1.      Heard Mrs. K. Radha, Advocate, for Srinivasa Automobile Private Ltd. and Mr. K.K. Bhat, Advocate, for New India Assurance Company Ltd. in both the appeals, which are arising from the same order of the State Consumer Disputes Redressal Commission, Andhra Pradesh, dated 03.02.2011, passed in Consumer Complaint No. 77/2009 and are consolidated. By the impugned order the complaint has been allowed and the insurer has been directed to pay Rs.59,01,604/- after deducting the amount of Rs.37,05,006/- i.e. balance of Rs.21,96,598/- along with interest @9% p.a. from 09.06.2009 till the payment and cost of Rs.10,000/-.

2.      The office has reported 6 days delay, in filing First Appeal No. 214 of 2011. The appellant has filed an application for condonation of delay, in which reason for delay has been explained. Cause shown is sufficient. Delay in filing the appeal is condoned.

3.      Srinivasa Automobile Private Ltd. (the complainant) (hereinafter referred to as the Insured) filed a complaint (registered as Consumer Complaint No. 77/2009) for directing New India Assurance Company Ltd. (the opposite parties) (hereinafter referred to as the Insurer) to (i) to pay balance claim amount of Rs.36,97,000/- along with interest @ 18% p.a. from 18.08.2007 till the date of realization, (ii) to pay compensation of Rs.5,00,000/- for physical and mental harassment and (iii) to pay cost of Rs.25,000/- and to pass such other order, which the Commission deems fit and proper under the circumstances of the case.

4.      It has been stated that the Insured was a company, incorporated, under the Companies Act, 1956, having its head office at Kakinada and branch office at Rajahmundry. The Insured was an authorised dealer of M/S Bajaj Auto Ltd. and used to sell two wheelers and spare parts from the showroom situated at Rajahmundry and Kakinada. The complainant availed working capital facility from State Bank of India, Rajahmundry Branch as such all the vehicles and spare parts, accessories etc. were in hypothecation of the bank. State Bank of India obtained Standard Policy No. 620402/11/07/11/00000257, of Standard Fire & Special Perils Policy, from the Insurer, for coverage of Rs.30,00,000/-, for the stocks of spare parts at Rajahmundry showroom and of Rs.20,00,000/- for the stocks of spare parts at Kakinada showroom, for the period of 30.07.2007 to 29.07.2008,. After paying extra premium, the coverage was extended through Endorsement No. 620402/11/07/11/83000013 to Rs.55,00,000/- on 03.08.2007, for the stocks of spare parts at Rajahmundry showroom. The Insured had another Policy No. 620402/11/06/11/00000899 of Standard Fire & Special Perils Policy, for coverage of Rs.1,90,00,000/-,which was valid from 05.02.2007 to 04.02.2008, for various items including two wheelers, spare parts, accessories etc. at V.L. Puram showroom for coverage of Rs.22,00,000/-. Fire broke out at the store room, at Rajahmundry showroom, due to electric short circuit, on 18.08.2007 at 23.30 hours, in which whole stock of spare parts were destroyed. Fire was reported to Fire Service Station Rajahmundry, where it was noted vide Report No. 155/2007 dated 18.08.2007. Fire Tenders immediately attended the fire and put off it with great difficulty. The Insured informed the local police, where it was registered vide Report No. 249/2007 dated 19.08.2007. The Insured informed the Insurer, about the fire incident in his store room on 19.08.2007 and prayed for making survey, assess the loss and reimburse it under the Insurance Policy. On information, the Insurer appointed Mr. Raviram Imandi, Surveyors & Loss Assessors, Samalkot, on 19.08.2007 to conduct a preliminary survey and assess the loss, who inspected the premises on 19.08.2007, along with the Branch Manager of State Bank of India. He collected the papers relating to the stock from the Insured and the bank and submitted preliminary report dated 24.08.2007, assessing the loss of Rs.58,38,316/-. The Insurer appointed Cunningham Lindsey International Private Ltd., Visakhapatnam as the Surveyor and Loss Assessor on 23.08.2007 to conduct a survey, find out the cause of fire and assess the loss of the stock. Mr. A. Nageswara Rao, of Cunningham Lindsey inspected the premises on 30.08.2007. He demanded details of loss of the stocks and the papers relating to it, which were supplied to him on 22.09.2007. Cunningham Lindsey submitted its Final Report on 30.11.2007, showing net loss of Rs.59,01,604/-. When even after the report dated 30.11.2007, no settlement was made, then the Insured submitted his representation for settlement of the claim, then he was informed through letter dated 09.05.2008 that the Insurer had appointed J. Basheer & Associates Surveyors Pvt. Ltd. Mumbai, a fresh surveyor and loss assessor on 23.04.2008. Mr. J. Basheer inspected the premises on 27.05.2008 and made an inquiry and collected the papers relating to stock on 28.06.2008. He submitted his report to the Insurer on 21.03.2009, after nearly nine months. The Insurer sent a cheque of Rs.37,05,006/- dated 09.06.2009, as full and final settlement of the claim of the Insured on 04.07.2009, to State Bank of India. On coming to know about the aforesaid fact, the Insured made a representation on 05.08.2009 to the Insurer to pay remaining amount of the claim, i.e. Rs.36.97 lakhs and also informed that he had already cleared the entire dues of State Bank of India on 09.06.2009, but the Insurer did not give any reply. The Insured also sought for an information, under Right to Information Act, 2005, on 27.08.2009, which was not attended. The Insured made another representation on 23.09.2009. When nothing was done then the present complaint was filed on 16.11.2009.

5.      The Insurer contested the case and filed its written statement on 02.03.2010, in which the facts (i) relating to the business of the Insured at the said premises, (ii) Insurance of stocks of the Insured, under Standard Fire & Special Perils Policy, scheme through policy No. 620402/11/07/11/00000257, from the Insurer, for coverage of Rs.30,00,000/-, for the stocks of spare parts at Rajahmundry showroom and of Rs.20,00,000/- for the stocks of spare parts at Kakinada showroom, for the period of 30.07.2007 to 29.07.2008 and extending of the coverage, after paying extra premium, through Endorsement No. 620402/11/07/11/83000013 to Rs.55,00,000/- on 03.08.2007, for the stocks of spare parts at Rajahmundry showroom, (iii) Information regarding incident of fire on 19.08.2007, at the premises and putting off the fire by Fire Tender (iv) appointment of Mr. Raviram Imandi to conduct a preliminary survey and assess the loss and his report dated 24.08.2007. (v) appointment of Cunningham Lindsey International Pvt. Ltd. Surveyors & Loss Assessors Pvt. Ltd. as the Surveyor on 23.08.2007 and his final report dated 30.11.2007 and (v) appointment of J. Basheer & Associates Surveyors Pvt. Ltd. on 23.04.2008 and his report dated 21.03.2009 are not denied. It has been stated that findings in the previous reports were inconsistent and incomplete in respect of cause of loss and quantum of loss, as such it were not accepted and J. Basheer & Associates Surveyors Pvt. Ltd. was appointed on 23.04.2008, for fresh survey, who submitted his report on 21.03.2009. On the basis of that report, the claim of the Insured was settled for Rs.37,05,006/- and a cheque dated 09.06.2009 of that amount was sent to State Bank of India, which was accepted by the bank. The Insured was informed in this respect. The Insured deputed his employees for pursuing his claim, who were throughout in touch of the Insurer, while making settlement. The Insured was never informed that the employees, who were pursuing the claim, had no authority for settlement. The cheque dated 09.06.2009 was delivered to Mr. Suri Babu, employee of the Insured in his office. “Agreed Bank Clause” under the Terms and Condition of the Policy, provides for payment of the claim to the Bank. Once the Bank has accepted the cheque dated 09.06.2009 as full and final settlement, it cannot be questioned by the Insured. The Insured was informed on 05.08.2009 in this respect. Cunningham Lindsey International Pvt. Ltd. has based his report upon statement of stock of the bank from March, 2006 to July 2007, the business trend from the VAT returns for the period of 01.04.2006 to 01.07.2007 and physical inventory of burnt spares and assessed the loss of Rs. 59,01,604/-. Although statement of the stock of the bank was Nill on 30.07.2007 and the claim of the Insured was for Rs.74.02 lakhs. In view of discrepancy another surveyor was appointed, who submitted his report dated 21.03.2009, assessing the loss of Rs.39,09,521. The Insured has never produced any reliable evidence relating to the stock.    

6.      The Insured filed documentary evidence as Exs. A-1 to A-28 and the Insurers filed documentary evidence Exs. B-1 to B-19 as documentary evidence, which are detailed in the appendix of the order of State Commission dated 03.02.2011. The Insured filed an Affidavit of Evidence of B. Pullam Raju, Managing Director, an Additional Affidavit of Evidence of B. Pullam Raju and Affidavit of Evidence of T.V.V. Satyanaraina, a charted accountant, who was also cross examined by the Insured on questionnaire form. The Insurer filed Affidavit of Evidence of Dr. M. Shankar, the Regional Manager, Additional Affidavit of Evidence of Dr. M. Shankar, Affidavits of Jalal Basheer and A. Nageshwar Rao, the surveyors.

7.      State Commission, after hearing the parties, by judgment dated 03.02.2011 found that the alleged settlement was not signed by the Insured or any of his employee. The bank has already received entire dues before the settlement. Receiving cheque dated 09.06.2009 and its deposit in the bank do not amount to full and final settlement of the claim. Relying upon the judgments in New India Assurance Company Vs. Shree Shyam Cotspin Ltd., (2009) CPJ 110 (NC) and Sri Venkateshwerya Syndicate Vs. Oriental Insurance Company, (2010) CPJ 1 (SC), it has been held that appointment of J. Basheer & Associates Surveyors Pvt. Ltd. without permission of IRDA as fresh surveyor on 23.04.2008 was illegal. The complainant submitted the statement of the stock of July 2007, showing value of the spare parts as of Rs.58,38,316/-, then the bank sought for enhancement of the coverage of the policy of the stock, on which coverage was enhanced through endorsement dated 03.08.2007.Cunningham Lindsey International Pvt. Ltd. has considered audited balance sheet of the earlier years and provisional balance sheet for 2006-2007, Income Tax Returns, monthly returns of VAT, statement of the stock of the bank and submitted his report dated 30.11.2007, showing the value of the stock as Rs. 59,01,604/- after deducting salvage. J. Basheer & Associates Surveyors Pvt. Ltd. in his report dated 21.03.2009 has raised a presumption that the stock included the stock of three wheelers, to the extent of 45% of the total stock as the business of three wheeler was being done from another premises, from long before the incident as such he had reduced 45% of the value of the stock on presumption, which is not liable to be accepted. On these findings, State Commission accepted the report dated 30.11.2007 and awarded compensation on its basis along with an interest @ 9% p.a. from 09.06.2009 and cost of litigation as Rs.10,000/-  

8.      We have considered the arguments of the counsel for the parties and examined the record.  The counsel for the Insurer argued that cheque dated 09.06.2009 was for full and final settlement; The cheque was received by Mr. Suri Babu, the accountant of the Insured and deposited in State Bank of India, who has granted cash credit facility to the Insured and goods of the stock were hypothecated with it; as such in view of Agreed Bank Clause, full and final settlement of the claim, has been done. The Insured was not entitled to file the present complaint, after final settlement of the claim.

9.      Relevant clauses of “Agreed Bank Clause” are quoted bellow:-

(i). Upon any money becoming payable under this policy, the same shall be paid to by the Company to the bank and such part of any money, so paid, as may relate to the interests of other parties insured hereunder shall be received by the Bank as  agents for such other parties.

(ii) That the receipt of the Bank shall be complete discharge of the Company therefor and shall be binding on all the parties insured hereunder.

(iv) That any adjustment, settlement, compromise or reference to arbitration in connection with any dispute between the Company and the insured or any of them arising or in connection with this policy if made by the Bank shall be valid and binding on all parties insured hereunder but not so as to impair rights of the Bank to recover the full amount of any claim it may have on other parties insured hereunder.  

10.    From these provisions, it is clear that clause-ii talks about the money becoming payable under the policy. Till issuing the cheque dated 09.06.2009, there was serious dispute between the Insured and the Insurer about the amount of money payable under the policy as such even if the bank of the Insured accepted the cheque (which according to the Insurer was of full and final settlement and according the Insured it was part payment of the claim), it does not amount to complete discharge of the Company. Under clause-iv, the bank has been authorised for the adjustment, settlement or compromise. The Insurer did not disclose the name of the officer, who had settled the claim nor adduced any evidence in this respect. In the absence of any pleading, it cannot be determined as to who had signed the alleged Settlement Voucher (Ex-B-5). In written statement, the Insurer took plea that Mr. Suri Babu, the accountant of the Insured, who was pursuing the claim on his behalf, had agreed for settlement. But no such paper was produced, in which Mr. Suri Babu had agreed for settlement. Mr. Suri Babu had authority to pursue the claim and not to enter into any settlement with the Insurer for lesser amount as such this argument is not liable to be accepted. The letter dated 09.06.2009 was addressed to the Bank and not to the Insured. It came to the knowledge of the Insured through the Bank. Then the Insured protested the matter through his representation. This Commission also by order dated 18.05.2011, passed in F.A. No. 172 of 2011, given time to disclose the name of the person, who had authority to settle the claim and had settled the claim but the name has not been disclosed. As such the arguments in this respect is not liable to be accepted.

11.    The counsel for the Insurer next argued that settlement dated 09.06.2009 was based upon the report of J. Basheer & Associates Surveyors Pvt. Ltd. dated 21.03.2009, in which total loss was assessed to Rs. 39,09,521/- as such the settlement can be treated as a valid settlement by the Insurer. State Commission has illegally ignored the report dated 21.03.2009. Supreme Court in Sri Venkateshwerya Syndicate Vs. Oriental Insurance Company, (2009) 8 SCC 507 and New India Assurance Company Ltd. Vs. Luxra Enterprises Pvt. Ltd. (2019) 6 SCC 36, has held that Section 64 UM of Insurance Act, 1938 did not impose any restriction for appointment of a fresh surveyor. As such it cannot be said that the appointment of J. Basheer & Associates Surveyors Pvt. Ltd. as fresh surveyor and loss assessor and his dated 21.03.2009 are illegal.

          However, the surveyor and loss assessor appointed under Section 64-UM of Insurance Act, 1938, is an expert and a fact finding authority. Before the Court/Commission, the report of Surveyor and Loss Assessor is an expert evidence/opinion and is relevant under Section 45 of Evidence Act, 1872. An expert evidence is not a conclusive proof. Its validity can be examined by the Commission. As the report of J. Basheer & Associates Surveyors Pvt. Ltd. dated 21.03.2009 has been challenged by the Insured, we have to deal with the arguments of Insured also in this respect.

12.    The Insurer has filed the report of J. Basheer & Associates Surveyors Pvt. Ltd. dated 21.03.2009 and affidavit of Jalal Basheer to prove it. There is no dispute in respect of cause of fire as all the surveyors have found that fire was caused due to electric short circuit. J. Basheer & Associates Surveyors Pvt. Ltd. in report dated 21.03.2009 has noted the statement of D. Ananthraju, General Manager of the Company on page 13 of his report, who has stated that Srinivasana Automobile Pvt. Ltd. was incorporated in 1987 and was dealing with business of sales and service of Bajaj 2 wheeler and 3 wheeler, from Kakinada and Rajahmundry. The business of 3 wheeler was delinked with the company and included in M/S Srinivasa Automobile Proprietorship since 01.04.2006. Due to poor sale of Bajaj 2 wheeler, he discontinued the sale and service of Bajaj 2 wheeler around 31.05.2007. From 01.06.2007, they were trying to sell the spare parts on wholesale basis at a discount of 35%. This statement has not been disbelieved. However, on page 19 of his report, he found that spare parts closing stock statement as submitted on 31.03.2007 included spare parts of 3 wheeler at Serial No. 22 and 24. Some of the spare parts are commonly used in 2 wheeler and 3 wheeler. On its basis, he formed his opinion that in the stock of spare parts of 3 wheeler were also stored at D-14-116/1, V.L. Puram Rajahmundry. On page 23, he found that in April 2006, the sale of 3 wheelers was of Rs.48,76,211/-. He found that total 7140, 2 wheelers of Rs.27.132 cr. and total 2511, 3 wheelers of Rs.22.59 cr. were sold as such ratio of 54.56% was of 2 wheeler and ratio of 45.43% was of 3 wheeler. Although he found that total valuation of the stock on the date of fire in the store of D-14-116/1, V.L. Puram, Rajahmundry was of Rs.60,30,300.10 but on deducting the value 3 wheeler on aforesaid ratio, he assessed the loss to Rs.39,09,521/-  He further doubted bonafide of the Insured for extending the coverage of the Policy from Rs. 30 lakhs to Rs. 50 lakh as on that day including the coverage of Policy No. 620402/11/06/11/00000899, total coverage was of Rs. 52 lakhs, while the stock declaration was of Rs. 58.63 lakhs (on page-17).

 13.   The report of J. Basheer & Associates Surveyors Pvt. Ltd. dated 21.03.2009 is wholly absurd. Inasmuch as he has not taken into consideration that Insurance Policies were in respect of stock of spare part of showroom at D-14-116/1, V.L. Puram, Rajahmundry (at page 6 of his report) and there was no description of 2 wheeler and 3 wheelers stocks nor these spare parts were distinguished in these policies. The sale of 2 wheelers and 3 wheelers vehicles were totally unrelated with the sale of spare parts. The business of 3 wheeler were transferred to Morampudi Raod, V.L. Puram, Rajahmundry, from 01.04.2006. If some spare part remained from being transferred, in huge stock, it does not matter as the stock as a whole was insured.

14.    Report of Cunningham Lindsey International Pvt. Ltd. dated 30.11.2007, has been filed by the Insured in FA No. 214 of 2011.  In this report, Audited balance sheet of the Insured for the financial year 2003-04, 2004-05, 2005-06 and Provisional balance sheet of the year 2006-07, monthly returns of VAT for the period 01.04.2006 to 01.07.2007, Income Tax Return for the year 2004-05 and 2005-06, Bank stock statements from March, 2006 to July 2007 and closing stock statements for the year 2004-05, 2005-06 and 2006-07 were examined and by comparative study, statement of stock of July 2007 was found to be correct. It was also found that after 01.04.2007, the stock of spare parts were transferred to showroom at D-14-116/1, V.L. Puram, Rajahmundry from Kakinada. Deducting the amount of the spare part sold after 31.07.2007, the value of the stock was determined. He found that this value was based on MRP basis as such he calculated the value on Distributor Price basis to Rs.62,54,012/- at the time of fire on 18.08.2007. He further deducted 5% total for dead stock and 5% for salvage. Report dated 30.11.2007 does not suffer from any illegality. Supreme Court in New India Assurance Company Ltd. Vs. Luxra Enterprises Pvt. Ltd. (2019) 6 SCC 36 (paragraph-21) has held that the stock, hypothecated with the Bank, who had first charge on it, was verified by the Bank, cannot be ignored by the Insurer.

15.    The Insured and the Insurer both are not satisfied with the report dated 30.11.2007. According to the Insurer, this report was not consistent with the claim of the Insured. Apart from this objection, the Insurer could not point out any other illegality. According to the Insured, Cunningham Lindsey International Pvt. Ltd. in his report dated 30.11.2007, has illegally reduced the amount of his loss from Rs. 74.02 lakhs to Rs.59,01,604/-. As stated above, although the stock of spare parts as submitted by the Insured were verified to be true but its value was found on MRP basis. For assessing the loss, it was assessed on Distributors Price basis and 5% total for dead stock and 5% for salvage were deducted from it. Loss was rightly assessed taking in to account of Distributors Price basis and deduction of 5% total for dead stock and 5% for salvage. State Commission has rightly relied upon this report. We do not find any illegality in the order of State Commission. Both the appeals have no merit and liable to be dismissed.    

.                                               O R D E R

In view of the aforesaid discussion, both the aforementioned appeals are dismissed. The parties will bear their own cost.