State Consumer Disputes Redressal Commission
M/S Sanginita Chemicals Ltd vs The New India Ass Co Ltd on 11 September, 2023
Details DD MM YYYY
Date of Judgment 11 09 2023
Date of filing 31 03 2016
Duration 11 05 07
IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION
STATE OF GUJARAT
COURT NO.4
Complaint no. 39 of 2016
COMPLAINANT: Sanginita Chemical Limited
Address: 301 Shalin Complex,
Behind Meghmalhar, Sector 11,
Gandhinagar-382010
Insured Premises:
Plot No. 1133 Phase IV, Chhatral GIDC,
Tal - Kalol, Dist - Gandhinagar
VS
RESPONDENT: The New India Assurance Co. Ltd
Address: Plot No. 318, Near Dena Bank,
Over Avkar Restaurant, Near GH 4, Sector 16,
Gandhinagar
CORUM: Mr. R.N. Mehta, Presiding Member
Ms. P. R. Shah, Member Appearance: Mr.R.U. Nahar Advocate for Complainant Mr. Ajay R. Mehta Advocate for the Respondent RNM cc392016 Page 1 of 24 By Mr. R.N. Mehta, Presiding Member [1]. Every repudiation of the insurance contract is a subject matter of consumer dispute or not, is to be adjudicated in this complaint. The complainant in this case, has prayed for the relief as under:
"a.YOUR LORDSHIPS may kindly to admit and allow the present consumer complaint.
b. YOUR LORDSHIPS may kindly direct the Respondent insurance company to allow the claim of Rs. 65, 61,374/- with 12% interest from date of claim.
c. YOUR LORDSHIPS kindly imposed heavy cost of Rs. 1,00,000/- on the respondent insurance company for deficiency in service and cost of Rs. 1,00,000/- for physical and mental agony caused to complainant and levy cost of litigation of Rs. 50,000/-, d. YOUR LORDSHIPS may kindly order the insurance company to pay the survey fees incurred by the insured to appoint a private surveyor."
It is the case of the complainant that Sanginita Chemical Ltd is a company incorporated under the Company Act, 1956 and had availed an insurance policy for indemnification of stock, stock in process, building, plant and machinery etc. under the Standard Fire and Special Perils Policy, for the period from 2013 to 2014. It is averred in the complaint that during the subsistence of the policy, the factory premises had undergonedamage due to major flood situation in surrounding area and stock material, plant and machinery and the factory building sustained a hugedamage. According to the complainant, the claim was put up before the Insurance Company.However, the said insurance claim was repudiated by the Insurance Company and therefore, the complainant alleged deficiency in service and the unfair trade practice on the part of opponent insurer.
[2]. The complainant states that there were two different policies, one for stock and another for building FFF, plant and machinery. The RNM cc392016 Page 2 of 24 policy for the stock was in operation for the period from 24/04/2014 to 23/04/2015, whereas, the policy for the building and plant and machinery was in operation for the period from 08/07/2014 to 07/07/2015. The alleged loss occurred during night intervening between29/07/2014 and 30/07/2014. The complainant states that the insurance coverage for building Rs. 3,87,00,000/-, Plant & Machinery insured for Rs. 2,79,00,000/-, Furniture, Fixture and Fittings insured for Rs. 10,00,000/- and stock was insured for Rs. 18,00,00,000/-.
[3]. The complainant company is doing business of chemical manufacturing and enjoying finance facilities of bank and therefore, to cover the risk of insurance, Standard Fire and Special Perils Policy was purchased. According to the complainant, since many years, policies were taken and were renewed periodically but there was no claim under the contract of insurance. On or around 30/07/2014, there was major rain fall in Chhatral, Tal - Kalol, Dist - Gandhinagar and its surrounding areas. Since the complainant insured's premises located at Plot No. 1133 Phase IV, Chhatral GIDC, Tal - Kalol, Dist - Gandhinagar also was under the water logging for 3-4 days. The complainant states that because of the inundation of water in the surrounded area, it was practically impossible for the insured to reach the premises. The complainant had taken photographs, which were submitted to the surveyor. The accumulation of water was too much and it remained there for couple of days and the water level was found between 18" to 36" in the factory premises. When the Insurance Company was intimated about the loss, the opponent Insurance Company deputed surveyor Ms. A.M. Patel ISLA Pvt. Ltd. The surveyor made few visits to the insured premises. It was observed by the complainant during the surveyor's visits that the surveyor had negative bias RNM cc392016 Page 3 of 24 from the beginning and he was asking for documents, one after another just to show that he is making thorough assessment of the loss. He had asked for certain documents, which were totally irrelevant for the assessment purpose. The complainant also stated that it came to the knowledge of complainant that the surveyor had submitted his report on or around 12/01/2015.It is also stated therein that the surveyor had taken the opinion of one chemical engineer and based on said chemical engineer's report, the surveyor had decided the admissibility of claim and finally recommended for repudiation of the claim, though it was not within the scope of his duty. Based on recommendation of the surveyor, the Insurance Company then applied the provisions of general conditions No. 1 and 8 and thereafter, intimated the complainant about the repudiation of claim vide letter dated 04/02/2015.
[4]. From the said repudiation letter, it came to know that the surveyor gave a false ground for the repudiation of claim for the damage totube well saying it was not shown during his first visit. The surveyor also falsely observed that electrical motors were in working condition. The surveyor wrongly observed that there was no loss to the chemicals in the factory and whatever loss that was shown to him was towards the "sweeping waste/waste materials." The surveyor has stated that the complainant had incorrectly reported that stock in process was Nil, whereas, in fact stock in process was found for more than Rs. 45,52,050/-. Thus, the insurer has repudiated the claims on flimsy recommendation of surveyor. The complainant thereafter, lodged their objection and gave explanation by letter dated 04/09/2015 but even thereafter, the Insurance Company did not change its decision and reiterated repudiation of the claim. The complainant is left with no option RNM cc392016 Page 4 of 24 and therefore, asked for reports of the surveyor through RTI application and it was replied with copy of surveyor report. The complainant stated that surveyor's attitude was totally biased and though the total loss was more than Rs. 80,00,000/-, but surveyor assessed loss only around Rs. 31,00,000/-! The surveyor took more than sufficient time and delayed the submission of report for no valid reasons. The complainant has thereafter, obtained a report from another independent surveyor, who gave his report and assessed the loss of Rs. 78,755/- towards the tube well and for stock Rs. 64,74,219/-. Thus, the surveyor appointed by insurer has intentionally tried to minimize the liability of loss payable to complainant. Therefore, the complainant has alleged that the surveyor indulged in Unfair Trade Practice. It is also further stated by complainant that the surveyor has wrongly discarded loss to the stock on the ground that loss caused to material was waste material. The surveyor also could have examined it from CENVET audit report what kind of material it was. Thus, according to the complainant, the claim was payable but the surveyor has wrongly recommended for the repudiation of claim. The complainant has produced on record authority to file complaint, insurance policies, copies of the surveyor's report, copy of paper cuttings, copies of photographs and affidavit of Mr. B.G. Bhatt, who had carried out survey at the instance of the complainant. The complainant has also produced on record an affidavit of a person, who repaired the tube wells. The complainant also produced the copies of correspondence exchanged between opponent insurer, complainant, and surveyors.
[5]. This Commission vide its order dated 04/04/2016, ordered to admit the complaint for adjudication and notice was sent to the opponent. On receipt of notice, the opponent insurer appeared RNM cc392016 Page 5 of 24 through advocate and filed written statement contending therein that the insurance Company has repudiated claim after consideration and perusing all the documents on record and therefore, there was no question of "Deficiency" in "Service" on the part of opponent. It was contended that the complaint is not tenable and required to be dismissed as there are innumerable disputed questions of facts and to deal with such complicated questions of law and fact summery jurisdiction of this Commission is not competent. It is also further submitted that the adjudication of the complaint requires voluminous oral evidences. The technically experts are required to be examined on oath and therefore, this Commission should not exercise its jurisdiction in the matter. Insurance Company also submitted that complainant is also guilty of misrepresenting when it was claimed waste material lying in its factory shown as finished product and falsely misrepresented through a false declaration that there was no stock in process. This statement was wrong because complainant's own books of account established that the stock in process was around Rs. 45,52,050/-. Thus, Insurance Company alleged that entire claim of the complainant based on falsehood with the apparent intent to extort money by adopting false and fraudulent means, which is violating of the terms and conditions of the insurance policy. Therefore, the Insurance Company has applied the conditions No. 1 and 8 to repudiate the claim. It is also further submitted by the Insurance Company that the company had deputed surveyor as soon as the intimation was received from the complainant. The surveyor has visited the site immediately thereafter, and obtained necessary documents from the complainant for the assessment of loss. The surveyor after studying the documents apprehended that the material, which was shown as damaged finished product is not finished product as RNM cc392016 Page 6 of 24 such and therefore required to be tested through competent chemical laboratory. The surveyor had sought assistance from an expert who also doubted and with the expert's advice, sent it for laboratory testing. The insurance Company submitted that the samples were collected by surveyor in presence of the complainant's representative and were sent to the laboratory. After receipt of test reports, discussions were arranged between the surveyor and the complainant's representative and thereafter, to confirm chemical properties, the samples were tested. On receipt of the reports from the competent laboratory, the expert opined that the material shown as the finished product is not the finished product but waste material and therefore, the surveyor has submitted his report recommending therein that complainant has tried to mislead the Insurance Company. The Insurance Company thereafter, also formed Committee of Senior officers and discussed various aspects of the surveyor's report, considered complainant's representations, policy conditions and then concluded that claim is not payable. The complainant was informed vide letter dated 04/02/2015 that the claim is not payable. The Insurance Company has placed on record certified copies of the insurance policies and the affidavit in support of the written statement.
[6]. The complainant has filed formal rejoinder affidavit, denying the fact that there was a misrepresentation as alleged by the opponent insurer. During the pendency of the complaint, an application was moved for amendment in the cause title as the name of the complainant company has been changed from M/s Sanginita Chemical Private Limited to Sanginita Chemicals Limited and produce the certificate issued by the Registrar of Companies. Accordingly, this Commission vide its order dated 14/10/2021, granted permission to amend cause title in the complaint and the RNM cc392016 Page 7 of 24 matter was than posted for argument since neither party wanted to lead any oral evidence in this regard.
[7]. We have heard Mr. Rakesh Nahar for the complainant and Mr. Ajay R. Mehta for the opponent Insurance Company. Mr. Nahar submitted that the complainant's company had insurance policies with the opponent is not in dispute. It is also not in dispute that the loss claimed by the complainant has occurred during the subsistence of the policy. It is also not in dispute that the Insurance Company was informed about the loss as soon as it came to the knowledge of complainant and the complainant has submitted all detailed information that was asked by the opponent's surveyor. According to Mr. Nahar, the policy covers the risk of flood and inundation and the claim of the complainant is based upon the inundation (accumulation of water) that took place during 31/07/2014. The complainant produced on record various newspaper reports which indicate that entire area of the GIDC where the complainant's premise is located was under heavy accumulation of water in the areas. The photographs produced on record, makes it further clear that there was water level around 3feet. The surveyor visited the factory premises on 5th August and by that time water level reduced. To avoid further damage, obviously the complainant insured also had to clean the factory premises. This being a common and natural action on the part of insured, However, insurer appointed surveyor reported as if insured did it for other intentions and reported that when he visited the factory, it was clean and factory working had already started. This proves that surveyor had negative mind. Mr. Nahar also submitted that the complainant has rightly alleged in the complaint that the attitude of the surveyor was not proper, he was asking for documents one after another and never asked all the RNM cc392016 Page 8 of 24 documents at a stroke, which also could have minimized the period of survey. The surveyor has taken more than sufficient time which is not standard manner of performance particularly when the IRDA Regulation suggests that the survey should be complete within the limited time. This surveyor was asking for documents in phase vise manner. This indicates that the surveyor was not interested to expedite process of survey. Mr. Nahar further submitted that though total loss more than Rs. 80,00,000/-, the surveyor assessed it to the extent of Rs. 31,00,000/-only. If this is considered than it is clear that the surveyor was having bias mind and therefore, the report of the surveyor cannot be believed. The surveyor raised several issues regarding quality of the material damaged and the explanations were given through various letters to the surveyor, but surveyor has wrongly reported in its report that no satisfactory explanations were given by the complainant. Mr. Nahar submits that when the entire area was under
accumulation of water from where the rainy water entered into the premise that is not known and spoiled the stock of the complainant. Obviously, when the stock suffered damage must have lost its original quality and might not have retained the chemical property of finished product and therefore, the testing reports also might not have shown as quality of finished product and it was considered as waste material. Mr. Nahar also submitted that the complainant's company is doing business on a large scale and therefore subjected to excise and reports of excise audit were submitted to the surveyor. None of these documents shows any stock of waste material was existed in factory premises and therefore, the surveyor was expected to have considered all these documentary evidences, but he simply relied upon the testing results and opinion of expert who certified that it is a waste material. Thus, surveyor has not taken into consideration the then RNM cc392016 Page 9 of 24 conditions under which the loss has occurred and recommended for repudiation of claim.
[8]. Mr. Anmol Mehta, Advocate for the opposite party submitted that in fact, there is no case of deficiency in service on the part of opponent Insurance Company. The complainant intimated the loss to the company and very next day, surveyor appointed and was asked to visit premises. The surveyor visited the premises, to assess the loss obtained documentary evidence from the complainant, analyzed it. When he found that subject matter requires technical study of material alleged to have lost, took assistance from an expert and based on report of the expert concluded that complainant have not stated true facts and therefore, recommended for the repudiation of the claim. The Insurance Company, on receipt of the report from the surveyor, studied the survey report, considered representations made by the complainant and when it found that there is substance in the recommendation made by the surveyor, finally repudiated the insurance claim. Under such circumstances, it cannot be said that surveyor appointed by insurer acted arbitrarily or in a manner which is prejudicial to the interest of the complainant's claim. The advocate further submitted that it is the right of insurer under the contract of insurance that if fraudulent representation or misrepresentation regarding actual cause of loss or for the extent of the loss, the Insurance Company can disown the liability under the contract of insurance. The opponent Insurance Company has exercised its right on the basis of the concrete evidence and therefore, it cannot be termed as "Deficiency in Service" by any stretch of imagination.
[9]. The advocate further submitted that it is well known to all that insurance is a contract of "Uberrima Fides," which is a Latin RNM cc392016 Page 10 of 24 phrase meaning thereof Utmost Good Faith. Uberrima Fides describes that the parties to the contract shall have to deal with all matters in good faith making a full declaration of all material facts within their knowledge and such obligation is from the beginning of the contract and to continue till the end of contract. The parties are required to confirm to a higher degree of good faith then in the general law of contract. In a sense, insurance is a special kind of contract when it devised of risk transference stands on a separate basis. The non-disclosure of a material fact by the assured whether fraudulent or innocent, has the same effect of avoiding the contract. The stringent duty is imposed on the assured to provide all the material facts that might prejudiced the right of the insured. It is the duty of the assured to disclose all material facts within its knowledge. In the instant case, though the complainants are within the knowledge of the fact that the loss, the complainant sustained is not to the extent of its claim put before the Insurance Company. It was well within the knowledge of the insured that the material, which was shown as the finished product was not as such finished product or a fresh product. It was nothing but a waste material and though, the insured has tried to avail the benefits of calamities that has taken place during the period of insurance. Thus, the insured has tried to convert "calamities" into the "prosperity" which is not permissible under the contract of insurance. Therefore, the surveyor has rightly recommended for the repudiation of the claim.
[10]. Mr. Mehta also submitted that appointment of second surveyor from the complainant was never brought to the notice of the insured at initial point of time. Neither the Insurance Company nor surveyor was informed about the visit of the said surveyor Mr. B.G. Bhatt and therefore what was observed by the second surveyor and RNM cc392016 Page 11 of 24 what was shown to him by the complainant is not known to the Insurance Company. It is interesting to note that the said surveyor Mr. B.G. Bhatt has not offered any comment or gave any explanation in his report about the observations made by the statutory surveyor appointed by the Insurance Company. The said surveyor was well within the knowledge of the fact that the surveyor appointed by the opponent Insurance Company has recommended the claim for repudiation. In such a case, it was expected from the said surveyor to give plausible explanations as to how reasoning of statutory surveyor were wrong or false or the mistakes committed by the said statutory surveyor appointed by the opponent Insurance Company. In absence of any such explanation on the part of the second surveyor, the report of the statutory surveyor cannot be ignored lightly. Mr. Mehta submitted that the surveyor appointed by the company has given satisfactory explanation for the time consumed during the assessment of loss. Therefore, there is no reason to say that the claim assessment was intentionally delayed by the surveyor.
[11]. Mr. Mehta submitted that the surveyor A.M. Patel ISLA Pvt. Ltd explained in detail in his report in paragraph 3 and its sub paragraphs, action taken by the surveyor for assessment of loss. So far, the valuation of stock is concerned, Mr. Mehta submitted that surveyor reported paragraph 4, shows how he worked it out and how the valuation has been taken by the surveyor. The method adopted by the surveyor is generally acceptable in commerce and therefore, it cannot be said arbitrary on the part of insurer. Thus, Mr. Mehta has relied upon the recommendation made by the surveyor and submitted that the Insurance Company has taken every step-in line with the Standard Practice of Assessment of Claim and therefore, it cannot be termed as RNM cc392016 Page 12 of 24 deficiency in service. Mr. Mehta has submitted series of judgments of the National Commission as well as of the Supreme Court. Relying upon the said judgments, Mr. Mehta submitted that since the complainant has not come with clean hands and has tried to misrepresent before the Insurance Company about the extent of loss suffered by it, it does not deserve any sympathy, in a summery trial. The complaint is required to be dismissed and this Commission should decline to exercise the summery jurisdiction in this case.
[12]. We have heard both the parties and from the rival submissions, we are of the opinion that the case is in narrow compass. Whether the complainant has in fact misrepresented as to the extent of loss suffered by it or not is a pure question of facts. It is true that the insurance contract is a contract of Utmost Good Faith and therefore, both parties are required to observe complete good faith during the entire contract period. Either the complainant or the insurer if breached the good faith, the other party has right to remedy. In case of Manmohan Nanda Vs. United India Assurance Co. Ltd (Civil Appeal No. 8386 of 2015 on 06/12/21)the Hon'ble Supreme Court observed that the duty of insured to observe Utmost Good Faith is enforced by requiring him to respond to seek all relevant information in a completely true and correct facts. In the instant case, first issue raised by opponent Insurance Company relates to stock in process that was exists on the date of loss. The Insurance Company relied upon letter of complainant dated 14/11/2014 addressed to the surveyor (at page 141 on record) reads as under:
"In reference to above the stock - statement of Dt. 31.07.2014 having the detail of Raw Material is submitted herewith. The Detail of finished goods is already submitted to you. The Detail of stock under process is Nil."RNM cc392016 Page 13 of 24
In the survey report, at para 4.2 under the heading "Valuation of the Stocks," surveyor has mentioned as under:
"4.2 Valuation of the Stock 4.2.1 The insured had submitted the Audit Report for F.Y. 2013-14, Provisional Trading A/c & Balance Sheet, Purchase & Sales Ledger, Purchase & Sales Bills, Excise Registers, etc. for 01/04/2014 to 30/07/2014. The same are taken on our record.
The abstract from the Trading A/cs is as under:
Description 2013-14 01/01/2014 to 30/7/2014
Opening Stocks 130324928.00 146313521.35
Purchases 1123430319.00 319367515.00
Sales 1189870076.00 347727015.00
Expenses 23643270.00 5502449.00
Closing Stocks 146313521.00 14,95,73,869.89
Thus, the closing stocks of Raw Materials, Finished Goods & SSP, etc. as on DOL is found totally ₹14,95,73,869.89.
The copy of the Trading A/c is attached herewith as an Annx. K1 & K2.
4.2.2 The insured had not submitted the details of the stocks under process.
The insured had confirmed that there are eight furnaces to manufacture the finished goods as required by them from the copper Raw Materials.
The copy of the insured's letter dtd. 24/09/2014 confirming as above is attached herewith as Annxs.L1 & L2 The insured had confirmed the running batches during the claimed incident and the same were stopped due to non-availability of the Electric Power as under:
a) Furnaces 2 Nos. Cuprous Chloride &/or Copper Oxide
b) Furnaces 1 Batch Copper Sulphate
c) Furnaces 1 Batch Cupric Chloride Total 4 Batches In the furnaces The copy of the insured's letter dtd. NIL confirming stocks in process as above is attached herewith as an Annx. M. RNM cc392016 Page 14 of 24 The insured had also confirmed in their letter dtd. 24/09/2014 that the capacity of each furnace is @ 1500 to 2000 Kgs. of copper consumption and also confirmed that the value of the Batch ₹9,00,000/- for the consumption of 1650 Kgs. copper as claimed by the insured. For the same, we have ascertained & corrected from the insured's A/c as ₹7,58,675.00 for the value of one Batch Thus the total value of the 4 Batch under Process will be ₹30,34,700/- considering only the batch of Cuprous Chloride (not considering any batch of Copper Oxide).
We considered the unaffected stocks of atleast 2 Batches under process inthe other stages like centrifuges, etc. i.e. of 15,17,350/-
Hence total stocks under process which was not affected at all is @ ₹45,52,050/-, if we do not consider any materials under batch of CopperOxide, Nickel Chloride, Nickel Carbonate, Moly oxide, etc. Note: Thus the insured had misrepresented the claimed Qty. of waste material damaged due to inundation of water stating that there was no any stocks under process vide their letter dtd. 14/11/2014.
Please refer the insured's letter dtd. 14/11/2014 as an Annx. P. The insured had not claimed for any damages to the stocks in process under the manufacturing shed (the floor level of the same is lower than the floor level of the storage Otta) and hence some stocks must be not damaged in the running equipments &/or remaining stocks must be shifted at the safe place.
4.2.3 As required by us for ascertaining the detailed value of the closing stocks as onDOL, the insured had submitted us the details of the closing stocks of the undamaged Raw Materials as ₹11,83,46,229.06 & Finished Goods as on 31/07/2014 as ₹2,60,11,495.83 The copies of the insured's letter dtd. 14/11/2014 along with stock statements ofunaffected FG & RM are attached herewith as Annx P and Annxs. N1 & N2.
Thus the total unaffected closing stocks of R.M. & Finished Goods as on31/07/2014 is ₹14,43,57,724.89 i.e. after sales done on dt. 31/07/2014.
RNM cc392016 Page 15 of 24The insured had further clarified in their email dtd. 15/11/2014 stating the sales of Cuprous Chloride of ₹52,16,145/-on dt. 31/07/2014.
The copy of the insured's email dtd. 15/11/2014 is attached herewith as Annx. O. Thus the total value of unaffected stocks as on dt. 30/07/2014 is ₹14,43,57,724.89+ ₹52,16,145/- =₹14,95,73,869.89 which is equal to closing stocks mentioned in Trading A/c as on dt. 30/07/2014 only for unaffected R.M. & unaffected Finished Goods.
Thus accordingly to trading A/c submitted by the insured, there is no any affected stocks as on DOL 30/07/2014 It also proves that insured had not considered the value of the Stocks under Process ₹45,52,050/- as on Date of Loss as confirmed by the insured vide their email dtd. 15/11/2014.
The stocks under process was also unaffected as confirmed by insured vide their letter dtd. NIL attached as an Annx. M. So the total value of stocks as on DOL of the unaffected stocks R.M., F.G. & S.S.P. @ ₹15,41,25,919.89"
The complainant has in para 9 alleged that the insurer has also incorrectly stated sock in process is Nil as against the stock in process Rs. 45,52,050/-. Now, this allegation of complainant is contrary to his own letter which is referred by surveyor in his report and it has bearing for the total valuation of stock damaged in the flood. The surveyor has thus considered it properly and elaborately explained how he has arrived at the valuation of the stock. To counter this, the complainant has lead evidence of B.G. Bhatt and Company as an expert opinion. Now, in his report, Mr. B.G. Bhatt has not offered any adverse comment against the method of valuation or the mode of assessment made by statutory surveyor. In such circumstances, it would be highly improper to RNM cc392016 Page 16 of 24 discard, at this stage, the method adopted by the opponent statutory surveyor or to hold it unjustified.
[13]. In Khatema Fibers Limited Vs. New India Assurance Insurance Company Limited (V (2021) SLT 617), it has been held by the Hon'ble Supreme Court as under:
"38. A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor's report to forensic examination of its anatomy, just as a Civil Court could do. Once it is found that there was no inadequacy in the quantity, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop."
Therefore, we are of the opinion that there is no sufficient material to discard observation made by statutory surveyor. Even otherwise also in Ramesh Chandra Agrawal Vs. Regency Hospital Ltd (2009 4 CPJ 27 (Sc)) the Supreme Court had an occasion to explain how expert opinion should be considered. It is observed that the law of evidence is designed to ensure that the Court consider only that evidence which will enable it to reach a reliable conclusion. The first and foremost requirement for expert evidence to be admissible is that it is necessary to hear the expert evidence. The test is that the matter is outside the knowledge and experience of the lay person. Thus, there is a need to hear an expert opinion where there is a technical issue to be settled. The scientific question involved is assumed to be not within the Court's knowledge. Thus, cases where the science involved, is higher specialized and perhaps, even esoteric, the central role of expert cannot be disputed. If we read the provision under section 45 of the Evidence Act, which makes opinion of expert's admissible lays RNM cc392016 Page 17 of 24 down, that, when the Court has to form an opinion upon a point of foreign law, or science, or art, or as to identity or handwriting or finger impressions, the opinions upon that point, persons especially skilled in such foreign law, science, or art, or in questions as to identity of handwriting, or finger impressions are relevant facts. Therefore, in order to bring the evidence, the evidence of a witness as that of an expert, it has to be shown that he has made a special study of a subject or acquired a special experience therein or in other words that he is skilled and has adequate knowledge of the subject.
[14]. In the instant case, there are two independent qualified surveyors.
One is statutory that is appointed by the Insurance Company whereas the complainant has appointed Mr. B.G. Bhatt and Company. When the statutory surveyor has assessed the loss but the complainant is not satisfied with his assessment and therefore appointed another qualified surveyor of its own then in that case, it is obligatory on the part of newly appointed surveyor to make it clear how the assessment made by the statutory surveyor was incorrect or arbitrary or not in accordance with the standard method of assessment of loss and therefore not acceptable. The said B G Bhatt not pointed out any error stated to have been committed by statutory surveyor or not commented which method was not proper and not in line with the standard method of assessment. We are of the opinion that the real function of an expert is to put before the Court all the materials, together with the reasons which induced him to come to the conclusion, so that the Court, although not an expert, may form its own judgment by its own observation of those materials. Mere assertion without mentioning the data or basis is not evidence, even if it comes from expert. Where the experts give no real data in support of their RNM cc392016 Page 18 of 24 opinion, the evidence even though admissible, may be excluded from the consideration as affording no assistance in arriving at the correct value. Therefore, at this stage, we are unable to accept the opinion of an expert i.e., B.G. Bhatt & Co. to hold that the loss was to the extent of assessment made by him. So far, the claims pertaining to the tube well, the statutory surveyor has observed that on 05/08/2014, when he visited premises, he was not shown the loss or damage to the tube well. It seems to us that it might be possible because tube well was working below the ground may not have immediately came to know by the complainant and it was brought to their knowledge subsequently. However, we also believe that the inundation of water or accumulation of water may not affect adversely to the tube well which works below the ground and therefore, there is valid reason to discard the said loss. The complainant has lead evidence in the form of expert opinion of a person who repaired the tube well but considering the bills produced and the qualification of the said person, we are not convinced that he can be treated as an expert in the subject. He may have worked for many years in this field but neither he possesses any technical qualification nor he had work experience under any qualified technician and therefore he cannot be considered as an expert.
[15]. The repudiation letter issued by the opponent Insurance Company is placed on record at page 106, which read as under:
"M/S. Sanginita Chemicals Pvt.Ltd 301,Shalin Complex, Opp: Vijay Petrol Pump, Sector-11, Gandhinagar Gujarat-382010.
Dear Sir, RNM cc392016 Page 19 of 24 Ref: Your Flood claim under Pol.no. 212100/11/14/01/00000263, Date of Loss: 29/07/2014 We refer to your claim intimation email dt. 04/08/2014 regarding the loss/damage to your chemical stocks and tube-well etc. The surveyor M/S.A.M.Patel I.S.LA Pvt.Ltd was appointed to survey and assess the loss. Now we have received his survey report and have observed the following:
1) The Electric motor claimed by the insured was not shown to the surveyor on it's foundation at the time of their visit. Moreover during the surveyor's visit all the electrical motors were in working condition.
2) The electric power supply was stopped before inundation of the rain water and hence there is no question of short-circuit.
3) During the visit of the surveyor on 5/8/2014 the insured had not shown any loss/ damage to the Tube well. Hence the claim of tube-
well is not justifiable and thus damage to the tube-well is not related to the above said loss.
4) As per the expert chemical engineer the insured had claimed only for the sweeping waste/ waste materials which were found wet only by the rain water.
5) Moreover these waste materials are totally insoluble in the water and there will be no any value loss to these waste materials even after water might have affected these chemical stocks.
6) The insured has claimed for the five chemicals as finished goods. As per the expert opinion of chemical engineer the said finished goods contains very low basic metals. But it contained very high other soluble/ insoluble materials.
7) In the sealed customary packing how the soluble/ insoluble materials got into the bags having inner / outer liners.
8) Thus from the point it has been proved that the claim lodged by the insured is Not for the finished products but they have mis- represented us by claiming for the damaged waste/sweeping waste including soluble and insoluble external impurities collected duting and/or after the claimed incident and/or during monsoon season.
9) Considering the test of CRDC the expert opinion of independent chemical Engineer it is confirmed by the chemical expert that no raw- materials, finished goods and SSP goods were affected by the above said event.
10) The insured had falsely declared in the accounts that the stocks in process is NIL as against stocks in process was found more than Rs.45,52,050/-
Thus looking to the above the insured had misrepresented the waste materials lying in their factory as claimed finished goods. Moreover the insured had misrepresented by putting a false declaration that there were RNM cc392016 Page 20 of 24 no stock-in-process where as per the books of account it showed Rs.45,52,050/-
In view of the above the insured had breached the policy's General condition no. 1 and condition no. 8 which reads as under:
Condition no.1: "The policy shall be voidable in the event of mis- representation. mis-description or non-disclosure of any material particulars".
Condition. No 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 device are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the willful act, or with the connivance of the insured, all benefits under this policy shall be forfeited".
Under the above circumstances, the company's liability does not exist and hence competent authority has repudiated the above said claim, which please note."
The insured has claimed for 5 chemicals as finished goods. The surveyor appointed by the Insurance Company has obtained the report of expert and that was discussed with the complainant also. When there was some doubt about the reports, the samples were taken and sent for the further detail analysis and the reports of the analysis have been placed on record from page No. 115 to 138. Considering all these reports, the expert opined as under:
"The Claimed products are not finished products as claimed by the party but damaged waste/sweeping waste including soluble and insoluble external impurities collected during and/or after the claimed incident and/or during the monsoon season"
The complainant is under obligation to prove that the reports of the said expert are not admissible as evidence in this matter. The report of the said expert is also produced by the complainant along with the complaint. Therefore, it is for the complainant to disprove the contents thereof. The surveyor Mr. B.G. Bhatt and Company did not utter a word about the correctness of the analysis made by RNM cc392016 Page 21 of 24 the laboratories or the conclusions drawn there from by an expert. Under these circumstances, we are left with no option but to accept that there is prima facie proof for the Insurance Company to come to a conclusion that material that was shown as the finished product may not be true and the complainant had suffered loss is not admissible to that extent. The complainant ought to have produced on record the documentary evidence to disprove the conclusions drawn by the expert. The complainant has not produced on record any literature on chemical to prove that the accumulation of water might have affected inbuilt property of the chemicals. Thus, the complainant has failed to prove on record on its part that the deficiency in the service on the part of opponent Insurance Company. The complainant may have right under the regular civil laws through regular Civil trial but not in a summary procedure like Consumer remedy where complainant to prove deficiency. From the aforesaid repudiation letter, it is clear that the Insurance Company has considered all aspect that was represented by complainant and even thereafter the claim is not found admissible and therefore relied upon recommendation made by the surveyor.
[16]. This is more important because under the provisions of the Consumer Protection Act, question is whether the services of the opponent can be said deficient or not. The word "deficiency" is defined in the Act and if the claim is not falling within those parameters of scope of deficiency, obviously, the claim is not entertainable before the Consumer Court. It this in context it is made clear that we do not know whether the standard method has been adopted by the surveyor or not but burden is upon the complainant to prove that the surveyor has acted arbitrarily or there is any element of adhocism. In absence of any such proof, we RNM cc392016 Page 22 of 24 are not able to believe that the complainant has discharge its duty to prove that the services rendered by the insurer were deficient in nature. At the cost of reiteration, this is not fit case where deficiency in service is established. In Ranveet Singh Bagga Vs M/s. KLM Royal Dutch Airlines (III (1999) CPJ 28 (SC)) where the Hon'ble Supreme Court has stated as under:
"The deficiency in service cannot be alleged without attributing fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be performed by a person in pursuance of a contract or otherwise in relation to any service. The burden of proving the deficiency in service is upon the person who alleges it. The complainant has, on facts, been found to have not established any wilful fault, imperfection, shortcoming or inadequacy in the service of the respondent. The deficiency in service has to be distinguished from the tortuous acts of the respondent. In the absence of deficiency in service the aggrieved person may have a remedy under the common law to file a suit for damages but cannot insist for grant of relief under the Act for the alleged acts of commission and omission attributable to the respondent which otherwise do not amount to deficiency in service. In case of bona fide disputes no wilful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance in the service can be informed. If on facts it is found that the person or authority rendering service had taken all precautions and considered all relevant facts and circumstances in the course of the transaction and that their action or the final decision was in good faith, it cannot be said that there had been any deficiency in service. If the action of the respondent is found to be in good faith, there is no deficiency of service entitling the aggrieved person to claim relief under the Act. The rendering of deficient service has to be considered and decided in each case according to the fact of that case for which no hard and fast rule can be laid down. Inefficiency, lack of due care, absence of bona fide, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the service."
We are therefore, of the opinion that no element of deficiency in established and case deserves to be a complete failure. Therefore, following order is passed.
(ORDER) [1]. Complaint No. 39 of 2016 is hereby dismissed for want of sufficient evidence of deficiency in service.
RNM cc392016 Page 23 of 24[2]. There shall be no order as to cost.
[3]. The office is directed to supply the copy of this order to the parties to free of cost at earliest.
Pronounced today on 11thday of September, 2023.
Ms.P.R. Shah R.N. Mehta
Member Presiding Member
RNM cc392016 Page 24 of 24