AI Structured Summary
Not yet generated for this judgment
Judgment
This first appeal has been filed by the appellant National Insurance Co. Ltd. against the order dated 23.10.2013 of the State Consumer Disputes Redressal Commission, Punjab, (in short 'the State Commission') passed in Consumer Complaint No.43 of 2012.
Brief facts of the case are that on 14.03.2011, the respondent/complainant had taken a Standard Fire & Special Perils policy in respect of the stocks and other items for a total sum of Rs.50,00,000/-. Under the policy the stocks were insured for Rs.39,34,000/- and other items like plant and machinery for Rs.10,66,000/-. On 19.09.2011, there was a fire in the insured premises and on the intimation received by the appellant Insurance Company, N.Kumar Surveyors Pvt. Limited were appointed by the appellant company to survey and assess the loss. On 25.10.2011, the said surveyor visited the insured premises and carried out survey, inspection and called upon the insured to furnish the documents and information. Based on the records submitted by the insured, the said surveyors submitted their report on 25.10.2011. The surveyor after making detailed observations with regard to the records of the insured assessed the net loss at Rs.11,34,433/-. On 26.12.2011, on receipt of the report of the surveyor, the claim was processed by the appellant company and agreeing with the recommendations of the surveyor, the claim was approved for Rs.11,34,433/-.
Vide letter dated 26.12.2011 the complainant was informed that the competent authority has approved the claim for the said amount and the complainant was requested to return the discharge voucher to enable the company to release the payment. On 29.12.2011, the respondent complainant returned the discharge voucher duly stamped and signed for the sum of Rs.11,34,433/- in full and final settlement. On 04.01.2012, after receiving the payment, the respondent complainant sent a letter to the appellant stating therein that they are not satisfied with the amount and the said amount is taken under protest. On 31.05.2012, since the claim was approved by the appellant company as per the recommendations of the surveyor and further that the amount of Rs.11,34,433/- was accepted by the respondent complainant in full and final satisfaction, the appellant company informed the respondent complainant that no further amount can be paid. The complainant thereafter filed a complaint before the State Commission alleging that his claim of Rs.95,00,000/- has been wrongly approved for Rs.11,34,433/- and prayed that the balance amount may be paid to the complainant along with compensation, interest and cost. On 18.10.2012, the appellant Insurance Company filed their written statement to the complaint. It was pleaded that once the amount has been accepted by the complainant in full and final settlement no further claim lies. It was further submitted that the amount which has been approved by the appellant was strictly in terms of the assessment made by the surveyor and therefore, even otherwise the complainant is not entitled to any further amount.
The State Commission after considering the evidence and submissions of the parties allowed the complaint vide its order dated 23.10.2013 as under:-
"27. Sequel to the above discussion, the complaint filed by the complainant is accepted and the opposite parties are directed to pay to the complainant, a sum of Rs.60.00 lacs (Rupees Sixty Lacs) on account of loss suffered by the complainant due to the fire and Rs.1.00 lac (Rupees One Lac) as compensation and Rs.10,000/- (Rupees Ten Thousand) as litigation expenses, within 45 days of the receipt of copy of the order, failing which the entire amount shall earn interest @7.5% per annum from the date of loss till realization."
Hence the present appeal by the appellant Insurance Company.
Heard the learned counsel for the parties and perused the record.
The learned counsel for the appellant stated that the State Commission has not accepted the legal position that once the claim has been settled and the payment voucher has been signed by the insured as proof of full and final settlement, the insured has no right to further claim any amount beyond the settlement. The State Commission has not accepted the settlement as full and final perhaps on the ground that the voucher was not brought on record. The fact of discharge voucher is admitted by both the sides and therefore, this does not matter whether the voucher was filed by the Insurance Company or not. The clear legal position in this regard is that if claim has been settled between the insured and the insurer, the policy contract terminates and no further claim can be raised by the insured. In support of his arguments, the learned counsel referred to the following judgments:-
"(1)Unitted India Insurance Vs. Ajmer Singh Cotton & General Mills & Ors., II (1999) CPJ 10 (SC)
(2) National Insurance Company Ltd. Vs. Nipha Exports Pvt. Ltd., IV (2006) CPJ 17 (SC)"
It was further stated by the learned counsel for the appellant that the State Commission has not accepted the report of the surveyor basically on two grounds. First, that the surveyor has not considered the actual figure of purchase of material and secondly, the surveyor has not accepted the statement of stock submitted by the complainant to the bank. In this regard, the learned counsel stated that the surveyor has given clear reasons for not accepting the abnormal increase in purchase of material during the month of July and August, 2011. The surveyor has compared purchase from previous two years and has found that there has been abnormal increase in the purchase of stocks in two months prior to the accident whereas the sale has been slower in this period. The State Commission has erred in not appreciating the sound reasoning given by the surveyor for arriving at the figure of stock lost. In fact, most of material has been shown to have been taken on credit and as there was no vat on clothes, it was even not possible to verify the actual purchase. Had the payment been actually made by the cheques, same would have been verified. Thus, the State Commission has overlooked the reasons given by the surveyor for not accepting abnormal increases in purchase for July and August, 2011. Similarly, the statement of stocks submitted to the bank also becomes doubtful and there was also, an abnormal increase in the stocks for the last two months for the July and August, 2011. There was also an abnormal increase in creditors because most of the purchased stocks has been taken on credit. The complainant was not able to explain these abnormalities and therefore the surveyor has rightly not considered these documents.
The learned counsel for the appellant argued that the State Commission has reached to its conclusion to award Rs.60.00 lacs in addition to settlement amount of Rs.11,34,433/- without any proper reasoning and without any calculation in this regard. The learned counsel drew my attention to the paragraph 26 of the State Commission order which reads as under:-
"26. The complainant has claimed the loss of Rs.95,00 lacs, but the complainant has not placed on record any documentary evidence, but has relied upon the survey report only. The opposite parties have also relied upon the survey report Ex.C-16/EX.R-2. As per the Evaluation of Records and Financial Statement, the closing stock as on 19.08.2011 was of Rs.65.86 lacs and as per the stock value declared to the Muktsar Central Cooperative Bank, Muktsar, the value as on 31.08.2011 was Rs.66,58,694/- and as per the survey report, the stock held on trust was for Rs.3.02,000/-. The depreciated value of furniture, fixture, sewing machines, electrical appliances, computers, cameras, as per books of the insured as on 31.03.2011 was calculated as Rs.2,75,932/- by the surveyor. After calculating the various deductions and depreciation etc., in our opinion the compensation of a sum of Rs.60.00 lacs (Rupees Sixty Lacs) to the complainant will meet the interest of justice."
On the other hand, learned counsel for the respondent/complainant stated that IRDA has issued guidelines wherein it has been stated that even after signing the discharge voucher, if the insured is not satisfied, he can file a complaint for additional amount. It clearly means that there is no bar in filing the complaint even after taking the payment and signing the discharge voucher. The fact is that in the present case just after receiving the payment the protest letter was sent to the Insurance Company clearly stating inadequacy of the amount paid and request for paying the remaining amount was also made. When the Insurance Company did not respond properly, the complaint case was filed before the State Commission. The State Commission has passed a very exhaustive order considering all aspects of the surveyor report. The issue of stock is the main issue that needs to be considered and appreciated in the light of the documents filed by the complainant. The complainant has submitted all the bills for purchase of the stock including those purchased in July and August, 2011.
The surveyor has rejected purchase from MAHA Laxmi Textiles on the ground that this was a new purchase point and they would not give the material on credit. It was on the basis of present relationship that the firm had given stock on credit and there is no bar in purchasing stock on credit, nor stock purchased on credit is not to be covered under the policy. The surveyor has thus, discarded all the new purchases and has based his assessment only on the trend of previous years. It was a growing concern and therefore, the calculation of stock based on trend of previous two years is not justified. Based on these reasons, the State Commission has not accepted the report of the surveyor in this regard and has relied upon the statement of stocks submitted by the complainant to the bank. The complainant has suffered a total loss of Rs.95,00,000/- and the Insurance Company settled only for Rs.11,34,433/- and the complaint was filed for the remaining amount. Even the amount awarded by the State Commission does not fully satisfy remaining claim of the complainant, however, the complainant is satisfied with the order of the State Commission and has not preferred any appeal. It was prayed that the order of the State Commission be maintained and the appeal of the Insurance Company be dismissed.
I have carefully considered the arguments advanced by both the sides and have examined the surveyor report as well as other material on record. General rule is that the surveyors are appointed under the Insurance Act, 1938 and their reports are to be considered for settlement of insurance claims. The reports cannot be brushed aside without any cogent reasons. The State Commission has not accepted the report of the surveyor in the present case mainly, on two grounds that the surveyor has discarded the increase in the purchases shown in the period from 01.04.2011 till 19.09.2011. In this regard the surveyor has not even accepted the statement of stocks submitted by the complainant to the bank, which had approved the cash credit limit of Rs.10,00,000/-. In this regard, the State commission has observed the following:-
"22. The surveyor in its report under the head 'Verification/Evaluation of Records", observed as follows:-
"Insured has submitted the audited financial statement for the period ending 31.03.2010, 31.03.2011 & provisional financial statement for the period 01.04.2011 to 19.09.2011 along with copies of VAT returns.
On the verification of financial record, salient data is derived as follows:-
Sr. No.
Particulars
2009-10 (Audited)
2010-11 (Audited)
2011-12 (Provisional) (01.04.2011 to 19.09.2011
1.
Sale
46.53
54.36
26.27
2.
Purchase
45.37
54.01
72.60
3.
Gross Profit %
12.11
14.89
30.00
4.
Purchase/Sale Ratio%
97.51
99.36
27.64
5.
Sale/Purchase ratio %
102.56
100.65
36.18
6.
Closing Stock
4.47
12.22
65.86
7.
Sundry Creditors
0.91
4.60
34.99
"24. The surveyor has shown the above figures on the basis of audited financial statement for the period 31.03.2010 to 31.03.2011 and provisional financial statement for the period 01.04.2011 to 19.09.2011 along with copies of VAT Returns. There was no reason to doubt the purchases on the higher side as all the records were audited. Again under the head "Bank', the surveyor has mentioned the stock value declared by the insured as follows:-
Sr. No.
Particulars
Amount (Rs.)
1.
As on 30.04.2011
2173000
2.
As on 31.05.2011
2553000
3.
As on 30.06.2011
2944308
4.
As on 31.07.2011
6246000
5.
As on 31.08.2011
6658694
The surveyor has again raised an eyebrow on the above figures that there is abnormal increase in July/August, 2011. Rather, these declared stock values are in consonance with the audited amounts and the complainant has not anticipated any fire to its stock in September, 2011."
First of all, the State Commission has committed error in treating the figures relating to year 2011-2012 (from 01.04.2011 to 19.09.2011) as audited figures. The table clearly shows that the audited figures are only for the year 2009-2010 and 2010-2011. Obviously, the accounts are only audited at the close of the financial year, therefore, the figures for the period 01.04.2011 till 19.09.2011 cannot be taken to be the audited figures. The surveyor has analyzed the abnormal increase in the purchases for the period 01.04.2011 to 19.09.2011 and has given reasoning for not accepting the abnormal increase in purchases. In this regard, the following observations of the surveyor given in the surveyor report are important:-
"Purchases:
During 2009-10,2010-11, the sale/purchase ratio is by & large consistent.During 2011/12 there is abnormal variation from 99.36 to 27.64% and the sale/purchase ratio from 100.65% to 36.18%, meaning thereby the purchases are abnormally high as compared to sale.Further, the product dealt by the insured is not of any brand equity/imported, requiring higher period of storage, easily/locally available as such there is no justification for holding high inventory as compared to past trend of the business.
Against the total purchase shown at Rs.72.60 lacs by the insured for the period 01.04.2011 to 19.09.2011, the purchases for the quarter ending 01.04.2011 to 30.06.2011 as per vat return comes to Rs.24.90 lacs only.This shows that the purchases shown for the period 01.07.2011 to 19.09.2011 are 47.70 lacs (Rs.72.60 lacs- Rs.24.90 lacs)
Creditors:
The analysis of sundry creditors trend shows abnormal variations.In 2009-10 the business period of approx. 9 months the creditors are to the extent of Rs.0.91 lacs only.In 2010-11 business being established, the creditors stand at Rs.4.60 lacs.On the other hand, during the period 01.04.2011 to 19.09.2011, the creditors are shown for Rs.34.99 lacs.On detailed scrutiny of the creditors list as on 19.09.2011 it is observed that a new party MAA Laxmi Textiles Bathinda has been introduced for the first time w.e.f 01.07.2011 and purchases amounting to Rs.2955250/- has been shown during the period 01.07.2011 to 05.08.2011 in respect of above party.
The perusal of the account reveals:
(a) There is no VAT on cloth and purchases can be shown/booked upto any amount.
(b) Heavy purchase are shown on credit.
(c) Not even a single payment has been made through cheque/DD/RTGS and all the payments are shown in cash of Rs.20000 per transaction in order to liquidate the account.
(d) Being new party such heavy credit, normally are not offered by the party in running course of business.
Further, while going through the bills of MAHA Laxmi Textiles, it is observed that the serial no. of the bills is not maintained by the party for e.g. bill No.6087, 6089 are dated 10.07.2011, 16.07.2011 while on the other hand the bill no.6117 is of 08.07.2011. Similar is the position in respect of bill No.6094, 6099.
The Purchases from the party do not seem to be genuine, hence not considered:
Bank:
Against the cash credit limit of Rs.10.00 lacs availed by the insured from Muktsar Central Cooperative Bank Muktsar, insured has declared the following stocks value:
Sr. No.
Particulars
Amt (Rs)
1.
As on 30.04.2011
2173000
2.
As on 31.05.2011
2553000
3.
As on 30.06.2011
2944308
4.
As on 31.07.2011
6246000
5.
As on 31.08.2011
6658694
While going through the same, it is noticed that the stock trend declared to the bank upto (30.06.2011) is by & large consistent whereas it is showing abnormal increase in July/August 2011 viz-a-viz non transaction in the bank account, which in a normal course of business does not happen.
Hence, after taking into account the above observations like past/trends, sale purchase ratio, creditor trends, the purchase of the insured have been reconsidered at 100.65% of the sales and amounts to Rs.2643923/- and is taken into account.
Sale:
As per VAT returns, insured has shown the sale for the period 01.04.2011 - 19.09.2011 atRs.2569750/- (net of returns) against which the sales for the period 01.04.2011 to 30.06.2011 as per vat returns comes to Rs.1719335/- which shows the sales for the period 01.07.2011 to 19.09.2011 for Rs.850415/-. As such the average daily sale for the period 01.04.2011 to 30.06.2011 is Rs.18894/- and for the period 01.07.2011 to 19.09.2011 is Rs.10499/-.
It is unbelievable that the sale of the insured shows decreasing trend, during 2nd quarter (July to September 2011) while on the other hand the purchases are showing increasing trend which is not justified.Hence, can't be believed in the normal course of business. The sales as per trading account of 19.09.2011 at Rs.2626848/- is accordingly accepted and taken into account."
From the above, it is clear that the surveyor has observed the deficiency in bills given by the MAHA Laxmi Textiles, which goes on to show that the bills may have been fabricated. Thus, the surveyor was right in discarding these purchases. As the surveyor has given convincing reasoning for not accepting the abnormally increased purchases in July and August, 2011 and due to this fact the surveyor was right in not accepting the statement of stocks submitted to the bank.
So far as the assessment of the surveyor in respect of the stocks held at trust, furniture, fixture and fittings and plant & machinery is concerned, the State Commission has not raised any specific objection to these assessments. Even during the arguments, no specific shortcoming in this assessment was informed from the side of the complainant. I have gone through these assessments and found that the surveyor has assessed them correctly to a great extent and does not need any interference. With respect to stocks, I agree, to some extent, with the argument of the learned counsel for the respondent/complainant that the complainant may be a growing concern and it is not necessary that the purchases remain at the same level as they were in the previous year or year before the previous year. In this regard, it is seen that the purchase for the year 2009-2010 was Rs.45.37 lacs and in the year 2010-2011 it was 54.01. Thus, the trend of increase comes out to be 19% over the previous year. The surveyor has estimated the purchase for period of 01.04.2011 to 19.09.2011 to be Rs.26,43,923/-. If the same trend of increase is applied on the purchase of stock for the period 01.04.2011 to 19.09.2011, as assessed by the surveyor then the purchase could be taken to be for Rs.31,46,268/-. Thus, if this increased purchase is taken into consideration, the additional loss suffered by the complainant could be for Rs.5,02,345/-. Accordingly, the complainant is entitled to get this amount of Rs.5,02,345/- from the Insurance Company over and above the amount of settlement of Rs.11,34,433/-.
Based on the above discussion, the appeal of the Insurance Company is partly allowed and the order dated 23.10.2013 passed by the State Commission is modified to the extent that the appellant Insurance Company shall only be liable to pay Rs.5,02,345/- along with interest @7% p.a. from the date of filing of the complaint i.e. 31.05.2012 till actual payment to the respondent/complainant instead of Rs.60,00,000/- as ordered by the State Commission. Rest of the order of the State Commission is maintained. The order shall be complied within a period of 45 days from the date of receipt of the order by the appellant. No order as to costs for this appeal.