National Consumer Disputes Redressal
National Insurance Co.Ltd. vs M/S Jyothi Tobacco Traders on 18 September, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO.493 of 2006 (From the order dated 29.06.2006 in Complaint No.42/2003 of the State Commission, Andhra Pradesh) National Insurance Co. Ltd. Appellant Versus M/s Jyothi Tobacco Traders Respondent BEFORE: HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER For the Appellant : Mr.Vishnu Mehra and Ms.Sakshi Gupta, Advocates For the Respondents : Mr.Mruthyunjaya Sastry N, for Mr.Prabhakar Sripada, Advocate Pronounced on 18th September, 2012 ORDER
PER VINEETA RAI, MEMBER This First Appeal has been filed by the National Insurance Co. Ltd. (hereinafter referred to as the Appellant) being aggrieved by the order of the State Consumer Disputes Redressal Commission, Andhra Pradesh (hereinafter referred to as the State Commission) which had allowed the complaint of M/s Jyothi Tobacco Traders, complainant before the State Commission and Respondent herein.
FACTS Respondent/complainant is a proprietory concern doing business in the name and style of M/s Jyothi Tobacco Traders since 1992. It had been insuring stocks which were under hypothecation of State Bank of India for a total sum of Rs.35 lakhs and for which 3 Fire Insurance Policies were taken with validity periods running from 29.10.1997 to 10.12.1998. Respondent stated that regular stock statements were being submitted to the Bank which also periodically inspected the stocks in question. On 02.09.1998, a fire broke-out in the godown in which the Respondents goods were stored when its proprietor was away to Chennai, and the entire goods stored there were gutted in the fire which also caused extensive damage to the godown building. Police registered a case of accidental fire. The Appellant/Insurance Company who was informed appointed a Surveyor who immediately visited the site and also made subsequent visits to assess the loss.
The entire ledger, stock registers, bank statement etc. were handed over to him and the Surveyor assessed the loss at Rs.7,68,416/-. On 20.03.2001, Appellant/Insurance Company repudiated the claim of the Respondent without any valid reason. Respondent approached the Ombudsman for redressal of his grievance and projected a total loss of Rs.20 lakhs although the actual loss was even higher. The Ombudsman passed an Award on 10.02.2003 directing the Appellant/Insurance Company to settle the claim as assessed by the Surveyor. However, no interest or damages were awarded. Respondent contended that the Ombudsman merely accepted the report of the Surveyor and did not go into the details of actual loss suffered by the Respondent. In fact, value of the goods destroyed was apparent from the certified Accounts/Stock Statements given to the Bank as also the prevailing price of the stocks which was not appreciated by the Surveyor who made his assessment based largely on the ash remains that were available at the site even though it was specifically pointed out that a substantial amount of the ash had been washed away while extinguishing the fire and thereafter.
Since the Surveyor grossly under-estimated the loss which was also accepted by the Ombudsman, Respondent being aggrieved filed a complaint before the State Commission requesting that the Appellant/Insurance Company be directed to pay Rs.28,41,069/- towards insurance claim with interest @ 18% p.a. from the date of accident till the date of payment and Rs.2 lakhs towards damages and other costs and reliefs.
The above contentions were denied by the Appellant/Insurance Company who stated that the Respondent had given an unconditional written acceptance of the awarded amount of Rs.7,68,416/- as assessed by the Surveyor in full and final settlement in respect of the insurance claim and accordingly this amount was paid.
The State Commission after hearing both parties and after considering the evidence filed before it partly allowed the complaint and directed the Appellant to pay the Respondent, Rs.13,67,534.50p with interest @ 9% per annum from the date of repudiation till payment together with cost of Rs.10,000/- within a period of six weeks from the date of receipt of the year.
The operative part of the order of the State Commission is reproduced:
Taking into consideration the stock statement of the State Bank of India, Ex.A-15, wherein the stock is valued at Rs.28,41,069/-, in the interests of justice, we rely on the Stock Statement given to the State Bank of India and the Certificate issued by the State Bank of India vide their letter Ex.A5 and their inspection of the stock on 22.8.98 and also take into consideration the facts and circumstances of the case and quantify the loss suffered by the complainant as follows:
S.N. Claimed by the complainant Allowed by the Commission Rs.
Rs.
a) 8,246 Kgs of Kutcha/non redried tobacco @ Rs.14/kg 1,15,444/-4123
Kg @ Rs.14.00 57,722.00
b) 17,748 Kgs of IS/non redried tobacco @ Rs.53/- kg 10,46,644/-
8874kg @ Rs.53.00 4,70,322.00
c) 35,723 Kgs. Of IS/non redried tobacco @ Rs.47/- kg.
16,78,981/-
17861.15 kg @ Rs.47/-
8,39,490.50 Total 28,41,069 13,67,534.50 and direct the opposite party to pay this amount of Rs.13,67,534.50p. Out of this amount, Rs.7,68,416/- has been assessed by the surveyor and confirmed by the Insurance Ombudsman but no interest or damages has been awarded.
Hence, the Complainant did not accept the payment in protest. Taking into consideration that only on 24.03.2003 the discharge Voucher for Rs.7,65,915/- was sent to the complainant after he approached the Honble Insurance Ombudsman and the very delay caused by the Opposite Party in repudiating the claim on 20.03.2001, is by itself an act of deficiency of service, hence, we are inclined to also award interest @ 9% p.a. from the date of repudiation i.e. 20.03.2001 on the amount of Rs.13,67,534/-.
Hence, the Appellant/Insurance has filed the First Appeal.
Learned Counsel for both parties made oral submissions. Counsel for Appellant stated that the State Commission erred in awarding a higher compensation than assessed by the Surveyor who concluded that the loss was of Rs.7,68,416/- and had given detailed reasons in his report for reaching this conclusion. Surveyor had specifically allowed a 10% margin for loss of any ash which may have been washed away and the grades of tobacco were differentiated and appropriate rates arrived at to assess the quantum of loss. Respondent on the other hand was unable to produce any credible evidence, except to state that the ash was not properly quantified and the Stock Statement of the State Bank of India indicating the actual amount and value of the tobacco stored was not taken into account by the Surveyor. All these facts were considered by the Surveyor as also the Ombudsman who clearly recorded that by allowing a 10% margin for loss of any ash while it was stored in the godown and also applying the appropriate rates to the tobacco stocks, the basis for the Surveyor to reach this conclusion could not be faulted. It was further rightly pointed out by the Ombudsman that there was a gap between the date of certification by the State Bank of India and the date of occurrence of the fire incident and therefore it would not be reasonable to go simply on the basis of the State Bank of Indias stock verification. Apart from this, the Respondent could not produce past records of the sales and purchase to support his contentions. Respondent had accepted the amount of Rs.7,68,416/- in writing in full and final settlement and not under protest. Under the circumstances, the order of the State Commission needs to be set aside and the present Appeal allowed.
Counsel for Respondent on the other hand contended that the State Commission had rightly relied on the stock verification report of the State Bank of India rather than the Surveyors report since the Surveyors assessed a residual loss on 09.09.1998 whereas the fire incident took place on 02.09.1998 by which time a great deal of the ash had been washed away. Apart from, this the Surveyor had not correctly assessed the value of the actual stocks and had therefore, concluded that its value was only Rs.28,41,069/-. Thus, there were serious deficiencies in the report of the Surveyor in respect of the calculation of the loss which was substantially redressed by the State Commission.
We have heard learned Counsel for both parties and have gone through the evidence on record.
The fact that the fire incident took place in the insured premises of the Respondent in which tobacco stocks were destroyed and that the Surveyor appointed by the Appellant/Insurance Company had assessed the loss as being Rs.7,68,416/- and this was also confirmed by the Insurance Ombudsman are not in dispute. It is also a fact that Respondent had accepted this amount in full and final settlement.
Notwithstanding this, Respondent did file a complaint before the State Commission challenging the lesser assessment of the Surveyor for the reasons indicated by Counsel for Respondent before us. We have carefully considered these submissions and we note that keeping in view the fact that some of the ash may have been washed away, the Surveyor in his detailed report has allowed a 10% margin over and above the residual ash that was present on 09.09.1998. Also samples of unburnt tobacco were sent to two laboratories in Hyderabad and on the basis of these reports, the Surveyor has given reasons for calculating the loss of the tobacco based on its variety and quality by considering it as F4 variety for the loss assessment. We are, therefore, of the view that the Surveyor has given adequate justification for quantifying the losses suffered in the fire as being Rs.7,68/416/-. The Respondent on the other hand has not been able to controvert these facts by any specific evidence except to state that as per stock verification carried out by the State Bank of India a few days prior to the fire incident, the value of the stocks stored was higher than that assessed by the Surveyor and that the ash that was washed away, was not taken into account while assessing the loss. As stated earlier, these facts were considered both by the Surveyor and the Ombudsman who have given credible reasons for estimating the loss. The report of the Surveyor, as is well established, is an important and substantial piece of evidence in respect of such cases and has to be relied on unless it is controverted by cogent and convincing reasons challenging its findings. In the instant case, we agree with the Appellant that the Respondent has not been forthcoming with any such evidence and we are, therefore, unable to sustain the order of the State Commission directing the Appellant/Insurance Company to pay an amount higher than that assessed by the Surveyor, to the Respondent in respect of the loss suffered in the accidental fire. We, therefore, set aside the same and confirm that the sum of Rs.7,68,416/- as assessed by the Surveyor and agreed by the Ombudsman is a correct and reasonable assessment of the loss suffered by the Respondent and that the claim has rightly been settled for Rs.7,68,416/- by the Appellant/Insurance Company. The First Appeal is therefore, allowed on the above terms. No costs.
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(ASHOK BHAN J.) PRESIDENT Sd/-
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(VINEETA RAI) MEMBER /sks/