Om Prakash Varma vs Oriental Insurance Co. Ltd. and Anr.

COMPLAINT was filed, inter alia, alleging that the complainant is the proprietor of M/s. Mahavirji Enterprises which is engaged in the manufacturing of canvas cloth and acrylic cloth, etc. Complainant purchased policy from the opposite party - Insurance Co. for the period from 30.12.1994 to 29.12.1995 of a sum of Rs. 32.00 lakh covering the risks to the building for Rs. 10,00,000, to the machinery for Rs. 12,00,000 and to the raw materials and finished goods in the godown for Rs. 10,00,000. It was alleged that a fire took place in the factory of the complainant on 26.11.1995 due to electric short circuit at about 4.30 p.m. Fire was extinguished by the fire tender from Fire Station, Hapur, opposite party - Insurance Company was intimated of the fire on 27.11.1995. Mahesh Jindal, Surveyor appointed by the opposite party visited the site on 27.11.1995 at 8.30 p.m. He demanded 40% of the claim for giving favourable report which was refused by the complainant. Complainant asked the opposite party to change the Surveyor. M.K. Garg, another Surveyor visited the site in the afternoon on 28.11.1995 and he asked for certain records. Complainant told the Surveyor that the records had been destroyed in the fire. By the letter dated 31.3.1998, the opposite party repudiated the claim. Loss to the building was assessed by R.K. Sharma, Engineer. Break -up of the amount claimed has been set out in para No. 17 of the complaint as under: "1. Loss due to burning of raw material and finished goods stored in the godown Rs. 11,82,100.00 2. Loss of building due to fire accident Rs. 6,00,000.00 3. Electricial Loss Rs. 65,000.00

IT was prayed that opposite party -Insurance Company be directed to pay the said amount of Rs. 18,47,100 with interest of Rs. 11,89,797.86 as also damages for mental agony of Rs. 10.00 lakhs.

OPPOSITE party -Insurance Company contested the complaint by filing written version. Issuance of the policy was not disputed. It was alleged that on receipt of intimation of fire the answering opposite party deployed Mahesh Jindal Surveyors Pvt. Ltd. to assess the loss. On 27.11.1995, Surveyor asked the complainant to show the books of accounts, etc. pertaining to the raw material and finished goods, etc. which were lying in the godown. Complainant assured to show the records on 28.11.1995 as those were with the accountant. However, on 28.11.1995 the complainant said that the records had been destroyed in fire. It was further stated that the case of the complainant that fire was caused due to electric short circuit is belied by the record of the timing of power cut maintained at U.P.S.E.B. Power House, Pilkhuwa which showed that there was no electric supply in the area where the factory of complainant was located from 16.05 hrs. to 16.50 hrs. on 26.11.1995. It was pleaded that the building where the fire took place, was a small structure measuring 8x10 ft. wherein semi -damaged newspapers, iron goods, petromax, three bundles of damage clothes were found kept. It was denied that the goods worth Rs. 12.50 lakh were damaged or that the walls of the godown had developed cracks. It was stated that neighbours of the complainant had told the Surveyor that the complainant was trying to make a bogus claim by burning some old newspapers and other material. Annual sales and purchases of the complainant was only Rs. 3,24,128.60 and Rs. 2,76,277.45 respectively. Complainant stated that the stock of the value of Rs. 2,25,000 was saved. Total amount of loss, thus, could not exceed Rs. 99,127 as opined by the Surveyor. Copy of the report of the fire brigade placed on the file would show that there was fire on 26.11.1995 at Shri Mahavirji Enterprises and the cause of fire was electric short circuit. Considering this report, the plea taken in written version that fire could not have been due to electric short circuit as the area wherein the factory of complainant was located, did not have electric supply from 16.05 hrs. to 16.50 hrs. deserves to be repelled being without any substance. Relying on the copies of Trading Account of Shri Mahavirji Enterprises for the years 1992 -93, 1993 -94, 1994 -95 and 1995 -96 issued by Sales Tax Department, Hapur and the said report of fire brigade, the submission advanced by Aashish Mohan for the complainant was that the value of stock on the date of fire was of more than Rs. 11.00 lakh and the loss as assessed by Mahesh Jindal Surveyors Pvt. Ltd. is without any basis. Further submission advanced was that the Surveyor did not assess the damage caused to the insured building and the valuation report of United Building Planners, Architect, Engineers and Valuers filed by the complainant has, thus, to be accepted. To be noted that in the report of fire brigade the loss to the goods is shown to be Rs. 9.00 lakh while the value of saved goods as Rs. 11.00 lakh. It was not within the domain of Fire Department nor did it possess expertises to assess the value of the goods damaged/saved. Therefore, the said report is of no assistance to the complainant. Aforesaid four trading accounts are the copies issued by the Sales Tax Department to the complainant. These trading accounts were submitted by the complainant. There is nothing on record to suggest that the figures of purchases, sales and closing stocks given in these trading accounts were actually verified by the Sales Tax Department. Complainant despite having assured the Surveyor on 27.11.1995 did not make available the account books necessary for assessing the loss on ground of their having been burnt in fire later on. Bare perusal of the Trading accounts would show that the amount of purchases was inflated and amount of sale was depressed in order to show higher value of the closing stock. Trading accounts, therefore, cannot form basis for ascertaining the stock position of the finished goods and raw material before the fire. Para No. 4 of the Surveyor''s report dated 17.3.1998 dealing with the assessment of loss which is material, is re -produced below: "The details of annual sales and purchase of the insured are as given below: Particulars 1993 -94 1994 -95 1995 -96 Purchase 2,86,664.04 4,17,643.75 3,24,127.60 Sales 4,52,361.00 3,66,379.15 2,76,277.45 As per sales and purchase records of the insured it seems that the value of stock maintained by the insured should not exceed Rs. 1,00,000. As per insured''s statement which is enclosed herewith the value of stock saved after fire is Rs. 2,25,000. If we assume that the total purchase of financial year 1995 -96 upto the date of fire were with the insured on the date of fire even then the assessment of amount of loss will be as follows: Total Purchases Rs. 3,24,127.60 Less: Stock saved Rs. 2,25,000.00 Amount of loss : Rs. 99,127.60

HAVING discarded the aforesaid evidence of the complainant, there seems to be no reason to disbelieve the said assessment of loss made by the Surveyor. Pursuant to the order dated 6.5.2005, the opposite party - Insurance Company has deposited with this Commission amount of Rs. 2,08,349.00. This includes amount of Rs. 99,000 with 12% interest from 1.1.1996.

COMING to the later limb of argument in regard to damage to the building, admittedly the Surveyor has not assessed the loss to the building. However, from the Surveyor''s report dated 17.3.1998 it may be seen that the fire took place in a room measuring 8x10 ft. on the ground floor. Aforesaid valuation report dated 22.12.1995 of United Building Planners would show that the total covered area of the factory on the ground floor was 2025 sq. ft. Area on the 1st floor was 1971 sq. ft. 2025 area on the ground floor consisted of a big hall, Tana machine room, lobby, store, RCC room, Parraset stair care, etc. Valuer has assessed the damage at Rs. 6 lakh as against the total value of the property of Rs. 9,90,000 taking the damage to 60% portion. As noticed above, fire had taken place only in a room of 8x10 ft. Obvioulsy, damage of Rs. 6.00 lakh as assessed by the valuer is totally erroneous. None of the parties have led evidence as regards actual damage caused to the room in the fire. Damage to the room is estimated at Rs. 15,000 by guess. With the deposit of said amount of Rs. 2,08,349 the amount payable by the Insurance Company comes to Rs. 15,000.

IN view of foregoing discussion, the complaint is disposed of with direction to the opposite party - Insurance Company to deposit amount of Rs. 15,000 with this Commission within six weeks. This amount together with deposited amount of Rs. 2,08,349 and interest accruing thereon will be released by the Registry in equal proportion to UP Financial Corporation and State Bank of India, branch at Pilkhuwa (Ghaziabad) from whom the loans were raised and in whose favour hypothecation deeds were executed by the complainant. No order as to cost. Complaint disposed of.