hon‟ble Apex Court in its judgement in Khatema Fibres Ltd. Vs. New India Assurance Company Ltd. & Anr, IV (2021) CPJ 1 (SC), has observed in paragraph No.38 that : -
"38.------. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop"
In the facts and circumstances of the instant case, so far as observations and opinion given by the surveyor Rohit Kumar & Co. in its final survey report is concerned we do not find any reason to deviate from the observations of the surveyor as no cogent evidence is adduced by the Partly Allowed. Page 18 of 20 Complaint Nos.: M/s. Shri Shyam Food Products Date of CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024 opposite party in contrary or to question the integrity, honesty or adequacy in the quality, skill and nature of duties and responsibilities of the Surveyor Rohit Kumar & Co. Hence, there is no question to doubt the report of the Surveyor.
22. Learned counsel for the opposite party insurance company has placed reliance upon judgement of Hon‟ble National Commission in M/s. Yadav Builders (supra) and argued that surveyor report carries weightage unless is proved to be wrong. He has relied Shri Sai Industries (supra) case regarding maintainability of complaint on the ground that the complainant is an industry and is engaged in commercial activity hence the complaint is not maintainable as the services were availed for commercial purpose. So far as obtaining insurance cover is concerned the settled principle in catena of judgements is that it is always obtained for indemnifying losses to the insured property and the disputes arising out of such insurance cover are very well maintainable before Consumer Fora. This issue was discussed in detail by the Hon‟ble Apex Court in its latest judgement dated 13.04.2023 in Civil Appeal No.5352-5353 of 2007 between National Insurance Co. Ltd. Vs. Harsolia Motors and Others the above principal has been regarded. Learned counsel for the opposite party has placed on judgements of the National Commission on the issue of misrepresentation of material facts, but as discussed hereinabove as per report of the surveyor Rohit Kumar & Co. who submitted their final survey report it does not appear that any material information were concealed or misrepresented by the insured. He has also placed reliance upon judgement of Hon‟ble Supreme Court in Sonell Clocks & Gifts Ltd. (supra). In that case the claim was repudiated on the ground of delay as the intimation of incident of loss was given late by the insured. But, that is not the facts of present case hence the judgment is distinguishable.
Partly Allowed. Page 19 of 20
Complaint Nos.: M/s. Shri Shyam Food Products Date of
CC/19/67 Vs. Pronouncement:
The Oriental Insurance Co. Ltd. 22/03/2024
23. Thus, with the foregoing discussion we are of the considered view that the opposite party ought to have acted upon the Final Survey & Assessment Report of Rohit Kumar & Co. and to settle the claim accordingly and in not doing so they have committed deficiency in service and unfair trade practice in unnecessary delaying the settlement of claim in appointing different investigators and seeking investigation cum expert opinion which was uncalled for and against the provisions under the Regulation 2017 and the Section 64 UM of the Insurance Act. Hence, we decide the issue Nos.(ii) &
(iii) also in favour of the complainant.
24. In view of the foregoing discussion, we find substance in this complaint to succeed. We partly allow this complaint and direct the opposite party Insurance Company to pay the complainant within 45 days the amount as under : -
a) Rs.85,71,271.00 (Rupees Eighty Five Lacs Seventy One Thousand Two Hundred Seventy One) i.e. the net liability assessed by the surveyor M/s. Rohit Kumar & Co. with simple interest @ 6% p.a. from the date of filing of this complaint i.e. 24.12.2019.
b) The interest so awarded shall also take care of the compensation for mental harassment suffered by the complainant.
c) Cost of litigation, which is quantified at Rs.15,000/- ( Rupees Fifteen Thousand).
(Justice Gautam Chourdiya) (Pramod Kumar Varma)
President Member
/03/2024 /03/2024
Pronounced On: 22nd March 2024
Partly Allowed. Page 20 of 20