National Consumer Disputes Redressal
M/S. Target Plywood Industries Ltd., ... vs Senior Divisional Manager, The ... on 19 July, 2006
NCDRC NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI ORIGINAL PETITION NO. 426 OF 2000 M/s. Target Plywood Industries Ltd., W.H.S. Kirti Nagar Delhi Complainant Versus 1. Senior Divisional Manager, The Oriental Insurance Co. D.D. XI, Ansal Industrial Area G.T. Karnal Road, Azadpur, Delhi-110033. 2. Asstt. General Manager The Oriental Insurance Co. 9th Floor, Jeevan Bharti Building Connaught Circus New Delhi-110 001 Opposite Parties BEFORE : HONBLE MR. JUSTICE M.B. SHAH, PRESIDENT MRS. RAJYALAKSHMI RAO, MEMBER For the Complainant : Mr. Sukumar Pattjoshi, Advocate For the Opposite Parties : Mr.S.M.Tripathi and Ms. Deepa Chacko, Advocates Dated the 19th July, 2006 O R D E R
M.B. SHAH, J., PRESIDENT It is the say of the complainant that it is a small scale industry engaged in the manufacturing and marketing of Plywood and allied products. It has taken two insurance policies from the Opposite Party No.1 by paying full premium. On 25th September, 1997 fire broke out in the factory and caused heavy loss.
Immediate information was conveyed to the Fire Brigade, the Police and the Insurer.
Thereafter, the Complainant submitted a claim, along with all the documents, for a sum of Rs.81.33 lakhs, out of which a sum of Rs.79,08,314/- was for the stocks destroyed. We have referred to the amount of stock destroyed, because the dispute in this complaint is only with regard to assessment of loss for the stock destroyed.
It is the say of the Complainant that the Surveyor Subhash Kapoor & Associates, appointed by the Insurance Co. assessed the loss and recommended to the Insurance Company to pay a sum of Rs.58.25 lakhs.
It is the further say that subsequently the Surveyor scaled down the claim and reduced it to Rs.29.62 lakhs for inexplicable reasons.
Thereafter, the Insurance Co. appointed an Investigator who assessed the loss at Rs.22,41,536/-. Without taking consent of Complainant, the Insurance Co. sent a cheque for the said amount to the bankers of the Complainant. It is the contention of the Complainant that the assessment of the loss is totally unjustified and, therefore, the Insurance Company should be directed to pay the balance amount of Rs.59 lakhs for the loss suffered, and Rs.20 lakhs as compensation for harassment caused to it.
A. Survey Report dated 12.12.1997:
A. (i) Undisputedly, the Surveyor Subhash Kapoor & Associates submitted an interim survey report dated December 12, 1997. In the interim survey report, the surveyor has accepted that it was an accidental fire. The Complainant had claimed a sum of Rs.81.33 lakhs and odd for the loss of the stock. For making budgetary provision, the surveyor stated presently it is suggested that a cautious conclusion in respect of stocks may be taken at around Rs.75 lakhs considering the unaffected stocks/recoverable salvage lying in the Insureds premises.
Thereafter, in his remarks it has been, inter alia, stated as under:
Some points of Annexure to Auditors Report attached to the Audited Balance Sheets for the year ending 31st March 1997 and reading as under are listed for purpose of record:-
As the Company has not maintained reasonable records of stocks, therefore we are unable to certify the correctness of valuation of closing stock and unable to comment on the discrepancies between the physical stocks and book records.
As Complete details of stock, consumption etc. of stock have not been provided to us (transfer) we are unable to certify the correctness of stock and its valuation.
(ii) Subsequently, on 6th March, 1998, the Surveyors submitted final survey and assessment report. That report requires exhaustive consideration because the Surveyor has assessed the loss caused to the stock at Rs.62,38,655.76 and, thereafter, deducted Rs.5,09,535.00 as the salvage value, thereby he assessed the loss at Rs.57,29,120.76. From that, half (50%) of the amount was deducted for various alleged deficiencies as stated by him and assessed the loss at Rs.28,64,560.38.
Thereafter, he has assessed the loss caused to the building, electrical fittings, plant and machinery and has finally arrived at the conclusion that the net loss was of Rs.29,62,063.78.
The question which requires consideration would be whether the Surveyor was justified in reducing the assessed loss to one-half.
For the aforesaid purpose, we would refer exhaustively to the relevant discussion in the survey report, which is as under:
35. The Insured had provided us needed details and documents except the Production & Stock Registers to establish the precise quantities of Face and Core Veneer manufactured and lying stored in their factory as on the date of loss. We had to undertake complete Audit of all their purchases, sales, physical inventories lying after the fire in their factory premises, labour records, electricity bills and diesel consumption for running the installed D. G. Set. We had carried out an exhaustive exercise to arrive at the reasonably correct value of stocks.
36. .
VALUE AT RISK AT THE TIME OF LOSS I Stocks
37. A comprehensive analysis of the Insureds manufacturing activities and complete audit of their Books of Accounts was carried out by us.
38. In spite of extensive and intensive efforts it was not practicable to conclude regarding actual quantities of Face and Core Veneer manufactured by the Insured. However, manufacture of plywood/ plyboard/ blackboards was concluded based on sales & physical inventories in their Works.
39. Complete ash of the reportedly burnt Face and Core Veneer was weighed. Samples of Face and Core Veneer were also burnt to work out a volumetric analysis of the weighed ash. This exercise, coupled with certain assumptions, did not reveal a reliable picture of Face and Core Veneer lying in the Insureds factory premises as on the date of loss.
40. The only practical methodology which could be adopted to arrive at the reasonably correct stock position was to consider (a) total purchases of wooden logs as well as Face and Core Veneer from market,
(b) evaluate the cost of material consumed during trial testing, defective goods and sales.
41. We had also established after scrutiny of the Insureds records that goods purchased on high seas from M/s. Gupta Gbobal Exim Pvt. Limited, were only partially lifted till the date of loss on 25.11.1997 against the total contracted amount. The value of stock not lifted till then was disallowed.
42. Value of stocks arrived at the aforestated bases was worked out at Rs. 62,38,655.76.
The relevant details are given under the Heading Assessment of loss.
43. On the above basis, the coverage for stocks at Rs.80 lakhs under the three Policies was considered to be adequate coverage.
..
PARAMETERS OF ASSESSMENT I Stocks
53. Total value of stock as on the date of loss has been concluded at Rs. 62,38,655.76 Refer details under the heading Assessment of loss.
Salvage value of the sound wooden logs, Face and Core Veneer besides wooden battens, sound finished stocks of plywood and plyboard as also recovery from partly burnt material has been arrived at Rs. 5,09,535.00 as under:-
*Timber logs : 37.08 Cubic Meter at Rs. 10,162.35 per Cubic Metre Rs.
3,76,820.00 *Core Veneer : 4495 sq. Metre at Rs. 7.86 per sq. Metre Rs. 35,330.00 *Face Veneer : 500 Sq. Metre at Rs. 8.32 per Sq. Metre Rs. 4,160.00 *50% of partly burnt of finished material valued at Rs. 1,64,890.00 Rs. 82,445.00 *Sound finished material Rs. 10,780.00
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Rs. 5,09,535.00 =============
55. Gross stock amount after adjustment for above salvage value has been discounted by 50% to account for (i) inaccuracies in Audited Balance Sheet, (ii) Auditors qualifying remarks that the Insured had not maintained reasonable records of stocks, (iii) non establishment of precise production of Face and Core Veneer within the factory premises (iv) Wastage of wood from logs to Face and Core Veneer and (v) sale of scrap saw dust etc. B. Investigators Report dated 26.11.1998 Despite the aforesaid survey report, instead of paying the amount as assessed by the Surveyor, the Insurance Company, by telephonic message, appointed one M/s. S. Soni & Co., for investigation into the fire claim made by the Complainant with special emphasis on the high value of the stock on the date of fire and to ascertain the cause of fire. The Investigator noted that according to the earlier survey report there were three possibilities of fire (i) short circuiting,
(ii) fire due to burning of jungle bushes and (iii) fire could be because of some person carelessly throwing burning bidi or cigarette.
They have also mentioned that according to the Fire Brigade report, the fire was related to the jungle fire which was around insureds factory premises. According to them, the fire was probably because of the carelessly throwing of burning bidi or cigarette.
Subsequently, they reproduced the assessment made by the previous surveyor. They have not agreed with the discounting of stocks by 50%. However, they assessed the value of the stock by arriving at the conclusion that for some purchases complainant had failed to establish the same because according to them lorry receipts were fictitious. The relevant part thereof is as under:
CHECKING OF BOOKS & RECORDS.
SALES.
We have thoroughly checked the sale transactions during the period 96 97 and during 97 98 upto the date of loss and found them in order with the sale bills. We also verified the sales with the sale tax returns provided by the insured and found that the sales are not correlating with the Sales Tax returns. The details as follows:
Year Ending Year Ending 31.3.1997 25.11.98 Sales as per Sale Tax Returns 9,38,112.68 8,77,438.76 Sales as per Sales Bills and Sales Ledger 8,62,706.36 7,35,917.11 We have taken the value of sales as per the Sale Tax returns since it is higher of two.
PURCHASES We thoroughly checked the purchase transactions with the original purchase bill & copies of lorry receipt of purchases made by the insured during the period of 96 97 and 97 98 and found that the purchase transactions are properly entered in the books of accounts and payments are proper. We conducted the verifications of Lorry Receipts with their respective transporters telephonically and found the Lorry Receipts to be genuine and issued by the respective transporters except in two cases where we found the transporter, M/s. Amit Transport Co. not existent since it was the telephone number of supplier of goods on the lorry receipt itself and another Transporter M/s. New Economic Roadways denied having issued the Lorry Receipts in question, he confirmed in writing by fax that the Lorry Receipts have not been issued by them and are fake. This in turn proves that the purchases/ stocks have actually not been sent or if sent then have not gone to the factory, but have gone else where. So we proposed to disallow the above purchases on the above grounds. The following is the details of the verification of the G.R's issued by New Economic Roadways and Amit Transport Co. given in (Schedule A enclosed) herewith the report.
The total purchases as per the purchase bills for 96 97 & 97 98 are as follows:
1996 97 :Rs. 52,65,539.43 1997 98 :Rs. 21,91,587.00 Including Rs.13,50,000/- for high seas (Upto the date of Loss) Purchases from Gupta Global International.
The following are the suppliers and the details of purchases made by the insured during the period 96 97 & 97 98. (Supplier wise) SNo. Name of Supplier Total Purchases
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01. Apogee Chemical (P) Ltd. 1,34,160.00
02. Aggarwal Enterprises 14,58,684.00 (See Schedule-A)
03. Bansal & Co. 17,49,940.00 (See Schedule-A)
04. Shukhna Plywood (P) Ltd. 3,04,995.42
05. K.C.Timber Products 1,54,506.50
06. New Haryana Timber 3,16,600.00
07. Mangalam Timers 2,60,000.00
08. Daichie International 1,61,746.00
09. Bansal Timber Store 4,00,000.00
10. Gopal Chemical & Co. 50,434.48
11. Mohta Plywood Ind. (P) Ltd. 2,62,023.91
12. Allied Wood Products 1,62,471.00
13. Sun Grace Industries 51,360.00
14. Gupta Global Exim (P) Ltd., 13,50,000.00
15. Bharat Plywood Agency 28,700.00
16. Modi Udyog 28,483.00
17. R.S.Enterprises 7,222.00
18. S.B.Traders 81,826.00 ?
19. Shree Kartar Timbers Traders 4,11,888.64
20. S.S.Haridas Udyog 11,464.00
21. Ramesh Traders 17,056.00
22. Aryano Corporation 18,460.00
23. Gaurishankar & Co. 19,300.00
24. Vishwa Timber 9,942.45
25. Pine Exports 6,861.00
26. K. Prakash 11,600.00
27. Ganesh Plywood Agency 16,262.00
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Total:
74,79,486.43 Less 2,360.00
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74,57,126.43 ========== From the above, it is clear that purchases at S. No. 2 and 3 from Aggarwal Enterprises & from Bansal & Co. are although entered in records and payment made, but are to be disallowed since the same as per above explanations do not seem to be genuine/authentic.
Verification of Bank Records:
We visited the Union Bank of India, the bank where the stock is hypothecated and obtained the stock inspection reports and stock statements. As per the banks inspection report, they inspected the stock on 5.11.1996 and 31.12.1996. We found that as per the stock statement as on 31.3.1997 the value of stock is Rs.78,35,492.11. We also verified the payments made by the insured through bank and found that they are in order except one payment mentioned above was not made for Rs.1,61,746/-.
Finally they assessed the loss for stock as under:
OUR ASSESSMENT On the basis of the above facts, we assessed the loss as follows:
Stock as on 25.11.98 as per Trading A/c Rs.61,50,990.15 Less: Purchases which are not genuine as per (Schedule A) 32,08,624.00 Less: Purchases whose Payment is not made (and bill is tampered with and does not have form 31 1,61,746.00 ______________ Rs. 33,70,370.00
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STOCK AS ON 25.11.97 Rs. 27,80,620.15 Less: Salvage of leftover (after loss) based On Surveyors report (-) Rs. 5,09,535.00
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LOSS OF STOCK Rs. 22,71,085.15 ============= From the aforesaid amount, there was further deduction on the assessment that there would be deduction @ 5% for dead stock and further reduced it by Rs.1,13,554.25 and arrived at loss for the stock at Rs.21,57,530.90.
Thereafter, the loss for building and other plant and machinery was assed and the loss was summarised as under:
SUMMARY OF TOTAL LOSS ASSESSMENT The loss is summarised as below:
Particulars Loss Allowed Average Clause Dead Stock Factor 5% NET LOSS ASSESSED STOCKS Building & Electrical Fittings Plant & Machinery 2271065.15 610137.00 63500.00 NIL 28798.00 1733.55 113554.25 NIL NIL 21,57,530.90 32,239.00 61,766.45 TOTAL 2395602.15 30531.55 113554.25 22,51,536.35 Less: Excess Clause 2500 x 2 Policies (-) 5,000.00 NET LOSS ASSESSED 22,46,536.35 In this complaint, we are concerned only with the method adopted by the surveyor in deducting the value of the stock by 50% ; or deduction of Rs.32,08,624 by the investigator, on the alleged ground that lorry receipts were fake. The purchase of the stock for which payment is made to the vendor by an account payee cheque/draft is not believed. Otherwise both the Surveyor and the Investigator have assessed the loss to the stock at Rs.62,38,655/- and Rs.61,50,990/- respectively.
Learned counsel appearing on behalf of the complainant submitted that the deduction made by the surveyors as well as Investigator is without any basis and is unjustified.
It is also an admitted fact that on the basis of the Investigators report the Insurance Company paid the amount of Rs.22,23,404/- to the Complainants banker, Union Bank of India, without taking the consent of the Complainant. Hence, the complaint is filed contending that the Complainant has suffered loss to the tune of Rs.81 lakhs and the direct payment of Rs.22,41,536/- by the Insurance Company to the Complainants banker is totally unjustified and arbitrary. Therefore, the Insurance Company should be directed to pay the balance amount of Rs.59 lakhs for the loss suffered and Rs.20 lakhs towards compensation for the harassment caused to the Complainant.
Submissions/Findings:
We have to bear in mind that (i) as per the preliminary survey report dated 12.12.1997 the Surveyors were satisfied that the loss to the stock even by cautious conclusion would be around Rs.75 lakhs; (ii) in the final report also loss to the stock was assessed at Rs.57,29,120/-; and, (iii) The Investigator has also assessed the loss to the stock at Rs.61,50,990/-.
Learned Counsel for the Complainant submitted that (i) deduction of 50% of the value of the stock on the alleged ground that there were inaccuracies in the audited balance-sheet; (ii) and the Auditors qualifying remarks that the insured had not maintained reasonable records of the stock, are on the face of it, unjustified and without considering the Auditors report, which was produced on record. With regard to the Auditors report, learned Counsel for the Petitioner referred to a letter dated 4.8.1997 addressed to the Chartered Accountants who had made the initial remark. The relevant portion thereof is as under:
With reference to your Audit report dt. 01.08.1997 on Audit of Accounts of our company M/s Target Plywood Industries Ltd. for the year 1996 97, you have qualified Audit Report regarding non-submission of stock statement and quantitative details regarding Raw Material purchased, its consumption, finished and semi finished goods.
Due to heavy pressure of work on commencement of our new unit at Greater Noida, we could not complete our Stock register and Quantitative details. Now we are submitting herewith duly completed Stock Register, Quantitative details of Raw Materials, its consumption, finished and semi finished goods and Sale & Purchase bill file for your verification.
In regard to valuation of closing stock as on 31st March, 1997, we would like to comment on the following points.
1) Stock of Raw Material has been valued at Average cost price of items like Face Veneer, Core Veneer, Timber etc.
2) Regarding Stock of defected goods-quantitative details could not be prepared and it has been valued at estimated Net Realizable Value.
So you are requested to verify the stock statement enclosed herewith.
Thereafter, on 10.8.1987 the Auditors submitted the report on verification of stock register and replied and stated as under:
TO SHAREHOLDERS AND MEMBERS OF M/S. TARGET PLYWOOD INDUSTREIS LTD.
With reference to your latter dated 04.08.97 regarding verification of stock statement for the year ended 31st March 1997 we report that:
On the basis of examination of Stock Statement, Sale and Purchase bill/vouchers and other relevant record produced before us, we are satisfied that Stock Valuation is fair and proper.
We further comment that:(1)
Physical verification has been conducted by the Management in respect of Finished goods, stores and raw materials;(2)
According to information and explanation given to us, raw material has been valued at average cost and finished and semi finished goods has been valued at cost or net realizable value whichever is less;(3)
No quantitative details regarding defected goods in stock has been produced before us. According to information given by Management it has been valued at estimated net realisable value;(4)
In respect of stock in transit, no entry of quantities has been made in stock register for the year ended 31.3.1997.
Thereafter, the Chartered Accounts, M/s. Bhupesh K. Dhingra & Co., have certified to the following effect on 10.8.1997:
This is to certify that stock statement along with relevant documents of M/s. Target Plywood Industries Ltd., 47, Furniture Block, Kirti Nagar, New Delhi 110015 (New Delhi Office and Greater Noida Works) produced before us is true and proper in respect of quantity and its value for the year ended 31st March, 1997.
It has been pointed out that all these documents were produced before the Surveyor and, yet, the Surveyor picked up the initial comment by ignoring the aforesaid certificate issued by the Chartered Accountant on 10.8.1997.
With regard to the other grounds mentioned by the Surveyor, learned Counsel for the Complainant pointed out that they are baseless and has no bearing on the stock. The other grounds are as under:
(i) non-establishment of precise production of face and core veneer within the factory premises;
(ii) wastage of wood from logs to face and core veneer; and,
(iii) sale of scrap saw dust, etc.
(b) Learned Counsel for the Complainant further submitted that even if one takes the Investigators assessment, the deduction of Rs.32,08,624/- (as mentioned in Schedule-A) is totally unjustified. For this purpose, he submitted that purchase bills are not doubted by the Surveyor. He further pointed out that for the said purchases, the amount was paid by a cheque and for this purpose, he has produced on record the certificate given by the Chief Manager, UCO Bank, which reveals that the Complainant has paid the amount for the said purchases by cheque and Demand Draft. The relevant portion is as under:
In relation to above, we hereby state that payments by cheque/P.O/DD in your account on following parties was as under:
Sl.
No. Instrument No. Cheque No. Date of Instrument/clearance Amount (In Rs.) Mode of Payment/Name of Party whom payment was done
1.
149113 14.11.96 4,00,000-00 Aggarwal Enterprises P.O.
2. 155003 18.11.96 5,00,000-00
-do-
3. 155019 6.12.96 5,50,000-00
-do-
4. 122996 31.10.96 2,25,000-00 Bansal & Co. DD Agra
5. 149112 14.11.96 3,00,000-00
-do-
6. 155017 3.12.96 7,00,000-00
-do-
7. 155026 14.12.96 1,50,000-00
-do-
8. 155027 13.12.96 3,50,000-00
-do-
9. 122970 9.10.96 4,00,000-00 Bansal Timber Store B.O.I. Clg. Narela
10. 155042 27.12.96 10,00,000-00 Gupta Associates DD Kundla
11. 155069 15.1.97 4,50,000-00
-do-
12. 122938 18.9.96 2,60,000-00 Manglam Timbers BOB Kirti Nagar L.Clg.
13. 155065 11.1.97 2,88,000-00 Mohta Plywood P. Ltd. PO
14. 155068 15.1.97 3,00,000-00 Sukhna Plywood P. Ltd. DD Ghaziabad
15. 155084 25.3.97 1,00,000-00 New Haryana Timbers DD. Sitapur.
Sd/xxxxx (K.K.Manghani) Chief Manager Remarks: Learned Counsel for the Complainant submitted that even if the payment is made by cheques and/or draft the Investigator had not accepted it solely on the ground that the lorry receipts were not tallied.
Hence, he contended that deduction of Rs.32 lakhs (approximately) from the assessed value of the stock is totally unjustified and arbitrary.
In our view, these submissions of the learned Counsel for the Complainant require to be accepted, because: (i) the amount is paid by cheque or Demand Drat for the purchases made by him; and
(ii) the ground given by the Surveyor in not believing the said purchases on the alleged ground that the lorry receipts were not conformed by the transporter, would hardly be grounds for holding that the purchases were not made or the amounts were not paid. For the transport of the goods which are purchased by the Complainant, transporter is engaged by the vendor and how the vendor manages to transport the goods is not the concern of the purchaser.
Submissions of learned Counsel for the Insurance Company:
The learned counsel for the Insurance Company raised a preliminary contention that as the full and final receipt is given by the Bank of the insured, the complaint is not maintainable. For this purpose he referred the Agreed Bank Clause. The relevant part thereof is as under:
AGREED BANK CLAUSE:
All policies in which a Bank has a partial interest shall be made out in the name of the Bank and Owner or Mortgagor and shall contain the following clause:-
-
It is hereby declared and agreed:-
a. That upon any monies becoming payable under this policy the same shall be paid by the Company to the Bank and such part of any monies so paid as may relate to the interests of other parties insured hereunder shall be received by the Bank as Agents for such other parties.
b. That the receipts of the Bank shall be complete discharge of the Company therefor and shall be binding on all parties insured hereunder.
N.B. The Bank shall mean the first named Financial Institution/Bank named in the policy.
c. That if and whenever any notice shall be required to be given or other communication shall be required to be made by the Company to the insured or any of them in any matter arising under or in connection with this policy, such notice or other communication shall be deemed to have been sufficiently given or made if given or made to the Bank.
d. That any adjustment, settlement, compromise or reference to arbitration in connection with any dispute between the Company and the insured or any of them arising under or in connection with this policy if made by the Bank shall be valid and binding on all parties insured hereunder but not so as to impair the rights of the Bank to recover the full amount of any claim it may have on other parties insured hereunder.
In our view, the Agreed Bank Clause would not debar the insured (owner) from contending that he has suffered a loss which was much more than what is paid to the banker. This clause would have no binding effect on the insured (owner). If the Agreed Bank Clause is interpreted, as contended by the Complainant, it would mean that the owner has not only hypothecated the goods but also his right to reimbursement of the loss suffered by him. Further, this clause cannot be interpreted to mean that if the bank commits obvious error, knowingly or unknowingly, or intentionally or unintentionally with a view to protect its business interests only, it would be binding on the owner, for whose benefit the insurance policy is taken. Such an interpretation would be totally unjustified and would be repugnant to principles of justice as the insured would be condemned without knowledge and hearing. Therefore, this Agreed Bank Clause would bind the bank, but not the owner.
In any case, this clause is to be interpreted reasonably and in terms of the words used in the clause. It only provides that in case any monies becoming payable under this policy the Insurance Company shall pay the same to the Bank. This would mean that in a case where the amount is crystallized/settled between the parties, i.e. the insured and the insurer and on finalisation of payment, if any monies are required to be paid under the policy, the same is required to be paid to the bank so that banks interest is fully protected. It also provides that if the money payable is in excess of the amount payable to the bank, then the bank shall receive the same as an agent of the insured. In such case, the receipt given by the bank would be binding on the insured. This clause would have no effect, if the amount payable is under dispute. First the dispute is required to be settled, then monies become payable. Without settling any dispute, as contended by the insured, if the Bank receives the same, this Agreed Bank Clause would have no effect. In any case, if the Bank receives the amount, it would be for satisfaction of its dues, but it would not mean that the amount payable to the insured for the loss suffered by him is extinguished. Clause (d) specifically provides that if any dispute arises between the Company and the insured, the dispute is required to be settled and thereafter that settlement would be binding. Settlement by ignoring the insured and his interest, cannot bind the insured.
Even in the receipt given by the bank to the Insurance Company, there is a specific note to the following effect:
Note: When paying the claims, the agent is required to have an acknowledgement of the same recorded upon the policy by the insured in addition to the receipt to be given on the above form.
Admittedly, no such acknowledgement from the insured was taken.
This Commission in M/s. New India Assurance Co. Ltd. Vs. S. Jeyarajan Thamp & Ors., First Appeal No. 230 of 2001 decided on 25.9.2002, reported as III (2002) CPJ 349 (NC), held that as the discharge voucher was executed by the bank alone, it cannot bind the actual claimant. In that case also the banker directly, without the consent of the claimant, signed the discharge voucher and it was held that such a settlement is unfair and is not binding on the Complainant.
The learned counsel for the Insurance Company further contended that even the banker of the Complainant had lodged an FIR contending that the Complainant has shown exaggerated stock for taking loan and that there was cheating and forgery with the Union Bank of India. On that basis CBI Inquiry was held. He contended that this would reveal that the stock Registers maintained by the Complainant are not reliable. He further contended that as the officers of the CBI have directed the Insurance Company not to release the funds in favour of the Complainant, there was some delay in making the payment to the Bankers. For that the Bank is not responsible.
In our view, this submission does not deserve much consideration because on the basis of the investigation held by the CBI no offence was made out against the Complainant. It was found that the allegations were not proved and no incriminating evidence was found. Thereafter, the CBI officers directed the Insurance Company to release the funds for the loss suffered by the Complainant.
In any case, the Surveyor as well as the Investigator, appointed by the Insurance Co., have checked various documents including the audited purchases and sales, physical inventories were taken with regard to the goods lying in the factory premises, labour records, electricity bills and have carried out exhaustive exercise to arrive at the correct value of the stock. That is specifically mentioned in the survey report.
The learned counsel for the Complainant referred to documents in Volume-IV which were filed on 9th February, 2004, wherein documents are produced to the effect that auditors have verified the stocks and the bills regarding purchases from Aggarwal Enteprises, Bansal & Company and Daichi International are produced.
Further, the Surveyor as well as the Investigator after taking into consideration various documents, arrived at the conclusion that the stock on the date of fire was Rs.62,38.655.76 and Rs.61,50,990.15 respectively. This finding recorded by the Surveyor and the Investigator clearly reveals that the value of the stock was more than Rs.61 lakhs. In the preliminary survey, the amount estimated was Rs.75 lakhs and the Insurance Company was informed to make budgetary provision for the same. Therefore, the contention of the learned counsel for the Insurance Co. does not deserve much consideration.
Amount payable to the Complainant:
The next question would be as to what amount is payable to the Complainant for the loss of stock suffered by him due to fire?
(i). As stated above, the Investigator has reduced the amount of Rs.61,50,490/- by Rs.32,08,624 on the alleged aground that the purchases were not genuine because two lorry receipts were not tallying. They have ignored the fact that for the said purchase bills amount was paid by cheque or demand drafts. For arriving at such conclusion the Investigator has ignored the bank accounts. In this complaint the Complainant has produced the extract of bank account, as quoted above, which establishes beyond doubt that the amount was paid by the Complainant by account payee cheques and/or drafts. Therefore, the said ground given by the Investigator is without any substance.
Similarly, the Surveyor has reduced the amount by discounting it by 50%. The method of discounting by 50% is even not accepted by the Investigator. In any case, the reason given for discounting is mainly on the basis of auditors initial remarks without considering the relevant letters written by the Chartered Accountant to the Company and its reply as well as final certificate given by the Chartered Accountant on 10.8.1997 wherein they have stated that the stock statement was produced before them and the same was found to be true and proper and in respect of quantity and its value for the year ended 31.3.1996. The other ground which is given is with regard to non-establishment of precise production of face and core-veneer within the factory premises and wastage of wood from logs to face and veneer as well as sale of scrap saw dust. In our view, this would have no bearing with regard to the existing stock as per the stock registers.
For the foregoing reasons we allow this complaint and hold that the value of the stock destroyed by the fire was Rs.57, 29,120.76 as assessed by the Surveyor and also hold that the deduction of 50% on the alleged various deficiencies is wholly unjustified. We also mention at this stage that we are relying on the assessment made by the Surveyor and not by the Investigator.
Hence, we direct the Insurance Co. to pay the deducted amount of Rs.28,64,560/- with interest @ 10% p.a. from 1st June, 1998 (i.e. after 7 months from the date of the incident and three months from the date of the report of the Surveyor). The complaint is allowed accordingly. The Opposite Party shall pay costs assessed at Rs.1,00,000/-, which shall be deposited by the Insurance Co. with the Registrar of this Commission. On deposit of the said amount, the Registrar will further deposit the same in the Consumer Welfare Fund.
Sd/-
.J. ( M.B. SHAH) PRESIDENT Sd/ (RAJYALAKSHMI RAO) MEMBER