M/s. Jewellery World (the complainant hereafter) is a partnership firm in the business of Gold, Silver, Diamond etc. It had availed facilities of “Cash Credit Limit” & “Term Loan” from Indian Overseas Bank against hypothecation of its stock in trade. It had insured this stock in trade with the Oriental Insurance Co. Ltd. (OP hereafter) through a “Jeweller’s Block” policy covering inter-alia stocks of Rs.2,40,00,000/- (Rs 2.4 crore) and cash of Rs.3,00,000/- (Rs 3 lakh). On 03.02.2008, around 3 P.M., in a robbery at gun point, the strong room was forcibly opened and looted. FIR No.0016/2008 was registered. Three culprits were arrested on 14.03.2008. Part of the stolen goods was also recovered. On the same date, 3.2.2008, OP was also informed over telephone.2. On 15.2.2008, insurance claim form was filed with the OP for a loss of Rs.2.40 crore based on a rough assessment (Annexure-V, pg. 106). On 25.2.2008, a revised claim amount of Rs.1,98,16,089/-, after retrieving from computers data on stock statements, and taking into account stock recovered from police, left over stock in the premise, and stock with the makers, was filed. On 21.08.2008, the complainant submitted the police final report, zimanama and value of goods recovered, to the surveyor and the OP. On 18.3.2010, the complainant gave consent to the surveyor for loss assessed at Rs.1,46,28,903/- against loss of stock (Annexure-X1). On 29.3.2010, final report was submitted to OP by the surveyor, assessing the loss at Rs.1,48,28,903/- (Rs. 1,46,28,903/- plus Rs.2,00,000 towards loss of cash) (Annexure-XII). On 18.5.2011, the complainant received a letter from OP containing pre-receipt discharge voucher for Rs.1,39,57,323/-, in full and final settlement of the claim (Annexure-XV). This however was not acceptable to the complainant, so a protest letter dated 24.5.2011 asking for release of the offered amount as an interim payment was sent to the OP (Annexure-XVI). OP however did not release the amount. Alleging deficiency in service, the complainant has filed this consumer complaint seeking the following:“A. That the respondent is liable to pay an amount or Rs. 13957323/- admitted by it vide discharge voucher dated 18.05.2011. An interim application for release of this amount is prayed for as the banker Indian Overseas Bank has issued demand notice declaring the credit account of the complainant to be irregular.B. That the respondent is liable to pay an amount of Rs.57,77,185/- towards interest @12% Per Annum on the admitted amount of Rs.1,39,57,323/- from 03.02.08 to 15.07.11 and till its actual payment.C. The respondent is liable to pay an Rs.871580/- and interest @12% thereon from 03.02.08 till its realization for wrongly deducting the said amount (Value of Jewellery with maker) from Rs.1,48,28,903/- (refer to Point 20 of the Survey Report). It is submitted that on this account Rs.1135000/- has already been deducted by the surveyor while assessing the loss at Rs.1,48,28,903 (refer to Page.20 of survey report), whereas while offering full and final settlement the respondent has arbitrarily deducted Rs.871580/- from assessed amount of Rs.1,48,28,903 and offered full and final settlement at Rs.1,39,57,323.D. The respondent is liable to pay an additional amount of Rs.45,28,443/- with 12% interest on account of Lower assessment of loss by the Surveyor arbitrarily by adopting the method of Gross Profit (GP) ratio while assessing loss. The surveyor has not explained the reason for applicability of the Gross Profit ratio in arriving at a lower loss figure when the actual Stock Statement(s) regarding the weight of different items and its valuation at average weighted cost price submitted by the claimant in support of loss assessment was not disputed by the surveyor (refer to Clause 24 and Clause 24.3.6 of the Survey report).E. That the respondent is liable to pay an amount of Rs.1000000/- as mental agony and harassment compensation to the complainant. It is submitted delay in settling claim has caused immense loss and agony to the complainant as the value of gold has increased many fold and the compensation offered by the insurance is not matching with the loss suffered by the complainant on account of appreciation of value of stocks in trade.F. That the respondent is also liable to pay cost of litigation to be allowed by this Hon’ble Commission.”(Ad verbatim per record)3. This complaint was contested through a written version filed by the OP. Preliminary objections have been taken such as: (i) no cause of action as amount of Rs.1,39,57,323/- was offered vide letter dated 18.5.2011; (ii) complaint not maintainable as nothing survived after offer to pay the claim amount; (iii) complaint was not maintainable under Consumer Protection Act, 1986 (Act) as complex questions of facts and law involved; (iv) the complainant not a consumer within the meaning of section 2(1)(d) of the Act as the insurance taken was for commercial purpose. On merit, it is admitted that the showroom of the complainant was insured under Jeweler’s Block Policy and that on 4.2.2008, the dacoity incident of 3.2.2008 was intimated. In this intimation, the complainant was not able to give the extent of loss (Annexure- R-5). OP had appointed Shri R.N. Tripathi for a preliminary survey, to begin with, as final surveyor could be appointed only on the basis of quantum of estimated loss, as per IRDA guidelines. Shri Tripathi immediately visited the site on 5.2.2008, and vide letter dated 5.2.2008, requested the complainant to furnish some documents (Annexure-R-6); reminder was sent on 9.2.2008 (Annexure-R7), and the preliminary survey report was submitted on 14.2.2008 (Annexure-R8). It was stated in this report that except the seizure list and copy of the policy, documents sought were not submitted by the complainant. This was brought to the notice of the complainant vide letter dated 18.2.2008, in which a request for estimate of loss was also made (Annexure-R9). Complainant vide letter dated 25.2.2008 submitted estimate of loss as Rs.1,98,16,000/- (Annexure-R10). Thereafter, OP appointed Sanjay Dwivedi and Associates for final survey. In the final survey report, it was depicted that documents were furnished by the complainant in a piecemeal manner. It was also reported that the loss could not be finalized earlier as the culprits were arrested and some recovery from them was made which details were provided only subsequently. These were important factors for the assessment of the loss. Correspondence between the complainant and the OP (Annexure - R-11 colly) was referred to in this regard. Finally, surveyor’s report was issued on 29.3.2010 (Annexure- XII) which arrived at a net loss of Rs.1,48,28,903/-, inclusive of loss of cash, Rs.2,00,000/-. Clarifications were sought by the OP from the surveyor vide email dated 20.8.2010 (Annexure-R12) which was replied to vide letter dated 28.8.2010 (Annexure-R13 colly). On request from the head office, further clarifications were sought from the surveyor which were provided vide letter dated 24.3.2011 (Annexure-R4). Post clarifications, the loss payable was finally approved by the head office for an amount of Rs.1,39,57,323/- and communicated to the complainant vide letter dated 18.5.2011 (Annexure-R1). The complainant refused to sign the discharge voucher and sought instead release of the amount as an interim payment. OP informed the complainant that reduction of the claim amount from Rs.1,48,28,903/- to Rs.1,39,57,323/- was on account of gold jewellery worth Rs.11,35,000/- lying with the makers. As such, the OP submitted in their written version that the complaint was not maintainable, had no merit and was liable to be dismissed.4. Rejoinder by the complainant, followed by affidavit of evidence by both the parties has been submitted, as have short synopsis of arguments. Arguments were heard on 23.09.2020.5. Learned counsel for the complainant began by submitting that the amount of Rs. 1,39,57,323/- against a claim of Rs.2.40 crore was released vide National Consumer Disputes Redressal Commission’s order dated 17.11.2011. After this, he argued three issues. One, the assessment itself: the surveyor had discussed three methods of calculation of loss and had settled for the method which yielded the least amount of loss. Two, the delay in payment of the insurance amount, of over three years, meant a huge loss in interest to the complainant. Three, that the amount of gold lying with the makers had been debited twice and needed to be restored.6. He drew attention to the surveyor’s report, para 23.0- BASIS OF ASSESSMENT, and para 23.5, to make the point that the loss was assessed by three different methods and the least of the three was the loss considered by the surveyor. Referring to table 24.0: LOSS ASSESSMENT, he pointed out that the assessed loss by three different methods were as below:(a) Loss Assessment as claimed by insured: Rs.1,98,16,089/- (cost of gold jewellery per 10 gram- Rs.9,128.37);(b) Loss as per provisional balance sheet (1.4.2007 to 3.2.2008): Rs.1,80,30,995.54;(c) Loss by considering average gross profit (G.P.): Rs.1,46,28,903/-.He submitted that the surveyor had recommended the least loss arrived at by following the gross profit method which, after adding Rs.2 lakh cash loss, came to Rs.1,48,28,903/-. He argued that the surveyor ought to have recommended the first method of loss estimation: this was so because that was based on the stock statement, on the physical quantities and was therefore the most accurate. To support this argument, he drew attention to the interrogatory served upon the OP and the replies thereto, by Sri Gouranga Patra, Senior Divisional Manager. Questions k, n, o, and the replies thereto are as follows:(k) Has the surveyor disputed the stock statement of the complainant firm?- No;(n) Do you agree that the actual loss could have (been) properly estimated by multiplying the market price into the weight of the lost ornaments? - Yes;(o) Do you agree that the surveyor has improperly debited the amount of jewellery with the market (makers)? - Yes.Similarly, he referred to the second interrogatory served upon the surveyor, Sh. Sanjay Dwivedi. Questions and answers are as below.Question 3(a)- In your survey report have you disputed the stock statement of the complainant firm? - No;Question 3(b)- Could you state the total quantity of stock just prior to loss and its market value as per prevailing market rate on 3.2.2008? - Answer was in the form of a table, showing quantities of various items with their values, as per the provisional balance sheet; total came to Rs.2,51,34,745/-;Question 3(e)-Why you have follow gross profit method in calculating the loss?- Reply was that based on experience, it was the best method in this case;Question 3(f)- What is the valuation of stock with maker? - Answer was Rs.11,35,000/-;Question 3(g)- How many times you have debited the stock with maker from the total stock while assessing the loss? - Answer was “ONCE”;Question 3 (h)- Is it correct to state that you have debited the value of stock with maker twice? – Answer was NO.Thus, argued the counsel, the gross profit method for calculation of loss was wrong and inappropriate as gold is a valuable commodity and when actual figures of stock were available, the assessment should have been on the basis of this figure, and not on the basis of gross profit. Thus, Rs.1.98 crore, the amount claimed by the Insured complainant, per table 4.1 of the surveyor’s report (supra) was the correct assessment of loss.7. On the aspect of delay in making payment of the claim, he argued that this had to be compensated as per IRDA (Protection of Policy Holders Regulation 2002): Regulation 9 lays down the claim procedure in respect of a general insurance policy and requires the survey report to be submitted within six months; the date of loss was 3.2.2008 and therefore, the survey report should have been submitted not later 3.8.2008; it was actually made available only on 29.3.2010, representing a substantial delay. Thereafter, offer for full and final settlement was made on 18.5.2011. Consequences of delay have also been laid down in the said regulation: Regulation 9(6) provides that upon acceptance of offer of a settlement by the insured, the payment shall be within 7 days; in case of delay, the insurer shall be liable to pay interest at a rate 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it. Counsel argued that the complainant had availed loan against the hypothecated stock and was paying interest even as the stock had been stolen. As to what rate of interest was being paid, the counsel could not say. However, he submitted that the banker’s certificate was on record. He drew attention to I.A. No.1990 of 2013, page 11 thereof, containing a certificate dated 16.2.2013, certifying that the bank had debited interest for the loan account 270800003 and C.C. account 3005 held by the complainant at various rates for various periods of time. He argued that while the bank rate in regulation 9(6) (supra) was not defined, since the complainant was paying interest on loan to the bank, it should be 2% above the interest rate(s) being paid. He then referred to a chart showing calculation of interest by a Chartered Account, N. Aggarwala & Associates, submitted with I.A. No.1990 of 2013 (supra) and submitted that the loss of interest on account of delay in payment of the claim amount was Rs.80,86,804.21. In support of this claim on account of loss by way of the complainant paying interest to the Bank, he cited order dated 10.10.2013 of the National Commission in this consumer complaint: vide this order, the Commission had directed the bank to file an affidavit showing how much amount of interest had been paid by the complainant in respect of account no. 27080003 and account no.3005 (supra). He further referred to Commission’s order dated 10.5.2013 to submit that the issue of interest had been kept open for deciding along with other issues at the time of final hearing.8. Qua jewellery stock with maker(s), Counsel argued that this was not included in the original claim; however, the surveyor had still debited this amount from the final claim. He referred to the surveyor’s report, para 21.0: “INSPECTION & VERIFICATION OF RECORDS”, para 21.8 thereunder, where the total stock just prior to the loss, has been shown: ‘gold with maker’ has been shown as 998.900 grams. Counsel submitted that this figure was extracted from the balance sheet. Referring then to para 21.11, counsel submitted that value of this gold with makers was Rs.11,35,000/-, as per the provisional balance sheet. This was a loss that had been illegally debited from the total loss amount and should be paid to the complainant with interest for the delay.9. Learned counsel for the OP began his argument with the claim by way of interest for the delay alleged by the complainant in offering settlement. Referring to I.A. No.1990 of 2013 filed by the complainant (supra), he drew attention to para 3 thereof: per this, the amount paid to the complainant was directly credited to the Bank account on 23.12.2011, after which the said account had been closed. Counsel argued that this was therefore on 23.12.2011; however, the bank certificate was dated 16.2.2013 and was not proved by way of an affidavit of an officer of the bank. Recalling the direction of the National Commission dated 10.10.2013 (supra), he argued that the direction was clearly to an officer to file an affidavit whereas what has been produced on record is a certificate dated 16.2.2013. The bank was supposed to say on affidavit how much amount had been paid by the complainant in respect of account nos. 27080003 and 3005 by way of interest; instead, an affidavit has been submitted with which a statement of account of 78 pages has been attached. Counsel argued that he could not make out as to how this affidavit was a compliance of the Commission’s order. The affidavit was supposed to be quantifying the complainant’s claim of loss by way of interest paid on loan against the stock which had been looted. This has not been done. Counsel further submitted that while under IRDA regulation complainant may well be entitled to some interest, it certainly could not be the exorbitant interest amount of Rs. 80,86,804.21. Counsel submitted that complainant should have filed a proper affidavit from its bank. In other words, he argued that the complainant has not shown how Rs.86 lakh odd by way of interest has become payable on Rs.1.39 crore paid to the complainant, albeit with some delay.10. Coming to the aspect of delay in settlement of the claim, learned counsel referred to the survey report. He drew attention to para 1.3 which states that documents were produced in a piecemeal manner and therefore loss could not be finalized earlier as the culprits were arrested and some recovery was made from them whose details were subsequently provided. His point was that since police had made some recoveries, final loss in the gold stocks had necessarily to await the final report of the police. It was only after receipt of all documents from the insured in 3rd week of March 2010 that the final survey report could be submitted on 29.3.2010. In this way, the delay till 29.3.2010 stood explained: clearly, responsibility lay with the complainant, not the OP. After the survey report was received, OP had to examine the same and seek clarifications, as necessary. So, clarification was sought. After receipt of the same, soon after, settlement of the claim was offered to the complainant. Counsel emphasized that on the very first date after notice of this consumer complaint was issued i.e. 17.11.2011, the OP raised no objection at all to the interim application of the complainant to remit Rs.1,39,57,323/- to the Indian Overseas Bank. In fact, OP complied with this direction immediately and paid the amount and therefore cannot be said to have caused any delay.11. Coming to the aspect of loss claimed and assessed by the surveyor, learned counsel drew attention to the consumer complaint: in para 8, the initial claim was Rs.2,40,00,000/-; in para 9, this was revised to Rs.1,98,16,089; in the prayer section, clause A claims the admitted amount of Rs.1,39,57,323/-, while clause D makes a further claim of Rs.45,28,443/- with 12% interest on account of lower assessment of loss. Counsel submitted that adding the two claim amounts, the total still comes to Rs.1.84 crore whereas the counsel for complainant has been arguing for a sum of Rs.1.98 crore. As such, the counsel is going beyond what is contained in the original complaint, something which is clearly not permissible. Further, the counsel argued that the surveyor’s report admittedly was not the last word; however, it has to be shown as to why the surveyor’s report is not correct. He submitted that the complainant had enough time to challenge the surveyor report, with cogent reason(s). But he has not attempted to do so. He submitted that there was no correspondence to show why the complainant felt that the surveyor report was not correct. Counsel’s argument was that since this was so, it was quite clear that this consumer complaint was an afterthought. He then drew attention to letter dated 18.3.2010 (supra) of the complainant to the surveyor: this clearly recorded complainant’s consent for Rs.1,46,28,903/-. As such, counsel argued, the counsel for complainant cannot now argue for a higher amount. Drawing attention to the section on loss assessment in the survey report, counsel submitted that assessment shown, in para 24.1, of Rs.1,98,16,089/-, is not by the surveyor; rather, it is assessment as claimed by the insured, and has been merely recorded as such in the report. Counsel further submitted that the surveyor had given reasons why he had opted for loss assessment by employing the method of average gross profit : it was because it was their experience which showed this to be the best method. Further, the counsel argued that insurance policy was for indemnity of loss, and loss meant loss viz. cost of acquisition, and not loss of profit on sale.12. Coming to the issue of the stock of gold lying with maker(s), he submitted that there was no dispute that it was Rs.11.35 lakh. Para 24.3.6 of the surveyor’s report shows the loss at Rs.1,46,28,903/-. This is after accounting for the value of leftover and recovered gold jewellery and diamond, and the amount recovered by the police. This did not account for the gold lying with the maker(s). Surveyor’s attention was drawn to this by the OP vide e-mail dated 23.3.2011 ( Annexure R-3): OP had enquired of the surveyor as to why in para 24.3.3., the value of gold with maker had not been deducted while it had been deducted in para 24.2; the surveyor had, in reply dated 24.3.2011 (Annexure-R4), admitted, in para 12 thereof that value of gold with maker should have been deducted from the total value of gold and accordingly, after reassessment, arrived at the figure of Rs.1,37,323/-, which, with Rs.2 lakh cash loss, resulted in the loss and net liability of the OP coming finally to Rs.1,39,57,323/-. Counsel argued that this is the amount that was offered to the complainant. Concluding, the counsel for the OP submitted that it was clear that there was no deficiency of service on the part of the OP and that the complaint was liable to be dismissed.13. After having heard submissions of the learned counsels and having perused the record carefully, I am of the considered view that the complainant has not been able to establish his case.14. First, delay in settlement of the claim on account of which interest is being claimed by the complainant. There is no argument that a delay not explained properly, with sound and cogent reasons, would lead to a violation of the IRDA ( Protection of Policy Holders’ Interest) Regulations 2002. In the instant case, learned counsel for the OP has explained, stage by stage, reasons for the delay. In fact, part of the delay was because the complainant had not been able to furnish all the documents or had furnished the same in a piecemeal manner as noted in the surveyor’s report; also, there was delay in the police report becoming final and available, and this report had to be awaited as culprits were apprehended and recovery had been made. Further, the delay in terms of regulation 9(5), requiring the insurer to decide within 30 days of receipt of the surveyor’s report (29.3.2010) has been, in my opinion, satisfactorily explained by the OP by reference to time taken to examine the surveyor’s report, seek clarification (23.11.2011), after receipt of which (24.3.2011), make an offer of settlement vide letter dated 18.5.2011. Delay qua regulation 9(6) of the IRDA regulations, requiring payment within 7 days of acceptance of offer of settlement, is also not established: offer of settlement dated 18.5.2011 was initially declined vide complainant’s letter dated 24.5.2011; thereafter this consumer complaint was filed in July 2011 with an interim application seeking release of the offered amount of Rs. 1,39,57,323/-; this IA was allowed unopposed by the Commission on 17.11.2011 and the amount was credited to the complainant’s Bank on 23.12.2011. This cannot qualify as a delay inviting punitive cognition. However, for this delay in crediting the complainant’s Bank account, the complainant has sought Rs. 80,86,804.21. The complainant has not been able to explain how this amount was arrived at. As the counsel for OP has argued, the Commission had asked for an affidavit from an officer of the Bank to show how much had been paid by the complainant in respect of it’s loan and CC accounts. This was however not filed. Instead, the complainant filed a general “TO WHOMSOEVER IT MAY CONCERN” certificate from the Bank which only stated that interest had been debited from the loan and CC accounts of the complainant at various rates (10.5% to 14.75%). In addition, it also filed a Chartered Accountant’s certificate dated 5.3.2013 which stated that it had checked the interest calculation in the CC account of the complainant as per rates applicable and as per certificate issued by the Bankers on the amount of Rs. 1,39,57,323/-, for the period 3.2.2008 (date of dacoity) to 23.2.2011 (date of payment by the Insurance company) and found the amount of interest, Rs. 80,86,204.21, to be correct. Counsel for the OP correctly argued that it was far from clear how this huge amount was arrived at. Indeed, it is so. A part of the answer to this puzzle lies in the fact that the interest has been calculated from the date of the event, 3.2.2008, to the date the amount was credited, 23.12.2011. This, prima facie, is without any basis. Nor has it been sought to be explained by the complainant. If considered, it would mean that the insurance amount arrived at after survey and assessment is payable from the date of the loss. Clearly, this cannot be so. The other part of the answer is the method by which interest paid- and therefore payable- has been calculated: interest calculated on Rs. 1,39,57,323/-, at varying rates, for varying periods in days, ha
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s been added to the principal amount at each step, to arrive at Rs. 80,86,804.21. It is hard to comprehend how such a calculation has been made by the complainants relying on regulation 9(6) of the IRDA Regulations (supra): a plain reading shows that interest at 2% above bank rate becomes payable after the offer of settlement has been accepted and the amount is not paid within 7 days thereof. What has been argued by the counsel for the complainant is an amount calculated, on a period by period compounding basis, right from the date of the incident till the date of payment. Counsel for OP has correctly submitted that it was not at all clear to him how this figure was arrived at and in any case, it was not acceptable because all the delays envisaged in the Regulation (supra) had been explained. I agree.15. Second, as for method assessing the loss, the surveyor has explained why he chose the gross profit method in preference to either (i) assessment of loss as claimed by the insured, based on complainant’s claim and (ii) as per provisional balance sheet. Gold is a valuable commodity and its price does fluctuate on a daily basis. It would never be clear as to which price would be the most appropriate price for calculation of loss of gold on a particular day. In such a situation, reliance on the average gross profit method, which took into account two years of business operations, for arriving at the total value of stocks as on date of loss, seems to be eminently reasonable. Further, as correctly argued by the counsel for the OP, insurance policy is indemnity of loss i.e. the price of acquisition and not on the basis of price on sale (which includes profit margin), on the date of the loss. Reliance on average figures obtained from two years balance sheet is certainly more reliable than the figure relied upon by the complainant for assessment of his loss.16. Third, the issue regarding stock with the maker. The complainant has not been able to prove that his statement of claim had not claimed the stock lying with maker and that therefore there was no justification for the surveyor to have deducted this amount from the loss. Para 24.3.6, under loss assessment of the survey report, clearly reveals that the figure arrived at had not taken account the gold lying with the maker. This had to be pointed out by the OP after which the surveyor accepted the same. As such, this argument of the complainant also fails.17. In view of the above and for the reasons discussed, it is clear that the complainant has failed to establish it’s case and that the OP has not committed any deficiency in service in having settled the claim as soon as it was able to. This consumer complaint no.157 of 2011 is accordingly dismissed. In the facts of the case, there shall be no order as to costs.