National Consumer Disputes Redressal
Rinku Sharma vs New India Assurance Company Ltd. on 18 July, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 161 OF 2009 (Against the Order dated 05/01/2009 in Complaint No. 52/2006 of the State Commission Delhi) 1. RINKU SHARMA Sole Prooprietor,
M/s. Jai Durga Industries,
106-107,
Old Housing Board Colony Panipat - 132 103 ...........Appellant(s) Versus 1. NEW INDIA ASSURANCE COMPANY LTD. Through Divisional Manager,
C-30, Community Centre,
Phase I,
Naraina New Delhi - 110 028 ...........Respondent(s) FIRST APPEAL NO. 259 OF 2009 (Against the Order dated 05/01/2009 in Complaint No. 52/2006 of the State Commission Delhi) 1. NEW INDIA ASSURANCE CO. LTD. Divisional Office,
C-30, Community Centre,
Phase-I,
Naraina,
New Delhi-110 028,
Also at Delhi Regional Office-I,
Jeevan Bharti Building,
Connaught Circus New Delhi ...........Appellant(s) Versus 1. RINKU SHARMA Sole Prop.,
Jai Durga Industries,
106-107, Old Housing Board Colony Panipat - 132 103 Haryana ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE D.K. JAIN,PRESIDENT HON'BLE MRS. M. SHREESHA,MEMBER
For the Appellant : For Rinku Sharma : Mrs.Radha Rao, Advocate For the Respondent : MR. P.K. SETH
Dated : 18 Jul 2017 ORDER
O R D E R (ORAL)
These two cross-Appeals by the Complainant and New India Assurance Company Limited (for short "the Insurance Company"), the sole Opposite Party in the Complaint, are directed against the order dated 5.1.2009, passed by the Delhi State Consumer Disputes Redressal Commission at New Delhi (for short "the State Commission") in Complaint Case No.C-52/2006. By the impugned order, while accepting the Complaint filed by the Complainant, alleging deficiency in service on the part of the Insurance Company in repudiating the claim made by her for indemnification of the loss, amounting to ₹47,63,174/- on account of the fire, which had allegedly broken out at the business premises of the Complainant on 16.5.2003, the State Commission has directed the Insurance Company to pay to the Complainant a sum of ₹24,68,000/- towards the actual loss assessed by the Surveyor appointed by the Insurance Company; ₹2,00,000/- as compensation for mental agony, harassment and other loss suffered by her and ₹10,000/- as cost of litigation.
2. Succinctly put, the material facts necessary for deciding the Appeals, are as follows:
The Complainant, a sole proprietary concern, named and styled as Jai Durga Industries, was engaged in the business of trading in carded wool, carpet yarn, woolen yarn and other handloom products, etc. She had obtained from the Insurance Company, a fire insurance policy in the assured sum of ₹50,00,000/-, covering stocks of carded wool, woolen yarn, blankets, table mats, etc. stocked at her business premises, situated at E-45 Industrial Area, Panipat. The policy, covering fire and allied risks, was valid for the period from 31.3.2003 to 30.3.2004. As per the Complaint, on 16.5.2003, a devastating fire broke out at the aforesaid premises, causing extensive damage to the building and the stocks lying therein. On receipt of information about the incident, the Insurance Company appointed a spot surveyor to inspect and assess the loss. Inter-alia, recording that certain documents were furnished by the Complainant and noting that according to the Insured, the value of the stock in the premises as on 31.3.2003 was to the tune of ₹47,63,174/-, albeit without any details of purchases and sales of different items, the spot surveyor submitted his status report dated 19.5.2003. In the said report, the spot surveyor did not assess the quantum of the loss suffered by the Complainant. On 21.5.2003, the Insurance Company appointed an investigator namely, Mr. R.G. Verma, Chartered Accountant to assess the loss, suffered by the Complainant. The Investigator, in his report dated 04.02.2004, raised certain doubts about the cause of the fire, reliability of cash sales and shifting of godown etc. Thereafter, M/s R.N. Sharma & Co. was appointed as the Surveyor to assess the loss. In their report dated 31.3.2004, the Assessor, while assessing the loss at ₹24,78,000/-, subject to deduction of ₹10,000/- on account of excess clause, made scathing comments on the authenticity of the documents furnished to them by the Complainant in support of her claim. For the sake of ready reference, a few critical observations, having direct bearing on the veracity of the accounts/documents relied upon by the Complainant are extracted below:
"...... The closing stock is claimed to be ₹44,67,787.00 as on 31.3.03 against a capital of ₹2,09,155.95. Further Sundry Debtors worth ₹5,60,997.25 are standing as on 31.3.03. The high stock holding and Debtors balance has been made possible because of non-payment to Sundry Creditors worth ₹48,24,409.30, as neither adequate capital nor financing by any institution exist in instant case.
.......................................
In case of M/s Shugan Wooltex, purchase of ₹14,11,125/- have been made during the period 20.3.03 to 16.5.03, and amount of ₹50,000/- received from the said party. As against this, a payment of ₹2,00,000/- through cash and sale of ₹3,84,527.25 has been made to the same party. There is no other cash or bank transaction either for payment for purchase or receipt of sale and prima facie the entries seem to lack any business rationality because even on 16.5.03, the total outstanding amount to the party is ₹8,76,597.75.
It may be noted from the above that the Insured has made total purchases worth ₹44,67,787/- during the twelve days period from 20.3.03 to 31.3.03 and surprisingly, almost the whole of the purchase is on credit. Further, the mode of payment to the parties in cash and that too ₹20,000/- each time. Out of total purchases of about ₹1.02 crores during 20.3.03 to 16.5.03, only payment of about ₹11,13,000/- has been made through bank till 16.5.03, which is a ridiculously low payment pattern.
Because of non-payment to the parties, there are creditors worth ₹48,24,409.30 as on 31.3.03, which is abnormally high figure for a business of 12 days standing. Even in case of cash payment, it is rather strange to note that the payments have been made in the form of ₹20,000/- cash per day to the parties for a number of days. Under such circumstances, these cash payments of ₹20,000/- cash each time are just considered as adjusting/fictitious entries of payment and the reasons for avoiding the payment through normal banking channel are best known to Insured, which they could not explain when confronted." (Emphasis Supplied) 2.1. It is significant to note at this juncture itself that under the provisions of the Income Tax Act, 1961, except in specified circumstances, purchases in cash exceeding Rs.20,000/- are prohibited.
3. Relying on the said report, vide its letter dated 20.04.2004, the Insurance Company repudiated the claim in entirety, on the ground that the Complainant had failed to establish the cause of fire and the supporting documents produced were found to be fabricated and hence the conditions in the policy (No. 1, 6 and 8) stood violated.
4. Aggrieved, the Complainant filed Complaint before the State Commission praying for payment of the afore-stated amount. On evaluation of the evidence adduced by the parties and taking into consideration the fact that the balance-sheet for the year ending 31.3.2003, along with the Income-tax return for the said year had been furnished by the Complainant, the State Commission has come to the conclusion that there was deficiency in service on the part of the Insurance Company in repudiating the claim. However, rejecting the claim of the Complainant that she had actually suffered a loss amounting to ₹47,63,174/-, the State Commission, relying upon the report of M/s R.N. Sharma & Company, wherein the loss had been assessed at ₹24,78,000/-, without prejudice to their observations in the report, has issued the afore-noted directions.
5. Being dissatisfied, as noted above, both the parties are before us in these Appeals. The Complainant prays for enhancement of the claim whereas the Insurance Company has questioned the very foundation of the claim by the Complainant.
6. We may note that notice in the Appeal preferred by the Complainant was confined to the question of non-award of interest on the awarded amount. In other words, the prayer by the Complainant for enhancement of compensation stood rejected at the threshold.
7. When the Appeals came up for final hearing on 23.11.2016, upon hearing learned Counsel for the parties for some time, in order to effectually adjudicate upon the serious allegations by the Insurance Company on the Complainant about manipulation of its records, we had directed learned Counsel appearing for the Complainant to seek instructions on the following points :
The details of the Banks, in which the Complainant was maintaining account(s) for conducting the business of her concern and file copies of Bank Statement(s) for the period from 20.03.2001 to 16.03.2003;
Prior to setting up of the present business from 20.03.2001, whether the Complainant was engaged in some other business or this was her first business venture; and, To file the copies of the profit and loss account and balance sheet, filed by the Complainant with her Returns of the income for the years ending 31.03.2001 to 31.03.2003.
8. On the succeeding date, learned Counsel prayed for and was granted four weeks' further time to furnish the afore-stated information/documents. On next date, i.e. 7.3.2017, learned Counsel stated that despite best efforts she has not been able to get complete instructions on the afore-noted points. Today again, learned Counsel states that despite written communication, the Complainant has not contacted her. It can be safely inferred from the afore-noted conduct of the Complainant that she has no satisfactory answer for the afore-noted queries. Under the circumstances, we are left with no option but to dismiss her Appeal, wherein she has prayed for award of interest on the compensation awarded by the State Commission. It is ordered accordingly.
9. Adverting to the Appeal preferred by the Insurance Company, it would suffice to observe that the conduct of the Complainant in not furnishing the afore-stated documents/information, lends support to the observations made by Surveyor that when on 10.9.2003, he met the Complainant, she had stated that her concern did not have any Bank limits; she had invested only a paltry sum of ₹1,45,000/- in the business; she did not have any past dealings with the parties from whom purchases in the relevant period were shown; and that most of the sales and purchases were in cash within a short span of two months, which were unverifiable. In our view, the stated circumstances, substantiate the stand of the Insurance Company that the claim, by the Complainant, being based on fabricated documents, Condition No.8 of the terms and conditions of the policy, viz. any claim based on fraudulent and false declaration, would result in forfeiture of the policy, stands violated. Having arrived at the said conclusion, the necessary corollary is that there was no deficiency in service on the part of the Insurance Company in repudiating the claim made by the Complainant under the subject policy.
10. Consequently, Appeal preferred by the Complainant (No.161/2009) is dismissed; Appeal filed by the Insurance Company (No.259/2009) is allowed and the impugned order is set aside, leaving the parties to bear their own costs.
11. Vide order dated 23.7.2009, the Insurance Company, was directed to deposit, in this Commission, a sum of ₹24,78,000/- as a pre-condition for stay of the operation of the order impugned in the Appeal. Since the Appeal preferred by the Insurance Company has been allowed, it will be open to it to withdraw the said amount, along with accrued interest, if any. The statutory deposits made by both the Appellants, at the time of filing of the Appeals shall stand transferred to the Consumer Welfare Fund.
Both the Appeals stand disposed of in the above terms.
......................J D.K. JAIN PRESIDENT ...................... M. SHREESHA MEMBER