PER MR SUBHASH CHANDRA

1.          The present First Appeal has been filed against the judgment dated 20.01.2016 passed by the Haryana State Consumer Disputes Redressal Commission, Panchkula ( in short, ‘the State Commission’) in Consumer Complaint no. 79 of 2013, whereby the State Commission had allowed the complaint partly and directed the respondent to pay an amount of Rs.18,750/- to the appellant with interest @ 9% per annum from the date of filing of the complaint till its realisation.

2.     The facts, in brief, are that the appellant is a partnership firm established in the year 2004 and consists of three partners.  The appellant is engaged in the business of sale and purchase of foot wear and is an authorised dealer of Liberty Footwear Company. The appellant had taken a godown on rent in a building situated near Sugar Mill, Meerut Road, Karnal. The firm maintained its stock and regularly informed its banker regarding the status of the stock.  The appellant firm obtained insurance cover by the opposite party for the period from 28.06.2011 to 27.06.2012 for a sum of Rs.70 lakhs on stocks of all types of leather shoes, ladies shoes, kid shoes, sport shoes, liberty foot wear and other allied goods pertaining to the insured trade whilst stored and/ or lying in the insured premises built on 1^st class construction. On 16.05.2012, at 11.15 p m a fire broke out in the godown premises. Mr Krishan Kumar Chaudhary immediately rushed to the site and the Fire Brigade was informed who undertook dousing of the fire. The fire was extinguished within two hours. Stocks lying in the godown worth approximately Rs.25 lakhs were alleged to have been burnt. The appellant firm informed the opposite parties regarding the incident vide letter dated 16.05.2012. On the same day, the banker of the appellant firm requested the opposite parties to appoint a surveyor to assess the loss vide letter dated 16.05.2012. Local police appointed a forensic expert to submit a report as to the cause of the fire.  In his report dated 17.05.2012 the expert clearly stated that the fire could be due to sparking in the electric wires.  The report noted that all the walls and ceiling were blackened with soot of smoke fire and inner surface of shutter was also found blackened which indicated that the shutter was closed at the time of fire. The electric meter fixed on the left side of the wall of the godown entrance was found to be almost melted due to heat of fire. All electric wires in the godown except one small piece hanging from the meter were found burnt.

3.     The opposite parties appointed an independent investigator to report on the incident. The investigator recorded the statement of employees of the appellant firm. The investigator appointed by the opposite parties is alleged to have not been responding promptly to the grievances of appellant firm. The appellant requested the opposite parties to look into the matter and expedite in assessing the loss suffered by it because Mr N S Sidhu (Surveyor) and Mr Kashmira Singh (Investigator) did not cooperate with appellant firm and were causing undue delay in submitting reports. The appellant addressed a letter dated 09.10.2012 to the opposite parties to settle the loss without any further delay. On 20.11.2012, Consolidated Surveyor Private Limited addressed a letter seeking additional information and documents from the appellant. The appellant submitted the requisite information and documents. The investigator, Royal Associates, also sought the rent agreement from the appellant vide letter dated 23.11.2012 which was provided vide letter dated 19.12.2012. The appellant also submitted the claim form and claim bill on 21.12.2012. As the surveyor and the investigator were delaying the matter, the opposite parties requested vide letter dated 24.12.2012, the surveyor for the sixth time to submit its report as per IRDA guidelines.

4.     On 02.01.2013, the investigator submitted its investigation report to the opposite parties. The investigator did not make any comment regarding the incident and the loss suffered by the appellant.  The Consolidated Surveyors Pvt., Ltd., also submitted the survey and assessment report on 18.01.2013, wherein it was observed that:

“………it appears that old shoes were set on fire, only to avail unjustified claim from the underwriters………”,

It was also observed that:

“The underwriters may repudiate the claim as old/ discarded shoes set on fire by insured and the neighbours has also confirmed the fact that they being neighbours were not in a position to submit their statement in writing”.

5.     Appellant submitted that the conclusion rendered by the surveyor is devoid of merit. Hence, the appellant was constrained to file a consumer complaint before the State Commission, Haryana, Panchkula praying for directions to the respondent to pay an amount of Rs.23,57,191/- and interest @ 18% per annum from 15.05.2012 i.e., the date of fire incident till the date of payment. The appellant further sought Rs.5,00,000/- towards compensation for harassment and mental agony suffered by the appellant since 15.05.2012. The respondent filed his written statement to the complaint and prayed for the dismissal of the complaint.  

6.     The State Commission vide its order dated 20.01.2016 has partly allowed the complaint and directed the insurance company to pay an amount of Rs.18,750/- to the complainant along with interest @ 9% per annum from the date of filing of the complaint till its realisation. Dissatisfied by the order of the State Commission, the appellant is before us praying for the following:

1. Allow the appeal against the final judgment and order dated 20.01.2016 passed by the State Commission, Panchkula in complaint no. 79 of 2013;
2. Summon the entire record of the complaint bearing no. 79 of 2013 of the State Commission;
3. Direct the respondent to pay an amount of Rs.23,57,191/- with interest @ 18% per annum from the date of incident till realisation as claimed in the consumer complaint;
4. And pass such other orders or further orders of law, as it may deem fit and proper in the facts and circumstances of the case.

7.     We have heard the learned counsel for the parties and have carefully considered the material on record. In the interest of justice, the delay of 22 days in preferring the first appeal is condoned.

8.     Learned counsel for the appellant stated that the State Commission merely relied upon the report of the surveyor which was neither according to the terms and conditions of the insurance policy nor as per the records made available by the insured to the surveyor and partly allowed the complaint of the appellant and directed the respondent to pay an amount of Rs.18,750/- along with interest @ 9% per annum from the date of filing of the complaint till its realisation in a mechanical manner without appreciating the evidence properly. It is contended that the order is on the basis of the conjecture and surmises.  Learned counsel for the appellant submits that the employees of the appellant have corroborated that the brunt stock comprised new shoes and that “off season” shoes used to be kept in the godown where the fire occurred. However, the surveyor concluded that the entire stock consisted of old, discarded foot wear and empty cardboard boxes. It was further stated that a statement had been recorded by the investigator which clearly stated that new and “off season” shoes and old shoes were both kept in the godown. Despite recording the statement of the partner and employees and corroborating the same, the investigator wrongly concluded that as per the statement of Krishan Kumar and all workers, only “off season” and old shoes were being stored in the said godown. According to the appellant, it was clear from the statement that new and fresh shoes were not stored in the godown in question. Learned counsel for the appellant further submitted that as per the trading account, stock at the time of occurrence of fire was for a value of Rs.23,57,191.81 which was the closing stock in the affected godown and that this was part of the record of the State Commission. The stock was also recorded item wise in the claim bill. He further submits that there was no evidence to show that only old and empty boxes were kept in the godown in question. It was also contended on behalf of the appellant that as per the balance sheet for the year ending 31.03.2012, the closing account was for Rs.1,04,77,559.73 and the opening balance for the trading account from 01.04.2012 to 15.05.2012 (the date of loss) was also Rs.1,04,77,559.73. The closing stock on the date of occurrence of fire is stated by appellant to have been Rs.23,57,191.81. Appellant contends that the surveyor was appointed on 16.05.2012 and he submitted his report on 18.01.2013, i.e., after a period of 8 months. The investigator was also appointed on the same day i.e., 16.05.2012 and he submitted his report only on 02.01.2013, i.e., after a period of seven months.  Appellant has relied upon the judgments of the Hon’ble Supreme Court as well as this Commission in the case of New India Assurance Co., Ltd., vs Pradeep Kumar, New India Assurance Co. Ltd., vs Protection Manufacturers (P) Ltd., (2010) 7 SCC 386 and this Commission’s judgment in Sarvalaxmi Marines vs Oriental Insurance Co. Ltd.  Learned counsel for the appellant therefore prays for the appeal to be allowed.

9.     Per contra, learned counsel for the respondent argued that the appellant did not fall under the definition of ‘consumer’ as defined under the Act. It was contended that the appellant is a partnership firm and has been dealing in the sale and purchase of shoes on a large scale and has been keeping with them a retinue of employees for the sale and purchase of the shoes. Therefore, the appellant has not been running the shop for his livelihood but for a commercial purpose which is excluded from the provisions of the Consumer Protection Act. He further submits that the appellant has not come to this Hon’ble Commission with clean hands as the claim lodged by the appellant was a result of fraud and misrepresentation of facts. He further submits that the appellant has not lodged any FIR immediately on the day of occurrence of fire, and instead a DDR was lodged on 18.05.2012, whereas the incident of fire occurred on 15.05.2010.

10.   Learned counsel for the respondent submitted that the surveyor deputed by the company visited the site of the fire and concluded that old and discarded shoes were set on fire which was extinguished by the Fire Brigade within two hours and only a meagre loss of about Rs.1875/- had been incurred by the appellant. After deduction of excess clause of Rs.10,000/- loss payable was to the extent of Rs.8750/- only. Learned counsel for the respondent further submits that the appellant failed to submit the requisite documents in spite of repeated reminders. The claim was filed as a “No Claim” as recommended by the surveyor in their report dated 18.01.2013. The complainant has claimed an exorbitant loss only to extract/ claim money from the opposite parties by submitting a fraudulent claim by engineering a fire in the said godown with mala fide intentions. Learned counsel for the respondent further submitted that the appellant did not cooperate with the investigator and surveyor deputed by the opposite parties and no documentary evidence has been submitted before the surveyor. It was also submitted that the appellant was duly informed by the opposite party vide their letter dated 08.03.2013 that such a case does not fall under the definition of ‘deficiency in service’ provided by them. Respondent further submits that the appellant had not been regularly maintaining the stock register and the same was manipulated. No stock register had also been produced before the investigator or the surveyor. Counsel for the respondent denied that stock lying in the godown worth Rs.25 lakh had been burnt in the so called fire on 15.05.2012.

11.   The State Commission after hearing both the parties arrived at the finding that:

“14. The complainant is only relying upon the stock statement and returns etc. The stocks of the complainant lying at four places were insured by a consolidated policy exhibit C1. The occurrence had taken place only at the godown. Dinesh Grover, Chartered Accountant upon whose evidence much reliance is being placed upon, has only stated that he had prepared the balance sheet and trading account etc. He has admitted that he did not physically verify the stocks at different locations. Thus, how much stock was lying at which of the insured premises, there is no evidence on file at all.

15. Balbir Singh, one of the partners of the complainant, though admits that they maintained a movement Register of shoes from godown to their outlets, however no such register has been produced, besides how and on which basis the complainant had tried to make out its case for the loss of Rs.23,57,191.81 has not been led by the complainant. The complainant has admitted that the surveyor appointed by the insurance company inspected the spot and had taken photographs of the place of occurrence. He has also admitted that investigator appointed by the insurance company also visited the spot. The photographs of the scene of occurrence corroborate the extent of loss as per the surveyor’s report.

16. The insurance company has placed on the file along with the report of surveyor Exhibit R 3, photographs Exhibits R 3/1 (total 37 photographs). As per the date appearing the photographs, these were taken on 16.05.2012. The occurrence took place during the intervening night of 15/16.05.2012. Thus, the photographs were certainly taken without any loss of time and without the evidence being tampered with. The photographs clearly depict that the shoes affected by fire, were in a stack and without any boxes etc. The question is as to whether documents prepared without physical inspection has to be preferred than physical situation at the spot. Certainly the physical situation as is being shown in the photographs has to be preferred and going by that the report submitted by the surveyor carries more value than the mere stock statement got prepared by the complainant from Chartered Accountant. The Chartered Accountant only inspected the accounts books of the complainant. He does not say about the extent of loss suffered by the complainant. There is no cogent and convincing evidence with respect to the actual loss suffered by the complainant. On the other hand, the report of the surveyor, who assessed the loss after physical verification at the place of occurrence, is an important documents and same cannot be brushed aside.

17. In Sri Venkateswara Syndicate vs Oriental Insurance Company Ltd., and Anr. (2009) 8 SCC 507, the Hon’ble Apex Court has held as under:

“There is no disputing the fact that the surveyor/ surveyors are appointed by the insurance company under the provisions of the Insurance Act and their reportare to be given due importance and one should have sufficient grounds not to agree with the assessment made by them”.

18. In the case in hand the complainant has failed to rebut the report (Exhibit R 3) of the surveyor by leading any cogent evidence and therefore, the same cannot be brushed aside. By this report, the loss suffered by the complainant was assessed at Rs.18,7850/-.

[ Emphasis added ]

The State Commission has, therefore, allowed the complaint partly.

12.   The contention of the appellant before us is that the findings of the State Commission is flawed since it did not consider the report of the spot surveyor which recorded that the fire had occurred inside the godown and that all electrical wires were found to be burnt. There was no dispute regarding fire having occurred on account of electrical short circuit. The only ground which the claim has been disallowed was that shoes were old and the boxes were empty on the basis of the report of the surveyor dated 18.01.2013 which reads as below:

14.1    The captioned premises of the insured, where the alleged fire broke out was called upon by us on 16.05.2012 and it was observed that a fire of medium intensity had operated in the godown premises of the insured. The entire contents lying the godown were minutely inspected and we observed that the entire contents consisted of old discarded foot wears and empty cardboard boxes. The godown was thoroughly searched by us and not even a singly pair of fresh footwear was found lying therein. Old shoes were lying packed in cardboard boxes. It appeared that the either the captioned godown was being used by the insured only for storing old shoes and empty boxes or these were intentionally stored there so as to claim an engineered loss from the underwriters.

14.2    The underwriters had also deputed an independent investigator to investigate the captioned loss. The investigator too has found that the stock lying in the godown was only of old discarded shoes and empty boxes. We asked the insured about presence of such type of inventory, but they were not able to give any satisfactory reply.

14.3    It appears that the old shoes were set on fire, only to avail an unjustified claim from the underwriters. However, in order to define and contain the liability of the underwriters, we tried to obtain the documents from the insured, but inspite of our best efforts the insured had not submitted the claim bill and other relevant documents till the date of release of this report. However, on the basis of our physical verification the loss is assessed as under. The pairs were counted and we have taken Rs.50/- as value of each pair, but practically a pair of the old shoe is not worth of even Rs.50/- the assessment of the loss is as under:

          Number of Cartons                                                25

          Pairs of shoes in each cartons                                  15

          Total number of pairs                                           375

          Value of old/ used/ discarded shoes                   18,750

          @ Rs.50/- per pair

          Less: Policy excess                                          10,000

                                                                   ______________

          Adjusted loss                                                  8,750

The underwriters may repudiate the claim as old/ discarded shoes were set on fire by the insured and the neighbours has also confirmed the fact but they being neighbours were not in a position to submit their statement in writing.”

[ Emphasis added ]

13.   The case of the appellant is that the impugned order has wrongly relied upon the report of the Surveyor to conclude that the stock of shoes were old and the shoe boxes were empty. It is contended that all relevant information had been provided to the surveyors who did not correctly appreciate the same.

14.   The State Commission has considered the issue whether the report of the surveyor be considered as sacrosanct and the final word. It has reached its conclusion on the basis of a reasoned order which is itself based upon the facts of the case and the evidence produced before the State Commission. The order clearly records that no evidence to substantiate the quantity of stock of new shoes was brought on record by the appellant. Hence, as laid down by the Hon’ble Supreme Court in Sri Venkateswara Syndicate (Supra), the State Commission has proceeded to hold that the admission of the claim by the opposite party to the extent of Rs.8750/- was valid. For the foregoing reasons there are no reasons to interfere with the order of the State Commission as there is no contrary evidence brought on record by the appellant to warrant its reconsideration.

15.   In view of the foregoing and the facts and circumstances of the case, the appeal is liable to fail. The appeal is accordingly, disallowed and is dismissed as without merits. No order as to costs. All pending IAs, if any, also stand disposed of with this order.