Case Law Details
Renuka Multipack Pvt. Ltd. Vs Oriental Insurance Co. Ltd. (National Consumer Disputes Redressal Commission)
Conclusion: In present facts of the case, the National Consumer Disputes Redressal Commission have observed that contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. Therefore, the complaint against Insurance Company is maintainable.
Facts: The Complaint in this case was filed under Section 21(a)(1) of the Consumer Protection Act, 1986 by a Private Limited Company. The Complainant unit got insured by the Opposite Party Insurance Company in 1998. The case of the Complainant is that the Policy was renewed and was in force from 22.02.2009 to 21.02.2010 covering the stock in trade for Rs.60 lakhs and Plant and Machinery for Rs.60 lakhs, vide Standard Fire Policy. On 23.04.2009 at about 10 PM, a fire broke out. During the fire, the Complainant unit was completely burnt. The Surveyor submitted his preliminary report on 28.04.2009 and final report on 11.09.2009. Opposite Party No.3, after receipt of the final Survey Report, demanded certain original documents and copies of the police records etc. The Building Claim of Rs.5,04,500/-, covered under a different Policy was paid on 05.01.2010. But the fire loss in respect of Plant/Machinery and Stock, exceeded the pecuniary limits of the Divisional Office, Solapur, the claim was recommended and forwarded for approval to the Regional Office, Pune. The loss of the building had been already paid by the Insurance Company on the basis of the same Surveyor’s Report. However, the claim with respect to the second head was still under dispute, even after the Surveyor recommended payment for the loss due to fire under both the Policies. The Surveyor, submitted the final report accepting the liability to the tune of Rs.55,45,000/- towards plant and machinery and a sum of Rs.45,47,697/- towards stock. But the Regional Office, Pune repudiated the claimed they contended that the Complainant submitted fake and bogus documents to Income Tax and Sales Tax Department and therefore, in view of Condition No.8 of the Policy, the claim was void and not payable. Alleging deficiency in service and unfair trade practice on the part of the Opposite Parties, the Complainant filed the instant Consumer Complaint before this Commission.
After taking submissions from both sides, it was observed by the Commission that the plea of Opposite Party No.1 that the Complainant submitted fabricated documents was without any basis. The statements disputed by the Insurance Company were accepted and regularized by the Government Departments. The Policy was renewed in February 2009 only after verification of the raw material stock, semi-finished and finished goods available in the unit and after proper verification of tax paid invoices and bank statements etc. by the Insurance Company. The Branch Manager, after verifying the record and calling for a number of documents, forwarded the claim to the Divisional Office. The Divisional Office after proper verification forwarded the claim to their Regional Office, shows that, all Government Departments and Insurance Authorities at their Branch, Division and Regional level including the Surveyor had approved the claim. Therefore, repudiation of claim was, thus, unjustified.
On the issue of maintainability of the Complaint, it was observed that this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] has held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon’ble Supreme Court, the Complainant is a “Consumer” and the Complaint is maintainable. The Opposite Parties also contended that the Complaint involved complicated facts which cannot be adjudicated in a summary manner under Consumer Protection Act, 1986. Therefore, this Commission was held to be fully competent to adjudicate the instant Consumer Complaint.
Further, it was observed that that the Surveyor Report is to be given due importance and the Insurance Company cannot go on conducting multiple Surveys to get a tailor made report to their satisfaction. If the reports were prepared in good faith with due application of mind and in the absence of any error or ill motive, the Insurance Company is not expected to reject the report of the Surveyor. Accordingly, it was held that the Complainant was entitled to the amount of loss assessed by the Surveyor in the Final Survey Report dated 11.09.2009 and the Opposite Parties were directed to pay Rs.1,00,92,697/-, as assessed by the Surveyor in the final Survey Report dated 11.09.2009, to the Complainant along with interest @ 9% p.a. to be calculated from the date of repudiation till realization.
FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
1. The present Complaint is filed under Section 21(a)(1) of the Consumer Protection Act, 1986.
2. The Complainant is a private Limited Company having its industrial unit and establishment at Plot No.M-55, M.I.D.C., Waluj, Taluka Gangapur, Distt. Aurangabad, Maharashtra. The Complainant deals in the manufacture of plastic woven tape, fabric, bags, tarpaulin, tents, etc. Under the Central Government special scheme for ex-servicemen (SEMFEX-I) State Bank of India, Beed Branch had advanced a loan to their unit. As per the Bank Policy and procedure, depending on the loan advanced and other investments made therein, in the year 1998 the Bank got the Complainant unit insured by the Opposite Party Insurance Company at their Beed Branch Office.
3. The case of the Complainant is that the Policy was renewed and was in force from 22.02.2009 to 21.02.2010 covering the stock in trade for Rs.60 lakhs and Plant and Machinery for Rs.60 lakhs, vide Standard Fire Policy No.161904/11/09/520. On 23.04.2009 at about 10 PM, a fire broke out. It was a holiday and the unit was closed. The premises and the building was owned and possessed by M/s. Jai Bhavani Packaging Industries, a proprietary firm run by Shri R.S. Nagargoje, Managing Director of the Complainant. During the fire, the Complainant unit was completely burnt. Complainant Company was duly insured with the Opposite Party on the date of the incident. The intimation of loss was given to the Opposite Party. The Complainant raised a claim \of Rs.60 lakhs towards Plant and Machinery and Rs.60 lakhs towards Stock in Trade. The Insurance Company deputed Shri Vijaykumar S. Saokar, as Surveyor for assessment of loss. The Surveyor submitted his preliminary report on 28.04.2009 and fmal report on 11.09.2009. Opposite Party No.3, after receipt of the final Survey Report, demanded certain original documents and copies of the police records etc. The Branch Office forwarded the claim papers to their Divisional Office, Solapur. The Building Claim of Rs.5,04,500/-, covered under a different Policy was paid on 05.01.2010. Since the building loss was within the fmancial limits of the Divisional Office, the claim was paid and settled. As the fire loss in respect of Plant/Machinery and Stock, exceeded the pecuniary limits of the Divisional Office, Solapur, the claim was recommended and forwarded for approval to the Regional Office, Pune. The loss of the building had been already paid by the Insurance Company on the basis of the same Surveyor’s Report. However, the claim with respect to the second head was still under dispute, even after the Surveyor recommended payment for the loss due to fire under both the Policies. The Surveyor, submitted the final report accepting the liability to the tune of Rs.55,45,000/- towards plant and machinery and a sum of Rs.45,47,697/- towards stock.
4. Shri. Rahul Duggal, Opposite Party No.2 was then working as Chief Regional Manager at Pune Regional Office. During a personal meeting, Opposite Party No.2 demanded 10% of the recommended amount i.e. Rs.10,00,000/- by way of bribe for the settlement of claim at his level and by altering the amount to bring it within his financial sanction limits. In order to bring the claim within the powers and limits of Opposite Party No. 2, he directed the Surveyor Shri. Vijaykumar S. Saokar to reduce the amount assessed. The Surveyor, under the pressure exercised by the Regional Office, Pune, revised the assessed amount to Rs.99,53,287/-, without valid reason. As a consequence, second Survey Report was submitted on 05.03.2010, i.e. almost after one year of the fire incident and after 6 months of submission of the final report. As the survey was already completed and the consent for building repairs and disposal of salvage was already provided, the salvage was disposed and building repairs were completed within one month on receipt of the building claim on 05.01.2010. In these circumstances, there was no reason to carry out Survey again at such a belated stage. Opposite Party No.2 persistently demanded “bribe” for sanction of the amount. Ultimately, the Complainant lodged Complaints to C.B.I., New Delhi, I.R.D.A. Hyderabad, C.V.C. New Delhi, Hon’ble President of India and Opposite Party No.1, Head Office of the Opposite Party Insurance Company. Opposite Party No.1, vide its letter dated 26.02.2010, assured necessary action but they failed to take any disciplinary action in the matter. Opposite Party No.2 Office issued legal notice dated 20.04.2011 to the Complainant stating that everything happened due to some misunderstanding and threatened to launch defamation proceedings against the Complainant. The
Regional Office, Pune repudiated the claim, vide their letter dated 10.10.2011. According to the Insurance authorities, the Complainant submitted fake and bogus documents to Income Tax and Sales Tax Department and therefore, in view of Condition No.8 of the Policy, the claim was void and not payable. Alleging deficiency in service and unfair trade practice on the part of the Opposite Parties, the Complainant filed the instant Consumer Complaint before this Commission with the following Prayer:-
“A. To direct the respondent insurance company place on record the claim papers and original office record.
B. To direct the insurance company to make payment of Rs. 1,00,92,697/- by way offire loss claim duly assessed and accepted by the Surveyor in his final survey report dated 11.09.2009.
C. To direct the insurance company to pay penal interest at the rate of 18 % per annum right from 11.09.2009, on which day the final survey report was filed, till its realization on the part of the complainant.
D. To direct the respondent company to pay the damages at the rate of Rs.2,36,688/- per month right from 23.04.2009, the date offire incident till satisfaction of the insurance claim on account of business loss caused to the industrial unit due to its permanent closure in view of non-settlement of the insurance claim raised on their part.
E. By way of an interim relief the respondents be directed to make the payment of Rs.45,47,697/-towards the agreed and accepted amount on account of loss caused to the plant and machinery so determined and assessed by the surveyor in his final survey report dated 11.09.2009, since, there is no dispute on that count.
F. On account of the retrenchment compensation paid to the employees after closer of the unit due to non-settlement of the insurance claim at the earliest opportunity on the part of the respondent company, they be ordered to pay lump sum damages of Rs.10,00,000/- to the complainant unit.
G. Towards the legal and incidental charges, a sum of Rs.1,00,000/- be paid to the complainant by way of cost of the proceedings.
H. To pass any other just and equitable relief in the interest of justice.”
Opposite Party No. 1 resisted the Complaint by filing written statement stating that Opposite Party No. 2 and 3 are not necessary parties and are liable to be deleted from the array of Opposite Parties. It was stated that the Complaints with allegation of fraud are not maintainable under the provisions of Consumer Protection Act, 1986. Opposite Party No. 1 stated that the Complaint was also not maintainable under the provisions of the Consumer Protection Act as complicated questions of law and fact involved, which cannot be adjudicated in a time-bound and summary trial envisaged under the provisions of the Consumer Protection Act. Opposite Party No. 1 also submitted that the Complainant is not a consumer within the meaning of Section 2 (1) (d) of the Consumer Protection Act, 1986 as he had availed the services of the Opposite Parties for Commercial Purpose.
7. On merits, it was stated that the claim of the Complainant was repudiated by giving detailed reasons. There was, therefore, no deficiency in service on the part of the Opposite Parties. The claim was also not payable as per Condition No.8 of the Policy, as the documents submitted by the Complainant in support of the claim were found to be fake, fabricated and non-genuine. It was submitted that as per Sales Tax Department MVAT Returns for the 3rd quarter, it was revealed that the purchase of Rs.27,74,910/- was revised to Rs.25,73,540/-. The insured, however, did not provide the revised returns of Rs.25,73,540/- to the Surveyor. It was also stated that there was a difference of Rs.14,93,327/- as per Sales Tax Department MVAT details of GTO Purchase and similarly a difference of Rs.2,58,330/- under the Sales Tax Department MVAT details of GTO Sales for the year 2008-09. All Revised Returns were filed after the date of loss. In the Survey Report, numbers of discrepancies were observed. The matter was, therefore, taken up with the Complainant and he was requested to furnish additional documents, which were submitted on 20.02.2010. On the basis of the additional documents, the Surveyor submitted an addendum report dated 05.03.2010, re-assessing the loss at Rs.99,53,287/-. It was again observed that the addendum report did not consider some vital aspects. On 05.04.2010, a letter was written to Surveyor seeking clarifications on the above-said issues. The Surveyor, vide letter dated 07.04.2010 wrote to the Complainant to provide the necessary documents. The Surveyor issued another addendum report on 10.03.2011, thereby revising the assessment to Rs.86,09,209/-.
In the addendum report dated 10.03.2011, the queries raised by the Opposite Party/Insurance Company, vide letter dated 05.04.2010, were not addressed by the Surveyor. The Insurance Company, therefore, appointed M/s J.C. Bhansali & Co. to investigate the matter and more importantly confirm the authenticity of bills, returns of Income. M/s J.C. Bhansali & Co. submitted their report on 29.09.2011. The Investigator in view of the findings recorded observed that the transactions needed to be deeply investigated to ascertain their authenticity. The Complainant took considerable time to submit the documents required by the Surveyor which raised doubts about its authenticity. He also failed to furnish complete documents and information despite repeated reminders. The Complainant also manipulated certain documents, which led to applicability of Condition No. 8 of the Policy and repudiation of the claim. The claim of the Complainant was, thus, rightly repudiated and there was no deficiency in service or unfair trade practice on the part of Opposite Party No. 1 .
8. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for Complainant submitted that the Chartered Accountant certified the balance sheet and Sales Tax return submitted to the Income Tax and Sales Tax Department. The plea of Opposite Party No.1 that the Complainant submitted fabricated documents was without any basis. It was submitted that Sales Tax Department never objected to the returns and no query was ever raised by the Insurance Company in the last 2 and half years prior to repudiation of the claim. Total purchase of Rs.27,74,910/- was made as shown in the Sales Tax Returns for the quarter of 01.10.2008 and the same figures and statement of accounts was handed over to the Surveyor. It was submitted that the statements disputed by the Insurance Company were accepted and regularized by the Government Departments. The Policy was renewed in February 2009 only after verification of the raw material stock, semifinished and finished goods available in the unit and after proper verification of tax paid invoices and bank statements etc. by the Insurance Company. Objection and query raised relate to the Sales Tax Returns for September 2008 quarter, which pertained to previous policy period, having no concern with the present Policy. The Surveyor submitted his report to the Branch Office of the Insurance Company. The Branch Manager, after verifying the record and calling for a number of documents, forwarded the claim to the Divisional Office. The Divisional Office after proper verification forwarded the claim to their Regional Office. It was after scrutiny of the claim file for a period of more than 4 months and after calling for some additional information from the Complainant, the Regional Office further recommended the claim to the Regional Claim Committee. This shows that, all Government Departments and Insurance Authorities at their Branch, Division and Regional level including the Surveyor had approved the claim. Chartered Accountant also certified balance sheet and Sales Tax returns submitted for the relevant period. Further, Opposite Party No.1 admitted that there was difference of a meager amount of Rs.2,01,370/-. Repudiation of claim was, thus, unjustified.
9. Learned Counsel for the Opposite Party No.1 submitted that the allegations made in the Complaint against Opposite Party No.2 were baseless, unsubstantiated, slanderous and defamatory for which legal notice had already been sent to the Complainant. The said allegations, however, cannot be adjudicated under the provisions of the Consumer Protection Act. Further, Opposite Parties Nos. 2 and 3 are not necessary parties as no claim has been made against them. The Consumer Complaint involved complicated questions of law and fact, which cannot be adjudicated in a summary manner under the provisions of Consumer Protection Act, 1986. The Complainant is not a Consumer within the meaning of Section 2 (1) (d) of the Consumer Protection Act, 1986 as he had availed the services of the Opposite Parties for Commercial Purpose.
10. On merits, the Learned Counsel submitted that the Complainant took considerable time to submit the documents which raised doubts about the genuineness of the documents. The Complainant manipulated and fabricated documents with intent to inflate the claim to defraud the Insurance Company. The claim, therefore, was rightly repudiated as per Condition No. 8 of the Policy.
11. Admitted facts of the case are that the Complainant had taken Standard Fire and Special Perils Policy from Opposite Party No. 1 in respect of stocks insured for Rs.60 lakhs and for plant and machinery for Rs.60 lakhs. During the subsistence of the Policy, fire broke out in the insured premises on 23.04.2009. The Surveyor submitted final report on 11.09.2009, assessing the loss as Rs.1,00,92,697/-. The Insurance Company, vide letter dated 10.10.2011 repudiated the claim on the ground that the Complainant submitted fake and bogus documents with the Income Tax and Sales Tax Departments.
12. So far as maintainability of the Complaint is concerned, this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] has held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon’ble Supreme Court, the Complainant is a “Consumer” and the Complaint is maintainable. The Opposite Parties also contended that the Complaint involved complicated facts which cannot be adjudicated in a summary manner under Consumer Protection Act, 1986. Reliance is placed on the observation made by Hon’ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd v. Development Credit Bank Ltd, Appeal (Civil) 7228 of 2001 wherein it was held as follows:-
“It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved.”
(Emphasis supplied)
From the above, it is clear that even if some questions of fact and law are involved, this cannot be a ground for shutting the doors of the Consumer Forum. Moreover, we find that the facts of the case are clear and no complicated question of fact is involved. Similarly, the Complainant claimed payment of Rs.1,00,92,697/- with interest, which involved no complicated question of law. The Opposite Parties simply made bald allegation to the effect that the Complaint involved complicated question of fact and law. They failed to substantiate this allegation. This Commission is, thus, fully competent to adjudicate the instant Consumer Complaint.
13. It had been held in various judgements time and again that the Surveyor Report is to be given due importance and one should have sufficient grounds not to agree with the loss assessment made by the Surveyor. The Insurance Company cannot go on conducting multiple Surveys to get a tailor made report to their satisfaction. If for any reasons, the report of the Surveyor was not acceptable, the Insurer had to give valid reasons for not accepting the Report. If the reports were prepared in good faith with due application of mind and in the absence of any error or ill motive, the Insurance Company is not expected to reject the report of the Surveyor.
14. In view of the facts of the present case and following the settled law, we see no reason for conducting further Survey after the first Survey Report was submitted, as Opposite Party No.1 has not proved any malafide against the Surveyor. The contention of the Opposite Party Insurance Company regarding genuineness of the documents was also not substantiated with cogent evidence. In this regard, observation by the Surveyor in the final Survey Report dated 11.09.2009 is relevant, which reads as follows:
“1) The cause of loss is due to fire and the cause of fire is due to short circuit in the electrical installation of the Insured’s factory premises.
2) The assessed loss of Rs.1,00,92,697/- is admissible under the policy and the insured also accepted the same as per our telephonic discussions.
3) There is no breach of any warranty or any breach of terms and conditions of the referred Policy.
4) The cause of short circuit which is exclusion is not deducted; electrical having remained totally uninsured/disallowed.
r) This report is issued WITHOUT PREJUDICE.”
(Emphasis supplied)
From the above it is seen that the Surveyor had observed that there was no breach of any warranty or any breach of terms and conditions of the Insurance Policy. The case of the Opposite Party is that the Complainant submitted fake and fabricated documents, which was contrary to the observation of the Surveyor. The Opposite Party failed to produce any evidence to substantiate their plea. Consequentially, repudiation of claim attracting Condition No.8, on the basis of genuineness of document, is not justified. The Complainant is, therefore, entitled to the amount of loss assessed by the Surveyor in the Final Survey Report dated 11.09.2009.
15. For the aforementioned reasons, we direct the Opposite Parties to pay Rs.1,00,92,697/-, as assessed by the Surveyor in the final Survey Report dated 11.09.2009, to the Complainant along with interest @ 9% p.a. to be calculated from the date of repudiation till realization. The order be complied within two months from the date of order, failing which the amount shall carry interest @ 12% p.a.
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