NEW INDIA AUTOMOBILES vs NEW INDIA ASSURANCE CO. LTD.

DISSATISFIED and aggrieved by the order of the State Commission in Complaint No. 249/SC/91 dated 22.4.1997, the complainant M/s. New India Automobiles filed this appeal before us. Case of the complainant:

THE complainant who sells motor parts at a shop at Tikonia Road. Haldwani Distinct since 1974 had an insurance policy for Rs. 3.00 lakh valid from 21.1.1988 to 20.1.1989. On 15.5.1988 at about 11:00 p.m. he received an information regarding fire accident at his shop when his wife was about to be operated. Fire brigade came to the spot and extinguished the fire. THE New India Assurance Company the opposite party was also intimated about the fire accident on the next day i.e., 16.5.1988. THE Insurance Company appointed Shri A.K. Gupta as Surveyor who inspected the shop and asked the complainant to produce the correct stock position and necessary papers. THE complainant had availed a credit limit of Rs. 60,000 and a loan of Rs. 10,000 from the Punjab and Sind Bank. THE complainant had submitted all the necessary papers to the Insurance Company including the balance sheet prepared by the Chartered Accountant for the past three years and requested the Insurance Company to reimburse the total loss to the tune of Rs. 3,52,300. Case of the opposite party Insurance Company: The Insurance Company denied of having any knowledge about the operation of his wife. The cause of fire mentioned in the claim form is that the fire broke out due to Dhoopbati/Agarbatti. The complainant locked the shop without extinguishing the Agarbatti and Dhoopbatti and came to the hospital. This shows that the complainant has not taken reasonable care of the insured goods and if the incident of fire had occurred, it is the sign of carelessness. Though the complainant obtained a loan from the Bank, he had not submitted the stock statement regularly to the Bank. The complainant in his stock statement has shown the value of the stocks as Rs. 3,12,800 but when the officials physically verified the stock of the shop it was found to be to the tune of Rs. 25,000 only. When the Bank officials pointed out the value of the stocks is Rs. 25,000 the complainant informed the officials that the remaining stocks are lying in the godown situated at Purani Building, Rampur Road. The complainant has insured his property from 22.1.1985 to 21.1.1986 for Rs. 50,000 and Rs. 20,000 only, whereas suddenly on 21.8.1988 he insured the same for Rs. 2,80,000 and accordingly the investigation by the Insurance Company revealed that though the value of the stocks were increased to 5 times, the value of the fittings and fixtures should have been increased in the same ratio which makes the claim doubtful. The shop of the complainant was only about 10 ft by 12 ft and it is difficult to believe that goods worth more than Rs. 3.00 lakh could be kept in the small premises. The complainant sent a letter dated 4.10.1999 requesting the Insurance Company that he is willing to accept Rs. 45,000 as full and final settlement. The Insurance Company had to take a decision for the said claim even though the amount is not payable, because the business of the Insurance Company is based on high level trust between the Insurance Company and the insured. The insured tried to claim compensation from the Insurance Company in violation of the condition of the insurance policy after concealment of facts and through misrepresentation and attempt to conspiracy. Therefore, the Insurance Company had rejected the claim.

The State Commission after hearing the parties directed the insured to pay Rs. 45,000 with 18% interest per annum from 15.11.1988 till the date of payment with Rs. 5,000 towards mental agony and Rs. 1,000 towards costs. Submissions of the learned Counsel for the complainant/appellant:

NO audit was conducted by the Insurance Company to ascertain the stock position at the time of fire accident. On the other hand, the insured has engaged M/s. N. Sharda and Associates, Chartered Accountants who has submitted the stock valuation of report to the New India Assurance Co. Ltd., wherein they have valued the stock at Rs. 3,52,300 as on 15.5.1988. The State Commission has not doubted the veracity of the fire accident. In his affidavit Mr. Inder Raj Lamba, Senior Divisional Manager of the Insurance Company has stated that the complainant vide his letter dated 4.10.1998 himself requested for immediate disposal of his claim towards full and final settlement for a sum of Rs. 45,000. The learned Counsel argued that this letter was given under indigent circumstances as the complainant was facing financial crunch. On the other hand, the Insurance Company has repudiated the claim stating that the claim is bogus. Neither the Surveyor nor the investigator has assessed the loss and quantified the same. Submissions of the learned Counsel for the opposite party/respondent: The learned Counsel for the Insurance Company/respondent submitted that the preliminary Surveyor Mr. Dinesh Kumar Saxena has observed that no hazardous stocks/goos as lubricants, etc., were there in the shop at the time of fire. On thorough inspection of the salvage the same was found rusted and appeared to be burnt/damaged. The insured did not sign the list and submitted a separate list. The insured''s list of damaged items appears to be on the higher side. On reminding a statement dated 30.10.1987 was submitted showing the stocks of Rs. 3,12,800 but on carrying out the physical inspection/verification of the insured''s shop at Tikonia Road, Haldwani by the representative of Bank, only the stocks of Rs. 25,000 approximately were found there and it was reported to the Bank that the rest of stocks were kept in the godown at Rampur Road, Haldwani but even on insistring by the Bank the above godowns was not shown to them. Further no response of the Bank''s reminder dated 1.1.1988 was given by insured till the date. From the above it is evident that insured had been hiding facts from the Bank.

THE investigator has stated that: (i) As the shop is measured at 10 ft by 12 ft, it is very difficult and under any circumstances that stocks worth Rs. 3.00 lakhs can ever be stored in that small premises. (ii) THE insured amount was suddenly increased which itself creates suspicion. (iii) THE insured had not given the correct figures to the Bank for which he had borrowed loan of Rs. 60,000. Hence he assessed the stock at Rs. 25,000 to be considered as the maximum amount. In conclusion he felt that the value of the stock in the shop could only be Rs. 8,000 to Rs. 10,000 under any circumstances.

Findings: The fact of fire accident is not disputed. The Insurance Company has not filed an appeal against the order of the State Commission whereas the State Commission has concluded that there was fire accident in the following words: The report of Fire Extinguishing Officer proves that fire accident did occur whereby the shop and the goods lying inside it were damaged and the fire accident occurred on 15.5.1988 and just prior to the fire, the complainant upon receiving information regarding illness of his wife, left the shop without extinguishing the Agarbatti/Dhoopbatti and there was a fire at the shop at around 11.00 which has been confirmed by the report dated 18.5.1988 of the fire control oficer. The shop of complainant at Tikonia Road was burnt on 15.5.1988 whose information was given by Fire Control to the Insurance Company and that the Surveyor and investigator have admitted the accident of fire in the insured shop but have suspected the stock and value of stock kept in the shop. The State Commission has further mentioned that: Complainant has filed his affidavit dated 25.9.1992 in reply to the written statement of opposite party along with Annexures 1 to 14 wherein mainly insurance policy, balance sheet of 1985-86 and stock valuation report dated 29.11.1988 wherein prior to the fire mishap a stock value of Rs. 3,52,257 has been shown to be remaining and along with it. Cash memos and bills regarding purchase of said stock has also been annexed, vide Annexures No. 8, 9 and 10, the state of sales tax for years 85-86, 86-87, 87-88 has been shown vide Annexure 11, it has been clarified that on 23.4.1987, the complainant had informed the New India Assurance Co., Branch Haldwani, regarding shifting to his old building Bareilly Road and further that stock worth more than Rs. 2,00,00 had been stored there and report dated 14.1.1988 whereby it has been informed that stock has again been transferred to Tikonia Road.

THE preliminary Surveyor has observed that no hazardous stocks were kept in the shop. It is a well known fact that motor spare parts consists of several rubber parts which are highly inflammable.

NEITHER the preliminary Surveyor nor the investigator have taken pains to assess the loss by listing out various items which were fully burnt and half-burnt. The very fact that the Insurance Company has not filed an appeal against the order of the State Commission, confirms the case of the complainant that there was fire accident. The issue remains to be decided is what is the quantum of loss. The complainant has claimed a compensation of Rs. 3,52,200 whereas he has accepted a sum of Rs. 45,000 as full and final settlement. The complainant has alleged that he was forced to give a letter under indigent circumstances as complainant''s financial position had become very critical. One can imagine the trauma of the insured who faces a problem both on the home front as well as in business. His wife had to undergo a sugery and on the same night his insured shop was reduced to ashes by fire accident, which forces him to beocme a defaulter to the Bank. When all his belongings are wiped out he tries to clutch the proverbial last straw, that was why what-ever money the insured company was willing to pay he accepted it by giving proper aquittance. Later on realizing the folly of his act in a hury, submitted a claim for proper compensation. We have a certificate of the Chartered Accountant''s firm who has given the stock valuation report wherein he has assessed the stock of 1985/1986 onwards after examining the purchase vouchers, sales tax, income tax returns, etc., and had arrived at a conclusion that the stock position as on the date of the fire accident was Rs. 3,52,300. As against this the Surveyor appointed by the Insurance Company failed to assess the loss. They could have at least listed the items which are fully burnt, half-burnt and those which were not burnt at all and made a serious attempt to assess the value of the loss which they have failed to do so. The primary job of the Surveyor is to assess the loss that is why they are called as Surveyors and loss Assessors. They have only doubted the veracity of the fire accident. The appellant had produced a proof affidavit of purchase of motor spare parts running to more than 175 pages. These bulky records were produced before the State Commission. If investigator doubted the genuineness of the purchases he could have met the sellers and pin pointed the items, which he has not done. Hence we have no reasons to disbelieve these bills which were filed before the State Commission and also before us. It is true that the goods were insured for Rs. 3 lakh and the fire accident is not disputed by the Insurance Company. But the claim is for higher than the insured amount. Accordingly we limit the same to Rs. 3 lakh. While allowing appeal we hereby direct the Insurance Company to pay Rs. 3.00 lakh minus the amount already paid to the appellant from the date of the complainant before the State Commission with 6% interest till the date of payment. There shall be no order as to costs. Appeal allowed.