NATIONAL INSURANCE COMPANY LIMITED vs M/S. SEWA (SOCIAL ECONOMIC WELFARE ASSOCIATION)

First Appeal No.480 of 2009 challenges the order dated 10.8.2009passed by Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram (State Commission) in Consumer Complaint No.72 of 2002has been filed under Section 19 of the Consumer Protection Act, 1986 by theappellants/ opposite party – Insurance Company.

The brief facts as per the respondent/complainant are that the respondent/complainant is a Public Charitable Trust involved in various activities including medical transcription and software development, which are conducted as asubsidiary in its unit known as MIT (Medical Institute of Transcriptions).This is functioning in the administrative office of the respondent-Trust, and was insured under Standard Fire and Special Perils Policy (material damages) from the appellant/opposite party – Insurance Company for a sum of Rs.21,32,850/- against the premium paid of Rs.1,344/-.

According to the complainant, sometime in April 2001, internal problems arose between the complainant and some of the administrative staff, leading to gherao on 2.5.01 and 3.5.01.

This led to the closure of MIT from 3.5.2001 on which date the complaint/petition was filed before S.P.Kottayam who intervened and restored order in the office.

The complainant states that on 22.5.2001 , one member of the staff, upon a visit to MIT, noticed certain accessories of one computer missing and the window lying broken.Upon further investigation, it was found that it was not simply theft but an act of malicious nature designed to cause damage to the expensive computer systems.It is alleged by the complainant that such an act could only be performed by persons who knew the value of the computer systems.

The complainant filed a report on 23.5.2001 before the Kottayam Police Station, and the same was registered as FIR No.326/01 as a case under theft.Further investigation by the complainant revealed that willful internal damages has been caused to 17 computer systems, EPABX, telephone, typewriters etc. in the said administrative office of MIT.This led the complainant to request the appellant - insurance company to issue claim form.It is alleged that after repeated requests, a Fire claim form was issued on 29.5.2001 , requesting the complainant to treat this as a claim form for malicious act. When this form was duly filled up and submitted to the appellant opposite party, it was returned on 6.6.01 to the complainants with the observation that the FIR should show ‘mischief’ and not ‘theft’.Accordingly, the appellantrequested the Police who however refused to alter the section in the FIR.This led the complainant to approach First Class Magistrate at Kottayam, upon whose direction, FIR No.390/01 was registered, showing the incident as a case under ‘mischief’''.

Thereafter, after repeated requests and issue of legal notice etc. a survey was done at the instance of the appellant. Against claim of Rs.11,69,050/- submitted by the complainant, the loss wasassessed at Rs.8,89,554/-.

The complainant, thereafter, approached the State Commission alleging opposite party for deficiency in service and unfair trade practice and seeking compensation for a loss of Rs.11,94,554/- comprising Rs.8,89,554/- by way of loss estimated by the surveyor and Rs.3 lakhs on account of rent loss caused to the complainant from 31.7.2001 till 19.11.2001 on account of not being able to repair the computer system and hire their services out. They also asked for Rs.5,000/- as cost of litigation.

This was contested by the appellant/opposite party – Insurance Company whereby it put the complainants to strict proof of the truth of the facts stated in the complaint/petition. In particular, it was denied that the complainanthad carried out an investigation after which it was concluded that it was a case of malicious nature, and not a simple theft, the argument being that nothing had been disclosed about the nature of the investigation.In other words, the appellant denied that the said event was an act of malicious nature.

The appellant/opposite party squarely denied that they ever agreed on a loss estimate of Rs.8,89,554/-; rather they held that the independent surveyor had assessed the loss at Rs.3,91,901.55.In fine, the appellant while admitting the loss as assessed by their surveyor, repudiated the claim on the ground that the event was an act of theft, not an act of malicious nature, and the act of theft is not covered under the insurance policy.

The State Commission allowed the complaint in part, directing the opposite party-Insurance Company to pay a sum of Rs.3,91,901.55 within two months from the date of receipt of this order failing which the amount shall carry interest @ 9% p.a. from the date of default till the date of payment.The complainant is also entitled to get cost of Rs.5,000/- from the opposite party.

Hence, this appeal before the National Commission. Heard the learned counsels and perused the records.

Learned Counsel for appellant-Insurance Company presented her arguments at the bar, emphasizing that there was nothing on record to prove that there was an investigation by the complainants which led them to believe that there was malicious intent and which therefore changed the character of the complaint before the police, from theft to mischief.She suggested that change from “theft” to “malicious act” was at the instance of the complainant with a view to file an insurance claim, in the knowledge that theft was not covered under the policy.In support of this assertion, she referred to the surveyor report assessing the loss at Rs 3,91,901.55, pointing out that it made no mention of any investigation report !She thus challenged the finding of the State Commission in para 11 of its order viz. that the incident was one of malicious intent rather than simple theft, as having no basis.

Ms. Amita Kumari, Amicus Curiae on behalf of the respondent opposed the submissions made by counsel at the bar, holding that the entire background of the event had to be considered in order to understand why this was not a simple case of theft but one with a malicious intent to cause damage to the organization.

It is obvious that everything in this case hinges on whether the incident or the event was an act of simple theft or an act of malicious intent designed to cause willful harm to the organization.I am inclined to agree with the reasoning put forth in the order of the State Commission that it was a case of malicious intent.This is so because this is the only reasonable interpretation that can be put to the series of actions that were taken by the complainant after the incident.An FIR was filed with the Police immediately, on the presumption that it was a theft. A broken window and some damage inside the building would presumably lead to such an impression and hence the complaint to the police alleging theft.This, however, changed after an inspection by the complainant soon after in which it was discovered that serious damage had been caused to 17 computer systems etc., suggesting willful and malicious intent to cause damage and harm, and also suggesting that it was an act performed by someone in the know of things. In this regard, the reasoning of the State Commission is reproduced below : -

“ If theft was the reason it is true that the opposite party need not pay any amount. But on a careful reading of Ext, A9 the survey report, we find that serious damage had happened to the computer systems and its accessories. If there (theft) was the reason for the loss the thieves would have taken away the whole system rather than destroying the internal parts. In this case, it is unequivocally proves (proved) that the miscreants have not (no) idea or intention to take away the computer system. If theft was the intention they would have taken away the items.  In the instance case, it is observed  that whoever be the miscreants they have the idea to dis-function/destroy the said   computer systems thereby causing damages

and loss to the complainant. The complainant would say that it was a malicious act committed by certain persons consequent to the labour dispute that arose during the middle of April, 2001. The Hon’ble Supreme Court in Muralidharan Sarangi Vs. New India has described malicious act as follows : ‘an act prohibited by law done intentionally to cause loss to another’. In the instant case it is observed that the act was done by miscreants with the intention to cause loss to the complainant and in such a situation we are of the view that it cannot be but malicious act that has contributed the loss to the complainant which the surveyor had also assessed at Rs.3,91,901.55.”

In view of the discussion above, the First Appeal is dismissed and the order of the State Commission is upheld.In view of the facts and circumstances of the case, there are no order as to costs which the parties may themselves bear.