ANUP K. THAKUR

          This Consumer Complaint No.1166 of 2016 has been filed by M/s. S.R. Bio Chem, a registered partnership firm, engaged in manufacture of Ascorbic Acid I.P. (Vitamin C).  Mr. Satish Mehra, partner has been duly authorized to file the present complaint. 

2. The complainant had started erection of their factory in 2005 at Plot No.10A and 10B, Goalthai Industrial Area, Phase II, Bilaspur, Himachal Pradesh and completed the same in 2007.  It commenced production of Vitamin ‘C’ in 2008.       The complainant enjoyed credit facilities from Oriental Bank of Commerce (OP3-Bank hereafter) for such as term loan, cash credit against hypothecation and import/inland/letters credit on general terms and conditions as detailed in the sanction letter dated 10.02.2006.  One such condition was that the assets financed shall be fully and comprehensively insured, with agreed bank clause, with premium borne by the complainant.  Accordingly, insurance was taken and renewed every year. The last credit facility was vide sanction letter dated 25.9.2012 (Annexure:C-1), for, inter-alia, cash credit of Rs.2.90 Crore for the period 25.9.2012 to 24.9.2013.  Among the conditions for this was to keep assets/securities charged to the bank, movable or immovable, comprehensively insured with “Agreed Bank Clause for the full value at the borrower’s cost”. 

3.      It has been stated in the complaint that OP3-Bank had a tie up with OP1-Oriental Insurance Co. Ltd. (OP1 hereafter) and that, at the instance of OP3, the complainant took in 2013 a Standard Fire and Special Perils Policy (Policy hereafter) to insure their plant and machinery, building and manufacturing of all kinds of chemicals, pharmaceuticals etc.  The premium was paid by debiting the account of the complainant with OP3.  This policy was renewed by OP3-Bank debiting the complainant’s account for a gross premium of Rs.2,80,829/- to obtain policy no.124500/11/2014/5 dated 12.04.2013 for the period from 10.04.2013 to 09.04.2014, providing insurance cover for (i) plant and machinery : Rs.3.50 Crore, (ii) building : Rs.80,00,000/-, (iii) stock of all kinds of chemical etc. : Rs.5 Crore, subject to “Reinstatement Value Policies Clause” and “Agreed Bank Clause” (Annexure: C-2 (Colly).  Statement of account of the complainant’s bank account showing debit of Rs.2,80,829/-, premium amount is at Annexure : C-3.   

4.      A major fire occurred on 14.7.2013 at about 8 P.M. in the complainant’s factory godown situated next to the plant at 10-A, Phase-II, Industrial Area, Goalthai, Bilaspur, Himachal Pradesh.  Immediate intimation was given to Olinda Fire Station who rushed to the site and controlled the fire by next morning.  The fire, as per the complainant, gutted and destroyed totally the factory godown building, the entire stock, and all the documents including books of account, stock registers etc..  After the fire was extinguished completely on 15.7.2013, the complainant addressed letter dated 16.7.2013 to the Chief Fire Officer, Bhakra, Bilaspur informing that raw material, material/goods in process and the finished goods valued at approximately Rs.4.17 Crore were lost and requested issue of their certificate in this regard.  Complainant ( S K Mehra, Managing Partner) also wrote to the In-charge, Police Chowki, Goalthai, Bilaspur giving details of materials physically stored in the factory godown and intimating the estimated value of stocks lost at Rs.4,19,36,035/-. OP1-Insurance Company and OP3-Bank had also been addressed on 16.07.2013.  Letter to OP1, intimating the fire incident and a claim of approximately Rs.6 Crore, was also copied to OP3-Bank (Annexure: C-6).

5.      OP1 appointed Allied Surveyors Pvt. Ltd., Mumbai under section 64 UM of the Insurance Act, 1938 to survey and assess the loss.  The complainant addressed a letter dated 17.07.2013 (Annexure: C-7) to the surveyor; also, letter dated 18.07.2013 (Annexure:C-8) was addressed to the Member Secretary, IADA, Goalthai, Bilaspur intimating the authority about the major fire.

6.      Pursuant to the intimation to the police, Roznama dt 15.7.2013 & 18.7.2013 were prepared: the full statement of Mr. Satish Mehra on 16.7.2013 at 11.15 A.M. was brought on record (Ann. C-9).

7.      Also submitted with the complaint was a “Report of Valuation of Immovable Property” affected by the fire for the purpose of estimating “Construction Expenditure” dated 29.7.2013 (Ann. C-10) by P.P.S. Sandhu, Engineer and Consultant: estimated replacement value of the affected godown, after depreciation, was Rs.28,08,000/-.  At Annexure: C-11 is a letter dated 30.07.2013 from the Single Window Clearance Agency, Goalthai, Bilaspur containing a brief report of inspection of the factory premises by the Assistant Engineer, Himachal Pradesh State Industrial Development Corporation and Member Secretary, Single Window Clearance Agency Department of industries, with the following findings : building badly damaged, major cracks all over in walls and slabs, building unfit and unsafe for use. 

8.      The complainant stated that they suffered a heavy loss amounting to Rs.4.46 Crore, including claim against stock of  Rs.4.16 Crore and against building of Rs.29.43 Lakh.  Due to delay in settlement by OP1, the complainant, vide letter dated 19.08.2013 approached the OP3-Bank to grant additional loan facility (Annexure: C-12).  Thereafter, the complainant also addressed letter dated 30.08.2013 and 31.08.2013 to OP3-Bank, resulting in the OP3-Bank requesting the insurance company to settle the complainant’s claim at the earliest vide letter dated 2.9.2015.  The additional loan facility sought by the complainant from OP3 was Rs.2 Crore.  Complainant had also expressed inability to pay the interest on the existing loan.  The said letter is at Annexure: C-13.

9.      Fire Insurance Claim Form dated 5.10.2013, enclosing claim details dated 4.10.2013 for Rs.4,46,08,133.00 was submitted to OP1 vide Annexure:C-14 and Annexure: C-15.

10.    The case of the complainant is that despite several requests and follow-up, the claim was not settled by OP1.  Complainant also simultaneously pursued the claim with the surveyor requesting that they submit the survey report at the earliest.  Surveyor however vide letter dated 18.12.2013 sought from the complainant quotation of 2 Keto Gluconic Acid as on the date of loss as it was required to value the reduction percentage of the spent alcohol after each process.  It is further stated in the complaint that the surveyor had obtained a letter dt. 29.02.2014 from OP3-Bank whereby the OP3 had given consent on an amount of Rs.3,82,50,000/- for the loss incurred by the complainant.  This was the amount alleged to have been assessed by the OP surveyor.  The case of the complainant is that without its knowledge and consent, the surveyor had tried to settle the claim with OP3-Bank.  This action was mala-fide and illegal, and in complete violation of Section 64 UM of Insurance Act and Regulation 9 of the IRDA (Protection of Policyholder’s Interest).  The delay in settlement caused a financial crisis for the complainant and it was in this situation that the above information of loss settlement had become available to the complainant.  A copy of the said letter dated 29.02.2014 is at Annexure:C-19.  The complainant has submitted that this letter obtained by the surveyor amounted to coercive bargaining, hence an unfair trade practice by the surveyor in connivance with the officials of the OP1 and OP3.  Surveyor issued final survey report dated 07.03.2014, attached with it the consent letter dated 29.02.2014 and confirmed that cause of fire was purely accidental and due to short circuit only.  This report is at Annexure : C-20.

11.    Against the insurance claim of Rs.4,46,98,111/- the complainant claims that OP1 and surveyor had wrongly made deductions and wrongly applied the Excess Clause which was applicable to “Earthquake-Add on Cover” and misused their dominant position to obtain the consent letter dated 29.02.2014 for Rs.3,82,50,000/- from the OP3-Bank without the complainant’s knowledge/consent.  This was not acceptable to the complainant.  The allegation was that the surveyor had prepared a tailor made survey report at the instance of OP1.  It is the further case of the complainant that he had submitted various documents pertaining to the total stocks kept in the premises with supporting invoices showing the actual value of goods, and that therefore, the under estimation of loss was unfair: OP2, the surveyor and OP1, the insurer had acted hand in glove to defeat the legitimate claim of the complainant.  He drew attention to e-mail dated 3.4.2014 of the OP3-bank to OP1 (Annexure:C-21), vide which OP3 had advised OP1 to the effect that delay in receipt of claim would make the complainant’s account a non-performing asset and had therefore requested OP1 to settle and remit the claim into the complainant’s account  with the bank.  The complainant followed up with their own e-mail dated 2.5.2014 (Annexure:C-22).  After this, more information was sought and given to the surveyor by the complainant.  The surveyor vide letter dated 20.05.2014, conveyed this information to OP1 (Annexure: C-23).  The complainant, unable to service their interest liability with the bank, addressed OP1 vide e-mail dated 25.7.2014 (Annexure :C-24), requesting settlement and release of the claim in order that they could restart factory operations and save the company.  Again. vide e-mail dated 16.8.2014 (Annexure: C-25), the complainant addressed the CMD of OP1, with no response.  Then, the complainant, with official of OP3 met one Dr. Johnson of OP1 in OP1’s office and after this meeting, the complainant, vide email dated 6.11.2014 put the meeting on record (Annexure:C-27). 

12.    Finally, after their visit to OP1’s office and repeated requests for settlement of claim, OP1 issued a discharge voucher dated 18.11.2014 for an amount of Rs.3,60,55,990/- in favour of OP3-Bank.  Complainant took this up with OP1 and in the joint meeting was informed that the said discharge voucher would have to be signed by the complainant as a witness without any addition/alteration and then only the insurance company would release payment of the claim amount after deducting reinstatement premium.  Complainant submits that they had no alternative but to sign the discharge voucher under duress and undue influence of OP1.  The discharge voucher is at Annexure:C-28.  Complainant immediately sent a letter dated 18.11.2014 (Annexure : C-29) making it clear that the amount offered in the discharge voucher against complainant’s claim of Rs.4.46 Crore had been accepted under protest, and that complainant had signed the discharge voucher only as a witness.  It is further submitted by the complainant that even after signing the discharge voucher, the amount was not released and therefore, interest on loan/cash credit of the complainant kept piling up.  When complainant visited OP1 on 22.1.2015, it came to learn that OP1 had directly made payment of Rs.3,59,75,154/- into the complainant’s account with OP3-Bank.  Complainant immediately, vide letter dated 22.1.2015, intimated the OP1 about how the complainant had further suffered a loss of Rs.1.10 Crore on account of bank interest and unauthorized deduction of Rs.22,78,585/- from the assessed loss of Rs.3,82,53,739/-. In reply, OP1 explained how the claim had been fully and finally settled by paying Rs.3,59,75,154/- to OP3-Bank and closed the matter with the complainant. (This letter is not on record).  Complainant also submitted that in response to their letter dated 22.1.2015, a letter dated 4.2.2015 had been received from Customer Service Department informing the complainant that the matter had been taken up with concerned office(s) of OP1 who were being asked to expedite and that a proper reply would be received (Annexure:C-31) .  Subsequently, complainant received a letter dated 27.4.2015 from OP1 (Annexure:C-32): it advised that the claim amount of Rs. 3,59,75,154/- was settled after adjustment of reinstatement of premium as per policy and was after getting the duly discharged voucher by the Bank. Complainant immediately responded to OP1 vide letter dated 16.5.2015  (Annexure:C-33), protesting the reduction of claim amount in the discharge voucher by Rs.22,00,000/-, claiming wrong  settlement of claim by Rs.85,00,000/-, and claiming  these with 18 % interest.  There was no response to this.  Vide letter dated 15.7.2015 (Annexure: C-34), complainant again wrote to OP1, requesting that the short settlement made by OP with consequences thereof be made good.  Grievances of the complainant were reiterated vide letter dated 25.7.2015 (Annexure:C-36).  A reply dated 31.8.2015 (Annexure:C-37)   reiterated that the claim had been fully and finally settled and that if the complainant was not satisfied, it could approach the Insurance Ombudsman or the Court with its grievance.  Vide letter dated 1.9.2015, complainant thereafter sought the break-up of settled claim amount in order to enable the complainant to take necessary action against the OP1 company (Annexure:C-38).  On 8.9.2015, the complainant sought the information under Right to Information Act from OP1 and OP2, seeking all correspondence exchanged between the complainant, OP1 and OP2 with respect to the claim, and a copy of the survey report submitted by OP2 (Annexure:C-39).  In response, complainant received final survey report, copy of consent letter, replies to the queries and email correspondence from OP2/surveyor, vide letter dated 7.10.2015 (Annexure:C-40).  Complainant further sought from OP1 copy of survey report which had been submitted to OP 1’s regional and Head Offices at Mumbai and Delhi respectively as well as break-up/calculation of the insurance claim that was settled (Annexure:C-41).  In response, OP1 submitted the break up of claim amount and an attested copy of the surveyor report, vide letter dated 7.10.2015 (Annexure:C-42).  In this letter it was clarified that the amount assessed as per survey report was Rs.3,82,53,730/-, the amount deducted by OP1 was Rs.21,97,740/- and thus, the claim approved was Rs.3,60,55,990/-. 

13.    Complainant thereafter served legal notice dated 15.2.2016 (Annexure :C-43), claiming Rs.2,03,91,844/- on account of loss of building and stocks, interest for 16 months till the time of releasing part payment on Rs.80,25,807/- w.e.f. 23.11.2014 to 23.2.2016. 

14.    Thereafter, claim on various accounts have been detailed in the consumer complaint and the following prayer has been made:

 “It is therefore, most respectfully prayed that this Hon’ble Commission may be pleased to:

a) allow the consumer complaint and direct the Opposite Party Nos.1 to 3 to jointly and severally pay to the Complainant a sum of Rs.2,21,03,001/- with interest as stated in detail in para 67 of the present complaint;

b) award interest @ 18% p.a. from date of filing of the present complaint;

c) direct the opposite parties to jointly and severally pay a sum of Rs.3,50,000/- to the complainant towards legal costs;

d) direct the opposite parties to jointly and severally pay a sum Rs.10,00,000/- towards compensation and damages for mental harassment and agony on account of delay in settlement of claim and non-payment of claim;

e) pass any other order or orders as this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case.”

15.    This complaint was contested by means of written statement filed by OP-Insurance company and OP3-Bank.  Rejoinder with affidavit evidence to the replies were also filed by the complainant. Affidavit by way of evidence were duly tendered by OP-1 and 3. Short written arguments were also filed on behalf of the parties.  Final arguments were heard on 8.7.2019 when order was reserved.

16.    Counsel for the complainant narrated the basic facts of the consumer complaint, including the report of the surveyor which had assessed the loss at Rs.3,82,53,730/- against the claim of Rs.4,46,98,132/-. Counsel argued that it was not clear how the surveyor had reduced the amount of loss claimed by the complainant. Drawing attention to letter dated 13.06.2013 (Annexure: C-44 Colly), counsel submitted that details of stocks etc. were submitted to OP3– Bank, and it was not understood how on the basis of same documents which were submitted to the bank and excise department, the surveyor came to a different amount for the loss claimed, and furthermore, how the surveyor and OP3- Bank agreed to a lower figure of loss, without keeping the complainant in picture. Resultantly, discharge voucher dated 18.11.2014, was issued by the OP3-Bank and signature of the complainant obtained under duress. Counsel submitted that though the complainant had signed the discharge voucher, on 18.11.2014 itself, it was intimated to OP1- insurance company that the complainant had accepted the amount under protest and that they would be taking up the matter of their settlement with higher authorities, and that they had merely signed the discharge voucher as a witness. Vide letter dated 22.1.2015, counsel submitted that the complainant made a request to OP1 to pay immediately Rs.1.32 Crore, this being the amount lost towards bank interest, deduction of Rs. 22 lakh from the settled amount etc. Counsel finally referred to IRDA circular and also submitted 5 judgements of Hon’ble Apex Court/NCDRC and concluded his argument by showing that the complainant’s case rested upon (i) delay in settlement, (ii) short assessment, (iii) law as laid down in IRDA circular and citations.

 17.   Learned counsel for OP1- insurance company drew attention to complainant’s letter dated for 04.10. 2013 (Annexure: C-15) vide which a claim of Rs.4,46,08,133/- had been filed, for goods damaged in fire, under the Policy, with detailed breakup showing quantities of items, their rates and value, as also loss in building. Against this claim, discharge voucher dated 18.11.2014 for Rs.3,60,55,990/- had been accepted by the complainant’s banker – OP3. Therefore, since Rs.3.6 Crore had already been settled, the complaint could only be about balance amount claimed by the complainant amounting to Rs. 86 lakh. As this amount is less than Rs.1 crore, the complaint was not maintainable before the National Commission. Second, counsel drew attention to the policy to point out that this had been purchased by OP3 – Bank to insure the bank’s loan and that there was, in the said policy, clause 8: agreed bank clause, which has to be read with the discharge voucher. Since, the OP1 could only pay the insurance claim amount to the bank in terms of the said clause 8, and since this discharge voucher was in full and final settlement, OP1had no liability qua claim of the complainant. Counsel argued that the allegation that OP 1 and OP 3- Bank had colluded and settled for an amount less than the amount claimed, without the consent of the complainant, cannot stand as both OP1 and OP3 are PSUs and would have no reason to collude against the complaint. Counsel further drew attention to the detailed discussion noted in the report of the surveyor to point out that every point made by the surveyor had been backed up with detail explanation and, therefore the allegation that the surveyor  had committed illegality in arriving at a short assessment of the loss, had no basis. Counsel further pointed out that as for delay by OP1 in settling the claim, this was on account of delay in submission of the survey report.  Counsel submitted that the list of relevant dates would make this obvious: fire on 14.7. 2013, intimation on 15.7.2013, appointment of surveyor on 17.7.2013, survey report on 7.3.2014, claim filed on 4.10.2013 and claim settled by discharge voucher on 18.11.2014.   Counsel submitted that this would show that OP1 had acted promptly in settling the claim of the insured complainant, and that therefore there was no deficiency in service and that the complaint was accordingly liable to be dismissed.

18.    Counsel for the complainant made a short rebuttal. On jurisdiction, he submitted that the claim made was for Rs. 1.32 crore for the consumer complaint and as such there was nothing wrong as for as maintainability on pecuniary ground was concerned. He pointed out that a detailed statement of claim had been made in the consumer complaint in Para 67, showing claims in various heads, price difference on certain items, wrongful deduction by surveyor on account of excess clause, interest liable and so on, amounting to Rs.2,22,28,001/-.  Drawing attention to the policy, and the bank clause, counsel for the complainant argued that it is true that the bank had taken the policy on behalf of the insured in its own name but it is also true that the bank could not have stepped into the complainant’s shoes and decided the claim with the surveyor.  Counsel for the OP3-Bank submitted that the bank depended upon the surveyor and the insurance company for giving its consent and that vide letter dated 20.2.2014, the bank had agreed to accept loss assessed at Rs.3,82,50,000/- in full and final settlement, after deducting the realizable salvage value and the policy excess applicable as per terms and conditions of the policy and that their consent had been given after going through the assessment of the surveyor and that they had already requested the surveyor to finally assess the loss of amount on market value basis.  Counsel further submitted that there was no grievance against the bank till the consumer complaint was made. Still further, counsel submitted that there was no reason for the bank to get into any sort of collusion with OP1.

19.    Counsel for the complainant thereafter cited a few judgments of the National Commission to support his argument that the bank could not have given consent to the discharge voucher without keeping the consent of the complainant in picture. In support of the contention that something was not quite right in the OP-3/Bank accepting the discharge voucher, counsel drew attention to letter dated 3.4.2014 by the OP3 – Bank to OP1 wherein the Bank had written to the insurance company to settle the claim amount in order to keep the loan account of the complainant from becoming a non-performing asset. 

20. Counsel for the OP1/Insurance company finally drew attention to close 8 (iii) of the policy to make the point that this made it clear that the receipt of the amount by the OP-3/Bank established complete discharge of the insurance company. This being so, counsel argued, the point being made by the complainant that complainant kept writing even after discharge voucher had been accepted though under protest, simply did not mean anything as far as the insurance matter was concerned which had been finally and fully settled.

21.    I have heard arguments of the learned counsels and carefully perused the record.

On  maintainability of this consumer complaint, it has to be decided in favour of the complainant. The complainant was within it’s right, under the Consumer Protection Act, 1986, to file a consumer complaint before the National Commission. This is so because it was entitled to file a consumer  complaint even after having signed the discharge voucher if it could show that it had done so under duress. That it did is clear from the fact that it immediately issued a letter in protest, making it clear that it was signing the discharge voucher only as a witness and no more. Law on this is set as shown successfully by the citations presented and argued by the learned counsel for the complainant viz. signing of discharge voucher does not mean that a further consumer complaint is ruled out. Further, the ground of pecuniary jurisdiction argued by the learned counsels for OP-1 (difference between claimed amount and amount settled was less than Rs. 1 crore) cannot hold when it is noted that the value of the complaint was shown as Rs. 2,22,28,001/-. Even if the compensation of Rs. 10 lakh claimed towards mental agony is ignored because companies cannot be said to have mental agony, the amount claimed is in well in excess of Rs. 1 crore. Hence, it is clear that this consumer complaint is maintainable.

On merit however, I find little of it, in this consumer complaint.   First, admitted fact is that against a claimed amount of loss of Rs.4,46,08,133/-, the loss was assessed by the surveyor at Rs.3,82,53,730/- which amounts to 85% of the claimed amount.  This assessed loss, even after it was reduced to Rs.3,60,55,990/- , amounted to substantially settling the claim. If so, the gravitas of the complaint itself does come under question.

Second, there is an averment in the complaint that there was a tie-up between the OP-3-Bank and OP-1-Insurance company. It is this that led to settlement of the claim via discharge voucher wherein the complainant had to sign for an amount that did not have its consent. This amount, it has been alleged, was consented to by the OP-3-Bank and the OP-1 and the surveyor but not the complainant. No hard evidence other than a bland averment by the complainant is found on record. In absence of hard evidence, reliance has to be placed on other facts. The most relevant hard fact is that the claim has been settled to the extent of nearly 85%  and this certainly does not show any collusive behavior on the part of OP s. Moreover, as has been correctly argued, both OP1 and OP3 are PSUs and would have no earthly reason to collude.  Fact is that the claim had been duly assessed for loss by the surveyor and after submission of the survey report, had been settled quite expeditiously.  A look at the dates, as noted earlier, (para 18 above) would confirm this and be sufficient to establish that allegations of any mala-fide and/or collusion between the opposite parties are desperate averments by the complainant, and lack merit completely. To have a tie-up, as has been suggested by the complainant, does not automatically translate into collusion: a tie –up between a Bank and an Insurance company could just be a business arrangement and in fact, would make for better and more efficient service to a business loanee such as the complainant. When seen against the fact that the claim was settled substantially ie. to the extent of nearly 85%, any allegation of any unfair trade practice or collusion cannot be serious. Therefore, this part of the argument of the complainant is rejected as not reasonable, and not established.

Third, a careful perusal of the survey report reveals that it has been prepared with due care and with proper regard to the principle of reasonableness. The main claim is on account of stocks lost. In assessing loss on this account, the quantities of each of the items has been taken as furnished by the insured, and rates have been marginally adjusted from the rates claimed and reasons for doing so have been furnished. As such, no patent error of logic or fact or arbitrariness is found in the surveyor’s report. If so, settlement through Discharge Voucher by payment of the settled amount into the complainant’s account with the Bank fairly expeditiously cannot be termed as deficient service. If anything, it would be to the contrary.

Fourth, it would not be out of place to make a mention of the part of the surveyor’s report where gross profits/ loss of the insured business from inception have been tabulated, and to note that the business was in fact not doing too well. However, there is no suggestion in the survey report that there could have been any foul play or that the cause of fire was suspect. The report fairly concludes that the cause of fire was a short circuit. This supports the overall impression that the surveyor’s report, an important document that has to be given due importance as per established law, was professional and provided a fair and reasonable assessment of the loss, in the instant consumer complaint. If so, the complaint cannot sustain.

22.    On the basis of discussion above, I find that the insurance claim of the complainant has been substantially settled, to the extent of around 85% of the loss claimed, on the basis of the surveyor’s report. No fault can be found with this settlement. The complaint has not been able to establish any deficiency in service or unfair trade practice on the part of the OP1 and OP3. This consumer complaint is accordingly dismissed.