ARUN INKS PVT. LTD. vs UNITED INDIA INSURANCE CO. LTD.

The present revision petition has been filed against the judgment dated 23.06.2015 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai (''the State Commission) in First Appeal no. 490 of 2014.

The facts of the case as per the petitioner/ complainant are that the petitioner was a private limited company, which had obtained a Standard Fire and Special Peril Policy from the respondent/ Insurance Company which was in force for the period 04.08.2004 to 03.08.2005. Under the said policy, sum insured was Rs.1,00,000/- for building, Rs.2,00,000/- for plant, machinery and accessories, Rs.40,000/- for furniture, fixtures and electrical, Rs.5,50,000/- for other stock and Rs.60,000/- for laboratory equipment. Due to flooding in Mumbai on 26.07.2005 the petitioner claimed to have suffered damage and loss to the property to the tune of Rs.7,97,157/-. Petitioner accordingly filed a claim with the Insurance Company. The Insurance Company appointed a surveyor. The surveyor appointed an investigator. The surveyor himself visited the spot. He obtained records, made various requisitions to the petitioner and submitted a report to the insurance company, thereafter the insurance company repudiated the claim by a letter dated 24.11.2008. Petitioner, therefore, filed a consumer complaint seeking a monetary claim of Rs.9,47,157/- viz an amount of Rs.7,97,157/- towards indemnification of the damage caused + Rs.1,50,000/- by way of compensation.

The respondent insurance company contested the claim by filing written version stating that surveyor had made various requisitions to the petitioner for furnishing the requisite information. However, since, the petitioner did not furnish the requisite information the surveyor came to the conclusion that the claim was not substantiated. This report of the surveyor was forwarded to the insurance company on 04.05.2006. It appears that thereafter, the insurance company had called the petitioner for discussions. There was again further correspondence and eventually, the claim was repudiated. The insurance company stated that though the surveyor had assessed the claim at Rs.30,682/- only, even that amount could not be paid because of breach of terms of the policy condition nos. (1 and 8) Insurance company, therefore, sought dismissal of the complaint.

The District Consumer Disputes Redressal Forum, South Mumbai vide its order dated 08.05.2014 had dismissed the complaint.

Aggrieved by the order of the District Forum petitioner filed an appeal before the State Commission. The State Commission vide its order dated 23.06.2015 while dismissing the appeal observed as under:

"6. Complainant seems to have relied on figure of closing stock which Mr Dilip Solanki, Director could not substantiate. Closing stock as on 31.03.2005, i.e., about four months before the incident, had been certified by an auditor at Rs.8,40,017/-, which included material with processors and material at another premises of the complainant. After excluding these items, stock as on 31.03.2005 would be of Rs.4,53,170/-. If therefore, the complainant had dealt in stock, i.e., purchased or sold goods, this should have been reflected in the books of accounts. It was stated that the books of accounts were also destroyed in the floods. It appears from the correspondence that the complainant had another business premises at Mumbai and Mr Dilip Solanki, Director stated orally on our query that these other premises are situated on the 9 th floor of a building at Tardeo. It is not clear as to how entire record could have been destroyed by floods at premises at Vasai. Had the complainant endeavoured, the record could have been reconstructed since purchases or sales could have been recalled from suppliers or the purchasers and on the basis of their books of accounts and/ or their invoices and cash memoranda. These particulars could have been furnished had the complainant so desired. This was not done inspite of requisitions by the surveyor. It is also pertinent to note that even according to Mr Dilip Solanki, Director, complainant had a very small unit having only two employees. Therefore, considering magnitude of transactions, it would not have been impossible for the complainant to provide the requisite information.

Mr Dilip Solanki, Director stated that several transactions took place from his wife''s personal bank account in ICICI Bank. Now, when the complainant is a private limited company and which is supposed to maintain proper books of accounts, transactions through an account of one of the Directors (Since Mr Dilip Solanki, Director appearing on behalf of the complainant company stated that his wife is the other Director) is inexplicable. In any case, these transactions should have also been reflected in the books of accounts.

Surveyor had also mentioned that two entities were in fact, working in the premises one, the complainant viz., Arun Inks Private Limited and other was possibly a proprietary concern v8iz., Arun Inks. Mr Dilip Soloanki, Director of the Complainant company does not dispute that he owned the proprietary concern by name ''Arun Inks''. However, he stated that the claim did not pertain to anything belonging to the proprietary concern, ''Arun Inks''. He submitted that excise officers would not have permitted two manufacturing units to operate from the same premises. Now, if Arun Inks was also a manufacturing units, it must have been registered with excise authorities. If, it stopped functioning that intimation must also have been given to the excise authorities. Without these clarifications, we would not be able to find fault with the surveyor''s conclusion that there was no certainty that the entire stock belonged to the complainant company.

As regarding furniture, Mr Dilip Solanki, Director stated that since the insurance company was supposed to provide restitution, there was no question of producing any evidence about purchase of articles of furniture in respect of which, a claim was made. He submitted that the surveyor who had visited had in fact, sat on some furniture and therefore, could not have said that there was no loss of furniture. We do not see as to who this advances the cause of the complainant company. If there was furniture, which the surveyor used, it was obviously not damaged, If the furniture was damaged, the complainant should have shown some evidence about acquisitions of furniture.

We find that the requisitions of the surveyor invariably evoked a different response from the complainant company rather than making material sought available. Therefore, if the complainant did not comply with the requisitions made and did not furnish unimpeachable evidence of what stock was available or what was the cost of acquisition of furniture which was damaged, the surveyor could not have concluded that there was some loss. Conclusions drawn by surveyor and accepted by the insurance company cannot, therefore be faulted.

We therefore, find that the case of the complainant company has been rightly adjudged by the District Forum and therefore, see no merit in the appeal, hence, the appeal stands dismissed".

Hence, the present revision petition.

I have heard the counsel for the petitioner. He contended that the respondent/ opposite party based the repudiation on the report of the surveyor. The surveyor in his assessment of damages has specifically mentioned about the furniture at the factory premises. While on the one hand the surveyor had stated that there was no furniture present and on the other hand admitted the use of furniture presence during their inspection. The respondent has wrongly stated that the petitioner had not cooperated in giving all the documents required to assess the loss. He further contended that it is an admitted fact that there was a heavy rainfall in the vicinity of the factory on 26/27 of July 2005 and so the claim should not have been repudiated. It is an admitted fact that even in the vicinity of the factory area was submerged in water almost up to three feet.

I have carefully gone through the record. The claim of the petitioner was repudiated by the respondent for the following reasons:

As you are aware that in accordance with the IRDA regulations the insurance company is bound by the survey report and therefore, the insurance company decides the claim on the basis of the survey report, which established serious discrepancies in regard to the claim made by the yourself;

In the first instance, you have not cooperated with the surveyor initially to assess the loss on 02.08.2005 for reasons best known to you;

You have failed in your obligation to discharge your duty as a insured since the surveyor has specifically in his report dated 27.04.2006 stated that no furniture affected by you as sough to be claimed by you was shown to the surveyor;

You have further failed to discharge your obligation as a prudent insured to produce the records relating to plant and machinery, stocks, and the assets register on a false pretext that the same was destroyed in the floods. You are very well aware that the insurance company requires sufficient proof to pass the claim on the basis of the investigation report, but it is unfortunate that you have not provided a shred of evidence to the investigator to justify your claim;

You have failed to establish the loss in toto, since due to the delay caused on your side to cooperate with the investigator, the investigator could not even trace the water marks at the factory premises to ascertain the level of the water that may have actually come into your premises;

You have provided inappropriate documents of the investigatory all of which do not hold any veracity to justify your claim. This is so because the documents produced by yourself are itself questionable in the first instances the balance sheet provided by you, we also not authentic and proper and justifiable to process your claim;

The balance sheet provided by yourself is questionable on the face of it since on verification it has been found that you have not filed your returns with the competent authority, i.e., the Registrar of Companies and therefore, the same cannot be taken into account so as to process the claim further;

You have failed to give proper justification since the statements signed by your auditors is itself questionable. This is so because the statement signed by your auditors pertains to payment made by the Directors for purchase of raw material. As you are aware that a private limited company is a separate entity in law and any payment made in regard to purchase by the company can be funded by the Directors, however, these kind of payments are as a matter of utmost surprise not even reflected in the balance sheet nor the same is properly defined, further there is also discrepancies in the signature on the balance sheet provided initially and the one given subsequently''

You have failed to justify your basis of loss to the surveyor since the documents made available by you do not even correspond with the date and the claim made by you.

I have carefully gone through the surveyor''s report which has been placed on the file. The surveyor Mr C Venkatasubramanian has given a very detailed and elaborate survey report giving the reasons for arriving at his conclusions. With regard to furniture and fixtures the surveyor has recorded that no damaged items were shown to him. The petitioner was also not in a position to produce any record pertaining to the furniture and fixtures, plant and machinery or stocks as according to the petitioner they were destroyed in the flood. Petitioner has produced bills, quotations towards repairs and replacement but failed to produce the asset register and stock statement etc. The surveyor has also recorded that during his visit on 12.08.2005 they found several tins of chemicals which were empty. No evidence was produced to show whether they were empty prior to the flood or empty post flood.

With regard to stocks, the petitioner could not produce the Invoices, Stock Register claiming they were damaged due to flood. Thereafter, the petitioner submitted a P & L Account and balance sheet of Arun Inks (P) Ltd., for three years, few purchase bills and bank statement from the State Bank of India. However as per the agreed Bank clause of the policy it was in favour of the Bank of India so he was asked to produce the statement of Bank of India which he failed to do so.

The surveyor has also mentioned in his report it came to their knowledge that the petitioner has one more firm by the name Arun Inks. On an enquiry the petitioner has informed that it was a proprietary concern but not functional at the time of flood. The firm was kept alive only for the purpose of receiving an old insurance claim. The petitioner was also holding stocks and material at other locations and further was sending material to outside for processing. These facts were not disclosed at the time of survey. No record was produced for plant and machinery. After the detailed investigation and after their visits the surveyor has come to the following conclusions:

" Conclusion :

In view of the foregoing, the claim has not been substantiated by the insured and there has been a lot of contradictions in his statements and presentations of facts the very fact that the balance sheet figure itself is wrong, the veracity of the balance sheet is questionable.

We have been informed by insured only on 16.12.2005 that they also trade in products which were not manufactured by them like enamel paints, hamonertone paints and that they are getting some of their products processed outside. This fact was not made known to us till 16.12.2005 and after repeated probing, we ascertained the above facts.

On every occasion when we have raised a query, the insured had come out with other facts and neither he was in a position to substantiate the claim with proper documents explanations nor his explanations were to say the least unconvincing.

We have enlisted the services of an Investigator, Shri Jagannath Sharma, Thee Escorts E 107, Crystal Plaza, Andheri Link Road, Andheri (West), Mumbai - 400 053 to verify the veracity of the documents produced. The insured has refused to cooperate with him in this matter.

The insured has also refused to disclose the address of his auditors, M/s Jhaveri and Co., for our verification. Under the circumstances, we have to conclude that there has been some jugglery of figures, just to project a health business. Hence, it is considered necessary to investigate this matter by an independent investigator.

In regard to insured'' s statement that he has issued personal cheques of Mrs Aruna Solanki from ICICI Bank or transaction of the company, we have to place very little reliance on the same, as it is not a common practice to issue personal cheques in a private limited company.

Whilst the State Bank of India Statement, hardly reflects any transactions and Debits and Credits of ICICI Bank could not be properly explained by the insured, correlating his purchases or sales, despite the insured being given several opportunities to explain the same during our discussion.

We are also of the opinion, there has been suppression of material facts in regard to this claim. The insured stated that all his records were destroyed. During discussion he has admitted that he has an office at Tardeo, Mumbai and it is only possible, true records are available there. The insured has not volunteered to furnish any sort of information in this matter.

Under the circumstances, we have to state, the insured''s claim has not been substantiated and the documents submitted by the insured would definitely form a base for repudiation of the claim. His further attitude of not co-operating with the investigator possibly reflects on his need to suppress material facts. We leave it to the insurers to deal with the claim as they deem fit.

We have made our assessment in regard to plant and machinery and laboratory equipment''s without prejudice, only based on documents furnished to us. So far the insured has not repaired the same, which would possible throw light on the fact whether there has been a genuine loss. We also reiterate during our visits to the insured premises, we did not see any activity.

It would also be observed from the list of plant and machinery furnished by the insured, he has stored some machinery which belongs to some other company. This fact has not been made known to the undersigned in the first instances nor to the insurers.

We once again leave it to the insurers to deal with the claim as deemed fit."

The petitioner has failed to controvert the conclusions of the survey report and give any evidence to show that the findings of the surveyor are not correct and are not based on actual facts and evidence.

In view of the above, the State Commission has correctly concluded that quote:

"10. We find that the requisitions of the surveyor invariably evoked a different response from the complainant company rather than making material sought available. Therefore, if the complainant did not comply with the requisitions made and did not furnish unimpeachable evidence of what stock was available or what was the cost of acquisition of furniture which was damaged, the surveyor could not have concluded that there was some loss. Conclusions drawn by surveyor and accepted by the insurance company cannot, therefore be faulted ".

In view of the discussion above, I find no jurisdictional error or material irregularity in the impugned order which may call for interference in exercise of powers under section 21 (b) of the Consumer Protection Act, 1986. Revision petition is, therefore, dismissed with no order as to costs.