SHAFA MEDICAL AGENCIES vs ORIENTAL INSURANCE CO LTD

-ORDER dated 23. 3. 2006 passed by the Divisional Consumer Protection Forum, Jammu (hereinafter to be referred to as the Forum) has been taken in this appeal. The appellant owned a chemist shop in the town of Batote, Distt. Doda which was insured with the respondent for an amount of Rs. 4. 50 lakh for all kinds of medicines and in addition to that the furniture and fixtures of the shop were insured for a sum of Rs. 50,000. It was Fire ''a'' policy issued under No. 234104/11/98/00777/305. The policy had commenced from 2. 2. 1998 and was valid upto 1. 2. 1999. The appellant had taken loan of Rs. 1. 50 lakh in the unemployed self-employment scheme from State Bank of India, Branch Batote. It is alleged that on 30. 3. 1998 at 11. 30 p. m. a fire broke out inside the shop which engulfed the stocks of medicines, furniture and fixtures. Insured claim was immediately raised with the respondent and on 1. 4. 1998 Mr. M. K. Gupta, Investigator of M. K. Gupta and Co. conducted the preliminary survey and submitted the report before the respondent on 5. 11. 1998. He mentioned in the report that appellant''s representative on spot did not provide him account books, ledgers, etc. at the time of survey and had promised to produce later on. Consequently, zeroxed copies of ledgers, cash memos and account statements certified from chartered accountant were made available. The purchase bills till the date of loss i. e. 1. 4. 1998 were of the value of Rs. 5,52,120 and the sale records were to the tune of Rs. 2,13,696 The stocks were physically valued at Rs. 38,226. 80 and 10% was deducted as profit margin. The expired medicines were not taken into account and in this way the value of the stocks was assessed at Rs. 34,400. The loss of furniture, fixtures and fittings was assessed at Rs. 2000 and approximately the total loss was assessed at Rs. 36,300. It was stated that the fire was accidental and respondent was requested to get the final investigation report prepared for the loss assessor which was not got done. The appellant waited for the settlement of the claim and ultimately when nothing was done he filed the complaint before the Forum. After hearing the parties, the Forum vide its order dated 1. 6. 2001, directed the respondent to indemnify the appellant to the tune of Rs. 36,000 only. This order was challenged in the Commission and vide its order dated 18. 12. 2003, it was held that the appellant had lodged a claim of total loss to the tune of Rs. 4,89,986. 92 and the respondent in its written version had not explicitly refuted the claim. It was admitted that the survey had not been made on the basis of all the documents. Taking stock of all these factors the order was set aside and case was remanded back to the Forum with a direction to reopen it and a fresh Surveyor may be appointed "who shall be cooperated by both the parties". The Surveyor was required to furnish his report before the Forum within four weeks. The respondent was required to furnish all the documents to the Surveyor within one week from the date of his appointment. As a consequence of this order, Mr. Kuldeep Sharma of Sharma Surveyors was appointed as a Surveyor. On 8. 1. 2004, the appellant received a communication whereby he was informed about the appointment of the Surveyor and he was required to produce documentary evidence in order to assess quantum of loss. It is alleged that on 20. 1. 2004, all the record which was demanded was given to the Surveyor against a receipt. The said Surveyor Mr. Kuldeep Sharma made fresh assessment and assessed the loss to the tune of Rs. 63,487. 17 from which again deduction of Rs. 25% was made to take care of assumptions in absence of books of accounts. The Forum accepted the loss to the tune of Rs. 63,487 because of fire incident to the stock and a loss of Rs. 2,000 of the furniture and fixtures. In other words, a total liability of Rs. 65,487 was fixed against the respondent to indemnify the appellant along with interest @ 6% per annum with effect from 1. 7. 2004 till its final realization. Besides that, litigation charges in the sum of Rs. 2,000 were made payable. The order was passed on 23. 3. 2006 and the appellant felt aggrieved has challenged the same in this appeal inter alia on the following grounds: (a) The directions of the State Commission contained in the order dated 18. 12. 2003 were not complied by the respondent because it is not known when the Surveyor was appointed. The Surveyor also was not made aware of the directions of the Commission because he never physically visited the spot as well as the reassessment of the loss was not made as per the documents which were furnished by the appellant to him on 20. 1. 2004 against a receipt. There is no mention in the report about the Drug Inspector''s Certificate regarding the destruction of burnt medicines, as well as about the passing of the decree passed by the learned Additional Judge, Ramban. The Surveyor did not know about the date of his appointment and he made the report without knowing the price of the medicines and their quantity. He prepared his report on 30. 4. 2004 and the same was filed in the Forum on 20. 10. 2004 i. e. after five months and 20 days. This was done in flagration of the direction of the Commission which required production of report before the Forum within four weeks. Instead of furnishing the report in the Forum the Surveyor had submitted the report before the respondent.

(b) The Forum has solely relied upon the Surveyor which was of partisan nature and that the other independent evidence which was on the record was not considered. The appellant at page 2 and in para No. 2 of his affidavit has given full description of the loss suffered by him and quantified it at Rs. 4,89,986. 92. Furthermore in para No. 3 of his affidavit, he has mentioned the documentary evidence in support of his claim which is in the form of FIR, final police investigation report, the report obtained from the fire-brigade, drug licence, purchase bills of the medicines which were purchased before the incident, certificate issued by the Tehsildar, copy of rent deed, etc. which were being demanded by the respondent from time-to-time but none of the said document was considered by Sharma Surveyors at the time of preparing the report. Not only that full details of medicines along with cost values which were gutted in fire was given and their total value was assessed at Rs. 3,86,772. 82 along with the details of the expired medicines and their value too was mentioned but there is no mention about them in the report of the Surveyor. The appellant had taken loan to the tune of Rs. 1,12,500 from the State Bank of India, Branch Batote and for its recovery suit was filed in the Court of learned Additional Distt. Judge, Ramban whereas decree was passed but no mention has been made about this decretal amount though certified copy of the decree was placed on the record.

(c) The learned Forum below placed implicit reliance on such a tainted report of the Surveyor and the other cogent evidence which was on the record was not taken into account. An order which is not based on evidence is illegal.

HEARD the arguments and perused the record. At the outset, the learned Counsel appearing for the appellant has assailed the report of the Surveyor namely, Sharma Surveyors (proprietor Kuldeep Sharma) on the pleas raised in the memo of appeal as stated above. He has further stated that Mr. Kuldeep Sharma, Surveyor did not bother to visit the spot as he could still find out the condition of the burnt furniture and fixtures which had an insurance cover of Rs. 50,000 but blindly followed the finding of the Investigator namely, Mr. M. K. Gupta who without any reason had fixed the loss at Rs. 2,000. The litigation charges fixed at Rs. 2,000 are also arbitrary as the fee structure of the Advocates has increased manifold. This increase has been made by the Central and State Government of their Standing Counsel. That Mr. Sharma, Surveyor has not given any reason to discard the balance sheet prepared by the charted accountant namely, Babita and Associates which was prepared on 5. 8. 98 i. e. after the incident had taken place which had occurred during the intervening night of 30th-31st of March, 1998. His appointment was made by the respondent in a suspicious manner by giving a go-by to the directions of the Commission dated 18. 12. 2003. That the Surveyor has blown hot and cold in the same breath which fact can be established from his report dated 30. 4. 2004. In para No. 5 of his report, he has stated, "the financial statements pertaining to the financial years 1995-96 as submitted by the insured without having support from the books of account which reportedly burnt in the fire, can be considered genuine as the same had been submitted to the Income Tax Department on 26. 8. 1997 i. e. about 7 months prior to the date of loss and which have been attested by the Department". He does not assign any reason to discard the contents of these official statements prepared by the Income Tax Department, which were submitted 7 months prior to the date of loss. The financial statement for the period ending 30th March, 1998 was discarded on the ground that the same could not be verified in the absence of books of accounts. The second excuse for discarding it was given that, "the sales shown in the financial statements is quite disproportionate to the sales of previous year. Copies of sale bills submitted cannot be relied upon in the absence of account books". The appellant had produced the stock register and the sale bills but could not produce the ledger and the cash book before him on the plea that the latter were burnt in the fire. It is not known how and on what basis the Surveyor has stated that sale figures appear to be suppressed for increasing the value of stock in hand at the time of loss. This reason has emanated from personal imagination and not based on any data. That after the remand order dated 18. 12. 2003 passed by the Commission, the appellant placed on record the supplementary affidavit which was notarised by the Oath Commissioner on 20. 5. 2004 and subsequently placed on the record of the Forum wherein the copies of the Income Tax Returns were produced and in the balance sheet of 31. 3. 1998 the loss caused to furniture and fixtures destroyed in fire on 30. 3. 1998 was shown to the extent of Rs. 10,960. 20. In the absence of any contradictory evidence the authenticity of these income tax statements could not be doubted. The account of decretal amount which was paid in the Court of Additional Distt. Judge, Ramban supported by documentary evidence has also not been taken into account by the Surveyor. The purchase bills shown in Annexure J from running pages 39 to 54 (marked in red) is documentary evidence which show the purchases of the medicines at different times from Medicare Pharmaceutical Agencies at Batote, Bhagwati Medicine Traders, Nishat Traders, J. K. Pharma as well as Public Traders of Jammu City. Amongst these purchases, the purchases made immediately before the alleged incident could throw sufficient light regarding the stock position at the time of the incident but Mr. Sharma, Surveyor has not taken into account these medicines purchase bills and arbitrarily has discarded the claim of consumable stocks of medicines which had been valued at Rs. 3,86,772. 82 and that of the expired medicines had been priced at Rs. 10,894. 36. Their rejection in toto to assess the loss was an arbitrary exercise at the discretion of the Assessor Mr. Kuldeep Sharma. The Commission which is required to do justice on even scales as a Forum of equity can easily discard this report and base the finding on other evidence which is available on the record. In rebuttal it has been contended by the learned Counsel of the respondent that the Commission has not discarded the report of M. K. Gupta, Investigator and still it has evidentiary value. That M/s. Sharma Surveyors could take help from that report which recorded the first hand account of the incident just after the happening. That the appointment of M/s. Sharma Surveyors was delayed by about four and half years from the date of the incident and naturally he had to place reliance on the report of preliminary Surveyor Mr. M. K. Gupta. In the absence of stock register which was stated to have been burnt in the fire the chartered accountant M/s. Babita and Associates could not make authentic report and on that account their report loses the evidentiary value. The appellant had been found purchasing the medicines mostly from Batote and their sale in wholesale at the very place is a doubtful affair and cannot be believed. Concluding his arguments he stated that the Surveyor''s report could not be disbelieved as this Commission in the case of Muzaffar Ahmed Ganie v. United India Insurance Co. Ltd. , 2003 (2) JKJ Cons. 183 (PC), has held that the report of the Surveyor deputed under rules to assess the damage caused cannot be challenged. He has also cited the case of National Insurance Co. Ltd v. Lone Pharmaceuticals, 2003 JKJ (Suppl.) 380, wherein it has been held that in absence of any ocular evidence or any documentary evidence in the form of vouchers or bills, the amount assessed by the Surveyor has to be accepted.

After considering the respective contentions of the Counsel appearing for the parties we have to state here that Sub-sections (1) and (2) of Section 11 of the Jandk Consumer Protection Act clearly has laid down that that the Divisional Forum and the State Commission have to decide the disputes under the Act on the basis of evidence brought to its notice by the parties. In the proceedings before the Consumer Forum mere preponderance of possibility suggests that a fact is said to be proved when the Forum either believes that it exists or considers its existence so probable that a prudent man ought under the circumstances of a particular case to act upon the supposition that it exists. The Fora constituted under the Act for the redressal of grievances of the consumers are not fettered or bound by the rules contained in the Evidence Act. The rigour of the rules of evidence contained in the evidence Act is not applicable to the proceedings before the Consumer Forums constituted under the Act. What is required is that they must conduct themselves in accordance with the principles of justice, equity and good conscience. They must follow the procedure laid down in Section 11 of the Act. If that is done such proceedings cannot be called in question in any Court on the ground that the principles of natural justice have not been complied with. In the premises aforesaid, when we appraise the evidence we find that as per Annexure ''dl'' which is a balance sheet and was prepared on 5. 8. 1998 by "babita and Associates chartered accountants" the assets of the appellant in the balance sheet as on 30. 3. 1998 have been valued at Rs. 4,89,986. 92. In the written version in reply to the averments made in para Nos. 8 and 9 of the complaint; the respondent has admitted the report of the chartered accountant along with the report of the fire incident but it has stated that they are not sufficient to admit the loss because the appellant had to follow the claim form and submit the final police report, fire brigade certificate, bank stock statement and other documents as recorded in the letter of the respondent. Though at the initial stage; these documents were not produced but subsequently they were made available to the Surveyor namely, Sharma Surveyors but he has not taken them into his account. However, the bank stock statement was not produced but a copy of the decree sheet prepared by the Court of Additional Distt. Judge, Ramban stating therein the liability of the appellant to pay the decretal amount in the sum of Rs. 1,12,1992 along with interest @ 7% per annum was produced. The decree holder was the State Bank of India, Branch Batote. Annexure ''c'' is the certificate of the fire brigade which was produced with the complaint which states that fire had broken out at 11. 30 p. m. and the damage was caused to the contents which were existing in the shop. The final investigation report dated 14. 5. 1998 prepared by SHO, Police Station Batote was also produced which stated that the fire had broken out because of reaction of chemicals contained in the bottles and all the medicines which were inside were destroyed. In the final investigation report, the loss of medicines was shown to the tune of Rs. 3,86,772. 82. Annexure ''d'' also speaks of the loss of this value as well as the value of the expired medicines was stated to the tune of Rs. 10,894. 36 The appellant in his evidence has clearly stated about this loss. His version is supported by the deposition of his witnesses namely, Dr. J. M. Khan, Mohd. Yaqoob (brother of the appellant) and Dr. Shakeel Ahmed Sumbria of S. K. M. Hospital, Batote. These witnesses have been cross-examined and their veracity could not be shattered. Mr. Mohd. Yaqoob was present on the spot in the absence of appellant and he had informed the police as well as immediately gone on the spot. In rebuttal the respondent has cross-examined Mr. M. K. Gupta, Surveyor who had gone on the spot but his report was not believed by the Commission. In para No. 3 of his deposition made on affidavit, he has admitted that the insured had not furnished the police report and bank statement before him. In his report it is found that he had requested the respondent for getting the loss assessed from a Surveyor but that request was not accepted by the respondent. The evidence of Mr. D. S. Motten, Branch Manager who has appeared on behalf of the respondent is not of much help to advance the case of the respondent. In this way by discarding the report of the Surveyor, M/s. Sharma Surveyors we find that the appellant has proved the loss to the tune Rs. 4,89,986. 92 (say Rs. 4,90,000) which included the loss of medicine stocks as well as furniture and fixtures. This is a round about figure and here the method of approximation to assess the loss can be applied by making a deduction of 25% from the total loss which method is approved one to assess the loss in the absence of expert evidence of credulous nature. The law cited at the bar by the Counsel appearing for the respondent to accept the report of the Surveyor has no bearing to the facts and circumstances of the case because the report of the Surveyor is not believable due to the various defects already stated. In this view of the matter, we award a compensation of Rs. 3,67,500 (Rs. 4,90,000 Rs. 1,22,500) in favour of the appellant along with interest @ Rs. 6% per annum from the date of loss i. e. 31. 3. 98 till the final payment is made. The appeal is accepted with a cost of Rs. 5,000. The record of the Forum be returned. Appeal allowed.