Jaisri Mines Products Pvt. Ltd. vs New India Assurance Co. Ltd. And Anr.

IN the amended complaint it is, inter alia, alleged that the complainant -Co. has been carrying on business of manufacture and supply of fibre ropes in the oil fields of Assam and other north -eastern States. Complainant took a policy covering the peril of fire to the finished goods of Rs. 50.00 lakh and to the electrical accessories of Rs. 1.40 lakh for the period from 22.3.2000 to 21.3 2001 from opposite party No. 1 - Insurance Co. Later on, at the insistence of bank a policy of Rs. 115.00 lakh for the period from 2.11.2000 to 1.11.2001 was purchased for rest of the finished goods, raw material, plant and machinery and building. In the night of 17.3.2001, fire broke out in the manufacturing -cum -store of the complainant Co. Cause of fire was electric short -circuit. Incident was reported to the fire service station, OP No. 1 -Insurance Co. and the bank on 18.3.2001. FIR was lodged with the local police. Insurance Co. deputed Jaswant Singh, preliminary Surveyor. He inspected the factory on 18.3.2001. M.K. Bardoloi, Surveyor -opposite party No. 2 was appointed for assessment of the loss. He visited the factory on 19.3.2001. OP No. 2 sent a letter dated 22.3.2001 to submit the books of accounts and documents. Complainant intimated OP No. 2 that it was collecting the documents from various agencies. It was stated that the father of the managing director of the complainant -Company underwent a major surgical operation at Guwahati in July, 2001. Representative of the complainant took all the documents to the office of Insurance Co. for their onward transmission to OP No. 2 -Surveyor. However, the Senior Divisional Manager refused to receive the documents saying that those be submitted to OP No. 2 -Surveyor. All the documents were submitted to OP No. 2 on 14.9.2001. Opposite party No. 2, Surveyor visited the office of complainant Co. from 22.11.2001 to 24.11.2001 and verified the documents. Complainant submitted further documents on 22.11.2001 to OP No. 2 as per his letter dated 21.9.2001. Complainant gave the remaining documents to the Surveyor along with letter dated 23.11.2001. On 2.2.2002, the complainant received a letter from OP No. 2 to authenticate the documents submitted by it by putting the seal of Company and signing them to which the complainant objected to the Sr. Divisional Manager vide letter dated 11.2.2002. With reference to the letter dated 11.2.2002, the complainant sent a letter dated 8.3.2002 to the Sr. Divisional Manager intimating that the complainant is ready to authenticate the documents and requested him to call them back to his office for that purpose. Complainant thereafter did not receive any letter from the Insurance Co. Opposite party No. 2 Surveyor reported the matter to CID and the CID officers visited the factory on 12th May for inquiry. It was alleged that despite extending fullest co -operation, the Insurance Co. repudiated the claim by the letter dated 14.3.2003. Repudiation is bad in law. It was pleaded that an engineer from M/s. Blue Star Ltd., Calcutta visited the factory on 27.3.2001 and after checking he reported that the entire machines were damaged by the heat of fire. Direction was sought to be made to the Insurance Co. to settle the claim of complainant for Rs. 1.61 crores with 24% interest and pay amount of Rs. 50,000 towards compensation for mental agony, etc.

OPPOSITE party No. 1 -Insurance Co. alone contested the complaint by filing written version. Issuance of two policies was not disputed. It was denied that at the insistence of bank, second policy for Rs. 115 lakh for the period from 2.11.2001 to 1.11.2002 was taken by the complainant. It was alleged that fire was not accidental but was deliberate with intention to claim false insurance claim. Opposite party No. 2 was appointed to have final survey. He visited the factory on 19.3.2001. Since the beginning the complainant had been avoiding supply of documents to the surveyors on one ground or the other with intention to gain time to prepare bogus documents. Final surveyor informed the answering opposite party that the representative of the complainant along with a forwarding letter dated 14.9.2001 had submitted some documents in his office. After scrutiny of those documents, the Surveyor by the letter dated 21.4.2001 called upon the complainant to submit other documents and pointed out some deficiencies in the list of documents and non -authentication of some of the important documents. It was admitted that OP No. 2 visited the office of complainant on 22.11.2001. It was denied that the complainant submitted all the remaining documents on 22.11.2001 as per the letter dated 21.9.2001 as alleged. Complainant was repeatedly asked by OP No. 2 to authenticate the documents particularly the vouchers relating to the cash transaction and sale and purchase memoes but the representative of the complainant refused to do so on 22.11.2001 and he assured that those will be authenticated on 23.11.2001. However, he did not turn up thereafter. Cash memoes and ledgers for the period 1998 -99 were never delivered to OP No. 2. It was denied that the complainant gave remaining documents to OP No. 2 along with the letter dated 23.11.2001. It was stated that complainant had been totally non -cooperative with OP No. 2 -Surveyor. Instead of authenticating the documents, complainant asked the Sr. Divisional Manager to call back the documents from OP No. 2 for authentication in his office. It was pleaded that on receipt of final survey report dated 3.2.2003, the OP No. I -Insurance Company examined it as also the documents. Thereafter, papers were placed before the Competent Authority for taking appropriate decision. On examination of the documents and Surveyor report it was revealed that the financial condition of the Company was precarious and it was unable to return the loan and despite continuance of previous policy it took another policy on 2.11.2000 for Rs. 115.00 lakh though the factory was not functioning. Sale -purchase vouchers submitted by the complainant were found bogus. Claim with regard to stocks was not supported by the salvage. Accordingly, the opposite party repudiated the claim by the letter dated 14.3.2003.

WE have heard Mr. Rajiv Mehta for the complainant and Mr. P.K. Seth for opposite party No. 1. The two points which mainly arise for determination in this complaint are, (i) whether fire in the factory was accidental or deliberate and (ii) whether complainant in order to support the claim made of Rs. 1.61 crores had fabricated the documents/account books. In support of the case that fire was due to electric short circuit, our attention was drawn by Mr. Mehta, Adv. to the report made to P.S. Digboi (copy at page 149), fire attendance certificate (copy at pages 150 and 151) and preliminary survey report (copy at pages 114 to 116). On the other hand,to substantiate the defence that fire was set deliberately, it was pointed out by Mr. Seth, Adv. that the policy for the period 22.3.2000 to 31.3.2001 covered the risk of fire to the stock in godown of Rs. 50.00 lakh and to the electric accessories of Rs. 1.40 lakh. Though the factory was almost lying closed still the complainant purchased yet another policy for the period 2.11.2000 to 1.11.2001 covering the risk to the building of Rs. 5.00 lakh, to the machinery and accessories of Rs. 20.00 lakh and to the stocks in process of Rs. 90.00 lakh, totalling Rs. 115.00 lakh. According to the learned Counsel, though in para No. 3 of the amended complaint it is pleaded that second policy was taken at the insistence of the bank still such an evidence in the shape of letter(s) from the bank has not been filed by the complainant. Our attention was invited to para No. 10 of the affidavit dated 28.8.2008 of Dipak Maity, then working as Manager with the complainant Co. as also the CID report dated 17.12.2008. It is not in dispute that fire had taken place in the manufacturing -cum -store of the complainant Co. in the intervening night of 17/18.3.2001. Thus, burden to prove that fire was deliberate is on the opposite party -Insurance Co. [see Shobika Attire v. New India Assurance Co. Ltd. and Anr. IV (2006) CPJ 3 (SC)=VI (2006) SLT 598=(2006) 8 SCC 35.] Aforesaid fire attendance certificate issued by the Directorate of Fire Service, SFSO, Guwahati notices that more than 11 hrs were taken to extinguish the fire and on thorough investigation it was concluded that cause of fire was electric short circuit. As may be seen from the document at page 149, report regarding fire in the factory was recorded on the information on phone received from one Sujoi Prasad on 18.3.2001 at about 1.10 a.m. at P.S. Digboi. This report indicates that fire was due to electric short circuit. Jaswant Singh, preliminary Surveyor, in para No. 4 of his report dated 3.8.2001 under the sub -heading cause of fire'' stated that the exact cause of fire could not be ascertained at the time of preliminary survey which could only be known at the time of detailed survey of the premises. However, cause of fire may be due to electric short circuit. Turning to the evidence of Insurance Co., in para No. 10 of his affidavit said Dipak Maity averred that on 17.3.2001 at about 9.00 p.m. there was a storm in the area and electricity supply in the factory premises was cut off, at about 10.00 p.m. he was in the rest room inside the factory -cum -godown and when came out for nature''s call in torch light he saw Utpal Kakoti, managing director, proceeding towards the gate of the factory/godown around 10.30 p.m., Utpal Kakoti after reaching the gate of the factory -cum -godown slightly pushed the door, lighted a match stick and threw it inside the godown -cum -factory and left the premises. This affidavit was sworn in on 28.8.2008. On cause of fire in para No. 5 of the final survey report dated 3.2.2003, opposite party No. 2 -Surveyor has stated that he enquired from Dipak Maity and 6/7 labourers about the cause and extent of damage but all of them were tight lipped and told that only Utpal Kakoti knew about it. Inquiry from Dipak Maity and others seem to have been made on visit of the factory by OP No. 2 Surveyor on 19.3.2001. Statement made in said para No. 10 by Dipak Maity who did not disclose the cause of fire on 19.3.2001, after more than 7 years of the incident of fire, cannot be believed. Moreover, in para No. 10 of the reply dated 14.10.2008 supported by the affidavit of Utpal Kakoti. Shri Kakoti has averred that he had returned Tinsukia along with his wife after attending a function at Guwahati in the morning of 18.3.2001 and was not in Tinsukia when the fire broke out. In its aforesaid report the CID has concluded that cause of fire might or might not be electric short circuit. It is true that the second policy of Rs. 115.00 lakh was taken during the continuance of first policy when the factory was lying almost closed, but from this fact coupled with non -filing of letter from the bank for purchase of policy to cover the risk to the building and plant and machinery, etc., it cannot be safely inferred that the fire to the factory was set deliberately. Aforementioned evidence of the complaint proves that the fire was accidental caused due to electric short circuit.

ADVERTING to the second point referred to above, it was pointed out by Mr. Seth, Advocate that the documents and account books in support of the claim were made available by the complainant after about 6 months of the fire incident to OP No. 2 - final Surveyor and those too were incomplete. Insurance Company had appointed Bunkim Das as Investigator for verification of the bills of sale and purchase submitted by the complainant. 90 such bills of sale and purchase were sent to the Forensic Science Laboratory Assam, Guwahati who opined that the bills Q -1 to Q -81 were written by one and the same person. Remaining bills Q -83 to Q -87 were also opined to be in the handwriting of one and the same person. It was further pointed out that in its report the CID has reported that the claim of fire loss had been exaggerated by manipulation of records as suggested by the investigation made. Complainant Co. does not dispute that OP No. 2 -Surveyor had sent a letter dated 22.3.2001 which was followed by reminders for production of documents and account books and part of them were submitted to OP No. 2 only on 14.9.2001. Para Nos. 7 and 8 of the report dated 3.2.2003 of OP No. 2 Surveyor which has bearing on the issue on hand, is reproduced below: "7. I requested the insured to produce the stock registers, other books of accounts and production records (which were not damaged in fire). Sri Utpal Kakoti told me that he had sent all these documents to his Consultant. When asked about the Consultant, Sri Kakoti told me that he had left for Rajasthan in that morning. The insured also did not divulge about the identity of his Consultant.

The stock registers, other books of accounts and production records were also not produced before the Preliminary Surveyor, Sri Jaswant Singh, on 18.3.2001. Computer generated records were produced to him after 2 (two) and (half) months after the incident of fire. When I enquired as to how he used to ascertain the actual stock positions of raw materials and finished products in absence of basic documents like stock registers and production records, he could not answer and simply kept on repeating that those documents were with his Consultant and as such he was unable to produce these records.

I also made local confidential inquiries with the neighbouring villagers about the factory. The villagers told me that the factory was non -functional for a long time. They had not seen any activities in the said factory since long. They were under the impression that the factory was already closed and had wound up.

After completing the preliminary works, the undersigned visited the insured''s registered office situated at Sardar Market, A.T. Road, Tinsukia. There also, the insured could not produce before me any records and documents, not even a proforma copy of the bill. No records in respect of the previous year also could be furnished by the insured. His only answer was that all the records were with his Consultant only, who was away from the station. This is a very peculiar circumstance. An insured who had an annual turn -over of more than Rs. 1.50 crores (Rupees one and half cores), did not have a single paper in his factory and also in his Regd. Office. In such a rare circumstance, the main reason for not furnishing the copies of accounts and records, could be attributed only to mala fide intentions.

Later, I sent a letter dated 23.3.2001 to the insured detailing the documents and books of accounts to be submitted to the undersigned within 15 (fifteen) days. The visit was again made by the undersigned to the insured''s office at Tinsukia on 6.4.2001 and requested them for the production of the documents as asked for vide letter dated 23.3.2001. The insured told me that the books were still with the Consultant and who had not returned from Rajasthan yet.

In between, the undersigned wrote several letters to the insured from time -to -time requesting him to expedite submission of the required documents. The insured could deposit the requisitioned documents in part in the office of the undersigned on 15.9.2001, only after a letter from the insurer that the insured was not interested in the claim any more and the claim file would be closed accordingly. Since all the required documents were not submitted, the undersigned wrote a letter again to the insured on 21.9.2001 asking him to submit the balance of the documents at the earliest.

The insured did not reply to the letter dated 21.9.2001 nor had submitted the balance documents and records. So the undersigned wrote to the insured again on 2.11.2001 stating that he would be visiting Tinsukia on 22.11.2001, ....... The undersigned accordingly, visited the insured''s office at Tinsukia on 22.11.2001 accompanied by the Sr. Divisional Manager of the insurer, where they met Sri Utpal Kakoti, the Managing Director. He was explained the deficiencies in the books and documents submitted by him so far, specifically the authenticity of the internally generated purchase and sales vouchers and also requested to submit the balance of the documents. He was also provided with an additional list of documents on 22.11.2001, which in the opinion of the undersigned, became necessary in view of the deficiencies observed while scrutinizing the accounts and documents already submitted by the insured. Sri Kakoti assured us to come back in the afternoon as he had some works in the Court in connection with the preparation of an affidavit, but he never turned up thereafter, though the undersigned waited for him from 2.00 p.m. onwards outside his closed office. The undersigned telephoned several times to the insured''s residence on that day, but every time he was told that Sri Kakoti was away. Next morning, i.e. on 23.11.2001, the undersigned went to the insured''s office again at 10.00 a.m. The insured''s office was found closed. The undersigned waited for Sri Kakoti upto 12.00 noon and had made several calls to his residence enquiring about him. The undersigned was told that Sri Kakoti was away from the station and would come back in the evening only. When in the evening, Sri Kakoti was enquired over telephone at his residence, the undersigned was told that he was not back yet.

In the next morning, i.e. on 24.11.2001, the undersigned went to the insured''s office again at about 10.00 a.m. but found the office to be closed. When enquired at Sri Kakoti''s residence over telephone, it was told that he had gone out of the station. From the acts of Sri Kakoti, it became clear to the undersigned that he wanted to avoid the undersigned for the reasons best known to him.

This sequence of incidents were also informed to the insurer. Finding no way out, the undersigned returned to Jorhat on 24.11.2001.

During the visit of the undersigned to Tinsukia on 22.11.2001, the undersigned enquired about a few purchasers of the insured''s products in Tinsukia, whose names and addresses appeared on the duplicate copy of the sales bill submitted by the insured. But in spite of the best efforts, no parties bearing those names and addresses who had purchased ropes from the insured, were found, in Tinsukia. In the last part of December, 2001, the insured submitted some documents in part in the insurer''s office at Tinsukia, which were later forwarded to the undersigned. From the scrutiny of the documents submitted so far, it was found that the insured still had not submitted some basic documents of prime importance, details of which are furnished in the page No. 23 of this report.

A scrutiny of papers submitted by the insured on 26.12.2001 revealed the following 3 (three) startling facts: 1. The insured had submitted internal vouchers in support of his purchase of raw materials, hard fibres (except for a few purchases made from Kolkata and Orissa) and purchases were shown made from the small growers scattered over various places in Assam, like Borpeta, Mongaldoi, Lanka, etc., even though he had categorically stated in his Project Report submitted to bank that these raw materials were not grown in this country and were imported from Philippines only.

Incidentally, the handwriting in all these internally generated purchase vouchers submitted for the 3 (three) financial years 1998 -99, 1999 -2000 and 2000 -2001, appeared to be of one and same person with different thumb impressions for same suppliers. 2. Electricity consumption was absolutely very minimal -on an average 300 units to 400 units were consumer in a month. In certain month, the unit consumption was as low as 15 units. The connected load of the factory was 32 kw. The electricity units consumption appeared to be below the average consumption of a house -hold unit, not to speak of an industry. So the matter was thoroughly investigated. The undersigned along with the Sr. Divisional Manager of the insurer enquired the matter in Tinsukia and Digboi Electrical Sub -Divisional office. The details of electricity consum -ption by the insured''s factory were obtained and got it checked by Sri H.N Dutta, Retired Additional Chief Engineer, Assam State Electricity Board. Jorhat and also a Licensed Electrical Supervisor, who opined that on the basis of electricity consumption records, the insured''s factory was almost defunct, dead and non -functional Copy of the report dated 25.2.2002, obtained from Sri H.N. Dutta, is enclosed.

There was not a single debit/credit entry in the bank loan statements of Apex Bank, Tinsukia Br. Submitted by the insured, as against his claim that he had to increase the insurance cover on stocks as he had increased turn -over and more stock holdings.

The matter was thoroughly discussed with the Regional Manager of the insurer, at Guwahati, in the backdrop of the above findings and dubious circumstances of the incident of fire. Since a substantial amount was involved in this claim and the insured was not cooperating as per advice of the Regional Manager of the insurer, it was decided to refer the matter to a competent statutory authority and accordingly the Addl. D.G.P. of State CID, was intimated vide letter dated 28th February, 2002, for an appropriate action. However, to my information, the matter is still under investigation with the said Department."

AT this juncture, it will be profitable to refer to the investigation report dated 30.1.2003 of Bankim Das, Investigator whom the bills of sale and purchase submitted by the complainant were sent for the purpose of verification of the genuineness thereof. Material portion of this report reads thus: "The undersigned undertook the task of investigation as entrusted and in my first leg of investigation picked certain areas out of the numerous areas relevant to the bills of purchase and sale during the various financial years. The areas selected are viz. Mukalmua, Nalbari, Murajhar, Barpeta, Nil Bagan, Lanka, Udali, Daboka, Ganeshguri, Mathuranagar, Palashbari, Mirza, etc. and I have put my best of efforts to trace out the addresses connected with the transactions of sales and purchase. But except one addressee in "Ashok Saw -Mill" of Palashbari, none could be traced out for the fact that nothing could be known about their whereabouts nor the localities of its address could throw any light in this respect. The only addresse in Ashok Saw -Mill alleged to have had transaction with the insured on various occasions has to say that since their Saw -Mill was closed down in the year 1998, therefore, no question arises as to having transaction with the insured in the years 1999, 2000 and 2001. Further, the Mill being a timber sawing mill, there was no requirement of fibre ropes, etc. for use in the mill..........."

Remark: After the investigation carried out threadbare, the undersigned could safely come to the conclusion that since the very existence of the addresses as concocted and fabricated in the bills and vouchers are irrelevant and bogus, therefore an attempt made with some ulterior motive and mala fide intention to illegally and unfairly gain, cannot be ruled out. However, in the greater interest and veracity of the fate of the matter, examination of bills and vouchers are sent for expert opinion of Forensic Science Laboratory and Finger Prints Bureau, Assam and its results expected soon."

ALONG with the report, statements of the persons from whom inquiries were made were appended.

FSL report dated 8.4.2003 would show that out of 90 sale and purchase bills, 87 were found written by one and the same person while the remaining also by one and the same person. Submission advanced by Mr. Mehta, Advocate was that OP No. 2 - Surveyor did not consider the Assessment Orders of the Income Tax and Sales Tax authorities and there were factual errors in the survey report dated 3.2.2003. In our view, loss to the stock due to fire has to be proved independent of the Assessment Orders. Certain errors which have been pointed out, do not diminish the value of the survey report which is a valuable piece of evidence. Had all the documents and account books submitted by the complainant being genuine, it may not have taken time of about 6 months in supplying them to OP No. 2 -Surveyor. Explanation given in para No. 12 of the complaint for late submission of documents does not inspire confidence. Since Jaswant Singh was a preliminary Surveyor, making available to him computer generated copies of some of the documents after 1 months is of no help to the complainant. What has been stated in para Nos. 7 and 8 of the Surveyor''s report coupled with reports of investigator, FSL and CID as also the discussion made above, support the case of Insurance Company in regard to the documents and books of accounts having been fabricated by the complainant Co. to support the claim made. There was, thus, sufficient justification for the OP -lnsurance Company to have repudiated the claim by the letter dated 14.3.2003.

ACCORDINGL Y the complaint is dismissed with cost of Rs. 20,000 as costs to OP No. 1 - Insurance Company. Complaint dismissed.