National Consumer Disputes Redressal
Ravindra Nath Fruit Canning Industries ... vs The Divisional Manager United India ... on 10 January, 2006
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO. 238 OF 1998 Ravindra Nath Fruit Canning Industries (P) Ltd. Through its Managing Director Shri G. Jayaram Naidu 18-990 Prakasam High Road Chittoor (A.P.) 517 001. Complainant Versus 1. The Divisional Manager United India Insurance Co. Ltd. Divisional Office Post Box No.31-10-114 Gandhi Road Extension Chittoor 517 001. 2. The Manager, Andhra Bank, Chittoor Branch Chittoor 517 001. Opposite Parties BEFORE : HONBLE MR.JUSTICE M.B. SHAH, PRESIDENT DR. P.D. SHENOY, MEMBER For the Complainant : Mr. V.R. Reddy, Sr. Advocate with Mr. V. Balaji, Mrs.R. Meena Kumari, Ms. Fathima Altaf and Mr. Vinod Mehta, Advocates For the Opp. Party : Mr. K.L. Nandwani, Advocate Dated : 10.01.2006 O R D E R
M.B. SHAH, J., PRESIDENT Facts:
It is contended by the complainant, a private limited company dealing in fruits, that it purchases mangoes from agriculturists and other traders which form the bulk of raw material for manufacture of mango pulp. Purchases were made both directly as well as through Andhra Pradesh Agricultural Marketing Committee. As the complainant is engaged in manufacturing mango pulp and for ripening of the mangoes, the mangoes were required to be placed in the sheds with a cover of grass. The business of the complainant is seasonal. It is his say that since 1989 onwards, when the company started production of the mango pulp, it was taking insurance against the thatched sheds and raw materials.
Complainant contends that absence of transparency had permitted and accentuated arbitrariness by Statutory Authority, namely, the United India Insurance Co. Ltd. to repudiate the claim of the complainant despite as many as two surveyors, two investigators and Divisional Manager, Chittoor, having given their report to the effect that the claim of the complainant was genuine. However, on the basis of the report of an investigator, the claim was repudiated. Hence, this complaint.
It is the say of the complainant that on 31.5.1996, the complainant took an insurance coverage for a sum of Rs.3.10 lakhs for the period between 24.6.1996 and 23.6.1997 in respect of thatched sheds in which he was storing mangoes on large scale. Thereafter, on 12.5.1997, the complainant took another insurance policy for a sum of Rs.50 lakhs in respect of stocks of mangoes in the thatched sheds for a period of 3 months from 12.5.1997 to 11.8.1997 as the mango business is seasonal. On 4.6.1997 fire took place due to short-circuit at about 12.55 PM.
Due to fire, the thatched sheds and the mangoes were destroyed.
- Immediately at 1.00 PM, the police, the fire brigade and the insurance authorities were informed about the outbreak of the fire. The fire brigades reached there immediately and controlled the fire after fighting for 3 hours and 15 minutes.
- The insurance company deputed a surveyor to visit the spot on the same day to assess the loss.
- On 5.6.1997, the insurance company informed the banker of the complainant, namely, Andhra Bank, about the fire accident and that the second surveyor would also be attending the job.
- On 6.6.1997, the second surveyor visited the fire affected sheds, verified the purchase bills and stock registers and attested his signatures in the stock register. He also advised for weighment of the debris and that on 7.6.1997, debris weighing 5,53,460 Kgs. was removed from the accident site in 61 trucks.
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The first surveyor submitted his report on 7.6.1997.
- On 17.6.1997, the second surveyor engaged by the insurance company called for certain documents and particulars. The particulars were supplied on 11.7.1997 and thereafter the second surveyor submitted his report to the insurance company.
The insurance company appointed an investigator in September 1997. He made enquiries with the villagers, the fire brigade, the police and the bank officers and tendered his report in the same month.
Thereafter, the insurance company appointed on 12.3.1998 second investigator who also made enquiries and submitted his report dated 19.5.1998 to the Divisional Manager of the insurance company at Chittoor. It is the contention of the complainant that the Divisional Manager of the insurance company forwarded the file to the Regional Office at Hyderabad.
- In December 1997 and in January 1998, the Andhra Bank requested the insurance company for an early settlement of the claims.
- On 2.3.1998, the insurance company appointed a third investigator. Requisite information was also sent to him. As nothing was heard, the complainant wrote a letter to the Chairman and Managing Director of the insurance company. The letter was acknowledged by them on 24.2.1998.
- On 28.9.1998, the insurance company repudiated the claim by invoking Condition No.8 of the policy by stating that the purchases said to have been made from one Shri K.R. Palani Pillai were false as per the investigation. Thereafter, on 13.10.1998, the complainant wrote to the Regional Manager and the Divisional Manager of the insurance company to make available the survey reports of the first surveyor, the second surveyor, the first investigator, the second investigator, the Divisional Manager and the third investigator.
Feeling aggrieved, the complainant has filed this complaint praying that he is entitled to reimbursement for the following loss suffered by him
a) Loss due to spoiling of the Mangoes (raw material)
(i) Alphanso - Rs.25,33,620/-
(ii) Totapuri - Rs.19,36,935/-
b) Loss due to destruction of Thatched sheds - Rs. 1,53,600/-
c) Loss due to employment of labourers for clearing the debris - Rs. 68,500/-
d) Loss of business from June97 to date in respect of mango pulps - Rs.12,00,000/-
e) Compensation for mental agony - Rs.
1,00,000/-
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Total - Rs.59,92,655/-
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It is also prayed that a sum of Rs.59,92,655/- be paid with interest at the rate of 12% per annum and also the cost of litigation.
It is further prayed that the insurance company be directed to furnish copies of the various reports submitted by the surveyors, investigators and the Divisional Manager, Chittoor Branch, along with all documents filed on record of this Commission.
Repudiation letter:
At the outset, we have to state that there is no dispute with regard to the fire or the insurance coverage. The only controversy is with regard to invocation of Condition No.8 of the insurance policy in repudiating the claim made by the complainant for the loss suffered by him. We would, therefore, refer to the said letter as a whole, which is as under :
Reg : Fire Accident on 4.6.97 of M/s.Ravindranath Fruit Canning Industries (P) Ltd., Chittoor
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With reference to the above claim, we have gone through all of the papers and it is observed and clearly established that Alfonso fruit said to have been damaged were not present in fire affected sheds and the purchases said to have been made from Sri K.R. Palani Pillai were false as per our investigation.
In the light of above circumstances, it is a clear breach of Condition No.8 of the Policy C If the claim be in any respect fraudulent or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the willful act or with the connivance of the insured, all benefits under this policy shall be forfeited.
In the above circumstances, we express our inability to entertain your claim.
Whether Clause (8) can be relied upon for repudiating the claim?
From the aforesaid letter, it is apparent that claim is repudiated on the grounds that
1) alphanso fruits said to have been damaged were not present in the fire affected sheds; and
2) the purchases said to have been made from K.R. Palani Pillai were false as per the investigation.
Therefore, Clause-8 of terms and conditions of the policy was invoked.
The aforesaid Condition No.8 can be bifurcated as under:
i) if the claim be in any respect fraudulent ;
OR
ii) if any false declaration be made or used in support thereof ; OR
iii) if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under the policy; OR
iv) if the loss or damage be occasioned by the willful act or with the connivance of the insured.
all benefits under this policy shall be forfeited.
In this case, the first part only would be applicable, i.e., if the claim, which is in any respect fraudulent, the insurance company is entitled to forfeit all the benefits. In our view, there is no question of the claim being fraudulent because the accidental fire and the damage due to fire are undisputedly proved beyond doubt.
Presuming that there is exaggerated claim with regard to Alphanso mangoes or that the Alphanso mangoes were not there, and only Totapuri mangoes were there, it cannot be said that the claim was fraudulent. At the most this would amount to an exaggerated claim.
Mr.Nandwani, learned counsel for the insurance company, referred to Halsburys Laws of England, Vol.25 and referred to the following passages :
492.
Effect of fraudulent claim.
The making of a fraudulent claim is a breach of the duty of good faith and consequently the assured forfeits all benefit under the policy, whether it contains an express condition to that effect or not. Policies of non-marine insurance usually contain an express condition against fraudulent claims.
493. What claims are fraudulent:- A claim which is put forward when the assured knows that he has suffered no loss or which is supported by false evidence is clearly fraudulent. The position is not so clear where the claim is for an amount in excess of the real amount of the loss and the charge of fraud is based upon the suggestion that the claim has been fraudulently exaggerated. The mere fact that the assured has claimed an excessive amount is not necessarily proof of fraud; questions of amount are largely matters of opinion and the assured may have honestly over-estimated the value of his property or the amount of his loss. The excess may be so great as to justify the conclusion that, having regard to the circumstances, the exaggeration of the amount cannot be an honest estimate but must have been intended to deceive the insurers and to induce them to pay a larger sum than is properly payable; in this case the exaggeration is fraudulent. An exaggeration of amount may also be classified as fraudulent where the assured puts forward deliberately exaggerated figures, not for the purpose of inducing the insurers to pay the full amount of the claim, but for the purpose of fixing a basis upon which to negotiate a settlement.
From the aforesaid paragraph No.493, it is apparent that the claim which is put forward would be a fraudulent claim if the assured knew that he has suffered no loss or it is supported by false evidence. With regard to the accidental fire, it would be difficult to arrive at the conclusion that the fire was not accidental, in view of the two survey reports and one investigation report. Only one investigator who was appointed on 2.3.1998, i.e. after nine months of accidental fire reported that the fire was not accidental. He has also qualified his statement by stating that there is no evidence to that effect.
Further, by not believing the account books maintained by the Complainant or that finding fault somewhere here and there, would not mean that the Complainant had made false declaration in respect of its claim and not believing for want of proof is different from making false declaration in support of the claim.
In any set of circumstances, in the present case, there is a total failure on the part of the Insurance Company to prove the alleged fraud. The reasons are:
(i) repeated appointment of surveyors and investigators reveals lack of good faith on the part of the insurance company;
(ii) the three survey reports, i.e. (i) the report dated 12,9.1997 submitted by Gunasekhar; (ii) the report dated 30.8.1997 submitted by C.Venkata Subramanian;
(ii) Investigation Report dated 28.11.1997 submitted by S.Anoop Kumar, establishing that the fire was due to short circuit and loss was assessed after verification of relevant accounts and other facts.
(iii) fire accident took place on 4.6.1997 and the books of accounts were attested by the second surveyor on 6.6.1997.
(iv) the inspection report given by the Senior Inspecting Officer, Ministry of Food Processing Industries, Government of India, Chennai that the Complainant was manufacturing pulp from Alfonso and Totapuri fruits;
(v) Correspondence by Andhra Bank reveals that the report given by the Second Investigator, M.V.Subba Reddy, is not justifiable.
(vi.). the statements made in the affidavits filed on record.
(i). Appointment of repeated surveyors/investigators: Reading
Section 64 UM it is clear that the Insurance Company cannot go on appointing repeated surveyors. For this purpose we would reproduce the relevant provisions of Section 64 UM which are as under:
(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.
Then sub-sections (3) and 4 read under:(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 it 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 it 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 sub-section (3), issue such directions as it 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 despatch 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.
Sub-section (7) further provides that if the Authority is satisfied that approved surveyor or loss assessor was guilty of willfully making a false statement, his licence can be cancelled. That procedure is, admittedly, not followed. Relevant sub-section (7) is as under:
(7). If the Authority is satisfied that an approved surveyor or loss assessor has been guilty of willfully making a false statement knowing it to be false or of being knowingly a party to the settlement of a claim in a fraudulent manner, he may, after giving such surveyor or loss assessor an opportunity of being heard, cancel the licence issued to him with effect form such date as may be specified by him and shall notify such cancellation in the Official Gazette.
Proviso to sub-section (2) contemplates that the insurer has right to pay or settle any claim at amount different from the amount assessed by the approved surveyor or loss assessor. Secondly, sub-section (3) provides that the authority is entitled to call for an independent report from any other approved surveyor or loss assessor and on receipt of such survey report issue such directions with regard to settlement of the claim at a figure less than or more than at which it is proposed to settle it and the insurer is bound to comply with such directions. From the aforesaid scheme of Section 64 UM it appears that the authority can appoint at the most two surveyors. But, in any set of circumstances, stringent action is provided against the surveyor or loss assessor who is guilty of breach of his duties or willfully making a false statement or has acted in fraudulent manner which may empower the authority to the cancellation of licence given to him. Admittedly, no such action is taken as required under sub-section (7).
This Commission has taken a consistent view that under Section 64 UM Insurance Company cannot go on appointing Surveyors one after the other so as to get a tailor made report to the satisfaction of the concerned officers.
In Revision Petition No. 488 of 1998 dated 8.2.2002, this Commission held as under:
Stringent action is provided against surveyor or loss assessor who is guilty of breach of his duties or willfully making of false statement or acting in a fraudulent manner, entailing cancellation of license given to him. There are ten sub-sections of Section 64UM which it would appear prescribe a complete code as to how a surveyor or loss assessor should conduct.
Thereafter, it is further held:
Scheme of Section 64UM, particularly of sub-section (3) and (4), would show that insurer cannot appoint second surveyor just as a matter of course. If the report of the surveyor or loss assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second surveyor. Appointment by the insurer of a second surveyor itself would be a reflection on the conduct of the first surveyor. Surveyor or loss assessor is duty bound to give a correct report. If the insurer-Insurance Co.
finds that surveyor or loss assessor has not considered certain relevant points or has considered irrelevant points or for any other account it has reservation about the report, it can certainly require the surveyor or loss assessor to give his views and then come to its own conclusion, but insurer cannot certainly appoint a second surveyor-cum loss assessor to counter or even contradict or rebut the report of the first surveyor.
However, the learned Counsel for the Insurance Company relied upon the decision rendered by the Apex Court in National Insurance Co. Ltd. Vs. Harjeet Rice Mills, (2005) 6 SCC 45. In that case, the insured had taken an insurance policy from the Insurance Company for the stocks in the rice mill. The insured claimed compensation on the ground of damage by fire for which it approached the State Commission. The Insurance Company raised the contention that it has no jurisdiction and also pointed out that further investigation was necessary. One of the main defences of the Insurance Company was that fire was not accidental and the Insurance Company has no liability under the policy. It was pleaded by the insured that on the basis of police investigation, the surveyor has reported that fire was caused by short circuit. As against that subsequent police investigation and the investigation by the DSP, it was reported that earlier investigation was perfunctory and that the cause of fire has to be properly investigated and fresh investigation was called for. The insurer engaged a private investigator to investigate and that agency reported that fire might not have been caused by short circuit and that it could have been arson or deliberate attempt to make the insurance claim. In the background of the said facts, the Court observed that the State Commission ought to have given an opportunity to the Insurance Company to prove the investigation report and in establishing that the claim was a fraud on the company. The Court also observed that the State Commission did not apply its mind to the aspect highlighted that the first police investigation was reported to be perfunctory and a fresh proper investigation had been recommended. In this set of circumstances, the matter was remanded for fresh inquiry and decision by the State Commission.
In the present case, the situation is altogether different. The first Surveyor was sent by the Insurance Company on the spot during the fire itself. He has submitted his report as stated hereinafter. Similarly, second surveyor was also appointed to assess the loss and he visited the site after one day of the accidental fire. Both have reported that the cause of fire was short circuit. They have submitted exhaustive survey reports after taking into consideration the books of accounts and other relevant documentary evidence. Thereafter, the insurance company, not satisfied with the said survey reports, appointed an investigator. After a detailed investigation he also arrived at the conclusion that fire was due to electric short circuit. He has also verified the books of accounts, recorded some statements and assessed the loss. Despite these three reports, the insurance company selected and appointed one retired Additional Inspector General, (Prisons), as Investigator, on 2.3.1998, i.e. after a lapse of around 9 months, who has submitted his report, it appears, as desired by the insurance company. And, therefore, in our view, this attitude of the insurance company is totally frustrating and unjustifiable.
Now, we would now refer to the survey and investigation reports:
(ii) Survey & Investigation Reports:
A. Preliminary Survey Report of Gunasekhar, dated 12.9.1997:
The first surveyor & loss assessor, Gunasekhar, has submitted his report on 12.9.1997. He visited the site on 4.6.1997 at 1.00 PM in the presence of the Managing Director of the complainant Company. According to him, the cause of fire was electric short-circuit. For bringing the fire brigade, a car was sent and it arrived at about 1.10 PM and the fire was brought under control. It is his say that the mangoes stored in the sheds were of two varieties, namely, Alphanso and Totapuri, which were found charred and de-shaped. He observed that 18 stacks in each shed were totally affected and in all 36 stacks in both the sheds were completely damaged.
He has also reported that record like purchase register, store register and the processed stock register were physically verified by him. He has further stated as under
:
As per my physical verification, the varieties affected by the fire is Alphanso is 1,31,890 Kgs. and Totapuri is 4,21,520 Kgs. was completely burnt.
The total stock unaffected on 4.6.97 is given as Alphanso is 35,373 Kgs and Totapuri is 2,62,212 Kgs.
The Market price of the stock at the time of the report was confirmed from the Local Market by me on 4.6.97, is Rs. 10/- per Kg for Alphanso and R. 3.05/- per Kg for Totapuri.
In conclusion, he has stated that the affected quantity of the stock as well as the unaffected quantity of the stock were physically weighed and registered.
If we take into consideration the affected varieties, details of loss according to the surveyor was Variety Quantity Rate/Kg. Amount
a) Alphanso 1,31,890 Kgs. Rs.10/- Rs.13,18,900/-
b) Totapuri 4,21,520 Kgs. Rs.3.05 Rs.12,85,636/-
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Total Rs.26,04,536/-
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B. Final Survey Report of C.Venkata Subramaniam, dated 6.6.1997:
There is survey report dated 30.8.1997 given by C.Venkata Subramanian, who visited the site on 6.6.1997, i.e., 2 days after the fire accident for assessing the loss and damage caused by the fire to the stock and to the thatched sheds. He has given details of the shed and the way in which mangoes are stored and how the pulp is manufactured. With regard to the cause of fire, it is his say that in the thatched sheds wherein raw materials are stored, the area is electrified by providing tube-lights on wooden rafters and the fire was possible because of short-circuit. He has given details with regard to the damage to the sheds and its valuation. Similarly, he has verified and has given details of purchase of Alphanso and also the purchase of Totapuri mangoes.
He has discussed in detail with regard to the purchase of the mangoes as also debris was weighed and found to the scale at 55,29,110 kgs. That means there was difference of 66,431 Kgs. of difference on the total quantity affected by fire as pr the books maintained by the complainant. It is his say that this 10.73% difference was justified. Therefore, loss was supported by the books and he finally assessed by loss as under:
Value of 167203 kgs of Alphanso Mangoes at average cost of Rs. 14.72/kg. Rs. 24,61,228.00 Value of 452138 kgs of Totapuri Mangoes at average cost of Rs. 3.24/kg Rs. 14,64,927.00
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Rs. 39,26,155.00
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(unquote) To the loss to the mangoes, he has also added the loss to the sheds and has arrived at the conclusion that total loss was Rs.39,52,601/-.
C. First Investigation Report of S.Anoop Kumar, dated 28.11.1997:
Thereafter, there is an investigation report dated 28.11.1997 submitted by S.Anoop Kumar, Investigator, appointed by the insurance company. In his report, he has stated that he has collected a copy of the survey report submitted by Mr. C. Venkata Subramanian and also referred to the preliminary survey conducted by one Mr. P.S. Gunasekhar, Chittoor, whose services were utilized during the debris weighment and also to monitor the consumption of undamaged mangoes in the unaffected shed. It is his say that the debris of damaged mangoes was weighed to arrive at the actual weights of stocks damaged and the difference in quantity when compared to the books was shown as 66,431 Kgs. which was 10.73% less. This was negligible due to the reason that allowance was required to be given for moisture/evaporation losses during the fire. He has valued the cost of Alphanso mangoes at Rs.4.72 per Kg. and that of Totapuri at Rs.3.24 per Kg. It is also stated that the Alphanso fruit was basically imported from Bangalore market as very less quantity was available in Chittoor area. He has collected the invoices, verified the ledger and also verified from the Agricultural Market Committee the bills made for Totapuri variety of fruit. Finally, after giving details of his verification, he has assessed the loss as under:
Value of Alphanso stocks destroyed In fire on 04.06.97 Rs. 24,59,556.00 Value of Totapur stocks destroyed Fire on 04.06.97 Rs. 11.43.965.00 Add cost of loss on building/thatched sheds after Applying under insurance.
Taken as allowed by the final surveyor. Rs. 28,946.00 T O T A L Rs. 36,32,467.00 Less: Compulsory excess Rs. 2,500.00 Nett liability of the insurers Rs. 36,29,967.00 Rupees Thirty Six Lakhs Twenty Nine thousand Nine Hundred and Sixty Seven only In his conclusion, he has stated that the complainant has suffered a genuine loss due to the fire because of electric short-circuit. The same was purely accidental. The rates of mangoes purchased by the insured were genuine and there was no manipulation in the purchase price by the insured. He has also stated that he had gone through the stock purchased account and the statement and, therefore, in his opinion, there was no need to take any opinion of Chartered Accountant.
D. Second Investigation Report of M.V.Subba Reddy, dated 19.5.1998:
It appears that not satisfied by the aforesaid reports, insurance company appointed one M.V. Subba Reddy, Addl. I.G. of Prisons (Retd.) as investigator. He submitted his report on 19.5.1998. He gave his 100 page report and arrived at the following conclusion:
CONCLUSIONS OF THE INVESTIGATOR :
1.
As revealed during the course of this investigation. It is very much appeared that the fire occurrence was not accidental, and there were more changes, that the Insured himself had attempted to set fire for the sake of Insurance claim. But in the absence of any substantial evidence forthcoming this direction in support, it is becoming very difficult to establish this point in clear cut terms, as discussed in this report.
2. The reports of both Preliminary Surveyor and Final Surveyor are false and fabricated. In fact the issue of fraudulent cheques to Sri Pillai was started from 9.6.97 onwards, i.e. after the visit of final surveyor and not before.
3. The Investigation conducted by Shri Anoop Kumar is a mere farse and only to strengthen the false reports of both Surveyors.
4. The statements of the Insured are unreliable. The cheques purported to have been issued to Sri K.R.Palani Pillai are fabricated. Cash has been drawn in the name of Sri K.R.Palani Pillai forging his signatures, and appropriated for himself with the connivance of the Bank officials. His ledger postings pertaining to Sri K.R.Palani Pillai are false and fabricated.
5. Sri K.R.Palani Pillai is a small fruit merchant moving from place to place to eke his livelihood and his business status does not indicate that he was capable of supplying Rs. 25.00 lakhs worth of goods on credit basis and within a period of 5 days. He was highly apprehensive of the present investigation and avoiding receipt of my communications addressed to him. He appears highly dubious in his conduct and his introduction in this claim was pre-planned.
6. 18 lorry loads of Alphanso mangos were not supplied by Sri K.R.Palani Pillai from 27.5.97 to 31.5.97 as stated and only false entries were made in the records fabricating Takt Patties and gate passes. Some of the entries were made even after verifications of books and of the attestation by the Final Surveyor.
7. The existence of overhead tank, sump, spare water tanker, cisterns and running water supply in the Insured premises and the presence of 300 labour force at the time in that unit was suppressed by the Surveyors (and supported by Shri Anoop Kumar) to give a colour of big fire accident and heavy loses, which were not there.
8. The role of Bank officials in this shady deal and their connivance with the Insured in this false claim is very much evident.
9. Weighment way bill receipts pertaining to removal of debris were managed from the concerned local dealers and they do not pertain to this transaction at all. In fact there was fire occurrence in one shed only and in one portion. The second shed was not at all fire affected. Thus the question of engaging 61 lorries does not arise. Which covered the entire book balances in both sheds.
10. The connivance of the Agricultural Marketing Committee Officials with the Insured, while giving false information of Takt Patty bills, is also very much evident.
11. There is no possibility of any losses, exceeding Rs. 3.70 lakhs in this fire occurrence, and under any circumstances. Even this mock fire had not spread to entire two sheds as falsely reported and it was limited to a specific portion and, in one shed only.
12. The fire had not at all spread to the second shed. Only one shed that too, in one corner was set on fire for insurance purpose.
13. The claim is false and fraudulent and a big conspiracy against the Insurers, by the Insured abetted by the Preliminary Surveyor, Final Surveyors, Andhra Bank Officials at Chittoor and Shri K.R.Palani Pillai and to make an illegal gain out of the Insurance coverage which is a Government of India undertaking and thus misappropriate the public money.
Conclusions:
Keeping the aforesaid reports and the ground given in the repudiation letter as well as the other evidence produced on record, we have to decide whether the stand taken by the Insurance Company is justified.
We hold that the same is unjustified for the reasons mentioned below:
(i). Firstly, in any short circuit, the fire would damage the thatched roof, which ultimately damage the mangoes. This aspect is rightly discussed by the second surveyor.
(ii) Secondly, the 2nd Investigator has, without any basis, arrived at the conclusion that fire was not accidental but the insured might have attempted to set afire for the sake of insurance claim. After making the said statement, he admitted that no substantial evidence was forthcoming in the said direction, and therefore, it cannot be established. This shows that his entire approach was just to deny the claim.
(iii) Thirdly, it is surprising that this Investigator criticized both the Surveyors preliminary and final surveyors by stating that both the reports are false and fabricated. In our view, if they were false and fabricated, it was the duty of the authority i.e. the Insurance Company to take appropriate action under sub-section (7) of Section 64 UM. Not taking of action may mean that the report of the second Investigator is baseless.
.(IV.) Fourthly, the report given by the investigator, Mr. Subba Reddy is on the presumption that he is the only honest man as he has doubted the role of the bank officials, weighing bills issued by the local dealers, agricultural marketing committee officers and others. In our view, such an approach by the Investigator is totally unjustified one and the report based on such assumption cannot be the basis for rejecting the claim.
(v). Apart from the three reports, if the account books of the Complainant were fabricated, as observed by the Investigatir/second surveyor, those account books would not be kept ready at the time of fire or after the fire for attestation. There is no justifiable ground to reject the said account books.
(vi). The learned Counsel for the Insurance Company, however, contended that as per the endorsement on the photographs by Dr.L.Venkataratnam, relied upon by the second Investigator, the entire mango lots of were only of totapuri variety and this he has certified at the reverse of the photographs by Dr.Venkataratnam. In our view, this contention does not require much discussion as, the said endorsement is without any basis, because he has opined solely by referring to the photographs only. Against this, the first surveyor visited the spot during the fire itself and has seen the mangoes. Therefore, there is no justifiable ground to doubt the first surveyors report that a part of the mangoes which were destroyed were of Alphanso variety. It is also to be stated that Dr.L.Venkataratnam was a retired government employee who has not filed any affidavit before this Commission.
(vii). Further, as the claim with regard to stock of alphanso variety of mangoes was disputed by the Insurance Company, the Complainant has produced on record inspection memo issued by the Senior Inspecting Officer, Ministry of Food Processing Industries, Government of India, Chennai, wherein it is specifically mentioned vide report dated 14.6.1997, as under:
Attended the C.I. for Totapuri mangoes for exports. The Unit has started production from 16.5.1997 and upto 13.6.97. They have provided:
Alphanso Mango pulp 41,373 Nos. of cans Totapuri Mango Pulp 46,135 Nos. of cans They have consumed fruits :
Totapuri 210.8 Mts.
Aflangso 167.8 Mts.
Another 100 MTs fruit is lying in the sheds. Regular fruits are coming.
This certificate of the Senior Inspecting Officers, Ministry of Food Processing Industry, Government of India, is not required to be doubted and the same establishes that the Complainant was manufacturing alphanso pulp. This would require alphanso manoges.
(viii) Fifthly, without verifying the proper facts the second investigator arrived at the conclusion that Mr.Pillai was a small fruit merchant and he was not capable of supplying mangoes worth Rs.25 lakhs.
To meet this contention learned Counsel for the Complainant has produced the affidavit given by Mr.Pillai, his bank accounts and the affidavits of other persons working with him revealing that he was a genuine merchant and the second Investigator failed to consider that the business was seasonal and ripe mangoes would be available during those particular months only.
Considering this aspect, in our view, the report of the second Investigator (4th surveyor) is totally baseless and not reliable and is tailor made to suit the Insurance Company.
(ix). Further, there are statements made by the different persons which are produced on record by way of affidavits to establish that the Complainant has issued the cheques in the name of Mr. K.R.Palani Pillai. Cheques were honoured by the Bank were presented by Mr.Pillai, and for this purpose, an affidavit of Mr.Pillai is filed on record wherein he has stated as under:
I state that I had received payments for the mangoes supplied by me by way of cheques which I have encashed directly from the bank. All the cheques drawn in my name were encashed by me only and the other signatures of K.Babu, A.Saravana Kumar, C.Suresh Naidu are the signatures of my employees and they were entrusted to collect money from the purchasers of different places. I state that I have not committed any fraud as alleged in the report of Sri Subba Reddy, Investigator of United India Insurance Company Limited. I state that I have fully cooperated with the investigation conducted not only by earlier surveyors but also the investigation conducted by Sri Subba Reddy. Sri Anoop Kumar, Investigator also checked my ledgers for the supply of Alphonso Mangoes supplied to the Complainant herein namely M/s. Ravindranath Fruit Canning Industries Private Limited, Chittoor and also cross checked with the Takkapatties of 18 lorries of Alphonso mangoes supplied with my ledgers.
I state that all the transactions regarding the sale/supply of mangoes to the Complainant was only through the Agricultural Market Committee. The takkapatties issued by the Market Committee will prove the genuineness of transaction. I have also paid the Market Committee Cess and the required licence fee.
Apart from the aforesaid affidavit, payment of money by the Complainant is supported by their bank pass-books and other documents. Hence, to hold that Mr.Pillai was a small merchant who would not be in a position to supply the mangoes, as held by the second Investigator, is without any basis. The Bank documents cannot be doubted in such a manner.
(x). On the basis of Condition No.8 of the policy the claim is repudiated. That is unjustified because it cannot be said to be fraudulent, as the accidental fire is established beyond doubt.
Therefore, it cannot be said that any false declaration was made or used in support thereof.
(xi) In any case, the Insurance Company has to establish the alleged fraud committed by the Complainant. In our view, it has failed to prove that the Complainant had made a fraudulent claim by establishing that he has knowingly made a false statement knowing that it is untrue.
ORDER:
In the result, the complaint is allowed. The Insurance Company is directed to reimburse the Complainant on the basis of the loss assessed by the surveyors. In the first survey report the loss assessed is Rs.26,04,536/- without including the loss to the premises. In the final survey report, the loss assessed is Rs.39,26,155/-. In the first investigation report the loss is assessed at RS.36,29,967/-. Considering this assessment as per the final survey report and as per the investigation report, we hold that the Insurance Company is liable to reimburse the Complainant for a sum of Rs.36,29,967/- with interest at the rate of 10% p.a. i.e. from 4.12.1997 from six months after the occurrence of the accidental fire till its payment. The Insurance Company shall pay costs of Rs.1 lakh. The complaint stands disposed of accordingly.
..J. (M.B.SHAH) PRESIDENT .
(P.D.SHENOY) MEMBER