Haryana

StateCommission

A/81/2022

CHOLAMANDALAM MS GENRAL INSURANCE Co LTD - Complainant(s)

Versus

MS SWASTIK WARDROBE PRIVATE LIMITED AND ANOTHER - Opp.Party(s)

J P NAHAR

05 Dec 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

 

Date of Institution:02.03.2022

Date of final hearing:03.10.2023

Date of pronouncement:05.12.2023

 

First Appeal No.81 of 2022

 

 

IN THE MATTER OF

 

 

1.      Cholamandlam MS General Insurance Co. Ltd., Head Office, 2^nd Floor, Dare House, 2NSC Bose Road, Chennai-600001 through its Managing Director.

2.      Cholamandlam MS General Insurance Co. Ltd.,  Plot No.6, Pusa Road, Near Metro Pillar-81, New Delhi-110005 through its Senior Manager.

Now through its authorized signatory, Sh. Pradeep Pathak, Deputy Manager Claims (Legal), Cholamandlam MS General Insurance Co. Ltd., SCO No.2463-2464, 2^nd Floor, Sector 22-C, Chandigarh.

…Appellants.

Through counsel Mr. J.P. Nahar, Advocate

 

Versus

 

1.      M/s Swastik Wardrobe Pvt. Ltd., S-314, Dharuhera, Udyog Vihar, Phase-1, Gurgaon (Haryana)-122001, through its Partner/Director and authorized signatory Ashwani Manocha, R/o A-226, South City-1, Gurugram (Haryana).

….Respondent No.1.

Through counsel Mr.R.C. Gupta, Advocate

 

2.      Oriental Bank of Commerce, Branch Office, MSME, Now known as Punjab National Bank (After merger), near Railway Road, Branch office, Gurgaon.

….Respondent No.2 (Proforma respondent).

(Service dispensed with).

 

Present:-    Mr. J.P. Nahar, counsel for the appellants.

                   Mr. R.C. Gupta, counsel for respondent No.1.

                   (Service of respondent No.2 dispensed with vide order dated 17^th May, 2022).

 

 

First Appeal No.116 of 2022

 

Date of institution:03.03.2022

Date of final hearing:03.10.2023

Date of pronouncement:05.12.2023

 

IN THE MATTER OF

 

M/s Swastik Wardrobe Pvt. Ltd., S-314, Dharuhera, Udyog Vihar, Phase-1, Gurgaon (Haryana)-122001, through its Partner/Director and authorized signatory Ashwani Manocha, R/o A-226, South City-1, Gurugram (Haryana).

…..Appellant.

Through counsel Mr. R.C. Gupta, Advocate

 

Versus

1.      Cholamandlam MS General Insurance Co. Ltd., Head Office, 2^nd Floor, Dare House, 2NSC Bose Road, Chennai-600001 through its Managing Director.

2.      Cholamandlam MS General Insurance Co. Ltd.,  Plot No.6, Pusa Road, Near Metro Pillar-81, New Delhi-110005 through its Senior Manager.

Now through its authorized signatory, Sh. Pradeep Pathak, Deputy Manager Claims (Legal), Cholamandlam MS General Insurance Co. Ltd., SCO No.2463-2464, 2^nd Floor, Sector 22-C, Chandigarh.

….Respondents No.1 & 2.

Through counsel Mr. J.P. Nahar, Advocate

 

3.      Oriental Bank of Commerce, Branch Office, MSME, Now known as Punjab National Bank (After merger), near Railway Road, Branch office, Gurgaon.

….Respondent No.3 (Proforma respondent).

(Service dispensed with).

 

Present:-    Mr. R.C. Gupta, counsel for the appellant.

                   Mr. J.P. Nahar, counsel for the respondents No.1 & 2.

                   (Service of respondent No.3 dispensed with vide order dated 17^th May, 2022).

 

CORAM:   Mr. S.C. Kaushik, Member.
 

 

O R D E R

 

S.C. KAUSHIK, MEMBER:

 

          Vide this common order above mentioned two appeals bearing F.A No.81 of 2022 and F.A. No.116 of 2022 will be disposed of as both have been preferred against the impugned order dated 16.12.2021 passed by the learned District Consumer Disputes Redressal Forum, Gurgaon (now ‘District Commission’) vide which the complaint filed by the complainant (M/s Swastik Wardrobe Pvt. Ltd.) was partly allowed and the opposite parties (‘Ops’) were directed as under:-

“…we are of the view that it would be suffice, that if the 50% amount of total loss i.e. Rs.2,88,36,467/- suffered by the complainant, is awarded to him. Accordingly, the OPs No.1 & 2 are jointly and severally directed to pay Rs.1,44,18,233/- i.e. 50% of the total loss amount to the complainant along with interest @ 9% p.a. from the date of filing of this complaint till realization. The complainant is also entitled to compensation for harassment and mental agony to the tune of Rs.22,000/- as well as litigation expenses to the tune of Rs.22,000/-. The opposite parties shall make the compliance of this order within 30 days from the date of receipt of the copy of this order.”

 

2.                Brief facts of complaint filed before learned District Commission are that the complainant company had been subscribing Standard Fire and Special Perils Policy of insurance since year, 2012 from inception with insurance companies through MSME cluster of Oriental Bank of Commerce, Gurgaon Branch (“OBC”)-OP No.3 by the bankers only without any gap. The said bank had the standing instructions of the complainant to get all kinds of stock and other goods insured with the insurance company, which was done regularly without any gap, by the bankers only.  The stocks/fixtures/goods of all kinds available in the premises of the complainant firm including finished and unfinished goods were duly insured from time to time through bankers or otherwise appropriately. In this process, OP No.2 through OP No.3 had insured the premises of the complainant to the extent of all the stock and other insurable goods present therein vide policy No.2130/01266793/000/00 for the period 13.07.2018 to 12.07.2019 for a sum insured of Rs.3,00,00,000/- (Rs. Three crores only) by way of payment of advance premium of Rs.71,278/- as mentioned in the schedule policy. The premium amount was paid from the complainant’s (company) account. The policy of insurance was issued by OP No.2 on being fully satisfied on all the aspects about the entity, kind of business, financial status, dealings, status of clients, trade practices and all other issues pertaining to the complainant firm in the course of business as it was doing well and growing business. The policy of insurance was never sent directly to the complainant by the insurance company whereas the said policy might have been released to the bank i.e. OP No.3.

3.                Unfortunately, on 23.12.2018, in the afternoon an accidental fire took place in the insured premises and in the finishing and packing hall due to short circuit, as a result of which it spread and involved the entire stocks/fixtures/goods and raw material as well as the finished/unfinished goods and the allied goods with respect to work in progress, which were burnt to ashes and one Suraj Chaudhary succumbed to the injuries suffered in the said accidental fire, whereas seven others were badly injured. The police was duly intimated about the incident of fire and loss of life and goods/property on the same day. Fire Brigade was also immediately informed and several fire tenders were put in the job of extinguishing the fire, but they could not save the stocks and other material/goods/stock present in the insured premises. Thereafter, complainant on the very next morning sent ex-mail to OP No.3, who in turn informed the insurance company (OP No.2) about the said loss. On 25.12.2018 Surveyor and Loss Assessor of OP No.3 visited the premises of incident and all the queries raised by them vide letter dated 26.12.2018 were duly replied by the complainant orally as well as by documents.

4.                It was alleged that complainant replied all the queries of OPs time to time and requested them to complete the process of survey report, but they put off the matter on one pretext or the other and in an arbitrary manner and in violation of Section 64 of the Insurance Act, 1938 and the guidelines laid down by the Hon’ble National Commission as well as the Hon’ble Supreme Court of India through various judgments with respect to the restriction in deputation of second surveyor or series of surveyors/investigators etc. by the insurer, still preferred to depute another person Shri Suresh Mittal, a Chartered Accountant for the purposes of alleged verification of various accounting aspects and documents which was done even by the earlier surveyor as well, completely in disregard to the law. Complainant replied all the queries raised by them orally as well as by way of documents, but OPs did not release the claimed amount and issued letters raising one query or the other without any basis. It was further alleged that non action/wrong repudiation of the claim by the OPs resulted into accumulation or recurring interest loss to the complainant without any fault. Thus, there was deficiency in service on the part of Ops.

5.                Upon notice, Ops No.1 & 2 have appeared before learned District Commission and submitted their written versions submitting therein that the stock summary provided by the complainant as on date of loss was for Rs.2,88,36,468/- but during investigation surveyor found that the stock value was Rs.2,74,24,554/- leading a difference of Rs.14,11,000/- for which no satisfactory reply had been given by insured. It submitted that major quantity of stocks damaged in the reported fire were being prepared against the three orders of Samaira India Pvt. Ltd. totaling to Rs.2,64,00,000/-. The purchase orders from Samaira India Pvt. Ltd. were not supported by any correspondence documents/e-mail and it was surprised to know that no e-mail communications had happened/received from the client for manufacturing the huge quantity of order. Moreover, as per investigation report, complainant verified business credentials of M/s Samaira from 2012 to 31.03.2017 and found negligible turnover of the company and only during 2017-18 company had achieved trading turnover of Rs.32,86,000/-. So, it cannot be considered a bonafide customer or exporter and their financial standing did not justify an assumption that the insured had taken a risk of manufacturing order of value of Rs.2,64,00,000/- without any communication or advance. It was further submitted that there was huge difference in terms of quantity of production. The purchase order provided was not matched with the balance sheet and there was lot of variation in the cost of fabric consumed for each shirt. Further, it was submitted that opening stock of finished goods was shown as Rs.1,24,00,000/-, but breakup of the same was not available in the audited balance sheet for the year ending 31.03.2018. In the balance sheet all stocks were shown as stock in trade.

6.                It was submitted that the complainant was not having license for operating the garments factory, which was violation of statutory provision and same is violation of terms and conditions of policy. However, the OPs appointed K.D. Kohli Insurance Surveyor and loss assessors Pvt. Ltd., who assessed the loss of Rs.96,52,528.58Ps. The profit and loss account for the year shows the change in inventories of finished goods, work in progress and stock in trade as nil. It shows insured were not carrying inventories of finished & semi-finished goods. However, the tax audit report states that insured were carrying finished goods of 24,604 pcs. No information was available for the value of these items. The information provided by the complainant states insured were carrying FG for Rs.124,10 lakhs. The cost working provided vide e-mail dated 13.05.2018 states negligible value of goods manufactured during the year. It was further submitted that complainant provided provisional balance sheet as on 31.12.2018, certified by their Chartered Accountant, according to which total value of stock at risk on the date of loss was Rs.2,88,36,467/-. Complainant had also provided copies of GST returns (2A for purchased and 3B for sales). The value of 2A & 3B GST returns, tally with the values reflected in the provisional balance sheet except nominal difference in purchase value. However, since the GST return for the month of December, 2018 had not been shared with them, so any sale made therein was not reflected.

7.                It was further submitted that OPs requested the insured vide their e-mail dated 21.06.2019 to clarify about material issued to job-worker(s). Nothwithstanding the lack/absence of capacity to covert raw fabric into finished garments on the date of issue of fabric in a single day, the insured had recorded such conversion and production which in their opinion might have given him the advantage when compared to the low rate of fabric to the corresponding per price value of finished garments produced. Surprisingly, the value of fabric which was Rs.155,40 resulted in increase in the value of finished garments on the very date of issue of fabric and conversion to garment. The low rate of fabric by showing fabric being converted to garments had increased the value of finished garments by nearly Rs.8,372,777/- and this further raised question with regard to value of closing stocks at risk as on the date of loss.

8.                It was further submitted that considering various relevant facts as well as in the absence of required necessary documents, which were not submitted by the complainant, OPs No.1 & 2 have made an effort to carry out only an academic assessment of loss which comes to Rs.96,52,528.85Ps. Other allegations levelled in the complaint have been denied and thus there was no deficiency in service on the part of Ops No.1 & 2. Finally, prayed for dismissal of the complaint.

9.                OP No.3 (Oriental Bank of Commerce) has been made as performa respondent by learned District Commission vide its order dated 09.09.2021.

10.              After hearing, learned counsel for the parties, learned District Commission partly allowed the complaint as mentioned above in para 1^st supra.

11.              Aggrieved from the impugned order, OPs No.1 & 2 (the Cholamandlam MS General Insurance Cim. Ltd.)-Appellants have preferred First Appeal No.81 of 2022 for setting aside the impugned order passed by learned District Commission and complainant (M/s Swastik Wardrobe Pvt. Ltd.)-appellant has preferred the First Appeal No.116 of 2022 for enhancement of award, passed by learned District Commission.

12.                 Arguments have been advanced by Mr. J.P. Nahar, learned counsel for appellants in First Appeal No.81 of 2022 (respondents No.1 & 2 in F.A. No.116 of 2022) and Mr. R.C. Gupta, learned counsel for the appellant in First Appeal No.116 of 2022 (respondent in F.A. No.81 of 2022). With their kind assistance the entire records as well as original record of learned District Commission including whatever evidence have been led on behalf of the parties had also been properly perused and examined.

13.                 Learned counsel for complainant (M/s Swastik Wardrobe Pvt. Ltd.) has argued that OP No.2 (M/s Cholamandlam MS General Insurance Co. Pvt. Ltd.) through OP No.3 (OBC) had insured the premises of the complainant as well as all the stock and other insurable goods present therein vide policy No.2130/01266793/000/00 for the period 13.07.2018 to 12.07.2019 for a sum insured of Rs.3,00,00,000/- (Rs. Three crores only) by way of payment of advance premium of Rs.71,278/- as mentioned in the schedule policy.  He further argued that unfortunately, on 23.12.2018, in the afternoon an accidental fire took place in the insured premises and in the finishing and packing hall, due to short circuit, as a result of which it spread and involved the entire stocks/fixtures/goods and raw material as well as the finished/unfinished goods and the allied goods with respect to work in progress, which were burnt to ashes. He further argued that complainant intimated OP No.3, who in turn informed the insurance company (OP No.2) about the said loss and on 25.12.2018 Surveyor and Loss Assessor of OP No.3 visited the premises of incident and all the queries raised by them vide letter dated 26.12.2018 were duly replied by the complainant orally as well as by way of documents. He further argued that complainant replied all the queries of OPs No.1 & 2 time to time and requested them to complete the process of survey report, but surveyor of insurance company assessed the loss only of Rs.96,52,528.85Ps out of claimed amount of Rs.2,88,36,467/-. He further argued that learned District Commission has erroneously awarded only 50% of claimed amount i.e. Rs.1,44,18,233/- alongwith interest @ 9% p.a. without appreciating the facts on record and that too from the date of filing of complaint not from the date of incident having taken place.

14.                On the other hand, Mr. J.P. Nahar, learned counsel for insurance company (M/s Cholamandlam MS General Insurance Co. Ltd.) has argued that the stock summary provided by the complainant as on date of loss was for Rs.2,88,36,468/- but during investigation surveyor found that the stock value was Rs.2,74,24,554/- leading to a difference of Rs.14,11,000/- for which no satisfactory reply had been given by the insured. He further argued that major quantity of stocks damaged in the reported fire were being prepared against the three orders of Samaira India Pvt. Ltd. totaling to Rs.2,64,00,000/- and purchase orders from Samaira India Pvt. Ltd. were not supported by any correspondence documents/e-mail. As per investigation report, complainant verified business credentials of M/s Samaira from 2012 to 31.03.2017 and found negligible turnover of the company and only during 2017-18 company had achieved trading turnover of Rs.32,86,000/-. He further argued that there was huge difference in terms of quantity of production. Further, the opening stock of finished goods was shown as Rs.1,24,00,000/-, but breakup of the same was not available in the audited balance sheet for the year ending 31.03.2018 and in the balance sheet all stocks were shown as stock in trade. He further argued that the complainant was not having license for operating the garments factory, which was violation of statutory provisions and the same is violation of terms and conditions of policy. However, the OPs appointed K.D. Kohli Insurance Surveyor and loss assessors Pvt. Ltd., who assessed the loss of Rs.96,52,528.58Ps.  He further argued that the complainant provided provisional balance sheet as on 31.12.2018, certified by their Chartered Accountant, according to which total value of stock at risk on the date of loss was Rs.2,88,36,467/-. Complainant had also provided copies of GST returns (2A for purchase and 3B for sales). The value of 2A & 3B GST returns, tally with the values reflected in the provisional balance sheet except nominal difference in purchase value. However, since the GST return for the month of December, 2018 had not been shared with them, so any sale made therein was not reflected. He further argued that considering various relevant facts as well as in the absence of required necessary documents, which were not submitted by the complainant, insurance company (OPs No.1 & 2) have made an effort to carry out only an academic assessment of loss which comes to Rs.96,52,528.85Ps.

15.                It is an admitted fact that the complainant claimed relief for an amount of Rs.2,88,26,467/- towards the loss occurred due to fire that took place on 23.12.2018 in its insured premises. It is also an admitted fact that all the stocks/fixtures/goods etc. available in the insured premises of complainant were insured with the appellants-OPs No.1 & 2(M/s Cholamandlam MS General Insurance Co. Ltd.) vide policy No.2130/01266793/000/00, valid from 13.07.2018 to 12.07.2019 for a sum of Rs.3,00,000,00/- (Rs. Three crores only). However, the surveyor appointed by insurance company vide its report dated 01.08.2019 assessed the loss to the tune of Rs.96,52,528.85Ps. only, but complainant did not agree for the same.

16.                 Appellant-complainant(M/s Swastik Wardrobe Pvt. Ltd.) has filed the appeal for enhancement of award as it sought relief to the tune of Rs.2,88,36,467/-. It is also an admitted fact that the surveyor of insurance company assessed the loss of Rs.96,52,528.85Ps. vide its report dated 01.08.2019 just to carry out only an academic assessment of loss not under any liability which was incorporated in policy. However, learned District Commission after going through the entire record of complaint as well as surveyor report, awarded only 50% of claimed amount i.e. Rs.1,44,18,233/- without any reasoning along with interest @ 9% p.a., from the date of filing of complaint till its realization.

 It is pertinent to mention here that complainant had taken the insurance policy for a sum of Rs.3,00,000,00/- and it is an admitted fact that the premium of Rs.71,278/- was also paid. On the other hand, it is also proved on record that the fire took place at the insured premises and learned District Forum awarded 50% of the claimed amount.

17.                After giving a thoughtful consideration to the contentions raised by learned counsel for parties, in considered view of this Commission, while passing the impugned order, learned District Commission has erroneously fell into error while awarding 50% (Rs.1,44,18,233/-) of the claimed amount (Rs.2,88,36,467/-) without giving any reasoning. However, as per surveyor report, surveyor assessed the loss to the tune of Rs. 96,52,528.85Ps. vide its report dated 01.08.2019, which is also an admitted fact. Learned District Commission should have justified by passing a speaking order while awarding an amount of Rs.1,44,18,233/- to the complainant. It is also pertinent to mention here that the incident of fire as well as loss was admitted by the insurance company relying upon its surveyor who assessed the loss to the tune of Rs.96,52,528.85Ps., but learned District Commission nowhere mentioned as to how 50% of claimed amount was taken into consideration at the time of awarding the amount. A bare reading of the impugned order dated 16.12.2021 reveals that it is a non-speaking order without giving any reasoning in support thereof. Only the facts, evidence and contentions of the parties have been mentioned. Although, the learned District Commission had made reference to the judgment of Hon’ble Supreme Court of India in the impugned order yet it failed to give any reason as to how the report of surveyor (Ex.RW-3) has been discarded by it. The learned District Commission should have pointed out each and every amount, which was to be allowed or disallowed by giving specific reasons. The District Commission should have given some cogent reasons and justification before issuing the aforesaid directions. The judgment must provide the reasons for an appellate court to consider and reasons are soul of any order to sustain and to appreciate the same by the appellate authority. This has been observed in a catena of judgments by Hon’ble Supreme Court of India. Reference may be made to the order of Hon’ble Supreme Court of India  in “Shyam Lal Suresh Kumar Vs. State of Haryana & Others (2008) 149, PLR, 262. However, nothing has been discussed by the learned District Commission on the evidence of the parties. A very innocuous order has been passed by the learned District Commission, which is liable to be set-aside.

18.                In view of the above discussion, impugned order dated 16.12.2021 passed by learned District Commission, Gurgaon is hereby set-aside. The case is remitted to the learned District Commission, Gurgaon for deciding the same afresh after hearing the parties afresh and on appreciation of the whole evidence on record by passing a speaking and reasoned order preferably within a period of six months from the date of issuance of a copy of this order. If required, the District Commission may take the assistance of expert opinion of a Chartered Accountant, loss assessor, an expert on insurance matters or any other expert to arrive at just assessment of loss incurred and consequent calculation of compensation involved in this case.

19.                The statutory amount of Rs.78,28,387/- was deposited by the appellants at the time of filing of the First Appeal No.81 of 2022 titled as “Cholamandlam MS General Insurance Co. Ltd. Vs. M/s Swastik Wardrobe Pvt. Ltd.” Thereafter, an amount of Rs.39,14,193/- was released in favour of complainant (M/s Swastik Wardrobe Pvt. Ltd.) as per the order dated 15^th July, 2022 passed by this Commission. Since, the fact of loss occurred to complainant due to fire was admitted by insurance company and its surveyor after verification of documents, site visit and investigation assessed the loss to the tune of Rs. 96,52,528.85Ps. and it is apparent from the material on record that the insurance company is inclined to release the amount of compensation assessed by its surveyor, so, in considered opinion of this Commission, it would be in the interest of justice, if the remaining deposited amount is ordered to be released in favour of complainant (M/s Swastik Wardrobe Pvt. Ltd.). Hence, the remaining deposited amount of Rs.39,14,194/- be also released in favour of complainant (M/s Swastik Wardrobe Pvt. Ltd.) against proper receipt and due verification after expiry of the period of appeal, revision, if any against this order.

20.                Both the appeals bearing F.A No. 81 of 2022 and F.A. No.116 of 2022 stand disposed of in terms of the aforesaid. The parties through their counsels are directed to appear before the learned District Commission, Gurgaon on 20.12.2023.

21.                The original judgement be attached with appeal No.81 of 2022 and its certified copies be attached with appeal No.116 of 2022.

22.                A copy of this order be provided to all the parties free of cost as mandated by provisions of the Consumer Protection Act, 2019. This order be uploaded forthwith on the website of the Commission for perusal of the parties.

23.                Application(s), pending, if any, stand disposed of in terms of the aforesaid order.

24.                File be consigned to record room alongwith a copy of this order.

 

Pronounced on 05^th December, 2023                           S.C Kaushik,

Member        

Addl. Bench-III