State Consumer Disputes Redressal Commission
M/S Tulip Yarn vs New India Assurance Company on 2 March, 2016
2nd Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH
Consumer Complaint No. 122 of 2014
Date of institution: 5.8.2014
Date of Decision: 2.3.2016
M/s Tulip Yarn, Village Khasi Kalan, Tajpur Road, Ludhiana through its
Partner Arpit Gupta s/o Lt. Sh. Harikishan Gupta r/o H. No. 1632, Ground
Floor, Guru Ram Dass Colony, Sec. 39, Chandigarh Road, Ludhiana.
Complainant
Versus
1. The New India Assurance Company Limited, Regional Office at SCO
12, Feroze Gandhi Market, Ludhiana.
2. The New India Assurance Company Limited, Head Office : 87, M.G.
Road, Fort, Mumbai.
Opposite Parties/Respondents
Consumer Complaint under Section 17 of the
Consumer Protection Act, 1986.
Quorum:-
Shri Gurcharan Singh Saran, Presiding Judicial Member
Shri Jasbir Singh Gill, Member
Mrs. Surinder Pal Kaur, Member
Present:-
For the complainant : Sh. Rahul Rampal, Advocate
For the opposite parties : Sh. J.P. Nahar, Advocate
Gurcharan Singh Saran, Presiding Judicial Member
ORDER
Complainant has filed this complaint against the opposite parties(hereinafter referred as Ops) under Section 17 of the Consumer Protection Act, 1986(for short 'the Act') on the averments that complainant is a partnership firm and this complaint has been filed through one of his partner Mr. Arpit Gupta. The complainant had taken a fire floater policy by insuring the following properties:- Consumer Complaint No. 122 of 2014 2
"1. Stocks of all kinds of yarn, fibers &/or cotton their raw materials, semi finished/finished goods &/or stock in process etc. lying &/or stored with in the factory premises &/or in attached godown. Goods hled in trust/on job work/on commission also covered. STFI & EQ risks also covered.
2. Same stocks as mentioned in factory premises location No. 1"
for the period 20.5.2012 to 19.5.2013 after paying the premium of Rs. 97,867/- with coverage of Rs. 5,50,00,000/-. However, no terms and conditions of the policy were supplied to the complainant. The complainant had been taking this type of policy since 2009-10. Before issuing the policy, officials of Op Company had physically verified/scrutinized the record, raw material and finished goods. However, on 22.6.2012, unfortunately, a fire broke in the godown of complainant firm at Village Khasi Kalan and raw material in the form of Nylon, Fibre, Wool, Acrylic, polyester and finished goods lying/ stored in the godown had burnt to ashes and fire brigade was called to douse the fire and it took almost 4 hours for the fire brigade to control the fire. DDR to this effect was also recorded. The incident also appeared in various newspapers. Intimation was given to Ops. Complainant assessed the loss to the tune of Rs. 2,32,13,984/- and submitted the claim vide letter dated 11.9.2012. Op appointed Sh. N.S. Sidhu as a Surveyor, who inspected the spot and conducted the necessary investigation. However, suddenly Ops vide their letter dated 20.3.2014 had repudiated the claim of the complainant. No survey report was handed over to the complainant. No detailed Consumer Complaint No. 122 of 2014 3 reasons were intimated to the complainant for rejecting this claim. Therefore, Op Company had acted in utmost deficient manner and wrongly declined the claim of the complainant. Hence, the complaint to pay Rs. 95,00,000/- on account of loss suffered by him, although loss was on the higher side, pay damages to the extent of Rs. 2,00,000/- and litigation expenses to the tune of Rs. 50,000/- or pass any other order or direction as deemed appropriate by the Commission.
2. Complaint was contested by Ops, who filed written reply/version taking preliminary objections that this Commission does not have the pecuniary jurisdiction to entertain this complaint because according to the complainant, loss was to the extent of Rs. 2,32,13,984/- which exceeded the pecuniary jurisdiction of this Commission and as per the surveyor report, it was assessed Rs. 1,30,700/-, which also does not falls within the pecuniary jurisdiction of this Commission and that the complainant has not approached the Commission with clean hands. On merits, issuance of the policy was admitted. Terms and conditions of the policy were supplied to the complainant. In case it was not supplied, the complainant could have approached Ops office to supply the same. It is just an excuse that terms and conditions of the policy were not supplied. It was denied that physical verification of the record of the raw material was got done by Ops before issuance of the policy. It was denied that the fire broke out accidently on 22.6.2012. The cause of fire is doubtful in nature as cause of fire is stated to be short circuit but there is no electricity connection/wiring in the godown. There was delay in Consumer Complaint No. 122 of 2014 4 reporting the matter to the fire brigade, which was intentional. In the report of the fire brigade, it has been stated the cause of fire is electric short circuit or over heating the material due to hot weather. However, possibility of fire with malafide intention of the insured cannot be ruled out because the quantum of loss claimed by the insured is not substantiated with the material available on the site. On verification some purchases made by the insured were found to be fake. Then fire had broken out in one out of the two godowns. The insured had concealed the stock stored in the second godown. The caption godown had no proper shutter and locking arrangement. The Surveyor had assessed the loss to the extent of Rs. 1,30,700/- because only textile waste material was burnt and that too to the height of 1-2 ft. and fire area occupied was less than 40% of the floor area. Therefore, it will cover only 4690 Kg. waste, which @ Rs. 30/- per Kilogram comes to Rs. 1,40,700/- and after deducting excess clause of Rs. 10,000/-, assessed loss was Rs. 1,30,700/-. According to the books of account of the complainant, the complainant purchased goods worth Rs. 51,05,370/- from M/s Westened Yarns Pvt. Ltd., goods worth Rs. 4,08,815/- from M/s Texteron Industries and Rs. 6,27,495/- from M/s Lamba International Pvt. Ltd. but during investigation, the investigator/surveyor did not find the existence of these firms. Major purchases were made in the month of March, 2012 to increase the amount of loss. In case entire loss is taken, it comes to 1,04,596.20 Kgs. and it is not possible that this material will burn in one hour. Complainant has submitted two sets of trading and manufacturing account for the period 1.4.2012 to 21.6.2012 and two Consumer Complaint No. 122 of 2014 5 sets of accounts is in itself fraudulent act and on that account, the claim was rightly repudiated keeping in view Condition No. 8 of the policy. Therefore, there was no deficiency in service on the part of Op. Clam was rightly repudiated. There is no merit in the complaint, it be dismissed.
3. The parties were allowed by the learned District Forum to lead their evidence.
4. In support of his allegations, the complainant had tendered into evidence affidavit of Arpit Gupta, Partner Ex. CW-1/A, insurance cover Ex. C-1, insurance policies Exs. C-2 to C-4, fire brigade report Ex. C-5, DDR Ex. C-6, newspaper cuttings Exs. C-7 7 8, claim and calculations Ex. C-9, repudiation letter Ex. C-10, stock register Ex. C-11, VAT returns Exs. C-12 to 16, bills Exs. C-17 to 67, electricity bills Exs. C-68 & 69, lease deed Ex. C-70, photographs Exs. C-71 to 76, VAT Return Exs. C-77 & 78, details of payment Ex. C-79, affidavit of Somnath Sharma, Accountant Exs. CW-2/A, two certificates Exs. C-80 & 81. On the other hand, Ops had tendered into evidence affidavit of R.N. Gupta Ex. Op-1/A, affidavit of N.S. Sidhu, Director Ex. Op-1/B, rent deed Ex. Op-1/1, fire floater policy Ex. Op- 1/2, surveyor report Ex. Op-1/3, letters Ex. Op-1/4, repudiation letter Ex. Op-1/5, statement of Arpit Gupta, Partner Ex. Op-1/6, photographs Exs. Op-1/7.
5. We have heard the learned counsel for the parties and have carefully gone through the pleadings of the parties and evidence on the record as well as written arguments filed by the parties. Consumer Complaint No. 122 of 2014 6
6. Before adverting to the controversy between the parties, a preliminary objection has been taken by the counsel for Ops with regard to the pecuniary jurisdiction of this Commission. It has been stated in the written reply that the claim submitted by the complainant was to the tune of Rs. 2,32,13,984/- whereas the Surveyor had assessed the loss to the tune of Rs. 1,30,700/- whereas the pecuniary jurisdiction of this Commission is from Rs. 20,00,000/- towards Rs. 1 Crore. In case the loss assessed by the complainant is taken it exceeded Rs. 1 Crore then it does not fall within the pecuniary jurisdiction of this Commission and in case loss assessed by the Surveyor is taken, it is just Rs. 1,30,700/-, which falls within the pecuniary jurisdiction of the District Forum. However, pecuniary jurisdiction is to be considered according to the claim claimed by the complainant in the complaint. In the complaint, complainant had restricted his loss to the tune of Rs. 95 lacs although the claim was more than that but there is no legal restraint that complainant cannot cut short his claim. After taking this amount of Rs. 95 lacs and Rs. 2 lacs as damages and Rs. 50,000/- as litigation expenses, it comes to Rs. 97,50,000/-, which comes within the pecuniary jurisdiction of this Commission. Therefore, we are of the opinion that this Commission had the pecuniary jurisdiction to entertain this complaint and we do not find any merit in the objection raised by the counsel for Ops.
7. Now adverting to the merits, some of the facts are admitted between the parties that policy for the period 20.5.2012 to 19.5.2013 was taken for the premises of the complainant as referred above after paying the premium of Rs. 97,867/- and sum insured was Consumer Complaint No. 122 of 2014 7 Rs. 5,50,00,000/-. During this insurance period on 22.6.2012, fire broke out in the godown of the firm at Village Khasi Kalan and intimation was given to Ops. On 11.9.2012 claim of Rs. 2,32,13,984/- was claimed by the complainant for which he suffered a loss. Ops appointed Sh. N.S. Sidhu as a Surveyor, who inspected the spot. However, the claim of the complainant was repudiated according to Condition No. 8 of the policy, which reads as under;-
"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."
and accordingly, communication was sent to the complainant vide letter dated 20.3.2014.
8. Now we are to consider whether total repudiation is justified, if it is not so, what was the loss suffered by the complainant and to which amount the complainant firm is entitled to as a loss to his goods in the fire. So far as incident of fire is concerned, there is report of Municipal Fire Brigade, Ludhiana Ex. C-5 dated 22.6.2014 and DDR in this regard was recorded in P.S. Jamalpur Ex. C-6 and the news of this incident had appeared in various newspaper placed on the record as Exs. C-7 & C-8. The report of the Surveyor is Ex. Op-1/3 and at point 6.1, which is reproduced as under:- Consumer Complaint No. 122 of 2014 8
"6.1 It has been reported to us by the representative of the insured that on 22.6.2012 around 1.30 pm a fire broke out in the godown situated at a distance of approximately one Km from the factory premises situated in the residential premises of Sardar Sohan Singh S/o Ram Singh. The fire was noticed by one of the insured's employee, who was incidentally passing from the site of loss. He noticed the smoke and informed the partners of the firm and they rushed to the site of fire and informed the fire brigade at Ludhiana. By the time fire brigade arrived everything was reduced to ashes. It has been informed to us that fire brigade arrived almost after one hour."
9. Therefore, so far as fire incident is concerned, it has been admitted but it has been alleged by Op that there was intentional delay of one hour. However, in case we go through the report of the Surveyor as referred above that fire broke out around 1.30 p.m., it was noticed by one of the insured's employee, who was incidentally passing from the site of loss and informed the partners of the firm and they rushed to the site of the fire and informed the Fire Brigade, Ludhiana. Statement of the partner Arpit Gupta has been referred and he in his statement stated that he had reached the place of incident at 1.35 p.m. and then he informed his partner Kartar Singh and Fire Brigade office was informed by M.L. Sharma from Ludhiana office and he personally went to fire brigade station at Miller Ganj and fire brigade had reached at 2.00 p.m.. In case it is read alongwith the report of the Municipal Fire Brigade occurrence report, time and leaving the fire office is 14.10 p.m., therefore, in case Arpit Gupta had Consumer Complaint No. 122 of 2014 9 reached the site at 1.35 p.m. then he intimated M.L. Sharma, who personally visited the fire brigade office and then fire brigade was to collect the staff. In that eventuality, we does not consider that there was any intentional delay on the part of complainant to give intimation to the fire brigade. An other factor is pertinent to be referred here that as per the claim lodged by the complainant, the fire took place due to short circuit but no electric wire was found affixed in the captioned godown whereas the fire brigade has mentioned the loss as over heating/short circuit. The plea of breaking fire due to electric short circuit was ruled out as there was no electric fittings. However, possibility of fire due to spontaneous combustion was also ruled out as stock of acrylic fibre, wool and nylon does not fall in high risk or moderate risk of materials or spontaneous combustion take place in the materials, which had oil content or are greasy, therefore, the Surveyor referred the case of fire as malafide. Whereas on the other hand, the complainants have placed on the record two bills issued by PSPCL Ex. C-68 & C-69 in the name of Gainpreet Kaur and address of consumer is Swainder Sinv Kassi. Therefore, it has been stated by the counsel for the complainant that godown had the electric connection, although it was in the name of Gainpreet Kaur relative of the owner of the godown. Otherwise, the presence of any of the partner of the complainant was not found there. No other circumstances have been referred by the complainant by which intentional fire is possible. No doubt that surveyor report is material document but it is not sacrosanct document and in case any findings given by the Surveyor are not supported by cogent evidence or not Consumer Complaint No. 122 of 2014 10 based upon specific reasoning then we are not bound by the findings given by the Surveyor and the Consumer Fora can look forward to the other evidence on the record. There is specific evidence of the complainant duly supported by his own evidence and statement of his Accountant and further corroborated by the report of the Municipal Fire Brigade where it has been mentioned over heating or short circuit. In case no wiring would have been there then it has not been explained why the fire office in their report has mentioned short circuit. Therefore, the findings of the Surveyor are not based upon any specific evidence that it was not due to over heating or short circuit but with any malafide intention at the instance of the complainant. Whatever may be the reason to catch the fire but Ops have failed to prove on record that it was intentional one. An other plea was taken that fire remained for a short period and during this period such a huge stock as claimed by the complainant cannot destroy. However, as per report of Municipal Fire Brigade Ex. C-5, it took three hours 54 minutes to extinguish this fire. In view of this duration of the fire, plea taken by Ops as referred above is not tenable. The policy taken by the complainant is Standard Fire and Special Peril Policy and in case any material duly insured under policy had destroyed in the fire then claim is maintainable, therefore, without any specific evidence on the record, we do not agree with the findings recorded by the Surveyor that claim was not maintainable as fire to the stock was with malafide intention.
10. The next contention raised by the counsel for Ops is that the claim filed by the complainant is fraudulent on the plea that the Consumer Complaint No. 122 of 2014 11 complainant in his accounts has referred to have purchase the material from Westend Yarn Pvt. Ltd. of Rs. 51,05,870/-, Texteron Industries Rs. 4,08,815/- and Lamba Brothers Rs. 6,27,495/- and that these firms were not in existence, therefore, these bills were false, fabricated, just to inflate the compensation amount. Again report of the Surveyor is relevant. He in his report Ex. Op-1/3 in Point No. 14.2 has referred the registered letter addressed to M/s Westened Yarns Pvt. Ltd. and M/s Texteron Industries were received back with the report that parties does not exist. Then they alongwith the partners of the insured firm tried to locate the said parties but partners of the insured firm could not locate the parties. Then the partners stated that they had purchased the material through broker. Broker was called for to identify the party but he also could not give proper reply. After a week's time insured contacted them and informed that they have located the parties. On 16.1.2013, the Surveyor again visited Ludhiana to verify the record but to their utmost surprise they found that in a residential area in two rooms some textile waste bales were stored and two boys were sitting in the other room without any record. When inquired about the bill books they replied that the same is in their office but the partners were unable to take them to the office. Then they visited the registered office of the Company wherein it was found that Company was defunct and had not filed the balance sheet since 2010. No VAT return was filed by M/s Westened Yarn Pvt. Ltd. and similar was the position with regard to M/s Texteron Industries whereas the purchase from Lamba Industries was stated to be doubtful as 31790 Kg. was purchased in March, 2012 whereas Consumer Complaint No. 122 of 2014 12 consumption was only 4292.77 Kg., therefore, there is no reason to get 19 months advance requirement, therefore, this purchase was doubtful. Whereas on the other hand, counsel for the complainant has argued that they had made the payment through their bank account through various cheques and its detail has been given in Ex. C-18 showing payments to Westend Yarn and Texteron Industries and Lamba Industries and it was confirmed by these firms in the documents Exs. C-80 & C-81. The bills of Lamba Industries has been placed on the record as Ex. C-34, Texteron Industries Ex. C-61 and Westend Yarns Pvt. Ltd. Ex. C-62 to Ex. C-67. VAT returns of the firm Exs. C-12, C-13, C-14, C-15, C-16 to C-33. In case the VAT invoices are there then how it can be said that purchases were fake. However, mere Vat return is sufficient. The firms must exist where heavy purchases were made by the complainant. As per the report of the Surveyor during the period in question, the complainant had purchased goods worth Rs. 51,05,370/- from M/s Westened Yarns Pvt. Ltd. and Rs. 4,08,815/- from M/s Texteron Industries. The report of the Surveyor further says that surveyor alongwith the partners of the complainant firm had visited the given address but firms were not existing then the partner of the complainant firm took them to another premises where only two boys were sitting without any record. No return was filed with Registrar of Companies, in that situation, the complainant was required either to examine the broker or any official/partner of those firms from where these heavy purchases were made during the period in question but the complainant has failed to examine any such witnesses, therefore, these purchases seems to Consumer Complaint No. 122 of 2014 13 be doubtful, therefore, these purchase cannot be considered in the stock of the complainant at the time of alleged incident. Whereas there is no report that Lamba Industries does not exist. It has been stated to be doubtful on the ground of heavy purchase. Mere heavy purchase itself is no ground to render the entire purchase to be doubtful.
11. The next question arises what was the stock with the complainant on the date of incident. The documents were submitted by the complainant with the Surveyor and as per the report of the Surveyor Ex. Op-1/3, he had assessed the stock to the tune of Rs. 1,22,85,938.88. Although the complainant has alleged that his loss was to the tune of Rs. 2,32,13,984/- for that he was required to place on the record his trading account showing the stock on the date of incident. On the record, the complainant has placed his stock of Polyester, Nylon, Poly Cotton Yarn, Viscose, Wool, Acrylic Fibre, blended yarn, Acrylinc yarn for the year 2012-13 but it is not a trading account. Actual stock can be assessed only from the trading account showing the stock on the date of incident. Otherwise, counsel for the complainant has not been able to challenge the assessment made by the Surveyor, how it is incorrect. Therefore, in case we take the assessment made by the Surveyor as Rs. 1,22,85,938.88 and after deducting a sum of Rs.55,14,185.88 i.e. material purchased from Westend Yarn and Texteron Industries being doubtful, the balance will come to Rs. 67,71,753/-.
12. The next question for determination is whether actually the stock of the complainant had burnt in the fire or it was only a Consumer Complaint No. 122 of 2014 14 waste material as per the observations made by the Surveyor in his report. He has stated that the goods were stored in the godown upto the height of 1-2 ft. and fire area occupied was less than 40% of the floor volumetrically and total floor area was taken 1748 sq. ft. and damaged area only and occupied and residue was 699.20 and accordingly he assessed that only 4690 Kg. of waste can be covered in that area. However, the photographs are on the record as Ex. Op-7 and from some of the photographs one can easily see the huge residue after the fire and the fire has gone even upto the ceiling and ceiling had fallen, therefore, we do not agree with the plea taken by the Surveyor that the covered area was only of 1-2 ft. and merely on the basis of residue the assessment cannot be made with regard to the actual loss and no evidence is coming forth from the side of the Ops that the material on the site was only the waste because godown is not hired by the party only to stock the waste, otherwise where he will put his stock, he has just two godowns, therefore, the stock will be in both the godowns and during investigation no other evidence was available that stock was somewhere else. During the course of arguments, it has been stated that the entire material was in the 2nd godown, which was not subject to fire and this godown was not under fire. However, in case it had come to the notice of the Investigator that the complainant had two godowns. In case the investigator in order to verify the existence of the firms, can go to any extent to visit the firm in entire City of Ludhiana, it is astonishing why he did not find time to check the stock in the 2nd godown. It was in the knowledge of Ops/Surveyor because they themselves have placed on the record Consumer Complaint No. 122 of 2014 15 the rent deed in which two godowns have been referred. However, at the same time, in case no fire had taken place in the 2nd godown then it was the duty of the complainant at the time of lodging the claim to say that there was no stock in the 2nd godown and the entire stock was in the godown, which was subject to fire. We have gone through the claim form submitted by the complainant Ex. C-9, he has just submitted the total loss as Rs. 2,32,13,984/-. Alongwith the detail of the loss without giving any detail what was the stock in the godown put to fire and the stock in the godown, which was not under fire, therefore, both the parties are negligent not resorting to check the stock of the complainant in the 2nd godown. Where there is a case of contributory negligence, then guess work should be the main function. It has been so held by the Hon'ble National Commission in the judgment IV (2015) CPJ 121 (NC) "Western Tobacco Limited versus United India Insurance Co. Ltd. & Ors.". In that case, on the basis of guess work, the complainant was allowed 2/3rd of the assessment made by Surveyor. Here also, both the parties were negligent not to make assessment of the stock lying under the 2nd godown, therefore, the complainant will be entitled 50% of the stock. Therefore, he will be entitled to 50% of the stock available on the date of incident. In case the stock in question on the date of fire was of Rs. 67,71,753/- then 50% of the same will come to Rs. 33,85,876.5p.
13. Another plea was taken by Op that this godown was having no shutter or locking system, therefore, it is not possible that the complainant will keep such costly goods in that godown. We have Consumer Complaint No. 122 of 2014 16 again gone through the photographs placed on the record by the complainant. No doubt that there is no shutter but door is there, which can be locked. In case some space is there above the door, in case of theft such a plea can be considered whether there was possibility of committing theft from that place or reasonable precautions were taken. But here it is a case of fire, therefore, such a plea with regard to the condition of the godown cannot be entertained. Moreover, when any property is insured, it is visited by the Officers of the Insurance Company and in case they were satisfied with the condition of the property then lateron they cannot take the plea with regard to the condition of the property that such a heavy stock of goods cannot be stored in such a godown.
14. Ops have repudiated the claim under Condition No. 8 of the policy on account that claim is fraudulent. However, in view of our above discussion, it is with regard to the purchase from Westened Yarns Pvt. Ltd. and M/s Texteron Industries. In the account of complainant, bills are there but those transactions have been stated to be suspicious as the firms were not existing at that time in view of the report given by the Surveyor and accordingly the purchase made from those terms have been deducted from the stock on date of fire. However, in case a party is not believed on one account it does not mean that his entire claim is false as per the principle of 'falsus in uno, falsus in omnibus'. Every evidence has to be appreciated independently and the entire claim cannot be rejected merely because one or two transactions out of the entire purchase running in crores are found to be suspicious. Therefore, we are of the opinion Consumer Complaint No. 122 of 2014 17 that the plea under which the claim of the complainant was totally repudiated is not correct. The assessment made by the Surveyor that only waste material had burnt is also not acceptable. Total rejection of claim amounts to deficiency in service on the part of Ops. We are of the opinion that in view of the findings recorded above, the complainant had suffered a loss of Rs. 33,85,876.5p
15. In view of the above, we partly accept this complaint and direct Ops/respondents to make payment of Rs. 33,85,876.5p to complainant. Ops are further directed to make payment within 45 days from the receipt of the copy of the order, failing which the complainant will be entitled to interest @ 9% p.a. from the date of order till actual payment. They are further directed to pay Rs. 20,000/- as compensation for harassment and Rs. 11,000/- as litigation expenses.
16. The arguments in this consumer complaint were heard on 4.2.2016 and the order was reserved. Now the order be communicated to the parties as per rules.
17. The consumer complaint could not be decided within the statutory period due to heavy pendency of Court cases.
(Gurcharan Singh Saran) Presiding Judicial Member (Jasbir Singh Gill) Member March 2, 2016. (Surinder Pal Kaur) as Member