KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION
VAZHUTHACADU THIRUVANANTHAPURAM
OP.NO.103/2000
JUDGMENT DATED 9.11.2010
PRESENT
SMT. VALSALA SARANGADHARAN : MEMBER
SHRI. M.V. VISWANATHAN : JUDICIAL MEMBER
SHRI. M.K. ABDULLA SONA : MEMBER
M/s. Alliance Grain Products (Pvt) Limited.,
Kunnayyathu West, Punnathala,
Kollam -691012 : COMPLAINANT
represented by its authorized signatory
Mr. M. Amunudeen, Manager..
( Rep. by Adv. Sri. David Koshy)
Vs.
The Director,
Kerala State Insurance Department, : OPPOSITE PARTY
Thiruvananthapuram.
(Rep. by Adv. Sri. S. Vijayakumaran)
JUDGMENT
SRI.M.V.VISWANATHAN,JUDICIAL MEMBER
Complaint filed under Section 17 read with Section 12 of the Consumer Protection Act, 1986 claiming compensation and cost on the ground of deficiency in service on the part of the opposite party in repudiating the insurance claim preferred by the complainant.
2. The case of the complainant is as follows:-
The complainant is a Private Limited Company, which established a Roller Flour Mill for processing Wheat into wheat products. The complainant/company is located at Palathara in Kollam District. It has authorized his Manager M. Ameenudeen as the authorized signatory to initiate Civil and Criminal procedures. It availed financial assistance from Kerala Financial Corporation and from Bank of Baroda. The KFC insisted to insure the entire factory and stock in trade by insurance policy issued by the Kerala State Insurance Department, Thiruvananthapuram. The complainant/ company paid premium for the fire policy and its extensions and endorsement therein. The Insurance premium was paid for the Insurance coverage for Fire, Floods etc. The payment of Insurance premium is covered by receipt dated 14.5.98. The insurance was for the period from 14.5.98 to 13.5.99 for the risk of Fire, Flood etc. in respect of stock in trade worth Rs.75,00,000/-, plant and machinery worth Rs. 64,49,000/-, EMB for Rs.17,05,405/-. The premium receipt dated 14.5.98 was issued by the District Insurance Officer, Kollam for and on behalf of the opposite party. The original policy document was not sent by the opposite party, but the opposite party admitted the coverage by their actions and admission. The policy came into force from 14.5.98. On 8.10.98 there was heavy rains and showers and as a result, the entire factory was flooded. The approach to the factory, the washing plant and generator cabin had been immersed due to flood. The water level was above 2 ½ ft. from the ground level. A portion of the generator was sunk in water. Lion share of the stock in trade had also sunk in water. The complainant took effective steps to salvage the generator, washing machine and the stock in trade. Though a portion of the stock in trade had been removed from the godown, the loaded truck could not be taken out from the factory due to heavy flood. The truck itself got damaged. The value of the stock in trade in the factory was Rs.52,63,932.40. The entire stock was damaged by flood. The value of the processed finished goods was worth Rs.10,09,153/- and the Raw wheat was worth Rs.12,22,402/-. On 13.10.98 the complainant informed the opposite party about the peril. The opposite party directed its surveyor to conduct inspection of the flood affected area and the goods. Immediately, the surveyor came to the site and conducted detailed and time consuming survey to assess the loss caused due to the flood. It is understood that the surveyor submitted a report to the opposite party. The complainant had been running from pillar to post to get the claim processed and settled. At one stage, the opposite party wanted the complainant to commit in respect of the quantum of compensation to bring out the full and final settlement. In order to avoid liquidity problem, complainant thought it beneficial to settle the claim without further delay. The District Manager of the opposite party insisted for a commitment with regard to the quantum of compensation. In order to avoid delay, but without prejudice to the right of the complainant to get the entire amount of damages payable by the opposite party due to damage caused by the peril of flood, the complainant admitted the compensation to be fixed at Rs.13.50 lakhs in full and final settlement, to purchase peace with the opposite party and on condition that the claim should be settled without further delay. The actual compensation estimated by the complainant is Rs.22,31,555.50. The above commitment was reduced to writing. Several reminders in writing and in person had been made by the complainant for an early settlement. But, the opposite party did not settle the claim so far. The non-supply of the insurance policy amounts to deficiency in service on the part of the opposite party. The failure to settle the insurance claim would also amount to deficiency in service. The risk is covered by a valid Policy. Since, the opposite party was not inclined to settle the claim, there is no bondage between the complainant and the opposite party in the light of the above said commitment. The complainant is at liberty to withdraw the said commitment. The complainant is entitled to get the actual damages amounting to Rs.22,31,555.50. Complainant is limiting the claim for compensation at Rs.19,50,000/- to bring the claim within the pecuniary jurisdiction of the Hon.State Commission. Complainant is voluntarily waiving the right to the remaining claim for Rs.2,81,555.50. Complainant is also entitled for interest at the rate of 20% per annum on the said sum of Rs.19.50 lakhs from the date of complaint till realization. Opposite party has made undue delay in settling the insurance claim. On 25.5.2000, the complainant caused to issue a notice to the opposite party and the same was received and acknowledged by opposite party. Opposite party issued a reply to complainant’s counsel seeking time to settle the transaction. Opposite party is taking evasive attitude to delay payment. Complainant is a consumer and is entitled to get all protection, rights and privileges as envisaged under the Consumer Protection Act. Thus, the complainant claimed compensation to the tune of Rs.19.5 lakhs from the opposite party together with interest at 20% per annum and also for further compensation of Rs.25,000/- with cost of the proceedings.
3. The opposite party/Director of State Insurance, Thiruvananthapuram filed written version contending as follows:-
The complaint as framed is not maintainable either in law or on facts. Complainant has suppressed material facts and alleged falsehood. Complaint is filed with a view to claim some illegal amount by harassing the opposite party. The sum insured under the policy by the complainant is disputed. Complainant has insured assets worth Rs.1 crore 10 lakhs with the opposite party. The averment that no original policy document was sent by the opposite party so far is not fully correct. Since the policy coverage is Rs.1crore 10 lakhs, the policy is to be issued by the opposite party herein and not by the District Officer of the opposite party. The complainant has to prove the averments in Para 4 & 5 of the complaint regarding flood and damage to the factory and stock in trade by producing documentary evidence such as weather report. Documentary evidence regarding the stock in trade and the damage sustained, which is claimed in the complaint, is without any basis or bonafides. The opposite party on getting information entrusted Sri.C.Renadev, Insurance Surveyor, Kollam to conduct survey and assess the loss sustained. The said surveyor has assessed the loss and recommended compensation of Rs.13,50,353/-. The recommendation made by the said surveyor is very exorbitant and so the opposite party deputed another surveyor M/s.T.S.Ramaswamy, Kollam for further investigation and technical opinion. M/s. T.S.Ramaswamy vide their report No.SL-15033/98-99 dated 5.12.98 reported that the former surveyor Sri.Renadev had not scrutinized crucial documents and records and gravity of loss had not been substantiated. The second surveyor returned the file to the opposite party suggesting investigation at departmental level. The inspection wing of the Finance Department conducted inspection regarding the loss and estimated the actual loss as Rs.4,63,227/-. On the basis of the same, the Government of Kerala have taken up the matter with the Vigilance Department and the enquiry report has not been completed so far. Final assessment of loss to the complainant can be made only after getting the vigilance report from the Government. There is no willful delay with respect to assessment of loss. Complainant is not entitled to recover Rs.19.5 lakhs with interest at 20% per annum. The claim is to be settled after receipt of report of the vigilance enquiry conducted by the Vigilance Department. Opposite party issued reply to the Advocate Notice stating the true facts. There is no delay, laches or negligence on the part of opposite party in settlement of the claim. Hence, opposite party prayed for dismissal of the complaint with cost.
4. On the basis of respective pleadings of the parties to the complaint following points arise for consideration.
1. Whether there occurred any deficiency in service on the part of opposite party in settling the insurance claim preferred by the complainant?
2. What is the actual damage suffered by the complainant?
3. The case of the complainant that it suffered total loss of Rs.22,31,555.50 can be accepted?
4. Whether claim for compensation of Rs.19.50 lakhs towards the damage caused to the insured items on account of the flood during the month of October 1998 can be allowed.
Evidence in this case consists of the oral testimonies of PWs 1 & 2, RWs 1 to 4 and Exts. P1 to P14, R1 to R5, and X1 series , (X1 to X1 gg)
5. Point no.1:-
Complainant herein is a registered Private Limited Company. Complainant/company is represented by its Manager Mr.M.Ameenudeen as the authorized representative. Opposite party herein is the Director, Kerala State Insurance Department, Thiruvananthapuram written version in this case is signed by the Director of State Insurance, Thiruvananthapuram and it is filed through the Additional Government Pleader, Thiruvananthapuram. Definite case of the complainant is that the complainant company’s factory ( Flour Mill) with its plant and machinery and stock in trade was insured with the opposite party Kerala State Insurance Department, Thiruvananthapuram for the period from 14.5.98 to 13.5.99. It is also the case of complainant that the insured items were covered for the risks fire, flood etc. In Paragraph 3 of the written complaint, it is averred that the stock in trade worth Rs.75,000/-, plant and machinery worth Rs.64,49,000/- and EMB (Electrical Machineries Breakdown Policy) for Rs.17,05,405/- were covered by the said insurance policy.
6. Opposite party, the Director, Kerala State Insurance Department, Thiruvananthapuram in his written version categorically admitted that the complainant has insured assets worth Rs.1crore 10 lakhs” with the opposite party “the complainant has insured assets worth Rs.1crore 10 lakhs”. It is further admitted in the written version that the policy coverage is for Rs.1crore 10 lakhs. The reason stated in the written version for the delay in sending the insurance policy to the complainant is stated that the opposite party/the Director, Kerala State Insurance Department, Thiruvananthapuram is to issue the policy because of the fact that the policy coverage is Rs.1 crore 10 lakhs. It is also stated that the District Officer of the opposite party cannot issue the policy. In Paragraph 7 of the written version, it is admitted that the opposite party entrusted the surveyor Renadev to conduct a survey and assess the loss sustained. It is therein stated that since the recommendation made by the surveyor Renadev is very exorbitant, the opposite party deputed surveyor M/s. T.S.Ramaswamy, Kollam for further investigation and technical opinion. It is also stated therein that the surveyor M/s. T.S.Ramaswamy, Kollam submitted report stating that the former surveyor Renadev had not scrutinized the crucial documents and records and gravity of loss had not been substantiated and that the second surveyor M/s. T.S.Ramaswamy, returned the file to the opposite party suggesting investigation at departmental level, that the Finance Department conducted an inspection and estimated the actual loss as Rs.4,63,227/-, that the Government of Kerala taken up the matter with Vigilance Department and that the opposite party is awaiting the Vigilance enquiry report. It is categorically contended in the written version that the insurance claim can be settled only after getting the vigilance report from the Government. It is pertinent to note at this juncture that the opposite party has not denied or repudiated the insurance claim preferred by the complainant. But, in the written version, the opposite party submitted that the claim can be settled on getting report of the vigilance enquiry conducted by the Vigilance Department. A careful scrutiny of the written version filed by the opposite party would make it abundantly clear that the opposite party/the Director, Kerala State Insurance Department, Thiruvananthapuram admitted the insurance policy and expressed the readiness of the opposite party to settle the insurance claim on getting the vigilance enquiry report. The opposite party has also admitted the fact that the surveyor Sri.Renadev and the second surveyor M/sT.S.Ramaswamy were deputed by the opposite party for assessing the loss sustained by the complainant/insured.
7. The opposite party admitted the insurance policy and the insurance coverage. But disputed the insurance claim made by the complainant. The opposite party has also disputed the loss of Rs.13,50,353/- assessed by the surveyor Renadev. It is also stated that the Finance Department of the Government of Kerala conducted an investigation with respect to the insurance claim and they estimated the actual loss as Rs.4,63,227/-. It is pertinent to note that the opposite party has not disputed the loss estimated by the Finance Department at Rs.4,63,227/-.
8. The Insurance policy was for the period from 14.5.98 to 13.5.99. The peril of flood occurred in this case on 8.10.1998 and on the subsequent days. The first surveyor inspected the premises of the complainant on 13.10.98 and on the subsequent days. It can be concluded that the claim was preferred in October 1998. The first surveyor submitted R1 survey report on 26.10.1998. The Finance wing of the Government submitted R5 report. The Vigilance Department submitted Vigilance Report and annexes (X1) series on 14.3.2001. But, the opposite party could not settle the insurance claim preferred by the complainant/company till this date. It is to be noted that even after getting the vigilance enquiry report, the opposite party has not initiated any step for settlement of the insurance claim preferred by the complainant. It is to be noted that Ext.P8 rain fall details, P9 certificate issued by the Panchayath authority would also make it abudently clear that the insured premises of the complainant/company and the stock in trade were adversely affected by the peril of flood which occurred during the second week of October ‘98. It is further to be noted that the opposite party and the surveyor who conducted inspection of the flood affected premises of the complainant/company and also the Finance wing of the Government of Kerala have not disputed the fact that the complainant/company suffered damages on account of the peril of flood which happened during the second week of October ‘98. In such a situation, it was incumbent upon the opposite party being the insurer to settle the insurance claim preferred by the complainant/company being the insured. The inordinate delay on the part of the opposite party in settling the insurance claim would amount to deficiency in service.
9. The Additional Government Pleader who appeared for the opposite party/the Director, Kerala State Insurance Department, Thiruvananthapuram argued for the position that there was no insurance policy coverage for the complainant/company’s factory, plant and machinery and stock in trade. In the additional argument notes submitted by the Government Pleader for the opposite party it is submitted that acceptance of premium for the policy would not amount to acceptance of the offer and that there was no contract of insurance. The aforesaid stand taken by the opposite party would give an indication that the opposite party wilfully delayed the matter without even accepting the insurance coverage and the existence of a contract of Insurance during the relevant period. But, at the same time, the written version and the other evidence available on record would show that the opposite party accepted the insurance coverage for the factory premises, plant and machinery and the stock in trade of the complainant/company. It is to be noted that the opposite party cannot be permitted to adopt highly inconsistent and contradictory stand. At one point, the opposite party would admit the insurance policy coverage and the liability to pay reasonable compensation for the damage caused to the insured items. On the next moment the opposite party would contend that there was no insurance policy coverage at the time of the peril and the opposite party/State Insurance Department has no liability to pay compensation to the complainant/company for the loss suffered on account of the flood which adversely affected the complainant/company’s Roller Flour Mill and its plant and machinery and stock in trade. But, the materials on record would clinchingly prove the fact that there was a valid insurance coverage for the complainant/company and that the insurance policy was admitted by the opposite party/insurance company. The actions and admissions on the part of the opposite party would establish the fact that the opposite party was bound to indemnify the complainant/company for the damages suffered by the complainant/company on account of the flood, which affected the complainant/company during the second week of October 1998.
10. The opposite party has been finding fault with its District Insurance Officer. It is to be noted that the District Insurance Officer has been acting for and on behalf of the opposite party/the Director, Kerala State Insurance Department, Thiruvananthapuram. The District Insurance Officer, Kollam has been functioning as the subordinate officer of the opposite party. The complainant/company is located in Kollam District and naturally the complainant/company could very well approach the District Insurance Officer of the opposite party. It is also to be noted that the premium for the insurance policy was accepted by the District Insurance Officer on behalf of the opposite party. Ext.A2 receipt dated 14.5.98 was issued by the District Insurance Officer, Kollam. The aforesaid insurance premium was accepted by way of cheque drawn on Bank of Baroda for Rs.73,891/-. Ext.X1(F) cheque register would also show that the said cheque was accepted towards the insurance premium. Ext.X1 (g) letter dated 26.10.98 would also show as to why there occurred the failure to issue the policy. It is also to be noted that the aforesaid cheque given towards the insurance premium was encashed on 2.6.98. Ext.X1 (F) entries would also prove that fact. Thus, the opposite party accepted the Insurance Premium through his District Insurance Officer. The action on the part of the District Insurance Officer in accepting the Insurance premium has been admitted and ratified by the opposite party. It would also show that the opposite party acted in pursuance of acceptance of the insurance premium. The opposite party was finding fault with the District insurance Officer for his failure to forward the insurance policy for getting the signature of the opposite party. It is also to be noted that the insurance premium was accepted on 14.5.98, the peril of flood occurred only during the second week of October 1998. There had 5 months time for the opposite party to accept the premium or refuse the same. Admittedly, the opposite party accepted the premium and failed to issue the policy document. But, the actions and admissions on the part of the opposite party would make it crystal clear that the opposite party accepted the offer from the side of the complainant/company and there was only some lapse on the part of the opposite party in issuing the policy because of the failure on the part of the District Insurance Officer, Kollam in forwarding the policy for getting the signature of the opposite party. In effect, there was insurance policy coverage during the relevant period and that there left only an empty formality of issuing the policy document. In other words, the opposite party. admitted the insurance coverage with respect to the complainant/company’s factory, plant and machinery and the stock in trade. The mere fact that the policy document (Insurance policy) was not handed over to the complainant/company cannot be taken as a ground to hold that there was no insurance policy or insurance policy coverage.
11. It is to be noted that acceptance of offer and its communication are the relevant aspects for a concluded contract of insurance. In this case, the acceptance of the contract of insurance is evidenced by the actions and admission on the part of the opposite party. The opposite party himself in his written version admitted the insurance policy with respect to the complainant’s factory with plant and machinery and stock in trade. It can very safely be concluded that there was a valid and effective contract of insurance between the complainant/company and the opposite party. There was a valid insurance coverage for the complainant’s Roller Flour Mill with its plant and machinery and stock in trade. The failure on the part of the opposite party in settling the insurance claim preferred by the complainant/company would amount to deficiency in service. The mere fact that the complainant/company being the insured put forward a tall claim with respect to the damages suffered cannot be taken as a ground to hold that the opposite party being the insurer is not liable to indemnify the insured for the reasonable and sustainable claim for damages. So, this Commission have no hesitation to hold that there was deficiency in service on the part of the opposite party on account of the failure to settle the insurance claim preferred by the complainant/company. This point is answered accordingly.
12. Point Nos.2 to 4:-
Complainant/company had the fire/ flood policy covering the risk of flood with respect to the plant and machinery and the stock in trade. Admittedly, the stock in trade was insured for Rs.75 lakhs. The opposite party in the version has also admitted the insurance coverage for a total of Rs.1 crore 10 lakhs. Ext.P10 receipt issued by the District Insurance Officer, Kollam would also show the coverage for stock worth Rs.75 lakhs. RW1, the Deputy Director of Insurance admitted the total insurance coverage for Rs.1crore 10 lakhs. RW2, who was a member of the inspection team of the Finance Wing, has also admitted the insurance coverage. RW3 who conducted vigilance enquiry has also deposed about the existence of insurance policy at the time of the peril of flood. Ext.X1 (E) Fire premium register (Page 221) would show existence of policy for the period from 14.5.98 to 13.5.99 for Rs.1 crore 10 lakhs. Ext.X1 (F) cheque register (Sl.107) would also establish acceptance of premium of Rs.73,891/- by way of cheque dated 14.5.98 drawn on bank of Baroda and that the said cheque was credited on 2.6.98. Ext.X1 (G) policy file contains fire policy (C ) at page 17 of the said file. Thus, it can very safely be concluded that there was policy coverage for Rs.75 lakhs for the stock in trade at the time of the peril of flood, which occurred between 8.10.98 and 14.10.98.
13. The continuous rain and the resultant inundation and flood in the area where the complaint/company is located is proved by P8 rain fall report dated 29.5.01 of the meteorological Center, Thiruvananthapuram. It is reported that from 8.10.98 to 13.10.98 there was daily rainfall. It is further reported about the rainfall in (MM) of Kollam for the period from 8.10.98 to 13.10.98 as follows:-
8/10 -- 46.0
9/10 -- 57.0
10/10 -- 35.5
11/10 -- 83.0
12/10 -- 87.0
13/10 -- 40.0
Total : -- 348.5
============
14. Ext.P9 certificate issued by Village Officer, Thazhuthala would further show that at Palathara where the complainant/company is located was affected by flood due to continuous rain from 8.10.98 onwards. Thus, it can be concluded that the complainant/company was affected by flood during the aforesaid period from 8.10.98 to 13.10.98.
15. PW1, the authorized representative of the complainant/ company and PW2, the licensed surveyor have deposed about the flood in Palathara area where the complainant/company is situated. The opposite party or any of the witnesses who were examined on the side of the opposite party have not disputed the flood condition in Palathara area.
16. Ext.X1 (G) is the original policy file with the survey report submitted by PW2, the licensed surveyor, who was deputed by the District Insurance Officer, Kollam. The original survey report filed by PW2, contains the photographs (92 Number). It is reported that there was Fire policy “C” insuring the stock for Rs.75 lakhs with the plant and machinery for Rs.35 lakhs for the period from 14.5.98 to 13.5.99. The surveyor was deputed on 13.10.98. It is reported in Ext.X1 (G) report that the insured (complainant) claimed that on 12.10.98 evening onwards, water level in that area raised up very speedily in continuation of inundation and flood, that the factory ground floor immersed in water by about 2 feet and the stock worth Rs.53 lakhs damaged. As per X1 (G) report, the surveyor first inspected the factory on 13.10.98 at 11 am. It is reported that the water level in the ground floor of the building was 3 to 3 ½ height. But, the photographs attached to survey report would not give any indication that the water level inside the factory building was 3 or 3 ½ feet height. A perusal of the photographs would only show that the water entered the ground floor of the factory and it had raised up to a maximum of 1 to 1 ½ feet in some portions of the ground floor. It would also give an indication that in some other portions of the ground floor of the factory building, the water level was below 1 foot height. It is true that the water level outside the premises of the complainant/company was about 2 to 2 ½ feet height. In the written complaint also it is stated that the water level was above 2 and 2 ½ feet height from the ground floor. According to PW1, the Manager of the complainant/company the water level raised up to 2 ½ feet in the godown which is on the ground floor of the factory building. But, the case of the surveyor that the water level in the ground floor of the building was 3 to 3 ½ feet height cannot believed or accepted. This circumstance would show that the surveyor (PW2) had given an exaggerated version in his survey report, about the water level and the resultant damage caused to the stock in trade.
17. The complainant has no definite case about the damages suffered due to the flood. In the written complaint, it is stated that stock worth Rs.52,63,936/- was in the factory and that the entire stock was damaged in the flood. It is also stated in the written complaint that the finished goods worth Rs.10,09,153/- and raw wheat worth Rs.12,22,402/- were damaged and the compensation is estimated at Rs.22,31,555/-. In the complaint, the claim is limited to Rs.19.5 lakhs in order to bring the claim within the pecuniary jurisdiction of this State Commission. The complainant has also admitted in the written complaint that the complainant/company was ready to settle the claim at Rs.13.5 lakhs. The aforesaid readiness on the part of the complainant/company to settle the insurance claim at Rs.13.5 lakhs would give an indication that there was not so much loss suffered by the complainant/company as pleaded in the written complaint.
18. The report in X1 (G) file would show that the licensed surveyor (PW2) assessed the loss at Rs.13.5 lakhs. The opposite party/ the Director, Kerala State Insurance Department, Thiruvananthapuram was not prepared to accept the survey report submitted by PW2. The opposite party then deputed another surveyor M/s.T.S.Ramaswamy to conduct investigation and furnish the opinion on the claim preferred by the complainant/company and also on the survey report of Sri.G.Renadev (PW2). The aforesaid letter, appointing M/s.T.S.Ramaswamy & Company as the surveyor is at Page 293 of Ext.X1 (G) file. The aforesaid letter is dated 5.11.98. The second surveyors M/s. T.S.Ramaswamy & Company expressed their reluctance in conducting investigation in the matter. They issued the letter dated 5.12.98 (at Page 299 of X1 (G) file) stating the inability of the surveyor to undertake the investigation and to give opinion on the insurance claim. Thereby, M/s.T.S.Ramaswamy & Company returned the claim file with the aforesaid letter dated 5th December ’98. Ext.R2 is attested copy of the said letter dated 5.12.98. In R2 letter, it is stated that on going through the survey report and connected papers, it is observed that the surveyor (PW2) had not scrutinized many essential documents and records for loss assessment. It is further stated in R2 letter that the gravity of loss has not been substantiated and that for making a thorough study and computing the actual loss suffered to the insured property more informations and details are required; that collecting these details would take considerable time and that under the circumstances M/s.T.S.Ramaswamy & Company are not in a position to undertake investigation in the matter. The second surveyor had also recommended for an investigation at the instance of the State Insurance Department.
19. Thereafter, the opposite party reported the matter to the Principal Secretary, Finance Department, Government Secretariat, Thiruvananthapuram vide his letter dated 23.12.98. The aforesaid letter is attached at Page 301 of Ext.X1 (G) file. As per the said letter, the opposite party requested the Government for conducting an investigation at Government level. Thereafter, Government ordered investigation by the Finance Wing of the Government.
20. RW2 was in the inspection team of the Finance Wing. He deposed about the investigation conducted by the Finance Inspection Wing at the complainant/company and submission of report. Ext.R5 is attested copy of the report submitted by the inspection team of the Finance Inspection Wing. RW2 deposed about copy of the survey report (R1) submitted by the surveyor Renadev and R2 letter issued by the second surveyor M/s.T.S.Ramaswamy & company and also about R3 and R4 documents.
21. R3 is the details of informations relating to the business activities of the complainant/company. But, RW2 was not in a position to say as to who prepared or furnished R3 details. RW2 further deposed about R4 Claim Form submitted by the complainant/company. It is reported that Claim Form was not properly completed with all the details and that the said claim form was written with pencil. The original of the inspection report submitted by the inspection team of the Finance Wing is incorporated at Page 321 onwards, in Ext.X1 (G) policy file.
22. The inspection team of the Finance Wing of the Government estimated the actual loss to the stock at Rs.4,63,227/-. They also found the issuance of Fire policy (C ) for the period from 14.5.98 to 13.5.99 with the policy coverage of Rs.75 lakhs on stock and Rs.35 lakhs on machinery and accessories.
23. The inspection team of the Finance Wing accepted the assessment of loss by the surveyor Renadev (PW2) with respect to the damage caused to Rough bran, Sooji, Atta, Bran Flakes and Maida. But, the assessment of loss with respect to raw wheat made by the surveyor (PW2) has not been accepted by the inspection wing. The surveyor assessed the loss to raw wheat at Rs.7,93,976/- and the salvage value of damaged wheat was assessed at Rs.40,000/- by the surveyor. But, the inspection wing assessed the loss to raw wheat at Rs.1,12,256/- and the salvage value at Rs.5,000/-. Likewise, the inspection wing did not agree with the loss assessed by the surveyor with respect to PDS Atta. The surveyor had assessed the loss under the head PDS Atta at Rs.4,49,865/- and the salvage value of damaged PDS Atta at Rs.20,000/-. But the inspection wing reduced or limited the loss to 50% of the loss assessed by the surveyor. Therefore, the inspection team of the Finance wing assessed the loss under the head of PDS Atta at Rs.2,24,933/- and the salvage value of damaged PDS Atta at Rs.10,000/-.
24. The inspection wing has given the reasoning for not accepting the loss assessment made by the surveyor (PW2) with respect to Raw wheat. The reasons are given at Para 12 & 13 of R5 report. The aforesaid reasoning can be considered as sound. It is to be noted that the complainant/company effected purchase of raw wheat on 8/10, 9/10 and 10/10/98. As per P2 stock register of raw wheat, on 8.10.98, the complainant/company purchased 907 bags (86,253 kgs) of Raw wheat. On 9.10.98, 757 bags (71,528 kgs) of Raw wheat and on 10.10.98, 734 bags (68,735 kgs) of Raw wheat. Ext. P8 and P9 weather report and certificate would show that there was continuous rain from 8.10.98 onwards and the water in the Palathara area has raised on 8.10.98 onwards. PW1 has categorically deposed that from 8.10.98 up to 14.10.98 there was rain and water started to rise “ #:_[f :UEH[f AKBUOf[k \,T5]7UO CtC!3U [Em^ *BLUBUCWkW&
If that be the position, nobody will purchase Raw wheat on 8/10, 9/10 and 10/10/’98. This circumstance would show that the case of the complainant regarding purchase of raw wheat on 8/10, 9/10 and 10/10/98 cannot be believed or accepted. This would in turn give an inference that the complainant/company boosted their stock of Raw wheat in order to make a false insurance claim. The purchase bills produced by the complainant/company to substantiate their case regarding stock of raw wheat can be treated as concocted or forged purchase bills.
25. PW2, the surveyor who submitted the survey report estimating the loss at Rs.13.5 lakhs failed to consider these relevant aspects. The testimony of PW2 that he perused the entire records and he was convinced about the stock of raw wheat and that he conducted physical verification of the stock of raw wheat cannot be believed or accepted. There is nothing on record to show that PW2, the surveyor perused the gate pass register, log book of the vehicles, dispatch register, workers list, work register, semi processing (semi processed products) register. There is no whisper in the survey report about verification of the above records. There is no case for the complainant/company that those documents were taken by the Vigilance Police. RW2, who was a party to the inspection team of the Finance Wing has deposed that weighbridge register, gate pass register and workers list were not available for their inspection while conducting the inspection at the premises of the complainant/company. Survey report is totally silent about those documents. There is no reason to doubt the testimony of RW2 that the aforesaid documents were not given to the inspection team and those documents were not available. It is to be noted that gate pass register and log book of the vehicles, workers list and work register are very important documents while computing the purchase of Raw wheat and also the stock of Raw wheat at the relevant time.
26. Ext.X1 is copy of the Vigilance enquiry report submitted by RW3 who conducted the Vigilance enquiry and submitted X1 Vigilance enquiry report. The documents taken into the possession by the Vigilance have been attached to X1 report. Those documents were also produced and marked as Ext.X1series. But the afore-mentioned gate pass register, log book of vehicles, workers list, workers register, weighbridge register were not available for the scrutiny by the vigilance Department. RW3 has deposed about the vigilance enquiry conducted by him and submission of Ext.X1 report. There is no reason or ground to doubt the testimony of RW3 and Ext.X1 vigilance enquiry report and the connected documents marked as Ext.X1 series. RW3 conducted an elaborate enquiry regarding the purchase and sale of Wheat and Wheat products by the complainant/company. He also scrutinized the survey report submitted by PW2 and pointed out the irregularities and the defects in assessing the loss by the surveyor. X1 vigilance enquiry report would establish the fact that some of the purchase bills were created for the purpose of making a false insurance claim especially with respect to the purchase of raw wheat between 1/10/98 and 10/10/98.
27. The RW3 while conducting the vigilance enquiry had also occasion to enquire about the sales effected by Century Trading Company, Changanassery. It was reported by the Sale Tax authority that the sales returns submitted by Century Trading Company, Changanassery were not supported by the sales details. X1 (T) & (U) are the sale bill books maintained by the aforesaid Century Trading Company, Changanassery. It can be seen that during the very same period, the aforesaid Century Trading Company used to maintain 2 bill books. The sale bills are issued to the complainant/company during October ’98 from both the sale bill books namely; Ext.X1 (T) and X1 (U). It can also be seen that in many of the sale bills, the vehicle number is not written and in some other sale bills the vehicle number has been altered but the said alteration could not be seen in the carbon copy of the sale bill. RW3, the Enquiry Officer in his X1 enquiry report has very elaborately discussed about these irregularities and anomalies. Ext.X1 (V) is the wheat taxable stock register of Century Trading Company for the period 1998-99. Ext.X1 (W) is some of the sale bills taken into custody by the Vigilance Police during the Vigilance enquiry. Ext.X1 (W) sale bills would show that the sale bill dated 10.10.98 for sale of Raw wheat amounting to 35 bags to the complainant/company (Alliance Product Private Ltd, Palathara, Kollam) and another sale bill dated 10.10.98 issued by Century Trading Company to the complainant/company for sale of 75 bags of wheat are not entered in Ext.X1 (V) wheat taxable stock register.
28. RW3 in his X1 enquiry report has also pointed out the irregularity in issuing the sale bills by A. Shaheed, Thattamala, Quilon to the complainant/company with respect to purchase of Raw wheat. It is reported that the purchase of 30 bags of raw wheat from A Shaheed is not entered in the stock register on 12.10.98. But, it is recorded on 10.10.98. Another important aspect to be noted at this juncture is the purchase on 12.10.1998 of 30 bags of wheat was from A.Shaheed, Thattamala, Quilon. The weather report and the certificate of the Village Officer would show that 12.10.98 was the peak time of the flood. In such a situation, nobody will purchase raw wheat from a seller at Kollam itself. This circumstance would make it crystal clear that the complainant/company was in the habit of creating purchase bills to make unlawful gain under the pretext of loss to the stock of Raw wheat. Thus, it is established in this case that the complainant/company was making false insurance claim with respect to stock of raw wheat. Thus, the inspection team of the Finance wing who submitted R5 report is perfectly justified in not accepting the claim of the complainant/company. They are also justified in not accepting the loss assessed by the surveyor.
29. The materials on record would show that the surveyor (PW2) failed to conduct a proper investigation and assessment of the loss. The attitude of PW2 (surveyor) in assessing the loss with respect to Raw wheat would give an indication that he was very much interested in accepting the sale bills produced by the complainant/company and he did not take any pain to investigate the genuineness and correctness of the sale bills and the circumstance under which those sales were effected. The surveyor failed to cross cheque the correctness of the sale bills and the purchase register maintained by the complainant/company. Ext. P2 purchase register maintained by the complainant/company with respect to purchase of raw wheat cannot be accepted. The aforesaid purchase register deserves rejection. The inspection team of the Finance wing can be justified in quantifying the damage to the raw wheat and in computing the total quantity of raw wheat available at the time of the peril.
30. It is true that there will be an element of guess work in assessing the loss. But, the complainant/company is to be found fault with in submitting false claim with respect to raw wheat. The complainant/company invited the trouble by creating false purchase bills and maintaining in correct and improper purchase register with respect to the purchase of raw wheat during the relevant period. The complainant/company deliberately suppressed material documents like gate pass register, weighbridge register, dispatch register, log books of vehicles etc; and thereby the complainant/company prevented the opposite party in assessing the actual loss. So, the loss with respect to Raw wheat assessed at Rs.1,12,256/- by the inspection team of the Finance wing is to be accepted. The salvage value of damaged raw wheat at Rs.5000/- is also to be upheld.
31. The complainant/company had lifted 160 MT of wheat from the godown of Food Corporation of India, Kollam on 28.9.98. Ext.X1 (a-e) would establish the lifting of 160 MT wheat from FCI godown on 28.9.98. Ext.X1 (a-e) letter dated 23.9.98 issued by Kerala Civil Supplies Corporation would show that the aforesaid PDS wheat of 160 MT is to be converted to PDS whole wheat atta and to be delivered to Kerala State Civil Supplies Corporation at Kollam, Punalur and Sasthamkotta at the rate of 42.2 MT, 60 MT and 45 MT respectively between 1.10.98 and 12.10.98. But the complainant failed to supply the aforesaid quantity of PDS atta to the Kerala State Civil Supplies Corporation. It is the case of the complainant/company that 50670 kgs. of PDS atta was totally damaged and 14010 kgs of PDS atta partially damaged. The surveyor (PW2) took 50% of the partially damaged atta to calculate the total damage. Thus, 57675 kgs. of PDS atta was taken as damaged PDS atta. Thereby, the surveyor assessed the loss to PDS atta at Rs.4,49,865/- and the salvage value of PDS atta is taken as Rs.20,000/-. Ext.X1 (A-a ) is the register maintained by the complainant/company for PDS conversion of wheat into whole wheat atta for the period from May 1998 onwards. As per this PDS conversion into PDS atta (Page 33) of Ext.X1 (A-a) the PDS wheat of 160 MT was converted into PDS atta on 8.10.98, 9.10.98 and 10.10.98. It can be seen that by 10.10.98 the entire PDS wheat amounting to 160 MT was converted to PDS atta. It can also be seen that 10 MT PDS atta was delivered on 9.10.98 and 47.500 MT of atta was delivered to the Civil Supplies Corporation on 12.10.98. The total quantity of atta to be converted from 160 MT of wheat was 147.200 MT. Thus, 89.700 MT of PDS atta was to be delivered to Civil Supplies Corporation. But, as per the so-called physical verification by the surveyor, there was only (50670 + 14010) 64,680 kgs. of atta at the godown of the complainant/company. This would make it clear that Ext.X1 (A-a) register would not tally with the so-called actual physical verification done by the surveyor. This circumstance would show that the entries in Ext.X1 (A-a) register of PDS conversion of wheat into whole wheat atta were wrong or that the surveyor failed to make physical verification of the stock of PDS atta. Thus, it is established that the complainant/company was not maintaining proper accounts with respect to the PDS atta.
32. The surveyor cannot be justified in assessing the loss under PDS atta at Rs.4,49,865/-.The available circumstance would also make the case of the complainant/company unacceptable. According to the surveyor the entire area was flooded with water at a height of 3 and 3 ½ feet and the people in the locality had blocked the road with barricades. In such a situation, it is highly improbable to believe that the complainant/company carried out the work of conversion of PDS wheat to PDS atta during those days ie; between 8.10.98 and 10.10.98. The case of the complainant/company regarding the loss they sustained on account of damage to PDS atta cannot be believed or accepted. The inspection team of the Finance wing can be justified in adopting guess work in assessing the loss under the head of PDS atta. Thus, the loss under the head ‘PDS atta’ can be taken as Rs. 2,24,933 with the salvage value of Rs.10,000/-. The actual loss assessed by the inspection team of the Finance wing as per R5 report is to be upheld. They are also justified in deducting the total salvage value of Rs.32,225/- and the policy excess Rs.2500/-. Hence, the total loss suffered by the complainant can be treated as Rs.4,63,227/-.
33. The opposite party relied on Ext.X1 (0) terms and conditions of Fire policy (C ). They much relied on condition No. (8) of the Fire policy (c ). It is as follows:-
“If the claim be in any respect 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 anyone acting or his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under the policy shall be forfeited’’ .
34. On the strength of the aforesaid forfeiture clause the learned counsel for the opposite party argued for the position that the complainant/company is not entitled to get any benefits under the Fire policy (C) because of the false claim made by the complainant/company. It is to be noted that the opposite party/insurer of the Fire policy (C ) had not taken any such contention in their written version. On the other hand, the opposite party was of the view that the actual loss has been assessed by the inspection wing of the Finance Department at Rs.4,63,227/- and the matter is pending with the Vigilance Department and final assessment of the claim can be made only after getting the vigilance report from the Government. It is also to be noted that till this day the opposite party has not filed any additional version denying the insurance claim based on Clause 8 of the Fire policy (c ). It may be correct to say that the complainant/company created some false bills and registers in order to boost up the purchase of raw wheat and thereby to make a tall claim under the Fire policy (c ). In this circumstance, it is not just or fair to deny the entire claim made by the complainant/company.
35. Another important aspect to be noted at this juncture is Ext.P11 lawyer notice dated 25.5.2000 issued at the instance of the complainant/company to the opposite party, the Director, Kerala State Insurance Department, Thiruvananthapuram. As per the said lawyer notice, the complainant/company repeated their request for settlement of the insurance claim. Ext.P14 is the reply dated 27.6.2000 issued by the Director of Insurance, to the counsel for the complainant. In P14 reply, the opposite party requested the complainant/company to wait for some time as the matter is pending with the Government in the Finance Department. It is also submitted that final reply shall be sent to the complainant/company on getting advice in the matter from Government. Thus, it can be seen that the opposite party never repudiated the insurance claim preferred by the complainant/company . In such a situation, it is not just or fair on the part of the opposite party in repudiating the entire insurance claim of the complainant by taking advantage of the provisions of Clause (8) of the Fire policy (c ). It is also to be born in mind that no such ground was taken by the opposite party before the institution of the complaint in OP.103/2000 or in the written version filed in the present complaint. It has been held by the Hon. National Commission in the case of M/s.Abhilash Jewellery Vs. New India Assurance Company Ltd. reported in 2003 (1) CPR 85 (NC) that new ground for repudiation cannot be permitted. It is further held that Consumer Forum should not have allowed Insurance Company to take up plea of violation of Clause in the Insurance policy, which was not a ground for repudiation. It is also held that such a ground was clearly afterthought and advanced for the first time to deny the claim on every possible ground and this approach itself would amount to deficiency in service. So, the case of the opposite party that the benefit due under the policy can be forfeited under Clause 8 of the Fire policy (c ) cannot be upheld.
36. The forgoing discussions and the findings thereof would make it clear that the opposite party/Insurance Company is well justified in not accepting the survey report submitted by the licensed surveyor G.Renadev (PW2). The materials on record would also make it clear that PW2, the surveyor totally failed in assessing the actual loss to the stock in trade. It can also be held that the complainant/company made a tall claim based on false and forged documents including purchase bills and purchase register and other connected account books. The complainant/company miserably
failed in establishing the alleged total loss at Rs.22,31,555/- and also their claim for Rs.19.5 lakhs. There is also nothing on record to substantiate the loss of Rs.13.5 lakhs assessed by the licensed surveyor Mr.G.Renadev. The documentary as well as the oral evidence available on record would show that RW3, the Vigilance Enquiry Officer conducted a proper vigilance enquiry in the matter and submitted Ext.X1 vigilance enquiry report. There is no valid reason or ground to doubt the correctness of vigilance enquiry report. The evidence of RW2 and R5 report submitted by the inspection team of the finance inspection wing of the Finance Department would show that the complainant/company suffered financial loss of Rs.4,63,227/-. The facts and circumstances of the case would permit making of guess work in assessing the loss suffered by the complainant/company. The complainant/company invited the entire problem and trouble by creating false documents to substantiate false insurance claim. Thus, the loss suffered by the complainant/company on account of the peril of flood is fixed at Rs.4,63,227/-.
37. The complainant/company filed the complaint in OP.103/2000 on 28th September 2000. So, the complainant is entitled to get interest at the rate of 9% per annum on the said amount of Rs.4,63,227/- till the date of realization. The complainant is also entitled to get cost of Rs.10,000/- from the opposite party/Director, Kerala State Insurance Department, Thiruvananthapuram. The complainant is awarded the insurance claim with interest and cost. So, no separate compensation is awarded for deficiency in service on the part of the opposite party. These points are answered accordingly.
In the result, the complaint is allowed. The opposite party is directed to pay Rs.4,63,227/- to the complainant/company by way of the insurance claim with interest at the rate of 9% per annum from the date of the complaint (28.9.2000) till the date of realization and
cost of Rs.10,000/-. The opposite party is directed to pay the decree
amount with interest and costs within one month from the date of receipt of copy of this order.
M.V. VISWANATHAN : JUDICIAL MEMBER
VALSALA SARANGADHARAN : MEMBER
M.K. ABDULLA SONA : MEMBER
s/L
APPENDIX
COMPLAINANTS WITNESS
PW1 : M.Ameenudeen
PW2 : G.Renadev
COMPLAINANTS EXHIBITS
Exts. P1 : Certified copy of the stock register.
“ P2 : Certified copy of the stock register of Raw wheat.
“ P3 : “ “ bi-products
“ P4 : “ purchase bills.
“ P5 : “ sales register.
“ P6 : “ debit-credit account of
wheat purchase.
“ P7 : Certified copy of the balance sheet
up to 31.3.1999.
“ P8 : Rainfall report of Kollam during the period from
8.10.98 to 13.10.98.
“ P9 : Photocopy of certificate issued from Thazhuthala
Village office dated 14.10.98.
“ P10 : Photocopy of the receipt issued by the District
Insurance Officer.
Exhibit P11 : Lawyers’ notice dtd.25.5.2000.
“ P12 : Postal receipt
“ P13 : Acknowledgement Card.
“ P14 : Reply dated 27.6.2000 by Director of Insurance.
OPPOSITE PARTIES WITNESS
RW1 : Krishnanandan
RW2 : P.Radhakrishna Pillai
RW3 : K.Rajasekharan Pillai
RW4 : Gopalakrishnan
OPPOSITE PARTIES EXHIBITS
Exhibits R1 : Final survey report by G.Renadev
Dated 26.10.98.
“ R2 : Letter from T.S.Ramaswamy, Surveyor
dated 5.12.98.
“ R3 : Details of information relating to the insured
business activities.
“ R4 : True copy of the claim form.
“ R5 : True copy of the report on Inspection conducted by the Finance Inspection Wing.
Exhibits X1 and X1 series [X1 (a) to X1 aj] : Vigilance enquiry report and other related files (marked through RW3)
M.V. VISWANATHAN : JUDICIAL MEMBER
VALSALA SARANGADHARAN : MEMBER
M.K. ABDULLA SONA : MEMBER
