National Consumer Disputes Redressal
M/S. Raj P.U. Foam Industries vs M/S. National Insurance Co. Ltd. & Anr. on 11 December, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 168 OF 2008 1. M/S. RAJ P.U. FOAM INDUSTRIES Through its Proprietor Sh. Vijay Kumar Manchanda,
6, Sehgal Colony,
Court Lane,
Civil Lines New Delhi Delhi - 110 054 ...........Complainant(s) Versus 1. M/S. NATIONAL INSURANCE CO. LTD. & ANR. Registered & Head Office at 3,
Middleton Street Kolkata - 700 071 West Bengal 2. REGIONAL OFFICE 2E/9, Jhandewalan Extension New Delhi - 110 055 Delhi 3. DIVISIONAL OFFICE 1, Mehrauli Road (Opposite SBI) Gurgaon - 122 001 Haryana 4. CENTRAL BANK OF INDIA Janpath New Delhi - 110 001 Delhi ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER
For the Complainant : Mr. Abhishek Mishra, Advocate For the Opp.Party : Mr. Kishore Rawat, Advocate
Dated : 11 Dec 2015 ORDER
HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)
1. The complainant is stated to be a partnership firm of two persons, namely, Desh Raj Manchanda and his son Vijay Kumar Manchanda. The complainant firm obtained two insurance policies from the opposite party, namely, National Insurance Company Ltd. in respect of its factory situated at A-11/3, Site-IV, Industrial Area, Sahibabad. The first policy covered the building and shed along with IPU Foam Plant, Circular Cutting Machine, Vertical and Horizontal Cutting Machine and complete plants of cotton coated fabrics lying in the aforesaid premises whereas the second policy covered the stock of raw material in process, finished, semi-finished goods, stock of packing material, stocks of release paper and stock of fabric in the godown as well as kept in open at the above said address. The stock is alleged to have been mortgaged with the Central Bank of India, Janpath, New Delhi, which is opposite party no.2 in this complaint.
2. The case of the complainant as set out in the amended complaint is that on 24.07.2001 at about 10.35 PM there was a major fire at the insured premises due to short circuit of electricity causing heavy loss to the building and stock lying therein. The machinery is also alleged to have been damaged due to fire. The intimation of the fire was given to police, excise department, bank as well as the insurance company. A surveyor was appointed by the insurance company, who submitted his final survey report dated 17.04.2003, estimating the total loss to the complainant at Rs.2,74,19,180/-. Before submitting the said final report, the surveyor suggested that certain aspects of the claim enumerated in the said report be investigated by senior investigator. Vide another letter dated 29.06.2002, the surveyor requested the insurance company to sanction investigation on the ground that the insured was pressing hard for the survey report. The insurance company appointed an investigator, who, based on the fire expert report, reported that the fire could have ignited by the fall of halogen bulb. The investigator was of the view that halogen bulb could have fallen in the extreme heat due to fire on the shed of the affected area. He further noted that the labour of the factory could not be contacted and after one year of the incident evidence was difficult to detect.
3. The complainant submitted a claim to the insurance company on 17.09.2001 claiming an amount of Rs.5,65,00,000/- approximately. The cause of fire given in the claim was falling of halogen bulb on PU Form stocks.
4. Since no payment was made to the complainant despite submission of the survey report, this complaint was filed seeking the following relief:-
"i. award a sum of Rs.3,36,35,987/- on account of loss caused to the stocks in favour of the Complainant and against Respondent No.1;
ii. award a sum of Rs.37,05,883/- on account of estimated cost to carry out repairs at the insured building; and a sum of Rs.90,01,473/- on account of loss of Plant & Machinery;
iii. award interest @ 24% per annum on Rs.4,26,37,460/- from the date of fire till the date of realization of amount in favour of complainant and against Respondent No.1.
iv. award additional interest @ 2% per annum under Regulation 9(6) of IRDA on Rs.4,26,37,460/- from the date of fire till the date of realization of amount in favour of complainant and against Respondent No.1.
v. award a sum of Rs.10,00,000/- on account of compensation in favour Complainant and against Respondent No.1;
vi. award a sum of Rs.5,00,000/- on account of loss of business and market reputation in favour of the complainant and against Respondent No.1;
vii. award a cost of present proceedings in favour of the Complainant and against Respondent No.1."
5. After filing of this complaint, the insurance company sent a letter August 18, 2009 to the complainant stating inter-alia as under:-
"You have not responded to the queries raised vide DO letter dt. 18.02.05, 10.08.2005 and 24.03.2006 (copies enclosed) Response to the query raised regarding any claim having been earlier taken by you or your sister concerns, you have given an affidavit that you or your sister concerns have not taken any policies from M/s United India Insurance Co. nor have lodged any claim on them. But it is found that two claims have already been taken by your sister concerns earlier from different insurance Companies.
Bills of replacement and repair of damaged parts along with custom duty and supporting documents in respect of earlier claims involving the same machines have not been furnished. It appears that claim has been repeatedly lodged as there had not been reinstatement/repair of damages due to earlier fire losses.
Actual cause of loss as the case of loss mentioned to excise department was short circuit whereas it was reported to the surveyors that it was due to fall of halogen lamp.
The building is on lease from M/s Arihant Suedes Ltd. and the velvet plant is on lease from M/s Raj business ltd. However in all the three companies Mr. Vijay Manchanda is the director and all the Companies have the same working address and the same Regd. Office address. The other two companies have already taken a claim before therefore the details of the claim taken, reinstatement of the affected plant and machinery and building were asked which have not been given, it again implies that earlier claim has been repeatedly lodged.
Kindly let us know why your claim should not be repudiated due to following reasons:
Misrepresentation & concealment the facts by you thus violating the terms and condition of policy. Lodging fabricated claim by repeating earlier claims earlier lodged and taken from other insurers. Misleading company by not furnishing desired documents to support your claim."
6. Though the complainant responded to the aforesaid letter to the insurance company on 1.10.2009, the insurance company vide its letter dated 30.09.2009 had already closed the file as 'no claim'.
7. The opposite party filed its written version to the complaint, alleging therein that the complainant had contravened conditions no.6 & 8 of the insurance policy. It was inter-alia stated in the reply that the complainant had failed to supply the requisite documents and information, which it was duty bound to supply in terms of the condition no.6 of the insurance policy. It was further stated that a false declaration was made in the claim since it was not disclosed that the claims had already been taken in respect of the insured premises where the fire had allegedly broken out. One claim, according to the opposite party, was taken from Oriental Insurance Company Ltd. and the other claim was taken from New India Assurance Co. Ltd., the first claim being for Rs.12,90,933/- and second for Rs.2,71,27,537, which included claim for plant and machinery at Rs.34,51,320. It was also pointed out in the reply that the cause of fire disclosed to the insurance company was falling of halogen bulb on PU Form stocks, whereas to the other agencies the cause of fire was stated to be short circuit of electricity. It is also alleged that the complainant failed to produce its workers for the purpose of verification by the investigator. It is also claimed that the complainant had no insurable interest in the premises on the date the policy was taken.
8. The insurance company also alleged that false and fabricated invoices of Sigma Footwears were submitted to it by the complainant whereas the invoices of Sheena Polyfabs Pvt. Ltd. submitted by the complainant were found to have been issued only as accommodation bills. It was also pointed out that the claim filed with the insurance company included excise duty on the stock whereas the complainant had already claimed reimbursement of excise duty from the excise department and this information was gathered by the insurance company from excise department on receipt of notice from the said department inquiring about the settlement of the claim. Yet another plea taken in the reply is that no intimation with respect of the financial interest of the bank in the insured goods was given to them by the complainant.
9. Condition No. 8 of insurance policy reads as under:
"If the claim be in any respect be fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices 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."
It would thus be seen that if the claim made by the insurance company is even partly fraudulent or if any declaration made by him or a document submitted by him to the insurer, in order to claim a benefit under the policy is found to be false or fabricated, the insurer is not liable to make any payment to the insured and stands relieved of all its contractual obligations under the contract of insurance.
10. It is an admitted position that the complainant had submitted, to the insurer/surveyor two invoices purporting to be issued by Sheena Polyfabs Pvt. Ltd., one being invoice no. 111 dated 25.06.2001 for Rs. 1 lac and the other being invoice no. 105 dated 13.06.2001 for Rs. 4,61, 150/-. A perusal of the letter dated 29.06.2002 written by the surveyor to the insurer would show that when he visited the aforesaid address, no such premises could be located by him. He made enquiry with the local Municipal Corporation and was informed that no such premises existed in that area. The complainant did not produce any representative of Sheena Polyfabs Pvt. Ltd. before the surveyor nor did it produce before him any evidence to prove the existence of premises bearing no. 161, Rajender Nagar, Sahibabad, District Ghaziabad, U.P., which was the address given in the invoice purported to be issued by Sheena Polyfabs Pvt. Ltd. Despite the opposite party having claimed fraud on the part of the complainant, no evidence has been produced before this Commission to prove existence of any premises bearing no. 161, Rajender Nagar, Sahibabad, District Ghaziabad, U.P. In my view, considering the above referred letter from the surveyor, it was necessary for the complainant to prove the existence of the aforesaid premises either before the surveyor or before this Commission.
No official from Sheena Polyfabs Pvt. Ltd. has been produced by the complainant before this Commission to prove that the invoices purporting to have been issued on 25.06.2001 and 13.06.2001 are genuine invoices and that they had actually sold the case mentioned in the aforesaid invoices to the complaint. No affidavit of any Director or employee of the aforesaid company has been filed by the complainant to prove that the aforesaid invoices are genuine documents.
11. It was stated by the learned counsel for the complainant, during the course of the hearing that the complainant could not find out the present location of the above referred company Sheena Polyfabs Pvt. Ltd. and that was the reason they could not summon any Director/employee of the aforesaid company. However, no such averment has been made in the rejoinder. In any case, considering the stand taken by the insurance company in its reply, the complainant, in my view, should have led evidence to prove not only that Sheena Polyfabs Pvt. Ltd. existed at the address 161, Rajender Nagar, Sahibabad, District Ghaziabad, U.P. at the time the above referred invoices purported to have been issued but also that the sale evidenced by the aforesaid invoices was a genuine sale made to the complainant. Though it was stated by the learned counsel for the complainant, during the course of hearing that the address given on invoices is the same address which Sheena Polyfabs Pvt. Ltd. had given to the Registrar of Companies, there is no evidence in support of the aforesaid contention. No record from the Registrar of Companies has been produced to prove that Sheena Polyfabs Pvt. Ltd. had at any point of time, given its address as 161, Rajender Nagar, Sahibabad, District Ghaziabad, U.P. I find from a perusal of the invoices that there also appear two telephone numbers besides Sales Tax Number and CST Number of Sheena Polyfabs Pvt. Ltd. Therefore, even if it is assumed that the aforesaid company had shifted from the address given in the invoices to some other address, the complainant could easily have located the said company or at least the persons who were in charge of its affairs, by verifying their current address from Sales Tax Department or from the Telephone Department. The latest address of the aforesaid company could have also been easily obtained from the Registrar of Companies. No such effort having been made, the inevitable inference is that the complainant knows that the aforesaid invoices are not genuine documents.
12. The payment of Rs. 1 lac and Rs. 4,61,150/- would, in the ordinary course, have been made by the complainant to Sheena Polyfabs Pvt. Ltd. by cheque. This is not the case of the complainant that the said payments were made in cash. The complainant therefore, could easily have obtained the current address of the aforesaid company by contacting its banker and ascertaining the address of the company from the said banker. The particulars of the banker of Sheena Polyfabs Pvt. Ltd. could easily have been ascertained by the complainant by contacting its own bank and finding out, to which account the amount of the cheque issued to Sheena Polyfabs Pvt. Ltd. was credited.
Another discrepancy I find in the aforesaid at least in one of the invoices is that despite the aforesaid invoice having columns meant for LST/CST Number of the purchaser, mode of dispatch and payment through, no such details have been filed in the invoice. In fact, the complainant did not make even an attempt to request this Commission to send summon to Sheena Polyfabs Pvt. Ltd. at the address given on the aforesaid invoices. Had that been done, this Commission would at least have come to know whether in premises bearing the above referred address actually exists or not. In these circumstances, I have absolutely no hesitation in holding that the invoices purporting to be issued by Sheena are false and fabricated documents. Consequently, the insurance company was entitled to reject the claim on this ground alone.
13. This is also the case of the insurance company that the invoices issued by Sigma Footwears to the complainant do not represent genuine transaction of sale of foam to the complainant and were only accommodation bills meaning thereby the bills issued at the request of a person, in order to accommodate him but without actually entering into a transaction evidenced by the bill. The surveyor appointed by the insurance company recorded the statement of one Mr. Fahim Ahmad in which he stated that bills no. 84, 526 & 525 though issued by them, were later cancelled by them and the goods mentioned in the aforesaid bills were neither sold by them nor purchased from them. He further stated that he was running a footwear shop and was not engaged in business of foam. The learned counsel for the complainant has pointed out that the signatures of Fahim Ahmad on the above stated statement are not legible and in any case he has filed the affidavit of Mr. Fahim Ahmad stating therein that he had commercial transaction with the complainant and invoices no. 54, 525 & 526 were issued by him which are correct and genuine. The above referred affidavit is silent as regards the alleged cancellation of the aforesaid invoices as well as the statement alleged to have been recorded by the surveyor. What is important in this regard is the name of the firm of Sh. Fahim Ahmad which is Sigma Footwears. It is unlikely that a footwear seller will be stocking and selling foam and that too, in a large quantity. However, I need not take a final view on the genuineness or otherwise of the invoices purporting to be issued by Sigma Footwears since, in my view, submission of false and fabricated invoices of M/s. Sheena Polyfabs Pvt. Ltd. by itself is sufficient to reject the claim of the complainant.
14. A perusal of the claim form coupled with the report of the surveyor would show that the complainant had made a claim for the value of the finished products and that value included the excise duty payable for finished products. It is also an admitted position that the complainant had requested the Excise Department to waive excise duty on the finished goods vide letter dated 27.07.2001 addressed to the Deputy Commissioner, Central Excise, Ghaziabad. The complainant had requested waiver of the excise duty involved in the goods lost in the fire incident. The claim with the insurance company was lodged much later than the complainant writing this letter to Excise Department. In the claim to the insurance company, the complainant did not disclose that he had requested the Excise Department to waive/remit the excise duty on the finished products. At no stage, the complainant wrote to the insurance company informing that it had requested the Excise Department to remit/waive the excise duty on the finished products and saying that in the event the remission/waiver is granted, the claim may be reduced to the extent of the remission/waiver. The report of the surveyor shows that the complainant strongly resisted the suggestion of the surveyor to exclude the excise duty component on the finished products. In fact, the report shows that there was no claim for the raw material. The complainant resisted the suggestion of the surveyor on the ground that they did not resume production after the loss and therefore, could not avail modvat credit. From the aforesaid conduct of the complainant, it appears to me that it intended to take excise waiver/remission from the Excise Department while simultaneously taking the value of the finished products including excise duty component from the insurance company. Had the insurer not received a notice from the Excise Department and not gone to it, probably it would never have come to know that the complainant had applied for waiver/remission of the aforesaid excise duty. Therefore, the claim, to the extent it pertains to excise duty component of the finished goods, was fraudulent and consequently, the insurance company was entitled to deny the entire claim on this ground alone.
15. A perusal of the claim form submitted by the complainant would show that it was required to disclose whether there had been a previous fire in the insured premises or in any other premises in which the insured was interested. The answer given by the complainant was 'N.A.' implying thereby that there was no previous fire in the insured premises or in any other premises in which the insured was interested. It is however, an admitted case that M/s. Arihant Suedes Ltd. which was functioning in this very premises, had taken two claims, one from Oriental Insurance Company and the other from New India Assurance Company. Shri Vijay Manchanda, one of the partners of the complainant firm, was a Director in M/s. Arihant Suedes Ltd. Therefore, it cannot be said that the complainant was unaware of the aforesaid claim taken by M/s. Arihant Suedes Ltd. The complainant thus, supplied wrong information to the insurance company in the claim form submitted by it. The purpose obviously was to ensure that no doubt with respect to the claim of the complainant is created in the mind of the insurer on account of earlier claims taken in respect of the same premises. The claim submitted by the complainant therefore, was founded on concealment of material facts.
16. The plant and machinery got insured by the complainant from the opposite party included a P.U. Foam plant. Admittedly, a claim in respect of P.U. Foam plant had been taken previously by M/s. Arihant Suedes Ltd. on re-instatement basis. The insurance company asked the complainant to produce evidence to prove that M/s. Arihant Suedes Ltd. had actually re-instated the P.U. Foam plant in respect of which claim on re-instatement basis had been taken. It was stated by the complainant company that having made enquiry from the Directors of M/s. Arihant Suedes Ltd., they had come to know that the aforesaid plant was re-instated by them on repair basis, from their own funds, and no bills evidencing such re-instatement had been retained. The case of the complainant, as stated by its counsel is that the P.U. Foam plant got insured by it was not the same plant which M/s. Arihant Suedes Ltd. had got re-instated and that the complainant had purchased its own P.U. Foam plant from another source. However, neither the source of purchase of the P.U. Foam plant by the complainant has been disclosed in the complaint nor has the complainant produced any evidence to prove the purchase of such a plant from a source other than M/s. Arihant Suedes Ltd. The learned counsel for the complainant states that he did not produce any evidence with respect to purchase of P.U. Foam plant because the said plant was not a subject matter of the present claim in this complaint. However, in my view, considering the plea taken by the insurance company in its reply, the complainant should have produced evidence to prove the alleged independent purchase of P.U. Foam plant from a source other than M/s. Arihant Suedes Ltd. Be that as it may, even if I exclude from consideration the lack of evidence with respect to purchase of P.U. Foam plant by the complainant, the fraudulent claim with respect to excise component of the finished goods and the submission of the false and fabricated invoices of M/s. Sheena Polyfabs Pvt. Ltd., in my view, is sufficient to reject the entire claim of the complainant. I, therefore, need not take a view on the other plea taken by the insurer.
17. For the reasons stated hereinabove, the complainant is hereby dismissed, with no order as to cost.
......................J V.K. JAIN PRESIDING MEMBER