PER MR SUBHASH CHANDRA, MEMBER

                This first appeal has been filed under section 22 (A) of the Consumer Protection Act, 1986 (in short, ‘the Act’) impugning the order dated 11.06.2019 of the Uttar Pradesh State Consumer Disputes Redressal Commission, Lucknow, (in short, ‘the State Commission’) in Complaint no.547 of 2017. The State Commission has allowed the complaint filed by the present appellant partly and directed the respondent to appoint another surveyor within one month to assess the loss on account of a fire accident. Appellant has prayed that the claim amount assessed by the chartered accountant be considered and allowed.

2.     In brief, the facts, as stated by the appellant, are that she is the proprietor of M/s M J Surgical located at Baij Nath Dham, Nunhai, Agra dealing in pharmaceuticals/ consumables. She had obtained a Standard Fire and Special Peril Policy (in short, ‘the policy’) for a sum of Rs.1,20,00,000/- from the respondent covering stocks for a value of Rs.62.00 lakhs, plant and machinery for Rs.18.00 lakhs and building for Rs.40 lakh by way of two policies.  Premia of Rs.21,000/- and Rs.10,500/- respectively were also paid. The Policy was valid between 31.10.2015 to 30.10.2016. On 27.06.2016, at about 07.00 p m, a fire accident occurred in the factory premise, which was put out by the fire brigade. Local police were also informed about the fire on 28.06.2016. The fire brigade assessed the loss at more than Rs.65 lakhs. The opposite party deputed a spot surveyor, Ms Amita Garg, who prepared the preliminary survey report and noted the loss assessed by insured to be Rs.70,00,000/-. Thereafter the final surveyor, Mr Ram Gopal Verma, Insurance Surveyor & Loss Assessors, New Delhi was deputed on 29.06.2016. Information sought by the surveyor was provided by the appellant from time to time. The surveyor has estimated the loss at Rs.1,93,978/- vide his report dated 28.09.2016. The appellant has alleged that [the surveyor made illegal demands] about which she has complained to the respondent. The State Commission, vide impugned order, partly allowed the complaint and directed the opposite party to appoint another surveyor within a month from the date of order to correctly assess the actual loss by examining and considering all facts and grounds of the accident and documents such as bank statement, VAT return, sale purchase receipts, weight of burnt stock, trading account, balance sheet and other documents submitted by the complainant.  The opposite party was directed to finalize its decision within a period of one month, if felt necessary with the help of the Chartered Accountant, in the assessment of loss.

3.     It is averred by the appellant that the State Commission has erred in directing the respondent to re-assess the claim by appointing another surveyor since as per IRDA guidelines a claim has to be decided within three months.  It is stated that the incident of fire in the storeroom is not disputed where the stock of medicines, raw materials and finished surgical goods were stored contrary to the report of the surveyor that the items burnt in the fire were bought from outside to inflate the claim which is against the photographic evidence produced.  As per record, the weight of the burnt items had been correctly recorded in the presence of the representative of the surveyor on 28.07.2016.  The surveyor has not considered the consumable raw material, packing material, surgical goods manufactured and stock of surgical goods for trading but have only assessed bottles with collar, urine bags and urine meter and have wrongly concluded that 15,000 urine bags were verified from the burnt materials as it was not possible to count and separate the items which were burnt as claimed by the surveyor.  As regards the medicines, the surveyor, according to the appellant, only considered the stock which was not burnt and did not consider the medicines held in stock based upon bills of purchase and confirmation from suppliers.  The surveyor is also alleged to have wrongly held that the bill for medicines shows the residential address of the appellant and has wrongly concluded that the medicines were not on the premises at the time of fire.  It has also been stated in the surveyor’s assessment that the factory premises did not have adequate storage capacity to store the items.  The conclusion of the surveyor that the IV fluids which were safe from the fire, be the basis of rejecting the claim against the loss of medicines, is incorrect and has been rejected by the State Commission.

4.     The appellant is before us with the following prayer:

       In view of the facts and circumstances of the case and grounds stated here in above the appellant is most respectfully prayed to this Hon’ble Commission kindly may graciously be pleased to allow this appeal petition by quashing the impugned judgment and order passed by learned State Consumer Dispute Redressal Commission U.P. and pleased to allow the complaint in totality by giving direction to the respondent for making payment of claim amount as assessed by the Chartered Accountant by awarding cost compensation as prayed in complaint.

5.     The respondent has contested the appeal by way of written submissions. It has been contended that the complaint is not maintainable and is based on incorrect facts and is, therefore, misconceived.  The claim of the appellant had been considered on the basis of the report dated 28.09.2016 of the surveyor appointed by the respondent and was admitted for an amount of Rs.1,93,978/-.  The report of the spot surveyor Ms. Amita Garg on 01.07.2016 was only a preliminary survey report which was subject to the final assessment by the final surveyor.  It is contended that the final surveyor, after visiting the site, had requested the appellant to provide purchase bills, purchase ledger, fire brigade report, D-Vat Returns, balance sheet with ITR, trading account and claim form.  As per the report of the surveyor, loss for surgical goods was assessed at Rs.1,71,793/- and the claim for compressor and sealing machine at Rs.28,000/-. The report of the surveyor, according to the respondent, indicates different addresses with reference to the policy documents and that the amount for loss of surgical goods was exaggerated according to the surveyor.  The godown did not have sufficient space to store the stocks claimed to have been burnt and the insured did not maintain a stock register, issue register, production register or despatch register so as to confirm the loss.  The respondent took note of the surveyor’s report that no physical evidence to confirm that such a huge loss of surgical goods had occurred was found.  The godown also did not have any air-conditioner, freezer or air cooler to store surgical goods and IV fluids and the surveyor had, therefore, concluded that the godown was not fit for storing such quantity of medicines.  The surveyor had also noted that most of the medicines were expired drugs and no bill was provided for such expired medicines.  No loss had been noted in the main production hall as per physical verification.  The admitted claim vide letter dated 20.01.2017 was re-considered by the surveyor who reported on 30.01.2017 that :

“We finally observe as follows:

        The loss has been assessed on the basis of joint physical verification of stock of surgical goods and medicines. No reliance has been made in assessment of the claim for the exaggerated outside stock brought by them to inflate the claim.

        In our considered opinion, on the basis of our survey insurer’s liability is engaged to the extent of Rs.1,93,978.00 as per our assessment and as per policy terms and conditions issued to the insured.”

6.     The respondent has relied upon the judgment of Hon’ble Supreme Court in the case of Khatema Fibres Ltd. Vs. New India Assurance Co. Ltd. & Anr. in Civil Appeal No. 9050 of 2018 decided on 28.09.2021 [2021 SCC Online SC 818] that “where the claim of the appellant has been admitted, to the extent of the loss as assessed by the Surveyor………..the jurisdiction of the special forum constituted under the Consumer Protection Act, 1986 is limited.  Perhaps if the appellant had gone to the civil court, they could have even summoned the surveyor and cross examined him on every minute detail.  But in a complaint before the Consumer Forum, a consumer cannot succeed unless he establishes deficiency in service on the part of the service provider.”  Accordingly it has been contended that the claim be rejected.

7.     Both the parties have filed their written synopsis. We have heard learned counsel for both the parties and considered the material on record carefully.

8.     It is apparent from the record that against a claim of Rs.22,19,030.34/- filed by the appellant, the respondent has admitted the claim for Rs.1,93,978/-.  The incident of fire accident, as a consequence of short circuit, is not in dispute.  The respondent has based his repudiation of the claim on the basis of the report of its surveyor Ram Gopal Verma, Insurance Surveyor & Loss Assessors, New Delhi who has concluded that the cause of loss being accidental short circuit is covered under the policy issued to the insured and there is no breach of policy terms and conditions.  The gross loss is assessed at Rs.65,64,466/- and the insurance liability is assessed at Rs.1,93,978/-. 

9.     The case of the appellant is essentially that the respondent has erred in accepting and relying upon the report of the surveyor in repudiating his claim.  Per contra, respondent has justified the repudiation which is based on the surveyor’s report, which has assessed the loss to stock, plant and machinery and building as per the details provided by the appellant.  The order of the State Commission dated 11.06.2019 reads as under:

“On dated 01.06.2016 complainant firm has declared total stock Rs.68,72,400/- before Bank of India. In the VAT return of first quarter of the year 2016-2017 total sale turn over of the complainant firm has been declared Rs.61,37,858.16 and total Rs.3,06,892.94 as tax has been deposited. For examining truth of the declared stack at the time of accident of the complainant firm, VAT return of two year before is relevant. But the surveyor without considering all above documents and grounds has been prepared survey report and only Rs.1,93,978/- has been assessed the loss, while from version of complaint it is quite clear that the complainant firm has stated about illegal demand of surveyor prior to submitting surveyor report.

Therefore after considering complete fact and evidence we are with view of that the report of the surveyor Shri Ram Gopal Verma is not reliable and based on factual grounds. Thus, it is appropriate and correct to direct the opposite party insurance company for deciding insurance claim of the complainant legally by appointing surveyor again and assessing the actual loss.

The learned counsel for complainant has produced the judgments Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. & Anr. in CA No. 4487 of 2004 dated 24.08.2009 - (2009) 8 SCC 507,in which it has been stated that appointment of second surveyor not prohibited under the Act. It is very difficult work to the Commission for assessment of loss amount after examination and analysis of the evidence and documents filed by the complainant. Therefore, for assessment of loss it is necessary to appoint another surveyor again.

On the ground of above conclusion the complaint is partly allowed and the report of surveyor Shri Ram Gopal Verma is denied and the opposite party insurance company is hear by directed that within  a month from date of judgment appoint another surveyor who will submitted report from another a month after correct assessment of actual loss by examining and considering all facts and grounds of accident and documents, such as Bank Statement, VAT Return, sale purchase receipt, weight of burn stack, trading account, balance sheet and other documents submitted by complainant.

Thereafter the opposite party insurance company will decide the claim of complainant finally within one month.

If the surveyor feels need, could take help of chartered accountant for assessment of loss”.

10.   Based upon the facts and material brought on record, the assessment of loss for surgical stock, medicines and machinery and building has been assessed by the surveyor as below:

11.    Surveyor has not included the stocks of materials where the bills indicated different addresses to the insured premises.  He has also discounted the quantities for surgical items based on his assessment adequate storage capacity was not available on the premises. He has also excluded stock of medicines which had expired dates on the ground that these were brought from outside to inflate the claim.  However, no basis for this has been brought out.  The report of the surveyor based upon these observations is as below:

1. It may be noted that almost all the bills has address of c-60, trans Yamuna colony, whereas the address as per insurance policy is Plot No. 5. Baij Nath Dham, Nunhai, Agra, Uttar Pradesh-282006.
2. The main production hall which was storing raw material, semi-finished and finished goods was not affected by fire.

3.       There is wall between the main production hall and godown affected by fire.

4.       In the godown, on the back side, the insured had one office and in the front side of godown there was a shutter.

5.       Between the production hall and the godown, there is one iron door.

6.       This godown is used for storing accessories etc. and expired unusable medicines.

7.       The insured later on inflated the claim for surgical goods to Rs.22,19,030.00. The insured provided these details after about 2  months of the loss.

8.       There was no space in the godown to store the alleged exaggerated quantity claimed by the insured worth Rs.22,19,030.00. After the fire we did not find any physical evidence of the exaggerated quantity claimed by the insured.

9.       There is no salvage value of the fire affected surgical stock as per our market survey. To inflate the claim, the insured had brought about 60 bags of plastic waste from some other sources but there is no ash content in the said waste.

10.     The insured does not maintain stock register, issue register, production register, dispatch register etc. As such we are not in a position to verify the huge loss claimed by the insured.

11.     We have relied on the initial joint physical verification done (refer to page no. 58 of annexure no. 6) along with the insured surgical goods found in the fire affected godown. Accordingly the assessment has been done.  We have not relied upon and not assessed on the basis of the outside stock brought from some outside source, by the insured later on, to exaggerate the claim and this extra stock was not present in the godown at the time of initial physical verification done by us. We have not rejected the claim on fraudulent grounds but only the actual loss has been allowed to be indemnified.

12.     Mere bills purchase are not enough to justify the claim. Physical evidence after fire is very important to justify a claim. In this case we did not find physical evidence of fire affected surgical goods as claimed by insured except the little quantity physically verified by us. The physical verification dated 30.6.2016 is signed by the insured also.

13.     Value of saved surgical stock after fire is worth Rs.55,890.00.

14.     It has been noted that even IV Fluids had been claimed to have been stored in the godown by insured. The godown where the surgical goods were alleged to have been stored was not having any AC or air cooler or there was no freeze to store them in cool place. The godown was having lot of dust and heat. In such a place it is not possible to store the alleged claimed IV Fluids.

12.        Accordingly the claim for surgical stocks has been assessed at Rs.1,71,793/-.  Similarly, the claim for medicines has been assessed as NIL against a claim of Rs.40,73,348/-. The claim for machinery and building has been assessed at Rs.36,407/- as against the claim of Rs.48,927/-.  It is noted that as per the audit books of accounts for the year 2013-2014 and 2015-2016 and the provisional trading account, the total stock before the fire was worth Rs.63,48,269.67/- as on 27.06.2016.  It is concluded that the VAT component in the loss assessment has not been allowed since the VAT component has not been surrendered to the VAT department. The average sale of surgical goods per month is assessed at Rs.1.84 lakhs and therefore, the assessed loss of Rs.1,71,793/- is justified as loss for surgical goods.  It is also observed that this assessed loss is justified as per VAT credit of Rs.6,862/- available as at the end of June, 2016.  It has also been observed that the assessment of Rs.2,08,200/- comprising of Rs.1,71,793/- for stock and Rs.36,407/- for building was on the basis of physical verification in the presence of the insured and that assessment cannot be done on the basis of stock as per profit and loss account or balance sheet.  The surveyor has discounted outside stock of medicines (expired) in the assessment of the claim as this was to inflate the claim by the insured.

13.    From the foregoing it is evident that the repudiation of the claim of the respondent is based on the report by the surveyor appointed by him.  This is as per IRDA guidelines and Section 64 U.M. of the Insurance Act, 1938. The respondent, as per Khatema Fibres Ltd. (supra), has repudiated the claimed based upon the report of an authorized surveyor, which cannot be considered to be arbitrary or illegal.  The State Commission has held on the basis of Sri Venkateswara Syndicate (supra) that the respondent re-visit the issue and appoint another surveyor who could consider taking the assistance of a Chartered Accountant.  The petitioner’s objection to the appointment of another surveyor, especially when a time limit of one month has been prescribed by the State Commission to finalize the claim, is not reasonable or justifiable.  The State Commission’s order is reasoned and logical.  In view of the foregoing, we do not find any illegality or perversity in the order of the State Commission warranting our interference.  The petitioner has not been able to justify his claim that there is any deficiency in service.  The appeal is, therefore, dismissed with no orders as to cost.