National Consumer Disputes Redressal
M/S Ponni Agro Industries Private ... vs M/S Bajaj Allianz General Insurance ... on 9 January, 2026
IN THE NATIONAL ^CONSUMER DISPUTES REDRESSAL COMMISSION
AT NEW DELHI
NC/CC/108/2014
WITH
NC/IA/7727/2022 AND 2369/2025
(Directions, Early hearing)
M/s Ponni Agro Industries Pvt. Ltd.
Regd. Office at Sappanipatti Village,
Karagur Post, Krishnagiri Taluk & District-625111,
Tamil Nadu, India,
Rep. by its Managing Director
Sri L. Moorthi S/o Lakshmanan,
R/o Keelpaiyur Village, Paiyur Post,
Krishnagiri Taluk & District-635112,
Tamil Nadu, India, ... Complainant
Versus
1. M/s Bajaj Allianz General Insurance Co. Ltd.
H.O. and R.O. GE Plaza, Airport Road,
Yerwada, Pune-411006 (India),
2. M/s Bajaj Allianz General Insurance Co. Ltd.,
Third Floor, People's Park,
Govt. Arts College Road,
Coimbatore-641018,
Tamil Nadu, India,
3. M/s Bajaj Allianz General Insurance Co. Ltd.,
15, Kolaman Complex,
First Floor, Opp. ABN Amro Bank,
Saratha College Main Road,
Salem Taluk & District-636004,
Tamil Nadu, India,
4. Branch Manager,
M/s Lakshmi Vilas Bank Ltd.
(Now part of DBS Bank India Ltd.),
9-C, Nethaji Bi-Pass Road,
Hotel Agarwal Bhavan Building,
Dharmapuri-636701,
Tamil Nadu, India,
5. Managing Director & CEO,
Lakshmi Vilas Bank,
(Now part of DBS Bank India Ltd.),
Regd. Office:
GF: Nos. 11 & 12 & FF Nos. 110 to 115,
Capitol Point BKS Marg,
Connaught Place,
Delhi-110001,
Corporate Office: First Floor,
Page | 1
Express Tower, Nariman Point,
Mumbai-400021, ... Opposite Parties
BEFORE:
HON'BLE MR. JUSTICE A.P. SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
For the Complainant :Mr. Maibam N. Singh, Advocate
Mr. A. Mohammed Nazar, Advocate
Mr. Amier Abbaz, Advocate
Mr. Shanmugasundaram, Advocate with
Mr. Moorthy Lakshmanan, MD of complainant
For the Opposite Parties :Mr. Nachiketa Joshi, Sr. Advocate for OP-1-3/
Bajaj Allianz General Insurance Company Ltd.
(through VC)
Mr. Anand Shankar Jha, Advocate &
Ms. Nandika Kaushik, Advocate for OP-4 & 5/
Lakshmi Vilas Bank (Now DBS Bank India Ltd.)
Pronounced on 9th January, 2026
ORDER
PER A.P. SAHI, J„ PRESIDENT AND HON'BLE MR. BHARATKUMAR PANDYA, MEMBER The complainant before us is a Mango Pulp Manufacturing Unit that had acquired two insurance policies, one for Stocks and the other for Building, Plant & Machinery together with its accessories. We are referring to the policies which are Standard Fire and Special Perils Policy, policy no. 00000003 and 00000706. For the sake of reference, we will mention the policy for Stocks as policy no.03 and the policy for Building, Plant & Machinery as policy no. 706. The duration of the policy for Stocks was from 18.08.2009 to 17.08.2010 whereas the policy for the Building, Plant 8i Machinery was for the period 19.08.2009 to 18.08.2010.
We may point out that the Plant had been established way back in the year 2004 and was running and we have mentioned the policy numbers and the duration thereof which relates to the date of incident and the claim made in respect whereof the present complaint has been filed.
According to the complainant, the devastating fire that occurred on 10.02.2010 caused an extensive damage to the Building, Plant & Machinery as Page|2 L well as to the Stocks that were stored in permanent Pucca constructions as well as in a godown which has been described, and is one of the essential disputes raised, made of temporary or "Kutcha" constructions.
According to the complainant, policy no. 03 covers the risk of all Stocks stored in the premises comprising both the Pucca godowns as well as the Kutcha godowns, and therefore the entire loss and damage deserved to be indemnified. The complainant has relied on the terms of the policy schedule that has been filed along with the complaint as Annexure C-3. It is the contention of the complainant that since the goods were hypothecated to the Lakshmi Vilas Bank, the insurance was negotiated by the Bank itself and the premium thereof was also debited by the Bank from the account of the complainant.
In order to ascertain as to how the proposals were made, this Commission had passed orders calling upon the Insurance Company to file the requisite proposal forms in response whereto even though the Insurance Company has filed documents but the proposal form that has been filed on 11.02.2025 along with the compilation vide Dy. No. 4249, contains the proposal form only of policy no.03 which is for Stocks. The proposal form for the insurance of the Building, Plant & Machinery in respect of policy no. 706 has not been filed by the Insurance Company. We shall delve into the documents pertaining to both the policies later on but for the time being the claim was made for the loss and damage under both the policies before the Insurance Company.
The Insurance Company appointed M/s Asawa & Co. as Surveyors and Loss Assessors who visited the premises and the location of the loss on 11.02.2010 and conducted their survey even thereafter whereupon a comprehensive survey report was tendered by them on 31.12.2010. The said report is extracted hereunder:
Page | 3 asawa & co.
SURVEYORS A LOSS ASSESSORS APPROVED VALUERS Dt. 31.12.10 REPORT NQ.402/10-11 SURVEY REPORT .
SURVEY REPORT ON 10.02.10.
1.0 GENERAL:
THE INSURED : M/s. Ponni Agro Industries (P) Ltd., Sappanipatti Village, No.2 Rogini Gardens, KaragurP.O., y Krishnagiri-
THE INSURERS : M/s. Bajaj Allianz General Insurance Co. Ltd., No. 11,People's Park, 3rd Floor Govt. Arts Collage Road, Coimbatore- 641 018.
: Occurrence of fire in the Unit on H).02.10^ THE INCIDENCE at about 10-45 pm r : I) Stock of finished goods i.e. Mango pulp PROPERTY INVOLVED packed in tins.
: 2fKutcha shed.^ : M/s. Ponni Agro Industries (P) Ltd.. LOCATION Sappanipatti Village, No.2 Rogini Gardens, Karagur P.O., Krishnagiri- fl Sappaipatti village near Krtshnagiri on 11.02.10 and su^^^^ sunrev and assessftgJosLdueto . occurrence of fire in .the p^s stock of finished goods i.e. mango pulp packedjntos. 5 ( C£- • J $ jj Office : 2552094 Fa* : 0422-2553182 COIMBATORE-641002 Mobile : 93448 78899 e-mail : asawa22glaniail.com Page|4 SURVEYORS & I.OSS ASSESSORS ASAWA <& CO.
APPROVED VALUERS 2-0 THE INSURANCE <& THE INTEREST:
PARTICULARS STOCK POLICY ' BUILDING POLICY 2.01. Policy no. OG-10-1512-4005-00000003^ OG-10-1512-4001-00000706 (SFSP- DECLARATION POLICY) (SFSP POLICY) 2,02. Period of policy 18.08.09 to l7.08Jb~/' ~l 9.08.09 to T8.08.10 / 2.03. Address of the location as Sappanipatti Village, S. No. 793/6, 819/2, 820/8.
given on the face of the KaragurP.O. ( Paiyur Village, policy. Krishnagiri- Kaveripattinam, Krishnagiri-635112 I 2.04. Description of the risk Stock of Mango, Raw Buildings (super structure) Material & Finished Goods.
2.05. Sum Insured_______ Rs.51500000 ________ Rs. 7565000 2.06. Policy excess______ Rs. 10000_______________ Rs. 10000 ■ 2.07. Special perils covered Earthquake (Fire & Shock) Earthquake (Plinth & Foundation) ; 2.08. Special Exclusions Terrorism Damage cover & Other Exclusions as per Standard Fire & Special Perils Insurance Policy__________ J 2.09. Special Clauses 1. Agreed Bank Clause 1. Agreed Bank Clause
2. Designation of property 2. Designation of property clause clause
3. Earthquake (Fire & Shock) 3. Earthquake with Plinth & clause Foundation.
4. Declaration clause^ 4. Terrorism damage cover
5. Terrorism damage cover exclusion clause exclusion clause 5. Removal of Debris clause
6. Removal of Debris clause (up to 1 % of the claimed (up to 1% of the claimed [__________________ amount).____________ _ I 2.10. Special Conditions Hypothecated with " The Lakshmi Vilas Bank Ltd., Dharmapuri"
! Frequency of declaration-
Monthly
Mode of Declaration- Highest
value of stocks held dunng..
the month
Basis of Declaration- Market
value basis.
If the declarations are not
received with in the specified
period, the full sum insured
under the policy shall be
deemed to have been declared^
warranty
Construction warranty Construction
| 2.11. Warranties (ApplicaFTe other than the (Applicable' other man the
open space storage)
warranty • ;'''L
2
Page | 5
SURVEYORS & LOSS ASSESSORS ASAWA & CO.
APPROVED VALUERS
Copies of the insurance policies (marked- Al and A2) are enclosed for reference.
3.0 ABOUT THE INSURED:
M/s. Ponni Agro Industries (P) Ltd. was incorporated on 19.12.2003 and the commercial production started on 15.05.2004. The unit is situated at Sappanipatti Village, Karagur P.O. Krishnagiri-
The unit was started in their own land and buildings.
The copy, of the Companies Profile (marked-Bl) submitted by the insured is enclosed for reference. The insured had filed a memorandum for manufacturing Enterprise, to Dept of Industries and Commerce. A copy of the acknowledgement of the memorandum (marked --B2) is enclosed.
The following persons are the directors of the company.
| Mr. L. Moorthy - Managing Director.
•t Mr. E. Madhavan - Director ♦ Mr. M.S. Manoharan - Director | Mr. A. Rajasekaran - Director The Unit is a seasonal industry and mostly operates (manufacturing activities) during the period from May to July every year. The mam activities are to produce Mango as well as Guava pulp. During the season the insured employs around 700 persons for three shift Krishnagiri, Pollachi, Udumalpet, Them, Salem etc. par day.
id 09-1.1^^^ The annual turnover for previous two years i.e. 08-09 an< lakhs and Rs. 637 lakhs respectively.3
■Page | 6 SURVEYORS & LOSS ASSESSORS APPROVER VALUERS AS AW A <& CO.
Following x., 310 the ma,n buyers of the product i.e. mango pulp:
1. Ms. Capricorn Food Products India Ltd., Chennai
2. M s. Oceanic Tropical Fruits Private Ltd., Chennai
3. M/s. Safa Agro Pvt. Ltd, Hyderabad
4. M/s. Exotic Fruit Pvt. Ltd., Bangalore A list of the buyers submitted by the insured (marked-B3) is enclosed.
? W°rkS 311 thC ShiftS) Only durinS the season which ^pan for 70 to 90 days in a year from the month of May to July every year O*e™'se 'he workers are engaged only for packing and despatching activities for the rest of the period. P e It is to be noted that the insured is engaged in JOB WORK for the following buyers based on the orders/ quantity. The buyer and the seller enter in to an agreement for such job works. The buyers fund the purchases or deliver the mangoes (raw material), cans, cartons, labels etc to the insured. The insured •35 to, p[ocess 1116 stock received from the buyers and processes it. The insured charges only the processing charges to these parties.
1. M/s. Capricorn Food Products India Ltd., Chennai
2. M/s. Oceanic Tropical Fruits Private Ltd., Chennai These two parties/ buyers have the separate insurance cover for their stocks in the premises of the insured i.e. M/s Ponni Agro Industries (P) Ltd. f ro Copies of the insurance policies (marked-B4 and B5) are enclosed for reference.
Financials:
On going through the Profit and Loss accounts of the insured for previous four years the financial performance has been as follows:
Sales in Net Profit for
Year ending
Rs. the year
in Rs_
31.03.2006 2'6217800 7' 1010647
31.03.2007 40109912 _____ 1002727
31.03.2008 40213343 1298482
31.03.2009 50945579/1 1352479
These financial results indicate that the insured has been making prpftiiS^^tK business operations.
■----------------- !------------------- • 7
4
\ ./
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SIIRVF.YORS & LOSS ASSESSORS ASAWA <& CO.
APPROVED VALUERS
Copies of respective pages of the balance sheets (marked-B6, B7 and B8) are enclosed for ready reference.
4.0 OCCURRENCE:
We had detailed interaction with the following officials of the insured:
Mr. L. Moorthy ; Managing Director
Mr. M.S. Manoharan : Director
production activities were came to a halt at the end of the season (July 09). Thereafter the stock was being packed and stored in the godown. Since the space in the pucca godown was not enough a part of the stock was stored ;n t^mporar^tihatched roof sheds near to the7Samgoaownwi'ffi-in the premises. There was electrical installation Tn the'temporaiy'tKaR'Hed roof On 10.02.10 the normal work (mostly packing and dispatches) was carried out between 8.30 am to 5.30 pm and all the workers left the premises after completion of work. There were 15 workers who were engaged in packing and loading activities in the premises.
It'was reported by the insured that 2 loads, comprising 5440 cans, were dispatched.
The. office was also closed at about 7 pm and there after there were 3 security personnel (M/s. Rangasamy, Villaly and Nagendran) in the premises for night duty. 7 were rushed to the site. The insured made arrangements by way of water tankers to ensure uninterrupted supply of water to the fire engines.
C07bin,edIXf°rtS the fi-^as^pntrolled by 6 am the next day The insured employed JCB to help fire fighting?^--ne tZd^thC inCidenCC rePOrt (marked-C1) bythe security men on duty, is Di0„X"" * rToT.o'VZTof'T'''1 fa (^rked- CZ) is enclowd for referenced '•'3\\ XfcW s (iKcf' y <77/I C IT Page | 8 SI R5 EY0RS & LOSS ASSESSORS AS AWA & CO.
APPROVED VALUERS The matter was reported to the Kaveripattinam Police Station by Mr. L. Moorthy and FIR was obtained. The copies of the complaint letter and FIR no. 83/2010 dt. 16.02.10 (marked-C3 and C4) are enclosed for reference.
When we visited the premise on 11.02.10 the damaged stock of Mango pulp tins were seen littered through out the kutcha sheds where it was stored. The sheds were completely razed to the earth. The thatched roof gutted and only stone pillars were seen standing. The wooden rafters were also gutted and reduced to ashes.
We had taken physical inventory, in presence of the insured, of the sound stock stored in the pucca godown which was not affected by the fire.
Immediately after inspection, the insured was advised to segregate the sound mango pulp tins from the heap of the damaged stock and store it separately for our further inspection. During our next visits on 19.02.10 and 02.03.10, we had supervised the segregation works and took physical inventory of both the sound as well as damaged stock in the premises.
The following departments/ Govt, officials were informed of the fire incidence in writing:
1. Police Station, Kaveripattinam
2. Police Station, Kariamangalam
3. Revenue Officer, Krishnagiri
4. Fire Station, Krishnagiri
5. Fire Station, Palacode
6. Fire Station, Pochampalli
7. Taluk Officer, Krishnagiri
8. Supdt. Of Police, Krishnagiri
9. District Collector, Krishangiri The copies of some of the letters (marked-C5 to CIO) are enclosed for reference.
ITie photographs of the damaged stocks, taken by us, are enclosed with, this report. /z »c°
-
Page|9 SURVEYORS <& LOSS ASSESSORS AS AW A <& CO.
API-ROVED VALUERS 5 0 BRIEF DETAILS OF THE DAMAGE:
During our visit the following damage were noticed:
5.01 Building:
The kutcha sheds in premises were gutted.
5.02 Stock of Mango pulp (packed in tins) stored in the sheds was damaged.
6 0 LOCATION, CONSTRUCTION & OCCUPATION:
As per stock policy the processing unit is situated at Sappanipatti Village, Karagur P.O. Krishnagiri As per the building policy the address is as follows:
S. No. 793/6, 819/2, 820/8, Paiyur Village, Kaveripattinam, Krishnagiri-635 112 We took complete round of Paiyur Panchayat area during our visit and observed that the premises fall under Paiyur Panchayat and Sappanipatti, Kargur, Kaveripattanm etc. are the names of the areas under the panchayat. Therefore it is concluded that the address given in both the policies refers to only one place.
The insured has submitted copies of the land documents, property tax payment receipt, topo sketch of the land , patta, certificate of ownership of land (marked-Dl to D4) as a proof of address. A copy of the layout plan (marked- D5) is enclosed. There are no. of buildings in the premises. The Plant & Machinery and stock of Mango pulp was stored in theipiicca"go3oW) In addition to the pucca godown there were kutcha shedsjn the„premises housing stock of mango pulp cans, raw material, office etc. /■/' The kutcha sheds were said to have been constructed in the year 2004. It was constructed with stone pillars and thatched roofing. There wefe"no doors and windows. It was open from all the sides. There was no flooring either. We could notice a hollow brick wall, up to a height of around'^fei^^s, all around the sheds. The construction of the shed was thus KUTChX/', ---
--^7' A*''
' J!'
0^4/
Page| 10
SURVEYORS & LOSS ASSESSORS
approved valuers
ASAWA & CO.
Kir?.ar Was the case for the ofrice canteen buildings. But these
buildings were having alround walls with thatched roofing on wooden I?ft"'.,Thus 1116 constniction of these buildings was also Kutcha only. Both the buildings also gutted.
The walls of the pucca godown building are of brick/ stone masonry with asbestos sheet roofing. The floor of the building is finished with cement mortar. Thus the construction of the pucca godown conforms to class A category.
The insured is engaged in the business of manufacturing and marketing of Copy of the license (marked-D6) js enclosed. 7.0 PROCESS DETAILS:
Brief details of the process is as follows:
The raw material is fruits like mangoes, guavas etc. and purchased form various sources as described above. The fruits are received and stored in the natural ripening sheds. Once the fruits are ripening / sorting is carried out manually to remove the unripe fruits.
The selected fruits are washed in fruit washer and sent to tip cutting table where the tips of the mangoes are cut manually and it is then fed to destoner through the screw conveyor. Here the fruit is crushed and skin and the seed are separated from the pulp. After destining, the stock is stored in the collection tank. From here the stock is fed to pulper where the fibres are removed from the pulp and collected in a separate Pulp collection tank.
The pulp is then pre heated to 55 to 65° C and passed through the Decander where black fix are removed and the fine pulp is collected in kettles where it is heated to 90°C. Finally the pulp is filled in the cans and sealed. The filled cans once again heated to 100° C and then cooled to room temperature for 15 minutes and stored for marketing. A copy of the detailed flow chart (marked- D7) is enclosed for reference.
8.0 CAUSE OF FIRE:
The loss was intimated by the insured to the insurers immediately on 11.02.10. We had detailed discussions & thorough inspection of the ptegHsgs to ascertain most proximate cause of fire. According to the insured4fi$^A^X first fire claim in the premises. //c z'' .V\ 8 Page| 11 SURVEYORS & I.OSS ASSESSORS ASAWA <i CO.
APPROVED VALUERS We had detailed interaction with the security personnel who were the eye witness of the occurrence of fire. In addition to this we had also discussions with the following personnel of the insured:
Mr. L. Moorthy : Managing Director Mr. M.S. Manoharan : Director Based on our inspection of the site, interaction/discussions and out come of enquiries, our observations are as follows:
1. The cause of fire as reported by the insured, verbatim , is given here below:
'ELECTRICAL POWER LEAKAGE"
'DUE TO ELECTRICITY LEAKAGE IN THE PANEL BOARD."
2. No fire-was reported in the near vicinity of the area on the day & hence any fire in the premises due to spread of fire from out side is ruled out.
3. Cordial relations are being maintained between the workers and management and hence the chances of fire due to sabotage, are ruled out.
4. The financial performance has been good and hence any moral hazard is thus ruled out.
5. No cooking or such activities were being carried out in the premises and hence chance of any fire due to this also ruled out.
6. The Police has filed FIR under section ACCIDENTAL FIRE (DUE TO ELECTRICAL LEAKAGE)
7. The news paper has reported the cause of fire as Electrical short circuit.
8. The workers left the premises by 5.30 pm and hence chances of origin of fire due to smoking material are also ruled out.
9. On detailed inspection of the premises we observed that there was a small panel board on which some switches / starters were mounted. It was with in the thatched roof shed and was seen completely destroyed. The loss near the panel board was also found to be more sever. Therefore it is concluded that the some electrical spark might have originated due to short circuit in the panel board/ cables/wires and resulted in fire.
10.Die final report (marked- E) from the police has been reeeh by the insured is enclosed. The report concludes t^^i^^lre as Electrical Short Circuit.
9Page| 12 SURVEYORS & LOSS ASSESSORS approved Valuers ASAWA & CO.
11 .In andview of these observations.
hence^heTis dS CaU5e °f 9.0 ASSESSMENT:
to conduct the survey and assess the loss was received by us on 11.02.10 from the insurers.
1*02 IQ5 inSUre<1 °n 1116 f°lk)wingdates:
2) 19.02.10
3) 02.03.10
4) 07.06.10 to 08.06.10 add*1100 to this we had several rounds of meetings/ discussions in our office with the insured to get clarifications. muuronice ™JLdaniaSflSt0Cks Were "d inventory of sound stock was taken in presence of the representative of the insured. Hie insured was asked to start salvaging operations immediately so as to minimize the loss.
During our second and third visits we had inspected the stock which ,M "d tad " b' S!)': a sum of rsi583"m ,o"vide «» SI. Claimed No. Particulars amount in Policy no.
Rs.
Mango pulp
139956 cans @Rs.86.43 12096150
per can_____________
2. Carton- Packing Material OG-10-1512-
4005-00000003
35000 @ Rs. 14.5 per carton
Wooden Pallet 300 @ 588500
Rs.270 per pallet_________
3 Open Shed
29600 sft @ Rs.85.51 per 2531000
__sft________ ___________
4 OG-10-1512-
Cement bags
_ 300 bags @ Rs.220 per bag 66000 4001-00000706
_ Furniture, computers etc. 150000
6 _ Spares & SS Pipe lines
400000
Total 15831650 ___
10
Page| 13
SliRVEVORS & LOSS ASSESSORS
_ ASAWA & CO.
APFROVEO VALUERS
In addition to this two of the parties whose stock was also damaged have claimed term their insurers. The details are as follows:
Name of the insured Name of the Claimed quantity in Copy of the claim insurers terms of cans form M/s. Capricorn Food Products India Ltd.. Chennai United India Insurance Co. Ltd. 60000 Marked-F2 ' M/s. Oceanic Tropical Fruits The New India i Private Ltd.. Chennai Insurance Co. Ltd. 18000 Marked-F3 Policy no. OG-10-1512-4005-00000Q03, issued by the insurers to M/s. Ponni ^fOreHthwSt°Ck ? PaCking materials' Cement bags' furniture' "Wuters, spares and SS pipe lines etc. are not covered by this policy and hence not assessed by us. -
As stated above the insured stored the stock of mango pulp cans at two places with m the premises as follows:
L Pucca Godown
2. Kufcha shed in open yard.
stock in Pycca godown was unaffected and was sound. The stock stored in the Kumrawg?^^ '''•••••n ii«i • ii i.u >ui*« ii* .i^ui According to the insured the Pucca Godown had the stocks manufactured for the following parties:
1. Capricorn Food Products India Ltd., Chennai.
2. Exotic Fruits (P) Ltd., Bangalore
3. Safa Agro Pvt. Ltd., Hyderabad
4. Insured's own stocks According to the insured the Kutcha sheds (under claim) had the stocks manufactured for the following parties:
1 • Capricorn Food Products India Ltd., Chennai. (Insured with M/s. United India Insurance Co. Ltd.)
2. Oceanic Tropical Fruits (P) Ltd., Chennai. (Insured with M/s. The New India Assurance Co. ltd.)
3. Insured's own stocks (Insured with M/s. Bajaj Allianz General Insurant) 'M) ft/ - Yal II Page114 SURVEYORS & I,OSS ASSESSORS APPROVED VALUERS ASAWA <& CO.
t?ISthCk.figUreS rCferred 'n the Balance sheets and Stock Statements submitted o the bankers are for the total stocks in the premises belonging to all parties.
Claj"ed for 139956 ca"s vide his claim bill (marked-Fl) S^sequently m one of the letters (marked-F4) the quantity was revised to xicans.
We have assessed the quantum of loss with the following methods:
' nrM„rHn h3?™6 °f reflected in 016 balance sheet and actual production and sale during the period from 01.04.09 to 10.02.10
2. Based on Stock statements submitted to the bankers
3. Physical verification method.
Xe ^ficaSn^T °f n,eeftin8s/ discussions " office with the insured to f1 i j A Py of the minutes of last meeting held on 15 09 10 (marked-FS) is enclosed for reference.
BASED ON BALANCE SHEET FIGURES and sales figures from 01.04.09 to 10.02.10) were arrived at from £e records subnutted by the msured. The details of the production and sales are Jven in annexure XI and X2 -The detailed working of the closing balanced the stock damaged are tabulated in annexure X3.
BASED ON STOCK STATEMENT S SUBMITTED TO THF BANKERS The insured submits stock statements to the bankers once in a mon* and at times meso^oTc'L^h Cl"Sln,8 '"v5 31M ()9 <m"'-ked-F9) was 60000 cases or 96000 cans. The quantity works out to 96000 x 3.1 = 2976000 kgs or 297.6 MT nrSndCktaS On j1''J3 0? Was taken as an °Pening stock as on 01.04.09 at frnS. th P °duC!10n sales hSlires ( 01.04.09 to 10.02.10) were arrived sales rCC°rdS SUbmittcd by lhe insured- 7116 details of the production and Page| 15 SURVEYORS <S LOSS ASSESSORS ASAWA & CO.
APPROX ED VALUERS The stouk (belonging to the insured) which could have gutted/ damaged works out to(-) 19081 Cans i.c. MINUS 19081 CANS (NEGATIVE STOCK) PHYSICAL VERIFICATION METHOD As stated earlier we ]had carried out 100% physical verification of the stock in side the pucca godown as well the damaged stock in kutcha shed.
The stock under claim was produced recently and while physically examining 1 the cans under claim wc: had noticed the manufacturing date markings (engraved at the bottom of the tin) as 1 PAI IMP 16 05 09 2 PAI TMP 20 07 09 __3 PAI IMP 23 06 09 4 PAI TMP 20 07 09 5 ~PAI TMP 17 05 09 6 ~PAI TMP 23 06 09 ' 7 ~~PAI TMP 01 05 09 8 PAI AMP 17 05 09 ~ 9 ~PAI TMP 23 06 09 10 PAI TMP 24 06 09 11 ~PAI TMP 18 05 09 12 ~PAI TMP 20 07 09 13 PAI TMP 20 05 09 14 PAI TMP 15 07 09 ri5" PAI TMP 25 05 09 16 ' PAI TMP 23 06 09 17 ~ PAI TMP 20 07 09 18 ~ ~PAI TMP 21.05'09 19 ~ PAI TMP 17 06 09 20 ~ PAI TMP 23 06 09 21 ~ PAI TMP 21,05 09 22 ~ TAI TMP 22 05 09 23 PAI TMP 23 06 09 24 PAI TMP 18 07 09 .25 _ PAI TMP 19 07 OF 26~ PAI TMP 25 06 OF
27| PAI TMP 23 06 09 28 PAI TMP 21.06 09 29 ~PAi TMP 20 07 09 PAI IMP 21 05 09 31 PAI IMP 10 07 09 32 PAI IMP 23 06 09 33 .... ............
PAI IMP 15 v 07, 09 34 i PAI TMP 14 07 09 35 j PAI TMP 16 07 QQ 13 Page| 16 SURVEYORS & LOSS ASSESSORS ASAWA & CO.
APPROVED VALUERS The marking denotes:
PAI IMP 23 06 09 It denotes PAI - Ponni Agro Industries TMP - Totapury Mango pulp 23- Date 06- Month 09- Year The stock manufactured has a -shelf life of 15 months from the date of manufacture. The stock under claim was manufactured during the period from May 09 to July 09 and thus 7 to 9 months old. Therefore the stock still has shelf life ranging from around 6 to 9 months.
The results are tabulated in annexure X5. The quantity of damaged stock physically verified by us thus works out to 159603 cans as against revised claim for 217956 cans.
Out of this the insured had delivered 60000 cans to M/s. Capricorn Food Products India Ltd., Chennai and 18000 cans to Oceanic Tropical Fruits (P) Ltd., Chennai. As both these parties have insured the stocks in the premises of M/s'. Ponni Agro Industries (P) Ltd. No sale invoice was raised while delivering the damaged goods to M/s. Capricon and Ocean Tropicana. Only FIR copy was given for transporting.
Thus the remaining damaged stock physically verified by us works out to 88407 Cans only.
In our opinion the balance sheet figures are considered to be more authenticated figures which are submitted to the Income Tax Department after thorough and complete verification by the auditors.
While adopting the closing stock figures as on 31.03.09 and further working out the net stock in the premises as after fire, on 10.02.10, by adding the production and subtracting the sales, damaged / sound stock delivered to the other insureds etc., finally the net stock works out in negative which shows that the stock which is damaged and physically counted, does not belong to the insured. It could be of some other party or unaccounted stock. And therefore the insured does not have any insurable interest in it.
COSTING AND ASSESSMENT OF LOSS:
The insured has submitted a cost sheet (marked-Gl) towards the c^ifigofihe manufacturing of mango pulp. [7.^- --
■ 14 Page| 17 SURVEYORS & LOSS ASSESSORS APPROVED VALUERS ASAWA & CO.
1 he cost of manufacturing has been giiven as:
in Rs per carton Totapuri Mango Pulp 5193F Alphonso Mango Pulp 945.81 Raspuri Mango Pulp 540.33 M"50 pulp while assessing the »ck «« Only 'S' PI<K1UC,i0" of of The PW ^ons "the kUtCha Sheds R was ,0 be i"
has.submi,,'d a "W (marked-G2) of the circular towards fixing of The details of total stock in the kutcha sheds (based on physical verification) was as follows (annexure X5);
Total Sound
stock in stock Damaged
Name of the Party segregated stock with Fully Total
kutcha crushed
godown from the damaged Damaged
damaged Pulp cans stock
before fire
stock
Ponni 140187 51780 74901 13506 88407
Ocean 18000 18000 18000
Capricorn 60000 6804 34950 18246 53196
i Total 218187/ 58584f 127851 31752 159603 Z
Gross Loss:
Total Stock damaged and under claim- Cans 159603 (refer annexure X5)______ Jn terms of cartons (each containing 6 cans) ~' 26600 Cost of production in Rs. per carton or per 6 519.31 cans (refer enclosure marked-G1) Gross loss in Rs.
i 13813646 Z Lans, Cartons and labels are being supplied by most of the buyers.
I5
Page| 18
SURVEYORS & LOSS ASSESSORS
APPROVED VALUERS AS AW A <& CO.
In one of the r----
C^eSnpnC.e.th* insurzed had mentioned that a part of the stock manufactured for M/< kutchashed Asnerdi T 111118 ( } Was also stored in the &ted iksEStssss For producing I kg of pu|p 2 kgs of m ©Rate Amount in Cost of Mangos____ 2 kgs. Rs.
Rs.7.64 per kg T Rs.15.27 I Processing charges -
i per kg of pulp______ Rs. 3.65
Cost of production
Per kg of pulp Rs.18.92
There was no sale in the month of FeblO except for 5440 cans on 10 no in f Since foe cost of^production (Rs.18.92 per kg) is more than the sale (Rs. 17.37 per kg) foe later has been considered for assessing foe loss. rate There were 218187 cans in foe kutcha sheds out of which 159603 , amaged/ crushed. Therefore the gross loss would be:
Total No, of cans in Kutcha shed 218187 1/ Total no. of cans damaged . 159603, Total weight of the pulp in kgs 494770 ■ Cost of pulp damaged (Gross loss) @Rs.17.37 per kg x T After delivering the <'damaged/ sound cans belonging to M/s Capricorn and M/s Ocean, the balance cans sr-s Ilying in the shed works out to 88407 for which-thefe^ no insurable interest being held by the insured.
The cost of pulp alone in these cans works out to 88407 x 3.1 kg per can x Rs. 17.37 per kg = Rs.4760452 V V ^s] I6 Page| 19 SURVEYORS & LOSS ASSESSORS AS AW A & CO.
APPROVED VALUERS It the cost of cans, (which is Rs.9 per kg) is included, the loss in respect of this stock would work out to 88407 x 3.1 kg per can x Rs.26.37 per kg = Rs.7227007 Salvage:
The salvaged stock of mango pulp in damaged cans can not be used for human consumption and hence to be discarded. The quantum of the stock, based on physical verification, was 88407 cans.
e enquired in the market the rate of such' damaged stock. The quotations received from some of the interested buyers (marked-Hl to H3) are enclosed. They have quoted as follows:
Name of the buyer Rate in Rs.
per can
Arunachala Traders _______ 6
Annai Mango traders 5.50
Shiva Traders______ 4.80
The damaged stock could fetch Rs.6 per can Therefore the total salvage value which can be realised would be 88407*6=Rs.530442 The loss on account of stock Rs.7227007 < Less: salvage Rs. 530442 f The net loss Rs.6696565 BUILDING:
The insured has claimed a sum of Rs.2531000 towards reconstruction of the kutcha sheds (29800 sft.) which were destroyed in fire.
A copy of the estimate (marked-11) prepared by M/s. M.S. Constructions, Knshnagin and submitted by the insured is enclosed for reference.
The estimate submitted by the insured is for 22400 sft as against 29800 sft. claimed vide claim form. The cost of construction claimed by the insured works out to Rs.108 per sft for the super structure. While estimating the insured had considered ATHARE SHEETS for roofing as against thatched roofing The kutcha sheds were said to have been constructed in the year 2004. It was constructed with stone pillars and thatched roofing. There were no doors and windows. It was open from all the sides. There was no flooring either. We could notice a hollow block wall, up to a height of around 3 feet, all around tho^heds^ lhe construction of the shed was thus KUTCHA.
17 Is?
Page 120 1 SURVEYORS A LOSS ASSESSORS ASAWA & CO.
APPROVED VALUERS A copy of the sketch (marked -D5) is enclosed. The storage area was divided in to two sections i.e. shed no.1 and shed no.2. Both these shed were gutted and need reconstruction.
In addition to the sheds the office and canteen each measuring 30 feet x 20 feet, weie also gutted and need reconstruction. These were having full walls, doors, windows and-flooring with thatched roofing. As per the construction warranty laid down in the policy the kucha sheds/ construction is not covered. However we have assessed the loss only for academic purpose.
We had worked out the area of such kutcha shed as follows:
: SI. Length Breadth No. of
No. Shed Area in Sft
in feet in feet sheds
1 Shed no,1______ _ 110 40 4 17600
2 Shed no,2_______ 90 40 3 3600
3 Office and canteen 30 20 2 ' 1200
Total 22400
The rate of reconstruction cost for the storage sheds and office '& canteen shed were, after enquiring, Rs.50 and 100 per sft. respectively. Thus the loss works out as follows:
SI. ! Area in Rate of cost of Total Cost of • No.:
Shed construction in construction in Sft i i___________ Rs. per sft. Rs.
' 1 l Shed no.1 17600 50 880000
; 2 ! Shed no,2 3600 50 180000
3 Office and 1200 100 120000
canteen
Total 22400 1180000
The sheds were said to have been constructed in the year 2004 and thus were in use for 6 years.
The average life of such kutcha sheds would be very less and hence a depreciation of 75 has been applied while assessing the loss.
Total Cost
SI. of Net loss in
Shed Depreciation
No. construction Rs.
_ in Rs.
Shed no.1 880000 660000 220000
2 Shed no.2 180000 135000 45000
3 Office and
canteen 120000 90000 30000
Total 1180000 885000 295000^/
I8
\\ i h hr
vS-' ? v
Page | 21
SURVEYORS & l .OSS ASSESSORS ASAWA A CO.
APPROVED VALUERS
Salvage:
The sheds were destroyed completely. Since all these shed were kutcha sheds there was no salvage of any kind after fire.
10.0 ADEQUACY OF INSURANCE:
STOCKS:
The insured has insured the stocks of Mango, Raw Material and finished goods for Rs.51500000 Since it was off season therefore there was no stock of raw material/ mango in the premises on the day of fire i.e: 10.02.10.
The total stock of finished product, prior to fire, was 515467 cans of mango pulp (of all parties) both in the pucca godown (insured) and Kutcha sheds (not insured). The value at risk has been worked out as follows:
Total stock in terms of cans 515467
Total stock in terms of kgs. 1597948
Rate per kg including cans. 26.37
Total Value at risk in Rs. 42137888
It includes the stocks of M/s. Capricorn as well as Ocean who have separate policies.
Therefore the insurance is adequate.
Adequacy based on Stock Declaration: The special condition laid down in the policy reads as follows:
'Hypothecated with " The Lakshmi Vilas Bank Ltd., Dharmapuri" Frequency of declaration- Monthly Mode of Declaration- Highest value of stocks held during the month. Basis of Declaration- Market value basis. If the declarations are not received with in the specified period, the full sum insured under the policy shall be deemed to have been declared."
It is a declaration policy and the insured was supposed to have declared the stocks every month. In this case the insured has never submitted any sjoekrtetaHs to the insurers. ' 19 Page|22 SURVEYORS & LOSS ASSESSORS A5AWA & CO.
APPROVEO VALUERS If the declarations are not received with in the specified period, the full sum insured under the policy shall be deemed to have been declared."
1 hereforc we have assumed the sum insured as the stock declared every month.
The stock to be declared for the month of Jan 10 was 75500 cartons. Even if it is valued @Rs. M9.31 per carton (inclusive of cans etc.) the stock value works out to Rs492079^w^ch is well with in the sum insured i.e. Rs.51500000 and thus adequate.>TKus there is no under declaration.
•^2,0^54.
Therefore the sum insured, on declaration basis also-is more than adequate.
BUILDINGS:
The buildings in the premises have been insured for a sum of Rs.7565000 (super structure only) The present market value has been arrived in annexure X 7.
It works out to Rs. 12793000 as against insured amount of Rs.7565000. Hence the insurance is inadequate.
11. ASSESSED VALUE OF THE CLAIM:
Stocks:
/ A Zx-
"Revised Net
SI. Claimed loss Assessed
Claimed ■alvage adjusted
Particulars amount (before amount in
No. amount in Rs. loss in
in Rs. salvage) Rs.
in Rs. Rs.
in Rs.
i 1 I Mango j 12096150
i I pulp_____
18837552 13813646 7227007 530442 6696565
| 2 :■ Carton- ■
, Packing 588500 0 0 0 0 0
' Material
3 , Cement
66000 0 0 0 0 0
' bags
4 Furniture,
computers 150000 0 0 0 0 0
eta______
5 Spares &
SS Pipe 400000 0 0 0
lines_____
Total 13300650 18837552 13813646 7227007 342578,1 6696565J
'! i 'J
20 Av1
Page|23
M'R\'EYOR.S& loss assessors
Al'FROVEl) VALUERS
AS AW A & CO.
'♦Ihc. insured had claimed for 139956 cans i"vide 'his L claim bill (marked-FD Subsequently in otic of the letters (marked- F2) the'^ugtlg f was revised to 21/9. 6 cans. Or 217956*Rs.86.43 percan= Rs.18837552 Buildings:
SI. Claimed Assessed Sum Present Net
No. | Particulars amount in Amount in Insured in market adjusted
Rs. Rs. Rs. value in loss in
i'i T Rs. Rs.
Open Shed 2531000 ~ 29500Q 7565000 12793000 174444
Assessed value of loss Rs.
1. Stocks (net of salvage) 6696565
2. Building 174444 tr.
6871009/-
Less: Policy excess 10000 --
6861009
(Rupees Sixty eight lakhs sixty one thousand and nine only)
12. OBSERVATIONS & RECOMMENDATIONS:
made\yrusCeding may COnsider 1116 followin8 observations
1. The policy has been issued with Construction warranty clause. The stock damaged was in kutcha shed made of thatched"roof. This is jualation of the warranty/ cond^nIttSEKktt|)e policy and S the&is nMe
2. While deriving the damaged stock that belonged to the insured it"was"^!^ that the figures were coming in negative which indicates that the stock damaged belonged to some pthw party and not the insured. Thus the jnsnrpd do n&have any insurable interest in the stock damaged aiiTaZe^a^Te 1 herefore there is no liability on the part of the insurers for the stock which is damaged and physically verified / assessed by us. ' ~~ ISSUED WITHOUT PREJUDICE AND SUBJECT TO THE TERMS AND CONDITIONS AND WARRANTIES OF THE INSURANCE POLICY.
For Asawa & Co.
(R. tTAsawa)' ./ 21 •U(.
Page | 24 . ANNEXURE X1 Details of Production from Anril 09 to 10 n? in PRODUCTION 3.1 KG 5.25 KG Total MONTH Wtln lilt In Reference Cans Metric Cans Wtln Metric Cans Tons Metric Can Lot Note Retort Note Tons April -09 ___ 0 0.000 Tons ___ 0 0.000 Pages May -09 311161 964.599 0I 0.000 108556 569.919 Juno -K 620302 J922 936 419717' 1534.518 CL~1 ' 47080 147J70 July -09 328954 1019.757 667382'_217Q106CL4~n~ p1 To P288 0 0.000 5 .CL6 Aug -09 __ 0 0.000 328954 p2891 To P3q7~ 0 0.000 Seal -09 0 0 __ 0.000 p302 To P459~~ 0 000 0 ' Del -09 0.000 ___ 0 0.000 0 0.000 ' (Nov -09 ___ 0 .0.000 _ ._21 0 °ooo 0 jDec -09 0 0.000 ' ' __ 0 '0.000 Jan -09 0.000 0 0 000 0 0.000 0 0000 0 0 0.000 ~~ 0.000 0 0.000 0 0.000"
total 012604171 0.000 3907.293 0 155636 0.000 817.089 1416053 ~ 4724 ■ANNEXUREX2
Details of sales from April 09 to 10.02.10 3.1 KG Cans 5.25 KG Cans Total Wt In Metric Wtln Wtln Referance No MONTH Cans Cratons Cans Cartons Tons Metric Cans Metric of Invoices Tons Tons 9588 57528 178.337 0 0 0.000 57528 178.337 SI To S6 Apnl -°9, 24800 148800 461.280 0 0 0.000 148800 461.280 S7 To S26 May -°9 11000 66000 204.600 0 0 0.000 66000 204.600 S27 To S28 June - 39 14000 84000 260.400 0 0 0.000 84000 260.400 S29 To S32 July -cs 67620 405720 1257.732 0 0 0.000 405720 1257.732 S33To S36 Aug -09 30000 93.000 0 0 0.000 30000 93.000 S37 {Sept - 09 5000 78000 241.800 0 0 0.000 78000 241.800 S38To S39 13000 105.369 0 0 0.000 33990 105.369 S40To S42 5665 33990 {Nov -09 356.748 S43To S44 115080 356.748 0 0 0.000 115080 iOeT-OS -- 19180 0 0 0.000 187248 580.469 S45 To S49 31208 187248 580.469 jjan -09 0 0.000 0 0.000 [Feb - 09 (upto~ 0 0 0.000 0 [10.0310) 0 0.000 1206366 3740 1206366 3740 0 [TOTAL 201061 Page|25 ANNEXURE X3 ^SESSMENTOF. LOSS AS PER OPENING REFLECTED IN BALANCE SHEET Year 06 07 In MT Tota Puri- Alphonso Guava Total Qty inMT Opening stock as on 01.04.06 381 0 0 Production from 01,04,06 to 31.Q3 07 1736 317 74 Sales from 01,04,06 to 31.03,07 2097 298 74 Closing balance as on 3T03 07 20 19 0 39 Year 07 08 Tota Puri Alphonso Neelam Total Qty inMT Opening stock as on 01,04.07 19 19 0 Production from 01.04,07 to 31,03.08 3154 130 131 Sales from 01.04,07 to 31,03.08 3154 149 131 Closing balance as on 31.03.08 19 0 0 19 Year 08 09 Tota Puri Alphonso Neelam Total Qty inMT Opening stock as on 01.04.08 19 0 0 Production from 01,04.08 to 31.03.09 1572 130 227 Sales from 01.04,08 to 31.03.09 1507 130 116 Closing balance as on 31.03.09 84 0 111 195 Copies of relevant pages of the balance sheet showing the stock details (marked-F6, F7 and F8 ) are enclosed For Production and sales figures - refer Annexure XI and X2.
Page 126 ANNEXURE X3 (contl assessment of loss as per opening reflected in balance sheet Openingjalance as per balance sheet as on 195 MT 01.04.09______________ Production from 01,04,09 to 10,02.10 4724 MT _Sale from 01,04.09 to 10,02.10 3740 MT Sale on 10.02.10 (5440 cans or 16.864 MT) 16.864 MT Balance stock in the premises as on 10.02.10 1162.136 MT In terms of kgs 1162136 Kg In terms of cans 374883 Cans Sound stock physically ventied by us in Pucca-----
Godown (all parties)________ 297280 Cans Damaged/ Sound Stock deliverd to Capricon as they have separate insurance policy with United India Insurance Co. Ltd.
60000 Cans Damaged/ Sound Stock deliverd to Ocean as they have separate insurance policy with The New India Assurance Co. Ltd.
18000 Cans Stock in kutcha godown belong to Ponni Agro Sound Stock segregated from the damaged one ' •397 Cans (other than Capricorn and Ocean) from kutcha shed Cans S",|toCk WhiCh C0Uld ha^Teen dama9^~ ~~ | A/c Ponni
----------------------------------------------------------- -52177 Cans The insured had despatched 5440 cans on 10.02.10 before the fire but did not record it. It was confirmed by him during our first visit itself.
25Page|27 ANNEXUREX4 ASSESSMENT OF LOSS BASED ON THE FIGURES OF STOCK STATEMENTS SUBMITTED TO THE BANKERS Opening balance as per the stock statement as on 1.04.09 297,6 Z MT Production from 01.04.09 to 10.02.10 ■ 4724 |z MT Sale from 01,04.09 to 10.02.10 374o|z MT Sale on 10.02.10 (5440 cans or 16.864 MT) 16.864 MT Balance stock in the premises as on 10.02.10 1264.736 MT In terms of kgs 1264736' Kgs In terms of cans <40797i> Cans Sound stock physically verified by us in Pucca Godown (all parties)________ 297280 Cans Damaged/ Sound Stock deliverd to Capricon (from kutcha shed) as they have separate insurance policy with United India Insurance Co. Ltd.
60000I Cans Damaged/ Sound Stock deliverd to Ocean (from Kutcha shed) as they have separate insurance policy with The New India Assurance Co. Ltd.
18000 Cans Stock in kutcha godown belong to Ponni Agro (32699) ^Cans Sound Stock segregated from the damaged one (other than Capricorn and Ocean) from kutcha shed 51780 Cans Balance stock which could have been damaged A/c Ponni
-19081 Cans 26 ■ i! /J Page| 28 1 ;
ANNEXUREX5 ASSESSMENT of LOSS based on physical verificahoh method
---------- all in Cans Sour r~ ' Name of th6 Forty SectionNot_ Section No.2 . Section No.3 Total 3.1 kgs 5.25 kgs II kgs S.lSkgs 3.1 kgs 5.25 kgs 3000 6072 1416 624 11112 jcaafc®. 42000 47990 43285 2720 16715 18170 170880 4830 32806 11592 49228 6000 60060 66060 llotal 49830 47990 88163 2720 89783 18794 297280 Stock in Kutcha Godown all in Cans Total stock Sound stock Damaged Fully Total inkulcha segregated slock with Kame ol the Party godown from the damaged crushed Damaged cans stock -
before fire damaged stock pulp
Ocean 18000 ■ 18000 18000 InsuredbyTheNewIndia
Capo 60000 6604 34950 18246 Insured by Unfed India
Other than Capricorn 13506 f88407)
140187 51780 74901
and Ocean
Total 218187 58584 127851 31752 159603
totalstockimthepremises
/
Sound Stock in Pucca Godown
Stock in Kutcha Godown
Total stock priorto the Ore
297280 Cans
218187 Cans
515467 Cans
q
*
27
/
Page | 29
ANNEXUREX6
WORKING OF AVERAGE PREVAILING RATE Sale invoice No of Rate/ Amount Invoice Description Packing Date Cartons Carton In Rs marked AMP Natural 2009 6* 3.1 Kgs Per 05.01.10 88 775 68200 S45 crop _______ Cartoon 21.01.10 6* 3.1 Kgs Per TMP Natural 2009 crop 6000 312 1872000 S46 Cartoon 23.01.10 TMP Natural 2009 crop 6* 3.1 Kgs Per 10120 350 3542000 S47 Cartoon .
6* 3.1 Kgs Per
■ 25 °110 TMP Natural 2009 crop Cartoon 10000 310 3100000 S48
6* 3.1 Kgs Per
25.01.10 TMP Natural 2009 crop Cartoon 5000 300 1500000 S49
Total 31208 10082200
In terms of cans 187248
In terms of kgs 580469
Rate In Rs. per kg 17.37
28
Page|30
ANNEXUREX7
ADEQUACY OF INSURANCE-BUILDINGS Rate of cost of Total Cost of Length Breadth in No. of Area in construction in construction Dep. Net amount in SI. No. Shed in feet feet sheds Sft Rs.
Rs. per sft in Rs.
110 40 4 17600 50 880000 75% 220000
1 Shedno.l
90 40 3 3600 50 180000 75% 45000
2 Shedno.2
30 20 2 1200 100 120000 75% 30000
3 Oilice and canteen
210 50 1 10500 450 4725000 12% 4158000
4 Processing Block
2 10000 450 4500000 12% 3960000
5 Godowns 100 50
1 10500 450 4725000 12% 4158000
6 Godown 210 50
7 Gen set room 340 250 85000 40% 51000
20 17 1
8 IeBRooci 340 250 85000 40% 51000
20 17 1
9 ETP section
10 llaboursheds etc.
H iBafhrooms 300000 60% 120000
12 jsecuritvroom
13 [Main cate
' ilotal 15600000 12793000
A'-a
29
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On the submission of the said survey report, which was after making extensive enquiries from the complainant and supply of all documents, the recommendation seems to have been made by the surveyor that since the warranty clause excluded any loss to the goods stored in the "Kutcha" sheds.
made of thatched roof, therefore there was a clear violation and breach of the terms of the policy regarding storage of Stocks and therefore the claim was not payable. It was further opined that the figures of the damaged Stocks on a calculation and assessment made were coming in the negative, as the Stocks that were damaged belonged to some other party, and therefore the complainant had no insurable interest, hence no liability could be claimed.
These observations and recommendations have been indicated in para-12 of the report extracted hereinabove.
It may be pointed out that it was also the case of the complainant that there were entities who had purchased the finished products, namely, M/s Capricorn Food Products India Ltd., M/s Oceanic Tropical Fruits Pvt. Ltd. as well as M/s Exotic Fruits Pvt. Ltd.
The said recommendations seem to have been analysed and the claim was repudiated vide letter dated 08.05.2012. The letter of repudiation is extracted hereunder:
Page | 57 '©cVnlotV Pan) j i s ■ ■ ■1= iN-coN-iBOT-ij-eeeeww Bajaj Allianz General Insurance Company Limited 0BA4AJ | Allianz® BYRPAO i ■ Coimbatore 8* May 2012 To Ponni Agro Industries Private limited KA: Mr. L Moorthy, Manajlni Director Sappanipatti Village Karagur Post-
Krishnagiri- 635 111 Dear Sirs, Subject fire Claim under Policy No. OS-IO-ISU-OOOSOOOOOOOJ & OG-1O-1512-4001-00000706; Date of loss -10.02.2010 '_________________ _________________ We have considered the daim preferred by you under the within mentioned Policy and would like to point out as fallows:
1. You had preferred a dalm for loss of goods Insured (stocks of mango pulp & Kutcha building) In a fire accident on 1002-2010 at about 10.45 pm and we had deputed M/s. Asawa & Co. duly 1 licenced by IRDA to Inspect and assess the loss suffered by you on 11-02-2010. The Surveyor reached your Office/ fire affected factory premises on 11-02-2010 and inspected the damaged stocks and damaged thatched roof building (where stocks of mango pulps were stored & ?
damaged due to above fire). On the first day itself, surveyor has taken physiol inventory for J undamaged stocks of mango pulps stored in the AC sheet building (Le., pucca godown).
2. The Surveyor has on physiol verification of the premises reported that the construction of the building is Kutcha construction. The stocks were stored in the said kutcha construction. Your attention is invited to the Construction Warranty in the Policy which reads as below:
"Buildlngts) having waHs and/or roofs of wooden planlu/thatehed leaves and/or grass/hay of any tind/bamtoo/plastte doth/asphah doth/canvas/tarpaufln and the like shall be treated as 'Kutcha* construction for rating*.
3. The Surveyor has reported that considering the balance sheet figures the net stock works out in negative which shows that the stock which Is damaged and physically counted does not belong to you and there fore you not have any Insurable interest in it. I !
4. Further you were unable to prove the errtent of loss suffered by you in respect of stocks by authenticated records.
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Page|58 o BAUZK-* | Allianz (@) BajaJ Allianz General Insurance Company Limited You have further declared while proposing Insurance that the stocks would be stored In pucca I sodown. However It was found that the same was stored in kutcha construction. Non disclosure of fact Is the main factor which Is very much material to the loss. In view of the non disclosure of material fact we ere treating the contract as void -eb- Initio are forfeited.
We are therefore constrained to Inform you that your Claim Is Inadmissible as per the terms of the ■ Policy.
Please note that nothing contained in this letter Is or should be construed os a waiver of
-any one or more right* on our part and all our right* under and in relation to the Policy remain fully reserved.
Yours faithfully, For BaiaJ Afltana General Insurance Company Ltd., I J Cc to : LakshJ Vila* bank ltd. krishnsglrii.
cA7Oi-^~f From a perusal of the report and the letter of repudiation, it is apparent that the cause of fire was not disputed and it was opined that the fire had occurred on account of electrical power leakage in the panel board. There is therefore no dispute about the occurrence of the incident but the claim has been repudiated on three grounds namely that the Stocks were stored in a "Kutcha" construction godown as was evident from physical verifications and since the Kutcha constructions were excluded under the warranty conditions of the policy, the claim was not indemnifiable. The second ground taken is that keeping in view the balance sheet figures, the net Stock worked out in the negative that indicated that the Stocks, that had been damaged and physically Page|59 counted, did not belong to the complainant who did not have any insurable interest. The third ground taken is that the extent of loss could not be authenticated by records and even otherwise the complainant while proposing insurance had declared that the Stocks would be stored in Pucca godowns. Since the Stocks were stored in a Kutcha construction, such non-disclosure of fact was the main factor and material to the loss. Consequently, this non disclosure was also made the basis for repudiation.
The complaint came to be filed on 17.04.2014 and notices were issued to the Insurance Company as well as to the Bank. It is necessary to point out that both the Insurance Company and the Bank filed their written versions but very recently as informed by Mr. Jha, learned counsel for Lakshmi Vilas Bank, that on 27.11.2020 the Lakshmi Vilas Bank stands amalgamated with M/s DBS Bank India Ltd. An application has also been filed bringing the said fact to the notice of this Commission.
The parties filed their evidence affidavits and as indicated above, learned counsel for the Insurance Company had been directed to file the complete survey report and the policy schedule along with the proposal forms that came be to be filed, except the proposal form of policy no. 706, on 11.02.2025 vide Dy. No. 4249 and once again another compilation was handed over that had been filed online. A physical copy of the same has been provided during the course of submissions by the learned counsel for the complainant.
Learned counsel for the complainant Mr. Maibam N. Singh has also filed an additional short synopsis on 26.07.2024 vide Dy. No. 26254 for substantiating his submissions.
The evidence affidavit has also been filed by the opposite parties about 6 which reference will have to be made later on account of the contents of one of the policies, namely policy no. 706 regarding Building, Plant & Machinery where the schedule appended as Annexure-II to the original policy has been filed by way of evidence affidavit by the Insurance Company referring to the coverage of Kutcha constructions. Since a heavy reliance has been placed on the said document by the learned counsel for the complainant to urge that the same is Page | 60 an admission on the part of the Insurance Company, the facts and the contested submissions regarding the same shall be dealt with later on.
Mr. Maibam N. Singh advancing his submissions urges that the survey report and the letter of repudiation completely ignore the admitted status of the coverage of the Kutcha constructions of the building under policy no. 706 and have erroneously proceeded to rely on the exclusion clause and the warranties. The said approach is erroneous and against records in view of the fact that no distinction had been made for accepting the policy for the entire premises which included all the constructions and installations including Kutcha constructions. The warranties and the exclusions therefore did not apply on the facts of the present case where the policy explicitly covers the risk of the Kutcha constructions as well. Mr. Singh therefore submits that in view of Annexure-II to the policy schedule filed as an evidence along with the affidavit by the Insurance Company that has been sworn on the basis of records, clearly establishes the fact of the Kutcha constructions having been insured as a covered risk under the policy.
He therefore submits that once the building was insured, then the Stocks stored in the said Kutcha constructed buildings were clearly covered under the risk and the ground taken for repudiating the claim is manifestly erroneous.
He then submits that the stand taken in the repudiation about non disclosure or an express declaration that the goods would be stored only in Pucca constructed godowns is a total imagination, inasmuch as both the proposal forms were filled up by the Bank for securing the insurance of the Building, Plant & Machinery as well as Stocks that were hypothecated to the Bank. The insurance coverage was a sine qua non and the Bank had itself dispatched the proposal forms for securing the insurance covers. There was therefore no scope for any suppression or non-disclosure by the complainant when the form itself was filled and sent by the Bank for securing policies.
The contention of Mr. Singh is that there is no suppression or any non disclosure that can be attributed to the complainant who had not even filled up the proposal forms. There was no declaration that all the Stocks would be kept in a Pucca godown as stated in the letter of repudiation. The assumption by Page | 61 the Insurance Company of such a declaration is therefore without any basis and the repudiation on this count is perverse.
It is urged by Mr. Singh that it is for this reason that this Commission had called upon the Insurance Company to file the original proposal forms to verify as to whether any such suppression or non-disclosure could be evinced from a perusal of the said documents. The Insurance Company has filed the proposal form of only policy no. 03 which is for Stocks. The copy of the original proposal form of policy no. 706 relating to the Building, Plant & Machinery has not been filed in spite of a clear direction and therefore this breach on the part of the Insurance Company should be read adversely against them. He therefore submits that there is no proof or evidence to establish the allegation of any suppression or non-disclosure by the complainant and therefore the letter of repudiation is based on surmises and conjectures and deserves to be discarded.
It is therefore urged by Mr. Singh that the surveyor's report is not creditworthy to that extent and accordingly his assessment of loss and the computations made by him on quantum are also erroneous and against records. He submits that all answers to the queries raised by the surveyor were given with complete records, including the Stock Statement from the Bank, the records pertaining to the Stocks from the company, the bills and vouchers relating to the transactions of the finished products and therefore there was no scope to gather an inference of a negative stock. He submits on the basis of the reports and the replies tendered by the complainant to urge that the calculation made by the surveyor is factually incorrect and without any basis. He has further invited the attention of the Bench to the various charts and the calculations that were tendered before the surveyor to point out the errors in calculation but the Insurance Company while repudiating the claim has completely ignored the same. The contention raised is that the loss has been suffered pertaining to the Stocks and a serious damage has been caused to the Building, Plant & Machinery, which deserves to be indemnified.
Page | 62 Mr. Singh has read out the various portions of the surveyor's report to contest the same with the material filed along with the complaint to substantiate his submissions.
Mr. Jha, learned counsel appearing for the Bank, states that his participation in these proceedings is formal in nature but he does not dispute the acquisition of the policies and submits that whatever documents were received from the Insurance Company were transmitted to the complainant that has been filed along with the complaint. He further submits that the policy documents filed along with the evidence affidavit of the Insurance Company cannot be discarded as it is an evidence filed by the Insurance Company to support its contentions before this Commission. He has further indicated that the said evidence affidavit was filed way back in the year 2015 and the affidavit has been sworn on the basis of records and therefore the same should be accepted as valid which indicates the coverage of Kutcha constructions in policy no. 706 issued by the Insurance Company. According to him, the Stocks as well as the Building, Plant & Machinery were all protected under the terms of the policy.
He also informs that so far as the loan dues of the complainant towards the Bank are concerned, the same seems to have been satisfied but the Bank had been made a party when this claim had to be considered keeping in view the fact that the insurance coverage has a Bank clause. Thus, the Bank's interest has to be protected and it is to that extent that he has advanced his submissions.
Mr. Joshi, learned Senior Counsel, appearing for the Insurance Company, has urged that the calculations made by the Surveyor regarding the negative Stocks is correct and there was no insurable interest available, inasmuch as the goods belonging to third parties, even if held in trust, stood excluded under the terms and conditions of the policy. He further submits that the warranty conditions and the special conditions clearly exclude the coverage of Kutcha constructions and therefore there is no evidence filed by the complainant to establish the said coverage or claim any indemnity in respect thereof. He submits that the complainant has filed the policies that have been received by it Page | 63 and the same nowhere indicates the coverage of the Kutcha constructions and godowns. To the contrary, the warranty conditions accompanying the same exclude any coverage of Kutcha constructions.
The complainant has nowhere taken a plea on the basis of the document that has been filed along with the evidence affidavit of the Insurance Company to dispute the applicability of the warranty conditions. Mr. Joshi submits that there is no pleading or even any claim on the basis of the said document and therefore no advantage can be taken of the document filed by the Insurance Company in the evidence affidavit that has been relied on by the complainant and by the learned counsel for the Bank.
He therefore submits that in the absence of any coverage of the risks of Stocks or even otherwise the Building, Plant & Machinery and there being a clear breach by the complainant due to non-disclosure/incorrect disclosure while proposing the policy, there is no scope for any indemnification and the claim has been rightly repudiated. He therefore submits that in view of the findings arrived at by the surveyor and as accepted by the Insurance Company in its letter of repudiation, there is no perversity or error in the decision taken to repudiate the claim, hence the complaint deserves to be dismissed.
As noted above, there is no dispute regarding the incident and the fire that led to the loss on 10.02.2010. The goods were hypothecated to the Lakshmi Vilas Bank and for confirming the same the Insurance Company had been called upon to file the proposal forms. The Insurance Company filed it on 11.02.2025 and as noted above, it only contains the proposal form of policy no. 3 that was for stocks. The proposal form for the building plant and machinery being policy no. 706 had been proposed separately. The Insurance Company ought to have brought forward the said form as it is the specific case of the complainant that all constructions within the premises, including kutcha construction sheds had been insured under the said policy.
The complainant's counsel is correct in his submissions that non production of the proposal form by the Insurance Co. leads to an adverse inference that can be safely drawn upon the Insurance Company in the background of Annexure No. II attached to the policy that has been filed by Page | 64 none else than by the Insurance Company alongwith its evidence affidavit that has already been noted in the submissions hereinabove. Mr. Joshi, learned senior counsel for the Insurance Company urged that the complainant did not bring any such document on record and it was the complainant who had to prove the same. This argument has to be rejected once this Commission after taking notice of the said fact had specifically exercised its powers calling upon the Insurance Company to file the proposal form for confirming the same. The Insurance Company has nowhere disputed the documents filed by it in its evidence affidavit which contains Annexure-ll to the policy schedule. That annexure has not been filed along with the compilation on 11.02.2025 while filing the documents as desired by this Commission including the proposal forms. Annexure-ll to the policy that has been filed with the evidence affidavit of the Insurance Company therefore remains undisputed. The onus had been shifted on the Insurance Company under the orders of this Commission calling upon it to explain the same, but in spite of this opportunity, the Insurance Company has failed to do so. The argument of Mr. Joshi therefore has to be rejected and it stands established that Annexure-ll to the policy categorically recites the coverage and inclusion of kutcha constructions as well. The said fact therefore leaves no room for doubt that the policy coverage included the kutcha constructions. As a sequel to this, any stocks kept inside the kutcha constructions would also stand covered under the risk coverage of stocks, which was clearly intended to be stored in these sheds within the premises.
Coming to the report of the surveyor, we find a total omission of the discussion of the above noted documents and consequently, the observation by the surveyor that the kutcha constructions were not covered under the risk is against the evidence on record. To that extent, the survey report is not credit worthy as it fails to address itself to a vital document regarding coverage. The document has been filed by the Insurance Company itself as evidence and it is therefore surprising as to why such an omission has occurred in the report of the surveyor and has also been overlooked by the Insurance Company while repudiating the claim.
Page | 65 Having said that, we further find that the warranty conditions and the special conditions as pointed out by Mr. Joshi do indicate exclusions from the definitions of construction, but at the same time, the said conditions would not apply on the facts of the present case, in as much as, there was a specific coverage of the kutcha constructions and for which a separate premium has been charged. Consequently, the exclusion is nowhere attracted and to the contrary the risk stands covered. The argument therefore on behalf of the Insurance Company for applying the Exclusion Clause is also rejected.
Mr. Maibam N. Singh therefore is justified in advancing his submissions and is correct in his arguments that the policy coverage covered the risk of the stocks that had been stored in the kutcha constructions as well.
The damage to the kutcha sheds and the stocks kept therein are nowhere disputed and which is also evident from the description in the survey report and the photographs which have been attached thereto and have been extracted hereinabove.
In the given circumstances, there is no reason for us to accept the argument of the Insurance Company and consequently, the repudiation dated 08.05.2012 cannot be sustained on that ground.
The second ground of repudiation to draw the inference of a negative stock is on the foundation that it belonged to other parties. The complainant has also admitted that the finished products that were lying in the sheds including the kutcha sheds were for supply to Capricorn Food Products India Ltd., Oceanic Tropical Fruits Pvt. Ltd. and Exotic Fruits Pvt. Ltd. For this, the complainant has relied on the agreement between the complainant and those entities to demonstrate that the insurance coverage in respect of such stocks had to be procured by the complainant.
While discussing the status of the stocks, the surveyor has referred to the fact that no stock details month-wise were submitted to the insurers. We find that the stock statements and the stock accounts have been submitted as available with the Bank, but some doubt has been created by the Surveyor. The balance sheet figures and the stock statements submitted to the Bankers were available with the Surveyor, and over and above this a 100% physical Page | 66 verification of the stocks inside the pucca godown as well as the damaged stocks in the kutcha shed have been conducted and categorically referred to in the report. The damaged stocks have been physically verified by the Surveyor which he mentions to the tune of 88,407 cans only, but comes to the conclusion that it did not belong to the complainant and therefore drew a negative balance. In this connection ground no. 3 and 4 in the repudiation letter, which pertain to stocks and quantum of loss may be reproduced as under:
3. The surveyor has reported that considering the balance sheet figures the net stock works out in negative which shows that the stock which is damaged and physically counted does not belong to you and therefore you do not have any insurable interest in it.
4. Further you were unable to prove the extent of loss suffered by you in respect of stocks by authenticated records.
With regard to loss/damage to the stock of cans of mango pulp, the insured claimed loss of 139956 cans of mango pulp of its own valued at approx Rs. 1.21 crores (subsequently revised upwards to 217956 cans valued at RS18837552 ) apart from additional 78000 cans claimed destroyed for which third parties i.e. M/s Oceanic Tropical Food Products India Ltd (Oceanic) and M/s Capricorn Foods Products India Ltd (Capricorn) were owners and have also claimed insurance from their respective insurers qua this quantity. Admittedly, the fire and loss was only in Kutcha godown and the stocks in pukka godown was unaffected. The grounds 3 and 4 of the repudiation are based on the observations of the surveyor in the assessment of loss of stocks made by him at internal pages 12 to 17 of the report. The surveyor has attempted to make assessment on three alternative methods and while doing so he has, although finally assessed the loss on the basis of detailed physical inventory of damaged/lost items, also made two critical observations based on the books of accounts, more particularly the balance sheet as on 31.03.2009, regarding the position of the quantum of stock. First, it has been observed on the internal page 12 in the survey report that there is no availability of any damaged stock in the kutcha shed as per books of accounts of the complainant if the computation of such book-stock is started by taking closing stock figure in Page | 67 the balance sheet as at 31.03.2009 and if it is further adjusted for the figures of production from 01.04.2009 to 10.02.2010 and sales during the same period including that on 10.02.2010 (annexure XI and X2 to the survey report). Annexure X3 to the survey report, giving this calculation, is simple and self- explanatory. As per the same, the stock of the insured which can be available on the affected kutcha shed of the insured on 10.02.2010 at 10.45 PM, and which can get destroyed in fire, is less than zero as per the books of accounts of the complainant. The surveyor has carried out this exercise of arriving at the stock of the insured in the kutcha godown, by adopting the figures of opening stock as per balance-sheet as on 01.04.2009 as starting point and adjusting the same by the figures of production and sales as provided by the insured for the period 01.04.2009 to 10.02.2010. Such stock for the unit as a whole as on the date of the incident comes to 374883 cans. As such, after deducting the number of cans stored in the pukka godown as inventorised by the surveyor (297280 cans), and the stocks of M/s Capricorn and M/s Ocean totalling (78000 cans), the available stock of the insured so as to be in kutcha godown is less than zero, i.e minus 397 cans. The sound stock of 51780 cans claimed to be belonging to the insured was further and additionally found in kutcha shed and duly inventorised, implying that for such actual and physical finding of the stock, the book-stock of the complainant as on the date of the incident has to be minus 52177 cans, i.e. the claim of ownership is more than what is evidenced by books of accounts. As such, even the sound stock of the insured 5 as found by the surveyor and inventorised by him is more than the book-stock. Thus, the surveyor concludes that if the balance sheet figure of stock as on 31.03.2009 is adopted, which has to be so, there is no possibility that the stock of the insured as "reflected" in the books of accounts as on 10.02.2010 has in fact got destroyed, because there was no such of the insured to have got so destroyed. In other words, what the surveyor concludes, as explained, is that while the quantity of lost/damaged stock of 139956 cans of mango pulp as physically found and inventorised as stored in kutcha godown, obviously did get destroyed in the incident of fire, still it cannot be concluded on the basis of books of accounts that the destroyed stock belonged to the insured so as for Page | 68 the insured to have insurable interest therein or to claim indemnification by contending that the same was covered under the subject policy. The sequitur to this is the implied conclusion of the surveyor that the stock which got destroyed, in fact, belonged not to the insured but to some third parties. Similarly, as second critical observation, the surveyor has also arrived at the stock at the date and time of the incident on the basis of stock statement as on 31.03.2009 submitted to the bank in connection with the hypothecation of stocks for the loan. On the same line as discussed with regard to the computation of stock on the basis of the balance sheet as discussed above, the surveyor has given the computation in annexure X4. As can be seen from perusal of Annexure X4, the available stock belonging to the insured that can be available in kutcha godown is worked out at 32699 cans. However, the surveyor has physically inventorised even the sound stock of 51780 cans claimed by the insured to be belong to it available in the kutcha godown. Thus, he comes to the same conclusive finding of negative stock of 19081 cans, re-emphasizing the conclusion that no stock belonging to the insured got destroyed in the incident of fire at kutcha godown and in fact what got destroyed in kutcha godown was neither the stock belonging to the insured nor insured had any insurable interest therein and that the destroyed stock in fact belonged to third parties. The third assessment method adopted by the surveyor is based on the inventory of damaged stock prepared by him as per which the assessment of indemnifiable loss of stock is Rs.6696565/-. However, based on the first two conclusions of the surveyor of negative book-stock, the insurer has repudiated the claim, inter alia, on the grounds 3 and 4 in the repudiation letter as reproduced above.
Objecting to the grounds 3 and 4 in the repudiation letter, the complainant in para 18 of the complaint has made averments that the insurer should have changed the surveyor as was requested by it and should have appointed another surveyor, and further, that the failure in this behalf is questionable and is deficiency in service. Denying the same, the OP in para 23 of the reply has stated that the surveyor is an IRDA licensed surveyor duly appointed under Section 64UM of the Insurance Act, 1938 and that the Page| 69 indemnifiable assessment as made by him is not binding on the insurer but is subject to terms, conditions and warranties as laid down in the policy. Para 29 of the complaint has referred to the repudiation letter dated 08.05.2012 and has objected to the same, not in very comprehensible or categorical fashion, but by generally referring to the objection letter dated 05.03.2012 sent to the insurer being annexure C- 30 & 31 (page 691, 698), which are reproduced as under:
5 March, 2012 To,
1. M/s. Bajaj Alliance General Insurance Co.Ltd., Branch Office, No. 15, Kolaman Complex, 1 Floor, Opp. to ABN Saradha College Main Road, Amro Bank, Salem-4
2. M/s. Bajaj Alliance General Insurance Co.Ltd., Divisional Office, No. 11, Officer Road, People Park, Arts College Road, Coimbatore-18 Under instructions from my clients Ms. Ponni Agro Industries Private Limited rep by its Managing Director namely Moorthy, son of Lakshmanan, residing at Keelparyur Village, Paiyur Post, Kishnagiri Taluk. I issue this legal notice to you as follows:
1. My client is the Managing Director of the Ponm Agro Industries Pvt. Ltd.
which is situate at Payur in Krishnagiri Taluk and District. My client is doing manufacturing mango pulp business. The said firm is a registered one under the Registrar of Companies at Coimbatore. The company's Registration No. 4015131720BPT0010900.
2 My client and his partner are running the said firm and they have invested Rs. 6,00,00,000. For the safety of the company, the stocks, machineries, stocks, buildings cic my client insured the sand stock machinenes, stocks and buildings de with you for a sum of Rs. 5. 15,00,000/-und the policy his is 03-10-1512-4001- 00000706 The period of policy is from 15.8.2009 to 14.8.2010. "The insurance was covered for the company including company materials, machineries, stocks and also buildings etc
2. Unfortunately, the said company was met with a fire accident on 10.2.2010 and put to damage for more than Rs. 2 crores: While the time of fire, it was informed by my client to the Fire Service Station of Kaveripattinam, Krishnagiri, Palacode and Pochampelli. Immediately the Fire Service vehicles came from Kaveripattinam, Krishnagiri, Pochampalli and Palacode and they have done their best to subside the fire. My client's company staff and the neighbour company's staff staff have also made steps to subside the fire. The accidental fire was also informed by my client to the Kaveripattinam Police Station and a case was registered in Cr.No.83/2010 as Accidental Fire.
3. My client also informed the fire accident to you. Next day morning, your surveyor came to the spot and note down the damages and they made out a report with plan on that effect in the presence of the Reventie. Divisional Officer, Tahsildar and other Government Officials and Bank Officials. While the time of visit, the officials of your company gave assurance that the policy is existing, so they will pay the damages and they assessed the damage for a sum of Rs 1,58,32,650-00 and, directed my client to send the application with all details. My client sent application with all details and necessary documents to you on 10.3.2010 and the same was received by you on 12:3.2010. Unfortunately, inspite of repeated requests made by my client, even your officials did not consider, and gave evasive replies and simply dragging on to do your legal duty and pay the damage which was assessed by your officials
4. Inspite of continued requests and representations, again your officials visited the spot and assessed the damage and fixed the damage for a sum of Rs. 1,58,31,650-00. At that time also, you and your officials gave assurance that you will settle the damage amount within 15 days. But unfortunately, you did not choose to Page | 70 • pay the damage or sent any reply on that effect. Your officials failed to do your lawful duty and failed to pay the damage to my client. Due to your lethargic attitude and deficiency in service, my client is put to great mental shock and agony Due to your lethargic attitude, my client suffered heart attach and spent more than Rs 50,000-00. You are liable to pay a sum of Rs. 1,00,000-00 to my client as compensation. My client met you more than 100 days and he came from Priyur and spent more than Rs.2,00,000-00 and you are responsible for the expenses incurred by my client for getting compensation from you. The policy is in existing and as -per policy you are liable to pay the compensation to my client of a sum of Rs. 1,58,31,650-00 with subsequent interest at the rate of 12% per annum 5 It is therefore my client call upon you and request you to please pay the damage for a sum of Rs. 1,58,31,650-00 to my client within 10 days from the date of receipt of this legal notion, failing which my client will be forced to take necessary legal action against you for getting the damages caused to my client and you will be held liable for all costs and consequences that may be caused to my client. .
ADVOCATE P.V. RAVI It is also the contention of the complainant, though not very specific and objective, that the hypothetical negative figures of stocks as arrived at by the surveyor are biased and could not have been acted upon by the insurer so as to repudiate the genuine claim when neither the fact of incidence of fire nor the fact and extent of loss or damage has been denied by the insurer. Moreover, the surveyor, in any case, based on a physical inventory of damaged stock as prepared by him, has categorically and specifically quantified 159603 cans of pulp as damaged goods and has assessed the gross loss of Rs.8594155/- applying the rate of Rs.53.847 per can as against the claim raised by the insured at Rs.1.21 crores for loss of 139956 cans valued at Rs.86.43 per can. The claim was also revised upwards subsequently. With regard to the survey report dated 31.02.2010, Mr. Maibam Singh has drawn our attention to the written arguments filed on 16.07.2024 and contended that in light of this Commission's decision in Gulshan Chemical Ltd. Vs. United India Insurance India Ltd. (2022) SCC Online NCDRC, there is delay both in submission of the survey report as also in the action of repudiation of the insurer in violation of Regulation 9 of IRDA (Protection of Policyholder interest) Regulation, 2002 and therefore a clear deficiency in service. There is no whisper of explanation with regard to such delay in the reply filed by the insurer. It is also contended that the surveyor was biased and a request for change of the surveyor was made to the insurer which was not acted upon. Mr. Maibam Singh has also drawn our attention to para 10 in the written arguments with regard to the fact that the OP, while filing the survey report, has not filed the requisite annexures or Page | 71 documents accompanied or relied upon by the surveyor and has produced only 7 out of the 49 documents, and, particularly, the documents of physical inventory have not been filed. Additionally, on the deficiency and error in methodology of the surveyor in the quantifying and assessing the loss, drawing our attention to the relevant clauses in the agreement with Oceanic and Capricorn, it has been contended that the complainant company was obliged under these agreements to obtain the insurance of the goods of both these parties and therefore deduction of 78000 cans belonging to these parties from the quantity of damaged goods for quantifying the eligible loss is wholly uncalled for, arbitrary and therefore, the full claim as made by the complainant needed to be assessed and the insurer was required under the policy to indemnify the whole revised quantity of damaged goods as claimed by the complainant. With regard to the finding of negative stocks, it has further been contended that the insurer had visited the premises of the complainant and every detail of the stock was disclosed in the proposal form which has not been produced by the insurer and therefore the theory of negative stock as propounded by the surveyor has no merit. It is further contention that after the submission of the survey report dated 13.12.2010, the surveyor had "communicated with the complainant" to furnish certified copies of the balance sheet as at 31.03.2010 which was duly supplied as evidenced by page 82 to 87 of the written arguments. In sub-paras 4 to 8 of para 11 in the written arguments, the complainant has relied on pages 79-81 and 38-39 of the same, to contend firstly, that the surveyor even after the submission of the survey report asked for certain documents which were supplied, meaning that the assessment of loss in survey report was only tentative. Second, page 79 depicts the stock of 489 MTs valued at Rs. 1.16 crores and page 80 shows the stock of Rs.2.46 crores as on 11.02.2010 as submitted to the bank after the incident of fire, which documents were subsequently supplied to the surveyor. Similarly, page 39 also records an entry in "pledge register" certified by Laxmi Vilas bank recoding the fact that "estimated damage to stock as reported" is around Rs.2.5 crores.
Page | 72 Qua these contentions, the learned counsel for the insurer has contended that it is not even the averment of the complainant in the complaint that the stock as per the balance sheet or as per the bank stock statement as on 31.03.2009 as taken by the surveyor are wrongly taken. It is also not the case of the complainant that the figures of production and sale as taken by the surveyor have not been based on the documents/figures provided by the complainant or are wrongly taken by the surveyor. All other documents, whether or not requisitioned further by surveyor before or after the submission of the survey report, do not at all change or impact in any way the sound exercise of the surveyor in adopting the stock figures in balance-sheet as on 31.03.2009 and thereafter working forward the stock as on 10.02.2010 by taking the figures of production and sales. As a matter of fact, the balance sheet as on 31.03.2010 or the bank statement submitted by the insured to the bank after the date of incident, or the entry in the pledge register of the Bank, being post-event and non-contemporaneous, have little probative evidentiary value in comparison to the pre-event and contemporaneous documents relied upon by the surveyor. Therefore, the factual conclusion of the surveyor and the insurer that as on the date of incident, the stock of the insured in the kutcha godown as claimed by the insured was negative and thus contrary to the books of accounts, and consequently, there was no insurable interest of the insured in such stock which got burnt/damaged in the kutcha godown, is sound and based on cogent material, and therefore, the claim has rightly been repudiated on that ground.
We have perused the relevant entire material on record. We agree with the insurer that the surveyor demonstrably being a licensed surveyor, cannot and need not be arbitrarily changed by the insurer. The action of the insurer based on the report of the surveyor would remain open for the insured to be challenged in appropriate proceedings. Therefore, there is no merit in the contention that the surveyor was biased or that the insured's request for change of surveyor needed to be acceded to by the insurer. As a matter of fact, after minute perusal of the report and the material relied upon by the surveyor therein, we find neither any bias nor any arbitrariness, unreasonableness, and Page | 73 high-handedness nor any infirmity in the survey report as brought on record. Also, though the submission of survey report is beyond the prescribed maximum period of six months, there is no material on record to conclude that the delay is wholly attributable to deficient functioning of the surveyor. Second, in any case, the deficiency by way of delay in settlement of claim, if any payable, due to such belated submission of survey report, or otherwise, would need to get recognised and compensated by award of interest for such period of delay in such settlement. This aspect of delay cannot form the basis for castigating or discarding the evidence-based observations of the surveyor in the survey report.
Having heard the learned counsels, we find that there is indeed prima facie merit in the evident conclusion drawn by the insurer on the basis of the findings of the survey report, because, if the book-stock of the insured is less than even the sound stock physically found and inventorised by the surveyor, prima facie there is no question of the insured's stock having been lost in the incident or the insured having insurable interest in such damaged stocks. The insurer has rightly insisted that onus of establishing the claim, both admissibility and quantum thereof, with all requisite documentary evidence including books of accounts and stock registers, is squarely on the insured, but the claim as made by the insured is found by the surveyor to be not in consonance with the books of accounts or even with the stock statement submitted to the bank. The s documents referred to by the insured in the written arguments are all post event and have been prepared after the submission of the survey report and have little, if any, evidentiary value. Therefore the repudiation, based on the finding of absence of insurable interest and the obvious conclusion of complete absence of loss to the insured as emerging from the book-stock figure, is unassailable, particularly when there is no attempt at all even in the present complaint to duly explain the paradox of negative book-stock. There is no serious and credible attempt by the insured either before the surveyor or before the insurer or even in the complaint before this Commission to coherently and conclusively established with cogent evidence that the finding of the surveyor with regard to negative stocks and lack of insurable interest of the complainant Page | 74 '•A in the damaged goods are wrong or unsustainable and therefore the repudiation, based thereon need not and cannot be interfered with.
However, the prima facie merit in the repudiation on these grounds, remains only prima facie, and in our opinion, cannot still justify the repudiation of the claim on these grounds of negative book-stock. This is for the reason that there is undisputable, undisputed and unimpeachably strong evidence of loss of stock of goods including quantum thereof, which took place on the insured's premises. The surveyor himself has prepared a detailed inventory of quantity of damaged stocks after physical verification. There is presumption, though rebuttable, that the goods on one's premises or in one's possession, belong to him unless proved otherwise. The inventory of such lost/damaged goods on the insured's premises is prepared by Surveyor himself. We have to take note of this unassailable evidence of physical inventory of damaged stock prepared by the surveyor himself as per which the damaged stocks in the kutcha godown was lying and was destroyed and which has been duly assessed by him. The book-stock figure as arrived at by the Surveyor is though a material evidence is still a mere derived figure while physical inventory is based on physical finding of surveyor himself. While the "mystery of negative stock" could not be explained or unravelled cogently by the complainant even in the present complaint, from the survey report and discussion therein, however, we note that as per the inventory of damaged goods prepared by the surveyor himself, 159603 damaged cans were identified as per annexure X5. This finding of the surveyor has not categorically been challenged by either of the parties. Further, as per the surveyor, as noted by him on page 15 of his report, 88407 cans of damaged stocks belonged to the insured while 71196 damaged cans belonged to Oceanic and Capricorn. In this scenario, neither the surveyor nor the insurer has sought any specific explanation of the insured on the issue of negative stock. Under the duty of verification and investigation, the surveyor has not gone a step further in pursuing the lead, if at all, of negative stock in investigating and verifying it further and in arriving at a finding after due investigation that if not to the insured, as alleged, whom did the physically inventorised stock in fact belong to. While the insurer is right that the loss has Page| 75 to be established by the insured, the strong physical evidence of the inventory of the stock damaged in the fire which took place on the insured's own premises cannot simply be brushed aside to repudiate the claim without any specific conclusion about the ownership of the lost goods particularly when the damage was identifiable, quantifiable and is accordingly in fact quantified. Even after noting that Oceanic and Capricorn had their goods on the affected premises, and after also noting that both these parties raised their own claims with their insurers, no further details of the actual claim made by these parties on the basis of their ownership of part of the damaged goods have also been brought on record either by the surveyor or by the insurer to conclusively come to a conclusion that the additional damaged stock (i.e. in addition to 71196 cans) belonged to them so as to establish that the same is not covered in the subject policy. Thus, the claim of the insured of ownership of the physically found damaged goods as aided by the legal presumption of such ownership, has not been rebutted by any positive and conclusive evidence by the surveyor or the insurer. We, therefore, in light of this paramount fact of the physical inventory of damaged stock as prepared by the surveyor himself, are unable to agree with the insurer that the physically found goods being in excess of the deduced or derived book-stock as on 10.02.2010 in itself and alone, and without any further investigation by the surveyor leading to a positive evidence and finding as to whom did the stock actually belong, in the facts and I circumstances of the present case, can be a valid ground for repudiating the claim. The existence of the damaged stock as found by the surveyor on the insured's premises in itself is a positive evidence of the fact of the same belonging to the insured. The finding of negative book stock, in this particular scenario, can perhaps still lead to the conclusion that the stock physically found lost is not in the books of accounts of the insured or that the books of accounts of the insured are not wholly reliable, but certainly not to the necessary conclusion that the insured had no insurable interest therein or that the lost goods in fact belonged to some other party. To have validly come to such a conclusive findings, the surveyor needed to go a step further in investigation and positively establish that the stock in fact belong to particular third parties, Page | 76 which has not been done. In a given scenario of absence of any physical finding and quantification by way inventory of the damaged stocks, the finding of negative book-stock alone, if not cogently explained by the insured, could perhaps have sufficed to infer absence of any loss or damage or any insurable interest of the complainant therein, which clearly is not the case here. Thus, on the overall weight of evidence and on the basis of preponderance of probability, we are unable to uphold the repudiation based merely on the finding of negative book-stock or on the ground that the insured could not prove the loss, when there is undisputed, positive and precise finding of the quantity of stock lost in the fire arrived at by the surveyor himself. We therefore do not agree with the submissions on behalf of the insurer that the claim has rightly been repudiated. Thus, there is clear deficiency in service in the wrong and untenable repudiation of the claim by the insurer and the claim as such is payable. Accordingly, and in view of the discussion as above, we hold that there is no merit in the repudiation of claim on any of the grounds as mentioned in the repudiation letter, and therefore, there is clear deficiency on the part of the insurer in wrongly repudiating the claim.
Now turning to the quantum for indemnification, we may firstly note that, upon verification, we have found no merit in the contention of the complainant that the stocks of Oceanic and Capricorn was wrongly deducted by the Surveyor, because the agreement with these parties obliged the 1 complainant to insure their goods. The contention is fallacious and misleading. The agreement clauses 13 with Oceanic (pg 60 of written arguments) obliges the complainant to obtain insurance in oceanic's name for oceanic's benefits, which obligation does not at all change the fact that the complainant has no interest, insurable or otherwise, in the goods wherein both these parties have acquired title, have insured the goods and have also raised respective claims before their insurers. We note that the surveyor has meticulously prepared the inventory of the damaged stock and has made very detailed notings and observations in this behalf which has not been categorically and cogently disputed by the parties. No fault can be found in not considering the Oceanic and Capricorn Stocks in the assessment of loss of the complainant. The Page | 77 complainant insists for indemnification as per the revised claim made. It has not categorically come on record, however, as to on what evidentiary basis the insured has claimed that 139956 cans (revised subsequently to 217956 cans) of mango pulp got destroyed in the fire and that the valuation need to be adopted at Rs.86.43 per can. On the other hand, the surveyor has duly taken into account the number of physically found damaged stock of 88407 cans, 18000 cans and 53196 cans respectively of insured, Oceanic and Capricorn (pg 15-17 of report). There is no other evidence of any damage or any loss physically noticed or recorded by the surveyor or claimable. The surveyor has methodically, and on evidence-based reasons, arrived at the rate of Rs.26.37 per kg. i.e. Rs.81.75 per can in place of Rs.86.43 per can as claimed by the insured. There is no serious challenge to this working by either of the parties to arrive at the indemnifiable gross loss of stocks of Rs 72.27 lacs and indemnifiable net loss, after considering the salvage value, at Rs. 6696564/- as arrived at and adopted by the surveyor. Otherwise also, the assessment made by the surveyor, without strong and palpable reasons evidenced on record to deviate therefrom, being that arrived by a statutory expert, cannot and need not be interfered with. In addition to assessing the indemnifiable loss of stocks V at Rs.6696565/- after adjusting for salvage, the loss with regard to the building has been arrived at by the surveyor at Rs. 174444/- so as to arrive at the total indemnifiable loss at Rs.6861009/-. In view of this, and in view of absence of any strong evidenced-based alternative placed before us, for the purposes of indemnification, we would adopt and approve the loss as assessed by the surveyor and direct the insurer to pay the same to the insured with 8% interest, within a period of two months from the date of this order.
In the result, the complaint is partly allowed. We, -finding deficiency in service in wrongful and untenable repudiation, set-aside the repudiation and hold the claim indemnifiable. The OP-insurer shall accordingly pay to the complainant a rounded off amount of Rs. 69 lacs with compensatory 6% simple interest for the period starting from the date of complaint i.e. 17.04.2014 till the date of actual payment, within a period of two months from the date of this Page | 78 \ order. Failure to comply would entail interest at 8% from the date of end of window of two months. The insured shall also be entitled for costs of Rs. 1 lac.
Sd/-
( A.P. SAHI, J-) PRESIDENT i * Sd/-
iBHARMKUMARPANDYA) Mukesh/Pramod/aj/Court-l/Reserved Matter 5 J. Page| 79