National Consumer Disputes Redressal
M/S Hemkunt Coated Paper Pvt. Ltd., vs M/S New India Assurance Company Ltd. & 2 ... on 4 February, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 441 OF 2013 1. M/s HEMKUNT COATED PAPER PVT. LTD., Village Gaunspur, VPO Hambran, LUDHIANA. ...........Complainant(s) Versus 1. M/s NEW INDIA ASSURANCE COMPANY LTD. & 2 ORS., Regd. & Head Office: New India Assurance Building, 87, Mahatma Gandhi Road, Fort, MUMBAI - 400001. 2. M/s. National Insurance Company Ltd., Regd. Office: 3, Middleton Street, KOLKATA - 700071. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER
For the Complainant : Ms. Nandadevi Deka, Advocate with
Mr. Sudhir Yadav, Advocate For the Opp.Party : For Opposite Party No. 1 : Mr. J.P.N. Shahi, Advocate.
For Opposite Party No. 2 : Mr. Yogesh Malhotra, Advocate
Dated : 04 Feb 2022 ORDER
1.The present case is filed under Section 21(a) (1) of the Consumer Protection Act, 1986.
2. The Complainant is a manufacturer of Kraft Paper and Grey Board and used to purchase the raw material such as corrugated boxes and waste paper locally in India and imported from U.S.A. The Complainant took Insurance Policy No.360201/11/09/11/00000148 from Opposite Party No.1 for an amount of Rs.3,36,50,000/-. Complainant also took Insurance Policy No.401600/11/ 09/3100000232 from Opposite Party No.2 for an amount of Rs.3,32,60,000/-, covering the risk of stock, plant & machinery, furniture, building, etc. and paper and carboard mills (including lamination) respectively. Both Policies were valid from 29.06.2009 to 28.06.2010.
3. The case of the Complainant is that on 28.05.2010 between 1.00 pm and 1:30 pm during weekly power shutdown, fire broke damaging the waste paper (raw material) lying in the open yard/go-down of the Complainant. Due to the power shut, no work was going on and only few staff members were present in the factory. Some of the neighbouring farmers and villagers noticed the fire incident and intimated the fire station and the Complainant. The fire burnt all the waste paper, finished sheets and bundle reels. Mr. Gurbir Singh, the Director of the Complainant, reached the spot of incident within 15-20 minutes and noticed that two fire brigades were trying to control fire, which spread due to the wind and damaged the raw material completely. The fire continued all night and could only be controlled at around 2 pm on the next day.
4. On 28.05.2010, Opposite Party No.1 deputed M/s Rajesh Mahajan & Co. to conduct the Preliminary Survey. He recorded loss to major portion of stocks lying in the open due to fire. The stock also got damaged due to soaking of water, blackening by soot and smoke deposit. The cause of the fire could be due to spark travelling from the neighbouring factory, where the employees burnt its waste. The Preliminary Surveyor assessed the loss at Rs.50 lakhs. Opposite Party No.1 deputed M/s Soni & Co. as Surveyors to investigate and assess the loss. The Surveyor carried out a detailed investigation of accounts as well as the sale made by the Complainant. The Complainant provided documents pertaining to the Bank Accounts, invoices relating to the purchases made during the relevant period along with the stock ledger accounts. On 23.05.2012, the Complainant sent separate letters to the Opposite Parties intimating that the Complainant had received collective amount of Rs.50 Lakhs from the Opposite Parties and asked the Opposite Parties to provide the basis of settlement of claim and registered a protest for non-acceptance of the settlement. On 11.12.2012, the Complainant sent a legal notice to Opposite Party No.1.
5. Opposite Party No.2 deputed Mr. Vinod Sharma, Surveyor & Loss Assessor to conduct the Preliminary Survey who, vide letter dated 31.05.2010, observed that as the firefighting efforts were still going on, they were not in a position to comment about the quantum of loss. On 31.05.2010 itself, Opposite Party No.2 deputed P.S. Ramanathan, Surveyor who, vide Report dated 26.06.2011, estimated the total loss at Rs.49,32,536/-. The Complainant was not satisfied with the assessment made by the Surveyors. Alleging deficiency in service on the part of the Opposite Parties, the Complainant filed the instant Consumer Complaint with the following prayer:-
"(i) Direct the opposite parties to settle and release an amount of Rs.1,82,88,849.40 (Rupees One Crore Eighty Two Lacs Eighty Eight Thousand Eight Hundred Forty Nine) with 24% per annum jointly and severally since the date it became due till the date it is realized and/or;
(ii) Direct the Opposite Parties to pay a sum of Rs.10,00,000/- as compensation for gross deficiency in service and harassment and/or;
(iii) The Opposite Parties be directed to pay a sum of Rs.1,10,000/- towards the cost of litigation and/or;
(iv) Pass any such other order(s) which this Hon'ble Commission deem fit and proper in the facts and circumstances of the present case."
6. The Complaint was resisted by the Opposite Parties by filing separate Written Statements. Both Opposite Parties took preliminary objection regarding maintainability of the Complaint on the ground that the Complainant was a commercial organization doing business for profit and was not a Consumer within the meaning of Section 2 (1) of the Consumer Protection Act, 1986. Opposite Party No.1 also took the objection that the Complaint was barred by limitation. The Complaint was also contested on the ground of pecuniary jurisdiction. On merit, Opposite Party No.1 stated that the Complainant had filed the Consumer Complaint after receiving the entire claim amount assessed by the Surveyor and the Complaint is an afterthought with an ulterior motive. It was stated that Opposite Party No.1, after receiving the intimation of fire, appointed Mr. Rajesh Mahajan for preliminary survey. Further, they deputed M/s Soni & Company, Surveyor and loss-assessor, who assessed the loss at Rs.46,72,609.63/- and also allowed the fire-fighting expenses of Rs.1,24,000/- which came to Rs.46,72,610/-. The loss of Rs.46,72,610/- was apportioned between Opposite Party No.1 and Opposite Party No.2, as the Complainant was double insured. Opposite Party No. 1 also stated that they had already paid the amount and nothing was payable to the Complainant and the Complaint against Opposite Party No.1 was liable to be dismissed.
7. Opposite Party No.2, in their Written Statement stated that they received the intimation of fire on 28.05.2010 and on 29.05.2010 appointed Mr. Vinod Sharma, Surveyor & Loss Assessor, to conduct the preliminary survey. The said Surveyor visited the factory premises of the Complainant on 29th May, 2010 for survey and reported, vide letter dated 31.05.2010, as follows:-
"We have been informed that the above Insured through their bankers, Bank of Baroda, Ludhiana had intimated an estimated loss of Rs.50 Lacs due to fire. However, we have been informed by the Insured in writing that the loss is in the range of Rs.2.50 to Rs.2.75 crore which may also change. Since the smouldering is still there in the affected Stocks of paper waste (raw material) as the fire-fighting efforts were still going on and there are damages to Electrical Cables/Machinery/Building which are yet to be quantified, therefore, we are not in a position to comment about the quantum of loss at this stage. Moreover, the Insured also did not produce any stock records, books of accounts as their accountant was not available due to some medical problems in the family."
8. Thereafter on 31.05.2010, Opposite Party No. 2 appointed Mr. P. S. Ramanathan, Surveyor and Loss Assessor, to conduct the final survey and to assess the loss. The Surveyor submitted Survey Report, dated 26.06.2011, assessing the net loss to stocks at Rs.44,54,529/-, net loss to plant & machinery at Rs.3,54,008/- and net loss due to Fire Fighting Exp. at Rs.1,24,000/-, totalling to Rs.49,32,536/-. Considering that the Complainant had obtained a similar Policy from Opposite Party No.1, New India Assurance Co. Ltd., the Surveyor assessed the net proportionate loss payable by Opposite Party No. 2 at Rs.24,37,400/-, while the net loss payable by Opposite Party No.1/New India Assurance Co. Ltd. was assessed at Rs.24,95,136/-. Surveyor had made observation regarding discrepancies in the stock and that books of account were not produced for verification. Opposite Party No.2, therefore, appointed M/s S.K. Bhasin & Associates to make the assessment on following aspects:-
" i. Verification of all purchase bills and confirm their genuineness.
To verify the particulars of payment made by the insured in respect of the bills showing purchases made immediately before fire.
To verify VAT returns of various suppliers from whom the raw material was purchased by the insured.
On page no. 10 of the survey report monthly average purchases from April to 28.5.2010 i.e., date of loss is shown as Rs.83,45,950/- whereas during the year 2009 and 2010 the monthly average purchase comes to Rs.27,01,406/- and Rs.31,35,092/- respectively. Sudden increase in monthly average purchase immediately before loss is doubtful and needs investigation."
9. M/s S.K. Bhasin & Associates after making necessary investigation submitted report dated 27.04.2012 confirming that the purchases made before the date of fire and the payments made to the suppliers were genuine. They also observed that VAT returns were correct and that the sudden increase in average monthly purchases was not unusual. The claim was examined at various levels and on 08.05.2012 approved by the competent authority of Opposite Party No.2 at a sum of Rs.23,04,035 as under: -
"i. Stock : Rs.20,75,391.24 Plant& Machinery : Rs.1,77,004.00 Fire Fighting Exp. : Rs.61,640.40 Rs.23,14,035.64 Less Excess : Rs.10,000.000 Total : Rs.23,04,035.00 subject to adjustment of short premium of Rs.6,012/-."
10. Opposite Party No.2 offered an amount of Rs.22,97,595/- to the Complainant in full and final settlement of the claim. The Complainant accepted this amount and executed discharge voucher on 16.05.2012 in full and final settlement of the Claim and the said amount of Rs.22,97,595/- was remitted by the Opposite Party No. 2 to the Complainant. Opposite Party No.2 had indemnified the Insured and the Complaint is, therefore, liable to be dismissed.
11. Heard the Learned Counsel for the Parties and carefully perused the record. The Learned Counsel for the Complainant submitted that the loss suffered by the Complainant did not fall in the exclusion clause and the Complainant had provided the stock ledger from 01.04.2010 to 28.05.2010 to the Surveyor. However, the Surveyor of Opposite Party No.1, vide Survey Report dated 18.07.2011, quantified the loss at Rs.46,72,610/-, which is not even remotely close to the actual loss of Rs.1,82,88,829.40 suffered by the Complainant. Surveyor had underweighted the damaged raw-material without assigning any reason. He submitted that in para 19 of the Surveyor Report, it was observed that purchase invoices from 01.04.2010 to 28.05.2010 were verified and the same tallied with the Stock Ledger. He relied on the judgment of this Commission in Sudhakar Traders vs. National Insurance Co. Ltd. and Ors. [2006 (1) CPR 240] and Texcones Tubes Company vs. The Oriental Insurance Co. Ltd. & Ors. 2008 (2) C.P.C. 166, wherein it was held that the Surveyor must give precedence to the Stock Ledger and Bank Stock alone and the assessment of loss by way of alternative method is vague and hypothetical. It was also submitted that the Surveyor had considered the average of one year stock from April, 2009 to April, 2010 which is not justified. The Surveyor should have considered the stock of last one month for assessment of loss. The Learned Counsel further submitted that the Surveyor's report dated 18.07.2011 is erroneous.
12. Learned Counsel for Opposite Party No.1 submitted that this Commission has no pecuniary jurisdiction to entertain the present Complaint as the claim amount payable by Opposite Party No.1 is Rs.21,86,200/-, as assessed by the Surveyor. The Complainant had exaggerated the claim amount for the purpose of invoking the jurisdiction of this Commission. Learned Counsel for Opposite Party No.1 submitted that the Surveyor had assessed the loss at Rs.46,72,610/-. Since the Complainant had got the property double insured, the liability of Opposite Party No.1 was for an amount of Rs.21,86,200/- which had already been paid to the Complainant. It was also submitted that Opposite Party No.1 paid the amount on 26.08.2011 and the Complaint was filed on 16.12.2013 after expiry of more than two years. The Complaint is nothing but an abuse of process of law and liable to be dismissed.
13. Learned Counsel for Opposite Party No.2 submitted that the Complainant did not disclose that it had already obtained a similar Policy from Opposite Party No.1. It was also submitted that the allegation of the Complainant regarding wrong assessment of loss by the Surveyor is not correct. The Surveyor appointed by Opposite Party No.2 fixed the liability of Opposite Party No.2 at Rs.22,59,035/-. Even the Surveyor appointed by Opposite Party No.1 fixed the liability of Opposite Party No.2 at Rs.24,37,400/-. M/s S.K. Bhasin & Associates appointed by Opposite Party No.2 to investigate certain issues also fixed the liability of Opposite Party No.2 at Rs.22,97,595/-. So far as Opposite Party No.2 is concerned, all the three Surveyors had assessed almost same amount. Opposite Party No.2 had already paid the amount of Rs.22,97,595/- to the Complainant on 14.05.2012. The Complainant had also executed discharge voucher on 16.05.2012 in full and final settlement of the claim. There is, thus, no deficiency in service on the part of Opposite Party N.2 and the Complaint is liable to be dismissed.
14. The validity of the Insurance Policies has not been challenged by the Opposite Parties. The incident of fire is also admitted. The Opposite Parties have raised the objection as to the maintainability of the Consumer Complaint on the ground that the Complainant is a Company involved in commercial activities. Opposite Parties have also challenged the Complaint on the ground of delay. On merit, the only dispute relates to the assessment of loss made by the Surveyors.
15. So far as maintainability of the Complaint is concerned, this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] has held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint is maintainable.
16. Opposite Parties have also challenged the Complaint on the ground of pecuniary jurisdiction. The Complainant took Insurance Policy from Opposite Party No.1 for Rs.3,36,50,000/-. Complainant also took Insurance Policy from Opposite Party No.2 for Rs.3,32,60,000/-. Complainant filed Insurance Claim of Rs.1,82,88,829/-. In the prayer clause of the Complaint, the Complainant has claimed an amount of 1,82,88,829/- with interest @ 24% alongwith compensation of Rs.10 lakhs and litigation cost of Rs.1,10,000/-. As the total amount claimed in the Complaint exceeds Rs.1 crore, the Complaint is maintainable.
17. So far as the question of delay is concerned, in para 13 of the Complaint, it is stated that the Complainant had sent a legal notice to Opposite Parties Nos.1 & 2 on 23.05.2012 (Annexure C-8). Thereafter, the Complainant had sent a legal notice dated 11.12.2012 to the Opposite Parties. The instant Complaint filed on 16.12.2013 is well within time. The argument of Opposite Party No.1 that the Complaint is time barred is, therefore, rejected.
18. On merits, the Complainant had alleged that the Surveyor M/s Soni & Co., vide report dated 18.07.2021, had underweighed the damaged raw-material, without giving any reason. In the Survey Report dated, 18.07.2011, the Surveyor M/s Soni & Co. had stated that the entire stock was mixed during the firefighting operation. So, the weighment of damaged stock had been made in mixed condition. Para 13 of the Survey report is relevant, which reads as follows: -
"During the course of physical verification of burnt/damaged stock it was not possible to segregate the stock quality wise as the entire stock was mixed during the firefighting operation and so, the weighment of damaged stock has been made in mixed condition which includes burnt ash and some water content in the so weighted damaged stock.
During our survey we have got weighted the damaged stock of waste paper on the weighting bridge after getting it loaded on the truck and trolleys as it was not possible to physically verify the quantity due to damages. Total weight of such damaged stock was 419835 kgs. as per Annexure-I In our opinion based on the physical verification of the damaged stock although the burnt stock has lost weight from its original weight but the water content compensated the same found in the so damaged stock. Though we carried out weighment of damaged stock after a week of fire, but insured was regularly pouring water on the burnt stock to avoid any reoccurrence of fire. The damaged material was lying in the open and due to rains also water was added to the damaged stock. So we considered the quantity physically verified as the damaged quantity for our further calculation."
19. Perusal of above para 13 shows that the Surveyor had given detailed reasons for weighment of the damaged stock. The Complainant had not given any evidence, oral or documentary, to prove that the weighment done by the Surveyor was wrong. The allegation of the Complainant that the Surveyor had not given any reason for assessment of the value of the damaged stock is without any basis and rejected.
20. It was also alleged that for the purpose of assessment of loss stock of the last month should have been taken into consideration by the Surveyor and not the average stock of the previous year, as the Complainant had accumulated extra raw material in anticipation of high demand of finished goods. In this regard, para 21 of the Survey Report dated 18.07.2011 is relevant, which reads as follows: -
"The insured provided us purchase ledger and copies of purchase bill for the period 01.04.10 to 28.05.10. We verified the purchase ledger with the copies of purchase bill and found that all the purchases have been correctly entered in the purchase ledger. We also verified the payments made against the purchases from the bank statement and found the same to be correct and authentic. However, during scrutiny of ledger accounts we observed that insured has made purchases during April & May (mostly in May) of about Rs.1,30,00,000/-. We discussed about such huge purchases with the insured but insured informed us that these were normal purchases. However, the trial of goods, raw material reaching the factory was also not available. The payments for those purchases were not made during the month of April & May. So, the purchases seem doubtful. We analyse the purchase pattern of raw material for last two years and compared it with the purchase in the current period i.e. during April & till 28th May, 2010 as under: -
Period Amount Monthly Average 2009 32416878 2701406 2010 37621110 3135092 01.04.10 to 28.05.10 16629341 8314670 From the inordinate rise in the monthly purchase is established without doubt."
21. The Surveyor had given the specific reasons for assessment of loss on average basis. The Surveyor recorded that the purchases made in the month of April & May, 2010 seemed to be doubtful. He observed that "We discussed about such huge purchases with the insured but insured informed us that these were normal purchases. However, the trial of goods, raw material reaching the factory was also not available. The payments for those purchases were not made during the month of April & May. So, the purchases seem doubtful." It is clear that since the Surveyor had doubts about huge purchases made in the month of April & May, 2010, they adopted the purchase pattern of raw material for last two years.
22. Regarding submission of the Complainant that it had accumulated extra raw material in anticipation of high demand of finished goods, Surveyor had given specific note in para 26, which reads as follows:-
"Note: The difference in loss assessment by different methods could be due to high purchase and stocks built up by the insured for which no need was there and no payments were made in April and May and the insured could not prove its physical quantity in the affected premises, since no gate entry register was maintained by them and they have two locations and it was not proved as to which Unit the goods were physical transferred, since they are doing the same work in both units."
23. From the above, it is clear that the Complainant failed to place on record the proof of payment in April and May, 2010. The Complainant also could not prove the physical quantity in the affected premises. The allegation of the Complainant that it had accumulated extra raw material in anticipation of high demand cannot be accepted.
24. The next contention of the Complainant is that the Surveyor should have adopted the stock ledger method for assessment of loss. In this regard, para 19 of the Surveyor report dated 18.07.2011 is relevant, which reads as follows: -
" STOCK RECORDS METHOD As the loss has occurred in the raw material (Waste Paper) and Consumable stores only and insured is not maintaining any stock records for Consumable stores, so we have considered the stock records for waste paper only for assessment of loss based on stock records method and the loss for the Consumable stores has been considered on the basis of physical verification basis only. We obtained the copy of stock register maintained by the Insured and verified the opening balance given in the Stock Register from the quantity as per balance sheet for year ending 31.03.2010. We have also obtained the purchase invoice for the period 01.04.2010 to 28.05.10 and verified the same with the quantity mentioned in the Receipt column of the stock Register and found the same matching."
25. The Surveyor has given reasons for adopting the "Stock Records Method." Surveyor had recorded that "Insured is not maintaining any stock records for Consumable stores, so we have considered the stock records for waste paper only for assessment of loss based on stock records method and the loss for the Consumable stores has been considered on the basis of physical verification basis only." Since the Complainant was not maintaining any stock records for consumable stores, the Surveyor had adopted the Stock Records Method. The allegation of the Complainant that the Surveyor should not have adopted the Stock Records Method is, therefore, rejected.
26. The only issue relates to the quantum of loss assessed by the Surveyors. In this regard, it is necessary to discuss the Surveyors Reports. The Opposite Parties have independently appointed different Surveyors. Opposite Party No.1 appointed Mr. Rajesh Mahajan for Preliminary Survey and M/s Soni & Company for final Survey Report. Opposite Party No.2 appointed Mr. Vinod Sharma for Preliminary Survey and later appointed Mr. P.S Ramanathan, but due to discrepancies on certain points, the Opposite Party No.2 appointed M/s S.K Bhasin. The preliminary Surveyor appointed by Opposite Party No.1 assessed the loss at Rs.50 lakhs and the Surveyor appointed by Opposite Party No.1 for final assessment, estimated the loss at Rs.46,72,610/-. The Surveyor, however, observed that since the Complainant had got the property double insured, the liability of Opposite Party No.1 was for the amount of Rs.21,86,200/-. Complainant admitted that Opposite Party No.1 had already paid this amount to the Complainant.
27. The Surveyor appointed by Opposite Party No.2 assessed the loss at Rs.49,32,536/-. However, since the Complainant had doubled the insurance, the Surveyor appointed by Opposite Party No.1 fixed the liability of Opposite Party No.2 at Rs.24,37,400/-. M/s S.K. Bhasin & Associates, Surveyor appointed by Opposite Party No.2 fixed the liability of Opposite Party No.2 at Rs.22,97,595/-. Opposite Party No.2 had already paid the amount of Rs.22,97,595/- to the Complainant on 14.05.2012. The independent Surveyors appointed by the Opposite Parties separately had assessed almost the same amount. The Surveyors visited the factory premises and inspected the place of incident and thereafter gave separate reports. Report submitted by a Surveyor is an important piece of evidence and it has to be given due weight, provided there is cogent evidence. In the present case, the loss was assessed separately by the Surveyors appointed by Opposite Parties Nos. 1 & 2 respectively. The Complainant did not lead any evidence disproving the report submitted by the Surveyors. In the absence of any evidence to the contrary, the reports submitted by the Surveyors of the Insurance Companies are accepted.
28. In the view of above discussion, we are of the view that the loss by the fire was properly assessed and indemnified by the Opposite Parties. The Complainant has already received the amount of loss assessed by the Opposite Parties. The Complaint is devoid of merit and is dismissed with no order as to cost.
...................... C. VISWANATH PRESIDING MEMBER ......................J RAM SURAT RAM MAURYA MEMBER