PUNJAB ALLOYS PRIVATE LIMITED vs ORIENTAL INSURANCE COMPANY LIMITED

THE appellant - Punjab Alloys Private Limited got goods purchased and stocked by it insured under the policy of insurance bearing No. 23124/II/96/50060 dated 31.1.1996 issued by the respondent - Oriental Insurance Company Limited (for short hereinafter referred to as the Insurance Company) having its branch in Sector 17-A, Chandigarh.

THE policy aforesaid covered the risk to the goods from floods. It is alleged that there was heavy rains in the area where the premises of the company is situated on 8.9.1996, which caused considerable damage to the goods i.e., Zinc Ash, which was stored in jute bags and which was buried under the debris of the wall, which fell due to soil erosion caused by heavy rains. THE loss caused to the goods was brought to the notice of the respondent - Insurance Company, which appointed a Surveyor to assess the loss. THE Surveyor appointed by the respondent - Insurance Company reported that there was no proof regarding the purchase of the goods i.e., Zinc Ash, the subject matter of the policy of insurance and reported that the claim was based on fabricated documents. According to the report of the Surveyor, Condition No. 8 of the policy of insurance was attracted and the benefits occurring under the policy of insurance were liable to be forfeited under the said Condition No. 8. The respondent-Insurance Company accepted the report of the Surveyor and repudiated the claim of the appellant-company. The appellant filed the complaint in the year 1997, which was registered as Complaint Case No. 487 and alleged that the respondent - Insurance Company rendered deficient service by repudiating the genuine and well founded claim under the policy of insurance in respect of the goods valued up to Rs. 29 lacs and charged a premium of Rs. 9,077/-, which was paid by the appellant-company. The claim was, however, made by the appellant - company for the estimated loss of Rs. 4,24,000/-. The appellant-Company had purchased the raw material through Bank and the payments were made through cheques by the Banker. The Bank statement of the stock lying at the works were sent to the Bank after fortnight and the last statement of the Zinc Ash was submitted on 3.9.1996, which was of Zinc Ash weighing 25895 Kg. On 8.9.1996, the opening stock of the raw material was 1985.0 kg. out of which 1230 kg. was used and the balance of 18620 kg. was lying in the bags in the stock of the company at their works. As a result of floods, Zinc Ash weighing 11200 kg had been washed away and the remaining 7420 kg of Zinc Ash became useless as the same had been completely drenched in muddy flood water.

The O.P. filed reply in which the insurance of policy of insurance on 31.1.1996 and valid up to 30.1.1997 was not disputed. The Insurance Company contended that after receiving the claim from the appellant-company, it appointed M/s. Duggal & Gupta Associates, Surveyor and Loss Assessor to assess the loss and instructed the Surveyor and Loss Assessor to verify the bills submitted by the complainant pertaining to M/s. Arora Trading Company, Jagadhari. Upon receiving the verification report dated 17.2.1997, the Insurance Company found that no such company of the name of M/s. Arora Trading was in existence at Railway Road, Jagadhari. Thereafter, concerned Chartered Accountant of the complainant - Company namely M/s. Oberoi and Associates were contacted as the Chartered Accountant aforesaid had certified about the existence of the aforesaid firm M/s. Arora Trading Company vide certificate dated 7.1.1996. The Chartered Accountant was, however, not able to give the address or telephone number, name of the staff, sales tax number of the said M/s. Arora Trading Company. The investigation report disclosed that the bankers of the complainant were Union Bank of India, Sector 21, Chandigarh and the payments alleged to have been made by the bankers were cleared through Punjab and Sind Bank, Sector 24, Chandigarh. It was alleged that on investigation from the said Bank, it was found that the account of M/s. Arora Trading Company were maintained with the Punjab and Sind Bank and the said account stood closed. The name and address of M/s. Arora Trading Company was not disclosed by Punjab and Sind Bank, Sector 24, Chandigarh. The report submitted by the Surveyor and Loss Assessor was thus acted upon and relied by the respondent - Insurance Company and the claim was repudiated vide letter dated 25.2.1997.

THE complainant as well as the Insurance Company filed evidence in the shape of affidavits. On behalf of the complainant - company affidavit was filed by Shri Raj Kumar Arora, Managing Director while on behalf of the respondent - Insurance Company, affidavit of Dr. N.K. Nagal, Senior Divisional Manager was filed. The District Forum referred to the report of the Surveyor and Loss Assessor as submitted to the Senior Divisional Manager of the respondent - Insurance Company, which was extracted in the impugned order. The District Forum thereafter referred to Condition No. 8 of the policy, which provided that "If the claim in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under this policy shall be forfeited." The District Forum held that as the bills furnished by the complainant in support of his claim were found to be forged one by the O.P. Insurance Company and on that basis, the claim was repudiated, hence, there was no deficiency in service on part of the O.P. - Insurance Company. Resultantly, the complaint was dismissed.

AFTER receiving the notice of appeal, the respondent - Insurance Company put in appearance through Mr. Vaneesh Khanna, Advocate. On behalf of the appellant - company Mr. Ravi Kant Sharma, Advocate appeared. The record of the complaint case was summoned. We have heard the learned Counsel for the appellant as well as the learned Counsel for the respondent. We have carefully gone through the impugned judgment and order and the record of the case. The District Forum after narrating the facts of the case as set out in the complaint and written statement and after referring to the report of the Surveyor and Loss Assessor and extracting the same along with Condition No. 8 of the policy of insurance, recorded a finding about there being no deficiency in service on the part of O.P. in repudiating the claim of the complainant. In nutshell, the District Forum accepted the version of the respondent - Insurance Company that the claim preferred by the appellant - company was a forged one and it justified the Insurance Company to repudiate the claim under Condition No. 8 of the policy of insurance. This finding is obviously based on the report of the Surveyor and Loss Assessor who, in the process of assessing the loss caused to the goods stored in the stock of the appellant company at their aforesaid premises, went on investigating the genuineness of the bills submitted by the complainant and thus assumed a role of a Court to record a finding about the bills being forged and the claim being fraudulent.

IN our considered opinion, the Surveyor and Loss Assessor could not legally conduct an inquiry of the kind they have conducted and submit a report in the shape of a finding about a particular transaction of the purchase of goods being forged and the claim being fraudulent. Once the District Forum considered the defence set up by the O.P. - INsurance Company regarding the claim of the appellant - company being fraudulent, it should have instead of endorsing the report of the Surveyor and Loss Assessor and upholding the repudiating of the claim by the respondent - INsurance Company, should have either gone into the evidence regarding the genuineness or otherwise of the transaction purchasing the goods insured under the policy of insurance i.e., Zinc Ash, which were got insured by the appellant from the INsurance Company and should have independently recorded a finding about the same and keeping into consideration the fact that the transaction were materialized through the Bankers of the appellant company in the purchase of the goods or in case the same could not appropriately be done under the limited summary jurisdiction given to the District Forum under the provisions of the Consumer Protection Act, 1986, the appellant company ought to have been relegated to its remedy of approaching a Civil Court of competent jurisdiction, which could appropriately consider and decide the genuineness or otherwise of the transaction of purchase of the goods, which were got insured by the appellant company from the respondent-INsurance Company.

THE complaint, which involved a dispute about a particular claim or transaction being vitiated by fraud, undue influence and coercion, cannot appropriately be adjudicated under summary jurisdiction of the Consumer Disputes Redressal Agencies set up under the provisions of the Consumer Protection Act, 1986. It is only the Civil Court of competent jurisdiction, which can appropriately decide the averments of fraud, undue influence and coercion vitiating a particular transaction or claim under the policy of insurance after full dressed trial. The District Forum, in our considered opinion, committed an error in dismissing the complaint in the exercise of summary jurisdiction and basing the finding purely on the report of the Surveyor and Loss Assessor and without independently considering the same on the basis of evidence and material placed before it.

We are also of the considered opinion that it is a fit case in which the appellant company should be relegated to its remedy of approaching a Civil Court of competent jurisdiction by filing an appropriate civil suit claiming damages under the policy of insurance regarding loss caused to the goods, which got insured by the policy of insurance.

RESULTANTLY, the appeal is accordingly to the extent that the impugned order of the District Forum dismissing the complaint is set aside and the appellant company/complainant is relegated to his remedy of approaching a Civil Court of competent jurisdiction by filing an appropriate civil suit seeking redressal of his grievance regarding the settlement of his claim filed under the policy of insurance regarding loss caused to the goods, which was got insured under the policy of insurance. Under the circumstances of the case, the costs of the complaint as well as appeal shall be borne by the parties themselves. Copies of this order be sent to the parties free of charge. Appeal partly allowed.