Jagdamba Foods Limited vs NEW INDIA ASSURANCE CO. LTD.

THE present complaint is filed by M/s. Jagdamba Foods Ltd. through their Director, Mr. Ashok Gupta, against the opposite party -New India Assurance Co. Ltd. for deficiency in service in arbitrarily reducing the claim amount.

THE complainant is engaged in the business of purchase, processing, selling and export of rice of all qualities. It is a Government recognised trading house and has its ultra modern plant at Taraori, District Karnal, Haryana. Complainant received a purchase order from Saleh Abdulaziz Babaker Sons Co., Saudi Arabia for purchase of 3,000 mt. tons vide Purchase Order dated 1.3.1998 (Annexure C -V). A contract was entered between the complainant and the Importer (Annexure C -VI) at the rate of US$ 845 to 870 C and F Damam per mt. ton. As per the Export Promotion Policy of the Government of India, the exporter is also entitled to get Duty Draw Back and other benefits. The working of the rate per ton was Rs. 38,327 for 75 kg. bags.

TO meet this export order and other export commitments, the complainant purchased, processed, packed and transported the Basmati Sela rice from its factory to Kandla Port, which was packed in 30,649 bags weighing 2537.465 mt. tons. The complainant purchased three insurance policies from the opposite party for covering the fire, flood, storm and tempest risks. The details of the policies are given here as under: Sl. No. Policy No. Dated Valid up to Value Insured 1. 11/5733 12.11.97 11.11.98 3 Crores 2. 11/5939 30.12.97 29.12.98 2 Crores 3. 11/6190 10.2.98 9.2 -99 4 Crores Total Value Insured 9 Crores

A severe cyclone hit the Kandla Port on 9.6.1998 causing heavy damage to the Port and the Godowns nearby. The rice stock of the complainant was lying in Godown No. NG -12 and NG -3, which was allotted by Kandla Port Trust to M/s. V. Arjoon, the clearing and forwarding agent of the complainant at Kandla Port. The stock certificate issued by M/s. V. Arjoon and another confirmation regarding the allotment of the Godown are placed as annexure C -VIII and C -IX respectively. The complainant stated that his export cargo, which was lying in the Godown, suffered heavy damages due to the cyclone and the rice stock was extensively damaged. He sent an intimation regarding the loss to the opposite party on 10.6.1998. The Godown owner also requested them vide letter dated 11.6.1998 for the appointment of the Surveyor.

PRELIMINAR Y survey was conducted by M/s. G.P. Dave and Sons. Thereafter the complainant got the quality test done of the Sela Basmati rice and it is reported that out of 30,649 bags of rice, 21,597 bags are neither fit for human consumption nor for animal feed. 5,860 bags were certified as not fit for human consumption but fit for Cattle Feed. The balance 3,192 bags were certified as containing 50% of the rejected material, but fit for human consumption after reprocessing. The complainant submitted the claim bill for Rs. 4,58,52,391 along with the relevant supporting documents placed as Annexure C -X. Opposite party sanctioned on account payment of Rs. 1,65,95,021 on 5.8.1998 and demanded some documents to finalise the claim which were supplied on 24.8.1998. M/s. Rakesh Jain and Associates, Surveyors raised some queries vide letter dated 31.8.1998 to which the complainant replied on 2.9.1998. Thereafter opposite party paid a sum of Rs. 1,50,09,979.

THE complainant had no option but to sign the receipt on compulsion because he was facing great hardship. It is also averred that the opposite party has threatened that it will reject the entire claim otherwise. After receiving the amount, the complainant immediately lodged a protest with the opposite party on 6.11.1998 through registered AD letter against the illegal deductions of Rs. 1,38,97,621 made from the total claim amount of Rs. 4,58,52,391, for which no details were provided. The complainant had asked for the details and the basis for deducting Rs. 1,38,97,621 but the said information was not provided to him. The complainant sent a letter dated 10.11.1998 seeking the information and followed by another reminder dated 28.11.1998. Thereafter, complainant wrote several letters dated 10.12.1998 and issued legal notice dated 2.2.1999 calling upon the opposite party to supply the details of the illegal deduction made from the claim amount of Rs. 4,58,52,391. Aggrieved by the actions of the opposite party, who indulged in unfair trade practice by illegally deducting Rs. 1,38,97,621, due to which complainant suffered operational losses and financial hardship suffered as his entire working capital structure was completely affected.

COMPLAINAN T prayed for the following directions to be issued to the opposite party: (a) to pay Rs. 1,38,97,621 with interest @ 18% p.a. w.e.f. 1.9.1998 i.e. after allowing the reasonable time for settlement of the claim; and

(b) to pay interest @ 18% p.a. on the delayed part payment of Rs. 1,50,09,979 made on 6.11.1998 for the period from 1.9.1998 to 6.11.1998; and

(c) to pay wrongly deducted amount of Rs. 2,85,670 with interest @ 18% p.a. w.e.f. 1.9.1998; and

(d) to pay the token damages of Rs. 50,000.

THE complainant referred to letter dated 6.11.1998, which clearly shows that he has not accepted that this amount be treated as full and final settlement and reserved his right to claim the balance amount. Omitting immaterial portion, the letter dated 6.11.1998 reads, thus: "we thanks for receipt of cheque No. 241796 dated 6.11.1998 amounting to Rs. 1,50,09,979 and on account payment on dated 5th August, 1998 of Rs. 1,65,95,021 against our subject claim of Rs. 4,58,52,391.

We like to submit that the attached receipt voucher dated 6th November, 1998 of Rs. 3,19,54,770 shall not be treated as full and final settlement. This is subject to the reservation of our right to claim the balance amount of Rs. 1,38,97,621 deducted from the total claim amount of Rs. 4,58,52,391 arbitrarily without our consents and the reasons best known to you."

LEARNED Counsel for the complainant argued that even the survey report of M/s. Rakesh Jain and Associates was not given to them earlier and that it was only produced in this Commission. A copy of the said report dated 11.9.1998 was supplied to the complainant only at the time of submission of the reply after filing of the present complaint. It is argued that mere signing the discharge voucher for receiving the amount, complainant cannot be estopped from making claim for further payment from the opposite party. Opposite party vide letter dated 24.11.1998 gives the details of the payment made to the complainant after deductions, which comes to Rs. 3,19,54,770. In this letter the details are given as under: (a) On account payment made on 5.8.1998 1,65,95,021.00

(b) Difference of premium for 3 years plus current year 2,54,961.00

(c) Re -instatement value premium 64,100.00

(d) Recovery on account of difference of premium on other policies as per audit report 30,709.00

Payment made now 1,50,09,979.00

EVEN at that stage, the opposite party did not mention as to how Rs. 1,38,97,621 was deducted from the claim. M/s. Rakesh Jain has arrived at a figure of Rs. 3,36,13,260 whereas they settled and approved the claim for Rs. 3,19,54,770 without explanation which is deficiency in service. Learned Counsel for the complainant relied on the following judgments given below: "National Insurance Co. v. New Patiala Trading Co., I (2003) CPJ 33 (NC), wherein para 7, page No. 36, the National Commission held that:

"It is a statute which prescribes licensed Surveyor or Loss Assessor who is to be appointed to assess the loss where it is equal to or more than Rs. 20,000. Prima facie, therefore, credence will have to be given to the report of such approved Surveyor or Loss Assessor."

Ajay Gupta v. Allahabad Bank, 1986 -2002 Consumer (NS) wherein para 23, page No. 5406, the National Commission observed:

"In (1995) CPJ 41 NC in the case of Sitha Vedanayagam v. India Assurance Co. Ltd., this Commission laid down the ratio that when there is no fraud, alleged in the matter of valuation the whole amount should be allowed....... We believe the Surveyor is an independent body appointed by the Insurance Comopany and effectively represents the interest of that company."

Kamla Devi Kanakani v. United India Insurance, 1(2003) CPJ 282, wherein para 4, page No. 283, the National Commission observed -

"It is not explained as to why the Surveyor''s report could not be accepted and acted upon. There is also no material to challenge the assessment of compensation arrived at by the Surveyor....the Insurance Company is directed to make payment of the sum as assessed by the Surveyor in his report."

M/s. Uniplas India Ltd. v. National Insurance Company, 1986 -2002 Consumer 1654 (NS), the National Commission held -

"Deficiency in service -Insurance Co. has reduced the amount payable under the insurance policy arbitrarily, unfairly and has not settled the claim with reasonable expedition and thus has been guilty of deficiency in service."

Wherein it is clearly held that Surveyors are the best persons and their report should be accepted. Learned Counsel also contended that Surveyor had not assessed the goods according to the costing price given by the complainant and also did not add labour and transport charges amounting to Rs. 16,89,061 in their report dated 19.9.1998 to which the complainant is entitled to. Further, the opposite party deducted Rs. 2,85,670 on account of difference in premium which was an after thought and the said amount is also deducted in the claim. Reliance has been placed on the judgments of Apex Court which are extracted hereunder:

IN Oriental Insurance Co. v. M/s. Montora Oil Product (P) Ltd, 2000 (10) SCC 26, the Hon''ble Supreme Court held: "If there was a mistake on the part of the appellant in collecting the premium, the same should have been pointed out at the time of entering into the contract or immediately thereafter. After having received the benefit under the policy of insurance from the respondent by way of premium, it is not open to the appellant to contend that there was a mistake on its part in charging the premium at a rate lower than the rate at which it should have been charged. If the parties were not ad idem on this vital part of the contract of insurance, it would have an adverse effect on the contract itself."

IN Hanil Era Textiles Ltd. v. Oriental Insurance Co. Ltd. and Ors., I (2001) CPJ 1 (SC)=VIII (2000) SLT 500=88 (2000) DLT 623 (SC)=(2001) 1 SCC 269, the Hon''ble Supreme Court held: "Insurance Premium -Short charged premium -Insurer''s attempt to recover from the amount payable under the policy when the validity period of the policy had already lapsed, held, illegal."

THE complainant in his affidavit stated that he signed the discharge voucher by specifically writing as per details on the face of the said discharge voucher and by making a protest note that the claim amount was approved by the insurance company without our consent on the overleaf of the said discharge voucher. Opposite parties have arbitrarily sanctioned the claim amount and did not give details of the difference of Rs. 1,38,97,621; deducted a sum of Rs. 2,85,670 on account of difference in premium for the last three years; the costing of rice was calculated by the complainant at the rate of Rs. 38,327 per metric ton whereas the Surveyor has taken very low costing and do not give opportunity to the complainant to prove their assessment. Lastly submitted that opposite parties should pay the illegally deducted amount of Rs. 1,38,97,621 along with interest at the rate of 13% per annum alongwith wrong deductions made from the sanctioned amount. Version of the opposite party:

AS against this, learned Counsel for the opposite party submitted that there is no deficiency on their part and settlement of payment of the insurance claim in question. After careful examination of the terms and conditions of the policy, Surveyor''s report and other relevant documents, Insurance Company had settled the claim for Rs. 3,19,54,770. Opposite party paid an "on account payment" of Rs. 1,65,95,021 on 5.8.1998 to the complainant. It is the complainant who did not submitted the relevant required information to the Surveyor and hence Surveyor could not submit their report.

THE Director of the complainant alleged that he was called to opposite party''s Karnal office and told that if he would not sign the discharge voucher his total claim would be rejected. In their reply, opposite parties contended that the claim was settled as full and final settlement. It is submitted that on 30.7.1998 Insurance Company has put the complainant to notice vide letter dated 30.7.1998 wherein approval of on account payment of Rs. 1,80,00,000 was informed but subject to the following which are given below as under: "1. Recovery of difference of premium

(a) Between Rs. 4.80% and Rs. 2.10% for fire policy C '' cover.

(b) Between Rs. 10% and Rs. 0.75% for flood extension.

(c) Application of 25% flooter extra for fire as well as flood.

Confirmation from the insured that the goods were kept only in godowns Nos. 3 and 12 and not any other location within or outside the Kandla Port premises.

Confirmation as to there being no marine policy covering the consignments.

The above recoveries are to be made for the affected policies as well as for the prior three years before making on account payment."

IT is submitted that complainants did not reply back with any objections to the letter dated 30.7.1998. The complainants without any whisper received the amount and did not send any communication thereafter rejecting the contents of the 30th July, 1998 letter. The ad hoc payments and the final payments were done and the complainant was fully aware of the recovery and difference of premium that had to be adjusted and all the other deductions, which have been made. It is submitted that there was no coercion or pressure as all the details of calculation of amount payable are duly mentioned on the voucher (Annexure C -XIII), which bears the signature and stamp of the complainant. Learned Counsel argued that the insurance claim of the complainant was settled within a period of five months from the date of loss. Further, the loss occurred on 9.6.1998 and the opposite party very quickly without any normal delays made on account payment of Rs. 1,80,00,000 on 5.8.1998 and thereafter the balance on 6.11.1998. The claim of the complainant was processed and settled without any delay and in record time these amounts were paid. The complainant cannot file this complaint alleging deficiency in service on the part of the opposite party specially when the claim was processed very quickly without any hindrance to the complainant and hence this complaint should be dismissed.

HEARD the learned Counsel for both the parties, perused the record, the affidavits filed by them and the surveyor''s report. Firstly, M/s. Rakesh Jain and Associates, Surveyors in their report have considered the certificate of Chartered Accountants, M/s. Kumar Sunil and Associates, Ludhiana where cost/purchase price of rice has not been considered reliable. The surveyor has calculated after calling for the supporting cost sheet in support of the Chartered Accountant''s Certificate showing cost/purchase price of India Sela Basmati Rice at Rs. 3391.5 per metric ton and additional expenses of Rs. 970 per metric ton in (10 kg. x 4=40 kgs.) packing than another in 45 kgs. packing. The cost sheet, which was received by the surveyor was unsigned. Surveyors in their report mentioned as here under: "We insist upon insured to sign the cost sheet but he refused to sign by saying that the forwarding letter attached is signed and there is no need to sign the attached cost sheet."

FURTHER , the Surveyor mentioned in the report that Indian rupee against US $ has also devalued by around 7.51 during the fortnight before the date of loss. Indian rupee against US $ was quoted as Rs. 39 on 26.5.1998 and Rs. 41.93. Surveyors found Chartered Accountant Certificate regarding the value of cost/purchase of the Indian Sela Basmati Rice unreliable. The Surveyor further compared the purchase order and found that rates in US$ were taken higher than what it should be. Accordingly, the stocks lying in the New Godowns 3 and 12 were assessed for the loss keeping in view of the excess rate that has been claimed by the complainant and estimated the same at Rs. 3,36,30,260. It is because of non -cooperative attitude of the complainant who did not supply the required documents to Surveyor to process the same and the fact the Chartered Accountant Certificate certifying additional expenses of Rs. 970 per ton (10 x 4=40 kgs.) than in 45 kg bags is not correct.

SECONDLY the Insurance Company has put the complainant to notice regarding the recovery of difference of premium vide letter dated 30.7.1998. Complainant never objected to the same and hence the said deductions made were very much within the knowledge of the complainant and now cannot allege that he was not aware of the same.

INSURANCE Company also informed the complainant vide letter dated 5.8.1998 wherein the reference has been made to their earlier letter dated 30.7.1998 which again showed correct net amount payable which was given as under: On account payment Rs. 1,80,00,000 Short charged premium deducted Rs. 14,04,9 79 Total: Rs. 1,65,95,021

In the same letter it was also noted that the recovery of previous three years as pointed out by the auditors would be made at the time of final payment. This cheque was received by the complainant and the said document is placed on record. In our view, complainant was continuously being put to notice regarding the recovery of difference of premium as early in the month of July and August and it has not been done behind back of the complainant.

THE main contention raised by the complainant is that in the final discharge voucher where the calculations were given, there was no mention of Rs. 14,04,979 and that it is an afterthought. In our view, this contention is incorrect because letter dated 5.8.1998 clearly notes the said deduction, which has not been disputed by the complianant. Insurance Company also has put complainant to notice vide letter dated 24.11.1998 which has taken "on account payment" made on 5.8.1998 as Rs. 1,65,95,021. Their letter dated 5.8.1998 clearly mentions the "on account payment" the total amount as Rs. 1,80,00,000 and after deducting Rs. 14,04,979 it comes to Rs. 1,65,95,021 and these amounts clearly tally with each other and we have no reason to doubt the calculation.

IN the present case, opposite parties have discharged their duties by settling the claim in javery_short span i.e., in less than five months from the date of loss, which we can say unusual and swift action on the part of Insurance Company. The doubts that were raised by the Surveyor have not been met with by the complainant by submitting and forwarding requisite documents. Even the conduct of the complainant needs to be doubted specially when the Surveyor asked him to get the cost sheet duly signed. We do not find there was any arbitrary deduction made by the opposite party because the complainant concurred with it silently throughout. The variation of the price of the Sela Rice and the actual loss by taking cost price into consideration by the Surveyor before arriving at the figure is a normal procedural work and he cannot be faulted for the same. As per the allegations of coercion and duress that the complainant was forced to accept the amount is difficult to digest on the basis of the record itself. Because, the complainant continued to accept all the deductions mentioned by the Insurance Company for making the "on account" payments without any delay and hence the conduct of the Insurance Company cannot be said unjustified. The complainant is unable to prove deficiency in service by the opposite party and hence the complaint is dismissed. There shall be no order as to cost. Complaint dismissed.