M/s Sleepins Apparels Pvt. Ltd vs M/s Bajaj Allianz Insurance Co. Ltd

Heard Mr. Kunal Sharma, Advocate, for the complainant and Mr. Joy Basu, Sr. Advocate, assisted by Mr. Prantar Basu Choudhury, Advocate, for opposite party-1.

M/s. Sleepins Apparels Private Limited (the Insured) has filed above complaint, for directing M/s. Bajaj Allianz Insurance Company Limited (the Insurer) to pay (i) Rs.192477496/- with interest @18% per annum from the date of loss till the date of payment, towards their insurance claim; (ii) suitable compensation for loss of business, mental agony, harassment; (iii) litigation costs; and (iv) any other relief which is deemed fit and proper in the facts and circumstances of the case.

The complainant stated that M/s. Sleepins Apparels Private Limited (the Insured) was a company, registered under the Companies Act, 1956 and primarily engaged in the business of manufacture, wholesale, retail sale and export of all kind fabrics, children, men and women clothing and wearing apparels. The Insured established its garment factories i.e. Unit-1 at Gat No.2338 and Unit-2 at Gat No.2333, Ubalenagar, Wagholi, Pune and more than 25 outlets and showrooms in various cities of the country. The Insured availed financial assistance of term loan and cash credit facilities from Union Bank of India and IDBI Bank Limited (OP-2 and 3). M/s. Bajaj Allianz Insurance Company Limited (the Insurer) was an insurance company and used to provide insurance services to general public. The Insured obtained “Standard Fire and Special Peril Policy” No.OG-09-2001-4001-00011148, for a period of 30.01.2009 to 29.01.2010, for a sum of Rs.20050000/-, (i.e. Rs.10000000/- for the Building, Rs.7500000/- for Plant & Machinery and Rs. 2550000/- for FFF) and “Floater Standard Fire and Special Peril Policy” No.OG-09-2001-4006-00000003, for a period of 30.01.2009 to 29.01.2010, for a sum of Rs.210000000/-, on stock of various locations and two burglary policies from the Insurer. In the factory situated at Gat No.2333, Ubalenagar, about 150 employees used to work from 10:00 hours in morning till 19:00 hours, daily. In night hours, the factory used to be closed. On 20.03.2009 at about 19:55 hours, Nilesh, the watchman at the factory situated at Gat No.2333, Ubalenagar, Wagholi, Pune, noticed smoke emanating from the factory premises. He immediately informed Nishant Kishor Chhabria, Managing Director, on his mobile phone about the incident. Who immediately informed Fire Service Station on the phone, from where four fire tenders were deputed on the spot, who could control the fire in about 6:30 hours. Due to devastating fire at the factory premises, top floor of the building collapsed, causing material damage to the Building, Plant & Machinery, Fixture Furniture Fitting and Stock was totally burnt. The Insured informed about the incident to Police Station Lonikand, who registered the case. The Insured informed about the incident and loss to the Insurer on 21.03.2009, who appointed Parimal R. Shah & Company & J.C. Bhansali & Company, Mumbai, as the joint surveyor, who inspected the location of fire on 21.03.2009 and recorded statement of the witnesses. The surveyor instructed to segregate the debris and asked for various papers, vide letter dated 22.03.2009. Thereafter, the surveyor again visited the factory premises on 22.03.2009, 24.03.2009 and 26.03.2009 and prepared inventories. As desired, the Insured submitted claim form, claiming loss of Rs.6400000/- for building, Rs.1832224/-, for plant & machinery, Rs.125000/- for FFF and Rs.182989272/- for stock (total Rs.192477496/-). Stocks were hypothecated to the banks (OP-2 and 3) as such, the Insured used to submitted statement relating to stock to the banks in every month and the banks used to verify it. The Insured gave statement of stocks as maintained by the banks, audited accounts, tax record etc. As the documents relating to purchases from third parties, invoices, bills, challans, transport receipt/delivery, the registers kept at factory premises etc. were burnt, it could not be produced. As desired, the Insured gave names, addresses of the third parties, suppliers of the materials to the surveyor. The surveyor and the Insurer went on demanding duplicate copies of the Invoices and bills from the suppliers. In collecting duplicate copies of the Invoices and bills from the suppliers, the Insured took about 8 months and supplied it. The surveyor assessed loss of the building, plant & machinery and FFF for Rs.70.62 lacs on 26.10.2009 and sought for consent of the Insured for settlement of the claim in this respect, which was given by the Insured as the Insured was in need of money. The surveyor asked the documents relating to the stock, as per list provided by him. A meeting was held with the surveyor, the Insurer, the bankers and the Insured, in which the surveyor and the Insurer insisted to supply the lorry receipts of Roshwill Enterprises. As Roshwill Enterprises has shifted its office, it took time for the Insured to trace its new office and obtained the required documents. The Insurer appointed Mr. Shirish Rautraya, as an Investigator on 09.12.2009. The Insured submitted all set of documents relating to the stock to the Investor. Thereafter, the surveyor assessed the loss of the stock for Rs.82/- lacs on 12.03.2010. We raised an objection to the assessment of loss for the stock. However, without considering the objection, the Insurer, vide letter dated 26.06.2010, repudiated the claim, holding that some of the documents submitted by the Insured were not found as genuine by the Investigator. The surveyor, not only verified the loss and damages but also prepared inventories after segregation of burnt/ half burnt stocks. From statement of stocks as maintained by the banks, audited accounts, tax record etc. and the inventories prepared by the surveyor loss of the stock for about Rs.20/- crores was proved. The surveyor found the claim to be genuine. The Investigator’s report has not been supplied to the Insured. Despite having furnished all possible conceivable information, the claim of the Insured was previously delayed in processing and subsequently repudiated by taking another report from the Investigator. The service of insurance is of the nature of benevolent intention to mitigate the probability arising out of unforeseen contingencies. It extends the protection in the areas/situation where human faculty refuses to treat. Insurance provides a succour to a distraught mind and body ravaged by the inclement circumstances and is grounded on the premises of “uberrima fides”. It is incumbent upon the Insurer to process and assess the loss and not to find out a ground to repudiate the claim. In the present case, by delaying unreasonably and appointing an Investigator, the Insurer has not acted in good faith. There was no reason to disbelieve audited statement of account as well as statement of stock as maintained by the bank. On these allegations, the complaint was filed in September, 2010.

M/s. Bajaj Allianz Insurance Company Limited (the Insurer) filed its written reply on 30.01.2013 and stated that as soon as the Insurer received information of the loss, it appointed Parimal R. Shah & Company and J.C. Bhansali & Company, Mumbai, as the joint surveyor, who inspected the location of fire on 21.03.2009 and recorded statement of the witnesses. The surveyor instructed to segregate the debris and asked for various papers, vide letter dated 22.03.2009. Thereafter, the surveyor again visited the factory premises on 27.03.2009, 03.04.2009, 13.04.2009, 12.05.2009, 23.05.2009, 29.06.2009, 14.07.2009, 13.08.2009, 19.09.2009 and 10.10.2009 gave reminders for the papers. The Insured, themselves delayed in supplying the requisite papers for assessment of the loss. The surveyor submitted Final Survey Report dated 31.10.2009, in respect of building, plant & machinery and FFF, assessing loss of Rs.7062357/-. The surveyor mentioned that the Insured had another Fire policy from M/s. Cholamandalam MS General Insurance Company Limited, which according to them, they had requested for its cancellation after loss. The surveyor vide letter dated 19.11.2009 requested the Insured and its bankers to provide details of inspection, carried out in respect of stock. Union Bank of India, vide letter dated 24.11.2009 and IDBI Bank, vide letter dated 10.12.2009, informed that item-wise verification of the stock was not done by them. A joint meeting was held with the Insured and its bankers on 11.03.2010, in which, the surveyor informed that M/s. Roshvill Enterprises, M/s. Carleen Fabric Private Limited, Kay Enterprises, Ashish Tex Address, M/s. R.K. Traders, M/s. Kemarv Fabrics, M/s. P. Rangalia, M/s. Badresh Trading Corporation, M/s. H.J. Textile, whose Invoices were given by the Insured were traceable. The surveyor again vide letter dated 31.03.2010, asked the Insured to supply, where about of the aforesaid traders but it were not supplied. The Insured then asked for volumetric analysis but later on raised objection in this respect also. Insurance policy for the stock was a floater policy, which required for giving due information of the stock at various locations to the Insurer. Purchase and Sale registers are necessary documents for assessing the stock. So far as bank’s record relating to statement of stock, it was found by the surveyor that it was never verified physically by the banks officers. The Insured claimed loss for the stock of Rs.182989272/-. It was incumbent for them to prove this loss by producing documents relating to its purchase. Since the documents submitted by the Insured were found as fabricated, the Insurer vide letter dated 26.06.2010, repudiated the claim, invoking clause-8 of General Terms and Condition of the policy. The surveyor submitted Final Survey Report dated 30.06.2010, in respect of stock, assessing the loss to Rs.8281750/-, mentioning therein that the Insured has submitted the Invoices from the parties which are not in existence. The sales tax numbers appearing on the bills of the majority of the suppliers are not in existence. The Insured submitted LRs of a transporter M/s. Roshvill Enterprises, which was not in existence. Limit of sum insured was enhanced by Rs.9/- crores, 7 days before the incident. The Insurer appointed Thee Escorts Investigator, Mumbai for investigating into the documents of the Insured, who submitted its report dated 21.12.2010 that existence of the trading companies were not traced on the addresses in the bill/Invoices. The Insurer appointed SPH Services Private Limited, Pune again as an Investigator on 03.06.2013 to verify the bills/Invoices and LRs produced by the Insured, who also submitted its report dated 19.08.2013, that existence of the trading companies were not traced on the addresses in the bill/Invoices. The complaint raises complicated issue of facts, which cannot be adjudicated in exercise of summary jurisdiction. The complainants are not consumer as the policies were obtained for commercial purposes. There was no deficiency in service on their part. The complaint has no merit and liable to be dismissed.

The Insured filed Rejoinder Reply, Affidavit of Evidence of Kishor Chhabria, Additional Affidavit of Rajkumar Hemdev and documentary evidence. The Insurer filed Affidavits of Evidence of Amit Wadhwa Deputy Manager, Monoj John Jiviam, Senior Manager, Parimal R. Shah, the surveyor, J.C. Bhansali, the surveyor, Shirissh Raautraya, proprietor of Thee Escorts and documentary evidence. Both the parties have filed their written arguments.

We have considered the arguments of the counsel for the both the parties and examined the record. The Insured obtained “Standard Fire and Special Peril Policy” No.OG-09-2001-4001-00011148, for a period of 30.01.2009 to 29.01.2010, for a sum of Rs.20050000/-, (i.e. Rs.10000000/- for the Building, Rs.7500000/- for Plant & Machinery and Rs. 2550000/- for FFF). The surveyor submitted Final Survey Report dated 31.10.2009, in respect of building, plant & machinery and FFF, assessing loss of Rs.7062357/-. As per order of Bombay High Court passed in Writ Petition No.5697 of 2010 dated 08.04.2011, the Insured executed voucher relating to full and final satisfaction and this amount was paid by the Insurer vide cheque No.763297 dated 18.04.2011 as such the claim in this respect is finally settled.

The Insured obtained “Standard Fire and Special Peril Policy” No.OG-09-2001-4006-00000003, Floater Declaration, for a period of 30.01.2009 to 29.01.2010, for a sum of Rs.210000000/-, on stock at various locations (List of locations has not been filed). Sum insured was enhanced to Rs.30/- crores, seven days before the fire incident. According to the Insured, it had two factory premises and 25 outlets and showrooms in different cities of the country. From the plaint of OA No.135 of 20010 filed by OP-2 and 3 before Debt Recovery Tribunal, Pune, it appears that Union Bank of India sanctioned Term Loan of Rs.65/- lacs and Cash Credit Facility of Rs.9/- crores to the Insured on 19.12.2008 and IDBI Bank sanctioned Cash Credit Facility of Rs.10/- crores on 24.01.2009. Present claim relates to loss occurred at Factory Unit-2 at Gat No.2333, Ubalenagar, Wagholi, Pune on 20.03.2009 due to fire. The Insured claimed loss of Rs.182989272/- for stock. The Insurer vide letter dated 26.06.2010, repudiated the claim, invoking clause-8 of General Condition of the policy.

In order to prove the loss the Insured supplied (i) Audited accounts for last two years, (ii) last two sales tax return, (iii) stock statement submitted to the banks for last one year, (iv) Sale & Purchase registers, (v) copies of purchase invoices, (vi) Lorries receipts, (vi) Bifurcation of goods meant for trading and manufacturing, and (vii) details of the goods rejected. The joint surveyors found that that the banks officers never verified the stock physically as such statement of stock was not considered for assessing loss. A joint meeting was held with the Insured and its bankers on 11.03.2010, in which, the surveyor informed that M/s. Roshvill Enterprises, M/s. Carleen Fabric Private Limited, Kay Enterprises, Ashish Tex, M/s. R.K. Traders, M/s. Kemarv Fabrics, M/s. P. Rangalia, M/s. Badresh Trading Corporation, M/s. H.J. Textile, whose LRs and Invoices were given by the Insured were untraceable.

After receiving Final Survey Report dated 30.06.2010, the Insurer appointed Thee Escorts Investigator, Mumbai for investigating into the documents of the Insured, who submitted its report dated 21.12.2010 that Kay Enterprises, M/s. P. Rangalia, C. Ashish Tex, M/s. Badresh Trading Corporation, M/s. H.J. Textile, Life Style, M/s. Carleen Fabric Private Limited and M/s. Kemarv Fabrics were not found in existence and were not traced on the addresses in the bill/Invoices. The Insurer appointed SPH Services Private Limited, Pune again as an Investigator on 03.06.2013 to verify the bills/Invoices and LRs produced by the Insured, who also submitted its report dated 19.08.2013, that M/s. R.K. Traders, M/s. Badresh Trading Corporation, C. Ashish Tex, M/s. Carleen Fabric Private Limited, M/s. H.J. Textile, M/s. Kemarv Fabrics, Kay Enterprises, M/s. P. Rangalia, Roshvill Enterprises and Priyank Fabs were not in existence not traced on the addresses in the bill/Invoices. Neither these trading companies were verified nor payment against their bills were proved. These witnesses have filed affidavits of evidence but the Insured did not cross-examine any witness. All these reports cannot be ignored.

Condition-8 of the General Condition of the policy is quoted below:-

“8. If the claim be in any respect fraudulent, or in any false declaration be made or used in support thereof or any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under this policy shall be forfeited.”

As large amount of the claim was based upon the Invoices, bills and LRs of the trading companies, which were not existing, as such, the Insurer has not committed any illegality in repudiating the claim, invoking Condition-8 of the General Condition of the policy. The complaint has no merit and it is liable to be dismissed.

ORDER

In view of aforesaid discussions, the complaint is dismissed.