K.C. Gupta, President:
1. Briefly stated the facts are that complainant firm has got tube light manufacturing unit at 0-9, Industrial Area, Sonepat and its head office is situated at Sonepat. The present complaint has been filed through its partner Sh.Pawan Malik.
2. It was averred that opposite party had issued insurance policy for burglary and house-breaking which is Annexure C-2 and also issued another insurance policy for fire and special perils for its manufacturing unit which is Annexure C-1 and was operative from 24.12.2005 to 23.12.2006 (mid-night). The factory was insured for Rs. 40 lacs and complainant had paid premium of Rs.18,514 for two policies.
3. It was next averred that unfortunately a fire broke out on the night intervening 3rd/4th Jaunary, 2006 due to which its entire stock was burnt and the machinery was also severally damaged. The fire could be brought under control only after five hours by various fire tenders called from the adjoining arrears. The copy of the fire report by the Haryana Fire Service is Annexure C-3. The fire incidence and the loss were immediately reported to opposite party by fax letter dated 4.1.2006, whose copy is annexure C-4. The report was also lodged with the police which was recorded in Daily Diary Report at No. 22 on 4.1.2006 at Police Station City Sonepat and its copy is Annexure C-5.
4. It was further averred that a total claim of Rs. 20,55,130 regarding loss of finished goods, semi-finished goods, raw material, packing material, flair machine, vacuum pump and spare parts was lodged with the respondent, whose copy is Annexure C-6.
5. It was next averred that OP had sent surveyor M/s. Mehta and Padamsey Surveyors Private Limited, New Delhi immediately on 4.1.2006 who visited the spot and made various inquiries which were suitably replied.
6. It was further averred that thereafter OP appointed another surveyor/investigator Sh. Laxman Dass Arora and associates who also visited the spot and complainant completed all the formalities as required by OP and some of the documents and letters in this regard are Annexure C-7.
7. It was next averred that after almost eight months of the loss, OP still appointed another investigator Mr. A.N. Chopra without any rhyme or reason, who visited the factory premises in August, 2006 and all the relevant documents were supplied to him.
8. It was further averred that OP did not sanction the claim of the complainant firm although documents were supplied and even had written letters for speedy redressal of the claim of complainant and ultimately served legal notice dated 14.10.2006 calling upon OP to pay the claim. The copy of the legal notice is Annexure C-17.
9. Alleging deficiency in service, the complainant claimed a sum of Rs. 20,55,130 along with interest @ 12% p.a. with effect from 4.1.2006 till payment is made, as mentioned in para 22 of the complaint.
10. With these allegations, the complaint was filed on 17.11.2006.
11. Opposite party contested the complaint and filed written reply dated 15.1.2007. It took certain preliminary objections; that the complainant firm was a private limited company and was running the factory which was involved in manufacturing of various electrical equipments and, thus, activity being undertaken by it was for commercial purpose which was not covered under the Consumer Protection Act; that the complaint would require voluminous evidence to be recorded which could not be done in a summary manner and as such the matter should be referred to the civil Court. On merits, it denied the allegations and stated that the alleged loss occurred on the intervening night 3/4.1.2006 due to alleged short circuiting and on receipt of intimation regarding the incidence, it appointed M/s. Mehta and Padamsey Surveyors Private Limited to go to the spot and to assess the loss . The said surveyor promptly submitted preliminary loss report dated 5.1.2006, whose copy is Annexure R. 3. In view of the preliminary report, it asked the complainant to provide certain documents, so ,as to enable it to verify and assess the loss and copies of the correspondence between surveyor and insured complainant company are Annexure R-4 and Annexure R-5 but the complainant firm failed to respond to such queries in an effective manner and the information and documents as sought were either not supplied or were supplied in piecemeal manner. It further stated that it had deputed M/s. Lakshman Dass Arora and associates to investigate the loss and other attending circumstances and it recorded the statements of employees of the insured and verified the bills of purchase/sale of the stock. The investigator asked for certain documents which were not supplied and as such he approached the Haryana Fire Services, Sonepat for ascertaining the cause of fire vide letter dated 3.2.2006, whose copy is Annexure R-6 and further sought information from Oriental Bank of Commerce, Sonepat for ascertaining the nature of credit facility and amount outstanding as per credit sanction vide letter, whose copy is Annexure R-7 but complete information was not supplied and ultimately investigator submitted his addendum report dated 10.8.2006, whose copy is Annexure R-9 and the letter written by the investigator to the venders/suppliers is Annexure R-10 collectively. Still another investigator Retd. Captain A.N. Chopra was appointed to further gather material information relating to the claim of complainant firm with special emphasis on the role of parent company M/s. Satyam Electro Mech., who visited the spot and came to the conclusion that the insured factory was a demo unit of parent unit i.e. M/s. Satyam Electro Mech. and majority of sales were made by the complainant through its parent unit who in turn refused to show the records of the sale of goods. The copy of the investigator report of Capt. (Retd) A.N. Chopra dated 29.8.2006 is Annexure R-11. Ultimately M/s. Mehta and Padamsey surveyors assessed the loss to the tune of Rs. 4,25,432 vide report dated 25.10.2006, whose copy is Annexure R-12 and, thus, it was liable to pay only the said amount as per survey report and not more than that. It further stated that it had been very prompt in dealing with the claim of complainant but the delay, if any, occurred was on account of non-cooperative approach adopted by the complainant firm itself.
12. Parties adduced their evidence by way of affidavits.
13. We have heard Counsel for complainant Mr. Pankaj Chandgothia, Counsel for opposite party Mr. Ashwani Talwar along with Mr. Jitin Talwar, Advocate and carefully gone through the file.
14. Annexure C-1 is copy of the insurance cover issued to the complaiant known as fire and special perils. Annexure C-2 is the copy of insurance cover issued to the complainant by OP known as burglary and house breaking insurance. Both were valid from 24.12.2005 till midnight 23.12.2006. The factory was insured for a sum of Rs. 40 lacs and the total premium paid for both the policies was Rs. 18,514. The detail of property insured under both the policies is as under:
1. Raw Material + Finished goodsâ
Glass shell, Fluorescent powder, butyle, Gunjpoll, cement, cap, lead in wire, filament, sipreat, Amile Acceate, Paste, Boric Acid, CS2, Solider + packing material + finishing goods
2. Machineryâ
Coating 1, Baking 1, sealing machine 2, Eagsoat Machine with Vacum pump 18, capping machine 1, conveyor 2, Ball mill 1, Statre 1, steam machine 2, flair machine 3, blower 5, Genset 65 KV, Emmeter 1, Testing Bench 3, Testing conveyor 1, Cement mixture 1, Cap Piller 1, Tube cutting 1, compressor 1 and its spare parts.
15. Unfortunately, a fire broke out in the factory of the complainant firm on the night intervening 3/4th Jaunary, 2006 during the validity period of the insurance policies. According to complainant, the entire stock was burnt and the machinery was also severally damaged and the fire could be extinguished only after more than 5 hours by various fire tenders called from adjoining arrears. Annexure C-3 is copy of the fire report dated 10.1.2006 of Haryana Fire Service. It shows that fire broke out in the factory of complainant on 4.1.2006 at 3.00. The category of the fire was medium and it took place due to short circuiting and damage was caused to the raw material, finished goods, building, machinery and electric cables and damage to the property involved was Rs. 20 lacs approximately and it took 3 hours to extinguish the fire. The very fact that it took about 3 hours to extinguish the fire by fire tenders shows that the fire was extensive. Annexure C-4 is fax message addressed by the complainant to the branch manager of the OP sent on 5.1.2006 at 3.55 p.m. bringing to its notice that a serious fire had broken out in its godown at factory premises and the fire broke out at 3.15 a.m. on the night intervening 3 /4th January, 2006 and fire brigade from Sonepat and Ganaur came and controlled the fire at about 6.00 a.m. It is further stated in it that entire stock of raw material, finished goods, packing material, machinery and spare parts were completely burnt and the loss was of 25-30 lacs. Annexure C-5 is copy of the DDR No. 22 dated 4.1.2006 lodged with the Police Station, Sonepat by Mr. Pawan Malik, partner of the complainant firm stating about the loss by fire at the godown of his factory.
16. Annexure C-6 is copy of the fire insurance claim lodged by the complainant firm with OP in which it was stated that there was estimated loss of Rs. 20,55,130 and the goods affected were finished goods, semi-finished goods, raw material, packing material, flair machine, vacuum pump and spare parts. Annexure C-7 is copy of affidavit dated 12.1.06 which was filed by Sh. Pawan Malik, partner of S.D. Lighting-complainant firm with the Surveyor stating that the fire had occurred in its premises on 4.1.2006 in the morning and there was no other premises to store or to keep stocks except the above affected premises and further they had not removed or caused to be removed any of the unaffected stocks from the premises in question either before or after the said fire and further all the books of account and records pertaining to the previous as well as current years had escaped from the said fire. Annexure C-8 is copy of the letter which was addressed to the surveyor M/s. Mehta and Padamsey surveyors Pvt. Ltd. Dated 21.1.2006 giving the details of the documents which were supplied to the surveyor (it is in two pages). Annexure C-9 is again copy of the letter addressed to the Surveyor dated 24.2.2006 by the complainant company submitting further documents as required by him including copy of the income tax return, copy of the balance sheet duly certified by sales tax authority, electrical engineer report along with detailed layout plan, item-wise statement of entire plant and machinery, copy of stock register, certificate from the bankers of complainant, audited balance sheet for the accounting year 2005 to the date of fire, purchase and sale bill details, item wise statement of quantities and value of stocks in the premises immediately prior to the fire. A joint reading of letters Annexure C-8 and C-9 shows that complainant had supplied complete information to OP or surveyor or investigator as required. It had further supplied certain other documents to the surveyor vide letter Annexure C-10 dated 3.4.2006. Vide letter Annexure C-14 dated 7.8.2006, OP through Regional Claims Manager had conveyed to the complainant that it was not alleged by OP that the complainant firm had lodged a fraudulent claim and further it had not cast any aspersions on the complainant or its partners. Annexure C-17 is legal notice issued by the complainant through Counsel dated 14.10.2006 while Annexure C-18 is copy of the reply sent by OP on 20.10.2006. Thereafter reminders were given to OP to expedite the submission of report but nothing was done. Annexures C-22 to C-25 are copies of balance sheet and profit and loss account of the complainant firm.
17. Annexure R-3 is copy of the preliminary report of the surveyor M/s. Mehta and Padamsey Surveyors Private Ltd. dated 5.1.2006. It shows that the loss had occurred due to short circuiting and further the fire had broken down in three stores/godowns (inter-communicating with one another) of the insured. These stores were occupied for the storage of finished fluorescent tube lights and various raw materials including packing materials and spare machinery. The electrical wiring was partly in conduit pipes and partly of open type. The estimated loss was about Rs. 20 to 25 lacs as estimated by the complainant (insured). Vide preliminary report, surveyor had sought certain information which was duly supplied by the complainant company vide letters Annexure C-8 and C-9.
18. Thereafter OP did not rest with the appointment of M/s. Mehta and Padamsey surveyors Pvt. Ltd. but still appointed one after the other two more investigators. M/s. Lakshman Dass Arora and Associates submitted report Annexure R-8 dated 27.3.2006. Mr. Lakshman Dass Arora is a retired police officer of crime branch of Delhi police,. In our opinion, retired police officers should not be appointed as investigators by the Insurance Companies. The proof required in criminal cases is different than in civil cases. In criminal cases, the evidence is required to be proved beyond reasonable doubt for holding a person guilty of an offence but a civil case is based on preponderance of evidence. Thus, attitude of the police officials is not helpful or conducive in determining/assessing loss as their attitude is quite different. It was admitted by Lakshman Dass Arora in his report that the complainant had submitted photocopy of purchase bill, attendance sheets , bank statement and floppy of stock record which was not working but later on submitted another CD of record. This evidence should have been enough for the investigator to assess the loss but he tried to find out gaps in the claim statement of the complainant, apparently for no solid reasons. If one of the parties had returned the goods being of inferior quality goods, then it cannot be said that all the material sold by the complainant company was inferior. The purchase bills produced by Sh. Pawan Malik were got verified from the concerned sellers on different dates. The purchase bills had shown the material purchased from different persons which must have been stored in the godown which got fire. He had even stated under the heading âfindings that the cover note relating to burglary submitted by the insured at Chandigarh office was fake on verification from UIC. This is totally incorrect as the OP had admitted in the written reply that both policies were issued by it. Again it further shows that he had tried to find out lapses without any apparent reasons, so as to reject the claim. It shows his biased attitude. He had stated without any reason that loss shown by the insured was not genuine. If the stocks with the complainant were available of the goods manufactured in the years 2003, 2004 and 2005 then it did not signify that sales were not enough. It could be that there was more production than sale.
19. OP was not still satisfied with the report of M/s. Lakshman Dass Arora and Associates and appointed another investigator namely ex. Capt. A.N. Chopra. He submitted his report dated 29.8.2006, whose copy is Annexure R-11. The practice of OP in appointing one after another surveyor/investigator is deprecated. It shows that OP wanted to have favourable report to reject the claim of complainant. If returned goods had been made part of the closing stocks, then there was nothing wrong in it. It cannot be considered as junk as observed by the investigator ex. Capt. A.N. Chopra. If a party for certain reasons or may be due to inferior quality had returned goods, that does not mean that the same are a junk. There was no justification on the part of investigator to draw conclusion that false bills were made just to spruce up sale figuratively as well as to justify the high production of FTL, both for demo purposes. Certainly for demo purpose high production cannot be made. From the mere fact that on or two parties had returned consignment of fluorescent tube lights, it cannot be said that the material burnt was sub-standard and was returned by a large number of parties. According to the investigator, the possibility of siphoning the raw material purchased by the manufacturing of FTL could not be ruled out and the material purchased and stocked in the factory, according to him, appeared disproportionate to the actual manufacturing requirement. No body can project before hand. Sometimes requirement falls due to non-demand of goods in the market and sometimes it goes up. Moreover, the complainant firm was trying to increase production and sales which could be evident from the fact that it had raised the number of employees from 11 in April, 2005 to 19 in December, 2005 as per Annexure C-32 and C-33
20. Finally M/s. Mehta and Padamsey Surveyors Pvt. Ltd. submitted report Annexure R-12 dated 25.10.2006 awarding a sum of Rs. 4,25,432 . The report of the surveyor is not based on sound reasoning. It is true that ordinarily the report of surveyor has to be believed to be correct. The surveyor in its report Annexure R-12 at internal page 8 in Clause 10.01 had mentioned that they had found that the insured had given two different values of closing stocks as on 31.3.2005 as under:
| In the unsigned profit and loss accounts and balance sheet, as provided to us during our first visit. | Rs. 8,89,881 |
| In profit and Loss accounts and balance sheet, as certified by the concerned assessing authority on 15.2.2006 i.e. after the date of fire ; and submitted to Income tax authorities on 15.12.2005(prior to fire) | Rs. 13,05,681 |
| PARTICULARS | AMOUNT(Rs.) |
| Value of stocks as on 3.1.2006 | 942138 |
| Less: Value of sound stocks in the affected premises as on 3.1.2006 | 76813 |
| Value of stocks burnt/damaged in the fire | 865325 |
| Less:Deduction towards unsaleable/ dead stocks @ 50% | 432663 |
| Less : Salvage value as scrap @ 5 | 21633 |
| ASSESSED LOSS | 4,11,030 |
| Less: under-insurance | Nil |
| ADJUSTED LOSS | 4,11,030 |
| 11.2 Machinery Estimated cost of repairs/replacement Caused to the machinery | 55,370 |
| Less: Salvage value as scrap | 15370 |
| Assessed loss | 40,000 |
| Less: Under insurance @ 38.996% | 15,598 |
| Adjusted loss | 24402 |
| Item of loss | Assessed loss | Adjusted loss |
| Â | (Rs.) | (Rs.) |
| Stocks | 411030 | 411030 |
| Machinery | 40,000 | 24402 |
| Total | 451030 | 435432 |
| Less : excess clause | 10000 | |
| Â | Net Liability | 4,25,432 |