National Consumer Disputes Redressal
Gajanan Mahadeo Chimankar, Prop. M/S. ... vs United India Insurance Co. Ltd. & Anr. on 14 December, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 266 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 14/2007 of the State Commission Maharashtra) 1. GAJANAN MAHADEO CHIMANKAR, PROP. M/S. GAJANAN ELECTRICAL R/O. ANANT SMRUTI, 'D' WING FLAT NO. 17, SR. NO. 74/1A, BV AREA, DATTA NAGAR ROAD, KATRAJ PUNE-46 MAHARASHTRA ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & ANR. GOVERNMENT OF INDIA UNDER TAKING, THROUGH ITS DIVISIONAL MANAGER, DIVISIONAL OFFICE AT V.P. CHOWK, NEW OSMANPURA, AURANGABAD MAHARASHTRA 2. UNITED INDIA INSURANCE COMPANY, THROUGH ITS REGIONAL MANAGER, REGIONAL OFFICE, AMBIKA HOUSE, 4TH FLOOR, DHARAM PETH EXTN., SHANKAR NAGAR CHOWK, NAGPUR-440010 ...........Respondent(s) FIRST APPEAL NO. 267 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 15/2007 of the State Commission Maharashtra) 1. GAJANAN MAHADEO CHIMANKAR, PROP. M/S. G.M. ENGINEERING PROP. M/S. G.M. ENGINEERING, PRESENTLY R/O. ANANT SMRUTI, 'D' WING FLAT NO. 17, SR. NO. 74/1A, BVP AREA,DATTA NAGAR ROAD, KATRAJ, PUNE-46 MAHARASHTRA ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & ANR. GOVERNMENT OF INDIA UNDER TAKING, THROUGH ITS DIVISIONAL MANAGER, DIVISIONAL OFFICE AT: V.P. CHOWK, NEW OSMANPURA, AURANGABAD 2. UNITED INDIA INSURANCEE COMPANY, THROUGH ITS REGIONAL MANAGER, REGIONAL OFFICE, AMBIKA HOUSE, 4TH FLOOR, DHARAM PETH EXTN., SHANKAR NAGAR CHOWK, NAGPUR-440010 ...........Respondent(s) FIRST APPEAL NO. 268 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 16/2007 of the State Commission Maharashtra) 1. REKHA GAJANAN CHIMANKAR PROP. REKHA SALES CORPORATION, R/O. ANANT SMRUTI, 'D' WING FLAT NO. 17, SR. NO. 74/1A, BVP AREA, DATTA NAGAR ROAD, KATRAJ, PUNE -46 MAHARASHTRA ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & ANR. GOVERNMENT OF INDIA UNDER TAKING, THROUGH ITS DIVISIONAL MANAGER, DIVISIONAL OFFICE AT V.P. CHOWK, NEW OSMANPURA, AURANGABAD MAHARSHTRA 2. UNITED INDIA INSURANCE COMPANY THROUGH ITS REGIONAL MANAGER, REGIONAL OFFICE, AMBIKA HOUSE, 4TH FLOOR, DHARAM PETH EXTN., SHANKAR NAGAR CHOWK, NAGPUR-440010 ...........Respondent(s) FIRST APPEAL NO. 471 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 14/2007 of the State Commission Maharashtra) 1. UNITED INDIA INSURANCE CO. LTD. THROUGH ITS DVISIONAL MANAGER, DIVISIONAL OFFICE AT V.P. CHOWK, NEW OSMANPURA, AURANGABAD NAHARASHTRA ...........Appellant(s) Versus 1. GAJANAN MAHADEO CHIMANKAR PROP: M/S. GAJANAM ELECTRICAL, BUSINESS AT PLOT NO. 542, N-3, CIDCO, AURANGABAD MAHARASHTRA ...........Respondent(s) FIRST APPEAL NO. 472 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 15/2007 of the State Commission Maharashtra) 1. UNITED INDIA INSURANCE CO. LTD. THROUGH ITS DIVISIONAL MANAGER,
DIVISIONAL OFFICE AT V.P. CHOWK, NEW OSMANPURA, AURANGABAD, MAHARASTRA. ...........Appellant(s) Versus 1. GAJANAN MAHADEO CHIMANKAR PROP. M/S GAJANAM ELECTRICAL, BUSINESS AT PLOT NO.542, N-3, CIDCO, AURANGABAD, MAHARASTRA. ...........Respondent(s) FIRST APPEAL NO. 473 OF 2014 (Against the Order dated 07/02/2014 in Complaint No. 16/2007 of the State Commission Maharashtra) 1. UNITED INDIA INSURANCE CO. LTD. R.O. 1, KANCHENJUNGA BUILDING, BARAKHAMBA ROAD, NEW DELHI. ...........Appellant(s) Versus 1. REKHA GAJANAN CHIMANKAR PROP. M/S REKHA SALES CORPORATION,
BUSINESS PLOT NO.542, N-3, CIDCO, AURANGABAD, MAHARASTRA. ...........Respondent(s)
BEFORE: HON'BLE MR. DR. B.C. GUPTA,PRESIDING MEMBER HON'BLE MR. DR. S.M. KANTIKAR,MEMBER
For the Appellant : For the Respondent :
Dated : 14 Dec 2017 ORDER
APPEARED AT THE TIME OF ARGUMENTS
For Gajanan Mahadeo Chimankar &
for Rekha Gajanan Chimankar
:
Mr. Kamal Mohan Gupta, Advocate
Mr. Ajay Gupta, Advocate
United India Insurance Co.
:
Mr. Ravi Bakshi, Advocate
Mr. Shashank Kumar, Advocate
PRONOUNCED ON : 14th DECEMBER 2017
O R D E R
PER DR. B.C. GUPTA, MEMBER The six appeals as detailed in the heading above, have been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986 and arise out of a common order dated 07.12.2014, passed by the Maharashtra State Consumer Disputes Redressal Commission (hereinafter referred to as 'the State Commission') in consumer complaints Nos. 14/2007, 15/2007 & 16/2007, vide which, the said complaints were partly allowed. Three appeals have been filed by the complainants seeking enhancement/award of compensation, while the other three appeals have been filed by the opposite party (OP), the United India Insurance Company Ltd., seeking dismissal of the consumer complaints on account of fraud/misrepresentation on the part of the complainants, resulting in alleged violation of the terms and conditions of the Insurance Contract between the parties.
2. The brief facts giving rise to the three consumer complaints in question, are that the complainants Gajanan Mahadeo Chimankar and his wife Mrs. Rekha are engaged in the business of supply of electrical goods/appliances/fixtures/fittings, cables etc. for various public sector and private sector institutions and are recognised/licensed contractors for the same. Gajanan Mahadeo Chimankar is running his business under the name and style as Gajanan Electricals and as G.M. Engineering at plot No. 542, N-3, CIDCO, Aurangabad. His wife Mrs Rekha is running a business in the name of Rekha Sales Corporation at the same premises. The complainants obtained insurance policies from the Opposite Party (OP), the United India Insurance Company for their business. An insurance cover of ₹30,15,000/- for the period 20.01.2005 to 19.01.2006 was obtained for the firm M/s. Gajanan Electricals and is the subject matter of consumer complaint No. 14/2007. Another policy was obtained for the firm M/s. G.M. Engineering, covering risk of ₹27,50,000/- for the period 04.03.2005 to 03.03.2006 which is the subject matter of consumer complaint No. 15/2007. M/s. Rekha Sales Corporation obtained insurance cover for sum assured of ₹90,85,155/- under various policies taken from time to time, which is the subject matter of consumer complaint No. 16/2007. The complainants had also obtained cash credit facility from the Ajanta Urban Cooperative Bank Limited and for that purpose, it hypothecated all the stocks with the said Bank.
3. It is stated that there were two incidents of fire at the three premises in question, within a short span of each other - one on 12.08.2005 and the other on 24.08.2005. Gajanan Mahadeo Chimankar had gone to Nagpur on 11.08.2005 to attend a matter in the DRT Court. At about 2:30AM on 12.08.2005, a fire broke out in the godown of Rekha Sales Corporation. On information, the Police arrived at the spot and immediately called the fire brigade which extinguished the fire. The Police made inquiries and registered a criminal case No. 240/2005 against both the complainants, alleging that they had deliberately managed to cause the fire by hanging bags containing petrol, and connecting those bags with electrical heaters etc. with malafide intention to receive the insurance amount. Both the complainants were taken into custody by the Police and later, released on bail. It is further stated that there was another incident of fire on 24.08.2005, when the complainant was in magisterial custody. The fire was there in all the three shops owned by them and it went on flickering for 10 to 15 hours. According to the complainants, there was huge damage to the commercial as well as residential premises including furniture, fixtures, electrical and other goods. At the time of both the incidents of fire, the insurance company appointed Sh. K.B. Parmar, a local surveyor from Aurangabad to carry out the preliminary survey. The said surveyor submitted his report for each occasion for the said shops. The Insurance Company also appointed Shri R.V. Sarda, surveyor and loss assessor to carry out the assessment of loss. The said surveyor visited the premises alongwith technical experts and submitted his detailed reports after getting the matter investigated by two different investigators. The complainants claimed loss of ₹144.16 lakh towards loss of fire to all the three shops, out of which, the loss claimed for Rekha Sales Corporation was ₹90.85 lakh, for Gajajan Electricals ₹24.89 lakhs and for GM Engineering ₹28.42_lakh. The surveyor R V Sarda assessed the loss to stocks in Gajanan Electricals as ₹11,01,225/- and loss to FFF (Furniture, Fixtures and Fittings) as ₹1,01,461/-. For GM Engineering, the said surveyor assessed the loss to stock as ₹11,40,384/-. For Rekha Sales Corporation, the loss to the stock was assessed as ₹26,72,256/- and loss to FFF as ₹2,47,930/-. However, in all three cases, the surveyor categorically stated that the insured had broken the principle of utmost good faith and used fraudulent means to inflate the claim. It was also stated that the insured had provided false statements and declaration to get the benefit of the insurance policies. The surveyor stated that under condition 8 of the policies, no claim was payable to the insured as the same was fraudulently inflated.
4. Based on the report of the surveyor, the insurance company repudiated the claim filed before them by issuing a detailed repudiation letter. However, on the other hand, the complainants filed the three consumer complaints in question, seeking directions to the insurance company to make payment of the claim of ₹36,18,000/- alongwith interest @20% p.a. from 24.11.2007 in the case of Gajanan Electricals, in addition to ₹5 lakh as compensation against mental harassment. For GM Engineering, a direction was sought to pay claim of ₹38 lakh alongwith interest @20% p.a. from 24.11.2007 and ₹5 lakh as compensation against mental harassment. For Rekha Sales Corporation, a sum of ₹98,85,155/- was demanded as total compensation alongwith interest @20% p.a.
5. The complaints were resisted by the OP Insurance Company by filing their written statement before the State Commission in which they denied any liability towards the complainants based on the report of the surveyor, according to which the claims were fraudulent. The OP Insurance Company pleaded that the consumer complaints should be dismissed.
6. Vide impugned order dated 07.02.2014 passed by the State Commission, in all three complaints, it has been ordered as follows:-
"All the three complaints are partly allowed as follows:
1. Opponent insurance company shall pay insurance amount of Rs.11,01,225/- (Rs.Elevan Lakhs one thousand two hundred and twenty five only) to the complainant Gajanan Electricals with interest @ 9% with effect from 12.10.2005 till the realization of the entire amount.
2. Further opponent insurance company shall pay to complainant Gajanan compensation of Rs.10,000/- (Rs.Ten thousand only) for causing physical and mental harassment and amount of Rs.5000/-(Rs.Five thousand only) towards cost of the proceedings.
3. Opponent insurance company shall pay to complainant M/s Rekha Sales Corporation insurance amount of Rs.26,72,256/- (Rs.Twenty six lakhs seventy two thousand two hundred and fifty six only) with interest @ 9% p.a. with effect from 12.10.2005 till realization of the entire amount.
4. Further opponent insurance company shall pay to complainant M/s Rekha Sales Corporation compensation of Rs.10,000/- (Rs.Ten thousand only) for causing mental and physical harassment and further to pay Rs.5000/-(Rs.Five thousand only) towards cost of the proceedings."
7. It is evident from above, that in the case of Gajanan Chimankar, a sum of ₹11,01,225/- alongwith interest @9% p.a. has been allowed, saying that the said amount was for both the complaints filed by Gajanan Chimankar. It is evident, however, from the record that the amount of ₹11,01,225/- was computed by the surveyor for loss to stock, only in the case of the shop of Gajanan Electricals. In addition, the amount of ₹26,72,256/- has been allowed for the shop Rekha Sales Corporation. There is no mention of the loss computed for GM Engineering on the part of the surveyors.
8. During hearing before us, the learned counsel for the complainants vehemently argued that the State Commission while passing their order, had not touched upon the claim made for the shop GM Engineering, for which the surveyor had carried out a separate assessment and brought out that loss to the stock was ₹11,40,380/-, the learned counsel argued that the amount of compensation allowed by the State Commission should be suitably enhanced and the claim for the furniture, fixtures etc. should also be allowed. The learned counsel argued that the State Commission should have allowed the claim as demanded by them, rather than relying upon the report of the surveyor. Moreover, the State Commission had awarded a meagre interest of only 9% to them, whereas they should have awarded the interest of 16% on the claim. The learned counsel further argued that there was huge deficiency in service on the part of the insurance company in the matter. The surveyor had made an inordinate delay in submitting his report. Moreover, the claim had been repudiated by the Insurance Company after the consumer complaints in question were filed. The learned counsel stated that they had been getting the policies renewed from time to time. In so far as the stocks maintained by them were concerned, the same had been duly inspected by the Bank which had advanced loan to them. The learned counsel further argued that there had been no fraudulent claim made by them. There was no question of any bogus bill being submitted by them and hence, clause 8 of the Insurance Policy had no application in the present case. The learned counsel tried to draw a distinction between fraudulent claim and exaggerated claim, saying that clause 8 was applicable in the case of fraudulent claims only. The learned counsel further argued that stock statements were being filed by them regularly every month with the Bank. The learned counsel has drawn attention to an order passed by this Commission in "Ravinder Nath Fruit Canning Industries (P) Ltd. vs. The Divisional Manager, United India Insurance Company" [Original Petition No. 238/1998 decided on 10.01.2006], in support of his arguments. The learned counsel also referred to an order passed by this Commission in "New India Assurance Co. Ltd. vs. Kohinoor Sizing Factory" [II (2006) CPJ 237 (NC)], saying that in the said case, interest @12% p.a. had been allowed by this Commission.
9. Per contra, the learned counsel for the OP Insurance Company stated that they had sent a detailed repudiation letter to the complainants, explaining in detail the reasons for denying the claim. The learned counsel argued that the police had registered criminal case against the complainants, alleging that they were responsible for causing fire to the stocks deliberately. It was made out, therefore, that there was a prima-facie case for wrong doing, made out against the complainants. The learned counsel argued that if the fire had been caused deliberately by the complainants, the claim could not be given to them. The learned counsel has further drawn attention to the report of R V Sarda surveyor, in which it had been clearly brought out that the claim was based on bogus bills submitted by the complainants. The report of the surveyor was based on the report of two investigators, in which it was brought out that the parties stated that the bills were not in existence and the telephone numbers printed on the bills were not genuine. The hand-writing on all the bills was that of only two persons. The surveyor, therefore, clearly brought out that the claim was in violation of clause 8 of the policy and hence, not payable. They had, therefore, issued repudiation letter, giving detailed reasons for denying the claim.
10. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.
11. The main issue that requires consideration in the matter is whether the action of the OP Insurance Company in repudiating the claim of the complainants in whole, on the ground that the claims were fraudulent and hence, in violation of conditions of the policy, was in accordance with law or not. The facts and circumstances of the cases bring out that criminal proceedings were initiated by the police against the complainants, levelling allegations that they deliberately caused fire to the said premises on two different occasions within a short span of each other. However, notwithstanding the outcome of the criminal proceedings against them, the facts brought out in the report of the main surveyor and the investigators are quite significant in arriving at proper conclusion in the case. Shri R.V. Sarda, Surveyor and Loss Assessor brought out that the parties mentioned in the purchase bills produced by the insured were not traceable and hence, those were bogus bills. The matter had been investigated through two different investigators. The telephone numbers printed on the bills were found to be bogus. The opinion of the handwriting expert stated that the hand-writing of all the bills was only of two persons. The surveyor stated in his report as follows:-
"To conclude, "insured had broken the principle of utmost good-faith. He has fraudulently inflated the claim to get the benefit out of insurance claim."
There was, therefore, a violation of clause 8 of the insurance policy.
12. The clause 8 of the Insurance Policy reads as follows:-
"8. 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 wilful act, or with the connivance of the Insured, all benefits under this policy shall be forfeited."
13. The material placed on record indicates that the complainants had not been able to offer any reasonable explanation on the points raised in the report of the surveyor. They have taken the stand that they had purchased the stocks, in question, from the agents and not directly from the parties, whose bills had been produced. However, the State Commission have rightly observed in the impugned order that the insured could have very well produced such agents and brought their testimony on record, in order to establish the veracity of their claim, but it was not done. It is evident, therefore, that there has been a violation of the terms and conditions of the policy and the claim being fraudulent in nature, the Insurance Company was not liable to pay any part of the claim to the claimants.
14. In this regard, we may refer to a judgment delivered by the Hon'ble Apex Court in "United India Insurance Co. Ltd. vs. Harchand Rai Chandan Lal" [(2004) 8 SCC 644], in which it has been held as follows:-
"Therefore, it is settled law that the terms of the contract have to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous."
15. Further, in "Suraj Mal Ram Niwas Oil Mills Private Limited vs. United India Insurance Company Limited & Anr." [(2010) 10 SCC 567], it was held as follows:-
"Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties."
16. It becomes a settled legal proposition, therefore, that in a contract of insurance, the terms and conditions of the contract have to be strictly followed. As stated earlier, the insured having not been able to refute the points brought out in the report of the investigators/surveyor that proper evidence in respect of the purchase of the stocks in question, could not be established by the insured and hence, at least, part of the claim was fraudulent. It is held, therefore, that the insurance company is not liable to pay the claim in question, considering clause 8 of the terms and conditions of the policy. In so far as the order passed by the State Commission is concerned, the said Commission did bring out that the complainants had deliberately shown excess stock on the basis of fake and bogus purchase vouchers. The State Commission also stated that the insured failed to disclose the names and address of their agents from whom they used to purchase the goods. The State Commission also concluded that no weightage could be given to the affidavit of Bank Manager to determine the stock position. However, the State Commission did not advance any reasons as to why the claim should be allowed even partly, although the violation of the terms and conditions was writ large on the face of it. Moreover, the State Commission has simply allowed a sum of ₹11,01,225/- which was assessed as value of stock and damage for Gajanan Electricals only. The State Commission have not touched upon the assessment made in the case of GM Engineering. The order passed by the State Commission, therefore, is clearly perverse in the eyes of law and the same is ordered to be set aside.
17. The learned counsel for the complainants did try to draw a distinction between exaggerated claim and fraudulent claim and stated that there was no violation of the terms and conditions of the policy. However, the said arguments are not tenable because the use of fraudulent means or devices used by the insured to obtain benefit under the policy is clearly established from the facts and circumstances on record.
18. Based on the discussion above, the appeals filed by the Insurance Company are allowed while the appeals filed by the complainants are ordered to be dismissed. All the consumer complaints, namely, CC/14/2007, CC/15/2007 and CC/16/2007 are ordered to be dismissed and it is held that the insurance company shall not have any liability to pay any part of the claim to the complainants. There shall be no order as to costs.
...................... DR. B.C. GUPTA PRESIDING MEMBER ...................... DR. S.M. KANTIKAR MEMBER