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Judgment
V.K. Jain, J
The complainant company, which is engaged in the business of manufacturing drugs and pharmaceuticals at Thol, in District Mehsana in Gujarat, obtained two insurance policies from the OP, one in respect of the building, plant, machinery and installations of its factory at Thol and the other in respect of the stock of raw material, packing material, store consumables etc., for the period from 01.04.2009 to 31.03.2010. A fire broke out in the factory of the complainant on 25.07.2009, during the currency of the said insurance policies, resulting in substantial damage to the building, fittings & fixtures and stock etc. M/s A.M. Patel Surveyors Pvt. Ltd. was appointed by the insurer to assess the loss suffered by the complainant in the said fire. Vide its report dated 14.12.2009, M/s A.M. Patel Surveyors Pvt. Ltd. assessed the net loss to the complainant at Rs.66,62,249/-. The complainant however, was not satisfied with the said assessment and wrote letters dated 25.03.2010 and 27.03.2010 expressing its dis-satisfaction and claiming that the net loss to the complainant in respect of the stock itself was Rs.168.78 lacs. Thereupon, the insurer appointed M/s J. Basheer & Associates Surveyors Pvt. Ltd. to carry out re-assessment of disputed items of stock lost in the fire. Vide their report dated 23.11.2010, M/s J. Basheer & Associates Surveyors Pvt. Ltd. assessed the net loss to the complainant at Rs.1,52,47,793/- including the loss on account of damage to the building, furniture, fixtures and fittings.
The summary of the assessment made by M/s A.M. Patel Surveyors Pvt. Ltd. reads as under:
8.0 SUMMARY OF ASSESSED LOSS
Building
F.F.F.
Stocks
TOTAL
Allowable Loss
525900
631879
5898528
70,53,307.00
Less: Salvage
11844
147084
54664
2,13,592.00
Add: Fire Brigade Charges
19,000.00
Add: Debris Removal
12,000.00
Net Assessed Loss
51406
497553
5843864
68,73,715.00
Less: Depreciation
105180
84229.47
0
1,89,409.47
Less: Under Insurance
NIL
12389.85
NIL
12,057.02
Less: Excess
10,000.00
Net Payable Loss
66,62,249.00
The summary of the assessment made by M/s J. Basheer & Associates Surveyors Pvt. Ltd. reads as under:
Particulars
Building(Rs.)
F.F.F. (Rs.)
Stock (Rs.)
TOTAL (Rs.)
Gross Assessed Loss
5,25,900
6,31,879
1,44,84,072
1,56,41,851
Less: Depreciation
1,05,180
84,229
0
1,89,409
4,20,720
5,47,650
1,44,84,072
1,54,52,442
Less: Salvage
11,844
1,47,084
54,664
2,13,592
Assessed Loss:
4,08,876
4,00,566
1,44,29,408
1,52,38,850
Less: Under Insurance
NIL
12,057
NIL
12,057
Assessed Loss after U.I.:
4,08,876
3,88,509
1,44,29,408
1,52,26,793
Add: Debris Removal
12,00
Add: Fire Brigade Charges
19,000
1,52,57,793
Less: Excess
10,000
1,52,47,793
Vide letter dated 12.12.2011, the insurer offered a sum of Rs.1,13,95,705/- to the complainant. The said offer being not acceptable to the complainant, it has approached this Commission by way of this Consumer Complaint with the following prayers:
Grant permission, under section 12(c) to the complainant in the interest and benefit of the complainant.
Claim towards actual loss under policy no.301900/11/09/3300000009 of the opposite party - Rs.1,59,70,296/-.
Claim towards actual loss under policy No.301900/11/09/3300000008 of the opposite party - Rs.30,09,624/-.
Claim towards mental trauma caused due to negligence and deficiency in service - Rs.25,00,000/-
Claim towards loss of profits - Rs.25,00,000/-
Interest @ 18% per annum on (B) & (C) from 25.07.2009 till date of disposal of the instant complaint.
During the course of hearing, the learned counsel for the complainant stated on instructions that the complainant is ready to accept the assessment made by M/s J. Basheer & Associates Surveyors Pvt. Ltd. and accept a sum of Rs.1,52,47,793/- inclusive of the amount already received by it during the pendency of this complaint alongwith appropriate interest on that amount.
The first question which arises for consideration is as to whether the assessment made by M/s J. Basheer & Associates Surveyors Pvt. Ltd. should be accepted or it should be rejected. The contention of the learned counsel for the insurer is that M/s J. Basheer & Associates Surveyors Pvt. Ltd. was appointed only for the purpose of re-working the cost of the material consumed by the complainant between 01.04.2009 till the date of fire and therefore, it was not mandated to make a fresh assessment of the loss suffered by the complainant. However, there is no document on record to prove that M/s J. Basheer & Associates Surveyors Pvt. Ltd. was appointed only for the limited purpose of re-assessment of the material which was consumed by the complainant during the above referred period. On the other hand, the report of M/s J. Basheer & Associates Surveyors Pvt. Ltd. clearly shows that they were appointed for the purpose of working out re-assessment of disputed items of stock lost in the fire. Moreover, an internal letter written by the Chief Manager to the Deputy General Manager, A.R.O., Ahmedabad would show that it was proposed to appoint M/s J. Basheer & Associates Surveyors Pvt. Ltd. to give the expert opinion on the assessment of stock of packing material. The insurer, on receipt of the report of M/s J. Basheer & Associates Surveyors Pvt. Ltd., did not write to them claiming therein that the report submitted by them was beyond the mandate given to them and that they were required only to re-work the value of the packing material which had been consumed by the complainant between 01.04.2009 and the date on which the fire took place.
On a perusal of the assessment made by M/s J. Basheer & Associates Surveyors Pvt. Ltd., I find that the said assessment is based upon the gross assessed loss of the building, FFF and the stock, the applicable depreciation and salvage. The table on the internal page 54 of the report of M/s J. Basheer & Associates Surveyors Pvt. Ltd. would show that the stock of the damaged packing material was taken at basic price and taxes etc. were added to the said cost. Thereafter, cost of damaged consumables was added to the aforesaid items, arriving at a sub-total of Rs.1,58,40,877/-. Thereafter, the surveyor made deductions on account of material returned from job workers, value of quantity drawn as samples, deduction towards obsolenc etc. and value of salvage. In this manner, he assessed the net loss in respect of the stock at Rs.1,44,29,408/-. After deducting depreciation and salvage, and adding the loss to the building and FFF, he added the cost of debris removal and fire brigade charges. Thereafter, he deducted policy excess of Rs.10,000/- and came to a figure of Rs.1,52,47,793/- which he recommended for payment to the insured. Having appointed M/s J. Basheer & Associates Surveyors Pvt. Ltd. to re-assess the quantum of loss suffered by the complainant in respect of the stock of material, the insurer should accept the said assessment unless it is shown to be arbitrary or wholly unsustainable, based upon logical reasoning. That however, has not been done.
Coming to the report of M/s A.M. Patel Surveyors Pvt. Ltd., a perusal of the letter dated 19.09.2011 written by the complainant to the insurer would show that while computing the value of the consumed material, the surveyor took into account firstly the full product i.e. the syringe and then he also separately considered the components of the same product i.e. stopper, tips, rods, etc. of the syringes. This obviously was not correct since the pre-filled syringe would include all its components and therefore, there would be no justification for adding the value of the components to the value of the pre-filled syringe in order to work out the value of the consumed material. If the difference on the aforesaid account is taken into consideration, it will result in an addition of Rs.65,32,006/- to the assessment made by M/s A.M. Patel Surveyors Pvt. Ltd. Moreover, the same letter also shows that M/s A.M. Patel Surveyors Pvt. Ltd. did not take into account the excess material amounting to Rs.9.03 lacs which was returned by production, amount of Rs.12.81 lacs towards value of CENVAT and Vat Credit and Rs.15.37 lacs towards purchase value for sterile water. If these three items are added to the assessment made by M/s A.M. Patel Surveyors Pvt. Ltd. alongwith Rs.65,32,006/- on account of difference in the value of the consumed material, the aggregate would come to more than the net assessment made by M/s J. Basheer & Associates Surveyors Pvt. Ltd.
The learned counsel for the OP states that they have taken highest of the value of the whole product by taking the value of 0.5 ml syringes as well as value of 1ml syringes which has been valued at Rs.15,91,865/- and Rs.32,00,732/-. The aforesaid amounts, according to the learned counsel for the insurer, represented the maximum value of the material consumed by the complainant between 01.04.2009 and the date of fire. During the course of hearing, I asked the learned counsel for the insurer to show me the basis of taking Rs.15,91,865/- as the value of 0.5 ml syringe when according to the complainant, the value was Rs.12,28,642/-. No supporting document however, has been shown. Similarly, I asked the learned counsel to show to me how the value of 1 ml syringe was taken at Rs.32,00,732/- when according to the complainant, its value was only Rs.18,14,437/-. Again, no supporting document could be shown to me. The learned counsel for the insurer submits that the surveyor had recorded the cost of the consumed material at Rs.2,88,85,076/- on the basis of the figure given by Shefali B. Shah who was appointed as the Chartered Accountant by the Surveyor. However, even the certificate of Shefali B. Shah, Chartered Accountant which is available on page no. 166-167 of the paper-book in part-I Vol-II, does not indicate the cost of 0.5 ml syringe and 1 ml syringe.
Moreover, no justification has been shown for not including the value of the excess material returned by production which the surveyor considered as consumption, value of CENVAT and Vat Credit and the value of sterile water for injection. Therefore, in my opinion, neither the assessment made by M/s A.M. Patel Surveyors Pvt. Ltd. was satisfactory nor the insurer was justified in offering a sum of Rs.1,13,95,705/- to the complainant.
For the reasons stated hereinabove, I hold that the complainant is entitled to a sum of Rs.1,52,47,793/- inclusive of the interim payment made to him, pursuant to an interim order of this Commission. The complaint is therefore, disposed of with the following directions:
(i) The insurer/OP shall pay a sum of Rs.1,52,47,793/- - Rs.1,14,00,000/- = Rs.38,47,793/- to the complainant.
(ii) The OP shall pay interest @ 9% per annum to the complainant on the entire amount of Rs.1,52,47,793/- w.e.f. six months from the lodgment of the claim till the date on which the amount of Rs.1,14,00,000/- was paid to the complainant.
(iii) The OP shall pay interest @ 9% per annum to the complainant on the balance amount of Rs.38,47,793/- w.e.f. the date on which payment of Rs.1,14,00,000/- was made till the date on which the balance payment in terms of this order is made.
(iv) The entire payment shall be made by the insurer directly to the bank with whom the stock had been hypothecated by the complainant. The insurer will work out the amount payable to each bank and disburse payment accordingly. If however, the complainant is able to satisfy the insurer that all the outstandings of the banks stand paid and nothing remains payable to them, the entire payment in terms of this order shall be made directly to the complainant.
(v) The payment in terms of this order shall be made within three months from today.