New India Assurance Company Ltd. vs Kalyani Labour House Building Co-operative Society Ltd.

THESE two revision petitions challenge the order dated 10.08.2006 of the Himachal Pradesh State Consumer Disputes Redressal Commission, Shimla (in short, the State Commission) in appeal no. 263 of 2005. The complaint filed by M/s. Kalyani Labour House Building Cooperative Society, Ltd. (in short, the Society) before the District Consumer Disputes Redressal Forum, Shimla (in short, the District Forum) was dismissed by the latter holding that the matter involved complicated questions of law and facts and a great deal of evidence had to be adduced and hence, the complaint could not be adjudicated in summary proceedings. The District Forum, however, allowed the parties to approach the Civil Court, if so, advised. In appeal by the above-mentioned Society, the State Commission set aside the aforesaid order of the District Forum and directed the New India Assurance Company Ltd. to pay Rs.1,92,600/- (the claimed amount) to the Society along with interest @ 6% per annum from the date of filing of the complaint, i.e., 15.06.1996 till the date of payment, within thirty days of receipt of the order, failing which the interest rate payable was raised to 9% per annum. In addition, the State Commission awarded cost of Rs.5000/- to the Society.

AGGRIEVED by this order, the Insurance Company has filed revision petition no. 4039 of 2006, whereas the Society has filed revision petition no. 3808 of 2007 after a delay of 1010 days and without any accompanying application for condonation of delay. The case of the complainant/Society before the District Forum was that its entire insured stock of building material like wood, etc., stored in its godown was gutted in a fire that broke out in the night of May 5/6 2005. As a result, the Society suffered a loss of more than Rs.2 lakh. The Society brought the incident to the notice of the Insurance Company on telephone on 06.05.1995 and requested appointment of a surveyor to assess the loss. However, the Insurance Company did not do so in good time. Though the Society submitted its claim and also furnished copies of the audited accounts etc., as required by the Insurance Company, the Societys claim was not settled and hence, it filed a complaint.

(i) It would appear that the complaint was decided by the District Forum on 29.12.1998 allowing the entire claim of Rs.1,92,600/- of the Society which was the total amount of two insurance policies availed of by the Society during the relevant period. (ii) This order was challenged by the Insurance Company before the State Commission which remanded the matter to the District Forum to decide the complaint afresh after allowing the parties to file the surveyors report. Thereafter, by its order dated 09.12.2002, the District Forum partly allowed the complaint and directed the insurance company to pay Rs.16,909/- towards the insurance claim with interest @ 12% per annum from the date of filing of the complaint (15.06.1999) till the actual payment. In addition, cost of Rs.2000/- was awarded. (iii) This order was challenged by the Society before the State Commission. By its order dated 01.01.2004, the State Commission again remanded the matter back to the District Forum for a fresh decision in accordance with the law on the basis of pleadings, evidence already recorded, after giving opportunities to both the parties to be heard. (iv) This led to the order dated 16.08.2005 of the District Forum and thereafter, the impugned order dated 10.08.2006 of the State Commission, as already noticed.

IN this case, it was initially alleged by the INsurance Company that the Society never intimated the loss as a result of which, the surveyor could not be appointment to investigate and examine the matter to assess the loss at the appropriate time. However, a surveyor was later appointed who submitted his report on 30.10.1999. IN the report, the surveyor pointed out that there was large variation in the value of the stocks as shown in the balance sheet of the Society and those as per its audited accounts. Moreover, one of the transport receipts in support of the alleged purchases was of 25.02.1993, whereas the purchase, as per challan, was of 25.02.1995. The surveyor further pointed out that the audit of the accounts of the Society for 1994-95 was conducted by the Registrar of the Cooperative Societies on 30.09.1995. The audited account noted the closing of stock as on 31.03.1995 at Rs.1,36,566/- and though the audit was carried out after the alleged fire on 04.05.1995, the report did not even mention that event. The surveyor went to the extent of reporting, We understand that the insured had maintained two separate books of accounts i.e., one set shown to us and another one to the auditor. Thus the insured has fraudulently represented the facts to the insurer. The veracity of the purchase bills/ challans and transport bills presented by the Society in support of its insurance claim was also investigated by the Insurance Company with the help of a retired police officer. The detailed report of the investigator shows that one M.L.Sharma, owner of Madan Trading Company claimed to have sold timber to the Society. However, the licence of this company to sell timber and run the saw mill had been cancelled by the Divisional Forest Officer, Shimla on 26.04.1994, because of illegal acts committed by Sharma in the sale of timber. The challans for the alleged supply of timber to the Society were also found to be unsupported by any document corroborating the supply and it also appeared that no payment had been made by the Society against the said challans. Discrepancies in the truck transport receipts were also pointed out.

IN view of these findings, the surveyor stated that the claim was fraudulent and hence, not payable. However, he added that in case the INsurance Company was inclined to settle the claim, it could do so for Rs.16,909/- which was the value of the opening stock with the Society as on 01.01.1995 as per its audited accounts. It may be noted that the District Forum, by its order dated 09.12.2002, partly allowed the complaint and directed the Insurance Company to pay the Society a sum of Rs.16,909/- towards the loss of the insured goods with interest @ 12% per annum with effect from the date of filing of the complaint. We have heard the learned counsel for the Insurance Company and for the respondent Society and considered the documents placed on record. The reports of the surveyor and the investigator clearly bring out that the Society was completely unable to support its claim of loss by any document on which reliance could be placed. It is settled law that the primary responsibility to establish an insurance claim is that of the insured, which the Society was unable to discharge in this case. Therefore, in our view, the State Commission erred by concluding that there was no fraud in the case and if any irregularity had been committed by the timber seller, the purchaser Society could not be held responsible therefor.

IN conclusion, the revision petition filed by the INsurance Company is partly allowed and the impugned order of the State Commission is set aside. The INsurance Company is directed to pay to the Society a sum of Rs.16,909/- with interest @ 12% per annum from the date of filing of the complaint, i.e., 15.06.1996 till the date of payment, within six weeks from the date of this order. Needless to add that the revision petition filed by the Society is dismissed on the grounds of inordinate and unexplained delay as well as lack of merits. There shall be no order as to costs in these proceedings.