Su -Kam Power System Limited vs NEW INDIA ASSURANCE COMPANY LTD

THIS appeal has been filed by the appellant against the order dated 16.09.2013 passed by the State Consumer Disputes Redressal Commission, UT, Chandigarh (in short, ''the State Commission'') in Complaint No. 35 of 2013 M/s. Su -Kam Power System Ltd. Vs. New India Assurance Co. Ltd. by which, while allowing complaint partly, OPs were directed to pay Rs.21,91,904.31 with 9% p.a. interest from 1.7.2012 and further awarded cost of litigation Rs.11,000/ -.

BRIEF facts of the case are that complainant/appellant being manufacturer of various types of transformers used to purchase various raw materials like copper wire, core, bobbin and other related components. Complainant availed insurance coverage from OP/respondent pertaining to burglary and housebreaking for the period from 1.4.2010 to 31.3.3011 for a sum of Rs.5,25,00,000/ -. It was further alleged that insurance covered the risk of stocks at all the stages of manufacture. On 3.1.2011, burglary took place in the factory premises by breaking open the shutter wherein copper wires of different types weighing more than 6 tons costing Rs.34,26,783.38 were taken away. FIR was lodged on 4.1.2011. OPs were informed and they deputed Mr. N.S. Sidhu of Consolidated Surveyors Pvt. Ltd., who assessed the loss. It was further alleged that surveyor vide report dated 2.5.2012 assessed loss to the tune of Rs.18,90,936.25 and did not allow any amount for Copper wire No. 10 and camera and accessories and also deducted 2.5% on account of dead stock and 25% on account of alleged unreliable books and 0.5% on account of excess clause whereas complainant was maintaining computerized accounts books and all purchases were properly recorded. Alleging deficiency on the part of OPs, complainant filed complaint before State Commission. OP resisted complaint and submitted that complaint was pre -mature and in case of dispute matter was to be referred to Arbitrator. It was further submitted that Mr. Rajesh Kumar Dhiman through whom the complaint has been filed had no locus standi to file the complaint. It was further submitted that complaint required production of voluminous records in the shape of books of accounts, witnesses and evidence which could not be decided in summary procedure and complainant should approach to Civil Court. It was further submitted that surveyor rightly assessed loss and made deductions on the basis of reasons given in survey report. Surveyor calculated stock on the basis of the stock record provided by the complainant and finally amount payable was Rs.18,90,936.25. Learned State Commission after hearing both the parties allowed complaint as mentioned above.

HEARD learned Counsel for the parties and perused record. Learned Counsel for the appellant submitted that learned State Commission has committed error in disallowing claim pertaining to Copper No. 10, allowing deduction of 25% on the basis of unreliable accounts books and 2.5% deduction on the basis of dead stock whereas the accounts books were duly audited by Chartered Accountant and there was no question of dead stock; hence, appeal be allowed and impugned order be modified. On the other hand, learned Counsel for the respondent submitted that order passed by learned State Commission is in accordance with law; hence, appeal be dismissed.

IN memo of appeal, appellant also claimed amount for CCTV and accessories but during course of arguments, learned Counsel for the appellant did not press his appeal to this extent and in such circumstances, appeal to the extent of claiming Rs.69,338/ - pertaining to loss of camera and accessories stands dismissed.

LEARNED Counsel for the appellant submitted that all the stocks of different number of cooper wire at IMS (Intermediate Sub Inventory) was stolen; even then, surveyor committed error in not allowing claim for copper wire no. 10.

PERUSAL of record and survey report reveals that there was no production of items by using copper wire No. 10 in the months of November, 2010 and December, 2010, whereas in this period items were manufactured by use of copper wire nos. 11, 12 and 17.50. As there was no consumption of copper wire no. 10 at IMS stage in the months of November -December, 2010, there was no occasion for keeping huge stock at IMS stage without any production. Surveyor has not committed any error in disallowing claim for copper wire no. 10 and learned State Commission has rightly rejected claim of the complainant to the extent of value of copper wire no. 10.

LEARNED Counsel for the appellant submitted that there are many discrepancies in survey report and in such circumstances, merely because there was no production of items consuming copper wire No. 10 in the months of November -December, 2010, it cannot be presumed that copper wire was not lying at that stage. Apparently, this argument is devoid of force because as per complaint and books of accounts, goods used to be issued on daily basis and inventory of stocks was to be taken on daily basis. When there was no production of any transformer, etc. consuming copper wire no. 10, no person will keep huge quantity of copper wire at that stage for any production and in such circumstances, learned State Commission rightly disallowed claim to this extent.

LEARNED Counsel for the appellant submitted that learned State Commission has committed error in allowing deduction of 25% on the basis of unreliable accounts books. Perusal of survey report and record reveals that except claim pertaining to copper wire no. 10, claim pertaining to copper wire nos. 11, 12 and 17.50 have been treated genuine by surveyor and on that basis assessed loss. No doubt, complainant could not establish that copper wire no. 10 was also at IMS at the time of burglary, but merely because this fact could not be proved, it cannot be said that accounts books were unreliable. Learned Counsel for the respondent has drawn my attention towards clause 9 of terms and conditions of policy which runs as under: "9. FRAUD : If any claim under this Policy shall be in any respect fraudulent or if any fraudulent means or device are used by the Insured or any one acting on the insured''s behalf to obtain any benefit under this Policy, all benefits and rights under the Policy shall be forfeited".

Apparently, I do not find any fraud on the part of complainant in claiming compensation for copper wire no. 10 and merely by not proving claim, it cannot be treated as fraudulent claim. This clause provides that in case of fraudulent claim, all benefits and rights under the policy shall be forfeited. Admittedly, surveyor allowed full claim pertaining to all other copper wires except copper wire no. 10 and this clause also does not provide for deduction of 25%, I am of the view that surveyor has committed error in reducing amount of compensation by 25% on account of unreliable books and learned State Commission also committed error in reducing claim by 25%. As per surveyor himself accounts books of the complainant were audited by Chartered Accountant and daily entries are made in the accounts books, in such circumstances, deduction of compensation by 25% was not justifiable; hence, to this extent, appeal is to be allowed.

LEARNED Counsel for the appellant further submitted that there cannot be any dead stock pertaining to copper wire and learned State Commission committed error in reducing claim by 2.5% on the basis of dead stock. Learned Counsel for the respondent submitted that normally, there is no dead stock in the copper wire, but on account of pilferage and shortening in process of manufacture surveyor rightly reduced 2.5% on account of dead stock. This argument is devoid of force because surveyor has nowhere mentioned in his report that on account of pilferage or shortening of quantum in manufacturing process, 2.5% has been reduced. As there cannot be any dead stock in the copper wire, I am of the view that surveyor has committed error in reducing claim on the basis of dead stock and learned State Commission further committed error in reducing claim by 2.5% and in such circumstances, appellant is entitled to get aforesaid amount.

IN the light of above discussion, it becomes clear that appellant is entitled to receive Rs.25,33,917.92 out of which, 0.5% of policy excess i.e. Rs.12,669.50 is to be reduced and appellant is entitled to get Rs.25,33,917.92 Rs.12,669.50 = Rs.25,21,248.42 and appeal is to be partly allowed.

CONSEQUENTLY , appeal filed by the appellant is partly allowed and order dated 16.9.2013 passed by the State Commission in Complaint No. 35 of 2013 M/s. Su -Kam Power System Ltd. Vs. New India Assurance Co. Ltd. is modified and appellant is entitled to get Rs.25,21,248.42 instead of Rs.21,91,904.31 awarded by learned State Commission and rest of the order of State Commission is upheld. Parties to bear their own costs.