National Consumer Disputes Redressal
M/S. Singal Udyog vs National Insurance Co. Ltd. & 2 Ors. on 29 September, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 610 OF 2019 (Against the Order dated 09/04/2018 in Complaint No. 298/2017 of the State Commission Punjab) 1. M/S. SINGAL UDYOG THROUGH ITS PARTNER MAHESH GUPTA, PLTO NO 4, PAWA OPP TEXLA TV , GT ROAD LUDHIANA PUNJAB ...........Appellant(s) Versus 1. NATIONAL INSURANCE CO. LTD. & 2 ORS. THROUGH ITS MANAGING DIRECTOR/PRINCIPAL OFFIER, 3, MIDDLETON STREET KOLKATA 2. NATIONAL INSURANCE CO LTD THROUGH ITS BRANCH MANAGER, DIVISIONAL MANAGER, DIVISIONAL OFFICE AT IV, KESAR GANJ CHOWK , LUDHIANA PUNJAB 3. VINOD SHARMA SURVEYOR & LOSS ADJUSTERS, 101, BUILDING NO 5, LOCAL SHOPPING CENTRE MADANGIR NEW DELHI 110062 ...........Respondent(s)
BEFORE: HON'BLE MR. DINESH SINGH,PRESIDING MEMBER HON'BLE MR. JUSTICE KARUNA NAND BAJPAYEE,MEMBER For the Appellant : Mr. V.K. Sharma, Advocate with Mr. Mohit Sharma, Advocate For the Respondent : For the Respondents No. 1 & 2 : Mr. Zorawar Singh, Advocate with Mr. Jayant Rastogi, Advocate For the Respondent No. 3 : NEMO Dated : 29 Sep 2022 ORDER
1. This appeal has been filed under section 19 of the Act 1986 in challenge to the Order dated 09.04.2018 of the State Commission in complaint no. 298 of 2017.
2. We have heard the learned counsel for the appellant (the 'complainant firm') and the learned counsel for the respondents no. 1 and no. 2 (the 'insurance co.'). No one appears for the respondent no. 3 (the 'surveyor').
We have also perused the record including inter alia the complaint, the written version, the preliminary survey report dated 31.03.2016, the investigation report dated 26.06.2016 and the final survey report dated 04.07.2016 as well as the State Commission's impugned Order dated 09.04.2018 and the memorandum of appeal.
3. The matter relates to repudiation of an insurance claim. As evinces from a perusal of the record the complainant firm had taken insurance to cover the risks of burglary and house breaking. Burglary took place in the insured premises in the intervening night of 12-13.08.2015. An FIR was lodged on 13.08.2015. The police could not trace the culprits and filed an 'untraced report' under section 173 of the Cr.P.C. Though the complainant firm had not mentioned details of the approximate quantity of goods stolen or the approximate value of the loss in its first information report with the police, but it initially raised a claim of Rs.54,00,000/- with the insurance co. and later on revised it to Rs.75,67,919/-. In the normal wont of its functioning the insurance co. went into the mechanics of survey and investigation, considered the preliminary survey report dated 31.03.2016, the investigation report dated 26.06.2016 and the final survey report dated 04.07.2016, and closed the claim as 'no claim' vide its letter dated 29.08.2016. The complainant firm feeling aggrieved filed a complaint with the State Commission on 02.05.2017, which did not find favour with the State Commission and it dismissed the same vide its impugned Order dated 09.04.2018.
4. In our view the State Commission appears to have made a well weighed and reasoned appraisal in arriving at its findings that the claim was not substantiated with authentic documents or by proper evidence as all the purchase bills were found to be accommodating bills without actual movement of goods and the books of accounts were not authentic. As such there was no deficiency in service or unfair trade practice on the part of the insurance co. since the complainant firm had failed to establish its claim by not being able to produce genuine and authentic documents in support thereof.
5. We ordinarily do not feel inclined to quote extensively from the impugned Order passed by the Commission below, preferring to limit reciting only brief excerpts as may be felt relevant and necessary, but at times extensive quoting becomes necessary for a clearer understanding and transparent appreciation of the facts and evidence in right perspective. In the present case we find that the State Commission has reasoned out the factual matrix and evidence in quite some detail and we feel that for ready appreciation of the matter relevant extracts of the State Commission's appraisal as contained in paragraphs 9 to 19 of its Order ought to be reproduced here:
9. I have given my thoughtful consideration to the respective contentions of the parties.
10. There is no dispute with regard to issuance of the policy, in question, and occurrence of loss at the insured premises of the complainant within the validity of the policy. FIR, Ex.C-8, was duly registered about the said burglary/theft in Police Station, Sahnewal, Ludhiana. As per the document Ex.C-13, placed on record, the complainant claimed loss of 117400 pieces of ledger blades at the rate of ₹22.50P per piece amounting to ₹26,41,500/-. Besides this, he also claimed loss of 35000 pieces of Top Cup at the rate of ₹37/- per piece amounting to ₹12,95,000/-; 80000 pieces of bottom cup amounting to ₹14,60,000/-. The total of all these amounts comes to ₹53,96,500/-, whereas the saved stock shown by the complainant has been mentioned in the preliminary survey report, Ex.C-14, to the tune of ₹1,99,64,500/-. However, the loss claimed was brought down to the tune of ₹75,67,919/- before surveyor, Vinod Sharma. Preliminary survey report, Ex.C-14, submitted by Rohit Ramesh and Associates further states that heavy quantum of loss of stocks has been alleged by the insured, which needs to be verified from accounting records, in view of purchases, sales, stock record, orders and expected date of despatch of export order etc. However, the same could not be verified, as the complainant stated that the said stock had been stolen. However, no supporting evidence has been brought on record by the complainant to show that the said sales/purchases were actually made by the complainant firm during the alleged period. Regular transactions, through which the consignments were exported, were also required to be verified. The complainant claimed that two trucks were used to take away the goods from the insured premises by the thieves. However, it is not possible that single truck could be used to load the goods from each of the gates.
11. Admittedly, the closing stock of the complainant as on 31st March, 2015 was 'NIL'. Same was the position on 01.04.2015. Perusal of Investigation Report of Sh. R.S. Ahluwalia, Ex DSP (BSF) dated 26.06.2016, Ex.OP-4, clearly records a finding that the burglary has taken place, but it was not to the extent, as stated in the claim made by the complainant. Rather, a specific finding has been recorded that the total weight of the stocks stolen was around 75 Tons and allegedly two trucks were used to carry the same. It is matter of common knowledge that a truck carries only 10 to 15 Tons of load. Thus, in any circumstance, 75 Tons load cannot be carried out only by two trucks. Furthermore, in the Preliminary Survey Report, Ex.OP-1, which was initially done, the amount of loss was shown much less to the extent of ₹53,96,500/- and the saved stock was shown to the extent of ₹1,99,64,500/-. However, subsequently, the amount of loss was exaggerated to the extent of ₹75,67,919/-.
12. Now, the question arises, whether the complainant has been able to prove the existence of above said quantity of stock at the time of loss?
13. The perusal of Final Survey Report dated 04.07.2016, Ex.OP-4, under head "Stocks" reveals that the complainant had been purchasing the articles from two firms, namely; (i) M/s EK Jot Enterprises; and (ii) M/s Devi Shiv Shakti. The surveyor specifically observed in his report that there was no firm namely M/s Ek Jot Enterprises at the given address i.e. Ahluwalia Street, 396/494, Miller Ganj, Ludhiana. Then, the insured took him to Mandi Gobindgarh to the suppler claimed as Ek Jot Enterprises, but it was found to be only a financing firm, who was doing private lending to the businessmen. This firm was absolutely not in trade of manufacturing of the items claimed by the insured. Thus, the purchase bills of above said material by the complainant from M/s Ek Jot Enterprises at Ludhiana was not found to be genuine. Similar is the situation with regarding to Devi Shiv Shakti firm, which was also not found to be in existence at the given address. Thus, all the bills were found to be fake. The complainant has failed to prove before this Commission that the above said firms were in existence and had been dealing in the items, which the insured/complainant has been claiming to have purchased from them. As such, the bills issued by the above said firms were not found to be genuine.
14. It is also relevant to mention that in the bills Ex.OP-12 to Ex.OP-14 issued by Ek Jot Enterprises, no G.R. No. is mentioned. To transport the quantity of 20000 pieces of ledger blades, 20000 pieces of bottom cups, 10000 pieces of top cups, only two vehicles bearing Registration No.PB-23J-9308 and HR-56-6557 could not have been sufficient to carry such a heavy load. Similarly, as per bills Ex.OP-16 to Ex.OP-18, against the quantity of 20000 each of ledger blades and bottom cups and 10000 of top cups, three vehicles are mentioned therein. Neither Ek Jot Enterprises nor the complainant provided copies of G.Rs. to the surveyor, despite his repeated demands. Thus, I am of the opinion that without valid and authentic documents, the claim of the complainant cannot be said to be established. The onus is upon the complainant to prove that the actual loss suffered by it in the burglary/theft, by way of producing authentic and genuine documents in support of its claim, but he miserably failed to discharge the said onus.
15. Similarly, Sh. R.S. Ahluwalia, Investigator in his Investigation Report, Ex.OP-7, specifically mentioned that taking away of the material by the burglars in two trucks, which has already been referred in the earlier part of the order, was not possible. He has also stated in his opinion that since the matter relates to the accounting of stock etc., as such, the same needs to be corroborated with the accounting documents. However, the complainant has failed to corelate the material purchased with the respective bills.
16. It has also been observed by the surveyor in the Final Survey Report, Ex.OP-4, that the complainant has various sister concerns and it is mainly dealing with its sister concern i.e. M/s Single Overseas. It means that majority of the transactions were only paper transactions between the complainant and its sister concerns. This fact is further corroborated from perusal of column "Remarks", at page-5 of this report, it has been specifically mentioned that main business of insured is high sea purchase and sale and that too sale is made to sister concern Single Overseas. This fact leads me to the only conclusion that the alleged transactions of the complainant were fake; specifically when no cogent and convincing record has been produced to prove their authenticity.
17. Furthermore, the surveyor, in the Final Survey Report, observed various contradictions in the claim made by the complainant. The insured gave in writing to the preliminary surveyor that 117400 ledger blades were stolen, whereas later on the insured claimed that 183400 ledger blades were missing. Similarly, initially the insured reported that up to 35000 pieces were stolen and later on the same were increased to 58700 pieces. The insured intentionally avoided submitting of records to the preliminary surveyor, on the ground that the computers were also stolen. However, subsequently, he compiled all the records and up dated the same. Thus, he gained time to adjust the records, as per other claims. Still further, statutory auditor of the insured stated that cash book ledger and journal are being maintained, but there is no mention of stock records in the report of the auditor. As per trading account as on 13.08.2015, the gross loss was of ₹6.91 lac on the turnover of ₹624.86 lacs, which was not possible. This fact proves that the books of account of the complainant did not reflect true position and cannot be relied upon. Similarly, in the stock statement dated 09.05.2015, the value of the stock is declared to the extent of ₹270.88 lacs, whereas there was no local purchase during April-May, 2015; meaning thereby that the entire stock declared by the complainant is bogus and false, as per above records. Still further, the insured has mentioned ledger blades of 280000 in the stock statement dated 06.08.2015, whereas the stock ledger showed balance of 205000 pieces only. The surveyor observed that the bills were issued from Sr. No.025 to 56 with occasional gap. The insured could not submit any proof of transportation for the alleged purchases. From the perusal of entire record, it is clear that the aforesaid mentioned contradictions have remained un-explained by the insured. All these facts indicate that the complainant has not approached this Commission with clean hands and it is settled law that the person, who does not approach the Forum/Court with clean hands, is not entitled to any relief. Hon'ble National Commission in case M/s Mukherji Builders and Construction Corporation v. Dr. (Mrs.) Annupurna Mishra I (2014) CPJ 254 (NC) held in Para No.23 as follows:
"It is well settled that no leniency should be shown to such type of litigants who in order to cover up their own fault and negligence, goes on filing meritless petitions in different Fora. Time and again courts have held that if any litigant approaches the court of equity with unclean hands, suppress the material facts, make false averments in the petition and tries to mislead and hoodwink the judicial Forums, then his petition should be thrown away at the threshold. Equity demands that such unscrupulous litigants whose only aim and object is to deprive the opposite party of the fruits of the decree must be dealt with heavy hands."
18. So far as the Statements issued by Punjab & Sind Bank are concerned, it is relevant to mention that same pertains to the period from January, 2015 to August, 2015. The same pertain to the Cash Credit Limit obtained by the complainant from the Bank. In the said Statement, it has been specifically mentioned that the Bank never did physical verification of the stock of the complainant, meaning thereby that even the CC Limits have been obtained by the complainant from the Bank, without supplying the actual stock list and without getting it verified from the concerned Bank. Specific query was raised to the counsel for the complainant that once the entire record, including computers, was stolen, then how the record was prepared and reconciled regarding the stolen items? However, no plausible explanation has come forth from the side of the complainant in this regard. Thus, the observation of the surveyor, that the entire claim made by the complainant is a concocted one, cannot be brushed aside. Rather, it is to be accepted as correct.
19. In such circumstances, the claim of the complainant was rightly and legally closed as "No Claim", vide letter dated 29.08.2016, Ex.OP-6, on the grounds mentioned in earlier letter dated 17.08.2016, Ex.OP-5, that the claim is not substantiated with authentic documents and by proper evidence, as all the purchase bills are accommodating bills without actual movement of goods and that the books of the accounts of the complainant were not found authentic.
6. We also take note that the final survey report made a recommendation that the loss was not payable under the policy. The same is reproduced below for perusal:
"1. The insured is not able to substantiate the claimed loss by proper evidence and all the purchase bills were not found authentic because of the various observations in our report. All the Purchase Bills are accommodating Bills without actual movement of goods. Hence entire claim of Insured as per Books (Rs.61,84,440/-) is found as Bogus not supported with proper evidence / records."
"2. Further, the insured's books of accounts were also not found authentic in support of the claim. Since entire supporting documents i.e. Purchase Bills etc. were found accommodating / manipulated."
7. Some extracts from the final survey report, which show and bring out the basis on which the above recommendation was made, are reproduced below for reference:
"There are certain abnormalities/inconsistencies in loss claimed by insured. The insured was not satisfactorily replying/clarifying the issues enquired by us."
"From our verification it is observed main business of insured is high sea purchase and sale and that too sale is made to sister concern Single Overseas."
"The insured auditor in their tax audit reports submitted to Income tax departments did not mention the maintenance of stock records whereas insured has submitted to us and shown to us computerized stock records for our verification. As such there is contradiction with auditors report."
"The police has issued Non traceable Report. The report is submitted under Section 173 of CRPC. It is mentioned in the report that police could not get any clue of sale of stolen goods and it is not advisable to continue investigation."
"There is no mention of stolen goods nor it has value in the police report i.e. FIR. However, in the non-traceable report, items with quantity in numbers are mentioned without value. Copy of police untraceable report is enclosed."
"The insured is not properly submitting stock statements to the bank and these cannot be relied upon. The major observations are as under:"
"The insured has reportedly claimed loss due to burglary of 3 items i.e. top up, bottom up and ledger blades. All three 3 items were purchased from 2 parties:
1. M/s EK Jot Enterprises
2. M/s Devi Shiv Shakti We visited both the parties to verify the purchases. Our findings are as under:"
"1. M/S EK JOT ENTERPRISES
i) M/s Ek Jot Enterprises, the said supplier has issued the bills with address: Ahluwalia Street, 396/494, Millar Ganj, Ludhiana. There is no firm operating at this address. However, the insured took us to Mandi Gobindgarh to the supplier claimed as Ek Jot Enterprises. We found that it is a financing firm who are doing private lending to the businessmen. The said firm is absolutely not in trade of manufacturing or trading in the items claimed by the insured. The said firm gave us computerized statements of accounts which matches with the insured's books of accounts. However, the following are the major discrepancies noticed by us in the purchases from the above dealer.
1. The said supplier did not show us any books of accounts as these are reportedly lying somewhere else.
2. The said firm has taken the sales tax number for cycle parts whereas items supplied by them are used in shuttering in construction business.
3. Neither the insured nor the said supplier could submit any transportation proof in support of the material supplied.
4. Most of the bills are in continuous serial nos. and almost on daily basis bills are issued in continuous number from 98 to 700, 718 to 720, 732 to 734 etc. The entire purchase of Rs.87.64 lacs were made in 3-1/2 months.
5. At one point of time i.e. as on 7.8.15 outstanding balance payable to the supplier is Rs. 73.13 lacs. The insured could not explain how so much credit was extended.
6. As per checking from the online records the sales tax number of M/s Ek Jot Enterprise has been duly cancelled.
7. The insured argued that proper sales tax returns have been submitted but we are not convinced because of the bills relating to the loss are pertaining to current quarter and supplier was in very much position to timely filing the sales tax return, even if these bills are accommodating bills.
8. Surprisingly, the insured has no business dealings with said firm during the last 3 years and did not purchase these items from the said supplier during the last 3 years.
II DEVI SHIV SHAKTI
1. We first enquired from the insured that how the credit of Rs.46.16 lacs were extended to them by the said supplier particularly when there was no business during the last 3 years. The insured explained the said firm is very big firm, financially sound and have extended the credit in routine to every customers'. We asked the insured to accompany us to the said supplier's warehouse in Ludhiana and when we visited we found that there is no firm operating from the premises. On enquiry we were told that by the neighbors and present occupants that owner of the said firm has absconded suddenly after closing down his business and he owes lot of payment to the market and no whereabouts of him are known.
OUR OBSERVATIONS ARE AS UNDER:
1. The supplier has extended credit of Rs.46.16 lacs for almost 3 months which is not understandable specially when the man has ran away from the market after closing the business.
2. The bills were serially issued from 025 to 56 with occasional gap.
3. The insured could not submit any proof of transportation for these purchases, even in the case of FOR basis, copy of GR transportation slip is normally kept for records.
4. The Insured was to submit corresponding Purchase Bills from these suppliers but the same were not submitted.
"OUR CONCLUSION In the absence of any proper transportation proof, continuous serial numbers, no previous history of business dealings, we are of the opinion that all these purchases from both the suppliers are accommodating bills and there is no physical movement of the goods."
8. We are of the view that survey and investigation are one of the fundamentals in settling a claim, and cannot and should not be disregarded or dismissed without cogent reasons, though it also goes concomitantly that the survey or investigation should be convincing and pass credence in scrutiny.
In the instant case we find the things just the other way round, that cogent and convincing reasons are quite abundantly made out in the survey and investigation for arriving at the recommendation that the claim was not payable under the policy and as such we find no remissness on the part of the insurance co. in closing the file as 'no claim'. We just do not see any cogent or convincing evidence or reason forthcoming on behalf of complainant firm as may justify overruling the survey and investigation.
9. Learned counsel for the appellant makes an argument that all three, that is, the preliminary surveyor, the investigator and the final surveyor, were "biased" and that the each of them gave biased reports and so they should not be accepted.
Learned counsel for the insurance on the other hand submits that this is an unsubstantiated contention without any basis and without any evidence or material to show any such prejudice or predilection on the part of the two surveyors and the investigator.
10. In the absence of any evidence or circumstances to show malafide, we are not at all convinced that the all three i.e. the preliminary surveyor, the investigator and the final surveyor were biased or partisan. As such this argument made by learned counsel for the appellant deserves to be dismissed outright being specious.
11. In the wake of the facts that no details of the loss, either the quantity or the value, were mentioned in the first information report with the police, and initially a claim of Rs. 54,00,000/- was made with the insurance co., the same was then revised to Rs. 75,67,919/-, and in the wake of the patent inconsistencies and incongruities enumerated objectively on basis of record and inquiry in the survey and investigation, learned counsel for the complainant firm was requested to show some rational and convincing material and computation to demonstrate what part of the claim could be treated as genuine. Learned counsel however makes a submission that the same has to be seen by this Commission i.e. the distinction between fake and genuine has to be made by this Commission only. Thus having the disadvantage of complete absence of candour on the part of the complainant firm in the direction to provide the requisite assistance on its behalf to enable this Commission to distinguish between bogus and authentic, we find it rather difficult and hazardously dicey if not impossible to separate the wheat from the chaff, to identify what part of the claim was genuine, if at all it was, because the truth and falsehood are so inextricably entangled with each other that any attempt in that direction may quite lead to absurdity or perversity and may be entirely misleading and misconceived. As such we are unable to justifiably provide even partial relief to the complainant firm. On the other hand we see clear malafide on the part of the complainant firm in attempting to obtain a fraudulent claim on the basis of false and fake documents and assertions, for which the rapacious complainant firm and its dishonest intentions are themselves to blame.
10. This appears to be a clear case of the complainant firm approaching the consumer protection forum with unclean hands and unclear conscience, with fake accounts, fake bills, inflated claim, falsehoods and untruths, which cannot be countenanced with, its brazen and intransigent efforts to defraud the insurance co. cannot be taken lightly. We did not miss to see the obvious as is gleaning out of the facts of the case that the complainant firm has made an unsavory attempt to convert its misfortune into a means to make fortune and in that process has undertaken the unscrupulous exercise of fabrications and falsehoods. If a consumer does not approach the consumer protection fora with clean hands and clear conscience and indulges in unethical conduct of projecting fake claims just to exploit a situation or occurrence such an exercise can neither be encouraged nor approved.
11. As such the appeal is dismissed with imposition of cost of Rs.25,000/- to be deposited in the consumer legal aid account of the State Commission within four weeks from today, consumer protection fora are not meant to be tools for a firm to attempt to defraud an insurance co. in the way and manner as has been attempted by the complainant firm in the present case.
12. The Registry is requested to send a copy each of this Order to the parties in the appeal and to their learned counsel as well as to the State Commission. The stenographer is also requested to upload this Order on the website of this Commission immediately.
...................... DINESH SINGH PRESIDING MEMBER ......................J KARUNA NAND BAJPAYEE MEMBER