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Judgment
1.THE Appellant in the First Appeal No. 1 of 1991 (THE Oriental Insurance Co. Ltd.) has assailed the order of the 10th October, 1990 of the State Commission of Rajasthan directing the payment of a sum of Rs. 5 lakhs to the respondent claimant here. THE amount sanctioned comprises of Rs. 4,62,599/ - as the insurance amount for the losses sustained by the respondent due to alleged burglary and Rs. 37,400/ - as compensation for not settling the claim within reasonable time.
THE Order of the State Commission has been impugned on the following grounds : (i) That the Consumer Forums have no jurisdiction to adjudicate on the disputes between the insured and the insurer which essentially are in the nature of civil Suits and therefore the matter is beyond the jurisdiction of the Forums under the Consumer Protection Act.
(ii) That the contracts of insurance in this case specifically provide for arbitration if there is a dispute regarding the quantum of loss or damage. The Respondent should have sought redress through arbitration instead of through Consumer Forums.
(iii) The Canara Bank were the mortgages of the Insurance Policies under which the State Commission has determined Rs. 4.63 lakhs (approximately) as payable to the Respondent. The amount of insurance was payable to the mortgagees viz. the Canara Bank and the Bank had not been impleaded as a party in the proceedings of the State Commission even though the Bank was necessary a party and should have been so impleaded.
(iv) Apart from the amount of compensation awarded viz., Rs. 37,400/ -, the State Commission could have ordered the refund of the insurance prcmia paid by the respondent to the appellant and not the amount of insurance.
(v) The State Commission has grossly erred in appreciating the evidence of the alleged theft of the insured material from the factory premises of the respondent. According to the appellant, the Respondent had himself assessed his loss due to the alleged theft as per the F.I.R. of 18.9.1989 at Rs. 29.000/ - in his report to the Police on 22nd September, 1988. According to the Appellant the explanation of the Respondent that a second theft had taken place in the factory premises of the Respondent on the same date (22nd September, 1988) and that the quantum of loss mentioned viz. Rs. 29,000/ - related to the second theft was false inasmuch as no F.I.R. had been filed by the Respondent regarding the alleged second theft on the 22nd September, 1988. Further, the Appellant has argued that the written report of the 22nd September, 1988 makes no mention whatsoever of the second theft on that date and the list of articles stolen, attached to the report of 22nd September, 1988 is clearly in respect of the F.I.R. of 19.9.1988. Therefore the Respondent Claimants own assessment of the loss through theft is of the value of Rs. 29,000/ - only. Furthermore, according to the Appellant the Police did not make a thorough investigation of the first theft of 18.9.1988 as according to the evidence, the Police treated it a minor theft involving a loss less than Rs. 50,000/ -. No investigation was made by the Police in the second case of theft in the absence of an F.I.R. The Appellant has also alleged that the authenticity of the said report of the 22nd October, 1988 had not been tested by being shown to S.H.O. in the original proceedings before the State Commission nor was it taken as an exhibit in this case. In fact, the Appellant alleges that this letter of 22nd September, 1988 was filed by the Complainant after his evidence was closed and remaining unproved and as such was in -admissible in evidence. Nevertheless the State Commission had inter alia relied on this evidence in deciding this complaint.
(vi) Furthermore the list of the articles stolen on 22.9.1988 is of dubious nature. Whether the figures mentioned against the goods are quantity measures or value of goods lost.
(vii) The Appellants have dismissed the reports of the Surveyors as deficient and being based wholly on the information and documents supplied by the insured belatedly and that the insured Respondent had foisted a false claim against the Appellant.
(viii) The Appellant has particularly emphasised that he had analysed the financial position of the Respondent and found that the business of the insured was completely at stand still when the theft of the stocks reportedly occurred; at the end of June, 1989 the Respondent had incurred a net loss of Rs. 1,32,000/ - (round). During the period 1.7.1987 to 30.6.1988 (two and half months before the theft) his net sales were of the order of Rs. 34,216/ - against the purchases of the value of Rs. 1,25,588.85 and a closing stock of Rs. 9,54,133/ -. According to the report of Surveyor there was no transaction (presumably of purchase and sale) from 1.7.1988 to the date of burglary and that at the time of the theft the Respondent firm was having only one employee on its rolls.
There is no merit in the preliminary objections raised by the Appellant. We have decided in a number of cases that where deficiency in service on the part of an Insurance Company towards the insured is established in respect of the services to be rendered under an Insurance Policy, the jurisdiction of the Consumer Forums would be attracted if complaints are lodged in terms of provisions of the Act. Again as laid down in Sec. 3 of the Consumer Protection Act, 1986 the provisions of this Act are in addition to but not derogation of any other law in force. Consequently a Complainant has the option to seek redress either under this Act or under the provisions of any other law including through arbitration as provided in the Contract of insurance.
It is true that the Canara Bank was the mortgagee of the Insurance Policies in question and that it would have been appropriate if they have also been impleaded before the State Commission. But that is not a fatal flaw in the proceedings conducted by the State Commission inasmuch as the Bank had alimited interest viz. to receive the amount payable to the insured on the insurance policies, so that the Bank could adjust the same against the amounts advanced by the Bank to the Respondent. The obligation of the Appellant arose out of the Insurance Policies only.
The contention of the Appellant that the Consumer Forums in such disputes can only award the amounts paid by the insured by way of premium and not the amount of insurance is untenable. If, in any case, the contingency for payment of the amount under insurance policies to the insured, such as burglary, arises, the insured would be entitled to receive the amount of insurance due to him and this is what the Consumer Forums would be competent to sanction if any deficiency in discharge of its obligations by the insurer towards the insured is established.
TURNING to the merits of the case it appears that the State Commission, incoming to the conclusion regarding the theft and the quantum of loss as a result thereof had relied on : (i) That the Canara Bank which had granted credit -facilities to the insured had undertaken physical verification of stock monthly regularly.
(ii) That the account -books and records maintained by the respondent complainant had been verified and found to be in order. These account books vouch for the quantity and value of stocks with the Respondent on the date of the theft even though the F.I.R. of 18th September, 1988 does not quantify the loss due to theft. The Trading Account at the end of the year 30th June, 1988 indicated a closing stock of Rs. 9.89 lakhs (finished stocks of Rs. 9.32 lakhs and waste stock of Rs. 21,570/ -).
(iii) That the Appellant had appointed two Surveyors to survey the losses one after another, because he was not satisfied by the first survey report and both these survey reports came to the finding that the respondent had incurred a loss of over Rs. 9 lakhs through burglary of the stocks. The second survey had categorically stated that his enquiries and investigations did not reveal any foul play by the Respondent Complainant.
(iv) Nevertheless the Appellant disregarded the two survey reports of Surveyors of his own choice and appointed an investigator who gave an adverse report with the result that the claim of the Respondent under the Insurance Policies was rejected.
The State Commission has also noted that the report of 10th June, 1989 of the special Investigator is vitiated by the fact that the investigator had been directed by the Appellant insurer not to make any enquiry from the Respondent insured. In addition the State Commission had also examined the witnesses both for the insured (Complainant) and Insurer. It is, therefore, observed ''that in this case we have tested the evidence placed before us on the basis of probabilities. It is undoubtedly law i.e., in such proceedings findings as to valuation of the loss can and may be rested on the preponderance of the probabilities.''
WE have also noted the fact that the appellant had appointed two Surveyors Of his own choice who upheld the claim of the respondent. The appellant was also not justified in directing the Investigator (whole report led to the rejection of the insurance claim) not to contact Respondent Complainant. More significantly now the appellant is making allegation that the claim of the respondent is false and that the Public Sector Bank, which had advanced credit, is party to the same and took 23 days in reporting the theft to the insurer viz. by a letter dated the 13th October, 1988 which reached the Bank on the 17th October, 1988. There are, however, certain gaping holes, in the vital evidence which appear to have justified the appellant in delaying and resisting the insurance claim. (i) The records show clearly that in his report on 22nd September, 1988 the respondent complainant had assessed the loss at Rs. 29,000/ -only. If the figures given against the goods listed on 22.9.1988 are deemed to be in Rupees their money value -the total works out to Rs. 5,28,736/ -. There was no second F.I.R. regarding the second theft alleged to have been taken place on that date and the wording of the report of 22nd September, 1988 leaves no doubt that this pertains to the incident of theft which occurred on the 17/18th September, 1988. The list of 22.9.1988 of goods lost suffers from ambiguity.
(ii) The State Commission in the said Order referred to the Trading Account for the year 30th June, 1988 and the Auditors Report therein which indicates that the closing stock of Rs. 9,88,803/ - consisted of finished stock of Rs. 9,32,563/ - and waste stock of Rs. 21,570/ -only. In other words, there was little raw material in stock. The report of the 22nd September, 1988 to the Police giving particulars of the stolen material indicates that the stolen material consisted mostly of raw -materials and not of finished stock.
(iii) Considering that the value of the goods alleged to have stolen was over Rs. 9 lakhs, the delay in reporting the loss through theft by the Bank remained unexplained adequately.
The State Commissions observation in its order that ''the Complainants letter dated 22nd September, 1988 to the S.H.O., Shastri Nagar, Jaipur is in respect of the theft committed by the Chowkidar'' does not appear to have been arrived at after thorough examination of the evidence in this case.
WHILE there is adverse evidence to doubt the theory of the theft, there is evidence to show that the respondent was under pressure to meet his debt liability to the Bank. The Trading Account for the period ending June, 1988 shows that the business of the insured had come to a stand still at the time the theft was reported at the end of June, 1988 there were huge stocks of over 9.54 lakhs and there was no transactions after June, 1988 and the number of workers employed by the Respondent was just only one in September, 1988. All these facts strongly suggest that there is a need for the investigation whether a theft did take place and if so what is the quantum of loss due to the theft. The gaping holes in evidence regarding the occurrence of the theft, the value thereof and the possible motivation on the part of the respondent claimant to solve his financial difficulties by obtaining the insurance amount led the Appellant in this case to reasonably doubt the factum of theft. He had good grounds to apprehend that the claim was not genuine. Only he did not take the matter to its logical conclusion to file a complaint with the Police. Perhaps keeping these facts in view the State Commission had itself observed that it had decided this case on the basis of preponderance of the probabilities.
As the upshot of the facts recorded above is that the appellant has reasonable grounds to doubt the genuineness of the claim, as such the non -payment of the insurance amount under the policies cannot be deemed to be a deficiency in service arising from negligence. Under Sec. 14 of the Consumer Protection Act, 1986 compensation can be granted to a consumer for loss or injury arising from deficiency in goods supplied or services rendered provided the sams is due to negligence. Such a presumption or negligence cannot normally arise where the factum of deficiency is established on the basis of balance of evidence or preponderance of probabilities. Hence the order of the State Commission is set aside and the parties are left to pursue their claims through States Investigating Agencies and the Courts of Law.
This also disposes of the Cross Appeal No. 107 of 1990 wherein the Appellant has sought for increase in the quantum of compensation awarded to him by the State Commission.
There is no order as to costs.