National Consumer Disputes Redressal
Sri Venkateswara Syndicate vs Oriental Insurance Co. Ltd. And Anr. on 19 January, 2003
Equivalent citations: IV(2004)CPJ68(NC)
ORDER
Rajyalakshmi Rao, Member
1. The complainant is a registered partnership firm doing business in cotton. A fire accident took place in the godown of one Jay Bharat Traders leased by the complainant firm where his cotton stocks were stored at about 2.10 a.m. in the morning hours of 24.8.1999 and according to the complainant the loss was of Rs. 1.90 crores. It is not disputed that the cotton stocks in question was covered by 7 insurance policies issued by the O.P., Oriental Insurance Co. Ltd. for a total sum insured of Rs. 1.98 crores during the period when the fire accident took place. An FIR was filed with the police on the day of the fire itself and a claim was made on the Insurance Company.
2. It is alleged that the Insurance Company appointed an Insurance Surveyor, K. Shivaprasad, who gave a report on 9.9.1999 assessing the loss at Rs. 1,73,92,310/-. Two more Surveyors, Mehta and Padamsey Surveyors Pvt. Ltd., Chennai and Eaypens from New Delhi who carried out a joint inspection gave a joint report on 15.11.1999 assessing the loss at Rs. 1,74,82,080/-. Yet another Investigator Shri P.N. Panchal was appointed on 17.5.2000 who in his report of 6.9.2000 also came to a conclusion that there was an accidental fire and the quantity of cotton lost is Rs. 1,350/- F.P. cotton bales and 88 boras of lint i.e., as claimed by the complainant. In spite of these and various reminders to settle the claim, the O.P. did not respond besides saying merely that the matter is under consideration. After failing to receive a reply to a legal notice dated 6.3.2001, the complainant approached this Commission on 9.5.2001 seeking settlement of the insurance claim and certain other reliefs as mentioned in the complaint.
3. During the course of the proceedings, O.P.-1 repudiated the claim of the complainant vide its letter dated 2.8.2002 on three grounds as mentioned below:
(a) That at the material time there was several firms by the name of Sri Venkateshwara Syndicate or Sri Venkateshwara Syndicate Old or Sri Venkateshwara Syndicate New, operating at the same time and it has not been established by evidence that your firm is the one which is insured under the subject insurance policies.
(b) The locational identification of the premises of M/s. Jay Bharat Traders as per the rental agreement differ from the description given in the policy case diary. For this reason it has not been established that the fire which occurred did in fact take place at the insured location.
(c)You have claimed the loss in respect of 1350 fully pressed bales and 88 boras of lint. It has been ascertained that 275 bales belonging to you were sold by Shri Seshagirisa Syndicate without there being any record of your having sold those bales to them. Your claim to that extent has been deliberately inflated. Moreover during the month of August 1999 you have sold 548 boras of lint leaving only 3 boras. Your claim for 88 boras of lint, therefore, is also deliberately inflated.
4. In their written statement and at the time of hearing, the respondents took some additional pleas. An argument has been advanced that the insurance policy was actually issued to M/s. Union Bank of India A/c SVS Syndicate and it is argued that SVS Syndicate per se is not the insured. It is submitted that the policy, by this description covers the Banks interest, only in the property which has been mortgaged/pledged/hypothecated to the Bank. The words "Account SVS Syndicate" are merely descriptive in nature and do not place M/s. SBV Syndicate as an independent insured. It is further argued that the said insurance policy covers the property of M/s. SVS Syndicate only at location where the Bank has interest in the storage locations. The locations at which the stocks are hypothecated to Bank are indicated in para 3 of the Bank notice dated 22.5.2002 (Annexure R-1) to borrowers as given in P. 15 of written statement is given as under:
"That Nos. 1 to 3 of you who availed the loan also executed hypothecation agreement, hypothecating all the stocks situated in your working premises and godowns situated in Sri Srinivasa Cotton and Oil Mill, Ganapavaram, Sri Kalyanachakravarty Cotton Pvt. Ltd., Nallapadu and Sri Laxmi Srinivasa Cotton Traders, Nallapadu."
It is, therefore, argued that the above description clearly indicates that the Bank had no interest in the cotton stocks stored at Jai Bharat Traders premises. The Bank, therefore, has no pecuniary interest in the stocks even if stored at those premises. They also argued that only the bankers could have, by production of loan agreement and other records, tendered evidence as to which of the above several firms bearing same/similar names are their borrowers. The complaint, it is argued, is thus bad for nonjoinder of necessary party i.e., the Bank.
5. It is further pleaded that the investigator of the respondents has been advised that the essential records of the said Union Bank of India are missing (according to paras 11 and 13 pg. 123 of affidavit) and that this is a clear attempt by interested parties to assist the complainant to set up a fraudulent claim against the insurer respondents. Issues relating to the actual quantum and value of stock lost in the fire have also been raised.
6. The important issues for decisions, therefore, are:
(i) Whether the complainant firm is the insured firm;
(ii) Whether the stock lying at Jay Prakash Trading are the stocks of the complainant firm and whether they are covered by the insurance?
(iii) Whether the complainant firm had insurable interest in the stocks in the light of the facts that the said insurance policy has been issued to M/s. UBI-A/C SBS Syndicate?
(iv) Whether UBI is a necessary party to the insurance?
(v) What is the quantum of loss?
7.1. The record brought on file clearly shows that the partnership deed registered on 16.10.1992 has two partners, T. Laxmi Kumari and N.V. Chalapati Rao. This firm has been referred to as SVS Syndicate (old). The new partnership deed in the same name SVS Syndicate was registered on 18.9.1997 when N.V. Chalapati Rao was replaced by one T.P. Krishna Rao. Two sons of T.P. Krishna Rao namely T. Ram Kalyan and T. Surya Raghavendra were also admitted for a share in the profits of partnership. The new reconstituted firm referred to sometimes as SVS Syndicate (old) took over the assets and liabilities of the old firm. It is stated on affidavit that the old SVS Syndicate continued its business only upto 31.3.1998. At the relevant time when the fire took place, UBI Bank as well as the respondent Insurance Company were dealing with this latter firm i.e., the one registered on 18.9.1997. Therefore, there is no doubt that the complainant firm is the insured firm.
The respondent tried to argue that both the firms, old and new continued to do business simultaneously, and further argued that it is not clear as to which firm is the insured firm. To prove that the old firm continued in business, they pointed out that the accounts show that the old firm owed to the new one amounts as follows: "
As on 31.3.1998 Rs. 1,34,82,663.96 As on 31.3.1999 Rs. 18,06,260.13 As on 31.3.2000 Rs. 17,96,184.13
Their argument is that the above shows the old firm also continued in business. We see no force in this. The complainant clearly explained that the old firm owes the amount with the new one which went on paying over a time as indicated above.
The argument of the respondents that one C.H. Sitaraman signed on a letter dated 24.8.1999 addressed to the respondents in his capacity as partner of the CVS Syndicate and this is yet a third company with the same name. We find no force in this argument also. The alleged letter of 24.8.1999 (Annexure R-6) is a brief letter written within hours after the fire accident informing the respondent company about the outbreak of the fire and Sitaraman appended his signature at the printed portion "partner, CVS Syndicate". The complainant satisfactorily explained that the said Sitaraman is only an employee of a company and not a partner. Further the actual insurance claim form is signed by the partner Mr. T.P. Krishna Rao.
7.2. As regards the identity of the place where the fire has taken place, there is no doubt that it has taken place in the premises of M/s. Jai Bharat Trading Co. As regards the question whether the stocks lying at the premises leased from M/s. Jai Bharat Traders were covered by the insurance none of the three independent investigators appointed by the O.P's. themselves raised any doubts or questions. It is an established fact that the complainant has been keeping his cotton stocks at the above premises right from 1993. A copy of the letter issued by the Union of Bank of India dated 17th August, 2002 (Annexure-19) clearly shows this. The complainant has further averred that in the past i.e., on 11th June, 1996, his cotton stocks stored at the very same premises namely M/s. Jai Bharat Traders were damaged due to fire and that the O.P. had settled the insurance claim preferred by the complainant without any demur (Annexure P-18). This has not been contradicted by the O.P. Further the insurance policy itself which is at page 69 (Annexure R-8) clearly indicates that the policy applies to the premises at M/s. Jai Bharat Traders, situated at Nallapadu Road, Ankireddypalem, Guntur-5. The complainant further argued that the owners of the building, M/s. Jai Bharat Traders had insured the building with the O.P. against risk of fire. While the complainant lodged a claim for the cotton Stocks lost there, M/s. Jai Bharat Traders had also simultaneously preferred a claim for the damages to the building caused by the fire on 24.8.1999. The O.P. paid the claim to M/s. Jai Bharat Traders without any demur but repudiated the claim for loss in the same premises. The complainant argues that this is a clear evidence of double standards being followed by the O.P. Insurance Co. We agree with the arguments of the complainant. The argument of the O.P. that the notice dated 22.5.2002 issued by the Union Bank of India to the complainant does not cover the stocks stored at premises of M/s. Jai Bharat Traders is irrelevant as the period referred to is much after the fire incident, and further since the policy itself in no uncertain terms covers the premises of M/s. Jai Bharat Traders.
7.3. The discrepancies regarding description of the boundaries of the said premises given in the rental agreement and the police case diary which has been relied upon by the O.Ps. are easily reconcilable. There is also no doubt that the stocks at Jai Bharat Traders premises are hypothecated to the Union Bank of India. The Bank Certificate dated 17.8.2002 clearly states so.
7.4. While it is true that the insurance policy is issued in the name of M/s. UBI-A/c SVS Syndicate, it is evident that the real insured is SVS Syndicate, operating through the Union Bank of India who have financed the operation of Insured Company. The fire insurance proposal form dated 15.7.1999 in Annexure R-8 was signed by the partner of the complainant firm. All information to the police and to the Insurance Company regarding the loss was furnished by the complainant and not by the Union Bank. The insurance claim form, claiming the loss was signed by the partner of the insured company and not by the Bank. As such Bank could only be treated as formal party; since the Bank would like to protect its financial interest first in case of any loss due to fire etc. the insurance was obtained in its name, so that any payments made by the Insurance Company would pass through the Bank A/c of SVS Company, so that the Bank can protect its interest. As regards the issue that the Bank should have been impleaded as essential party, it is clear that there is no dispute between the complainant and the Bank. There is, therefore, no need for the complainant to implead the Bank as a party. If the Insurance Company has any dispute or grievance against the Bank, it is for it to examine the Bank as a witness.
7.5. As regards the quantum of loss, we need to give weightage to the estimates made by various investigators appointed by the Insurance Company. The first three investigators assessed the loss at about the same figures i.e., the loss is of 1350 fully pressed bales of cotton and 88 boras of lint valued at about Rs. 1.73 to Rs: 1.74 crores. However, the Insurance Company having noticed that these investigators had not gone into the details of transactions and stocks in thorough manner, asked another Chartered Accountant, M/s. R. Srinivasan and Co. to specially ascertain the quantum of loss caused by the fire. M/s. R. Srinivasan and Co. submitted a "Accounts Verifications Report" on 22.11.2000 and assessed the loss at Rs. 1,05,00,817/-. They also furnished subsequent clarification on 22.12.2000, 22.1.2001 and 9.9.2002 pointing out the lacunae in the reports of the previous investigators.
7.6. Finally we would like to record that subsequent to the notice issued by this Commission, the opposite party remained absent and we directed to continue the proceedings ex parte. The O.P. thereafter filed an application to set aside the ex parte order and accordingly we directed restoration on payment of Rs. 5,000/- as costs. In the restoration order dated 8.4.2002, we directed the O.P. to file the reply within 4 weeks. However, the reply was filed on 6th August, 2002 i.e., after a delay of three months. Just 4 days before filing the reply, the opposite party by its letter dated 2.8.2002 repudiated the insurance claim of the complainant. Thus the repudiation was done 3 years after the claim was made. Further 3 Surveyors have given independent reports spread over a period of one year, assessing the loss ranging from Rs. 1,74,82,080/- to Rs. 1,73,92,310/-. Two of these Surveyors are from two places as distant as Chennai and New Delhi. There is no possibility of the complainant influencing so many Surveyors from different places. Even various reports relating to the period 22.11.2000 to 9.9.2002 given by auditors finally appointed by the Insurance Company to verify the claim have also assessed the loss at Rs. 1,05,00,817/-. The Supreme Court as well as this Commission have on various occasions taken a view that the Insurance Companies cannot discard the reports of various Surveyors and keep on appointing one after another Surveyors till the Insurance Company gets a favourable report. Finally the opposite parties themselves, while disputing their liability to pay, have however agreed that the loss is only Rs. 1,05,00,817/- and not Rs. 1.90 crores as claimed by the complainant.
7.7. Therefore, for the reasons recorded at paras 7.1 to 7.6 we are inclined to accept this figure of Rs. 1,05,00,817/- as the loss incurred due to fire, which needs to be reimbursed by the respondents. Allowing a reasonable time of three months from the date of final report of the loss assessed, the payment ought to have been made by 28.2.2001. With the above discussions we pass the following order.
The complaint is allowed and the respondents are directed to pay a sum of Rs. 1,05,00,817/- to the complainant with the interest at 6% from 1.3.2001 till the date of payment within two months from the receipt of this order. No order as to costs.