DR. INDER JIT SINGH, MEMBER

1.         The present Consumer Complaint/Original Petition (hereinafter referred to as CC)  has been filed by the Complainant against Opposite Parties (OPs) as detailed above, inter alia praying for the following directions:-

(i)        OP-1 to pay a sum of Rs.1,47,87,672/- on account of loss to the plant & machinery, building and firefighting operation, with interest @13.5% from the date of fire till realization and award additional interest @ 2% per annum under Regulation 9 (6) of IRDA on Rs. 1,47,87,672/-;

(ii)       OP-1 to pay a sum of Rs.2,69,07,774/ on account of loss in business;

(iii)     OP-2 to pay a sum of Rs.2,86,39,337/- in favour of the Complainant on account of deficiency in service;

(iv)      OPs-1 & 2 to pay Rs.25,00,000/- as cost.

2.         Notice was issued to the OPs on 28.04.2008.  Written Statement was filed by OP-1 (hereinafter also referred to as Insurance Company) on 07.12.2008 and by OP-2 (hereinafter also referred to as the Bank) on 18.08.2008. Complainant filed Rejoinder on 17.07.2009. The parties filed their Evidence by way of Affidavit on 05.10.2009 and 04.05.2017 (Complainant), 15.02.2011 (OP-1) and 02.07.2010 (OP-2).  The complainant filed Written Arguments/Synopsis on 10.01.2019, 25.05.2022 and on 18.07.2024.  The OP-1 and OP-2 filed its written arguments on 05.01.2017 and 10.02.2022 respectively.

3.         Brief facts of the case, as presented by the Complainant and as emerged from the pleadings of the parties and other case records are that:

(i)        The complainant company is incorporated under the Companies Act and originally promoted by Shri Krishan Gopal Garg and Shri Deepak Kumar Garg in the year 1989. Shri Krishan Gopal Garg is one of its Directors.

(ii)       The Ministry of Agriculture formulated a scheme for capital investment subsidy for construction/expansion/modernization of cold Storage.  National Horticulture Board (NHB) and National Bank for Agriculture and Rural Development (NABARD) are the agencies to implement the scheme.  This scheme was introduced considering that nearly 1/3^rd of the Horticulture Produce, especially fruits, vegetables and other agricultural products, were being wasted mainly on account of poor storage facilities. 

(iii)     The Complainant Company set up a Cold Storage and sought financial assistance from OP-2 for setting up the Cold Storage Plant.  The Complainant is carrying on the activities of the grinding and trading of the spices and Uttar Pradesh Financial Corporation (UPFC) had given a loan of Rs.18,70,000/-.  The Bank of India-OP-2 also sanctioned a working capital limit of Rs.8 lacs to the Complainant.  The loan of UPFC was repaid in full and being satisfied with the performance of the complainant, OP-2 granted Term Loan @12.5% interest and cash credit facilities @13.5% to the complainant.

(iv)      Opposite Party No.1 is a public sector Insurance Company and Opposite Party No. 2 is a Public Sector Bank.  The Complainant has been associated with the OP-1 Insurance Co. since 1989.  The insurance policy with OP-1 for the present building has been renewed four times since 2002.  The complainant obtained Insurance Policy from OP-1 for insurance coverage of the building, plant and machinery, furniture, fixtures and fittings in the Cold Storage of the Complainant Company located at 105, G.T. Road, Chhipiyana Buzurg, District Gautam Budh Nagar, U.P. for a sum of Rs.1.60 crores for the year 2005-06 being Policy No. 252100/10/2006 issued by  OP-1.  The period of insurance was from 08.04.2005 to 07.04.2006.  Out of the total sum insured, Rs.70 Lakh was the cover for the building, Rs.40 Lakh for the machinery and Rs.50 Lakh for fittings, fixtures and furniture. 

(v)       On 18^th April 2005, there was major fire at the Complainant’s cold storage.  The fire brigade and the police authorities including in-chrage of the police station were informed about the fire immediately on the same day by the Complainant by making call on telephone No.100.   The villagers  of the nearby villages and traders whose stocks were also lying at the cold storage rushed to the site.  Because of the increase in toxic level and decrease of oxygen in air, the fire fighting authorities of NOIDA were forced to take assistance of their counterpart at Delhi.    The Police and other State authorities cordoned off the entire area of the cold storage compound and were not allowing anybody to enter inside the premise because of heavy toxic fumes emanating and the on going process of dissolving/discharging the ammonia gas.  Since there was no way to enter inside the cold storage to carry out the fire extinguishing operation, the fire personnel first of all made holes in the roof and then in the wall by hammer.  Due to the cumulative effect of hammering, heavy water and high temperature, the building of the cold storage got collapsed and the entire stocks lying there got gutted.   On the same day, the Complainant intimated OP-1 and other concerned authorities about the incident who appointed M/s K.D. Kohli and Co., the Surveyor to survey and access the loss.  The representative of the surveyor visited the site on 22^nd April 2005.  OP-1 also requested the Loss Prevention Association of India to investigate/verify the fire loss. 

(vi)      The Complainant submitted the claim form on 19^th April 2005 claiming Rs.1,60,00,000/-.  On 19^th April 2005 itself, the District Magistrate, Gautam Budh Nagar and the District Horticulture Officer, Gautam Budh Nagar and also OP-2 being Banker of the Complainant were informed about the incident of fire.  The authorities like District Horticulture Officer as well as media persons also arrived at the site of the Cold Storage.  The officials of District Horticulture Office also sealed the stock register and other papers and took away the same with them on 19^th April 2005 itself with acknowledgment.  The press and media also visited the site of Cold Storage.   The total building of the cold Storage collapsed due to fire.  Various documents asked for by the Surveyor on 26^th April 2005 were provided by the complainant on 3^rd May 2005.  The information sought by the Surveyor, was provided by the Complainant from time to time on various dates.  The Surveyor submitted its report on 8^th September 2005 to OP-1 assessing the loss for a sum of Rs.1,36,94,588/- with the observation that “Prima facie as the loss has occurred due to an insured peril i.e. a sustained fire resulting in complete damage to the cold storage, in our opinion such a loss falls within the purview of fire policy”. The surveyor report was not provided to the complainant. 

(vii)    Time and again, the complainant requested the OP-1 for early settlement of the claim.  On 17^th October 2005, again the complainant requested OP-1 for settlement of claim informing it about the threat of the bank to make the account NPA.  The Surveyor in their report suggested the insurer to clarify certain matters/points, if deemed necessary from the client.  The OP-1 failed to do so.  Under the Policy Holder’s Interest Clause, OP-1 should have settled the claim within four weeks of the receipt of the surveyor report but, failed to do so.  Against the claim bill of Rs.1,60,00,000/- which was discussed with the Surveyor and the Surveyor had agreed for the above said amount  but in the surveyor report, he assessed the loss at Rs.1,36,94,588/-.  On 26^th October 2005, the Complainant in order to verify the difference of quantum of loss invoked the arbitration incorporated in Condition No. 13 of the policy.   The act of OP-1 in not settling the claim after receipt of the surveyor report dated 8^th September 2005 is against the law.  The Surveyor after examining the complete records, documents and other relevant documents concluded that the loss suffered by the complainant falls within the perils of the Policy.   As per Section 64 UM of the Insurance Act, 1938, only licensed surveyor is authorized and competent to investigate and assess the loss.  The Act further provides that no unlicensed person can investigate or survey the loss.  Regulation 15(5) of the Insurance Surveyors & Loss Assessors (Licensing, Professional, Requirements & Code of Conduct) Regulation, 2000 further provides that no person shall accept or perform survey works in area for which he does not hold a license.  OP-1 appointed the unlicensed investigator-M/s Top Professionals. M/s Top Professionals submitted their report on 11.03.2006. Again, the complainant requested the OP-1 on various occasions for settlement of the claim.  On 22^nd November, 2005, the OP-1, in reply to complainant’s letter dated 11^th Nov. 2005, stated that they are taking up the matter with the concerned officers. 

(viii)   On 27^th December 2005, the complainant requested the nominated arbitrator Dr. Arun Gopal Aggarwal to act as the sole arbitrator as per condition No. 13 of the policy.   On 13^th January 2006, the OP-1 replied that no arbitration was possible.  On 4^th April 2006, the complainant applied under RTI Act, 2005 for the copy of the surveyor report, which was made available to them on 11.05.2006.  The OP-1 repudiated the claim on 27.04.2006.  Hence, the complainant has filed this complaint before this Commission.

4.         The OP-1 in their written statement/reply stated that:

The complaint is not maintainable being clearly frivolous and vexatious having regard to the statutory provisions of Section 26 of the Consumer Protection Act, 1986 and is thus liable to be dismissed on this ground itself.  There is no deficiency in service on the part of OP on facts and circumstances of the case. Immediately after getting a delayed information of the alleged fire incident, the OP deputed M/s K.D. Kholi & Company Pvt. Ltd. as Surveyors and loss assessors, who submitted its preliminary report on 08.09.2005.  Based on the observations of the surveyors, the OP, appointed M/s Top Professionals to investigate into the facts and circumstances of the alleged fire and the Investigator submitted their report dated 11.03.2006 clearly opining that “On the basis of the investigations made and findings recorded above, we are of the considered opinion that the insured’s claim is not genuine and is an outcome of his long term planning to recover his losses from the insurers to neutralize the loan taken from the Bank  and from other government agencies.  Some of the acts committed by the insured were not only immoral but were illegal….”.   The surveyors submitted their Final Survey Report dated 25.03.2006 clearly reporting that (i) the complainant did not produce the Books of Accounts in spite of repeated requests; (ii) the cause of fire is not accidental but arson; (iii) the complainant maneuvered with the record so as to secure loans.  The surveyors have categorically observed that Moral hazard of the insured has been established beyond doubt and it is also apparent that he had manipulated to get the above mentioned certificate and (iv) the surveyors were constrained to make hypothetical assessment of loss. After examining the survey report, investigation report and other material on its file, the OP was constrained to repudiate the claim by their reasoned letter dated 27.04.2006.  The timings reported for the origination of the fire and intimation to the Fire Brigade in various statements/records are found to be inconsistent.  It was necessary for surveyors to ascertain the reasons for catastrophic fire which could not be put out for several days and finally resulted in the collapse of the building.  The weight of stocks was required to be ascertained.  But the books of accounts were not produced before the Surveyors for verification. The complainant refused to provide the loading and unloading slip issued at the time of loading/uploading stocks into/from the Cold Storage.  The stock register produced as an evidence was found improperly maintained and lacking vital information. The available details revealed that initially the fire was not serious and several depositors found it possible to take out and did intend to take out stock which were then safe.  They were however, not allowed to do so. Even the Fire fighting squad were found to be inactive for quite some time.  The police report was lodged after 4 days of the occurrence and that too at a police post, without a proper FIR being recorded and investigation conducted. The complainant failed in making compliance with the contractual obligations. The complainant had taken heavy amount of loans/finances from the Banks and were not in a position to make regular repayments.  The balance sheets for previous years were showing losses.  The surveyors could not find evidence that the fire was accidental. The claim was found highly exaggerated.  The complainant has not approached the Hon’ble Court with clean hands and has suppressed/not disclosed material facts having bearing on the outcome of the case.  The facts of the case are highly disputed and complicated which cannot be decided without taking elaborate Oral as well as Documentary evidence which is not permissible under the summary jurisdiction as contemplated under the C.P. Act, 1986.  In this view of the matter, the complaint be relegated to pursue the civil remedy where, the parties will have adequate opportunity to adduce Oral as well as Documentary evidence besides taking out Commissions to visit the site for ascertaining and verification of the true facts. The complainant invoking arbitration clause by letter dated 26.10.2005 was not legal and tenable.  The arbitration clause can be invoked when there is admission of liability but dispute between the parties is with regard to quantum of liability.   As regards appointing investigator, IRDA is not issuing any license to any investigator and the norms for surveyors are not applicable to the investigators.  The prayer clause of the complaint is wrong and denied.

5.         The OP-2 in their written statement/reply stated that:

The complainant was sanctioned various Financial Facilities by OP-2, Bank at Ghaziabad.  The total dues which the complainant is liable to pay to the OP Bank is a sum of Rs.1,37,94,149 as on record plus interest w.e.f. 23.05.2007.  However, on 18.04.2005, when a fire broke out in the premises of the complainant, at Ghaziabad, two claims were lodged with different Insurance Companies i.e. with National Insurance Company Ltd. (NICL) and Oriental Insurance Company Ltd. (OICL).  The claim with NICL was lodged under Policy No. 361200/11/04/3100192 and the claim with the OICL was lodged under Policy, issued by the OP-1 i.e. OICL. The OICL rejected the claim of Complainant on the pretexts mentioned in their letter dated 27.04.2006, giving about 10 reasons for repudiating the claim of loss caused due to fire on 18.04.2005, against the Policy No. 252100/11/2006/10, with the conclusion that the claim was not genuine.  One of the reasons for repudiation of claim was that the complainant had taken heavy amounts of loans/finances from the banks and was not in a position to make regular payments and yet they had managed to get false certificates and reports etc.   The proceedings before the Arbitrator were also started, but for reasons best known to the Complainant Company, the same was later on withdrawn by it.  The Bank has classified the Account of the complainant as NPA as on 30.11.2006 and the Notices under securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were issued on 24.05.2007.  However, now the case has been handed over to the Recovery Agent and Symbolic possession was taken over on 16.10.2007.  The complainant has wrongly impleaded arrayed the Bank of India as OP-2, with ulterior motives, therefore the complainant has not come with clean hands and the OP-2 ought to be discharged from this case as the present complaint is mainly related with the insurance claim against OP-1 for the loss sustained by them on account of the fire which allegedly broke out on 18.04.2005 at the cold storage of the complainant.  No relief has been sought against the OP-2.  The complainant has sought relief on account of deficiency of service against OP-1, the OP-2 has nothing to do with the settlement of the claim.  In the whole complaint, the complainant has nowhere established anything regarding deficiency of service on the part of the OP-2 nor any direct relief has been sought against OP-2, except a mention in the para 25(e ) of the prayers, whereby a direction is sought that the OP-2 may be directed to award a sum of Rs.2,86,39,337/- , on account of deficiency in service on the part of OP-2 which obviously is incorrect and a motivated allegations without any basis.  The services provided by OP-2, i.e. Bank Facilities, have not been at all disputed and no deficiency has been established against OP-2.  The reason for impleading the OP-2 is very obvious and the present complaint filed against OP-2 is frivolous and vexatious, which deserves to be dismissed with costs under Section 26 of the C.P. Act, 1986, because it is filed with malafide intentions and ulterior motives qua the OP-2.

6.         Complainant in his rejoinder stated that:

(i)        OP-1 has repudiated the claim on the basis of a false and unauthenticated report of an unlicensed Investigator, denying that the claim of the complainant was not genuine.  The complainant also denied that the complainant was not in a position to make the regular payment or they had managed to get a false certificate/reports, stating further that the repudiation of the claim of the complainant is unjustified.  In reply to para 1(f) of reply filed by OP-1, the complainant contends that against the award of the Ld. Arbitrator the Insurance Co. has filed an objection and thereafter, a writ before the Hon’ble Allahabad High Court and moreover, in order to avoid further delay, the complainant has made a statement in the complaint that they undertake not to pursue with the execution of the award dated 30^th September 2006. The said facts have nothing to do with the maintainability of the present claim. 

(ii)       It is stated that the OP-2 is an agent of the insurance company and therefore, it is their duty to expedite the settlement of claim.  The OP-2 took insurance coverage from Insurance Company (National Insurance Company) for the stocks lying at the cold storage which were hypothecated to them.  After the fire dated 18^th April 2005 the Surveyor assessed the loss but the Insurance Company (National Insurance Company) failed to pay the same and despite repeated requests and reminders OP-2 failed to cooperate the complainant in pursing the claim with the Insurance Company and has now initiated the proceeding under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAISI Act) and handed over the case to a recovery agent and symbolic possession was taken on 16.10.2007.  The SARFAISI Act of the OP-2 is totally against the banking norms and RBI guidelines.  The property of which the Bank has taken the possession through the recovery agent is an agricultural land on which the said act is not applicable. As per Section 31(i), the provisions of SARFAESI Act shall not apply to any security interest created in agricultural land.  The OP-2 has wrongly auctioned the property of the complainant below the market value even below the circle rate as fixed by the government authorities.  The OP-2 has wrongly employed the recovery agent to take over the physical possession of the complainant.  The said Act of OP-2 is against the RBI guidelines. 

7.         Heard learned counsel of both sides.  Contentions/pleas of the parties, on various issues raised in the Complaint, based on their Complaint/Reply, Rejoinder, Evidence, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

7.1. It is contended by the complainant that on 08.04.2005, after inspecting premises/structure of the complainant's cold storage and accepting premium of Rs.40,000/-, OP No.1 issued a fire insurance policy for Rs.1.60 crores for the period from 08.04.2005 to 07.04.2006 covering building, plant and machinery and furniture, fixtures and fittings.A major fire broke out on 18.04.2005 due to electric short circuit at the complainant's cold storage, where the entire building was damaged and collapsed. Complainant company immediately informed OP No.1 and OP No.2 and other relevant authorities about the said incident and submitted a claim form on 19.04.2005.OP No.1 appointed M/s KD Kohli & Co. as surveyor to investigate and assess the loss suffered by the complainant. M/s K.D Kohli & Co. submitted a detailed final survey report dt. 08.09.2005.It is contended that the Hon'ble Supreme Court in Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd. [(2009) 8 SCC 507] has held that the report of a surveyor if prepared in good faith with due application of mind and in the absence of any error or ill motive, cannot be rejected by an Insurance company by appointing a second surveyor to get a tailor-made report in its favour. Insurance company is obligated to specify valid reasons for not accepting the report of the surveyor. No reasons were put forth by the OP No.1 for not accepting the Surveyor’s report dated 08.09.2005 and for appointing M/s Top Professionals as Investigators/surveyors. M/s Top Professional vide report dated 11.03.2006 wrongly held accidental fire to be a case of arsonM./s KD Kohli & Co. while relying upon illegal report of M/s Top Professional prepared a so called "final survey report" dated 25.03.2006, thereby, falsely repudiating the claim of the complainant on the ground of arson. M/s KD Kohli & Co. was also appointed by OP No.1 to investigate the loss incurred by M/s Rajesh Trading Company and M/s Gopi Gramudhyog Sansthan as their goods stored in complainant's cold storage were also destroyed in the fire accident occurred on 18.04.2005.M/s KD Kohli and Co. while assessing the loss incurred by M/s Rajesh Trading Company and M/s Gopi Gramudhyog Sansthan vide its reports dated 25.03.2006 found the fire to be accidental in nature and recorded that the loss falls within the insured perils.That OP No.1 on dated 27.04.2006 falsely repudiated the claim of complainant on the grounds that alleged inconsistency in the reporting of time in fire brigade certificate 8:03 AM vis-à-vis claim form 8:20 AM. Submission. Surveyor M/s KD Kohli & Co. in its report dated 08.09.2005 in para 8.2 has itself admitted that the timing of fire 8:03 AM as recorded in fire brigade certificate is due to a clerical mistake and the same has been recorded erroneously. Similar observation was made by M/s KD Kohli & Co. in para 9.3 in its reports dated 25.03.2006 in respect of claims of M/s Rajesh Trading Company and M/s Gopi Gramudhyog Sansthan respectively. Garg and Jain in its report dated 03.03.2008 also records that timing of fire recorded in the fire brigade certificate is due to a clerical mistake and it should have been 9:03 AM instead of 8:03 AM. The dispute of alleged excessive goods load is contrary to record as the complainant had a license granted by National Horticulture Board to the extent of 45030 quintals. Loss Prevention Association of India (LPA) in its report dated 29.04.2005 at para 5 has specifically recorded that at no point of time the cold storage was loaded to the full capacity. There is no finding in any of the report that excess goods than the sanctioned load were kept in the cold storage. The falsity of the allegation is reflected from the following reports which hold the fire to be accidental and not an arson: a) Report of fire brigade authority (b) Police incident report dated 22.04.2005 quoted in M/s. Garg and Jain report dated 03.03.2008. Loss Prevention Association of India (LPA) report dated 29.04.2005 in para 10.3 records that the fire is accidental is nature and has taken place due to electrical short circuiting. M/s. S. Soni & Co., Surveyor of National Insurance Company, who investigated the complainant's claim in respect of stocks and goods insured with National Insurance Company vide report dated 21.01.2006 found the fire to be accidental in nature.M/s S. Soni & Co. also quoted police report issued by In-charge, Police Chowki, Ghaziabad which found the cause of loss to be electrical short-circuiting.The Licensing authorities like NHB & NABARD have never disputed the cause of fire. M/s Garg and Jain vide report dated 03.03.2008 cross checked the receipts and found them to be clerical mistakes. Surveyor M/s S. Soni & Co. who investigated the claim in respect of stocks observed in its report dated 21.01.2006 in paras 6.0, 23.0 & 33.0 that there was no discrepancy in the books of account/ loading and unloading register of the complainant and has also appreciated the maintenance of records by the complainant. The Complainant on being advised by authorities deputed watchmen & guards to ensure that nobody went near the collapsing building and got hurt. Pungent smell of burning chillies stored in the complainant's cold storage made it difficult for fire fighters to put out the fire from close quarters. Fire personnel from Ghaziabad fire brigade authorities ill- equipped to carry out necessary fire fighting operations and only after they got the equipment (VA masks) from their counterparts in Delhi, they started extinguishing the fire. The observation of M/s KD Kohli & Co. with regard to negative financial credibility of complainant is not correct. TheCC limit of Rs.40 Lakhs was sanctioned by the Bank against the hypothecation of the stock against which balance outstanding on 18.04.2005 was Rs.28,84,123/- and not Rs.39,25,096 as indicated by the Surveyor. M/s KD Kohli & Co. has indicated amount of repayment as NIL which gives a wrong impression as no repayment was required to be made against the amount outstanding in the CC account. The Balance sheet prepared by PK Jain, Chartered Accountant showed profit. On 07.01.2005, OP No.2 on behalf of the complainant took insurance cover for coverage of stocks hypothecated with them. Despite M/s S. Soni & Co. recommending for payment of loss, OP No.2 failed to get the claim of the complainant settled despite them being the beneficiary under the policy. Moreover, they failed to provide any financial assistance to run the trading business which in turn caused financial loss. It is clear from the above acts that both OPs are liable for deficiency in service and the complaint being maintainable, complainant shall be awarded payment along with interest as asked for in the complaint.

       7.2  On the other hand, it is contended by the OP-1/Insurance Company that the Complainant intimated the alleged fire incident to the Opposite Party with a delay. Immediately upon receipt of the intimation, M/s. K.D. Kohli & Company Pvt. Ltd. were appointed as Surveyors and Loss Assessors, who submitted their Preliminary Report dated 08.09.2005. The surveyor was unable to finalize and conclude the survey and assessment report due to non-compliance by the complainant of certain important documents. The Surveyor recommended for appointment of the Investigator and the Opposite Party was constrained to appoint M/s. Top Professionals to investigate into the facts and circumstances of the alleged fire. The investigators submitted their Report dated 11.03.2006 clearly opining that the claim of the Complainant is not genuine and is an outcome of his long term planning to recover his losses from the insurers to neutralize the loan taken from the Bank and from other government agencies. The surveyors submitted their Final Survey Report dated 25.03.2006 clearly reporting that (i) the complainant did not produce the Books of Accounts in spite of repeated requests; (ii) the cause of fire is not accidental but arson in para 10 of the report; (iii) the complainant maneuvered with the record so as to secure loans. The surveyors have observed that moral hazard of the insured has been established beyond doubt and it is also apparent that he had manipulated to get the above mentioned certificate, (iv) the surveyors were constrained to make hypothetical assessment of loss.  It is further contended that on the cause of loss and liability, the surveyors have reported that it appears to be a case of arson and not an accidental fire. Therefore, it would not fall within the purview of insurance coverage provided by the policy, which only covers the damage / loss caused by accidental / fortuitous fire. On assessment of loss, the surveyors have made "Hypothetical Assessment of Loss" at Rs. 1,36,94,588/- for the loss on Building, Plant and Machinery and FFF. The Surveyors had obtained analysis and opinion on the audited balance sheets and loading / stock register of the complainant through Sanjeev Khurana & Associates, Chartered Accountants who submitted their report dated 18.08.2005. After examining the Survey Report, Investigation Report and other material on its file, the Opposite Party was constrained to  repudiate the claim by their reasoned letter dated 27.04.2006. It was further contended that insurance is a contract between the parties and the terms and conditions forming part of the insurance policy are binding upon both the parties. The complainant invoking arbitration clause by letter dated 26.10.2005 was not legal and tenable. The arbitration clause can be invoked when there is admission of liability but dispute between the parties is with regard to quantum of liability. The complainant was informed about the same by letter dated 29.11.2005. Since the claim has been repudiated by a well-reasoned and detailed letter dated 27.04.2006, there is no deficiency in service attributable against the OP. The Complaint is not maintainable under the provisions of the Consumer Protection Act, 1986 and is thus liable to be dismissed.

7.3       The OP-2 contended that the Complainant was liable to pay huge amounts to OP-2, Bank of India, which they had borrowed availing the financial facilities.  When the fire broke out in the premises of complainant at Ghaziabad, two claims were lodged with different insurance companies i.e. National Insurance Company Ltd. and OP-1 i.e. Oriental Insurance Company Ltd.  The OP-1 rejected the claim on the pretexts mentioned in their repudiation letter dated 27.04.2006.  The reason for such rejection was that the claim was not genuine.  One of the reason for repudiation of the claim was that the Complainant had taken heavy amounts of loan and financials from the banks and was not in the position to make regular payments and were trying to get false certificates and reports etc. The Bank classified the Account of the Complainant as NPA as on 30.11.2006 and Notices under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were issued on 24.05.2007. Mortgage was created on 04.10.2004 on the Mortgaged Properties.  Now the case has been handed over to the Recovery Agent and Symbolic Possession was taken over on 16.10.2007.  The Bank was unnecessarily impleaded in the present complaint as OP-2 even though OP-2 was not at fault and was dragged into the dispute which was mainly between the Complainant and OP-1.  Thus the complaint qua OP-2 deserves to be dismissed.

8.         Vide order dated 26.09.2023, this Commission considered at length the objections of Insurance Co. on the maintainability of the complaint in the light of Arbitral award dated 30.09.2006 in favour of the Complainant in the light of subsequent order dated 10.02.2023 of the District Court vide which said award dated 30.09.2006 was set aside and no appeal having been filed by the Complainant against it and contentions of the Complainant that doctrine of election would not be applicable in the present case in as much as, firstly the terms of arbitration as provided for were limited only to the extent of quantum of any claim and not with regard to repudiation, thus the remedy of arbitration was not available to the extent it was claimed in the proceedings before the arbitral tribunal right from inception, secondly, the aforesaid issue is no longer relevant when the Complainant is faced with order dated 10.02.2023 that has already set aside the award and no appeal has been filed against it.  After considering the rival contentions of the parties on the issue of estoppel, in the light of decisions of Hon’ble Supreme Court in Ireo Grace Realtech (P) Ltd. Vs. Abhishek Khanna (2021) 3 SCC, the objection of the Insurance Co. that the complaint should be dismissed in the background of this case was rejected.

9.         As regards contentions of the Insurance Company for relegating the complaint to Civil Court on the grounds of it involving disputed and complicated facts, Hon’ble Supreme Court in J.J. Merchant and Ors. Vs. Shrinath Chaturvedi (2002) 6SC 635 observed that “the object and purpose of enacting the Act (Consumer Protection Act) is to render simple, inexpensive and speedy remedy to the consumers with complaints against defective goods and deficient services……….. delay in disposal of the complaint would not be a ground for rejecting the complaint and directing the complainant to approach the Civil Court for appropriate relief in case the complaint involves complicated issues requiring recording of evidence of experts, which may delay the proceeding.” Regarding contention that questions of facts cannot be decided in summary proceedings, Hon’ble court observed that “under the Act, for summary or speedy trial, exhaustive procedure in conformity with the principles of natural justice is provided……… the legislature has provided alternative, efficacious, simple, inexpensive and speedy remedy to the consumers and that should not be curtailed on such ground. It would also be totally wrong assumption that because summary trial is provided, justice cannot be done when some questions of facts are required to be dealt with or decided. The Act provides sufficient safeguards.” It was observed by Hon’ble Supreme Court in this case that Procedure under Section 13,18 – 22 is adequate vis-à-vis Civil Suit to decide complaints  involving complicated questions of law and fact. Hence, we see no merit in these contentions of the Insurance Company.

10.       The claim has been repudiated by the Insurance Co. on account of various reasons/grounds mentioned in their letter dated 27.04.2006, thrust of which is that possibly the fire was not accidental. Hon’ble Supreme Court in a catena of cases (Galada power & Tele Communications Ltd. Vs. United India Insurance Co. Ltd., (2016) 14 SCC 161, Saurashtra Chemicals Ltd. Vs. National Insurance Co. ltd. (2019) 19 SCC 70, JSK Industries (P) Ltd. Vs. Oriental Insurance Co. Ltd. (2022) 17 SCC 340), New India Assurance Co. Ltd. Vs. Mudit Roadways (2014) 3 SCC 193) have held that Insurance Company cannot travel beyond the grounds mentioned in the repudiation letter. In Mudit Roadways (Supra) Hon’ble Supreme Court observed:

“34. Canvassing supplementary arguments during the hearing, (beyond those in the insurer’s repudiation letter), is explicitly prohibited. Consequently, it is held that the insurer cannot introduce additional reasoning beyond those detailed in their letter, to justify the repudiation.”

Hence, in the paras that follow, we will examine, whether the Insurance Company was justified in repudiating the claim on the grounds mentioned in the repudiation letter dated 27.04.2006.

11.       Cause of Fire – Accidental or Arson

The main reason for repudiation of claim is the suspicion in the mind of the Insurance Company that possibly fire was not accidental. However, neither the surveyor appointed by the Insurance Company, nor the Insurance Company, based on any other evidence, has come to a definite finding that the fire in question was not accidental and the insured himself/themselves have caused such a fire. The only thing mentioned in the repudiation letter is “The Surveyors could not find evidence that the fire was accidental”. This itself raises a very pertinent question in respect of consideration of insurance claims by the Insurance Company under a fire policy. If the goods insured are covered under a fire policy, what the insured have to demonstrate is that there was a fire and goods got damaged in such a fire. While he may indicate the probable cause of fire, he may not be in a position to indicate the exact cause of fire, and in our considered opinion, he is under no obligation to establish the exact cause of fire. No doubt, the Insurance Company can ask the insured or on its own, engage any expert agency/experts to ascertain the exact cause of fire, but if despite such efforts, the cause of fire remains unestablished, the Insurance Company cannot deny its liability under the policy on the grounds that exact cause of fire could not be ascertained. If the Insurance Company alleges or raises a suspicion that the cause of fire was not accidental and the insured was in way responsible/instrumental for such fire, directly or indirectly, the burden of proving so is squarely on the Insurance Company. As was held by Hon’ble Supreme Court in “Bhagwati Prasad Sah & Ors. Vs. Dulhin Rameshwari Kuer & Anr. 1951 SCC 486 the burden of proving a fact is on the party who asserts existence of a particular state of things.  Hence, we will also see whether Insurance Company has adduced cogent and reliable evidence in support of the reasons of repudiation mentioned in the letter dated 27.04.2006.  In the absence of any cogent and reliable evidence that the fire was not accidental, but caused by the insured himself, the Insurance Company, merely on the basis of suspicion, cannot repudiate the claim. What the Insurance Company/surveyors appointed by it in such cases have to gather evidence is about the fire not being accidental but caused by the Insured and not that fire was accidental. In the absence of evidence to the contrary, the fire is to be treated as accidental only and claim of Insured need to be processed and passed on merits.

12.       The claim of Complainant has been repudiated primarily on the basis of suspicion in the mind of Insurance Company that fire was not accidental. With respect to cause of fire, the repudiation letter dated 27.04.2006 states.

1. The surveyors could not find evidence that the fire was accidental.

2. The timing reported for the origination of the fire and intimation to the fire bridge in various statements/records are found to be inconsistent.

3. The available details reveal that initially the fire was not serious and several depositors found it possible to take out and did intend to take out stocks which were then safe. They were however not allowed to do so.

4. We have the information that serious efforts to fight the fire were not taken by you. Even the fire fighting squad were found to be inactive for quite sometime and we are advised that it was so at your instance and for lack of your assistance.

5. The police report was lodged only after 4 days of the occurrence and that too at a police post, without a proper FIR being recorded and investigation conducted.

13.       In response to the repudiation letter dated 27.04.2006, Complainant wrote to the OP-1 Insurance Company on 11.05.2006 stating inter alia, as follows:

1. 3.You have not provided us the details available to you revealing that initially fire was not serious and several depositors found it possible to take out and did intend to take our stocks which were then safe. There was a huge crowd at the site, fire brigade and Police. How could we deny anyone an opportunity to take out his material. It was such a huge fire that no one was prepared to risk his life for the sake of taking out his material particularly when the chilly smoke was so suffocating and irritating that no one could even go near the cold storage. You can appreciate that when in our homes even a slight chilly burnt in kitchen is not possible to tolerate, how could one afford to go inside the cold storage where bags and bags of chilies had caught fire.

2. 4.It is most unfortunate and hurting to note your allegation that the fire fighting squad was found to be inactive for quite some time at our instance. We wonder that how could anyone in his proper senses believe that the fire bigrade after being called by us will not be active to fight fire even if we want them to be so, particularly when Police and whole administration was watching and overseeing the whole fire fighting operations. It appears that just to deny your liability you are attributing most unwarranted and silly motives to us.

3. 5.The purpose of lodging the FIR with the Police is to inform them about the mishap. It was such catastrophic fire that the Police was there at the site without our having to lodge an FIR. We have been busy in fighting the fire for 4-5 days and could think of nothing else. In the circumstances whether it is material that we lodged the FIR after 4^th day of the occurrence. About your observations of the FIR not being recorded properly and the investigation conducted, our duty was to inform the police and we have no control over the police as to how they record the FIR or conduct their investigations. We may add that on 18^th April we had informed Thana KOTWALI about the fire then on 19^th April 2005 itself we had informed the district collector about the fire and then on 22^nd April we had informed Thana Vijainagar about the fire (The copies of the letters are enclosed herewith for your kind perusal). We wonder what else you expected us to do.

4. We may further add that we had informed you about the fire on 19th April 2005 (on 18th April 2005 your office was closed) and your surveyor visited the site on 22nd April 2005. Had you ensured his visit on 19th April itself. He could have witnessed himself the intensity and genuineness of fire.

5. 8.The cause of the fire could be ascertained by the authorities present at the site at the ime of fire. The police authorities who were present at the site have certified that the fire was accidental. Your alleging it to be not accidental cannot be agreed by any impartial person.

6. We feel most disappointed to have received your letter dated 27^th April 2006 repudiating your liability (after one year of the loss) in respect of our above claim. Our submissions in response to the points raised by you are as under:

1. There is no material difference in the timings reported for the originations of fire. You may kindly point out the differences observed by you to enable us to explain the same.

2. About ascertaining the reasons for catastrophic fire by the surveyor and the requirement of weight of stock for the purpose what we had submitted to surveyor vide our letter dated 15-12-2005 is reproduced below for your kind perusal;

"Kindly refer your letter J-02/05/APR-02/05/189/364 dated: 14-12-2005 to note the contents of which we feel most surprised. You have now come out with a strange argument that without having total load available at the cold storage you are unable to provide convincing and logical reasons to establish the possibility of such a devastating fire resulting in the collapse of complete cold storage, as the material burnt is an important factor of the cause and effect of fire and the insurer may rightly or wrongly conclude that the damage may have done due to deliberate arson and not because of normal accidental fire.

Your this line of argument appears to be totally illogical to us however from our side we would not like to be wanting and are therefore enclosing herewith a statement showing the approx.weight of the total quantity stored at the cold storage at the time of fire.

14.       We have carefully perused various documents placed on record by the parties, in particular the following:

1. Letter dated 18.04.2005 (Annexure P-5) from Complainant addressed to Branch Manager of OP-2 Bank, which is seen signed by the Plant Manager on 19.04.2005 and received by the OP-2 bank of 19.04.2005. This letter states the timing of fire as ‘about 8.20 AM’. Extract of this letter is reproduced below:

• सादर अवगत कराना है कि आज दिनांक 18.04.05 को सुबह लगभग 08:20 बजे कृष्णा कोल्ड स्टोर में अचानक आग लग गई है और भीषण आग लगी हुई है फायर स्टेशन गा. वाड., नौऐडा, NTPC एंव दिल्ली फायर सर्विस की गाड़ियां मौके पर है आग पर काबू किये जाने का प्रयास किया जा रहा है
• मिर्च के धुऐ की तेज घसाक के कारण फायर वाले भी हताश है। स्टाक वालों को भी सूचित कर दिया है। आज शाम तक भी आग लगी हुई है सूचनार्थ सादर प्रेषित है।“

2. Letter dated 18.04.2005 from Complainant addressed to SHO, Police Station Kotwali, Ghaziabad. This letter is signed by Director of the Complainant company and is seen received by the Police Station on 18.04.2005 itself. This letter also states the timing of knowledge of fire as ‘about 8.20 AM’. This letter also states that fire brigades have also been informed and fire brigade are at the site trying to control the fire. This letter further states that persons whose stocks have been kept have also been informed. Extract of this letter is reproduced below:

• सादर निवेदन यह है कि कंपनी के कोल्ड स्टोर मे आज दिनांक 18.04.05 को अचानक भीषण आग लगी हुई है सुबह से 8:20 के लगभग पता चला है फायर बिग्रेड को सूचना हो गई है फायर बिग्रेड मौके पर है आग पर काबू का प्रयास किया जा रहा हैं कोई जन हानि नही है कंपनी का कार्यालय आपके थाना क्षेत्र में है सूचानार्थ एंव आ. का. यदि हो तो कृप्या करें हम आपको सूचित कर रहे है। नौऐडा फायर स्टेशन से भी गाड़िया आ चुकी है। गाड़ी में व्यापारियों जिनका माल रखा है उनको भी सूचित कर दिया है।“

3. Letter dated 19.04.2005 from Complainant company addressed to the District Magistrate Gautam Budh Nagar. This letter is signed by the Director of Complainant company and is seen sent to the office of D.M. on 21.04.2005 through speed post no. 9142. Extract of the letter is given below:

• सादर अवगत कराना है कि दिनांक 18.04.05 को कृष्णा कोल्ड स्टोर में करीब 0815 बजे अचानक बिजली के सर्किट शाँट हो जाने के कारण अचानक आग लग गई जिसकी सूचना मेरे द्वारा तत्काल पुलिस कंट्रोल रूम को दी गई तत्पश्चात फायर स्टेशन कोतवाली की गाड़ियां समय करीब 0825 बजे घटनास्थल पर पहुँच गई उसके पश्चात फायर स्टेशन फेज-II नौऐड़ा, दिल्ली फायर सर्विस, सी.आई.एस.एफ. एन.टी.पी.सी. की फायर गाड़ियां मौके पर पहुँची परन्तु अथक प्रयास के बाद भी गाडियां आने पर आज दिनांक 19.04.05 तक काबू नही पा सकी है।
• सादर प्रेषित है।“

4. Letter dated 22.04.2005 from Complainant company addressed to SHO Vijaynagar (Ghaziabad), Police Station. This letter is seen received by the Police Station on 22.04.2005. This letter states the cause of fire as short circuit. Extract of this letter is given below:

“          सादर अवगत कराना है कि दिनांक 18.04.05 को कृष्णा कोल्ड स्टोर में शाट सर्किट हो जाने के कारण आग लग गई थी जिसको कि फायर सर्विस के अथक प्रयासो के बाबजूद भी बचाया नहीं जा सका था और कोल्ड स्टोर पूरी तरह नष्ट हो गया था काफी प्रयासों के बाद दिनांक 30.04.05 तक आग पर काबू पाया जा सका था कोई जन हानि नही हुई थी केवल माल का नुकसान हुआ था महोदय स्वयं भी कई बार मौके पर गये थे। आज दिनांक 22.04.05 तक --------------- है केवल इमारत ही कुछ शेष खड़ी है।

रिपोर्ट सूचनार्थ सादर प्रेषित है अत: यदि कोई आ.का. हो तो लिखकर करने की कृपा करें,

महोदय की महान कृपा होगी।“ 

15.       Correspondence between the Surveyor (K D Kohli and Company Private Limited), Complainants and the OP-1 Insurance Company (Oriental Insurance Company)

15.1    Surveyor vide letter dated 26.04.2005 wrote to the Complainant stating that they have inspected and surveyed the said cold storage building on 22.04.2005 at about 10 A.M. This letter states “Inspite of the fact that fire was still buring, consuming the residual stocks of red chillies & other spices, the pungent smell thereof pervaded the atmosphere all around the Cold Storage.” Through this letter the surveyor sought certain information and documents from the Complainant, this letter further confirms that the Complainant informed the surveyor telephonically that due to severe fire damage, the outer walls of the Cold Storage are collapsing and even threatening the safety of the neighbours. The letter further states that they are informing the insurers so that if any further inspections by TAC or LPA are required, they may arrange the same immediately. This letter also states that it would be in order if for the sake of safety of your (Complainant’s), neighbours and yourself, certain portions of the loose hanging walls are demolished. The Complainants responded to this letter of the surveyor vide his reply dated 03.05.2005 submitting various documents/information as sought by the surveyor. In this letter, the Complainant also stated that the cause of fire seems to be electricity short circuit. A detailed incident report of the Director was also enclosed. Surveyor’s letter dated 05.05.2005, was responded by the Complainant vide his letter dated 25.05.2005, submitting various details/documents, including, inter alia, audited balance sheets for the year 2001-02, 2002-03 and 2003-04 and photocopy of the Cold Storage Stock Registers, NOC fire safety issued dated 02.07.2002 issued by SSP, Gautam Budh Nagar, copy of Delhi Fire Service report dated 11.05.2005 and FIR. The claim bill dated 25.05.2005 was submitted to the OP-1 Insurance Company detailing the loss to building, wooden racks, plant and machinery etc. totaling to Rs.1,60,00,000/-. A revised claim bill dated 09.07.2007 was also sent to the OP-1 Insurance Company in which the total estimated claim amount mentioned is also Rs.1,60,00,000/-. Through its letter dated 04.06.2005, surveyor sought to seek the original records pertaining to stock registers stating that photocopies won’t suffice. Complainant vide its letter dated 18.06.2005, referring to the discussions held with the surveyor, again furnished more information/documents, stating inter alia that “we agree with you that without carrying out inspection of the Commissioned Cold Storage, the Financial Institutions and Bank would neither sanction subsidy nor give term loan or CC Limit. Joint inspection was carried out on 08.09.2003 by NABARD, Bank of India & NHB (copy of the Inspection Report already provided).” In continuation of this letter again on 09.07.2005, the Complainant supplied further documents/information, including, inter alia, the certificate issued by the fire department, Police Investigation Report by Police Station, Vijay Nagar, Ghaziabad. This letter further states “Regarding cause of fire, we further investigated and enquired from all the concerned persons, every body was of the opinion that cause of fire was not other than electric short circuit. Therefore, we further confirm that to the best of our knowledge and information, the cause of fire was only electricity short circuit, the detailed incident statement of Mr. Kishan Gopal Garg, Director has already been submitted to you.”

15.2    Surveyor further wrote to the Complainant on 29.07.2005, referring to the visit of the Complainant in the office of the surveyor to provide certain clarifications with regard to maintenance of accounts and systems of storing various commodities/spices in the Cold Storage by different Storers. Vide this letter, the surveyor sought further clarifications, which were replied to by the Complainant vide letter dated 05.08.2005. Extract of important portions of this reply is reproduced below:

“We refer to your letter dated 29/7/2005 and personal meeting with your goodself on 29/7/2005.

After going through your above referred letter, we are unable to understand the purpose of asking so much of information about the valuation of stock in cold storage. We wish to clarify that our stock is not insured with The Oriental Insurance Company Ltd and have not lodged any type of claim on stock with The Oriental Insurance Company Ltd. However, we are submitting the desired information and documents as under

1. We only mention the name of commodity and package as "Katta or Bori” and do not mention the weight because the rent of cold storage is on the basis of per package and not on the basis of weight of the package. The rent for Katta is different from Bori that is why we mention either Katta or Bori. Generally weight of Katta is 50-60 kg and of Bori is 60-80 kg. depending upon the nature of commodity. Particularly in the case of Mirchi Bori, the weight is 40-60 kg that is even lower than Katta. In the case of old bardana, weight may be lower due to less volume.

2. We do not mention the value of commodity as we are not concerned with the value of the commodity because our cold storage rent is not dependant on weight or value of commodity. The same Rent is charged for per Katta / Bori and not on the basis of weight or value of package.

3. Regarding some of entries having future dates of November, 2005 which should be read as November, 2004. This is due to clerical mistake

4. Regarding filling up of your Performa, it is not practical for us to prepare this Performa. However, we are enclosing herewith the Statement of stock commodity wise showing opening stock, Receipt, Issue and closing stock on the date of loss.

5. Regarding rate and value of commodity - explained above in point ro. 2. Since the commodities do not belong to us, we are not concerned with the value of commodities stored in cold storage so question of getting it certified from Mandi Committee does not arise. Further we would like to add here that Mandi Committee can not certify without verifying the quality of commodity.

6. Regarding weight of stock - as explained to you in persona meeting that total number of packages was 14703 nos. and the approx. weight is 50 kg each. So total weight of stock works out to approximately 750 MT on higher side as against the certified weight is 4125 MT certified by National Horticulture Board (Ministry of Agriculture). It is very clearly evident that actual load is just 20% of weight allowed.

7. Wooden racks - The information about dimensions and type of wood used in the wooden racks is mentioned in the Building estimate which has already been submitted to you. The copies of invoices / Bills are enclosed.

8. Copies of Bill and invoices of Plant & Machinery are enclosed.

9. We appreciate you that you have explained us basis of assessment of loss in the building.

Sir, since we have submitted all the desired information and documents, we request you to kindly make final assessment of loss and submit your report to insurance company at the earliest. We are under deep financial crisis and facing lot of problems because of fire incident. We expect you will understand our problems and help to come out of financial crisis.”

15.3    Complainant wrote to the CMD of the OP-1 Insurance Company on 13.08.2005 pointing out the delay in finalisation of their claim and seeking release of on account of payment of atleast Rs.1 crore so that interest liability of the Bank could be mitigated to some extent. Complainant wrote to the Regional Manager of the OP-1 Company on 17.10.2005 stating the difficulties being faced by them from their bankers due to delay in getting the claim. Extract of relevant portion of this letter is given below:

“We refer to our letter dated 6-10-2005 wherein we requested you to release on account payment.

In the meantime, we have got notice from our bankers viz. Bank of India vide reference no.GZB/CM/SC/05-05/208 dated 3-10-2005 that our account is running out of order due to non-servicing of interest and installments and our accounts will become NPA (Non Performing Asset) on 31-10-2005. The copy of letter is enclosed for your ready reference. They have advised us to deposit out of order amount to save the accounts from becoming NPA. They have further threatened us that if we do not deposit out of order amount, appropriate action will be taken against us and guarantors for recovery of dues.

Our account with bank has been out of order due to the fire loss occurred on 18/4/05 and since then nearly six months have passed but we have got no relief. Once the bank accounts become NPA, we shall not be able to revive our business in future as no bank will extend us credit facilities required for business. Further, bank will take action against the guarantors also which will affect our goodwill in the market.

In the above circumstances, we request you to please settle our claim at an early date to save our credibility in the market. In case final settlement of claim is going to take time, then we request you to kindly release on account payment of Rs.100 lacs before 31-10-2005 so that bank accounts are saved from becoming NPA.”

15.4    Vide its letter dated 26.10.2005, Complainant again wrote to the Divisional Manager of OP-1 Company seeking to invoke arbitration clause. Again on 11.11.2005, Complainant wrote to the CMD of the OP-1 company expressing his concern with respect to appointment of an unlicensed investigator and not getting the copy of the surveyor’s report etc. Extract of this letter is reproduced below:

“We are having a cold storage at: Gram Chippyana, Gautam Budh Nagar, which was insured with your company since beginning (2003). We suffered a fire on dated 18-04-2005. In this fire whole of our cold store, Plant & Machinery and the goods stored therein were completely burnt causing us a loss of Rs.160 lacs. The cold storage was our bread & butter and because of this fire we are totally on roads. To investigate this loss M/s K.D. Kohli & Company were appointed as surveyors & loss assessors by your company. They submitted their survey report near about two and a half months back. However, now instead of finalising our claim your Regional Office at Thapper plaza building, Ghaziabad has appointed M/s V.J. Nathan as second surveyors and directed it vide its letter 07-11-2005 to obtain all necessary documents/papers from M/s K.D.Kohli & Co. Pvt. Ltd. Instead of complying with this directive Shri. V.J. Nathan has approached us to provide certain documents all of which have been available by us already to M/s K.D.Kohli & Co. We further understand that Mr. V.J. Nathan is having no licence to act as insurance surveyors, where as, as per sec 64UM.(G) (2) of the Insurance act 1938 no such person can be appointed as surveyor. Further it is only IRDA which is authorised to appoint a second surveyor under sec 64UM. (G) (3) of the Insurance act 1938.

We are unable to understand as to how & why your regional office is acting beyond all the parameters of the insurance act and regulations. We are enclosing herewith a copy of the letter appointing Mr V.J. Nathan as surveyors a perusal of which will reveal that even the terms of reference and the area of investigation to be conducted by the investigator is not indicated in the letter. It appears that the sole purpose is to harass us and delay the settlement of the claim.

We have been asking the Regional Office to make us available a copy of the survey report of M/s K.D. Kohli & Company to which we are fully entitled under the provisions of the insurance act. However, even our the simple request is yet to be acceded by your regional office.

We feel therefore forced to approach your goodself with the request to kindly make us available a copy of the survey report of M/s K.D. Kohli & Company and ask your regional office to finalise our claim at the earliest instead of harassing us. We may add that we have been financed by Bank of India and are incurring an interest liability of Rs.5500 per day. Besides this we are suffering a loss of income of Rs.10,000/- per day which we could have certainly started earning, had our claim been finalised and paid.”

15.5    On getting the repudiation letter from the OP-1 Insurance Company dated 27.04.2006, the Complainant wrote to the Divisional Manager of the OP-1 Insurance Company, on giving point wise response and requesting Insurance Company to reconsider the claim and also sought an opportunity to explain the case in person.

16.       In the paras that follow we have briefly extracted the observations of Surveyor(s)/Investigations on the incident/cause of fire

1. the Surveyor (KD Kohli’s preliminary report dated 08.09.2005)

1. 1.0 Pursuant to your instructions, we surveyed the above loss on 22.04.2005 and on subsequent dates. At the time of first inspection, we found that stocks of spices (such as Red Chilies) stored in various Chambers were still burning. The Cold Storage Building had sustained very heavy damage due to catastrophic fire, which continued unabated almost for two days. It would be seen from the enclosed digital photographs (on a CD) that as a result of serious fire, The Cold Storage structure started collapsing. During subsequent visits, the remaining partially standing structures also fully collapsed and only some of RCC columns and beams could be identified…….

2. 2.0 THE INSURED:

2.1 The building of Cold Storage was erected and completed in year 2003 and was inaugurated for commercial commissioning on 07.04.2003.

XXX

(*) Note on FFF-Sum Insured Rs.50,00,000.00:

We requested the Insured to clarify what according to their proposal was insured as FFF (Furniture, Fixture & Fittings). It was explained that as per usual design and construction of cold storages, each Floor is covered with wooden structures known as Racks on which the Bags containing stocks are kept in orderly rows. The racks are so constructed as to provide circulation of cold air due to convectional currents. This is required to achieve a uniform cooling of stocks during storage. Therefore, it appears reasonable that a Cold Storage, which has a storage capacity of around 45030 Quintals, did have a huge number of wooden racks for covering the cold chamber floors on 8 levels, i.e., basement plus ground floor plus six upper floors. It is also clear that any other type of furniture, fixture or fittings kept in Insured's office or elsewhere were not intended to be insured under this item

4.0 ITEMS AFFECTED

4.1 Building

Complete Cold Storage building comprising of three Cold Chambers with 8 storage levels/floors were damaged and finally collapsed.

The pre-cooling chambers were not found to be damaged when we visited the Cold Storage first on 22.04.05. These became damaged subsequently due to collapse of cold storage walls and structures due to impact of which cooling chambers were also damaged.

4.2 FFF

Wooden racks on various Cold storage levels/ floors as already explained.

4.3 P&M:

The Refrigeration Plant consisting of:

• 2 Nos. Screw type Ammonia Compressors driven by 2 Nos. 60 HP Electric Motors,
• Liquid Ammonia Receiver Tank (6.3m x 0.75m),
• Circulating Water Pumps;
• 2 Nos. Finned Expansion Coil Assembly with Ceiling Fans for circulation of cold air,
• Atmospheric Condensers etc., and
• Other refrigeration plant accessories.

xxxx

5.14 We have described the construction of the Cold Storage Building in detail so that the Insurers would be able to understand how and why such a building had completely collapsed after the fire. It would not be appropriate for us to offer any technical comments on the strength and stability of the building as before approving the subsidy, NHB and NABARD and even the BOI had duly got the cold storage inspected. They approved the building and only then sanctioned the subsidy and released 50% of the same against which loans were approved by Bank of India, Ghaziabad. 

3. At the time of inspection and survey, the Cold Storage had already collapsed and it is difficult for us to comment on house-keeping and fire-fighting equipment and facilities, which the Insured may have maintained at the premises. However, the certificate issued by NOIDA Fire Station dated 16.01.2004 had opined that Cold Storage had adequate fire-fighting arrangements and hand-held fire extinguishers kept at strategic locations.

4. OCCURRENCE

5. As per the statement of Insured and their various employees as also according to enquiries made at the Cold Storage during inspection, it was learnt that the fire took place/was first noticed at about 08.20 hours on 18.04.2005.

6. First Fire Tender from Ghaziabad arrived at Cold Storage after a few minutes and started fighting the fire. Their fire-fighters rescued the trapped Mr. Murli Dhar and Mr. Dharam Pal. The certificate issued by the Fire Brigade put the time of fire at 08.03 A.M. while the time of fire recorded in the Claim Form is 08.20 A.M. The Insured have not been able to explain this discrepancy. It is possible that due to a clerical mistake, the time may have been recorded erroneously.

7. The fire kept on spreading from one floor to the other and from one Chamber to the adjacent one. Soon whole of the Cold Storage was in flames. The fire-fighters from Ghaziabad Fire Station informed similar Stations in the adjacent localities and one after the other, fire tenders arrived from:

1. NOIDA Phase-II, Gautam Budh Nagar
2. N.T.P.C., Dadri Power Station
3. NOIDA Phase-l, Gautam Budh Nagar
4. Delhi Fire Service
5. Sikandrabad
6. Meerut
7. Modi Nagar
8. Hapur

8. The above-mentioned Fire-brigades from adjacent localities and Towns participated in fire-fighting using their Tenders and Fire-fighters. As soon as the main fire in the Cold Storage came under control, the fire tenders from neighbouring towns left one after the other leaving Ghaziabad Fire Station to take care of the residual fire & such fires which would flare up after every few hours.

9. As per enquiries made and also seen personally during our initial few visits, the localised fires in the Cold Storage premises, which had been put up, were flaring up again and again.

10. We first inspected the premises on 22.04.2005 when the Cold Storage Building because serious fire had started collapsing. At the time of our subsequent visit, it was found that some of the still standing walls had also collapsed. As a matter of fact, the authorities insisted that the dangerously fire damaged & partially collapsed building should be fully demolished to avoid any untoward accident in which even human casualties could be involved.
11. ACTION TAKEN BY INSURED:

Soon after noting the fire, the Insured requested the fire brigade on phone to attend and put out the fire at the earliest. As the fire soon became a conflagration, the Insured was completely helpless-to take any suggestion, which could have resulted him minimization of loss. However, as advised by the authorities, he deputed watchman & guards to ensure that nobody went near the collapsing building and got hurt. They informed the Insurers on 18.04.05 on telephone as well as in writing.

12. 10.0 CAUSE OF LOSS & LIABILITY

The precise cause of loss is difficult to ascertain. The Insured, in the claim form have shown the proximate cause as a short-circuit in electrical wiring/equipment, which may have initiated the fire.

On enquiries from the Fire Brigade, no further explanation except the possibility of a short circuit being a cause of loss was available.

13. 10.2 Prima facie, as the loss has occurred due to an insured peril, i.e., a sustained fire …… in complete damage to the Cold Storage, in our opinion, such a loss falls within…… purview of Fire Policy.

2. Investigator M/s. Top Professional’s report dated 11.03.2006

1. ….to show that the claimant had malafide intentions right from the beginning and ….. to manipulate the claim to his advantage.

2. The additional verbal statement made by Mr. Krishan Gopal Garg appears to be a figment of his imagination. When the discrepancy in the timing of occurrence of fire being reported to Fire Brigade is taken as 08.03 hours on 18.04.05, then it becomes apparent that either the employees had entered the Cold Storage much earlier or they had entered when the Cold Storage was already on fire. This particular discrepancy is highlighted here to show the contradictions in written statement of Insured, verbal statements made and also the statement made by Mr. Krishan Gopal Garg when he had stated to the Surveyor Mr Kohli that.

3. The Insured maintaining his fabricated story, stated that first tender from Ghaziabad Fire Station arrived at the Cold Storage after a few minutes and started fighting the fire. The fire-fighters rescued the alleged trapped Mr. Murli Dhar and Mr.Dharam Pad from the terrance of the Cold Storage. As a matter of fact, it would be seen from our detailed investigation report that the Fire-Brigade having arrived at the scene was induced not to put out the fire and remain outside the Main Gate of the Cold Storage. Therefore, even the rescue of the Insured's employees is a fabricated story. In fact they may have simply walked down the Cold Storage.

4. The final fact remains that fire whether caused by accidental reasons or being set intentionally completely destroyed the Cold Storage and whatever stocks were allowed to remain within its chambers. From the subsequent statements of Storers recorded by us, it comes out clearly that the Insured did not permit the Storers to remove their still intact stocks from the Cold Storage and insisted that nobody would go near the Cold Storage (perhaps till it was completely gutted).

5. Cause of loss and liability:

Since a fire had occurred in the Cold Storage, therefore, anyone of the following could have been the cause of fire:

a) An accidental fire caused by a short-circuit or some other reason;

b) Arson- Fire set intentionally by the Owner and/or his agents for recovering an unjustified and illegal claim from the Insurers.

As regards liability, if the fire is proven to be cause of reason (a) mentioned above, there could have been a liability under the policy.

As apparently, the fire was not caused by accidental reasons and was more, a case of arson, in our opinion, as per policy conditions, in the case of intentional damages caused/arson, the policy becomes voidable and no indemnity is claimable thereunder.

6. Police Station Vijay Nagar Ghaziabad:-

We visited Police Post bypass Vijay Nagar Ghaziabad. We requested for verification of the Police Diary and other records, if any, maintained in respect of the above-captioned fire. It was verbally explained by Munshi Anil Kumar that in the first place, the Cold Storage Owner came to Police Post four days after the fire and even if the fire was major, the police taking cognizance of such an accident, would have been already over delayed. A letter reporting fire having occurred in Cold Storage on 18.04.2005 was delivered at the Police Post (a copy of the letter has already been submitted by the Surveyor to you). Later, the Cold Storage Owner visited the Police Post once again accompanied by son of local MP and using influence, got a note stamped by the Police Post, confirming the occurrence of fire. This document is also on record. It however does not show any visit by the Police personnel to the site though as requested by the Insured, they confirmed the damage to the Cold Storage and its complete destruction.

7. One of our operatives also visited Police Station Vijay Nagar and was emphatically told by the Station House Officer that since Police was not asked to investigate into the cause of loss by fire or destruction of Cold Storage and specifically in view of no casualties being involved, the Police Station did not take any cognizance of the above matter. The SHO also showed his annoyance about the police post having issued, a brief letter, as described above, to the Cold Storage Owner when the matter was withheld from the knowledge of police for four days.

8. Fire Station Noida:-

Fire officer, NOIDA Phase-II. Mr. Y.B. Dwedi Office, had issued a fire certificate No.463 dt. 1/7/05 as well as a receipt on account of "Pumping Charges" regarding the fire in the Insured’s Cold Storage

He confirmed the following details:

Date of occurrence              18/4/05

Time of occurrence              8.03 a.m.

Name of Cold StorageKrishna Spico Ind. (P) Ltd.

& Property involvedG.T. Road Chhaprola Gautam Buddha Nagar

It was also confirmed by him that the information regarding fire occurred at M/s Krishna Spico Industries Private Limited. Cold Storage was received at around 8.03 am, and fire tenders from Noida Phase II Fire Station, NTPC Dadri, Noida Phase I. Delhi Fire Service, Sikandrabad Fire Service. Modi Nagar Fire Service and Hapur Fire Service also came to the site in view of the fire being major and quite devastating in nature. These Fire Brigades participated in putting out the blaze. Fire was brought under control on 20/4/05. The Certificate issued to the Cold Storage Owner also confirms that estimated loss due to fire was Rs.2.00 Crore

9. Fire Station Delhi:

The Divisional Office, Delhi Fire Service, Govt. of NCT, Delhi has issued a fire report No. FI/FB/DFS/2005-2006/89 Dt. 11/5/05 regarding the fire occurred in the cold storage.

The important details as per report are given below :-

Date of occurrence:18/4/05

Time of Receipt of call:12.10 pm

10. As per unconfirmed rumors, the Insured had removed and sold high-value stocks before occurrence of fire (or possibly arson) and as such, at the time of actual occurrence of fire, there was not enough fuel inside, which could have completely destroyed the Cold Storage. Complete destruction of the Cold Storage may have been caused due to following possible reasons:

1. Allowing the fire to take hold and not putting it out till it had gone beyond a point of no-return and completely consumed all the combustible material generating considerable heat due to which RCC may have splinted, the reinforcement steel having been heated beyond 700 °C could not maintain alignment and started sagging, further aggravating the collapse of Cold Storage.

2. In spite of having calculated the fire load, RCC structures do not collapse in the manner in which these had in the above-captioned Cold Storage. Possibility of highly inflammable/ combustible material such as petroleum products having been used cannot be ruled out. After complete collapse of Cold Storage and our appointment being made after several months of occurrence, was not helpful in more detailed analysis and investigations into the possible and real cause of fire/loss

11. 18/4/15 at about 8.30 a.m. fire was noticed in cold storage by two employees of Insured. The precise cause of loss is difficult to ascertain. The insured, in the claim form have shown the proximate cause as short-circuit in electrical wiring / equipment, which may have initiated the fire.
12. The chronology of events mentioned by the Insured and recorded by the Fire Brigade is seriously in conflict. The time of receipt of call recorded by the Fire Brigade cannot be disputed, there being an outside party and receiving a call from the Insured, whose property has caught fire. However, the time of entry recorded by the Insured in the written statement of his Plant Manager clearly shows that entry was made at 8.20 A.M. on 18.04.2005. It would appear that either the employees entered while the Cold Storage was already on fire, which appears to be impossible, or the statement made by them is totally wrong and they were hiding something incriminating. For instance, they may have entered the Cold Storage to set it on fire and got the time of fire recorded in the Fire Brigade documents as 8.03 A.M. This is further corroborated by the statements made by so many Storers who had visited the premises after fire and were not permitted by the Cold Storage Owner to enter the chambers to remove their stocks, which were still unburnt and safe. The request for entry by Stores continued upto 12.30 P.M. as would be seen from our Investigation Report. This also indicates that perhaps the first Fire Tender was permitted to operate only after 12.30 P.M., say at around 1.00 P.M. This is further confirmed by the fact that Delhi Fire Brigade received the call at 12.10 P.M. It would have been estimated by the Insured that fire tenders coming from Delhi would not reach the Cold Storage before 1.00 P.M. the time at which the first Fire Tender was permitted to put out the fire. The chronology of time of occurrence of fire, different fire brigades being informed, police being not informed soon after the fire, the storers not being permitted to remove their stocks, all points finger to the criminal manipulation of the situation by the Owner to make sure that Cold Storage would be destroyed in such a manner so that the analytical investigation may become an impossibility.

13. Opinion

On the basis of the investigations made and findings recorded above, we are of considered opinion that the Insured's claim is not genuine and is an outcome of his long-term planning to recover his losses from the Insurers to neutralize the loan taken from the Bank and from other Government Agencies. Some of the acts committed by the Insured were not only immoral but were illegal.

3. Final report dated 25.03.2006 of the Surveyor (KD Kohli & Co.), relying on the report of the Investigator M/s. Top Professional, and his preliminary report dated 08.09.2005 have in addition to repeating many of the contents of his earlier report, has stated as follows :

1. To justify various conclusions arrived at by us, we had prepared an analysis of various facts and contradictory statements of the Insured and fabricated records, which, in our opinion, called for declining the liability.

However, we had also proposed that in all fairness, if Insurers deemed fit, they may appoint a competent Investigator to look into all relevant aspects of the claim and circumstances attendant upon the so-called "Fire" in the Cold Storage as a result of which the Insured had put up a claim. We have recently received a copy of Investigation Report submitted by M/s. Top Professionals (the Investigators). The contents of the investigation report more than justified what we had written in, our letter dated 8th September, 2005 and subsequently analyzed various discrepancies and contradictions in our letter of 14th September, 2005.

2. CAUSE OF LOSS & LIABILITY:

The precise cause of loss is difficult to ascertain. The Insured, in the claim form, have shown the proximate cause as a short-circuit in electrical wiring/equipment, which may have initiated the fire. The time lapsed between the entry of Mr. Murli Dhar and his colleague into Cold Chamber for taking temperature & humidity measurement and the occurrence of fire is very short. It was not explained by the Insured as to how the fire spread in the Cold Storage so fast resulting in the same getting completely gutted and finally collapsing into heap of rubble. On enquiries from the Fire Brigade, no further information except the possibility of a short circuit being a cause of loss was available.

3. Prima-facie, the loss may have occurred due to an insured peril, i.e., a sustained fire, resulting in complete damage to the Cold Storage. On the other hand, in view of the circumstances explained, discrepancies found out by us and subsequently by the Investigator, statements of so many Storers of their Stock in the Cold Storage, it appears to be a case of arson and not an accidental fire. Therefore, it would not fall within the purview of Insurance coverage provided by the policy, which only covers the damages/loss caused by accidental/fortuitous fire.

(d) LPAOI in its report dated 29.04.2005 has inter alia, stated as follow:

1. INCIDENT

As explained by the insured, on 18.04.2005 at about 0820 hrs one of the employees noticed smoke in the 6th floor while he was unloading some items. Immediately he informed to the owner, in turn the owner informed to the fire station and rushed the site. However as per the fire station report the call about the fire received at 1210 hrs. Around ten fire tenders (including Fire engines from NTPC & private Auto Mobil company) joined the fire fighting operations. As the entry into the storage area was risky due to heat and the fear of roof collapsing the fire crew kept on spraying the water from the outside areas. Fire fighting operations are also affected due to the vapors formed by the burning of dry red chili. The fire was finally extinguished after 2 1/2 days of continuous fire fighting. Even at the time of site visit, little smoke was coming out from the debris of the………(not legibile).

2. Exact cause of the fire could not be ascertained as no evidences were available and building has been total damaged.

As informed no dangerous operation was being carried out at the time of incident it is envisaged that the fire might have initiated due to electrical reasons all this particular case because of following reasons

• PVC conduits & insulated wires have been used inside the cold chambers and PVC insulation deteriorates over a period of time due to low temperature

• The electrical switches are installed insides the chambers

• Ordinary type of electrical fittings have been provided inside the chambers

Because of the above-mentioned reasons sparks might have generated due to fault in electrical installation and these sparks when came in contact with combustible materials like packing boxes, wooden structure and combustible stocks, the fire might have initiated. However exact reason for initiation of fire is difficult to ascertain

The reason for large loss is mainly due to absence of any kind of smoke venting arrangement and inadequate access for fire fighting and non-availability of suitable fire fighting equipment at the site.

3. A39 not marked

5. Surveyor M/s. S Soni & Co.’s report dated 21.01.2006 has

1. SECURITY ARRANGEMENTS

The said premises of M/s Krishna Spico Industries Pvt. Ltd had adequate fire fighting arrangements as per the security requirements. These safety measures & installations were being regularly inspected by the Fire Brigade Department and certified by the Fire Service Officers, Noida. They had also carried out the inspection work and issued the certificate on 16.1.2004 for the following fire fighting arrangements.

It was also certified that the installations were ISI mark and the fire safety measures were satisfactory.

From the above it is clear that there were proper fighting arrangements and there was no lapse in the security of any kind on part of the Insured.

2. According to Mr. Murlidhar Tiwari, employee of M/s Krishna Spico Ind. (P) Ltd. He along with another worker Mr. Dharampal went inside the storage Chamber as per his routine on 18.4.05 at about 8.00 am. On reaching the 6th floor suddenly there was a power cut resulting in total darkness. Immediately burning smell of chillies & smoke started coming out of the storage. Both of them somehow managed to reach top floor and called for help. With in few minutes the Fire Brigade came and rescued them and started fire fighting operations, later on fire tenders from Noida-Phase II, CISF, NTPC, Dadri & Delhi were engaged and the fire fighting operations continued till evening of 20.4.05 and the fire was brought under control but still the fire kept smouldering till 21.4.05 when the western side wall of the building and also some portion of rear wall collapsed down. According to him, the cause of fire may be electrical short-circuiting. He was told that there was a blast in transformer near cold storage at that time when they were inside and the fire had started and everything inside the cold storage was burnt.

Mr. Krishna Gopal Garg, Director in the said Company also stated the same facts about the incident according to him, due to this fire complete building had been badly damaged and collapsed and all the stocks of his Company and stocks of other Companies had been burnt. As per him, the fire could be due to electrical short-circuiting.

3. Fire officer Mr. Y.B. Dwedi of Fire Brigade Office, Noida Phase II, Gautam Buddha Nagar has issued a fire certificate no. 463 dt. 1.7.05 as well as receipt on account of "Pumping Charges" regarding the fire in the Insured's Cold Storage. The details are as under: -

Date of occurrence:18.4.05

Time of occurrence:8.30am

Name of cold storage & property involved:Krishna Spico

Ind. (P) Ltd.

GT Road, Chhaprola

Gautam Buddha Nagar.

It is also certified that the information regarding fire occurred at M/s Krishna Spico Industris Private Limited had been received at around 8.03 hours. Then the Fire Tenders from Noida Phase II, NTPC Dadri, Noida Phase I, Delhi Fire Service, Sikandrabad, Modi Nagar and Hapur came to the site and were engaged in the fire fighting operations and the fire was brought under control on 20.4.05.This also mention a total loss of Rs.2 crores.

4. The Divisional Office, Delhi Fire Service, Govt. of NCT, Delhi has issued the fire report no. F1/GB/DFS/2005-2006/89 dt. 11.5.05 regarding the fire broke out in the insured's cold store. The details of report are as under. -

Date of occurrence:18.4.05

Time of Receipt of call:12.10

Property involved:M/s Krishna cold

Storage

Near Lal Kuan Police Chowky

Dadri, Ghaziabad.

Name of occupier:M/s Krishna Spico Ind.

(P) Ltd.

The fire was in the condiments, spices, dry fruits and wooden racks etc. The fire report clearly mentions about the loss to the stocks of M/s Krishna Spico Ind, (P) Ltd.

5. We also obtained the copy of intimation letter dated 22.4.2005, given to the Police Station Vijay Nagar (Ghaziabad). As per this, the fire broke out due to short circuit at the Krishna Cold Storage on 18.4.2005. It could not be saved even after the great efforts of the fire brigade and cold storage had been completely gutted in to fire. After great efforts, the fire could be controlled by 20.4.2005. No casualty loss was reported

6. The Insured provided us a copy of the Police Report issued by Incharge, Police Chowki Bye Pass, Thana Vijay Nagar, Ghaziabad stating that the enquiry was conducted and it was found that there was a short circuit at M/s Krishna Cold Storage on 18.4.05, which caused the fire. The Fire Service unit controlled the fire with great effort, which lasted many days but could not save the building from collapsing.

No casualty loss was reported. As per the Police Report the cause of loss could be due to short-circuiting. Therefore the loss is accidental in nature only.

7. 14.0          CAUSE OF FIRE

As per statement of Mr. Murlidhar Tiwari, (worker of the cold storage) the cause of fire could be electrical short circuiting, when he came out or when he was rescued he was further informed that there had been a blast in the transformer near the cold storage around the time when the fire broke out.

As per Mr. Krishan Gopal (Director) the fire broke out due to electrical short circuit but the exact point of origin inside the cold storage could not be found out. As a result of this fire the building had been badly damaged and collapsed and all the stocks of their company along with the stocks of various other parties were burnt.

The fire brigade Report/Certificate does not mention about the cause of fire but states that there was reporting of fire at 8.03am on 18.4.05 and fire fighting operations were carried out by the Fire Tenders of Noida Phase II, Sikandrabad, Modinagar, Hapur, Delhi, NTPC and Dadri and the fire was brought under control on 20.4.05 and total estimated loss was reported as Rs.2 croros

As per the police report the huge fire was caused due to electrical short-circuiting. The fire was brought under control after great efforts but the building could not be saved from collapsing.

During the course of our survey we met some persons who were present at the site at the time of incident and we made enquiries about the cause of loss and it was informed us that the fire could have taken place due to electrical short- circuiting.

During our visit to the site we noticed that the building had collapsed down and the burning smell of spices were coming and the fire flames were also coming even after spraying of water on the stocks. Water hydrants were also seen which were being used for pouring the water on the fire. The electrical wiring and switchboards were also found in damaged condition.

The spread of fire to the whole cold store could be due to stock of dry spices lying there, which are highly inflammable, so the fire might have caused due to electrical short circuit and due to this stocks kept in the store caught the fire and subsequently spread to whole cold storage.

So the fire appears to be accidental in nature.

We also confirm that the loss or damage has arisen proximately caused by the insured perils. Also, none of the exclusions under the policy has caused the loss or damage.

6. M/s. Garg & Jain & Co’s report dated 03.03.2008

1. As per Society their claim is of Rs. 7,42.910/ the assessed amount was for Rs. 2.95,558 (not legible) only and the claim was rejected by the insurance company. So applicant sought our professional services as licensed surveyor and to investigate the fire incident at cold storage and to examine the survey report of the surveyors & investigators as pointed by the insurance co. The following points were required to be particularly examined.

1. Whether the plea of the insurance company, that the fire was not an accidental one but a case of arson by M/s Krishna Spico, is substantiated from the facts on records?

2. Whether the conduct and the financial position of M/s Krishna Spico warrants the above conclusion?

3. Whether the insured is entitled to the claim as per the policy conditions and if yes then what should be the amount?

To examine above point, to investigate the case so for assessment of loss we visited the insured, M/s Krishna Spico Industries P Ltd., police station, fire brigade office etc and carried out an investigation, our report are as under:-

2. Our Assessment of the Integrity /Intensions of the Krishna Spico.

The project was completed at a cost of Rs. 172 lacs on 07/04/2003 and the insurance cover was secured by the company for Rs. 160 lacs. The fire took place on 18/04/2005. and according to the assessment made by the surveyors M/s K.D. Kohli & Co. Pvt. Ltd the market value of the building was Rs. 321.74 lacs and that of plant and machinery Rs. 42.38 lacs totaling Rs. 364.12 lacs. Obviously if M/s Krishna Spico Industries Pvt. Ltd. had any intensions of deriving the financial benefits from the insurance claim, the first step on their part could have been to secure a higher insurance cover say, for Rs. 350 lacs. Instead the insurance cover was secured for the actual cost incurred only. In the circumstances it was highly imprudent to cause a deliberate fire and suffer a loss of say Rs. 200 lacs even if the claim for the full insured value had been settled by the insurer. Apart from this loss there would have been another loss of interest for the period of settlement of the insurance claim. Any intelligent conclusion would therefore lead to total improbability of a deliberate causing of the fire by the insured

3. ABOUT THE TIME OF INCIDENT

In the survey report, fire certificate & in the statement of the insured times of fire given are not same. The surveyor M/s K.D. Kohli & Co has following to say in his survey report dt. 08/09/2005 at para no. 8.2.

"The certificate issued by the Fire Brigade put the time of fire at 08.03 A.M. while the time of fire recorded in the Claim Form is 08.20 A.M. The insured have not been able to explain this discrepancy. It is possible that due to a clerical mistake, the time may have been recorded erroneously".

On investigations the facts reveal that the opinion of the investigator Mr. V. J. Nathan proprietor of M/s Top Professionals appears to be an influenced one and not genuine as can be concluded from the following:-

As per records, Mr. Krishan Gopal the director of the company got a telephone call from his manager about the occurrence of fire in the cold storage at about 8.30 am. He conveyed the message to his friend Mr. Ashok Kumar who was sitting with him, who informed the police about the incident at telephone no. 100.

To ascertain the facts we visited Police Kotwali Ghaziabad & enquired about the records of control room. We learnt that the records of the calls made to police control room at 100 no. are maintained in the office of police control room situated in the premises of the Kotwali.

We requested the duty officer to provide the records related to fire information Dt. 18/04/2005.

As per register information of incident related to fire at the Krishna Cold Storage is recorded as under :-

It is thus clear that first information of fire reached at Ghaziabad control room at 08.40 a.m. who informed police station Kavi Nagar and fire station Ghaziabad.

To proceed further in the matter we visited Police Fire Station Noida phase -2 & enquired about the time of receipt of intimation of fire and source thereof. As per records

To ascertain further facts we reverted back to fire station phase II Noida and met Mr. Tejpal head mohrir enquiring about the difference in the times of fire recorded as 08.03 in the fire certificate and as 09.03 in the GD. He then showed the fire records related to this fire an a fire incident report which revealed the following further major points:-

1. Probable cause of fire electric short circuit

2. Details of machines used-MF1-13, J.T.V-04, Gypsy-1, pumping 32584 Km, 12.45hrs.

3. Experiences and suggestions about the incident --Fire extinguishing was done from 18/04/05 to 20/04/05 through many fire tenders and the neighbouring property and lives were saved. Immediately after the receipt of the information one fire service along with MFI and JTV were sent to the site under the charge of FSO Y.P Dwedi where it was observed that there was a heavy fire at Krishna Spico Industries and goods stored at the cold storage were burning causing so heavy toxin fumes that it was very difficult to even breathe. On inquiring it was learnt that there were lot of spices including the bags of chilies in the cold storage making this smoke so toxic. At the site fire station Ghaziabad people were extinguishing the fire who informed us that there were two employees of the cold storage engaged in fighting the fire and had climbed the roof of the cold storage but having been trapped in the smoke inside and being still trapped their have been rescued by the fire station people risking their own lives. Immediately after taking line from the vehicle to the roof of the cold storage effort were made to extinguish the fire but seeing the seriousness of the fire and the smoke V A sets of Treat Door Honda CL 1G. Yahama Motors and MFI and maximum VA sets of NTPC Dadri and fire station phase I Noida and fire station phase II Noida

Delhi fire Service were requested and the higher authorities were informed of the full situation at the site. All the units reached the site immediately helping the fire fighting the water of the vehicles got exhausted hence engaging vehicle no. UP 16 V-5922 at the outside nallah fire fighting was continued pumping the water therefrom. The fire fighting continued engaging the other vehicles from Samtal Limited. Entry was made wearing the VA set inside the cold store but due to the deme smoke and large quantity of storage of goods correct information of the fire could not be secured hence taking information from the owners about the location of the chilly bags and taking the other necessary information from the available employees fire fighting was continued guessing about the seat of the fire by making big holes at different places in the building. Seeing the seriousness of the fire its information was given to the Chief Fire Officer Meerut who had reached the site on 18/04/05 itself. The smoke of chilly was so toxic that in spite of wearing the VAsets the employees has to face lot of problems on 19/04/05 the fire having not been controlled and the employees having been tired after 24 hrs of labour chief fire officer Meerut requested for fire service units from Sikandrabad, Meerut, Modi Nagar and Hapur. All the units reached the site and started helping the fire fight. There was 7 tons of ammonia gas out of which two tons were sent outside and 5 tons was dissolved in the water otherwise the situation could have been very serious. CO Dadri and SDM Dadri also inspected the site and the fire was controlled on 20/04/05 after untiring efforts of all concerned. About the cause of fire it appears that either its information was given late and the initial controlling efforts were not made in time otherwise so much loss could have not been caused. The electric short circuit was reported by the owners to be the cause

of fire which appears to be doubtful.

In our investigation it was observed that the time of fire was recorded as 8.03 in the Fire Incident Report and as 9.03 in the GD of fire station Noida phase II. The cause of fire was also reported to be appearing doubtful. To clarify the matter we had discussions with the head Mohrrir Mr. Tejpal. He clarified that the information is first recorded in the GD and transmitted from there and hence that time is more authentic and there could be a clerical mistake in the time recorded in the fire information report. About the electric short circuit being the cause of fire reported to be appearing doubtful he said that if the chief fire officer Meerut doubted that the fire could have been deliberately caused by the owners he could order an FIR at the police station to initiate the further investigations in the matter and we should contact CFO Meerut to find out the further facts in the case. We contacted the Chief Fire Officer Meerut Mr. Soni to have further details and were informed that the further investigations were not considered necessary in the matter.

We then contacted Vijay Nagar Police Station to find out if any investigations in the matter were conducted by them. We were informed that S.I,. Mr. Narender Sharma was the investigating officer and as per the investigations the electric short circuit could have been caused of the fire as is recorded in the GD dt.22/04/2005. In view of the aforesaid fact, the findings of the investigator that it is a case of arson is not correct. To reach a final conclusion we made a written request to the chief fire officer Meerut (the copy of the request enclosed herewith).

4. Intensity of the Fire between 09.00 am to 12.00 noon

To find out whether in the beginning the fire was not that intensive as not to allow the retrieval of the goods from the fire and if the parties were stopped from retrieving their goods from the fire in the cold storage, we wrote the letters to the different parties but as yet no party has come out with such a complaint. The copy of the letter and the list of the parties to whom the letters were sent are enclosed. It is observed that only one letter has been received undelivered meaning all the other parties have duly received the letter. No FIR was registered whether by the depositers or by the state authorities which clearly indicates that no criminal manipulation by the insured was suspected by anyone.

From this information it is very clear that information of fire at fire office Noida was received at 09.03 hrs. So time of fire intimation as 09.03 is established and the time of 8.03 hrs. as mentioned in Fire certificate issued by Noida Phase 2 fire office was indicated wrongly through inadvertence.

When Noida fire brigade reached at the fire site, fire unit from Kotwali Ghaziabad were busy in extinguishing the fire.

In fire department's report it is indicated that initially the fire was not serious and the losses could have been contained with the timely efforts. The survey has raised the apprehensions that the parties were not allowed to retrieve their goods from the fire. To find out the truth we contacted the different persons and went through the records available. It appears that the district authorities having reached the site as earlier 9 am and the toxic smoke emanating from the fire making it quiet hazardous to enter inside the cold storage, it was the district authorities who could have not allowed any body to enter inside the cold storage risking the life because It was very difficult for even the district authorities to stand there at the site without putting on the V A sets which had to requisitioned from different sources.

Even the fire brigade people were not able to enter inside the cold store because of the toxic smoke and ultimately the help had to be sought from Delhi Fire Service who could only enter inside the cold store fully equipped to take care of such cases.

As per records of fire department. In the fire incident 17 fire tenders & 87 persons were deputed to douse the fire and help from fire station Hapur, Modinagar, Sikandrabad, Meerut & Delhi were called. We have observed from the records that the fire was so intensive that it was impossible for the fire brigade personnel to carry out the extinguishing operation as the fire personnel from Ghaziabad fire brigade authorities were not equipped with masks to carry out the fire fighting operation and only after they got the equipments from their counterparts at Delhi, they started extinguishing the fire.

The investigator has failed to observe that in the cold storage combustible material like thermocol, tarcol, wooden rakes were used which helped to aggravate the fire.

Admissibility of the Claim

It will be quiet clear from the above discussion that the owners of M/s Krishna Spico could have no motive in deliberately causing the fire.

17.       It is the case of the Complainant that on 18.04.2005, somewhere between 8.00 and 9.00 a.m., a fire erupted, which according to Complainant was due to alleged short circuit inside the cold storage. The Complainant has brought on record the intimations sent to the police, the District Magistrate, the bank and other authorities as well as to the Insurance Company informing them about the incident and requesting for taking appropriate steps with regard to the loss that has been suffered. The Complainant submitted that reports, including the police report as well as the fire report, establish that the cause of fire was short circuit. Our attention was also drawn by the Complainant to the investigation and report submitted by M/s Garg and Jain surveyors dated 03.03.2008 and to the general diary entries at fire station no. 2 of Noida and also G.D. entry of Vijay Nagar, Police Station. The Complainant also substantiated his submissions and tried to corroborate the information with that recorded in the report of the Loss Prevention Association of India, where the cause of fire has been shown as an electrical short circuit that occurred for the reasons stated therein, namely, the deteriorating or declining condition of the ordinary electrical fittings of PVC tubes and other fittings, which in their opinion might have caused the sparks to occur-such electrical sparks, therefore, according to the learned counsel for the Complainant, were the cause of the said fire and therefore, a combined reading of these documents would demonstrate that the cause of the fire had been located and was not eclipsed or not non-identified. The contention is that this cause of electrical short circuit was established not only by these documents but only the probability and preponderance whereof is evident on account of the huge damage that was caused not only to the goods and to the building but also according to indications given in the Survey reports that were submitted by the same surveyor in respect of the loss of goods of other third parties that was established. A special reference was made to the two reports in respect of sister concerns of the Complainant that were submitted arising out of the same fire incident. It was contended that the claim of the Complainant is clearly confirmed by the said reports, which are also on record. The Complainant further submitted that a separate insurance policy with regard to the goods stored by the Complainant, that was taken from the National Insurance Company, was also a claim in which another surveyor M/s S. Soni & Co. was appointed, who conducted the survey in order to find out the cause of fire, which is detailed in the said document. The Complainant submitted that the said report also has referred to the police report, the fire service report as also its own conclusions drawn after having visited the site. It was therefore contented that these investigations and report also clearly supplement the argument in order to support the claim of the Complainant that the cause of fire was a short circuit. The Complainant further submitted that a doubt has been cast on the running of the business of the Complainant as if the Complainant was suffering some sort of loss of business and hence the conclusion drawn that the fire was not accidental and was an arson is also not correct and for which the audited accounts of the Complainant for the year 2004-05, 2005-06 have been placed to urge that gross profits have been clearly indicated therein. The conclusion to cast a doubt on the functions or running of the business does not appear to have been appropriately assessed. The submission is that the doubt with regard to loans and finances taken from banks and not being regularly repaid cannot be a ground to doubt the successful running of the business and then to conclude that cause of fire may have been arson. The contention is that this is clearly subverting the entire line of investigation or an excuse which otherwise is not borne out from the facts on record. Learned counsel for Complainant contended that the survey reports which have been taken into consideration  for the purpose of repudiation, particularly the final survey report dated 25.03.2006, is a report which is based on an investigation carried out, the facts of whereof are contrary to records. Complainant, therefore, contended that such an investigation, on the basis of which the final survey report has been relied on also deserves to be discredited as it is against the evidence that was led by the Complainant to establish its claim. As regards inconsistency in the timing of the accident, the Complainant submitted that surveyor in his report dated 08.09.2005 has observed that inconsistency in timing of fire brigade certificate and claim form is due to clerical mistake and the same has been recorded erroneously.

18.       Insurance Company on the other hand has contended that Complainant has intimated the alleged fire incident to them with a delay, the surveyor was unable to finalise and conclude the survey and assessment report due to non-compliance by the Complainant of certain important documents, he recommended the appointment of an investigator, the investigator in his report dated 11.03.2006 opined that claim of the Complainant is not genuine and it is the outcome of his long term planning to recover his losses from the insurers to neutralise the loan taken from the bank and from other government agencies. The surveyor in his final report dated 25.03.2006 reported that cause of fire is not accidental, but arson, surveyor has observed that moral hazard of the insured has been established beyond doubt, surveyor has made hypothetical assessment of loss at Rs.1,36,94,588/- for the loss on building, plant and machinery and furniture, fixture and fittings (FFF).     

19.       As regards contentions of Insurance Company that initially the fire was not serious and many depositors were not allowed to take out their stocks, serious efforts to fight the fire were not taken by the Insured, even the fire fighting squad were found to be inactive for quite sometime and it was so at the instance of the Insured, the Complainant have submitted that District Authorities cordoned the entire area of the cold storage and they were not permitting anybody to go inside on account of devastating nature of toxic fumes and ammonia gas. Even the fire tender people were not able to enter the premises of cold storage with masks. To extinguish the fire, the fire people had to break the roof of the cold storage, the fire was extinguished after 3 days of fire. The surveyor in its report has observed that after noting the fire, the Complainant immediately requested the fire authorities to attend and put off the fire at the earliest. However, the fire authorities stopped entry in the cold storage as the authorities were breaking the roofs and walls of the cold storage. M/s S. Soni & Co. has also observed that there were proper fire fighting arrangements and that there was no lapse in the security of any kind. Police authorities were intimated by the Complainant immediately about the fire.

20.       Insurance Regulatory and Development Authority (IRDA) established under the provisions of Section 3 of the IRDA Act 1999, in exercise of powers under relevant provisions of the Insurance Act, 1938 and IRDA Act has notified IRDA (Protection of Policyholders-Interest) Regulations, 2002. Regulation 9 of these regulations pertain to claim procedure in respect of general insurance policy. As per these regulations, Insured has to intimate the insurer of any loss immediately, insurer has to appoint a surveyor within 72 hours of intimation, surveyor, has to communicate his findings to the Insurer within 30 days of appointment, Insurer has to decide the claim, either accepting or repudiating, within 30 days from the receipt of survey report and in case of acceptance of claim, pay the same within 7 days from the date of acceptance of the offer by the insured, and in case of delay, insurer is liable to pay the interest at the rates prescribed in the regulation. The regulations also contain provisions relating to seeking of additional report by the Insurer from the surveyor in case it finds the report incomplete in any aspect. There are provisions for surveyors seeking an extension of time in submitting his report in cases of special and complicated nature, but in no case surveyor can take more than 6 months from the date of his appointment to furnish his report. Extract of Regulation 9 is reproduced below:

“9. Claim procedure in respect of a general insurance policy

(1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.

(3)  If an insurer, on the receipt of a survey report, finds that it is incomplete-in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report. Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.

(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.”

21.       The Complainant has contended that surveyor and insurer have not followed the guidelines and time limits prescribed under these statutory Regulations which in itself amount to deficiency in service on the part of Insurance Company. Copy of surveyor’s report was also not provided, which had to be obtained under RTI. In this case, the accident happened on 18.04.2005, Complainant claims to have intimated the Insurance Company immediately on the same day itself and submitted a claim on 19.04.2005, Insurance Company claims to have appointed the first surveyor (M/s. K.D. Kholi & Co. Pvt. Ltd.) on 21.04.2005, who submitted his first/preliminary report on 08.09.2005.   An investigator Mr. V.J.Nathan (M/s. Top Professionals) was appointed by the insurer on 07.11.2005, who submitted his report on 18.03.2006, based on which, the surveyor M/s. K.D. Kohli & Co. submitted his final report on 25.03.2006.  In addition Loss Prevention Association of India (LPAOI) submitted a report on 29.04.2005. Final repudiation letter was issued on 27.04.2006, i.e. after a gap of about one year from the date of incident/the date when insurer claims to have got the intimation of the accident.

22.       In Canara Bank Vs. United India Insurance Co. Ltd. (2020) 3 SCC 455, it was held by Hon’ble Supreme Court that the Insurance Company cannot escape its liability if there is nothing to prove that the fire was caused by the insured itself, irrespective of what the cause of fire was. In New India Insurance Co. ltd. Vs. Mudit Roadways (2024) 3 SCC 193, Hon’ble Supreme Court observed.

“50. On the above aspect, Ncdrc has rightly placed reliance on Canara Bank v. United India Insurance Co. Ltd. [Canara Bank v. United India Insurance Co. Ltd., (2020) 3 SCC 455 : (2020) 2 SCC (Civ) 126] , wherein the Court decided to not place reliance on the surveyor's report conducted by M/s Truth Labs, for lack of sufficient analysis and held that : (SCC p. 466, para 17)

“17. In any event, neither in the report of M/s Truth Labs nor in the other reports by the Insurance Company is there anything to show that the insured had set the cold store on fire. Whether the fire took place by a short-circuit or any other reason, as long as insured is not the person who caused the fire, the Insurance Company cannot escape its liability in terms of the insurance policy. We reject the contention of the Insurance Company that the fire was ignited by the use of kerosene and hence it is not liable.”

51. Therefore, it was unequivocally declared that the precise cause of a fire, whether attributed to a short-circuit or any alternative factor, remains immaterial, provided the claimant is not the instigator of the fire. This case underscored the fundamental principle that an Insurance Company's obligation to the insured is of much greater import. Ncdrc's judicious application of this binding precedent appears to be well-merited.”

                                                                                                  (Emphasis Supplied)

23.       Further, the Complainant has contended that the insurer has appointed an unlicenced investigator Mr. V.J. Nathan (M/s Top Professionals) in violation of the provisions of Insurance Surveyors & Loss Assessor (Licencing, Professional Requirements and Code of Conduct) Regulations 2000, which provide that no person shall accept or perform the survey work in area for which he does not hold a licence. The Complainant further contends that under Section 64 UM of the Insurance Act, only licenced surveyor is authorised and competent to investigate and assess the loss. The Act provides that no unlicenced person can investigate or survey the loss. These actions of insurer, the Complainant contended, amounts to unfair trade practice.

24.       Extract of relevant provisions of the Act and the Regulations cited are given below:

The Insurance Act, 1938

64 UM Surveyor or Loss Assessors – (1) Save as otherwise provided in this section, no person shall act as a surveyor or loss assessor in respect of general insurance business after the expiry of a period of one year from the commencement of the Insurance Laws (Amendment) Act, 2015, unless he-

1. Possesses such academic qualifications as may be specified by the regulations made under this Act,

2. is a member of a professional body of surveyors and loss assessors, namely, the Indian Institute of Insurance Surveyors and Loss Assessors. 

xxxx

(2) Every surveyor and loss assessor shall comply with the code of conduct in respect of his duties, responsibilities and other professional requirements, as may be specified by the regulations made under the Act.

xxxx

(4) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding an amount specified in the regulations by the Authority in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance Laws (Amendment) Act, 2015, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):

Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.

xxxx

(7) No insurer shall, after the expiry of a period of one year from the commencement of the Insurance Laws (Amendment) Act, 2015 pay to any person any fee or remuneration for surveying, verifying or reporting on a claim of loss under a policy of insurance unless the person making such survey, verification or report is an approved surveyor or loss assessor.

(8) Where, in the case of a claim of less than the amount specified in sub- section (4) in value on any policy of insurance it is not practicable for an insurer to employ an approved surveyor or loss assessor without incurring expenses disproportionate to the amount of the claim, the insurer may employ any other person (not being a person disqualified for the time being for being employed as a surveyor or loss assessor) for surveying such loss and may pay such reasonable fee or remuneration to the person so employed as he may think fit.

xxxx

Insurance Regulatory and Development Authority (Insurance Surveyors and Loss Assessors) Regulations, 2000

            Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000 (hereinafter referred to as the 2000 Regulations1[1]) issued by Insurance Regulatory and Development Authority (IRDA) in exercise of powers conferred under the Insurance Act, 1935 contain duties and responsibilities of a Surveyor and Loss Assessor and Code of Conduct. Extract of relevant provisions of these Regulations is given below:

“DUTIES AND RESPONSIBILITIES OF A SURVEYOR AND LOSS ASSESSOR

13 (1) A surveyor and loss assessor shall, for a major part of the working time, investigate, manage, quantify, validate and deal with losses (whether insured or not) arising from any contingency, and report thereon, and carry out the work with competence, objectivity and professional integrity by strictly adhering to the code of conduct expected to such surveyor and loss assessor.

(2) The following shall, inter alia, be the duties and responsibilities of a surveyor and loss assessor:-

xxxx

(iv) examining, inquiring, investigating, verifying and checking upon the causes and the circumstances of the loss in question including extent of loss, nature of ownership and insurable interest.

xxxx

(vi) estimating, measuring and determining the quantum and description of the subject under loss;

xxxx

(xv) taking expert opinion, wherever required

xxxx

CODE OF CONDUCT

15. Every surveyor and loss assessor shall-

xxxx

(5) not accept or perform survey works in areas for which he does not hold a licence;

(6) not accept or perform work which he is not competent to undertake, unless he obtains some advice and assistance, as will enable him to carry out the work competently.”

The above stated provisions of the Insurance Act and 2000 Regulations clearly bring out that Insurance Companies can engage only licensed surveyors’ to carry out the investigation and loss assessment. The Regulations do permit a Surveyor to take expert opinion. Similarly, Insurance Company is competent to obtain expert reports. However, the Act/2000 Regulations do not contain any provisions for appointment of Investigators. Hence, we see merit in the contentions of the Complainant that in the present case, action of Insurance Company to appoint M/s Top Professional / “Nathan as Investigator, who is not a licensed Surveyor under the 2000 Regulations, was not correct. Investigator was not appointed as an expert to give opinion/report on a specific issue: Final report of Surveyor (K D Kohli & Co.) merely relies on the report of Investigator on various aspects, including the cause of fire while observing that “it appears to be a case of arson and not an accidental fire”. It is primarily based on the report of the Investigator (M/s. Top Professional), that the OP-1 Insurance Company has stated that cause of fire is not accidental. LPAOI, who was appointed by OP-1 Insurance Company has also concluded on the probable cause of fire that ‘exact cause of the fire could not be ascertained as no evidences were available’. It is the report of Investigator M/s. Top Professional who has stated in its report that “As apparently, the fire was not caused by accidental reasons and was more, a case of arson”. M/s. Garg & Jain, who are the licensed Surveyors and Assessors under the Insurance Act/ 2000 Regulations, and were appointed by M/s. Gopi Gramudhyog Sansthan to assess and comment on the fire loss suffered by them in the same fire incident in the cold storage of the Complainant herein, and whose claim was also referred by the Insurance Company (OP-1 Oriental Insurance Company), and hence he sought professional services of M/s. Garg & Jain as licensed Surveyor to investigate the fire incident and to examine the survey report of the Surveyors and investigators appointed by the Insurance Company. They have examined the plea of the Insurance Company that fire was not accidental one but a case of arson by the Complainant in the present consumer complaint and whether the conduct and financial position of the Complainant herein warrants the above conclusion, etc. in detail. Extract of relevant paras of this report have been reproduced in the preceding paras. This report, to summarise, on the cause of fire, has clearly concluded that

1. Complainant herein had no intention of deriving (wrongful) the financial benefit for the Insurance Company.
2. The opinion of the Investigator Mr. V.J. Nathan, of M/s. Top Professional appears to be an influenced one and not genuine, the findings of the investigator that it is a case of arson is not correct.
3. The first information reached Ghaziabad control room at 8.40 am, who informed the police station Kavi Nagar and Fire Station Ghaziabad. The time of fire was recorded as 8.03 in the fire incident report and as 9.03 in the GD of fire Station Noida Phase II. So the time of fire intimation as 9.03 is established and the time of 8.03 hrs as mentioned in the fire certificate issued by Noida Phase 2 fire office was indicated wrongly through inadvertence.
4. As per records of fire department, in the fire incident 17 fire lenders and 87 persons were deputed to douse the fire. The fire was so intensive that it was impossible for the fire brigade personnel to carry out the extinguishing operation.
5. Owners of M/s Krishna Spico (Complaint herein) could have no motive in deliberately causing the fire.

25.       Other Reasons/Grounds mentioned in the Repudiation Letter.

The Insurance company in its repudiation letter dated 27.04.2006 has stated

1. Books of account were not produced by the Insured before the Surveyors for verification.
2. Insured refused to provide the loading and unloading slips issued at the time of loading/unloading stocks into/from the cold storage.
3. The stock register produced as an evidence was found improperly maintained and lacking vital information, besides being full of errors and discrepancies.
4. Evidently, such records are unreliable as they appear to be made out after the event to collect the claim.
5. The insured have failed in making compliance with their contractual obligations contained in condition 6 (1) of the insurance policy. Even otherwise, insured have failed to act as through uninsured in loss minimization.
6. You had taken heavy amounts of loans/finances from the banks and were not in a position to make regular repayments.
7. Balance sheet for previous years were showing losses.
8. Yet, you had managed to get further subsidies/loans from financial institutions on a certificate and reports from the banks/financial institutions that all the accounts of insured are running satisfactorily.
9. The aforesaid situation well attracts policy condition no. 8 and all benefits under the policy stand forfeited.

26.       Complainant in its reply dated 11.05.2006 inter alia, gave following response to the above stated repudiation letter:

1. We have always made you available whatever documents/records you wanted reiterating again and again at the same time that the relevance of the most of these is beyond our comprehension for the assessment of the damages to the buildings.
2. We may add that we are providing no new information we have already provided vide our letter dated: 05-08-2005 the number of bags stored and the approx. quantity per bag. Now the same numbers of bags are being multiplied by the approx. quantity per Katta / Bori in the statement enclosed herewith to arrive at the total quantity stored at the cold storage at the time of fire. The statement has been prepared without prejudice as the weight per bag assumed here is standard weight as per the market norms and there may be 5% variance in actual quantity. We would like to reproduce here the para No. 6 of our letter dated 05.08.2005

Regarding weight of stock - as explained to you in personal meeting that total number of packages was 14703 nos. and the approx. weight is 50 kg each. So total weight of stock works out to approximately 750 MT on higher side as against the certified weight is 4125 MT certified by National Horticulture Board (Ministry of Agriculture). It is very clearly evident that actual load is just 20% of weight allowed."

About providing the loading and unloading slips to the surveyor what we had submitted to him vide our letter dated 3-12-2005 with a copy to you is reproduced below for your kind perusal;

"1.1 The person making the entries in the cold storage loading & unloading register is not very efficient and has been making the entries therein at his convenience from the goods receipt challan and gate passes and from the stock available in the register for the previous year. The entries, therefore, are not in strictly chronological order. You can however, check the same from the primary books i.e. goods receipt challan and gate passes to verify their authencity.

1.2 About your inspection of receipts issued for loading of material and subsequent delivery receipts for removal we had submitted that it was irrelevant, according to us, for your assessment of the loss caused to the buildings. However, as already submitted above to expedite the matters we are prepare to yield and you can inspect the same as and when you like."

About your observations regarding the books of accounts being not produced by us before the surveyor for verification we may reproduce the following from our letter dated 18 June 2005;

"Though we have sent photocopies of Stock Register, which could not be produced for your verification during your visits, we once again put up this register for your verification. You may kindly sign the relevant pages so that photocopies of the same we can once again provide to you"

Your conclusion in the circumferences about the records to be unreliable is most unfortunate and unwarranted.

3. 6. In view of the explanations given hereinabove your observation that we have failed in making compliance with our contractual obligations contained in condition 6(i) of the insurance policy or we have failed to act as though uninsured in loss minimization is quite unwarranted and unfortunate.

7. We find it strange to note your statement that we had managed to get further subsidies/loans from financial institutions on a certificates & reports from the banks/financial institutions that all accounts of ours are running satisfactorily, whereas in fact we were running in losses. Firstly we were not running in losses but rather had a profit of Rs.2086981 before interest and depreciation in the year 2004-05 and a profit of Rs.1664749 before interest and depreciation in the year 2003-04 i.e. showing an ascending trend as per the table given below.

Secondly even if we had losses what benefits do you think we could derive by causing first the fire then attempting not to control it, suffering huge losses in the process and then claiming the same from insurance. Your whole line of thinking appears to be most incomprehensible and aimed at denying the claim somehow.

4. 9. The quantum of loss has been well documented by us and is not at all exaggerated. We can neither enhance the area of building nor the number of machineries, how can then we exaggerate the quantum of loss.

10. In view of the explanations given hereinabove your observation that the aforementioned situation will attract policy condition no. 8 and all benefits under the policy stands forfeited is most unwarranted and unfortunate.

27.       In the following paras, we have briefly extracted the relevant extract of reports of Surveyor/Investigator, touching the above points.

1. The Surveyor (KD Kohli & Co.)’s preliminary report dated 08.09.2005.

7.0 VERIFICATIONS:

7.1 In spite of our request, the Insured could not provide the Books of Accounts maintained for the Cold Storage. Only stock register maintained by Insured for loading & unloading stocks from various locations in the Cold, Chambers was provided……..

7.2 On specific enquiries from the Insured, it was stated by them that while loading the stocks in the Cold Chamber, they only mention the name of the Storer and the Lot Number and location in the Cold Storage where it was actually kept. No record of the weight of stocks received or its value was being maintained in the register, which makes it absolutely difficult to confirm that the stocks as claimed by the Insured, were actually kept in the Cold Storage.

7.3 The basic argument of the Insured justifying the above lapse on their part was that under the captioned policy, they were not putting any claim on stocks whatsoever. However, to understand the reasons for catastrophic fire, which could not be put out for several days and finally resulted in the complete collapse of the Cold Storage Building, the weight of Stock becomes important. This weight combined with the wood used for racks, doors, staircase, etc. would constitute the fire load.

7.4 The Insured, on our request, provided the audited balance-sheets for years 2001-02, 2002-03, 2003-04 and 2004-05 (provisional) and Provisional Balance-sheet & Trading Account for period 01.04.2005 to 18.04.2005. The balance-sheets for previous years have continually showed losses. Losses w.e.f. the construction of Cold Storage increased considerably apparently because of higher deduction of depreciation, which diluted/wiped off trading profits, if an. The ……………………..(not legible) decreasing but continued even in the year ended 31.03.2005. A nominal net profit has been shown during 18 days of financial year 2005-06 for an amount of Rs.3,08,145.00. Incidentally, this profit appears to be only an eye-wash because no corresponding depreciation for the current financial year was debited even in the provisional balance-sheet and trading account.

7.5 The loans taken by the Insured from different Financial Authorities are summarized as follows:

7.6 From the above tabulation, it would be seen that the Insured had taken large amount of loans from Bank of India, Ghaziabad. The term loan (TLN-50028) was taken for an amount of Rs.82,50,000/-, out of which only Rs.15,11,818/- was returned.

7.7 Term loan TLN-50029 amounting to Rs.37,03,895.00 was taken from Bank of India against a total sanctioned amount of Rs.41,25,000.00, using the subsidy granted by National Horticulture Board (Ministry of Agriculture), 50% of which was partly paid to the Insured and 50% had to be released after commercial commissioning of the Cold Storage subject to important condition that Insured would not be under debt to the Bankers.

7.8 In spite of the business results discussed above, the Insured managed to get a certificate and a favourable monitoring report. They also managed to get substantial loan from Bank of India, the status of which has already been tabulated above. Irrespective of the fact that the moral hazard of the Insured can not be termed as good, it goes without saying that they suffered a very heavy loss on account of almost complete destruction of the Cold Storage, stocks stored therein (not insured in this policy) as also the plant & machinery etc. To avoid complicating the survey & assessment report, we are writing separately to Insurers about results of indepth analysis made by the Chartered Accountant appointed by us with due permission of the Insurers. Various other aspects of the Insured's business, accounts and related matters have also been discussed in the above-mentioned note being submitted later.

2. Report dated 11.03.2006 of M/s. Top Professional

1. Findings

6. The Insured has taken a loan of Rs.82,50,000/- vide (TLN 50028) from Bank of India Ghaziabad out of which only one installment amounting to Rs.15,11,818/- was returned. In addition to above, Insured took yet another loan of Rs.37,03,895/- from Bank of India vide No.TLN-50029. The Insured has a CC limit of Rs.40,00,000/- vide CC No. 400039 from Bank of India. The Insured was sanctioned a subsidy of Rs.41,25,000/- by NIIB out of which only 50% was paid to Insured. Using the sanction of subsidy as a collateral, the Insured was sanctioned the above-mentioned loan of Rs.37,03,895/- subject to important condition that Insured would not be under any debt to the bank. It would thus be seen that the Bank sanctioned and delivered loan amount to the Insured through various types of influences notwithstanding various conditions imposed and inherent in the NHB and NABARD sanctions.

7. On a study of the balance-sheets, the Insured was having losses during 2002-03 and 2003-04, i.e., since construction of cold storage. Inspite of losses insured managed to get a certificate, which entitled him for enjoying loans from the Bank. He also managed to have a favourable monitoring report issued by various Government Agencies (NHB, NABARD, etc.). The Bank of India irrespective of various discrepancies and deficiencies and visible moral hazard of the Insured advanced loan after loan to the Insured, which has been fully described by the Surveyor in his analysis of Insured's Finances.

(ii)       12. It is surprising, rather shocking how the Insured succeeded in manipulating the Bankers, who in spite of serious irregularities of their accounts and payment of only one installment in more than two years against a loan of almost a Crore of Rupees, confirmed in writing that their Client's account was regular. However, having realized the gravity of Situation and possible action being taken against the Bank Officials responsible for such a serious neglect initiated proceedings and declared the Insured a defaulter. We also met the Manager. Mr. Chakravarty of Bank of India, Ghaziabad and held detailed discussions and made penetrating enquiries. Mr. Chakravarty in spite of putting up a brave face was unable to give any convincing reason as to how he confirmed to the Surveyor that the account of the Claimant was regular.

3. Report dated 21.01.2006 of M/s. S. Soni & Company

1. 3.1.1   TERM LOAN & SUBSIDY LOAN

The company has term loan and subsidy loan facility from the Bank of India, Ghaziabad, secured by way of Equitable Mortgage of Land & Building, Fixed Machinery and Plant and other Fixture & Fittings erected or installed there and on hypothecation of all tangible moveable plant & machinery and other assets.

3.1.2 CASH CREDIT

The company is also enjoying the cash credit facility from the Bank of India, Ghaziabad, against the Stocks of Raw Material; Finished & Semi Finished Stock of Spices, Herbs of the Company and personal guarantee of the directors. The limit is of Rs.40 lacs subject to 25% margin of stocks.

2. 6.0       SYSTEM OF BOOKS AND RECORDS

The insured is maintaining the books and records in computerised format however the sales bills and stocks register is maintained in manual form. We verified the computerised ledger accounts of goods purchased & goods sold with the purchase and sales bills and found them to be duly entered in the respective ledger accounts. The insured is also maintaining the party ledger accounts in the computerised format and we cross checked the purchase and sales with the party ledger accounts and found them to be tallying.

3. 16.       OUR OBSERVATION ABOUT THE CONDITION OF STOCKS

After our appointment we proceeded to the affected site and noticed that the stocks had been completely burnt and the building had collapsed down. The burnt stocks were buried in the rubble of the building structure. The water had also logged during the fire fighting operations. We also saw the fire flames and stocks were smouldering thereafter also.

It was also observed that the stocks of the insured had been completely gutted into ashes.

The detailed extent of damages, as mentioned above is also corroborated by the photographs taken by us and is also enclosed here with for underwriter's consideration and reference.

17.0 ANALYSIS OF GROSS PROFIT BASED ON LAST THREE YEARS AUDITED BALANCE SHEETS

We obtained the copy of Audited Balance Sheets for last two years 2002-03 and 2003-04 and Provisional Balance Sheets for the year 2004-05. The analysis of gross profit of last three years is given as under.-

From the above table it is clear that there has been a little fluctuating trends in the gross profit ratio over last three years. So we computed the average of the above and found the average gross profit as 18.5% {(18.34+18.19+18.97)/3} however the insured has provided us copy of trading account till the date of loss in which gross profit had been reflected as 17.85% and the same is lower than the average gross profit as computed above. Therefore in this situation the gross profit @ 17.85% is the reasonable in the present situation keeping in view the conservative approach.

More so as this gross profit is also nearly equivalent to the average gross profit of last three years and also based on the current year transactions actually made by the insured. Thus the gross profit @ 17.85% is the reasonable in the present situation. We considered the gross profit @ 17.85% for preparing the trading account till the date of loss.

22. VERIFICATION OF BANK-STOCK STATEMENT

We obtained the copy of bank stock statement for the month of 30.4.04 to 31.3.05 submitted to the bank. From the bank stock statements it is observed that the insured was submitting an over all value of stock held by them at end of each month.

The stock position showed by the bank stock statement submitted to the bank on monthly basis is given subsequently. We verified the Bank stocks records and also obtained certified copies from the Bank and found that the Insured has been submitting Stock statements of stocks of increased value.

Since the date of loss was 18.4.05, where as the stock statement last submitted to the bank was for the month of 31^st March 2005, we there fore considered the stock of Rs.54,32,000-00 as opening stocks as on 1.4.2005.

To arrive at the value of closing stocks as on loss date we adjusted the sale and purchase figure and other expenses as per the ledger accounts for 1.4.05 to 18.4.05 to the figure of opening stocks to arrive at the value of stock as on loss date i.e. 18.4.05 and gross profit has been considered @ 17.85%.

The value of stock as on loss date is computed as under.

The value of stock as on loss date comes to Rs.48,40,889.48 and the same has been considered for loss assessment purposes.

23. STOCK RECORDS

The Insured is maintaining item wise stock records in computerised format for the current period up to loss date, at 372-C, Kirana Mandi, Ghaziabad. We verified the inward quantity i.e. purchases with the purchase bills and the sales i.e. Ourward quantity from the sales bill and also cross checked with the figures shown in the ledger A/c of purchase and sales with individual items of stocks and found that all the entries had been properly recorded. Thus the stocks record maintained by the insured is found proper and in order.

The insured is also maintaining the stocks record in manual form at the cold storage related to the goods being transferred to the cold storage freezer area for all the parties concerned, which was sealed and signed by the district Horticulture Officer. However the stocks lying out side the cold storage freezing area are not entered in the said register. The quantity shown in the manual stocks record has been crosschecked with the computerised stocks register and found them to be tallying.

Based on such record the stock position is given as under: -

4. Report dated 03.03.2008 of M/s Garg & Jain (Surveyor)

A subsidy loan of Rs. 37,03,895 was disbursed by the bank which was adjustable against subsidy to be received from National Horticultural Board. Before the date of fire the subsidy stood duly received by the bank from the National Horticulture Board however the adjustment entry thereof against subsidy loan was yet to be passed and hence this loan continues to be outstanding in the books of the bank on the date of loss incorrectly. Though no interest was charged on this loan by the bank.

CC limit of Rs.40 lacs was sanctioned by the bank against the hypothecation of the stock against which balance outstanding on 18/04/2005 was Rs. 28,84, 123.09 (as per the bank statement) as against the amount of Rs. 3925096.09 indicated by the surveyor. Zero amount of repayment shown against this by the surveyor gives an erroneous impression as if there was a default in the repayment on this account whereas no repayment is actually ever required to be made against the amount outstanding in the CC account.

Profitability

The company's cold storage unit started functioning on 07/04/2003. In the initial years of commencement, as is the case generally with any project, there were losses due to interest & depreciation. Some projects are not able to generate even operating profit i.e profit before interest, depreciation. To ascertain the profitability position of the company we prepare statement of cash profit by the company as under:-

XXX

Profitability & Financial Position of M/s Krishna Spico Ind. Pvt. Ltd.

 A loan of Rs. 82.50 lacs to the company was sanctioned and disbursed. On 01/09/2004 the bank, after taking into account the payments already made, re-sanctioned the loan to Rs. 79.40 lacs with repayment from July 2004. The scheduled installments of repayment of the term loan and the actual balance outstanding against the company are given here under:-

In the first two quarters actual amount outstanding was more than the scheduled because of the application of the interest amount. Then as per the terms of the scheme of NHB the repayment was to start after two years. However the bank took this period as one year only and therefore in the first two quarters the actual balance outstanding was more than the stipulated one. The deficit was however made good later and thus in the next two quarters the actual balance was less than the stipulated one meaning that the party was prompt in repaying the loan and there was no default in the repayment of term loan.

From the statement we observed that there were cash profits in every year & after paying interest there was cash generation in the unit. Due to this cash generation unit was able to pay the due installments of loan to the bank. In very first year of operation after paying interest of Rs. 13.15 lacs company was having cash profit to the tune of Rs. 3.58 lacs. Above results don't show bad about the profitability of the company.

28.       As regards deficiency in service on the part of OP-2 bank, the Complainant in its complaint has stated as follows:

            “25. On 7^th January 2005, Respondent No.2 on behalf of the complainant took an insurance cover from M/s National Insurance Co. for coverage of complainant's stocks lying at the cold storage as the stocks were hypothecated with them. After the fire on dated 18^th April 2005 the bank was immediately informed and the bank informed the insurers about the fire. M/s National Insurance Co. Ltd. deputed M/s S. Soni & Co. to survey the loss against the policy no. 361200/11/04/3100192 dated 7^th January 2005 and they inspected the site on 21^st April 2005 to survey and assess the loss. They assessed the loss and submitted its survey report recommending the payment of loss to the insurance co. on dated 21^st January 2006. The insurance company, however, didn't care to settle the claim of the complainant and the complainant requested Respondent No. 2 to get the claim settled at the earliest. However, Respondent No.2 never bothered to get the claim of the complainant settled from National Insurance Co. although they are beneficiary under the policy. Respondent No.2 worked as Agent of the Insurance Co. and it was, therefore, their duty to expedite the claim. However, they failed to discharge their duty and are now bent upon to auction the land of the complainant below the market value which is as per Circle Sector Rate is more than Rs.5 crore (approx.) plus building Rs.50,00,000/-. As the insurance company was not settling the claim nor Respondent no. 2 was taking any interest in getting the claim settled, the complainant had to file its complain before Hon'ble State Commission, Delhi being complaint No. 107/2007 in which Respondent No.2 has not even bothered to file their reply. Respondent No.2 failed to assist the complainant in settlement of claim. They also failed to provide any financial assistance to run the trading business. The complainant company has grown after financial support of Rs.40,00,000/- in the month of October 2004, the business of the complainant has grown @ 190% in six months and therefore 491% only in 17 days during the next year. The aforesaid figure is also supported by audited balance sheet and the same is duly verified by M/s S. Soni & Co. The gross profit in the last 3 years is 18.19%, 18.97% and 17.84%. The Complainant has presumed the future growth @10%, and if the growth of 10% is presumed, the Complainant's turn over for the year 2005-2006 comes to Rs.5,82,0750/-, for the year 2006-2007 comes to Rs.31,475,167/- and for the year 2007-2008 it comes to Rs.34,622,684/-. During the last 3 years the average gross profit @ was 17.5%. The Complainant has suffered loss to the tune of Rs.13,05,121/- during the year 2005-2006, Rs.68,85,193/- in the year 2006- 2007, Rs.68,16,341/- for the year 2007-08 which comes to Rs.1,50,06,655/-. The total loss on account of good will comes to Rs.1,36,32,682/-. The Complainant assessed further loss of 18,675/- per day on account of deficiency in services on the part of Respondent No.2.

29.       Correspondence of the Complainant with the OP-2 Bank (Bank of India)

Complainant vide letter dated 13.08.2005, emphasised on the condition no. 9 of the policy where the claim procedure in respect of a general insurance policy has been mentioned and requested the Bank to intervene personally in the matter. Further on 26.10.2005, Complainant claimed that the surveyor of M/s S. Soni & Co.  delaying the finalisation of his assessment. Bank, being the corporate agent should be extra attentive in this case for expeditious settlement of the claim. But the bank is taking an indifferent attitude and not even providing the bank stock statement for the month of Sept. 2024 desired by the Surveyor.

Vide letter dated 05.11.2005, the Complainant apprised that all the documents have been submitted from their end and M/s K.D.Kohli & Co. Pvt. Ltd. already submitted their report to the Insurance Company two months back but till date the claim has not been settled. Further Complainant explained in a chronological order  how much time taken by the Surveyor in responding to them and the time taken by the Complainant in responding to the Surveyor to enable the Bank to judge to what extent his allegation is justified that “the inured is not cooperating at all and is rather giving threats quoting IRDA regulations and also levelling false charges and baseless allegations against us.” On 28.12.2005, Complainant asked the Bank for favour by exerting pressure on the Insurance Company to settle the claim and requested not to initiate any recovery/legal proceedings at this stage as the unit is not earning any profit and in the absence of the same it is not possible to regularise the accounts immediately.

30.       It is to be noted that allegations against and prayers qua OP-2 Bank pertain to the policy for insurance of stocks taken by the Complainant through OP-2 Bank from National Insurance Co. and not in respect to insurance policy with respect to building, Plant & Machinery and FFF taken from the OP-1 Insurance Co. (Oriental Insurance Co.). Hence, in our considered opinion, if there was a delay/deficiency in service on the part of National Insurance Company, ideally the Complainant ought to have made OP-2 Bank a party in a case against National Insurance Company and not in a case against OP-1, as policy issued by OP-1 does not concern stocks and OP-2 Bank was not in the picture with respect to policy taken from OP-1. If Complainant is aggrieved with the actions of OP-2 post fire incident in terms of declaring their loan accounts NPA and/or action under SARFAESI Act/ taking possession of property etc., their remedies lie somewhere else and not under the Consumer Protection Act. Complainant admits in para 25 of his complaint that Surveyor appointed by National Insurance Company (M/s S. Soni & Company) visited the site on 21.04.2005. It means OP-2 Bank did intimate the National Insurance Company in time. If there was a delay on the part of National Insurance Company, Complainant ought to have pursued separate remedies against National Insurance Company and OP-2 Bank. Pursuing remedy against OP-2 Bank, on the grounds of they being agent of National Insurance Company, in a consumer complaint against Oriental Insurance Company, where OP-2 Bank is not in the picture, does not appear to be appropriate. Hence, no relief can be granted to Complainant against OP-2 Bank in the present case. However, we do feel that OP-2 Bank could have played some active role in getting the claims of Complainant expedited from the  Insurance Company. As loan facilities extended by OP-2 became NPA after the fire incident only and were in order till the date of incident, OP-2 ought to have clarified such position to OP-1/surveyor as huge loans from OP-2 and these being irregular was one of the contentions of surveyor/OP-1 in repudiating the claim. 

31.       Observations and Findings on the  grounds for repudiation.

            We have carefully gone through various documents, in particular reports of the Surveyors/investigators, other relevant records and rival contentions of the parties. There is no cogent and reliable evidence on record to establish that the fire in question was not accidental but a result of arson caused by Complainant/his representatives. There is no definite finding by the Surveyor or investigator or the OP-1 Insurance Company that the fire was not accidental. The whole case of the Insurance Company is based on mere suspicion, possibly due to higher amount of claim. The reason given in repudiation letter “The Surveyors could not find that the fire was accidental” is not tenable. As stated earlier, what the Surveyors/Investigator/Insurance Company has to establish is that fire was ‘not-accidental but the result of arson caused by the Complainant/his representative’. They have failed to discharge their burden in this regard. Discussion in the forgoing paras clearly show that there was no delay on the part of Complainant in informing the concerned police, fire and other authorities as well as OP-1 Insurance Company. A discrepancy in timing of fire stand                      well-explained, and is a mere clerical mistake. Even the Surveyors in its report has also accepted this inconsistency as due to clerical mistake. There seems to be no doubt on the timing of fire being about 8.00-8.30 A.M. A perusal of correspondence between the Surveyor and Complainant shows that there was possibly an attempt to unnecessarily call for too many details/documents which were not connected with the loss pertaining to the present policy. Appointment of Surveyor M/s. K.D. Kohli and LPAOI and an Investigator Top Professional shows that Insurance Company somehow had made up its mind not to accept the claim because of suspicion on the cause of fire. Most of the details/documents sought by the Surveyor were provided by the Complainant. We tend to agree with the Complainant’s contention as contained in its reply dated 05.08.2005 to the Surveyors with respect to seeking of too many details with respect to stocks of the Complainant despite the fact that stocks of the Complainant lost in the fire were not covered under the policy of OP-1 but Complainant had a separate policy with respect to stocks from National Insurance Company who had appointed a separate Surveyor (M/s S. Soni & Company) to assess the loss with respect to the loss to the stocks. The same holds true with respect to stocks of other customers of the Complainant, which also got burnt during the same fire incident. The observations of  Insurance Company that initially the fire was not serious, and that serious efforts to fight the fire were not taken by the Complainant and that fire fighting squad were found to be inactive for some time and that it was so at the instance and for lack of Complainant’s assistance are totally ill founded and without any basis. Records speak otherwise. The Complainant gave timely intimation of the incident to the police and fire authorities. Once the police and fire authorities get information of such incident and arrive at the spot, they perform their duties as per law and well laid down protocols. They are not under the control of building owners (the Complainant in the present case) and not obliged to get any wrongful directions. Casting aspersions on the integrity of fire authorities in being inactive for quite some time and not taking timely steps to extinguish the fire amounts to leveling baseless allegations against such Government authority. Onus to prove such allegations squarely fall on the Insurance Company. There is no evidence to support such allegations by the Insurance Company. Similarly, observations of Insurance Company in the repudiation letter that Complainant managed to get further subsidies/loan from financial institutions on a certificate and reports from banks/financial institution that all the accounts of Insured are running satisfactorily amounts to casting aspersion/doubts on the decision/judgement of competent authorities like NHB/NABARD/Banks etc., which is totally devoid of any basis and are insinuations  to justify the denial of the claim. The observations that Complainant have taken heavy amounts of loans/finances from bank and were not in a position to make regular repayments is also factually incorrect. At the time of incident, the various loan facility available by the Complainant were well in order. It is later on only that on account of fire incident and complainant not getting the insurance claims from the Insurance Companies that their bank accounts became irregular and non-performing and OP-2 took action under SARFAESI. Hence, these are not a valid ground to deny the claim of the Complainant. The observations of Insurance Company that balance sheet for previous years were showing losses is also not correct.  If the Insurance Company was having any suspicion about the cause of fire not being accidental but result of arson by the Complainant, it ought to have engaged an expert or an expert agency like Forensic Science Laboratory to find out the cause of fire. Instead of doing so, it chose to appoint an unlicensed investigator M/s. Top Professionals, who had no expertise in this regard.  The conclusion drawn by M/s Top Professionals that “as apparently, the fire was not caused by accidental reasons, and was more, a case of arson,” is without any expert scientific study and basis. Surveyor M/s. Garg & Jain have appropriately covered most of the observations of M/s Top Professional in this report dated 03.03.2008, which have been discussed in the preceding paras.

            In view of the foregoing we hold that OP-1 Insurance Company was not justified in repudiating the claim of the Complainant on the grounds mentioned in the repudiation letter dated 27.04.2006. Accordingly, we hereby set aside the said repudiation letter dated 27.04.2006 and hold that OP-1 was guilty of deficiency in service in wrongfully rejecting the claim merely on the basis of suspicion that fire was not accidental, and not deciding the claim within the prescribed timeline, not providing copy of surveyor’s report to the Complainant in accordance with Regulation 9 of 2000 Regulation etc.

32.       Assessment of the Loss

In view of our findings that repudiation of the claim of the Complainant on account of reasons/grounds related in the repudiation letter dated 27.04.2006 was not justified, and setting aside the said repudiation letter and holding that OP-1 was guilty of deficiency in service to the Complainant,  we hold that the complainant is entitled to claim under the policy of the OP-1.  As a period of more than 19 years have lapsed since the date of incident i.e. 18.04.2005, at this stage fresh assessment is neither possible nor desirable.  Surveyor appointed by OP-1 Insurance Co. (M/s K.D. Kohli & Co. in its final report has assessed the loss, which it termed as hypothetical loss.  In its report dated 08.09.2005, the Surveyor also observed “Prima facie as the loss has occurred due to an insured peril i.e. a sustained fire resulting in complete damage to the cold storage, in our opinion such loss  falls “within the purview of the policy” by the complainant”.  Hence, we hold that complainant is entitled to get his claim as per the loss assessed by the Surveyor in its final report i.e. Rs.1,36,94,588/-.  Details of this assessed loss, as given in the final report of the Surveyor, is given below:

12.0 HYPOTHETICAL ASSESSMENT OF LOSS:

12.1 In spite of having thoroughly explained that on the basis of enquiries held by us, analysis of discrepancies conveyed to Insurers and finally, the thorough investigations made by the Investigators who have already submitted sworn statements of various witnesses and storers, we have found it prudent to hypothetically assess the loss for the pure purpose of limiting the liability should there be a dispute subsequently between the Insurers and the Insured.:

33.       Final Orders

In view of the foregoing and keeping in view the entire facts and circumstances of the case, Original Petition No. 51 of 2008 is allowed and disposed off with the following orders:

(i)      OP-1 –Oriental Insurance Co. is directed to pay the assessed  loss of Rs.1,36,94,588/- (Rs. One crore thirty six lakhs ninety four thousand five hundred and eighty eight) to the Complainant within 45 days of this order along with interest @9% p.a. w.e.f. date of filing of complaint i.e. 28.04.2008 till the actual date of payment, failing which, amount payable at the end of 45 days shall carry interest @12% p.a. w.e.f. expiry of 45 days of date of this order till the actual date of payment.

(ii)    Considering that the Original Petition is being contested by the Complainant since 2018, OP-1 shall also pay an amount of Rs.5 Lakhs towards litigation costs to the Complainant.  This amount shall also be payable within 45 days, failing which, it shall carry interest @12% p.a.

(iii)   In view of our observations in para 30 of this order,  OP/51/2008 is dismissed as against OP-2 Bank of India. 

34.       All the pending IAs in this case, if any, stand disposed of.