Sunder Art Exports vs Regional Manager, United India Insurance Company Limited

THIS appeal challenges the order dated 6th May 2010 of the Rajasthan State Consumer Disputes Redressal Commission, Circuit Bench, Jodhpur (in short, "the State Commission") by which the complaint of the appellant"s registered partnership firm against the opposite party " United India Insurance Co. Ltd., was disposed of with the following observations: "Keeping in view all the relevant material as also the facts and circumstances, the loss was correctly assessed by the Surveyor. The complainant was offered the amount of Rs. 9,35,022/- only on executing the receipt voucher for full and final discharge which the complainant wanted to receive under protest. The amount offered was not paid to the complainant. As the company wanted the complainant to accept the amount as full and final settlement, the complainant was justified in refusing the same because he wanted to agitate the matter before the Commission. The company should have offered the amount to the complainant unconditionally. In our view, under such circumstances, the complainant is entitled to get interest @ 9% per annum from 04.12.2006 i.e., the date when the surveyor report was submitted till 30.03.2009 when the cheque was handed over to the complainant. To this extent, the complaint is allowed refusing other reliefs at this stage. Looking to the fact and circumstances of the case, the parties shall bear their own costs of litigation. The complainant if so advised, may agitate the rest of the claims before the Civil Court".

THE case of the complainant/ appellant was that it had obtained a fire insurance policy from the respondent Insurance Company for a sum of Rs.38,25,000/- for the period 23.06.2004 to 22.06.2005. On account of a fire that broke out in the insured premises on the midnight of 27/28.12.2004, the entire stocks as well as furniture, fixtures, fittings and equipment were completely damaged. THE complainant informed the Insurance Company which appointed United Technical Services, Udaipur as the Surveyor. It was alleged by the complainant in his complaint that though the Surveyor first assessed the loss at Rs.27,39,844/-, the amount was not acceptable to the Insurance Company, which pressurised the Surveyor to reassess the loss. THEreafter, in the second survey report dated 04.12.2006, the loss was re-assessed at Rs.9,35,022/-. This amount was offered by the Insurance Company to the complainant which the latter accepted under protest, reserving the right to represent. THE Insurance Company, however, did not pay even this amount. This led the insured to file a complaint before the State Commission claiming Rs.45 lakh towards indemnification of the loss, in addition to Rs.5 lakh as compensation, Rs.50,000/- for reimbursement of charges for legal services, etc., and interest on the aforesaid amount @ 24% per annum from the date of the loss till its realisation, in addition to cost. Thus, the principal allegations were that though all documents, including bank records and reconstructed books of account were furnished to the Surveyor, the Insurance Company delayed settling the claim which was first assessed by the Surveyor at Rs. 27,39,844/-. Further, the Insurance Company pressurised the Surveyor to reduce the assessed amount to Rs.9,35,022/-. These acts amounted to serious deficiency in service. These allegations were emphatically denied by the Insurance Company. On consideration of the pleadings, evidence and documents brought on record, the State Commission passed the impugned order as noticed earlier.

I have heard Mr. S.N.S.C. Javeria, learned counsel for the appellant/ complainant and Mr. Ravi Bakshi, learned counsel for the respondent/ Insurance Company.

(i) The main contention of Mr. Javeria is that some bills of Purchases were issued in the names of other sister organisations of the aPPellant firm in accordance with the aPPlicable trade Practices. Corrections made in these bills, therefore, reflected the factual Position that the stocks were Purchased by the aPPellant firm and were damaged in the fire in question.

(ii) In this context, it will be sufficient to notice the findings of the fact by the State Commission which are based on the rePort of the Surveyor. These are reProduced below: "The rePort dated 22.05.2006 given by United Technical Services, Surveyors and Loss Assessors has been Placed on record which goes to show that earlier the claim was found worth Rs.27,39,844/-. Due to the reasons mentioned above, the matter was again examined and it was found that some of the Purchase bills submitted by the comPlainant were found to have been issued in the name of M.M. Handicrafts and M.M. Handicrafts (P) Ltd. but the name of Sunder Art ExPorts was interPolated to show that the transaction in fact was entered into with Sunder Art ExPorts. The list of such bills has also been Placed on record, the amount of which comes to Rs.39,38,690/-. During re-examination, some other mode of calculation was found reasonable or rational which has not been challenged during the course of arguments. The simPle question before us is whether the bills the total amount of which is Rs.39,38,690/- should be included for the assessment of loss. We have Perused those bills which are in the names of M.M. Handicrafts and M.M. Handicrafts (P) Ltd. These names find Place against the work "M/s" which shows that in fact these bills were intended to be issued in the name of above firms. In all these bills, the name of Sunder Art ExPorts has also been included and inclusion of the name of the comPlainant is in such a way that either below the name of M.M. Handicrafts it has inserted or above the name of M.M. Handicrafts. In some of the bills, we find that the name of M.M. Handicrafts has been cut and in its Place Sunder Art ExPorts has been written. Such bills do not lend credence at all. These bills have rightly been kePt out of consideration by the Surveyor while assessing the loss of the comPlainant firm. During the course of arguments, the learned counsel for the comPlainant firm submitted that above transactions were entered into with the comPlainant but as all the three firms are owned by the family members of Mr. Mahendra Jalani in issuing the bills, the name of wrong firm was written. This Please is not accePtable. We had advised the counsel for the comPlainant to Produce any other document of any Tax DePartment or any entry in the Bank which may show that such transactions were really entered into with the comPlainant firm. If the transactions were really entered with the comPlainant firm, the firm could have Produced the Bank account showing the entries of Payment to those firms from whom the goods were Purchased. The Bank account of the comPlainant has been Placed on record. Some of the entries do tally with the amount shown in the voucher but it is not Possible to know as to which entry relates to which voucher number. The Bank account does not show the voucher number and the date. It simPly indicates the date and the amount withdrawn. At the fag end, an aPPlication was made under Order 26 Rule 11 of the CPC. We have considered those aPPlications and in view of the findings given above, we disallow the request of the comPlainant".

These observations regarding the factual Position would clearly bring out that after actually examining the bills in question, the State Commission itself found that there had been extensive maniPulations, corrections, etc., in the name of the Purchasing organisation. If Mr. Javeria"s contention (regarding the bills having been first made out in the name (s) of sister firm (s) according to existing trade Practice) was right, some accePtable evidence would have been cited and noticed by the State Commission. The State Commission had also asked the comPlainant"s counsel to Produce any other indePendent documents like bank records to show if there was Proof of Payment of the disPuted bills. After examining the bank records Produced by the aPPellant/ comPlainant firm, the State Commission came to the conclusion that it was not Possible to link the amounts withdrawn with the sPecific bills, though some of the amounts tallied

IT is settled law that it is for the insured to establish its claim for indemnification of the insured loss. If the documents underlying the claim amount are not fully reliable or raise suspicion of having been manipulated, the Insurance Company would be fully justified in discarding such documents as proof of value of the stocks damaged in the insured peril and determine the claim payable after appropriate adjustments/ deductions. Merely because the Surveyor had initially assessed the loss at Rs.27,39,844/-, the insured did not get a legitimate right to claim that amount because of the proviso to section 64 UM (2) of the Insurance Act, 1938. In accordance with section 64 UM (2), the insurer has to mandatorily appoint an independent surveyor to assess any loss equal to or more than Rs.20,000/- but in view of the proviso, the law does not prevent the insurer from finally determining the claim for an amount different from that of the loss assessed by the surveyor, albeit for sufficient reasons. In this case, the Insurance Company appears to have carefully examined the basic documents like the bills/ vouchers presented by the complainant in support of its claim and, on doing so, found that many of these bills were of highly doubtful veracity, because of extensive corrections in the name of the purchaser. When this fact was taken up with the Surveyor, it was the latter (with the assistance of a Chartered Accountant) who found it necessary to re-assess the value of the loss. The fact of manipulation in the purchase bill was also noticed by the State Commission. Thus this is not a case of needless appointment of a second surveyor, as Mr. Javeria has also contended. Mr. Javeria has further sought to place reliance on some judgments of the Apex Court in support of his contentions. IT is, however, not necessary to examine the applicability of the ratio of these judgments to this case for the simple reason that the bills produced by the appellant/ complainant in support of its claim regarding the value of the stocks damaged in the fire were found to have been extensively corrected/ manipulated. IT is this fact that led the same surveyor to re-assess the amount of loss at a significantly less amount. The manipulations in the bills is also a finding of fact by the State Commission which the appellant (or, its learned Counsel) was not able to controvert with any cogent and reliable evidence. As a result, the appeal fails and is dismissed, leaving the parties to bear their own costs.