National Insurance Co. Ltd. vs NATIONAL PROCESSORS

THESE two cross-appeals arises from the order of the State Consumer Disputes Redressal Commission, Punjab, whereby the State Commission partly allowed the complaint. Feeling not satisfied with the order of the State Commission, both the parties have come in appeal before us. 1. The facts of the two cross-appeals are as follows. The respondent in the First Appeal No. 389 of 1997, M/s. National Processors, Amritsar, is engaged in the business of yarn, finished shawls, etc. as work for local manufacturers. He had taken two insurance policies from the National Insurance Company (the appellant) covering stock-in-trade against loss or damage by fire and burglary. The case of the respondent is that on the night intervening 4th and 5th of March, 1990, burglary took place in the factory premises and that about 2400 shawls and 350 kilos of yarn belonging to various local manufacturers and lying at the respondent''s premises were stolen. It is not disputed that the date on which the alleged theft took place and the type of material stolen are covered by the insurance policies.

THE respondent promptly lodged a police complaint on March 5, 1990 and the police registered an F.I.R. Simultaneously he claimed from the Insurance Company an amount of Rs. 4,03,408/- on account of loss of shawls and yarn. THE Insurance Company appointed M/s. SSB Surveyors and Consultants Pvt. Ltd., Chandigarh as Surveyors. A detailed survey was conducted promptly on March 7, 1990 at the factory premises. THE Surveyors sent their report to Insurance Company on September 20, 1990. Meanwhile, the police had filed the case as untraced vide their report dated August 1, 1990 which report was subsequently submitted to the Insurance Company. Even though the Surveyors submitted the report, the Insurance Company after a lapse of over three months, i.e. on 3.1.1991 appointed one M/s. Integrated Security Corporation of India, Chandigarh, as Investigator. Mr. D.C. Sharma of the Integrated Security Corporation of India, twice visited the factory premises in January and in April, 1991, and demanded further information which was again supplied. It appears from record that Shri D.C. Sharma gave his report to the Insurance Company on May 3, 1991. However, as the Insurance Company did not settle the claim, the respondent continued visiting the office of the Insurance Company but with no success. The respondent, therefore, issued a legal notice on February 27, 1992 to the Insurance Company through the Advocate calling upon them to settle and decide their claim within ten days of the receipt of the notice thereof.

Having received no proper response from the Insurance Company, the National Processors filed a complaint before the State Consumer Disputes Redressal Commission, Punjab on 16.6.1992 seeking issue of directions to the Insurance Company to pay the claim amount of (Rs. 1,07,000 sic) interest for delayed payment, compensation for loss of business, harassment and acute humiliation and costs of the complaint.

BEFORE the State Commission the Insurance Company stoutly argued that in fact no burglary took place and that the version of the complainant with regard to the theft and loss caused thereby was mere strategy to raise fabricated claim against Insurance Company. It was also argued that there was no inordinate delay in assessing the loss and that if there is any delay, it was due to the fault of the insured firm who could not submit necessary documents to the Investigator. The learned State Commission in its order dated 22.9.1993 took the view that it is not for the Commission to go into the highly contested question of facts or the complexity of legal rights of the parties under the Act and that the issues involved cannot be resolved except in the ordinary process of civil law. It also held that the insured firm has been unable to lay sure foundation of establishing as a fact that the theft took place, that his not chosen to lead necessary evidence and that it is not possible to arrive at any categorical finding of facts. The learned State Commission held that the complainant must fail in its attempt to seek redressal with the summary jurisdiction under the Act and dismissed the complaint. When the matter came up before the Commission earlier in first appeal, the Commission vide its order dated August 6, 1996, remained the case to the State Commission for de novo disposal after allowing both sides to adduce further evidence so that the State Commission can come to a satisfactory conclusion as to whether there was, as a matter of fact, any incident of burglary in the premises of the insured on the night in question and to examine the quantum of loss in a more detailed manner. Both parties produced affidavits and documents after remand. The Insurance Company took the plea that the Investigator''s report revealed that the complainants themselves have removed the goods to commit fraud on the Insurance Company and that the claim was properly repudiated vide their letter of May 21, 1992, and that there was no inordinate delay or deficiency in service, and that the delay, if any, is due to the failure of the complainants themselves who did not submit necessary documents to the Investigator.

THE learned State Commission came to the conclusion that there is fallacy in the argument of the Insurance Company that the first Surveyor was appointed to value the losses suffered whereas the second Investigator was appointed to determine whether a theft took place; that no reasons were put forth by the Insurance Company for not accepting the SSB Surveyors'' report and for appointing another Surveyor/Investigator; and that the practice of Insurance Company appointing one Surveyor after another till someone makes a report in their favour has to be deprecated. It further observed that in the letter of repudiation dated 21st May, 1992, no reasons have been recorded as to why the claim is being repudiated and that the letter merely conveyed the fact of repudiation of the claim; it also held that the report of Investigator concluding that no burglary was committed is based on a conjectures and surmises and cannot be accepted. It also came to the conclusion that the second report is merely a second opinion on the material already discussed by the first Surveyor and is not based on any fresh material collected by the second Surveyor/Investigator. Based on the reported cases of the National Commission, the State Commission held that a period of four months is a reasonable period for settlement of the claim that the Insurance Company took about a year''s time even to repudiate the claim after the second Surveyor/Investigator had made the report. After taking into account all the evidence, the State Commission held that there is deficiency in service. As regards the actual loss suffered, the State Commission accepted the report of the first Surveyor and placed it at Rs. 1,83,170/- plus interest at the rate of 12% from January 1, 1991 with further direction that for the remaining amount, if any, the complainant may approach the Civil Court. First Appeal No. 389 of 1997 is filed by the National Insurance Co. Ltd. aggrieved by the relief given to the complainant by the above order. First Appeal 560 of 1997 is an appeal for enhancement against the same order by M/s. National Processors aggrieved by the fact that only partial relief was given by way of compensation for loss suffered. In the proceedings before us, both the parties filed their written submissions. In addition to repeating the arguments advanced before the State Commission, the National Insurance Company Ltd. further argued that M/s. National Processors have not led any further evidence on record on the question of genuineness of their claim after remand of the case. The only additional evidence led was on the quantum of loss. It is argued that the Insurance Company is at liberty to appoint an investigator and it was wrong on the part of the State Commission to hold that the Investigator was in fact a second Surveyor. It is further argued that the National Processors did not lead any evidence to rebut the findings of the Investigator. It is argued that the State Commission totally neglected the detailed investigation report of the Investigator holding that in fact there was no theft. It is, therefore, the State Commission merely reviewed its own earlier decision which it is not competent to do.

IN view of the stress laid by the INsurance Company on the report of the INvestigator, we have carefully gone through the report. While the alleged incident of theft took place on the night of 4/5 March, 1990, the INvestigator started his investigation only in the last week of January, 1991, that is after about 10-11 months when most of the evidences on the ground would have disappeared. INvestigator paid two visits to the factory, once on 22nd January, 1991 and on the second occasion on 22/23 April, 1991. Immediately following his first visit, he wrote a letter on 26th January asking for certain detailed information like the plan and layout of the factory to actual scale, etc., which according to us is putting undue burden on the insured Company. Some of the information asked for prima facie does appear irrelevant for the purposes of investigation.

HOWEVER, in the reply given by the insured Company on February 8th, we find that there is substantial compliance of the requirements of the Investigator. The main deficiency was that the insured Company could not produce copies of the earlier insurance policies since they have not kept such copies. We also find that soon thereafter on February 14th the representative of National Processors visited the Investigator''s office but the Investigator was not available, being away in Delhi. We also find that though the insured Company supplied information, the Investigator in a routine manner went on asking for the same information again and again. For instance, to a specific query about the name of the Chowkidar of the neighbouring factory, the same was supplied by the insured Company on February 8, 1991. HOWEVER, by his letter of April, 2, 1991, the Investigator again asked for the name of the same Chowkidar. Similarly, photostat copy of the attendance register for the month of March was furnished on February 8, 1991 as is evident from the letter of the National Processors to the Investigator. The Investigator, however, again asked for a copy of the same vide his letter on 2nd April, 1991. One more instance should reveal the casual approach and bias of the Investigator. The factory of the National Processors is located in Amritsar on the Batala Road. However, in his final report dated April 26/May 3rd, 1991, in the very first paragraph, the Investigator writes : "The word Batala in Punjab has attached an unwholesome notoriety for crime and violence and on hearing its name, one gets mentally prepared to listen and accept any episode of criminality". A number of speculative questions were raised in the investigation report; for instance a question posed is as to why the burglars did not use a vehicle to take away the material, etc. as if, the insured Company is in control on the burglars thinking.

From the whole tenor of the investigation report, we tend to agree with the learned State Commission that it is based on surmises and conjectures. As correctly observed by the State Commission even after the investigator''s report which itself is delayed by a year and two months, the claim of the insured Company was not decided one way or the other for another year. We, therefore, hold that there is deficiency in service. Similarly, as regards compensating the loss, we have to go by the report of the first Surveyor who has assessed the loss after taking into account various facts. We find, there is no infirmity in the order of the State Commission. We, therefore, confirm the orders dated 5th August, 1997 of the learned State Commission. Both the appeals stand dismissed. Rs. 5,000/- as costs be paid to the appellant by the respondent in First Appeal No. 560/1997. Appeal dismissed.