State Consumer Disputes Redressal Commission
Rajkumar Tomar, vs The New India Assurance Company ... on 8 October, 2013
BEFORE THE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION PANAJI GOA Complaint No.07/13 Rajkumar Tomar, s/o Shri Ramsingh Tomar, Prop. M/s. Kumar Trading Company, Aged 43 years, r/o Flat No.3, First Floor, Maria Neela Building, Near B Happy Soda Factory, Bellem, Navelim, Salcette, Goa 403 707 .Complainant V/s. The New India Assurance Company Limited, Divisional Office, 3rd Floor, Velho Building, Panaji Goa. .Opposite Party Complainant is represented by adv. Shri N. Kale Opposite Party is represented by Adv. B. V. Sukhthanker Coram:Shri Justice N. A. Britto, President Smt. Vidhya R. Gurav, Member Dated: 08/10/2013 ORDER
[Per Shri. N. A. Britto, President] This consumer complaint filed on 25/04/13 is being disposed off by this order.
2. The admitted facts are as follows:
2.1 The Complainant obtained on leave and licence, by agreement dated 01/11/2010, from Stanley Joseph, shop premises bearing no.FS-1 in Gemini Residency at Ponda and started a business in ready made clothes in the name and style of Kumar Trading Company and the said shop was furnished by 10/11/2010.
2.2 The Complainant obtained from the OP through Shri R. Pandey, an insurance agent, a fire and allied perils policy effective from 10/11/2010. One Shri Tushar Sathe, a Development Officer of the OP, inspected the premises of the Complainant, before issuing the said policy.
2.3 On 17/11/2010 the Complainant closed his said shop and returned home at about 8 p.m. Smoke was noticed in the shop of the Complainant and it was reported to the said Stanley Joseph, who in turn informed the Fire Brigade as well as the Complainant and the Complainant rushed to the said shop and found that the Fire Brigade had taken charge of the fire and had broken the locks of the Shop for extinguishing the fire. According to the Complainant the stock of readymade garments were burnt in the fire.
2.4 The Complainant informed the OP about the said fire accident through the said Shri R. Pandey on 18/11/2010 and the OP appointed Mathew Peris of Facts Finders to conduct an investigation as to the cause of fire, and, on the same day also appointed Shri Mohan Pai Vernekar, a Chartered Engineer and approved Surveyor/ Loss Assessor to conduct a survey, who visited the premises of the Complainant on 19/11/2010 and after collecting information from the Complainant through several letters and after making inquiries, submitted his survey report dated 14/03/2011 wherein he concluded that the fire had started due to a short circuit in the electrical wiring inside the Complainants shop and assessed the loss caused to the Complainant in the sum of Rs.17,70,490/-.
2.5 Earlier, the Facts Finders through the said Mathew Peris submitted a report dated 10/02/2011 after conducting exhaustive inquiries with the Complainant, the Ponda Police Station and the Ponda Fire Station and came to the conclusion that the Complainants shop had caught fire on 17/11/2011 at about 2300 hours when the policy was effective and the cause was due to a short circuit in the shops electric wiring and not by any fraudulent means. Facts Finders also submitted a further report on 11/06/2011 after carrying out additional investigations and after examining the original inventory book, cash memos, and concluded that there was no fraudulent means used by the Insured to manipulate any of the inventory books/cash memo/ etc. Shri Mathew Peris in this additional report concluded that the fire incident was genuine and the Insured had suffered financial loss approximately to the tune of the sum insured or otherwise he would not have mortgaged his property to the Bank to clear off some of his financial loss of his creditors, till such time he received his insurance compensation.
2.6 The Complainant then went on visiting the office of the OP and met their Sr. Divisional Manger, one Mrs. M. M. Borkar who kept on assuring the Complainant that their claim was accepted in full and was sent for ratification to their regional office at Mumbai and would be settled at the earliest. The Complainant visited the office of the OP on 23/06/2011 and informed that in case his claim was not settled during the next week or so he would file a complaint to IRDA - Insurance Regulatory and Development Authority and did file a complaint on 25/06/2011.
3. Now, the case of the Complainant is that at the instance of IRDA the claim of the Complainant was settled by letter dated 09/08/2011 (copy at page 49) for a sum of Rs.17,70,000/- and the Complainant was called upon to sign claim vouchers and to return the same and the Complainant on 10/08/2011, submitted the duly signed vouchers and at the request of a clerk in the office of the OP, he met the said Smt. Borkar, the Sr. Divisional Manager, who told the Complainant that issuance of cheque would take some time. (The Complainant was required to be given the cheque within 7 days, as per Regulation 9 (6) of the IRDA (Protection of Policy Holders Interest) Regulations, 2002, but did not get the same.)
3.1 Further, the case of the Complainant is that the said Shri R. Pandey, the agent, approached the Complainant and reported that in the normal course 10% of the amount should be paid to the Officer and only then the cheque would be disbursed to the Complainant. The Complainant claims that he was perturbed with the said information and as such he contacted the IRDA who in turn told him to report the matter to the Grievance Redressal Officer of the OP, Smt. Malinin Dalvi, and to the Ombudsman and he contacted Smt. Dalvi and to the Ombudsman and he contacted Smt. Dalvi through his advocate and also sent an email to the said Grievances Redressal Officer and so also to the Ombudsman and as the fax of the said GRO was not operative, he sent a fax on the next day.
3.2. It is also the case of the Complainant that somewhere on 25/08/2011 an investigator reportedly from Mumbai visited his shop but his identity was not told to the Complainant and despite the same the Complainant co-operated with the said investigator and on or about 11/09/2011 the Manager of Jai Ambe Distributors who are regular suppliers of readymade garments to the Complainant, reported to him on 25/08/2011 that a person by name Bright had visited him through the agent Shri R. Pandey and taken him to a liquor bar and had threatened him and he had reported the matter to the Colva Police Station vide complaint no.426/2011.
3.3 It is the case of the Complainant that on 04/11/2011 the OP communicated to the Complainant and rejected his claim whereupon he underwent deep depression, and, he served a notice on the OP and then filed the complaint.
4. On the other hand, it is the case of the OP, that they received a letter on 22/08/2012 from one Mukesh Kumar Khatri stating that the claim of the Complainant was based on forged documents, requesting the OP to verify the said documents. According to them, the said Shri R. Pandey, their agent, was in collusion with the Complainant and had projected a fabricated claim and had also issued several fabricated cover notes and as such the OP had filed an FIR against him and he was arrested. According to the OP, their controlling office at Mumbai appointed Bright and Company from Mumbai to investigate the claim and on the basis of the said investigation report, OP came to know that the claim filed by the Complainant was false and fabricated and as such repudiated the policy in terms of clause 8 thereof.
5. Admittedly, the claim of the Complainant was first approved by the Divisional Claims Committee consisting of the said Sr. Divisional Manager Mrs. Kamat and two other officers for a sum of Rs.17,70,000/- and was also approved by the OPs Regional office at Mumbai and then only the approval was conveyed to the Complainant by letter dated 09/08/2011 issued by the said Mrs. Kamat, the Sr. Divisional Manager of the OP. The Complainant had complied with the requirements of the said letter.
Although Shri Sukhthankar, the lr. advocate has stated that no letter was received from IRDA directing the OP to approve the claim of the Complainant, we are inclined to believe, that the claim of the Complainant was first approved by the Divisional Claims Committee, at the instance of IRDA and then by OPs regional office at Mumbai and then on receipt of report dated 10/10/2011 from Bright and Company the claim was repudiated by the same Committee, though it appears that no approval of the Regional Office was taken for repudiation of the claim by letter dated 04/11/2011 (copy at page 58).
6. Was the OP justified in repudiating the claim of the Complainant by letter dated 04/11/2011 when the same was earlier approved by the Divisional Claims Committee of which Smt. Borkar, the Sr. Divisional Manager was a member with the approval of the Regional Office of the OP?
7. The answer has got to be in the negative and for more reasons than one. We have perused the record and have heard the submissions of the Lr. advocates on behalf of both the parties.
8. Shri N. Kale, the Lr. advocate of the Complainant would submit that the Complainant has filed the affidavit of Mukesh Kumar Khatri to falsify the claim of the OP that they had received a communication dated 22/08/2012 from the said Shri Khatri. Lr. advocate submits that the report of Bright and Company was got tailor made with a view to repudiate the claim of the Complainant because of his complaint which he had made on or about 23/08/2011 to the Grievance Redressal Officer, Smt. Dalvi, about the demand of 10% commission of cheque. Lr. advocate submits that Arvind Jain of Jai Ambe has not filed any affidavit in support of the case of the OP, particularly to support whatever Bright and Company has stated in relation to him but on the contrary the Complainant has produced a copy of a complaint dated 10/09/2011 filed by him to the Colva Police Station to show that he was being pressurized to say that he had not made any supply of ready made garments to the Complainants business. Lr. advocate submits that the endorsement made on the bill issued by Jai Ambe Distributors dated 11/11/2011 (copy at page 101) is not that of the said Arvind Jain. Lr. advocate submits that it is not the case of Bright and Company that no fire had taken place in the shop of the Complainant in as much as the so called Bright & Company are not approved Surveyors/Loss Assessors. Referring to the affidavit filed by Bright & Co. dated 06/08/2013 (copy at page 130), Lr. advocate submits that it is no affidavit in the eyes of law as it is signed by a person whose identity is not known and who is other than the person who signed the report whose identity is also not disclosed in the said report. The Lr. advocate submits that Mrs. Borkar was still the Sr. Divisional Manager of the OP when notice of the complaint was served on the OP and yet she has not filed her affidavit inspite of the fact that all the facts were within her knowledge, and, an affidavit has been filed by another Sr. Divisional Manager by name Samarendra Das claiming that the contents of the affidavit are based on the records which are in his possession. Lr. advocate submits that the OP neither through the said Mrs. Borkar or through the said Mr. S. Das, Divisional Managers of the OP, have tried to deny or controvert the allegations of the Complainant that the demand was made for 10% commission by way of illegal gratification.
8.1 Shri Kale has placed reliance on Regulation 13 of the Insurance Surveyors and Loss Assessors (Licencing, Professional Requirements and Code of Conduct) Regulations, 2000 to show what are the duties and responsibilities of a surveyor/loss assessor.
The duties and responsibilities of a surveyor are indeed set out by Regulation 13 of the said Regulations of 2000.
Interalia, they are as follows:
iv) examining, inquiry, investigating, verifying and checking upon the causes and the circumstances of the loss in question including extent of loss, nature of ownership and insurable interest;
v) estimating, measuring and determining the quantum and description of the subject under loss; and
ix) surveying and assessing the loss on behalf of insurer or insured.
8.2. Shri Kale has also referred to Regulation 9 of the IRDA (Protection of Policy Holders Interests) Regulations, 2002 to show what the procedure to be followed in a case or loss. Regulation 9 (1) of the Regulations of 2002, interalia, provides that in case where the Surveyor is appointed for assessing the loss/claim, it should be done within 72 hours of the receipt of intimation from the insured and it further provides that the Surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured. Regulation 9 (3) to 9 (6) read as follows:
(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report. Provided that the facility calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4) the surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.
(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the 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.
8.3 Shri Kale has also placed reliance on a decision of the Division Bench of Jammu & Kashmir High Court in the case of Oriental Insurance Co. vs. Bhushan Lal Pandita & anr., wherein the Division Bench presided by the C.J. has held as follows:
Assuming what the appellant is contending is correct, still then no interference is called for, in as much as, the report of the second surveyor, in law, could not be looked at by the Commission and, in fact, the Commission has not relied on said report, in as much as, appointment of the second surveyor, without the permission of the Inspector of the Insurance, was contrary to law.
The quantum of interest is discretionary. In the instant case, discretion has been used to fix interest @ 12% taking into account the conduct of the appellant.
Having regard to the conduct of the appellant we see no reason to interfere with the quantum of interest fixed by the Commission.
9. On the other hand, Shri B. V. Sukthankar, the lr. advocate of the OP would submit that pursuant to the letter of Khatri dated 22/08/2011 that their Mumbai office appointed Bright & Co., fact finders, to investigate the claim. Lr. advocate Shri Sukhtankar concedes that the said Shri Khatri has now supported the case of the Complainant and further concedes that none of the persons who were interviewed by the said Bright & Co. have supported the case of the OP as they are not willing to come forward and file affidavits in support of their case. Lr. advocate Shri Sukhtankar then has taken us through the report of the said Bright and Company.
10. We are impressed with the submissions made by Shri Kale, the lr.
advocate. As already stated, the claim of the Complainant was initially admitted by the OP based on the reports of Shri Mathew A. Peris of Facts Finders and Shri Vernekar, the approved Surveyor and Loss Assessor. We had asked Shri Sukhtankar the lr. advocate, as to under what provisions of law Facts Finders or Bright & Co. who are not licensed surveyors were appointed to investigate the loss caused as the duties cast on a surveyor, appointed under section 64 UM (1) of the Insurance Act, 1938, and in terms of their duties prescribed under the Regulations of 2000 are to verify and check not only the cause and circumstances leading to the loss but also to the extent of loss, nature of ownership and insurable interest, etc. but lr. advocate has not been able to provide any answer much less a satisfactory answer. On the contrary, primafacie, it appears that such appointments are opposed to subsection (5) of Section 64.UM of Insurance Act, 1938 in claims of more than Rs.20,000/-.
11. Be that as it may, a licensed surveyor occupies an important position under the scheme of section 64 UM of the Act of 1938 and the Regulations of 2002 framed thereunder.
No claim of more than Rs.20,000/- can be settled by an insurer unless a report is obtained from him or otherwise directed by the Regulatory Authority. In giving a report, a surveyor performs a statutory function and as such a report submitted by him carries great evidentiary value unless proved otherwise. This Commission in New India Assurance Co. Ltd.2012 (4) CPR 22 has this to say:
As stated by the National Commission in National Insurance Company Ltd., a report of a surveyor is an important document and cannot be brushed aside and the assessment made therein has to be specifically agreed or rebutted. In this case we find that there is no rebuttal to the report of the surveyors by any other report of equivalent weight. Again, the National Commission in the case of Oriental Insurance Company Ltd., has stated that the surveyors report is an important piece of evidence and the respondent can be awarded compensation only on the basis of the surveyors report. A similar view was also taken in H. C. Saxena v. New India Assurance Co.
11.1 . Honble Justice M. B. Shah writing for a Bench of the National Commission in Ravindra Nath Fruit Canning Industry (P) Ltd. vs. Divisional Manager, United India Insurance Co. Ltd., 2006 (1) CPR 270 (NC) has held that:
This Commission has taken a consistent view that under Section 64 UM Insurance Company cannot go on appointing Surveyors one after the other so as to get a tailor made report to the satisfaction of the concerned officers.
The Commission further reiterated that:
Stringent action is provided against surveyor or loss assessor who is guilty of breach of his duties or willfully making of false statement or acting in a fraudulent manner, entailing cancellation of license given to him. There are ten sub-sections of Section 64UM which it would appear prescribe a complete code as to how a surveyor or loss assessor should conduct.
The Commission further held that:
Scheme of Section 64UM particularly of sub-section (3) and (4) would show that insurer cannot appoint second surveyor just as a matter of course. If the report of the surveyor or loss assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second surveyor. Appointment by the insurer of a second surveyor itself would be a reflection on the conduct of the first surveyor. Surveyor or loss assessor is duty bound to give a correct report. If the insurer-Insurance Co. finds that surveyor or loss assessor has not considered certain relevant points or has considered irrelevant points or for any other account it has reservation about the report, it can certainly require the surveyor or loss assessor to give his views and then come to its own conclusion, but insurer cannot certainly appoint a second surveyor-cum loss assessor to counter or even contradict or rebut the report of the first surveyor. (emphasis supplied) 11.2 Again in M/s. Jaganath Power Tyres vs. National Assurance Co. Ltd. 2012 (1) CPR 242, the National Commission after relying upon the decision of the Apex Court in New India Assurance Co. Ltd., vs. M/s. Protection Manufacturers Pvt. Ltd., AIR 2010 SC 3065, has held that:
`though it is permissible to appoint a second surveyor to assess the loss, this must be by giving reasons and only through the auspices of the regulatory Authority i.e. IRDA and proceeded to hold that the appointment of second surveyor was not in accordance with the provisions of section 64 UM of the Insurance Act, 1938 and therefore the said report of such a surveyor ought to be discarded and as it cannot form the valid basis of the settlement of the insurance claim of the Complainant.
12. As far as the case at hand is concerned, the report of Shri Vernekar, the Surveyor was the only report of a surveyor called for by the OP and remains unscathed. Shri Vernekars report was accepted by the OP and on the basis of the same the claim of the Complainant was approved. In case, the OP had found that his report was based only on invoices and bills, as contended by the Sr. Divisional Manager, it was always open to the OP, in terms of Regulation 9 (3) of the Regulations of 2000 to call for additional report from him. That was not done. On the contrary, the report of Shri Verenkar was accepted and the claim of the Complainant was approved. Having done so, it was not open to the OP, when time came for issuance of cheque, to reopen the claim. The claim could have been rejected only by following the procedure prescribed by Regulation 9 (5) of the said Regulations of 2002 and within the time stipulated therein and not otherwise. On this count alone, the repudiation done by letter dated 04/11/2011 cannot be sustained.
12.1 Secondly, at no stage prior to approval of claim by letter dated 09/08/2011, was the report of Shri Vernekar ever doubted. His report is also not doubted after the report of Bright and Company.
If it was doubted, action would have been taken against him in terms of subsection 7 of Section 64.UM of the Act of 1938. Not taking action against Shri Vernekar or for that matter against Mathew Peris would go to show that the report of Bright and Company is baseless. Moreover, the report of Bright and Company is not even a report of licenced and qualified surveyor to be compared with that of Mr. Vernekar who is a qualified and duly licensed surveyor. In this context it may be observed that a report of a surveyor appointed under section 64.UM is always preferred to a report of a private surveyor, as held in 2013 (3) CPR 161.
We have already held that Bright and Company are not approved surveyors. The report of Shri Vernekar was accepted by the OP and even now it needs to be accepted in the absence of any other report of equal weight. The report of Bright and Company, apart from not being a report of a duly approved surveyor, has also to be rejected as opposed to Section 64 UM of the Act of 1938 and also being contrary to the principle laid down in Oriental Insurance Company vs. Bhushan Lal Pandita and anr. (Supra) as well as in M/s. Jaganath Power Tyres vs. National assurance Co. Ltd. (Supra).
12.2 Thirdly, as already stated, the report of Bright & Co. was obtained by the OP only after OPs agent made unlawful demand for illegal gratification.
The said report cannot also be accepted for reasons more than one.
12.3 Firstly, the very foundation of the defence that it was obtained because of the complaint of Shri Mukesh Kumar Khatri has fallen flat in view of the affidavit filed by him in support of the case of the Complainant wherein he states that the signature on letter dated 22/08/11 (copy at page 81) is forged and it indeed appears to be forged, if one compares the signature on the said letter and that on the affidavit duly verified filed by him. The Complainant has also explained, and in our view rightly, that the said letter does not bear the official inward stamp of the OP and that it mentions only the mobile number. The Complainant has further explained that he contacted the said mobile number and on being given to understand about the said letter, the said Khatri came to the shop of the Complainant and submitted an affidavit to prove that he did not have any knowledge about the Complainant or his dealings and the said letter was not written by him. It is therefore obvious that the said letter dated 22/08/11 was fabricated by the officer/s of the OP to create a ground to call for another report. The report of Bright & Co. also cannot be accepted for lack of identification of persons who have signed the same. While the report is signed by one person, the affidavit in support thereof is signed by another person and it is not known as to what they mean by referring to themselves as we. The said report is entirely based on hearsay evidence and as far as what is attributed in the said report to M/s. Jai Ambe Distributors, the same has been controverted by Arvind Jain by filing a complaint to the Police on 09/09/2011. No affidavits of any other persons referred to therein have been filed by the OP to substantiate the report of Bright & Co. It is also interesting to note that although Bright & Co. accepts that there was fire, it does not reduce the claim but recommends the case as no claim. It is also interesting to note that the report proceeds as if they are the only honest persons, doubting the role of everyone and even commenting on the leave and licence agreement of the Complainant with Stanley Joseph as having no legal value. Suffice it to say that the said report of Bright & Co. cannot even stand along with the report of surveyor Shri Vernekar and much less to displace his report. The report of Shri Vernekar was accepted by the OP and the claim was settled. It does not require discerning eye to conclude that the claim which was initially accepted and was awaiting issuance of cheque, was repudiated because of the complaint made by the Complainant to the Grievance Redressal Officer about the demand made by the agent on behalf of the Sr. Divisional Officer. A false ground was created by fabricating letter dated 22/08/2011 and Bright & Co. were appointed to shoot down the approved claim of the Complainant with a view to teach him a lesson.
Give the dog a bad name and shoot it, appears to be the adage made use of by the OP in appointing the said Bright & Co. so that the claim of the Complainant which was earlier approved, could be repudiated.
13. The OP is a State within the meaning of that expression given in the Constitution of India. It is always expected to act fairly. The approval of the claim of the complainant by letter dated 9/8/11 was in fair exercise of its power. The rejection of the claim by letter dated 4/11/11 was not in exercise of power but in malafide abuse of power to harass the complainant for complaining against illegal demand. The Officers of OP have indulged in unethical conduct. This is a case of gross deficiency in service on the part of OP.
On facts of this case, the claim which was approved could not have been repudiated.
14. For reasons aforesaid, the complaint deserves to succeed. The OP is hereby directed to pay to the Complainant Rs.17,70,000/- in terms of prayer (1). The OPs to pay pending and future interest on the said sum to the Complainant at the rate of 9+2% per annum from 14/04/11 until payment in terms of prayer (2).
The OP has caused much tension and harassment to the Complainant, and considering the facts of the case, we deem it proper to direct the OP to pay a sum of Rs.2,00,000/- by way of compensation to the Complainant in terms of prayer (3). The OP shall pay to the Complainant a sum of Rs.10,000/- by way of costs of this complaint in terms of prayer (4). The sums herein awarded to the Complainant shall be paid by the OP within a period of 30 days and in case not paid the sums awarded under prayers (3) & (4) shall carry interest @ 9% until they are paid. The OP shall recover the sums herein awarded under prayer clause (2) (3) & (4) either from the Sr. Divisional Manager Smt. Kamat or other members of the Claims Disposal Committee or any other Officer as deemed fit by conducting a proper inquiry.
We have taken note of the directions of the Apex Court in LDA vs. M. K. Gupta (1994) (1) SCC 243 and GDA v/s. Balbir Singh, AIR 2004 SC 2141 in passing this order. The Apex Court in Balbir Singh (supra) has reiterated that the Forum after recording a finding must direct payment of compensation and also direct recovery from those found responsible for such unpardonable behavior.
A report to be filed within six months of action taken. The OP deals with public money. Public money cannot be used to harass the consumers. The fees paid to Bright and Company shall also be recovered from the aforesaid officers. The complaint is disposed off on the above terms.
[ Smt. Vidhya R. Gurav ] [ Justice N. A. Britto ] Member President /lm