National Insurance Co. Ltd. vs Ashok Construction Co.

- THIS is an appeal against the Order dated the 12th December, 1990 of the State Commission of Rajasthan. The delay in filing the appeal is condoned. The relevant facts of the case are briefly given below:

THE respondent complainant had obtained two insurance policies of Rs. 3 lakhs each (i) for burglary and (ii) for various other perils including fire, riots, malicious damages etc. THE policies were effective from 29th December, 1986 to 28th December, 1987. On the 16th June, 1987 during the currency of the insurance policies a building under construction by the respondent collapsed. Due to this accident two persons were killed and many were injured. This provoked a mob to gather at the site of the accident and they are alleged to have indulged in rioting and theft/burglary of building materials at site.

After examination of evidence, the State Commission observed that a large crowd of pesons entered the site without permission and attempted to kill the contractor and his employees, that persons who had collected at the site removed the building materials that were lying there and that the facts of the case disclosed that the burglary had taken place. This was covered by one of the two insurance policies. Further, the Commission held that the "the facts that have come under record clearly show that the persons who had collected there in thousands, became angry and attacked the partners and the employers with the intention to cause loss to the property. In short, the Commission held that the disturbances at the spot constituted breach of peace and that the incidents that had taken place on 16th June, 1987 were covered by both the insurance policies.

THE State Commission also found on the basis of the evidence that the conclusion of the surveyor as per the survey report on 31st March, 1988 that the complainant insured had suffered loss due to the riotous mob and loss of material and equipment lying at the site after the mishap and that Rs. 2,03,678/- was a fair and reasonable indemnity to the insured for the loss suffered by them on account of riot and malicious damage and theft. THE State Commission, therefore, observed that "in our opinion a sum of Rs. 2,03,678/- will be reasonable amount for which the complainant is to be indemnified." It disallaowed the claim of the complainant for interest which he had to pay to the Bank for the loan raised for purchase of the hypothicated and insured materials as the same was not recoverable from the insured under the insurance policies. The State Commission also disallowed a claim of Rs. 1 lakh on account of mental agony undergone by the complainant due to the insured not immediately releasing the payments of the insurance claims on the ground that this claim had not been substantiated by the complainant and was not recoverable under the terms of the policy. However, the Commission felt that the insurers were negligent in not settling the claim within a reasonable time and, therefore, awarded a sum of Rs. 59.322/- as compensation for the loss suffered by the complainant due to this delay.

THE sum and substance of the appeal is that the complainants have failed to prove the proximate cause for the alleged loss said to have been suffered by them, that they had failed to prove the existence of the articles and materials said to have been stolen from the site, that only an accident or mishap viz. the collapse of building under construction by the respondent complainant had occurred, that the F.I.R. registered by the police on the 16th June, 1987 was under Sections 337, 338 and 304A of I.P.C. viz., causing simple and grievious hurt and death by rash or negligent acts for which the respondents complainants were solely responsible and that the said F.I.R. was still under police investigation, that the respondent complainants filed their F.I.R. on the 12th February, 1988 i.e., about 8 months after the occurrence and that this second F.I.R. was only an after thought and fabrication. Further the appellant has submitted that an investigation was in progress by One Man Commission appointed by the Government of Rajasthan to enquire into the causes of collapse of building under construction on 16th June, 1987. Furthermore, the appellant has stated that he had apponted an ininvestigator to enquire into the matter. According to his report of June, 1991, there was no riot or riotous situation and malicious damage, loot, theft, burglary etc. after the collapse of the building or 16th June, 1987, that police had not registered any case of riot or looting etc. under different provisions of I.P.C. nor any riot was declared to have taken place by the police and that no theft or burglary of any materials can be said to have been committed. It is on the basis of the investigator''s report that the appellant insurer repudiated the claim. We have gone through the record and heard the parties and also taken on record the written arguments filed by the appellant on 13th December, 1991. Their letter of 25th July, 1987, the respondent had explained satisfactorily as to why it was not possible and practicable for, them to lodge a complaint in the police station of rioting and burglary after the collapse of the building on 16th June, 1987 the police had registered a case against the partners and the respondent firm under Sections 337,338 and 304-A of the I.P.C. and the police was wanting to arrest them. As the State Commission has noted that the respondent complainants had tried to get an F.I.R. lodged with the police but unsuccessfully and eventually Their F.I.R. was recorded by the police in February, 1988 through the intervention of the Superintendent of Police. The respondent Complainants have also explained the circumstances prevailing at the site on 16th June, 1987, in which it was not possible for them to undertake a stock taking of the materials burgled or taken away.

THE respondent complainant had requested for the appointment of a surveyor by the insurer immediately after the incident, but he was appointed by the appellant Insurance Company only in February, 1988. ''THE Appellant Insurance Company now slates that the surveyor failed to give an unbiased or independent report. It has also been alleged by the appellant Insurance Company that the surveyor had intentionally withheld the survey report till 31st March, 1988 to enable the insured to file an F.I.R. with the police and eventually gave to the insured a favourable report.

THE Surveyor, who was the appointee of the Insurance Company, had, in his report of 31st March, 1988 stated that 14 labourers were trapped due to the collapse of the building and in consequence a woman and a child thed in this accident, that the occurrence of collapse of the building attracted thousands of people to collect at the site of the mishap, they became agitated and turned violent and indulged in looting of various materials of the insured lying around the site. It is also noteworthy that the police has not come to any finding with reference to the F.I.R. filed on the 16th June, 1987, or by the respondent contractor on the 12th February, 1988, nor has the One Man Commission of Enquiry appointed by the Government of Rajasthan gave any report as to the cause of the collapse. It is significant that an investigator was appointed by the Insurance Company in 1991 i.e. after the State Commission had passed the Order in December, 1990. It is on the basis of the report of the investigator of June, 1991, that the findings of the State Commission are being challenged in this appeal. This Commission feels that it was not proper on the part of the appellant Insurance Company to attempt to create fresh evidence after it had lost its case before the State Commission. In fact, the respondents claimants have alleged that their F.I.R. of 12.2.1988 has been tampered with by showing the value of the loss as being Rs. 500/- only whereas the F.I.R. actually filed by them did not disclose the value of the loss. The State Commission in its order has observed that no specific reply was given by the appellant Insurance Company with respect to the various amounts of compensation claimed by the complainant in his complaint, that Shri R.C. Siyal, Sr. Divisional Manager of the Insurance Company had not controverted the statements of the respondent claimant (Shri S. Ashok Singhal) with respect to the claim amount, that the surveyor had also assessed the loss at over Rs. 2 lacs, that Shri R.C. Siyal had admitted in his deposition that the loss had in fact been caused to the complainant due to the alleged event that the appellant Insurance Company did not exercise its right to test the authenticity of the entries in the stock register of the respondent which form the basis of the assessment of loss.

Having considered all the materials placed on record, we have ho hesitation in holding that the findings of the State Commission are correct and that the appellant Insurance Company has indulged in objectionable conduct in trying to create fresh evidence so as to be able/to challenge the findings of the State Commission (This is apart from allegation of respondent that the F.I.R. has been tampered with by the appellant Insurance Company).

IT has remained unexplained by the appellant as to why the survey report was not rejected forthwith and the claim of the insured repudiated, if the survey report was false and insurance claim was a fake claim. As noted by the State Commission in its Order, the insurer did not settle the claim of the insured for a long time-26 months-from the date of the incident in spite of repeated requests made by the insured complainant and the Bank of Rajasthan. We, therefore, direct as under: (i) The respondent complainant should be paid a compensation of Rs. 2,03,678/- on account of loss or damage to his materials as determined by the State Commission with interest at the rate fixed by the State Commission till the date of the order of the State Commission and at 18% for the period subsequent to that date until the date of actual payment. (ii) The appellant Insurance Company should pay a sum of Rs. 10,000/- as costs to the respondent complainant.

Order accordingly.