Vineeta Rai, Member
1. This First Appeal has been filed by New India Assurance Company Ltd., Opposite Party before the Punjab State Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred to as the State Commission) and Appellant herein being aggrieved by the order of the State Commission which had allowed the complaint of M/s Trimurti Tablewares Ltd., Original Complainant before the State Commission and Respondent herein.
2. FACTS :
Respondent-Complainant M/s Trimurti Tablewares Ltd., a limited company, contended that it was running the business of manufacturing glass tumblers, bottles and other gift items of glass in its factory premises at Village Bhagpur, Machhiwara Road, Kohara, District Ludhiana, for which he had taken a cash credit limit of Rs.75 Lakhs and a term loan of Rs.307.50 Lakhs from Indian Overseas Bank for its building, plant, machinery and stocks etc. Respondent-Complainant got the building, plant, machinery, accessories, raw material and finished goods/products insured with Appellant/Insurance Company on 15.09.2003 for Rs.430 Lakhs, i.e. Rs.130 Lakhs for building, Rs.250 Lakhs for plant and machinery and Rs.50 Lakhs for stocks of all kinds of powder, chemical sand, LDO, RFO, LPG, raw material, packing material and other finished and unfinished goods of similar nature stored in the insured premises. Respondent-Complainant surrendered the cash credit limit and the term loan of the Indian Overseas Bank and opened a new account with State Bank of Bikaner and Jaipur in December, 2003.
3. In the night intervening 6/7.6.2004 there were strong winds and storm accompanied with heavy rain which created a flood like situation in the area of the industrial unit of the Respondent-Complainant causing massive damage/loss to both the factory as also the raw and finished material making the entire unit inoperative. The matter was reported to the Appellant-Insurance Company as also State Bank of Bikaner and Jaipur. On receipt of this information, senior officers of both the Appellant/Insurance Company and the Bank visited the factory premises on 07.06.2004 and the Surveyor appointed by the Appellant-Insurance Company took the necessary documents in possession and also signed the books of accounts, sale book, register, purchase book, production register and the packing material register etc. and noted the damage caused to the building, plant, machinery as also material/stocks. A videographic film was also prepared. Respondent-Complainant on its own appointed a private technician-contractor M/s Nibhiulla Contractors and Technicians, who after inspecting the premises and machinery concluded that a sum of Rs.47,71,310/- was needed to repair the machinery. Two other Contractors/Fabricators appointed by the Respondent-Complainant to assess the loss caused to the building and on account of labour opined that it was to the tune of Rs.11,71,242/- and Rs.8,73,022/- respectively. Apart from this, since stocks of Quartz Power, Soda Ash, Calcite Sand, Fedopar powder etc. as also finished glass were damaged/destroyed, the loss assessed was Rs.18,15,918/- and electric fittings of Rs.98,800/- were also destroyed. The total loss in this way came to Rs.1,59,28,247/-. The Surveyor appointed by the Appellant-Insurance Company had estimated the total loss as being Rs.78,75,995/- and Surveyor had also obtained the signature of the Managing Director of the Company on the consent letter dated 09.07.2004 and he never doubted any of the documents submitted by the Respondent-Complainant. Although the Appellant-Insurance Company assured the Respondent-Complainant that the claim would be settled for the above amount within shortest possible time, they failed to do so and instead repudiated the claim vide letter dated 29.12.2004 on the plea that the Respondent-Complainant had made false and exaggerated claims by fabricating bills and thus violating the terms and conditions of the insurance policy because of which the entire claim was repudiated. Being aggrieved by the wrong repudiation of their insurance claim, Respondent filed a complaint before the State Commission on grounds of deficiency in service and requested that the Appellant-Insurance Company be directed to settle the insurance claim and pay sum of Rs.78,75,995/- on account of loss suffered by it with 9% interest from 07.06.2004 till the date of actual payment and Rs.10,000/- as litigation costs.
4. Appellant-Insurance Company on being served filed a written rejoinder and denied that the claim was wrongly repudiated. It was also denied that the Surveyor had in his report assessed the loss at Rs.78,75,995/-. In fact the total claim had been calculated at Rs.32,79,530/- vide the report dated 13.10.2004. However, even this amount was not admissible since Respondent-Complainant had violated Policy Condition No.8 of the Standard Fire and Special Peril Policy which provided that if there is any false declaration made or used in support of a claim, then all benefits under this policy shall be forfeited. In the instant case, admittedly a false and fraudulent claim was made since the samples drawn by the Surveyor of various raw materials were sent to Shriram Institute for Industrial Research for investigation and as per the report received from that Institute, the purity results were either less or nil in respect of Cobalt Oxide, Arsenic Trioxide, Selenium, Zirconium Oxide and Sodium Sulphate etc. Thus, these were just waste materials which had been stored in the insured premises. M/s Vardhman Soap (India), from whom these goods had been purportedly bought according to the Respondent-Complainant, declined that the goods were bought from them. In view of the above facts, admittedly, a false and fraudulent claim was made and, therefore, the Insurance Company had rightly repudiated the same.
5. The State Commission after hearing the parties and on the basis of evidence produced before it, partly allowed the complaint by observing as follows :
œ21. ¦ It is not disputed in the present case that there was devastating storm and a flood like situation was created and the industrial unit of complainant was filled with water and there was heavy damage/loss. The complainants cannot be deprived of some compensation when their industrial unit was insured with the respondents. There may be Policy Condition No.8 of Standard Fire and Special Peril Policy but that does not mean that the respondents can take the shelter under this policy condition and repudiate the claim of the complainant, which is otherwise proved to be genuine. If the repudiation in such like cases is permitted, the Insurance Companies can always exploit this clause in each and every case. Some information given by the claimant would always be found to be false for one reason or the other. The complainant alleges to have suffered the loss to the tune of Rs.1,59,28,247/-. It may be exaggerated but after reducing the value of goods/bills which were found by the respondents to be false, the Surveyor has assessed the value to the tune of Rs.32,79,530/- and the respondents are not ready to grant even this much amount.
22. The only question in this case was that certain claims were made by the claimants which were disbelieved by the respondents and the value of those items were already reduced by the Surveyor from the amount assessed. The loss was originally assessed at Rs.78,75,995/- which was reduced to Rs.32,79,530/-. The respondents should not squeeze the complainants still further. However, the complainant is also not entitled to more as the claim made by them was found to be false on certain aspects. Moreover, the complainant cannot claim Rs.78,75,995/- as they have already given consent letter for an amount which is very close to Rs.32,79,530/-.
23. Accordingly, we partly allow this complaint costs of Rs.10,000/- and direct the respondents to pay an amount of Rs.32,79,530/- to the complainant with interest @ 9% from the date of repudiate i.e. 29.12.2004 till the date of payment.?
6. Being aggrieved by the order of State Commission, the present first appeal has been filed.
7. Learned Counsels for both parties made oral submissions.
8. Learned Counsel for the Appellant-Insurance Company while reiterating the facts as stated before the State Commission contended that since an insurance policy is a contract between two parties and its terms and conditions have to be construed strictly in terms of what is written therein, the claim was rightly repudiated for violation of Policy Condition No.8 of the insurance policy taken by the Respondent-Complainant. The State Commission while acknowledging that the Surveyor had rightly concluded that the claim in the instant case was false and fraudulent, yet partly allowed the same without appreciating the sanctity of Condition No.8 in terms of contract between the two parties. Counsel for the Appellant-Insurance Company also brought to our notice a judgment of this Commission in M/s R.S. Metals Pvt. Ltd. v. New India Assurance Co. Ltd. [I (1993) CPJ 1 (NC)], wherein this Commission had taken suo-moto cognizance of a similar provision and concluded that in view of the fraudulent claim made, the Insurance Company was fully justified in repudiating the entire claim.
9. Counsel for the Respondent-Complainant on the other hand stated that the actual loss suffered by the Respondent-Complainant was much higher than the awarded amount. However, despite this, it accepted the finding of the State Commission on the vastly reduced claim of Rs.32,79,530/-. As pointed out by the State Commission, the Surveyor had reduced Respondent-Complainants genuine claim on the grounds that some documents could not be verified and other reasons as recorded by the State Commission and, therefore, Respondent-Complainant had already suffered a loss on account of deduction of these amounts from the genuine claim. Under the circumstances, it would be unfair to repudiate the entire claim. In view of the vastly reduced claim amount, there was, thus, no scope or reason for any further deduction.
10. We have carefully considered the submissions of learned Counsel for both parties and have also gone through the evidence on record. The fact that Respondent-Complainant had taken insurance policies from the Appellant-Insurance Company in respect of his factory, machinery as also stocks lying therein is not in dispute. It is further a fact that in the floods that occurred on 6/7.6.2004 substantial damage was caused to all three items as confirmed by the Surveyor in its report. We further note that the Surveyor had drastically reduced the originally assessed loss of Rs.78,75,995/- to Rs.32,79,530/- payable to the Respondent-Complainant on the grounds that some necessary documents were not supplied to it to verify the claim and further some raw materials which had been sent for analysis to Shriram Institute for Industrial Research clearly indicated that it had negligible purity value and, therefore, these were not saleable items and had little market value. Counsel for the Appellant-Insurance Company has vehemently argued that in view of Policy Condition No.8 the entire claim was rightly repudiated and the State Commission erred in not appreciating this fact. We are unable to accept this contention because in a large number of consumer cases pertaining to insurance claims that have come up before us, Insurance Companies based on the Surveyors report have reduced the claim amount when claims are not verifiable by documentary and other evidence and because the insuree had not been able to produce evidence to controvert Surveyors findings. We have accepted that in such cases the Surveyor rightly deducts these amounts from the insurance claim. In the instant case, we also note that the Surveyor has deducted and drastically reduced the claim amount by not entertaining those claims which could not be verified or were found to be false. Under these circumstances, it would not be fair or reasonable to reject even the genuine claims of the insuree which had been verified and found to be correct by the Surveyor. We, therefore, agree with the finding of the State Commission that the Appellant-Insurance Company was liable to settle the reduced insurance claim of the Respondent-Complainant in respect of his genuine and proved loss amounting to Rs.32,79,530/- and uphold the same.
11. The present first appeal, therefore, stands dismissed. Appellant-Insurance Company is directed to settle the claim and pay a sum of Rs.32,79,530/- to the Respondent-Complainant as per order of the State Commission. Counsel for the Appellant-Insurance Company informs that a sum of Rs.20 Lakhs had already been paid to the Respondent-Complainant. If that be so, then Appellant-Insurance Company is directed to pay the Respondent-Complainant remaining amount of Rs.12,79,530/- with interest @ 9% per annum from the date of repudiation i.e. 29.12.2004 till the date of payment within a period of 8 weeks.