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Judgment
These two cross First Appeals arise out of the Order dated 31.10.2012 passed by the State Consumer Disputes Redressal Commission, Punjab at Chandigarh (hereinafter to be referred to as the ‘‘State Commission’’) in Consumer Complaint No. 33 of 2007. By the Impugned Order, while partly allowing the Complaint filed by the Appellant in First Appeal No. 42 of 2013/Complainant in the Complaint, the State Commission has directed the United India Insurance Company Ltd./Opposite Party in the Complaint (hereinafter referred to as the “Insurance Company”) to pay a total sum of ₹8,27,082/- to the Complainant towards the loss suffered by it on account of fire incident at the insured premises.
Since both the Appeals emanate from the same Impugned Order and between the same Parties, these are being disposed of by this Common Order.
Briefly put, the material facts, giving rise to the filing of the present Appeals, as culled out from the Complaint, are that the Complainant Company obtained two Insurance Policies from the Opposite Party No.2 Insurance Company. One Policy was taken for the stock of the cattle feed and the raw material in the shape of cotton seed, scrap of chips, broken/damaged grains of all kinds including wheat, husk and other raw material in the shape of finished/semi-finished/stocks while in process and lying stored in the insured premises. The Second Policy was taken for the entire building occupied as Oil Extraction Plant-cum-Cattle Feed Factory. The said Policies were valid for the period from 26.09.2006 to 25.09.2007.
In the intervening night of 21.10.2006 and 22.10.2006, on the eve of Diwali, a fire broke out in the insured premises of the Complainant which caused a huge damage to the raw material and packing material. The roof of the Godown was also fallen. The Fire Brigade was informed about the incident of fire and it reached at the spot and fire was extinguished by them. On the morning of 22.10.2006, the matter was reported to the Police and DDR was entered in the Police Station, Sadar, Khanna. On the same very date, the Opposite Party Insurance Company was also informed about the fire Incident through an Intimation Letter. Upon intimation, the Insurance Company appointed the Investigator, Shri Hari Charan Kalia who vide letter dated 29.10.2006 sought some documents from the Complainant Company. The Complainant Company vide letter dated 04.11.2006 informed the Divisional Manager that the Surveyor and Loss Assessor had already visited the factory, photographs of the premises had been taken and the damaged stock was checked. Hence, the Complainant Company sought permission to restart the factory to avoid further loss and also requested the Insurance Company to settle the claim as early as possible. However, the another Surveyor and Loss Assessors, Rajesh Nakra & Company, vide their letter dated 07.11.2006 requested the Complainant Company to furnish the details/documents of estimate of loss of stock, item-wise detailed loss of the Building with schedule of measurement and supporting evidence of a Civil Engineer/Architect. Therefore, the Complainant appointed the Bhambri Associates to evaluate the loss of the Building which submitted his Detailed Valuation Report on 05.12.2006. The Complainant Company supplied all the requisite documents to the Surveyor. However, it was alleged by the Complainant Company that the said Surveyor demanded a bribe of ₹2 lakh which was not acceded to by them. Later on, the said Surveyor was arrested red-handed by the Police in another bribe case. The Complainant Company approached the office of the Insurance Company for the quick relief but on the contrary, the Insurance Company appointed another Investigator, Shri Harjit Singh, Retired Superintendent of Police without their knowledge. The said Investigator visited the factory premises, employees and their relatives along with four/five Gunmen. He also visited the village of Avtar Singh, Driver of the Complainant Company and in his absence recorded the statements of his relatives as per his wish by threatening that the Avtar Singh would be put behind the Bar. Further, he recorded the statement of the Labh Din, Proprietor; Hakam Din, Brother of the Proprietor and Surinder Singh alias Kala who was a former employee of the Complainant. Finally, he submitted his report dated 11.12.2006 holding that the Fire in question is not accidental and it could be a deliberate action.
After the expiry of the considerable period, when no action was taken by the Insurance Company to settle the claim, the Complainant Vide Letter dated 20.01.2007 intimated the Insurance Company that the Surveyor had already completed the Survey, but the claim of the Complainant has not been settled so far and requested that it may be settled at the earliest.
Vide Letter dated 20.04.2007, the Insurance Company relying upon the report of the Investigator, Shri Harjit Singh repudiated the claim of the Complainant as a fraudulent claim in violation of the Condition No. 8 of the Insurance Policy. Thereafter, the Complainant requested the Insurance Company to supply copy of Report of the Investigator along with Statements recorded by him, but the same were not provided to the Complainant. Consequently, Complainant through its Counsel issued a legal notice on the Insurance Company to supply the Survey Report under the Right to Information Act. In response to the said Legal Notice, copy of the Investigation Report was sent to the Complainant. The Investigator raised the objection that the insurance was raised from ₹29.00 lakh to ₹45.00 lakh and the Bank Limit was also enhanced from ₹15.00 lakh to ₹22.00 lakh. It was further stated in the Report that though most of the Bills submitted by the Complainant were verified by the Investigator and found to be genuine but the Chura Chips were purchased on a higher rate than the local market rate. The Investigator verified the Bills from various Firms/Mills and found them genuine but he raised doubt about the rate of bardana and heavy stock of DOC i.e. 462.80 quintals purchased within the span of three days. A Report was obtained by the Investigator from one Punjab Singh Jandu as expert opinion to the effect that any flying object like Churrli and Atishbazi cannot possibly enter the Godown. According to the Complainant the said Report was based on conjectures and surmises and was prepared with a pre-determined mind to repudiate the claim. Feeling aggrieved, the Complainant filed the Complaint before the State Commission claiming ₹25.83 lakh as the loss suffered by them along with interest @12% and compensation and litigation expenses.
Upon notice, the Complaint was contested by filing a joint Written Statement on behalf of all the Opposite Parties, inter-alia contenting that there was no deficiency in service on the part of the Insurance Company and the claim of the Complainant was repudiated after due application of mind and conducting of survey and investigation; the claim lodged by the Complainant was a fraudulent claim in terms of Condition No.8 of the policy; Complainant had failed to provide the proof of the occurrence of the events as alleged by him; Complainant had not co-operated with the Surveyor in submitting the proper estimate of loss; claim is exorbitant; as the issue involved was complex in nature, the Complainant was required to be relegated to a Civil Court; the unit in question was located in a scheduled place and the likelihood of any burning ember from fire cracker entering into the Store was too not very likely and consumption of electricity by Asian Agro Industries in the record of SDO (PSEB) Khanna indicated drastic decline of manufacture of cattle feed since June 2006.
On appreciation of the material available on record and the evidence adduced by the parties before it, the State Commission, as noted above, allowed the Complaint with the following observations:-
“ The Complainant intimated the Respondent Insurance Company about the fire vide Annexure C-8 on 22.10.2006 and the Insurance Company deputed Shri Hari Charan Kalia, Investigator and vide Annexure C-9, he demanded the documents. As per the Complainant, the documents were supplied. The Respondent Insurance Company thereafter deputed Rajesh Nakra & Co., Surveyor and Loss Assessors and the said Surveyor also demanded the documents vide Annexure C-12 and C-13. The Complainant also asked Bhambri Associates, Valuers, who submitted the valuation report and gave the net loss of the building as Rs.3,89,051.58. Rajesh Nakra & Co. gave the Status Report Ex.R-3 and the4 final survey report Ex R-4 and relying upon the policy nondition no. 8, concluded that the claim is not maintainable. The Respondent Insurance Company again deputed Shri Harjit Singh, Investigator and he submitted the detailed report Ex. R-2 and concluded that the fire occurred on 20/21.10.2006 at M/s.. Asian Agro Industries was a stage managed by selecting the Diwali night.
The Version of the Complainant is that the said Investigator recorded the statements of the witnesses under coercion and gave a favourable report to the Respondent Insurance Company. The Respondents’ plea is that the fire was a stage managed, just to get the insurance claim and the claim was rightly repudiated.
The surveyor Rajesh Nakra was summoned by this Commission, because in spite of the survey conducted by him, he has not given the detail of the damage and only filed the Final Report, stating that the claim is not maintainable. Sh. Hari Charan Kalia also did not give any report regarding the loss. It appears that the respondents were bent upon to somehow or the other repudiate the claim, ignoring the fact that the fire occurred during the intervening night of 21/22.10.2006 and the photographs clearly prove that the loss to building and the stock was caused by the fire. Rajesh Nakra submitted his assessment report regarding the fire loss dated 21/22.10.2006. As per the report of said Rajesh Nakra, Surveyor, the insured has raised a claim of Rs.25,83,034/-. He has assessed the loss of building as Rs.1,32,442/- and stocks to the extent of Rs.6,94,640/- and in all, the total assessment was made of Rs.8,27,082/- The complainant has made the exorbitant claim because during investigation also, some of the bills produced were not found genuine by Sh. Harjit Singh, investigator and some of the bills were genuine. The surveyor Rajesh Nakra in his report dated 11.07.2012 has given the detail of the loss of the building as well as the stock and has considered the genuine bills and ignored the bills which could not be verified by the Investigator. Sh. Harjit Singh and has assessed the loss to the building and stock, as mentioned above. The complainant has raised objections to the said report, but in our opinion, the objections raised are without any basis and the loss assessed by the said surveyor is genuine. The complainant has not led any evidence to prove the genuineness of bills, nor has filed affidavit of those persons, who issued the bills. Therefore, the claim of the complainant is exorbitant and the loss assessed by Sh. Rajesh Nakra & Co. is reasonable and is based upon the documentary evidence, including the investigation Report submitted by the investigator appointed by the Respondent.
In view of above discussion, the Complaint is partly allowed and the Respondents are directed to pay in all Rs. 8,27,082/- within two months from the receipt of the order, failing which they shall be liable to pay this amount along with interest @ 9% per annum from the date of filing the complaint till realization.”
Hence, both the parties are before us by preferring these cross First Appeals. First Appeal No. 42 of 2013 has been filed by the Complainant for enhancement of the Compensation awarded by the State Commission along with interest as the same was not awarded by the State Commission. However, the First Appeal No. 35 of 2013 has been filed by the Insurance Company for setting aside the order passed by the State Commission.
We have heard the learned counsel for the parties at some length and perused the material available on record.
Learned Counsel appearing for the Insurance Company vigorously submitted that the State Commission has failed to properly appreciate the four Investigation-Cum-Survey Reports dated 10.11.2006, 01.12.2006, 11.12.2006 and 15.01.2007. The Surveyors and the Investigators appointed by the Insurance Company, on verification of the documents, came to the conclusion that the fire was stage-managed by selecting Diwali Night. He further submitted that the claim lodged by the Complainant was not only false and fraudulent but exorbitant also. The Bills produced by the Complainant in support of loss suffered by them were bogus and fake. He fervidly urged that the Independent Surveyor, Shri Harjit Singh in his final report has concluded that consumption of electricity by the Factory has come down to 245 units only as compared to 5173 units consumed in June 2006. Insurance was got enhanced from 29 lakh to 45 lakhs from 26.09.2006 when the manufacture was the lowest. Raw material of more than 10 lakhs was purchased within 25 days and the factory allegedly caught fire after 25 days it was insured. It is submitted that there was no possibility of fire due to crackers as there was no inhabitation within the radius of 1000 yards of the insured premises and the fire was pre-planned strategy of the Complainant Company to ignite the godown on the very night of the Diwali. The fire was not accidental rather intentional to get claim from the Insurance Company.
Per contra, Learned Counsel for the Complainant Company scrupulously contended that a claim for ₹25.83 lakh towards loss suffered by the Complainant Company was lodged with the Insurance Company but the Surveyor had assessed the loss at ₹8,27,082/- only. The Surveyor has made illegal deductions and the Report is biased which has been prepared on the directions of Insurance Company to repudiate the claim. He further submitted that the State Commission has committed a grave error by not awarding the interest on the compensation in terms of Insurance Regulatory and Development Authority (Protection of Policy Holders Interest) Regulation 2002. It is argued by the Learned Counsel that the Complainant was not provided the terms and conditions of the Insurance Policy except the Cover Note. Further, all the documents demanded by the Surveyors/Investigators were supplied by the Complainants to them. The Surveyor, Shri Rajesh Nakra demanded ₹2.00 lakh as illegal gratification which was refused by the Complainant and therefore, he submitted the status report on 30.11.2006 to the Insurance Company without assessing the loss and thereafter has given his final report on 15.01.2007. He was also caught red-handed by the CBI in a separate bribe case. Though Shri Harjit Singh, retired Superintendent of Police, Investigator appointed by the Insurance Company found the bills of the raw material as genuine but had wrongly concluded that fire was manipulated. The Insurance Company has appointed three Surveyors/Investigators to assess the loss which is against the Section 64 (U) (M)(G) of the Insurance Act, 1938s. It is urged that while assessing the loss for the building the Surveyor has reduced the claim of ₹1,32,442/- without any justification whereas the Complainant has produced certificate of the Engineer and Evaluator who has assessed the loss of Building. The Surveyor has intentionally also reduced the loss of the stocks drastically.
Having bestowed our anxious consideration to the rival contentions of the parties and careful perusal of the documents available on record, we are of the considered opinion that the Insurance Company was not justified in repudiating the claim of the Complainant on the ground that the fire was not accidental and it was manipulated. The Complainant has obtained two Insurance Policies from the Insurance Company which were valid for the period from 26.09.06 to 25.09.2007. The building of the Factory was insured for a sum of ₹10 lakh and stocks for ₹35 lakhs. A fire took place at the insured premises during the intervening night of 21/22.10.2006, the day of Diwali. There was huge damage to the DOC, rice bran, wastage chips chura, plastic bags, bardana etc. The godown measuring 70 X 30 feet was totally damaged and collapsed. On intimation, the Insurance Company appointed Shri Hari Charan Kalia, Investigator to assess the loss. All the documents demanded by him were made available. However, the Insurance Company without assigning any reason suddenly changed its Surveyor and appointed Shri Rajesh Nakra & Co., Surveyors and Loss Assessors to assess the loss. On his request, the Complainant asked Bhambri Associates, Valuers to assess the net loss of the builing which as quantified at ₹3,89,051.58 by them. The said Investigator submitted the Interim Status Report and the Final Report without assessing the loss suffered by the Complainant. Therefore, the Insurance Company deputed Shri Harjit Singh, Investigator who submitted his detailed report with the finding that the fire was not incidental but was a stage managed by selecting the Diwali night. It is beyond our understanding as to why the Insurance Company had been appointing Surveyor after Surveyor/Investigator and finally repudiated the claim. In our view, there is clear violation of Section 64 (U)(M)(G) of the Insurance Act, 1938 wherein it has been strictly prohibited that the Insurance Company cannot appoint Surveyor after Surveyor and Investigator after Investigator without prior permission from the Competent Authorities. We find it a fit case to rely upon the Judgment passed by the Hon’ble Supreme Court in “New India Assurance Co. Ltd. v. Luxra Enterprises (P) Ltd., (2019) 6 SCC 36, wherein it has been held that it is not open to the Insurance Company to appoint another surveyor till such time it gets report/assessment in its favour by observing as under:-
“25. In fact, in the present case, it is evident that the claim of Rs 54,93,865 was accepted by the surveyor M/s Sunil J. Vora & Associates. The second surveyor M/s ABM Engineers & Consultants accepted the claim in the sum of Rs 24,76,585. The third surveyor R.G. Verma recommended total repudiation of claim. It is the third surveyor's report which subserved the interest of the Insurance Company which was made basis of repudiation of the claim of the complainant on the same day, when the report was furnished. We find that in view of the judgment in Sri Venkateswara [Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd., (2009) 8 SCC 507 : (2009) 3 SCC (Civ) 447] , it is not open to appoint another surveyor till such time, it gets a report in its favour. In fact, the appointment of the surveyors was to repudiate the claim of the complainant on one pretext or the other.”
Similarly in the present case, the appointment of Shri Harjit Singh, Retired Superintendent of Police was to only with the sole purpose to repudiate the claim on wrong presumption of manipulated fire. Hence, we reject the contention of the Insurance Company that the fire was manipulated.
Now, coming to the question of quantum of compensation to the awarded to the Complainant, the most of the Surveyors had upheld that the bills produced by the Complainants were genuine though there was some different of rate of purchase of the articles or the same was purchased in the bulk quantity. Since, none of the Surveyors assessed the loss suffered by the Complainant due to fire, the State Commission directed Rajesh Nakra & Co. to assess the loss and they assessed the loss to the tune of ₹8,27,082/- as against the total claim of ₹25.83 lakh which is as under:-
(i) Building ₹3,89,0512.00
(ii) For Stocks
(a) Raw Material 11,43,689.00
(b) Scrap 6,06,630,00
(c) P.P. Fabric 2,99,708.00
(d) Bardana 1,43,955.00
25,83,034.00
While assessing the total loss suffered by the Complainant, the Investigator has rejected some claims on the grounds that he could not verify the bills, the Supplier did not supply the account statement, no transport or freight receipt was produced, some of the firms are family concerned and further the claim of the building was reduced from ₹3,89,0512.00 as assessed by the Bhambri Associates to ₹1,32,442/- on the ground that the quantities claimed are on a much higher side than the actual loss and some of its part was not insured. In our considered view, the Surveyor while assessing the loss suffered by the Complainant has not applied his mind. The Surveyor has overlooked the record produced by the Complainant with regard to the Stocks lying in the insured premises and reduction of claims is based on his own whims. It appears that with some malafide intention, the Surveyor has rejected some of the genuine claims made by the Complainant. The loss of Building was assessed by Bhambri Associates, Civil Engineer after visiting the spot and each and every detail regarding loss has been given in the said report. The Complainant has produced sufficient evidence/documents with regard to stocks in support of actual loss suffered by them but the Insurance Company as well as Surveyor has totally ignored the documentary evidence for the reasons best known to them. The Surveyor has not considered the raw material of 3097.60 qtls on the ground that the same was not mentioned in the initial report to police which is not a cogent ground. The Surveyor has wrongly deducted 1450 qtls. of raw material sold to Sharma Industries. The said sale of raw material was prior to the date of incident and duly reflected and deducted in the stock of the Complainant. The Complainant has also submitted the report of stock in hand as on 21.10.2006 duly certified by the Chartered Accountant after examining all the bills. The Surveyor ought to have assessed the loss on the basis of actual account statements and the material lying at the spot and not on the basis of his own imaginary thoughts. Further, we are of the opinion that the Complainant was entitled for the interest on the amount awarded by the State Commission towards indemnification of the loss.
In the light of the aforesaid reasons, First Appeal No. 42 of 2013 filed by the Complainant for enhancement of compensation is allowed and the First Appeal No. 35 of 2013 filed by the Insurance Company is dismissed as devoid of any merit. Accordingly, we direct the Insurance Company to pay the claim amount of ₹25.83 lakh to the Complainant with interest @9% p.a. from the date of filing of complaint till actual realization within a period of 8 weeks from the passing of this order failing which the amount shall carry interest @12% for the same period.
Vide Order dated 29.01.2013, the Insurance Company was directed to deposit 50% of the awarded amount with this Commission as pre-condition of stay of the impugned order. If any such amount is lying deposited with the Commission, we direct the Registry to release the said amount along with interest accrued therein to the Complainant.