KULWANT RAI SINGHAL And CO. vs NEW INDIA ASSURANCE CO. LTD.

Mr. Justice A.L. Bahri, President

THE complaint having been dismissed by District Forum, Bathinda on September 17, 1997, the complainant has challenged the aforesaid order in this appeal. Kulwant Rai Singhal and Co. through sole proprietor Kulwant Rai Singhal some time in 1991 purchased one old mill (sick mill) at Sirsa from Haryana Financial Corporation. Since the Mill was not working, he purchased insurance policy from New India Insurance Company, the opposite party covering risk against fire and theft of the machinery, etc. lying at the Mill. This policy was got renewed year after year on payment of the premium by the complainant. At the relevant time, policy purchased on October 5, 1994 for a sum of Rs. 1,50,000/- was in force as issued by New India Insurance Company, Divisional Office, Bathinda - opposite party No. 3. Particulars of the Cover Note are given in the complaint. From time- to-time, the complainant was visiting the Mill premises to take care of machinery and goods lying there. On February 15, 1995 when he visited the Mill premises, he found the theft having taken place. The thief had damaged outer sliding bar and locks of the shutter and had taken away all the machinery, which was attached to the earth. Such machinery was installed on foundations. According to him, the theft took place during the period February 11 to February 15, 1995 as he had last visited the Mill premises on February 11, 1995. The matter was reported to the police on February 15, 1995 at Police Station Sadar, Sirsa. Ultimately a case was registered under Sections 457 and 380, IPC. The Insurance Company was informed on February 24, 1995. Surveyor M/s. Mittal Surveyors Pvt. Ltd. as appointed by the Insurance Company investigated the case and submitted the report dated October 26, 1995 assessing the loss at Rs. 1,40,000/-.

The complainant submitted his claim before the Insurance Company for the aforesaid amount with interest @ 18% p.a. from the date of the loss. Since the amount was not paid, District Forum was approached. Apart from the aforesaid amount, a sum of Rs. 10,000/- was claimed for mental tension and agony suffered.

THE Insurance Company submitted its version alleging that the claim was validly repudiated as in fact no such theft had taken place as reported by M/s. Mittal Surveyors Pvt. Ltd. as well as by the Investigator subsequently appointed. THE police also did not accept the version of the complainant regarding theft and was contemplating proceedings under Section 182, IPC against the complainant. Both the parties produced their evidence on affidavits and documents on the basis of which the impugned order was passed. THE District Forum accepted the version put forth by the Insurance Company and held that the repudiation of the claim was bona fide and the delay in repudiating the claim was not material. The main question for consideration is as to whether repudiation of the claim by the Insurance Company is arbitrary or based on reliable material. The next question co-related is as to whether there was deficiency in rendering service on account of delayed repudiation of the claim i.e. after two years. At the outset it may be stated that lodging of the report was only expected of the complainant. Further investigation or recovery of the stolen articles or in that sense prosecution of the accused in the Court of law or its failure are not relevant factors to be taken into consideration while deciding the question of repudiation of the claim by the Insurance Company. It may further be observed that any opinion expressed by the Investigating Officer during investigation of the criminal case or any such opinion expressed by the Surveyors, if not supported by any material evidence, will be of no consequence. Thus, it is the evidence collected during the investigation of the claim by a Surveyor or Investigator as appointed by the Insurance Company which is to be taken into consideration either by such Surveyors or by the Insurance Company or at the subsequent stage by the FORA before whom the matter is brought for adjudication. Any such conclusion arrived at by the Insurance Company based on conjectures or surmises would be nothing but arbitrary action on the part of the Insurance Company to repudiate the claim.

REFERRING to the report of the Surveyor M/s. Mittal Surveyors Pvt. Ltd., the loss was assessed at Rs. 1,40,000/- on account of loss of the machinery from the Mill. What weighed with the Surveyor to prima facie to come to the conclusion that no theft had taken place was the effect of absence of any dragging marks of the heavy machinery removed from the Mill. To support this observation, reliance was placed on another fact found that of pigeon droppings scattered around without any indication of disturbance which is merely a conjecture. The fact cannot be lost sight of that since the purchase of the Mill by the complainant in 1995, the Mill never worked or functioned. Initially as per stand of the complainant a Chowkidar was employed who left after about six months and thereafter the complainant himself had been visiting the Mill premises off and on. He referred to the two dates of February 11 and February 15, 1995 when he visited the premises and it was during this period that the theft occurred. According to him, in fact the theft occurred on the night of 14th and 15th February, 1995. According to him, the police had taken into possession the broken locks of the shutter of the Mill. The Surveyor did not make any inquiry-investigation and did not examine such locks, which would prima facie have shown the commission of theft that the thief entered the Mill after breaking open the locks. Another factor which weighed with the Surveyor, the existence of a tree with its branches covering the passage, that without damaging such branches the heavy machinery could not have been removed from the Mill. In our view, these are merely conjectures on which the Surveyor or the Insurance Company rested their decision that no theft had factually taken place as is alleged by the complainant. In fact there are some observations in the report of the Surveyor that the theft had earlier taken place and not as stated in the complaint. The Insurance Company as well as the District Forum observed that the complainant Kulwant Rai Singhal was himself a Surveyor of some Insurance Company and he manoeuvred in getting the insurance policies. In fact he had not purchased such machinery from the Haryana Financial Corporation. This contention would have been accepted if the Surveyor had made enquiry from the Haryana Financial Corporation as to whether at the time of the sale of the Mill, it contained machinery or not. The Surveyor would have further obtained material regarding particulars of the machinery purchased by the complainant. Without making any such inquiry from "the aforesaid Corporation, no observation could be made that the complainant in fact had not purchased the machinery and if purchased the same was not removed by the thief as contended. Another argument which weighed with the District Forum was that being a Surveyor, the complainant manoeuvred to get insurance policies year after year and only during the currency of this policy a case was got registered in order to defraud the Insurance Company. This contention is again based on surmises and conjectures. If there was any intention to defraud the Insurance Company, there were ample opportunity since 1991 to make a false claim against the Insurance Company. The complainant would not have waited for five years and then to suddenly come up with the claim for loss of property which in fact never existed. There was no bar if such machinery had been removed earlier during the currency of the previous policy for the complainant to make a claim. He fully knew the effects of the insurance policies obtained being a Surveyor himself. Being a Surveyor of an Insurance Company is not a handicap that the claim made by such Surveyor be looked into with suspicion and purpose of the policy should be doubted. It was unnecessary for the Insurance Company to wait for the final result of the investigation of the police in order to repudiate the claim. Undue delay of two years in repudiating the claim per se amounts to deficiency in rendering service. The other question for consideration as argued by Counsel for the Insurance Company is that the Mill premises were not guarded continuously for a period of 7 days or more and hence the loss is not covered under the terms and conditions of the policy. Actual policy was not issued to the complainant. Only a cover note was issued, which is Annexure A19. The brief particulars of the risk as covered therein read are as under : "On Stock-in-Trade i.e. the machinery of Oil Mills whilst stored and/or installed and / or fitted in the insured''s factory (silent) situated at Begu Road, Sirsa."

THIS Cover Note also provides that the same was subject to the terms, provisions, exceptions, conditions of the Company''s standard printed policy. The significant fact to be noticed is that the Mill was reported to be ''silent'', meaning thereby that it was non-functional. On behalf of the Insurance Company, copy of the printed insurance policy was produced as Annexure R2. At the outset, it may be stated that this document describes miscellaneous accident insurance policy as issued in the name of M/s. Kulwant Rai Singhal & Co. Along therewith terms and conditions of the policy, "burglary and house breaking policy (business premises)" has been attached. A serious dispute is being raised at the time of arguments as to whether printed terms and conditions of the policy as attached as Annexure R2 are really applicable in the case of covering risk by fire and theft for which the complainant had purchased the insurance policy. Ex. A19, described the cover note as Miscellaneous Temporary Cover Note. Class of insurance was mentioned as burglary. For argument sake, it is taken that printed terms and conditions of the Burglary Policy would be applicable. Clause (viii) of the ''Exclusions'' provides as under : "(viii)(a). If the premises shall have been left uninhabited by day and night for seven or more consecutive days and nights while the premises are left uninhabited."

IN case such seven days are to be treated just prior to the date of the theft, it would appear that this clause will not be attracted to the facts of the present case as the complainant had visited the premises on February 11, 1995. If prior thereto, the Mill was left uninhabited for some period, may be more than seven days, the risk covered by the policy is not excluded. This period has to co- relate with the alleged date of theft. The stand of the INsurance Company relying upon the Exclusion Clause to repudiate the claim is not justified in the circumstances of the present case. The repudiation of the claim being arbitrary and illegal, there was deficiency on the part of the INsurance Company in not settling the claim. For the reasons recorded above, this appeal is allowed. Order of the District Forum is set aside. The complaint is allowed. A direction is given to the Insurance Company to pay Rs. 1,40,000/- with 12% p.a. interest thereon w.e.f. May 15, 1995 till payment, allowing three months to the Insurance Company from the date of the alleged theft to settle the claim. The Insurance Company would pay costs of litigation amounting to Rs. 2,000/-. The directions are to be complied within a month of receipt of copy of the order. Appeal allowed with costs.