National Consumer Disputes Redressal
Indo Swiss Jewels Ltd. vs New India Assurance Co. Ltd. on 14 July, 2005
Equivalent citations: I(2006)CPJ158(NC)
ORDER
Rajyalakshmi Rao, Member
1. The present complaint has been filed by Indo Swiss Jewels Ltd. against opposite party, the New India Assurance Co. Ltd., for deficiency of service for non-settlement of the claim for losses lodged by the complainant. Facts of the case are:
The complainant is a mechanical high precision industry engaged in the business of manufacturing micro precision components like jewels for watches and other industrial appliances, watch crystals, permanent magnets and gaskets in their factories located at Bangalore, Karnataka and Hosur, Tamil Nadu. The complainant insured its building, plant and machinery, raw material, stocks, stores, consumables, work in process, finished goods, fixtures, office equipment and electrical installations, etc. located in its factory premises at 137A, Sipcot Industrial Complex, Hosur, Tamil Nadu with the opp. party, New India Assurance Co., vide policy No. 111413021314 dated 13th March, 1997. The above insurance policy was issued for a cover of Rs. 3,42,38,264 by Mapusa branch, Goa of opposite party in respect of perils arising out of the strike, riots and malicious damage. On 16th March, 1998 the said fire policy was also renewed after one year.
2. On 15th October, 1997 the workers in the complainant's factory at Hosur, Tamil Nadu went on strike. The complainant reported the said matter to the Inspector of Police, Sipcot area, Hosur, vide letter dated 16th October, 1997 thereby requesting that their complaint be registered and adequate protection be afforded to the loyal employees and the properties of the complainant. On 8th November, 1997 another complaint was registered under No. 453 with the police and yet nothing was done by the police. On 4th December, 1997, Deputy Managing Director and Managing Director of the company met the Deputy Superintendent of Police and with the help of police they entered the factory premises and found that the lock to the store had been tampered with and was broken. Another complaint was, therefore, filed with the Sipcot Police Station, Hosur, vide letter dated 5th December, 1997. The representative of the complainant noticed on 10th December, 1997 that the machines in the factory were tampered with and a complaint was again filed on 11th December, 1997 under registration No. 117/97.
3. On 11th January, 1998 the complainant addressed a letter to opposite party informing that the striking work force caused malicious damage to the plant and machinery, and is obstructing the complainant to enter the premises to assess the damage and that he has sought police help to make a full assessment of the damage and enquired whether the O.P. would like to be associated with the exercise at that stage itself, so that a proper and joint valuation of the damage could be done. Opposite party on 16.1.1998 instructed the Fire Technical Department, Bangalore, to arrange for an investigation-cum-survey of the damages and sent a copy of the said letter to the complainant asking him to submit the claim form therewith duly completed along with other documents required. The complainant further stated that the documents required to be annexed with the claim form were not specified in that letter from the opposite party. The opposite party on 27.1.1998 appointed Mr. U.V. Sharma, Surveyor to assess the damage after site visit. Mr. U.V. Sharma wrote to the complainant on 4.3.1998 as to when the factory could be inspected and complainant replied on 9.3.1998 that the Surveyor should postpone the visit as there was hindrance from striking workers in the factory. Finally on 12.5.1998 the Surveyor visited the premises for the first time. On 5th August, 1998 complainant's personnel were allegedly prevented from entering the factory and on the same day 15-20 workers entered the factory premises. When the complainant's personnel visited the premises on 10th August, 1998 they found that the finished goods and raw materials were scattered, the locks of various rooms were also missing. This was the second event of damage from striking workers. The opposite party appointed U.V. Sharma to investigate and assess the loss on 27th January, 1998. Mr. Sharma submitted his report to the opposite party on 10th March, 1999 but the copy of the Surveyor report was not made available to the complainant. Opposite party sent a letter to the complainant on 5th May, 1999 expressing its inability to entertain the claim of the complainant on the ground that as per the Surveyor's report there was no liability under the policy in view of the fact that there was no FIR lodged by the complainant with the police. Meanwhile, complainant also engaged a consultant Mr. Gergan, a qualified consultant to assess the damage and give an estimate of the cost of repairs/restoration of the damaged properties.
4. It is the say of the complainant that he replied to the opposite party clarifying that various police complaints were lodged and then an FIR was also enclosed with the same. The opposite party informed the complainant that the Surveyor Mr. Sharma would be contacting them to assess the loss. On 28th February, 2000 Mr. U.V. Sharma submitted to the opposite party the additional Surveyor report wherein it was reported that "the compensation payable as per my calculations eventwise as follows:
(a) Event 1-5.12.1997: Compensation payable is Rs. 21,62,143.
(b) Event II-5.8.1998: Compensation payable is Rs. 32,34,235.
5. After making several requests and reminders to the opposite party, the complainant sent a legal notice on 1st July, 2000. The Grievances Cell of the Insurance Company informed the complainant on 7th July, 2000 that the matter was under investigation and assured the complainant of prompt action. The compensation sent another legal notice on 21st November, 2000 demanding settlement of the claim. The second legal notice was replied vide letter dated 23rd December, 2000 by the opposite party alleging that there are certain lacunae in the claim of the complainant but stated that if these are clarified they would take up the matter for reassessment. In response, the complainant sent a detailed reply dealing with all the issues raised by the opposite party on22.1.2001. Finally when there is no response from the opposite party after years of frustration the complainant filed the present complaint on 28th June, 2001.
The complainant has claimed the following amounts:
Amount of claim Rs. 1,99,33,259
Interest on the claim @ 18% p.a.
from July 1999 till 30.4.2001 Rs. 65,77,975
Business losses suffered in the
year 1999-2000 Rs. 2,50,00,000
Loss of goodwill Rs. 1,50,00,000
Expenses incurred on travel,
telephone calls, fax messages, etc. Rs. 75,000
Total : Rs. 6,65,86,234
6. The complainant also claimed interest @ 18% from the date of filing of the complaint till the date of realization, and cost for the proceedings and any reliefs. During the proceedings of this petition in the Commission by order dated 21st February, 2002 learned Counsel for the complainant accepted to restrict his claim to Surveyor's report where assessment of Rs. 21,62,143 and Rs. 32,34,235 was given. The learned Counsel for the complainant gave up the amounts of Rs. 2,50,00,000 and Rs. 1,10,00,000 for alleged business loss and goodwill and agreed to press these claims.
7. In their submissions opposite party alleged:
(a) that the complainant's factory was closed on 17.10.1997 and the workers were on indefinite strike till end of December, 1997 but this intimation was given to the opposite party for the first time on 11.1.1998. Opposite party did not acknowledge the alleged loss on account of strike, riots and malicious damage since the factory was closed and workers were on strike from 16.10.1997. The police did not believe version of the complainant in spite of the various complaints made on 8.11.1997, 24.11.1997, 5.12.1997 and 11.12.1997. The police did not register FIR and even the registered letters of the complainant were returned back to them which speak volumes of complainant's claim and that it is a false claim. The fact that the complainant did not inform opposite party upto 11.1.1998 while one of the principles of fundamental contract with regard to uberrima fides that is utmost good faith.
(b) The opposite party contended that the complainant did not co-operate with the Surveyor for more than nine months in 1998 and did not make arrangements for site inspections for Surveyor on the pretext of hindrance by workers. It is also alleged that the complainant was clandestinely removing the large number of machinery to the unit in Bangalore without informing the opposite party and loss on account of strike, riots and malicious damages was not genuine.
(c) It is further contended by the opposite party that the complainant's version was not believed by the police at any stage so much so that they refused to register FIR. Finally FIR was registered at the direction of the Judicial Magistrate vide order dated 29.6.1999. Although FIR was lodged eventually, complainant's criminal complaint before Judicial Magistrate which was filed on 8.11.2001 was dismissed vide order dated 14.11.2002 even without concluding the evidence on the ground that prima facie no offences were made out.
(d) The investigation report dated 19.10.2001 of Shri P. Upendra conclusively shows that the loss on account of strike, riots and malicious damage was not established. It is also argued that the police authorities and the competent Criminal Court dismissed their complaint without even concluding the evidence.
(e) It is further contended that the complainant was not cooperative in furnishing information and did not allow Surveyor to make visits on the pretext that there was hindrance from striking workers which delayed the investigation proceedings. The Surveyor could only visit the site on 12.5.1998 and second visit on 13.1.1999. The Surveyor submitted his report dated 10.3.1999 and only then the opposite party could issue letter of repudiation dated 5.5.1999. In fact opposite party decided to carry out further survey and investigations after an FIR was registered through intervention of Court on 29.6.1999 to see if there is any justification for review of the repudiation and to quantify the loss by way of an alternative plea in case the complainant approaches Consumer Forum. Opposite party also contended that the assessment report given by complainant's Surveyor, Mr. K.S. Gergan on 14.4.1999 for Rs. 1,99,33,359 cannot be accepted as the damage to the list of properties that was given does not match to the incidents of 15.10.1997 and 5.8.1998. Secondly, this assessment report is purely made out on the basis of inventory and not on the actual damaged property in the alleged incidents. It is further argued that the delay in lodging police complaint and not providing list of the goods damaged during the time of incident, not acting prudently in protecting their own properties, the information collected by the Surveyor from the securing guards that the materials in question was stolen and not damaged, that they were removed by the Directors from the factory premises. Another investigator, Mr. P. Upendra, was appointed to ensure the authenticity of occurrence of strike. His report dated 19.10.2001 is completely based on the meetings held with the police authorities, Sipcot Police Station, Hosur. The opposite party relied on his report and the statements made to police authorities have concluded that the fact of these two occurrences/events reported to have occurred at the insured factory in October, 1997 and August 1998 is not established by the investigation and final report of Sipcot Police Authorities. Opposite party relied on this report as the alleged acts of malicious damages to the insured properties caused by the workers is not established by a conclusive report of the police authorities to substantiate adequate evidence required in terms of the policy, they have repudiated the claim on 14.12.2001.
8. We have carefully gone through the records and heard the arguments of the parties. The first contention of the Insurance Company that the complaint is false and based on fraudulent allegations first of all is not established by any stretch of imagination. The Judicial Magistrate-II, Hosur has passed two orders, the first one on 9.1.2002 holding that a criminal case under Sections 447, 451,427 and 506(ii), IPC be taken on file UNDER Section 203, CPRC against 10 workers. The second one is a final order passed in the same matter on 14.11.2002 holding that the said 10 accused had not directly involved in causing the extensive damage to the factory and the products and hence acquitting them. But it is very clear from the order dated 14.11.2002 of the Judicial Magistrate-II, Hosur, that while dismissing the criminal complaint the learned Magistrate also stated that, "It is proved beyond doubt that extensive damage has been caused." He also stated, "It is clear that extensive damage has been caused to the factory and things therein. There are clear and ample reasons to show that the employees damaged the factory and products therein. Because of the lethargic attitude of the police the real culprits could not be traced." After the losses have been assessed by the Surveyor U.V. Sharma based on all the information on 28.2.2000 two years after the alleged loss, Insurance Company appointed P. Upendra some time in late 2001 to carry out a study of the police/criminal proceedings. It is very clear that the Judicial Magistrate-II, Hosur, dismissed the criminal complaint and observed in their order in which they have clearly mentioned that "Supervisor and Engineers who went to inspect the factory were threatened on 5.8.1998 and on 10.8.1998 it was found that the machineries and the raw materials were thrown out and the finished products have been removed and Rs. 17-18 lakh worth damage has been done the complainant preferred a complaint with respect to above incident with police who refused to receive it and sent it back. Although the incident happened as early as 5.12.1997 and the first information has been given to the opposite party on 11.1.1998 the claim was finally repudiated only on 1.12.2001. Even if one takes from the date of copy of FIR submitted and all the information that has been furnished in spite of all the information in hand, the reasons best known to them, opposite party has unnecessarily harassed the complainant with baseless allegations. The repudiation of 5th May, 1999 is no repudiation as it is based on mere technical objection. Thereafter the same Surveyor was asked to reassess the loss and the Surveyor submitted an additional report on 28th February, 2000 itself shows that the opposite party was changing their mind from time-to-time. Even the reply dated 23.12.2000 from the Advocate of the O.P. points out certain lacunae in the claim and holds out a hope to reconsider the matter of repudiation if the complainant provides further convincing information. Further the opposite party after getting the relevant information from the complainant did not decide the matter according to the policy. We find in no uncertain terms that opposite party are liable for deficiency in service for not having made any offer of settlement even after the submission of the additional Surveyor report as early as 28th February, 2000 which quantified the loss. We also agree with the complainant that opposite party was obtaining multiple reports which was necessary and this delayed the entire process of assessment; that although Judicial Magistrate made observations that the striking workers caused heavy damage, it was ignored by opposite party and hence we hold opposite party liable for deficiency in service. Although various amounts have been claimed by the complainant, he finally restricted his claim to the assessment made in the additional Surveyor report which is Rs. 21,62,143 and Rs. 32,34,235. We direct opposite party to pay the same with 9% interest from 1.4.2000 till date of payment and Rs. 10,000 as cost. Complaint is allowed with the aforesaid directions.