State Consumer Disputes Redressal Commission
New India Assurance Co. Ltd. vs M/S. J.S.D. Classic International Ltd. on 19 December, 2025
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSIONHDCF
NEW DELHI
RESERVED ON: 17/11/2025
JUDGEMENT PRONOUNCED ON : 19/12/2025
FIRST APPEAL NO. 725 OF 2013
(Against the Order dated 14.08.2013 in Complaint No. C-172/10 of the State
Consumer Disputes Redressal Commission Delhi) With
IA/6514/2013, IA/6515/2013 (Stay, condonation of delay)
New India Assurance Co. Ltd., Regd. & H.O. New India Assurance Building, 87,
Mahatma Gandhi Road, Fort, Mumbai - 400001, Having its Delhi Regional
Office-2, Scope Tower-Il, Laxmi Nagar, Delhi - 92. Having its Meerut Divisional
Office-12, 339, Bombay Bazar, Meerut - 250001. Having its Meerut Branch Office,
201-205, Metro Plaza, Delhi Road, Meerut - 250002.
Through:
The Manager, New India Assurance Co. Ltd. Jeevan Bharti Building, Tower Two,
5th Floor, Connaught Place, New Delhi - 110001. Appellant
Versus
M/s JSD Classic International Ltd. Regd. Office 2365, Street No. 11, Raghubirpura
1, Gandhi Nagar, Delhi. Head Office at: 61, Shivaji Road, Meerut and Factory at
37, Mohakampur Industrial Complex, Phase-ll, Delhi Road, Meerut ...Respondent
BEFORE:
HON'BLE MR. JUSTICE A.P. SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
For the Appellant : Mr. S.M. Tripathi, advocate
For the Respondent : Mr. A.K. Soni, Mr. Pavan Kumar, Advocates
ORDER
PER BHARATKUMAR PA NDYA. MEMBER
1. This appeal by the insurer involves a dispute with regard to indemnification of loss of stocks suffered by it in an incident of fire which took place in the intervening night of 2/3.06.1998. The insured-respondent had obtained two Standard Fire and Special Perils Policies for stocks for total Sum Assured (SA) of Rs. 80 lac under two covernotes. A claim for indemnification to the extent of Rs.89,78,921/- was lodged. The claim was not settled and remained pending, as per the complainant, till 2010 when complaint before the State Commission, Delhi was filed. Learned State Commission has partly allowed the complaint and, as against the relief of indemnification claimed in the complaint of insurance claim of Rs.80 lakhs with corresponding interest, has awarded an amount of Rs.29,60,437/- with interest and further compensation of Rs. 1.5 lakhs for mental harassment as under:
£ it
25. The next question that needs our consideration is settlement of the claim. Sh.
A.K. Govil and Associates, the final Surveyor assessed the loss caused due to fire submitted their report dated 29.9.2000 in which net loss assessed was to the tune on Rs.29,60,437/-. This report regarding loss due to fire was based on the documents and information which were provided by the complainant to the surveyor. Despite clear report of loss to the tune of Rs.29,60,437/-, the insurance Company in its wisdom kept the matter pending without any decision. They were only awoken after the complainant sent a legal notice dated 29.4.2009 to the OP. The OP thereafter sent a reply on 2.6.2009 informing the complainant that as per direction of the Regional Office of the OP, the competent authority reviewed the matter and in the absence of non-submission of required information/documents, construed that the insured had nothing to reply. The Competent authority of the OP, therefore, reiterated its earlier decision of treating the claim as "No claim". For this reason, the claim was not found maintainable. It is interesting to note that both the complainant and the OP have relied upon the ruling of the Hon'ble SC in Sri Venkateswara Syndicate Vs. Oriental Insurance Co.- Ltd. - (2009) 8 SCC 507. In this leading case, the Hon'ble Supreme Court held:
(a) However, if report is prepared in good faith, with due application of mind and in the absence of any error or ill-motive, insurance company cannot reject the report of the surveyors.
(b) The Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them.
(c) Report of the Surveyor forms basis for settlement of a claim by insurer in respect of the loss suffered by insured.
26. Complainant also relied upon the ruling of the Hon'ble National Commission In Vee Kay Cotsyn Ltd, Vs. United India Insurance Company Ltd. - III (2013) CPJ 66 (NC), wherein it was held that surveyor report has significant evidentiary value.
27. The conduct of the OP Insurance Company was strange and incomprehensible. They neither rejected the report nor relied upon it. It should have formed basis for settlement of the claim but Insurance Company chose to brush the report aside by keeping quite. When legal notice was given, they simply said that the insurance claim was not maintainable, therefore, the claim was made as "No claim". Certain flimsy reasons were given but nothing was said about surveyor report which was totally based on submission of the documents and clarifications. The report dated 29.9.2000 of the Surveyor Sh. A.K. Govil and Associates is very candid and detailed covering of all aspects of the matter. It has been mentioned in the report that it is based on the documents/information submitted by the complainant. Assessment of loss was discussed and explained and the complainant was requested to accord its consent. It was also mentioned in the report that on visiting the fire affected portion of the factory, they were of the opinion that the fire may have been caused due to electric short circuit from where the finished goods were stored. Insured also furnished a copy of fire brigade report dated 20.6.1998 in vernacular and its English Translation which also supports the chances of fire being caused by electric short circuit. Ignoring hard facts, evidence and circumstances, the Insurance Company came to the conclusion that the incident of fire was manipulated to cover the loss caused in theft occurring in the factory two days before the incident of fire. They further rejected the electric short circuit as most probable cause of fire instead of relying the report of final surveyor Sh. A.K. Govil and Associates, Insurance company appears to have given more reliance on the report of Sh. R.K. Sharma, Investigator who was non-technical person and whose report does not carry much meaning.
28. In view of these facts and circumstances and legal position, we are of the clear view that the OP committed gross negligence and deficiency of service in not finalizing 1 the settlement of the insurance claim after the submission of report of Sh. A.K. Govil and Associates who were deputed to assess the loss caused due to fire. The Insurance Company instead relied upon the report of Sh. R.K. Sharma, Investigator, which appears to be tailor made and Complaint.
29. Thus the Insurance Company was clearly guilty of deficiency of service. They were legally, bound to settle the long pending claim of the complainant in the light of the surveyor report.
30. It was argued by Ld. counsel for the complainant that complainant was not only entitled to get at least Rs. 29,60,437/- as assessed loss by the surveyor due to fire but this amount was illegally withheld by the OP Insurance Company for a very long time and therefore, the complainant was entitled to get fair amount of interest as well. The Insurance Company is given a reasonable time of 2-3 months for settlement of the claim after the submission of the surveyor report. In the present case, surveyor submitted its report on 29.9.2000. In our considered view, complainant is entitled to get interest @ 9% from 1.1.2001 till the realization.
31. It was also argued that the complainant ran from pillar to post to get its lawful claim settled within reasonable time but it was made to suffer lot of harassment, mental agony and pain besides suffering huge financial loss. On this count, a sum of Rs. 10 Lacs has been claimed. Considering the entire facts and circumstances, we are of the view that a sum of Rs. 1,50,000/- towards compensation for harassment, mental agony and pain will suffice the end of justice. Besides a sum of Rs. 10,000/- will also have to be paid by the OP towards cost of litigation.
32. Before concluding, it would not be out of place to mention that over all attitude of the Insurance Company has been callous towards settling a lawful claim within the framework of Laws and within a reasonable time.
33. The Final Surveyor Sh. A.K. Govil and Associates also deducted a sum of Rs. 20 Lacs while calculating the loss caused by fire but we do not find very reliable and cogent basis for the same. However, it is our considered view that at least payment of net loss calculated by the Surveyor will have to be paid as the report of Surveyor has significant evidentiary value.
ORDER Accordingly, complaint partly succeeds and is allowed. OP New India Insurance Company Ltd is directed to pay a sum of Rs. 29,60,437/- towards insurance claim within a period of 30 days from the date of knowledge of the judgement and order along with interest @ 9% p.a. from 1.1.2001 till the date of realisation. OP is further directed to pay compensation of Rs. 1,50,000/- towards harassment, mental pain and .agony besides a sum of Rs. 10,000/- towards litigation expenses."
2. The aggrieved OP-insurer has, inter alia, raised the following substantive grounds in this appeal:
a) That State Commission had no territorial jurisdiction in the matter.
Respondent's factory where fire occurred is in Meerut and the appellant's policy issuing office also is in Meerut. No part of cause of action had arisen in Delhi and the State Commission wrongly assumed territorial jurisdiction in proceeding with hearing and deciding upon the complaint.
b) That State Commission wrongly observed that the Survey Report was based on documents/ information submitted by complainant. The surveyor, investigator and the Final Surveyor had repeatedly mentioned in their report about respondent's non-cooperation and non-submission of documents by 3 the insured. Even after meetings on 24.02.2000 and 10.03.2000, and the letters dated 5.12.2002 and 22.09.2005, the documents were not made available by the insured.
c) That the certified copies of sales tax returns for the relevant years and the original assessment orders of Sales Tax authorities were not produced before the Surveyor.
d) That the respondent is stated to have yet another premises at 31 Mohkampur but the details of stocks lying there were not provided to the appellants.
e) That smoking and cooking by employees was allowed by respondent inside the factory premises adjacent to the storage and the kerosene was stored there, thus increasing the risk of loss or damage by fire.
f) The State Commission erred in placing undue reliance on the assessment made in the surveyor when the assessment was based admittedly, on estimated figures of unreliable post-event inventory and figures of purchase and sales which figures also were admitted to be inaccurate and without supporting documents.
g) The State Commission erred in ignoring the critical adverse observations in the Survey report, the fact that the claim of the respondent was rightly made "no claim" in 2003 due to failure of the insured to furnish the supporting documents and requisite evidence, maintaining the same stand even after review in 2005 as no further evidence was produced by the insured for violation of policy condition 6(i)r:
h) Because as per terms and conditions of insurance policy, respondent is bound to submit the relevant documents. The relevant condition in the policy states as under:
6. (i) On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company (a) A claim in writing for the loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items or property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage not including profit of any kind, (b) Particulars of all other insurances, if any. The Insured shall also at all times at his own expense produce, procure and give to the Company all such further particulars, plans, specification, books, vouchers, invoices, duplicates or copies thereof, documents, investigation reports (internal/external) proofs and information with respect to the claim and the origin and cause of the loss and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonably required by or on behalf the Company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith. No claim under this policy shall be payable unless the terms of this condition have been complied with."
3. As stated by Mr. Tripathi, the incident of fire took place on intervening night of 2-3 of June, 1998. The preliminary surveyor in his report dated 25.06.1998 4 noted that (i) There was an incident of burglary on night of 31st May/1.06.1998, but the unit did not have burglary policy (ii) the estimated loss as intimated by the insured is around Rs.50 lakhs, (iii) as per para 6(h) of the report, the insured's books of accounts were outwardly fire/water damaged, and further, that the insured was advised to preserve these books in as sound a condition as was reasonably possible An investigator, Mr. R.K Sharma, was also appointed primarily to investigate the cause of fire who submitted his report dated 26.05.1999 contents whereof have been duly noted by the Final Surveyor in his report dated 29.05.2000. The investigator has recorded the statements, made necessary inquiries with the parties having dealing with the insured, has commented on the cause of fire, and, has also categorically mentioned that the security person Mr. Govind was interrupted and threatened by Shri S.C. Jain, who was present there, during the course of the statement, and on page 73-74 of the compilation has given his overall findings as under:
73Thu insured Lias been .very much non-cooperative to--Hie investigation »<> much so that they did not provide even the ttltendance of Hie-employpi^fr*** Fnflt ii Wflfl j..destroyed in fire. The insured has given a leply to my Letter sent * jn--July, 9S followed -by-various reminders by me and from the insurer side, they have given reply- on 01.05.99 only and virtually Hun ting ol my invgsligation comes in progress from 01.0b.99 due to non-cooperative altitude ol the insured. Due to the inordinate delay in supplying the relevant information, from the insured/ it has not been possible to procure list of employees from other source also. Hence, the repoi't is based on the material came-forth before 01.05.995 _ -~ --------------- ----- ------ :------------
' ; * ft is pointed out that about a week back, a dismissed employee contacted me, who has assured me to proidde sonic vital clues to ' the investigation, who had hands in this fire at the instance of the insiii'ed. In case, he .provides some fruitful clues with concrete evidence, I would submit further report.
l ire Brigade FR is also ncit clear about die <:iuis£_<4 Hiv, They have Miiiyply tTWHiiirmed--ihe |Uift»iil>iIity of fire ~by^short circuiting. But from the statements of' Hye employees . including Govind Chawkidar and police GO-report it is establisheddl^at there was no fire by 4.00 AM. There is also evidence that normal work was not 'done'in'the factoiy .on 02.06.98 and there was nd consumption load on the electric' meter, which was found in functioning \ condition after fire. .
CONCLUSION :
hi view ol the ttbove, I am ot the opinion (hot 1 do not «f-i'ee wiUi th. presumptive hndings of the Rire Biigmle reKnr<|in}. fire,by short citrmting ni)< keeping m view the eviitonre in thesluipe of stolemenliof employees inditdim clwwkKtar, police G.D. icport mid the heavy liability on the shoulder of insurer u'yhSjrtl^Jos^jt gnpears thoi ignition job of fiJx. on the find floor of |.|I( lai iory at. the-instance-of the proprietor of die factory, in order l<: coverup me IwavxjfflTfnftMCgd, loss canned in die dacoily commfUed one dav before fhe hnHacideih. in the factory. - --------------------------- ------------------------
Submitted without prejudico.
VotitNi fattKAdkt
3. The surveyor, after taking note of such investigation at page 8 of his report, has proceeded to carry out necessary verifications and has, after taking into account the relevant circumstances, copies of purchase/sales bulls as produced, and past annual statements of accounts of the insured, and subject to the other observations therein and in the investigator's report, assessed the loss at Rs.29,60,437/- after categorically noting that no stock records were maintained or available, all financial records of FY98-99 and all other preceding financial year were destroyed in fire, the figure for FY 98-99 were on estimated basis, and also particularly noting that the claims of the insured of alleged "goods return" of nearly Rs. 20.05 lacs and the purchases worth Rs. 13.85 lacs are not at all established by the insured. The ad hoc nature and the unreliability of the figures from which the figures of assessment of loss was deduced were categorically so commented on internal pages 9 to 19 of the report. Ignoring all these vital facts, the State Commission has noted in para 5 of the order that the claim of Rs.89,78,921/- was filed with the insurer and the survey report dated 29.09.2000 stood submitted with the insurer. The insurer neither rejected the survey report nor relied upon it. In the opinion of the State Commission, the survey report should have formed the basis for settlement of the claim but insurer chose to brush the report aside by keeping quiet. When legal notice in the year 2009 was given, it was said that the insurance claim was not maintainable, therefore, the claim was made as "No claim". State Commission also observed that the survey report is based on the documents/information submitted by the complainant. Assessment of loss was duly discussed and explained. It was also mentioned in the report that on visiting the fire affected portion of the factory, the Surveyors were of the opinion that the fire might have been caused due to electric short circuit where the finished goods were stored. Insured also furnished a copy of fire brigade report dated 20.6.1998 in vernacular and its English Translation which also supports the chances of fire being caused by electric short circuit. Ignoring such hard facts, evidence and circumstances, the insurer came to the conclusion that the incident of fire was manipulated to cover the loss caused in uncovered event of theft/burglary which took place in the factory two days before the incident of fire. Insurer rejected the electric short circuit as most probable cause of fire and instead of relying the report of final surveyor Sh. A.K. Govil and Associates, Insurance company appears to have given more reliance on the report of Sh. R.K. Sharma, Investigator who was a non-technical person and whose report does not carry much meaning. The relevant portions of survey report computing the assessed loss (page 75 to 98 of the complaint) is reproduced below:
"The fire damaged stocks were extensively damaged. During our subsequent visit, we have made an attempt to quantify the same in various categories of Insured's products as also the raw fabric to work out the pre-fire quantities. The same, however, did not yield any results and thus they were packed in gunny bags and stored in the same premises. Insured have been advised to keep them in their possession. These stocks are of no commercial salvage value and hence no value is being attributed to them.
• c In the forgoing, the assessable loss is worked out as under:
Gross Stocks as on 2.6.98 Rs. 53,30,538.00
Less: Goods Return for which no authenticated document/
Explanation could be furnished Rs. 20.05.618.00
Rs. 33,24,920.00
Less: Loss due to Burglary in the intervening night of
31st May/1st June 1998 as estimated by the Insured Rs. 94.843.00
Value at Risk Rs. 32,30,077.00
Less: Value of saved/unaffected stocks Rs. 2.59.640.00
Net Assessed Loss Rs. 29,70,437.00
Less: Excess as per policy conditions Rs. 10.000.00
Net Adjusted Loss Rs. 29,60,437.00
The loss is thus adjusted at Rs. 29,60.,437.00
NOTE:-
The Insured's claim for other two heads i.e. Fire Fighting Expenses amounting to Rs. 7,586.67 and segregation expenses of Rs. 10,000/- have not been considered, as 7 Insured has not been able to give supporting documents and justifications of these amounts."
4. As contended by Mr. Tripathi, the State Commission had no territorial jurisdiction as was objected to in reply para 3, and has thus wrongly exercised jurisdiction in as much as neither the cause of action i.e. incident of fire nor the insured's residence nor the policy issuing office is located within the territorial jurisdiction of Delhi State Commission. An investigator was appointed on 04.06.1998, who concluded that fire was not due to short circuit. Complainant had a very heavy liability towards banks/ financial institutions and the investigator was of the opinion that the fire was at the instance of the proprietor of the factory, in order to cover up the heavy uninsured loss caused in the dacoity committed one day before the said fire. It is further explained that after receiving the Survey Report and the Investigation Report, the insurer requisitioned further documents, evidences and explanations from the insured which were not provided and hence the file was closed as "no claim" on 30.09.2003 after the letters dated 04.02.2002 and 05.12.2002 (pg 110, C-8) were not responded to by the insured. The insured, unable to explain and provide the requisite documents, kept silence for 2.5 years before raising a base-less grievance to the Directorate of Public Grievances on 15.06.2005, after which, the insurer reviewed the claim and called for the details vide letter dated 22.09.2005 (pg 112-117, C-12) providing therein in Annexure complete details of the letters and reminders issued by the Surveyor between 06.06.1998 and 22.08.2000 which were not fully and satisfactorily complied with or responded. After the unsatisfactory and unsupported response dated 12.11.2005 (page 118) thereto, the stand of "no claim" was maintained. It is after a further acquiescence of more than 3 years thereafter that the insured again issued a so-called legal notice dated 29.04.2009. It is the contention of the OP insurer that State Commission had no territorial jurisdiction to entertain the complaint. Further the order passed by the State Commission is not in accordance with either the insurance law and practice nor in accordance with the terms and conditions of the policy. The requisite documents as called for by the surveyor and subsequently by the insurer were not supplied, and the palpable discrepancies and ad hoc and estimated basis, without any supporting documents, as adopted by the insured, for quantifying and claiming the loss, made the insurer requisition further documents and clarifications after receipt of the survey report wherein the insured evidently failed in supporting the claim. Hence the file was closed as "no claim" on 30.09.2003 after communications to the insured dated 04.02.2012 and 5.12.2002 remained without response from the insured, as averred in reply to the complaint in para 8. Most of the relevant records were neither available nor supplied and there were substantial discrepancies even in the documents prepared and supplied after after the incident. The preliminary surveyor categorically required the insured to preserve and subsequently produce even the books "in whatever condition", which were also not produced. The whole claim and quantification thereof was based either on the documents prepared subsequent to the event of fire or merely on "estimate basis", without any supporting documents. Therefore, after the petitioner's letter dated 5.12.2002, there was a long silence and implied satisfaction about petitioner's stand, till the new MD of the insured wrote to Directorate of Public Grievance on 15.06.2005, which was responded to on 22.09.2005 calling for various evidences, which was perfunctorily and casually replied without any reasonable attempt to furnish any evidence or explanation on categorical issues reiterated and raised therein. Again there was a long silence of more than 3 years when the legal notice was served by letter dated 29.04.2009. The State Commission has ignored all the material on record. Apart from the fact that the investigator found the fire to be self-inflicted, the claim was made "no claim" primarily for lack of requisite evidence, documents and discrepancies therein as pointed out in detail in letter dated 22.09.2005. Mr. Tripathi also brought our attention to para 8 to 19 of the reply (pg 53) filed by the insurer before the State Commission wherein the dates of communications by the Surveyor and the insurer have been detailed, to contend that there is absolutely no deficiency in service, the delays are caused by the insured's consistent failure in supporting the claim through clarifications and documents. No deficiency can be alleged when the insured has not supported even the basis of estimate for "estimated basis" of his claim, has supplied no reliable contemporaneous documents, and, when confronted with palpable discrepancies in the figures and claims as made, e.g. in the figures of purchases and sales, no cogent explanation has been provided. Taking us through the letter dated 22.09.2005 and reply of the insured thereto, Mr. I?
Tripathi submitted that vital information and evidence as called for and issues raised therein have remained without compliance even in the complaint filed after more than 4 years in 2010. The State Commission completely ignored the reply of the petitioner filed on record, the documents on record and simply proceeded to observe that "the survey report should form the basis of settlement". The survey report is no doubt a fundamental document and a reliable piece of evidence. But the State Commission has read and relied merely the assessment portion thereof ignoring all other serious adverse observations including those of non-supply of documents and clarifications and serious discrepancies and ad hoc and estimated nature of claim as recorded therein. The surveyor carried out his statutory duty of "assessing the loss" in best possible way, by categorically observing that the same is based on the foundation of incomplete and unreliable documents prepared and submitted by the insured and within the constraints of absence of requisite evidence furnished by the insured. The insurer has liberty and indeed the duty to seek further clarification and evidence from the insured before settling the claim wherever felt necessary, and the State Commission fell in serious error in rendering a finding of deficient service when all the delays were attributable to the insured, there were two long intervals of silence and acquiescence of more than 5 years before this complaint for claim of 1998 was filed in 2010 wherein also the insurer's letter dated 22.09.2005 has remained uncomplied. The appeal therefore needs to be allowed and the complaint need to be discussed.
5. Mr. Soni, for the respondent-complainant has, on the other hand, put heavy reliance on the order of the State Commission and submitted that the law is well-settled that once the fire is undisputed, unless the self-infliction is positively established by the surveyor, the claim cannot be rejected on the ground of cause of fire which is an insured peril. With regard to territorial jurisdiction, it is the submission that the same is rightly exercised in view of the Divisional Office location of the insured being within the State Commission's Jurisdiction. The Survey Report was receive by the insurer in the year 2000 but the insurer unreasonably went into a slumber rather than settling the claim which itself is a serious deficiency in service. All the documents in possession of the insured were duly supplied including the income-tax and sales tax returns, the stock inventory certified by an auditor, purchase and sales bills;
£0 and the surveyor has also categorically mentioned in the survey report that the assessment is based on the documents made available as listed on page 9 and 10 of his report. The insurer thereafter unduly, arbitrarily and unreasonably kept on insisting for irrelevant documents or the books of accounts which were already lost in fire. The inability of the insured in providing some of the documents due to loss of same in fire, and the absence of purchase and sale-bills or supporting documents for sales return has been duly noticed by the Surveyor and it is only for such unavoidable constraints, that the genuine loss of Rs. 89.78 lacs suffered by the insured has been assessed at a substantially lower figure of only Rs. 29.60 lacs by the Surveyor. The survey report is held by the SC to be a fundamental evidence in Venkateswara Syndicate (2009) 8 SCO 507 and in a series of subsequent judgments, and in view thereof, the non-payment of even the assessed loss amount is a continuing deficiency in service as rightly held by the State Commission. The exercise of making the claim "no claim" is superfluous. The State Commission's order is required to be upheld in toto.
6. We have heard the counsels and perused the record. Having done so, we firstly find some merit in the contention raised by Mr. Tripathi to the effect that the State Commission had no territorial jurisdiction. Learned counsel for respondent no. 1 - complainant relied on para 23 of the State Commission's order and the fact that the insurer's divisional office at Delhi, having administrative control over the policy-issuing branch, and having financial power in the matter, also made appointment of the surveyor, and therefore, the cause of action to that extent arose at Delhi, and therefore, the Delhi State Commission had rightly exercised the territorial jurisdiction. However, we note that there is no dispute that the complainant's factory and the place of incident of fire as. also the policy issuing Branch, are located at Meerut which is within the territorial jurisdiction of U.R State Commission, and not of Delhi State Commission. The administrative control by Division office of the OP on the policy issuing office and appointment of surveyor by such Divisional Office has nothing to do with the place of incident and the place of cause of action for the complainant, apart from providing semblance of justification for exercise of jurisdiction by Delhi State Commission. We are of the opinion that the State Commission should have avoided exercising jurisdiction when the cause of 11 action has not arisen within its territorial jurisdiction and the parties are also not located within its territorial jurisdiction, particularly when Supreme Court's decision in Sonic Surgical Vs. National Insurance Co. (2010) SCC 135 referring to Calcutta High Court's decision in IFB Automotive Vs. Union of India, 2003 AIR Cal. 30 and Supreme Court's decision in Union of India vs. Adani Experts, AIR 2002 SC126 explaining the meaning of "cause of action" categorically were relied upon by the petitioner insurer and were undoubtedly applicable. However, after noting some prima facie arguable justification for such exercise of jurisdiction by the State Commission on the ground of the Divisional Office of the OP, which appointed the surveyor, is located in Delhi, and, after mainly considering that a long time of nearly 27 years has passed from the date of fire, we would rather decline to interfere on the ground of territorial jurisdiction. Similarly, in our opinion, though there are sufficient grounds made out in the investigation report to strongly suspect the self-infliction of fire in view of cumulative factors of (i) preceding day loss in uncovered event for which (ii) the FIR filed (theft) is at variance with the actual event (robbery, dacoity) as noted in investigation report, (iii) the discrepancies in the statements of employees,
(iv) the absence of any physical indication of any short circuit, (v) the non-working of the factory and non-consumption of the electric load on the day of fire, (vi) admitted absence of any fire till 4 am, (v) substantial delay of about a year in responding to investigator's queries (vi) and all the other factors discussed in detail by the investigator. However, the respondent-insured and the State Commission are nevertheless right that there is indeed no positive and conclusive evidence on record to establish that the fire was self-inflicted. Mere suspicion, howsoever strong, cannot form the basis to conclude that the fire was not on account of an accident or an insured peril or that the same was self-inflicted. The onus of conclusively establishing self-infliction is on the insurer which, in the facts of the case, has not been successfully discharged. We therefore reject this ground/contention of the insurer as well. We would therefore proceed to examine the merits of the case.
7. Turning to the merits, few critical dates and facts may firstly be noted, after observing that the fact that the two policies issued by the petitioner for a total sum assured of Rs.80 lakhs is not in dispute. The fact that fire broke out and some damage or loss occurred is also not in dispute. The incident of fire took place in the intervening night of 2/3.06.1998. The final surveyor M/s A.K. Govil & Associates visited the site after being appointed for the first time, on 05.06.1998, submitted the final report as recorded by the State Commission on 29.09.2000. The preliminary surveyor M/s S.K. Aggarwal & Co. visited the site on 03.06.1998 and submitted preliminary report on 25.06.1998. The investigator Mr. R.K. Sharma was entrusted the investigation on 04.06.1998, who submitted his investigation report on 26.05.1999 which has duly been noted by the surveyor in his final survey report. The final survey report, though making a number of adverse observations and deficiencies in the evidences filed or made available by the insured to support his claim, particularly the quantum of claim, has assessed the loss on the basis of documents at Rs.29,60,437/- as against the claim of Rs.89,78,921/- made by the respondent. The first communication after the receipt of the survey report by the insurer to the insured is stated to be on 04.02.2002 in its letter dated 05.12.2002 which has been filed by the complainant as annexure C8 with the complaint. After that date, though allegedly made some follow up with the grievance department of the insured, the complainant for the first time registered grievance thereafter with DPG only after nearly 2.5 years on 15.06.2005, which, after receipt by the insurer, resulted in the detailed letter from the insurer on 22.09.2005 (annexure C12). As per the said letter of the insurer, the clarification and evidences on as many as 14 points was called for from the complainant, which was replied by the complainant on 12.11.2005. Both these letters are available at page 112 to 120 of the file in the additional documents filed by the appellant. Mr. S.C. Jain, the-then Managing Director of the complainant expired in December, 2005. As alleged in para 11 of the complaint, (page 41) the surveyor "declined" to provide copy of the survey report vide letter dated 31.07.2007. As per the averments in the complaint, the complainant wrote multiple letters to the insurer/IRDA in 2003 and in 2005 and 2006, but the same is neither referred in the State Commission's ordre, nor brought on record. However, the legal notice was sent on 29.04.2009 after which the complaint before the District Forum appears to have been filed on 31.05.2010.
8. After minutely perusing the entire record and the communications exchanged between the parties, we, to begin with, agree with the contention of Mr. Tripathi that though the Survey Report is a significant, statutory and fundamental document, and though the surveyor is duty-bound to assess the loss, the insurer is certainly not bound to read only the assessment portion therein and ignore the other observations in the same survey report and necessarily settle the claim in terms of the assessment of loss made by the surveyor. Under section 64UM of the Insurance Act, the insurer is bound to obtain a survey report before making payment of a claim, but there is no statutory obligation on the insurer to settle the claim in terms of the assessment in the Survey Report, more so, when such assessment, even as per the same report, is based on merely estimated figures of transactions of purchase and sales unequivocally so noted in the survey report as in the present case. The insurer is at liberty and indeed duty-bound to take note of all the observations in the survey report, to further seek clarification or evidence, and independently decide on the admissibility of liability and quantum thereof on the basis of subsequent enquiry, investigation or verification as may reasonably be carried out by them in the given circumstances. We are of the view that when the evidence on record indicates that the insurer has made a conscious decision of closing the file as "no claim" after duly considering the Survey Report in its entirety and when the further verification requirements have not been satisfactorily met by the insured, it is erroneous and unjustified for the State Commission to thereafter hold that the Survey Report and the assessment of loss therein should necessarily have formed the basis for the insurer to settle the claim, without examining the merits of the objections raised by the insurer. We may reproduce section 64UM(4) which prohibits the settlement or payment in excess of Rs. 20000/- without obtaining the survey report, but does not mandate to settle in terms of the Survey Report, and Regulation 9(4) of IRDA (Protection of Policy Holders' Interest) Regulations,2002 (enacted subsequent to the date of loss), which have bearing on the matter:
No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding an amount specified in the regulations by the Authority in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance Laws (Amendment) Act, 2015, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.
Regulation 9(4): On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.
9. It is indeed true that the insurer has perhaps failed in duly communicating their decision of "no claim" allegedly arrived at after December 2002, but the relevant Regulations came on the statute book only in 2002, and such failure of the insurer can not, in our opinion, automatically entitle the insured for the loss assessed by the surveyor, more so, when the insurer has opted to examine such assessment independently and thereafter there is a long period of acquiescence and silence from the side of the insured.
10. Now we may examine the merits of basis of the insurer's objections. The State Commission has observed in para 27 of its order that the conduct of the OP insurer company was "strange and incomprehensible" and that they neither rejected the survey report nor relied upon it and further that it (survey report) should have formed the basis for settlement but the insurance company chose to brush the report aside. It has also been noted by the State Commission that in response to the legal notice (served as late as on 29.04.2009), the insurance company simply said that the claim was not maintainable and that the claim was made "No claim". In the opinion of the State Commission, "certain flimsy reasons were given" for treating the claim as no claim but "nothing was said about the survey report which was totally based on the submission of the documents and clarifications". Referring to the contents of the survey report, the State Commission observes, only partially rightly, that the same was based on documents submitted and that there is no doubt about the cause of fire or to suspect that the fire was manipulated to claim the loss on account of uncovered risk of burglary. It is further observed that R.K. Sharma, the investigator was a non-technical person and his report does not carry much evidentiary value and therefore in not settling the claim despite the survey report, the insurer is liable for deficiency in service.
L5 10.1 However, we note in this behalf that the insurer, though woke up late from the alleged slumber, but did so, in any case, before the insured himself woke up from his own slumber in making any follow up about, or raising any grievance for non-settlement, when it issued a letters dated 5.12.2002, after which, in absence of any compliance, the claim was made no claim. It is only after further 3 years that the insured wrote to DPG whereupon the exchange of communications dated 15.06.2005, 22.09.2005 and reply dated 12.11.2005 ensued (pg 113-120 of the file). These critical exchange of letters which took place more than 3 years before filing of the complaint, throw considerable light on such objections by the insurer and response thereto of the insured, which have been fully overlooked by the State Commission without assessing the import thereof. The perusal of the said exhaustive letter dated 22.09.2005 read with Annexure thereto leaves no doubt in our mind that not only the decision of "no claim" of the insurer was neither arbitrary nor unjustified, it also clearly brings out satisfactorily as to why the documents listed by the surveyor for arriving at the assessment were incomplete and "estimated", and how the insured neglected volitionally to provide credibility and reliability to those insufficient and estimate-based documents by providing further documents and explanations as called for. The investigator, inter alia, has categorically noted on page 8 and page 11 of his report that the insured has been "totally non-co-operative" and that the insured did not reply to various letters for one full year till 01.05.1999. The Insurer has listed the Surveyor's efforts of communications and interactions in Annexure A to the letter dated 22.09.2005. Also, as can be seen from the reply of the insured in 2005, the insured again not only perfunctorily and superficially replied, but also went silent for more than 3 years thereafter, and as rightly submitted by Mr. Tripathi, there is no indication even in the complaint regarding the explanations and evidence with regard to fundamental and critical issues raised by the insurer in letter dated 05.12.2002, and dated 22.09.2005, more particularly in paras (vii) to (xi) and para (xiii) of the letter dated 22.09.2005. These adverse issues, directly or indirectly, also formed part of the observations in the survey report on pages 10-19 of the report, and there can be found no fault of the insurer in either raising these issues or in not settling the claim when no satisfactory and evidence-based reply is received from the insured. Still, all these relevant facts and communications on record and the valid concerns of the insurer have been wholly overlooked by the State Commission. The long silence of more than 3 years twice during the period from 2002 to 2009 before filing the present complaint, and the implications thereof on the maintainability of the complaint, though not categorically raised by the insurer in the reply to the complaint, but which the consumer fora are obliged to look into before admitting the complaint, have also been completely overlooked by the State Commission.
12. We have therefore come to a considered conclusion that the State Commission fell in error of law in concluding that the insurer is bound to settle the claim in terms of the assessment of loss as made by the surveyor in the survey-report implicitly also holding that other observations of the Surveyor in the very report, or, the objections of the insurer thereafter, even when not satisfactorily responded to by the insured, are irrelevant. Neither any statutory provision, nor any authority has been relied upon by the State Commission for that conclusion. The insured, in the facts and circumstances as evident on record, has been lax, negligent and half-hearted in firstly proactively supporting the quantum of loss and in providing the evidence and explanations to the Surveyor, and thereafter, in countering the insurer's valid objections. The evidence in complaint also does not improve the complainant's case. The insured firstly raised a claim for loss of Rs. 89 lacs and there is no material on record to evidence the basis, if any, to support such claim. As such, the principle of uberrima fide would, independent of policy conditions also, require the insured to act responsibly and bona fide and make no misleading or unsupported or palpably unevidenced and exaggerated claims. The quantum of stock lost in fire is to be established by the insured by credible, cogent and contemporaneous evidence before the Surveyor. Simply because books of accounts or documents were "claimed to be lost in fire", the whole or part of the claim as raised does not automatically become payable. It is for the insured to either reconstruct the books on the basis of verifiable informations and contra-accounts from the transacting parties and financial and bank records and statements, or by such other reliable efforts as the circumstances may warrant, to establish the quantum of available pre-event stock on the date of the incident. The insured failed to produce even the soiled books before the Surveyor despite specific instructions. After the surveyor has categorically IT noted that most of the documents supplied to him are peripheral which do not categorically support or evidence the quantity of stock available on the day of fire so as to establish the quantities, the insured was obliged thereafter to speedily comply with the insurer's requirements. The audited balance-sheet and "detailed inventory" as on 31.03.98 provided by the insured are post-event, not ordinarily prepared in the past by the insured, and therefore, doubted by the surveyor/insurer by pointing out that no such detailed inventory or stock details were ever prepared earlier, to bring out the likelihood of bringing in inflated and self-serving figures through post-event document. The figures of purchase and sales quantities and amounts are only partially provided and established. It is the specific main concerns, as communicated to the insured as early as vide letter dated 22.09.2005 that (i) the books of accounts as required by the preliminary surveyor to be reserved and presented in his report in para 6 (g) have neither been preserved nor been produced and were stated to be damaged, beyond retrieval, (ii) despite specific requests, certified copies of the returns and the documents filed with the income tax department and sales tax department not provided by simply relying on the copy of request made without any further responsible efforts for follow-up, (iii) though the earlier audit reports for financial years 1995-1996 to 1997-1998 states that the client was not maintaining any stock registers, how and why the detailed inventory of stock could be prepared and referred to in audited accounts filed subsequently, (iv) the huge discrepancy of more than Rs.50 lakhs in the figures of sales as claimed vis-a-vis those evidenced by bills remained unexplained and even the sales tax returns which were filed subsequent to the fire for May, 1998 does not have the acknowledgement so as to consider it authenticated which otherwise also would be subsequent to the event of fire and less reliable, (v) the claim of return of goods was purely estimated and no detail or basis or evidence of shifting of goods could be provided, (vi) as against the claim of purchases of Rs.52.01 lakhs, only purchases of Rs.38.16 lakhs could be evidenced, (vii) the sales tax advocate, whose record was allegedly relied, did not provide the requisite documents and the copies for surveyor's verification.
13. In view of the above, we find that the State Commission's findings allowing the complaint is not based on any relevant and reliable evidence and on the other hand, had been arrived at overlooking critical evidence on record including the evidence as not produced before the surveyor or insurer or even in the complaint. The State Commission also overlooked the long gaps and silence of the complainant in this complaint filed in 2010 for a claim of 1998. As such, there is no deficiency on the part of the insurenand th^efpre.Jhere jsy error in the complaint having been allowed .we set aside the ordeF of the pjfate ) Commission and dismiss the complaint. // i i Sd/-
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( A.P. SAHI, J. ) i
PRESIDENT ♦
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( BHARATKUMAR PANDYA ) t
MEMBER I
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