State Consumer Disputes Redressal Commission
Sk Handloom Handicrafts vs New India Assurance Co. on 4 October, 2023
Daily Order STATE CONSUMER DISPUTES REDRESSAL COMMISSION, HARYANA PANCHKULA Consumer Complaint No.582 of 2017 Date of the Institution:06.09.2017 Date of Order:04.10.2023 M/s S.K.Handloom Handicrafts, O/o Plot No.275, Sector 29, Part 2 HUDA Panipat (Haryana) through its proprietor Suresh Kumar. .....Complainant Versus 1. New India Assurance Company Limited, Divisional office, near SD College, G.T. Road Panipat 132103 (Haryana) through its Divisional Manager. 2. New India Assurance Company Limited, Regional office, SCO 36-37, Sector 17 A Chandigarh 160017 through its Chief Regional Manager. .....Opposite Parties CORAM: S.P.Sood, Judicial Member Present:- Mr.Mrigank Sharma, Advocate for the complainant. Mr.R.C.Gupta, Advocate for the opposite parties. O R D E R
S.P.SOOD, JUDICIAL MEMBER:
The brief facts giving rise for the disposal of the present complaint are that the complainant's firm deals in Handicraft and engaged in manufacturing and processing of yarn, cloth, fabrics, thread, latex, raw materials and finished goods. The complainant firm has obtained "Standard Fire and Special Perils Policy' No.35390011150100000516 dated 27.06.2015 from the opposite parties for the period from 27.06.2015 to 26.06.2016 for the sum insured amount of Rs.Three crore in respect of their premises i.e. building, plant & machinery and accessories alongwithall kind of stocks. The complainant has been regularly paying premium to the OP. On 08.05.2016, a devastating fire broke out in the premises of the complainant at Panipat due to electric short circuit andresulted into extensive damage to the building, machinery and stocks of the complainant. Having learnt about this development immediately due intimation was imparted to fire department,police authorities as well as to the opposite parties. Surveyor was appointed.However despite complainant firm suffered a loss to the tune of Rs.1,66,10638/- whereas the surveyor vide his report of 29.06.2017 assessed the loss to be of Rs.93,22,401/- but the said surveyor report was never supplied to the complainant as per the IRDA rules, rather it was only as per request of the complainant, the surveyor report was supplied to the complainant that too in August 2017. Despite complainant firm having fully cooperated with the surveyor, the OP insurance company vide letter dated 19.07.2017 closed the claim of the complainant as No claim alleging that the complainant has not submitted the documents i.e.rent agreement and copies of purchase invoices plus bills from M/s Mittal Enterprises one of its major client. Whereas the OP insurance company has failed to appreciate that the complainant and said M/s Mittal International were two completely separate firms, thoughthe complainant firm did work for M/s Mittal International as the same has been one of the leading exporter of such material from Panipat. However, the complainant firm has a separate legal entity with stand alone existence. The complainant firm has been an Income Tax assessee, with a separate pan Number and deposits employee Provident Fund for its workers since the day it came into existence. The complainant firm has also been member of the employee state insurance (ESI) for its employees right from the beginning. All the invoices were duly sent to the OP insurance company. The said invoices and purchase bills were duly obtained from Mittal International and were inturnforwarded to the OP insurance company. It was also submitted that even some of the stock and goods were also lying in the godown for packing and processing, but the complainant was liable to re-imburse the value of the same to the manufacturers and for that purpose the insurance company was liable to indemnify the insured. This is how complainant has not violated any terms and conditions of the insurance policy and even the surveyor in his report also has submitted that incident of fire was genuine and there was no break in the insurance coverage alongwith the fact that stocks were found in an extremely burnt conditions, so the OP insurance company could not allege that there was any concealment on the part of the complainant. Moreover complainant had not taken the policy for any profit making motive but had taken the policy for indemnification of the loss, if any. As such itrequested the OPs to settle the claim on several occasions, but to no avail. So under these circumstances the complainant firm was left with no option but to file the present complaint with a prayer that the appropriate direction may be issued to the O.Ps. to pay Rs.93,22,401/-, Rs.10,000/- for compensation on account of harassment and the amount of Rs.33,000/- as litigation expenses. Thus there was deficiency in service on the part of the OPs, hence the complaint.
2. The complaint was resisted by the O.Ps. by filing a written version raising various preliminary objections about maintainability, the complaint involving complicated question of law and facts so ideally should have been left for the normal courts to deal with, lack of locus standi etc. and requested to dismiss the same. Even the complainant was also assailed for the reasons that complainant has claimed the amount of Rs.93,22,401/-, alongwith cost and compensation just to bring it under the pecuniary jurisdiction of this Commission, whereas in fact the estimated loss alleged by it was to the tune of Rs.1,66,10,638/- and sum insured as per the policy was also ofRs.Three crore, therefore, present complaint is not triable by the State Commission. OPs admitted that the insurance policy covering the risk of various items as mentioned therein for the sum insured of Rs.3 crores. Was very much in existence. Neither the DO/Agent of the insurance company was ever communicated by the any representation in this regard from the complainant till today. The fire claim was reported with the OPs with regard to alleged fire dated 08.05.2016 in the premises of the complainant, following whichsurveyor Mr. Ashish Behl, was appointed, who submitted his preliminary report of the loss in question on 18.06.2016. Subsequently as per the settled procedure and practice M/s Consolidated Insurance Surveyors & Loss Assessors Private Limited and experienced Chartered accountant duly enrolled with IRDAI and on the panel of NIA, visited the premises on 10.05.2016 and also on subsequent dates and contacted the representatives of the insured, assessed the loss and submitted his report dated 29.06.2017. The complainant did not fully cooperate with the surveyor and loss assessor. OPs requested the complainant to justify the estimated claim of Rs.1,66,10,638/-, but, to no avail. The contents of surveyor report found that insured firm had no records/ documents in respect of the goods alleged to be destroyed i.e. copies of purchase invoices, challan etc. whereas the documents given to him were arranged from one M/s Mittal International by the insured firm. It was admitted that surveyor and loss assessor deputed by the OPs have assessed the loss to the tune of Rs.93,22,401/- and submitted his independent survey report dated 29.06.2017. The claim has rightly been rejected by the OPs as he has failed to submit relevant documents to establish itshaving insurable interest qua the goods destroyed in the alleged FIR. So finally the complainant was not found entitled for the compensation as prayed for that is why its claim was repudiated. Thus there was no deficiency in service on the part of the OPs and prayed for dismissing the complaint.
3. In evidence, Mr.Mrigank Sharma Advocate for the complainant tendered affidavit Ex.CA of Suresh Kumar proprietor of the complainant and also tendered documents Ex. C-1 to C-7 and closed its evidence.
4. On behalf of opposite parties, Sh.Sudhir Gupta, Advocate for the opposite parties tendered in evidence affidavit of Sh.Deep Shikha, Deputy Manager (Ex. RA), affidavit of Ashish Behal Surveyor as Ex. RB and affidavit of Sh.N.S.Sidhu, Surveyor as Ex. RC and also tendered the documents Ex.R-1 to Ex.R4 and authority letter Ex.RX and closed the evidence on behalf of OPs.
5. These arguments were advanced by Sh.Mrigank Sharma, Advocate for the complainant as well as Mr.R.C.Gupta, Advocate alongwithMr.Sudhir Gupta, Advocate for the opposite parties. With their kind assistance the entire record comprising of voluminous documentary evidence as well as whatever evidence has been led during the proceedings of the complaint was properly perused and examined.
6. Learned counsel for the complainant vehemently argued that it is admitted in the surveyor report that surveyor assessed the amount of Rs.93,22,401/- in its report, but insurance company has illegally repudiated the assessed amount. However, the complainant suffered loss more than Rs.93,22,401/-, but, complainant's in its prayer clause has restricted his amount of Rs.93,22,401/-. Perusal of the record shows that the complainant has placed on record rent agreement as well as invoices, which shows that the complainant was worked as its another firm. Thus, the complainant is entitled to Rs.93,22,401/-.
7. Learned counsel for the respondent vehemently argued that the surveyor has rightly repudiated the claim of the complainant vide its letter dated 19.07.2017. Further the complainant has claimed the amount of Rs.93,22,401/-, alongwith cost and compensation just to bring it under the pecuniary jurisdiction of this Commission, whereas estimated loss alleged by complainant was to the tune of Rs.1,66,10,638/-, therefore, the present complaint is not triable by the State Commission. Hence, the complaint be dismissed with costs.
8. It is not disputed that, the complainant's firm deals in Handicraft and engaged in manufacturing and processing of yarn, cloth, fabrics, thread, latex, raw materials and finished goods. It is not disputed that complainant firm has obtained "Standard Fire and Special Perils Policy' No.35390011150100000516 dated 27.06.2015 from the opposite parties for the period from 27.06.2015 to 26.06.2016 for the insured amount of Rs.Three crores in respect of their premises i.e. building, plant & machinery and accessories alongwith stocks of all kind. The complainant has been regularly paying premium to the OP. It is also not disputed that during the continuation of the insurance policy, incident of fire took place in the premises of the complainant at Panipat due to short circuit resulting into extensive damage to the building, machinery and stocks of the complainant. Surveyor appointed by the OP company following immediate information, assessed the loss of Rs.93,22,401/- videhis report dated 29.06.2017. Initially the surveyor report was never supplied to the complainant but upon request, it was supplied to the complainant in August 2017. The OP insurance company vide its letter dated 19.07.2017 closed the claim of the complainant as No claim alleging that the complainant did not submit the rent agreement and invoices.
9. The OP insurance company has assessed the loss by way of its surveyor Ex. C-3 which was an admitted fact. However, subsequently, the OP insurance company has repudiated the claim vide Ex. C-4 and has taken a decision that amount assessed by the surveyor is not to be paid and rather nothing has to be paid.
10. The counsel for the complainant has pointed out various documents in support of the claimi.e. rent agreement Ex. C-2, which proved the case of complainant. The surveyor report Ex.C-3, which shows that the complainant suffered a loss of Rs.93,22,401/-. The complainant has not violated any terms and conditions of the insurance policy. The surveyor in his report submitted that incident of fire was genuine and there was no break in the insurance coverage alongwith the fact that stocks were found in an extremely burnt conditions, the OP insurance company could not allege that there was any concealment on the part of the complainant. The complainant had not taken the policy for any profit making motive but had taken the policy for indemnification of the loss, if any. When the surveyors appointed by the insurance company have found that the claim of loss and fire to be genuine in his report, should not be a sufficient ground to deny the insurance claim.
11. The complainant has raised the issue of the amount assessed by the surveyors to be awarded to it and as such the only quantum being raised by the complainant is the amount assessed by the OP and as such for the purpose of value of goods in the present complaint, the amount is Rs.93,22,401/- only.
12. At the very out set before adverting upon to discuss various pros and cons of the case in hand, it has been the stand of the complainant firm that it used to carry out only the job work that too for M/s Mittal International. This fact has also been noticed by the surveyor-cum-loss assessor in his report. Added thereto it also evolves from the observation recorded in this report that besides the stock of all kinds of yarn, cloth, fabrics, thread, latex, raw materials textile goods handloom/powerloom product and all other goods related to their trade whilst in process/under-process lying or stored in process block godowns in factory premises even the goods held in trust and or on commission basis were also covered under the said policy which is not disputed. So a conjoint reading of the fact that insured firm were carrying out only job work of Mittal International and the goods available in godowns even if the same were entrusted to it for working upon the same were duly covered under the policy Ex.C-1. This arrangement is also supported by the balance sheet for the year ending 31.03.2016, showing of not of large quantities of various articles, may be by then the insured company must have supplied back the final goods as per the requirement of Mittal International when this balance sheet was prepared by the certified Chartered Accountant. Even otherwise if we try to understand the working of a firm which is primarily engaged in carrying out the job work of some other company, we find that such moments are quite rampart when the entire space at disposal of the firm will remain occupied by either the raw material and finished goods and afterwards when the entire job work is accomplished and final goods are delivered back to the principal owner then this entire area becomes vacant however whatever material remained there for any length of time the same though not owned by subsidiary company or firm but the same material happened to be in trust with it and therefore duly covered under the policy. That being so it is quite surprising as to how and what prompted the surveyor to observe in sub para of paragraph 13 of his report:-
"but in the godown in which fire broke out, the stocks which does not pertains to the captioned unit was stored i.e. the damaged stock was neither raw material nor finished goods of the captioned factory. Therefore, the insurable interest of the insured in the goods stored in the captioned godown could not be established."
Further more there does not seem to be any logic the way the surveyor has observed that the copies of challans provided to him by representative of insured alongwith bill issued in favour of M/s Mittal International by its suppliers did not match because in this case it is the challans issued in favour of insured firm which are important and not the bills vide which these raw materials were purchased by Mittal International. Likewise it could not be ascertained as to how/and what sort of job work was to be got carried out from the insured firm and even how it could be observed that the finished goods were not to be further worked upon or packed by insured firm. Infact the challan is being issued to indicate that certain gods were duly dispatched by one company and the same were duly accepted by the other entity may be for any purpose. So applying this analogy to the facts and circumstances of the case in hand, the issuance of challans copies of which were duly supplied by insured company to surveyor clearly indicate that the goods either raw material or other find reflected in those challans were entrusted to insured firm for taking up the job work thereon as per requirement. This development clearly establishes that those goods as found reflected in the challans were duly entrusted with the insured firm which ultimately got burnt. So when such an arrangement was put in place between insured firm and Mittal International then obviously it was the said Mittal Int. which would have supplied the copies of all the challans before the surveyor and therefore the objection raised by him that insured firm could not supply any documents rather it Mittal Int. which had done the needful in this regard. This is how it was Mittal Int. which had entrusted the raw material and other semi-finished goods to the insured firm which of course were duly covered under the terms and conditions of the policy. So far as the doubt expressed by surveyor as to why Mittal Int. would ever send the finished goods packed from insured firm which is situated at a distance of eight to ten kilometers well it is a matter of common experience that off late manufacturers have started laying much emphasis on packaging of the goods for their presentability before the prospective buyers. Therefore, we cannot read between the lines as to how Mittal Int. used to send its finished goods also to insured firm for packing alone. Likewise mere inability on the part of the insured firm to provide the rent note initially stood precisely settled to rest as the insured firm has actually provided the desired document before surveyor so for this reason this objection should not have been having any role with surveyor to have arrived at the conclusion of refusing the claim. No documentary or any sort of oral evidence could be lead by OP company to substantiate the observation of surveyor that earlier the godown where fire broke out was used by Mittal Int. for storing its stock and not the insured firm. So for all these reasons there was no rationale with the surveyor to have concluded that complainant could not prove his insurable interest in the goods and stock which all were gutted on 08.05.2016. Even the cause of fire noticed by surveyor under para 10 of his report is also quite significant as the author of this report has in his own estimation has held electric short circuiting to be the only probable cause of this fire after ruling out completely any such misadventure on the part of the complainant deliberately or intentionally so the surveyor has concluded that the fire was accidental and was thus duly covered under the policy. So in the net analysis the final conclusion arrived at by the surveyor recommending this claims to be not payable was not justified at all especially when he has worked out the estimated loss to the insured firm to the tune of Rs.93,22,401/-.
11. It was further evident from the prayer clause of the complainant that the complainant was only claiming the amount assessed by the surveyor, vide Ex.C-3 and as such the said amount being Rs.93,22,401/- is the only amount in dispute and can be considered as the value of the goods or services in question. It is worthwhile to note here that no interest has been claimed on the said amount in the prayer clause on the said amount and as such, the judgement of Ambrish Kumar Shukla & others Vs. Ferrous Infrastructure Private Limited is not applicable to the facts and circumstances of the present case and the present complaint is held to be within the territorial jurisdiction of this Commission.
12. Resultantly in view of the findings above, the present complaint deserves to be allowed and the OP insurance company is liable to make payment the amount assessed by its own surveyor vide Ex.C-3 i.e. Rs.93,22,401/- alongwith compensation for the mental agony and harassment assessed at Rs.50,000/- and litigation expenses at Rs.33,000/-. Since the complainant has not clamed any interest on the said amount, so the said amount of Rs.93,22,401/- be paid within a period of45 days without any interest alongwith compensation for mental agony and harassment with litigation expenses, from the date of receipt of certified copy of the orders.
13. However, since the repudiation of the claim vide Ex. C-4 has been rejected by this Commission it is made clear that in case, the above said awarded amount is not paid within a period of 45 days, then the entire amount shall carry interest @ 12% p.a. from the date of filing of complaint till actual realization as a default provision.
14. Applications pending, if any stand disposed of in terms of the aforesaid judgment.
15. A copy of this judgement be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986/2019. The judgement be uploaded forthwith on the website of the commission for the perusal of the parties.
16. File be consigned to record room.
04th October, 2023 S. P. Sood Judicial Member S.K (Pvt. Secy.)