New India Assurance Co. Ltd. vs BIRENDRA MOHAN KUMAR SINHA

THIS is an appeal against the order dated 15th Septem-ber 1992 made in Complaint No. 60 of 1991 on the file of the State Commission, Patna. That complaint had been filed by the present Respondent No. 1 Birendra Mohan Kumar Sinha as proprietor of Laxmi Textiles which had been arrayed as Complainant No. 2 and now is Respondent No. 2 in this appeal. The present Appellant M/s. New India Assurance Co. (for short the Insurance Co.) Ltd. was Opposite Party No. 1 in the complaint while Opposite Party No. 2 is its Regional Manager, Central Bank of India through its Chairman was Opposite Party No. 3 while Zonal Manager, Central Bank of India, Patna was Opposite Party No. 4. Managing Director, Bihar State Financial Corporation had been arrayed as Opposite Party No. 5 Except Regional Manager, New India Assurance Co. the other parties have been arrayed as Respondent No. 3 to 5 in this appeal. Vide impugned order the State Commission had accepted the complaint and the Insurance Company was directed to pay Rs. 7,03,901/- with interest at the rate of 18% per annum form 7.1.1991 i.e. from the date one month after the report of the Surveyor, till payment, as compensation for loss and mental strain sustained by the Complainants due to the deficiency in service on the part of the Insurance Company.

ACCORDING to the facts alleged in the complaint the Complainant Birendra Mohan Kumar Sinha is running small industrial unit for manufacturing fine hosiery cloths under the name of Laxmi Textiles. The Complainant got the building, machines, raw materials, finished and unfinished goods of the firm insured with the Appellant-Insurance Company under the fire insurance cover. Initially the Insurance Company had insured the building, plant and machinery of the said firm for Rs. 2.5 lakhs under the fire temporary cover note dated 14th November, 1988 for the period from 14th November, 1988 to 13th November, 1989. Sub-sequently, stock of hosiery goods, finished and unfinished goods and raw materials kept in the premises of the firm were also insured by the Insurance Company for Rs. 6.00 lakhs covering the period from 18th November, 1988 to 17th November, 1989. Thus the total insurance amount was Rs. 8.50 lakhs. After mid night of. 23rd November, 1998 there was a fire in the premises of M/s. Laxmi Textiles as a result of which damage and loss was caused to the factory building, machines, finished, unfinished goods and raw materials kept or stocked in the factory premises. The fire fighting squad was informed and they reached the spot and extinguished the fire with great efforts on the following morning i.e. on 24th November, 1988. Complainant No. 1 lodged information with the Police Station, Shastri Nagar about the aforesaid incident. On 25th November, 1988 the Complainant lodged claim with the Insurance Company''s branch at Patna. He also informed the Central Bank of India and the Managing Director, Bihar Financial Corporation about the occurrence. The Complainant lodged claim for Rs. 10.35 lakhs with the Insurance Company for the loss caused to the factory by fire. The Insurance Company appointed M/ s. Survey & Investigation, Patna to make survey and assess the damage caused to the Complainant on account of aforesaid fire incident. The Surveyor submitted his report on 17th December, 1990 assessing the loss caused to the Complainants at Rs. 7,03,901 /-. However, inspite of the report of the Surveyor and several letters written by the Central Bank of India and Bihar State Financial Corporation to the Insurance Company the said Company did not take any decision regarding the claim lodged by the Complainants. Ultimately on 7th October, 1991 the Complainant received letter dated 1st October, 1991 from the Insurance Company repudiating the claim of the Complainants. Consequently the Complainants filed the complaint before the State Commission alleging deficiency in service on the part of the Insurance Company.

Opposite Party Nos. 3 & 4 filed written statements supporting the Complainant''s case and claimed Rs. 7,03,901/- as admittedly the Bank had advanced loan to the Complainants for financing the business and the articles destroyed in the fire had been hypothecated with the Bank as security for the loan.

THE Insurance Company contested the complaint and disputed the claim of the Complainants inter alia on the ground of its being exorbitantly high and also alleged that taking into consideration the dates of taking insurance policies there appeared foul play on the part of the Complainants. It was further alleged that the matter was got enquired by a private Intelligence Agency and they reported that they were doubtful about the claim of the Complainants. On behalf of the Insurance Company it was urged before the State Commission that the claim had been repudiated by the Company and therefore the Commission had no jurisdiction to proceed with the case under the Consumer Protection Act as there was no deficiency in rendering service. The State Commission repelled that argument and remarked that the consumer cannot be denied the benefit of the Consumer Protection Act and the repudiation can be examined by a Forum constituted under that Act, to find out if the repudiation was justified. It further remarked that inordinate delay in repudiating claim of the consumer is itself deficiency in service on the part of the Insurance Company. Before the State Commission it was also urged on behalf of the Insurance Company that the Surveyor appointed earlier had become hostile to the Insurance Company and unduly favoured the insured. That plea was raised before the State Commission just one day prior to the date of the Order by means of an application. The State Commission was not inclined to place reliance on this belated plea as no such plea was taken by the Insurance Company in the written statement. The State Commission rejected the report of the Private Investigator as it was neither supported by any affidavit nor by oral evidence and further remarked that report did not falsify the case of the Complainant. The State Commission further remarked that suspecting foul play on the part of the Complainant simply on the ground that the incident took place within 10 days of the insurance policy cannot be justified particularly when there was no material before the Insurance Company for such suspicion and moreover, the report of the Fire Brigade Officer and that of the Surveyor which were quite detailed ones fully supported the claim of the Complainant. For the above reasons the State Commission held that the repudiation by the Insurance Company was arbitrary. The Bihar State Financial Corporation had also written to the Insurance Company for early settlement of the claim of the Complaint mentioning that the firm of the Complainant has been a well running unit which has fallen sick due to the fire incident and the said Corporation has taken up the unit under rehabilitation. In the light of the above findings the State Commission passed the impugned order.

FEELING aggrieved of that order the Insurance Company has filed the present appeal. We have gone through the records and heard the parties. We are of the opinion that this appeal is liable to be rejected. The Insurance Company had deputed M/s. Survey & Investigation to make the investigation and assess the loss sustained by the Complainant. The assessor assessed the loss sustained by the Complainant at Rs. 7,03,901/-. The main argument of the learned Counsel for the appellant was that the said Surveyor was in collusion with the Complainant and hostile to the Insurance Company and therefore, the Insurance Company removed the name of said Surveyor from the panel. It is the noticed that in the written statement, the Insurance Company had not made any allegations against the Surveyor. As noticed earlier, onle one day before the order was pronounced by the State Commission the Insurance Co. filed an application making allegation against the Surveyor and also produced some papers. A copy of the letter written to the Surveyor has also been filed alongwith the memo of appeal as annexure ''A''. In this letter also no allegations about the integrity of the Surveyor was made. The only grievance made against the Surveyor was that he was delaying the submission of reports. The Insurance Co. has produced the report of the private investigator i.e., Shri S.K. Mukherjee, appointed by it to make the investigation in this case from the suppliers of hosiery yam to M/s. Laxmi Textiles i.e. Complainant No. 2. The said investigator in his report doubted the genuineness of the purchase made by the Complainants of cotton yarn weighing 500 Kgs. valued at Rs. 21,800/- from M/s. Globe Textile. Its proprietor Ashoke Kumar Tantiya stated thathe issued a bill dated 27 November, 1987 to M/s. Laxmi Textiles but it was issued as Laxmi Textiles wanted the same for bank purposes in order to get some advance money for the purchase of hosiery yarn while in fact no yarn was supplied to M/s. Laxmi Textiles. The Complainant Respondent has produced on file a letter written by M/s. Globe Textile to the Central Bank of India, Rukanpura Branch forwarding the documents relating to that bill for Rs. 21,800/- for collection from the Complainants. M/s. Globe Textiles had also asked the bank to collect interest from the Complainants @ 20% p.a. Therefore, the statement made by the proprietor of M/s. Globe Textiles is clearly false.

ONE of the supplier firms, namely, M/ s. Rajdhani Traders had closed its business on 31st March, 1989 and therefore, the account books of that firm could not be produced before the investigator as the whereabouts of that firm were not known. The yarn valued at Rs. 144,86950 was supplied by M/s. S.C. Saha & Co. to M/s. Laxmi Textiles between 25th November, 1987 to 4th June, 1988. The accounts books of that firm corroborated the payments made to that firm by M/s. Laxmi Textiles. Thus, it cannot be said that the purchases shown by M/ s. Laxmi Textiles were bogus.

THE goods were hypothecated with Central Bank of India and its Manager had verified the stock on 19th November 1988 i.e. only a few days before the incident of fire. THE Complainants had taken working capital loan from Central Bank of India and the Limit of the loan was enchanced from time to time. It was rightly argued by the Complainant Respondents that M/s. Laxmi Textiles had started its business only four years prior to the occurrence of the fire and by passage of time the business grew. As the business grew, the limit of the loan from the Central Bank of India was enhanced from time to time and similarly the amount of insurance was also increased from time to time. We are unable to under stand that while enhancing the insurance amount why the insurer did not verify the stocks of the Complainant. It appears that the Insurance Company was only interested in the realisation of its premium. Therefore, it is too late for the Insurance Co. to say now that the stock worth Rs. 7,03,901/- as assessed by the Surveyors was not with the Complainant.

The main thing which appears to have weighed with the Insurance Co. is that the incidence of fire took place soon after the policy amount was enhanced. We think that this is not a valid ground for repudiating the claim. Fire can occur at any time. Even the private investigator has not said anything about the factum of fire. M/s. Laxmi Textiles were dealing with the Insurance Co. for the last four years prior to the occurrence of the fire. There is nothing on the file to show that at any time earlier the said firm lodged any claim with the Insurance Co.

WE have carefully gone through the order of the State Commission and we do not find any infirmity in it. Hence, we dismiss the present appeal with costs which we assess at Rs. 2,000/-. Appeal dismissed.