MD. NASHEMUDDIN vs National Insurance Co. Ltd.

PETITIONER, Md. Nashemuddin, filed Complaint Case No. 204 of 1994 before the District Forum, Munger, against the Insurance Company as well as the respondent No. 5, Branch Manager, S.B.I. (State Bank of India), Munger, contending that he had taken a cash credit facility from the respondent No. 5 for its wholesale business upto a limit of Rs. 2 lakh. The respondent No. 5 got the stock of the complainant insured with the respondent No. 1. The premium paid was debited to his account. It is his say that his business was extended by hiring Stall No. 19, Raja Bazar Sabzi Mandi, Munger on 1.7.1992. The bank was informed about the same on 3.7.1992. The bank renewed the insurance policy in question on 17.7.1992 itself.

IT is contended that on 7.12.1992 curfew was clamped in the entire Munger town and it continued till 13.12.1992. When the curfew was relaxed for two hours on 13.12.1992, the complainant found that the entire stock of vegetables in the Stall No. 19 at Raja Bazar Sabzi Mandi, Munger had been looted away by miscreants. An FIR was lodged and the Bank was informed accordingly. After things came to normalcy on 21.12.1992, he had requested the Bank to get his insurance claim finalised. On 15.1.1993 surveyor of the Insurance Company assessed the loss after inspecting the business premises at Stall No. 19, Raja Bazar Sabji Mandi. He was informed that all papers regarding stock purchase vouchers, sales records were missing along with the articles in the stall. The claim was not settled and finally on 26th October, 1993, the Insurance Company repudiated the claim on the ground that for the stocks at Stall No. 19, Raja Bazar Sabzi Mandi there was no insurance coverage. It is, therefore, contended by the complainant that he had suffered loss due to gross negligence and deficiency in service on the part of the respondent No. 1 and in any case at the negligence of the officers of the respondent No. 5.

In the written version, the Insurance Company pleaded that the insurance coverage was taken for the business which was carried out at place situated at Kauna Maidan, Munger, and there was no coverage for the business place at Stall No. 19, Raja Bazar, Sabzi Mandi. Therefore, the claim was rightly repudiated.

THE respondent No. 5, Bank, had contended that the complainant M/s. Kisan Traders was having a cash credit account upto a limit of Rs. 2 lakh with the Bank for their wholesale business in potatoes and onions located at Kauna Maidan, Munger, and the same was insured with the Insurance Company from time-to-time. THEreafter, at the time of renewal of the insurance policy, full details of the business places at Kauna Maidan and Stall No. 19, Raja Bazar were given to the agent of the opposite party No. 1. But, the business of the complainant at Stall No. 19 was not mentioned in the insurance policy for the reasons best known to the Insurance Company. The District Forum, Munger took into consideration the say of the State Bank of India, respondent No. 5, that they had informed the Insurance Company that complainant has started his business at Stall No. 19, Raja Bazar. After taking into consideration the aforesaid fact, the FIR and the Surveyor''s report, the District Forum arrived at the conclusion that the ground given by the Insurance Company that place of business at Raja Bazar was not covered by the insurance was unjustified. For the quantum it arrived at the conclusion that stock position of the vegetables was worth Rs. 2,42,000 but as the cash credit facility was Rs. two lakh, therefore, the claim for more than Rs. two lakh was not fit to be accepted. Finally, it was ordered that complainant was entitled to Rs. two lakh with interest @ 18% from the respondents jointly and severally.

AGAINST, that judgment the Insurance Company and the State Bank of India preferred appeal Nos. 218 of 1995 and 222 of 1995 before the State Commission. The State Commission referred to the order passed by this Commission in R.P. 1276/97 dated 22nd April, 2002 which was given in similar circumstances and to the surveyor''s report wherein it is observed that stock in the two shops i.e., one at Kauna Maidan, Munger would be Rs. 1,90,000. Surveyor divided the stock in both the shops in equal parts and had arrived at the conclusion that in Raja Bazar shop that stock was worth Rs. 95,000. On that basis, the State Commission awarded the compensation of Rs. 95,000 with interest @ 12% instead of 18% as awarded by the District Forum from two months after the date of Surveyor''s report and awarded Rs. 1,000 as cost of litigation. That order is challenged by the complainant. Learned Counsel for the petitioner submitted that the impugned order cannot be justified because there was no reason for arriving at the conclusion that stock in Raja Bazar was only worth Rs. 95,000. As against this, the learned Counsel for the Insurance Company submitted that there was no insurance coverage for the stock, which was kept in the stall at Raja Bazar.

REGARDING the objection raised by the Insurance Company, it is to be stated that there was no reason to disbelieve the say of the respondent No. 5 (State Bank of India) that it had informed the Insurance Company that petitioner has shifted its business at Raja Bazar and for that insurance policy was also taken. If officers of the Insurance Company are negligent in not recording the same in the insurance policy, the insured should not suffer. Hence, the contention raised by the Insurance Company is rejected, as similar contention was rejected by this Commission for the same area in R.P. No. 1076/97.

FOR the assessment of loss we have to refer to the Surveyor''s report. Surveyor has taken into consideration the purchase vouchers of the stocks claimed to be looted. The vouchers establish that the purchaser was M/s. Ehsan Traders, Raja Bazar, Subzi Mandi, Munger and the total value of the said goods calculated by him was Rs. 2,42,011. As per the statement submitted with the Bank also the stock as on 7.12.1992 at Raja Bazar was Rs. 2,40,000 and stock at Kauna Maidan was worth Rs. 1,90,000. After deducting Rs 50,000 for the green vegetables and daily sales he arrived at the conclusion that stock roughly could be valued at Rs. 1,90,000. Thereafter, without any basis Surveyor arrived at the conclusion that stock can be divided into two equal parts and each shop would be having stock worth Rs. 95,000. Relying upon this report, the State Commission awarded compensation of Rs. 95,000. From the facts stated above, it is apparent that there is no foundation for holding that complainant was not having stock worth Rs. 1,90,000 which was looted because of the riots during December, 1992 at his Stall at Raja Bazar, Munger. The statements submitted to the Bank for continuing the credit facility as well as purchase vouchers verified by the Surveyors fully corroborate the say of the complainant that he was maintaining stock worth more than Rs. two lakh at Raja Bazar stall. For the stock in Stall at Kauna Maidan, Munger, it was maintained separately and petitioner has not made any claim for the same. In this view of the matter, complainant is entitled to be compensated for a sum of Rs. 1,90,000 for loss suffered by him during the riots in December, 1992. In the result Revision Petition is allowed, It is to be stated that petitioner was maintaining separate stock at Kauna Maidan and that stock was not looted during the riots and for which complainant has not filed any claim.

The impugned orders passed by the State Commission and District Forum are modified and it is directed that Insurance Company shall pay Rs. 1,90,000 with 9% interest p.a. thereon from two months after the date of the Surveyor''s report and Rs. 1,000 as cost of litigation was awarded by the District Forum. The amount paid by the Insurance Company, on the basis of the order passed by the State Commission, shall be deducted and adjusted accordingly. There shall be no order as to costs. Revision Petition allowed.