Heard Mr. S.N. Pandey, learned counsel for the appellant, and Mr. Abhishek Kumar Gola & Mr. Anshul Mehra, learned counsel for respondent no.1/Insurance Company.  The respondent no.2 has already been served as per the Office report on 08.04.2024.  There is no one representing the respondent no.2 in this appeal inspite of service of notice.

Having heard learned counsel for the parties, this appeal is being proceeded with to be disposed of finally at this stage itself.

Both the parties have filed their written submissions and have also advanced their arguments on the merits of the claim.

The claim before the Insurance Company by the complainant appellant was with respect to a considerable loss in a fire that occurred in the intervening night of 21/22.12.2015.  The complainant appellant’s Rice Mill suffered a huge damage which was insured under a policy acquired from the respondent Insurance Company that was effective from 27.10.2015 to 26.10.2016.

The intimation of the incident was given to the Insurance Company as well as to the Bank and the Insurance Company seems to have appointed one Mr. R.C. Bajpai as surveyor who appears to have submitted a survey report.

The survey report according to the appellant was not supplied to him but the repudiation letter was issued on 13.04.2016 which is extracted hereunder:-

“APRIL 13, 2016

M/S SHIVA ENTERPRISES

JAGDISHPUR KATRA GULAB SINGH

SADAR, PRATAPGARH,

U.P.-230001

RE: FIRE LOSS UNDER POLICY NO 42030511150100000517

DATE OF FIRE : 21-12-2015

In regard to your fire loss on 21-12-2015 under above mentioned policy, we would like to inform you that you were failed to produce documentary evidences viz. Stock Register and any books of accounts to substantiate his claim, so non submission of necessary documents amounts to violation of policy condition.  Further, no source of fire was found at the time of survey which would have caused the fire.  The cause of loss is questions of doubt, which is misleading and also violates condition no 1 of the policy.  Again, you have disposed of the salvage without any intimation or permission from us that is yet another violation of condition no 7 of the policy.

Hence Competent Authority has closed your file as REPUDIATED.

This is for your information.

Sd/-

INCHARGE

(CLAIM HUB)

c.c.to: BRANCH OFFICE 420305

          THE MALL

          KANPUR”

Learned counsel submits that aggrieved the complaint was filed where affidavits were filed on behalf of the complainant appellant but the respondent Insurance Company failed to file their written version within the statutory limit of 30 days coupled with the extended period of 15 days and consequently their right to file a written version was closed by the State Commission on 10.07.2018.

The matter then proceeded to be finally heard by the State Commission and despite the fact that an order had been passed by the State Commission itself forfeiting the right of the Insurance Company to file a written version, the State Commission recorded in paragraph-5 as follows:

“5.      Report of fire brigade is present in the paper book, the report suggests that the cause of fire was electricity short-circuit.  A news clip of daily newspaper is also enclosed which also suggests that the cause of fire accident in the rice mill was short circuit, but both these documents are not prepared or published upon knowledge of anyone as such both these documents cannot be taken into consideration to decide the issue as to what was the cause of the fire.  Although because the written statement is not on record as exhibit, the facts stated in the written statement cannot be taken into consideration for the purposes of this judgment but a surveyor was appointed in this incident and since the surveyor was acting independently for both the parties as such the report of the surveyor will be taken onto account for necessary consideration. Similarly, the submissions made during the course of the arguments will also be considered.”

A perusal of the said paragraph indicates that the State Commission has adopted this approach, which is a strange procedure, where inspite of having rejected the pleadings filed by the Insurance Company as being beyond 45 days, it has yet chosen to rely on the surveyor’s report on the ground that the surveyor is an independent institution working for both the parties.  The surveyor’s report was a document of the Insurance Company possibly filed with their written statement that had not been taken on record.

Learned counsel for the complainant appellant submits that the approach of the State Commission is erroneous, inasmuch as once the right of the Insurance Company to file a written version stood foreclosed according to the law laid down by the Apex Court in the case of New India Assurance Co. Ltd. Vs. Hilli Multipurpose Cold Storage Pvt. Ltd. (2020) 5 SCC 757, the State Commission could not have taken into consideration any material whatsoever, including the pleadings and the documents filed along with the written version for contesting the case as held by this Commission in First Appeal No. 433 of 2024 (Era Realtors Pvt. Ltd. & Anr. Vs. Neeraj Saxena & Ors.), decided on 27.06.2024.  

Learned counsel submits that the impugned order is entirely based on the observations made by the surveyor and therefore the same is vitiated as the report of the surveyor could not have been relied on as it stood rejected.

Learned counsel for the Insurance Company however submitted that the facts which were on record have been taken into account and the Commission was not prevented from considering any relevant material to arrive at the correct conclusion.  The contention is that even otherwise on merits, the case set up by the complainant appellant that the fire had occurred on account of a short circuit was not proved and in effect the repudiation letter on the basis of this grave doubt was justified in proceeding to reject the claim of the complainant appellant.

Learned counsel for the Insurance Company has also submitted that on merits there are other issues which would go on to prove that the complainant appellant had failed to establish its case for the claim made by it in respect of the alleged loss suffered including the issue of cause of fire as also the existence of any stocks which were being claimed to have been destroyed in the fire.

Having heard learned counsel for the parties, it is not necessary for this Commission to enter into the merits of the claim as contested by either side, inasmuch as the impugned order cannot be sustained for the simple reason that the State Commission has proceeded to take into account the surveyor’s report, a copy whereof does not seem to have been supplied to the complainant appellant, and even otherwise it was part of the pleading of the written version, which could not be legally accepted on record once the right of the Insurance Company to file a written statement stood forfeited.  The procedure that was adopted by the Commission as indicated in paragraph-5 of the impugned order and extracted hereinabove was an incorrect method contrary to law and therefore the said procedure has prejudiced the cause of the complainant appellant.

Consequently, for the reasons stated hereinabove, the appeal is allowed; the impugned order is set aside; and the matter is remitted back to the State Commission for being decided afresh in accordance with law.