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Judgment
The present Complaint is filed under Section 21 (a) (1) of Consumer Protection Act, 1986. The Complainant is a Limited Public Company incorporated under the Companies Act, 1956. The Complainant is predominantly engaged in the manufacture and trading of all types of decorative paints, industrial solvents, thinners and other allied products.
The Complainant purchased Insurance Policies from the Opposite Party as per following details: -
Fire Policy Number
Coverage Particulars
Sum Insured
Period of Coverage
Payment of
premium as
assessed by the Insurance Policy
10039
Stock of raw materials, semi
finished goods and finished goods
1,20,00,000
20.05.1998
to 19.05.1999
Rs.57,456/-
06464
Increase in the
storage value of stocks-in-trade
from Rs.1.20 crores to 1.45 crores
Rs.25,00,000/-
04.08.1998
To 19.05.1999
Rs.11,970/-
10933
Building, Machine
and accessories
Rs.23,25,000
04.08.1998
To
Rs.17,716
Rs.13,75,000
03.08.1999
The case of the Complainant is that on 15.11.1998, at about 6:00 pm, fire broke out in the Building of the Plant when the manufacturing process of rotating the stirrer inside the mixer was going on. The fire was either due to short circuit or static electricity. All raw materials, semi-finished & finished goods, packing materials, machineries & accessories and office records such as stock, purchase & sales register and other documents and accounts lying in the building of the factory were completely burnt. The Building was also extensively damaged in fire. On 16.11.1998, FIR was lodged in the local Police Station and the Insurance Company was also intimated about the fire incident. The Opposite Party appointed M/s C.P. Mehta and M/s B.P. Shah & Associates as Surveyors. The Surveyors inspected the site of fire on 17.11.1998. All the required documents and information was provided to the Surveyor. The Opposite Party also appointed Loss Prevention Association (LPA) to investigate the matter, who visited the Plant on 07.02.1998 and observed that the raw materials, semi-finished, finished goods and packing material were fully damaged along with extensive damage to the Building, Machinery and Fittings and assessed the loss to the tune of Rs.1.5 crores. On 26.11.1998, The Opposite Party also deputed Tariff Advisory Committee (TAC) to carry out the investigation, who observed heavy damage to the Building, electrical installation, Stocks and Plant & Machinery. The Opposite Party also deputed C.P. Mehta & Co. and B.P. Shah & Associates as Surveyors and Loss Assessors, who submitted their final report dated 18.07.2002. The Complainant lodged the claim, vide letter dated 09.12.1998. Thereafter, the Complainant, vide letter dated 13.02.1999, sent a revised claim of Rs.1,63,19,035.37 to the Opposite Party. The Surveyor, vide letter dated 16.11.2000, asked the Complainant to furnish final claim after affecting the deductions allowed by the Central Excise Department. The Complainant, vide letter dated 23.11.2000, furnished final claim of Rs.1,59,68,010.07.
The Surveyor, vide Interim Report dated 04.03.1999, observed that the entire stock of raw material, semi-finished goods, finished goods and packing material was severely burnt and that the buildings was severely damaged and needed replacement. The Surveyor also recommended interim part payment of Rs.40 lakhs, which the Opposite Party failed to do. The Complainant, vide letter dated 25.06.1999 also requested the Opposite Party to expedite release of interim payment of Rs.40 lakhs but the Opposite Party did not do anything. The Complainant, vide letter dated 29.09.1999 again requested the Opposite Party to release interim payment of Rs.40 lakhs and direct the Surveyor to submit the Final Survey Report. The Opposite Party, however, vide letter dated 16.12.2003, offered to settle the claim at Rs.70,49,242/- towards full and final settlement of the claim. The Complainant disputed the amount arrived at by the Opposite Party. The Opposite Party also delayed settlement of the claim. Alleging deficiency in service on the part of the Opposite Party, the Complainant approached this Commission with the following prayer:-
“(a) Direct the respondent to pay a sum of Rs.163 lacks towards the loss incurred in the fire accident along with interest @ 18% p.a. from the date of accident till payment.
(b) Direct the respondent to pay a compensation of Rs.300 lacks due to inordinate delay in finalization of loss claim, the complainant had to forgo its business, goodwill, production could not be restarted and thereby financial loss to the complainant has accumulated which comes to approximately Rs.300 lacks due to increase in liabilities
(c) Direct the respondent to pay a sum of Rs.300 lacks due to stoppage of production of the Vasai plant, the other plant at Chiplun had also suffered heavily without due support from the Vasai plant and
(d) pass such other and further order or orders as may be deemed fit and proper in the facts and circumstances of the case on record.”
The Opposite Party resisted the Complaint by filing the written statement on the ground that the Complaint was barred by limitation as it was filed after six and half years from the communication of the final settlement of the insurance claim by the Insurance Company on 16.12.2003. It was also stated that the Complaint contained complicated facts which cannot be adjudicated in a summary proceeding under the Consumer Protection Act, 1986. It was averred that the Complainant was not a Consumer qua Opposite Party as the Insurance coverage was obtained by the Complainant to cover the risk for commercial purposes.
On merits, it was stated that the Opposite Party approved a sum of Rs.70,49,242/- towards the full and final settlement after examining the Survey Report, terms & conditions of the Policy and records. The Surveyor, after inspection of the site and verification of relevant documents furnished by the Complainant, assessed the loss at Rs.68,84,071/- and there was no unreasonable deduction as alleged by the Complainant. The Opposite Party, however, had approved and offered an amount of Rs.70,49,242/- towards the full and final settlement of the claim. The Complainant, vide letter dated 30.08.2007, declined to accept the amount offered by the Opposite Party. The delay was caused because the stock registers were completely burnt in fire and the Complainant took time to supply the required information and documents from the old record as well as from the bank. There was no deficiency in service on the part of the Opposite Party and the Complaint was liable to be dismissed.
Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Complainant stated that after the Interim Survey, the Surveyor recommended to release Rs.40 Lacs to the Complainant as an interim payment till finalization of the assessment. The Opposite Party, however, never released any interim payment, rather the Surveyor and the Opposite Party kept seeking information even after providing all the documents. The Surveyor submitted the Final Survey Report, dated 18.07.2002, after a period of nearly 4 years from the date of loss. The Final Survey Report was never supplied to the Complainant. The Report recorded the Complainant’s claim of Rs.1,59,68,010/-. The Opposite Party, however, reduced the claim to Rs.70,49,242/- without any justification. Learned Counsel submitted that the Surveyor erred in applying depreciation @ 32.21% and @ 75% respectively towards Building and Machinery. The Final Survey Report, dated 18.07.2002, was stated to be ante-dated as the Surveyor kept on asking for documents and information from the Complainant, vide letters dated 11.11.2002, 19.12.2002. 26.12.2002. 20.01.2003, 05.02.2003, 14.02.2003 and 25.02.2003. Also, ‘Schedule II’ in the Final Survey Report, detailing the loss assessment/deductions/reasoning qua stocks, was neither attached to the Final Survey Report nor was it filed by the Opposite Party. After a delay of four years, the Opposite Party, vide letter dated 16.12.2003, offered a sum of Rs.70,49,422/- to the Complainant towards full and final settlement subject to certain conditions. The Complainant, vide its letter dated 09.02.2004, communicated its non-acceptance of offer to the Opposite Party. It was submitted that as the Bank was jointly insured in the Policy, the Complainant, even otherwise, could not have accepted the offered amount unilaterally. It was also stated that the Policy was issued on reinstatement value basis, despite that the Surveyor carried out the assessment of loss of Building and Machinery by both methods, i.e. Reinstatement Value Basis and Depreciated Value Basis and recommended payment on Depreciated Value Basis on the ground that the Complainant failed to carry out the reinstatement. The Complainant was always ready and willing to carry out the reinstatement and restart its Plant, however, due to acute financial crunch and the failure of the Opposite Party in releasing Rs.40 lacs as an interim payment, the Complainant was unable to do so. The Surveyor's assessment of loss to Building and Machinery on Depreciated Value Basis was, therefore, unjustified and illegal.
Learned Counsel for the Opposite Party submitted that the Complaint was barred by limitation as it was filed after six and half years from the communication of the final settlement of the insurance claim in question by the Insurance Company on 16.12.2003. He also submitted that the dispute between the parties cannot be decided in summary proceedings under the Consumer Protection Act, 1986. It was further submitted that the Complainant was not a Consumer qua Opposite Party as the Insurance coverage was obtained by the Complainant to cover the risk for commercial purposes.
Learned Counsel for the Opposite Party submitted the Surveyor, without any delay, proceeded with the assessment of loss. The delay was caused because the Complainant was taking time in supplying the required information and documents to the Surveyors in order to ascertain the actual position of stock on the date of fire. The Complainant was also seeking settlement of claim on reinstatement basis in respect of damages to the Building and Machinery but despite having sufficient time and opportunity of about 3 years, the Complainant failed to reinstate the damages and as a result thereof, the Surveyors could not finalise the Survey Report. The Surveyor had been in constant touch with the Complainant during the entire process of Survey and final assessment. The issuance of Survey report was kept in abeyance due to the prolonged debate and negotiations with the Insured. It was also mentioned in the Final Survey Report that since the repairs and replacement was not carried out, the loss of plant and machinery was assessed on a depreciated value basis. There was, thus, no unjustified and deliberate delay on the part of the Surveyor in submitting the Final Survey Report dated 18.08.2002. After receipt of the Final Survey Report, the Opposite Party examined all relevant documents including the Survey Report and the Policy Terms and Conditions and sought approval of the competent authority for settlement of the claim. As soon as the Opposite Party received the approval of the competent authority, the Opposite Party requested the Complainant for the settlement of the Insurance claim at Rs.70,49,242/-. The Complainant did not accept the amount. The allegation of the Complainant that the Opposite Party, even after lapse of 9 years failed to indemnify the actual loss on some ground or the other is absolutely false.
It is admitted by the Parties that on the date of incident of fire, the Insurance Policy was in force. The incident of fire was also not disputed by the Parties. The only dispute relates to the quantum of loss and the delay in filing and settlement of claim.
As far as maintainability of the Complaint is concerned, this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] held that a contract of Insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon’ble Supreme Court, the Complainant is a “Consumer” and the Complaint is maintainable.
Another contention of Opposite Parties that the Complaint contains complicated facts which cannot be adjudicated in a summary proceeding under Consumer Protection Act, 1986. Reliance is placed on the observation made by Hon’ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd., Appeal (Civil) 7228 of 2001 wherein it was held as follows:
“It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved.”
From the facts and circumstances of the case, it is seen that there are no complicated questions of fact and law involved in this case, which cannot be decided by this Commission. Moreover, as held above by Hon’ble Supreme Court, involvement of some questions of fact and law cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved. This Commission is, thus, competent to adjudicate the instant Consumer Complaints.
The Opposite Party also challenged the Consumer Complaint on the ground of limitation. The Complainant filed the copies of the letters dated 20.03.2006 and 11.06.2007 issued by the Insurance Company to the Complainant asking the Complainant to accept an amount of Rs.70,49,422/- towards full and final settlement, after signing the discharge voucher. Thereafter, the Complainant also sent letter dated 30.08.2007 to the Insurance Company for settlement of the claim in the right perspective. From the above, it is clear that there was continuing cause of action. The argument of the Opposite Party that the Consumer Complaint was barred by limitation is, therefore, rejected.
As far as cause of fire is concerned, the final Surveyor Report, dated 18.07.2002, mentioned that the fire was accidental. In this regard, para 8.4 of the Final Survey Report being relevant reads as follows: -
“It appears that there was a short-circuit in the cable of the stirrer machine in the manufacturing area and sparks generated ignited the combustible material nearby and the fire spread because of a lot of combustible material which was stored around. Under the circumstances, the cause of fire was deemed to be accidental.”
Tariff Advisory Committee appointed by the Opposite Party in its report dated 05.01.1999 also held that due to electrical-circuiting cannot be ruled out. Para 7 of the Tariff Advisory Committee Report reads as follows: -
“CAUSE OF FIRE: The cause of fire is not known. However, the fire due to electrical short-circuiting cannot be ruled out. The electrical installation in the block concerned does not comply with Committee’s regulations as only industrial type of electrical fittings (light fixtures, switch boards) etc. have been used throughout instead of flame proof fittings (except for stirrer motor which is of flame proof type) as required under the Committee’s Regulations for Electrical Equipment of Buildings.”
Loss Prevention Association of India, Mumbai in its report dated 07.12.1998 also observed that the fire occurred either by short circuit or by static electricity. The Report reads as follows: -
“CAUSE OF FIRE
As per discussion held on 07.12.1998 with the Managing Director and the administrative officer who was an eye witness of the incident, the fire occurred due to short circuit or by static electricity. Discussion with the supervisor could not be done due to his non-availability at the site on the day of visit.”
The Surveyor, Tariff Advisory Committee as well as Loss Prevention Association all the agencies were deputed by the Opposite Party. All of them observed that the cause of fire was accidental. It is, thus, established that the fire was accidental.
The Complainant also alleged that the Surveyor submitted the Final Survey Report after more than three and a half years. The Opposite Party stated that the Complainant itself was asking for extension of time to reinstate the damage, due to which the Surveyor could not complete the Survey Report. It is the case of the Complainant that the record was burnt in the fire and they had to prepare the record again, which took time. The Surveyor had recorded these facts in his Final Survey Report. In para 1 (xlvi) of the Complaint, it is admitted by the Complainant that they sought extension of time for reinstatement upto 31.12.2002 which was denied by the Opposite Party, vide letter dated 26.03.2002. The Surveyor has also given reasons for delay in submitting the Final Survey Report. In the Survey Report, it is stated that “for a long time, at the Insured’s request, the issuance of the Survey Report was held in abeyance. The Insurers had also given notice to the Insured in the matter.” It is, thus, clear that the delay in submitting the Final Survey Report was caused due to the Complainant. The allegation of the Complainant that the Survey Report was delayed by the Surveyor is, thus, rejected.
The only issue relates to the quantum of loss. The Complainant contended that the Surveyor had not assessed the claim on reinstatement value, but on Depreciation. The Surveyor had given reasons for not assessing the loss on Reinstatement Value and the reason for adopting Depreciation method to arrive at his assessment of loss. The Complainant contended that they could not reinstate the damage during the time the Survey Report was pending. It was observed that since the repairs/replacements had not been carried out, the loss of plant and machinery had been assessed on depreciated value basis. We have no reason to differ from the findings of the Surveyor for adopting Depreciation method for assessment of loss. The LPA Report dated 15.11.1998 stated that “as per the insured and the preliminary survey report, the loss is around Rs.1.50 lakh.” There is no independent finding in the LPA Report nor any calculation for assessment of loss is given. For the purpose of assessment of loss, the LPA Report cannot be relied.
Similarly, Tariff Advisory Committee in its report dated 05.01.1999 observed as follows: -
“There was heavy damage to building, contents, electrical installation, plant & machinery and stock. As per insurers letter of 26/11/98, the estimated loss was indicated as Rs.2 crores.”
Regarding assessment of loss, Tariff Advisory Committee had not given any opinion nor had they given any calculation of loss. For assessment of loss, we are left with only Final Survey Report dated 18.07.2002 of C.P. Mehta & Co. and B.P. Shah & Associates. They had made assessment of loss in detail. In the Survey Report, it was stated that the site was examined and details of loss were carefully noted. Relevant bills and invoices as well as quotations for repair/replacement were examined carefully. After making thorough investigation, the Surveyor assessed the loss to the building at Rs.6,75,687/-, loss to the machinery at Rs.1,98,702/- and loss to the stock at Rs.68,84,071/-. The Surveyor assessed the value of the stock after deducting salvage. The Surveyor also clarified that since the repairs/replacements had not been carried out, the loss to the building and machinery was assessed on depreciated value basis. The total loss assessed by the Surveyor was at Rs.77,58,460/-. The Opposite Party offered an amount of Rs.70,49,242/- towards full and final settlement. The Opposite Party, however, had not given any reason to reduce the amount from Rs.77,58,460/- to Rs.70,49,242/-. The Final Survey Report dated 18.07.2002 is, in our view, justified. The Complainant failed to produce any evidence to prove that the Final Survey Report was incorrect or unjustified.
Moreover, the report submitted by a Surveyor is an important piece of evidence and has to be given due weight, though it is not sacrosanct and can be ignored, provided there is cogent evidence otherwise. In the present case, the Complainant did not lead any evidence disproving the report submitted by the Surveyor. In the absence of any evidence to the contrary, the report submitted by the Surveyor of the Insurance Company is to be accepted. Hon’ble Supreme Court in the case of Khatema Fibres Ltd. vs New India Assurance Company Ltd., 2021 SCC Online SC 818 held as follows:-
“38.A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor’s report to forensic examination of its anatomy, just as civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop.”
In view of aforesaid discussions, the Complaint is partly allowed. We direct the Opposite Party to pay Rs.77,58,460/- to the Complainant alongwith interest @ 6% p.a. from the date of filing the Complaint till realization. Order be complied in 2 months failing which interest be paid @ 9% per annum. No order as to costs.