ORIENTAL INSURANCE CO. LTD. vs M. PALAKSHI REDDY

This revision petition has been filed under Section 21(b) of the Consumer Protection Act, 1986 against the impugned order dated 28.2.2012, passed by the Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad (hereinafter referred as ''State Commission'') in First Appeal No.1271/2010, Oriental Insurance Company Ltd. vs. M. Palakshi Reddy and others, vide which, while dismissing the appeal, the order passed by the District Consumer Disputes Redressal Forum, Karnoor in Consumer Complaint No.84/2009, filed by the present respondent, allowing the said complaint, was upheld.

The facts of the case as stated in the consumer complaint are that the complainant/respondent is the owner of a drilling rig mounted vehicle, bearing No.AP02K 0558 which was insured with the opposite party (OP) insurance company for an amount of Rs.30 lakhs for the period 4.2.2003 to 3.2.2004. The said vehicle was damaged by some culprits on 14.10.2003. An information about the accident was given to the insurance company which sent a spot surveyor and then another surveyor to assess the final damage. The claim filed by the complainant was however, repudiated by the insurance company on 10.9.2007, taking the ground that bill of Rs.1,36,277/- given by M/s. Pioneer Automobiles and that of Rafi Brothers were fabricated. The complainant filed the consumer complaint in question, seeking directions to the insurance company to pay the claim as per the assessment made by the surveyor at Rs.8,76,003/- alongwith 12% p.a. interest from 14.10.2003 onwards and grant compensation of Rs.50,000/- for mental agony etc.

In their reply filed by the insurance company, it was stated that as per the investigation carried out by them, the complainant had submitted fake bills to the tune of Rs.1,36,277/- and the complainant had not provided the necessary documents like repair estimates, FIR, bills etc. to the surveyor.

The District Forum after taking into account the averments of the parties, allowed the complaint and directed the OPs to pay compensation of Rs.8,76,003/- with interest @ 9% p.a. alongwith cost of Rs.500/-. The District Forum observed that merely because some bills submitted by the complainant were found to be fake, OPs could not escape from their liability. Being aggrieved against the order of the District Forum, the insurance company challenged the same by way of an appeal before the State Commission, which was dismissed vide impugned order. Being aggrieved against the said order, the insurance company is before this Commission by way of the present revision petition. The State Commission observed in their order that the insurance company should not have repudiated the entire claim on the sole ground of submission of fake bills to the tune of Rs.1,36,277/- and Rs.17,800/- in the absence of any affidavit or documentary evidence.

The learned counsel for the petitioner insurance company argued that the complainant had produced two bills from some non-existent firms meaning thereby that a part of the claim was fraudulent. The insurance company was therefore, not liable to pay any amount to the complainant, because of this reason. Referring to the observation of the State Commission that the affidavits of concerned shopkeepers had not been filed, the learned counsel stated that the said shops did not exist at all, as per the investigation carried out by them and hence, there was no question of filing their evidence on record. The learned counsel has drawn attention to an information obtained by the petitioner under the Right to Information Act from the Deputy Commercial Tax Officer, Hyderabad, vide letter dated 14.6.2010, in which it was stated that there was no dealer in the name and style of M/s. Pioneer Automobiles, bearing the registration number CHM/05/01/2267 at their rolls, rather the said number had been allotted to some other firm, called M/s. Varsha metals. The learned counsel has drawn attention to an order passed by this Commission in R.S. Metals Pvt. Ltd. vs. New India Assurance Company Ltd. as reported in I (1993) CPJ 1 (NC), in which a view was taken that no person should misuse the remedies available under the Consumer Protection Act for lodging false complaint on the basis of fabricated evidence. The learned counsel stated that the order passed by the consumer fora below were erroneous in the eyes of law, as there was no justification to allow payment for the fake bills at all. With regard to the assertion of the OP about delay in finalizing the claim, the learned counsel stated that the claim did not become payable, even if there was delay in taking decision in the matter.

The learned counsel for the respondent has drawn attention to the order of the State Commission, in which the State Commission observed that the insurance company did not file affidavits of the relevant shop-owners to establish that the bills were fake. The learned counsel further stated that the report of the surveyor had been filed on 27.11.2004, whereas the claim was repudiated on 10.9.2007. No reasons had been given for the delay in finalizing the matter. The orders passed by the consumer fora below were in accordance with law, as these were based on the report of the surveyor. The learned counsel has drawn attention to an order passed by the Hon''ble Supreme Court in United India Insurance Company Ltd. vs. M.K.J Corporation 1996(6) SCC 428, saying that the insurance company was liable to pay the claim under the terms and conditions of the policy.

After hearing the arguments of the parties, another opportunity was afforded to the parties to file copy of the insurance policy in question and to point out the terms and conditions governing the said policy. The policy was filed on record by the insurance company, after which the learned counsel for the parties were heard again. The learned counsel for the insurance company stated that because of an element of fraud, the policy got vitiated and hence, the claim was not payable. He stated, however, that there was no specific condition in the policy to state that the entire claim got vitiated because of certain portion of the claim being fake. The learned counsel has again drawn attention to the documents placed by the insurance company on record, including the investigation report in which, it was clearly brought out that there was no such shop with the name and style of Pioneer Automobiles and S. Rafi Brothers. The learned counsel also stated that in the affidavit filed by the Divisional Manager, Oriental Insurance Company Ltd., mentioning that if there was any mis-description or mis-information by the insured, the entire policy shall be void. The learned counsel for the respondent again replied that for failure of the insurance company to file affidavits of the said firms, the allegations of fraud against them could not be proved.

I have examined the entire material on record and given a thoughtful consideration to the arguments advanced before me.

It is true that in the report submitted by the surveyor, the assessment of net amount payable, based on final bills on repair basis, was made at Rs.8,76,003/-, but the said assessment also includes the bill of Rs.1,36,277/- of M/s. Pioneer Automobiles and another bill of Rs.17,800/- from S. Rafi Brothers. On the basis of the investigation made by the Insurance Company, the said shops had been closed. The information received from the office of the Deputy Commercial Tax Officer also says specifically that the registration no. CHM/05/01/2267 printed on the bill given by M/s. Pioneer Automobiles, had in fact been allotted to some other firm, called M/s. Varsha Metals. The complainants have not been able to give any explanation to prove that the bills in question were genuine. The State Commission have taken an erroneous view that the insurance company should have filed affidavits of these shopkeepers. The arguments taken by the learned counsel for the insurance company that there was no question of filing affidavits of these shopkeepers, because the said shops did not exist, is based on sound reasoning. It is concluded therefore, that the bills submitted by these two firms were fabricated.

The main point for consideration in the present case is whether the repudiation of the whole claim by the insurance company on the ground that part of the claim was found fraudulent, is valid or not. As stated by the petitioner insurance company, there is no specific clause in the insurance policy which says that the entire claim shall become vitiated, if a part of it is found to be fraudulent. Since the factum of damage has been proved from the material on record, it is felt that it shall be in the interest of justice, if payment of claim is made to the complainant after excluding the amount mentioned in the two fake bills. This revision petition is therefore, partly allowed and the order passed by the consumer fora below are modified to the extent that the amount assessed by the surveyor shall be paid to the complainant after deducting the amount mentioned in two fake bills of Rs.1,36,277/- and Rs.17,800/-. The complainant shall therefore be entitled to receive the amount of Rs.7,21, 926/- (8,76,003 - (1,36,277 + 17,800) = 7,21,926/-). The said amount shall be payable alongwith interest @ 9% per annum from the date of repudiation of the claim i.e. 10.9.2007 till payment.

There shall be no order as to costs.