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Oriental Insurance Co Ltd. v/s Himachal Pharmaceuticals Ltd.

    First Appeal No. 1401 of 2018, 1498 of 2019

    Decided On, 18 January 2021

    At, National Consumer Disputes Redressal Commission NCDRC


    For the Appearing Parties: Mithilesh Sinha, Yaduinder Lal, Advocates.

Judgment Text

The present cross Appeals are filed by the Appellants under Section 19 of the Consumer Protection Act, 1986 against the order passed by the Himachal Pradesh State Consumer Disputes Redressal Commission, Shimla (for short 'the State Commission') in CC No. 08 of 2007 dated 10.05.2018. First Appeal no. 1401 of 2018 has been filed by the Appellant/ Insurance Company with a delay of 54 days as per the report of the Registry, however, as per the Appellant/Insurance Company the delay is 53 days. First Appeal No.1498 of 2019 has been filed by M/s Himachal Pharmaceuticals Limited with a delay of 401 days, as per report of the Registry. However, as per the Appellant/Complainant, the delay is of 364 days. For the reasons stated in both the applications and in the interest of justice, the delay is condoned.

2. Complainant is a partnership firm engaged in manufacturing and sale of Pharmaceuticals Drugs at its factory in Kandrori, Kangra District, Himachal Pradesh. The unit was started after obtaining loan from Oriental Bank of Commerce, Pathankot. Complainant obtained a Standard Fire and Special Risks Policy, valid from 13.04.2005 to 12.04.2006. According to the Complainant, the unit suffered extensive damage due to fire which broke out on 25.10.2005. On receiving information of the fire, the Opposite Party appointed a Surveyor, who visited the spot on 28.11.2005. The Surveyor assessed the loss at Rs.1,07,447.47. However, the Complainant filed a claim of Rs.20,19,689/- alongwith Rs.2 lakhs for mental agony and Rs.35,000/- for litigation cost. In spite of voluminous correspondence between the Parties, claim of the Complainant was not settled. Therefore, the Complainant filed Complaint before the State Commission with following prayer:

That this complaint may kindly be allowed and this Commission may kindly be pleased to direct the opposite party - insurance company to pay to the complainant;

The indemnification amount of Rs.20,9,689/- along with interest at the rate of 18% per annum with effect from 25.10.2005 till the date of actual payment;

A sum of Rs.2,00,000/- as compensation for mental torture and harassment suffered by the complainant;

A sum of Rs.35,000/- as cost of litigation.

3. The case was contested by the Opposite Party who contended that the Complainant had been a defaulter in making payment to the Oriental Bank of Commerce, Pathankot, and therefore, had been declared NPA in 2004. It was admitted that fire took place in the Complainant's unit on 25.10.2005 and Mr Duggal Gupta, Surveyors Private Limited was deputed to assess the loss. He submitted report on 15.01.2007 assessing the loss at Rs.1,07,447.47 and a cheque for Rs.1,06,905/- was issued in the name of the Complainant's banker, Oriental Bank of Commerce. There was no deficiency in service on the part of the Opposite Party and therefore the Complaint be dismissed.

4. The Consumer Complaint was decided by the State Commission on 28.08.2009, as follows:

"32. In the light of the above discussion, we are of the view that in the ordinary course of things, claim of the complainant should have been settled expeditiously by the opposite party - insurance company and it cannot be made to shift the burden or to wash off its hands by raising the plea that the complainant failed to provide necessary documents to the surveyor appointed to assess the loss. If this was the situation, nothing prevented the opposite party to have the closed the file.

33. It hardly needs to be emphasized in this context that as a limb of the welfare state, wholly owned and controlled by the Government of India who also have pervasive control over it, all actions of opposite party are expected to be just, reasonable and fair besides being not arbitrary. It was for the opposite party to have ensured that the surveyor appointed by it facts in a swift, just and expeditious manner to deal with the assessment and submit it report. According to us, claim of the complainant should have been settled within six months after the date of fire. Accordingly, we hold that the complainant is entitled to sum claimed Rs.20,19,689/- towards indemnification of the loss suffered by it along with interest @ 12% per annum from 01.04.2006 till the date of payment/ deposit whichever is earlier. In addition to this, complainant is held entitled to compensation for harassment etc., which we quantify at Rs.50,000/-. Besides, this opposite party is directed to pay Rs.20,000/- as punitive damages, as also Rs.10,000/- as cost of litigation. Complaint is allowed in these terms".

5. Aggrieved by the order of the State Commission, the Opposite Party filed Appeal No.474 of 2009 before this Commission, wherein the order of the State Commission was set aside and the matter remanded to the State Commission for taking decision afresh.

6. Learned Counsel appearing on behalf of both the Parties were heard and after carefully perusing the record, the State Commission in CC no. 8 of 2007 passed the following order:

"17. In view of the findings upon point no .1, complaint is partly allowed and it is ordered that opposite party would indemnify the complainant to the tune of Rs.10.00 lakh only along with interest @ 9% per annum with effect from 16.07.2007 till realisation. In addition it is further ordered that opposite party would pay compensation for mental torture and harassment to the tune of Rs.25,000/- to the complainant. In addition it is further ordered that opposite party would pay litigation costs to the complainant to the tune of Rs.10,000/-. It is further ordered that opposite party would be legally entitled to adjust the advance payment of cheque to the tune of Rs.1,06,905/- paid to the loanee back if the cheque has been enchased by the loanee bank. Letter sent by Mr B M Sood, Managing Director of complainant company dated 26.10.2005 Annexure 2, report of Up-pradhan Annexure A - 3 and Nakal Report no. 15 dated 26.10.2005 would form part and parcel of order".

7. Aggrieved by the order of the State Commission, Cross Appeals have been filed by both the Parties. Heard the Learned Counsels for the Parties and carefully perused the record.

8. Learned Counsel for the Complainant stated that Taxol is a generic name of Paclitaxel which is a final product and not a product at research or intermediate stage. He further stated that the Surveyor had neither valued nor calculated the loss suffered by the unit. Learned Counsel for the Opposite Party stated that the fire brigade was not called to douse the fire and also that the Complainant's unit was declared as NPA, as they did not pay dues to the Bank which financed the unit. The State Commission had not given any reason for rejecting the Surveyor's report. The impugned order be, therefore, set aside and their Appeal allowed.

9. Brief facts of the case are that the Complainant is a partnership firm engaged in the manufacture and sale of pharmaceuticals and had obtained a Standard Fire and Special Risks Policy from the Opposite Party, valid from 13.04.2005 to 12.04.2006. Fire broke out in the unit on 25.10.2005 and the Opposite Party was informed of the same on 26.10.2005. A report was also lodged with the Police.

10. Complainant informed the Surveyor that the fire brigade was not called after the incident. The Complainant stated that the fire occurred when their chemist was working in the laboratory and the person present on the spot controlled and extinguished the fire within half an hour. It is not understood as to how fire which allegedly led to extensive damage, was brought under control by a person present on the spot in 20 to 30 minutes, without calling for the fire brigade. The Complainant informed the Opposite Party on 26.10.2005 that the estimated loss was to the tune of Rs.8-10 lakhs. Police Report filed by Mr Brij Mohan Sood quoted the same figure. This has also corroborated by the report of Up-pradhan. The State Commission observed that the Complainant himself by his own admission held that the loss occurred to his unit was to the tune of Rs.8-10 lakh only. The Complainant was therefore entitled for damage to the tune of Rs.10 lakh.

11. However, later the Complainant, made a claim for Rs.20,19,689/- and thereafter filed a Complaint seeking compensation for the loss suffered by the unit. A Surveyor was appointed by the Opposite Party and he submitted his report on 15.01.2007 assessing the loss at Rs.1,07,447.47. Based on the report of the Surveyor, the Opposite Party offered a sum of Rs.1,07,447.47 to the Complainant which was not accepted by them. In his report the Surveyor stated that the actual loss suffered by the Complainant did not tally with the claim loss and the stock statements were not submitted after the unit was declared as NPA on 31.07.2004. The loss had been calculated on the basis of the record and hence, there was no deficiency in service on the part of the Opposite Party.

12. Regarding maintainability of the Complaint, the Learned Counsel for the Opposite party contended that the Complainant had been declared as NPA since 2004 and the present Complaint was not maintainable. The Insurance Policy was issued in favour of the Complainant which was valid from 13.04.2005 to 12.04.2006 and the fire incident had occurred on 25.10.2005, during the validity of the Policy. The Insurance Company had received the premium and hence, the Insurance Company was bound to indemnify the Complainant.

13. In FA no.474 of 2009, this Commission, vide order dated 22.09.2016, observed that the State Commission should have carefully gone into the details of the report submitted and then recorded their findings. The State Commission, vide order dated 10.05.2018, however, arrived at its findings merely based on the submissions of the Complainant as well as the report of the Up-Pradhan. Based on the admission and reports of the Complainant and Up-Pradhan, the State Commission awarded Rs.10 lakh along with interest and certain other cost to the Complainant. These admissions and statements cannot be considered as a valid basis for arriving at a decision. The State Commission, without analysing the issues raised has erred in solely relying on the submission of the Complainant, corroborated by a non-official Pradhan, ignoring the detailed Surveyor Report available on record. The order of State Commission therefore, deserves to be set aside.

14. I have carefully gone through the report of the Surveyor. The Complainant could not clarify the fact as to whether Taxol was extracted by their own concern or brought from others. Copies of the purchase bills or Taxus Extract or for leaves from which it was extracted were also not provided. In the absence of documentary evidence/ purchase and sale bills, the Surveyor was unable to arrive at the quantity and value of stocks which was destroyed in the fire. As regards Methoxsalene, insured could not establish quantity of this item available before the loss occurred due to fire. The Surveyor further observed that Chrysarobin did not appear in the details of stocks on hand as on 25.10.2005, as per information provided on the day of their visit and was found incorporated thereafter manually by the insured. Sufficient evidence was not provided for the purchase of raw material or semi-finished product of the chemicals. The Respondent also did provide any further evidence to the State Commission to analyse the loss suffered and, the State Commission sought to rely merely on the statement of the Complainant, Nakal Report and the estimate given in the report submitted by the Up-Pradhan, which hardly have any evidentiary value.

15. Learned Counsel for the Complainant during the course of arguments insisted that Taxol was a final product and was not at research stage, but could not produce any documentary evidence to show any licence to manufacture or sell Taxol. This argument, however does not seem to have been taken up in the past, as even this Commission, vide its order dated 22.09.2016, was given to understand that it was at research stage. However, this Commission has already held that the product whether at the research stage or at the final stage, had to be evaluated in a proper manner.

16. In Sri Venkateswara Syndicate Vs Oriental Insurance Company Limited & Anr., (2009) 8 SCC 507, the Hon'ble Apex Court held as under:

The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them.

17. It is very clear from the above judgment of the Apex Court that the report of the Surveyor is an import document and a basis for consideration o

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f the claim. There should, however, be sufficient grounds available on record to disregard the assessment made by the Surveyor. In the present case, the Surveyor had very clearly discussed the entire damage caused to the property and the stocks of the Complainant and specially dealt in detail with the three chemicals, whose loss could not be assessed. He had very clearly mentioned that even the basic details required for arriving at the loss suffered could not be satisfactorily provided and explained by the insured. Further, during the opportunity provided to the Complainant both at the State level and during the course of arguments in this Commission also, no further evidence was placed on record which could throw further light on the damage and the loss suffered by the Complainant in terms of the quantity and value of the stocks of these chemicals. 18. In view of the above, the order of the State Commission is set aside and the Opposite Party/Insurance Company is directed to pay Rs.1,07,447.47 net assessment made by the Surveyor for the loss suffered along with 9% interest from the date of filing of the Complaint till the date of payment. If any amount has already been paid and received by the Complainant, the same be adjusted from the amount to be paid and for that amount interest shall not be awarded from the date of such payment. Both the Appeals are accordingly disposed. There shall be no order as to costs. 19. The order be complied within a period of eight weeks.