Before  the District Consumer Dispute Redressal Commission [Central], 5th Floor                                         ISBT Building, Kashmere Gate, Delhi

                               Complaint Case No.-296/2016

M/s Diesel Power Internation,

107-108, Roots Tower, Plot No.-7

District Centre, Laxmi Nagar, Delhi-110092

Through its prop. Ms. Anita Sharma                                        ...Complainant

                                      Versus

OP1:  The National Insurance Company Ltd.

          7-E, Deen Dayal Upaddhaya Bhawan,

          Third Floor, Jhandewalan Extension.

           New Delhi-110055

OP2: The National Insurance Company Ltd.

          3, Middleton Street, Prafulla Chandra Sen Sarani

          Kolkata, West Bengal-700071                                   ...Opposite Party

                                                                   Date of filing:             10.08.2016

                                                                   Order Reserved on:     22.12.2022

                                                                   Date of Order:                 .02.2023

Coram: Shri Inder Jeet Singh, President

              Shri Vyas Muni Rai,    Member

              Ms. Shahina, Member -Female

Vyas Muni Rai

                                             ORDER

1.1. The present complaint had been filed by M/s Diesel Power International (in short the complainant) against 1. The National Insurance Company Ltd., 7-E, Deen Dayal Upaddhaya Bhawan, Third Floor, Jhandewalan Extension, New Delhi-110055 (in short the OP1) and 2. National Insurance Company Ltd., 3, Middleton Street, Prafulla Chandra Sen Sarani Kolkata, West Bengal-700071 (in short OP2) under Section 12 of the Consumer Protection Act, 1986. The complainant is proprietorship firm and the complaint has been filed through its proprietor Ms. Anita Sharma which is running its business from the above given address/ premise and it has also a warehouse/ factory located at Khush Khera Industrial Area, P.O. Tapukara, Alwar, Rajasthan.

1.2: The complainant is a Manufacturer and supplier of Diesel Generator sets and assessors, which are manufactured at the above factory/ premises of the complainant. The complainant had obtained an insurance policy no. 350201/46/12/7500000136 which was valid from 06.06.2012 to 05.06.2013 for her business purpose, covering, inter alia, the risks of ‘Burglary  and House Breaking’, at the premises/ factory etc. The said policy was issued by OP1 (copy of the insurance policy is annexed with the complaint as Annexure-A).

1.3: It is the case of the complainant that during the subsistence of the aforesaid policy, the complainant had suffered a loss on 13.12.2012 at around 01:30 AM, whereby, the factory of the complainant located at Khush Khera Industrial Area, P.O. Tapukera, Alwar, Rajasthan was burglared  by about 18-20 criminals, who were all armed with fire-arms, knife, other weapons, when the factory was closed at night. It is further pleaded in the body of the complaint that culprits had entered into the factory and stolen that ‘tools’, ‘machine parts’, ‘equipment’ like drilling machine, welding machine, 18 batteries, gas cylinder and other materials from the store factory of the complainant. The criminal had also disconnected the CCTV camera and taken away the DVR and the hard disk of the computer from the office/ factory of the complainant.

1.4: The happening of the incident came to the knowledge of the complainant, at around 05:25 AM when the security guards somehow untied themselves and rushed to the nearby factory and from there they called the police station, the security agency and it had also informed the complainant on telephone. The matter was duly reported to the police and the office of the OPs as well by the complainant without any delay and a claim bearing no. 350201/46/12/7590000073 had also been lodged with the OPs in this regard for a total some of Rs. 14,84,504/-.

1.5: On reporting the matter to the police an FIR no. 604 dated 13.12.2012 under Section 323/342/457/380 IPC was registered at P.S. Tapura, Alwar in this regard. (copy of FIR is annexed as Annexure-B with the complaint).

1.6: It is also the case of the complainant that the value of goods stolen from the factory prevalent at the relevant time more 20 lakhs but not all the damages was covered by the insurance policy and thus a claim for only Rs. 14,84,504/- had been lodged by the complainant with the OPs, which was covered under the insurance policy.

1.7: The incident was investigating by the police official and two persons namely Lakhwinder and Balwinder had been arrested by the police officials, but nothing substantial could be recovered from them except one set of keys (copy of the seizure memo was also sent to the OPs by complainant) (copy of seizure memo is annexed with the complaint as Annexure-C). The OPs appointed M/s Sony and company as surveyor for the assessment of the loss occasioned by the said crime to the complainant, the surveyor after their appointment on 15.12.2012 reached at the site and conducted their surveyor and verifications. The surveyor had sent letter dated 30.04.2014 to the complainant (copy of the letter dated 01.07.2014 is annexed with the complaint). In the letter dated 01.07.2014, the complainant had duly clarified the discrepancies in the amount of stocks lying in the premises on the night of the burglary. It had also clearly pointed out by the complainant that some of the dead stock items (scrap) worth of Rs. 1,27,06,927/- which had been written off were required to be taken into consideration by the surveyor of the OPs as the scrap had been physically removed from the premises. The story has been fabricated in the report of the surveyor that the alleged value of the stock found after the burglary, was of an amount of Rs. 2,76,39,692/- which is imaginary and based on conjecture and surmises. The false and motivated observations made regarding the stocks lying at site and that reflected in the books of accounts the reading of the alleged reasons in the survey report lead to absurd conclusion, which cannot be built by any prudent person and just and  true explanation offered by the complainant as been burst aside by the surveyors, while preparing the survey report. The value of the dead and written off stock has been considered, albeit wrongly and illegally.

1.8. The complainant has also pleaded that the report of the surveyors have found that all the entries made in the sales/ purchases or stock registrations/ accounts had been duly verified and found to be correct and tallying which could only got to suggest that the complainant had been maintaining true and correct records of the goods/ stocks/ purchases and sales etc., therefore, it was for the said surveyor to rely upon the records and facts produce by the complainant during inspection. It is wrongly alleged that the such dead stock item had been sold subsequently by the complainant, only to deny the legitimate claim of the complainant.

1.9. The surveyors, for their ulterior motive and extraneous considerations, made false and fabricated observations, in the report, despite the full and complete expectation offered by the complainant. The OPs have not paid the just and legitimate claim of the complainant.

1.10. To the utter shock and surprise of the complainant, a letter dated 26.08.2014 was received by the complainant, whereby OPs have rejected the legitimate claims of the complainant, for the unjustified reasons and on the ground for the repudiation of the claim (repudiation letter dated 26.08.2014 is annexed with the complaint as Annexure-F). The repudiation letter dated 26.08.2014 mentions, inter alia, that the ownership/ insurable interest on the stolen items are not proved in this case, since the booked value of left over stock is much more than the closing stocks as per books and the claims was considered as No Claim.

1.11. The complainant has also stated in the complaint that during the meeting with the officials of the OPs had also made a request for appointment of another/ independent surveyor so as to verify the facts and find the true position of the stocks but no action has been taken by the OPs. The impugned letter of repudiation dated 26.08.2014 unjustifiably puts the figure of the loss suffered by the complainant at Rs. 3,06,845.25/-. The complainant has pleaded deficiency in service and also unfair trade practices on the part of OPs.

1.12. Complainant also sent a legal/ demand notice to the OPs on 16.05.2015 by speed post (copy of the legal/ demand notice dated 16.05.2015 is annexed as Annexure-G) and the postal receipts of the same are collectively annexed as Annexure-H and I A.D. cards of the legal notice have been annexed as Annexure-J&K.

1.13. Based on the contents of the complaint, the complainant has made the following prayer:-

“a. Direct the respondents to pay a sum of Rs. 14,84,504/- towards the losses suffered by the complainant and fully covered under the insurance policy.

 b. Direct the respondent to pay a sum of Rs. 5 lakhs towards the compensations for the harassment, mental pain and agony suffered by the complainant, due to the malafide and illegal acts of the respondents.

 c.  Award of interest at the rate of 24% per annum on the aforesaid amounts for the period of delay including the period pendentelite and future, till the actual date of payment to the complainant.

d. Award the costs of the present litigation in favour of the complainant and against the respondents.”

2.1. OP has filed the reply of the complaint under the head ‘reply to the complaint u/s 12 of the Consumer Protection Act on behalf of respondent/ OP and the same is in two parts i.e. one preliminary objections and second reply on merits. Perusal of the reply filed by OP on record is the only narration of the contents given by the surveyor in its survey report dated 29.07.2014. In addition, OP has further stated in the reply that relying upon surveyor’s report and its recommendation and after due scrutiny of the records, has right passed No Claim in the matter. It is also the case of OP that there is no cause of action against the OP and the complaint is liable to be dismissed for want of cause of action. The present complaint is hopelessly barred by the limitation. OP has further pleaded in its reply that insurance policy containing the terms and conditions is a contract between the complainant and the OP and the terms and conditions therein has to be followed strictly by both of the parties and any violation in  respect thereto deserves the claim of the complainant to be dismissed.

2.2. Complainant has not come to the Hon’ble Commission with clean hand and has suppressed material facts and the complaint is liable to be dismissed on this ground. OP has pleaded no deficiency of service on its part. Rest of the contents of the complaint have also stated to be wrong and denied.

3. Perusal of the proceedings dated 24.04.2017 reflects that Counsel for complainant stated that he does not want to file replication to the reply of OP. Ms. Anita Sharma, Proprietor of the complainant company has filed the evidence by way of affidavit and the contents of the same is narration/ replica of the complaint.

4. OP has filed two affidavits of evidence i.e. 1. Under the signature of Shri Sanjeev Soni, Surveyor and 2. Under the signature of Suman, Assistant Manager, National Insurance Company Limited. In the first affidavit of evidence filed by Shri Sanjeev Soni, surveyor, it is mentioned that he had made the investigation and filed his survey report and the same has been exhibited as exh.-OPW-1/2. The said survey report dated 29.07.2014 is running into 14 pages and the relevant part will be discussed at later stage in this order/ judgment. The evidence by way of affidavit filed by one Suman, Assistant Manager of OP is more or less based on the survey report and the reply filed by the OP. No new facts have been stated.

5. Both the sides have also filed written arguments on their behalf. The complainant in its written argument has, inter alia, pleaded that the complainant was maintaining the inventory of goods including raw material, semi-finished and finished goods in a cogent manner. All these documents duly handed over to the surveyor. Still, the surveyor proceeded to adopt an erroneous method of assigning value to scrap material which the thieves also did not consider stealing and on the basis of value assigned to this scrap and written off material. The surveyor should have only considered the value and goods which were part of the inventory and stolen in the theft. Rest of the contents of written argument filed by the complainant is the narration of the dates and events, contents as pleaded in the body of the complaint. 

6.  OP in its written argument has taken the stand that there is no cause of action against the OP and the present complaint is also hopelessly barred by limitation. Rest of the contents of the written argument filed by OP on record is the repetition/ narration of the opinion given by the surveyor.

7.1. We have considered the contentions and rival contentions of the parties and have also perused the documents/ annexures submitted by both the parties, reply of the complaint filed by the OP rests and revolves on three major points i.e. 1. No cause of action against the OP has arisen. 2. Complaint is hopelessly barred by limitation and 3. The recommendation of the surveyor appointed by OP. Based on these three grounds, OP has pleaded that there is no deficiency of service in its part and has further pleaded for dismissal of complaint. All these above three points will be discussed one by one in the instant order.

7.2: The plea of OP that there was no cause of action arisen against it in this regard. Complainant has filed on record a judgment dated 18.08.2021 passed by Hon’ble Supreme Court of India in case title National Insurance Company Limited vs M/s Hareshwar Enterprises (P.) having Civil Appeal no. 7033 of 2009, wherein, inter alia, it has been record that:

“Ambiguity having noted the contentions of the provisions as contained, there is no ambiguity  whatsoever. However, what is required to be taken note is that provision indicates that the complaint is required to be filed within two years from the date on which the cause of action has arisen in that context, another decision relied on by the Ld. Counsel for the Appellant in the case of Kandimalla Raghavaiah and Company Ltd. held that “6. Having noted the contention, on the provision as contained, there is no ambiguity whatsoever. However, what is required to be taken note is that the provision indicates that the complaint is required to be filed within two years from the date on which the cause of action has arisen. In that context, another decision relief on by the learned counsel for the appellant in the case, Kandimalla Raghavaiah and Company vs. National Insurance Company and Another (2009) 7 SCC 768 with specific reference to para 18 would indicate that the term cause of action though not defined in the Act, but it is of wide import and it would have different meaning in different context while considering limitation. It has been held therein that pithily stated cause of action means, cause of action for which the suit is brought and which gives occasion for and forms the foundation of the suit. Reliance is placed on this case by the learned counsel since in the said case, which was also in respect of a fire incident it was held that the date of accrual of cause of action has to be a date on which the fire breaks out. However, what cannot be lost sight is that, such conclusion was reached in the cited case since the fire in tobacco godown took place 22/23.03.1988 and the bank in whose favour the stocks had been hypothecated was informed about it by the appellant on 23.03.1988 itself, but insofar as the claim, the matter had rested there till 06.11.1992 when for the first time the appellant addressed the letter to the insurance company and sought for claim form. The facts therein, if noted would indicate the reason for which this court had indicated that the date on which the fire broke out is the date of accrual of cause of action since it did not move forward in any other manner. It has not been laid in strait jacket. The cause of action will remain flexible to be gathered from the bundle of facts arising in each case.”

7.3: In the aforesaid case (supra) in para no. 7, the Hon’ble Court has also referred about para no. 21 of the complaint case filed by the respondent no. 1 (complainant before the NCDRC which would indicate, inter alia, that cause of action arose when the legal notice on behalf of complainant) issued and same was reply by the advocate on behalf of OP, therefore, the original petition was found to be within limitation.

7.4: Para no. 8 of the above cited case is also reproduced as under:-

          “If in the above context the fact situation herein is noticed, though the fire incident occurred on 06.11.1999, the same merely provided the cause of action for the first time to make the claim but the same did not remain static at that point. On the other hand, the process of joint survey though had concluded with its final report on 13.03.2001, the letter dated 22.06.2001 addressed by the insurer to the respondent no. 1 regarding appointment of the investigator had created a fresh cause of action and kept the matter oscillating. Thereafter, the matter did not rest at that but there was repeated action being taken by the investigators seeking for details. When the same did not conclude in an  appropriate manner, the respondent No. 1 (Insured) got issued a legal notice dated 05.01.2003 to which reply was issued, when in fact the repudiation was gathered and the complaint was filed. Even if the date on which the process of intimation of appointment of the investigator through the letter dated 22.06.2001, received by the respondent No. 1 is taken into consideration, from that date also the complaint filed on 26.03.2003 is within time. There was no need for the NCDRC to pass any separate order at the outset to hold the claim to be within limitation and then proceed when it is clear on the fact of it. As such the consideration of the complaint on merits by the NCDRC was justified. The contention therefore urged by Mr. Vishnu Mehra, Learned Counsel on that ground is accordingly rejected.”

7.5: Having the observations of the Hon’ble Court in the matter cited above, it is to be perceived that complaint in the present case has been filed on 10.08.2016 by the complainant after serving legal notice to the OP on 16.05.2015 and in support the legal notice, the complainant has also placed on record the original postal receipt as Annexure- H-1 (filed with complaint). So far as the cause of action is concerned, it was continuing till the legal notice was served to OP by the complainant. Not only this, the repudiation letter by the OP is dated 26.08.2014, therefore, even if date of repudiation is taken into account for the purpose of limitation period of 2 years comes to end on 24.08.2016, whereas the complaint has been filed by the complainant on 10.08.2016 which is well within the limitation period of two years after its discussions are taken into account and also the case referred above in para no………. on which the complainant has placed reliance the plea of OP that the complaint has been filed beyond limitation has no merit. However, plea of OP that no cause of action has arisen against it has also no substance as it is admitted fact that the complainant had taken the policy period which was effective with effect from 06.06.2012 to 05.06.2013, burglary took place in the business premises of the complainant at 13.12.2012, FIR was lodged by the concerned P.S. about the incident on 13.12.2012, the seizure report by the concerned police station  is dated 25.01.2013, in FIR no. 604/12 under Section 323, 342, 457, 380 IPC, wherein, it is stated in said report that two persons, namely, Lakhwinder and Balwinder have been arrested by the police officials but nothing substantial could be recovered from them except one set of keys (copy of the seizure memo has been filed with the complaint as Annexure-C) all these facts are undisputed, therefore, no cause of action arose against the OP in the case has no substance.

7.6: The third point taken by the OP for repudiation of the claim is the survey report dated 29.07.2014. After the matter was reported to the OP of the incident, OP appointed Mr. Sanjeev Soni (S. Soni and Company) as surveyor and detailed report of the surveyor has been submitted on record (OPW-1). Before delving into details of the survey report, it would be relevant to record the operative clause of the burglary and house breaking policy (business premises) containing the terms and conditions of the policy as under:-

“ The company hereby agrees subject to terms, conditions and exclusions herein contained or endorsed or otherwise expressed hereon to indemnify the insured to the extent of intrinsic value of:

(a) Any loss of or damage to property or any part thereof whilst contained in the premises described in the schedule hereto due to Burglary or House-breaking (theft following upon an actual forcible and violent entry of and/ or exist from the premises).

(b) Damage caused to the premises to be made good by the Insured resulting from burglary and/ or house-breaking or any attempt there at any time during the period of insurance.

Provided always that the liability of the Company shall in no case exceed the sum insured stated against each item of total sum insured stated in the Schedule.” 

7.7: After examination and investigation, surveyor appointed by the OP opined as under:-

          “based on the available documents, inspection at site, list of stolen items given to police, in our opinion, insured had suffered a loss of Rs. 3,06,845.25/-, however, the ownership/ insurable interest on the stolen items are not proved in this case, since the value of left over stock is much more than the closing stock as per books. Hence, the under writer may claose the file as No Claim.

          This report is issued without prejudice.”

7.8: Based on the aforesaid finding of the surveyor, OP vide letter dated 26.08.2014 addressed to the complainant has verbatim considered the claim as No Claim.

7.9: It is also on record that vide letter dated 30.04.2014 addressed to the complainant was sent by surveyor vide which some clarifications were sought from the complainant in response to the said letter, complainant vide letter dated 01.07.2014 addressed to the surveyor had, inter alia, clarified that “ with reference to your letter dated 30.04.2014 in which the clarifications was required that the closing stock as per trading account was Rs. 15,256,200/-, whereas the violation of the left over stock provided by us came to Rs. 27,639,692/- for the period of 01.04.2012 to 14.12.2012, in that record, it was informed by the complainant that as per audit books of account, the value is that of Rs. 15,256,200/-. After, it is to state that the figure mentioned of Rs. 27,639,692/- is inclusive that of dead stock times amounting to Rs. 12,706,927/- which has already been written off during previous years in due course of business. Hence, the said amount of dead stock is not to be considered. Hence, this dead stock is having no value as on 14.12.2012 because the stock has already been written off. Previously, in the said letter, the complainant has further stated that the same has already been verified during the auditors during the period of March 2013 and the provisional balance sheet as had 14.12.2012, it has been verified by the panel during their inspection visit. The complainant also attached with the said letter, the bifurcation of stock of Rs. 27,639,692/- indicating the dead stock and of the stock lying in godown.

7.10: In the survey report dated 29.07.2014, the surveyor is mentioned about the statement of Mr. Radhir working as security guard in the premises of the complainant, statement of R.S. Kasana, Supervisor of Shri Balaji Dreams Securirty but statements of the witness mentioned in the survey report have not been taken separately under their signature and/or thumb impression, but oral statements have been recorded by the surveyor himself. Further, in para no. 14 of the survey report under the head ‘ verification of books and records’ it has been stated that the insured is maintaining the item-wise stock register sales and purchase bills, ledger account and the books of records were also audited. They have provided us, the required information and the verification of the same which is further mentioned in the para 15 of the report. From this, it is clear that the complainant was maintaining, complete records including audit records audited. If that is so, in the survey report surveyor should have clarified that out of the left over stock what articles were junk and written off or otherwise, to make the clear assessment of the unaccounted stocks/ formed the basis of repudiation of the claim as ‘No Claim’ and this exercise ought to have been done with the support of witnesses under their signatures.

7.11: To travel further, in para no. 12 of the complaint, inter alia, the complainant has pleaded that during the meeting of the officials of the respondent had also made a request for appointment of another/ independent surveyor so as to verify the facts and finds the true position of the stock but no action has been taken by the respondents. The impugned letter unjustifiably( dated 26.08.2014) put the figures of the loss suffered by the complainant at Rs. 3,06,845.25/-. It is also pleaded in the said para that the reasons stated for the rejection of the claim of the complainant is that the left over stock is much more than the closing stock as per the books of accounts.

          However, in reply to this para of the complaint by OP in its WS, there is no mention/ murmur about such request of the complainant for appointment of another/ independent surveyor to verify the facts and find the true position of the stocks. This reflects the unilateral and arbitral approach of the OP.

7.12: In the written argument on behalf of the complainant which has been filed on record in para (a) and (b) under the head ‘Submissions’. It has been argued, inter alia, that the surveyor should have only considered the value of the goods which were part of the inventory and stolen in the theft. It is further mentioned in the written argument that all the documents were duly handed over to the surveyor. Still the surveyor proceeded to adopt a erroneous method of assigning values to scrap material which the thefts also did not consider stealing on the basis of the irrational values assign to this scrapped and written off material. From these written submissions of the complainant, it is matter of general prudence that had there been the written off stock of added values than the burglars who were about 18-20 criminals in numbers all armed with fire arms, knifes and other weapons could have not left these articles. Otherwise too case of the complainant also does not file under ‘exclusion’ calls mentioned in the terms and conditions of the policy.

7.13: The complainant has also taken the defence from the judgment dated 18.08.2021 of the Hon’ble Supreme Court of India in National Insurance Com. Ltd. vs M/s Hareshvar Enterprise (P.) in CA No. 7033 of 2009 (supra), wherein in para 10 (copy of the judgment has been filed by the complainant on record) of the said judgment, the Hon’ble Supreme Court has recorded has under:-

“ In that view of the matter the only question on merits which needs consideration herein is with regard to the loss assessed towards destruction of the stock-in-trade in the fire incident. On this aspect, the learned counsel for the appellant while contending that the NCDRC has committed an error in relying on the surveyor report as sacrosanct without giving credence to the investigation report has referred to the decision in the case, New India Assurance Company Limited vs. Pradeep Kumar (2009) 7 SCC 787 and referred to para 21 and 22 which read as hereunder:-

21. Section 64- UM(2) of the Act, 1938 reads: “64-UM. (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as “approved surveyor or loss assessor”):

Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.”

The object of the aforesaid provision is that where the claim in respect of loss required to be paid by the insurer is Rs. 20,000/- or more, the loss must first be assessed by an approved surveyor (or loss assessor) before it is admitted for payment or settlement by the insurer. Proviso appended thereto, however, makes it clear that insurer may settle the claim for the loss suffered by insured at any amount or pay to the insured any amount different from the amount assessed by the approved surveyor (or loss assessor).

22. 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.

7.14: After considering the pleadings of the parties, taken their complaint, reply, affidavit of evidence, written arguments, documents submitted on records and oral submissions supported by the judgment of the superior courts/ Commissions. The Preponderance of the possibility because in favour of the complainant and after considering the contentions and rival contentions of both the parties, the Commission order as under:-

8:  Announced on this ....day of  February, 2023. Copy of this sent/provided to the parties free of copy as per Regulations.