Om General Store vs NATIONAL INSURANCE CO LTD

1.M/s. Om General Store is a Proprietors hip concern. Its proprietor is Kailashchand Maheshwari. The complainant got the furniture, fixtures, goods, cash etc. insured with the opposite party (insurer). Policy No. 9300347/88 was issued to the complainant for the period 13 -12 -1988 to 30 -12 -1989. The shop which was occupied by the complainant was on rent from M/s. M.A. Shankur. The rent fixed was Rs. 500/ - per month. On 27 -11 -1989 at about 3.30 p.m. Mr. Kailashchand noticed people were running frightened from Ramganj Chopad to Ghatgate and were crying that riots have spread out in that area. Kailashchand discussed the issue with his neighbour and decided to close the shop looking at the gravity of the situation. He went to his residence at 3.45p.in. locking the shop. It was noticed by him from the roof top that the smoke is rising up all over the nearby areas. At about 5.30 p.m. he noticed smoke rising up from Ghatgate Bazar. After sometime he was informed on telephone that a crowd has gathered before his shop. The shop has been looted by breaking open the lock and shutter and the goods were taken away by the crowd. The goods which were looted from the shop were placed before it on road and were put to fire. He would not do anything due to the situation prevailing there. After sometime curfew was clamped in the area .On 29 -11 -1989 when curfew was relaxed in the morning, he went to the shop to find outs to what has happened. He found that all goods/stock have been looted from the shop. Furniture and stock lying outside the shop were completely burnt, practically converted into ash. Glasses of the show cases were broken, shutter were damaged and broken. The floor of the shop was full of empty boxes, cartons etc. Matter was reported to the Ramganj Police Station and the case was registered. The matter was also reported at the fire station. The complainant informed the opposite party insurer on 29 -11 -1989. It is said that the opposite party appointed Shri P.K. Bhatia, Surveyor and Loss Assessor and Subhash Jain and Co., Chartered Accountants Jaipur for assessing the loss. Mr. P.K. Bhatia submitted the report (Anx. 16) dt. 8 -3 -1990 and Subhash Jain and Co. submitted the report (Anx. 18) dt. 25 -1 -1990. It is alleged by the complainant that Shri P.K. Bhatia assured him that his claim will be settled at Rs. 1,50,000/ -. In para 22 of the complaint it has been alleged that the original record and the accounts of income and expenditure, sale and purchase etc. were burnt or they were taken away by the rioteers. Besides that the complainant obtained copies of the details of purchase by him from the persons who sold the goods and handed over the papers to the surveyors. A sum of Rs. 600/ - in cash was in the shop which was also taken away by the rioteers. The complainant has narrated a tale of woe in the complaint stating that the opposite party (insurer) despite furnishing the information and the documents did not settle the claim. He, therefore, filed the complaint before the State Commission on 18 -5 -1990 praying that a sum of Rs. 1,50,600/ - may be awarded to him with interest @ 18% p.a. until realisation from 27 -11 -1989. Imposition of penalty of Rs. 50,000/ - was also prayed for. A sum of Rs. 2,500/ - on account of rent and business loss (500 and 200/ -) were claimed from the month the riots had broken out. Estimated expenses of the complaint to the tune of Rs. 12,000/ - were claimed.

THE complainant submitted photostat copies of the FIR policy No. 9800347/88 dt 30 -12 -1988, list of goods which were burnt or looted. Photostat copy of the quotation of furniture and photostat copy of the certificate given by the officer of the Firebrigate Station. Notice was issued to the insurer. It resisted the claim on various grounds. However, it admitted the factum of insurance, insurance of policy for goods to the tune of Rs. 1,40,000/ - and furniture and fixtures for Rs. 10,000/ -. It was also admitted that a claim form was submitted by the complainant on 5 -2 -1990. Appointment of the two surveyors was also admitted. The defence taken was that the Insurance Co. was not satisfied with the reports submitted by Mr. P.K. Bhatia and Subhash Jain and Co. and, therefore, third surveyor Shri Prakash Sharma, Chartered Accountant and Surveyor was appointed. He demanded by registered letters bank statement from 1 -4 -1989 to 27 -11 -1989, certificate that income tax returns were filed, income tax assessment orders for the last preceding four years, GIR No. and Income tax ward, FIR, list of the goods damaged by letter dt. 14 -5 -1990. The letter was received back undelivered. Thereafter, again registered letter dt. 29 -5 -1990 was sent but that was also received undelivered. On 21 -6 -90 letter was also sent to the complainant with the photostat copies of the previous letters but that was also received back. Shri Prakash Sharma informed the complainant vide letter dt. 21 -5 -1990 that if the required information is not furnished within 15 days he will recommend "no claim". The jurisdiction given by the opposite party for not settling the claim of the complainant is that the required information and the documents were not submitted to Shri Prakash Sharma by the complainant. According to the opposite party there was no satisfactory evidence, information and documents on the basis of which the claim of the complainant could be settled. Affidavit of Shri Radhakrishnan Agarwal, Divisional Manager dt. 17 -9 -1990 in support of the version of the case, was submitted. Thereafter Kailashchand Maheshwari submitted his affidavit on 8 -10 -1990 swearing the facts stated in the complaint. On behalf of the opposite party affidavit of Shri Prakash Sharma C.A. and Mr. P.K. Bhatia were produced on 22 -10 -1990. An application was filed on behalf of the complainant for the production of the reports. On behalf of the opposite party survey reports alongwith the Anxs. were submitted vide application dt. 16 -1 -1991 with the prayer that the documents marked as Anxs. 1 to 52 may be taken on record. No specific order was passed by the Commission on the documents submitted by the opposite party. However, as and when necessary these documents will be take note of hereinafter. On behalf of the complainant written arguments were submitted on 16 -1 -1991. The opposite party submitted the written arguments in reply on 30 -1 -1991. We have considered the complaint, version of the case, affidavits filed on behalf of the parties, documents of the parties and the written arguments.

THE question with which we are concerned is whether by not settling the claim of the complainant in time the services rendered by the opposite party suffered from deficiency. The shop in question was covered under Traders Combined Policy vide Policy No. 9800347/88 which was valid from 31 -12 -1988 to 30 -12 -1989. The coverage given in the policy is as under: "Section Description Sum Insured I (a) Fire (b) Riot Strike Stock of general (c) Malicious merchandise Rs. 1,40,000.00 damages (d) Malicious Furniture, damages fixture and fittings as above I, II Rs. 10,000.00 Rs. 1,50,000.00 II Burglary III (a) Money in transit (b) Money in Rs. 5,000.00 (cash box Rs. 1,000.00 VIII Third party liability Rs. 10,000.00''

SHRI P.K. Bhatia went to the site 2 -12 -1989. His observations are mentioned at S. Nos. 1 to 4 in the report under the head observation. Mr. Bhatia has also mentioned the assessment made by him in his report. According to him net loss of stock to the complainant is Rs. 1,30,000/ - and the loss of furniture and fixtures was Rs. 5,700/ -. After taking into consideration the average clause he opined that net assessed loss of stock for Rs. 1,30,000/ - and for R/R Rs. 1,900/ - and so according to him Rs. 1,31,900/ - is the amount of loss suffered by the complainant. Photostat copy of the consent letter dt 3 -3 -1990 signed by the proprietor is on record, by which the proprietor agreed to accept sum of Rs. 1,31,900/ - subject to the terms and conditions and exceptions as per policy towards repair and new parts/total loss cash loss in full and final settlement of my/our claim which occurred on riot loss on 27 -11 -1989. It may be stated at this stage that Subhash Jain and Co. C.A. Jaipur surveyor of the opposite party insurer submitted report in loss claim due to riots on 25 -1 -1990. According to the report the value of stocks loss due to fire and loot was taken at Rs. 1,30,000/ -. He did not assess the loss of furniture. According to that report the value of stock before the incident arrived at was Rs. 1,33,000/ - and the insured was issued the policy for goods worth Rs. 1,40,000/ - and accordingly, the goods were found adequately insured and so average clause was not applicable on the loss of goods of Rs. 1,30,000/ -. Mr. Bhatia has taken into consideration the loss assessed by Subhash Jain and Co. in his report and thereafter he assessed the total loss for stock and furniture etc. to the tune of Rs. 1,31,900/ -. Subhash Jain and Co. in the report has taken into consideration the stocks, purchases and sales average, opening stock on 4 -1 -1989 as per balance sheet, proceeds of sales during April 89 to November 89 being sales etc. and thereafter arrived at the value of stock loss due to fire and loot at Rs. 1,33,000/ -. Subhash Jain and Co. was appointed to assess the loss by Mr. P.K. Bhatia. It has been found as a fact that Mr. Bhatia that no books of account were traceable after the mishap, so nothing as such could be verified. The insured was asked to submit duplicate purchase bills, last years balance sheet, statement of sales etc. for the purpose of assessing the stock position and loss which were submitted to Subhash Jain and Co. Copies of which have also been produced here with the report of Shri P.K. Bhatia. With the report Anx. 16 Shri P.K. Bhatia has enclosed 13 photographs and one photograph given by the insured, claim form, consent letter, quotation of furniture, Chartered Accountant''s report with the enclosures, photo copy of intimation to the police, photo copy of Fire Brigade report, photostat copy of bills, etc. The complainant submitted fire claim form on 5 -2 -1990 mentioning therein that on account of the communal riots which broke out in the evening of 27 -11 -1989; he suffered loss of Rs. 1,53,000/ -. Miscellaneous claim scrutiny sheet net liability of the company mentioned therein Rs. 1,27,023/ - but as the matter did not fall within the financial limit, the file was duly processed and referred to Division No. 2 Jaipur. The complainant has given his affidavit in support of the complaint and the documents produced by him stand corroborated from it. The claim of the complainant is covered by the Traders Combined Policy referred to here in above. A perusal of the affidavit of Shri Prakash Sharma C.A. which was produced on 22 -10 -1990 before the State Commission shows that he was appointed to investigate the loss caused to the complainant on 27 -11 -1989 on 7 -5 -1990. It appears from his affidavit that for investigation he sent the letters which have already been referred to here in above asking the complainant to supply information mentioned therein. It is clear that none of the letters was delivered to the complainant. Apart from the fact that some of the documents mentioned by Shri Prakash Sharma had already been delivered to the previous appointed surveyors of the opposite party -insurer namely to Mr. P.K. Bhatia who appointed also Subhash Jain and Co. C.A. There is no justification whatsoever on the part of the opposite party that the claim of the opposite party was not settled as the documents and the information sought by Shri Prakash Sharma were not made available by the complainant despite letters. At the risk of repetition it may be stated that some of the documents had already been filed by the complainant before the previous surveyors. The fact remains that the complainant could not supply the required information and documents as asked because the registerd letters sent to the complainant were not delivered to him. As per the policy the stocks in the shop were insured for Rs. 1,40,000/ -, furniture and fixtures and fittings were insured for Rs. l0,000/ - and the cash was insured for Rs. 1,000/ -. The affidavit of Shri Radhakrishna Agarwal Sr. Divisional Manager mentions some facts about which there is no dispute but the claim was not settled as per the recommendation made by Shri P.K. Bhatia as the matter was to be further investigated and for which Shri Prakash Sharma C.A. was appointed as surveyor to whom the documents were not submitted. We have already stated that there were good reasons for the complainant for not submitting the documents to Shri Prakash Sharma inasmuch as the letters were not received by him. The complainant is his affidavit has stated the documents which he supplied to the Surveyor Shri P.K. Bhatia, and Subhash Jain and Co, in para 38 of the affidavit. In para 26 he has also staled that he has produced the details of the goods purchased from the sellers from whom he has purchased. Despite all this the opposite party -insurer failed to settle the claim of the complainant within reasonable time from the receipt of the reports and thus there was "deficiency" is "service" rendered by the opposite party -insurer to the complainant as envisaged by Sec. 2(l)(g) and (o) of the Act and therefore the opposite party insurer is liable to indemnify the loss suffered by the complainant. It has come in the report of Shri P.K. Bhatia that there is a salvage. Shri P.K. Bhatia in his report Anx. 16 dt. 8 -3 -1990 has mentioned for the purpose of deduction a sum of Rs. 2,551/ - of the damaged goods worth Rs. 4,252/ - and salvage of worth Rs. 84/ - in regard to the furniture. Having considered the material on record produced by the parties we are of opinion that the loss assessed due to riot which broke out on 27 -11.1989 vide report Anx. 16 dt. 8 -3 -1990 is correct. We have tested the report on the basis of the evidence placed before us. The insured has not committed any breach of the condition of the policy under the Traders Combined Policy. The insurer agreed to indemnify the complainant in respect of loss or damage to the stock in the shop as well as the furniture, fixtures etc. The opposite party despite undertaking tailed to indemnity the insured in regard to the loss caused.

THE insured has claimed Rs. 600/ - as cash which are said to have been looted by he rioteers, Rs. 50,000/ - for the general irregularities committed by the opposite party and Rs. 2,500/ - on account of rent and loss of income. Under the terms of the policy the above amounts are not recoverable from the opposite party for the opposite party -insurer agreed to indemnify the insured in respect of loss or damage to the stock in the shop and to the furniture, fixtures and fittings as mentioned above under Sees. 1 and 2 of the policy. Anx. 16 report of P.K. Bhatia is dt. 8 -3 -1990. He obtained the consent letter from the complaint on 3 -3 -1990. Despite the receipt of the report the company did not settle the claim of the complainant -insured. The complainant was filed by the complainant be fore by the State Commission on 18 -5 -1990. Here at this stage we may mention that Shri Prakash Sharma was appointed on 7 -5 -1990 about two months after the submissions of the report by Shri P.K. Bhatia. Having taking into consideration the circumstances of the case, we do not consider it proper to award any interest by way of compensation on the amount of Rs. l,31,900/ - upto the date of the institution of the complaint. How -ever, even after the institution of the complaint the opposite party was negligent by not settling the claim and so insured was wrongly deprived of the amount of Rs. l,31,900/ - and as such interest by way of compensation should be awarded to the complainant on this amount. The complainant will be entitled to interest on Rs. 1,31,900/ - @ 12% from the date of the institution of the complaint (18 -5 - 1990) until the date of payment. As the cost of the salvage has been taken into account by Shri P.K. Bhatia in his survey report, no order is required for the delivery of the salvage to the insurer. In the case the insurer wants to take the delivery of the salvage it will be given to him and the amount of the salvage which has been deducted by determining the assessment of the loss will be paid to the complainant.

THE National Insurance Co., Jaipur (opposite party No. 1) is directed to settle the claim of the complainant arising out of Traders Combined Policy No. 9300347/88 for indemnifying the loss by riot by making payment of Rs. 1,31,900/ - to the complainant -insured. It shall also pay interest on Rs. 1,31,900/ - @ 12% p.a. from the date of the institution in the complaint i.e. 18 -5 -1990 until payment. For complying with the directions relating to the payment of Rs. 1,31,900/ - and interest by way of compensation on this a mount at the rate of 18% p.a. from the date of the complaint until realisation. One month''s time from the date of the receipt of the order is allowed, failing which resort will be made to Sec. 27 of the Act. The rest of the claim of the complainant -insured is dismissed. There will be no order as to costs. The complaint is accordingly decided as indicated above. Complaint allowed.