A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSIONAT HYDERABAD.
F.A. 577/2008 against C.C. 96/2007, Dist. Forum, Kadapa
Between:
The New India Assurance Company Ltd.
Rep. by its Divisional Manager
Divisional Office, Sairam Towers
Nagarajupet, Kadapa. *** Appellant/
O.P. No. 1
And
1) Vijitha Oil Company
Rep. by its Managing Partner
V. Bhagavan Reddy
S/o. Subba Reddy
Age: 45 years,
D.No. 9/108, Ukkayapalli Road
Kadapa. *** Respondent/
Complainant
2) State Bank of India,
Rep. by its Branch Manager
Main Branch, Kadapa. *** Respondent/
Op2.
Counsel for the Appellant: Mrs. Kalpana Ekbote
Counsel for the Resp: M/s. V. R. Reddy Kovvuri (R1)
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHREESHA, MEMBER
WEDNESDAY, THIS THE TWENTY FIFTH DAY OF AUGUST TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) This is an appeal preferred by the insurance company against the order of the Dist. Forum directing it to pay Rs. 11,23,908/- together with interest, compensation and costs.
2) The case of the complainant in brief is that it had taken standard fire and special perils policy on stocks of groundnut seeds for Rs. 11 lakhs, cakes for Rs. 15 lakhs, groundnut oil for Rs. 20 lakhs totalling Rs. 46 lakhs covering the period from 17. 3. 2006 to 16.3.2007. While so, there was a fire accident on 30.11.2006 resulting in damage of 170 bags of groundnut seeds worth Rs. 4,10,833/-, 10150 kgs of groundnut oil worth Rs. 6,14,075/-, 110 bags of groundnut powder worth Rs. 99,000/- totalling Rs. 11,23,908/- due to sparks from arc welding. After coming to know of this it submitted claim, however, the insurance company repudiated it on 17.5.2007 on the ground that there was discrepancy in the time of fire accident. It is without any basis. Therefore he claimed Rs. 11,23,908/- with interest @ 18% p.a., together with compensation of Rs. 50,000/- and costs of Rs. 5,000/-.
3) The appellant insurance company resisted the case. While admitting issuance of policy, it alleged, that in the intimation letter received by it on 2.12.2006 they found discrepancy wherein it was stated that the watchman came and personally informed whereas in the FIR it was mentioned that it was informed by phone. The fire department noted the outbreak of fire was at 6.30 p.m., information was given at 6.50 p.m and they extinguished the fire within 20 minutes. There was a mention that repair works were carried out at the oil mill premises. FIR was lodged belatedly though the mill was situated at 1-1/2 KMs. Immediately they appointed a surveyor on 1.12.2006 to conduct spot inspection. By the time he reached there the debris were cleared leaving no evidence to assess the actual loss. The investigator found that when huge fire accident took place it is not easy or possible to clean the area overnight and get the machine ready in a working condition by next morning itself. None of the machinery was spoiled. The walls were not even affected with smoke. The bills filed by the complainant were verified and found that no such persons mentioned in the bills were available. They also came to know that purchases were made a day or two prior to the accident. In November, 2006 they purchased groundnut seeds, oil and cakes. The mill was not in operation for the past two months prior to the date of accident. The bills are all fake. In fact Tractor bearing No. AP 04 T 3241 belonging to A. Sanjeeva Reddy was transferred to Ranga Reddy district on 27.11.2000 itself. Therefore the question of transportation in the said vehicle will not arise. The surveyor has assessed the actual loss at Rs. 1,49,336/- only. The complainant lodged a false claim for Rs. 16,43,908/-. The complaint was filed for Rs. 11,23,908/- as the claim being fraudulent the insurance company prayed for dismissal of the complaint with costs.
4) R2 bank filed counter stating that the complainant had availed cash credit loan of Rs. 40 lakhs on 18.7.2005. All the stock in trade have been hypothecated to it. All the sale have been routed through the account and the complainant has been furnishing monthly stock statements. The policy was obtained in favour of the bank for the period from 17.3.2006 to 16.3.2007. On 30.11.2006 it had informed the bank about the loss of stocks in the fire accident. Its field officer immediately went and inspected the unit and on his report it had informed the insurance company about the fire accident. At any rate it was not a necessary party. Despite complainant produced the relevant records the insurance company did not settle the claim. Therefore it prayed for dismissal of the complaint with costs.
5) The complainant in proof of its case filed the affidavit evidence of its Managing Partner and got Exs. A1 to A8 marked, while the appellant filed Exs. B1 to B17.
6) The Dist. Forum after considering the evidence placed on record opined that the complainant could prove that the stocks worth Rs. 11,23,908/- was lost in the fire accident that took place on 30.11.2006, and therefore directed the insurance company to pay Rs. 11,23,908/- with interest @ 9% p.a., from the 30.11.2006 till the date of realization together with compensation of Rs. 3,000/- and costs of Rs. 2,000/-. The case against R2 bank was dismissed.
7) Aggrieved by the said decision, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the claim was fraudulent. It did not consider the surveyor’s report wherein the loss was assessed at Rs. 1,49,336/-. The bills that were submitted were fake and therefore prayed that the appeal be allowed.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
9) It is an undisputed fact that the stocks situated in the oil mill were covered by a policy Ex. A1 covering the period from 17.3.2006 to 16.3.2007 for Rs. 46 lakhs. It is not in dispute that on information at about 6.50 p.m. on 30.11.2006 the Station Fire Officer, Kadapa reached the premises at 18.57 hours and extinguished the fire. He mentioned the loss of property at Rs. 16 lakhs. In fire attendance certificate Ex. A3 it was mentioned the supposed cause of fire was ‘sparks from arc welding became the source of ignition and after some time it caught fire’. A report was also given to the police on which a case in Crime No. 264/2006 was registered as accidental fire vide Ex. A4. The complainant alleged that after working hours it was closed at 6.00 p.m. and at about 7.30 p.m. it was informed that there was a fire accident on account of sparks from arc welding where stocks worth Rs. 16,43,908/- were destroyed. The complainant equally informed the insurance company as well as the bank from which it had borrowed the amount by hypothecating the stock in trade under Ex. A2. The insurance company pleaded in its counter that the “respondent company has appointed a surveyor immediately and he went to the oil mill for inspection on 1.12.2006 at about 11.00 a.m. to assess the loss and to conduct a spot inspection. While repudiating the claim by its intimation under Ex. A5 dt. 17.5.2007 six months after the accident it had mentioned that “ immediately after your claim intimation about the fire accident on 30.11.2006 at your oil company premises said to be caused damage to your stock etc., we deputed our surveyor Mr. G. Venkatarama Raju, Kadapa to inspect the place of accident and assess the loss if any. It was mentioned that he inspected the spot on 1.12.2006 and submitted his report. In order to come to a correct and just assessment, we also got investigated the matter by investigating agency viz., M/s. Reliable Investigation Consultants, Hyderabad. The said agency also conducted detailed investigation and submitted the investigation report.”
10) The claim was repudiated on the ground of discrepancy in time of accident between the report to the police and report to the fire officer. In the FIR there was a mention that the fire accident was informed to the complainant by his watchman over phone about 7.30 p.m. But in the fire attendance certificate the fire officer noted in the coloumn Nos. 3 to 6 that the out break of fire was at 6.30 p.m and intimation to them was at 6.50 p.m and reached the spot at 6.57 p.m. and within 20 minutes the fire was extinguished. We may state there is no proof that no other intimation was received by the Station Fire Officer from the locality, so that he could go and extinguish the fire. The fact remains that except the above minor discrepancy the very surveyor as well was investigator besides the Station Fire Officer had admitted that there was fire accident in the mill on 30.11.2006. The Surveyor Sri G. Venkatarama Raju by his belated report dt. 27.3.2007, while admitting the fire accident he noted “ it is due to welding sparks from the welding repairs to the elevator section contacted with G.N. seed stocks and caught fire and spread to the near by stocks & machinery etc. burnt and damaged”. He assed the loss as under :
1. Cost of 2191 kgs of G.N. oil @ Rs. 53.83 ps per Kg 1,17,941.53
2. Cost of 240 Kgs of G.N. seed @ Rs. 25.31 ps per Kg. 6,074.40
3. Cost of 3026 Kgs G.N. cake @ Rs. 7.42 ps per Kg 22,452.92
4. Water damaged G.N. seed loss considered at 20% 12,867.60 ----------------
1,59,336.45
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He was of the opinion that claim of the insured for Rs. 16,43,908/- is on a higher side. He assumed that “If that much oil, seed, cake burns the heat developed would have been very high. If that could have produced that much heat the factory roof sheets, iron, machinery would have affected very badyly. But it is not so happened only minor fire accident occurred and resulted in small loss.” This is evidently a surmise without any basis. Importantly he did not allege any foul play. He assessed the net loss at Rs. 1,49,336/- after deducting policy excess. He did not say that the bills were fabricated or that there was foul play. Obviously not satisfied with his report, the insurance company had appointed yet another investigator, though the Hon’ble Supreme Court time and again deprecated the practice of appointing surveyor after surveyor till a report is received to its liking. They have to give reasons if they intend to appoint vide Sri Venkateswara Syndicate Vs. Oriential Insurance Company reported in II (2010) CPJ 1 (SC). The investigator ‘ Reliable Investigation Consultants’ by a belated report dt. 10.1.2007 evidenced under Ex. B6 gave altogether a different report. He noted that on 30.11.2006 a small fire broke out in the premises of the complainant. He further noticed that there were no traces of smoke and they were all clean. He visited all the villages to contact the farmers who supposedly sold ground nut seeds and cake to the oil mill and found that all the addresses are fictitious. Even the tractor No. AP 04 T 3241 which was reportedly used for transporting ground nuts was transferred to Ranga Reddy district on 27.11.2000. Therefore he presumed that the insured had shown an inflated stock position as on the date of fire accident by producing fake bills. Obviously basing on this investigation report the insurance company had repudiated the claim by its letter Ex. A5 dt. 17.5.2007.
11) At the outset, we may state that the investigation report was contrary to the report submitted by the earlier surveyor. The affidavits of the village officers were not even filed to show that the names of the persons mentioned in the bills were all fictitious and they were not residents of those places. He obtained some letter from the so called villagers who in turn said to have stated that the person shown in the bill Sri Gangi Reddy had left the village about 10 years ago and residing at Nandyal. Obviously this sort of evidence was cooked up almost one year after the incident.
12) Evidently R2 bank to which stocks were hypothecated admitted the damage and that the sales were being routed through the account and the complainant has been furnishing the monthly stock statement. It has also stated that on receipt of report that a fire accident took place, it has informed the insurance company under Ex. B3 filed by the very appellant insurance company. It also alleged that its field officer inspected the unit and confirmed the same. It accused the insurance company that though the complainant had produced the relevant records to show that the fire accident took place in his premises the insurance company did not settle the claim. The complainant has filed Ex. A7 Sales Tax Returns as well as Ex. A8 General Stock Register for the month of November, 2006 to show that stocks were lying as on the date of accident. However, with one stroke it alleged that all these were fabricated. Neither the surveyor nor the investigator tried to find out from the bank whether these statements were routed through it.
13) To prove that the transactions are false, the insurance company tried to rely on a transaction where some stocks were transported by a tractor bearing No. AP 04 T 3241 standing in the name of one Sri Sanjeeva Reddy. According to it the vehicle was transferred to Ranga Reddy district on 27.11.2000 vide Ex. B15. A perusal of Ex. B15 shows that it was in the name of Sri Sanjeeva Reddy a resident of Sankapuram, Kadapa. The fact that it was transported on a tractor was gathered from an endorsement made on one of the bills marked as Ex. B7. Though the investigator while admitting that R.C. of the tractor was genuine but stated that it was transferred to Ranga Reddy district on 27.11.2000. Photostat copy of the R.C. which was marked as Ex. B15 does not show that it was transferred to Ranga Reddy district. It is not known where from the investigator could find such an endorsement. It is unfortunate that the investigator did not take the same in writing from the RTA authorities. Even assuming without admitting that it was transferred there is no proof that said tractor was not used for transportation of commodities mentioned in Ex. B7. We may state that these stocks were routed through R2 bank and there could not have been any suspicion in the claim. In fact there is palpable discrepancy between the surveyor’s report and the investigator report.
14) The learned counsel for the appellant relying a decision of Supreme Court in United India Insurance Company Ltd. Vs. Roshanlal Oil Mills Ltd. reported in (200) 10 SCC 19 contended that without considering the surveyor report the claim should not be allowed. No doubt it was held it is an important document and non-consideration of it would result in serious miscarriage of justice and vitiates the judgement. This contention has no place when the insurance company itself has appointed surveyor after surveyor till a report came to its satisfaction contrary to the decision of the Hon’ble Supreme Court cited supra. When the insurance company has appointed another investigator, after a long gap of time it did not mention why it did not accept the report of the first surveyor in order to justify appointment of second investigator. In fact it ought to have given reasons for appointing second investigator. We may state that on perusal of investigation report it would show that investigator must have been directed to gather some evidence for repudiating the just claim. The second investigator accordingly without any basis submitted a report by pointing out a discrepancy here and a discrepancy there which would not go into the merits of the matter and finally repudiated. Obviously that was the reason why the investigating agency while thanking the insurance company for entrusting job mentioned “We thank you for entrusting this job to us and hope our report is up to your expectations and satisfaction. We always look forward to be associated with you more frequently to develop our mutual business prospects and benefits.” Vide Ex. B6. This would connote that the investigator has obliged the insurance company and such a report was given in furtherance of business interests of both sides. This was really unfortunate.
15) To sum up, the complainant could prove that there was a fire accident wherein the stocks were destroyed confirmed by the FIR, Station Fire Officer report besides report of the first surveyor marked as Ex. B5. One year after the accident again the insurance company obtained a report from Reliable Investigation Consultants, Hyderabad contrary to the report given by the first surveyor under Ex. B5. We have perused Ex. B6 and of the opinion that he adopted specious reasoning in rejecting the claim. For example, in regard to account, linked to stocks maintained by State Bank of India. While admitting he stated that “Account with SBI is a cash credit account linked to stocks (under small scale industries). The insured is having a credit facility of Rs. 40 lakhs on this account. But the insured had failed to provide us a statement of account up to 30.11.2006. He gave us a statement up to 2.11.2006 only. Hence, we could not compare the purchases and withdrawal of amount from the bank as all the transactions were made in cash.” There is no reason why he did not seek the account from the bank, more so when the bank authorities had admitted that the stocks were routed through it. As we have earlier pointed out that he intended to repudiate the claim. These conclusions arrived at by him are fanciful and not based on any record. We have perused the entire evidence in this case and we are of the opinion that the Dist. Forum did not commit any irregularity either in appreciation of fact or law in this regard. We do not see any merits in the appeal.
16) In the result the appeal is dismissed with costs computed at Rs. 5,000/- Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 25. 08. 2010.
*pnr
