RESERVED

         STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

                                    UTTAR PRADESH, LUCKNOW

                                     COMPLAINT NO. 132 OF 2012

M/s. Rituraj Seed Company

A proprietorship concern Sole Proprietor

Om Narayan Kushawaha

S/o Late Prabhu Dayal Kushwaha

R/o D-512, Vishwa Bank Barra

Kanpur Nagar   

                                                                                      ...Complainant

Vs.

New India Assurance Company Limited

Having its Branch Office at 63/2, the Mall

Kanpur Nagar inter alia having its Regional

Office Green House Civil Lines, Kanpur

                                                                                       ... Opposite Party

BEFORE:

HON'BLE MR. JUSTICE VIRENDRA SINGH, PRESIDENT

HON’BLE MR. UMA SHANKER AWASTHI, MEMBER

For the Complainant       : Sri Sarvesh Kumar Sharma, Advocate.

For the Opposite Party   : Sri J N Mishra, Advocate.             

Dated : 08-09-2015 

                                                  JUDGMENT

PER MR. JUSTICE VIRENDRA SINGH, PRESIDENT

This complaint under Section 17 of the Consumer Protection Act, 1986 has been filed by M/s. Rituraj Seed Company against The New India Assurance Company Limited with the following prayers :-

(i) that the opposite party insurer be directed to pay a sum of Rs.78,00,000/- against the claim with regard to the Policy No. 420305/11/18/13/00000101 for their gross negligence and deficiencies in providing adequate services under the terms of the said policy.  

(ii) A sum of Rs.1,00,000/- be directed to be paid by the opposite party insurer to the complainant for harassment and mental agony.

(iii) A sum of Rs.50,000/- be directed to be paid by the opposite party insurer to the complainant towards the cost of present complaint.

The facts of the complaint case stated in brief are that the

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complainant for his livelihood is running business of selling and processing of Hybrid Seeds of various varieties of grain and vegetable. The complainant obtained a seed license vide License No. 51/5011 and was running the business very successfully. The complainant hired a godown at Village – Deshamau Premises No. 58, Bhauti Pratappur, Kanpur and was keeping all the stock of Hybrid Seeds of various kinds therein, including Packaging material, Seed Gradation Plant, Generator set, Office equipment such as Computer and the business record like Stock Register, Sale and Purchase bill voucher, Bank records etc. and for that workers were employed who were working therein. The complainant for the purpose of expansion of his business obtained a cash credit limit of Rs.50,00,000/- from the State Bank of India on 30-03-2010 against the Hypothecation of stock and other equitable mortgage. The complainant besides the above financial arrangement had already having the financial assistance with the Bank of India for the tune of Rs.15,00,000/-. Thus the total investment in the business including the margin money of the complainant was Rs.1.00 crore approximately. The complainant has purchased the insurance policy from the opposite party insurer on stock of all Hybrid seeds and all other goods, covering the risk against fire as well, for the value of Rs.78,00,000/- and paid the premium of a sum of Rs.15,529/- to the opposite party. The Policy No. 420305/11/18/13/00000101 was effective from 06-05-2010 to midnight of 05-05-2011. The said policy was issued after the due physical verification of the value of the stock by the insurer O.P’s agent. The said stock which was covered under such policy was the part of stock of the business hypothecated with S.B.I. Since the policy was purchased with the arrangement by the financier it was issued in the name of S.B.I., SMECC A/c Rituraj Seeds Company. The complainant was utilizing the facilities of C.C. Limit granted by the State Bank of India. The complainant alleged in his complaint that a fire took place in the godown on 06-02-2011 due to short circuit in electric supply by the generator set. At that time the workers were in the unit and working who noticed the fire, tried to extinguish the fire but could not succeeded as the lot of

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packing materials caught the fire which within a minute became a huge in fire of devastating eminence and by the time the fire brigade reached and controlled the fire, most of the stock more than a worth of rupees one crore was completely burned and badly damaged. This caused the complete loss of business to the complainant and ruined his entire business. The intimation of the fire was first received by the wife of the complainant on telephone by the workers, and who immediately telephoned the Fire Authority and police about the incident as the complainant was out of station. Upon coming back the complainant alongwith bank officials intimated the insurer about the fire incident, who deputed their Loss Assessors & Investigator to survey the loss and investigate the matter. Mr. R C Bajpai was deputed to investigate the matter and M/s. S. Soni & Co., Surveyor and Loss Assessors of New Delhi was deputed to assess the loss. The Surveyor Mr. Sanjeev Soni of M/s. S. Soni & Company vide his letter dated 09-02-2011 asked for  certain inquiries and documents mentioned therein from the complainant which were promptly provided to him by the complainant. Thereupon on 14-02-2011 the Surveyor Mr. Sanjeev Soni has personally come down to the site of incident and physically verified the burned stock, damaged stock, took all the assessment of the situation, at spot photographs were taken, debris of burned up stock and damaged stock were weighted out and every document, which were asked like stock register, bank statement, purchase and sale voucher, copy of license, account statement were given to him by the complainant for verification and for assessing the loss. Mr. Sanjeev Soni the surveyor vide his letter dated 15-02-2011 the very next day wrote to the complainant asking for some more information and documents which were again provided to him by the complainant. It is also pleaded by the complainant that still the queries of Mr. Soni the surveyor endlessly were going on and he vide his letter dated 12-03-2011 has further demanded more and more documents and some of them concerning to other traders were also asked for just to harass the complainant. Meanwhile apart from the surveyor queries, the investigator Mr. R C Bajpai started making enquiries from the

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complainant. The investigator further through his letters dated 30-04-2011, 26-12-2011, 12-01-2012, 28-01-2012 kept on accusing the complainant for doing the business against the provisions of Seed Act and Rule. In fact his entire act was nothing but a threatening to the complainant for his malafide intention to squeeze the undue money from the complainant. The letters referred above are self evidently to show his ill will and malafide intention which are nothing to do with the investigation of fire incident. The complainant replied the letters of Mr. R C Bajpai, Investigator submitting that the queries rather the allegations made by him have no concern with the investigation of the incident of the fire and claim of complainant. All the exercise of Mr. R C Bajpai, Investigator and Mr. Sanjeev Soni the surveyor and loss assessor were nothing but to defray the claim of the complainant on behest of O.P. insurer as they were the enlisted investigator and surveyor and loss assessor deputed to work by the insurer and were being paid to give benefit to the insurer. The Investigator and Surveyor furnished false reports to the insurer who also acting blindly on those false report without applying its own mind and without judging the false conclusion of the report and without examining the documents furnished by the complainant, refused the genuine claim of the complainant. The complainant further alleged in his complaint that before submitting his report Mr. Soni the Surveyor had asked for the report of Mr. R C Bajpai the investigator from the insurer to substantiate his report on the basis of the report of Mr. R C Bajpai, Investigator which shows the collusion in between the surveyor and investigator. The complainant had provided all the stock statement supported with the sale and purchase bill/voucher, balance sheet, stock register etc. to the surveyor Mr. S Soni as well as Mr. R C Bajpai, the investigator. The entries in the books just before the period of incident and during the financial year 2010-11 showing the stock valuation of Rs.95,00,000/- and the said stock was regularly verified by the banker State Bank of India. The opposite party insurer without considering the documents submitted by the complainant and without giving any weightage to the fire brigade report absolved

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themselves from any liabilities under the insurance policy which was duly purchased by the complainant after paying the premium. The complainant made a written request with the S.B.I. to assist the process of settling the claim with the insurer but the bank took no steps towards the request of the complainant and never cooperated in dealing with the insurer. The bank after coming to know that the claim of the complainant has been repudiated by the opposite party they have issued a notice for the payments of the dues of the C. C. Limit and even proceed before the D.R.T. for the foreclosure of the mortgage property. The bank is equally liable to pursue the insurer for the payments of the claim under the said insurance policy and not to pursue the recovery solely against the complainant. The cause of action firstly arose on 06-05-2010 when the insurance policy was purchased by the complainant, thereafter on 06-02-2011 when the incident of fire took place and lastly on 06-02-2012 when the opposite party refused to settle the claim within the jurisdiction of this Commission. The complaint is being filed within the statutory period of limitation provided in the Act.

The opposite party The New India Assurance Company Limited has filed written statement thereby stating that the complaint suffers from non-joinder of necessary and proper parties, namely the State Bank of India, which is the financier of the complainant and had got stock insured  and in whose name, the policy was issued and the National Insurance Company Limited is also liable to be arrayed as party to the complaint since the complainant had taken a policy from the National Insurance Company Limited for the same risk. It is further pleaded that the stock worth Rs. 1 crore was never destroyed and the complainant is liable to be put to strict proof with regard to the alleged extent of loss. As per investigation report dated 24-12-2011 submitted after detailed investigation, the complainant would not have suffered loss of more than Rs.10 to 12 lakhs and no irrelevant document was sought by Mr. Soni and there was no attempt to harass the complainant. The documents and information which were sought by Mr. R C Bajpai were vital for preparation of investigation report. The letters sent by the said

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investigation were related only to provisions of the Seed Act 1966 and the related Rules. It has further been pleaded that the investigator concluded that the complainant had submitted forged audited balance sheet, profit and loss, fabricated purchase bills, books of accounts and also that he submitted different set of books for the same firm to different insurer for the same incident. He also concluded that there were serious discrepancies in purchase/sales etc. The report of Mr. R.C. Bajpai and of Mr. Sanjeev Soni were prepared after due consideration of the records and the necessary investigations. The opposite party has committed no illegality in repudiating the insurance claim of the complainant. The surveyor assessed the value of damaged seeds to be Rs.8,45,667.50 on the basis of physical verification and weighment at site. It is further submitted that the complainant had taken double insurance coverage for the same stock and concealed the said fact from the opposite party. The opposite party insurer further pleaded that the repudiation letter dated 06-02-2012 has been passed after due application of mind to all the relevant records, including the investigation report, survey report, insurance policy and the fire brigade report and the complainant does not derive any cause of action to file the complaint, since he is guilty of fraud and has submitted forged Audited Balance Sheets, Profit and Loss Accounts, Purchase Bills and other Books of Accounts etc. The opposite party further pleaded that the complainant is not entitled to any of the reliefs prayed for in the complaint, in as much as the insurance claim has been repudiated by the opposite party in accordance with the terms and conditions of the insurance policy, the settled law and also the conduct of the complainant in misrepresentation and also of suppression of material facts. 

Evidence by the complainant

An affidavit, in support of the complaint case has been filed by Sri Om Narayan Kushwaha the complainant. The following documents have also been filed on behalf of the complainant as annexure with the complaint.

1. Photocopy of the letter dated 12-03-2011 issued by the surveyor S. Soni & Company.

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1.  Photocopy of Seed License.

1. Photocopy of C.C. Limited sanctioned letter of the bank.

1. Photocopy of insurance policy issued by the insurer.

1. Photocopy of statement of account of C.C. Limited for the period from 07-03-2010 to 23-03-2011.

1. Photocopy of Fire Brigade Report and the copy of G.D. of Police Station Sachendi.

1. Photocopy of photograph and physical weighment of damaged stock prepared by Mr. S. Soni.

1. Photocopy of letters of M/s. S. Soni & Co.

1. Photocopy of letters of Mr. R C Bajpai.

1. Photocopies of reply letters issued by the complainant.

1. Photocopy of letter of Mr. S Soni asking for the report of Mr. R C Bajpai from the insurer.
2. Photocopies of documents of stock statement supported with the sale and purchase bill/voucher, balance sheet, stock register etc. submitted by the complainant to the surveyor Mr. S. Soni and investigator Mr. R C Bajpai.

1. Photocopy of the verification report of the stock verified by the bank.

1. Photocopy of the repudiation letter dated 06-02-2012 of the insurer.  

Evidence by Opposite Party

An affidavit on behalf of the opposite party sworn by Sri Mohammad Khalid, Deputy Manager, The New India Assurance Company Limited in reply to the affidavit/evidence filed by the complainant has been filed. The following documents have also been filed on behalf of the Opposite Party as annexure with the affidavit.

1. Photocopy  of Interim Investigation report dated 24-12-2011 of Mr. R C Bajpai.
2. Photocopy of Survey Report of S. Soni & Company dated 23-01-2012.

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1. Photocopy of Status Survey Report of S. Soni & company dated 28-02-2011. 

Learned Counsel for the opposite party has also filed the following case laws.

1. Keshav Trading Company V/s United Insurance Company Limited reported in IV (2013) CPJ 159, wherein it is held that surveyor report has significant evidentiary value, unless is proved otherwise.
2. New India Assurance Company Limited V/s Balaji Emporium reported in I (2015) CPJ 588, wherein it is held that surveyor report is to get due weightage, unless there are solid reasons for rejecting the same. 
3. Mikikuki International V/s New India Assurance Company Limited reported in I(2015) CPJ 588, wherein it is held that surveyor report can be dismissed only if the parties can show that where the surveyor has got the ulterior objective and had passed report on imaginary aspects.
4. Hind Auto Center V/s National Insurance Company Limited reported in IV(2014) CPJ 356, where in it is held that if the where the complainant has not adduced cogent evidence to rebut the report of surveyor, mere assumption and presumption by way of affidavit cannot be taken as trustworthy.
5. Rajendra Singh Yadav V/s National Insurance Company Limited reported in IV(2014) CPJ 269, where in it is held that where the complainant could not produce any document on record to substantiate his claim that assessment made by surveyor is not in accordance with law or he has underestimated price or pat of any labour, the surveyor report assessment is worth upheld.
6. Ablilaksh Vinid Kumar Jain V/s Cox and Kings reported in AIR 1995 SC 1952, where in it is held that it is the duty of court to defend law from clear evasion and prevent perpetuation of fraud.

7. S.P. Chengal Varava Naidu V/s Jagannath reported in AIR 1994 SC 853, where in it is held that a judgement obtained by fraud is a nullity and is liable to be set aside at any stage.
8. General Insurance Society V/s Chandmull Jain and others reported in AIR 1966 SC 1644, wherein it is held that in a contract of insurance there is uberima fides, i.e. good faith.
9. New India Assurance Co. Ltd. V/s Kiran Singh and others reported in (2004) 10 SCC 649, where in it is held that insurance is a covenant of good faith, where both parties are covenanted to abide by the terms and conditions of the policy

We have heard Sri Sarvesh Kumar Sharma, learned Counsel for the complainant and Sri J N Mishra, learned Counsel for the opposite party and perused the record including the written arguments of both the parties and the law as is referred by the parties.

Learned Counsel for the complainant submitted that insurance policy was issued after physical verification of the stock and after ascertaining the position of the stock and after getting the internal report of the engineers of the insurance company and there was no concealment of the fact by the complainant. The complainant got his business financed by two different banks for entirely different purposes and there was no nexus with the operation of the two businesses. The bank in order to safeguard their respective loans purchased the policy which was for entirely different purposes. It is further submitted that the certificate issued by the department of Fire which is a statutory authority under Uttar Pradesh Fire Service Act, 1944 mentioned cause of fire as sparking from the generator set and it was observed that fire was extensive in nature and maximum seeds were destroyed in fire and remaining seeds were effected by fire. The investigator himself admitted the fact of operation of two different businesses in the similar roof but which of the provision of the Seeds Act has been violated has not been communicated to the complainant. Learned Counsel for the complainant further submitted that vide letter dated 03-06-2011 the complainant informed the investigator that cash details of year 2007-2008, 2008-2009 and 2009-2010 were kept

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in the office situated in the premises where the fire took place and the same stood destroyed alongwith the computer and the cash book of 2010-2011 which was kept in the head office stood supplied to them. The complainant vide letter dated 04-08-2011 submitted that major sale purchase is in cash since all the farmers and retailers are making cash transactions instead of bank transactions. Learned Counsel further argued that the opposite party committed grave deficiency in service as well as Unfair Trade Practice by flouting all the norms and regulations laid down by the IRDA and allied Insurance Laws. The complainant by virtue of letter dated 21-12-2011 represented IRDA and complaint was lodged for non settlement of the claim and for the mental agony caused to him. It is submitted that the policy was issued under the corporate agency arrangement by the bank and the insurance company. With respect to the objection of non-joinder of necessary party, it is submitted that the complainant has insurable interest under the policy and there exists consumer and service provider relationship between the complainant and insurance company and in the instant case there is no need for impleading the bank since the repudiation has been done by the opposite party and letter was issued to the complainant and not to the bank. The objection of the opposite party is baseless and is wholly misconceived. Learned Counsel further pleaded that the complainant has no concern for impleadment of the National Insurance Company in the instant case, since the subject matter in dispute is pertaining to policy issued by the opposite party and not with the National Insurance Company Limited and there is absolutely no nexus with both the insurance companies pertaining to the loss occasioned by the complainant. It is also submitted that the investigator has relied on the report of the surveyor of the National Insurance Company in his report dated 24-12-2011. Hence the opposite party is well aware of the factum of the proceedings commence by the National Insurance Company and if there is any illegality the same is the onerous duty of the insurance company to bring the same on record. There is absolutely no necessity in arraying National Insurance Company as a party in the instant case.

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Learned Counsel for the complainant further submitted that there is not an iota of evidence on record which justify the repudiation. Merely the observation of the investigator in his report has been made a basis without ascertaining the material evidences. Complainant relied on Section 64 UM(2) of the Insurance Act 1938, further submitting that investigator if is to be appointed, can only be appointed after the surveyor and loss assessor has submitted his report and if there is a proof of the element of fraud and with the prior permission of IRDA. In the instant case the opposite party without taking the permission of the IRDA and without any basis appointed the investigator who submitted his report dated 24-12-2011. The investigator ignored the report of the surveyor dated 28-02-2011. Learned Counsel further pleaded that the surveyor S. Soni & Company submitted another report dated 23-01-2012 reducing the claim and loss in pursuance and in influence of the investigator. He submitted that after inordinate delay the claim was repudiated by the insurance company on false and flimsy grounds and the entire procedure adopted by the opposite party is in complete contravention of the provisions of the Insurance Act as well as its allied rules and regulations. The IRDA (Policy Holders Interest) Regulations, 2002 under Clause 9(5) mandate for the disposal of the claim within a period of 30 days from the report of the surveyor or an additional survey report. The surveyor was appointed by the Insurance Company on 08-02-2011 and the report has been submitted by him on 28-02-2011 and subsequently the report was submitted on 23-01-2012 that is after about a year from his appointment. The clause 9(2) of the IRDA mandate that the surveyor shall submit his report within 6 months from the date of appointment. Thus the opposite party flouted all the mandatory provisions of the regulations laid down for the disposal of the claim and decided the claim in a most illegal and arbitrary manner and to this effect the opposite party committed gross deficiency in service. Learned Counsel further submitted that the Seeds Act, 1966 (Act No.54 of 1966) is an enactment which provides meticulously the mechanism of appointment of inspectors and also for issuing and revocation cancellation of license and the investigator has no authority to act as a Seed Inspector. The

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opposite party is pressing hard on the report of the investigator and submitting that he opined that the complainant has obtained loan on bogus balance sheet from the bank but no single evidence has been produced in the case to corroborate the alleged fact and even there is no evidence obtained from the bank to this respect. It was obligatory on the part of the opposite party to lead evidence before this Commission the evidences which proves the claim to be fabricated and forged. It has further been submitted that the Surveyor Mr. S S Soni submitted a survery report estimating loss to Rs.78 lakhs but the said report was never taken into account by the investigator in his report. The investigator straight way accusing the complainant for getting double insurance, which is not a case. The subject matter of insurance is different from the insurance taken from the National Insurance Company Limited. The investigator proceeded to doubt the Fire Authorities and even wrote to IG Fire for holding inquiry and what has been done on his representation has not been mentioned.

          Learned Counsel for the opposite party submitted that the complaint suffers from non-joinder of necessary and proper parties, namely the State Bank of India which is the financier of the company and National Insurance Company Limited is also liable to be arrayed as party to the complaint since the complainant had taken a policy from the said insurance company for the same risk. In such situation where loss is covered by two policies, then if liability is held, and then the loss is to share by the two insurers in ratio of sum insured.  It is further submitted that there is no evidence to show that stock worth Rs.1 crore was destroyed. As per investigation report dated 24-12-2011 the complainant would not have suffered loss of more than Rs. 10 to 12 lakhs. The investigator Mr. R C Bajpai after detailed consideration of the records concluded that the audited Balance Sheet was fake and the certifying Chartered Accountant stated in writing that he had not issued the Balance Sheet. He further submitted that the entire set of book of accounts submitted by the complainant was unreliable and a mere collection of fictitious entries passed by the insured to avail bank advance and to take

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undue advantage of insurance coverage. The repudiation letter dated 06-02-2012 does not suffer any illegality or infirmity and has been passed after due application of mind to all the relevant records, including the investigation report, survey report, insurance policy and the fire brigade report. The complaint is liable to be dismissed with heavy costs. Learned Counsel further submitted that the complainant does not derive any cause of action to file the complaint, since he is guilty of fraud and has submitted forged Audited Balance Sheets, profit and loss accounts, purchase bills and other book of accounts etc.

After hearing of both parties and perusal of the entire facts and circumstances on record, we have found as is evident on record that there is no dispute pertaining to the insurance coverage allowed by the opposite party to the complainant for Rs 7800000.00 on a premium of Rs 15529.00 on the materials of worth Rs 7800000.00 in godown on 0.6.05.2010. Statement of Account of the Bank reflects the transaction done by the complainant till 05.01.2011. The certificate of the Fire Brigade which extinguishes the fire certified that the fire occurred on account of the short circuit from the generator.

Challenging the repudiation of claim of the complainant by the insurer, this case was filed on 11.10.2012 which was admitted on 15.10.12 and opposite party was granted time to file the written statement within the statutory period of 30 days i.e. up to 27.11.12 the date fixed but no written version is filed on behalf of opposite party on the date fixed and merely memo of appearance is filed on 27.10.2012. Since even up to 21.07.2014 despite several (atleast seven times adjournments) opportunity remained with the opposite party, the  written statement was not filed by them, the complainant on 10.08.2014 moved an application under Section 13(2)(ii) of the Consumer Protection Act, 1986 along with written argument in support of the application. The opposite party thereafter filed the written statement along with the delay condonation application along with the objection to the application under Section 13(2)(ii).

We were of the view that the application under Section 13(2)(ii)

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shall be decided finally along with the complaint case, so we chose the application to be decided first.

Section 13 (2) (a) provides that refer a copy of such complaint to the opposite party directing him to give his version of the case within a period of thirty days or such extended period not exceeding fifteen days as may be granted by the District Forum;

(b) where the opposite party, on receipt of a copy of the complaint, referred to him under clause (a) denies or disputes the allegations contained in the complaint, or omits or fails to take any action to represent his case within the time given by the District Forum, the District Forum shall proceed to settle the consumer dispute,

(i) on the basis of evidence brought to its notice by the complainant and the opposite party, where the opposite party denies or disputes the allegations contained in the complaint, or

(ii)[ex parte on the basis of evidence] brought to its notice by the complainant where the opposite party omits or fails to take any action to represent his case within the time given by the Forum:

Further Section 13 (3A) which provides for the disposal of the complaint case.

          (3A)   Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the complaint within a period of three months from the date of receipt of notice by opposite party where the complaint does not require analysis or testing of commodities and within five months if it requires analysis or testing of commodities:

PROVIDED that no adjournment shall be ordinarily granted by the District Forum unless sufficient cause is shown and the reasons for grant of adjournment have been recorded in writing by the Forum:

PROVIDED further that the District Forum shall make such orders as to the costs occasioned by the adjournment as may be provided in the regulations made under this Act

PROVIDED ALSO that in the event of a complaint being disposed of after the period so specified, the District Forum shall record in writing, the reasons for the same at the time of disposing of the said complaint.

          Complainant in support of the application relied on the case laws of the Hon’ble Supreme Court in Dr. J.J.Merchant and others versus Srinath Chaturvedi reported in (2002) 6 SCC at page 635, Fairgrowth Investment       Limited versus Custodian reported in (2004) 11 SCC at page

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472, Kajpipla Co-operative Housing Society Limited versus Magic Properties Private Limited and another reported in 2014 (1) CPC at page 197, Revision Petition No. 2049 of 2014 M/s Accanoor Associates versus Akansha Co-operative Housing Society decided on 16.07.2014, Rajeev Hitendra Pathak versus Achyut Kashinath Karekar reported in IV (2011) CPJ 35, Anshul Aggarwal versus New Okhla Industrial Development Authority, reported in IV (2011) CPJ 63 (SC), State Bank of India versus B.S.Agricultural   Industries (I) II(2009)CPJ 29 (SC), TATA AIG General Insurance Company Limited versus Kanan Knitwear, Revision Petition No. 4799 of 2013, decided on 06.01.2014, Consumer Complaint Case No. 382 of 2013 Bhupendra Bhandari versus Kolte Patil Developers decided on 31.07.2014, Kolte Patil Dev Ltd. versus Bhupendra Bhandari.

          On the strength of the aforementioned authorities judicial pronouncement the complainant submitted that the written statement filed belatedly is liable to struck off and the complaint case may be decided ex-parte. The opposite party with the objection filed the affidavit of his alleged clerk Mr. Shiv Shankar, resident of Plot No. 882, Lal Banglow Kanpur, stating that complainant’s affidavit was served on him on 11.08.2014 and after studying the same the reply/counter is filed within 4 days. In support of his objections the opposite party relied on the judgment of Shri Ablikash Vinod Kumar Jain versus Cox and Kings AIR 1995 SC 1952, Chandradhoja Sahoo versus State of Orissa AIR 2013 SC 367, S.P.Chengal Varaya Naidu versus Jagannath AIR 1994 1994 SC 853, State of Nagaland versus Lipok Aao AIR 2005 SC 2191, Ramankutty Gupta versus Avara (1994) 2 SCC 642.

          The question which requires to be considered is whether the opposite party committed any delay in filing the written statement and whether the written statement can be taken on record after the statutory period of limitation. Complainant argued that the provision intended in Section 13 is the soul of the Consumer Protection Act, 1986 and the same has to be

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adhered strictly and that is what the Hon’ble Apex Court in J.J. Merchant Case (supra) has directed. It is admitted case of the opposite party that the written statement was filed only on 14.08.2014 whereas the complaint case was admitted on 15.10.2012 and memo of appearance by the opposite party was filed on 27.11.12. The affidavit filed by the clerk of opposite party is also challenged by the complainant and it has been submitted that no responsible officer of the insurance company has filed his affidavit and placed before this commission as to when the notice of the complaint case was received by the company and appearance has been put up on 27.11.2012, what was the reason of filing the written statement belatedly. Thus we conclude that the opposite party is guilty of violating the provision of Section 13(2)(ii) of the Consumer Protection Act, 1986. However since the opposite party has filed the written statement, affidavit, we deem it fit to allow the written statement to be considered as well as affidavit to be a part of the record subject to the payment of cost which we quantify to be Rs. 50,000/- as has been awarded up to Rs one lac by the Hon’ble Supreme Court in Civil Appeal No. 8166 of 2014 Kolte Patil Dev Limited versus Bhupendra Bhandari. With the aforementioned observation the application under Section 13(2)(ii) stood decided accordingly.

          The contention of the learned Counsel for the opposite party remained that since the policy was purchased by the State Bank of India and the State Bank of India has not been arrayed as party in this complaint and the complaint is bad for non joinder of necessary party which is not acceptable there being no dispute on this point that the insured is the complainant and the State Bank of India is not the insured, therefore, the insured has rightly filed the complaint against the insurer for the loss occurred due to fire for the material alleged to have been insured.

The contention of opposite party further remained that the National Insurance Company Limited is a necessary party in this case which has not been arrayed. This much contention too is not worth accepted for the reason that the case of the complainant against the National Insurance Company

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Limited is a different case which is pending before this Commission for the loss occurred to the complainant of the separate material lost in the fire and separately insured by National Insurance Company Limited. Since both the policies are separate policies and are for separate materials, therefore, the contention of learned Counsel for the opposite party in this regard is not tenable.

          It is vehemently stressed on behalf of the opposite party that as per the investigator the complainant has not suffered the loss over and above of Rs.12,00,000/- as the investigator has found and concluded that the complainant has submitted forged audited balance sheet, profit and loss and fabricated purchase bills, books of accounts and submitted different set of books for the same firm to different insurer for the same incident and there had been serious discrepancies in purchases/sales etc. We are not convinced with this contention of the learned Counsel for the opposite party because the surveyor after thorough investigation and after physical inspection firstly estimated the loss to the tune of Rs.78,00,000/- vide his status report dated 28-02-2011. Since the Insurance Company was not satisfied with the report of the surveyor, the insurer appointed Mr. R C Bajpai the investigator. It is evident that the complainant was carrying two different operations under one roof. The one is for seed processing plant and the other is for storage of seeds. In this regard perusal of the status survey report dated 28-02-2011 submitted by S. Soni & Company shows that as per request of the insured and banker all the three locations had been replaced in one location as House No. 58 Village Dasmau Partapur, Kanpur. Since such endorsement is done by the insurer, the insurer at this stage cannot object that two different operations under one roof  i.e. seed processing plant as well as seed storage is in contravention of Seed Act 1966 as is stated by investigator in his report. The survey report dated 28-02-2011 clearly discloses that during the course of survey the surveyor obtained most of the documents and estimated the loss based on surveyor’s inspection and verification at site assessed that in any case it would be around Rs.78,00,000/-. Though this loss is said to be subject to detailed verification of books and records under insurance if any

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and other terms and conditions of the policy. Meanwhile the insurer appointed investigator R C Bajpai who reported vide his report dated 24-12-2011 that keeping in view the forged audited balance sheet, profit and loss, fabricated purchase bills, books of accounts and also different sets of books of accounts for the firm and obtaining bank loan on the bogus balance sheet and various serious discrepancies found in purchase bills the insured’s case is not genuine case and however, even if the case would have been genuine the insurer’s liability would not have exceed Rs. 10 – 12 lacs. Apart from it the surveyor S. Soni & Company too on a second thought stated vide his report dated 23-01-2012 relying merely on the findings of the investigator that the insured has taken insurance coverage for the same stock simultaneously with two insurers i.e. New India Assurance Company Limited and National Insurance Company Limited and the audited balance sheet submitted by the insured was fake and the entire set of books of  accounts are unreliable, un-acceptable and are found mere collection  of fictitious entries passed by the insured to avail bank advance and to take undue advantage of insurance coverage. In his view as per physical entry at site there is loss of Rs.8,45,667.50 only and there to since the insured had provided the bogus documents and violated the various policy conditions, therefore, the surveyor advised the underwriters to close the file as no claim. We found it strange enough  that once the surveyor assessed the loss around Rs.78,00,000/- then how he has assessed it to lower side while it has not been clarified neither by the surveyor; nor by the investigator that how the books of accounts have been disbelieved by both the surveyor and investigator. How they can say that fictitious entries passed by the insured to avail bank advance while the bank authorities have accepted the accounts furnished by the insured for availing the loan. How the audited balance sheet submitted by the insured can be termed fake without verifying from auditors. Though the name of certifying Chartered Accountant appearing on the tax audit report is said stating in writing that he has not certified any documents of any M/s. Ritu Raj Seeds, the insured but neither such writing has been

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filed by the opposite party, nor any affidavit or any other evidence in this regard have been brought on record by the opposite party of the said Chartered Accountant and even the name of said Chartered Accountant has not been disclosed by the surveyor in his report.

        Further more the coverage of the same stock simultaneously by two insurers does not find place on record as the New India Assurance Company Limited is the insurer of M/s. Ritu Raj Seeds Company, M.I.G. 45, Sector-4, Barra-2, District Kanpur, U.P. vide its policy period of insurance 6-5-2010 to 5-5-2011 for Standard Fire & Peril Policy and the National Insurance Company Limited has insured M/s. Ritu Raj Seeds Company, YD 512 World Bank Colony, Barra, Kanpur vide its policy period of insurance 15-10-2010 to 14-10-2011 for stock of seeds and pesticides for Standard Fire & Peril Policy. The New India Assurance Company Limited i.e. opposite party in this complaint covered three godowns at locations (A)  M.I.G. 45, Sector-4 Barra- 2 (B) Chakarpur Sabji Mandi, Main Road, Chakarpur (C) Opposite Armmas Power House, Kanpur Dehat which were latter on have been replaced in one location as House No. 58 Village Dasmau Partapur, Kanpur as per endorsement of the insurer. Hence it cannot be said that the insured has taken the same stock insured simultaneously with two insurers. The entire facts and circumstances narrated in the investigation report as well as survey report nowhere justified that there were discrepancies in the records.

The law relating to fire insurance policies as follows is also worth perused.

 Halsbury’s Laws of England Fourth Edition 2003 Reissue Volume 25 at page 323, wherein it has been held that:

“603.Fire as Proximate cause of loss. To constitute a loss within the meaning of the fire policy, it is not necessary to show that the subject matter of the insurance has itself been burned; it is sufficient that the loss has been proximately caused by fire.

In the same volume at page 334 paragraph 628, provided as follows:

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“628.Valuation of Total Loss: In the case of total loss, the measure of indemnity must necessarily be the value of the property destroyed, up to the limit of the sum insured. For the purpose of ascertaining this value, the rules set out below may be applied.

• The value to be taken is the value of the physical property destroyed; no allowance is made for loss of prospective profits or other consequential loss.
• The value is the intrinsic value of the property to the insured, its real and actual value; no allowance has to be made for mere sentimental value.
• The value is the value at the time of the fire.
• Hon’ble Supreme Court in the case of New India Assurance Company Limited versus Pradeep Kumar IV (2009) CPJ 46 (SC)  has observed:
•             “22. In other words although the assessment of loss by the approved surveyor is a prerequisite 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 the 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.”

                   Section 2(6A) of the Insurance Act, 1938 defines ‘Fire           Insurance Business’ and a fire insurance contract is one:

i.       Whose principal object is insurance against loss or damage occasioned by fire.

ii.         The extent of the insurer’s liability being limited by the sum assured.

iii.     The insurer having no interest in the safety or destruction of the insured property.

          Sudhakar Traders versus National Insurance Company Limited and another IV (2005) CPJ 25 (NC) and Koyal Textiles versus United India Insurance Company Limited I (2007) CPJ 135 (NC) in which it has been held that the claim is duly supported by the vouchers needs to be allowed.

          Principle of Law laid down in Castellain versus Preston and others (1) 8 Q.B.D. 613 wherein Lord Brett L.J while elaborating the principle of Fire Insurance observed:

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          “In order to give my opinion on this case, I feel obliged to revert to the very foundation of every rule which has been promulgated and acted on by the courts with regard to Insurance Law. The very foundation, in my opinion, of every rule which has been applied to insurance law is this, namely, that the contract of insurance contained in a marine and fire policy is a contract of indemnity, and of indemnity only, and that this contract means that the assured, in case of a loss against which a policy has been made, shall be fully indemnified, but shall never be more than fully indemnified. That is the fundamental principle of insurance, and if ever a proposition is brought forward which is at variance with it, that is to say, which either will prevent the assured from obtaining the full indemnity, or which will give to the assured more than the full indemnity, that proposition must certainly be wrong”

          Hon’ble Supreme Court in M/s Modern Insulators Limited versus Oriental Insurance Company Limited I(2000) CPJ 1 (SC) has held:

          8. It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties know. The insured has a duty to disclose and similarly it is the duty of the insurance company and its agents to disclose all material facts in their knowledge since the obligation of good faith applies to both equally.

          Fire has been defined in Stroud’s Judicial Dictionary of Words and Phrases Seventh Edition 988 to mean “Loss or Damage occasioned by Fire” “Fire Insurance Business” is defined under Section 2(6A) of the Insurance Act (4 of 1938) “the business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire, or other occurrence customarily included among the risks insured against the fire insurance policies”.

          According to Halsbury Statutes of England “A fire insurance contract is a contract of insurance by which the insurer agrees for consideration to indemnify the assured up to a certain extent and subject to certain terms and conditions against loss or damage by fire, which may happen to property of the assured during a specific period”

          Hon’ble Supreme Court in LIC of India versus Asha Goel (2001) 2 SCC 160 wherein the Hon’ble Court, though in a case of life insured but not out of context, observed:

          “16. In course of time the Corporation has grown in size and at present it is one of the largest public sector financial undertakings. The public in general and crores of policy-holders in

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particular, look forward to prompt and efficient service from the Corporation. Therefore, the authorities in charge of management of the affairs of the Corporation should bear in mind that its credibility and reputation depend on its prompt and efficient service. Therefore, the approach of the Corporation in the matter of repudiation of a policy admittedly issued by it, should be one of extreme care and caution. It should not be dealt with in a mechanical and routine manner.”

          We conclude that we found evidenced on record that the insurance coverage was granted by insurer through the state bank of India under the corporate agency arrangement and accordingly insurance policy was issued covering the risk with effect from 06.05.2010 to 05.05.2011. The coverage was granted in view of the Bank Statement as well after the physical verification of the stock. In an incident, fire broke out in the godown of the complainant on 06.02.2011 and stock was gutted in fire. The date of occurrence is covered in that period of insurance. The fire brigade assessed the loss to the tune of Rs.80 Lac. Surveyor S.Soni inspected the site and physically weighted the damaged stock. During the pendency of the surveyor assessment Mr. R.C.Bajpai was deputed as investigator. The policy did not contain any condition 8 relied by the insurance company. Prior to the incidence the stock was duly verified by the bank, the appointment of the investigator is also against the Law of Insurance.

          On the facts and circumstances on record, we are of this view that in this case there being a status report filed by the surveyor first on record, the subsequent survey report as well as the investigator report may not be relied being unwarranted and self contradictory which are subsequently seem to have been procured  from investigator as well as from surveyor merely to negate the status report submitted by the surveyor thereby estimating the loss to the tune of Rs.78,00,000/- and the entire scenario of the facts shows that ultimate motive of subsequent report of investigator as well as the surveyor seems to have been submitted/procured merely to repudiate the claim of the insured which has been fully proved by the complainant on record there being the incident of fire occurred and the loss of entire stock of the complainant. In this regard this version of the opposite party is not acceptable that the accounts book and the audited report submitted by the complainant are fake and were prepared merely to seek the loan from the bank. There is no cogent reason or any discrepancy indicated by the

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investigator as well as the surveyor to disown the accounts book and the audited reports. Therefore, there was no justification to repudiate the claim of the complainant on the ground of fake accounts book and we are of this view that the complaint of the complainant is worth allowed for the sum claimed by the complainant in view of the first report of the surveyor to the tune of Rs.78,00,000/-.

Since the claim of the complainant has been un-necessarily delayed and wrongly repudiated, we are of this view that the complainant is entitled to get the interest @ 9% per annum from the date of filing this complaint till the date payment is made and we further find it expedient  to allow the litigation expenses to the tune of Rs.25,000/- to the complainant with this observation that the entire amount of claim shall be paid by the opposite party to the complainant within two months, failing which the rate of interest shall be calculated @ 14% per annum in place of 9% per annum.

                                            ORDER

          The complaint is hereby allowed. The opposite party shall pay to the complainant, the claim of insurance to the tune  of Rs 78,00,000/- (seventy eight lac) along with 9% PA interest from the date of this complaint till the date of payment, failing which the interest shall be paid @ 14% PA.

          A sum of Rs 50,000/- (fifty thousand) as cost of delayed written version filed by the opposite party and a sum of Rs 25,000/-(twenty five thousand) as cost of litigation further shall be paid to the complainant by the opposite party.

                                                            ( JUSTICE VIRENDRA SINGH )

                                                                                          PRESIDENT

                                                                                     ( U S AWASTHI )

                                                                                                MEMBER

Pnt.