DR. SADHNA SHANKER, MEMBER

1.       This appeal has been filed under section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as the ‘Act’) in challenge to the Order dated 10.08.2020 of the State Commission in complaint no. 182 of 2018 whereby the complaint was partly allowed.

2.       We have heard the learned proxy counsel for the appellant (hereinafter referred to as the ‘insurance company’) and the learned counsel for the respondent (hereinafter referred to as the ‘complainant’) and perused the record including the State Commission’s impugned Order dated 10.08.2020 and the memorandum of appeal.

3.       The appeal has been filed with reported delay of 43 days.

In the interest of justice, inter alia considering the reasons given in the application for condonation of delay, the delay in filing the appeal is condoned.

4.       The brief facts of the case are that the complainant, through its proprietor Mr. Vikas Sharma, had obtained a Standard Fire and Special Perils Insurance Policy for a total sum insured of Rs. 81 lakh against the stocks of pharmaceuticals items like medicine syrups, tablets etc. including the furniture kept at his business premises. The premium was paid and the policy was valid for the period from 09.09.2016 to 08.09.2017. During the subsistence of the insurance policy, in the intervening night of 1^st & 2^nd February, 2017, a fire took place, resulting which, the entire stocks got damaged / burnt. It is averred that timely information with regard to the fire was given to the police as also to the insurance company. The complainant submitted a claim of total sum insured, after completing all the required formalities.

5.       The insurance company appointed a surveyor, who conducted a survey and assessed the loss at Rs. 4,53,849/-. It is further averred most of the stocks melted, converted in dilapidated material and was beyond recognition and this fact was brought to the notice of the surveyor, as such, the complainant was asked to dispose of the salvage. The grievance of the complainant is that the surveyor while assessing the loss totally ignored the value of stocks, which were completely destroyed and turned into ashes, even after clearly opined by the investigator that the cause of fire was genuine. The insurance company passed a claim of Rs. 4,53,840/- only against the sum insured of Rs. 81 lakh.

6.       Being aggrieved, the complainant filed a complaint before the State Commission.

7.       The State Commission vide impugned Order dated 10.08.2020 partly allowed the complaint and directed the insurance company, jointly and severally to pay the claim amount equal to the sum assured (Rs. 81 lakh), after deducting the amount of the stocks, if any, which went safe and also held safe for human consumption, as per the report of the Drug Inspector concerned, along with interest at the rate of 7% per annum and lumpsum compensation of Rs. 1 lakh for mental agony, harassment, deficient services and also litigation expenses.

8.       Aggrieved by the said Order of the State Commission, the insurance company filed the instant appeal before this Commission.

9.       Learned proxy counsel for the insurance company has argued that the State Commission had discarded the surveyor’s report and allowed the amount of sum insured. It was further argued that the State Commission ignored the facts that the surveyor had asked for the books of accounts, which were partly lying in the office of Chartered Accountant and apparently in the lap top, which was said to be burnt in the fire and the insured did not produce the documents. The surveyor did not find anything except the inverter and the battery and printer at the insured premises and there was no sign of burnt laptop. Further, the surveyor repeatedly asked the insured to segregate the damaged stock which was not done. As per the final survey report, it was only the carton boxes which got burnt and the medicines were scattered on the floor and the inventory of each and every item of damaged and safe stock was taken in the presence of the insured and the claim consultant Mr. Rajiv Sengupta.

10.     In the final report, the surveyor, after talking to the people living in the surrounding area, observed that the complainant was under extreme financial stress and after physical verification of the stock at the insured premises on various dates, a huge difference in the stock level as per trading account and as per the physical inventory was found. The surveyor has also pointed out some bills to come to the conclusion that the figures of the claimed amount were highly exaggerated and that the sales and purchases bills shown are not genuine. In view of the above details, the final report of the surveyor cannot be brushed aside and has to be taken into account. He further argued that inordinate delay in producing necessary documents and non-submissions of supporting documents is a clear breach of the terms and conditions of the policy.

11.     For the proposition that the report of the surveyor cannot be disbelieved unless there are cogent and convincing reasons to do so, learned counsel for the insurance company has relied on the following cases:

1. Plastolene Polymers Pvt. Ltd. vs. ICICI Lombard General Insurance Co. Ltd. & Ors. 2015 SCC Online NCDRC 1778
2. Devender Malhotra vs. United India Insurance Co. Ltd. & Anr. 2016 SCC Online NCDRC 2139
3. Oriental Insurance Co. Ltd. vs. M/s Pavan Enterprises & Anr. 2015 SCC Online NCDRC 3263
4. Khatema Fibres Ltd. vs. New India Assurance Co. Ltd. & Ors., Civil Appeal No. 9050 of 2018 decided on 28.09.2021.
5. Garg Acrylics Ltd. vs. United India Insurance Co. Ltd., Consumer Complaint No. 36 of 2014 decided on 16.12.2014.
6. The Oriental Insurance Co. Ltd. vs. Ishwar Singh, Revision Petition No. 660 of 2013 decided on 09.01.2015.

He further argued that the fire was not a major one and the extensive damage being claimed is, therefore, not justified.

12.     Learned counsel for the complainant submitted that on the advice of the surveyor, the stock was segregated into different piles of totally damaged, partially damaged and safe articles for the purpose of making inventory. He further argued that on 15.02.2017, four trolley loads of the totally burnt stock were disposed off by the complainant. The affidavit of the tractor trolley owner was also filed before the State Commission. He further argued that the complainant had stock worth Rs. 93,63,768/- in the godown at the time of fire and audited copy of the profit and loss account clearly reflecting the stock value as Rs. 93,63,768/- as certified by C.A., was made available. The surveyor had demanded books of accounts and sale purchase invoices. The records of the transactions were stored in the laptop which was burnt in the fire. The sale purchase record upto 31.12.2016 was lying in the office of C.A. and was provided to the surveyor. Thereafter, a fresh requirement of data pertaining to year 2015-16, was also provided.

13.     The investigator appointed by the insurance company also checked and scrutinized all the sale and purchase bills by visiting the distributors from where the complainant had purchased the medicines etc. and it was reported by the investigator that all the bills were found to be true, correct and genuine in the report dated 14.10.2017. It was further contended that all the documents, which were demanded, were provided. The contention of the insurance company that there was inordinate delay in providing the documents is not borne out by the facts on record.

14.     It was argued that the value of the stock has been disbelieved by the surveyor based on conjectures and surmises and also discarding the investigator’s report of the insurance company. Learned counsel also relied on the fire brigade report to show that it was not a small fire as alleged by the surveyor and the observation of the surveyor that no stock was completely burnt in the fire has no basis.

15.     In support of his contention that the surveyor’s report is not the last and final word and the other material can be considered to assess the claim, learned counsel has placed reliance on the following decisions:

1. National Insurance Co. Ltd. vs. M/s Hareshwar Enterprises (P) Ltd. & Ors. 2021 (3) CPR 274
2. M/s Super Label Mfg. Co. vs. New India Assurance Co. Ltd., 2023 All SCR 1177 and
3. M/s Swarna Motors vs. Oriental Insurance Co. Ltd. & Ors., C.C. No. 3076 of 2017 decided on 09.11.2023.

16.     The issue for our consideration is whether the amount of loss of Rs.4,53,849/- assessed and offered by the insurance company on the basis of final survey report dated 08.11.2017 is correct or not.

17.     It is seen that the State Commission has dealt with all the disputed findings of the surveyor in detail and allowed the insured amount of Rs.81 lakhs.

18.     Firstly, as regards, the scale of the fire, it is seen that the undisputed report of the fire brigade report shows that since there was a huge fire at the site, another vehicle was called from the police line. The vehicles arrived at around 2.40 a.m. and returned at about 4.00 a.m. i.e. it took two hours to extinguish the fire. The fire brigade report also shows that the entire stock of the godown had vanished because of fire and because of said fire, the counter, internet and battery, printer, computer and medicines lying in the godown have been destroyed.

19.     After careful perusal of the report of the office of fire brigade station, we are of the view that the fire was not a small one.

20.     The main ground for not accepting the stock value given by the insured is, firstly, that the documents are not provided or provided late, that bill and purchases are not verifiable, since the insured was apparently under extreme financial stress, he manipulated his books of accounts to show higher stock. A few duplicate bills have been examined and it has been discussed and based on that the only book entries were being made and no sale or purchases were being carried out.

21.     It is seen, as also rightly pointed out by the State Commission, that no documentary evidence in regard to financial stress of the insured has been brought on record and this assertion is merely a hearsay. It is evident from the investigation report, which was prior to the surveyor’s final report, that the insured’s bills (that were provided to the final surveyor also) were verified and certified to be true and genuine by the investigator. The surveyor has disregarded the investigator’s report by stating that the investigator did not have expertise in accounts and could not comment on the genuinity of the transactions of the insured with different parties and one has to lift the veil to find out the reality behind such transactions. The surveyor,  being a Chartered Accountant, has lifted the veil over the insured’s so called genuine transactions.

22.     It is not clear as to how such an assertion can be made to dismiss the finding of an investigator appointed by the insurance company itself in the matter. A mere sampling of some bills cannot be used to discard entire transactions of the insured, that have been already verified by the investigator.

23.     As regards the valuation of the stock, it is seen that the value of stock has only been taken by the surveyor as the damaged and the safe stock. He has completely discarded the possibility of stock being entirely burnt in the fire and stated that the four trolley loads were only packing carton boxes. On the other hand, it is seen that he has accepted that the furniture of the premises got burnt and the claim for same has been allowed. How and why the stock that was located in the same premises did not get burnt, has not been explained. The conclusion of the surveyor that the claim was malicious and inflated is not established by evidence, and no cogent reasons have been brought out to disagree with the investigator’s report in the matter.     

24.     In view of the above, we are of the opinion that the surveyor’s report is not based on justiciable reasons and facts and cannot be relied upon, being arbitrary, and the same deserves to be discarded.

25.     It is settled law that the survey report is not the last and final word and can be departed if there are sufficient reasons to rebut the same. The Hon'ble Supreme Court in the case of New India Assurance Co. Ltd. v. Pradeep Kumar 2009 (7) SCC 787 held as under:

"In other words although the assessment of loss by the approved surveyor is a pre-requisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured."

26.     The Hon’ble Supreme Court in the case of DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda, in CA Nos. 4910-4941 of 2019 decided on 10.05.2019 has held that multiple compensations for singular deficiency is not justifiable. In view of this settled position, in the instant case, the award of compensation of Rs. 1 lakh towards mental agony, harassment, deficient services and also litigation costs given by the State Commission is found to be not tenable.

27.     We, therefore, dispose of the appeal by modifying the Order of the State Commission to the extent that the insurance company shall, jointly and severally, pay the claim amount equal to the sum assured (Rs. 81 lakh), after deducting the amount of the stocks, if any, which were safe / held safe for human consumption, as per the report of the Drug Inspector concerned alongwith compensation in the form of interest at the rate of 7% per annum from the date of filing the complaint till realization within four weeks’ time from today, failing which, it shall carry interest at the rate of 10% per annum.

28.     The appeal stands disposed of in above terms. All pending applications, if any, stand disposed of.