National Consumer Disputes Redressal
M/S. Crystal Crop Protection Pvt. Ltd. vs New India Assurance Co. Ltd. & 4 Ors. on 13 December, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 305 OF 2015 1. M/S. CRYSTAL CROP PROTECTION PVT. LTD. GI-17, G. T. Karnal Road, Industrial Area, Azadpur, Delhi - 110033 ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. & 4 ORS. 87, Mahatma Gandhi Marg, Fort, Mumbai -400001 Maharashtra 2. New India Assurance Co. Ltd. 3/10-11, Laxman House, 2nd Floor, Asaf Ali Road, NeW Delhi - 110033 3. New India Assurance Co. Ltd. Regional Office - II, 10th Floor, Core-I, Scope Minar Laxmi Nagar District Centre, Delhi - 110092 4. New India Assurance Co. Ltd. 1st Floor, Vardhman Complex, Opp. Civil Hospital, Osram Chowk, Sonepat - 131001 Haryana 5. New India Assurance Co. Ltd. Regional Office, 36-37, Sector 17-A, Chandigarh - 160017 ...........Opp.Party(s)
BEFORE: HON'BLE MRS. JUSTICE DEEPA SHARMA,PRESIDING MEMBER
For the Complainant : Mr. Joy Basu, Sr. Advocate
Mr. Gaurav Barathi, Advocate
Mr. Pavlov Handique, Advocate
Mr. Manish Kumar Singh, Advocate
Mr. Kanak Bose, Advocate For the Opp.Party : Mr. S. M. Tripathi, Advocate
Dated : 13 Dec 2019 ORDER
JUSTICE DEEPA SHARMA, PRESIDING MEMBER
The case of the complainant in brief is that it is running the business of manufacturing wide range of pesticides, fungicides, germicides, insecticides, herbicides, agri equipments, seeds and fertilizers etc. It is also engaged in research, manufacturing formulation, sales and marketing of agro-chemical products. The manufacturing activities of the complainant are based in Nathupur (Haryana) and Jammu ( Jammu and Kashmir). Shri Mahender Singh Malik has been duly authorised vide Board resolution dated 28.06.2013 to file, sign, verify, swear affidavits and to file the present complaint. Initially the name of complainant was M/s Jai Bharat Crop Chemical Private Limited. It was changed to M/s Cystal Crop Protection Private Limited vide certificate of change of name dated 14.11.2010 issued by Registrar of Companies. The complainant owned several godowns including the godowns located at Plot No. 76/17/1 and 76/17/2, Sersa Road, Opposite Mauza Shoes, HSIDC, Kundli District Sonepat, Haryana. In the year 2011 pursuant to merger between the complainant and M/s Crystal Phosphates Limited ( hereinafter referred to as 'CPL') stood merged with the complainant w.e.f. 01.04.2010 after the amalmagation scheme was sanctioned by the Hon'ble High Court of Delhi vide its order dated 02.08.2011. Thereafter, complainant filed applications in different government departments for endorsement of change of company name from CPL to M/s Crystal Crop Protection Pvt. Ltd. (hereinafter referred to as CCPL) including Central Insecticide Board, Director of Agriculture, Sonepat, Income Tax Department, Central Excise Division, Sales Tax Department, Service Tax Department. The complainant also pursued these applications but it took several months to obtain approvals from some of the departments. Some of the departments, however, had given their approvals. Since endorsement for change of name was still pending with Director of Agriculture and some other government departments, the complainant had no option but to continue the manufacturing and distribution of pesticides under the license in the name of CPL. The complainant had taken Fire Floater insurance policy bearing number 35420011110300000007 valid for the period w.e.f. 26.10.2011 (12.00 a.m.) to 25.10.2012 (11.59 pm) covering the risks to the extent of Rs.35 crores and paid the premium of Rs.1,92,542/-. This policy covered "stocks of all kinds of pesticides, goods, power having flash point above 65 degree C, and liquid in sealed containers and non hazardous other goods, insured's own or held in trust in deposit on commission of, belonging to others". Another floater insurance policy bearing no. 32340011110300000106 was also taken from the opposite party valid for the period 24.01.2012 (12.00 a.m.) to 23.01.2013 (11.59 p.m.) covering the risks to the extent of Rs.103 crores on payment of premium of Rs.5,15,501/-. This policy was, further extended to cover the risk worth Rs.123 crores on payment of additional premium of Rs.74,022/- on 21.05.2012. This policy covered stocks of all kinds of pesticides.
2 During the intervening night of 23rd and 24th June, 2012, the godown nos. 76/17/1 and 76/17/2 Sersa Road, opposite Mauza Shoes, Kundli, Sonepat, on rent, caught fire due to short circuit destroying huge stocks of pesticides worth Rs.22.21 crores. The walls of the godown were also damaged. This incident was reported in the local hindi newspaper on 25.06.2012. The insurance company was duly informed through email dated 24.06.2012 and 25.06.2012 and also letter dated 25.06.2012 and copies were sent to various offices of the opposite party and delivered at Delhi and Sonepat office against due acknowledgements. The insurance claim was also filed by the complainant, with opposite party M/s Taarani Insurance Surveryos and Loss Assessors Pvt. Ltd. was appointed by the opposite party for preliminary survey. He visited the site on 25.06.2012. The opposite party, thereafter, deputed M/s Mack Surveyors (P) Ltd., New Delhi for final assessment who submitted the report dated 16.08.2012 to the opposite party. M/s Mack Surveyors also conducted a thorough survey and also collected various documents from the complainant including the stock details. M/s Mack Surveyors on the basis of material supplied by the complainant calculated the total loss to the value of Rs.16,22,59,661/-. The complainant reluctantly but with a view to settle the matter decided to settle its claim for the said sum and issued a consent letter dated 07.01.2013. The said report, however, was not accepted by the opposite party and they sent several queries to M/s Mack Surveyors who though replied the queries but the opposite party appointed another surveyor M/s J.Basheer & Associates Surveyors Pvt. Ltd. for fresh investigation into the matter vide its letter dated 13.04.2013. M/s J. Basheer visited Delhi on 06.05.2013 for two days and submitted list of queries to the complainant vide letter dated 11.05.2013. The vide its letter dated 27.05.2013 replied the queries in detail and submitted all the essential documents consisting of 5000 pages. Thereafter, a letter dated 05.08.2013 was also sent to M/s J. Basheer informing him of the addition facts and developments. After lapse of considerable time when no decision was taken by the opposite party on its claim, the complainant vide letter dated 24.10.2013 requested the opposite party for the speedy settlement of its claim. M/s J Basheer submitted its report dated 13.12.2013 rejecting the claim of the complainant. Report of M/s J Basheer was obtained by the complainant under Right to Information Act. Complete report was not even provided to the complainant and pages no. 90-116 of the report were missing from the copy that was supplied to it.
3. The premises no. 76/17/1 and 76/17/2 Sersa Road, Opposite Mauza Shoes, HSIDC, Kundli, Sonepat were on rent. The total area of the premises was 41184 sq.ft. with built up area as 29260 sq. ft. with one guard room and one office room. The whole premises was divided into two blocks, namely Block A ( godown no. 1, 2 ,& 3) and block B ( godown nos. 4,5 & 6) separated by 21 feet wide road. The fire gutted the godown in Block B i.e. godown nos. 4,5 & 6. Godown nos. 5& 6 were completely destroyed but some goods could be retrieved from godown no.4. The godowns including its walls and roof were completely destroyed due to the intensity of fire and turned into a heap. The opposite party vide letter dated 12.03.2014, after a period of 20 months, illegally repudiated the claim of the complainant relying on the report of M/s J Basheer. It is averred that the appointment of M/s J.Basheer itself was illegal and was done with a malafide intention of procuring a favourable report. The appointment was done without even intimating the complainant. It is also averred that the complainant filed complaint dated 26.12.2014 with the grievance cell of the opposite party for re-examination of its claim. The reasons of repudiation given in the repudiation letter are baseless and contrary to material on record. It is averred that the ground that complainant had no insurable interest is baseless because after the merger of M/s Crystal Phosphates Limited with the complainant, all the rights of M/s Crystal Phosphates Limited stood transferred to the complainant. After the effective date of merger, the payments to the vendors have been made by complainant from its account. It has also obtained various credit facilities by hypothecating the stock with the banks. Although the stocks statement upto the month of August 2011 was submitted in the name of CPL because by that time merger was not approved by Hon'ble High Court of Delhi, all the stocks M/s Crystal Phosphates Limited which it was holding till the month of August 2011 were shown by the complainant in the statements of stock filed from September 2011 onwards as holdings of complainant. It is further contended that complainant had obtained no objection certificate from the Sarpanch of the Gram Panchayat, Sersa, Sonepat to store the pesticides in godown in question and that at the time of issuance of the policy, the opposite party had never demanded any such no objection certificate. Even after the incident of fire, the opposite party continued to issue fire floater policy for different godowns of the complainant without asking of any approvals or the license. It is further contended that complainant had played no fraud and adopted no dubious methods to make the claim. It is submitted that opposite party is relying on an information to show that there was no electricity between 18.30 hours on 23rd June to 00.30 hours on 24th June 2012, but their own surveyor M/s Mack Surveyors Private Limited had in its report submitted that the electricity was resumed at about 00.15 hours on 24.06.2012. It is further submitted that letter from Uttar Haryana Bijli Vitran Nigam ( UHBVNL) clearly shows that there was an active connection of electricity at the godown and the resumption of electricity of godown at about 00.30 hours on 24.06.2012. It is also submitted that there was no delay in informing the police and fire brigade. As soon as the guard learnt of the fire, he immediately raised an alarm. The fire was accidental and, therefore, covered under the policy. It is further contended that reason for repudiation that huge quantities of materials were stored in the godown which were beyond the normal shelf life is baseless. The complainant had submitted copies of purchase invoices / stock transfer invoices of the godowns alongwith details of their shelf life to M/s Mack Surveyors and M/s J.Basheer. It is further submitted that months between May-August is a peak season for the complainant's business as the farmers sow the seeds during monsoon time and it is for this reason that huge amount of pesticides were stocked in affected godown. Even in the past years during these months, the quantity of storage of goods had been the same. The allegation that complainant had razed the walls of the affected godown to the ground after fire is also baseless. Fire had destroyed the godown. It is further argued that one policy covers the stocks of all kinds of pesticides and this policy includes all the pesticides material having flash point 65 degrees centigrade and liquid in sealed containers etc and the second policy covers "risk on stocks of all kinds of pesticides". Therefore, pesticides, whether in raw or otherwise are covered under the policy and the grounds taken by the opposite party to reject the valid claim of the complainant were illegal, baseless and not justifiable. It is submitted that M/s J.Basheer was appointed without the knowledge of the complainant with malafide intentions to reject the valid claim of the complainant and he has acted without any basis. It is submitted that said act of the opposite parties has not only caused loss to the complainant but has also caused harassment and mental agony. Rejection of his legitimate claim by the opposite parties, amounts to deficiency in service. It is prayed that claim of the complainant to the tune of Rs. 16,22,59,661/- for the loss and damages suffered by it ( as per assessment of surveyor M/s Mack Surveyors) be directed to be paid to it together with Rs. 1.00 crore towards mental harassment, agony suffered by it alongwith the interest @ 18% p.a. from the date of incident till its realization.
4. The claim is contested by the opposite parties. Written version has been filed by the opposite parties. It is submitted that complaint is barred by limitation. The fire took place on 24.06.2012 but the complaint had been filed on 22.04.2015 i.e. beyond the period of two years and is liable to be dismissed. Issuance of policies is not denied. Incident of fire is also not denied. Appointment of preliminary survey and of M/s Mack Surveyors and of M/s J Basheer is also not denied. It is further submitted that claim had been rightly rejected and there was no malafide intention on the part of the opposite parties. It is also submitted that complainant did not have any insurable interest since the goods destroyed in fire belonged to M/s Crystal Phosphates Ltd. being repudiated by it and it did not have any insurance policy in its name. It is further contended that since, pursuant to the High Court order dated 02.08.2011, M/s Crystal Phosphates Ltd. stood merged with the complainant company, it could not carry on any business activities after the effective date of merger i.e. 01.04.2010 but the documents submitted shows that M/s Crystal Phosphates Ltd. still existed even on 07.03.2013. Although on records both the companies were merged, they were still working independently. The complainant's police complaint also states that Nand Kishore Aggarwal is the director of M/s Crystal Phosphates Ltd. The license to sell stock or exhibit for sale or distribute insecticide for the period 01.01.2012 to 31.12.2013 was issued to M/s Crystal Phosphates Ltd. Even the complainant in its letter dated 14.02.2012 addressed to Deputy Director of Agriculture has stated that the certificate no. 976 valid upto 31.12.2013 belonged to M/s Crystal Phosphates Ltd. The license for manufacturing of pesticides issued by Agriculture Department also stood in the name of M/s Crystal Phosphates Ltd for the period 01.01.2012 to 31.12.2013. On the same address, the complainant was also issued by same authority the license to manufacture for the same period and this fact further shows that both the entities had the individual manufacturing licenses for the period. The complainant was dealing from the affected location as trader / dealer of excisable products and in the sales license, three more companies were included but this fact is also not disclosed to the opposite parties when the policy was purchased. It is further submitted that since the license shows the name of additional firms, the stock identified as belonging to complainant alone would only fall within the scope of policy and not the goods imported by other license holders cannot be said to be the stock of complainant. It is further contended that even on merger, under the Insecticide Rules, 1971, there cannot be any automatic approval of the license in the name of the merged company. It is further submitted that godowns in question were operating for storage purpose without the requisite approval of the town planner. There is no approved plan of godowns. There is no occupation certificate and approval from town planner to store chemical materials in the godown. There is no NOC from Haryana State Industrial Development Corporation ( HSIDC) for storage of such hazardous material and this shows that godowns were illegally constructed and used. There was no NOC from the fire department as well. The complainant also did not possess any registration / license from the department of environment, forests and wildlife nor complainant had ever applied under the applicable rules. The godowns were thus being operated illegally and, therefore, claim was illegal. It is further submitted that godowns were connected to the electricity grid of Gupta & Co. and Gupta And Co. was in turn connected to the Kundli Electrical sub-station and Kundli Electrcial sub-station had confirmed that they had supplied no electricity to Gupta and Co. grid between 1830 on 23.6.2012 and 0030 on 24.06.2012 and thus the godowns drew no electricity. Even the meter readings from March to December 2012 show that only 20 units of electricity was consumed during this period. The electricity consumption bill for the period 22.04.2012 to 22.06.2012 was found to be zero. There was no electricity consumption between May 2012 to January 2013. A further letter dated 15.06.2013 of the electricity authorities re-confirmed that feeder supply was off from 16.30 hours on 23.06.2012 till 00.30 hours on 24.06.2012 and continued to be so till the date of letter i.e. 15.06.2013. Subsequent letter dated 26.07.2013 obtained by the complainant from electricity department is wrong and invalid and is in contradiction to the position admitted by the complainant in their letter dated 27.05.2013. Neither the police nor the fire authorities were informed by the complainant. It was the chance observation of the fire by the police who called the fire brigade and the fire brigade reached at the spot at 0230 hours on 24.06.2012 i.e. after two hours of the occurrence of fire. There is a considerable delay in fire brigade attending to the fire. It is submitted that it was an implied duty of the policy holder to make all reasonable efforts to avoid / minimize the loss which the complainant had failed to observe. No formal complaint was made to the police till 26.06.2012. The walls of the fire affected godowns were razed by the complainant prior to the surveyor's visit and thus, there is violation of clause 8 of the policy. It is also contended that surveyor had found huge quantities of material stored in the godowns which were beyond the normal shelf life of such material and that huge quantities of material was transferred to the fire affected godowns just prior to the fire for which the complainant could not provide any satisfactory explanation. It is further contended that policy covered only 'stock of all kinds of pesticides', however, the surveyor found that large quantity of raw material was destroyed in the fire and that the raw-material was not covered under the policy. It is further submitted that monocrotophos Technical has flash point less than 61 degree centigrade which was stored in the godown and which is not covered under the policy since the policy covers goods having flash point above 65 degree centigrade. It is also contended that large number of irregularities in accounting and excise records of the complainant were found. It was found that no register was maintained for finished goods and the register was maintained only for raw material. Also the complainant had not made any entry for purchase regarding Mancozeb 75% WP. The complainant has also not recorded in the excise stock register the purchase-return of raw material stock 'Acephate Technical' having invoice value of Rs.57,46,569/-. The discrepancies were also observed in import receipt of item Imidaclorpid Technical and over lapping discrepancies were found in item Buprofezin 25% SC 200 LTR x1 and Buprofezin 25% SC. M/s Mack surveyor had also committed large number of mistakes, omissions and did not properly verify the records. It has based its assessment on un-audited trading and manufacturing account. It is further contended that since there was no border check-post stamp on the invoice of the of purchase of Hexaconazole 5% EC, thus there was no physical purchase of this item. The surveyor has also assessed the loss of Pretilachlor Technical and hexaconazole Technical at higher rate. The surveyors have failed to assess the excise and custom duty loss separately and in view of these discrepancies M/s J. Basheer the Investigator was appointed to who reassessed the situation and loss and submitted its report. It is submitted that there is no deficiency of service. The investigator had correctly submitted its report. On these contentions, it is submitted that complaint is liable to be dismissed.
5. In the rejoinder, complainant had re-affirmed the averments in the complaint and had denied as incorrect the contentions raised by the opposite parties. It is submitted that pursuant to clause 2.1 and 2.7 of Part II of the Amalmagation Scheme sanctioned by the High Court of Delhi, all the membership, licenses, franchises, entitlements etc. stands transferred to the complainant without any further instrument, deed or act or payment of any further fee, charge or securities. It is further contended that under the said scheme, whatever benefit M/s Crystal Phosphates Ltd was entitled to, the complainant had become beneficiary of the same. It is further contended that M/s Mack Surveyors Ltd. had duly considered all the documents and verified it and then submitted its report and his report has been rejected on filmsy grounds by the opposite parties for appointing fresh surveyor M/s J. Basheer who was appointed without the permission of the complainant. He had been appointed with the sole intention to obtain a favourable report. It is further submitted that license to sell stock or exhibit for sale or distribute insecticide for the period from 14.03.2011 to 31.12.2012 was in the name of M/s Crystal Phosphates Ltd because the order of amalmagation was passed only on 02.08.2011 by High Court of Delhi and complainant could not have taken the permission to change the name from various authorities prior to passing of the order. Till that time name of the complainant was not endorsed by the department in their application for change of name. The complainant had to continue with the previous format of Principal certificates i.e. with Certificate No. 976. It is submitted that as per the procedure, the complainant was first required to apply for change of name in CIB and RC registration certificate on insecticides / pesticides which was duly done on 09.11.2011. CIB and RC, Faridabad approved change of name vide their letter dated 30.04.2012. Subsequently, alongwith list of insecticides and CIB & RC registration certificate, the complainant on 10.05.2012 made an application for change of name in manufacturing license before the department of Agriculture, Haryana. Thereafter, the manufacturing license issued in favour of M/s Crystal Phosphates Ltd., was amended by the Department of Agriculture, Haryana and issued in favour of the complainant company and this fact is also recorded in the license and that the tenure of license is 01.01.2012 to 31.12.2013 and this shows that both the documents are one and same. It is further submitted that M/s Crystal Phosphates Ltd maintained an active assessee code with the Central Board of Excise and Customs and it had surrendered its registration certificate and applied for new registration certificate in the name of complainant and it was duly informed to the Central Excise Department vide letter dated 01.11.2011. Vide letter dated 20.10.2011, the Income Tax Department was duly informed of the merger and request for de-activation and surrender of PAN number was made. Letters dated 09.10.2011, 12.09.2011 and 14.12.2011 were written to State Bank of India, Oriental Bank of Commerce and Punjab National Bank respectively for change of name of the company in the bank accounts by informing them about the amalmagation of M/s Crystal Phosphates Ltd with the complainant. The license issued by Deputy Director of Agriculture, Sonepat had confirmed vide letter dated 09.11.2011 that license originally issued in the name of M/s Crystal Phosphates Ltd had been endorsed in the favour of the complainant. It is submitted that entire stock and goods were owned by the complainant after the merger even though purchased on the license of M/s Crystal Phosphates Ltd. It is further submitted that documents regarding approvals from Director, Town and Country Planning has never been demanded by the opposite parties at the time of providing insurance cover or any other point of time. The opposite parties were very well aware of all the godowns and their location at the time of issuance of the fire floater policies and continued to issue fire floater policy for years for different godowns of the complainant without requiring any such approvals even after the incident. The opposite parties were also informed about the letter dated 25.11.2005 issued by Director Town and Country Planning vide which it had regularised the building plan after collecting the compounding fees for commercial usage. The license under the Insecticides Act, 1968 was also been obtained by the complainant. It is submitted that al-though opposite parties contended that there was no electricity between 18.30 hours on 23rd June to 00.30 hours on 24th June, 2012, however, the report submitted by M/s Mack Surveyors Private Limited clearly state that electricity was resumed at 00.15 hours. There was an active connection of electricity in the godown as per the letter of Uttar Haryana Bijli Vitran Nigam ( UHBVNL). The police was informed about the fire on the same night and they had the knowledge of fire and DD entries were also recorded. It is submitted that opposite parties had taken an illegal and untenable pleas in their written statement and their defence has no merit and is liable to be rejected.
6. The parties led their evidences by way of affidavits and they have also submitted their written submissions. I have heard the arguments and perused the relevant record.
7. It is argued on behalf of the complainant that opposite party cannot raise any other ground for repudiation except those which are enumerated by them in the letter of repudiation dated 12.03.2014 under challenge. It is submitted that despite their surveyor giving a favourable report, the claim is repudiated on the basis of report of second surveyor/investigator M/s J. Basheer and Associates Surveyors Pvt. Ltd. ( hereinafter referred to as investigator). It is submitted that appointment of investigator is completely illegal and bereft of any legal sanction and has been done in violation of section 64 UM of the Insurance Act. It is submitted that opposite party had appointed M/s Mack Surveyors Pvt. Ltd. ( hereinafter referred to as the surveyor) under section 64 UM of the Insurance Act and he submitted his report on 07.01.2013 recommending the settlement of claim of Rs.16,22,59,661/- and there were no valid grounds to appoint an investigator. It is submitted that if opposite party required certain additional queries to be answered then mandatorily it was obliged to refer those queries to the surveyor for clarifications. It is submitted that investigator has been appointed with sole intention to obtain tailor made report in their favour. It is further argued that there was no credible reason for appointment of the investigator. At the time of appointment of the investigator, neither the consent of the complainant was sought nor there is reference of any material showing that surveyor's report had suffered from any inconsistencies or inadequacies. It is further argued that without discrediting the report of the surveyor for some substantive reason, the investigator could not have been appointed. It is further argued that investigator acceded its jurisdiction. It is submitted that he was appointed to investigate and report only on five aspects which are : (a) time of power supply restored on the date of loss; (b) police finding on the fire loss; (c) fire brigade report; (d) which godown actually burnt and how much stock is stored in each godown at the time of loss and (e) details of inquiry detailed above, but he had extended its scope of investigation beyond these directions. It is submitted that since the appointment of M/s J.Basheer investigator was not tenable under the law, the act of the opposite parties i.e. repudiation of claim on the basis of report of M/s J.Basheer, the investigator, is liable to be set aside and rejected on this ground alone. It is further argued that before appointing the investigator, no permission of regulatory authority was sought. Reliance is placed on the decision of the Hon'ble Supreme Court in New India Assurance Co. Ltd. Vs. Protection Manufactures Private Ltd 2010 (7) SCC 386 and decision of this Commission in Revision Petition No. 488 of 1998 titled National Insurance Company Ltd. vs. New Patiala Trading Company decided on 08.02.2002. Reliance is also placed on the decision of this Commission in Original Petition No. 73 of 2002 titled M/s Jagannatha Poulteries Vs. New India Assurance Co. Ltd. 2012 (92) ALR 763 and Sparkling Traders Pvt. Ltd. Vs. New India Assurance Co. Ltd. & Ors. II (2015) CPJ (NC) and Hundi Lal Jain Cold Storage and Ice Factory Pvt. Ltd. Vs. Oriental Insurance Co. Ltd. II (2005) CPJ 17 (NC).
8. It is argued on behalf of the insurance company that surveyor in his final assessment of loss had ignored to examine the claim on several aspects and had also committed mistakes in ascertaining the liability of the opposite parties on several aspects. It is submitted that letter dated 19.02.2013 was written to the surveyor seeking his clarification on certain aspects. He replied vide its letters dated 27.02.2013 and 01.03.2013 but the same were not found satisfactory. Under these circumstances, it had become necessary to appoint an investigator and vide letter dated 13.04.2013 M/s J.Basheer was appointed. It is submitted that Insurance Company has acted within Section 64 UM of Insurance Act, only.
9. I have considered the rival contentions. Hon'ble Supreme Court in the case of "Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited & Anr. (2009) 8 SCC 507" had elaborately discussed the scope of section 64 UM of the Insurance Act 1938 and rules and regulations formulated by insurance regulatory authority which includes licensing and other aspect of surveyor and has held as under:
21)The Insurance Regulatory Authority (`IRDA' for short) has formulated Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000, which regulate the licensing and the work of surveyors. These regulations stipulate that the surveyor shall investigate, manage, quantify, validate and deal with losses arising from any contingency and carry out the work with competence, objectivity and professional integrity by strictly adhering to the Regulations.
22)The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or 17damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. There is no disputing the fact that 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. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report. Scheme of Section 64-UM particularly, of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course. If for any valid reason the report of the Surveyor is not acceptable to the insurer may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated etc., it must specify cogent reasons, without which it is not free to appoint second Surveyor or Surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of Surveyor/Surveyors. There is no prohibition in the Insurance Act for 18 appointment of second Surveyor by the Insurance Company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first Surveyor and the need to appoint second Surveyor.
23)Section 64 UM(2) of the Insurance Act, 1938, reads that `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 twenty thousand rupees in value on any policy of insurance, arising or intimates to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968 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 license issued under this Section to act as a surveyor. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of surveyor should be taken but it does not go further and say that the insurer would be bound whatever the surveyor has assessed or quantified, if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to 19 estimate the loss suffered by the insured. In the present case, the insurer has stated in the counter affidavit filed before the National Commission and even before us, why the appointment of second Surveyor was necessitated and also has given valid reasons for appointing second Surveyor and also has assigned valid reason for not accepting the report of Joint Surveyor. The correspondence between the insurer and the Surveyors would indicate the particulars differed by the insurer for differing with the assessment of loss made by the Surveyors. The option to accept or not to accept the report is with the insurer. However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. We hasten to add, if the reports are prepared in good faith, due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the Surveyors."
10. In the present case, no doubt the insurance company had written letters to the surveyor asking certain explanation and surveyor had submitted its clarification vide its letters dated 27.02.2013 and 01.03.2013 but before he could finally submit its explanation which he did vide its letter dated 20.04.2013, insurance company appointed the investigator M/s J.Basheer vide its letter dated 13.04.2013. The Supreme Court in the case of Venkateshwara Syndicate and several other of its pronouncements has clearly held that insurance company cannot go on appointing surveyor one after the another with the intention to obtain a tailor made report to its own satisfaction. Hon'ble Supreme Court has categorically stated that insurance company no doubt retains the power and authority to appoint a second surveyor / investigator but it can do so only if there are sufficient valid reasons for not accepting the report of the surveyor. The Hon'ble Apex Court has further held that the report of surveyor can be rejected only if it has inherent defects or where on the face, it is arbitrary, excessive or exaggerated, and that it can be rejected only by giving cogent reasons. This means that without rejecting the report of the first surveyor for valid reasons and after recording these reasons, the insurance company is precluded from appointing a second surveyor. M/s J.Basheer was appointed by the insurance company vide letter dated 13.04.2013 which is reproduced as under:
"HO/FIRE/CLAIM/INV/2013-14
APRIL-13, 2013
J. Basheer & Associates Surveyors Pvt. Ltd.
Mumbai
Ref : Fie claim of Crystal Crop Protection Pvt. Ltd.-
Appointment as Investigator-DOL 24.06.2012
Sir,
The above loss was surveyed by Mack Surveyors (P) Ltd.
During processing of the claim, it has been brought to notice that insured is having policies from two different RO's and the Chandigarh RO was not having information of the loss till 20.03.2013 and tax therefore requested HO to gather information and opined for a thorough investigation in the matter.
With this background, we are referring the matter to you for thoroughly investigating the loss with reference to:-
Time of the power supply restored on the day of loss.
Police finding on the fire loss.
Fire brigade report.
Which godown actually burnt and how much stock is stored in each godown at the time of loss.
Details of inquiry detailed above."
11. From the bare reading of this letter of the opposite party, it is apparent that letter is silent about rejection of the report of surveyor M/s Mack Surveyors. Even this letter does not show that the opposite party had rejected the report of Mack Surveyors and reasons for such rejection. No other document, showing that report of M/s Mack Surveyor was ever rejected, is produced on record. It, therefore, is clear that without even rejecting the report of M/s Mack Surveyor and without giving any reason, M/s J.Basheer was appointed as second surveyor/investigator. Learned counsel for the complainant has also relied on certain observations made by the Hon'ble Supreme Court against M/s J. Basheer in New India Assurance Co. Ltd. vs. Protection Manufacturer Pvt. Ltd. 2010 (7) SCC 386 in support of the argument that the only motive to appoint him was to obtain favourable report.
12. I have, however, also considered each and every ground of repudiation on merits as well to judge the report of investigator which is otherwise based on correct analysis of facts and circumstances. The first ground for repudiation is that complainant has no insurable interest. It is argued on behalf of the opposite parties that stocks lying in the godowns were owned by M/s Crystal Phosphates Ltd. and not by the complainant and since insurance is for the stock of the complainant, the complainant is not entitled to any claim. The stand of the complainant is that M/s Crystal Phosphates Ltd. stands merged with the complainant as per order of High Court of Delhi dated 02.08.2011 w.e.f. 01.04.2010. It is submitted that all the assets and liabilities of the transferee company i.e. M/s Crystal Phosphates Ltd. came to vest with the complainant thereafter, hence, it cannot be said that complainant had no insurable interest. It is submitted that complainant had applied for transfer of the various licenses with the relevant authorities but authorities had not immediately transferred those licenses in favour of the complainant and, therefore, the purchases etc. had been done in the name of the M/s Crystal Phosphates Ltd.. It is argued that M/s Crystal Phosphates Ltd. is not independent entity after merger having lost its entity on getting merged with the complainant and, therefore, all the assets and liabilities of M/s Crystal Phosphates Ltd. are now owned by the complainant. Complainant has also placed various documents on record showing that after the approval of amalmagation by the Hon'ble High Court of Delhi it had written letters for transfer of all the licenses, which were initially in the name of M/s Crystal Phosphates Ltd. in its name. These facts are not disputed by the opposite parties. In view of the fact that under the amalmagation scheme, M/s Crystal Phosphates Ltd. stood merged with the complainant, all the stocks of M/s Crystal Phosphates Ltd. are thereafter came to be owned by the complainant. In the case of Marshall Sons & Co. (India) Ltd. Vs. Income Tax Officer (1997) 2 SCC 302, Hon'ble Supreme Court has clearly held that on amalmagation of companies, the Transferor Company shall be deemed to have been carrying on the business for and on behalf of the Transferee Company from the date of amalmagation. The stocks insured thus covers all the stocks purchased by it in its own manner or in the name of the Transferee company M/s Crystal Phosphates Ltd. from the effective date of merger i.e. 01.04.2010. The policies which were purchased after the merger thus covers all the stocks lying in the godown. M/s Mack Surveyor had rightly calculated so in its report. The ground of rejection is not valid.
13. The second ground for repudiation is that dealership license had been issued by Deputy Director of Agriculture in the name of M/s Crystal Phosphates Ltd. and not in the name of complainant and hence M/s Crystal Phosphates Ltd. was still running the business as an independent identity. Counsel for the complainant has submitted that M/s Crystal Phosphates Ltd. was not operating as an independent entity. Pursuant to amalmagation, complainant had applied to Director of Agriculture, Central Board of Excise and Customs including other government institutions for fresh approvals, licenses and endorsement of change of name etc. and those authorities took their own time dealing with the application of change of name. The license was issued by Department of Agriculture to the complainant on 21.03.2013 after making endorsement on it. It is submitted that complainant did not have two licenses but by way of an endorsement, the license was assigned to the complainant and hence there was only one license for carrying on the business. The opposite parties have failed to bring to my notice any evidence on record to counter this argument / contention of learned counsel for the complainant. The repudiation on this ground is also invalid.
14. The claim is also repudiation on the ground that complainant was carrying on the business from a godown which did not have requisite approvals and licenses. It is argued by learned counsel for the complainant that they already have no objection from the sarpanch of Gram Panchayat Sersa, Panipat and Director, Town and Country Planner, Haryana had already granted permission for change of land use for construction of industrial building vide letter dated 25.11.2005. From the perusal of this letter dated 25.11.2005 it is apparent that the Director, Town and Country Planning, Haryana had already granted permission to the complainant for change of land use and for construction of industrial building over area measuring 4567.75 sq. yd. or 3819.19 sq. mtr. falling in Reet / Killa no. 76/17/1, 17/2 of the Revenue Building of Village Sersa, District Sonepat. It, therefore, cannot be said that complainant did not have any permission to use the said place for industrial godown purpose. This ground of rejection is also not a valid ground.
15. The claim is also repudiated on the ground that huge quantity of raw material which was stored in the godown were beyond the normal shelf life, my attention is not drawn to any document to substantiate this contention. The complainant on the other hand has placed on record the documents showing details of purchase materials with its expiry date. The opposite party has failed to point out any material which was lying in the godown and enlisted therein and its shelf life had expired. These documents have been prepared on the basis of purchase invoice / stock transfer invoice of the goods stored in the godown alongwith details of their shelf life and was submitted both to M/s Mack Surveyor and M/s J.Basheer while Mack Surveyor has accepted these documents, the investigator without any basis concluded that material were stored beyond their shelf life. Therefore, this ground of repudiation is a baseless ground.
16. Another plea taken by the opposite party while repudiating the claim is that huge quantity of material was transferred to the fire affected godown prior to the fire and it is argued that this shows that complainant had manipulated the fire incident and his claim is not justifiable. It is argued on behalf of the complainant that period between May to August is a peak season for the complainant business as this is the time when farmers sow the seeds and use huge amount of pesticides and that is why complainant every year increases its stock during that period. Simply because complainant had stored huge amount of pesticide in its godown it cannot be said that fire was not accidental but manipulated for undue benefits. Also it was not this year alone that the complainant's godown had such huge quantity of pesticides, the information of the previous years stock prepared on the excel sheet on the basis of documents, show that in previous years during this period the complainant had stored huge quantity of stocks in its godown. The report of M/s Mack Surveyor also shows that the surveyor had on visiting other factory of complainant at Nathupur found it filled to its full capacity. The said Nathupur factory was within a distance of 5 km from the affected godown. The investigator, however, based on conjectures and surmises held otherwise, in its report. The rejection on this ground, therefore, is based on surmises and conjectures and has no basis.
17. The claim is also repudiated because according to the opposite parties, complainant had razed the walls of the affected godown to the ground prior to the surveyor's inspection of site and that it had affected the correct assessment of the loss. Insurance company although has repudiated the claim on this ground as advised by their investigator M/s J.Basheer, however, they have not placed any document on record or any statement of any person on record to substantiate the claim that it was the complainant who had razed the walls of his godown to the ground after the fire and thus violated terms and conditions of the policy. Their appointed surveyor have also not supported the opposite parties. It is pertinent to note that M/s Mack Surveyor has done the investigation into the matter first and reported as under:
"8.00 Extent of Damage
8.01 The building of the affected godown collapsed in the incident of fire. The walls had collapsed and roof, made of asbestos sheets broke into pieces. The girders and trusses used for the roof got twisted and bent due to fire and high temperature and fell on ground The material was mainly stored in drums and carbouys and it was informed that that some of the drums and carbouys had blasted in the fire incident. Due to burning and or blasting of the drums the chemical stored therein got burnt and spilled. Finished goods stored in godown no.4 got burnt and at places it was visible only as a heap. Burnt chemical mix was spread inside the godown and in the open space in front of the godown up to the road.
8.02 The chemicals were poisonous and having burnt, spilled and mixed were exhuming poisonous fumes. Due to the fumes the people living and or working in the surrounding areas were constantly complaining of giddiness and vomiting and were reporting the matter to the pollution control department and police. Insured had to post additional staff to take control of the situation. Insured expressed that they wanted to shift their unaffected finished goods which was allowed by us due to the prevailing hazardous fumes and aggravating complains of the people in the vicinity."
M/s Mack Surveyor has clearly stated that 'walls had collapsed'. This ground for repudiation, therefore, is meritless.
18. The other ground for repudiation of claim is that policy was issued for "stock of all kinds of pesticides" and since the policy does not cover the raw materials and since only the raw material and no finished material i.e. pesticides was found to be stored in the godown and destroyed in fire no claim was admissible. Admittedly, one policy covers "stocks of all kinds of pesticide" lying in the godown or factory in policy no. 32430011110300000106. The policy does not distinguish between stocks of finished goods or raw material. The policy covers the entire stock of the pesticide. There is no dispute that the goods which were destroyed in the fire were pesticides. The second policy no. 35420011110300000007 covers 'risk on stocks of all kinds of pesticides, goods, power having flash point above 65 degree centrigrade and liquid in sealed containers and non-hazardous other goods, insured's own or held in trust in deposit on commission of, belonging to others". The complainant was dealing with chemicals for which license under Insecticide Act was issued to it. Under the Insecticides Act, 1968 the word ' Insecticide' is defined as under:
"1. any substance specified in the schedule; or
ii. such other substances ( including fungicides and (weedicides) as the Central Government may, after consultation with the Board, by notification in the official Gazette, include in the schedule from time to time; or
iii. Any preparation containing any one or more of such substances.
19. Counsel for the opposite parties has failed to point out that complainant had stored any chemical which did not fall within the schedule forming part of the Insecticides Act, 1968 and amended from time to time. The expression 'pesticides' is a broad expression covering insecticides, herbicides, fungicides etc. Dictionary meaning of Insecticide as mentioned in Oxford Advanced Learner's Dictionary is "a chemical used for killing insects." Word ' pesticide' in the Oxford Dictionary is defined as ' chemical used for killing insects". It is apparent that both the expression pesticides and Insecticides are used as synonym to each other. The opposite parties have failed to point out that pesticides means some finished goods. It is a chemical used for killing insecticides and has to be one which finds its name in schedule attached to the Insecticides Act, as no one can deal with such chemicals except in consonance of the Insurance Act. The repudiation on this ground is malafide act of the opposite parties.
20. The other ground for repudiation was that dealership license was in the name of M/s Crystal Phosphates Ltd. and also that assessee code of M/s Crystal Phosphates Ltd. was maintained with the Central Board of Excise and Customs and, therefore, the stocks were not solely owned by the complainant. This argument of the opposite party has no merit because letter of Deputy Director, Agriculture Sonepat clearly establishes that pesticide license to sell stock or exhibit for sale or distribute of insecticide vide no. 1721 / S (P) for the period from 14.03.2011 to 31.12.2012 was originally given to M/s Crystal Phosphates Ltd.. However, the said license was endorsed in favour of the complainant w.e.f. 09.11.2011. This shows that the complainant had license endorsed in its name and could deal with such material. The complainant has also placed on record document showing that Central Board of Excise and Customs had accepted their application and permitted them to act and that they had surrendered registration certificate issued to M/s Crystal Phosphates Ltd. by Central Excise Division vide letter dated 01.11.2011 and had applied for new registration certificate. These grounds of repudiation is also baseless and malafide.
21. The claim is also repudiated on the ground that M/s Crystal Phosphates Ltd. had maintained an active manufacturing license even after the merger and hence stocks had belonged to M/s Crystal Phosphates Ltd. It is argued by learned counsel for the complainant that as per the procedure, the complainant was required to first apply for change of name in CIB & RC on insecticides / pesticides and the complainant had applied on 09.11.2011. CIB and RC, Faridabad approved change of name vide its letter dated 30.04.2012. Subsequently, alongwith list of insecticides and CIB & RC registration certificate, the complainant on 10.05.2012 moved an application for change of name in manufacturing license before the department of Agriculture, Haryana. The manufacturing license of M/s Crystal Phosphates Ltd. was, thereafter, amended by the Department of Agriculture, Haryana and issued in favour of the complainant company. On the same license, name of company was changed from M/s Crystal Phosphates Ltd. to M/s Crystal Crop Protection Ltd. by making an endorsement on it. It is submitted that this argument has no merit. I have perused the documents placed on record by the complainant in support of his arguments and I am satisfied that as soon as merger took place, the complainant took steps for getting all the relevant licenses / other documents to be transferred from M/s Crystal Phosphates Ltd. to its name and that administrative delay only had occurred in between and necessary permission had also been given to the complainant. As discussed above, all the assets which were vested with M/s Crystal Phosphates Ltd., automatically on merger came to vests with the complainant. This ground for repudiation, therefore has no merit.
22. The claim is also repudiated on the ground that M/s Crystal Phosphates Ltd. was maintaining an active PAN number and bank account. It is argued by complainant that vide letter dated 20.10.2011, the income tax department was informed about the merger order and request for de-activation and surrender of PAN number was made. Letters were also written on 09.10.2011, 12.09.2011 and 14.12.2011 to State Bank of India, Oriental Bank of Commerce and Punjab National Bank respectively for change of the name of company in the bank accounts on the basis of amalmagation order and, therefore, all the necessary steps have already been taken. This certainly is not a valid ground of repudiation.
23. Another ground of repudiation of claim of the complainant is that complainant had violated condition no.8 of the respective policies. In the letter of repudiation, following facts showing violation of condition no.8 has been enumerated :
"1. The information provided with respect to the cause of the fire in question is that there was no electricity in between 2300 on 23 June and 0015 on 24 June 2012. Immediately thereafter, your security guard claims to have heard sounds similar to the bursting of a fire cracker and he says he smelled burning. He saw that the fire was spreading rapidly in and around the godowns and was getting beyond control. He says he immediately informed company officials and then started fighting the fire, without success. He again informed the company officials, and then claims to have informed the fire and police authorities.
2. However:
(a) The godowns were connected to the electricity grid of Gupta & Co. and Gupta & Co. was in turn connected to the Kundli electrical sub-station. It has been confirmed that Kundli electrical sub-station supplied no electricity to the Gupta & Co. grid between 1830 on 23 June and 0030 on 24 June 2012;
b. Although the godown was connected to the electricity grid of Gupta & Co., it drew no electricity. This is confirmed by the fact that the verified meter readings from March to December 2012 show only 20 units of electricity consumed for the entire period;
c. What electricity was in use was for the very low intensity purpose of lighting, for which in any event there was no need during the night hours in a storage godown.
d. Contrary to the information provided, neither the police nor the fire authorities were immediately informed about the fire. It was a chance observation of the fire by the police that resulted in them calling the fire brigade. We have noted that Crystal Crop acknowledges that there was a delay in calling the police and fire authorities, which it attributes to the illiteracy of the security guard, although Crystal Crop at the same is comfortable in relying of the literacy of the same security guard who claims the fire was caused by a short-circuit;
e. In fact, no formal complaint was made to the police until 26 June 2012, 2 days after the fire."
24. From the record, it is apparent that M/s Mack surveyors who was initially appointed by the opposite party to inquire into the claim of the complainant had on the issue of fire in the godown has given its report and relevant portion is reproduced as under:
"6.02. We are of the opinion that the fire was accidental in nature caused due to an electric short circuiting. As such the loss suffered by the insured is admissible under the terms and conditions of the policy."
25. The cause of fire was attributed to electric short circuit. The opposite party appointed second surveyor namely M/s J.Basheer and referred the following matters to him for thorough investigation :
"1. time of power supply restored on the day of loss;
2. Police findings on the fire loss;
3. Fire brigade report;
4. which godown actually burnt and how much stock was stored in each godown at the time of loss;
5. details of expiry date of stocks".
26. The second surveyor during his investigation made inquiries from electric sub station Kundli from where the electric supply was provided to the godown and recorded as under:
"During our Enquiry from Substation Incharge Mr. Hari Das on 07.05.2013, he had said that the Godown was not having Electrical Supply after 1800 hrs till 0030 hrs. as the feeder line of M/s Gupta & Co. from where the connection was taken to the godown was put off from 19/06/12 till the date of our visit on 07/05/13, as per the instruction of their Head Office in Punchkula."
27. On the basis of this information supplied to M/s J. Basheer, he had given its report. Relevant paras are reproduced as under:-
"1. The Insured had set his Godown on fire to prefer an insurance claim and intensity of Fire was so severe that even 50 Fire Brigade Vehicles could not extinguish the Fire for 3 days.
2. About 7000 to 8000 people staying in 4 to 5 surrounding villages were badly affected and remained ill for about 10 days.
3. Workers working in surrounding factories, including that of Mousa Shoes were given Holiday for about 10 days, owing to poisonous gases emitting out of godown, which being injurious to human health. For period of almost 6 months, the premises was guarded by a watchman to ensure that no birds, animals or human being to eat or drink anything and die over there. Area of about 10 kms surrounding was affected by this incident.
4. The main business of the insured was to export and import chemicals / gases from China, Japan, etc and by illegal means and bribing Excise, Port, Income Tax, Police, Custom Officials, he is evading Duties & Taxes and that is how he minted Rs.10,000/- crores from just Rs.1 Cr.
5. There was no such huge quantity of stocks in the fire affected godown as claimed by the insured.
6. It is wrongly claimed that the loss due to fire was on account of electrical fault, since as a matter of fact, there was no electricity in the godown during the incident. Since April 2012, the electric power connection was off.
Having been bribed, the police had not filed a complaint under IPC 436, 497, 420, 468, 379 and 34.
7. Insurance company did not obtain any evidence from the Godown / Land Owner. Before calling Insurance Officials, just 2 days prior, the Insured had shifted his stocks to his some other factory / godown. The proof of such shifting of stocks would be evident in the stock records available with the insured.
8. By putting stock worth about Rs.0.5 crore, he got his godown set on fire through his own people. By spending Rs.10-15 lacs, the insured has planned a conspiracy to earn upto Rs.10-15 crores."
28. The investigator has concluded that fire was caused by the complainant. The surveyor had recorded the statement of security guard Pratap Singh who was on night duty, on that day and noticed fire. In his statement, the security guard has stated that the electric supply in the Kundli godown area was erratic and there was no electricity around 11 p.m. on 23.06.2012 and 12.15 a.m. on 24.06.2012. According to him, there was resumption of electricity at about 12.15 a.m. and at that time he heard some sound like bursting of fire cracker and also felt the smell of burning. He, therefore, rushed in the direction of sound i.e. godown no.6 and found that smoke and fumes were coming out from inside of the godown. He tried to douse the fire with the help of fire fighting equipment. When the situation went beyond his control, he apprised the company officials and subsequently informed fire brigade and police authorities. Police personnel immediately reached at site. The fire brigade also arrived at site and by that time fire had already spread in godown nos. 5 and 4 as well. Fire brigade reached at the spot. Noticing the intensity of fire, more fire brigades were called from Sonepat, Gannaur and Bahadurgarh fire stations and by their hard efforts, they could control the fire only by 3.00 p.m on 24.06.2012. After they departed from the scene, fire was again noticed in the affected godown and fire brigade was again called and on reaching the spot, they extinguished the fire and they succeeded in dousing the fire only by 10 p.m. on 24.06.2012. In the morning of 25.06.2012, the fire was again noticed in the affected godown and the fire brigade was again called. Fire brigade reached at the spot at about 09.00 hours and they continued to fight with the fire till 6 p.m. when they finally succeeded in safely extinguishing the fire. This statement of Mr. Pratap Singh is duly supported by the police report and the fire brigade record. This speaks of the magnitude of the fire which was so large that the fire could not be completely extinguished till 6 p.m. on 25.06.2012. It is also apparent that police was immediately informed of the incident and they reached at the spot even before the fire brigade. The matter was, therefore, in the knowledge of police and it is not understandable how the recording of DD entry on 26.06.2012 defeat the claim of the complainant. Even the opposite party has pleaded that it was police official who first noticed the fire in the godown and called the fire brigade. So, admittedly police had the information of fire and it is ridiculous that on the face of these facts, the plea taken is that police was not informed immediately and has taken a false ground for rejecting the claim.
29. The two surveyors of the opposite parties have given two different reports regarding cause of fire. While surveyor M/s Mack surveyor has concluded that cause of fire was accidental on the ground that he did not find any evidence of the nature which could suggest that it was a man made fire, M/s J.Basheer, the second surveyor / investigator has based its report, that fire was not accidental, on letter dated 20.05.2013 of the electricity department wherein the department has stated that there was no electric supply in that area from 6.30 p.m. to 12.30 a.m. and so there could not be a short circuit. The letter 20.05.2013 is reproduced as under :
"From
SDO (OP) S/Divn.
UHBVN, Kundli,
To
M/s Crystal Crop Protection Pvt. Ltd.
Sersar Road Opp. Moza Shoes HSIDC
Kundli
Sub: Account no.SK/21-13.K
Ref : Your memo no.CCPPL/HO/2013-14 dated 13.05.2013
Regarding information above said account no. given below:
Certified that A/c no. SK/21-13 verified by service register owner of the connection of Sh. Kundan Lal s/oSh. Bhudhram, near Moja Shoes, Sersa Road, HSIDC Kundli.A & A no. 8961/CS dated 15.03.05 sanctioned loan 4986 K.W. SCO No. 36/23 dated 15.03.05 and date of connection 18.03.05 single phase connection.Feedername Gupta & Company and supply isnot disconnected from Nov-2011 to till date and there is regular supply to this account.
The bill were generated from Nov-2011 to March-2012 on Avg. basis as consumer meter was dead stop.The bill were made on Avg. basis from 7/20...(sic) to ...(sic) due to premises were locked.
The meter was changed on dated 28.03.2012 vide MCO no.42/117 and final reading 21544 of old meter position dead stop.
The reading taken of new meter on 22.04.2012 old reading was 02 and new reading was 20 after that no reading taken, due to premises were locked."
30. Electricity department in this letter has stated that electric supply to the godown was through the feeder line of M/s Gupta & Co. and this feeder line had no supply at the time of accident. The complainant, however, has placed on record a letter from the same electricity department dated 26.07.2013 wherein electricity department admits that they had wrong/false information in letter dated 20.05.2013. This letter is reproduced as under :
"From
SDO (OP) S/Divn.
UHBVN, Kundli,
To
M/s Crystal Crop Protection Pvt. Ltd.
Sersar Road Opp. Moja Shoes HSIDC
Kundli
Sub: Account No. SK/21-0013K
Ref : your letter dated 15.07.2013.
Point wise reply is as under:-
1.In this regard, that the electricity connection bearing A/C No. SK/21-0013K is installed at the premises of Sh. Kundan Lal s/o Sh. Budhram near Moja Shoes Sersa Road HSIDC Kundli Sonipat Haryana and running from Nov-2011 to till date, supply of electricity to this meter is given as per schedule of Nigam. There is no disconnection of above said connection from Nov-2011 to till date.
2. As per record of this office that the electricity supply has been switched off on 23.06.2012 at 23.05 hours and Switch On at 00.30 hours on dated 24.06.2012 as per new PRM schedule date 19.06.2012.
3. There is no any circular issued by M.D. directing that the electricity should be diverted from 18.30 hours to 00.30 Hours from industrial use to Domestic use. The electricity supply has been switched off as per message given by Control Reoom / higher office ( copy attached).
4. Relevant record of logbook from 20.06.2012 to 27.06.2012 attached herewith. The supply of electricity to this connection through 100 KVA T/F SOP to M/s M.R. Sales connected on 11 KV G.T. Road feeder. Previously this connection feeder name was wrongly mentioned has Gupta and Company vide this office memo no. 7478 dated 20.05.2013."
31. This letter completely demolishes the claim of the opposite parties that since the supply was through feeder line of Gupta and Co. and since there was no electricity supply from 6.30 p.m. to 12.30 a.m. in that feeder line, so fire due to short circuit was not possible. Subsequent letter of electricity department clarifies that electricity supply of the godown was not feeded through feeder line of M/s Gupta and Co. but the supply was given from the feeder line of M/s M.R. Sales connected on 11 KV G.T. road feeder. Electricity department had admitted that previously they had wrongly mentioned that connection from the feeder line was given through Gupta and Co. This letter demolishes the claim of the opposite parties totally. It is also a fact that complainants have been insuring its stock with the opposite parties for many years and they have never put up any claim. This was their first claim. It is settled proposition of law that burden is upon the opposite parties to prove by cogent evidences that loss had not occurred in an accidental fire but had been deliberately caused. In the present case as discussed above, opposite parties own appointed surveyors have given two different reports. While M/s Mack Surveyors find that fire was accidental, M/s J.Basheer, the subsequent surveyor based on letter of department (which department has itself admitted to have been wrongly issued) gave its finding that it was not accidental. The opposite parties, therefore, have failed to prove that fire was not accidental and was deliberately caused by the complainant. The opposite parties have failed to prove that there is any violation of clause 8 of the general condition of the policy by the complainant. Repudiation of the claim on this count is also bad in law.
32. In its reply, the opposite parties had raised certain additional grounds of repudiation, which were not grounds on which claim was repudiated vide the letter of repudiation. Counsel for the complainant has argued that opposite parties cannot take in its reply to the complaint any other ground except the one which form part of the repudiation letter. Reliance is placed on Galada Power and Telecommunication Ltd. Vs. United India Insurance Co. Ltd. ( supra). It is settled proposition of law as held by Hon'ble Supreme Court in Galada Tower and Telecommunication Ltd. ( supra) that insurance company should not be allowed to take any other defence to justify the repudiation of claim than the one they have enumerated in their letter of repudiation. It is not open to the opposite parties to challenge the claim of the complainant before this Commission on any additional grounds.
33. Hon'ble Supreme Court in the case of Galada Power and Telecommunication Ltd. Vs. United India Insurance Co. Ltd. 2016 (14) SCC 161 has clearly held that insurance company cannot raise objections beyond the letter of repudiation. The Hon'ble Supreme Court has held as under:
"In this regard, Mr. Mukheree, learned senior counsel appearing for the Appellant has commended us to a decision of the High Court of Delhi in Krishna Wanti Vs. LIC wherein the High Court has taken note of the fact that if the letter of repudiation did not mention an aspect, the same could not be taken as a stand when the matter is decided. We approve the said view."
34. From the facts and circumstances of the case as discussed above, it is apparent that opposite parties have failed to justify the ground of repudiation of claim of the complainant. Repudiation of claim, therefore, is bad in law and hence it amounts to deficiency in service. Their own surveyor has assessed the net loss at Rs.16,22,59,661/-. The complainant has clearly stated that he had already given consent to this assessment of loss.
I accordingly allow the complaint and issue the following directions:
a. The opposite parties are directed to pay to the complainant a sum of Rs.16,22,59,661/- (Rupees Sixteen Crore Twenty Two Lacs Fifty Nine Thousand Six Hundred and Sixty One only ) alongwith simple interest @ 9% from the date of repudiation of claim till the date of payment, for deficiency of service.
b. A sum of Rs.5.00 lacs ( Rupees Five lacs only) is also awarded towards mental agony and harassment.
With these directions, the present consumer complaint stands disposed of.
......................J DEEPA SHARMA PRESIDING MEMBER