BEFORE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD

C.C.NO.16 OF 2010

Between:

M/s Vijayanand Fabrics Private Limited
Regd.Off: 15-2-345, Mukhtiyargunj
Hyderabad rep. by its Director Sri Prakash Chand
Agarwal, S/o late Harichand Agarwal
Occ: Business R/o Banjara Hills, Hyderabad

                                                                        Complainant

        A N D

1. The National Insurance Co.,Ltd.
   Chikkadpally Branch Office
   301, Santoshimaa Complex, RTC X Rds.,
   Hyderabad-020, rep. by its Branch Manager
2. Mr.B.S.Murthy
   Occ:Surveyors and Loss Assessors
   R/o 1-10-234, Flat No.9, Nandini Mansion
   Ashoknagar, Hyderabad

                                                                        Opposite parties

Counsel for the Complainant          M/s U.Pratap Rao

Counsel for the opposite parties     M/s Manne Hari Babu (OP1)
                                                Served (OP2)

QUORUM:   SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER

AND

SRI THOTA ASHOK KUMAR, HON’BLE MEMBER

  FRIDAY THE SEVENTEENTH DAY OF AUGUST

TWO THOUSAND TWELVE

Oral Order (As per Sri R.Lakshminarasimha Rao, Hon’ble Member)

***

1.             The complaint is filed seeking for payment of a sum of `54,78,000/-with interest @24% p.a. and `50,000/- towards damages and costs.

2.             The averments of the complaint are that the complainant is a private limited company and its processing unit is situate at Chandraynagutta, Hyderabad and it insured with the opposite party no.1 insurance company for a sum of `3,45,00,000/- under Standard Fire and Special Perils Policy bearing number 551107/11/07/31000003 valid for the period from 4.04.2007 to 3.04.2008 covering the risk on the building and staff quarters, all types of machinery, transformer, ooil, generator, cables, all kinds of stocks, stocks in process, finished goods, other packing material.

3.             A fire accident occurred at 6.30 PM on 14.05.2007 at the complainant’s processing unit which was informed to the Fire Service Department which extinguished the fire. On information from the complainant, the Police Chandrayanagutta registered a case in FIR No.136 of 2007. The incident is reported in various newspapers. The complainant lodged claim claiming an amount of `54,78,000/-towards the loss sustained due to the fire accident. The second opposite party deputed by the first opposite party inspected the spot and assessed the loss caused to the property of the complainant-company. The complainant-company passed on the information available and  later, the other information to the surveyor. The surveyor had not requested for the information at a stretch.

4.             The surveyor assessed the loss at Rs.1,00,000/-as against the claim for `54,78,000/-. The first opposite party through its letter dated 13.05.2009 informed the complainant-company that its regional office agreed to review the assessment made by the surveyor. In response to the letter of the first opposite party,  the complainant submitted objections to the surveyor’s report by producing documents. The first opposite party affirmed the assessment made by the surveyor. The complainant-company got issued notice dated 29.12.2009 calling upon the opposite party no.1 to settle the claim. The first opposite party gave reply supporting the assessment of loss made by the complainant. Having been not satisfied with the reply, the complainant filed the complaint claiming the amount of `54,78,700/-.

5.             The first opposite party resisted the claim contending that the matter involves complicated questions of fact and law and it can be decided by a civil court.  It is contended that on receiving information, the first opposite party appointed surveyor who submitted his report on 18.3.2009.  The complainant submitted representation received by the first opposite party on 11.8.2009 for which the surveyor gave detailed claim.  After considering the complainant’s documents and surveyor’s report, the first opposite party accepted the surveyors assessed amount and offered the same which was not accepted by the complainant.  It is contended that non-supply of information by the complainant was the cause for the delay in submitting the surveyor’s report. 

6.             After submission of surveyor’s report the complainant gave representation and it was forwarded to surveyor who gave his reply.  The first opposite party offered the net assessed amount by the surveyor as the reasons given by the surveyor for assessment is just and proper.  There is no irregularity in surveyor’s report and there are no reasons to discard surveyor’s report.  The surveyor changed the damaged unit after the fire accident and verified and noted the loss.  The complainant made huge claim without any basis.  The first opposite party thoroughly considered the documents submitted by the complainant and the findings of the surveyor and the terms and conditions of the insurance policy.

6.             The complainant and its sister concern had been obtaining the insurance policy with the opposite party no.1 for several years.  The complainant is a firm which does not feel any mental tension pain and suffering.  Hence prayed for dismissal of the complaint.

7.             The Director of the complainant-company filed his affidavit and the documents, ExA1 to A37.   On behalf of the opposite parties, the Manager of the opposite party no.1 and the opposite party no.2 have filed their affidavits and the documents, ExB1 to B22.

8.             The points for consideration are:

i)             Whether the insured submitted the required information to the surveyor?

ii)           Whether the complaint involves complex questions of fact requiring examination of witnesses?

iii)          To what relief?

9.               POINT NO.1 and 2: The complainant-company obtained Standard Fire and Special Perils Policy No.5511071/11/07/310000003 for the period from 4.04.2007 to 3.04.2007 to cover the building , machinery and stocks of the complainant company for the total sum insured of `3,45,00,000/-.The issuance of the insurance policy and coverage of risk thereunder is not disputed. The complainant lodged complaint with the Police, Chandrayanagutta on 14.05.2007 that fire broke out in its factory premises and on receiving the information the Police and the Fire Department Staff rushed to the spot and extinguished the fire. In the complaint to the police it is mentioned that the material lying in the godown was almost burnt and the rest of the property was not damaged.

10.            The SHO, Fire Station, Moghulpura issued Fire Attendance Certificate on 20.06.2007 to the effect that the cause of fire was chemical reaction. The complainant had not submitted the Fire Attendance Certificate to the Surveyor. The surveyor in his report has stated that the complainant had not produced certificate from the Fire Department. As the Fire Accident and cause of fire has not been disputed, it is unnecessary to dwell on the matter as regards the cause of accident as to whether the short circuit or chemical reaction.

11.            The surveyor in his spot survey report has dealt with the records presented by the complainant which at page 3 of the report are mentioned as under:

                1.     Grey stock cloth register of insured are purchases

                        CB as on 14 May 07 – 1,90,191.05 mt

                2.     Grey clot (Supplied by APCO)

                        a)  Shirting         - 24,490.75 mt CB

                        b)  Suiting          -  Nil               CB

                3.     Grey cloth Kamal Handloom Corp. supplied

                        a)  Shirting         - 36,338 mt      CB

                        b)  Suiting          -  38,287.60 mt CB

12.            The complainant addressed letter dated 20.08.2008 to the surveyor that it would provide any information related to the claim during the discussion with the surveyor. The first opposite party through letter dated 25.08.2008 advised the surveyor to suggest a date to arrange meeting with the complainant-company to resolve the stalemate in the matter. Thereafter, it appears that the surveyor and the insured had a meeting and during the time if not the entire information sought, certain information in the shape of the documents was provided by the complainant. The surveyor submitted report on 18.-03-2009 to the first opposite party-insurance company. The surveyor in the report has mentioned that the complainant in its complaint to the police has stated that  the loss was between `20,00,000/- to `25,00,000/- and in the claim lodged with the first opposite party the amount claimed is `54,78,000/-.

13.            Apart from the discrepancy in the amount assessed towards the loss in the complaint and the claim, the surveyor had dealt with the amount claimed by the insured which according to him is neither connected with the loss nor is supported by evidence as under:

“In respect of the loss on building, having initially claimed a loss of Rs.11,00,000/- for the entire shed, now the insured had revised the loss on the same as Rs.2,72,752/- for the collapsed portion and Rs.1,26,555/- for the unaffected portion.

In support of their contention fo total loss machinery, the insured had supplied an opinion from VASCON Engineering Equipment’s that was found wanting as can be seen from our correspondence with the insured.  Now, the insured had changed talk and submitted quotation from the same VASCON Engineering Equipment’s that the repair cost of the machines would be Rs.5,84,590/-.  What is equally surprising is that the insured after nearly two years and cross correspondence with us, now through their letter DT.16 March 2009, brought in a new claim of Rs.2,63,120/- towards the panel board based on a quotation of Chaya Switchgears.  While the motors needed only servicing, the insured claimed loss on replacement basis for Rs.2,52,138/0.  Given the fact that there was no appreciable damage to the machinery save the panel board (not the type claimed by the insured) the insured’s claim based on unreliable supporting documents is untenable.

During our survey when we found the dismantled Decatise Machine under the collapsed roof, it was clear that it was in disuse and the insured too had agreed to the fact.  We further clarified to the insured then that the dismantled machine cannot be treated as machinery as per the policy percepts and thus the loss, if any, on the residual value of the equipment in disuse would not come up for indemnity under the Fire Policy,  However, the insured though not claimed the loss on the same at the time of sub mitting the claim form had in their 16 March 009 letter claimed a loss of Rs.4,50,000/- plus taxes. 

While the estimate in support of the loss on the shed was exaggerated, the opinion VASCON Engineering Equipment’s that the machinery was a case of total loss was contrary to the physical condition of the same .  All this and more was brought out the insured’s notice by us in the enclosed correspondence.

14.            In regard to the Stock Loss, the surveyor has observed that the complainant belatedly produced the stock register which was written afresh for the purpose of the claim.

15.            The surveyor expressed its opinion that the dyes and chemicals were kept in the Store and shown as if they were kept in the godown. The surveyor supported its finding basing on the fact that the assessment of  loss to the dyes and chemicals on the day of the accident would rest on production activity on the date of the accident. The surveyor observed the position of the stock at the relevant time as under:

The clue to their loss or otherwise should rest in the insured’s production activity in the wake of the fire on 14 May 2007 in which it was claimed that whatever dyes and chemicals present were destroyed therein.  But as the enclosed processing records submitted by the insured on 16 March 2009, would show, there was disruption of activity even on 15 May 2007 when 24,670 mts were processed for self (all the three registers may be seen to see that all was normal on the insured’s processing front).  If all the dyes and chemicals were burnt as claimed, ti would have been impossible to procure all of them overnight and maintain the same levels of previous production levels besides continuing the same the next day i.e. 16 May 2007 and subsequently.  This single circumstance alone would prove that the insured’s sound stocks were not in the fire affected godown but were secure in the store.

16.            There are several disputed questions of facts in regard to the quantity of the stock and the stock destroyed in the fire accident etc., as also the dispute as regards to the genuineness of the records produced by the complainant-company. The first opposite party in its reply to the notice of the complainant-company  referred to the incorrect information and fabricated documents. The matter involves examination and cross examination of witnesses and appreciation of voluminous documentary evidence as also finding out whether the documents are fabricated for the purpose of the claim. As such, the parties are required to be relegated to civil court for proper adjudication of the matter.

 17.           In “Oriental Insurance Co., Ltd., Vs Munimahesh Patel“ IV (2006) CPJ 1, the insurance company disputed the genuineness of the documents and the hon’ble Supreme Court held that where the matter involves adjudication of issues involving disputed factual questions, Consumer Forum cannot adjudicate the matter and the complainant was entitled to seek relief in court of competent jurisdiction.

“9. The Commission noted that the specific stand of the appellant was that there was mis-declaration in the proposal form and the false claim that the respondent’s wife was a teacher which as now appears is not the correct position. It also accepted that she was really not a teacher.

10. Proceedings before the Commission are essentially summary in nature and adjudication of issues which involve disputed factual questions should not be adjudicated. It is to be noted that Commission accepted that insured was not a teacher. Complainant raised dispute about genuineness of the documents (i.e. proposal forms) produced by the appellant.

11. The Commission having accepted that there was wrong declaration of the nature of occupation of the person insured, should not have granted the relief in the manner done.

12. The nature of the proceedings before the Commission as noted above, are essentially in summary nature. The factual position was required to be established by documents. Commission was required to examine whether in view of the disputed facts it would exercise the jurisdiction. The State Commission was right in its view that the complex factual position requires that the matter should be examined by an appropriate Court of Law and not by the Commission.

13. Above being the position, the Commission was not justified to deal with the matter in the manner as was done. In our view, the directions of the State Commission were more appropriate keeping in line with the nature of dispute. Accordingly, the appeal is allowed but with no order as to costs”.

18.            The National Commission in ‘Transport Corporation Employees Provident Fund Trust vs Orissa small Industries and another ‘ III(2207) CPJ 316(NC) and ‘Omprakash vs Allahabad Bank’ III(2206)CPJ 418, held that the matter involving adjudication of disputed questions of facts has to be tried by competent court. Thus, we are inclined to give opportunity to the complainant to approach competent court for adjudication of the matter.

19.            In the result the complaint is disposed of with an observation that the complainant shall be at liberty to approach Civil Court or any other appropriate Forum. In case he files a suit he will be entitled to seek exclusion of the time spent before the Commission under Section 14 of the Limitation Act in view of the judgment of the Hon’ble Supreme Court in the case of Laxmi Engineering Works v. P.S.G. Industrial Institute, II (1995) CPJ 1 (SC).  There shall be no order as to costs.

                                                                                MEMBER

                                                                                MEMBER

                                                                            Dt.17.08.2012

KMK*

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

For complainant                                                  for opposite parties

NIL                                                                           NIL

EXHIBITS MARKED

For complainant

For opposite parties

Ex.B.1                                       Standard Fire and Special Perils Policy for the period from 04.04.2003 to 03.04.2004

Ex.B.2                                       Standard Fire and Special Perils Policy for the period from 04.04.2004 to 03.04.2005

Ex.B.3                                       Standard Fire and Special Perils Policy for      the period from 04.04.2005 to 03.04.2006

Ex.B.4                                       Standard Fire and Special Perils  Policy for the period from 04.04.2006 to 03.04.2007

Ex.B.5                                       Kadel insurance services p ltd letter for renewal of policy the period from 04.04.2007 to 03.04.2008 With cheque and details of it.

Ex.B.6                                       Standard Fire and Special Perils Policy for  the period from 04.04.2007 to 03.04.2008

Ex.B.7                                       Joint finding/ inventory report   dt.14.05.2007.

Ex.B.8                                       Letter of Kadel Insurance Services  P Ltd  enclosing the 8 documents including the policy and claim form.

Ex.B.9                                       Various correspondence between the  surveyor, insured and the insurance company.

Ex.B.10                                      Surveyor’s report dated. 18.03.2009

Ex.B.11                                      Objection of the complainant for the surveyors report.

Ex.B.12                                      Surveyor’s reply dt. 13.08.2009.

Ex.B.13                                      O.P.s letter dt.17.08.2009 enclosing the  discharge voucher for Rs.1,00,000/-.

Ex.B.14                                      Legal notice dt. 29.12.2009 of the  complainant.

Ex.B.15                                      Reply notice dated. 21.01.2010.

Ex.B.16                                      Zaki Associates Estimation submitted by  the complainant to the surveyor.

Ex.B.17                                      Valuation report of the Sri P.V.Rajeswar Rao. submitted by the complainant to the Surveyor.

Ex.B.18                                      Amin Builders Revised estimation  submitted by the complainant to the Surveyor.

Ex.B.19                                      M/s Premier Engineering Corporation offers, submitted by the complainant to the Surveyor.

Ex.B.20                                      Vishal Engineering Estimations submitted  by the complainant to the Surveyor.

Ex.B.21                                      Police panchanama submitted by the  complainant to the Surveyor.

Ex.B.22                                      Original stock register submitted by the complainant to the Surveyor.

                                                                                      MEMBER

                                                                                      MEMBER