National Insurance Co. Ltd. vs Ganesh Trading Company

IN original complaint No.81 of 2002, Punjab State Consumer Disputes Redressal Commission, had originally directed the complainant on 30.1.2003 to seek his remedy before the civil court. IN appeal, the above order was set aside by the National Commission, on 13.7.2005 and the matter was remanded to the State Commission for fresh consideration on merits. The State Commission considered the matter afresh and allowed the complaint in its order of 7.12.2006. The appellant National INsurance Company has been directed to pay Rs.10,40,413/- to the Complainants with 9% interest together with Rs.25,000/- as compensation and Rs.10,000/- towards costs. This order of the State Commission is the subject matter of the present appeal before us, filed by National INsurance Company Ltd. The appeal has been filed a delay of 52 days. The explanation submitted by the appellant is considered and the delay is condoned.

AS seen from the record, the respondent Ganesh Trading Company, Ludhiana (Complainant in the proceedings before the State Commission) is a registered partnership firm trading in all kinds of automotive and machine parts. Business risk of the Complainant was sought to be covered through two policies taken from the appellant, National Insurance Company. The stocks were covered to the extent of Rs.150 lakhs against risk of fire and other perils like burglary. The second policy covered the risk to cash up to limit of Rs.5 lakhs. On 9.12.2000 the shop was closed at 6.30 p.m. and the shutters locked in the usual course. The next day being a Sunday, the shop was to be open on 11.12.2000. When the peon of the respondent/Complainant went at 9.00 a.m., he noticed that the shutters were broken open. It was found that the main front iron shutter had been broken and forcible entry made by breaking a glass door inside. Reportedly, the burglars had decamped with stocks worth Rs.9 lakhs and cash Rs.1.4 lakhs approximately. The Police were informed immediately, who registered an FIR. The appellant/OP appointed two Surveyors and an investigator, in a succession and eventually repudiated the claim. The ground for repudiation, as per the letter of 7.1.2002, was that the claim of forcible entry into the showroom of the company for the purpose of burglary was not proved and as per the investigator appointed by the appellant, the alleged burglary was stage managed by the Complainant.

The State Commission came to the conclusion that the report of the Surveyor Shri Arun Mehta completely corroborated the version of the Complainant and the report of the investigator could not be relied upon. Accordingly, the State Commission allowed the complaint and passed the award as mentioned at the beginning of this order.

WE have heard the counsels for the appellant, National Insurance Company and the respondent/Complainant, Ganesh Trading Company. WE have also perused the records of this case. Counsel for the appellant explained that there are two Surveyor reports as one is preliminary and other one in the nature of final report. However, he could not explain the need to appoint two survey agencies for this purpose. As for the appointment of the independent investigator, after two Surveyors, the counsel replied that it was in the background of anonymous complaint received by the appellant. This complaint, purportedly from unnamed employees of the insured/Complainant, claimed that the stocks for which insurance claim was filed, had been sold through the Chandigarh and Khanna branches of the Complainant Company. A reference to this anonymous complaint is found both in the report of 30.4.2001 filed by the Surveyor Duggal, Gupta and Associates and report of the investigator Harjit Singh, a retired Superintendent of Police. The latter mentions 29.3.2001 as the date on which the anonymous complaint was made. In reply, the counsel for the respondent/Complainant mentioned that the second Surveyor, as per his own report, visited the spot on 14.12.2000 even before the first Surveyor could send his report on 15.12.2000. There is no explanation for this undue haste to appoint the second surveyor.

HOWEVER it needs to be noted that neither Surveyor has questioned the fact of burglary. Even their assessments of loss are comparable. Thus, loss of stock is assessed as Rs.9.01 lakhs by the first Surveyor, Arun Mehta and Rs.8.3 lakhs by the second Surveyor, Duggal, Gupta and Associates. The difference between the two is seen in the assessment of loss of cash. The first has assessed it as Rs.1.39 lakhs (same as claimed by the Complainant and supported by the its computerised accounts) The second Surveyor has not made any assessment of cash loss, which was explained by the appellant counsel as due to absence of a safe in the premises for keeping of cash. The appellant has listed some inadequacies in the accounts, noticed by the Second Surveyor, and alleged that they are ignored in the impugned order. But, the fact is that for these inadequacies the surveyor has made appropriate deductions in his assessment of the loss. This report did not recommend repudiation. Therefore, the State Commission has rightly observed that the Surveyors reports have been ignored by the appellant. It is evident from the above, that the appellant/OP Insurance Company has based its decision of repudiation entirely on the report of the investigator. From a perusal of the investigators report, we find that it has made strong adverse assumptions without being able to support them with evidence. For instance-- a) From the gap of two days between the incident and the actual registration of FIR by the Police, an assumption is drawn that the concerned ASI was silenced under pressure. This assumption is meaningless, vis a vis the complainant, as the report of burglary was made to the Police as well as the insurance on 11.12.2000 itself. In fact, the surveyor Arun Mehta had even visited the spot on the same day i.e.11th itself. b) The claim of cash loss of Rs.1.39 lakhs is doubted, despite confirmation from the computerized accounts, on the ground that it was much higher than the complainants cash requirement of Rs.40,000/- per day, as assessed by the investigator. c) Eight individuals, to whom goods where supplied for sale on commission basis, were examined by the investigator. Seven of them confirmed receiving the articles as per bill raised on them. Only one, Tarsam Singh, denied having paid cash against the bills raised on him. He is not examined as a witness. Yet, the investigator has raised an assumption from it that the firm was selling goods without billing.

The investigator Harjit Singh has stated in his affidavit evidence that he was appointed by the appellant on 4.5.2001 to investigate the case. Thus, arriving on the scene nearly six months after the incident of early December, 2000, he could not have had benefit of any first hand examination and assessment of the situation as it obtained on 11.12.2000, when the burglary was first detected. In his report, he has relied on the opinion of a shutter manufacturer from Patiala, as an expert on the subject of shop shutters, to reach a conclusion that it was not a case of forcible entry at all. On this crucial point, the expert should have been examined before the State Commission. In the absence of the same his opinion will be of no assistance to the case of the appellant/OP.

FROM the examination above, it is evident that the Insurance Company has completely ignored the assessment of the two Surveyors appointed by it and has chosen to rely on the report of the investigator, which is full of unsubstantiated assumptions. Receipt of an anonymous petition may, to an extent explain appointment of the investigator, but cannot be the justification for rejection of reports of the surveyors. In this case, the appellant, Insurance Company has appointed the second Surveyor even before the first Surveyor could submit his report. On the significance of the report of the surveyor Honble Supreme Court of India has held in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. and anr., Civil Appeal No.4487 of 2004, decided on 24.08.2009:- In our considered view, the Insurance Act only mandates that while settling a claim, assistance of surveyor should be taken but it does not go further and say that the insurer would be bound whatever the surveyor has assessed or quantified, if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured. In the present case, the insurer has stated in the counter affidavit filed before the National Commission and even before us, why the appointment of second Surveyor was necessitated and also has given valid reasons for appointing second Surveyor and also has assigned valid reason for not accepting the report of Joint Surveyor. The correspondence between the insurer and the Surveyors would indicate the particulars differed by the insurer for differing with the assessment of loss made by the Surveyors. The option to accept or not to accept the report is with the insurer. However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. We hasten to add, if the reports are prepared in good faith, due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the Surveyors.

THEREFORE, in our view State Commission was fully justified in rejecting the decision of the appellant to repudiate the claim. The repudidation ignores reports of two Surveyors and is based on the report of the investigator, an ex-police officer. The appeal is therefore, dismissed and the order of the State Commission, UT Chandigarh, in Original Complaint No.81 of 2002 confirmed. There are no orders as to costs.