KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C. No.107/2017

JUDGEMENT DATED: 24.10.2024

PRESENT:

COMPLAINANT:

(by Advs. Akhil Suseendran & Aswathy Suseendran)

Vs.

OPPOSITE PARTIES:

(by Adv. Prasanna Kumar Nair)

(by Adv. S. Rajeev)

JUDGEMENT

SRI. AJITH KUMAR  D. : JUDICIAL MEMBER

          This is a complaint filed under Section 12 of the Consumer Protection Act, 1986. 

2.       The averments contained in the complaint in brief are as follows: -

The complainant has been running a medical shop in the name as “Kairali Medicals”.  The complainant had availed a loan of Rs.24,00,000/-(Rupees Twenty Four Lakhs only) from the Bank of Baroda, Varkala Branch and the shop was insured with the National Insurance Company for the period from 21.05.2016 to 20.05.2017.  On 15.06.2016 the complainant had closed the shop and on 19.09.2016 when opened the shop, he found that a fire had occurred in the shop and substantial damage was caused to the medicines, cosmetics, food supplements and the refrigerator kept in the shop.  Complainant had immediately reported the matter to the KSEB.  The officials attached to the KSEB had conducted inspection and prepared a Mahazar.  The matter was reported to the Police on the very same day itself.  The complainant had also informed the matter to the officials of the National Insurance Company with respect to the fire occurrence.  The complainant assessed the loss suffered as Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only).  He had raised the claim with the opposite party.

3.       On 27.01.2017, the Senior Manager of the opposite party had sent a reply that the claim raised by the complainant is exorbitant and the loss caused is only Rs.3,74,398/-(Rupees Three Lakhs Seventy Four Thousand Three Hundred and Ninety Eight only).  According to the complainant, there is grave error committed by the 2^nd opposite party, the insurance surveyor in assessing the loss.  He had assessed the loss pertaining to the damaged items alone.  But the remaining stock inside the shop was also partially damaged and the complainant would estimate the present value of those damaged stock as Rs.58,75,647/-(Rupees Fifty Eight Lakhs Seventy Five Thousand Six Hundred and Forty Seven only). 

4.       According to the complainant the overheating of the electrical parts of the fridge would have resulted in the fire.   As the room was not having any airhole or ventilation, the fire had fully consumed the oxygen inside the room and ultimately, the fire got extinguished which prevented from the burning up of the entire stock.  The complaint was not furnished with any report issued by the Surveyor.  The complainant is unable to repay the loan availed from the Bank of Baroda.  The complainant would seek for recovery of Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only) along with interest, Rs.1,50,000/-(Rupees One Lakh Fifty Thousand only) as compensation and Rs.25,000/-(Rupees Twenty Five Thousand only) as costs.

5.       The 1^st opposite party, the Senior Divisional Manager of the National Insurance Company filed version with the following contentions: -

The complainant is not a ‘consumer’ as he was conducting a commercial business and this Commission has no jurisdiction to adjudicate the matter.  The wife of the complainant, Smt. Suma Kumari being the partner of the business should be impleaded for a proper adjudication.  The opposite party would admit that the shop was insured with them.  The insurance policy covers only accidental damages.  As per the General Exclusions of the policy, it does not cover the first Rs.10,000/-(Rupees Ten Thousand only) for each and every loss arising out of other perils in respect of which the insured is indemnified in the policy.  As per General Exclusion (3)(b) the policy does not cover loss, destruction or damage directly or indirectly caused to the property insured by radioactive toxic, explosives or other hazardous properties of any explosives nuclear assembly or nuclear component thereof.  There is another general exclusion that the policy shall be voidable in the event of misrepresentation, misdescription or non-disclosure any material particulars.  General Condition No.8 stipulates that if the claim in respect of fraudulent or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under this policy or if the loss or damage be occasioned by the wilful act or with connivance of the insured, all benefits under the policy shall be forfeited.  General Condition No.7 stipulates that if any claim under the policy shall be in any respect fraudulent or if any fraudulent means or devices are used by the insured or anyone acting on the insured’s behalf to obtain any benefit under this policy, all benefits under this policy shall be forfeited.

6.       According to the complainant, the fire occurred in between 17.09.2016 at 8.30p.m. and 19.09.2016 morning.  The total loss reported was Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only).  On receiving the information, immediately the opposite party had arranged a survey of the claim which was carried out by the independent IRDA licensed Surveyor, Mr. D. Prasad who reported that there was no signs of any electric short circuit in the premises and observed that the fire was resulted by the wilful ignition by the insured at two places inside the shop to cause total loss.  The net loss assessed by the Surveyor is Rs.3,73,253/-(Rupees Three Lakhs Seventy Three Thousand Two Hundred and Fifty Three only).  Further, the loss assessed jointly by the Surveyor, Banker and the insured is Rs.3,74,398/-(Rupees Three Lakhs Seventy Four Thousand Three Hundred and Ninety Eight only).

7.       As per the claim put up by the complainant, the cause of fire is stated as electric short circuit.  But the survey report and the certificate of electrical inspectorate show that there was no such electric short circuit as all the electrical wiring was intact. 

8.       An independent investigation was carried out by Sri. Binoy Augustine who issued a report dated 25.11.2018 confirmed that the complainant had wilfully put fire to his shop with an intention to clear the bank loan with insurance amount and that the case between the owner for vacating the room had also motivated the claimant.  The owner of the shop room Sri. Kasim had filed a complaint before the Varkala Police Station against the complainant and his wife on an allegation that they had purposefully set fire to the shop by burning waste papers using kerosene.  On 07.10.2016 the owner of the shop had filed a petition before the insurance company by narrating the above state of affairs.  From the petition, it is seen that the owner of the building had asked the complainant to vacate the shop room and a case was pending in that regard.  Since the Varkala Police had not initiated any steps, the owner of the building had filed another petition before the Police Chief, Thiruvananthapuram.

9.       The Surveyor had issued a letter to the complainant for causing production of the essential documents so as to proceed further for preparing the final survey report.  But the complainant did not send a reply.  There was no co-operation on the side of the complainant.  Hence, two more letters were issued by the Surveyor to the complainant.  But the complainant did not co-operate.  Subsequently, Surveyor had sent a letter to the Senior Manager of the Bank of Baroda and requested the bank to co-operate with the assessment.  On 21.10.2016, the Surveyor had issued another letter requesting the complainant to cause production of the sale bills of his shop who submitted the monthly sales summary to the insurer.  On 28.12.2016 the Surveyor had issued another letter to the complainant for causing production of the carbon copies of the sale bills so as to authenticate the monthly sales summary statement.  The complainant had sent a reply that he was not in a position to cause production of the carbon copies of the bills.  The value of the stock was jointly taken by the Surveyor, investigator, officials of the Bank of Baroda in the presence of the complainant which was duly signed by the concerned persons including the complainant wherein the loss amount was assessed as Rs.3,73,253/-(Rupees Three Lakhs Seventy Three Thousand Two Hundred and Fifty Three only).

10.     As per the evidence collected through the investigation, survey report and the certificate issued by the electrical inspectorate, the possibility of a fire occurrence due to electric short circuit has been ruled out and it was clear that the fire had occurred due to the purposeful mischief done by the insured himself.  Accordingly, the claim was repudiated which fact was informed to the complainant through the letter dated 27.01.2017.  There is no bonafides in the claim raised by the complainant.   hence, the opposite party would seek for the dismissal of the complaint.

11.     The complainant had arrayed the Insurance Surveyor as the 2^nd opposite party.  He had filed a written version with identical to the contentions raised by the 1^st opposite party.  He would raise an additional contention that he being an independent surveyor who assessed the loss his impleadment in the case is unnecessary.  There is no cause of action against him for filing the complaint.  He would also seek for dismissal of the complaint.

12.     On the side of the complainant PWs 1 and 2 were examined.  Exhibits A1 to A17 were marked on the side of the complainant.  On the side of the opposite party DW1 was examined.  Exhibits B1 to B18 were marked.

13.     Heard both sides. Counsel for the opposite parties filed written notes of arguments.

14.     Perused the records.

15.     Now the points that arise for determination are:

1. Whether the repudiation of the insurance policy by the 1^st opposite party is proper?
2. Whether there is any deficiency in service on the part of the opposite parties as alleged?
3. Whether the complainant is entitled to get any compensation as claimed?
4. Reliefs and costs?

Point Nos.1 to 3:-

          12.     The complainant had sworn before this Commission as PW1 in support of the averments contained in the complaint.  Exhibit A1 is the copy of the certificate of registration issued in the name of the complainant by the Commercial Taxes Department for conducting business in the name as M/s Kairali Medicals.  Exhibit A2 is the Registration Certificate issued by the Assistant Drug Controller in favour of the complainant for conducting the medical shop.  Exhibit A3 is the document issued by the Bank of Baroda expressing their readiness to provide overdraft facility of Rs.24,00,000/-(Rupees Twenty Four Lakhs only) to the complainant.  Exhibit A4 is the bank statement pertaining to the account of the complainant.  Exhibit A5 is the copy of the insurance policy issued by the 1^st opposite party in favour of the complainant for the period from 21.05.2016 to 25.05.2017.  Immediately after the alleged fire occurrence, the officials attached to the KSEB had inspected the premises who prepared a site Mahazar, copy of which is marked as Exhibit A6.  In Exhibit A6 it is clearly stated that no damage was caused to the main switch or any other switches or electrical appliances found inside the premises.  It was also reported in Exhibit A6 that no damage was seen to the metre, metre box and cut out fuse.  From the facts reported in Exhibit A6, the possibility of fire being caused on account of electric short circuit is ruled out.  Exhibit A7 is the photograph pertaining to the premises in question.  After the fire, the Assistant Drug Controller had issued a direction to the complainant not to use any medicines kept in the premises, since the fire had generated high temperature and resultantly the entire stock became unfit for distribution.  Exhibit A8 is the letter issued by the Assistant Drug Controller to the complainant in this connection.  Varkala Police had registered a crime as crime No.1771/16 on the basis of a statement given by the complainant on 19.09.2016.  For proving this fact, the complainant had caused production of Exhibit A9, the copy of the FIR and FI statement.  Exhibit A10 is a letter issued by the complainant to the Branch Manager of the National Insurance Company to take an early decision to redress the grievance of the complainant with respect to the loss incurred on account of the fire occurrence.  Exhibit A11 is another letter issued by the complainant on 16.12.2016 to the Deputy General Manager of the National Insurance Company to grant the consequential loss incurred to the business on account of the fire occurred in the premises.  Exhibit A12 is the reply sent by the 1^st opposite party repudiating the claim on the reason that the claim is fraudulent as the investigation report, survey report and the certificate issued by the electrical inspectorate would rule out the possibility of a fire due to electric short circuit.  Exhibit A13 is the copy of a letter issued by the complainant requesting the opposite parties to issue the copy of investigation report and the report assessing loss incurred to the complainant by resorting to the provisions of the Right to Information Act.  Exhibit A14 is the report issued by the Scientific Officer attached to the Forensic Science Laboratory.  The remnants collected from the spot were forwarded to the Forensic Science Laboratory and the Scientific Officer issued Exhibit A14 stating that no inflammable oils could be detected in the sample forwarded to the laboratory.  In Exhibit A14, the Assistant Director, Physics Department of the laboratory had reached at a conclusion that on examination of the material objects, there was no indication of electric short circuit. 

          13.     The owner of the premises had filed a petition before the Varkala Police on an allegation that the complainant had committed mischief by setting fire to the shoproom.  Varkala Police had registered a crime as crime No.2231/16 under Section 435, 420 and 427 r/w Section 34 IPC against the complainant.  the copy of the FIR statement and the FIS are marked as Exhibit A15.  The Police after completing investigation had filed a report referring the crime as false.  The copy of the refer report is marked as Exhibit A16.  Bank of Baroda had initiated recovery proceedings against the complainant by resorting to the provisions of the SARFAESI Act.  The house and the landed property of the complainant was sought to be attached by the bank against which the complainant had approached the Debts Recovery Tribunal, Ernakulam expressing his readiness to make substantial payment in two instalments.  The above request was allowed and stay was ordered on a condition to deposit Rs.2,00,000/-(Rupees Two Lakhs only) on 21.12.2019 and Rs.3,00,000/-(Rupees Three Lakhs only) on 31.12.2019.

          14.     The complainant had examined the Scientific Officer attached to the Forensic Science Laboratory as PW2 who proved Exhibit A14.

          15.     The opposite party had assailed the testimony of PW2 and Exhibit A14 on the reason that the examination was conducted on the material object at a belated stage.  According to PW2, the sample was collected on 20.09.2016 which was examined only on 27.12.2017.  During cross examination, PW2 has given evidence that the presence of inflammable materials will depend upon the duration, their inflammability, time of collection and atmospheric conditions.  A suggestion was put to PW2 by the cross examiner as to whether the material objects collected by the Scientific Officer from the scene of occurrence to help the complainant.   The witness did not deny the suggestion, but gave an answer as “I do not know”.

          16.     The counsel for the opposite party would submit that the absence of evidence regarding inflammable substance in the material object as reported in Exhibit A14 may not be taken into account on the reason that the remnants of the inflammable liquid may last only for a short duration.  Here, the examination was conducted by the expert after elapsing a period of more than fifteen months.

          17.     The Assistant Manager of the 1^st opposite party was examined as DW1.  Exhibits B1 to B18 were marked on their side.  Exhibit B1 was marked through the complainant by confronting through cross examination.  Exhibit B1 is the shopkeeper’s insurance policy with terms and conditions.  There is a clause in Exhibit A5 that the complainant had availed loan from the Bank Of Baroda.  Though there was an agreed bank clause attached to Exhibit A5, the complainant did not implead the bank as a party to this proceedings for which the complainant had no explanation.  The wife of the complainant was a partner in the business.  But she was also not arrayed as a party to this proceedings to which also the complainant had no explanation to offer. 

18.     During the cross examination, the complainant had given evidence that when he filed the First Information Statement before the Police, he had approximately assessed the loss.  The report submitted by the Fire Force in respect of this fire occurrence was confronted to the complainant which is marked as Exhibit B2.  In Exhibit B2 the loss was assessed as Rs.1,50,000/-(Rupees One Lakh Fifty Thousand only).  During the cross examination of the complainant, it was elicited that the officials attached to the Fire Force had reached the spot on 19.09.2016 at about 10.51a.m. and by that time, the fire had subsided.  The officials attached to the KSEB had also inspected the premises and the Deputy Electrical Inspector had issued a report on 05.10.2016 that there was no iota of evidence at the scene of fire occurrence to the effect that the fire occurred due to short circuit.  This report was also confronted to the complainant and got marked as Exhibit B3.  Exhibit B3 is seen issued on the basis of a request put in by the complainant on 22.09.2016 which is the reference No.2 in Exhibit B3.  Exhibit B4 is the copy of the letter issued by the complainant on 19.09.2016 to the Manager of the Bank of Baroda that the complainant had suffered loss of Rs.48,00,000/-(Rupees Forty Eight Lakhs only) on account of the fire occurred at the premises.  Exhibit B5 was also admitted by the complainant during the cross examination as the claim form submitted by him to the 1^st opposite party.  In Exhibit B5 the complainant had shown his name as the Managing Partner and Smt. Suma Kumari as the Partner of the business.  The complainant had conceded during cross examination that no damage was caused to the fuse inside the shop room.  He had also admitted that the Insurance Surveyor had taken photographs at the premises in his presence.  The above photographs were marked through the complainant as Exhibit B6 series.  The Insurance Surveyor had filed a report which was marked through the complainant as Exhibit B7.  The complainant had conceded before the Commission that the Insurance Surveyor on 22.09.2016 had asked to cause production of the registers, bills and connected records pertaining to the business run by the complainant.  This letter is marked as Exhibit B8.  Exhibit B9 is the copy of the letter issued by the Insurance Surveyor requesting the complainant to co-operate with the survey by causing production of the details regarding the stock.  The complainant had refused to accept the request which is marked as Exhibit B9 series.  Exhibit B10 is the subsequent letter dated 04.09.2016 requesting the complainant to cause production of the details of the stocks kept in the premises.  The copy of the letter and the acknowledgement card are marked as Exhibit B10 series.  Subsequently, on 15.10.2016, the Insurance Surveyor had sent a letter to the Branch Manager, Bank of Baroda to co-operate with the survey regarding the stock position of the complainant.  The Insurance Surveyor on 21.12.2016 and 28.12.2016 had sent letters to the complainant to cause production of the copies of the sale bills and its carbon copy for the completion of the survey.  The copies of those communications were marked through the complainant as Exhibits B11 to B14 series.  Exhibit B18 is the statement of accounts pertaining to the complainant obtained from Bank of Baroda.  The documents marked on the side of the opposite parties were confronted to the complainant and received in evidence without any protest. According to the opposite parties there was a calculated attempt on the part of the complainant evading from the final assessment of loss by the Insurance Surveyor but no explanation has been offered by the complainant in this regard.

19.     The counsel for the complainant would submit that the fire occurrence had taken place when the shop was closed.  So it is not possible for the complainant to state the actual cause of fire.  It is also submitted by the learned counsel for the complainant that there are no materials on record to suggest any fraudulent act on the part of the complainant by setting fire with a view to avoid the liability with the bank.  According to the counsel for the complainant, in the absence of any evidence that the fire took place on account of the deliberate act of the complainant, it is obligatory on the part of the opposite party to pay the amount covered by the insurance policy.

20.     In answer to the aforesaid submission, the learned counsel for the opposite parties would submit that in a proceedings before the Consumer Commission, evidence has to be appreciated on the theory of pre-ponderance of probability.  Admittedly, the shop room was in the exclusive possession of the complainant.  There is also evidence on record that the complainant had opened the shop at 8.30p.m. on 17.09.2016 and he noticed the fire occurrence on 19.09.2016 when he visited for opening the shop.  His case is that when he opened the shop room, he found that the medicines and other materials kept in the shop room near to the refrigerator burnt.  The lower portion of the fridge was also burnt and he presumed that the fire was due to the burning of the refrigerator.  He had also shown the cause of fire as electric short circuit.

21.     The complainant had claimed the loss as Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only).  The Insurance Surveyor had visited the shop and who filed a report that there were no signs of electric short circuit and according to him, the fire occurred on account of the wilful ignition at two spots inside the shop.  The Insurance Surveyor had assessed the total loss as Rs.3,74,398/-(Rupees Three Lakhs Seventy Four Thousand Three Hundred and Ninety Eight only).  Admittedly, the complainant had availed loan from the Bank of Baroda and the stock was hypothecated with the bank.  The specific case set up by the opposite party is that the complainant had deliberately set fire to the shop room with a view to wipe off the liability with the bank by utilising the amount to be realised from the insurance company.  The Insurance Surveyor had taken all measures and directed the complainant for causing production of the registers with respect to the stock available at the shop room at the relevant point of time.  The complainant did not co-operate with the Insurance Surveyor in finalising the report. 

22.     Admittedly, the Insurance Surveyor had inspected the premises in the presence of the complainant and the representative of the bank.  The net loss was assessed by the Surveyor as Rs.3,73,253/-(Rupees Three Lakhs Seventy Three Thousand Two Hundred and Fifty Three only).  The survey report was confronted to the complainant and marked.  The complainant never raised any objections in receiving the survey report in evidence.  Though the complainant had claimed a loss of Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only), the complainant never co-operated with Surveyor to substantiate his claim that he had incurred a loss to the tune of Rs.47,98,500/-(Rupees Forty Seven Lakhs Ninety Eight Thousand Five Hundred only).  The conduct of the complainant in this connection appears to be strange.

23.     An independent investigation was also conducted by the opposite party.  There was a complaint against the complainant by the owner of the shop that the complainant had deliberately set fire to the shop.  Exhibit B3 is the certificate of Electrical Inspectorate that there was no electric short circuit and that the entire electrical wiring was intact.  But in the claim form the complainant had shown the cause of fire as electric short circuit.  An investigation was carried out by an independent investigator and his report is marked as Exhibit B14 that the complainant had wilfully put fire to the shop with an intention to clear of the bank loan by utilising the insurance amount.  The complainant had availed overdraft facility from the bank and the outstanding amount as on 31.08.2016 is Rs.24,24,211/-(Rupees Twenty Four Lakhs Twenty Four Thousand Two Hundred and Eleven only) as seen from Exhibit A4.  Though the complainant had caused production of the FIR and FI statement registered by the Police, no final report was produced by the complainant to substantiate his contentions.  The shop owner had initiated legal action against the complainant for realisation of arrears of rent which fact was admitted by the complainant in the cross examination.

24.     The shop room was in the exclusive possession of the complainant.  So it is the burden of the complainant to plead and prove that the fire had occurred accidentally.  He had set up a case that the fire occurred on account of the electric short circuit.  This fact is proved as false in view of the materials on record.  The reluctance on the part of the complainant to cause production of the registers for proving his stock and the claim of an exhorbitant amount as the alleged loss of Rs.43,00,000/-(Rupees Forty Three Lakhs only) are clear indications regarding the lack of bonafides.  The Surveyor had inspected the premises and assessed the loss as Rs.3,73,253/-(Rupees Three Lakhs Seventy Three Thousand Two Hundred and Fifty Three only) and the report issued by the Surveyor is marked as Exhibit B7 without any objection from the side of the complainant.  The report of the licensed Surveyor is a very important document which cannot be ignored.  Hon'ble Apex Court in “Sri Ventateswara Syndicate Vs Oriental Insurance Company Limited & Anr”. reported in (2009) 8 SCC 507 observed that “whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor is deputed who assesses the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim.  Surveyors are appointed as per the statutory provisions and the report of the surveyor could be the basis for settlement of the dispute with the insurer in respect of loss suffered by the insured”.

25.     The fire had occurred in two different spots.   Papers were seen lying burnt in one point.  If a fire occurred normally, there should be a continuation of the fire.  Admittedly, the complainant had opened the shop in the night on 17.09.2016.  The exorbitant claim raised by the complainant, the reluctance on the part of the complainant in co-operating with the Surveyor by causing production of the stock registers to prove the actual loss, the falsity of the cause of fire as electric short circuit are circumstances which would cast serious doubt about the genuineness of the case set up by the complainant that an accidental fire had taken place at his premises.  Admittedly, the premises was in the ultimate control of the complainant and fire had taken place when the shop was closed.  It is the burden of the complainant to plead and prove as to how the fire had occurred. 

26.     The case set up by the complainant that the fire occurred on account of electric short circuit is proved as false.  Clause 8 of the policy, Exhibit B1 stipulates that if the claim in any respect be fraudulent, all benefits under the policy shall be forfeited.  The 7^th Clause of General Conditions would also stipulate that if any claim under this policy shall be in any respect fraudulent, all benefits under this policy shall be forfeited.

27.     On a careful consideration of the entire evidence on record, we find that the stand taken by the opposite party appears to be probable and the complainant had set up a fraudulent claim with a view to wipe off the bank loan by utilising the amount to be realised from the opposite party on the strength of the insurance policy.  We find that the complainant has miserably failed to prove that the fire had occurred accidentally.  It is found that the complainant had raised a fraudulent claim with a view to get undue pecuniary advantage on the strength of Exhibit B1, the policy availed from the opposite party.  The act of repudiation on the part of the opposite party is perfect and legal and no deficiency could be attributed against the opposite party.  Therefore, the complainant is found not entitled to get any reliefs as claimed.  Points are found against the complainant.

In the result, the complaint is dismissed.  On consideration of the facts and circumstances of the case, it is found that the parties shall bear their respective costs.

Dictated to my Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Court, on this the 24^th day of October, 2024.

SL

C.C.No.107/2017

APPENDIX

1. COMPLAINANT’S WITNESS

2. COMPLAINANT’S DOCUMENTS

3. OPPOSITE PARTY’S WITNESS

4. OPPOSITE PARTY’S DOCUMENTS

5. COURT EXHIBITS

  JUDICIAL MEMBER