C.D.No.54 of 2004

Between-

M/s.Balabux Mantri, a partnership firm

Having its office at Bhainsa, Adilabad Dist.,

Rep. by its Partner Sri Murlidhar Bharadia,

S/o. Sri Bhikulal, aged 38 years,

Adilabad District                                                                               ..Complainant.

                        And

M/s.National Insurance Co. Ltd.,

Represented by its Branch Manager,

4-8-799/1, Ist floor,

B.Laxmiraj Complex, Jawahar Road,

Nizamabad.                                                                                       ..Opposite Party

Counsel for the Complainant- Mr.Suresh Kumar Bung

Counsel for the Opp.Party- Mr.T.Phalguna Rao

CORAM- THE HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.

          SMT.M.SHREESHA, MEMBER

AND

                       SRI G.BHOOPATHI REDDY, MEMBER.

TWO THOUSAND EIGHT

Oral Order-(Per Smt.M.Shreesha, Hon’ble Member)

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The brief facts as set out in the complaint are that the complainant  is a registered partnership firm carrying on business in cotton seeds, cakes, oil and allied products with registration number 682 of 1984.  The complainant submitted that they used to keep their goods in the godown premises of M/s.Tirupathi Industries, Nirmal road, Bhainsa for processing and storing and had insured their goods lying/kept in the said godown with opposite party from time to time by paying the premium. 

On 02-10-2002 the complainant insured their goods i.e. cotton seed and cake lying in the said godown with opposite party for a sum of Rs.30-00 lakhs and the period of insurance being 2-10-2002 to 01-11-2002 by paying a premium of Rs.2,246/- vide cheque bearingNo.088994 dt.02-10-2002.  Opposite party in confirmation of the said insurance and on receipt of the cheque issued a fire insurance cover note initially bearing No.010483 dt.02-10-2002 and the said cover note shall be in full force till a policy is issued in lieu thereof.   On 04-10-2002 at about 10.30 p.m. a fire broke out in the aforesaid godown premises of M/s.Tirupathi Industies and the same was informed immediately to the Bhainsa Fire Station and Police Station and the police issued F.I.R. No.62 in respect of the said mishap.  The goods of the complainant lying in the said godown were gutted in the fire accident and the complainant could not contact and inform the opposite party as he was not available.  However, he contacted Mr.G.Manohar Reddy, Development Officer at Nizamabad on Phone on 5-10-2002 and requested to depute a surveyor to assess the loss.  Mr.G.Manohar Reddy along with Mr.S.Baldev Singh, surveyor, of the opposite party came to Bhainsa on 5-10-2002 between 10.00 to 11.00 A.M. and visited the spot and inspected/verified the records including stock register and noted down the contents and the surveyor signed on the stock register maintained by the complainant.  At that time, the complainant issued a letter dated 5-10-2002 to the Development Officer informing the fire accident in writing and the fire extinguished at about 11.30 p.m. on 05-10-2002.  The complainant submitted the claim form to the opposite party.  On -9-10-2002, the opposite party represented by its Branch Manager and surveyor, Mr.S.Baldev Singh visited the spot and inspected the spot and records and the branch manager also signed on the stock register and informed the complainant that another surveyor from Hyderabad will also come to assess the loss. 

On 11-10-2003, Mr.M.N.Ramakrishna, surveyor of the opposite party from Hyderabad visited/inspected the spot and records of the complainant and signed on the stock register and collected all papers and information from the complainant with regard to the stocks.  The said surveyor has orally informed that the assessed loss would be around Rs.26 – 27 lakhs. The complainant repeatedly requested the opposite party to settle the claim but opposite party informed that the matter is in process and the claim will be settled but issued a letter dated 28-1-2003 to him repudiating his claim and cancelled the cover note and sent the cheque dated 28-1-2003 for Rs.2,246/- being the refund of premium received by them.  The opposite party alleged that the cover note for the risk is obtained after occurrence of loss fraudulently by misrepresentation, non-disclosure and suppression of material facts i.e. occurrence of loss prior to receipt of premium and thereby the contract of insurance is void a-bin-itio and therefore not liable for any loss under the above referred cover note.  Thereafter the complainant issued  a reply letter dated25-2-2003 to the opposite party denying the allegations made in the letter dated 28-1-2003 and returned the aforesaid cheque and requested them to given an opportunity to present the case.   Opposite party though received the said reply letter failed to issue any reply.  The complainant submitted in lieu of the cover note dated 2-10-2002, opposite party prepared Standard Fire Policy bearing No.3100948 for issuing to the complainant.  The complainant submitted that opposite party has no right to cancel the aforesaid cover note and that they failed to furnish any documents/record to the complainant in support of their allegations made in the letter dated 28-1-2003.  The complainant got issued another letter dated 21-4-2005 to the Regional Office of the opposite party and copies were marked to divisional office but they did not choose to give any reply.  The complainant issued a legal notice dt.6-10-2003 to the opposite party demanding the payment and also to furnish copy of the survey report of Mr.S.Baldev Singh and Mr.M.N.Ramakrishnan but did not receive any reply and therefore got issued another reminder notice dt.12-11-2003 for which a reply dated 16-1-2004 was given with false and frivolous allegations. 

The complainant submitted that 255 quintals (510 bags of 50 Kgs. each) of cotton seed cake which were not damaged were shifted to a nearby factory and the same has been inspected and verified by the said surveyors and branch manager of the opposite party and that 4115 quintals of cotton seed cake was gutted in the said fire and the cost of it is Rs.28-00 lakhs inclusive of sales tax and the complainant suffered the said loss and the opposite party is liable to settle the claim within 45 days but it failed to settle the claim inspite of repeated demands.  Hence the complaint for a direction to the opposite party to pay Rs.38,89,333/- towards loss/damage caused due to the fire accident with interest at the rate of 24 percent p.a. from the date of complaint till the date of payment, to pay a sum of Rs.25,000/- towards mental agony and also costs.

Opposite party filed counter and submitted that the Development Officer, Mr.Manohar Reddy of the opposite party, insurance company, branch office issued a cover note No.010483 noting the time and date as 11.00 A.M. on 02-10-2002 covering the stocks of cotton seed cake of insured M/s.Tirupathi Industries, Bhainsa for Rs.30.00 lakhs  with effect from 02-10-2002 (11.00 a.m.) to 01-11-2002 on Standard Fire  and Special Peril Policy.  The cover note with cheque was received in office on 7-10-2002 through courier and after thorough investigation, it was found that the said courier was booked on 05-10-2002 in Bhainsa by the said Development Officer.  Thereafter a fire claim was reported by the complainant on phone to the said development officer on 5-10-2002, who arranged spot survey  through the surveyor, Mr.Baldev Singh.   However, their branch at Nizamabad had received official intimation of claim on 9-10-2002 and ultimately referred the  matter to Regional Office of opposite party, Hyderabad for close promixity and survey.  Thereupon the Regional Office of opposite party, Hyderabad on 10-10-2002 appointed M/s.M.N.R. Investigator for investigating  and the said surveyor after conducting survey has submitted his report on 5-12-2002 with a final assessment of Rs.24,42,323/- and after applying excess of Rs.10,000/- worked out to Rs.24,42,343/- as loss on account of fire.  However, the surveyor while submitting his report has expressed the possibility of issuance of  pre-dated cover note by the development officer after loss colluding with the complainant and suggested thorough investigation.  Thereafter one Mr.K.Ganga Prasad, Administrative Officer of Hyderabad Regional Office was entrusted the job of doing investigation and he has done investigation and on 25-10-2002 submitted his report.  In the said report, it has been categorically stated that the cover note was issued by the development officer on 5-10-2002 with back dating from 2-1-0-2002 to 01-11-2002 i.e. after occurrence of the  fire loss at insured’s godown, misrepresenting and suppressing the material facts.  Thus it is a clear case of making false claim that too after occurrence of the fire accident. The complainant in collusion with the development officer of the opposite party company has created the cover note showing that as if it was issued on 2-10-2002 though it was obtained from the development officer on 5-10-2002 after occurrence of the fire accident.  In view of the above reasons, opposite party repudiated the claim of the complainant vide letter dated 28-1-2002 and the same was informed to the complainant.  Apart from that a cheque bearing No.710168 for an amount of Rs.2,246/- was also sent to the complainant towards refund of the entire premium  paid by them to the development officer. However, the complainant returned the cheque vide letter dated 25-2-2003 which was received by opposite party on 28-2-2003 requesting to reconsider the claim

Opposite party contended that the cover note was issued to the complainant by the development officer of the opposite party, however, with back date i.e. 02-10-2002 but as a mater of fact the cover note was given on 5-10-2002 i.e. after occurrence of the alleged fire accident dated 4-10-2002 in collusion with the complainant.  They also denied the allegation of the complainant that 255 quintals  each of cotton seed cake was not damaged and shifted to a nearby factory and the same has also been inspected and verified by the said surveyors and branch manager of the opposite party and that 4115 quintals of cotton seed cake were gutted in the said fire and the cost of the said 4115 quintals of cotton seed cake is Rs.28.00 lakhs.  They further reiterated that the cover note was obtained by the complainant with the help of the development officer of the opposite party fraudulently and submitted that there is no deficiency of service on their behalf and the question of liability of the opposite party does not arise and prayed for dismissal of the complaint.     

The complainant filed his affidavit in lieu of evidence and got marked Exs.A1 to A15.  He also filed C.C.I.A.No.1264/2008 along with his affidavit  to receive the enclosed documents, which are marked as Exs.A16 to A19. In his affidavit, he reiterated the facts stated in the complaint and denied the allegation that the cover was issued on 5-10-2002 with back dating after occurrence of the fire mishap and misrepresented and suppressed the material facts and that they in collusion of the Development Officer of the opposite party created the cover note as if it  was issued on   02-10-2002 though it was obtained on 5-10-2002.  He submitted that the opposite party in collusion with its staff and surveyor have created and concocted the alleged story of back dating of cover note with a view to avoid payment.  He further submitted that the opposite party cannot take advantage of the negligence of its employees and repudiate the lawful claim. He further submitted that the opposite party issued insurance policies to other insurers who have inured their goods on 02-10-2002 with the development officer of the opposite party and to whom the cover notes were also issued by the said Development Officer and subsequently policies were also issued to them and the said policies disclose that the risk is covered from 02-10-2002.   Thus, it is crystal clear that the said cover note issued by the development officer of the opposite party was not issued on 5-10-2002 as alleged by opposite party but issued on 2-10-2002 itself.  He further submitted that the development officer while covering the insurance on 02-10-2002 has issued cover notes to all insurers and the cover notes issued to other insurers is subsequent to the cover note  issued to the complainant.  Thus it cannot be said  that the cover note was issued to the complainant on 5-10-2002 and that the opposite party failed to file any document to show that there is collusion between the complainant and the said officer and that the said Development Officer is still working with the opposite party.  He also submitted that the allegation of the opposite party that the surveyor has stated in its report that the loss caused due to the fire is at Rs.24,42,343/- is not correct.  He also filed another affidavit in C.C.I.A.No.1264/2008 to permit him to file documents, marked as Exs.A16 to A19 which are cover note Nos.10484 to 19487 dated 2-10-2002 which prove that the cover note No.10483 was issued to the complainant on 2-10-2002 itself and prayed to allow the complaint as prayed for. 

Ex.A1 is copy of Fire Insurance Cover note bearing No.010483 dated 02-10-2002.  Ex.A2 is the  F.I.R.No.62 dated 5-10-2002 of Bhainsa Police Station, , Adilabad District.  Ex.A3 is letter of the complainant dated 5-10-2002 intimating fire accident to opposite party.  Ex.A4 is Fire Service Attendance Certificate dated 8-10-2002 stating that fire broke out on 4-10-2002 at 22 hours 30 minutes at the godown of M/s.Tirupathi Industries, Bhainsa.  Ex.A5 is the copy of Account Statement of the complainant duly verified and signed by Sri S.Baldev Singh, Surveyor, Branch Manager of opposite party and Sri M.N.Ramakrishna, Surveyor.  Ex.A6 is copy of repudiation letter dated 28-1-2003 stating that the cover note was obtained by the complainant fraudulently by mis-representation, non-disclosure and suppression of material facts.   Ex.A7 is copy of letter dated 25-2-2003 by the complainant to opposite party returning the cheque of premium amount and requesting the opposite party to reconsider their decision.  Ex.A8 is copy of letter of the complainant to the opposite party stating that the complainant is their old customer and the cover note was issued on 02-10-2002 and that the opposite party also hided the fact that the cover note was converted into Standard Fire Policy under Police No.3100948/02 and to give them an opportunity  to represent the matter with records and documents.  Ex.A9 are the courier acknowledgements.  Ex.A10 is the office copy of legal notice dated 6-10-2003 calling upon the opposite party to pay Rs.28-00 lakhs together with interest at 24 percent p.a. from 5-10-2002 till the date of payment.  Ex.A11 is the postal acknowledgement card.  Ex.A12 is reminder legal notice to opposite party dated 12-11-2003.  Ex.A13 is postal acknowledgement card.  Ex.A14 is reply notice by opposite party dated 16-1-2004.  Ex.A15 is the acknowledgement of Registration of Firm.  Ex.A16, is the cover note No.10484 dated 02-10-2002, issued to M/s.Shyam Sunder Mandhani covering  Cotton FP Bales situated at M/s.Sri Balaji Ginning Factory, Bhainsa.  Ex.A17 is cover note No.10485 dated 02-10-2002 issued to M/s.Shyam Sunder Mandhani covering Cotton FP Bales, situated at M/s.Mitesh Industries, Bhainsa.  Ex.A18 is cover note No.10486 dated 02-10-2002 issued to Sri Balaji Cotton Products covering Cotton seed cake, situated at M/s.Yogesh Oil Industries, Bhainsa. Ex.A19 is cover note No.10487 dated 02-10-2002 issued to Sri Ganesh Industries covering Cotton seed cake, situated at M/s.Sri Ganesh Industries, Bhainsa.

Opposite party filed affidavit in lieu of its evidence reiterating the facts stated in the counter and got marked Exs.B1 to B3.

Ex.B1 is copy of cover note No.10483 issued to the complainant.  Ex.B2 is the survey report of M.N.R.Associates dated 5-12-2002 assessing the net loss at Rs.24,42,343/-.  Ex.B3 is the investigation report dated 25-10-2002.

The point for consideration is whether there is deficiency of service on behalf of the opposite party and if the complainant is entitled to any relief sought for in the complaint-

The complainant as well as opposite party filed written arguments.