ORDER

SRI.H.R. SRINIVAS.  PRESIDENT

1.     This is the Complaint filed by the Complainant against the Opposite Parties (herein referred to as OPs) under section 35 of the Consumer Protection Act 2019 for the deficiency in service in  not paying the claim of insurance of Rs.30,00,000/- in respect of the fire accident that had taken place in his factory premises and for payment of the said amount and further Rs.25,000/- as compensation for the torture given by the OPs and for  such other reliefs as the Hon’ble District Commission deems fit.

2.     The brief facts of the complaint are that; complainant  is running a a garment manufacturing unit in the name “STAR FASHION”. He had obtained a standard fire and special policy for sum of Rs.55,00,000/- by paying an annual premium of Rs.12,007/- valid for the period from 20.01.2020 to 19.01.2021. It is contended that on 26.01.2020 at about 3.35 am when the complainant was in his native place at Bannenahalli, near Shanthigrama, Hassan Taluk and District, he was informed that a fire had taken place in his factory at Bangalore and all the materials, machineries were destroyed due to the said fire. By the time he reached the factory premises, the fire engines were trying to douse the fire.  He also made complaint to the jurisdictional police i.e. Peenya Police station who registered under a case No.01/2020 and the firefighting authorities issued a certificate confirming the incident and  the police have drawn a spot panchanama. He had incurred a loss of Rs.25 to 30 lakhs due to the said fire accident in the premises. He made a claim with OP as he was having the Standard Fire and Special Insurance policy who deputed one “Samba Shankar” representative of OP for assessing and surveying the damages caused due to the fire accident. Inspite of several requests and demands, OP did not give reply to his request and the claim not settled and always informing that the claim was under process and pending for approval by the head office at Mumbai. Inspite of it, they did not settle the matter and hence he had to issue legal notice on 18.12.2020. It was served on the OP.  In view of the OPs not settling the claim he has been put to lot of inconvenience and financial loss as he has to pay the amount borrowed to the persons and to the financial institutions.  Even the lenders are threatening that if the loan amount is not paid, they would attach his property and initiate civil and criminal proceeding against him to recover the loan amount. Hence the complaint.

3.     Upon service of notice on OP-1 and 2, they appeared before the commission through one C Lakshminarayan advocate and filed the version contending that the complainant is guilty of suppressing material facts relating to the incident and the claim. The complaint is vexatious, frivolous filed with mala fide intention and is malicious and is on false grounds liable to be dismissed with costs.  It is contended further that, the OP had issued a standard fire and Special Peril Policy to M/s Star Fashion covering for the period 20.01.2020 to 19.01.2021 for an insured sum of Rs.55,00,000/- and the liability of the OP is limited to the said amount subject to the terms and conditions of the policy.  It is also admitted that they were informed regarding the fire that took place in the factory premises on 26.01.2020 at about 3.35 am. After the receipt of the claim they appointed M/s SRK claims and recovery agency to inspect the spot and assess the loss and to submit the report. The surveyor contacted the complainant and sought the information to survey the loss and also requested the complainant to provide purchase bills and bill for purchasing the machines, sales record, sales invoice/bills for the stock issued, stock register, purchase and sales record details of the asset, the bank account in the name of the firm and details of the persons who were working as tailors in the said garment factory and the claim bill with claim related documents. Inspite of it, and inspite of sending a letter on 08.07.2021 seeking the above details to be provided by the complainant and also numerous follow up with the complainant, the complainant failed to provide the above details.  Hence with no other option OP closed the claim of the complainant for non-submission of the required documents as ‘no claim’. The liability of the OP is limited to and as per the loss assessed by the independent surveyor and the claim must be limited to the assessment made by the survey report. Since the complainant did not provide the details to assess the loss, there is no deficiency in service on the part of OP and also no unfair trade practice. Hence prayed the commission to dismiss the complaint with cost.

4.     In order to prove the case, both parties have filed their affidavit evidence and produced documents. Arguments Heard. The following points arise for our consideration:-

1) Whether the complainant has proved deficiency in service on the part of the Opposite Parties?

2) Whether the complainant is entitled to the relief prayed for in the complaint?

5.     Our answers to the above points are:-

POINT NO.1 & 2  :   Partly in the affirmative.

                                For the following.

REASONS

POINT No.1 & 2:-

6.     On perusing the complaint, version, documents, evidence filed by the parties, it becomes clear that, complainant obtained Standard Fire and Special Peril policy by paying the premium of Rs.12,007/- in respect of his business carried out in the premises and the insured amount is Rs.55,00,000/-.  It is also mentioned in Ex.R1 the insurance policy that the foundation of the building is insured for Rs.1,00,000/- plant and machinery for Rs.15,00,000/-, stock in trade under process Rs.35,00,000/- and others Rs.4,00,000/- in all Rs.55,00,000/-.  

7.     It is not dispute that the premises in which the complainant carrying on the garment factory, got destroyed due to the fire. In the certificate Ex P2 given by the Karnataka Fire Fighting and Emergency Services, Peenya Branch,  it is mentioned that the premises is an RCC structure measuring 15X40 wherein there were 15 machines about 6,000 readymade pieces iron box, packing covers, packings materials, boxes, furnitures wiring and other items have partially destroyed in the fire. 

8.     An FIR is also registered to that effect. Police have also drawn the mahazar in respect of the said incident. Further police have recorded the statement of the complainant wherein he himself has stated that the loss caused due to the said fire accident is about Rs.12 lakhs.  This is borne out from Ex.P3 and from Ex.P4 it is mentioned that the loss is about Rs.20,00,000/-. It is admitted fact that legal notice was also issued to the OP as per Ex. P5 which has been received as per Ex.P6. The postal acknowledge.

9.     On the other hand OP has relied on the same insurance policy issued by it and on Ex.R2 the surveyor report wherein the SRK claims and recovery agency appointed by the OP has carried out the survey regarding the loss and has assessed in the assessment as hereunder; 

“ASSESSMENT:

• Considering the costing as per oral discussion with insured representative the cost all the machines approx. 9 which have been purchase second hand over the period of last 6 years may not be valued more than Rs.2 lacs.
• Insured does not have any purchase bills or receipts for purchase of machines, stocks etc and have admitted that these were purchased second hand by paying CASH
• Total raw material and finished products may not be valued more than Rs.1 lac at any given point of time.
• The loss even as per complainant statement in FAR is Rs.12 lacs.
• Insured has no sales record and not in the practice of issuing sales invoice/bill etc and have admitted that all their sales were in cash without bill.
• As per the above assessment total loss of more than Rs.3 lacs is Ruled Out.

CONCLUSION:

From the above finds the insured’s clam for fire loss is grossly inflated and is now at your discretion subject to the terms and conditions of policy.

The report is issued based on the facts that came to light during our investigation. Based on the facts, findings and documentary evidence, the insurance company can take an appropriate decision.

Thanking you

Yours truly

For SRK CLAIMS & RECOVERY AGENCY

AUTHORIZED SIGNATORY”

10.   The said surveyor has also recorded the statement of the insured, it is stated in:

“INSURED STATEMENT

05.01.2020

From:

Prema BK W/o Manje Gowda

Bhavaninagar, NO.89, Chennanayakanapalya

Bangalore 560 073

To RGICL

Sir

I Prema BK and my husband Manje gowda runs Star Fashions Garments tailoring work. We have a small factory which was at Kushalnagar, Laggere. We had about 8 tailors working with us. In our factory one Kaha Machine, one over lock machine and one single stitching machine and we use to take orders from garment shops and stitch. For these garments we buy material from Tirupur. We supply to retail shops and we do not have nay bills for the same and our transactions are only cash and we don’t  have any bills.

On December 2019 as our agreement at Laggere location building, we shifted work to our own house building at Bhawaninagar, it is 15X30 ft and we shifted all machines on the first floor of our house, in the house on ground floor Durgesh Stays. We have purchased all machines in second hand and having using the machines since 6 years only Kaja machines is newly purchased and we don’t have bill or invoice for purchase of machines. This location does not have Electricity connection still and the place also is inadequate and hence the machines were just stored and no work  was going on. We had also stored the fabric in the same place and we don’t have purchase bills for the material also. In January 2020 from Om  Shakti Garments we purchased 4 single peddle machines second hand for Rs.50,000/- and they were also stored here. On 23.01.2020 Thursday we locked the place and on 24.01.2020 at 06.30 am we went to our native Ballenahalli, Hassan, on 26.01.2020 Sunday morning at about 03.00 am our tenants in ground floor  Durgesh called and informed about fire. Then we told brother in law Srinivas by phone and told him to take stock of the situation, in the mean time Durgesh and other neighbours had called the Fire brigade and informed the police. Then the fire brigade put off the fire. Then we came back from native 26.01.2020 and reached the spot by 07.30 am, that time we saw that all the machines were burnt and we informed the insurance. Please settle the claim at the earliest and oblige.”

11.   The final survey report is also produced issued by Rank insurance surveyor and loss assessor Pvt. Ltd. It has assessed the loss not more than Rs.3,00,000/- . It is also mentioned that without prejudice basis and without admitting the any liability to the insurance they have assessed the loss as insured’s indication of loss Rs.35,00,000/- (stock) as per police complaint Rs.12,00,000/-. As per the investigators market value stock loss Rs.1,00,000/- P and M Rs.2,00,000/- and total Rs.3,00,000/-. Gross assessed loss based on observation repair replacement cost Rs.1,00,000/- + Rs.4,00,000/- Rs.5,00,000/-, depreciation of usage Rs.2,00,000/-, value after depreciation Rs.3,00,000/-, salvage Rs.50,000/- , net assessed loss Rs.2,50,000/- , policy excess Rs.12,500/- net loss is Rs.2,37,500/- payable to the complainant.  Except this there is no other material placed by either of the parties. 

12.   It is the bounden duty of the complainant to provide full details regarding the value of the plant and machinery, stock in trade and also the profit and loss account to assess the exact loss which the complainant has incurred due to the said fire accident.  No doubt it is true that survey report under the circumstance has to be accepted. His report is also based on the probabilities as no documents has been inspected by him regarding the stock available in the premises at the time of the fire.  It is to be noted here and of common knowledge that the claimant will claim exorbitantly as in this case the complainant has sought for Rs.30,00,000/- as compensation whereas the insurance people and also the surveyor value the loss as low as possible to save the money for the institution. The forum has to strike the balance in between, to do justice to both the parties.

13.   Compensation cannot be a lottery or bonanza for the complainant and at the same time it should not a pittance for the complainant.  Complainant has stated before the police that the loss is about Rs.12,00,000/- at the first instance when the police inquired as to the cost of the material that had destroyed in the fire. As stated above, he had stored nine sewing machines and also about 6,000 readily stitched cloths in the said premises.  Looking into the said aspect we are of the opinion that if a sum of Rs.5,00,000/- is ordered to be paid as compensation  in respect of the said fire accident and if OP-1 and 2 are directed to pay along with interest at 12% per annum from the date of claim i.e. 26.01.2020 till payment of the entire amount would be just proper and reasonable. Under the circumstances. Hence repudiating the insurance/closing the claim as no claim amounts to deficiency in service when there is a clear cut case of fire in the premises which covers under the insurance issued by the OPs.  Assuming for the movement that the complainant has not produced any material to the insurance company it could have acted on the assessment of loss made by its own surveyor and would have paid the said amount to show its commitment towards its customers.  The same has not been done. In view of this, OPs to pay damages of Rs.25,000/- for not deciding the claim of the complainant at the earliest and Rs.10,000/- towards litigation expenses and answer POINT NO.1 AND 2 PARTLY IN THE AFFIRMATIVE and pass the following:

ORDER

1. The complaint is allowed with cost.
2. OP-1 and 2 are jointly and severally hereby directed to pay a sum of Rs.5,00,000/- to the complainant towards the fire accident along with interest at  12% per annum from the date of claim of the insurance policy i.e. 26.01.2020  till payment of the entire amount.
3. Further OPs are also directed to pay Rs.25,000/- as damages and to pay Rs.10,000/- towards cost of the litigation expenses.
4. OPs are further directed comply the above order within 30 days from the date of receipt of this order and submit the compliance report to this commission within 15 days thereafter.
5.   Send a copy of this order to both parties free of cost.

Note: You are hereby directed to take back the extra copies of the Complaints/version, documents and records filed by you within one month from the date of receipt of this order.

(Dictated to the Stenographer over the computer, typed by him, corrected and then pronounced by us in the Open Commission on this day the 25^th day of August 2022)

MEMBER                 MEMBER                PRESIDENT

ANNEXURES

1. Witness examined on behalf of the Complainant/s by way of affidavit:

Copies of Documents produced on behalf of Complainant/s:

Ex P1: Copies of the insurance policy papers.

Ex P2: Acknowledgement issued by the Fire Department

Ex. P3: Copy of the Spot Mahzaar.

Ex P4: Copy of the Report issued by the fire department

Ex P5: Copy of the legal notice

Ex P6: Postal acknowledgment

2. Witness examined on behalf of the Opposite party/s by way of affidavit:

RW-1: Sri Ibrahemsab Meyawar, Legal Manager of OP.

Copies of Documents produced on behalf of Opposite Party/s

Ex R1: Copy of the Insurance policy with terms and conditions.

Ex R2: Copy of the investigation report.

Ex R3: Copy of the reminder issues to the complainant.

Ex R4: Copy of the reminder issued to the complainant.

MEMBER                 MEMBER                PRESIDENT

RAK*