NATIONAL INSURANCE CO. LTD. vs M/S. GANESH ENTERPRISES & ANR.

Challenge in this First Appeal, under Section 19 of the Consumer Protection Act, 1986, by the National Insurance Co. Ltd. (for short "the Insurance Company") is to the order dated 28.01.2009, passed by the State Consumer Disputes Redressal Commission, Union Territory at Chandigarh (for short "the State Commission") in Complaint No. 21 of 2008. By the impugned order, the State Commission has accepted the Complaint filed by Respondent No.1 herein, a proprietorship concern, alleging deficiency in service on the part of the Insurance Company in repudiating the claim, preferred by its proprietor for indemnification of the loss suffered by him on account of fire, which gutted his insured godown on 15.07.2007, on the ground that fraudulent means had been employed by submitting highly exaggerated purchase invoices in support of the quantity of the material purchased and claimed to have been destroyed in the fire. Accordingly, the State Commission has issued to the Insurance Company the following directions: (a) to pay to the Complainant a sum of Rs.95,728.80Ps as loss to the building;

(b) the amount of loss will be worked out on the basis of books and records, after allowing all sales and purchases for the relevant time period, including those from three concerns i.e. M/s Shakumbari Woollen Mill; Ganpati Woollen Mill and Mahalakshmi International;

(c) to pay interest @ 12% per annum from the date three months after the submission of the claim by the complainant on the amounts of Reliefs (a) and (b) above till actual payment, with clarification that the interest awarded @ 12% would also include compensation for mental and physical harassment caused to the complainant;

(d) to pay to the Complainant a sum of Rs.5,000/- as costs of litigation.

At the outset, Mr. Kishore Rawat, learned Counsel appearing for the Insurance Company, has submitted that the order impugned in the Appeal deserves to be set aside on the short ground that the Fora below deprived the Insurance Company of an opportunity to adduce evidence in support of its plea that the purchases, claimed to have been made by the Complainant from three concerns, namely, M/s Shakumbari Woollen Mill; Ganpati Woollen Mill; and Mahalakshmi International, were not genuine. It is pointed out that during the trial in the Complaint, two applications were filed by the Insurance Company for summoning the record of the Excise and Taxation Department (Sales Tax Office), Panipat, relating to the aforesaid three concerns, in order to verify as to whether or not the sales shown by the parties in their Sales-Tax Returns tallied with the certificates, issued by them to the Complainant in respect of the sales in doubt. However, vide order dated 19.11.2008, the said Applications were dismissed by the State Commission by passing the following order: "The rejoinder to written statements of OPs No. 1 to 3 and OP No.4 filed. Reply of the application for leading additional evidence also filed. Heard. There is no need to allow the application for additional evidence to get the sales tax record because the surveyor had taken note of the same in his report (OP-4/27) dated 16.1.2008, which was received by the Insurance Company on 29.1.2008 and the surveyor had discussed the discrepancies in detail. Thus, the application for summoning the sales tax record is dismissed. The parties have already filed their evidence by way of affidavits. Now be put for arguments on 22.12.2008. Written arguments be also filed."

In short, the submission of the learned Counsel is that on the one hand, the State Commission has come to the conclusion that the Surveyor has already examined and pointed out discrepancies in the returns, when compared with the sale certificates and, therefore, there was no need to summon the record of the Sales Tax Department, on the other the State Commission has rejected the opinion of the Surveyor in respect of these very sales.

Per contra, learned Counsel appearing for the Complainant submits that since sufficient evidence in the form of VAT certificates issued by the said concerns had been furnished in support of the purchases made, which were also verified by the Bank, no useful purpose would have been served by summoning the said records.

Since I am of the view that there is substance in the aforesaid preliminary submissions made on behalf of the Insurance Company, I deem it unnecessary to state the facts in detail, giving rise to the filing of the present Appeal.

As noted above, the sole ground for repudiation of the claim by the Insurance Company was that the Surveyor had doubted the genuineness of the purchases by the Complainant from the said three concerns, as the sales reflected in the invoices produced by the Complainant did not tally with the sales shown by them in their Returns filed with the Revenue Authorities. Therefore, before arriving at the final conclusion on the genuineness or otherwise of the subject purchases, both the parties were required to adduce evidence in support of their respective grounds. That being so, in my view, the Insurance Company was justified in moving the applications for summoning of the afore-stated records from the Revenue Authorities. In that view of the matter, I am of the opinion that the State Commission erred in rejecting the said applications and, thus, denying to the Insurance Company to substantiate the observations in the report dated 16.01.2008 by the Surveyor, namely, M/s Consolidated Surveyor Pvt. Ltd., to the effect that when they visited Excise & Taxation office at Panipat and tried to verify the VAT returns submitted by the Insured (Complainant) of different suppliers, they were astonished to find that some of the returns were entirely different from those provided by the Insured and that the sales by the said parties, stated to have been made to the Insured, as recorded in the copies provided to them, were not at all reflected in the returns filed by the said parties with the said Department.

For the aforegoing reasons, the Appeal is allowed; the impugned order is set aside; and Complaint Case No. 21 of 2008 is restored to the Board of the State Commission for fresh adjudication, after affording due opportunity to both the parties to adduce additional evidence in support of their respective stands, relating to the genuineness of the purchases from the aforesaid three concerns. If the prayer made in the said applications is still pursued by the Insurance Company, the State Commission may summon the record from Excise & Sales Tax Department. Needless to clarify, the production of the records would be the responsibility of the Insurance Company.

It goes without saying that I have not expressed any opinion on the merits of the other grounds raised in the Appeal as also on the authenticity of the purchases claimed to have been made by the Complainant from the aforesaid three concerns. The deposit of 6,00,000/- stated to have been made by the Insurance Company, in terms of order dated 26.05.2009, if not already withdrawn by the Complainant, shall continue to remain in a Fixed Deposit Receipt and shall abide by the final result in the Complaint.

Since the Complaint was filed as far back as in the year 2008, the State Commission is requested to decide it as expeditiously as practicable. The parties/their Counsel are directed to appear before the State Commission on 03.10.2017 for further proceedings.

The statutory deposit made by the Insurance Company at the time of filing the Appeal shall stand transferred to the Consumer Welfare Fund by way of a Bank Draft drawn in favour of PAO, Ministry of Consumer Affairs, New Delhi. The Appeal stands disposed of in the above terms, leaving the parties to bear their own costs.