HON’BLE MR. ASHIS KUMAR BASU, MEMBER
Order No. 31
Date: 03.08.2022
The record is put up for order.
Introduction
1. The dispute in the present case arises out of a complaint filed by the complainant under Section 12 of the Consumer Protection Act, 1986 ( in short the Act ) in relation to deficiency in service and unfair trade practice for repudiation of insurance claim against the compensation for damage of cattle feed due to collapse of the building where the stocks were stored.
The Factual Background
2. The fact in brief is , Bhawani Khemka, proprietor of the firm under the name and style Ratanlal Traders has been running his business of cattle feed at Dhadka Road , Paschim Bardhaman for his livelihood. Bhawani Khemka purchased a Shopkeeper Insurance Policy being no. 51270048160600000026 for the period from 23.06.2016 to 22.06.2017 from the New India Assurance Company Limited , Opposite Parties No. 1 & 2 in this case, in favour of Ratanlal Traders for goods and stock in trade. On 28.08.2016 at 6-30 am, the building of Ratanlal Traders where the stocks and goods were stored collapsed resulting the damage of the stocks. Being informed of this accident , proprietor of Ratanlal Traders, complainant in this case , rushed to the spot and found that the entire building had been collapsed. He informed the incident to the Fire Station at Asansol without delay and the Fire Officer reached to the spot at 7-30 am. After examining the spot, the Divisional Fire Officer , Burdwan Division issued WEST BENGAL FORM No. 393 Z(27) bearing memo no. FES/BWN/1734/2016 on 28.10.2016 addressing District Magistrate , Burdwan informing the origin and cause of fire where it was mentioned that the ‘ cause fire – could not be ascertained’. Complainant also informed the matter to the Divisional Manager of New India Assurance Company Limited – OP No. 2 through a letter dated 30.08.2016 and lodged a claim for Rs. 42,00,000/- towards the indemnification of the loss.
3. The Opposite Parties no. 1&2 – Insurance Co. deputed a surveyor, named Mr. Santosh Kumar Mazumder to survey the assessment of the loss. Mr. Mazumder, the surveyor inspected the spot where the said building collapsed along with stock several times and gone through the Sales Register of Ratan Lal Traders. He also requested the complainant to provide some additional documents required for settlement of claims as per terms and conditions of the policy. After receiving all additional required documents surveyor asked the complainant through a letter dated 19.10.2016 to give explanation whether the collapsing of double storied shop building had been certified by Asansol / BDO or not . After inspection of the collapsed building and going through all documents, surveyor prepared his report and determined the loss at 2,95,273/- with VAT and Service Charge.
4. Subsequently, the complainant sent a letter to the OPs on 08.06.2017 that the damage of stock was to the tune of 42,00,000/- which was unsuitable for sale and lying in the godown required to shifted for disposal which is already converted into soil and accordingly necessary permission of the OPs. is required. OP No. 2 after receiving the report of the surveyor informed the complainant through a letter dated 22.06.2017that the compensation might be settled at Rs. 295273/- subject to terms and conditions of the policy. OPs requested complainant to provide his bank account particulars ( cancelled cheque etc. ) to settle the claim at the earliest. Complainant was shocked that the OPs settled the insurance compensation at Rs. 295273/- instead of his claim for Rs. 4200,000/-. Being disatisfied, complainant challenged the report of the surveyor and sent a letter to the OPs dated 08.08.2017 and 11.08.2017 stating that surveyor had made a wrong assessment of loss. The complainant raised the point that as per survey report the value of the stock stood at Rs. 1,02,15,067/- according to Purchase and Sales Register ( page no, 25 ) and as per Stock Statement submitted to the OP No. 3 – Oriental Bank of Commerce the stock stood at Rs. 98,07,000/-.” Therefore the stock of cattle food before collapse the insured shop was Rs. 408067/- ( Rs. 10215067/- - Rs. 9807000/- )”. Complainant informed OP Nos 1& 2 that surveyor applied an incorrect method and reached at a wrong conclusion for quantifying the loss for damage of cattle feed. The complainant requested the OP 1&2 to take the corrective measure of the report so that a fair settlement of claim can be reached .
5. Subsequently, OPs sent a letter to the complainant dated 07.12.2017 that after inspection of the spot , the surveyor opined that” the building collapsed of its own for wear and tears over the years, hence alleged loss of stock cannot be covered under any one of the perils mentioned above. Under such circumstances, OPs. – Insurance Co. is not liable for indemnification for the loss/ damage of the stock and constrained to treat the claim as No CLAIM. “
6. Being aggrieved for the repudiation of claim by the OPs 1 &2 the complainant sent a letter to them.dated 28.01.2018 to review the erroneous surveyor’s report giving due importance to the claim of the complainant. OPs. sent a letter to the complainant dated 17.05.2018 stating that based on the survey report , a second opinion was obtained from’ another expert’ from Kolkata , the OPs 1 & 2 were of the view that the claim for loss was not admissible under section 1B of the Shopkeepers’ Insurance Policy covering stock for Fire and Allied Perils, the cause of loss reported to be due to sudden collapse of the shop building and cause of such collapse was not known. OPs 1 & 2 alleged that from Fire Brigade and press report it was evident that the building was an old, insafe and dilapidated condition awaiting demolition and it might have collapsed on its own. Hence OPs- insurance Co. are not liable to pay insurance claim and accordingly they treated the claim as “ No Claim”.
7. Complainant went to the office of the OPs 1 & 2 and requested to reconsider the mater as he was facing financial crisis due to such loss as the earning from this shop was his only livelihood. Complainant alleged that OPs. did not pay any heed to his request which amounted to deficiency in service and unfair trade practice on the part of the OP Insurance Co.. Complainant alleged that at first on the basis of surveyor report the OPs settled the compensation at Rs. 295273/- but subsequently they repudiated the said amount and treated the claim as No.Claim. He also claimed that OPs. cannot go beyond the provisions of the Insurance Act as well as IRDA guidelines . Finding no other way to have relief complainant filed complaint before this Hon’ble Commission. It is worth mentioning that the complainant has no allegation against the OP No. 3 , oriental Bank of Commerce , the Financer, but for proper adjudication of this case the OPs 3 has been made a party.
8. Complainant alleged that due to repudiation of insurance claim by OPs , he has suffered a lot financially and mentally which amounts to deficiency in service and unfair trade practice on the part of the OPs under Section 2(1)(O) of the Act. and compelled to file this complaint before this Hon’ble Commission and prayed for passing the order directing the OPs to pay Rs. 4200,000/- as indemnification for the loss as per terms and conditions of the policy along with interest @ 18% per annum on the said amount from 07.12.2017 till the date of actual payment apart from Rs. 10,00,000/- for mental pain, agony and harassment along with Rs. 50,000/- as litigation cost.
Key Points
9. If we relook in to the matter, it is clear that there is no dispute that Bhawani Khemka, proprietor of Ratan Lal Traders, purchased a Shopkeepers Insurance Policy being no. 51270048160600000026 from OPs – Insurance Co. on 23.06.2016 ( date of proposal as mentioned in Policy Schedule ) covering the period from 23.06.2016 to 2.06.2017 with sum assured Rs. 83,50,000/- ( Rs. 82,50,000/- for stock in trade including goods) and paid Rs. 28724/-as premium accordingly. The building where the stock in trade were stored collapsed suddenly on 28.08.2016 at 6-30 am, during the subsistence of the policy i.e. it was a valid Shopkeeper Insurance Policy.
10. The two cardinal points in this case are ( a) whether the building collapsed on its own as it was very old and dilapidated condition as per OPs claim or due to impact of an earthquake occurred on 24.08.2016 . ( b) If it is due to an impact of earthquake what would be the actual loss of stock in trade suffered by the complainant for which he is entitled to have compensation.
11. Santosh Kumar Majumdar, the surveyor, deputed by the OP 1 & 2 examined the spot on 30.08.2016 , 15.09.2016 and 05.12.2016 and submitted survey report ( running page no. 22 to 26 of the complaint ) on 18.05.2017 showing loss payable to the tune of Rs.2,95,273/-. In course of computing the loss payable he showed the stock of cattle food before collapsing the insured shop at Rs. 408067.13/- where he took the value of closing stock statement submitted by the complainant which stands at Rs. 98,07,000/-, that means the surveyor accepted that value of closing stock as on 27.08.2016 shown by the complainant as stock statement submitted to his financer, Oriental Bank of Commerce. In the report, surveyor mentioned that “ the insured collpsed/broken cattle food shop was very old made of brick- lime and surki morter wall with pucca floor and cause of accident is not clear to us and having not definite shape.” Surveyor did not mention anywhere that the building was in a dilapidated condition, unsafe without any maintenance and collapsed due to its own for wear and tear for years and awaiting for demolition. On the contrary , in the surveyor’s report under heading ‘ RISK- FEATURE ‘ it was mentioned that the construction of cattle food shop premises was built of 1st class bricks wall concrete roof as well as cemented floor( Page no. 26). It would be pertinent to mention that the content In the W.B. Form No 393 Z ( 27 ) under Memo No. FES/Bdn/1743/2016 issued by Divisional Fire Officer , Burdwan Division on the date of accident, giving short description of building which is given below.
“ A double storied old existing building has been collapsed . None found injury or fetal. The party was instructed to remove the debris from the road side as soon as possible, brigade withdrawn . Charge handed over to Mr. Bhawni Khemka owner of the said shop in presence of Mr. Jetendra Tiwary, Mayor of Asansol Municipal Corporation.”
The Fire Brigade, which is undoubtedly, the competent authority in this regard has never mentioned that it was a dilapidated unsafe building and collapsed on its own and it was waiting for demolition, but mentioned only that it was an old two storied building, certainly it does not indicate that said ‘OLD’ building had been collapsed on its own due to ware and tear for years. The complainant submitted photo-copy of Trade License ( page No. 61 ) issued by Asansol Municipal Corporation on 18.08.2016 , just a few days before this incident, valid upto 31.03.2016. If the said building was in dilapidated and unsafe and awaiting for demolition, Municipal Authority could not issue Trade License in favour of Ratan lal Traders which wasvalid up to 31.03.2017. Complainant submitted a photo-copy of a letter issued by his financer , Oriental Bank of commerce, Asansol to the OP no. 2 on 26.04.2017 stating “ We have taken insurance of stock from you which is hypothecated with us. Ratan Lal Traders has availed Cash Credit facility from us. Unfortunately , the building in which stock was lying was collapsed on 28.08.2016 and the stock value Rs. 45 Lacs was damaged. So, kindly consider the claim sympathetically.” From records it is found that complainant purchased the said insurance through his financer Oriental Bank of Commerce ( page No. 92 ) who allowed to increase the limit of cash credit facility from 27 lakh to 75 lakh. Complainant raised the point *(Page no. 66 ) that if the stock in trade had been stored in a dilapidated , unsafe building waiting of demolition , the said bank would not finance and increase the limit of cash credit facilities and they used to visit the godwan for verification of stock on regular basis. OP 1 & 2 informed complainant through a letter dated 17/05/2018 stating that as per surveyor report and subsequently “ a second opinion obtained from an expert from Kolkata ‘ they are of the view that reported loss is not admissible under section 1B of the Shopkeeper Insurance policy covering stocks for fire and allied perils. “ OPs could not file the copy of the second opinion drawn by the expert in Kolkata and did not disclose how he had come to such conclusion. Complainant also contended that he had not received any notice from Asansol Municipal Corporation or from his landlord for demolition of the godown as it is dilapidated, unsafe as claimed by OPs. OP 1 & 2 could not submit any document in support of their claim. From such circumstances , it appears that it is mere conjecture and suspicion on the part of the OPs, that the Building had been collapsed of his own due to wear and tears over the years . A hundreds of suspicion proves nothing.
12. Complainant informed OPs through a letter dated 28.01.2018 stating that the surveyor of the OPs 1 & 2 might be informed of the fact through internet that several cities of West Bengal including Asansol and Kolkata covering a vast area had suffered an earthquake on 24.08.2016 at 1615 hrs IST and possibility of damage of building structure which was not visible externally could not be ruled out. Hence the collapse of the building was due to earthquake which is insured against peril of the Shopkeeper Insurance Policy held as mentioned in the OPs letter. Ref No. 521700/Fire/2017-2018/1581 dated 07.12.2017. Complainant filed several reports along with photographs published in various local newspaper.( Page no. 70 to 72 and Annexure -5 Page 2) where it is stated a powerful 6.8 magnitude earthquake hits Bengal , Bihar , Assam . The tremor lasted for 10 seconds and corresponding photo showed that people rushing out from their office and stood on the street out of panic. Another News paper report with photo stated that the earthquake led to temporary shut down of METRO and prompted an earlier closure of NABANNA. It also reported that DG of police rushed out of Nabanna and joined their colleagues who had by then gathered out side the secretariat. The earthquake was reported in local news paper which was corroborated with the emergency meeting held in Nabanna, H.Q. of Govt. of W.B. Ld. Adv. for OPs. contended that the earthquake happened on 24.08.2016 i.e four days before the day of the accident and earthquake was not all any factor or cause for collapsing the building. We saw no merit in this argument. None can deny the impact of an earthquake mainly on the structure of the buildings. It is an established fact that many buildings crumble down due to after effect of an earthquake. We have elaborately discussed regarding the cause of collapsing of the building which is a central point of this case. From above discussion, it is our considered view that the said building collapsed under impact of the earthquake occurred on 24.08.2016 which is a most logical conclusion. Hence the loss / damages is admissible under 1B of the policy covering stocks for Fire and Allied Perils as per terms of the policy and accordingly ,complainant is entitled to damages as reasonably practical.
13. Surprisingly, after receiving surveyor report , OPs informed complainant that loss may be settled at Rs. 295273/- ( Annexure- G, Page no. 28 ) . The excerpt of the letter dated 22.06.2017 is quoted below as it is very relevant to this case.
“The surveyor inspected the place of accident and visited place of loss several times to find out the actual quantum of damage to your property. He has assessed the loss on the basis of documents submitted by you tome to time and opined that the loss may be settled at Rs. 295273/- subject to terms and conditions of the policy. You are now requested to submit your bank accounts particulars ( cancelled cheque etc ) to settle the claim at the earliest. Please treat the matter as very urgent and intimate us accordingly.”
From above mentioned letter , it is quite evident that the OPs 1 & 2 going through all the details of this claim meticulously, finally decided to pay Rs.295273/- as compensation to the complainant and only for this purpose they asked complainant to submit bank accounts details immediately. In response to this letter, complainant informed Sr. Divisional Manager , Asansol that he decline to receive such a small amount where his total loss was to the tune of Rs. 42,00,000/-, and requested him to instruct the surveyor to reconsider the report for a fair settlement. But the OP 1 & 2 informed the complainant through a letter dated 07.12.2017 that collapsed of the building was due to its own dilapidated condition hence it would not come under Fire and Allied Perils cover granted under the policy.
14. It is very unfortunate , after passing a long time and giving several visit , and scrutinizing all books of accounts and stock statement and taking the final decision to pay Rs. 295273/- for loss , OPs. repudiated the claim entirely. It is crystal clear that such a repudiation of claim only shows that the OPs treated Complainant unfairly . Therefore the approach of the OPs- Insurance Co. is not acceptable to us. On 17/05/2018 OPs sent a letter to the complainant stating that they obtained a second opinion by an expert from Kolkata who opined that building collapsed on its own and the loss is not admissible under Section 1B of the Shopkeepers Insurance Policy covering stock for Fire and Allied perils. OPs did not disclose how the expert from the Kolkata come to this conclusion.
15. In course of assessing the loss, surveyor asked complainant to submit regular books of accounts , purchase , sale bills and stock statement for computing the damage suffered by the complainant. Complainant submitted Balance Sheet and Profit and Loss Account as on 31.03.2016 to show closing stock which stood at Rs. 1,01,23,408/-. Complainant also submitted Purchase Register, Sales Ledger, purchase and sales bills and stock statement month wise along with closing stock as on 27.08.2016. As per Banking Rule, complainant has to submit stock statement month wise to his financer , Oriental Bank of Commerce, for verification of stock to increase cash credit limit which was extended to 75 lakh. It appears that if there is any submission of incorrect statement of stock , concerned bank would not allow such extension of the said limit.
16. A critical issue of this case is to achieve the fair determination of the claim correctly. If we have a close look at the workout for evaluation of loss drawn by the surveyor, many irregularities will be found ( at page no. 25 & 26 ) Surveyor mentioned that Stock of cattle food before collapsed the insured shop was Rs. 408067.13 which he obtained by subtracting Rs. 9807000/- from Rs. 1,02,15,067.13. Actually he took the cumulative stock upto 27.08.2016 which stood at Rs. 26260572.13 including opening stock Rs. 10123408/- ( taken from Profit and Loss Account), less sale from 01.04.2016 to 28.08.2016 ( Rs. 16045505/-) along with closing stock Rs. 9807000/- ( Rs. 26260572.13/- -Rs.16045505/- - Rs. 9807000/- = 408067.13/- ) The above conception is erroneous as stock cannot be determined by subtracting total purchase price minus total sale price . In most cases Sale Price is always higher than Purchase Price as it contains transport cost, incidental charges and profit. The value of stock should be determined in terms of quantity or weight basis and it will be multiplied by purchase price to reach the value of stock as value of stock always depends on purchase price. Surveyor subsequently made the calculation taking Rs. 408067.13/-on the numerator . But the final figure i.e. payable amount Rs. 295273/- should be much higher as the figure Rs. 408067.13 would be much higher. If the surveyor followed the correct method , complainant would be entitled to much bigger amount. It is worth mentioning that though the surveyor accepted the figures for sale, purchase and opening stock supplied by complainant for calculation but made gross mistake in procedure and conception resulting less amount of loss suffered by the complainant. In our view the methodology for quantification of damage must offer a realistic prospect of establishing loss . Some of the narrations given by the surveyor in the workout were also incorrect and ambiguous. Hence the illogical workout for evaluation of loss made by the surveyor is not acceptable to this commission.
17. It is fact that to quantify the damage suffer by the complainant is very complicated at this stage as the complainant stated that all the damaged cattle food had been converted into soil and they are not suitable for sale. From record it transpires that complainant also did not come before this commission with clean hand. Initially complainant did not claim that the building collapsed due to impact of the earthquake and after passing of a long days he informed OPs 1 & 2 that the building had been collapsed due to impact of an earthquake. Complainant did not produce stock register though he had submitted other books of accounts , ledger bills, Final Accounts and month wise stock statement . Complainant did not pray to this court for Commissioner to ascertain the damages/ loss of cattle feed stores in the godwan. The surveyor had taken several photos of the collapsed building and godown for the recovered cattle feed which appears in good condition i.e saleable condition, but their volume or quantity cannot be ascertained from zerox copies of photos.
18. The complainant contended that the report of the surveyor is not sacroscent. Complainant cited the case of Khemka Fibres Ltd Versus New India Assurance Company Ltd. where Hon’ble Supreme Court observed that “ …. the law is settled that the surveyor’s report is not the last and final word . It has been held by this Court in several decisions, that the surveyor’s report is not sacrosanct as to be incapable of being departed from. An useful reference can be made in this regard to the decision of this Court in New India Assurance Company Ltd. V Pradeep Kumar, ( 2009) 7 SCC 787. The Insurance Act , 1938 even while assigning an important role for the surveyor, casts an obligation on him under sub-section 64UM to comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specify by the regulations made under the Act.” The complainant also cited the case of Manikant V New India Assurance Company Ltd, where Hon’ble NCDRC. observed that “ Producing a document in Court does not by itself constitute proving the document. It has to be backed by credible documents, In this instant case , no evidence was led to prove the surveyor’s report in absence of which the surveyor’s report has little evidentiary value. “ Complainant placed reliance on the judgement of the case of Murali Tiles V. Div. Manager New India Assurance Company Ltd. Revision Petition No. 2582 of 2016 where Hon’ble NCDRC observed that, “ No details are given by the surveyor in the aforesaid conclusion about age of the building ,even the metrological department report has not been placed on record. Therefore, the conclusion of the surveyor that one of the cause of the collapse of building was old age cannot be accepted.”. Regarding stock , Complainant cited the case of Oriental Insurance Company V. Kush Pandey & Anr. First Appeal No. 260 of 2018 where ld. NCDRC observed that “ As per that statement , the value of stock as on 31.12.2009 was Rs. 970000/-. There could be no reason for the complainant to submit an inflated stock statement on 1.1.2010 since he could not have anticipated that the fire will break out in his shop on 28.1.2010. …… Therefore , I see no reason to reject the stock statement which the complainant had submitted to the bank on 01.01.2010.”
19. In this case , the surveyor admitted that he had inspected the spot and godwn where the cattle feed stored after the accident several times but he did not specifically mentioned the volume or quantity had been recovered from debris and out of that quantity how much were fit for resale. Surveyor mentioned the cobweb on the bags lying in the godown but physically he did not inspect what was inside the bags and what were their condition. Mere presence of cobweb and taking of some photos from various angles as done by the surveyor, did not help at all for estimation of stock physically, which is utmost important in this case. From Records and circumstances it is well proved that the report drawn by the surveyor is highly defective and hence it is not acceptable to us.
20. Under such circumstances we have no other option but to settle the claim on non-standard basis. Complainant clamed Rs. 42,00,000/- as compensation but did not disclose precisely the quantity or value of stock which is recovered for resale.
Conclusion
21. We have given a thoughtful consideration of the arguments advanced by the Learned Advocates of both the parties and perused the documents and judgments given by Hon’ble Apex court and Hon’ble NCDRC in similar cases. It is our considered view that this Commission should take a broad and liberal view on this matter as anybody could desire and we shall deal with reality rather than conjecture. If we crystallize our thoughts ,it reveals that the OPs 1 & 2 were ready to pay complainant Rs. 295273/- as compensation after scrutinizing surveyor’s report, but finally repudiated the claim entirely though it is fairly clear that the building collapsed due to impact of earthquake. We accordingly cannot accept the insurer’s contention. For the aforesaid reasons, we think that the OPs 1 & 2 committed deficiency in service and illegally repudiated the claim. We think that the Complainant is rightly entitled to compensation. Under such circumstances we are inclined to settle the claim of the complainant on non-standard basis to quantify the loss. Complainant claimed Rs. 42,00,000/- as compensation but did not disclose precisely as we have said earlier, the quantity or value of stock which is recovered for resale. Insurance claim is not for gain . On considering of totality of the facts and circumstances, we are of the opinion that complainant is entitled to get one-third ( 33.33% of Rs. 42,00,000/- ) of the claim i.e. 14,00,000/- (fourteen lakhs ) as just and proper compensation.
ORDERED
The instant complaint be and the same is allowed on contest without cost against OPs 1 & 2.
OPs 1 & 2 are jointly or severally directed to pay the Complainant an amount of Rs. 14,00,000/- ( fourteen lakh) for insurance claim along with interest @ 8% per annum from 07.12.2017 till compliance within 45 days from the date of passing this order apart from Rs. 50,000/-( fifty thousand ) for mental pain , agony and harassment and RS. 20,000/- (twenty thousand) for litigation cost.
We pass no order against OP No. 3.
Let a copy of the judgment be supplied to the parties free of cost immediately.
