National Consumer Disputes Redressal
Shri Krishna Woolen Mills Pvt. Ltd., Mr. ... vs United India Insurance Company ... on 10 March, 2006
NAITIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NAITIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO.282 OF 1997 Shri Krishna Woolen Mills Pvt. Ltd. A Company Incorporated Under The Companies Act, 1956 Having its Office At 5-6, Regent Chambers, 12th Floor, Nariman Point, Mumbai-400 021 Complainant Vs. United India Insurance Company Ltd., Having its Registered and Head Office At 24, Whites Road, Madras 600 014 Also Its Divisional Office At No.7, Canada Building, First Floor, Dr. D.N. Road, Fort, Mumbai 400 001 Opposite Party BEFORE: HONBLE MR. JUSTICE M.B.SHAH, PRESIDENT. DR. P.D. SHENOY, MEMBER. For the Complainant : Mr. S.K. Sharma, Advocate For the Opposite Party : Mr. K.L. Nandwani, Advocate Dated 10th March, 2006: O R D E R M.B.SHAH, J. PRESIDENT: This Original Petition is filed in 1997 by the Complainant, Sri Krishna Woollen Mills Pvt. Ltd., Agra Road, Bhandup at Bombay, against M/s. United India Insurance Co. Ltd. (hereinafter called the Insurance Company) for recovering the loss suffered by it due to the fire which took place on 5.12.1988. During the fire the stock, building and machines, which were duly insured, were destroyed. The Surveyors appointed by the Insurance Company, even after submitting the two interim Survey reports, for the reasons best known, failed to assess the loss on the basis of the material which was already available with them, by contending that the assured has not submitted necessary information to assess the loss. Hence, this complaint. In our view, the contention of the Surveyors, M/s.Mehta & Padamsey Pvt. Ltd., appointed by the Insurance Company is on the face it unjustifiable, because : (1) In the present case, prior to the occurrence of fire, on the basis of the Civil Suit filed by the Indian Overseas Bank against the Complainant, the Bombay High Court had appointed a Court Receiver in September, 1987. After his appointment, the Court Receiver carrier out physical verification of the machinery and the inventory of the stock lying in the factory premises. Thereafter, he took the possession of the building, stock and machinery in June, 1988. That report of the Court receiver is on record. (2) Thereafter, the Surveyors along with Court Receivers Officers carried out another joint inventory after the fire in December 1988. It was completed in August, 1989. (3) The same Surveyors, namely M/s. Mehta & Padamsey Pvt. Ltd., had carried out survey of the factory premises because there was loss due to flood in the year 1991. They submitted report and assessed the loss and on that basis the claim of the Complainant was settled. These facts are to be kept in mind while deciding this complaint. FACTS: It is not disputed that the Complainant has taken seven fire policies for the period between 10.1.1988 till 9.1.1989. Undisputedly, on 5.12.1988 in the factory premises fire took place. The Insurance Company appointed M/s. Mehta & Padamsey Surveyors Pvt. Ltd. on 7.12.1988 as Surveyors and directed them to survey and assess the loss and damage caused by fire to the building, machinery and stock belonging to the Complainants factory. They submitted their first interim survey report dated 16.5.1989, wherein they narrated various difficulties they have faced in finalising the matter in assessing the loss and thereafter in paragraph No.4 they stated as under: 4. ESTIMATE OF LOSS : 4.1 As we have yet not received majority of the information/documents from the Insured, even at this stage, it is not possible for us to give any estimate of loss. The Insured have estimated their loss at Rs.300 lacs. However, we feel that this is still a tentative figure. 5. NOTE 5.1. We have completed the assessment of the Insureds claim on building at Rs.17.00 lacs. This is yet to be confirmed by them. 5.2. As we are not getting the desired co-operation from the Insured, the matter of finalisation of assessment of the claim is likely to take some time. Subsequently, correspondence went on between the surveyors and the complainant. The Surveyors, thereafter, submitted the second interim report dated 27.8.1991. In the first paragraph, it was stated as under: Further to our First Interim Survey Report bearing No.28488 dated 16th May 1989, we have been able to assess the Insureds claim on buildings at Rs.16,96,416/- to which the Insured have agreed. Despite this assessment of loss caused to the building at a sum of Rs.16,96,416/-, the insurance company paid an amount of Rs.10 lacs on 8.6.1993 and Rs.50,000/- on 17.12.1996. With regard to the occurrence, it has been stated as under: OCCURRENCE : As reported, Shree Krishna Woollen Mills P. Ltd. was manufacturing woolen blankets from shoddy wool which was imported from foreign countries, either in the form of old woolen garments, hosiery or tailor cuttings. The company was enjoying various credit facilities from Indian Overseas Bank, Fort, Bombay against the charge of Building, Machinery. The factory of the said company, situated at Bhandup is closed since last about 3 years on account of labour strike and that Indian Overseas Bank had freezed the companys account since 1985. Subsequently, the Court Receiver was also appointed. The bank has filed a suit against the company in the Bombay High Court for recovery of their dues and the company has filed a counter suit against the bank in the same Court for specific performance. On account of the strike and appointment of the Court Receiver the company could not carry out their normal activities. However, some minor activities were carried out by the company under the supervision and control of the Court Receiver before the date of the fire, by getting some job work done with outside parties by sending them some stocks of raw materials. The company has a sister concern by the name of A.K. Synthetic Pvt. Ltd. which also carry on some activities in the same premises as that of the Company. The company also had its own unit by the name and style of INDIA SHODDY MILLS which was also located in the same premises. For the cause of fire, it is stated as under : CAUSE : The exact cause of the fire could not be ascertained. In the fire brigade report, the cause is stated as Unknown. For the extent of damage, it has been mentioned as under : EXTENT OF DAMAGE: Due to the fire, out of building Block Nos.A, B & C, Block No.B was severely affected. The trusses had buckled. A major portion of that block had been destroyed by the fire leaving only salvage of steel gurders, columns and beams. A.C. sheet roof of the block was also damaged at several places. In addition to damage to the building, several machinery were very badly damaged leaving salvage of comparatively low value. Similarly, large quantity of woolen rags, and cloth used as raw material were almost completely burnt and/or heavily damaged by water used for extinguishing the fire. The Insured estimated their loss at about Rs.300 lacs. We have yet to finalise the assessment of loss on machinery and stocks. However, since the Court Receiver is insisting on our submission of our report for damage to building, the same is being submitted now. For the assessment of loss to the machinery and stocks, it was mentioned that the same was pending as some information was still awaited from the insured. However, there is a specific note as under: Our reports on assessment of machinery and stock will be submitted in due course. The aggregate amount of claim is estimated at Rs.300 lakhs. This report establishes beyond doubt that: (1) in addition to the damage to the building, several machineries were badly damaged leaving salvage of comparatively low value; (2) a large quantity of woollen rags and cloth used as raw material were almost completely burnt and are heavily damaged by water used for extinguishing the fire; and, (3) the insured estimated their loss at about Rs.300 lakhs. Thereafter, they submitted Final Survey Report on February 23, 1996 in which it has been stated as under: 1.12 At the time of the fire the Unit had already become sick and the Court Receiver, Bombay under the order of Bombay High Court took custody of all the properties of the Insured at Bhandup. The Court Receiver had carried out Physical inventory of the Insureds stocks in June, 1988. A copy of such inventory is made available to us by the Bank. The Court Receiver had also placed one person at the Insureds factory at Bhandup in June 1988 to keep a watch on the properties as well as to record the incomings and outgoings of the goods, if any. 1.13 On 18.12.1988, the Insured sent a claim form according to which they claimed their losses on various properties as follows: i) On Building .. Rs. 25.00 Lacs ii) On Machinery .. Rs.106.25 Lacs iii) On Stocks .. Rs.168.87 Lacs ---------------------------- Rs. 300.12 Lacs. ===============
Thereafter, they have narrated the grievances with regard to the assessment of loss as under:
1.15.1.
We desired to commence taking physical verification of the saved stocks and damaged stocks to the extent possible, but we could not commence the work as it was to be done jointly with the representative of the insured and Indian Overseas Bank . The difficulties faced by us have been described by us in details in our First Interim Survey Report dtd. 16.5.1989.
1.15.2.
In the middle of February 1989 we could commence the job of inventory taking and it came to a complete halt in the 1st week of March 1989 due to absence of the Insureds representative who reported sick from 3.3.1989. The Insured failed to make alternative arrangement for recommencing the work of inventory taking.
1.15.3.
The Court Receiver called a joint meeting on 17th April, 1989 in his Chamber in which the representative of the Insured did not remain present despite advance intimation of the meeting to them. At the said meeting it was decided to commence the inventory taking work from 19.4.1989 and accordingly the job recommenced on that date, without the presence of the Insureds representative.
Finally, it was stated that as more than 2 years have passed and as the assured has not sent the details required by them, they recommended repudiation of the claim of the insured for the machinery and stocks by invoking Condition No.6(i) of the Fire Policy C. They have also noted that before repudiation of the claim, insurers may get the matter examined by legal expert more particularly because Indian Overseas Bank is involved. On the basis of the said report, the insurance company repudiated the claim on 17.12.1996.
The aforesaid report also reveals that:
(i). the Court Receiver carried out inventory of the insured stocks in June, 1998;
(ii). a copy of such inventory was made available to the Surveyors;
(iii). the Court Receiver had also kept one person to keep a watch on the properties as well as to record incomings and outgoings of the goods;
Thereafter, complaint was filed before this Commission.
Main grievances of the complainant are as under :
1. Bombay High Court has appointed Court Receiver in September, 1987 and that inventory of the building, stock and machinery was taken by him as per the order of the High Court in June 1988. The property was in possession of the Court Receiver and the complainant had no chance to remove any article without the permission of the Court Receiver.
Thereafter, fire took place on 5.12.1988.
2. It is on record that insurance company has settled the claim of the complainant with regard to the subsequent event which took place in June 1991 in respect of other portion of the building which was affected by flood. In that survey report, reliance was placed on the inventory and the loss to the stock was assessed. However, that survey report was not produced on record or copy of the same was not given to the complainant.
3. That report was also given by the same surveyor, M/s. Mehta and Padamsey Pvt. Ltd.
4. It has to be stated that, that surveyors report was also finally given on 23.8.1993. It is the grievance of the complainant that the assessment made in the said survey report would have been a sufficient base for the surveyor to assess the loss suffered by the complainant with regard to the machinery and stock damaged in fire. The complainant has co-operated with the surveyors all throughout but for the reasons best known to them they have avoided to submit the survey report.
5. It is also pointed out that even after filing of the complaint, they tried to settle the dispute through the intervention of the concerned Ministry. For that, a meeting was held on 25.7.2003 in the Ministry of Finance in the presence of surveyors representative Mr. Jariwalla, the Chairman and General Manager of the insurance company and also the Chairman of the Bank. However, no settlement took place. Therafter, on 8.9.2003 on behalf of the complainant, the Director of the complainant wrote letter to the General Manager of the insurance company calling for an independent report from another approved surveyor or loss assessor as Mr.Jariwalla has stated that he would not give the loss assessment report even if God asks him to do so while refusing to divulge his reasons for the same. He also informed that Mr.Jariwalla has advised that salvation of the company lay in appointment of alternative surveyor to assess the loss.
In this view of the matter, the complainant obtained a report from Mr.Bhaskar Joshi, who is a licensed Surveyor and Loss Assessor recognized by the insurance company. That report is produced on record by the complainant. That report was objected to by the insurance company on the ground that it was obtained at a belated stage. It is also contended that Loss Assessment Report was prepared behind the back of the insurance company and in any case, Bhaskar Joshi is not examined by the complainant.
Considering the limited dispute of assessment of loss and the non-cooperation by the Surveyors appointed by the Insurance Company, by order 28th September, 2005, we directed that the survey report submitted by Mr. Bhaskar Joshi who is also the Surveyor of the Insurance Company be taken on record. The Complainant was directed to file an additional affidavit of Bhaskar Joshi who has assessed the loss stating therein the details and the basis of assessment of the loss. It was also directed that it would be open to the Insurance Company to cross-examine Mr.Bhaskar Joshi after receipt of the affidavit.
Mr. Bhaskar Joshi filed his affidavit on 25th October, 2005. For his cross-examination interrogatories were tendered by the Insurance Company and those interrogatories were replied by Mr.Bhaskar Joshi. The relevant portion of the affidavit, reply to the interrogatories is stated below:
Q.No.7: In what way were you handicapped in assessing the loss to stocks in fire for want of copy of survey report of flood loss in 1991?
Reply: We wished to verify the comments and remarks of the joint surveyors based on their physical examination of the damaged and undamaged stocks, Court Receivers certificates, Auditors certificates, Balance sheets and records of the company. Refer to para 4.08.3 of our report. Since the flood report was already available on record it was an added help to us in assessing the loss.
Q.No.8: Why party not supplied to you the same information and record which has been supplied to the earlier surveyor in respect of flood loss?
Reply: As the assessment was made and loss was indemnified to the insured and as there was no dispute about its quantum, we thought it more prudent to refer to the assessment report rather than reinvent the wheel.
Q.No.10: Whether the report submitted by you is an opinion or survey report?
Reply: I have given an assessment based on the data/documents produced before me by the insured. It is a report on assessment of loss containing my opinion on the aspects of the claim.
Q.No.11: Can the report submitted by you be called a survey report?
Reply: It contains requisite features of a survey report without physical verification of damaged assets which was not feasible at the time.
Q.No.13: Please clarify the status of report submitted by you because in some places you said it is your opinion and at some places you said it is the survey report.
Reply: It is a loss assessment report as stated earlier in Q.10.
Q.No.16: Have you made any attempt to make independent enquiry of your own to assess the loss?
Reply: I have based my assessment solely on documents produced before me.
Q.No.30: How much the report of M/s. S.N. Nadkarni & Co. is reliable when it does not quantify the quantity?
Reply: Though it does not quantify the quantities for stocks that were not in possession of court receiver as stated by us in para 4.08.01 of our report (Annexure 26) they have offered further clarification on the same vide letter dated 22.02.1990 (Annexure 29 of the report) . It is for the competent authorities to decide how much to rely on the report of a court receiver.
Q.No.31: Do you agree that when the management could not quantify the stocks even six months before fire, can the report of auditor dated 30.12.88 be considered the basis of assessing the loss?
Reply: The auditors have expressed their satisfaction on the methodology and we have gone by auditors remarks. The surveyors in para 11.3 of their flood report have also expressed satisfaction on the valuation method adopted by the insured and their auditors.
Q.No.32: Do you agree that different parameters are applied for the assessment of loss due to fire and for assessment of loss due to flood?
Reply: No. Q.No.33: Do you agree that in case of fire burnt stock cannot be physically verified, whereas in case of flood damaged stocks can be physically verified?
Reply: It depends on the state and condition of availability of damaged stocks. In case of fire if the stocks are burnt completely and in case of flood if they are flown away; verification of such physically non-available items is not feasible. However, if remnants are left after the occurrence of a peril the same can be physically verified. There is no specific answer to this general question.
Mr. Bhaskar Joshi, admittedly, is a licensed Surveyor and on a number of occasions he is appointed as a Surveyor by the Insurance Companies. It is his say that for the loss which occurred on 6.12.1988 at Shree Krishna Woolen Mills Pvt. Ltd., one of the Directors of the said Mill, namely, Mr. Manoj Puri requested him to assess the damage and loss caused to the buildings, machinery and stocks. He submitted his report on 23rd September, 2003. It is his stay that on the basis of the Survey Report dated 26.8.93 given by C.P. Mehta & Co. and M/s. Mehta and Padmasey Pvt. Ltd. assessing the loss suffered by the complainant on account of flood, he made the assessment in the present case.
It is his stay that at the time of discussion for settlement through the intervention of the Ministry of Finance, he considered whether the insured had given sufficient data/documents to the Surveyors, and whether it was possible to carry out the assessment of loss on the basis of the submissions. It is his say that after considering all the relevant documents this report was given and the same is solely based on the documents mentioned in paragraph 6.05 of the Survey Report. The said documents, inter alia, are as under:
1. Letter dated 28.11.03 addressed to MP (Mehta & Padamsay (Pvt) Ltd. with statement of workings of claim for loss for stocks.
2. Letter dated 28.11.89 addressed to MP (Mehta & Padamsay (Pvt) Ltd. with statement for workings of claim for loss for Plant and machinery.
3. Letter dated 17.2.90 addressed to MP with statement of Quotations for damaged machinery, copy of valuation report of Mr. P.R.Dave, copy of report of L.C.Sharma of Vinod Brothers in respect of extent of damage and salvage value of damaged machinery as well as the advisability of their repairs.
4. Letter dated 20.2.90 addressed to MP (Mehta & Padamsay (Pvt) Ltd. with statement of stock lying in outside godowns and statement of stock as certified by the representative of the High Court Receiver.
5. Letter dated 29.1.91 addressed to MP (Mehta & Padamsay (Pvt) Ltd. with details of location of Plant and machinery as well as location of stocks.
6. List of Machinery belonging to SKWM as per inventory taken by the office of the High Court Receiver and certified by them.
7. Letter dated 22.2.90 of M/s. S.D.Nadkarni & Associates confirming the stocks statement as well as the receipt of goods in the intervening period between the physical inventory taken by them and the incident of fire.
8. Letter dated 24.11.89 of M/s. Rajendra .K. Chaudhary (Chartered accountants of the company) in respect of verification of claim for loss on stocks prior to its submission.
9. Letter dated 6.8.92 addressed to MP (Mehta & Padamsay (Pvt) Ltd. in respect of stock flood claim with statement of breakup of closing stock for the years 1988 /19989 quantity wise and valuewise as reflected in the Balance Sheet and as certified by the auditors of the company and accepted for the finalization of the stock flood claim by MP (Mehta & Padamsay (Pvt) Ltd.
10. Letter dated 21.5.93 addressed to MP (Mehta & Padamsay (Pvt) Ltd. in respect of stock flood claim with revised workings of claim for loss stocks damaged in the floods on 9.6.91 and accepted for the finalization of the stock flood claim by MP (Mehta & Padamsay (Pvt) Ltd.
10. Purchase Invoices and debit notes for Synthetic Rags damaged in the fire.
11. Custom clearing documents for imported Woollen Hoisery and Woollen Rags of 1985.
12. Letter of offer dated 9.5.88 from M/s. Sri Enterprises offering various items of raw materials used by our company.
13. Balance Sheets of the company for the year ending 30.6.88 and 30.6.87.
Thereafter, he has stated that:
(a) The loss to the building was assessed at Rs.16,98,916/- by the Surveyors M/s.
Mehta and Padmasey Pvt.
Ltd., but the Insurance Co. has paid to the complainant only the sum of Rs.10,50,287/-.
(b) For the loss caused to the plant and machinery, the insured has claimed Rs.1,54,00,260/-. The Surveyors appointed by the Insurance Company were unable to assess the loss.
It is his say that on the basis of the material which was supplied to the previous Surveyors and on the basis of the information available from the documents, the loss could have been easily assessed. After calculating the amount and depreciation value it is his say that the quantum of damage to the plant and machinery was Rs.1,52,04,760/- and on that basis he has assessed the net loss payable to the Complainant at Rs.1,29,26,505.68.
(c) With regard to the assessment of loss to the stock lying in the insured premises, he referred to the inventory of stocks prepared on the directions of the Court Receiver, by M/s. S.D. Nadkarni & Associates and the extent of damage is narrated by them in their letter dated 22nd February, 1990. The loss was assessed after taking the Auditors report for the year ending 30th June, 1988 into consideration. He has also considered the assessment of loss caused due to flood, jointly made by C.P. Mehta & Co. and M/s. Mehta and Padmasey Pvt. Ltd.
and noted that the loss assessed due to flood has been paid to the Complainant and from that report inference can be drawn about prices of the goods at the relevant time. In the light of the above documents, he has assessed the loss to stocks. He has also noted that in the absence of anything contrary to what was stated by M/s. S.D. Nadkarni & Co. and the insureds auditors the computation given by the insured can be construed as the loss suffered by them. After considering various aspects he has concluded that the amount of loss to the stocks payable under stock policies was Rs.1,54,13,103/-.
He has emphasized in his assessment report dated 23.9.2003, he had referred to the documents listed in paragraph 6.05 of his affidavit and the survey report pertaining to floods in June 1991 which was issued on 26th August, 1993 jointly by C.P. Mehta & Co.
and Mehta and Padmasey Pvt.
Ltd., and these two reports were to be read as part of his affidavit.
With regard to the assessment of loss to the building, it has been stated that the Board of the Insurance Company has sanctioned Rs.10,50,289/- on this account against the said claim subject to deduction of Rs.2,10,731/- being short collection of the premium under various fire policies as pointed out by the Government auditors. There is no explanation by the insurer as to on what count the recovery was made and, thereafter, there is a further deduction of about Rs. 4 lakhs from the assessed loss of Rs.16,98,916/- for which no plausible explanation was also given.
In our view, the insured has accepted the said amount of Rs.10,50,287/- without any protest. Hence we are not inclined to deal with this claim and grant no further amount.
FINDINGS:
It is the say of the Complainant that the dispute between him and the Insurance Company arose because Surveyors assessed the loss to the building at Rs.17 lakhs (rounded) by their first interim report dated 16.5.1989. By the second interim report it was reduced to Rs.16,96,416/-. However, that amount was not paid, but on ad hoc basis Rs.10 lakhs were paid in June, 1993. Because of this undue delay, the Complainant demanded interest on the said amount. This has annoyed the officers of the Insurance Company and in connivance with the Surveyors began to allege that the information demanded by the Surveyors was pending and thereafter repudiated the claim.
During the pendency of the complaint also the Complainant approached the Ministry of Finance (Banking and Insurance) with a view to expedite the payment of its claim since there was pressure from its bankers to repay the amount due to them. A number of meetings were held and the Surveyors were requested to assess the loss, but their reply was that they would not do even if Gods were to ask that from them. They suggested that the solution lay in the appointment of alternate Surveyor to assess the loss. This was informed and discussed threadbare in the joint meeting at the Ministry of Finance.
Thereafter, the Complainant approached Mr.Bhaskar Joshi, an independent licenced Surveyor, who had submitted the copy of the report to the Joint Secretary in the Ministry of Finance who asked the same to be forwarded the Chairman of the Respondent Insurance Company.
It is contended that all the necessary documents were available with the Surveyors for assessing the loss suffered by the Complainant due to flood in the year 1991. The survey report was available with the Insurance Company for all the time. The survey report was not supplied to the Complainant till April, 2004 and that too only on the basis of the directions given by this Commission. It is his say that in respect of the stocks the following documents were available with the Surveyors.
(A) IN RESPECT OF COMPLAINANTS STOCK:-
(a) Confirmation and Certificate of Chartered Accountant R.K.Chaudhary that the quantities and values of the stocks were verified from the records of the complainant and belonged to the Insured.
(b) Working of claim of loss based on physical inventories taken by the office of the Court Receiver both before and after the fire.
(c) Statement of Stock as on date of Fire certified by S.D.Nadkarni & Associates, the agents of the Court Receiver.
(d) Letter dated 22/02/1990 of M/s. S.D.Nadkarni and Associates.
(e) Statement of closing stocks of the company showing quantities of values as recorded in the Balance Sheets of the Complainant.
(f) Invoices of Raw materials and Raw material prices as received by the company form Sri Enterprises (an arms length company) in May1988.
(B) IN RESPECT OF COMPLAINANTS PLANT & MACHINERY
(a) Working of claim for loss on Plant and Machinery based on report of P.R.Dave (Gazetted Valuers).
(b) Relevant quotations of damaged machines from competent sources.
(c) Valuation Report of Gazetted Valuers P.R.Dave & Co. regarding Machinery Loss as demanded by Surveyor vide their letter dated 11/01/1990 (Ann.18ci).
(d) Report of Vinod Brothers Textile Engineers on cost and advisability of repairs of damaged machines ad demanded by Surveyors by their letter dated 11/01/1990(Ann 18ci).
(e) Detailed specifications of machines with their production capacities alongwith their location as demanded by Surveyor.
(f). List of machines belonging to the insured as certified by the Agents of the Court Receiver.
(f) Affidavits and Lists of machines submitted by tenants, namely M/S. R.K.SYNTHETICS & FIBRES P. LTD, M/S. ARTHUR IMPORT EXPORT CO., M/S. INDIA SHODDY MILLS, as certified by the Agents of the Court Receiver M/s. S.D.Nadkarni & Associates, to confirm that they had no claim over the machines of the Insured.
(h) Sale Invoice of the year 2001 of the scrap of the damaged machines burnt in the fire.
Despite all these documents having on record, the Insurance Company repudiated the claim after a long time, i.e., only in December, 1996, on the sole ground of non-supply of documents by the Complainant.
In our view, from the record, as stated above, repudiation of the claim by the Insurance Company is unjustifiable. Secondly, the stand taken by the Surveyor not to assess the loss is also unreasonable and unjustifiable, because the entire record was produced before them while assessing the loss due to the flood in the year 1991.
The stand taken by the Insurance Company that the inventory made by the Court Receiver cannot be made the basis of the assessment of loss because the total machinery was not under the possession of the Court Receiver. And, secondly, the report of the Surveyor subsequent to the date of the fire cannot be made the basis of the assessment of the value of the machinery and stock. In our view, this submission cannot be justified. Fire took place in December 1988, inventory was taken by the Court Receiver in June, 1988. Thirdly, on the basis of the said assessment, loss suffered by the Complainant due to flood in the year 1991 was assessed and the claim was settled.
Further, the evidence led by the Insurance Company is of no assistance for assessing the loss suffered by the Complainant. Hence, we accept the survey report submitted by Mr.Bhaskar Joshi.
The date of occurrence of floods is 8/9 June, 1991; survey report is dated 27th August 1993 by the same Surveyors (i.e. Joint Surveyors, i.e. Mehta & Co. and Mehta & Padamsey Pvt. Ltd.). In that report at page 27, pr.3.7, it is mentioned that : As regards the stocks these were all lying in different buildings at the premises, since the time of closure of the mills, ie. April, 1986. There had been fire in the premises on 5th December, 1988 and thereafter inventory of all the undamaged stocks was taken by the Court Receiver. That statement was reproduced as Annexure-A to his report. There has been no sale of the stocks from the date of the fire, i.e. 5th December, 1988, upto the date of the loss/damage caused due to the floods on 8/9th June, 1991. Some undamaged stocks on hand were sold after the occurrence of flood on 8th/ 9th June, 1991. The last profit and loss account before the loss was for the year ending 31st March, 1991. In this account, closing stocks were all valued at market prices. In pr.11.3 it is stated that the relevant records, such as the previous balance sheets, Court Receivers certificates etc. were all examined to determine the market value of the stocks, which were all old stocks, the sales subsequent to the date of the loss due to floods were all analysed. Relevant invoices for this purpose were also examined. It was found that the balance sheet values for closing stock valuation were fair and were lower than the sales prices after the loss date. Hence, the values shown in the balance sheet, which represented costs were adopted. Finally, the claim was assessed at Rs.29,12,363/-.
If this material was available there was no reason for the Surveyors not to assess the loss on the basis of the record which was available in the survey for damages due to the flood in June, 1991.
It is apparent that Mr.Bhaskar Joshi appointed by the Complainant has assessed the loss on the basis of the record.
In the report of Bhaskar Joshi in para 4.7 there is assessment of loss to plant and machinery. He has relied upon the valuation report of M/s. P.R.Dave and Associates who have valued plant and machinery at Rs.1,81,84,010/-, i.e. depreciated value as certified by M/s. Dave Associates and finally assessed the loss at Rs.1,52,04,760/-. And, thereafter, deducting of such amounts, he has assessed the net loss payable under the policy at Rs.1,29,26,505/-.
In para 4.8.3 it has been stated that the insured has suffered loss due to flood on 8/ 9th June, 1991. Stock unaffected by fire on 5th December 1988 was damaged due to the floods in 1991 and the loss to the same has been assessed by M/s. Mehta & Padamsey Pvt.Ltd. and M/s. C.P.Mehta & Co. jointly. This claim of loss due to flood has since been concluded and the insurers have reportedly indemnified the insured basing on the report of joint Surveyors, inference can be drawn about the prices of goods from the said report because the joint Surveyors would have verified prices from the available records.
In pr.4.08.5 they have observed that they have attached to the report the computation of loss to stocks as provided by the insured. In the absence of anything contrary to what was stated by M/s. S.D.Nadkarni & Co. and insureds auditors the computation given by the insured can be construed as the loss suffered by them.
In pr.5.02 in the concluding remarks, it has been, inter alia, stated that in case of loss to building the indemnity offered to insured by insurers is inadequate since insurers have not provided any plausible explanation for reducing the claim amount from Surveyors assessment of Rs.16,98,916/- to Rs.12,61,018/-.
In pr.5.2.2 the insurers have deducted audited recovery of Rs.2,10,731/- for which also no explanation is provided by the insurers as to on what count the recovery was made.
In pr.5.03 in case of plant and machinery sufficient data was available for concluding an assessment and that it appeared that previous Surveyors were not able to conclude the assessment because of some constraint on their side. The previous Surveyors have intimated the insurers in their preliminary report itself that loss would be of order of Rs.300 lakhs.
In such cases joint Surveyors were required to be appointed as per the practice.
In pr.5.05 it is stated that although the joint Surveyors could conclude the flood claim, one of the Surveyors of the same team could not conclude the claim for loss of stock due to fire, where identical set of data is required to examine for both the claims.
In pr. 5.06 it is stated that they have given computation of loss provided by the insured to the Surveyors (previous) based on the data they had already submitted for assessment of loss due to flood. In such cases, insurers could have directed the Surveyors to use the same set of data for concluding the loss to stock due to fire as well.
In pr.5.07, they have stated that the insureds attempt of providing an alternate assessment by the insurers by not providing a copy of the report of assessment of flood claim by the joint Surveyors.
From the aforesaid reports and the conduct of the previous Surveyors as well as that of the Officers of the Insurance Company, it is apparent that for some unknown reasons the Insurance Company avoided to get proper assessment of the loss suffered by the Complainant. In this set of circumstances there is no alternative but to accept the report submitted by Mr. Bhaskar Joshi. Hence, we direct the Insurance Company to pay to the Complainant the following amounts as assessed by Mr. Bhaskar Joshi.
(i) for loss of stocks : Rs.
1,54,13,103/-; and,
(ii) for the loss of plant and machinery: Rs.1,29,26,505.68,
(iii) Since the complainant has accepted the amount of Rs.10,50,287/- for the loss of building, without any protest, we are not granting any further amount on the said count.
In the result, the complaint is allowed.
The Insurance Company is directed to pay in all Rs.2,83,39,608/-. This is also in conformity with the rough estimate of M/s. Mehta & Padamsey Pvt. Ltd. in its interim report that the loss would be to the tune of Rs. 300 lakhs.
In the result, the complaint is allowed. The Insurance Company is directed to pay the sum of Rs.2,83,39,608/- with interest at the rate of 10% p.a. from six months after the date of the fire., i.e. from 1.6.1989 till the date of payment. Insurance Company is directed to pay costs of Rs.50,000/- to the Complainant.
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.J. ( M.B.SHAH ) PRESIENT Sd/-
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( P.D. SHENOY ) MEMBER