R.S.OIL And GENERAL MILLS (P) LTD. vs National Insurance Co. Ltd.

WHAT is the true scope and nature of the inquiry within the consumer jurisdiction in cases of the repudiation of a claim by the insurer? This has come to be the focal question in this complaint. The facts and merits may be noticed with relative brevity relevant to this issue.

THE complainant M/s. R.S. Oil and General Mills (P) Ltd. as their name indicates is a Private Company having a manufacturing unit at Sonepat. THEy despatched 700 tins of mustard oil on the 19th of January, 1988 through M/s. Delhi Deccan Roadways vide Goods Receipt No. 14388 of even date. THE value of the consignment was to the tune of Rs. 2,56,296.90 paise and the same before the despatch stood insured with the National Insurance Company Ltd. (hereinafter called the ''Insurance Company'') vide Open Cover Policy No. 4400212 (Ann. P.1) dated 19th of January, 1988 for a sum of Rs. 2,73,000/- odd. THE truck containing the consignment however, did not reach the consignee-Guwahati Trading Company, Fancy Bazar, Guwahati (Assam) and consequently the complainant vide letters Annexures P.2 and P.3 dated 30th of January, 1988, lodged information with the Insurance Company about the non-delivery of the despatched goods. After obtaining a certificate regarding the non- delivery of goods from the transporters and the consignee, the complainant lodged a claim which was registered vide letter dated 10th of February, 1988 and they were asked to submit the requisite documents therefor which according to the complainant was done. THE relevant communications are Annexures P.4 & P.5. Further the complainant simultaneously lodged a claim with the transporters vide letter Ann. P.6 dated 10th of February, 1988. On the request of the Insurance Company documents Annexures P.7 & P.8 were also duly furnished and demand was made for the settlement of the claim. However, the insurers did not settle the claim despite a number of communications addressed to them and when nothing tangible emerged till the 7th of April, 1989, the representative of the complainant-company personally met the officials of the Insurance Company to seek an immediate settlement of their claim. Vide Annexure P.14, dated 10th of April, a Deputy Manager of the Insurance Company indicated assurances to settle the matter. However, the complainants were disagreeably surprised by the Insurance Company''s communication Annexure P. 15 dated 12th of April, 1989 to the effect that the issue had been referred for clarification to the Guwahati office and only on receipt of the same, it would receive further attention. It is the case that vide Annexure P. 18, the complainants were assured that their claim would be settled on or be fore 10th of July, 1989 butth is was again not done. However, on the 3rd of November, 1989, the complainants received a communication from the insurers that they should contact Shri D.C. Sharma, Managing Director M/s. Integrated Security Corporation of India, who had been appointed as the investigator in the case so as to enable him to investigate the matter. On the complainants'' own showing, Shri D.C. Sharma recorded the statement of the Director of the Company in connection with the marine loss of 700 tins of mustard oil. THEy also furnished additional information sought by the said Mr. Sharma. Even thereafter, the matter was not settled expeditiously and the complainants were required to submit the final Police investigation report. THEreafter, they were compelled to serve a formal legal notice on the insurers vide Ann. P.28 dated the 7th of January, 1991. However even this elicited no meaningful response, compelling the complainants to knock at the door of this Commission. THE relief sought is a sum of Rs. 2,70,000/- being value of the consignment with interest at 18% and also rupees three lacs by way of compensation on account of negligence and non-payment of the claim in time. On notice being issued the Insurance Company put in its written statement raising the preliminary jurisdictional objections on the ground that the insurance claim had been duly rejected by them and consequently this Commission has no jurisdiction to decide the matter. On merits, it was first highlighted that the complainant has no manufacturing mill and the alleged factory is lying closed since long and if at all any goods are sold by the Company they are purchased from the market and then supplied to others as a mere trader. The factum of the insurance cover obtained by the complainants is however admitted whilst the other allegations are controverted. The firm plea taken is that the complainant and the transporter and the consignee had all designedly hatched a conspiracy to show the loss of the consignment in order to obtain unjustifiable financial gain from the insurers. It was alleged and it did not stand proved at all that in fact the consignment had not reached the consignees. It is pleaded that the Insurance Company made all due efforts to enquire into the claim but were compelled to reject the same for want of full proof.

The basic stand on behalf of the Insurance Company is that the complainants wholly failed to satisfy the insurers with regard to the alleged loss sustained. Consequently, the insurers first appointed M/s. Investigations Legal Adviser and Suveyor to investigate this claim who in their report dated 22nd of July, 1988 did not recommend the payment thereof. Subsequently, the insurers deputed its own investigator Shri B.M. Boro who submitted his report dated the 2nd of May, 1989 again to the effect that the claim was not payable as it was not proved that the consignee had not received the goods and even the Police had not made any final report in the matter. Finally, the insurers appointed M/s. Integreated Security Corporation of India to give an investigation report. By its detailed report dated 13th of February, 1990, the said concern also concluded that no loss had been suffered by the complainants and recommended the rejection of the claim. The insurers on the basis of all these reports have therefore, rightly rejected the complainant''s claim.

ON behalf of the complainants a rejoinder was filed to reiterate their stand. The preliminary jurisdictional objections that the repudiation of the insured party''s claim was per-se a jurisdictional bar to seek redress before this Commission, was contentiously argued out before this Commission and decided by a detailed speaking order dated 21st of August, 1991. The opposite party carried the issue before the National Commission in First Appeal No. 203 of 1991 (National Insurance Company Ltd. v. M/s. R.S. Oil & General Mills, I (1992) CPJ 212 (NC) resulted in the interim stay of the present proceedings, but the order was later upheld by the National Commission. In support of its case the complainant placed on the record the detailed affidavit of Shri Vijay Arora, Managing Director of the complainant company and placed reliance on a mass of documents the authenticity whereof was not challenged on behalf of the opposite parties. The deponent aforesaid was cross-examined at great lengthen behalf of the opposite parties, making serious in-roads in the stand taken by the complainants. A belated attempt to implead M/s. Delhi Deccan Roadways as a party to the proceedings was then made on behalf of the Insurance Company which was rejected by the detailed order of the Commission on the 12th of May, 1992. Thereafter, in rebuttal, the Insurance Company put in the affidavits of Shri N.K. Daga, proprietor of M/s. Investigations Legal Adviser and Surveyor and Shri P.C. Narang and Shri D.C. Sharma of the M/s. Integreated Security Corporation of India and placed reliance on a number of documents which in turn were not assailed by the complainant. The deponents S/Shri P.C. Narang, G.D. Gupta, D.C. Sharma and N.K. Daga were cross-examined at considerable length by the learned Counsel for the complainant without how- ever making any dent in their testimony.

MR. B.S. Gupta, the learned Senior Advocate for the appellant had with painstaking ability taken us through all the relevant materials in the somewhat voluminous record. Learned Counsel first attempted to place undue reliance on what he contended to be an admission of the complainant''s case in the pleadings itself. Reference was made to Sub-para (xv) of the written statement in which the averments made in the corresponding part of the complaint were admitted as correct. It was contentiously contended that by virtue of the communication Annexure P-18 dated the 29th of January, 1989 the National Insurance Company Limited (herein- after referred to as the Insurance Company) was bound to honour the complainant''s insurance claim. We regret our inability to agree with Mr. Gupta that the brief averment in the afore-noticed part of the written statement is tantamount to a total concession of the case on the part of the Insurance Company, which has contentiously fought out the case at every stage. It is significant that in the complaint all that was alleged is that the complainant Company had received a letter dated 29th of June, 1989, from Mr. P.C. Narang, Assistant Branch Manager of the Insurance Company at Sonepat holding out an assurance that the claim would be settled on or before the 10th of July, 1989. Reading of the said cryptic hand-written document P-18 would belie the tall claim that the matter of an insurance claim to the tune of Rs. 2,73,000/- would stand concluded thereby. It is common ground before us that the settlement of an insurance claim of this nature had to be done at the highest executive levels of the Insurance Company''s regional office and not by anybody else. Apparently, as a valued customer the complainant concern was vide P-18 requested to continue its business with the Company on the alleged basis of a telephonic discussion with the Divisional Manager at Rohtak. The circumstances in which this letter was issued by the Assistant Branch Manager have been more than amply explained in the affidavit evidence of Shri P.C. Narang dated the 2nd of April, 1992 and the statement on oath before this Commission. Therein he categorically struck to the position that the relevant insertion of the words that ''your claim will be paid as per your claim bill amount'' were written at the insistence of the insured inspite of the fact that neither he nor even the Divisional Manager had any authority to settle this claim. Even before us it is now undisputed that the Assistant Branch Manager had not the least authority to finalise a claim of the present nature and consequently the sketchy handwritten note P-18 is and cannot possibly be conclusive. Whatever evidenciary value P-18 may have had, the same stands wholly destroyed by the evidence of Shri P.C. Narang both in his affidavit and his cross-examination. Apparently faced with the uphill task of three reports of the surveyor and investigators against him, Mr. B.S. Gupta, the learned Counsel for the complainant had then contended that the material on the basis of which those reports were rendered were collected behind the complainant''s back. A grievance was made that the complainant concern was not associated at every step taken by the surveyors and investigators and, therefore, their reports were of no value and must be ruled out for consideration. Serious grievance was sought to be made on the ground that the said reports were not duly served upon the complainant and they were not allowed to raise objections thereto. Reliance was placed on I (1992) CPJ 121 (NC) ''M/s. Raj Kumar & Co. v. M/s. United India Insurance Company Ltd. & Others.

WE are afraid that the aforesaid submission is somewhat completely off the mark in the context of the assessment of an insurance claim by the insurer and the scope of the consumer jurisdiction with regard thereto. The argument seems to presuppose that the investigation of an insurance claim by the insurer should be in the nature of a public enquiry or virtually a judicial trial. WE find no warrant either in law or in practice for such a supposition. The survey reports or the investigations conducted by an insurer with regard to the claim, either itself or got conducted through independent agencies of surveyor concerns are not to be equated with full dress judicial or quasi-judicial proceedings. Indeed the stand was taken on the part of the Insurance Company firmly that they are entitled to make confidential inquiries in the matter as well though as a matter of practice, they would normally associate the complainant at the relevant stages. WE are therefore unable to find much merit in the submission that because the complainant concern was not associated at every inch by the surveyors and investigators in finalising the claim their reports stand vitiated. The doctrinaire plea that all collection of material must be done after notice to the insurance claimant or evidence recorded in his presence with a right to cross-examination is patently untenable and has to be rejected. Equally the claim that the relevant reports must be served on the claimant and his objections thereto invited or he be heard personally in support thereof are all incidents of judicial procedure which are not at all attracted in a commercial transaction like an Insurance Company dealing with its clients or investigating their claims in the ordinary course of their business. The judgments relied upon by Mr. Gupta even when read with the closest care do not in our view in any way advance which appears to us as a overly technical submission on his part.

MR. R.S. Gupta has then assailed the report rendered by Shri B.M. Boro on the ground that he was an employee of the Company and, therefore, his investigation must be per-se ruled out at biased. We are unable to agree to this extreme stand as well. It is true that the reports rendered by an independent surveying agency would be of greater weight in the context of a contentions insurance claim, but that is a far cry from holding that the Insurance Company is either barred to get an investigation made through its own employees or further that such investigation must necessarily be thrown in the dustbin. Continuing in the same strain, Mr. Gupta had then assailed the communication of the Insurance Company repudiating the claim vide R-19. It was contended that the three line repudiation in the said document would itself vitiate the Insurance Company''s case. The submission was that the rejection of the complainant''s claim was arbitrary on this ground alone because it was in terms not a speaking order and did not delineate all the reasons which compelled the Insurance Company to reject the claim.

With respect we are inclined to the view that this very approach to the issue of the investigation of the insurance claim is if it was a lis in a judicial forum, is unwarranted. The repudiation of a claim by the insurer is not a judgment or a decision of a quasi-judicial body which must necessarily be a reasoned one. Indeed to our mind the very terminology of referring to the insurers denial of the insured''s claim as an "order" being passed or the same being ''arbitrary'' with its inevitable nuances of judicial determination is uncalled for in this field. The attempt to impose the judicial process in the obviously commercial activity of insurance must be resisted. It bears repetition that the thrust of the consumer jurisdiction is to get away from technicalities and to import them in again by a process of interpretation may indeed be contrary to its very spirit.

LASTLY, it was yet again contended before us on behalf of the complainant that there was no evidence of an individual application of the mind by the Insurance Company in repudiating the claim. The argument was that unless reasons were fully recorded, there could be no assumption that the matter had been considered with due application of thought and, therefore, the denial of the insurance claim stood vitiated. We are unable to agree. It is the firm stand of the Insurance Company that the claim of the appellant apart from having been got processed through three inquries was equally routed and considered through the hierarchy of its executive offices namely at Sonepat and the Divisional Office at Rohtak and the Regional Office at Chandigarh and even a references was inevitably made to the head office at Calcutta. In this fact situation, it cannot possibly be said that still there was no application of mind by the Company. Indeed the submission of the learned Counsel for the complainant as yet another facet of the same stance that the satisfaction of a commercial organisation must satisfy the tests of judicial process. We are afraid that this is neither the requirement of law nor of fact and indeed should not be so.

AN overall appraisal of the primal submission of Mr. B.S. Gupta pointedly brings to the fore the larger question of the true scope and nature of the inquiry within the consumer jurisdiction expressly in regard to cases of repudiation of a claim by the insurer, as in the present one. To our mind, firstly the processing of an insured claim by the insurer is not to be made akin with a public inquiry or a full-dress judicial proceeding as such. The collection of the necessary material either by the insurer itself or through the agency of independent Surveyors is not inflexibly to be done in the presence of the insurer nor is the service of the documents or collected evidence upon him germane to such a proceeding. Undoubtedly, the company should act in all fairness with consideration to its consumer-client yet such a proceeding is not to be converted into a judicia1trial. Equally, the ultimate repudiation of a claim by the Company is not to be equated with a judicial or a quasi-judicial order. Plainly enough, this is not to be like a judgment with the indicia of application of mind and impeccable reasons in support thereof. Broadly speaking, considerations which may be germane to the judicial process would be alien to commercial transactions carried on in the ordinary course of insurance business. Yet again, when such a lis is brought before the redressal agencies, it is not to be treated like a contentious civil suit. That indeed is the province of the plenary Courts of law alone. In the beneficient and summary consumer jurisdiction, the primal scope and nature of the inquiry inevitably is whether there has been a patent deficiency in the insurance services which the Company had undertaken to render. The overly strict technicalities of Civil Procedure are inevitably to be avoided. The whole thrust of the consumer jurisdiction is indeed directed to that larger purpose. Therefore, the core question in such cases should be allowed inevitably to remain simple, as to what the insurer had undertaken to perform either under the law applicable on the contraberd at and in the light thereof whether a deficiency had occurred in the performance of such services rendered. Viewed against the above acid test, it cannot possibly be said that herein the Insurance Company is guilty of default or the deficiency of the nature aforesaid. Mr. L.M. Suri, the learned Counsel for the opposite party was on firm ground that herein, the insurance claim (somewhat hastily launched by the complainant) indicated suspicious circumstances on the very face of the same. Indeed the Insurance Company''s firm case was that the goods had in fact reached the consignee and a conspiracy had been hatched betwixt the consignor and consignee and the carrier to hoodwink the Insurance Company with a trumped up claim. Particular reference was made by him to the ''Delhi Deccan Roadways (transporters, stance that the claim should not be paid to the complainants. In this situation, Mr. Suri was right in contending that the insurers had no technical barometer to determine instantly whether the claim is payable or not. Inevitably, they had to resort to the best available enquiry agencies and as many as three of them reported categorically against the validity of the complainant''s claim.

FIRM reliance has been rightly placed on behalf of the Insurance Company on as many as three reports got conducted in the present case. Reference may first be made to R.6 dated the 22nd of July, 1988, which is the report and conclusion of M/s. Investigator Legal Advisors and Surveyors. Therein after a reasoned assessment running into ten or more pages, it was opined that the truck in question had arrived in Guwahati in time with 700 tins of mustard oil which were unloaded there and the suspicious courting of arrest by the driver and his release on bail were pre-planned. The conclusion arrived at was that the consignment had been misappropriated by the consignee or their staff with the collusion of the carriers or their driver and the apparent connivance of the consignor as well. However, the matter did not rest at that and another investigation was got conducted through Shri B.M. Boro. He rendered his detailed opinion vide Ann. R.13. Therein, he concluded as under on the 2nd of May,1989: "In this connection, it may be stated that the case I feel warrants vigilance enquiry judging from the consignment/factors evidence in the various investigation is still in continuance at present."

LASTLY in this context is the report R-14 of Shri D.C. Sharma, I.P.S. This is indeed an exhaustive document running into 32 typed pages. The finding arrived at therein merits notice in extenso: " The investigation has proved: (1) that the consignment of 700 tins of M. Oil, sent by M/s. R.S. Oil Mills, District Sonepat, in truck No. UHG-371 vide G.R. No. 14328 dated 19.1.88 to M/s. Gauhati Trading Co., Gauhati was delivered intact to the consignee at Gauhati. (2) that the consignment did not suffer any loss in transit. (3) that it was consignment toisted by the insured by the version with M/s. Gauhati Trading Co., Gauhati. It deserves recaling that the author of the aforesaid report Shri D.C. Sharma credentials are impeccable and he buttressed the same to the hilt by his affidavit and what is more by his testimony in the crucible of a prolonged cross-examination by the complainant.

In the light of what has been held with regard to the scope and the nature of the enquiry herein, it seems unnecessary if not wasteful to over elaborate the matter. It suffices to conclude that herein no deficiency in the insurance service can be laid at the door of the Company in view of the salient factors noticed above. Even though the matter is plain on principle, authority is not now lacking on the point. Reference may instructively be made to the II (1992) CPJ 493 (NC) ''Jagdish Prasad Dagor v. Senior Divisional Manager, Life Insurance Corpn.'' I (1991) CPJ 574 ''Dr. (Mrs) Tripta v. United India Insurance Co., II (1992) CPJ 739 M/s. Gupta Chemical Pvt. Ltd. v. United India Insurance Co. Ltd. and II (1992) CPJ 632 ''Sushil Kumar v. Senior Divisional Manager, Oriental Insurance Company Ltd.''''

FOR the foregoing reasons, this complaint must fail and is hereby dismissed. However, we would not wish to burden the consumer with any costs despite the somewhat prolonged contentious proceedings herein. Complaint dismissed.