State Consumer Disputes Redressal Commission
M/S Manidhar Oil Industries vs Iffco Tokio Gen Ins.Co.Ltd. on 30 June, 2023
DETAILS DD MM YYYY
Date of Judgment 30 06 2023
Date of Filing 28 12 2012
Duration 19 06 10
IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION
STATE OF GUJARAT
COURT - 2
CONSUMER COMPLAINT NO. 69 OF 2012
COMPLAINANT: M/S. MANIDHAR OIL INDUSTRIES
(Through its Proprietor Mr. Chandrakant V Viradiya)
28/3, Bhojrajpara, B/h Railway Sidings,
Gondal, Dist: Rajkot.
V/s.
OPPONENTS: [1]. IFFCO-TOKIO GENERAL INSURANCE CO. LTD.
302-303, Nakshtra-III,
Nr. Raiya Telephone Exchange,
150 ft Ring Road, Rajkot. 360005
[2]. RELIANCE GENERAL INSURANCE CO. LTD
Business Empire, 3rd Floor, Opp. Rajkumar College,
Dr. Radhakrishnan Road, Rajkot- 360001.
CORAM: Hon'ble Mr. R N Mehta, Member
Appearance: Mr. R V Sakaria, advocate for Complainant Mr. R P Rawal, Advocate for Opp. No. 1 Mr. V P Nanavaty Advocate for Opp. No. 2 (Order by Hon'ble Mr. R N Mehta) [1]. Whether the action of insurer to discard claim of particular transaction was arbitrarily or not
and once having realized admissible claim amount from the insurer, a complaint against Rnm cc692012 Page 1 of 22 insurer for alleged non-payment of balance amount is maintainable under alleged "Deficiency in service" or not are the questions to be answered in this complaint.
[2]. In brief, facts are as under:
(2.01). The complainant is a proprietary firm, engaged in business of oil mill and its related trade. The Opponents are General Insurance Companies dealing with indemnification of risks of all type of General Insurance business. Since partial admissible claim has been paid over to insured, following facts are not in disputes. The complainant had obtained Fire Policies through opponent's agent, the Co-Operative Bank of Rajkot. There were two policies held by complainant, out of which, a policy bearing no.11293358 was issued by opponent no.1, IFFCO TOKIO General Insurance Co. Ltd (hereinafter referred as " ITGI") for sum insured Rs.78,00,000/- whereas another policy bearing no.160438265100026 was issued by Opp. No.2 Reliance General Insurance Co. Ltd (hereinafter referred as "RGIL") had sum insured Rs.50,00,000/-. It is stated that ITGI issued policy subject to Reinstatement of Value clause (Excluding stock & stock in process) to cover the risk of oil mill against fire and policy issued is publically known as " Standard Fire & Special Perils" policy. It is stated that sum insured, under various head of these policies was adequate to cover the value at risk at the material time of loss. It is alleged by the complainant that insurer never send complete policy documents.
(2.02). It is stated that there was fire at insured premises on 11/3/2009 and complainant suffered loss due to said accidental fire. It is averred in the complaint that due to this incident of fire, the insured claimed to have suffered loss of stock to the extent of Rs.46,91,867/- and Rs.9,71,000/-for building. The complainant had intimated opponents about the incident of fire, and therefore M/s. Rakesh Narula & Co. appointed as Surveyor by ITGI whereas M/s. Cunnigham Lindsey Int. Pvt. Ltd was appointed as surveyor for RGIL for inspection, verification and assessment of loss. It is stated that the surveyors visited site of fire at Gondal and collected necessary information, took photographs and instructed the complainant to Rnm cc692012 Page 2 of 22 submit the required documents to substantiate the amount of claim. It is alleged in the complaint that both these surveyors visited not only once but even during this visit, not seen four corners/and sides of insured premises and therefore, did not supervise segregation process or salvage weighing task. It is further alleged that surveyors before discarding transaction of purchase of stock failed to verify the entries made in the stock statement of Ravi Oil Mill and not paid any visit to its office.
(2.03). It is alleged that complainant insured had submitted all required documents to the surveyors so that they can make correct assessment of loss, but for the reasons best known to them, surprisingly, complainant insured was initially offered Rs.21,40,584/- towards loss of stock and Rs. 4,64,000/- towards loss to building considering under insurance. It is stated that when complainant asked for copy of survey report, insurers supplied only extract of the report vide letter dt. 5/1/2010 and requested complainant to give consent. The complainant informed insurers that books of account of complainant firm are subject to statutory audit and therefore entries made should be considered as correct and insisted for indemnification to the extent loss claimed. It is stated that it came to know from the aforesaid extract of report that surveyors have recommended to discard purchase of stock from M/s. Ravi Oil Mill and Vaibhav Traders. The complainant, at later point of time, submitted slips issued by APMC as supporting proof to establish genuineness of transaction of purchases from Vaibhav Traders. It is stated that the said slips were verified by the surveyor and being satisfied thereafter offered for settlement of claim at Rs. 28,66,970/- for stock and Rs. 1,78,434/- towards loss to building in January 2011. The complainant once again protested against the offer made by the surveyor and tried to convince them that all transactions are genuine. However, the insurer then compelled the complainant insured to accept offered amount. Since complainant was in dire need of money, insurer took disadvantages of its dominant position and therefore complainant was left with no option but to accept the amount offered by insurer. (2.04). It is stated in the complaint that the ITGI paid Rs. 17,33,815/- on 5/1/2011 and RGIL paid Rs. 12,86,200/- on 17/1/2011 accepting proportionate liability. It is stated that the Rnm cc692012 Page 3 of 22 complainant sent letter of protest dated 3/2/2011 informing insurer that insured has reserved its right to recover the balance payment of Rs.18,92,993/- towards stock and Rs. 6,00,000/- for loss to building. It is stated that the complainant repeated his demand of gross loss of stock worth Rs.46,91,867/- and for building Rs.9,71,000/-. The complainant keeps books of account and makes entries of each and every transaction of business in the books of accounts. It is stated that insurer had settled even partial claim almost after 1 year and 8 months. It is stated that partial claim accepted because complainant had no other choice to sign the documents sent by the opponent before, releasing the amount offered by the opponents. It is alleged that complainant neither agreed with reason stated by the opponent for repudiating their liability in part nor agreed with the assessment made by opponent's surveyor wherein they did not considered of Rs.18,92,993/- and Rs.6,00,000/- toward damage to building it is in these circumstances, the amount paid by the opponents to complainant cannot be considered as full and final settlement as the opponent have not considered the claim of stock purchased from Ravi Oil mill despite all the evidence, accounting statement including Chartered Accountant's report.
(2.05). Since, the complainant did not agree with the assessment made by opponent's surveyors, the complainant then obtained account report from M/s. P. V. Jasani & Co. Chartered Accountants. It is stated that the report was submitted in the opponent's office and complainant had requested the insurers to review their decision in view of the accountant report as well as accounts and stock statement. The opponents did not paid any heed to it therefore alleged that repudiation of liability in part is unjustified, arbitrary, not legal and therefore it amounts to "deficiency" in services. The complainant had sent a legal notice to opponents on 14/12/2011 which was not responded by the opponents till the date of filing of complaint and therefore complainant seeks relief in the form of direction to insurers for indemnification of loss of Rs.32,23,233/- which includes discarded claim of stock purchased from Ravi Oil Mill, interest and Rs.1,00,000/- compensation for the harassment and mental agony.
Rnm cc692012 Page 4 of 22 (2.06). In reply, both the opponents contended that the claim was settled and the complainant had realized amount offered by account payee cheque in full and final settlement on 17/1/2011 without any demur. Since the complainant has appropriated said amount by depositing the cheque in it's' bank account, subsequent demand for so called outstanding amount is nothing but an afterthought. The opponents have admitted receipt of letter of complainant dt. 3/2/2011 but contended that it has been intentionally written after realization of amount and that too with ill motive to raise issue of alleged non-settlement of claim. In such circumstances, it is after thought and therefore present complaint is not maintainable in the eye of law. It is contended that once the admissible liability has been paid under the contract, liability of insurer ceases thereafter and the contractual obligations comes to an end on the date of settlement of claim. Thus, there is no relationship of consumer and provider of service between the parties thereafter. Therefore, opponents contended that this Commission has no jurisdiction for adjudication of this matter under the Consumer Protection Act, 1986.It is contended by opp. no.2 that when initial point of time, insured was offered different amount for settlement, being aggrieved insured complainant made representation and provided additional evidences to support its claim. When surveyor verified it and found satisfactory they reported that transactions with Vaibhav Traders are genuine, reviewed offer amount and accordingly complainant was paid Rs.12,86,200/- by A/c payee cheque dated 17/1/2011 by opp. No 2 and Rs.1733815/- by Opp. No.1 on 5/1/2011. It is contended that even thereafter, complainant has filed this complaint which was affirmed on 26/12/2012. This proves it beyond doubt that it is an afterthought and raising misconceived legal issues which are not tenable at law.
(2.07). It is contended that the loss assessment of stock and building were explained vide letter to the complainant, and thereafter, insured has submitted claim disbursement voucher, voluntarily, with free consent on its letterhead dated 8/1/2011. The opponent denied allegation that the complainant has not received the complete policy document. It is submitted that insurers have deputed most renowned and independent survey firm licensed by IRDA for Rnm cc692012 Page 5 of 22 inspection, verification and assessment of loss and surveyors have carried out the survey work as per the relevant Regulations and verified and assessed the loss as per the documents provided by the complainant. It is denied that surveyor did not physically count the damaged stock, visited the site of occurrence only once and did not visit the four corners of the complainant's factory premises nor they supervised the segregation process and also not visited the office of Ravi Oil Mills and other suppliers for verifying the stock statement and accounts. The surveyors have taken numerous photographs of damaged properties which show a detailed inspection of loss carried out by them. It is submitted that there was delay in providing documents and other information on the part of complainant and because of that delay has been occasioned in preparing the final survey report by the surveyor. It is alleged that there was no concrete evidence to establish that insured complainant had in fact purchased goods purchased from M/s. Ravi Oil Mill Company as it canvassed. It is also further submitted that no credible proof shown for payment of alleged purchase of stock from Ravi Oil Mill. It is also submitted that it is not credible because while making so called payment for so called purchase of stock, usual business practices have not been followed. It is submitted that mere payment of VAT to Govt Authority at later date would not establishes purchases were made prior to date of fire. In this type of suspicious commercial transaction, it is immaterial that the accounts of the complainant are subject to statutory audit every year. (2.08). It is submitted that allegations made in complaint are illogical and without any substance. It is not correct to canvass after about eighteen months from the receipt of payment that insured had executed voucher for settlement of claim due to financial crisis or under the undue influence. As such, voucher was discharged after complete understanding of working of loss/claim assessment as full and final settlement discharge voucher on its letterhead. It is not in dispute that while offering this amount, the surveyors did not consider the stock of Rs.18,92,993/- and Rs.6,00,000/- towards damage to the building. (2.09). The opp. No.1 contended that admissible amount (Rs.17,33,815/-) has been paid on 5/1/2011 as full and final settlement of the claim and hence the complainant is not entitled to Rnm cc692012 Page 6 of 22 any further amount. It is submitted that complainant has executed false affidavit for which complainant can be criminally prosecuted. It is submitted that though bank was necessary party, it was not joined as party and therefore it is bad for non-joinder of necessary party. It is submitted that surveyors have dealt with all issues in detail and there were valid reasons for discarding stock that was stated to have been purchased from Ravi Oil Mill. It is submitted that insurer when got necessary support from documentary evidence that stock purchased from Vaibhav Traders corroborates with other reliable and independent sources, the insurer has considered it. It is also submitted further that there were no adequate evidence to support that complainant had genuinely purchased stock from Ravi Oil Mill and the same were explained to insured also. So it is well within the knowledge of complainant that why purchase of stock from Ravi Oil Mill was not considered.
(2.10). The Complainant has filed the rejoinder and stated that complainant has never considered the amount paid by opponent no.1 and 2 towards full and final settlement of insurance claim because despite giving all evidence (like account statement of both the firms and Report of Chartered Accountants'), the opponents have not considered the claim of stock purchased from Ravi Oil Mill. Further it is stated that the complainant had obtained Fire Policies through opponent's agent, the Co-Operative Bank of Rajkot and therefore the opponents never send complete policy documents along with the terms and conditions. It is submitted that to provide complete copy of insurance policy is their statutory obligation. It is reiterated that the surveyors neither visited premises of M/s. Ravi Oil Mills (to verify whether the stated stock was in fact supplied to insured) nor examined physical stock outward register to verify the same. On the contrary, called upon complainant to prove that stock in fact had been purchased. It is submitted that M/s. Ravi Oil mill in its Appendix for VAT Form 201 submitted before the Sales Tax Authority, which is a part of record, has mentioned vide detail list of goods sold wherein at item no.14 at invoice no. T-72 it is categorically mentioned that such stock has been sold to the Manidhar Oil Mills. It is therefore cannot be presumed that such event of submission before the authority is an afterthought since it has happened prior in Rnm cc692012 Page 7 of 22 point of time. It is submitted that the claimed amount of fire loss on goods have been recorded/ accounted into the balance sheet and same is reflected in the audited balance sheet of the year 2008-09 which is a part of record. It is submitted that it is statutory obligation on the part of opponent to provide an interest to insured under the various provisions as per the regulation no. 9 (5) & (6) of the Insurance Regulatory and Development Authority (Protection of Policyholder Interest) Regulations, 2002 enacted in exercise of the powers conferred by the clause (zc) of the sub-section (2) of section 114A of the Insurance Act,1938 (4 of 1938) read with section 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 opponents were duty bound to settle claim by or have to inform in writing within 30 days from the date of submission of survey report. It has been provided under statute that upon delay in payment, the Insurer shall be liable to pay interest at a rate which is 2 % above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it. (2.11). It is stated that the surveyors willingly tried to shift onus on the complainant to prove genuineness of transaction. In fact, the complainant had produced on record of this complaint a certificate issued by Ravi Oil Mill as well as Extract of Form No.201 duly submitted by the Ravi oil mill before an authority. The complainant has produced following documents to support claim. Copies of insurance policies, copy of claim form, copy of panchnama, FSL report, Rojkam by PGVCL, correspondence exchanged between parties and with surveyors, copy of statement of complainant firm in the accounts books of Ravi Oil Mill, copy of statement of account of Ravi Oil Mill in the books of accounts of complainant, copy of VAT paid by the Ravi Oil Mill, copies of accounting details sought by the surveyors for assessment of loss, copy of legal notice, copy of protest letter etc. The complainant also has filed affidavits of Mr. Harshadbhai Nandaniya, Paresh Jasani together with affidavit in rejoinder. (2.12). From the opponents, both surveyors report have been placed on record, both surveyor have filed affidavit in support of their reports and also placed on record correspondence exchanged with complainant firm. On 22/9/2021, the opp. No.1 had moved an application for cross examination of witnesses of complainants which was granted by this Commission and Rnm cc692012 Page 8 of 22 parties were directed to exchange interrogatories and replies thereof. Therefore all witnesses were examined through interrogatories.
[3]. On completion of pleadings and evidence through interrogatories, I have heard Mr. Sakaria advocate for complainant, Mr. R P Raval advocate for opponent no.1 and Mr. D M Parikh for V P Nanavaty advocate for Opponent no.2 at length.
(3.01). Mr. Sakaria submitted that initially the insurer had arbitrarily discarded two transactions of purchase of goods from Vaibhav Traders and also from Ravi Oil Mills. Though the transactions were correctly recorded in the books of account, the surveyors have discarded it on flimsy grounds that it increases stock just before the date of fire and suspected that complainant insured had tried to increase stock to claim more amounts. However, when it came to know that these two transactions have been discarded, the complainant than submitted slips issued by the APMC to support the claim of complainant regarding purchases made from Vaibhav Traders and therefore surveyors then issued addendum report and allowed the claim. This proves beyond doubt that transaction was genuine but without proper assessment the surveyor has discarded it. Mr. Sakaria submitted that once having submitted all relevant documents pertaining to purchase, to ascertain the amount of loss is the function of surveyor for that it is his duty to give adequate weightage to all documents submitted to him and to pay frequent visits at the site, collect necessary data, scrutiny of those data etc comes within the purview of his duty as surveyor. In the instant case, the surveyors have visited once and even during this visit they did not visited all sides of factory and therefore could not ascertain the actual stock lying there and damaged in fire. When documents were submitted they did not raised any further query and submitted reports after discarding above said transactions. When complainant submitted further proof they realized that transaction was genuine with Vaibhav Traders and therefore subsequently considered its claim. Similarly, in case of purchases from Ravi Oil Mill, the complainant insured had submitted even no's of vehicle through which goods were delivered but even then they suspected that transaction is not genuine just because payment of the said transaction was made subsequently to the date of Rnm cc692012 Page 9 of 22 incident. He submitted that when seller of goods have submitted extract of their statement of account of complainant in their books of account even then surveyor did not convinced and discarded the stock and caused loss to the complainant. He submitted that when both parties statement of accounts shows the same thing, the surveyor cannot discard the said transaction arbitrarily. The complainant insured had also placed on record affidavit of Mr. Harshadbhai Nandaniya wherein he has deposed that the transaction was genuine and they have sold goods described in invoices. The opponents have submitted interrogatories and he has replied too. Thus the complainant has proved on record that transaction of purchase of stock from Ravi Oil Mill was genuine and therefore complainant is entitle to loss of stock to that extent. However, the insurer and surveyors have discarded it without giving any plausible reasons for the same. This action of the opponent insurer is arbitrary and therefore it amounts to deficiency in service. Mr. Sakaria also submitted that while offering the amount of settlement of claim, the insurer had discarded stock of Rs. 18,97,285/- and since the complainant insured was in dire need of fund to restart its business after fire, complainant had signed the voucher for full and final settlement but immediately thereafter registered their protest and therefore the claim is payable.
(3.02). Mr. Sakaria also relied upon following judgments and circulars in supports of his submissions. (i). 2022-4-CPJ-469(NC), (ii). 2022-4-CPJ-618(NC), (iii). 2022-4-CPJ- 464(NC), (iv).2016-3-CPJ-40(NC), (v). 2013-4-CPJ-548(NC), (vi). 2007-1-CPJ-135(NC),
(vii). 2010-3-CPJ-313(NC), (viii). 2010-2-CPJ-1(SC), (ix). IRDA circular Dt.24-9-2015, and
(x). IRDA Circular dt.7-6-2016. It is to be noted after concluding of arguments of both side, Mr. Sakaria moved one more application to produce on record affidavit of Mr. Harshadbhai Nandaniya and also submitted clarification note for reply given by Surveyor Narula in his reply to interrogatories. However, advocates for both insurers have strongly objected production of those documents. This Commission has passed order that it will be considered subject to their contentions.
Rnm cc692012 Page 10 of 22
(3.03). Mr. R P Raval advocate for ITGI submitted that the complainant is a commercial enterprise and therefore it is not Consumer within the meaning and scope of The Act. He vehemently argued that the insurer has appointed surveyor to assess the loss, on submission of report of surveyor, the insurer has studied it and offered amount to insured, the additional documents submitted by insured considered and then settled the claim for the amount admissible under the policy. Therefore there is no question of deficiency in service and the insured once having signed full and final settlement voucher voluntarily now cannot claim for the amount that was discarded for want of sufficient evidence. He submits that insurance is a business of indemnification of loss actually suffered by the insured and not more than that. In the instant case, the complainant could not produce sufficient evidence to prove that there was genuine purchase of stock from Ravi Oil Mill and therefore the said amount was discarded. He submitted that burden is upon complainant to prove the loss but he failed to prove it and therefore the amount was offered discarding the said transaction. It cannot be said arbitrary action on the part of insurer by even any stretch of imagination. The complainant insured has not only signed voucher for full and final settlement but also gave affidavit to this effect and therefore after realizing the said amount he cannot claim anything more by raising dispute for alleged coercion. He has not lead any evidence to prove any coercion except a letter subsequent to payment. He also submitted that the complaint has been filed after a period of more than 18 months from the date of discharge voucher itself is sufficient to establish that filing of complaint is with malafide intention and afterthought. As such there is nothing like deficiency in service. He also submitted that even before this Commission insured has not lead and concrete and corroborative evidence to prove that transaction with Ravi Oil Mill was genuine and therefore surveyor was right in recommending for discarding the said transaction. He also submitted that in the instant case, insurance policy was subject to bank clause and therefore bank was also a party who had discharged voucher and though the complainant has not joined it a party. Mr. Raval relies upon judgment of Hon'ble Apex court in the matter between New India Assurance Co. Ltd vs. Genus Power Infrastructure (Civil appeal no. 10784 of 2014 order dt. 4/12/2014) and also judgments reported at 2015-3-CPJ-503(NC), Rnm cc692012 Page 11 of 22 2015-3-CPJ-319(NC), 2016-1-CPJ-404(NC), 2016-1-CPJ-479(NC), 2016-4-CPJ-35(NC), 2019-1-CPJ-459(NC), 2021-1-CPJ-148(NC). He submitted that complainant has failed to establish his claim and therefore not entitle to claim any amount under this complaint and it should be dismissed with heavy cost.
(3.04). Mr. Darshil Parikh for Mr. V P Nanavaty advocate for RGIL submitted that Consumer Courts are adjudicating disputes through summary trial and therefore it is expected that parties should come with clean hands. In the instant case, the complainant insured had availed indemnification of admissible claim amount and also executed settlement voucher for Full and Final Discharge and thereafter raises claim for the amount which was discarded at the time of settlement of claim and that too with explanation why such amount was discarded. He submitted that after discharge of voucher, claim was settled and amount was paid that was enjoyed by the insured and now alleges that partial rejection of claim was arbitrary action on the part of insurer! He submitted that if that is so, insured complainant would have filed regular suit before competent civil court since he raises disputes regarding discharging of voucher under coercion or alleged misrepresentation. This Commission should not entertain such type of complaint as jurisdiction of this Court is limited pertaining to claim of alleged deficiency in service or unfair trade practice.
(3.05). The insured had filed complaint after about long time from the date of discharge voucher itself sufficient to prove that on that day insured was satisfied with the amount offered an explanation given for discarding claim of stock purchased from Ravi Oil Mill. Therefore this complaint is instigated by someone and filed as an afterthought. He submitted that insured is entitle to claim amount of indemnification for the actual loss suffered. In this case, the surveyors have raised genuine doubts about the suspicious transaction and therefore complainant insured was called upon to submit proof of purchase. The complainant insured had submitted certain documents which are not considered reliable and therefore not allowed the claim of said stock. Referring page no. 168-169 of the compilation he submitted that adequate reasoning have been given for discard of said stock. He submitted that it has been Rnm cc692012 Page 12 of 22 observed by the surveyor that in the daily stock statement submitted by the insured, stock was never observed more than 60 MT during immediate past eleven months however on 9/3/2009 (i.e. just two days before date of fire) opening stock was showing 93 MT and though stock of 85 MT purchased and that too from a party from whom insured had no history of trading in past! Over and above this, payment for this transaction was not made even after a month thereafter. Mr. Parikh also submitted that details of supply of stock also raised doubts and all these are mentioned in the report categorically. It is in these circumstances, the stock of purchase from Ravi Oil Mill was not considered. When complainant failed to establish genuine purchase when called upon, obviously it cannot be said discarding stock was arbitrary action on the part of insurer. He also further submitted that when insurer offered amount discarding stock of Vaibhav Traders and Ravi Oil Mill, the insured had availed assistance of legal advisor and submitted certain documents to prove genuine purchase from Vaibhav Traders. After scrutiny of those additional documents it revealed that it is genuine purchase and therefore insurer had increased the offer amount and paid accordingly. Now this categorically proves that insurer has acted open mindedly and indemnified the loss actually suffered by insured. But when insured failed to satisfy that loss in fact has taken place, insurer cannot be blamed for discarding indemnification of that loss. In this sense, the action of the insurer is justified and cannot be called in question at later point of time. (3.06). Regarding allegation of coercion at the time of executing discharge voucher, he submitted that insured was having legal assistance even prior to execution of voucher and therefore it is difficult to believe that insured had executed voucher under coercion. He submitted that after executing discharge voucher, there is limited scope for review of decision taken at relevant point of time. The insured has to establish on record that there were circumstances, where insured had no option but to sign on voucher against his will. If insured has not proved on record that voucher was signed under any threat of coercion, he has no further reason to pray for amount of claim not settled under this summary jurisdiction since there is no proof of any deficiency in service. He submitted that discarding of claim for which Rnm cc692012 Page 13 of 22 no proof have been submitted by insured is a right of insurer under the contract of insurance and for which no action can lie under so called "Unfair Trade Practice" or "deficiency in service". Therefore complaint is requiring to be dismissed with cost. [4]. I have heard both advocates, perused record and studied evidence and my findings are as under: Since the insurer has settled partial claim of insured, policy details, terms and conditions of policy etc. are not in disputes. The basic dispute between parties revolving around claim pertaining to stock stated to have been purchased from Ravi Oil Mill. It is also not in dispute that whatever documents have been supplied by insured to establish purchase of stock suggests that the stock was purchased on 9/3/2009 i.e. just two days before the date of fire. This transaction seems to have drawn attention of surveyor because 85 MT ground nuts (Magfali) have been shown as purchased from Ravi Oil Mill by single invoice as against the purchase of 229 MT during entire February. The complainant has submitted copies of statement submitted to bank from where finance was availed. Scrutiny of these statements suggests that during the opening of financial year 2008-09, there was no opening stock of groundnuts. Thereafter stock position of groundnuts shown per month as under:
Opening stock Purchases Consumption Closing stock
1/4/2008 Nil 270785 257785 13000
1/5/2008 13000 304491 301491 16000
1/6/2008 16000 181684.5 161634.5 36050
1/7/2008 36050 133917.5 135940.5 34027
1/8/2008 34027 95829 110440 19416
1/9/2008 19416 252745 254161 18000
1/10/2008 18000 309437 311457 15980
1/11/2008 15980 664245 668225 12000
1/12/2008 12000 349970 361970 ------
1/1/2009 ------- 300652 279652 21000
1/2/2009 21000 229036 226036 24000
The surveyor has observed that complainant had purchased 194.252 MT stock during first nine days of March 2009 and it includes 85 MT purchased from Ravi Oil Mill on 9/3/2009 Rnm cc692012 Page 14 of 22 and that too when stock of 93000 was available on the end of 8/3/2009! The hand written in- out stock register shows that maximum closing stock was observed on 3/12/2008 i.e. 58658 It also appears from this record that closing stock was increasing during month of March 2009 and though 93000 was available 85 MT purchased to enhance stock on holidays! Obviously this was looking prima facie suspicious and therefore surveyor had started studying pattern of purchase and sales. During this it came to know that the insured complainant usually purchases from Vaibhav Traders or from J B Enterprise whereas this was the only bill for purchase from Ravi Oil Mill. It was also further come to know that complainant had no past history of any dealing with Ravi Oil Mill.
[5]. When surveyor has doubt about genuineness of transaction and therefore he asked for more evidences. He asked the complainant to submit proof of payment made to Ravi Oil Mill during visit on 25th April 2009. Although a period of more than one month has passed, complainant has not paid this price of stock purchased. Immediately thereafter complainant informed surveyor that he had arranged fund on 27/4/2009 and Rs.800000 have been paid by cheque. The complainant than claimed to have paid another cheque on 28/5/2009 of Rs.1097286/-. It is most surprising that the complainant has not lead any evidence before this Commission to show that in fact these two cheques have been realized by Ravi Oil Mill. The complainant could have produced banker's certificate to prove that amount mentioned in the cheque have been realized. Therefore mere issuing cheque in the name of Ravi Oil Mill is not sufficient to establish that amount has been paid. When the insurer has raised doubt about genuineness of transaction, it is duty of the complainant insured to prove it by corroborative evidences. To prove this, the complainant has submitted affidavit of owner of Ravi Oil Mill and he was examined on oath through interrogatories. A question was put to Mr. Nandaniya that since when he had business transactions with the complainant firm he replied that I do not have past record of any business transactions with complainant firm. This confirms that it was first transaction with the complainant and huge stock of 85 MT, costing of more than 18 lacs was given on credit! When he was put another question referring page 270 (Invoice) that Rnm cc692012 Page 15 of 22 is it the same invoice you have sold the goods to complainant, instead confirming the same he replied that he has sold goods vide Bill No.T-72 dated 9/3/2009. When he was asked about whether supply of material on FOR basis, he said that terms and conditions are mentioned in the bill. It is most surprising when this witness said that huge quantity of 85 MT materials supplied to complainant without issuing delivery challan. There were no weighment slips produced on record to confirm actual stock delivered. According to complainant and this witness, the only proof of supply of stock is invoice and VAT form. When a specific question was put to witness that there is no bank statement of your firm to prove that payment has been made in fact to you and he replied that we have made entries in our books of account is sufficient to say that we have received payment. He has not shown his willingness to produce his bank statement even before this Commission to prove that amount has been realized. [6]. As stated earlier, the complainant relies upon the form of VAT payment for the stock purchased from Ravi Oil Mill. The advocate for insurer raised an issue that VAT form was generated subsequently and therefore even VAT is also paid later on to cover this transaction. Witness Mr. Nandaniya is not credible witness according to insurer. I must endorse his submission because he has not replied correctly and tried to provide shelter to complainant. When the doubt is raised he must come with all record to show his bonafide but he did not responded well and his answers lacking confidence. This is more important because Mr. Sakariaya had moved an application for production of additional affidavit of this witness after concluding of his arguments and that was strongly objected by both the learned advocates for both insurers. According to Mr. Sakariya this affidavit was executed long before but inadvertently it was missed to produce on record. I have studied contents of this affidavit and found that in this affidavit, the said witness has referred all his documents and requested this Commission to exhibit the same which also includes the VAT report, His letter dated 24/4/2009, copies of statement of account of complainant in the ledger books of Ravi Oil Mill. Thus he tried to provide complete shelter to the said transaction. Since parties have completed submissions, I do not think it fit to consider the contents of the same as proved Rnm cc692012 Page 16 of 22 facts. It is also important to note that even in this affidavit he has not shown his willingness to produce his statement of bank account where above referred two cheques have been realized. The complainant also has not produced his statement of bank account to show that he had paid amount to Ravi Oil Mill. In law, proof of payment must be either in the form of receipt from the beneficiary and/or in case of cheque, certificate from the bank that fund has been credited to beneficiary account. In this case complainant has failed to prove payment of stock stated to have been purchased. There is another way of looking also, if the complainant has not paid value of stock, the same would not belongs to him and in such case, he had no insurable interest. It may be possible that Ravi Oil Mill might have delivered goods for job work and in such a case, it will be goods held in trust for the complainant insured. In absence of any such proof, I cannot assume that stock of goods belongs to complainant insured and he had suffered loss to that extent. It is complainant's case that goods belong to him and therefore he has to establish ownership of goods through permissible documents. [7]. According to complainant, page 270 is the bill through which stock of 85MT was purchased.
Bare reading of this document shows that it is not mentioned therein whether it is cash memo or credit bill. There is no mention in this bill delivery challan number or date of delivery. If no delivery challan is issued, recipient of goods must acknowledge it. According to Mr. Nandaniya, it is not practice in the trade to obtain signature for receipt of goods. This is unusual where stock of Rs.18 lakhs have been delivered that too for first transaction and on credit and no acknowledgement. In the bill (Page 270), there are seven vehicle numbers mentioned through which stock was stated to have been delivered to complainant. Now if it is compared with letter of Ravi Oil Mill dated 24/4/2009 (page 326) addressed to complainant there are only six numbers of vehicles. Thus, there are different versions of the said Ravi Oil Mill about supply of goods particularly when he claims that there is no trade practice to acknowledge the delivery of goods! All these are unbelievable and far from genuine trade practice.
Rnm cc692012 Page 17 of 22 [8]. To prove genuine purchase of stock, the complainant has also placed on record Form no. 201 i.e. Return under the Gujarat Value added Tax for the period from 1/3/2009 to 31/3/2009 dated 23/4/2009 but it does not bear any endorsement from the office of taxing department. Page no. 305 is acknowledgement of VAT form submissions by Ravi Oil Mill that is dated 14/7/2009. Thus it is submitted belatedly and covered this transaction. The complainant also have submitted affidavit of Mr. Paresh Jasani, Chartered Accountant of the firm and he has stated therein that he had carried out tax audit for complainant firm for the financial year ended on 31/3/2009 and submitted his report on 28/7/2009. Paragraph 3 of his affidavit reads as under:
"That, to prepare the above mentioned financial statements from the books of account are the responsibility of the proprietor of the firm. My responsibility is to express an opinion on these financial statements based on our audit. I have conducted my audit in accordance with auditing standards generally accepted in India. These standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements"
Mr. Jasani was served upon interrogatories where he was asked since when he knows complainant firm, he replied that he do not know the exact date. When he was asked about his tax audit report dated 28/7/2009, he said that he is unable to say without referring to court record however he had presented a copy of audit report. When he was asked that it is not the duty of the Chartered Accountant to verify whether the goods of a particular firm are delivered or not, he replied that it is not duty of chartered Accountant. When he was asked that you have not physically inspected or verified actual physical delivery of goods at the complainant's premises from Ravi Oil Mill, he replied that no such verification is under the scope of the duty of Chartered Accountant. He said that he has verified only financial statement on accounting point of view. Thus, even this witness is also of no help to complainant to prove that stock was infect purchased, stored in godown or damaged / lost in fire as canvassed by the complainant. The surveyor has given reasoning for discard of claim for purchase of goods from Ravi Oil Mill as under:
"PURCHASES FROM RAVI OIL MILLS FOR 85.850 MT OF GROUNDNUT WITH SHELL ON 9th MARCH 2009 According to the insured the said groundnut has been purchased on FOR basis which means that freight cost has been borne by the supplier. Hence no freight expenses for the said purchases were recorded in the books of account as per the insured since no books of account have been shown to us.
85.850 MT has been delivered by 7 vehicles, The registration no. of the vehicles are mentioned in the invoice but no Delivery Challans has been produced before us in support of the physical movement of groundnut on 9 March, 2009 by the insured. On Rnm cc692012 Page 18 of 22 enquiry with the insured as to why Delivery Challans has not been produced, no satisfactory reply has been given.
We asked the insured that since no freight cost has been paid by you for the said purchases and therefore in order to prove the genuineness of the transaction, kindly furnish the cash vouchers for the freight expenses which must have been paid by the supplier Ravi Oil Mills to the owners of 7 vehicles engaged in transportation of goods from their factory to the insured factory duly certified by the CA of Ravi Oil Mills Co. the insured has failed to do so.
The insured had informed us during our first visit on 14th March, 2009 that they had closed the unit on 10th March and 11 March 2009 due to the Festival of Holi and all the workers had gone to their home on 8th March 2009 evening for celebrating Holi festival.
Since 86 MT of groundnut has come on 9th March, 2009 and according to he insured date of invoice is the date of receipt in the mills, in absence of any other proof, we inquired with the insured as to how such a huge quantity of 86 MT was off loaded without the help of any workers. Moreover, no cash vouchers as well as toll tax receipts have been produced before us in case the payment of unloading charges was made by the insured on 9th March, 2009. No satisfactory reply was given by the insured in response to our query, On enquiry with the insured as to why they had resorted to such a huge purchase of groundnut just prior to the date of loss, they informed us that they were expecting the price to increase in future. However, the said reply of the insured is not convincing because if the prices were expected to increase then why would Ravi Oil Mills will supply nearly 86 MT of groundnut to the insured on credit when they themselves could have earned the profit due to appreciation in the price if they had kept the stocks with themselves.
No weighment slips have been produced before us showing the quantity of Groundnut received in each vehicle separately and only consolidated entry has been passed under cover of one invoice which is rather absurd and defies any logic. During the said meeting on 25 April, 2009 we inquired with the insured as to whether any payment has been made to Ravi Oil Mills Co. from 9th March, 2009 till the date (25th April 2009), against the said purchase of Rs.18,97,285, the brother of insured informed that payment has not been made since they were overdrawn in their bank account. On our request for furnishing the bank statement as on date, Mr. Vallabbhai informed that there was balance in the account but they have not made the payment and had asked for extension of time from Ravi Oil Mills Co, as they were facing liquidity crisis due to the incidence of fire The insured had furnished to us vide their letter dated 23 June, 2009 a computer printout without insured's signature (Kindly Refer Annexure B) showing that payment has been made to Ravi Oil Mills by issuing two separate cheques of Rs, 8,00,000/- and Rs. 10,97,285 on 27th April, 2009 and 28th May, 2009 respectively. From the perusal of the statement, it will be observed that the first payment has been made immediately after our meeting of 25th April, 2009 during which the pertinent question was raised before the insured as to whether any payment was made to Ravi Oil Mills. However, the insured has not furnished the bank statement which would reflect whether the cheques have been actually debited in their bank account. Hence we have not taken cognizance of the said payments.
In addition to above, the insured has furnished the computer printout purported to have been issued by Ravi Oil Mills (Kindly refer Annexure C) showing therein the account of Manidhar Oil Industries in the books of Ravi Oil Mills incorporating the aforesaid transaction of purchase and payment made by Manidhar Oil Industries. Rnm cc692012 Page 19 of 22
However, the said statement has not been signed by any authorized person of Ravi Oil Mills. Hence we have not taken cognizance of the same.
However, even for the sake of argument, we accept that the payment has been made by the insured to Ravi Oil Mill; the same has been made by them only after it was brought to their notice on 25th April 2009. Hence the action taken by the insured after their bringing to their knowledge does not make the transaction of purchase and payment genuine.
BASED ON AFORESAID REASONING AND THE FACTS PRODUCED BEFORE US WE ARE OF THE OPINION THAT THE SAID PURCHASE IS NOT GENUINE AND WE HAVE NOT CONSIDERED THE SAID PURCHASE OF 85.850 MT OF GROUNDNUT WITH SHELL IN OUR LOSS ASSESMENT."
I believe that surveyor has worked out as per standard method and reasoning cannot be said as arbitrary action of surveyor or insurer.
[9]. I have read page No. 143 of the compilation which is the policy issued by RGIL wherein under the special condition No.3 reads as under:
"3. On the happening of any damage in consequence of which a claim is or may be made under this policy the Insured shall a. forthwith give notice thereof to the Company;
b. with due diligence do and concur in doing and permit to be done all things which may be reasonably practicable to minimize or check any interruption of or interference with the business or to avoid or diminish the loss.
c. not later than thirty days after the expiry of the period of indemnity or within such further time as the Company may in writing allow, at his own expense deliver to the Company in writing a statement setting forth particulars of his claim together with details of all other insurances (if any) covering the damage or any part of it or consequential loss of any kind resulting therefrom.
d. at his own expense produce or procure and give to the Company such books of accounts and other business books, vouchers, invoices, balance sheets and other documents, proofs, information, explanation and other evidences as may reasonably be required by or on behalf of the Company for the purpose of investigating or verifying the claim together with a declaration on oath or in other legal form of the truth of the claim and of any matter connected therewith.
No claim under this policy shall be payable unless the terms of this condition have been complied with and in the event of non-compliance therewith in any respect, any payment on account of the claim already made shall be repaid to the Company forthwith."
Plain reading of the aforesaid provisions makes it clear that it is the obligation on the part of insured to provide the information and supporting documents for the claim amount which includes the books of accounts and vouchers and invoices and other documents also. In case of necessity, the explanation is also requiring to be given. In the instant case the insured complainant has not produced the statement of bank account which can be used to ascertain Rnm cc692012 Page 20 of 22 whether the stated amount in fact has been paid to Ravi Oil Mills or not. It is needless to mention that the insured has to prove his claim and then only Insurance Company can be made liable. In the case of United India Insurance Company Ltd Vs Kantika Colour Lab (2010-3-CPJ page 14), the Hon'ble Supreme Court has observed as under:
" Contracts of insurance are generally in the nature of contracts of indemnity. Except in the case of contracts of life insurance, personal accident and sickness or contracts of contingency insurance, all other contracts of insurance entitle the assured for the reimbursement of actual loss that is proved to have been suffered by him. The happening of the event against which insurance cover has been taken does not by itself entitle the assured to claim the amount stipulated in the policy. It is only upon proof of the actual loss, that the assured can claim reimbursement of the loss to the extent it is established, not exceeding the amount stipulated in the contract of insurance which signifies the outer limit of the insurance company's liability."
"....From the evidence, it is clear that the damage has been caused only to the printer model and not to the film processor and about which there was only apprehension and no more that its working might run into difficulty in future. However, there is no real basis for such an apprehension. In any case in the absence of proved damage affecting the performance of the machine, it cannot be assumed that the film processor was also damaged either wholly or in part so as to call for any repair or replacement of the said machine."
This makes it further clear that the insured can claim entitlement of the amount only upon proof of actual loss. In the instant case, the insured has yet not proved that goods were genuinely purchased from the Ravi Oil Mills. Although audited report has been produced on record but the auditor says that he has not verified each and every entry or physical verification of stock. Under such circumstances merely because of audit report of accounts have been produced will be sufficient to prove on record that the goods mentioned were in fact purchased by the complainant. Auditor has not certified stock on daily basis. If the complainant has not established his case, it is not within the scope of deficiency in service. In deficiency in service, it is necessary to allege fault, imperfection, short coming or inadequacy in the quality, nature and manner of performance, which is require to be perform by person in the pursuant of the contract or otherwise any relations to any service. The burden to prove the deficiency in service is upon the person who alleges it. It is found in the instant case that surveyor has raised certain doubts about the transaction taken place and his doubt is justified to a certain extent, and therefore, the insurer has discarded the amount of claim from the liability. When the liability has been discarded for genuine reason, it does not amount to deficiency in the service. It cannot be said by any stretch of imagination that it was any willful fault, imperfection, short coming or inadequacy. The deficiency in service is to be distinguished from the tortuous act. In the absence of deficiency in service aggrieved consumer may have remedy under the common law to file suit for damages but cannot insist for the grant of relief under this Act, because the act of insurer otherwise do not amount to Rnm cc692012 Page 21 of 22 deficiency in service. It is to be remembered that rendering of the deficiency in service has to be considered and decided in each case according to the facts of each case for which no hard and fast rule can be laid down. In deficiency, like want of due care, absence of bonafide action or omission and the like may be the factors who ascertain the deficiency in rendering of service. In the instant case, none of the factor exists and therefore, I cannot say that it is case of deficiency in service on the part of Insurance Company in discarding the claim of the complainant. The complainant has relied upon so many authorities but in none of the case, the facts of the present case are identical and therefore, it would not be proper to rely upon any of those judgments especially when the facts are not established.
[10]. So far the second issue is concern, with regard to whether complainant can file complaint for the discarded claim. After having executed in full and final discharge voucher, I would say that it depend upon the circumstances of each case, where the complainant can be permitted to file such complaint. In principle, I do not say that the complainant has no right to claim the discarded amount by filing a complaint under the Consumer Protection Act, but it is to be established on record with evidence that the claim was arbitrarily discarded by the insurer. When the complainant is failed to produce cogent reasons for not producing supporting proof and not produced concrete and corroborative evidence that the stock purchased was genuine and transaction was routinely executed commercial transaction as it canvassed in this case, the complainant is not entitled for any amount. In the instant case, when the loss of stock not proved, I do not want to deal with all other submissions as to maintainability of complaint after discharge of full and final voucher. I, therefore pass the following final order.
ORDER [1]. Complaint No. 69 of 2012 is hereby dismissed for none of sufficient evidence to prove deficiency in service.
[2]. There shall be no order as to cost.
[3]. Office is directed to send copy of the order to the parties.
Pronounced today by circulation on 30th day of June, 2023.
Mr. R N Mehta
Presiding Member
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