State Consumer Disputes Redressal Commission
M/S K.G. Cotton Spinning Mills vs The New India Assurance Company Limited on 20 December, 2012
2nd Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH.
Consumer Complaint No.22 of 2008.
Date of Institution: 30.04.2008.
Date of Decision: 20.12.2012.
M/s K.G. Cotton Spinning Mills (P) Limited, VPO Gohalwar, Tarn Taran
Amritsar Road, Amritsar, Punjab, through its Managing Director Birender
Singh S/o Sh. Gurdeep Singh, Resident of VPO Gohalwar, Tarn Taran-
Amritsar Road, Amritsar, Punjab.
.....Complainant.
Versus
1. The New India Assurance Company Limited, Regd. Office New India
Assurance Building, 87, Mahatma Gandhi Road, Fort Mumbai-400001,
through Branch Manager, Branch Office 4th Floor, Surya Tower, 108,
The Mall, Ludhiana-141001.
(Insurer of M/s K.G. Cotton Spinning Mills (P) Limited).
2. State Bank of India, Stressed Assets Resolution Centre, SCO-5,
District Shopping Complex, B-Block, Ranjit Avenue, Amritsar, through
its Authorized Officer/Manager.
...Opposite Parties.
Consumer Complaint under section 17
of the Consumer Protection Act, 1986.
Before:-
Shri Inderjit Kaushik, Presiding Member.
Shri Baldev Singh Sekhon, Member.
...................................
Present:- Sh. K.S. Dhanoa, Advocate, for Sh. T.P.S. Bhatti, Advocate, counsel for the complainant.
Sh. Parminder Singh, Advocate, for Sh. Paul S. Saini, Advocate, counsel for the opposite party no.1.
Opposite party no.2 exparte.
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INDERJIT KAUSHIK, PRESIDING MEMBER:-
M/s K.G. Cotton Spinning Mills (P) Limited, complainant (In short "the complainant") has filed this complaint under the Consumer Protection Act (in short, "the Act") against the opposite parties.
2. It was asserted that the complainant availed insurance policy from respondent no.1 vide "Standard Fire and Special Perils Policy and Burglary" on 18.07.2005 vide policy schedule 1/168-30007559923 and policy Consumer Complaint No.22 of 2008 2 no.360501/46/05/00390 valid from 12-15 hours on 18.07.2005 to midnight of 17.07.2006. The sum insured was Rs.35.00 lacs for the stock in trade and the premium was paid.
3. On 16.07.2006, the premises of the complainant company caught fire and huge loss of property and goods took place. At the time of fire, stock amounting to Rs.32,77,120/- was lying in the company. With the help of Municipal Corporation Fire Services, the fire was brought under control. The matter was also reported to the local police without any delay and DDR dated 23.07.2006 was lodged. The surveyor M/s Mittal Surveyors (Pvt.) Ltd. was appointed, who raised certain formalities vide letters dated 05.09.2006 and 18.11.2006 and the complainant company complied with all the formalities and satisfied all the requirements of the surveyor vide letter dated 05.04.2007.
4. Due to the fire in question, the total loss occurred in the said fire was more than Rs.40.00 lacs. The fire was brought under control with difficulty and efforts of the fire services after more than five hours. On the next date, fire again broke out. It was also published in 'Dainik Jagran'. The matter was immediately reported to the opposite party no.1 insurance company and on 17.07.2006 the next day of the FIR, Sh. Rana, C.A. with Branch Manager visited the premises and the entire record was handed over to Sh. Rana, who took it along with. The claim was filed and the letter dated 17.07.2007 was written to the opposite parties, showing loss approximately to the tune of Rs.35.00 lacs to Rs.36.00 lacs. The claim was not settled which amounts to negligence and deficiency in service on the part of the opposite parties. The complainant suffered financial loss and harassment.
5. It was prayed that the complaint may be accepted and the compensation of Rs.35.00 lacs may be awarded along with interest @ 18% compound interest from 23.07.2006 and Rs.7.00 lacs as compensation for deficiency in service.
Consumer Complaint No.22 of 2008 3
6. In the written statement filed on behalf of opposite party no.1, the preliminary objections were taken that the complaint is not maintainable, as the business/commercial activity of manufacturing of cotton yarns for earning profit was going on and the complainant is not a consumer. The claim of the complainant is false, fake, fabricated and bogus. The relationship between the complainant and the answering opposite party is contractual and is governed by the terms and conditions of the insurance policy. On receipt of information on 17.07.2006, the answering opposite party immediately deputed Sh. Dass Rana and Associates, Surveyor and Loss Assessor, Amritsar to conduct the spot/preliminary survey and thereafter deputed M/s Mittal Surveyors (Pvt.) Ltd., Bathinda for conducting thorough survey and for assessment of the loss. Sh. Rana Partap Singh Dass, Surveyor visited the factory premises of the complainant on 17.07.2006 and observed that the fire was still smouldering in the cotton godown and smoke was emitting. The factory was not equipped with any fire-fighting equipment. No action was taken to control the fire to minimize the loss till the arrival of the fire brigade, nor Sh. Amani Gulati, who is one of the Directors, could explain the cause of the fire. The surveyor again visited on 18.07.2006, but the smouldering was still going on and he wrote a letter dated 20.07.2006, demanding the requisite documents/clarification and after receiving some information and documents, the said surveyor again wrote a letter dated 05.09.2006 asking the complainant to furnish certain documents and the clarification to the queries raised there on, but the complainant did not arrange for the documents and another reminder dated 18.10.2006 was issued. Inspite of reminders and letters, the documents were not supplied. Final reminder dated 19.03.2007 was sent and the complainant vide letter dated 05.04.2007 furnished certain information, but did not supply important documents required for assessing the loss. As per the claim form and the fire report dated 16.07.2006, the cause of fire has been shown as 'unknown', but in the FIR lodged with the police by the complainant on 23.07.2006, the cause of fire is stated to be 'due Consumer Complaint No.22 of 2008 4 to sparking caused by striking of iron hoops of cotton bales caused at the time of unloading of truck of cotton bales in the godown'. On inspection of the salvage by the surveyor, no iron hoops were found in the ashes and on asking by the surveyor, the complainant changed the stand and vide letter dated 05.04.2007 submitted that the bales were packed with plastic hoops and not with iron hoops and, thus, were not available in the salvage. The sport surveyor submitted his report dated 14.06.2007 and M/s Mittal Surveyors submitted their report dated 18.05.2007 and assessed the loss to the tune of Rs.8,22,755/-. The said surveyor assessed the loss to the factory on account of the alleged fire only to restrict the liability of the insurer. The complainant could not substantiate the cause of fire and made no efforts to minimize the fire and the answering opposite party repudiated the claim vide letter dated 01.10.2007. Copy of the repudiation letter was also sent to opposite party no.2. The order, repudiating the claim, is legal and valid and the present complaint deserves to be dismissed. The complaint is false and the same cannot be decided in summary manner. The complainant has not approached this Commission with clean hands. The filing of the complaint is misuse and abuse of the process of law. The complainant did not cooperate and it is mentioned so in the survey report.
7. On merits, taking of the policy was admitted, but it was further submitted that the complainant is not a consumer as per the preliminary objections. Similar pleas as taken in preliminary objections were repeated and denying allegations of the complaint, it was prayed that the complaint may be dismissed with costs.
8. Opposite party no.2 has not contested the complaint and was proceeded against exparte vide order dated 22.02.2012.
9. The complainant in support of his claim, tendered affidavit of its M.D. Sh. Birender Singh, along with documents Ex.CA-1 to Ex.CA-13 and closed the evidence.
Consumer Complaint No.22 of 2008 5
10. The opposite party no.1 tendered affidavit of Sh. Sunil Mahajan, Divnl. Manager, as Ex.R-1/A; affidavit of Sh. Parmod Mittal, Surveyor as Ex.R-1/B along with Rs.Ex.R-1 to Ex.R-22 and closed the evidence.
11. We have heard the arguments advanced by the learned counsel for the parties and have minutely gone through the entire documents and other material placed on the record.
12. Learned counsel for the complainant argued that the complainant has taken the policy Ex.C-A/1 and insured the stock and trading for Rs.35.00 lacs and the policy was "Standard Fire and Special Perils Policy and Burglary". The fire broke out in the premises of the company and the opposite parties were duly informed. The Municipal Corporation Fire Services extinguished the fire and the fire report is Ex.C-A/4. Opposite party no.1 appointed surveyor and the complainant cooperated with him and supplied all the documents. The surveyor assessed the loss without considering the documents and the closing stock report dated 16.07.2006 Ex.C-A/23. Opposite party no.1 insurance company repudiated the claim illegally and is liable to pay the insurance amount with compensation for harassment, as prayed in the complaint.
13. On the other hand, learned counsel for opposite party no.1 vehemently argued that the claim is false and false and the complainant did not cooperate with opposite party no.1 and did not supply the documents as demanded vide letters and reminders Ex.R-3 to Ex.R-9 and Ex.R-11 and Ex.R-12. It was further contended that in the Fire Insurance Claim Form Ex.R- 14, the complainant mentioned the cause of fire as 'unknown'. In the fire report Ex.R-15 also, the cause of fire was mentioned as 'unknown', whereas in the DDR Ex.R-16 dated 23.07.2006, cause of fire was mentioned as 'due to striking of iron hoops'. It was further contended that in the preliminary survey report Ex.R-17, said facts were mentioned and it was mentioned that the insured was asked to produce the documents, but the same were not produced. The final survey report Ex.R-18 was submitted and under the head Consumer Complaint No.22 of 2008 6 'cause of fire', similar facts were mentioned. It has been argued that the surveyor, during inspection, did not find any iron hoops, then thereafter the complainant changed the stand and it was stated that the cotton bales were packed with plastic hoops which were burnt. It was contended that no bills or receipts or the evidence of payment made regarding the purchase of stock was produced before the surveyor and still the surveyor assessed the loss to the tune of Rs.8,22,755/-, but the same is payable subject to the terms and conditions of the policy. The repudiation is legal and valid, as the documents material for the settlement of the claim were not produced. It has been argued that the complaint filed by the complainant is false and frivolous and the same may be dismissed.
14. We have considered the respective submissions made on behalf of the complainant and opposite party no.1 and have scanned the entire facts, circumstances and documents placed on the file.
15. The complainant obtained the insurance policy vide "Standard Fire and Special Perils Policy and Burglary" on 18.07.2005 and as per the version of the complainant, the premises of the complainant company caught fire on 16.07.2006 and suffered huge loss of property and goods lying in the premises of the company and DDR dated 23.07.2006 was lodged. The respondent was informed and surveyor M/s Mittal Surveyors Pvt. Ltd. was appointed. As per the version of the complainant, the loss of Rs.40.00 lacs occurred in the said fire and the complainant cooperated, but the claim was not settled. The version of the opposite party insurance company is that the complainant has not cooperated, nor supplied the necessary documents and the claim was rightly repudiated. It is also the version of the opposite party insurance company that the complainant has not given the exact cause of the fire and violated the terms and conditions of the policy and is not entitled to any claim.
16. The fire broke out in the premises of the complainant on 16.07.2006 as per the complainant, but the police was not informed Consumer Complaint No.22 of 2008 7 immediately, but after seven days when the DDR Ex.C/A-5 was lodged. As per Fire Report Ex.C/A-4, the cause of fire was 'unknown', whereas in the DDR Ex.C/A-5, it was mentioned that the cause of fire was due to sparking by striking of iron hoops of cotton bales caused at the time of unloading of the truck of cotton bales in the godown, whereas at the time of inspection by the surveyor, no iron hoops were found in the ashes and the version of the complainant was found to be false and later vide letter dated 05.04.2007, the complainant came out with the version that cotton bales were packed with plastic hoops and not with iron hoops and, as such, the same were not available in the salvage. The opposite party insurance company sought for certain documents to settle the claim and the surveyor wrote letters Ex.R-3 to Ex.R-7, demanding documents which were required to assess the loss, but the documents were not supplied and the final reminder Ex.R-7 was given by the surveyor and thereafter, the opposite party insurance company vide letter Ex.R-8 again wrote to the complainant to supply the documents, or else the claim will be filed as 'no claim', as recommended by the surveyor. The opposite party insurance company again wrote letter Ex.R-9 dated 23rd January, 2007 to supply the documents. The surveyor as well as the opposite party insurance company wrote letters Ex.R-10 to Ex.R-12 to supply the documents, but that was not done. In the Fire Insurance and Claim Form Ex.R-14, again the cause of fire was mentioned as 'unknown' by the complainant.
17. From the above evidence and material placed on file, it is clear that the complainant itself was not sure about the cause of fire and has been making contradictory statements. The relevant documents such as bank stock statement, bank accounts, VAT return etc. and other documents as detailed in the above letters were supplied after lot of correspondence. As per the surveyor report Ex.R18, under the head 'Supplier's Accounts", it was mentioned as follows:-
Consumer Complaint No.22 of 2008 8
"The insured has provided unsigned copies of the supplier accounts. In some of the accounts it appears that only billing is done and no physical transfer of stocks took place. There was no payment against the purchases made. Heavy purchases are shown during the period on 01.04.2006 to 16.07.2006".
18. The policy i.e. "Standard Fire and Special Perils Policy (Material Damage)", covered the destruction of the property and under the head 'Fire', it is provided as follows:-
"Fire:-
Excluding destruction or damage caused to the property insured by
a) (i) its own fermentation, natural heating or spontaneous combustion.
(ii) Its undergoing any heating or drying process.
b) burning of property insured by order of any Public Authority".
19. Although, the complainant has not been able to specifically tell the cause of fire and it was mentioned as 'unknown' in the in the Fire Insurance Claim Form Ex.R-14 as well as in the Fire Report Ex.R-15, but the facts remains that the fire occurred in the premises of the complainant and it was for opposite party no.1 insurance company to prove that the exclusion clause is applicable, but opposite party no.1 insurance company has failed to bring on record any evidence to prove that the fire was due to its own fermentation, natural heating or spontaneous combustion or the other causes, excluding the claim. The surveyor i.e. M/s Mittal Surveyors (Pvt.) Ltd. in its final survey report dated 18.05.2007 Ex.R-18, after mentioning the detail of the stock statement, monthly summary, yearly statement of consumption and production, average weight per bale/bag; under the head quantum of loss, assessed the loss to the tune of Rs.8,22,755/-. The opposite party no.1 insurance company has not been able to prove that this amount is not payable to the complainant. The surveyor has considered the documents mentioned under the head 'Enclosures", including the photographs and has Consumer Complaint No.22 of 2008 9 shown the loss and, as such, opposite party no.1 insurance company is liable to pay the same to the complainant.
20. In view of above discussion, the complaint filed by the complainant is partly allowed against opposite party no.1 insurance company and opposite party no.1 insurance company is directed to pay Rs.8,22,755/- to the complainant along with interest @ 7.5% per annum from the date of surveyor report dated 18.05.2007 Ex.R-18 till realization. The complainant is also awarded Rs.10,000/- as litigation expenses. Complaint against opposite party no.2-bank is dismissed.
21. The order shall be complied by opposite party no.1 insurance company within 30 days of the receipt of copy of the order.
22. Arguments in this complaint were heard on 18.12.2012 and the order was reserved. Now the same be communicated to the parties.
23. The complaint could not be decided within the stipulated timeframe due to heavy pendency of Court case.
(Inderjit Kaushik) Presiding Member (Baldev Singh Sekhon) Member December 20, 2012.
(Gurmeet S)