1. Heard Mr. Ashok Anand, Advocate, for the complainant and Mr. J.P.N. Shahi, Advocate, for opposite parties-1 and 2.
2. Subrat Jalan has filed aforementioned complaint for directing New India Assurance Company Ltd. (the Insurer) to pay (i) insurance claim of Rs.10506735/- with interest @12% per annum, from the date of the loss till its actual payment, (ii) Rs.5/- lacs as the compensation for mental agony and physical harassment, (iii) the cost of litigation and (iv) any other relief which may be deemed fit and proper, in the facts and circumstances of the case.
3. The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-
(a) The complainant was a sole proprietor of M/s. Kamadgiri Fabrics Sahebganj, Gorakhpur (hereinafter referred to as the Insured). The Insured was engaged in manufacture of different kind of fabrics and trading to various cities in India. For supply of the fabrics to other cities, the Insured had contracts with the transporters, under which, the Insured used to supply the fabrics in bales to the transporters at its factory premises in Gorakhpur, who used to transport and store at their own godowns, from where, it used to be supplied to the traders, as per order. The Insured had contract with M/s. Kaka Transport Company (opposite party-3) for supply of the fabrics to Delhi, who had its godown at 32-A, Shyam Enclave, U.P. Border, Sahibabad, Ghaziabad.
(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 types. The Insured obtained Policy No.421300/11/10/13/00000031, i.e. Standard Fire & Special Perils Policy (Floater Policy) for a sum of Rs.325/- lacs, for the period of 19.04.2010 to 18.04.2011, of “Industrial Manufacturing Risk” i.e. stock with jobbers, the factory premises and the transporter’s godowns, total of forty-eight locations in the country, a list of which has been attached with the policy. Godown of M/s. Kaka Transport Company, 32-A, Shyam Enclave, U.P. Border, Sahibabad, Ghaziabad, was mentioned at serial No.35 of the list, attached with the policy.
(c) The fire was broke out in the godown at 32-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad, on 12.04.2011 at about 8:10 hours, due to electric short circuit. Ravi Dube, an employee present there, informed Hindon Fire Service Station, from where, fire tender was sent on the spot. By the time, fire tender could reach on the spot, the fire spread to the whole godown as such other fire tenders from Link Road, Modi Nagar, Hapur and Noida were also called for and they extinguished the fire. U.P. Fire Service, Hindon has given its report dated 15.04.2011. Information regarding incident was also given to Sahibabad Police Station, where it was registered vide Rapat No.48 on 13.04.2011.
(d) On receiving information of the fire, the Insured informed the Insurer at its office in Gorakhpur on 15.04.2011. The Insurer appointed V.P. Singhal & Company, Noida, on 15.04.2011, for preliminary survey. The representative of V.P. Singhal & Company inspected the godown on 16.04.2011 and submitted his preliminary report dated 17.04.2011, mentioning that fire was caused due to electric short circuit in the godown and damaged the entire stock.
(e) The Insurer appointed Sanjay Dwivedi & Associates, Surveyor & Loss Assessor, Ghaziabad, on 15.04.2011, for survey and assessment of the loss. The Surveyor inspected the godown on 16.04.2011, 17.04.2011 and 18.04.2011 and took photographs and prepared inventories. The Surveyor demanded various papers from the Insured time to time and also took statement in writing of the Proprietor of M/s. Kaka Transport and other persons. The Insured supplied the required documents. The Surveyor submitted his Final Report on 05.06.2012, stating that cause of fire was electric short circuit and quantum of loss was assessed to Rs.7829985/-.
(f) The Insurer, vide letter dated 21.11.2012, started inquiry at its own level. The Insured gave explanation of the letter dated 21.11.2012 and also informed that all the required papers have been supplied to Sanjay Dwivedi & Associates, the Surveyor. The Insurer again made query in respect of the bilties, which was again explained vide letter dated 06.04.2013. The Insurer was not satisfied with the explanation of the complainant and appointed Ashok K Agarwal & Investigator, Lucknow, on 26.06.2013, for investigation on 10 points. The investigator took explanation of the Insured on these points on 14.07.2013. The investigator verified the papers of the Insured relating to stock, from the papers of other locations, covered in the policy and submitted his report dated 25.10.2013, in which, he had not doubted on any point, except that the Insured did not have Internal Audit System and the consignments once handed over to the transporters amounts to be sold and not insurable.
(g) The Insurer then vide letter dated 31.03.2014, repudiated the claim on the ground that M/s. Kaka Transport Company was bailee of all the consignment and legally liable to all sort of losses in his possession. It was not proved that goods in question had ever been brought to the godown 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad. The Insured has not been maintaining Internal Audit & Account, which was a breach of the Terms of the Policy. The Insured, vide letter dated 15.04.2014, prayed for reconsideration of his claim, which was rejected on 28.05.2014. The complainant gave a legal notice dated 25.07.2014 to the Insurer, which was replied on 29.08.2015. The complaint was filed on 03.02.2015, on the allegations that the Insurer illegally repudiated the claim, although the loss was fully proved from various documentary evidence.
4. The insurer filed its written reply, on 23.07.2015, in which, the facts relating to the insurance policy and fire incident have not been denied. It has been stated that after receipt of the information of the loss, the Insurer appointed V.P. Singhal & Company, Noida, on 15.04.2011, for preliminary survey, who submitted his preliminary report dated 17.04.2011. The Insurer appointed Sanjay Dwivedi & Associates, Surveyor & Loss Assessor, Ghaziabad, on 15.04.2011, for survey and assessment of the loss. The Surveyor submitted his Final Survey Report dated 05.06.2012. The Insurer examined the records and found some discrepancies, as such, appointed Ashok K Agarwal & Investigator, Lucknow, on 26.06.2013, for investigation on 10 points. The investigator, in his report dated 25.10.2013 found that the Insured had issued invoices in favour of various clients in Delhi and accordingly G.Rs. were also issued from Gorakhpur to Delhi, in the name of M/s. Kamadgiri Fabrics as the Consignor as well as the Consignee both. As such, till the goods were delivered at final destination, the transporter was custodian of the goods and was legally liable as a bailee for all sort of losses. Despite repeated request, the complainant has not proved that goods in question had ever been brought to the godown at 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad. The Insured has not been maintaining Internal Audit & Account, which was a breach of the Terms of the Policy. As such, the claim was repudiated vide letter dated 31.03.2014. The Insured has never informed the Insurer that the godown at 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad was being used as transporter’s godown. The Insured has concealed this material fact. The complaint raises various complicated issue of facts, which could not be decided in summary jurisdiction. There is no deficiency in service on the part of the Insurer.
5. The Insured filed his rejoinder reply on 17.07.2017, in which, the facts stated in the complaint were reiterated. The Insured filed various documentary evidence and Affidavit of Evidence of Subrat Jalan. The Insurer filed Affidavit of Evidence of Sharda Sharma, Affidavit of Evidence of Sanjay Dwivedi and Affidavit of Evidence of Ved Prakash Singhal and various documentary evidence. Both the parties filed their short synopsis.
6. I have considered the arguments of the counsel for the parties and examined the record. 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. 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 held 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 adhocism or arbitrariness then the consumer forum will have no jurisdiction to ignore it.
7. The surveyor is an expert and its report stands on the footing of expert evidence and has to be corroborated from other evidence on record, in order to examine its correctness and bonafide/ malafide. In the present case, the Insurer appointed V.P. Singhal & Company, Noida, for preliminary survey who in his preliminary report dated 17.04.2011, found that cause of fire was due to electric short circuit, in which entire stock in the godown was gutted. Sanjay Dwivedi & Associates, Surveyor & Loss Assessor, Ghaziabad, in his Final Survey Report dated 05.06.2012, found the cause of loss as covered under insurance peril and the loss of the Insured was genuine and proved. Sanjay Dwivedi, in his Final Survey Report has mentioned the date of issue of the bilty and the date when bulty was delivered at the godown at 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad. He also recorded statement of the Proprietor of Kaka Transport, who had proved that the goods of the bilty were stored at his above godowns. The investigator, in his report dated 25.10.2013, did not find any discrepancy in the record of the Insured. He also confirmed delivery of the bilty at the godown at 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad. The Insurer, however, ignoring the report of Surveyor dated 05.06.2012, held that there was no proof that the goods as mentioned in various bilty were actually stored in the above godown. Without any contradictory evidence, it was not open to the Insurer to record any such finding in the repudiation letter, when the surveyor and investigator have verified and confirmed it.
8. The Constitution Bench of Supreme Court in Economic Transport Organization Delhi Vs. Charan Spinning Mills Private Ltd., (2010) 4 SCC 114, held that a contract of insurance is a contract of indemnity. The loss/damage to the goods covered by a policy of insurance, may be caused either due to an act for which the owner (assured) may not have a remedy against any third party (as for example, when the loss is on account of an act of God) or due to a wrongful act of a third party, for which, he may have remedy against such third party (as for example, where the loss is on account of negligence of the third party). In both cases, the assured can obtain reimbursement of the loss from the insurer. In the first case, neither the assured nor the insurer can make any claim against any third party. But where the damage is on account of negligence of a third party, the assured will have right to sue the wrongdoer for damages; and where the assured has obtained the value of the goods lost from the insurer, in pursuance of contract of insurance, the law of insurance recognises as an equitable corollary of the principle of indemnity that the rights and remedies of the assured against wrongdoer stand transferred to and vested in the insurer.
9. In view of the judgment of Supreme Court, the Insurer cannot deny its liability to indemnify the loss, only of the ground that after handing over the goods, the transporter has become its bailee. In the present case, from the bilties and statement of proprietor of Kaka Transport, it was fully proved that the goods were stored at 2-A, Shyam Enclave, U.P. Border, Sahibabda, Ghaziabad, which place was insured under the Floater Policy in question. The insurance claim cannot be denied on this ground.
10. The Insurer has illegally remarked the after issue of invoice and handing over the goods to the transporter, the goods were not insurable. Section 26 of The Sale of Goods Act, 1930 provides that unless otherwise agreed, the goods remain at the seller’s risk, until the property therein is transferred to the buyer.
11. The “internal audit” as provided under Companies Act, 2013 is not applicable in the present case, as the complainant is not a company nor it was requirement of the policy. The dictionary meaning of “internal audit’ is “an audit performed by an organiser’s personnel to ensure that the internal procedures, operations and accounting practices are in proper order”. It is required to maintain the records of the business, in order to protect the assets, detection of tortious act and error, causing loss/profit to the business. The Surveyor in Final Survey Report dated 05.06.2012 and the Investigator, in his report dated 25.10.2013, found that the Insured maintained the data relating to all the transactions of hi
Please Login To View The Full Judgment!
s business, in the computer. All the activities relating to the business are fully maintained in the computer. There was “internal audit system” of the Insured and there was no violation of the terms of the policy. 12. Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within 45 days, from the date of his appointment. The Insurer has been directed to make settlement within 30 days of receipt of Surveyor’s report. Regulation 9 (6) provides as follows: Regulation-9(6). Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer of by the insured. In case of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2 per cent, above the bank rate prevalent at the beginning of the financial year, in which the claim is reviewed by it. In view of this statutory provision, the Insured is entitled to interest @ 12% per annum after six months of the loss. ORDER In view of the aforesaid discussions, the complaint is allowed. The opposite party is directed to pay Rs.7829985/- along with interest @12% per annum from November, 2011 till the date of payment to the complainant, within two months from the date of delivery of this judgment.