1. Heard Mr. Aman Preet Singh Rahi, Advocate, for M/s. Balaji Textiles and Dr. Sudhir Bisla, Advocate, for New India Assurance Company Ltd.
2. M/s. Balaji Textiles filed Consumer Complaint No.26 of 2010, for directing New India Assurance Company Ltd. (the Insurer) to pay (i) balance insurance claim of Rs.6500000/- with interest @12% per annum, with monthly rest, under the insurance policy (ii) Rs.10/- lacs as compensation for mental torture and harassment (iii) Rs.3/- lacs as the cost of litigation and (iv) Rs.50000/- as expenses incurred in preparation of photographs, debris sheet and map, etc. State Commission, by impugned order dated 07.11.2014, allowed the complaint and directed New India Assurance Company Ltd. to pay (i) balance insurance claim of Rs.5908872/-, (ii) Rs.1/- lac as compensation and (iii) Rs.11000/- lacs as the cost of litigation. The Insured and the Insurer both have filed their separate appeals. As these appeals arise out of the same order passed in one complaint as such, these appeals were consolidated and heard together.
3. The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-
(a) M/s. Balaji Textiles (the Insured) was a sole proprietorship concern and engaged in wholesale business of ladies suits and clothes at Bathinda, from October, 2008. The Insured had cash credit facility up to Rs.24/- lacs from Canara Bank Bathinda.
(b) New India Assurance Company Ltd. (for short the Insurer) is a public insurance company, engaged in the business of providing insurance services of different nature. M/s. Balaji Textiles (the Insured) obtained Standard Fire and Special Peril Policy vide Cover Note No. 143291, (Policy No.360601/11/09/11/00000592) from the Insurer through Canara Bank, valid from 29.07.2009 to 28.07.2010, sum insured was Rs.65/- lacs, covering risk on stock of all kinds of cloths, suit, dress material, saree and/or pieces good and/or other goods of insured whist stored and/or lying in the shop, built of A class construction. It was alleged that Canara Bank was Development Officer cum agent of the Insurer.
(c) On the intervening night of 17/18.10.2009, fire was broke out in the shop at first floor. Ramesh Kumar, the husband of Smt. Robina, the proprietor, had his wholesale shop of ladies garments at ground floor, in the name of M/s. Goyal & Company. Sandeep Singh and Varinder Singh, who were living in the neighbourhood of the shop, noticed the fire at about 2:10 AM. They informed Ramesh Kumar, the husband of Smt. Robina, the proprietor, who informed Fire Service Station Bathinda, from where, two fire tenders were deputed on the spot, which controlled the fire, after hectic efforts. But the fire caused extensive damages in the two shops. The Insured informed the local police about the fire incident, where it was registered vide DDR No.10 dated 18.10.2009.
(d) The Insured informed the Insurer regarding the incident of the fire in the shop, on telephone on 18.10.2009 and in writing on 20.10.2009. The Insurer appointed M/s. Mittal Surveyor Pvt. Ltd., Bathinda, on 18.10.2009, for survey and assessment of the loss. Mr. Parmod Mittal, the Surveyor inspected the shops on 18.10.2009, 19.10.2009 and 26.10.2009 and submitted his preliminary report dated 05.11.2009, in which, he had mentioned that the fire was devastating in nature and damaged the entire stock of cloths at first floor. The stocks at ground floor were also badly burnt but large quantity of stocks had its physical entity. Cause of fire was not known. However, the Insured suspected from electric short circuit, originated from first floor, near the generator set.
(e) The Surveyor vide letter dated 19.10.2009 demanded the papers from the Insured i.e. Claim Form, Fire Brigade Report, Police Report, Newspaper reports, Map, Statement in writing about expected cause of fire and loss, Statements of neighbours, Bank’s statement of stock, Bank statement of account, estimates of loss with documentary evidence of quantity & rates, Audited balance sheets of 3 years and up to the date of loss, copies of Purchase and Sale accounts with the Bills, copy of the Supplier’s Account, Photographs, CD of the incident and Volumetric Analysis. The Insured supplied some of the documents, vide his letter dated 26.10.2009, and stated that it was duty of the Surveyor to survey and collect the papers for assessing the loss and she was under no obligation to supply any paper. The Insured obtained Stock Statement from the bank and submitted claim form on 05.11.2009, claiming loss of Rs.65/- lacs. The Insured wrote letters dated 28.10.2009 and 03.11.2009 to the Insurer to process and pay her claim and also permit her to clear the debris. The Surveyor wrote a reminder dated 05.11.2009 to the Insured demanding requisite papers, pointing out the Terms of Condition of the Policy, under which, the Insured has to supply the papers to prove the loss. In Provisional Trading Account from October 2008 to 15.10.2009, total stock of Rs.7073080/- had come.
(f) Insured obtained Audit Report up to 31.03.2009, got prepared a Complete Trading Account up to 15.10.2009, from her Charted Accountant M/s. Rajni Gupta & Associates. Cloth Sale Ledger Account, Cloth Purchase Ledger Account from 01.04.2009 to 15.10.2009, Site plan of the shop, DDR Report, Fire Brigade Report, Newspapers Reports, Copy of the Return of the Insured for the year 2008-09 and supplied it to the Surveyor along with letter dated 26.10.2009. The Insured wrote letter dated 03.11.2009 to Insurer and the bank with due intimation to the Surveyor and requested to permit the clearance of debris from the shop. The Surveyor again vide letter dated 05.11.2009, demanded same papers.
(g) The Insured, vide letter dated 30.11.2009 made a complaint to Insurance Regulatory Development Authority against the Surveyor. The Insured, vide letter dated 07.12.2009, made a complaint to Chief Regional Manager of the Insurer, against the Surveyor and local officers of the Insurer and demanded permission for removal of debris and repair of the shop. The Surveyor again wrote letter dated 08.12.2009, the papers, which had been supplied. The Insured, vide letter dated 09.12.2009, informed that requisite papers had already been supplied and also protested the conduct of the Surveyor.
(h) The Insured again received letter dated 10.12.2009, demanding original Fire Brigade and Police Reports. The Insured, vide letter dated 12.12.2009, informed that requisite papers had already been supplied. The Insured received duplicate copy of Insurance Policy through letter 15.12.2009. The Surveyor again vide letter dated 30.12.2009, demanded the papers, which had been supplied, which was replied on 01.01.2010. The Surveyor took statement of Ramesh Kumar on 04.01.2010. The Insured wrote letters dated 06.01.2010 and 16.01.2010. The Insurer also vide letters dated 15.01.2010 and 18.01.2010 demanded the papers. The Surveyor submitted his Final Survey Report dated 14.01.2010.
(i) The Insurer, vide letter dated 21.01.2010, sent an undated blank Full and Final Discharge Voucher for settlement of the claim for Rs.591128/-. The Insured signed the voucher under protest with an endorsement of “part payment of the claim” on 29.01.2010. The Insured gave a legal notice dated 27.01.2010, for remaining amount of the claim. The Insured gave a letter dated 06.02.2010 for appointment of another surveyor. The Insurer did not give even the money of part claim. This complaint was filed on 08.03.2010, on the allegations that the claim was wrongly settled for lessor amount. The Insured availed cash credit facility of Rs.24/- lacs which was utilized. The Insured purchased huge quantity of the suits and cloths, for Diwali festival, marriage and winter seasons. Apart from the racks, the stocks were stored on the floor also, as the shop of the Insured was a wholesale shop. The papers for proving loss of Rs. 7073080/- have been supplied to the Surveyor. The stocks stored in the shop were totally burnt and turned into ash. The Surveyor has illegally calculated the loss and submitted his report for a small quantity of the suits than the actual stock. There was deficiency in service.
4. The insurer filed its written reply on 14.12.2010, in which, the facts relating to the policy and fire incident have not been denied. It has been stated that after receipt of the information of the loss, the Insurer appointed M/s. Mittal Surveyor Pvt. Ltd., Bathinda, on 18.10.2009, for survey of the shop and assessment of the loss. The Surveyor visited the spot on 18.10.2009. The Insured was maintaining accounts of the shop in laptop, which they used to take at her house in night. The laptop was safe. The Accountant, who used to feed the data in the laptop, was present on 18.10.2009. The Surveyor demanded the print out of the account from the laptop, which was deliberately not provided, in spite of reminders dated 19.10.2009, 24.10.2009 and 05.11.2009. Instead of providing print out from laptop, the Insured provided Trading Account from October 2008 to 15.10.2009, prepared by Charted Accountant, showing closing stock of Rs.7073410/-, which was apparently exaggerated. The Surveyor, vide letter dated 10.12.2009, demanded the papers, on which basis, Provisional Trading Account etc. was prepared. The Inured replied that Provisional Trading Account was prepared on the basis of memory of the daily business. The Insured supplied the documents, relating to financial year 2008-09. From which, comparative ratio of stock was calculated. The Surveyor found that in Provisional Trading Accounts ending on 31.03.2009, closing stock was 23.31% of total sales, while closing stock as on 15.10.2009 was 108.19% of the total sales. Purchases were 118.52% of the sales up to 31.03.2009 while it were 189.62% of the sales as on 15.10.2009, as such, there was exaggeration. In the absence of the bills relating to the purchases, proof of payments and accounts of the supplier of these stocks, no reliance could be placed upon it. The Insured supplied another Trading Accounts for the same period, in which stock of Rs.7415796/- was shown. The Insured showed total purchase on credit of Rs.12996984/- after 01.04.2009 and loss of Rs13197231/-. Sales after 01.04.2009 as per Trading Account was of Rs.6854317/- and as per Sales Account of Rs.7004565/-. Insured supplied claim form on 10.11.2009, setting up total claim of Rs.7073080/- On volumetric analysis, it was found that stock of Rs.7073080/- could not be stored in the shop of the Insured. Monthly purchase and sale provided by the Insured shows that there were disproportionate purchase and sale. In the month of April, 2009, purchase was of Rs.1258088/ and sale of Rs.227880/-. In August, 2009, purchase was of Rs.2018214/ and sale of Rs.132571/-. In September, 2009, purchase was of Rs.3276042/ and sale of Rs.392826/-. In October, 2009, purchase was of Rs.2088751/ and sale of Rs.1511140/-. Normally, when sale was down, no prudent man would purchase the goods. The Insured provided Suppliers Details, showing purchase of total Rs.12996984/-. The Insured supplied a list of 68351 pieces of ladies suit, burnt in the shop. The Surveyor, therefore, proceeded to determine the loss on the basis of volumetric analysis. In the shop of the Insured 11 racks were in left side and 7 racks were in right side, out of which 4 rows were in 17 racks and 5 rows in one rack . The racks were of the size 6’ 6” height, 3’ 6” width and 10” depth. Total capacity of these racks were of 5808 suits, in utilizing their 100% space. From Photographs and on physical verification, no stock on floor was found. Rate was determined on the basis of total number of the suits and its value as claimed by the Insured. The Surveyor submitted his Final Survey Report dated 14.01.2010. The Insurer settled the claim on its basis. The Insurer, vide letter dated 21.01.2010, sent Full and Final Discharge Voucher for settlement of the claim for Rs.591128 /-. The Insured signed the voucher. The Insurer sent a cheque of that amount, which was en-cashed by the Insured on 12.03.2010. There was no deficiency in service on the part of the Insurer. The Surveyor has rightly deducted Rs.10000/-, under excess clause of the Policy. The claim was settled well within time as such the Insurer is not liable to pay any interest or compensation. After accepting final settlement, the complaint was not maintainable. Delay has occurred as the Insured has not cooperated with the Surveyor from day one. The Surveyor wrote letters dated 19.10.2009, 24.10.2009, 05.11.2009 and 10.12.2009, demanding the requisite papers for assessing the loss. It has been denied that that the policy was issued after physical verification of the stocks. Subsequently, the Insured supplied some bills relating to purchase of the stock. The Insurer appointed Ex. Maj. S.C. Bansal, Investigator, Bathinda for investigation of the genuineness of random three bills of Balaji Textile and Embroidery Works, 358-I, St. No.3, near Ranjit Singh Park, Ludhiana, amounting to Rs.234980/-, supplied by the Insured. After investigation, Ex. Maj. S.C. Bansal, Investigator, submitted his report dated 15.10.2010, showing that no such shop was ever existing. From this report it is proved that the Insured had based his claim on the fabricated bills and accounts. The complaint raises complicated questions of fact, which cannot be decided in summary proceeding of Consumer Protection Act, 1986.
5. State Commission, by the impugned order, found that the Insured had party-wise purchase accounts. On the basis closing balance as on 31.03.2009, the purchases made from 01.04.2009 to 15.10.2009 and sales done after 01.04.2009, the claim was set up in respect of 68351 pieces of the ladies suits. It is admitted that stocks in the shop of the Insured was totally burnt. The debris were full 50 bags with approximate weight of 731 Kg. It was not possible for the Insured to collect photocopies of the bills of the purchases and supply to the Surveyor. The purchase bills were filed before the Commission. The Surveyor has only taken into account the cloths kept in the racks and illegally ignored the stocks kept on the ground. The Insured has given month-wise sale and purchase from April, 2009 to 17.10.2009 and list containing the names of the suppliers. The stocks were verified by the bank. On these findings, the complaint was allowed for Rs.5908872/-. The Insured has filed his appeal, on the ground that State Commission has illegally failed to award the interest. The Insurer has filed its appeal, on the ground that State Commission has illegally assessed compensation on the basis of self-made Provisional Trading Accounts and List of Purchasers, which were not corroborated with Bills and Purchasers Statement of Account, as such, order is illegal.
6. I have considered the arguments of the counsel for the parties and examined the record. The Insured obtained the policy for Rs.65/- lacs on 29.07.2009. Huge purchases were allegedly done from August, 2009, on credit. Observation of State Commission that due to heavy stock, the Insured obtained insurance policy, is incorrect. The arguments that Diwali festival, winter season and marriage season were coming, therefore, the Insured had made heavy purchase also does not appear to be probable inasmuch as total sale in August, 2009 was of Rs.132571 and in September, 2009 was of Rs.392826/-, while total stock was purchased of Rs.12996984/-, which does not appear to be reasonable. State Commission observed that the statement of stock was submitted to the Bank although cash credit limit was sanctioned by Canara Bank, in September, 2009 and there is no evidence on record to show statement of stock was ever submitted to the bank and the bank had verified these stocks. The Insured himself took the case that these stocks of Rs.12996984/- were purchased on credit and no payment in these respect was made through the bank. State Commission has failed to analyse the facts and the evidence on record as such its finding is illegal.
7. The counsel for the Insured relied upon the judgment of Supreme Court in New India Assurance Company Ltd. Vs. Pradeep Kumar, (2009) 7 SCC 787 and submitted that the surveyor’ report is not a sacrosanct. Evidence on the record show that there was rift with the surveyor and the Insured from very beginning as such the surveyor has deliberately gave an incorrect report. Although from the photos it is proved that the stocks kept on the ground were totally burnt and gutted in ash but the surveyor has not taken into account of that stock and assessed the loss only on the basis of the burnt stocks on the racks. His assessment is much below the cash credit limit utilised by the Insured. The Insured was running wholesale business, in which, purchase on credit is also prevalent. As such no reliance can be placed on the report of the Surveyor.
8. The counsel for the Insurer relied upon the judgments of Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd., (2009) 8 SCC 507 and Khatema Fibres Ltd. Vs. New India Insurance Company Ltd., 2021 SCC OnLine SC 818 and submitted that the report of surveyor has to be given due importance. There should be sufficient ground to disagree with the report of the surveyor. Once it is found that there was no inadequacy in quality, nature and manner of performance of the duties and responsibilities and once it is found that the report is not based on ahocism or arbitrariness then the consumer forum will have no jurisdiction to ignore it.
9. It is mandatory for the Insurer to appoint a surveyor for assessment of loss, exceeding Rs.25000/- under Section 68 UM of Insurance Act, 1938. In the aforementioned cases, has been laid down that where the report of the surveyor is challenged by the aggrieved party, then, its correctness has to be examined in the light of evidence on record. Although the report is liable to be given due weight but it is not a sacrosanct. The surveyor is an expert and its report stands on the footing of expert evidence and has to be corroborated with other evidence on record, in order to examine bonafide / malafide of the Surveyor.
10. Fire in the shop of the Insured on 18.10.2009 at about 1.20 AM, due to electric short circuit and issuance of insurance policy, mentioned above are not disputed. The dispute is in respect of the quantum of loss. The burden of proof is on the Insured to prove the loss by supplying the requisite papers. The Insured submitted a claim of Rs.7073080/-(Annexure-R-12). The Insured supplied the details of the cloths as 68351 pieces ladies suits. In order to prove the claim, the Insured filed a List of Purchasers relating to purchases from 01.4.2009 to 17.10.2009 showing total purchase of Rs.15654696/- and Trading Accounts from 01.04.2009 to 15.10.2009. In the Trading Account total purchases of Rs.12996984/- were shown. These purchases do not tally with the purchasers as shown in the List of Purchases. These purchasers were allegedly done on credit in inasmuch as the Cash Credit Limit granted by Canara Bank was utilised for Rs.2277758/-. The surveyor, therefore, demanded the bills relating to the purchases made on credit as well as the statement of account of the suppliers which were not supplied to the Surveyor. The Insured was maintaining day to day transactions of the shop, in her laptop, but its printout was not supplied.
11. After submitting the report of the Surveyor on 14.1.2010 and settlement of the claim the Insured supplied some of bills of the purchase to the Insurer. The Insurer appointed EX. Maj. S.C. Bansal, Investigator, Batihinda for investigating genuineness of three bills randomly selected relating to M/s. Balaji Textiles and Embroidery Works, 358-1, Sector ST No.3, near Ranjeet Singh Park, Ludhiana. The investigator submitted his report dated 15.10.2010 (Annexure R-14) reporting that no such firm/concern existed on the said address and the bills were fabricated bills. From this report, it has been clearly proved that Insured had based her claim on the fabricated List of Suppliers. The related Bills and Account of Suppliers were not produced before the Surveyor. Subsequently, fabricated Bills were produced before the Insurer. The report of the Investigator dated 15.10.2010 was on the record of State Commission, but it has been illegally ignored.
12. The Insured filed Trading Accounts, Purchases and Sales Accounts prepared
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by her Chartered Accountant from August, 2008 to 31.03.2009 and from 01.4.2009 to 15.20.2009. The Surveyor found that closing stock as on 31.03.2009 was 23% of the sales and closing stock as on 15.10.2009 was 108% of the sales, which raises a grave doubt in respect of the papers prepared by the Insured. In the month of April, 2009, purchase was of Rs.1258088/ and sale of Rs.227880/-. In August, 2009, purchase was of Rs.2018214/ and sale of Rs.132571/-. In September, 2009, purchase was of Rs.3276042/ and sale of Rs.392826/-. In October, 2009, purchase was of Rs.2088751/ and sale of Rs.1511140/-. Normally, when sale was down, no prudent man would purchase the goods. 13. The Insured supplied the Map of the shop at ground floor, in which size of the shop was shown as 10’, 6” X 58’, 6” and a staircase in rear portion. The Surveyor noticed that if volumetric analysis is taken into consideration then it was not possible to store 68351 pieces ladies suits, in the shop of the Insured. The Surveyor found that Insured had his stocks on 11 racks in left side, 7 racks in right side and three wooden almirahs. According to the size of the racks and almirahs, the Surveyor worked out that on utilizing 100% capacity of the racks and almirah, 5808 ladies suits could be stored in the shop. The Surveyor further found that from the photographs and at the time of physical inspection, no stock was found on the floor. The report of the Surveyor has not been rebutted by reliable evidence. State Commission has illegally ignored the Surveyor’s report and based its findings on fabricated papers. 14. There is no evidence on record to show that the bank had verified the alleged stocks in the shop. In view of aforesaid discussions, the claim as set up by the Insured before State Commission is not proved from the evidence produced by her. Judgement of State Commission is illegal and liable to be set aside. ORDER First Appeal No. 5 of 2015 is dismissed. First Appeal No. 93 of 2015 is allowed. The order of State Commission, dated 07.11.2014, passed in Consumer Complaint No. 26 of 2010 is set aside and the consumer complaint is dismissed. The parties shall bear their own costs. Amount, if any, deposited by the Insurer be return to it with accrued benefits.