BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
C.C. No. 49/2005
Between:
Sri Sai Lakshmi Poultry Feeds
Pandalapaka, Bikkavolu Mandal
East Godavari Dist.
Rep. By its Manager
Palli Srinivasa Reddy S/o Venkata Reddy
Age: 38 yrs, R/o Bikkavolu
East Godavari Dist.
*** Complainant
And
1. United India Insurance Company Ltd.,
Rep. by its Divisional Manager
Divisional Office, 6-10-3, Hothavari Street
Innespeta, Rajahmundry,
East Godavari District
2. United India Insurance Company Ltd.,
Rep. by its Branch Manager, Mandapeta
East Godavari District.
3. Andhra Bank
Rep. by its Branch Manager.
Rayavaram, East Godavari Dist. *** Opposite Parties
Counsel for the Complainant: Mr. K. L. N. Rao
Counsel for the OPs: Mr. N. V. Jagannath (Ops 1 & 2)
Mr.Abhinand Kumar Shavili (OP-3)
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHREESHA, MEMBER
MONDAY, THIS THE TWENTY THIRD DAY OF MARCH TWO THOUSAND NINE
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
***
1) This is a complaint filed u/s 17 of Consumer Protection Act claiming Rs. 31,53,195/- towards loss of insured premises and raw material damaged in the fire accident.
2) The case of the complainant in brief is that it is a registered partnership firm engaged in production of poultry feed in the premises bearing No. 4-141/3. It took fire insurance policy from OP1 and Op2 covering the risk of its building and the stock from 10. 1. 2004 to 9.1.2005. The building was insured for Rs. 90,17,000/- while the stocks were insured for Rs. 60 lakhs. On taking extra premium it has included the risk covering the spontaneous combustion with effect from 27. 5. 2004 till the expiry of the policy. While so on 30. 6. 2004 at about 3.30 p.m. while it was engaged in the production of poultry feed there was accidental fire where De-oiled Bran worth Rs. 10,92,595/-, De-oiled Soya worth Rs. 2,05,400/-, Bran worth Rs. 17,11,200/- and Dry Fish worth Rs. 1,44,000/- totalling to Rs. 31,53,195/- were burnt. On intimation fire was extinguished by the Fire Department. It informed to the concerned officials and also to the insurance company. The insurance company appointed Sri K. N. S. Satyanarayana, Surveyor who inspected the spot on the very same day and verified the stock register etc. to whom it submitted the claim along with documents. However, the insurance company has appointed a second surveyor Sri V. Satya Sai Baba who also visited the accident spot, examined the records. Yet again it has appointed Sri M. S. Prasad an investigator. Though it had furnished all the material/record the claim was not settled. After issuing paper notification the damaged articles were disposed off and the salvage value of Rs. 62,674/- received was disbursed to it. Since the insurance company did not settle the claim though sufficient time was taken it filed the complaint claiming Rs. 31,53,195/- the loss caused to it besides Rs. 1 lakh towards compensation and costs.
3) The insurance company Opposite Parties 1 & 2 filed counter resisting the case. It alleged that though the policies were taken covering the risk, the complainant did not furnish any information to settle the claim. Despite the surveyor asking to submit information by his letter Dt. 18.9.2005 though the alleged loss was on 30.6.2004, the complainant did not submit and therefore the same could not be settled. The claim was pre-mature. There was no deficiency in service on its part. The value of the stocks shown in the policy reflects the value of the stock, but not the actual value of the stocks that were in existence at the time of accident. The surveyor did not observe any fire accident as reported by the complainant. There was no possibility of spontaneous combustion as alleged by the complainant. The characteristics found at the scene show totally in contrast to the allegation made by the complainant. The surveyor had found removal of damaged stocks from the premises. He counted the number of bags allegedly containing DoB, and requested the complainant to submit the records as to the stock etc. He did not submit the original records but submitted extract of stock registers and day books etc. Due to his non-co-operation the matter could not be settled. More over the final surveyor on scrutiny of copies of certain purchase invoices found that they were fabricated. In fact, in their enquiry M/s. Sudha Agro Oils & Chemical Industries Ltd., Samalkot by its letter Dt. 13.4.2006 informed that the invoices submitted by the complainant as proof of purchase of DoB to a tune of 109.600 tons were not the invoices issued by them. They did not sell 721.400 tons of DoB during the period from 26.12.2003 to 19.3.2004 as found in the stock register. They billed a quantity of 500 tons only. The damaged stocks of De-oiled Bran claimed to be purchased from the above firm was worth Rs. 10,92,595/-. So also the claim for damaged Bran to a tune of Rs. 17,11,200/- alleged to have been purchased from M/s. Sri Chakra Enterprises, Anaparthy was not substantiated by filing any bills. M/s. Sri Chakra Enterprises, Anaparthy did not reply to the notice issued by the surveyor in regard to these purchases.
The premises in which the accident took place was situated in D.No. 1-140/3/A whereas the premises covered under the policy was D.No. 1-141/3. There was no liability on its part to pay the amount covered under the policy and therefore prayed for dismissal of the complaint with costs.
4) Opposite Party No.3 though engaged an advocate did not choose to file any counter.
5) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A18 marked, while the insurance company filed the affidavit evidence of Sri Suryaprakasha Rao, Regional Manager as RW1, Sri K. N.S. Satyanarayana, Insurance Surveyor as RW2, and Sri V. Satya Sai Baba, Loss Assessor as RW3 and got Exs. B1 to B12 marked.
6) The points that arise for consideration are :
a) What was the loss that was caused to the complainant in the fire accident that took place on 30. 6. 2004.
b) To what relief?
7) It is an undisputed fact that the complainant a registered partnership firm engaged in production of poultry feed, purchased different types of raw material and kept in the premises bearing D.No. 4-141/3. It is also not in dispute that the insurance company issued policy Ex. A1 covering the building for Rs. 90,17,000/- while the stocks were insured for Rs. 60,000/- for the period from 10. 1. 2004 to 9.1.2005. Though originally the peril for spontaneous combustion was not covered, the same was extended with effect from 27.5.2004 till the expiry of the policy.
8) It is also not in dispute that on 30. 6. 2004 at about 3.30 p.m. there was fire accident wherein De-oiled Bran, De-oiled Soya and other stocks were burnt. On a report the Fire Station at Anaparthy extinguished the fire evidenced under certificate Ex. A3. The reason was spontaneous combustion. The said fact was informed to the Mandal Revenue Officer as well as Andhra Bank as it was having an account with it and instrumental for the policy being taken and also to the insurance company. The insurance company appointed a surveyor Sri K. N. S. Satyanarayana who visited the place at 4.15 p.m., along with Branch Manager of the insurance company. The Mandal Revenue Officer, Bikkavolu issued a certificate Ex. A4 after conducting enquiry opining that the fire was due to spontaneous combustion, and the loss could be Rs. 33,10,970/-. The complainant asserts that when the damaged materials were segregated the entire process was videographed and photos were also taken besides that stock registers were also furnished to the said surveyor.
9) While so the insurance company appointed second surveyor Sri V. Satya Sai Baba. He conducted enquiry, perused the registers and records.
10) In the meantime another investigator by name Sri M. S. Prasad was appointed.
11) The salvage was disposed off after issuing paper notification and an amount of Rs. 62,674/- was recovered, and the same was paid to the complainant vide Ex. A13.
12) The complainant alleges that the total damage was to an extent of Rs. 31,53,195/-. viz., De-oiled Bran worth Rs. 10,92,595/-, De-oiled Soya worth Rs. 2,05,400/-, Bran worth Rs. 17,11,200/- and Dry Fish worth Rs. 1,44,000/-. In order to establish that he purchased this stock from M/s. Sudha Agro Oils & Chemical Industries Ltd., Samalkot and M/s. Sri Chakra Enterprises, Anaparthy he filed Ex. A5 and Ex.A17. The fact that the stock register, and the above documents were filed before the surveyors were not in dispute.
13) The first surveyor Sri K. N. S. Satyanarayana filed his affidavit stating that he visited the place immediately along with Branch Manager took various photographs and submitted his report Dt. 7.8.2004, one and half month after the fire accident evidenced under Ex. B10. According to him when he arrived at the scene there was no fire fighting operation in progress. He did not find soot marks or blacking of the walls, ceiling, doors, machinery and floor outside the storage place of the godown. He stated that he signed in the stock register below the last entry along Branch Manager of the insurance company in order to ‘prevent further entries in the stock register.’ He verified and measured the stocks. Though according to him he could not find any traces of Bran but found loose Bran in yellow colour. He drew this conclusion from seeing the photographs. He was also of the opinion that spontaneous combustion could be on the long storage of DOB rather than on freshly stored Bran. Therefore he concluded “ it is known fact that spontaneous combustion if it had occurred, would be as a result of long storage, in a closed place under moisture conditions. The DOB stored closer to the South/South West wall would have been stocked before the stock said to have been damaged in front of the unaffected DOB stocks, were not affected.”
Curiously, he did not send any of these materials to any expert in order to confirm out as to his conclusions. He himself admitted that while he was arranging for segregation of stock Sri V. Satya Sai Baba, insurance surveyor supervised the operations till 3.00 p.m. and left the scene. Finally he was of the opinion from the above material that loss cannot take place due to spontaneous combustion. In fact, according to him, there was no flame and fire as a result of spontaneous combustion . Sri V. Satya Sai Baba another surveyor also conducted survey. Even before his submission of the report and in fact during the interregnum, the insurance company appointed another surveyor and loss assessor by name Sri M. S. Prasad to investigate into the same. He himself noted in his report Ex. B12 Dt. 16. 5. 2005 that the surveyor Sri K. N. Satyanarayana and another surveyor Sri V. Satya Sai Baba were investigating into it. Though neither of them stated, Sri M. S. Prasad in his report mentioned that the stocks that were damaged due to heat due to spontaneous combustion was procured just two to three weeks prior to the date of loss, found to be absurd. According to him there was enough ventilation, and this could not have been caused. Obviously, he had gone through the reports of the two surveyors, and almost adopted and finally of the opinion “ that any more visits of mine would serve no purpose as can be understood from the attitude of the insured, his suppliers and therefore I decided to conclude my job of verification of bills and to entrust the same to Mr. V. Satya Sai Baba, who also frequently pressing me to release my report.”. Along with the report he returned what are all the documents submitted to him and the pending details together with original letter Dt. 30.11.2004 containing the original handwriting of the Manager of the firm seeking time to furnish the information called for.”
14) Finally Sri V. Satya Sai Baba. Surveyor by his report Dt. 3.6.2006 almost two years after the incident opined that there was no spontaneous combustion nor loss to the stocks. He came to this conclusion on the ground that though the complainant had produced the extract of stock register (Ex. A16) and bunch of receipts issued by Sri Chakra Enterprises (Ex. A17), when he addressed letters to them with a direction to produce the registers and records they did not give any reply. As he could not prove from any record that these documents were fabricated by the complainant, he in his report alleged that when he contacted the representatives of those companies, the personnel belonging to M/s. Sudha Agro Oil and Chemical Industries Ltd. denied having supplied the material, while M/s. Sri Chakra Enterprises did not respond to his letters. He contradicted his own earlier findings and stated “ according to the information at spot given by the representatives of the said premises, the loss would be around two lakhs and might be due to spontaneous combustion which can only be identified after removing the entire stock.” He was of the opinion that Bran or Soya were not involved in the fire accident nor that stocks of dry fish. They were all fictious. There were no traces of these stocks. When important material was available with them there is no reason why they did not send it to an expert in order to find out the truth. This conclusion was arrived at despite reports of the officials like Fire Officer and MRO against whom nothing could be said. It is not as though they had come to the conclusion immediately. They have taken almost two years to investigate into the matter. Ex-facie, they could not prove either from the documents or from the registers that Ex. A5 and A17 were fabricated for the purpose of this case. They were all prior to the accident. The stock register was also furnished. When none of the investigators could prove that the complainant has come up with false claim nor a report of the police was given, we are unable to agree with the findings of the various surveyors. We do not intend to reiterate that appointment of a number of surveyors one after another till a report to their liking was received, is deprecated.
In New India Assurance Company Vs. Shree Shyam Cotspin Ltd reported in I (2009) CPJ 110 (NC) it was held that insurance company cannot appoint another surveyor.
“We also like to observe that under Section 64 UM of the Insurance Act, if the insurance company is not satisfied with the assessment of loss made by the an approved surveyor then they can request the IRDA for appointment of another surveyor whose report would have been processed by the ‘Authority’ and then direction was to be given by them to insurer to pay a given amount. This was not done at all.”
15) The insurance company for the reasons best known did not furnish any material secured by the surveyors, basing on which they concluded that the purchases were fictious in order to find out whether those entries tally with the documents submitted by the complainant. Except their reports they did not file the documents furnished by the complainant to them.
16) Not satisfied with this finally the insurance company alleged that the building which was insured under the policy bears D.No. 1-141/3 whereas the fire accident took place in the premises bearing D.No. 1-140/3/A and therefore not liable to pay compensation. At no point of time any of the surveyors disputed that the fire accident took place in the premises other than one which was covered under the policy. It must have taken inspiration from the house tax receipt issued by Panchayat Secretary, Pandalapaka Ex. B8 wherein door number was mentioned as 4-140/3/A. The insured might have owned this premises for which it had paid the tax but it does not mean that the accident took place in a different premises. No evidence whatsoever was furnished to state that the premises mentioned in the policy relate to Ex. B8. The insurance company could have taken a certificate from the Panchayat Secretary to confirm the said fact. Without any evidence whatsoever this plea cannot be accepted. These contentions were only taken in order to evade the lawful amount due to the complainant.
17) In the light of certificate issued by the Fire Officer and the MRO, Bikkavolu besides Exs. A5, A16 and A17 we are satisfied that the complainant has filed necessary documents in order to substantiate that stock worth Rs. 31,53,195/- was destroyed in the fire accident. However the complainant is entitled to Rs. 31,53,195/- less the salvage value amounting to Rs. 62,674/- which was already received by him.
18) In the result the complaint is allowed directing the Opposite Party insurance company to pay Rs. 30,90,521/- with interest @ 9% p.a., from the date of repudiation i.e., from 9.6.2006(*) till the date of realization. Since there was enormous delay of two years either in settling or repudiating the claim, a compensation of Rs. 20,000/- could be awarded which we feel reasonable and modest. The complainant is also entitled to costs of Rs. 10,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
(*) The date of repudiation is corrected as 9.6.2006 instead of 9.6.2004 as per orders in CCIA No. 874/2009 in CD 49/2005 Dt. 8. 6. 2009. Issue fresh copy of order to all the parties.
APPENDIX OF EVIDENCE
WITNESSES EXAMINED FOR
COMPLAINANT OPPOSITE PARTIES
None None
DOCUMENTS MARKED FOR COMPLAINANT:
Ex. A1; 12.01.2004 Insurance Policy issued for the period from
10.01.2004 to 09.01.2005.
Ex. A2; 27.07.2004 Claim form submitted by the complainant
Ex. A3; 15.07.2004 Certificate issued by A.P. Fire Service.
Ex. A4; 21.07.2004 Certificate issued by the MRO, Bikkavolu.
Ex. A5; 19.07.2004 Letter issued by Sudha Agro Oil & Chemical
Industries Ltd. Samalkot.
Ex. A6; 06.07.2004 Letter issued by Sri KNS Satyanarayana,
Surveyor to complainant.
Ex. A7; 06.07.2004 Letter issued by Sri V. Satya Sai Baba,
Surveyor to complainant.
Ex. A8; 18.07.2004 Letter issued by Sri V. Satya Sai Baba,
Surveyor to complainant.
Ex. A9; 04.08.2004 Letter issued by Sri KNS Satyanarayana,
Surveyor to complainant.
Ex. A10; 16.09.2004 Letter issued by Sri V. Satya Sai Baba,
Surveyor to complainant.
Ex. A11; 11.12.2004 Paper notification issued by complainant.
Ex. A12; 20.01.2005 Particulars of tenders received
Ex. A13; 01.03.2005 Particulars of Salvage Material
Ex. A14; 01.03.2005 Letter addressed by complainant to Op
Ex. A15; 18.09.2005 Letter issued by Sri V. Satya Sai Baba to
Complainant.
Ex. A16; 30.06.2004 Extract of stock register verified by KNS
Satyanarayana, Surveyor.
Ex. A17; -- Series of credit bills issued by Sri Chakra
Enterprises in favour of complainant.
Ex. A18; 27.03.2000 Acknowledgement of Registration of Firm
of complainant.
DOCUMENTS MARKED FOR OPPOSITE PARTIES 1 & 2.
Ex. B1; 09.06.2006 Letter of insurance company to complainant.
Ex. B2; -- Standard Fire & Special Peril policy (material
Damaged) terms and conditions.
Ex. B3; 30.11.2004 Letter of complainant to Sri M.S. Prasad,
Loss Assessor.
Ex. B4; 05.02.2005 Letter of complainant to Investigator.
Ex. B5; 13.04.2006 Letter of OP insurance company to
M/s. Sudha Agro Oil & Chemical Industries
Ltd., Samalkot.
Ex. B6; 27.04.2006 Letter of V. Satya Sai Baba to complainant.
Ex. B7; 27.05.2006 Letter of V. Satya Sai Baba to complainant.
Ex. B8; 06th Dec. Property tax receipt relating to Assessment
No. 614.
Ex. B9; 10.01.2004 Xerox copy of policy
Ex. B10; 07.08.2004 Letter of KNS Satyanarayana addressed to
the Branch Manager, United India Insurance Co.
Ex. B11; 03.06.2006 V. Satya Sai Baba, Insurance Surveyor report.
Ex. B12; 16.05.2005 Letter of M. S. Prasad addressed to insurance
Company.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
*pnr
