National Consumer Disputes Redressal
Mukesh Kumar Khemchandbhai Patel vs Bajaj Allianz General Insurance Co. ... on 12 July, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 1431 OF 2016 1. MUKESH KUMAR KHEMCHANDBHAI PATEL 1, SHREEKUNJ PARK, NR, RAILWAY NALA, AT & POST,DIST: PATAN-384265, GUJARAT. ...........Complainant(s) Versus 1. BAJAJ ALLIANZ GENERAL INSURANCE CO. LTD. & 2 ORS. (THROUGH ITS CHAIRMAN)
G.E. PLAZA, AIRPORT ROAD, YERAVADA, PUNE-411506 2. THE BRANCH MANAGER, BAJAJ ALLAINZ GENERAL INSURANCE CO. LTD.,
2ND FLOOR, SHREEDEV COMPLEX, OPP: G.P.O., PATAN-384265, GUAJARAT 3. THE ZONAL MANAGER, BAJAJ ALLAINZ GENERAL INSURANCE CO. LTD.,
4TH FLOOR, TURQUOISE, NEAR PANCHWATI, CIRCLE, C.G. ROAD, ELLISBRIDGE, AHMEDABAD-380006,GUAJRAT. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE A. P. SAHI,PRESIDENT
FOR THE COMPLAINANT :
Dated : 12 July 2024 ORDER
The Complainant states that he is the trustee of Vitthalprabhu Education & Charitable Trust duly registered under the Bombay Trust Act 1950 and is also the President of the Trust.
The Trust having various immovable properties was founded for various activities and an institution namely M.K. College was established affiliated with the Gujarat Technical University Ahmedabad and recognised by the All India Council for Technical Education.
It is the building as well as the fixtures, furniture, fittings, appliances and computers of the said College/School that was sought to be insured with the Opposite Party. A policy was acquired for an insured sum of Rs. 35 Crores after applying through a proposal form where the occupation of the risk was described as "School and College". As against this proposal, the Standard Fire & Special Perils Policy was issued where the school building was insured with add on cover for earthquakes with plinth and foundation. Annexure 2 appended to the Standard Fire & Special Perils Policy described the location as the "School Building of M.K. School". Further description details of insured items included furniture, fixtures, education material, air conditioners and other related material.
On 25.08.2015, riots broke out that continued a couple of days thereafter in Gujarat and miscreants entered the building causing huge damage and destruction of the property on 27.08.2015. The Complainant alleges that he approached the Police for registration of an FIR but having failed to receive any response he had to file a petition before the High Court in which orders were passed on 15.09.2015 as a consequence whereof, the First Information Report came to be registered on 16.09.2015.
The complainant has also alleged that a Panchnama was prepared on a detailed inspection of the entire damage caused and an approximate damage of Rs.3,58,39,532/- was estimated. The said Panchnama has also been filed on record.
The Complainant had also intimated the Insurance co. well within time but surprisingly enough, the surveyor appointed conducted a preliminary survey on 26.03.2016 who intimated vide a communication dated 26.03.2016 that the assessed loss was Rs.36,90,319/-.
The said letter is extracted hereinunder:
"With Prejudice
Dear sir,
As discussed during our meeting at Ahmedabad on 17/03/2016, we have finalised the assessment of loss based on our inspection and details/documents received from your end. The net assessed loss as per attached details works out to INR 3,690,319/-. Please send us your consent for the same to enable us to finalise our report accordingly.
Warm Regards,
Ashok Gupta
Absolute Insurance Surveyors & Loss Assessors Pvt. Ltd."
The Complainant along with the said assessment was informed with a note appended to the chart provided by the surveyor indicating that certain items were not assessed as they were not the property of the insured and belonged to the Trust. The other deductions indicated in the note together with the calculations were also indicated therein. The notes along with the said charts provided are as follows:
"1. Items highlighted above are in the name of Vitthalprabhu Education & Charitable Trust/ M.K. Infrastructure, etc. and hence not considered.
2. Charges for plaster/painting/flooring/piping, etc. has been considered as per actual measurements of damaged areas.
3. since, the damaged computers were repairable, the same has been considered as per repair estimates submitted earlier.
4. Since, burglary/theft during riots falls under policy exclusion, the equipments/cash,etc. stolen during the incident has not been considered.
5. the items not shown to us as damaged are not considered."
The notes appended with the other chart are extracted hereinunder:
"1. The CCTV cameras have been capitalized in accounts of Mr. Mukesh Patel. However, the purchase bills are in the name of M.K. School and hence not considered.
2. Items highlighted above are in the name of M.K.School/Vitthalprabhu Education & Charitable Trust/M.K. Infrastructure, etc. and hence not considered.
3.Charges for plater/ painting/ flooring/piping, etc. has been considered as per actual measurements of damaged areas.
4. The damaged Air Conditioners of Daikin & O-Genearl-54 nos. are in name of M.K.School and hence not considered.
5. Since the damaged computers were repairable, the same has been considered as per repair estimates submitted earlier.
6. since burglary/theft during riots falls under policy exclusion the equipments/cash, etc. stolen during the incident has not been considered.
7. The items not shown to us as damaged are not considered."
The Insurance Co. in its reply has referred to an investigation having been carried out through M/s Sundaram Multi Services/Mr. Jitendra Vayas, the report whereof is dated 30.05.2016. Along with the said report the verifications with regard to the disputed Bills have also been appended.
The claim was sought to be assessed and the Complainant alleges that in spite of having provided the entire information the assessment was totally truncated to suit the purposes of the Insurance Co. According to the Complainant, several letters were written and the matter was pursued personally by him as well. During the course of discussions the Complainant has also brought on record the arguments that were advanced in respect of the issues raised during the course of discussions.
There is no written response by the complainant on record to the letter dated 26.03.2016 extracted hereinabove that was sent by M/s Absolute Insurance Surveyors & Loss Assessors who had been appointed to conduct the survey.
There is no proof with regard to the physical tendering of the arguments to the Insurance Co. The arguments relied on by the Complainant are contained in the document filed as Annexure I and is extracted hereinunder:
"A Building
1.Amount sanctioned of plaster in servant room & store room is very very less against amount of the loss occurred so kindly reconsider the amount in point number 1
2. Amount sanctioned of flooring in store room, library & servant rooms is also very less against the amount of the loss occurred so kindly reconsider the same in point number 2
3. Amount sanctioned for painting in burnt store room on ground & first floor, ceiling of common passage, windows/grills etc. is very less against the amount of the lost occurred, so kindly reconsider the same in point number 4
4. Amount sanctioned in point number 5 for plate glasses on all windows, doors etc. incl labor is very less against the loss occurred and we do not accept the same. So kindly reconsider the same.
5. Amount sanctioned in point number 6 for aluminium section material is very less while loss occurred was very high, so kindly reconsider the same.
6. Amount in point number 7 is not sanctioned which we do not accept. So kindly reconsider the same.
7. Amount in point number 8 is also not sanctioned which we do not accept. Kindly reconsider the same.
8. Amount in point number 9 of electrification labor is only almost 50% while labor amount is 100% sanctionable. So kindly reconsider the same.
9. In point number 10, amount of gardening work and plantation is not sanctioned which is not acceptable for us. So kindly reconsider the same.
Contents
10. In point number 11, 12, & 13 only repairable amount is sanctioned while actual damage was very huge in amount. So we do not accept the repairable amount which is very less and we request you (company) to get that furniture repaired.
11. In point number 20, the actual amount of loss is 275000/- while you have sanctioned only 50,600/- which we do not accept. So kindly reconsider the same.
12. In point number 22, amount of musical instrument(1,62,600/-) is not sanctioned which is in the name of Mr. M.K. Patel, so kindly reconsider the same.
13. In point number 24, the repairing amount is very less sanctioned while loss was high. So we request you (company) to get repaired the playground instruments at your end and put them as the same as they were earlier while taking insurance.
14. In point number 26, 28 & 29, the amount of R. O. System, other electrical items, and telephone is not sanctioned which is not acceptable for us. So kindly reconsider the same.
15. In point number 32, you mentioned the A.C. amounting in 20 nos. are repairable while according to us they were not repairable. So we request you (company) to get them repaired and put them same as they were earlier as while taking insurance.
16. In the same point number 32, you have mentioned 34 A.C. in total loss and the cost of each a.c. is around 55000/-, so according to the calculation the sanctionable amount should be 18,70,000/- while you have sanctioned only 220000/- which is not acceptable. Kindly reconsider the same.
17. In point number 37, the amount sanctioned is very less against the loss occurred and which is not acceptable. So kindly consider the same.
18. In point number 38, you have declined the amount by saying that the amount of projector and software falls under trust, so for that we would like to clarify that every school in Gujarat is running under Trust only. No school can be run without the trust, hence the amount of the same is reconsiderable and also we would like to state that while taking policy we disclosed every activity running under this school premises( of which insurance is taken as per proposal form) to the representative / manager of the company. Moreover the president of the trust is Mr. Mukesh Khemchandbhai Patel himself in whose name the policy is taken. So legality is also proven there between the trust and Mr. M. K Patel. Kindly reconsider the same.
19. In point number 39, the amount of (CCTV Camera) sanctioned is very very less while loss occurred is very huge which is not acceptable. So kindly reconsider the same.
20. In point number40 amount of other electronic items is not sanctioned which is not acceptable for us, so kindly reconsider the same.
21. In point number41, the amount sanctioned is very less which we do not accept, so kindly reconsider the same.
22. In point number 42, the amount is not sanctioned by saying that it falls under trust so again we would like to state that Mr. M.K. Patel is the president of Vitthal Prabhu Education & Charitable Trust and thus legality is proven. So kindly reconsider the same.
23. In point number 43, amount of miscellaneous items is not sanctioned which is not acceptable, so kindly reconsider the same.
We would also like to state that Mr. Mukesh Patel is the owner of M.K. Infra, President of Shri Vitthal Prabhu Education & charitable Trust, which we had already disclosed to the representative/ manager of the company while taking insurance but they did not mentioned these things while taking policy. We disclosed every material facts to him when he came to take policy but nobody bothered to check these things in details before taking policy.
@ Moreover the amount of salvage in your sanctioned figure is very less. Hence we do not accept the same. So we request company to take the salvage and give the reimbursement amount of the same to us."
The aforesaid document has been denied and refuted by the Insurance Co.
The Complainant was served with another letter dated 03.06.2016 by the Surveyor which is extracted hereinunder:
"Without Prejudice Mr. Bhavesh Acharya, C/o Mr. Mukeshbhai Khemchandbhai Patel, 1, Shrikunj Park, Near Railway Station, Second Nala, Patan-384265 Sub: Your claim for damages to insured property due to riots on 26/08/2015 Ref: Policy: Standard Fire & Special Perils Policy Policy #OG-16-2216-4001-00000089 Dear Sir, Please refer our telecom discussions earlier and your comments against our trailing mail dated 27/05/2016 in respect of subject claim.
In this regards, please not the following.
We have already visited your premises number of times and every time the concerned official keep on changing at your end. Initially, the mater was discussed with your Mr. Kaushal Patel and thereafter the matter was discussed with your Mr. Yunus Nandoliya, then with Mr. Mukesh Patel himself, then with Mr. Sujal Patel engaged by you, then with Mr. Hemal Gandhi and now you have started discussing the matter. Hence, the complete details of discussions / chronology of movements and methodology of consideration may not be within your knowledge. Further, we would like to have the clear mandate from Insured Mr. Mukeshkumar Khemchandbhai Patel with regard to who would deal with the matter concerning his claim and without such express and duly authorized mandate, we would prefer to address our communications directly to Insured.
During our telecom discussions prior to sharing of revised assessment, we have specifically advised you to send us your comments with specific details of variations in the quantities of various items considered by us. However, your comments are general and vague in nature and are silent on your actual difference in the quantities expected by you and considered by us. Hence, we are unable to respond on the same.
Further, my surveyor colleague Mr. Umang Ramani had shared with Insured the estimate of repair / replacement of Air-conditioners, and computers reported to have been damaged in the unfortunate incident on 26 Aug 2015. Disregarding the offer for repair / replacement as per quotation arranged by my surveyor colleague Mr. Umang Ramani, the insured has gone for complete replacement of the said assets without approval / consent from us or the insurers - Bajaj Allianz General Insurance Co. Ltd.
Please note that the insurance policy has been taken in the name of Mr. Mukeshkumar Khemchandbhai Patel and hence the properties solely in the name of Mr. Mukeshkumar Khemchandbhai Patel can only be covered under the subject policy. However, we have also considered the properties in the name of M.K. School since the same was mentioned in the proposal form. Hence, please note that items which are not in the name of Mr. Mukeshkumar Khemchandbhai Patel or M.K. School would not fall under the purview of subject policy.
Hence, we would require the clear and point-wise revert to our assessment of loss from Mir. Mukeshkumar Chemchandbhai Patel, the insured latest by 10th June 2016, failing receipt of which, we shall have no other option but to release our survey and assessment report as per the assessment shared by us."
There is nothing on record to indicate that any response in writing was tendered by the Complainant to the said inquiry made by the surveyor.
The fact, however, remains that the surveyors M/s Absolute Insurance Surveyors & Loss Assessors did not submit any final survey report and the claim was repudiated vide letter dated 27.09.2016 which is extracted hereinunder:
"Without Prejudice 27 September 2016 Mr. Mukesh Bhai Kumar Khemchandbhai Patel, 1, Shrikunj Park, Near Railway 2nd Nala, Patan-384265, Gujarat, Dear Sir, Re: Your claim for damage sustained to M K School, Patan in an alleged incident of rioting on 26 Aug 2015.
Ref: Our Claim # OC-16-2202-4001-00000075 under Policy # OG-16-2216-4001-00000089 issued to you.
Your afore-mentioned loss has been surveyed by IRDA licensed independent surveyors Mr. Umang Ramani and M/S Absolute Surveyors represented by Mr. Ashok Gupta.
In this regard, your attention is drawn to the last mail communication by Mr. Ashok Gupta with your authorized Representative Mr. Bhavesh Acharya on 12 Jul 2016, which is yet to be responded from your end. Also please note that, you are yet to submit (a) Final Investigation Report from Police, (b) Provisional balance sheet and asset register / ledger account upto the date of loss duly certified by Chartered Accountant and (c) Proper documents in support of Repair / Replacement work carried out to reinstate your property to its pre-loss condition, despite several reminders from the IRDA licensed independent surveyors.
Meanwhile, we would like to state that certain bills furnished by you in support of your claim have been verified by us with the issuers of such bills and we regret to state that Bills / invoices furnished by the following entities could not be verified as either no such entity is in existence and / or the bills have been found to be fake :
Issuer of the Bill Bill # Amt. (Rs.) Issued to Prime seals agency, Ahmedabad 279,296&373 13,02,000/-
M.K.Patel Labh Enterprise, Ahmedabad 114,128,138-142, 161&188 128,22,788/-
M.K.Patel Subh Trading, Ahmedabad 50,62,88,125,144,150, 157,172,873&899 85,87,992/-
M.K.Patel Total 22 Bills 227,12,780/-
In this regard your attention is hereby drawn to General Condition #8 contained in the wordings attached to and forming part of Standard Fire and Special Policy # OG-16-2216-4001-00000089 issued to you, which reads as under:
8. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any ben- efit under the policy or if the loss or damage be occasioned by the willful act, or with the connivance of the Insured, all benefits under this policy shall be forfeited.
In view of the above, we regret to submit here that your afore-mentioned claim stands repudiated and closed on our books. All previous communication conveying loss assessment and seeking your consent thereon from the surveyors' end thus stands withdrawn and our liability under the Policy issued to you thus deemed non-existent.
Please note that nothing contained in this letter is or should be construed as a waiver of any one or more rights on our part and all our rights under and in relation to the Policy remain fully reserved Thanking you.
Yours faithfully, For Bajaj Allianz General Insurance Co. Ltd., Sd/-
Authorised Signatory"
The repudiation has been made primarily on the ground that the Complainant had attached bills of purchase from three trading agencies namely Prime Sales Agency, Labh Enterprises and Shubh Trading which bills on verification were found to be fake as the entities could not be located.
It is this verification which seems to have been carried out by the investigator M/s Sundaram Multi Services through Jitendra Vayas. The discrepancy regarding the bills is contained in the said investigation report dated 30.05.2016 which is extracted hereinunder:
"1.We have visited at Prime Sales Agency at At 32, harinagar society, Bhargav road, Meghaninagar. We found that said address is of residence and they are not doing any type of business. so we found that available bill of Prime Sales Agency is Fake.
2.We have also visited at Mahavir Sales Agency at 2582, Vachali Court sheri, Nr. Ladusa Peer, Kadiaynaka, Dariapur.
During discussion with surrounding are we came to know that this agency is involved in railway Scam and doing Illegally activity. Further they are not co-operating to us and not showing us original bill copy of them.
3.We have visited at LABH ENTERPRISE as available address on C-2 Bhaktinagar Apartment, Ramji Mandir Appt, Ranip, and Ahmedabad. We found that on this address a person Named Mr. Ketan Maru doing business of Furniture since last 10 Years and he is owner of both shop C- 1and C-2. So finally bills of Labh Enterprise are Fake.
4.WE have also visited Shubh Trading Co. at shop No. A-108 1st floor, Raj Residency shopping Centre, Nava Vadaj But the sald address is not found, so we have visited at Vadaj Civik Centre and inquired about this address but they also stated that they also heard this address first time.
5.We also observed that some of Bills are on Name of M K Infrastructure and Vitthal Prabhu Education and Charitable trust, MK School of Computer Science and application, Joshnaben M Patel, Sr. 46 is on the name of Parth Mukesh Patel. Sr. 31 on the name of M.K. Institute.
6.Pls note some Bills are of the year of 2003 and 2005."
The repudiation was carried out therefore not on the basis of any final survey report and the Insurance Co. rejected the claim on the ground of false declarations made by the Complainant as the bills were found to be fake. It may be noted that the repudiation letter records that the disputed 22 bills amounted to a huge sum of the claimed amount to the tune of Rs.2,27,12,780/-.
Surprisingly enough, the Insurance Co. along with its reply has submitted a final survey report by M/s Absolute Insurance Surveyors & Loss Assessors dated 27.03.2017. This final survey report emerged almost 6 months after the repudiation.
The complainant aggrieved by the repudiation approached the Commissioin by filing this complaint which has been responded to by the Insurance Co. through their written version and the documents filed on record referred to hereinabove.
Learned Counsel for the Complainant has urged that the Insurance Co. has carried out the exercise behind the back of the Complainant by appointing some alleged investigator about which no information was given to the Complainant prior to the repudiation. It has been urged that merely because a couple of the bills are alleged to have not been verified, the same could not have been made the basis for repudiating the entire claim.
Learned Counsel for the Complainant has cited the orders passed by the Haryana District Consumer Commission, Rohtak in Himank Maini CW564 Vs. United India Insurance Co. Ltd. in CC/325/18 decided on 26.10.2020 where an issue relating to submission of some bills being fake was dealt with in the following manner:
" 5. .....The second contention of the opposite party is that: "estimates & bills submitted by you have been found fake and no shop was found at the address mentioned on the bills"...
6. Regarding the address of the shopkeepers it is observed that the bills were related to the period 08/2016 whereas the investigation was made after 04.05.2017 after receiving the instruction from the insurer i.e. after more than 9 months and it is possible that after 9 months, the address of the shop would have been changed. Hence for one or two bills which were not found in order due to some reason, the claim of the complainant cannot be denied. Hence there is deficiency in service on the part of opposite parties and opposite parties are liable to pay the claim amount as per the report of surveyor Ex.R4."
The contention is that in the present case also since a couple of bills were alleged to be fake, the claim could not have been repudiated.
He has then relied on the order passed by this Commission in the case of United India Insurance Co Ltd. Vs. M/s Asian Agro Industries in FA/35/2013 where a bench while delivering its order on 24.01.2023 observed as follows:
"15. While assessing the total loss suffered by the Complainant, the Investigator has rejected some claims on the grounds that he could not verify the bills, the Supplier did not supply the account statement, no transport or freight receipt was produced, some of the firms are family concerned and further the claim of the building was reduced from ₹3,89,0512.00 as assessed by the Bhambri Associates to ₹1,32,442/- on the ground that the quantities claimed are on a much higher side than the actual loss and some of its part was not insured. In our considered view, the Surveyor while assessing the loss suffered by the Complainant has not applied his mind. The Surveyor has overlooked the record produced by the Complainant with regard to the Stocks lying in the insured premises and reduction of claims is based on his own whims. It appears that with some malafide intention, the Surveyor has rejected some of the genuine claims made by the Complainant. The loss of Building was assessed by Bhambri Associates, Civil Engineer after visiting the spot and each and every detail regarding loss has been given in the said report. The Complainant has produced sufficient evidence/documents with regard to stocks in support of actual loss suffered by them but the Insurance Company as well as Surveyor has totally ignored the documentary evidence for the reasons best known to them. The Surveyor has not considered the raw material of 3097.60 qtls on the ground that the same was not mentioned in the initial report to police which is not a cogent ground. The Surveyor has wrongly deducted 1450 qtls. of raw material sold to Sharma Industries. The said sale of raw material was prior to the date of incident and duly reflected and deducted in the stock of the Complainant. The Complainant has also submitted the report of stock in hand as on 21.10.2006 duly certified by the Chartered Accountant after examining all the bills. The Surveyor ought to have assessed the loss on the basis of actual account statements and the material lying at the spot and not on the basis of his own imaginary thoughts. Further, we are of the opinion that the Complainant was entitled for the interest on the amount awarded by the State Commission towards indemnification of the loss."
Learned Counsel then urged that the conduct of Insurance Companies has been commented upon by the Apex Court in the case of Gurmel Singh Vs. Branch Manager, National Insurance Co. Ltd. Civil Appeal No.4071 of 2022 decided on 20.05.2022 where the Apex Court observed as follows:
"4.1 In the present case, the insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on nonsubmission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control. In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control."
He has further relied on a judgment of the Apex Court in the case of New India Assurance Co. Ltd. Vs Pradeep Kumar decided on 09.04.2009 in Civil Appeal No.3253 of 2002 to contend that the report of the surveyor may not be the last word or sacrosanct or conclusive but it is a pre-requisite for payment or settlement of claim. The observations made by the Court is extracted hereinunder:
"15.The object of the aforesaid provision is that where the claim in respect of loss required to be paid by the insurer is Rs.20,000/- or more, the loss must first be assessed by an approved surveyor ( or loss assessor) before it is admitted for payment or settlement by the insurer. Proviso appended thereto, however, makes it clear that insurer may settle the claim for the loss suffered by insured at any amount or pay to the insured any amount different from the amount assessed by the approved surveyor (or loss assessor). In other words although the assessment of loss by the approved surveyor is a pre-requisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured."
Learned Counsel contends that the Insurance Co. violated the regulatory guidelines framed by the IRDA which require a survey to be conducted immediately and for the submission of a prompt report as no claim can be decided or entertained by the Insurance Co. without a surveyor's report in terms of Section 64 UM of the Insurance Act 1938.
Thus, neither a prompt survey was carried out as the survey was conducted after several months of the incident as indicated above and even otherwise the verification of the bills was carried out, without the participation of the Complainant and without putting him to notice about the same, through an investigator whose report is not even referred to in the repudiation letter.
Learned Counsel has emphasised that the final survey report arrived after six months of the repudiation establishes that the repudiation was done without there being any survey report as contemplated under Section 64UM of the 1938 Act. Learned Counsel urged that the fact that M/s Absolute Insurance Surveyors & Loss Assessors had been appointed to conduct the survey remains undisputed and it is they who had sent the letters to the Complainant making enquiries. The Insurance Co. therefore ought to have proceeded only after having received the said report and not otherwise. It is now established on record that the with the subsequent filing of the surveyor's report, the repudiation letter loses its efficacy as it is based on no consideration of a survey report as per the statutory provisions referred to above and also the IRDA guidelines and regulations in this regard.
Learned Counsel has further urged that the loss assessment made is also contrary to the claim made and hence the Complaint deserves to be allowed.
Controverting the said arguments, learned Counsel for the Insurance Co. has urged that the fact finding investigation conducted through the investigator reported on 30.05.2016 was itself sufficient to repudiate the claim as it was established that the bills submitted by the Complainant amounting to more than Rs.2 crores were found to be fake. This was a clear violation of General Condition No.8 that forms part of the Standard Fire & Special Policy that has been referred to in the letter of repudiation. Consequently, even if there was no final survey report at that point of time, the aforesaid unchallenged and unrebutted facts pertaining to fake bills stands confirmed. The Complainant has therefore not been able to establish a bonafide or genuine claim by controverting the facts taking into consideration the reasons afforded in the letter of repudiation. It is urged that even if the investigation report dated 30.05.2016 was not made known to the Complainant, the same facts have been accepted to be correct in the letter of repudiation which ought to have been challenged but the Complainant has failed to level any such allegation or disprove the said findings recorded therein. He therefore submits that either way, a contract of insurance being one of good faith and a matter of bilateral contract, the same has to be construed in terms thereof and hence no ground for allowing the claim has been made out as there is neither any element of unfair trade practice or an element of deficiency in service so as to indemnify the Complainant.
Learned Counsel for the Insurance Co. has relied on a couple of judgments of the Apex court in the cases of National Insurance Co Ltd. Vs. Harjeet Rice Mills (2005) 6 SCC 45 paragraph 6, and the judgment in the case of United India Insurance Co. Ltd. Kantika Colour Lab & Ors. (2010) 6 SCC 449 Paragraph 19 and 20. The judgment in the case of National Insurance Co. Ltd. (Supra) has been relied upon to contend that the provisions of Section 64UM cannot impede the exercise of authority by the Insurance Co. by relying on material to establish that the claim was fraudulent. Paragraph 6 of the judgment is extracted hereinunder:
"6. We are of the view that the State Commission should have given an opportunity to the appellant before us to prove the investigation report. Section 64-UM of the Insurance Act cannot stand in the way of the Insurance Company in establishing that the claim was a fraud on the Company, or that it was a case of deliberately causing a fire so as to lay the foundation for an insurance claim. Similarly, the Commission did not apply its mind to the aspect highlighted that the first police investigation was reported to be perfunctory and a fresh, proper investigation had been recommended. Similarly, the discrepancy in the capacity of the godown and the possibility that what was lost was only or mainly paddy husk, should have persuaded the Commission to make a proper enquiry before deciding to accept the surveyor's report in this case. The High Court, in our view, has failed to exercise its appellate jurisdiction properly. It failed to see that it had the duty as the Appellate Authority to satisfy itself that no fraud was involved and that the claim was genuine and sustainable. We are of the view that adequate prima facie material was available to warrant a proper enquiry on that question. In this situation, we are satisfied that interference is called for in this appeal."
Reliance has been placed in the case of United India Insurance Co. (Supra) for the proposition that the contract of insurance requires the proof of actual loss before any claim is indemnified. Paragraph 19 and 20 of the said judgment is extracted hereinunder:
"19. 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. The amount mentioned in the policy does not signify that the insurance company guarantees payment of the said amount regardless of the actual loss suffered by the insured.
20. The law on the subject in this country is no different from that prevalent in England which has been summed up in Halsbury's Laws of England, 4th Edn. in the following words:
"The happening of the event does not of itself entitle the assured to payment of the sum stipulated in the policy; the event must, in fact, result in a pecuniary loss to the assured, who then becomes entitled to be indemnified subject to the limitations of his contract. He cannot recover more than the sum insured for that sum is all that he has stipulated for by his premiums and it fixes the maximum liability of the insurers. Even within that limit, however, he cannot recover more than what he establishes to be the actual amount of his loss. The contract being one of indemnity only, he can recover the actual amount of his loss and no more, whatever may have been his estimate of what his loss would be likely to be, and whatever the premiums he may have paid, calculated on the basis of that estimate.""
Learned Counsel submits with the aid of the aforesaid two judgments that the Insurance Co. was in possession of the report dated 30.05.2016 by the investigator referred to hereinabove and therefore there was material available for repudiation. The said facts which form the basis of the repudiation having not been rebutted or successfully challenge herein, there was no proof of actual loss and therefore no liability could be fixed on the Insurance Co.
He has then relied on a couple of orders passed by this Commission, the first in the case of M/s Frontier Remedies Vs. Bajaj Alliaz General Insurance Co. Ltd & Ors. 2012 SCC OnLine NCDRC 486 where the issue of the existence of supplier was doubted and therefore the bills issued by the entity that was relied upon by the insured was not found to be acceptable. It was therefore held that such a material could not be ignored, the Commission came to the conclusion that if fake bills have been relied on, the Complainant cannot make it a part of its claim and then throw the responsibility on the insurer. It was held that no evidence was led on behalf of the Complainant to establish the veracity of the Bills and physical transaction actually having taken place. The claim was therefore held to be not indemnifiable.
The second decision of this Commission relied on by the learned Counsel for the opposite Party is in the case of Gajanan Mahadeo Chimankar & Ors. Vs. United India Insurance Co. Ltd. & Ors. FA/266/2014 and other appeals decided on 14.12.2017 paragraphs 11 to 16 thereof. The said decision holds the insured having not been able to refute the points brought out in the report of the investigator/surveyor about the proper purchase of stocks. The claim was fraudulent and therefore the terms and conditions of the Insurance policy as in the present case, clause 8, was breached. In that case excess stock had been shown on the basis of fake and bogus purchase vouchers.
Learned counsel for the Insurance co. therefore has urged that even assuming though not admitting that there was a violation of some time line in conducting the survey, the Insurance co. was fully justified in repudiating the claim on the basis of material on record including the investigator's report. He submits that the submission of the final survey report after six months of the repudiation is of no consequence inasmuch as the same only reaffirms the cause of repudiation.
Having heard learned Counsel for the parties, the first issue is with regard to the time line to be observed by an Insurance Co. for the appointment of the surveyor and the conduct of a survey. In the instant case admittedly the date of loss/incident is 26.08.2015 and 27.08.2015. The Insurance Co. had promptly appointed M/s Absolute Insurance Surveyors & Loss Assessors on 27.08.2015 itself on having received information about the incident. The final survey report by Mr. Shailesh M. Ramani dated 27.03.2017 records these facts as also the survey dates 27.08.2015, 31.08.2015, 09.09.2015, 31.10.2015, 02.11.2015, 07.01.2016, 15.01.2016 and 17.03.2016. It is the allegation of the complainant that the surveyor arrived late after several months. The aforesaid fact therefore is being disputed by the Complainant but the fact remains that while making assessment the surveyor has recorded as follows:
"04 ASSESSMENT Nature & extent of Damage and our Observations Pursuant to the intimation received from the insurers on 27/08/2015, a preliminary visit at the insured premises was made on the same day during which it was observed that most of the contents and FFF of entire building were in cracked / broken / scattered / damaged condition. It was observed that the record room on ground floor was completely charred / burnt / damaged including contents stored therein which resulted in heavy damages to masonry work of building. The smoke resulting from fire had also blackened walls of other parts of school building. These rooms and other adjacent affected rooms needed refurbishment. The servant / security room was also burnt completely necessitating plastering, flooring, repainting, etc. Almost all the windows / plate glasses installed on all floors of building were cracked / broken and required replacements. It was also observed that 54 nos. Air Conditioners (Indoor as well as Outdoor Units) were damaged. 121 nos. computers, printers, refrigerator, CCTV cameras, projectors, TVs, water cooler, playground instruments, various furniture items viz. notice boards, green boards, chairs, tables, benches, fans, etc were damaged necessitating repairs / replacements. The outdoor units of various air conditioners were observed dented / broken / damaged and entire school building was in a bad shape. Also, during survey visit, the burnt walls and flooring, damaged cameras, computers, projectors, air conditioner, etc. were verified. Also, some computers, air conditioners and laptops were reportedly stolen by the attackers.
Since, the insured intended to resume the school operations, they started cleaning the premises, mostly the glass pieces and they were requested to furnish detailed estimates of repairs / refurbishment of damages along with other supporting documents.
Thereafter, meeting was held with insured at their residence cum office premises at Ahmedabad on 31/08/2015 during which all documents required to be submitted by insured in support of the claim along with list of damaged items (mentioning purchase details with specifications, new replacement value, etc.) were discussed and explained to insured. The insured was also advised to segregate and keep aside all the damaged items for further verification / inspection. During discussions, the insured had verbally indicated estimated loss amount of about INR 4 Cr.
The insured school premises at Patan was again visited along with insurers on 03/09/2015 during which it was observed that the entire school premises was cleaned up and repair / replacement work of window, etc. glasses were under progress. During the visit, the damaged quantity of indoor and outdoor air conditioners whilst installed in various rooms was verified and it was observed that the insured had shifted all damaged computer units from two computer laboratories in their stores in basement and these were physically verified during the visit. Also, during discussions, the insured were advised to arrange repair estimates for damaged air conditioners (54 nos.) & computers (about 120 nos.) being major part of the claim on priority basis. However, the insured submitted estimates of new air conditioners and computers contending that the damaged machines were irreparable / total loss. The insured also submitted rough estimate towards colour work, civil work, FFF, etc. for INR 1.71 Cr. During the visit, the insured were requested to finalize the same with exact sizes, rates, values with supporting estimates from respective agencies.
However, the details were not furnished for long time and the insured informed that they were unable to find repairers for computers and air conditioner in Patan. Hence, we appointed two agencies from Ahmedabad - 1) M/s Arihant Computer & 2) M/s Unique Services for computers and air conditioners. Both the agencies visited the school premises in the first week of October, 2015 and provided estimates for repairs / replacement after detailed inspection of each computer and air conditioner. Out of total 120 nos. computers, 71 nos. computers were found repairable by repairer after testing which took about two days time and after this the claim of 71 nos. computers was reduced from about INR 30 Lacs to about INR 10 Lacs.
Thereafter, the insured requested for releasing an on-account payment. Since, no substantial documents were submitted by the insured in support of the claim, the request of on account payment was not considered. The insured was claiming for value of damaged items based on values as per their original purchase bills without segregation of damaged items. The insured as requested number of times for submitting estimates based on repairs / replacement quotations after the incident, same was not furnished to us for many months.
A meeting was held at the office of insurers on 31/10/2015 during which various claim aspects were discussed. We thereafter visited the insured premises at Patan on 02/11/2015 during which discussions were held with Mr. Kaushal Patel & Mr. Yunus Nandoliya of insured and Mr. Ketan Gandhi & Mr. Mohsin Pathan of insurers. During our meeting, all requested documents / clarifications / justifications were thoroughly discussed / explained to insured again and it was observed that the damaged tables, chairs, air conditioners, benches, cupboards, etc. were shifted by the insured in their stores in the basement of the school building and the same were verified. Apart from major loss to computers and air conditioners, third major item damaged during the incident was plate glasses / aluminium window sections and hence measurements of all affected glasses of each and every room of entire school was taken by us during the visit.
The insured subsequently submitted revised claim bill for INR 4.90 Crores on 07/11/2015 based on their purchase bills and not based on actual repairs / replacement work done after the incident. In view of non-cooperation and non-submission of documents, we again held a meeting at office premises of insured in Ahmedabad on 07/01/2016 during which all the requested documents were explained to the insured once again.
Thereafter, we again visited the school premises of insured at Patan on 15/01/2016 jointly with Mr. Ambarish Desai of insurers during which insured was again explained the format and documents required for the claim assessment.
The insured thereafter submitted revised claim bill for INR 3.55 Cr on 23/02/2016 without further supporting documents. The supporting bills / estimates of new repairs / replacement work and some old purchase bills were submitted by the insured on 01/03/2016. The insured had also claimed for about 150 nos. air conditioners and about 170 nos. computer systems which were not installed and were kept aside during the incident & some money in cash as stolen by attackers during the incident.
Hence, we again visited the office premises of insured on 17/03/2016 during which discussions were held with insured and insured was again requested to submit pending details / documents in support of their claim."
It is thus evident that the surveyor seems to have visited the spot even though intermittently but it cannot be said that the Insurance Co. did not comply with the regulations for appointing a surveyor or conducting the survey.
However, the fact remains that the surveyor did not submit his report even though a final meeting was held on 17.03.2016 and the surveyor himself had issued the notice dated 26.03.2016 extracted hereinabove calling upon the complainant to furnish information.
Not only this on 03.06.2016, the Complainant had been called upon to answer the queries raised after the discussions were held on 27.05.2016.
There is nothing on record to indicate that these letters were replied to in writing by the Complainant to the surveyor. The Complainant has alleged that a host of issues were argued which the learned Counsel submitted was oral and that has been enlisted in the document that has been filed as Annexure I of the Complaint that is extracted hereinabove. Since there is no proof of this written response and the same has been denied by the Insurance Co. the said document cannot be read as evidence.
However, even otherwise the said reply does not contain any material whatsoever to contradict the facts stated in the investigators report dated 30.05.2016 with regard to the verification of the fake bills. In the absence of any such material the findings recorded in the letter of repudiation about 22 fake bills to the tune of Rs.2,27,12,780/- remains unrebutted.
In the above background, what can be observed is that the letter of repudiation dated 27.09.2016 was issued without the final survey report which came six months thereafter on 27.03.2017. This therefore was a clear violation of the provisions of Section 64UM as well as IRDA regulations and guidelines in this regard. The Insurance Co. could not have proceeded to repudiate the claim without a surveyor's report. This issue has been dealt with by the Apex Court in the case of New India Assurance Co. Ltd. v. Mudit Roadways, (2024) 3 SCC 193. Para 43 to 45 extracted hereinunder:
"Value of a surveyor's report
43. According to the Insurance Act, 1938, an approved surveyor's assessment is necessary for a claim. The claimant however contends that the surveyor's report is not definitive. The key question is the extent to which the report is binding and under what conditions can it be overridden in. To address this, Section 64-UM(4) of the Insurance Act, 1938 can be usefully read which concerns surveyors and loss assessors:
"64-UM. (4) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."
44. The above provision mandates that claims above Rs 20,000 must be initially assessed by an approved surveyor. It is noteworthy that the insurer has the discretion to settle the claim for a different amount, than what is assessed by the surveyor.
45. In New India Assurance Co. Ltd. v. Pradeep Kumar [New India Assurance Co. Ltd. v. Pradeep Kumar, (2009) 7 SCC 787 : (2009) 3 SCC (Civ) 314] , the Court addressed whether one had to accept payment based on the surveyors' assessment or could provide independent evidence to support higher costs for replacement and repairs. The Court's pertinent conclusion is as follows : (SCC pp. 791-92, para 22) "22. In other words although the assessment of loss by the approved surveyor is a prerequisite for payment or settlement of claim of twenty thousand rupees or more by insurer, yet surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be the basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but such report is neither binding upon the insurer nor insured.""
Thus, the procedure established by law under the statute coupled with the IRDA regulations has been clearly violated by the Insurance Co. and to that extent the argument of the learned Counsel for the Complainant deserves acceptance. Admittedly the Surveyor report arrived long after the repudiation as noted above.
However, coming to the issue of establishing the claim, the Complainant was made aware of the terms of repudiation with a clear recital that Clause 8 of the General Terms and Conditions of the policy had been violated as 22 bills submitted by the Complainant amounting to Rs.2,27,12,780/- were found to be fake. Learned Counsel for the Opposite Party Insurance Co. is therefore correct in his submission, on the strength of the decisions cited by him, that the terms and conditions of the insurance policy have to be construed strictly provided there is no ambiguity in the same. The submission of a false claim with the support of 22 bills which could not be verified is a ground taken by the Insurance Co. The Complainant was therefore under an obligation to dispel the said doubt once the Insurance Co. had discharged its burden by bringing forth evidence relating to the allegation of fake Bills. Even if the investigator's report dated 30.05.2016 had not been supplied to the Complainant prior to the repudiation, yet the same has been made part of the record of the reply filed by the Insurance Co. The Complainant has been unable to rebut the findings recorded in the said investigation report. The Complainant has also not led any evidence to dislodge the said findings or the conclusions drawn in the letter of repudiation dated 2709.2016 where the description of the 22 Bills stated to be fake amounting to 2,27,12,780/- has been categorically recited. As noted above, the Insurance Co. therefore has brought forth material on record regarding the said false claim which has not been rebutted or controverted by any material either through any examination of any witness or placing on record any affidavit of the entities that had issued the said bills. Thus, a total lack of evidence to controvert this stand of the Insurance Co. is clearly established. The Complainant having failed in its obligation to do so, there is no reason to disbelieve the conclusion drawn by the Insurance Co. in the letter of repudiation dated 27.09.2016 that 22 Bills were fake.
Learned Counsel for the Complainant has relied on certain orders or decisions to urge that if some of the bills were fake the same cannot be a ground to deny the entire claim. In the present case, the fake bills amount to a very hefty sum of Rs.2 crores and above which is not a minor exaggeration. The claim of such a huge and heavy amount is not something trivial so as to be ignored in the absence of any evidence led by the Complainant to treat the said allegations to be incorrect or perverse. This is not a case of just few bills but is a substantial part of the loss that has been claimed by the Complainant for Rs.3 crores and odd. The failure of the Complainant to dislodge these conclusions drawn by the Insurance Co. therefore cannot be countenanced as something very minimal but to the contrary the said lapses are sufficient to conclude that the claim is neither genuine nor bonafide and hence this is not a case of any deficiency in service on the part of the Insurance Co. in the ultimate analysis.
Even though the Insurance Co. has not observed the procedure strictly as indicated hereinabove but at the same time, the Complainant has also failed to controvert the allegations and the facts regarding the fake bills and therefore neither equity nor justice aids the complainant in any way on the evidence on record. It is unfortunate that an incident might have happened but when it comes to an indemnification claim, learned Counsel for the Opposite Party is correct in his submission with the aid of the judgments relied on by him that the Complainant cannot claim such indemnification without proof of actual loss. The proof tendered by the Complainant in this case has been found to be fake and therefore the repudiation was fully justified. The complaint therefore cannot succeed as there is no deficiency in service, and is accordingly dismissed.
.........................J A. P. SAHI PRESIDENT