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Judgment
Original petition no.443 of 2002 has been filed by the complainants M/s Bijoy Mercantile Company Ltd. and another against the opposite party/Insurance company. Similarly, Original Petition No.442 of 2002 has been filed by the complainant Prakash Bansilal Bihani against the same Insurance Company. As the place of accident of fire is the same and the opposite party Insurance Company is also the same, therefore, both these cases are being decided together. The facts of the case are similar in both the cases, therefore, facts from OP No.442 of 2002 will be taken for discussion.
Brief facts of the case are that the complainant has been in the business dealing in electronic components & parts, computer parts and assembling of computer systems against specific orders of clients. Complainant insured his electronic components & other item with OP. Complainant took the larger premises for his business on Lease and License basis by an agreement dated 20.08.2001 from the owner Mr. Bipin Nagda. Under clause 5 of the said agreement electricity was to be provided by the licensor. In the view of the above shifting Complainant by letter dated 23.08.2001 requested OP for the necessary amendments in the following cover notes.
Policy No
Effective Date
020700/11/16/1080/2000
31.10.2000 to 30.10.2001
020700/11/01/00715
30.7.2001 to 29.07.2002
020700/46/03/16/053772/2000
1.11.2000 to 31.10.2001
020700/46/01/00209
30.7.2001 to 29.07.2002
On 01.09.2001 the entire new premises of the complainant was caught by fire & all the items were totally damaged. The fire brigade gave their report stating the cause of fire to be "Electric Short Circuit". By letter dated 04.09.2001 complainant informed OP about the occurrence of fire. M/s. Prabha Associates & M/s. SIB & Associates jointly surveyed the premises. Complainant submitted all the documents as required by the surveyor on different times. Complainant sent letter dated 30.9.2002 & 18.11.2002 to OP for the payment of claim amount as it was pending since last 14 months. OP replied vide letter dated 25.11.2002 that they were taking up the matter with the concerned Div office & shall revert back as soon as they hear from the RO. On 30.01.2003, OP has repudiated the claim of the complainant on the ground that the complainant failed to submit the documents as and when asked by the surveyor. Aggrieved by the act of OP & the surveyors, the complainant has filed the complaint before this commission. The relevant prayers made in the complaint are as follows:-
To direct OP to pay the complainant a sum of Rs.95 Lakhs being the value of the policy amount and the loss suffered by complainant along with 18% p.a. interest.
To direct OP to pay the complainant further sum of Rs.60 Lakhs as damages.
Both the opposite parties opposed the complaint by filing reply to the complaint. The Insurance Company reiterated their stand that claim was not payable as the complainant did not supply the relevant documents to the surveyors for assessing the loss. Both the parties filed their evidence by way of affidavits which have been taken on record.
Heard the learned counsel for the parties and perused the record. Learned counsel for the complainant stated that the complainant requested the Insurance Company on 23.08.2001 to transfer the insurance policy for the new premises as the complainant had shifted to the new premises, which was taken on lease vide an agreement dated 20.8.2001. The policy was effective from 30.07.2001 to 29.07.2002. On 01.09.2001, fire broke out in the premises and all the stock was gutted in the fire. The Insurance Company was informed on 04.09.2001. A team of two surveyors was appointed by the Insurance Company to survey the premises and to assess the loss. The learned counsel for the complainant stated that all the documents were provided to the surveyor. The complainant sent letter dated 30.09.2002 & 18.11.2002 to opposite party for the payment of claim amount as it was pending since last 14 months. The opposite party replied vide letter dated 25.11.2002 that they were taking up the matter with the concerned divisional office and shall revert back as early as they hear from the regional office. On 30.01.2003, the Insurance Company repudiated the claim by mentioning the following:-
"We are in receipt of your letter dated 9.12.2002 and have to state as under
We have taken prompt steps to investigate the matter and have obtained detailed investigation report and after going through the same and after considering the relevant material and after satisfying ourselves about the bona-fide report and also the letter from supplier Landlord and references of cross checking of data we are of the opinion that the claim is not maintainable.
Further the survey was conducted in your presence and opportunity was given to you to submit the documents which you have failed to do."
The complaint was filed for insurance claim of Rs.95,00,000/-. Learned counsel further stated that another OP No.443 of 2002 was filed for Rs.1,40,00,000/- for the same premises as the goods of both the parties were kept in the same premises.
Learned counsel for the complainant stated that when a surveyor is appointed under the provision of Insurance Act, 1938, he is supposed to survey the premises and to assess the loss. In the present case, the surveyor has not assessed the loss and has reported that certain clarifications and documents were not provided by the complainant. Both the surveyors have not done their job properly and they have not assessed any loss. A claim cannot be rejected only on the ground that the surveyor could not assess the loss. Learned counsel referred to the extract from the "Insurance Surveyors and loss Assessors (Licensing Professional Requirements and code of conduct) Regulations, 2000" and stated that the surveyors were duty bound to assess the loss. It was emphasised by the learned counsel for the complainant that his case is not covered under any exclusion given under the peril of fire in the policy. He stated that in fire brigade report dated 22.8.2001, the cause of fire has been stated as 'short circuit'. Learned counsel further stated that vide letter dated 01.10.2001 the stock statements and profit and loss account duly certified by the Chartered Accountant were submitted to the surveyor. Thus, everything was before the surveyors, but they did not asses the loss and thus deficiency on the part of the insurance company is evident. Learned counsel stated that the complainant requested the Insurance Company to release atleast the part amount of the insurance claim vide their letter dated 04.10.2001, 15.10.2001 and 30.09.2002. The complainant also approached the grievance cell of the opposite party on 30.09.2002. The complainant has taken the premises on lease and as per the lease deed, the electric connection was to be given by the landlord. The new premises were also endorsed in the policy. It has been further argued by the learned counsel that there is nothing on record to show that the fire was self-engineered. Learned counsel stated that all documents as demanded by the surveyor were supplied to the surveyors, still they did not assess the loss and therefore, it cannot be said that complainant does not have any case, rather it was a duty of the surveyors to assess the loss and if no loss has been assessed by the surveyors then the claim of the complainant is to be accepted.
Learned counsel for the complainant has relied upon the following judgments:-
New India Assurance Company Limited Vs. Protection Manufacturers Private Limited, (2010) 7 SCC 386. It has been held that:-
"In the absence of any material to support investigator's report, National Commission rightly held that fire was accidental and that investigator's attempt to attribute the same to arson was motivated and intended to benefit insurer."
New India Assurance Company Limited Vs. Pradeep Kumar, (2009) 7 SCC 787:- It has been held that:-
"15. ........ In other words although the assessment of loss by the approved surveyor is a pre-requisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured."
On the other hand, learned counsel for the opposite party/Insurance Company stated that Clause 5 of the rent agreement between the complainant and the landlord reads as under:-
"5. The electric connection and meter is not installed which Licensor undertakes to install on or before 22/08/2001."
Learned counsel for the Insurance Company stated that the landlord of the premises has given in writing the following facts vide letter dated 30.07.2002:-
"This is in connection with your letter with above reference we would inform you that we have given our premises on rent to tenant without any legal/illegal electricity connection or electricity meter.
If any electric connection was taken it was taken by the tenant on his own responsibility.
Please do the needful & settle our claim at the earliest."
The surveyor vide his letter dated 03.04.2002 has intimated the following to the complainant:-
"This refers to the discussions undersigned had with your representative some time back informing him that Sales Purchase Bank Stock Statements do not tally and need to be clarified along with payment received paid details to various parties appearing in monthly Bank Statement for reconciliation.
Further during our correspondence with some of major suppliers we find that they have already wound up the business quite sometime back and some of them have denied that any sales were made by them to Apple Elect..
Under above circumstances loss cannot be assessed."
The surveyor also wrote letter dated 03.06.2002 informing the complainant as under:-
"We invite your kind attention to our letter dated 03-04-2002 and the subsequent discussions held with your Mr.Prakash Bihani at the office of Prabha Associates on the 13th May 2002.
During the meeting we had explained to you that some of the major suppliers whose bills you had submitted to us in support of your claim have denied having done any business with you or supplied any material to you. The letters written by us to some of the suppliers have been returned to us by postal deptt/courier service with remarks like 'Addressee shifted'/Not operating from the premises/ 'Address incomplete'/ 'Not located' etc. These letters were sent to the addresses mentioned in the invoices submitted by you.
It was also pointed out to you that the Bank Statements submitted by you were not matching with the purchases reported to have been made by you. You had promised that you will be able to submit all details and statements which can be co-related to the purchases with payments made against the bills to the respective suppliers etc.
You have also not provided any conclusive evidence that the goods reported to have been purchased by you as covered by various purchase bills submitted had actually been taken into the affected premises where these were reported to have been subsequently damaged.
Even though you had promised to provide all the required information/clarifications within 2 days, we have not heard from you so far and are not able to make any headway in the mater of assessment of the losses.
In view of the above, we call upon you to kindly respond to this letter and provide information/clarification as detailed by us during our discussions, with all the documentary evidence within 15 days (fifteen days) of receiving this letter failing which we shall have no alternative but to close the files as "NO CLAIM" and inform the Insurers accordingly."
On the basis of the above letters, the learned counsel argued that when the correct information was not supplied by the complainant, it was not possible by the surveyors to assess the loss. It was the responsibility of the complainant to have supplied all the relevant information to the surveyor and to give all clarifications on the points raised by the surveyors. The surveyor could not have waited indefinitely to get replies. Thus, they submitted the report to close the claim. Learned counsel further argued that the surveyors in the final survey report have given the account of their inspection of the premises and the position in respect of the stocks. In fact, the surveyor has reported that:
INSPECTION & FINDINGS:
When we visited the affected premises, it was found with a lot of material lying in heaps, with fire damaged, de-shaped & warped slotted iron angles collapsed on to the material.
The entire floor area was occupied with such burnt material leaving no space to walk around.
The fire was seen to have spread from the front portion to the rear. The ceiling and walls showed marks of fire were blackened.
As for the components, a few dot matrix printers in damaged conditions could be identified. These were of some uncommon make. A heap of mother board cooling fans were found in their original cardboard packing and surprising more than 50% of these were found in comparatively un-burnt condition. Similarly huge quantity of compact discs were found and the Insured claimed that these contained software, games etc.
Insured informed us stocks belonging to both the companies-namely Bijoy Mercantile Pvt. Ltd. and Apple Electronics Industries were available in the affected gala and lying mixed up.
Insured was asked to provide us with lists showing the details of affected stocks belonging to both the companies. The insured was also requested to first remove all the damaged slotted angle racks, which were uninsured in any case, and then segregate the damaged components and separate them items wise for proper identification.
After getting confirmation from the insured that the stocks had been separated item-wise and after getting the list of stocks, we visited the premises again for verifications.
There was a huge quantity of resisters, ICs, bridges, printed circuit boards which the insured claimed to be mother boards, few modems, hundreds of mouse etc.
The burning on these parts was more or less uniform and no specification or other details could be read/verified.
Inspite of painstakingly checking a number of components from each lot, it was not possible to determine the specifications of these items from the burnt lot and co-relate with the list of stocks.
Insured informed us that the list given to us was as per their books and the actual stocks available in the affected premises could be more in some cases and less in other cases. We were informed that about 80% of the stocks as appearing in the list of stocks should be available in the warehouse and the rest might have been burnt to ashes. He also asked us to assess the loss as per the physical quantities that could be verified, even if these were lesser than the stock figures. However, such verification or physical count itself was proving to be impossible as in many cases parts were found to be fused together. Moreover in the case of very small parts like resisters, it was not possible to count the parts as these were tiny and fused into lumps. It should be noted that the stocks of both the companies were mixed up and there were number of parts common to both companies.
In the light of these difficulties, it was imperative to verify the books and records to ascertain as to what would have been the quantity and value of stocks. It was also necessary to ascertain the following:
a) Whether the stocks found in damaged condition at the affected premises belonged to the insured and what were the values.
b) Whether the insured had paid for the material.
c) Whether the stock of spares were new and saleable or old, rejected or dead stocks.
d) From where and when were the stocks moved into the affected premises.
The Insured were asked to provide supporting documents like purchase bills, bank statements, proof of payment to suppliers, lorry receipts, import documents, goods inward and outward details from the time the stocks were physically certified last. Octroi receipts etc.
In order to verify sales & purchases we requested insured to provide us Bank Statement giving names of buyers and sellers above Rs.50,000/-. However, Insured has reported that same is not possible as there were too many entries.
Inspite of our insistence that normally the bank Statements reflect the name of party to whom payments were made and it should be possible to provide such details, the insured maintained that it will not be possible to fulfil this requirements......"
Learned counsel also argued that if the landlord has not given electric connection to the complainant for the premises, there should be no question of any fire as a result of any short circuit. However, if any illegal electric connection was obtained by the complainant and fire broke out due to short circuit, then the Insurance Company would not be responsible for that loss because loss due to any illegal act is not indemnifiable. Surveyor has further reported that:-
"Of the few items that could be identified from the burnt lot, we picked up a few components and showed to some of the assemblers in the computer line. We were informed that these components are outdated.
We understand that Mr. Prakash Bihani has been in this line of business, operating in different names at different times and operating from different premises. It is a possibility that over a period of time the stocks of different components have been accumulated which could include rejected and outdated components.
Insured has submitted bogus bills from existing parties and bills from non-existent parties with a view to deceive the Surveyors and the Underwriters.
Insured has not submitted Bank Statement with the required specific information requested by us. We were also informed by the bankers Union Bank of India, Kalbadevi Branch that they have asked the Insured to co-operate with the Surveyors and submit the relevant details but the Insured refused to comply with the requirements.
Insured has provided information as to the movement of goods. Some of the bills show the address which is outside Octroi limit of Mumbai city. Insured claimed that these materials were brought back to Mumbai clandestinely to avoid Octroi. Then again how these goods were sent to Bhiwandi, evading Octroi at Thane is not explained.
It is extremely doubtful if the fire could have been caused by short circuit. There was no energy meter. Insured agreed that there was no official connection, which means power was drawn in an unauthorized manner. This becomes material to the claim because proper electrical connection with newly installed electrical wiring and fitting would not lead to shorting within a span of 7 days from the date of installation.
The landlord has given us a letter stating that he had not provided any electrical connection, either authorised or un-authorised to the affected premises. Copy of the letter is enclosed."
I have carefully considered the arguments advanced by the learned counsel for both the sides and examined the material on record. It is not the case of the complainant that fire broke out without any cause or it was engineered by somebody else, rather, it is a specific case of the complainant that the fire was caused due to short-circuit and in the police report, the same is mentioned. On the other hand, it is a specific case of the Insurance Company that there was no authorized electrical connection in the gala and therefore, there could have been no short- circuiting causing the fire. If any illegal connection was taken by the complainant and then if the short-circuit has been caused, the insurance claim is not payable as the act of the complainant would be an illegal act. Though as per the lease deed, the electrical connection was to be given to the complainant by the landlord by 22.08.2001, but it seems that the electrical connection was not given by the landlord as confirmed by the landlord's letter dated 30.07.2002.
As the police has observed that the fire has been caused due to electrical short circuit, it means that there was some illegal connection of electricity in the hired premises. Clearly, the landlord has not given the connection as is evident from the landlord's letter dated 30th July 2002. The complainant has also not come forward to state whether the complainant had got a valid connection if the same was not given by the landlord as per the agreement. Obviously the illegal connection cannot be as stable as a regular connection and therefore, chances of short circuit definitely increase in an illegal connection. Moreover if the fire has been caused due to short circuit in an illegal connection, then clearly, the loss is not indemnifiable because the policy does not cover any loss due to an illegal act on the part of the insured.
It is also surprising to note that the fire broke out on 1st September 2001 whereas the insurance company has been informed in writing by the complainant on 4th September 2001. The policy requires that immediate intimation should be given to the insurance company for any accident. Had the information been given to the insurance company on the same day or at least on the next day, the surveyors could have found some lead for the cause of the fire. The delay in giving information to the insurance company further intensifies the doubt that the fire may be self -engineered.
In these circumstances, when the fire is caused by some illegal act on the part of the complainant, the insurance claim cannot be favorably considered. In such situation, other issues like non-assessment of the loss by the surveyors etc. become subsidiary and do not necessitate any further discussion for decision in the present complaints.
Based on the above discussion, the consumer complaint Nos. 442 of 2002 and 443 of 2002 are dismissed.