New India Assurance Co. Ltd. vs M/S. Super Fashion

Challenge in this First Appeal, under Section 19 of the Consumer Protection Act, 1986 (for short “the Actâ€), by New India Assurance Co. Ltd.

(for short “the Insurance Companyâ€), the sole Opposite Party in the Complaint under the Act, is to the order dated 28.01.2010, passed by the

State Consumer Disputes Redressal Commission, Delhi at New Delhi (for short “the State Commissionâ€) in Complaint Case No. C-153/02. By

the impugned order, while accepting the Complaint, filed by the Respondent herein, alleging deficiency in service on the part of the Insurance

Company in not indemnifying the total loss quantified at 8,63,766/-, claimed to have been suffered by him on account of damage to the

equipment/material insured, under the Standard Fire and Special Perils Insurance Policy, obtained from the Insurance Company, the State Commission

has directed the Insurance Company to pay to the Respondent a sum of 6,43,344/-towards the balance claim, within thirty days of the date of receipt

of copy of the order, with a default stipulation that if the said amount was not paid within the said time, the said amount shall carry interest @ 6% p.a.,

and costs of litigation, quantified at 10,000/-. However, the claim for further compensation/damages, made by the Respondent, has been rejected by

the State Commission.

Briefly stated, the material facts, leading to the filing of the Complaint, are as follows: Â

The Respondent is a proprietorship concern of one Mr. Madan Kukreja. He was engaged in the business of fabrication and export of garments from

his premises in the basement, the 1 st floor and the 2 nd floor at 1446, C-13, Govind Puri, New Delhi. He had obtained from the Insurance Company a

Standard Fire and Special Perils Insurance Policy in the assured sum of 50.00 Lakhs, in respect of several items detailed in the policy, which was valid

from 16.06.2001 to 15.06.2002.

2.1 Unfortunately, due to heavy rains in the intervening night of 13/14.08.2001, the basement of the aforesaid premises got inundated. Admittedly, the

water accumulated up-to the level of 8 ft. The incident was duly intimated to the Insurance Company on 14.08.2001 itself. On receipt of the said

intimation, the Insurance Company appointed a Chartered Accountant as the Surveyor, who visited the affected premises on 14.08.2001.

Subsequently, the Respondent preferred a claim with the Insurance Company for indemnification of a total loss of 8,63,766/- under several heads,

which included the loss on account of damage to the fabric and finished products etc.

2.2 Vide his report dated 18.12.2001, the Surveyor assessed the total loss at 95,557/- as against the total claim of 8,63,766/-, and after applying the

excess clause, he recommended settlement of the claim at 85,557/-.

2.3 Obviously, aggrieved by the rejection of the balance claim made for the loss of 77,030/- for damage to the machines; 1,52,028/- for damage to the

raw fabric; and 4,21,378/- for damage to the finished products, the Respondent carried the matter in Appeal to the State Commission.

As noted above, the State Commission has allowed the Complaint, with the afore-stated directions, observing thus:

“13. Report of the surveyor dated 18.12.01 Ex. RW 2/1 (Annexure R-1) admits flooding of the basement of the premises where the garment

fabrication unit of the complainant is located. It also admits that damage was caused to the plan & machinery, threat/dori/laces; building and furniture,

fixture & office equipments, but the surveyor rejected the claim regarding fully damaged creatives, damaged fabrics & finished goods respectively

amounting to Rs.77.030.00, Rs.1,52,028 and Rs.4,21,378/-, on the ground that the fabrics & finished goods were not lying in the basement at the time

of their visit on the day of loss or on subsequent visits; that the accessories & fabrics shown to them could not have been damaged in the inundation of

water that had reached the height of the basement, because after these items were dried they could not have been in the condition as shown to them;

that the insured had proper stores on the ground & first floors of the building, therefore, there was no reason to store or keep the fabrics in the

basement. All these observations of the surveyors are based on surmises and conjectures as stated by the complainant & could be the figment of a

biased mind, finding ways & means to contain the OP authorities. We are therefore inclined to agree with the Ld. Counsel for the complainant that

declining of the claim of damage to machines, fabrics & finished goods by the OP is unjustified. Rejection of claim for Rs.5,73,406/- towards loss to

fabrics & finished goods is also uncalled for. We, therefore, hold the OPs liable to make good, loss suffered by the complainant.â€​

Thus, the State Commission has reached the conclusion that the rejection of the balance claim by the Surveyor, under the afore-stated heads, was

not based on any cogent material but on surmises and conjectures. It is equally evident from the material on record that the Company had repudiated

the balance claim only on the basis of the said report.

Since one of the contentions urged on behalf of the Insurance Company was that the Insurance Company was justified in relying on the

Surveyor’s report because the said report was well-reasoned, on a pointed query whether the objections/material filed by the Respondent/Insured

to the report of the Surveyor, after its submission, were considered by the Insurance Company, vide order dated 04.01.2018, Learned Counsel

appearing for the Insurance Company prayed for and was granted time to seek instructions in this behalf and, if so, place the relevant documents on

record. On the following date, i.e. 02.02.2018, the Learned Counsel submitted that though the original record had been brought by an official of the

Insurance Company but the same pertained to some different identical claim. She prayed for some more time to produce the original record pertaining

to the claim in question. While acceding to the prayer for adjournment, the Branch Manager of the Insurance Company was directed to remain

present along with the original record, wherein the material placed on record by the Respondent, after the submission of the Surveyor’s report,

was considered. It was clarified that if the said information was not furnished on the next date, the Regional Manager of the Insurance Company may

have to be summoned with the record to assist the Bench in making appropriate orders in the case.

When the case is taken for further hearing, it is stated by Learned Counsel appearing for the Insurance Company that the Regional Manager as

well as the Branch Manager of the Insurance Company are present in person but they are unable to produce the original record, wherein the claim in

question was considered, as the same has been misplaced during the shifting of its Divisional Office (DO) 24 from Basant Vihar to Dwarka, closed

sometime in the year 2006, and then from Dwarka to some other Branch. It is, however, conceded that as per the normal practice, before shifting, all

the records maintained in any Branch, particularly in those cases where the claims are under litigation, are duly inventorised and handing over/taking

over receipts are obtained. If that be so, it belies conviction that having received notice in the Complaint in the concerned Branch sometime in the year

2002, and that Branch having been shifted after almost four years of the filing of the Written Version on behalf of the Insurance Company, how the

original record pertaining to the claim had gone missing while shifting of the Branch, as is now being claimed. Neither the inventory of the files shifted

from the Branch nor any other material in support of the afore-noted specious plea has been produced. In the absence of any such evidence, I am

convinced that the original file is deliberately being withheld by the Insurance Company, leading to an irresistible inference that the Insurance

Company had failed to consider the evidence adduced by the Respondent in support of the loss suffered by him on account of the damage to the raw

material/fabric and the finished items lying in the basement, after the submission of the Surveyor’s report.

It needs little emphasis that if an Insured files objections to the report by the Surveyor, appointed by the Insurance Company to assess the loss, the

Insurance Company is bound to apply its independent mind on such objections/material before rejecting the claim. A blind reliance on Surveyor’s

report because it suits the interest of the Insurance Company, as in the present case, would be violative of the principles of natural justice. In the light

of the afore-noted factual scenario, it cannot be held that the afore-extracted findings by the State Commission are vitiated, more so, except for

remitting the amount as assessed by the Surveyor, the Insurance Company did not even think it advisable to communicate its final decision on the

balance claim, despite several requests by the Respondent/Claimant, inter alia, praying for reconsideration of his case on the basis of the additional

information/material, including the photographs of the damaged property etc., as specifically mentioned in para-4 of the Complaint.

In view of the afore-going, I do not find any material illegality in the impugned order, warranting interference with the direction to the Insurance

Company to pay to the Respondent the afore-stated balance amount. However, since 50% of the awarded amount is stated to have already been

deposited in this Commission on 23.08.2010, the direction in the impugned order relating to the award of interest, as default stipulation, is deleted.

Resultantly, the Appeal is partly allowed to the extent indicated above, leaving the parties to bear their own costs.

As a consequence, the amount deposited in this Commission by the Insurance Company, along with the accrued interest, if any, shall be released

by the Office to the Respondent forthwith. The balance amount due in terms of the order passed by the State Commission, as modified above, shall be

remitted by the Insurance Company to the Respondent by means of a demand draft, within four weeks of the date of receipt of a copy of this order.

The statutory deposit made by the Insurance Company, at the time of filing of the Appeal, shall stand transferred to the Consumer Welfare Fund,

by way of a Bank Draft drawn in favour of PAO, Ministry of Consumer Affairs, New Delhi.