State Consumer Disputes Redressal Commission
M/S. Nitin Industries vs 1. National Insurance Co. Limited on 3 February, 2012
1 C.C.No.:84-06
STATE CONSUMER DISPUTE REDRESSAL COMMISSION,
MUMBAI, CIRCUIT BENCH AT AURANGABAD.
Date of filing : 17.06.2006
Date of Order: 03.02.2012
COMPLAINT CASE NO.: 84 OF 2006
M/s. Nitin Industries
Through its Proprietor
Shri. Nitin Champalal Bora,
R/o. Yashwant Colony,
Ahmednagar. ...Complainant
-Versus-
1. National Insurance Co. Limited
Ambar Plaza, Opp. S.T. Stand,
Station Road, Ahmednagar.
2. Ahmednagar Merchants Co-op. Bank Ltd.,
Gulmohar Road Branch,
Opp. Civil Hospital, Saveeli Road,
Ahmednagar-414001. ...Opponents/Respondents
... Respondent
Coram : Mr. D. N. Admane, Hon'ble Presiding Judicial Member
Mr. K. B. Gawali, Hon'ble Member.
Present: Complainant in person.
Adv. Shri. D. S. Kulkarni for opponent/respondent.
- :: ORAL ORDER ::-
Per Mr. D. N. Admane, Hon'ble Presiding Judicial Member
1. Complainant M/s. Nitin Industries filed present complaint through proprietor Shri. Nitin Champalal Bora. Said firm is engaged in the business of plastic reprocessing situated at G-35, MIDC, Ahmednagar-414111. Complaint is filed against the Insurance Company which repudiated the claim of the complainant regarding fire occurred in his factory.2 C.C.No.:84-06
2. Opponent No.1 is National Insurance Company and opponent No.2 is Ahmednagar Merchant Co-op. Bank. Complainant by hypothecating his machinery obtained the loan of Rs.11,00,000/- from opponent No.2.
Complainant had taken "Standard Fire & Special Perils Insurance Policy" No. 271900/11/03/31/02847 for the period 10.03.2004 to 09.03.2005. Said policy was for sum assured Rs.29,00,000/-.
Details of the sum assured are as under:
i) Building ...Rs.5,00,000.00
ii) Machineries ...Rs.8,00,000.00
iii) On stocks of
Plastic goods, Raw Materials,
Finished goods ...Rs. 16,00,0000.00
------------------------
Total sum assured ...Rs.29,00,000.000
=========================
On the fateful day of 30th July, 2004 at about 10.45 a.m. all of sudden there was loud noise in the electric transformer installed by MSEB in front of factory premises. Therefore, complainant came out his factory and noticed that there was sparking emanating from the transformer. He immediately returned to his factory and found that main switch of the factory also burst with huge sound and fire occurred. The stock of plastic stored in the factory premises which is highly inflammable and hence fire sprayed rapidly. Complainant with his employees tried to douse the fire but of no use. Immediately complainant called Fire Brigade which took many hours to extinguish the fire.
3. Complainant gave information to the Insurance Company with the estimated loss and requested them to depute the surveyor to assess the loss. Accordingly, surveyor Shri. Thombre from Pune visited factory premises on 3 C.C.No.:84-06 31.07.2004 and inspected the premises and perused all the required documents. Thereafter the surveyor called some documents, such as, Fire Brigade Certificates, FIR, Panchnama, Certificate issued by Electrical Inspector, Income Tax Returns, Complaints made to MSEB before incident of Fire, Account Books, Stock Books, Statement of Accounts, and documents relating to Hypothecation etc. As complainant was in utmost need of financial aid he immediately supplied all the information and required documents. On 28.06.2005 near about 11 months after the incident of fire, the Insurance Company repudiated the claim on the ground that, claim was fraudulently lodged by the complainant. Therefore complainant approached to Insurance Ombudsman. After hearing the complainant and insurance company Ombudsman allowed the complaint on 17 th March.2006, but again on 31 st March, 2006 Ombudsman dismissed the claim of complainant as non- sustainable. It is explained by Ombudsman that in the earlier order word 'None' remained to be typed therefore he replaced the earlier order. It is allege by complainant that as per the directions of the Insurance Regulatory Authorities claim must have been decided within three months after the receipt of claim, but in the present case Insurance Company took 11 months to decide the claim and thereafter claim repudiated on the flimsy ground. Claim was not considered relying on the documentary evidence. Without verifications of the report of Police Authorities, Certificate of Electrical Inspector, Certificate of Fire Brigade etc. claim repudiated by Insurance Company. It is further alleged by complainant that Ombudsman is the person who was employee of Insurance Company and after retirement he is sitting as Ombudsman, therefore Ombudsman replaced his order earlier which was in favour of complainant. It is alleged by complainant that said Ombudsman is not expert in the field of electrical engineering or he did not inspect the premises where incident of fire occurred; therefore his order is not legal and proper. Therefore, complainant approached this Commission by claiming loss of Rs.26,00,000/- with 18% 4 C.C.No.:84-06 interest from 30.07.2004 till the realization and Rs.1,00,000/- with mental agony and Rs.25,000/- towards the cost.
3. In support of his claim he produced the documents as herein listed:
1. Insurance Policy Cover Note dated 10.03.2004
2. Fire Claim Forum dated 30.07.2004.
3. Intimation to insurance Co. dated 30.07.2004
4. FIR dated 30.07.2004,
5. Panchanama dated 30.07.2004,
6. Income Tax Return 02/03dated 29.07.2002
7. Income Tax Return 02/03dated 27.07.2002
8. Income Tax Return 03/04dated 22.09.2002
9. Income Tax Return 03/04dated 18.09.2003
10. Income Tax Return 04/05dated 10.08.2004
11. Income Tax Challan 04/05 dated 10.08.2004
12. FIRE Extinguishing Charges Receipt dated 30.07.2004
13. Fire Extinguishing Certificate dated 05.08.2004
14. Electrical Inspector Certificate dated 19.08.2004
15. Certification of stock statement by bank dated 30.08.2004
16. Stock Statement 11 nos. from 04.09 to 30.07.2004
17. Balance Sheet & T.P. L. A/c. dated 31.03.2002
18. Balance Sheet & T.P. & L. A/c. dated 31.03.2003.
19. Balance Sheet & T.P. & L. A/c. dated 31.03.2004
20. Machinery Bills dated 16.03.2003, dated 18.03.2003 & 03.04.2003
21. Repudiation of letter from Insurance Co. dated 28.06.2005
22. Surveyor letter demanding documents dated 06.08.2004
23. Letter of submission of documents to surveyor dated 08.08.2004
24. Letter of submission of documents to surveyor dated 24.08.2004 5 C.C.No.:84-06
25. Letter of submission of documents to surveyor dated 24.10.2004
26. Intimation of Fire to Insurance Co. dated 30.07.2004
27. Intimation to Insurance Co. about submission of documents to surveyor dated 25.10.2004
28. Letter to Insurance Co. regarding, correspondent and compliance with surveyor dated 25.10.2004
29. Letter to Insurance Co. regarding submission of zerox paper submitted to surveyor dated 10.01.2005
30. Investigation report dated 14.02.2005
31. Legal notice to Insurance Co. dated 21.07.2005
32. Reminder to Insurance Co. dated 28.12.2004
33. Reminder to Insurance Co. dated 07.01.2004
34. Notice to Insurance Co. dated 18.04.2006
35. Notice to Insurance Co. dated 18.03.2005.
36. Notice to Insurance Co. dated 09.05.2005
37. Fax to Head Office of Insurance Co. dated 02.06.2005
38. Fax to Regional office of Insurance Co. dated 02.06.2005
39. Letter to Governing Body of Insurance Council regarding delay in settlement of claim dated 02.03.2005
40. Bank Loan sanction letter dated 01.12.2001
41. Letter to MSEB about complaint, dated 12.07.2004
42. Statement of complainant recorded in Police Station dated 30.07.2004
43. Statement of Labour (Eknath Virkar) recorded in police station dated 30.07.2004
44. Statement of Labour (Ashabai Jadhav) recorded in police station dated 30.07.2004
45. Statement of Amit Shitre neighbourer recorded in police station dtd.
31.07.2004 6 C.C.No.:84-06
46. Statement of Khushiram Ahuja recorded in Police Station dated 31.07.2004
47. Statement of Dhiraj Khathed recorded in police station dated 31.07.2004
48. Summary of case No. 411/2004 dated 14.09.2004
49. Letter to MSEB by Amit Shitre regarding complaint dated 13.07.2004
50. Letter to MSEB by Kh7ushiram Ahuja regarding complaint dated 13.07.2004.
3. After receipt of notice opponent No.1 Insurance Company appeared through Adv. Shri. D. S. Kulkarni. Application filed by complainant, not pressing any relief from opponent No.2. Opponent No.1 filed written version stating that, in the complaint there is mention that complainant is partnership firm. In fact, it is run by proprietor, therefore it is submitted by Adv. D. S. Kulkarni that, at the outset it seems that complainant did not came before Commission with clean hands. There is no bursting of transformer on the day of incident. It is further submitted by Adv. Kulkarni that, there is no evidence to show that complainant had informed about the anticipation of any incident of fire to the MSEB. It is further submitted by Adv. Kulkarni that panchanama carried out by police authorities but they were not expert in the field therefore, their panchanama is not to be believed. It is further submitted by Adv.
Kulkarni that after the receipt of intimation about the fire surveyor M/s. Thombre and Company from Pune appointed to assess the loss and after receipt of surveyor's report claim was repudiated on 28.06.2005 by relying on the condition No.8 of the policy which reads as under:
Condition No.8:-
If the claim be in any respect of fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means of devices are used by the insured or any one acting on his behalf to obtain any benefit under this policy 7 C.C.No.:84-06 or if the loss or damage be occasioned by the willful act, or with the connivance of he insured, all benefits under this policy shall be forfeited."
4. It is submitted by Adv. Kulkarni that, after perusal of al the required documents and consideration of survey report insurance company repudiated the claim as not maintainable. Even the Ombudsman of the insurance company also dismissed the claim of complainant as not sustainable. Therefore, there is no deficiency in service on the part of insurance company. It is further submitted by Adv. Kulkarni that investigator appointed by insurance company approached to MSEB who replies to his queries as under:
"On date 30.07.2004, there is no explosion in transformer to the T/F Center, when message received that there is fire in M/s. Nitin Industries, the supply is kept off for two hours and then supply of M/s. Nitin Industries is disconnected. The fuses of distribution box are also not blown. There is no complaint from that T/F from 01.07.2004 to 30.07.2004 except above incident".
It is submitted by Adv. D. S. Kulkarni that, as per the report of MSEB the cause of fire was not the short circuit but otherwise. It is submitted by Adv. Kulkarni that there was no burst on the transformer as alleged by the complainant. Even as per the origin of fire approximate cause can not be ascertained and damage is not accidental in nature. It is also concluded by surveyor that foul play is suspected hence, claim is fraudulent. It is submitted by Adv. Kulkarni that transformer is away from the factory premises and many other factories were given electric supply from the said transformer, but there was no fire in any other factory except the factory premises of complainant. Therefore it creates doubt. It is submitted by Adv. Kulkarni that it is also not the contention of the complainant at the time of incident there was stormy winds. Therefore it can not be believed that fire sprayed rapidly. It is submitted lastly by Adv. Kulkarni that, it seems that complainant was defaulter of bank 8 C.C.No.:84-06 and therefore fire must have been managed by the complainant. Fire is not accidental but intentional. It is further submitted by Adv. Kulkarni that claim was not explained by the complainant. No details about the loss caused to the complainant was given by him therefore, at the utmost complainant is entitled to the amount as per survey report.
5. In support of his contention Adv. D. S. Kulkanri relied on-
i) Sikka Papers Vs. Woods & Phrases - 2009 (III) CPJ - 90 (SC)
ii) Oriental Insurance Co. Ltd. V/s. Mehta Wood - III (2007) CPJ 317 (NC)
iii) Star Chemicals Vs. Oriental Insurance Company, (IV) 2007 CPJ - 49.
It is submitted by Adv. D. S. Kulkarni that, no evidence is produced by complainant to show that he is authorized to run the said factory. As no license to run the factory is produced by complainant.
6. Complainant appeared in person. It is submitted by complainant that in the complaint it is wrongly mentioned that complainant is a partnership firm. In fact, in the affidavit filed by complainant it is clearly mentioned that complainant is a sole proprietor of Nitin Industries. At the outset, complainant mentioned that incident of fire had occurred in the broad day light at 10.45 a.m. therefore, the allegations of the insurance company that the fire was not accidental and intentional is not sustainable. It is further submitted by complainant that before the incident of fire many letters were issued by complainant and other factory owners to the MSEB about the sparking on the transformer installed near the factory premises of complainant, but MSEB did not take care, due to which incident of fire had occurred. It is further submitted by complainant that, opponent urged that transformer was burst but it is clearly mentioned by complainant that huge noise was heard by complainant at the transformer. Therefore, he rushed to factory and found that main switch in the 9 C.C.No.:84-06 factory was burst with huge sound and fire started from the main switch. It is further submitted by complainant that after the incident of fire immediately fire brigade was called which took several hours to extinguish the fire. It is submitted by complainant that the raw material and finished goods of plastic which were stored in the factory premises were highly inflammable in nature and hence the fire spread rapidly. Plastic used to melt quickly after getting the hit therefore it is impossible to remove the goods or raw material which was of plastic. Therefore, complete raw material and finished goods which were stored in the factory premises were gutted in the fire.
7. Surveyor Mr. Thombre inspected the factory premises and tried to assess the loss. But as surveyor Thombre is not expert in the field of electrical engineering he could not assess the loss properly. It is submitted by complainant that even after production of all the required documents surveyor could not assess the loss upto 11 months. During the period of said 11 months not a single documents called by the surveyor it means that all the required documents were supplied by the complainant to the surveyor. Even then repudiation was made by the insurance company after 11 months and that is also on the flimsy grounds that claim is fraudulent. Not a singly evidence produced by Insurance Company to show that claim was fraudulent. It is submitted by complainant that, complainant's industry is small scale industry and certificate issued by Government to run small scale industry is license to carry out the business.
8. It is further submitted by complainant that, bank statement and statement of accounts regarding year 2002-2003 and 2004 all were supplied to the surveyor. Perusal of said statement will clear that complainant was having stock worth Rs.16,00,000/-. It is further submitted by complainant that his machineries were hypothecated with the bank and accordingly agreement with bank was produced on record.
10 C.C.No.:84-069. It is submitted by complainant on hypothecation of machinery bank granted loan of Rs.11,00,000/-. Therefore price of machinery cannot be doubted. Report of electrical inspector regarding the cause of fire was also produced on record, therefore the contention of insurance company that incident of fire is intentional is perverse. The Electrical Inspector is expected to show probable cause of fire as he not witnessed the fire. It is submitted by complainant that Ombudsman is a person who retired from insurance company therefore; result in favour of complainant is not expected. Ombudsman on 13th March, 2007 allowed the complaint and on 31 st March he changed his order, therefore it can be held that Ombudsman did not apply his mind to the fact and record of the complaint. It is lastly submitted by complainant that incident of fire occurred in the broad day light. Before incident several letters were issued by many factory owners including complainant to the MSEB about the apprehension of any incident due to short circuit. All the required documents were supplied to the surveyor but claim repudiated after 11 months, after receipt of claim, this is deficiency in service on the part of insurance company.
10. In support of his contention he relied on-
a) Oriental Insurance Co. Ltd. Vs. Shishir Khandelwal - 2009 NCJ -
502 (NC).
It is held by National Commission that, when survey report based upon conjectures and probabilities is can not be accepted as conclusive evidence.
b) In United India Insurance Co. Ltd., Vs. Sona Spice Pvt. Ltd. - IV (2010) CPJ 95 (NC).
It is held by National Commission that, it would be wholly unjust to insured to deprive him even of his legitimate claim to which he 11 C.C.No.:84-06 is entitled once peril under policy has been admitted by Insurance Company - Report of Surveyor casts suspicion over genuineness of bills - Suspicion howsoever strong it may be, cannot take place of proof.
c) In Shambhunath Balmukund Vs. New India Assurance Co. Ltd. -
III (2011) CPJ 90 (NC).
It is held by National Commission that, deduction made by surveyor on the ground of 'Cause Factors' not justified. Deficiency in service proved.
d) In New India Assurance Co. Ltd. Vs. Dr. M. M. Krishan - II (2011) CPJ 301 (NC) It is held by National Commission that, Insurance Company contended that, fire caused due to electrical short circuiting which is excluded under policy not accepted. Fire was major one and took lot of time to control. Surveyor report important unless arbitrary and biased.
e) In United India Insurance Co. Ltd. Vs. Anil Modi Oil Industries Ltd. - I (2011) CPJ 322.
It is held by Pujab State Commission that, Nobody interested in damaging own machinery - Surveyor rejected claim without valid reason.
f) In Tanda Textiles & Processing Mills Pvt. Ltd. Vs. United India Insurance Co. Ltd. & Ors. - II (2007) CPJ 168 (NC).
It is held by National Commission that, surveyor's report based on assumption or notions, ignored- Complainant entitled to be reimbursement.
11. We heard both the parties and perused the record. It is an admitted fact that, complainant is running small scale industry by name and style "M/s. Nitin Industries". For running the said factory complainant obtained the loan from 12 C.C.No.:84-06 opponent No.2. Complainant had obtained loan by hypothecating the machineries. The incident of fire occurred at 10.45 a.m. on 30 th July, 2004 while the policy was in force. In our view, complainant had obtained the policy for "Fire & Special Perils" therefore; he is entitled to claim the policy amount for his loss. It has come on record that before incident of fire several letters were issued to officers of MSEB intimating the sparking on the transformer installed near the factory premises of complainant. Precautions were not taken by the MSEB, therefore on the fateful day short circuit occurred in the factory premises of the complainant. Surveyor was supplied all the documents and evidence about the incident of fire and estimated loss. From the date of visit of the surveyor i.e. 31.07.2004 till the repudiation not a single document was called from the complainant by insurance company. Therefore, it can not be held that no documentary evidence was produced by the complainant before insurance company Even then insurance company took 11 months time to settle the claim. This itself is deficiency in service. In our view, report of surveyor is based on assumptions and presumptions which can not be relied in toto. Surveyor has applied his own notions while submitting the report. In our view surveyor did not apply his mind while considering the documentary evidence produced by complainant. Even order of insurance Ombudsman is not proper as firstly he allowed the complaint and thereafter he rejected the complaint. The authorities produced by complainant are squarely applicable to the facts and nature of complaint. In our view, insurance company did not consider the claim of complainant in proper perspective. Even contention of insurance company that fire is not accidental but intentional not proved by any cogent evidence by the insurance company. The contention of Insurance Company that, complainant was defaulter of the bank and therefore with view to avoid the repayment of loan incident of fire might have managed. In our view, there is no force in the said contention as it is not supported by any authentic evidence.
13 C.C.No.:84-0612. The damages as claimed by the complainant at Rs. 26,00,000/- which includes Rs. 8,00,000/- towards the loss of machinery, Rs. 5,00,000/- towards loss of building and Rs. 13,00,000/- towards the loss of stock of goods, can not also be accepted as the same has not been properly justified. There appears no consistency in the loss claimed by the complainant in respect of all the three items. Although in his complaint loss is shown at Rs.26,00,000/- the same is claimed as Rs.24,00,000/- in his statement dated 30.04.2004 given before the police. In the police panchanama also the total loss mentioned is Rs. 24,00,000/-. The break up of this loss of Rs. 24,00,000/- is shown as Rs. 6,00,000/- towards the loss of machinery, Rs. 5,00,000/- towards loss of building and Rs.13,00,000/- towards loss of stock.
13. Considering the evidence on record the item wise total loss is therefore assessed as under:
i) Loss of Machinery:-
As mentioned above the complainant in his complaint claimed the loss of machinery of Rs. 8,00,000/-. However, in the statement given to the police the loss is claimed at Rs. 6,00,000/-. On the other hand, in the balance sheet ending 31.03.2004 the cost of machinery is shown as Rs. 7,68,320/- thus there are three different figures regarding the loss of machinery. However, we consider Rs. 6,00,000/- towards the loss of the machinery.
ii) Loss of Building:
The complainants has claimed the loss of Rs. 5,00,000/- against the loss of building. The value of the building as per the balance sheet ending on 31.03.2004 is shown as Rs. 3,69,900/- and an addition is shown as Rs.1,81,300/- that is total Rs. 5,51,200/- and allowing depreciation at 20 % the 14 C.C.No.:84-06 net value is shown as Rs. 4,76,080/-. The complainant however has not given any explanation about addition of Rs.1,81,300/-. Hence, the said value and also the claim of Rs. 5,00,000/- towards the loss of building can not be accepted. In this connection we rely with certain variation on surveyor's observation, in which it is mentioned that the complainant had obtained permission for construction of the shed which was damaged in the fire, from the MIDC on 28.04.2003. The construction of the same is taken as completed within 4 months i.e. end of August, 2003 as against May, 2004 as considered by the surveyor. Since the period of one year for construction as considered by the surveyor would not require. The cost of the shed as worked out by the surveyor at Rs.725/- per sq. mtr for 496 sq. mtr. is Rs. 3,69,600/- which appears to be acceptable when compared with the value of the existing building which is shown at Rs.3,69,900/- in the balance sheet of 31.03.2004. If this value of Rs. 3,69,600/- is in the month of August, 2003, therefore its value on 30.07.2004 i.e. after one year with deduction of depreciation works out to Rs.3,20,000/-. Thus, we fixed the loss of building at Rs. 3,20,000/-.
iii) Loss of stock:
The complainant has claimed loss of stock at Rs. 13,00,000/- which is not acceptable without any cogent evidence to that effect. The complainant has based his claim on the statement of stock submitted to the Ahmednagar Merchant Bank. In fact, on the perusal of this stock statement it is observed that they have not been acknowledged by the bank with any authentic stamp of the Bank. It is therefore doubtful whether these statements have been received by the bank and that the bank has verified the stock. It is also noted that, the stock statement of the month July, 2004 is shown to have submitted on 30.03.2004 i.e. on date of incident of fire. We therefore can not rely on these statements. In absence of any other reliable evidence we therefore have to rely on the balance sheet of 31.03.2004 in which the value of stock is shown as Rs.15 C.C.No.:84-06
10,10,000/- The incident of fire has taken place on 30.07.2004, however the complainant has not provided the figure of purchase and sale of raw material and finished goods respectively for the period of said 4 months. Hence, we consider this amount Rs. 10,10,000/- as the value of stock and so the value of loss as on 30.07.2004.
Thus total loss is therefore worked out as under:
Sr. No. Item Amount of Loss
1. Machinery Rs.6,00,000
2. Building Rs.3,20,000
3. Stock Rs. 10,10,000
---------------------------
Total - Rs.19, 30,000
As per the surveyor's report the total cost of salvage as obtained by complainant is Rs. 2,60,000/-. Deducting this amount of salvage the loss works out 16,70,000/- (19,30,000 - 2,60,000).
14. From the surveyor's report it is also observed that the complainant had not carried out any safety measures against the fire such as, fire extinguisher, piped water arrangement etc. The complainant himself has also not claimed anywhere to have made such arrangements. In fact, the material to which he was dealing with i.e. plastic is highly inflammable and therefore it was obligatory on the part of complainant to make sufficient arrangement to protect the stock from the probable incidence of fire. This failure on the part of complainant has also indirectly contributed the loss caused due to the fire. Hence we allow 20 % deduction on the above said amount of loss of Rs. 16,70,000/- and work out the net loss at Rs.13,36,000/- say Rs.13,30,000/- ( 16,70,000 - 03,40,000 ) for which complainant is entitled to receive.
16 C.C.No.:84-06In the result, we pass the following order.
-:: ORDER ::-
1. Complaint is partly allowed.
2. Opponent Insurance Company is directed to pay Rs. 13,30,000/- with 9 % interest from the date of repudiation of the claim i.e. 28.06.2005 within a period of 30 days from the date of receipt of copy of this order, failing which the opponent shall be liable to pay the interest @ 9% p.a. on the entire amount due on the date of order till the realization of the entire amount.
3. Opponent is directed to pay Rs.10,000/- for mental agony and Rs.5,000/- as cost of the complaint.
(K. B. Gawali) (D. N. Admane)
Member Presiding Judicial Member
Kalyanakar