M/S. Bikaner Agency vs United India Insurance Company Limited

This revision petition has been filed by the petitioner M/s. Bikaner Agency against the order dated 23.01.2015 of the State Consumer Disputes Redressal Commission, Chhattisgarh, (in short 'the State Commission') passed in Appeal No.FA/13/681.

Brief facts of the case are that the petitioner had taken insurance policy from the respondent Insurance Company for the stock kept in his godown and the policy was valid from 10.01.2010 to 09.01.2011. On 09.04.2010, fire broke out in the godown and all the material kept in the godown was lost. The petitioner is an agent of Cargil India Ltd. and there is an agreement between them. He filed an insurance claim of Rs.16,00,000/- and the claim was repudiated vide letter dated 05.03.2012 on the ground that there was stock of only Cargil India Ltd in the godown and there was no stock of the petitioner. The petitioner filed a consumer complaint bearing No.113/2012 before the District Consumer Disputes Redressal Forum, Surguja Ambikapur (in short 'the District Forum'). The District Forum vide its order dated 30.11.2013 passed the following order:-

"1. The OP will pay to the insured complainant for the loss suffered in fire during the policy period of Rs.14,80,000/- and 6% interest from 04.08.2012 within one month from the date of order.

The OP will pay Rs.4000/- for physical, mental harassment for inconvenience.

The OP will bear his own cost and cost of the complainant Rs.2000/- which will include advance fees also."

Aggrieved by the order of the District Forum, the opposite party Insurance Company preferred an appeal bearing No.FA/13/681 before the State Commission, wherein the State Commission vide its order dated 23.01.2015 allowed the appeal on the basis of the survey report and the investigation report and the order of the District Forum was set aside.

Heard the arguments of learned counsel for both the parties and perused the record.

Learned counsel for the petitioner stated that the District Forum after considering all the facts and evidence on record allowed the complaint of the petitioner and ordered the Insurance Company to pay Rs.14,80,000/- as insurance claim. However, the State Commission accepted the appeal filed by the Insurance Company and set aside the order of the District Forum. Learned counsel argued that the godown had the stocks of Cargil India Ltd. also. The District Forum on the basis of the documents filed, has given a finding that the stocks of the petitioner was also in the godown and accordingly the compensation has been ordered.

It was further stated by the learned counsel that actually it was immaterial whose stocks was in the godown because the total stocks kept in the godown was covered under the policy and policy does not distinguish between the stocks of the petitioner and the stocks of the other party. The State Commission has erred in not following the basic principle of insurance that loss in the insured property is to be indemnified by the Insurance Company.

On the other hand, learned counsel for the respondent Insurance Company stated that the surveyor and investigator both have reported that the petitioner has forged the stock register by manipulating entry on 08.04.2010 in the stock register, whereas the same entry was also made on 31.03.2010. In fact the surveyor has observed the following:-

"But on going through the records carefully it has been observed that purchase invoice/bill no.878 for Rs.1640203.00 plus VAT 5% Rs.82010.00 dated 31.03.2010 & purchase invoice/bill no.879 for Rs.101837.00 plus VAT 5% Rs.106929.00 totalling Rs.1829142.00 has been shown in the closing balance as on 31.03.2010 & also between 01.04.2010 to 08.04.10. Therefore the stock of Bikaner agency in the godown affected due to fire is in negative & all the stock affected lying in the godown belongs to Cargil India Ltd. Thus if the entries are rectified/corrected the claim lodged by the insured becomes null & void."

To verify this, Insurance Company appointed an investigator who in his report dated 27.10.2011 has also observed the following:-

"It is revealed from document Annexure VII that there has been double entry made of Rs.18,29,142.00 in the closing balance as on 31.3.2010 and as well as the closing balance on 08.04.2010 at the time of claim. From the above, if entries are corrected as single entry then the closing stock would be as negative balance. Hence it establishes that the stock in the godown was completely owned by insured principal and the claim under the scope of policy is not tenable as the books of accounts produced for the purposes of claim does not justify the loss as the title of the stock not transferred in favour of insured."

It was argued that the petitioner has not denied the finding of the double entries made in the stock register and particularly on 08.04.2010 just before the date of fire and has not given any explanation for the same. The District Forum has not given any specific reason for not accepting the report of the surveyor or the investigator and has allowed the claim on the basis of some other documents filed by the petitioner. It is the basic law that for deciding an insurance claim, the report of the surveyor is to be considered. The report of the surveyor is an important document as they are appointed under the Insurance Act, 1938 and their report cannot be brushed aside without any cogent reasons. The State Commission has rightly appreciated the reports of surveyor as well as the investigator as no explanation has been given by the petitioner for these double entries in the stock register. Even at the stage of the revision petition, learned counsel for the petitioner has not given any explanation or has not denied the existence of double entries in the stock register.

The learned counsel for the respondent further stated that the policy was taken by the petitioner and therefore, only the petitioner's stock was covered under the policy. The petitioner cannot have any insurable interest on the stock of Cargil India Ltd. In fact Cargil India Ltd. had taken another insurance policy from National Insurance Co. Ltd. for all the places where they have kept their stocks. The Cargil India Ltd. definitely may have taken up the matter for loss of their stock in the instant case with their insurer. The insurance claim cannot be paid twice for the same stock.

I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and have examined the material on record. The legal position is that the surveyors are appointed under the Insurance Act, 1938 and their report forms the basis for deciding insurance claim and accordingly these reports cannot be rejected without any cogent reasons. Hon'ble Supreme Court in its judgment ["Sri Venkateswara Syndicate vs. Oriental Insurance Company Limited & Anr", (2009) 8 SCC 507], has observed that:

"31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by insured, a loss adjuster, popularly known as loss surveyor, is deputed who assesses the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured.

There is no disputing the fact that the surveyor/surveyors are appointed by the insurance company under the provisions of the Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the officer concerned of the insurance company; if for any reason, the report of the surveyors is not acceptable, the insurer has to give valid reason for not accepting the report."

Hon'ble Supreme Court in Sikka Papers Limited Vs. National Insurance Company Limited and Ors., (2009) 7 SCC 777, has expressed the same view and the gist is quoted below:-

A. " Insurance- Terms and conditions specified in insurance policy- Binding effect- Insurance policy not covering parts of machinery which were required to be replaced due to normal wear and tear-Held, Insurance Company while assessing claim, rightly excluded those parts-

B. Insurance Act, 1938,- S. 64-UM- Surveyor/Loss assessor's report- Weightage to be given- Held, Though not the last word, yet there must be legitimate reason for departing from report- No infirmity found in surveyor's report and therefore held, Insurance Company rightly admitted claim as per the report."

The surveyor has categorically given finding that the petitioner/complainant has manipulated the stock register by making double entries in respect of purchase invoice/bill no.878 for Rs.16,40,203/-. The entries have been made on 08.04.2010 as well as on 31.03.2010. The copy of surveyor's report was available with the petitioner before filing the complaint, whereas the petitioner has not given any explanation about double entries in the complaint. As the petitioner has not denied these findings of the surveyor and the investigator, no basis is found for rejecting the report of the surveyor or the investigator. The District Forum has not given any specific reason for rejecting the reports of the surveyor and investigator though the District Forum has allowed the claim on the basis of some other documents. But the basic question is if the stock register has been manipulated, how the petitioner/complainant is entitled for any claim. If the manipulation is taken out from the stock register, then the surveyor has found that the stock of the petitioner becomes nil or even negative. Thus, clearly there was no stock of the petitioner in the godown on the date of accident of fire. So far as the question of stock of Cargil India Ltd. is concerned, the claim of the petitioner is that the policy covered every stock that was lying in the godown.

The petitioner has not made Cargil India Ltd. party in the complaint case and therefore, the complaint basically suffered from defect of non-joinder of necessary party as well. Had Cargil India Ltd. been made party in the present case, the position in respect of these stocks as well as insurance taken by the Cargil India Ltd. from other Insurance Company namely, National Insurance Company Ltd. would have been properly explained. The petitioner cannot draw any advantage for not arraying a necessary party in the case. I agree with the contention of the learned counsel for the Insurance Company that on the stock of Cargil India Ltd kept in the godown, the petitioner does not have any insurable interest. Otherwise also, it has been observed by the surveyor that the stocks were released from time to time from the stock of Cargil India Ltd. kept in same godown to the petitioner and it clearly means that two stocks were kept separately in the same godown, one by the owner and other by the assignee. The Insurance has been taken by the assignee. The learned counsel has not shown any clause in the agreement that the assignee was responsible for the insurance of total stock as well. When the petitioner has taken policy and the policy is for stocks kept in the godown, it would only mean that the policy had been taken for the stocks kept in the godown belonging to the policy holder. Thus, it is clear that the scope of the policy would be limited to the stocks of the petitioner kept in the godown. The surveyor and the investigator both have found that no stock of the petitioner was kept in the godown on the day of fire and therefore, the petitioner is not entitled to any insurance claim.

Based on the above discussion, I do not find any illegality, material irregularity or jurisdictional error in the order dated 23.01.2015 of the State Commission which calls for any interference from this Commission. Accordingly, the RP No.1119 of 2015 is dismissed with no order as to costs.