B Shantilal And Co vs NEW INDIA ASSURANCE CO LTD

THIS appeal is preferred by original complainants against dismissal of their complaint No. 193 of 1996 vide impugned judgment and order dated 5th March, 2004 by the State Consumer Commission.

THE appellants'' case before the State Commission, briefly stated, was as follows: The appellant No. 1 is a partnership firm and the appellant No. 2 was the acting partner thereof. The appellants used to run business of diamonds. They were having the business place in Panchratna Building, Opera House, Mumbai at the relevant time. They had taken Jewellers Block Policy No. 110900 on 27th June, 1989 for a sum of Rs. 1,18,50,000. The insurance policy was endorsed for a period of one year. On 26th February, 1990 at about 2.30 p.m. an incident of heist occurred. In the said incident, Wadilal Vora and others including some unidentified robbers intruded in the business premises of the appellants and decamped with diamonds form lot No. 116A worth Rs. 12 to 12.5 lakh. The deceased appellant No. 2 was threatened at gunpoint of dire consequences in case he would report the incident to the police. He was scared of death. He went to Surat. After 4-5 days, he returned to Mumbai. He mustered courage. Thereafter and lodged First Information Report with the police on 6th March, 1990. He later on, submitted insurance claim with the Respondent No. 1 (insurer). The insurer informed vide letter dated 3rd April, 1990 that necessary inquiry was being carried out. The insurer appointed a Surveyor to assess the loss. Though the insurance claim was pursued by the appellants (complainants), it was not settled. Subsequently, they filed the complaint with the State Commission.

THE Respondent No. 1 (insurer) resisted the claim. They alleged that it was not a case of consumer dispute. It was further alleged that the complaint was barred by limitation and that it was filed without any cause of action available to the appellants (complainants). The chief defence of Respondent No. 1 was that the story of alleged heist in the business premises of the appellants was untrue and was "stage managed" with ulterior motive to put forth a false claim. The claim was, therefore, unfounded. It was further alleged that the main culprits Wadilal Vohra and his wife, who were named in the FIR, were well known to the deceased appellant No. 2 and the incident pertained to certain money dealings between them. The Respondent No. 1 (insurer) expressed serious doubts about the very occurrence of the incident in view of the belated FIR filed by deceased the appellant No. 2 and other attending circumstances. Further contention of the insurer was that the appellants failed to furnish details of the incident and the outcome of the criminal case though they were called upon to give detailed information in this context. The insurer contended that there was inherent discrepancy in the versions of the deceased appellant No. 2 before the police, while lodging of the FIR and the averments made in the complaint before the State Commission. The insurer repudiated the claim on the basis of the opinion rendered by their Advocates, Solicitors and Notaries M/s. Motiwalla and Co. Thus, the insurer denied that the loss of diamonds was caused to the appellants during course of any criminal act of robbery, dacoity or theft. In view of such defence, the insurer submitted that the claim was not covered by the ''Jewellers Block Policy" relied upon by the appellants (complainants). The insurer, therefore, sought dismissal of the complaint.

THE Respondent No. 2 was a formal party before the State Commission and no relief was claimed against it. In this appeal too no relief is claimed against the Respondent No. 2. The Respondent No. 2 is the authorized investigator and the assessor of the loss and had been appointed to submit a report by the Respondent No. 1 (insurer). It is an admitted fact that the Respondent No. 2 submitted report dated 24th November, 1994 whereby net loss was assessed by Rs. 9,94,960. The Respondent No. 2, however, reported that the record was unavailable to verify the juxta-position of lot No. 116 (137.50 Ct) diamonds. Since certain diamonds were robbed, the average cost of polished diamonds was considered while preparing the report.

THE State Commission held that the appellants failed to prove any deficiency in service on the part of the respondent No. 1 (insurer). The State Commission held that the insurer duly proved that the repudiation of the claim of the appellants was justified. In keeping with such findings, the complaint was dismissed vide the impugned judgment and order. Feeling aggrieved, the appellants have come up in appeal.

WE have heard learned Counsel for the parties in extenso.

LEARNED Counsel for the appellants submits that the insurer never expressed any doubt regarding incident of the heist which occurred on 26th February, 1990. He contended that the denial of such incident while filing the written reply was after thought. He further submitted that though the insurance policy was for large sum of more than Rs. one crore yet only the due claim for loss of the diamonds worth Rs. 12 to 12.5 lakh was put forth. He argued that the result of the criminal case has no nexus with the conditions of the insurance policy and therefore the insurer should not have been allowed to reject the legitimate claim of the appellants. He further argued that the findings of the State Commission are based on conjectures. He, therefore, urged to allow the appeal. Per Contra Mr. Jos Chiramel, learned Counsel for the respondent supported the impugned judgment. It is argued that the delay in filing of the FIR on part of the deceased appellant No. 2 is a suspicious circumstance. It is argued that the business transactions between the deceased appellant No. 2, namely Bipin Shah and Wadilal Vora, named in the FIR, showd that certain amount was being demanded by the latter from Bipin Shah. It is argued that the deceased appellant No. 2 filed the criminal complaint though the incident was not of a robbery but it was a private dispute and may be, at the most, a case of cheating. He further argued that after death of Bipin Shah, the partnership is not in existence and, therefore, the legal representatives of Bipin Shah cannot continue the complaint without any evidence of their being partners of the firm. On these premise, Mr. Jos Chiramel sought dismissal of the appeal.

BEFORE we embark upon consideration of the rival contentions, it is worthy to be noted that the appellants were running the business of diamonds since a way back to the alleged incident. The business practice in the business of diamonds is that the traders obtain a specific insurance cover called "Jewellers Block Cover Policy". It has come on the record that since much prior to the alleged incident, for the number of years, the appellants had followed the practice of obtaining the insurance cover. There is no iota of evidence on record to say that any time in past they had sought reimbursement or compensation under the insurance policies which were taken by them for the earlier period. The copy of the insurance policy shows that the diamonds were covered under the terms of the "Jewellers Block Policy" as on the date of alleged heist i.e. 26.2.1990. The "Jewellers Block Policy" No. 46/110900/01417 was for an amount of Rs. 1,18,15,000 and was issued on 27th June, 1989. It appears that the diamond jewellers were required to take the diamonds in small pouches from the business place to other places in the market for the purpose of examination by the prospective purchasers and, therefore, there was always apprehension of some untowered incident, which could result in loss of such valuable diamonds. That was the purpose to obtain the umbrella of protection under the insurance.

WE have noticed that deceased Bipin Shah gave the FIR on 6th March, 1990 at the concerned police station. Copy of the FIR reveals that the incident of the alleged heist was narrated by the complainant-Bipin Shah. It is true that he named Wadilal Vora and Mrs. Vora as the culprits who were known to him. However, it does not mean that the FIR was concocted. There were some business relations between Bipin Shah and Wadilal Vora prior to the alleged incident. What appears from the record is that Wadilal Vora was demanding Rs. 3 crores from Bipin Shah and the latter had declined to pay such amount. It is more probable that Wadilal Vora and his wife took help of some gangsters and visited the business premises of the appellants in the relevant noon with a view to forcibly remove a part of the valuable stock of diamonds and to pass on threat for life of Bipin Shah in order to recover the demanded amount. The State Commission expressed doubts regarding the occurrence itself for the reason that Bipin Shah had not identified the other culprits, who were the accomplices of Wadilal Vora and his wife, and moreover there was delay in filing of the police complaint. The State Commission further observed that the amount of the claim shown in the complaint was for a sum of Rs. 19,52,223 on account of loss of the diamonds whereas the FIR indicated of the robbed articles being wroth about Rs. 12 to 12.5 lakh.

IT is well settled that the FIR cannot be considered as encyclopedia of all the events and detailed narration of the episode is not expected. The purpose of FIR is to set the criminal law in motion. The appellants gave explanation regarding the short delay of 8 days in filing of the FIR. They submitted that deceased Bipin Shah was scared to death after the heist at point of gun. He had gone to Ahmedabad and after coming back to Mumbai, he mustered the courage to lodge the FIR. The mental agony of such a person, who is threatened at the gunpoint by a group of gangsters, cannot be lightly ignored. In such a case, the delay caused in filing of the FIR is well justified. The discrepancy in the value of diamonds shown in the claim submitted before the State Commission and the amount of value of the diamonds shown in the FIR is also not of much significance. The estimated value of the diamonds taken away by the robbers was given by the complainant in the FIR as per the approximate value, which was yet to be ascertained. It is matter of record that the relevant registers of the appellants were in the custody of the DRI. The report of the investigator appointed by the insurer shows that the value of the diamonds was ascertained on the basis of the entries in the concerned registers, which were examined at the DRI office. The report shows that as regards lot No. 116, the incestigator had teken average value of polished dismonds for the purpose of working out the claim. The investigators appointed by the insurer eventually estimated the loss of the diamonds at Rs. 9,94.960.

NOW, it is pertinent to note that the investigators appointed by the insurer never expressed any serious doubt regarding truthfulness of the incident as narrated by deceased Bipin Shah in the FIR. The insurer neither accepted the report nor specifically discarded it. Instead, the insurer appointed M/s. Paras Bureau, a private investigator and consultancy agency to carry out the investigation in the matter. The private investigation bureau submitted a report dated 18th November, 1991. The private investigation bureau also observed that the accused persons Wadilal Vora and his wife along with 16/17 members of the under world gang had gone to the business permises of the appellant in the relevant noon. The private investigator also did not locate any kind of concoction of the story in respect of the alleged heist. The opinion expressed by the bureau of investigators appointed by the insurer was as under: "The under-signed is of the opinion that unless facts are ascertained by/from these two parties, final decision may not be taken as regards the quantum of payment. In case Shri Bipin Shah contacts your office, he may be requested to contact the under-signed."

AFTER a long drawn period of 19th December, 1994, the insurer informed the police as under: "As the outcome of the case is awaiting from the Court of Law, the claim cannot be settled till the outcome of the case is given by the Court. As a matter of fact, the outcome of the criminal case has nothing to do with the claim advanced by the appellants, which was in keeping with the terms of the insurance policy. It could not be a ground to reject the due claim when the private investigators of the insurer, on more than one occasion gave reports including the assessment of the loss and absence of any fabrication in the story of heist."

THE matter does not stop here. The respondents obtained legal opinion of their Advocates/Solicitors and Notaries. The legal opinion dated 30th March, 1996 is as stated herein below: "Your company should enter into an agreement with the assured and wherein you should stipulate that the assured will give all co-operation to your company in tracing the loss of diamond and the assured will take all steps to expedite the hearing of the criminal case and the assured will do his utmost for the identification of the diamonds. Before making payment of the claim under the policy, you may if you so desire, obtain an undertaking from your assured that the aforesaid case is pending against Mr. Wadilal Maganlal Vora and that the same has not been dismissed and that your assured will not compound and/or compromise the said criminal case without your consent and/or writing. Further, you may independently ascertain the status of the case either from your lawyers or by deputing officers from your company legal department. You should also obtain from your assured, copies of all proceedings including the replies filed by Mr. Wadilal Maganlal Vora in the said criminal case. If the same are not available from your assured then you may obtain the same from any other source which is available to you. It may further be pointed that Mr.Wadilal Vora appears to have been charge-sheeted, shows that there is a prima facie case against him. However, as stated above, your assured be deliberately not identifying the culprits during the identification parade has blatantly breached Condition No. 7".

IN our view, the stand taken by the Insurance Company in not paying the loss assessed by the Surveyor appears to be totally unjustified. Even their Advocate specifically stated that the amount may be reimbursed to the complainant on the condition that the assured would give full cooperation in the investigation, if necessary, by obtaining an undertaking from the assured, as stated in the aforesaid report. Even the investigators only stated that the independent facts may be ascertained, but did not opine not to reimburse the assured. After the police investigation, the accused are charge-sheeted and the criminal Court may take a long time to decide the matter. That can hardly be stated as a ground for not reimbursing the assured.

PERUSAL of the impugned judgment and order of the State Commission goes to show that the report dated 24th November, 1994 submitted by Rashmi Desai and Associates Surveyors, Assessors and Valuers appointed by the insurer was not duly considered. The observations of the Surveyors, Assessors and Valuers are as follows: "Observations-We have visited the insured, the police, the office of the DRI, have inspected the books and records of the insured made available to us by the insured as well as the DRI officials, and have conducted inquiries to be sent possible. We now report our observations as under: This appears to be a genuine case of robbery (dacoity) and the liability of the insurers exist. There has been a delay in informing of the loss and the claim to the insurer as well as the police. However, in view of the circumstances of the loss and the identity of the persons who visited the office of the insured, the insurers may suitably decide on whether the delay can be condoned or not specially when Mr. Shah had run away to Surat, out of the fear of physical harm to him and his family."

WE are of the opinion that the State Commission was obsessed with suspicion and considered the complaint filed under Consumer Protection Act, 1986 likewise that of a criminal case. It is not necessary to highlight the point that standard of proof required in such inquiry before the State Commission was not as high as required in a criminal case. The State Commission appears to have shifted focus of attention from the core issue and gave importance to the circumstances in order to find fault with the story of the heist. The State Commission appears to have been influenced by the fact that the insurer was justified in awaiting the result of the criminal proceedings. The insurer has placed on record the relevant copies of the FIR, charge-sheet and copy of the judgment dated 3.5.2002 rendered by the Sessions Court in Sessions case No. 506/1993. The judgment of acquittal rendered by the Additional Sessions Judge does not show that the alleged story of heist was fabricated or concocted by the complainant i.e. Bipin Shah. The Criminal Court has not recorded any specific finding about the falsehood in the case of prosecution. Complainant Bipin Shah was never prosecuted for lodging of false FIR. Under these circumstances, the total claim of the appellants could not have been repudiated by the insurer.

MR. Jos Chiramel invited our attention to certain observations in the case of Devender Singh v. New India Insurance Co. Ltd. and Ors., III (2003) CPJ 77 (NC). In the given facts and circumstances, the repudiation by the appellants therein was held as justified because the loss was reported to the insurer after a gap of about one month. In the present case the loss was reported to the insurer within a reasonable time frame. It need not be reiterated that though the investigator appointed by the insurer, the private investigation bureau and the Solicitors give opinion to reimburse the insured to the extent of the assessed loss determined by the Surveyor i.e. Rs. 9,95,000. Yet the insurer adopted stubborn attitude.

WE may mention here that by interim order dated 13th August, 2008, a three-Member Bench of this Commission, headed by Hon''ble Mr. Justice M.B. Shah, practically held the insurer liable to compensate the loss and directed the Insurance Company to deposit the amount of Rs. 9,95,000 along with interest @ 10% p.a. with the Registrar of the Commission. The appellants were allowed to withdraw the amount by furnishing the personal bond. We are of the view that this interim order should be made final with further modification that the appellants are also entitled to recover amount of Rs. 75,000 being the amount towards harassment, mental agony and cost of the prolonged litigation in which they have been dragged as a result of unjustified repudiation of the claim. The respondent has not placed on record anything to show that the firm is dissolved and the legal representatives of the deceased Bipin Shah are unconcerned with the same.

IN the result, we allow the appeal. The impugned judgment and order of the State Commission is set aside. The complaint is partly allowed. The appellants are entitled to recover amount of Rs. 9,95,000 with interest @ 10% p.a. from 1st January, 1991 till the date of realization of the said amount along with compensation of Rs. 75,000 in aggregate towards harassment, mental agony and cost of the prolonged litigation, in which they were dragged at the instance of the respondent. The respondent No. 1 to pay the due amount to the appellants, after deducting the amount, which is already deposited and paid, within four (4) weeks. Appeal allowed.