Chandigarh

DF-II

CC/15/2019

Sh. Ajay Partap Singh - Complainant(s)

Versus

Bajaj Allianz General Insurance Company Ltd., - Opp.Party(s)

Amarbir Dhaliwal Adv. & Sarbjit Kaur Adv.

01 Oct 2019

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

============

Consumer Complaint  No	:	15 of 2019
Date  of  Institution	:	09.01.2019
Date   of   Decision	:	01.10.2019

 

 

 

 

 

Ajay Partap Singh s/o Sh.Varinder Singh, R/o H.No.1678, Pushpac Society, Sector 49-B, Chandigarh, Proprietor M/s Toy Zone, SCO No.1108-1109, Basement, Sector 22-B, Chandigarh.  

 

             …………..Complainant

 

Versus

 

1]  Bajaj Allianz General Insurance Company Ltd., SCO 156, 157, 158, 159, 2^nd Floor, Sector 9, Chandigarh 160009, through its Managing Director/Directors.

 

2]  Bajaj Allianz General Insurance Company Ltd., GE Plaza, Airport road, Yerwada, Pune 411006 (India), through its Managing Director/Directors.

  …………… Opposite Parties

 

BEFORE:  SH. RAJAN DEWAN           PRESIDENT

                                MRS. PRITI MALHOTRA       MEMBER

           

 

Argued By: Sh.Amarbir Dhaliwal, Adv. for the complainant

Ms.Geeta Gulati, Adv. for OPs.

 

 

PER PRITI MALHOTRA, MEMBER

 

                                 The facts in brief are that the complainant, being Proprietor of M/s Toy Zone, is engaged in the business of selling/retailing toys & other kids items, for earning his livelihood.  The complainant got Shopkeepers Package Policy bearing No.0G-18-1201-4092-00000013 from Opposite Party, effective from 19.6.2017 to 18.6.2018, to indemnify & protect its business from fire and allied perils, burglary, money insurance & plate glass (Ann.C-1).  It is averred that the shop of the complainant suddenly caught fire during the intervening night of 13^th/14^th June, 2018 and the entire basement full with stock and other interiors got engulfed by disastrous fire flames.  The incident of fire was reported to Fire Brigade, Police as well as to OPs on 14.6.2018 (Ann.C-2).  It is stated that it took almost 24 hours for the firemen to extinguish the fire.  It is also stated that the stock to the tune of Rs.1,10,70,235/- lying in the shop cum office of complainant got burnt & damaged in the said fire.  Then the claim was lodged with OPs, who after a long period of 107 days and exchange of various communications with complainant, disbursed an amount of Rs.75 lacs only.  It is submitted that the OPs illegally and wrongfully withheld an amount of Rs.10 lakhs from the claim of the complainant and also took too much long time to make payment of partial claim amount of Rs.75 lakhs.  The complainant requested the OPs to release the balance amount of claim, but to no avail.  Hence, this complaint has been filed alleging deficiency in service and unfair trade practice on the part of OPs. 

 

2]       The Opposite Parties No.1 & 2 have filed joint reply and while admitting the factual matrix of the case, stated that the amount was disbursed to the complainant on receipt of the Survey Report dated 19.9.2018, thus there is no delay as alleged by complainant.  It is stated that as per Survey Report, it is the complainant who delayed the submission of documents and the same were provided upon various reminders by the Surveyor.  It is submitted that the OPs made the disbursal of the insured amount based on the Survey Report submitted by the Surveyor.  It is also submitted that the complainant has not disclosed under which clauses of insurance policy, the amount of Rs.10 lakh is payable.  It is further submitted that the complainant could not provide the proof of the sale of stocks, thus, such stock would be considered as dead stock.  It is stated that the salvage deduction is on the basis of the stocks segregated by the complainant and the assessment of the Surveyor, thus the salvage deduction and lastly the deduction under the policy excess @5% is as per the terms & conditions of the policy.  The Surveyor upon investigation of the stocks, has assessed the salvage amount and has thus made the recommended necessary deductions. Denying all other allegations and pleading no deficiency in service, the OPs have prayed for dismissal of the complaint. 

 

3]       The complainant also filed replication reiterating the assertions as made in the complaint and controverting that of the Opposite Party made in their reply.

 

4]       Parties led evidence in support of their contentions.

 

5]       We have heard the ld.Counsel for the parties and have perused the entire record.

 

6]       Admittedly, the complainant, Proprietor of M/s Toy Zone, availed Shopkeepers Package Policy bearing No.0G-18-1201-4092-00000013 from Opposite Party effective from 19.6.2017 to 18.6.2018 against fire and allied perils.  Unfortunately, fire incident took place during the intervening night of 13^th/14^th June, 2018 in the insured premises of the complainant thereby causing damage to the insured stock, which was timely intimated to OPs besides fire  brigade Officials and Police Authorities.  It is quite evident that Surveyor got appointed on behest of the OPs, claim was lodged and it has been settled by Opposite Parties by paying Rs.75 lacs only; which was short of Rs.10 lacs as alleged by the complainant as the sum insured under the policy is Rs.85 lacs. 

 

7]       The grouse of the complainant is regarding balance claim amount of Rs.10.00 lacs which has wrongly been deducted by the OPs.

 

8]       After giving due consideration to the submissions of the Parties and thorough perusal of record, comprising evidence brought forth by the parties, we are of the concerted view that the less settlement of claim by the Opposite Parties imposing forced deductions, is highly unjustified and we have not found any cogent basis for those deductions made by the OPs. 

 

9]       The complainant has placed on record Ann.C-9, which is the break-up of the claim settlement, procured by the complainant from the OPs after much persuasion.  Relevant part of the same is reproduced as under:-

 

	Assessment of Stocks
Sr.	Description		Value-Rs
1	Value of closing stocks as on 13 June 2018; duly certified by Chartered Accountant		1,08,45,649
2	Less: Dead Stocks/rate variations/Obsolence/wastage etc.@	25%	27,11,412
3	Net of dead stocks, rate variations, wastage		81,34,237
4.	Less :Salvage Value	LS	2,39,190
5	Assessed Loss		78,95,047
6	Less: Policy Excess@	5%	3,94,752
7.	Net Adjusted Loss		75,00,000
	Less reinstatement premium		295
8	Final Payable claim amount		74,99,705

 

10]      It is apt to mention that above break-up is not in consonance with the Final Survey Report dated 19.9.2018 submitted by Puri Crawford Insurance Surveyors & Loss Assessors India Pvt. Ltd. appointed by the OPs. For the sake of convenience, we would like to reproduce the Assessment of Loss, as assessed by Surveyor vide its Report (Ann.OP-1 Page 19):-

         ASSESSMENT OF LOSS

Description	Value- Rs
Value of closing stocks as on 13 June 2018; duly certified by Chartered Accountant/affected & damaged stocks/Gross Loss	10,845,649
Less: Deduction on account of variation in books of accounts/Dead Stocks/Wastage/Obsolesce @25%	2,711,412
Amount	8,134,237
Less: Salvage (Lump Sum)	50,237
Assessed Loss	8,084,000
Less : Under Insurance	Nil
Adjusted Loss	8,084,000
Less: Policy Excess @5%	404,200
Net Adjusted Loss	7,679,800

        

         As the amount of assessed loss was reduced, so the deduction @5% as policy excess has come to Rs.3,94,752/- in the break-up of the claim provided by the OPs.

 

11]      The comparative perusal of both the above referred charts reveals that the Opposite Parties in addition to the deductions imposed by the Surveyor vide its report dated 19.9.2018 also made further unreasonable deductions and made payment of Rs.74,99,705/- against amount of Rs.76,79,800/- as assessed by their own Surveyor.  No cogent evidence has been made part of the record to justify the further deductions made by the Opposite Parties.  The complainant vide present compliant not only challenged the further deductions made by the Opposite Parties, but also challenged the deductions made by the Surveyor as not genuine and are claimed to have been made beyond the policy terms & conditions. 

 

12]      The Opposite Parties in their reply to the complaint also failed to justify the deductions made by the Surveyor and also there is no justification for further deductions made by them which is referred in document Ann.C-9 (Claim Settlement break-up).

 

13]      Broadly, it is observed that the Opposite Parties besides making unreasonable deduction of 25% on account of Dead Stocks/rate variations/Obsolesce/Wastage etc., they have also deducted @5% of Rs.81,34,237/- on account of ‘Net of dead stocks, rate variations, wastage’ claiming it as Policy Excess.  It is also observed that there is huge different in assessment of amount of salvage, which the Surveyor & Loss Assessor after thorough verification has assessed to the tune of Rs.50,237/- whereas the Opposite Parties assessed the salvage value to the tune of Rs.2,39,190/-. No explanation has been appended to justify the same, hence considered to be arbitrary and unreasonable. 

 

14]      We could not find any of the terms & conditions of the policy, which validates the deductions made by the OPs & also by their appointed Surveyor. As the loss in the present complaint occurred due to the fire incident, so we, in order to verify the genuineness of the claim, have also gone through Clause 1.14 of the Policy Terms & Conditions (Ann.C-1 Page 16) which pertains to pre-condition applicable to Cover 1 and the incident of fire is covered under the Special Condition 1.14, which reads as under:-

“If the property hereby Insured shall, at the breaking out of any fire or at the commencement of any destruction of or damage to the property by any other peril hereby Insured against, be collectively of greater value than the Sum Insured thereon, then the Insured shall be considered as being his own insurer for the difference and shall bear a rateable proportion of the loss accordingly.  Provided, however, that if the Sum Insured hereby on the property Insured shall at the event of such fire or at the commencement of such destruction or damage be not less than 85% of the collective value of the property Insured, this condition shall be of no purpose and effect.”

 

15]      It is also apt to mention that the Excess clause is mentioned in the policy Clause No.1.13.1 (Ann.C-1 Page 16). 

 

16]      The thorough perusal of both the above referred clauses of the policy in question, clearly establishes that the case of the complainant is not covered under Policy Clause NO.1.13.1 (Ann.C-1 Page 16) i.e. deduction @5% of claim, is not applicable and the complainant is fully entitled for the insured amount to the full extent.

 

17]      A special reference required to be made in addition to these conditions is the observation made by the Surveyor while verifying and assessing the loss. The relevant extract of said observation is reproduced as under:-

“11.6           As aforesaid that stocks were completely gutted therefore it would be difficult to assess the loss on physical inventory basis.  Thus we have thoroughly verified the above information/documents &/or records produced before us and infer as follows:

Insured’s business was either on rising side or in line with previous year’s performance.

The closing stocks position in the last financial years is as follows:-

                  

2015-16 (Audited)	2016-17 (Audited)	2017-18 (Audited)	01.04.2018 till date d of loss i.e. 08.06.2018 (Provisional)
Value – Rs	Value – Rs	Value – Rs	Value – Rs
9,125,793	8,800,676	11,070,236	10,845,649

 

From above, it is clear that insured carries a high inventory at any point of time to cater supply in the market.

The details of purchase & sales for the period 01/04/17 till date of loss certified by Chartered Accountant was corroborating with VAT/GST returns. 

Bank account statement for the period 01/04/17 till date of loss reveals that cash earned on account of sales were deposited in bank account and simultaneously payments were made to suppliers through NEFT/Demand Draft from bank accounts.

From above, it is inferred that books of account provided by Insured provides accurate/fair position of Insured’s business.

11.7   Regarding ageing of the material, we discussed with Insured who in-turn informed us that they would not be able to provide details of the material based on their ageing as they were not maintaining any such records.  Moreover, all the records/books of account were burnt in fire for which an Affidavit was submitted before us. They further informed us that they were not selling any products on lower of their cost price even on special discounts & based on the ageing of the material from their stores.  Regarding baby cosmetic products which comes with an expiry they were able to replace such stocks from supplier, which is very minimal in nature.  Hence, Insured contested that there would be no dead stock related to their business.  However, we were not convinced to Insured’s view and in the absence of any supporting documents related to ageing of stocks, we have applied dead stock/handling losses, price variation due to market trend etc. @25%.

 

11.8   We have examined the Insured’s claim & documents submitted by the Insured and computed assessment of loss (on without prejudice basis) after considering the following parameters:-

The claim for stocks has been considered based on closing stock value lying at insured’s premises as on date of loss, duly certified by Chartered Accountant.

Deduction of 25% has been made towards dead/obsolete stock/price variation etc.

Salvage – The stocks was extensively damaged with no realizable salvage value. However, salvage on lump sum basis has been adjusted against claim.

Under insured if any has been adjusted against the claim.

                   Excess as per policy terms and conditions.

 

11.9   Based on above verification, the loss was worked out for Net Adjusted Loss amount of Rs.7,679,800/-“.

 

18]      The complete perusal of the above assessment clearly reveals that the deduction of 25% made towards Dead Stock/Rate Variations/Obsolesce/ Wastage etc. by the OPs from the claim of the complainant is arbitrary and is only based on surmises & conjectures.  The observations/assessment of the Surveyor reveals that they are fully satisfied with the records maintained by the complainant and only disagree with the complainant for want of any supporting documents related to ageing of stocks, applied dead stock/handling losses, price variation @25% as per market trend, which too is highly absurd & objectionable.  Also the stock admittedly been gutted in fire, thus, the Surveyor rightly assessed the salvage value to the tune of Rs.50,237/-. It has duly been admitted that the value of closing stock as on date of fire i.e. 13.6.2018 has duly been certified by the Chartered Accountant as more than Rs.One Crore.

 

19]      We are of the considered view that the deductions made as per clause 11.8, as mentioned in the Surveyor’s Report, under various head as well further deductions made by the Opposite Parties as mentioned in the break-up of the claim, are totally unjustified, thus entitling the complainant for its reimbursement. 

 

20]      From the discussion & findings, as discussed in the preceding paragraphs, we are of the opinion that the OPs have acted in an illegal and deficient manner and wrongly denied the full claim to the complainant under insurance policy.  Therefore, the present complaint is allowed against Opposite parties NO.1 & 2 with following directions. 

a]  To pay balance claim amount of Rs.10 lacs (Ten Lacs Only), after making deduction of Rs.50,237/- only towards  salvage as per surveyor’s report, to the complainant along with interest @9% per annum from 19.10.2018 i.e. after one month from the surveyor’s report till the date of payment;

b)  To pay an amount of Rs.25,000/- as compensation on account of deficient services.

 

c)  To pay litigation cost of Rs.10,000/- to the complainant.

 

         This order shall be complied with by the Opposite Party No.1 & 2 within a period of 30 days from the date of receipt of its copy.

 

         The certified copy of this order be sent to the parties free of charge, after which the file be consigned.

Announced

1^st October, 2019                   

                                                                   Sd/-                      (RANJAN DEWAN)

PRESIDENT

         

 

Sd/-

                                                                    (PRITI MALHOTRA)

MEMBER