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Ghai Agro Mills Ltd. v/s New India Assurance Co. Ltd. & Others

    Original Petition No. 113 of 1993

    Decided On, 26 April 1996

    At, National Consumer Disputes Redressal Commission NCDRC

    By, S P BAGLA

    For the Complainant: Mr. Naresh Mathur, Mr. H.S. Munjral and Mrs. Kanwaljit Kochar, Advocates. For the Opposite Parties: Mr. M.M. Awasthi, Mr. P.K. Seth, Advocates.

Judgment Text

Dr. (Mrs.) R, Thamarajakshi, Member

This Original Petition has been filed by M/s. Ghai Agro Mills (P) Ltd. having their Registered Office at Ludhiana. The Complainant had insured their factory premises at Village Saraud near Malerkotla, District Sangrur and the stocks of various oils and de-oiled cakes against fire, theft and other losses with the New India Assurance Company through three policies dated 17.11.1988 valid upto 16.11.1989.

2. The details of the complaint are that on the night of 27/28.5.1989, some miscreants loosened the nuts of oil tanks resulting in flowing out of oil from the manholes of all tanks. At the time of incident, Shri Surinder Si

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gh, Security Supervisor was on duty and he contacted Shri Kirpal Singh, Production Manager at 5.30 A.M. who in turn informed the Director at Ludhiana. The matter was reported to the police at Malerkotla, District Sangrur and a First Information Report was lodged on 28.5.1989 at City Police Station, Malerkotla. The police recorded the statements of employees of the Complainant-company, namely, Shri Surinder Singh, Sher Singh and Kirpal Singh and Shri P.S. Grewal, Director of the Company. After investigations, the police deduced that the above said sabotage was an act of certain miscreants. The Complainant had taken a loan amounting to Rs. 40 lakhs from Punjab & Sind Bank, Model Town Branch, Ludhiana and Rs. 38.6 lakhs and Rs. 30 lakhs respectively from the Punjab State Industrial Development Corporation Ltd., Chandigarh and Punjab Financial Corporation, Chandigarh. 3. A claim of Rs. 63,25,230.80 was submitted to the Insurance Company in May, 1989 by the Complainant. The Opposite Party-insurance Company appointed Subhash Kapoor & Associates, Consulting Engineers, Insurance Surveyors and Loss Assessors, New Delhi to investigate and assess the loss. The Surveyors surveyed the said factory premises on 3.6.1989. They also verified other account records and statements of security staff besides getting confirmation from the Punjab and Sind Bank about physical balance of stocks of oil on the day prior to the incident. According to the Complainant, the Surveyors during discussions on 26.1.1990 with them and representatives of the OP asked the Complainant whether they would agree to an amount of Rs. 54,09,356/- as the assessment of the loss of oils. The Complainant sent a letter on the same day to the OP Insurance Company agreeing to the said amount as the assessment. Thereafter, in the middle of 1990, the OP appointed an Investigator to further investigate into the matter as to the quantum of the claim of the Complainant. According to the Complainant, the Investigator required some documents and all these documents were produced. Since there was no indication of their claim being settled, the Complainant wrote on 27.04.1992 to the OP to settle their claim within 15 days failing which they will be constrained to take appropriate legal remedy. Since there was no response from the OP, the Complainant filed the above Petition before us on 17.3.1993 for a claim of Rs. 1,66,47,121.00 towards loss, interest imposed by financial institutions and Punjab & Sind Bank, salary and wages, electricity charges, settlement charges and damage for loss of business. 4. In their reply filed on 8.2.1994, the OP Insurance Company alleged that the Complainant tried to play fraud with them by furnishing incorrect information and bogus documents in respect of loss in question and managed in collusion with the Surveyors to get a favourable report. The OP thereafter entrusted the matter to M/s. S.S. Sachhar, Retired AIG of Police to investigate into the various aspects of the claim keeping in view the reports of the aforesaid Surveyors. After investigation the said investigator came to the conclusion that the Complainant had tried to dupe the OP for a huge amount by furnishing incorrect information as well as false and fabricated documents in support of their claim. According to the OP, they could not communicate the final decision of repudiation of the insurance claim in question to the Complainant as the matter became sub judice. 5. In their Rejoinder Affidavit dated 24.8.1994 the Complainant had stated that the claim in question was not processed in time and that they had neither committed any fraud with the Investigator nor had any malafide intentions. When the OP repudiated their liability on 15.9.1994, the Complainant filed an amended petition in March, 1995 by incorporating their contentions against the letter of repudiation. We heard the matter on 2.5.1995 and passed the following order: "Subsequent to the date of our last order dated 8th September, l994, the Insurance Company has repudiated its liability as per its letter dated 15.9.1994. The claim was preferred before it as early as in the year 1989 and the matter has been kept pending by the Insurance Company for more than five years. In these circumstances, we consider that the best course in the interest of both sides would be to have the matter referred for consensual adjudication to a retired High Court Judge instead of directing the parties to fight out the case before the ordinary civil court with all the attendant delay and heavy costs. Mr. P.K. Seth, counsel for the Opposite Parties assures us that he will seek instructions from the Insurance Company and ascertain its willingness to have the matter referred for consensual adjudication as indicated above. Mr. B. Pathasarthi appearing on behalf of the Complainant expresses his client's willingness to the said course. We adjourn the case for two weeks and direct that this matter shall be posted on 17th May, 1995 for further consideration."However, the OP submitted through their counsel that the arbitration clause applies only where the quantum is in dispute, liabilities being otherwise admitted and that the instant case being one of fraud and having been repudiated as such, the arbitration clause could not be attracted. 6. We are of the opinion that having regard to the allegation by the OP of fraud and since a long period has elapsed from the occurrence of the incident in 1989, the matter cannot be satisfactorily adjudicated in the Consumer Forum in its summary proceedings. We, therefore, decline to adjudicate on the merits of the Petition and we relegate the Complainant to pursue the remedy by way of civil suit, if so advised. However, we are convinced that there has been an inordinate delay of more than 5 years on the part of the OP in repudiating the claim of the Complainant. We consider that this delay itself constitutes a deficiency in service. We, therefore, direct the Opposite Party Insurance Company to pay a compensation of Rs. 20,000/- to the Complainant within three months from the date of receipt of this order. There is no order as to costs. The Original Petition is disposed of as above.

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