State Consumer Disputes Redressal Commission
M/S.Xtreme Corporation vs M/S.United India Insurance Co. Ltd., on 9 January, 2023
Cause Title/Judgement-Entry KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION BASAVA BHAVAN, BANGALORE. Complaint Case No. CC/96/2015 ( Date of Filing : 27 Mar 2015 ) 1. M/s.Xtreme Corporation Represented by its Proprietor, Mr.Ayaz Ahmed, A/a 32 years, S/o Mr.Abdul Aleem Residing at No.26/2, 7th A Main, BTM Layout I stage, Bangalore-29 (Factory address at No.38/8, 1st Cross, Garebavipalya, Hosur Main Road, Bangalore-560068, which premises was vacated on 1.12.2014) . ...........Complainant(s) Versus 1. M/s.United India Insurance Co. Ltd., Represented by its Manager, No.460/20, 1st floor, 8th Main Road, (Next to Jain Temple), 4th block, Jayanagar, Bangalore-560011 . ............Opp.Party(s) BEFORE: HON'BLE MR. Ravishankar PRESIDING MEMBER HON'BLE MRS. Smt.Sunita Channabasappa Bagewadi MEMBER PRESENT: Dated : 09 Jan 2023 Final Order / Judgement BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BANGALORE (ADDL. BENCH) DATED THIS THE 9th DAY OF JANUARY 2023 PRESENT MR. RAVISHANKAR : JUDICIAL MEMBER MRS. SUNITA CHANNABASAPPA BAGEWADI : MEMBER CONSUMER COMPLAINT NO. 96/2015 M/s Xtreme Corporation, Represented by its Proprietor Mr. Ayaz Ahmed, Aged about 32 years, S/o Mr. Abdul Aleem, R/at No.26/2, 7th 'A' Main, BTM Layout 1st Stage, Bangalore 560 029. (Factory address at No.38/8, 1st Cross, Garebavipalya, Hosur Main Road, Bangalore 560 068, Which premises was vacated on 01.12.2014) (By Sri Imran Pasha) ....... Complainant/s V/s M/s United India Insurance Company Ltd., Represented by its Manager, No.460/20, 1st Floor, 8th Main Road, (Next to Jain Temple), 4th Block, Jayanagar, Bangalore 560 011. (By Sri S. Krishna Kishore) .... Opposite Party/ies ORDER
MRS. SUNITA CHANNABASAPPA BAGEWADI : MEMBER
1. This is a complaint filed by the complainant alleging deficiency in service on the part of the Opposite Party and prays to direct the Opposite Party to pay Rs.75,74,719/- with interest at 12% p.a. from the date of claim along with costs.
2. The brief facts of the complaint is hereunder;
It is the case of the complainant that in order to safeguard and protect its business, the complainant had insured its furniture, fittings, fixtures, stock, raw material, work in progress, finished goods, electronic equipments etc., against any accident with Opposite Party and the Opposite Party in the said regard, the Opposite Party issued two policies. One is Standard Fire & Special Perils Policy No.070403/11/11/11/00000052 valid for the period from 23.06.2011 to 22.06.2022 covering risk to an extent of Rs.1,01,50,000/- in respect to the furniture, fixtures and fittings, raw materials, work in progress and finished goods. Another one is Electronic Equipment Insurance Policy No.070403/44/11/58/30000005 valid from 23.06.2011 to 22.06.2012 covering risk of Rs.62,000/- in respect of electronic equipments such as computers, FAX machine, scanner, HP Desk Jet Printers. In the process of its business, the complainant during first week of March 2011 (07.03.2011) interacted with one Mr. Mohammed Saeed Abduselem, Proprietor, M/s Saudi Trading Establishment Commerce and Contracts, Saudi Arabia and after much exchange of correspondence through mails between them, the said firm viz., M/s Saudi Trading Establishment Commerce and Contracts, P.O. Box 65514, Riyadh-11566, Saudi Arabia, placed an export order/purchase order on 07.07.2011 for Silk Scarves of 45,000/- meters, Fabric 57,000 meters, Home Furnishing Fabric 50,000 meters and Cushion Covers 25,000 meters. The terms of the said order was that 10% advance TT for order and remaining 90% L.C. or sight/D.P. basis and the delivery of the said material was required to be made within 12 months. It is submitted that after confirmation of purchase order, raw material was procured and started manufacturing 45,000 pieces of scarves. The complainant forwarded Performa Invoice No.01 dt.12.04.2012 along with packing list to M/s Saudi Trading Establishment Commerce and Contracts on 12.04.2012 together with details of its Bank for remittance of the funds.
3. The complainant in order to meet the financial implications involved in procuring the material and executing the order had availed financial assistance from Manappuram Finace Limited, Bangalore after pledging jewelry of family. The complainant completed manufacturing of 45,000 pieces of silk scarves and the same were packed in 23 Cartoon boxes covered with Polywoven cloth and stored in the store room on the first floor of the unit for onward dispatch to the buyer. It is submitted that with the intention to transport the said material to Riyadh, Saudi Arabia, the complainant started interacting with C & F Agent at Chennai and M/s Joy Shipping Services, Thambuchetty Street, Annasalai, Chennai for shipping the consignment to the buyer and was in the process of completion of documentation for export. In the like manner, on 12.04.2012 the complainant sent SMS via his mobile to Insurance Agent requesting for quotation of Marine Transit Insurance for dispatch of 45,000 pieces of Scarf materials to Riyadh, Saudi Arabia.
4. On 18.04.2012 around 2.20 a.m. due to electrical short circuit, there was fire accident in the unit and on noticing the same, one of the staff member intimated me through phone that there was fire in the first floor and store room and the stock of scarves stored for export was burning. Immediate steps were taken to inform fire brigade and police, who took massive steps for extinguishing the fire and by 4.30 a.m. fire was extinguished. It is submitted that the jurisdictional police who were present on the spot at the time of extinguishing the fire, drawn mahazar and registered the case under FA.06/2012. It is further submitted that without any delay, the complainant also informed the Opposite Party insurance company, who deputed one Surveyor by name M/s Professional Surveyors & Loss Adjusters (P) Ltd., situated at No.2, 2nd Floor, 1st Cross Street, Sastrinagar, Adyar, Chennai 600 020 and Mr. S. Upendra from Bangalore Branch who visited the spot and conducted survey and assessed the loss. At the same time, one Mr. V. Shyam Sunder of M/s Shyamravi Associates was also appointed by the Opposite Party to investigate into the accident. It is submitted that one of the staff Mr. Afroz Ansari @ Munna being the eye witness, he has given a statement to the Investigator to the effect that on the 17.04.2012 he was on night shift duty and that in the early hours of 18.04.2012 around 2.10 a.m. he went to the first floor and noticed smoke coming out from the store room next to the stair case and when he opened the sliding door, there was thick smoke and fire and that he immediately alerted the other staff Mr. Parvez, who was sleeping in the staff room adjacent to the godown and that in the meantime he called the owner Mr. Ayaz Ahned through mobile inter-alia intimating about the fire accident and that on the advice of the owner, he informed the fire brigade and the police for help. At the same time, unit workers and others came and started pouring water and were making all efforts to extinguish the fire and that as a safety measure, the fuse was also removed from the meter board. Around 2.20 a.m. fire brigade came and extinguished the fire completely. Thereafter, inspection was done with the help of police and fire brigade personnel and noticed huge damages caused to raw materials, stock, electrical equipments including 23 bundles in which scarves were packed and stored for export. The details and the cost of the damage so caused is as under;
Particulars of materials Kilograms Rate per KG Cost of the total material Raw Silk 3,307.500 Rs.1,750/-
Rs.57,88,125/-
Dying 3,307.500 Rs. 110/-
Rs. 3,63,825/-
LABOUR Wraping (on piece work Rs. 1/- mtr Rs. 45,000/-
Winding - Salary for 3 person @ Rs.4,000/- PM from July 11 to April 14 Rs. 1,08,000/-
Mounting and Jointing Rs.250/- per wrap 180 wraps Rs. 45,000/-
Weaving ! Rs.13/- per mtr 45,000 mtrs Rs. 5, 85,000/-
Printing ironing etc., Rs. 20/- per piece for 45,000 Rs. 9,00,000/-
Packing charges (Cartoon bags, polywoven bags etc.) Rs. 250/- per bag X 23 Cartoon bags 180 wraps Rs. 5,750/-
Miscellaneous Expenses KEB Charges For 9 months Rs. 5,000/- per month Rs. 45,000/-
Rental of the premises For 9 months Rs. 9,680/- per month Rs. 87,120/-
Total loss sustained for 45000 pieces of scarves In addition to the aforesaid loss, damage had occurred to electronic equipments, fixtures and fittings.
Electronic Equipments Graphic Card Invoice No.1151 Dt. 09.05.2012 Quantity 1 Rs. 1,785.00 Logitech, Mouse, SMPS, 2 GB Ram CS831/12-13 Dt. 22.05.2012 Quantity 3 Rs. 2,992.50 Furniture and Fittings For repair and replacement of aluminum partition with door Size 11' x 11' Rs.250/- per. sq. feet Rs. 30,250/-
Total loss of which comes to Rs.35,027/-
5. It is submitted that after segregating the entire materials, only around 300 good pieces were found undamaged and 2500 pieces were partially damaged. Since the consignment sustained water damages used by fire brigade, the contaminated water damaged the good pieces too. Hence, the entire consignment was damaged, spoiled and became useless. The Fire Department has also issued a Report dt.19.04.2012. As submitted supra, the complainant had insured its entire stock, finished goods, plant and machinery with the Opposite Party herein under two policies which policies were in force as on the date of occurrence of the accident. It is submitted although the complainant had made a claim for the amount he sustained loss immediately after the fire accident, the Opposite Party did not respond to the said claim inspite of repeated requests and reminders. The Surveyor/ Investigator after a lapse of 8 months and above viz., on 10.01.2013 had submitted his report to the Opposite Party.
6. It is submitted that despite several request made, copy of the investigating report has not furnished to the complainant except orally informing the reasons assigned by the investigator in the report. The adjacent units owners who were eye witnesses to the fire incident in the complainant's units have also given their statement in confirmation with the incident and the statement of the complainant and his staff members. The reports are biased and made in the interest of the Opposite Party so as to avoid payment of compensation to the complainant. It is submitted that Surveyor in his report has stated that the stock was not suitable for exports as they fall under prohibited ARYL AMINE, which is totally false. The further statement made in the complaint that the cause of fire is due to piloted ignition and is not an accidental fire is totally false in as much as the police opined after investigation and detail enquiry, that there is no suspicion found in the fire accident and the fire accident has taken place suddenly and the opinion totally negatives the statement of the Surveyor as well as Investigating Officer. Baseless ground has been made by the Surveyor in his report and the opinion that the insured does not have a valid and tenable claim under the policy of insurance is totally false and baseless. In other words, the entire report of the Surveyor and Investigating Officer are false. It is submitted that the Opposite Party without application of mind and on the basis of false and one sided surveyor report, has rejected the claim of complainant vide letter dt.10.09.2013. It is submitted that the Opposite Parties failed to take note of the fact that the police upon investigation have registered the case of fire accident and after completing their investigation, Madiwala Police in its final report dt.17.05.2013 as at Annexure-P has stated that there are no suspicion in the matter and no arrest of any person has taken place. Finally they have opined that the fire in the complainant's unit was sudden due to accidental fire. The complainant once again made correspondence with the Opposite Party to relook into the matter and reconsider the case for settlement of the claim and the Opposite Party after several correspondences being made by the complainant, replied vide letter dt.02.01.2014 inter-alia informing that the decision for repudiation is final. It is thus submitted that without there being an order direction from this Hon'ble Commission, the Opposite Party will not compensate the loss to the complainant. Hence, the complainant prays leave to prefer this complainant for suitable orders/directions. Hence, the complaint.
7. The Opposite Party appeared through advocate and filed their version and admitted the two insurance policies purchased by the complainant from the Opposite Party. One Standard Fire & Special Perils Policy No.070403/11/11/11/00000052 valid for the period from 23.06.2011 to 22.06.2022 covering risk to an extent of Rs.1,01,50,000/- in respect to the furniture, fixtures and fittings, raw materials, work in progress and finished goods. Another one is Electronic Equipment Insurance Policy No.070403/44/11/58/30000005 valid from 23.06.2011 to 22.06.2012 covering risk of Rs.62,000/- in respect of electronic equipments such as computers, FAX machine, scanner, HP Desk Jet Printers. The fire accident is also admitted by the insurance company and denied all other allegations of the complainant and contended that the complainant is not a 'Consumer' as per Sec. 2(b) of the Act and the present complaint is not maintainable in the eye of Law. The Opposite Party further contended that after receiving the information about fire accident by the complainant dt.18.04.2012 claimed Rs.1,02,00,000/- i.e. loss of Rs.45,000/- pieces of 100% pure silk scarves. The Opposite Party appointed M/s Professional Surveyors & Loss Adjusters Pvt., Ltd., Chennai to inspect and send survey report. The said Surveyor inspected the said fire place fire place in the presence of the representative of the complainant. In addition to the Surveyors and adjustors, the assistant of Sham Ravi Associates, Investigating Agency was also taken and the representatives of the complainant interacted with the said Investigating Agency and in their presence only the samples at the fire incident place were collected.
8. It is submitted that the Surveyors after careful consideration of materials collected by them on the information furnished by the complainant submitted the Survey Report dt.10.01.2013 which includes Investigation Report dt.26.05.2012 submitted by Sham Ravi Associates, the Investigators. After going through both the reports, the Opposite Party found that the complainant did not maintain proper books of accounts i.e., stock register to ascertain the nature of stock stored, quantity and its value failed to furnish purchase bills, produced manipulated order said to have been issued by M/s Soudi Trading Establishment, alleged that they have paid 10% of advance amount and the same is not reflecting in te Bank Accounts of the complainant, Lab Reports shows components of ARIARYL-AMINE which is a prohibited item to export the same in 23 boxes as alleged by the complainant, found serious discrepancies in bills obtained by selles of raw-materials, some of the traders denied their signature in the bills and in computer generated bills, name of the buyer is not mentioned. The documents were created and not to reflect bonafide transactions. In addition to that, the insured failed to take prompt steps to extinguish the fire by using fire extinguisher or water from broewell which was readily available to reduce the quantum of loss. In view of all the above points, the claim of the complainant was repudiated by sending letter dt.10.09.2013 by the Opposite Party to the complainant, explaining the reasons for repudiation in detail.
9. Further contended that the complainant stated that fire might have happened due to short circuit of electricity. However, the Electrical Inspector attached to the Office of the Deputy Chief Electrical Inspection, Bangalore South of BESCOM has stated that he conducted detailed spot inspection on 23.04.2012 and stated unequivocally that there was no evidence of any short circuit or any electrical sparks and further opined that the fire must have taken place due to other reasons. Even the lab report of sample of the partial damaged materials show that there cannot be any self ignition of the materials and they are non-combustible and also to a greater extent fire resistant. It was also opined that if there was a fire, it would have been localized and would have damaged only a limited portion. Therefore, in the absence of evidence of the fire being caused by electrical short circuit or other accidental means, the Opposite Party was forced to conclude that the fire accident is a deliberate action to make a false claim.
10. The Opposite Party further contended the lab reports indicates that the sample of materials damaged taken out from the insured premises immediately after the accident shows components of ariarlyl-amine which is a prohibited item, which means the scarves allegedly packed in the 23 boxes of export were banned items and could not have been exported and there cannot be any agreement to manufacture and export materials containing the banned items. This very fact indicates that the items said to have been lost or damaged in the fire were not exportable goods. Hence, the complainant submitted claim on false and frivolous information to the Opposite Party. Hence, the Opposite Party is not require to compensate the alleged loss claimed by the complainant and prays for dismissal of the complaint.
11. The complainants have filed affidavit evidence and marked documents at Ex. C-1 to C-23. The Opposite Party also filed affidavit evidence but not marked any documents. Heard the arguments of both parties.
12. On perusal, the following points will arise for our consideration;
(i) Whether the complaint is deserves to be allowed? (ii) What order? 13. The findings to the above points are; (i) Partly affirmative (ii) As per final order REASONS
14. Perused the contents of the complaint, version and affidavit evidence and documents on record produced by both parties, it is evident that the complainant has purchased two policies Standard Fire & Special Perils Policy No.070403/11/11/11/00000052 valid for the period from 23.06.2011 to 22.06.2022 covering risk to an extent of Rs.1,01,50,000/- in respect to the furniture, fixtures and fittings, raw materials, work in progress and finished goods. Another one is Electronic Equipment Insurance Policy No.070403/44/11/58/30000005 valid from 23.06.2011 to 22.06.2012 covering risk of Rs.62,000/- in respect of electronic equipments such as computers, FAX machine, scanner, HP Desk Jet Printers from the Opposite Party insurance company and it is also evident that M/s Saudi Arabia placed an export order/purchase order on 07.07.2011 for silk scarves of 45,000 meters fabric 57,000 meters, Home Furnishing Fabric 50,000 meters and cushion covers 25,000 meters. It is also evident that on 18.04.2012 fire accident was occurred in the first floor store room and stock stored for export was burning and the entire consignment was damaged spoiled and become useless.
15. It is also evident that the police and concerned PS investigated the matter in detail and final report was given and also the Fire Department has issued report dt.19.04.2012. The allegation of the complainant is that despite of all the procedure and investigation being completed, stock statement being recorded and the complainant having furnished all the information and submitted the records, receipts, invoices, books of accounts, register etc. The Opposite Party had not settled the claim of the complainant inspite of several requests. Per contra, the Opposite Party contended that the complainant is not a Consumer as per Sec.2(7) of the Consumer Protection Act. However, Sec.2(42) of the Consumer Protection Act reads as "SERVICE" means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.
Hence, as per Sec.24(42) of the Consumer Protection Act, 2019, complainant is a 'Consumer'. The Opposite Party in his affidavit evidence contended that the Surveyors after careful consideration of materials collected by them on the information furnished by the complainant submitted the Survey Report dt.10.01.2013 which includes Investigation Report dt.26.05.2012 submitted by Sham Ravi Associates, the Investigators. After going through both the reports, the Opposite Party found that the complainant did not maintain proper books of accounts i.e., stock register to ascertain the nature of stock stored, quantity and its value failed to furnish purchase bills, produced manipulated order said to have been issued by M/s Soudi Trading Establishment, alleged that they have paid 10% of advance amount and the same is not reflecting in te Bank Accounts of the complainant, Lab Reports shows components of ARIARYL-AMINE which is a prohibited item to export the same in 23 boxes as alleged by the complainant, found serious discrepancies in bills obtained by selles of raw-materials, some of the traders denied their signature in the bills and in computer generated bills, name of the buyer is not mentioned. Hence, the documents were created and not to reflect bonafide transactions. In addition to that, the insured failed to take prompt steps to extinguish the fire by using fire extinguisher or water from broewell which was readily available to reduce the quantum of loss. In view of all the above points, the claim of the complainant was repudiated by sending letter dt.10.09.2013 by the Opposite Party to the complainant, explaining the reasons for repudiation in detail.
16. Further, the lab reports indicates that the sample of materials damaged taken out from the insured premises immediately after the accident shows components of ariarlyl-amine which is a prohibited item, which means the scarves allegedly packed in the 23 boxes of export were banned items and could not have been exported and there cannot be any agreement to manufacture and export materials containing the banned items. This very fact indicates that the items said to have been lost or damaged in the fire were not exportable goods. Hence, the complainant submitted claim on false and frivolous information to the Opposite Party.
17. Perused the Survey Report, the Surveyor after performing the purchase bills, sales bills, purchase orders, proforma invoice, packing list, bank statement of the insured and financial accounts for the Order dt.31.03.2010, 31.03.2011 and 31.03.2012 and fire brigade report assessed the loss of Rs.14,80,504/- after salvage which clearly shows that the complainant has suffered damage as a result of fire incident. However, the Surveyor finally came to the conclusion that the cause of fire is not any electrical short circuit and as per physical evidence available the cause of fire is due to piloted ignition and is not an accident fire.
18. Now the point for consideration is whether the claim could be repudiated by the insurance company on the basis of Investigation Report and concluded that the claim was not payable because the claim submitted by the complainant on false and frivolous information to the Opposite Party? Even the complainant has failed to furnish stock record, the contention of the Opposite Party that the complainant tried to defraud the said Opposite Party is not substantiated from any record. The Opposite Party has contended that the Electrical Inspector attached to the office of Deputy Chief Electrical Inspection, Bangalore South of BESCOM has stated that there was no evidence of any short circuit or electrical sparks and further opined that the fire must have taken place due to other reasons, however, the Opposite Party has not produced the report of the Electrical Inspector. Further, the Opposite Party contended that the lab report of the sample of partial damaged materials show that there can be any self ignition of the materials and they are not combustible and also to a greater fire resistant. Moreover it is prohibited the items means silk scarves pack in the 23 boxes of export were banned items and could not have been exported. Further, the Opposite Party had not produced the lab report before the District Commissioner except affidavit of the Surveyor. Mere contention in objections of the Opposite Party is not sufficient without any relevant document to prove his contention. Per contra the complainant has produced police mahazar Karnataka State Fire and Emergency Report, eye witnesses etc., to prove their allegations. Hence, the complainant is entitled for the loss assessed by the Surveyor as a person who is finalized by IRDA was primary job is to verify the insurance claim with components of objectivity and professional integrity. Considering the facts and discussion made here, we are of the opinion that the complainant is entitled for the claim as per the Surveyor assessment. Hence, the following;
ORDER The complaint is allowed in part.
The Opposite Party is directed to pay Rs.14,80,504/- to the complainant along with interest at 6% p.a. from the date of fire accident i.e. 18.04.2012, till realization.
The Opposite Party is further directed to pay a sum of Rs.2,00,000/- as compensation and Rs.25,000/- as costs of litigation to the complainant.
The Opposite Parties are granted 30 days time from this date to comply the order.
Forward free copies to both the parties.
Sd/- Sd/- MEMBER JUDICIAL MEMBER KCS* [HON'BLE MR. Ravishankar] PRESIDING MEMBER [HON'BLE MRS. Smt.Sunita Channabasappa Bagewadi] MEMBER