SRI SAI ANIL ENTERPRISES vs Oriental Insurance Co. Ltd.

THE complainant is a proprietary concern dealing in wholesale and retail cloth business like suitings, shirtings and other types of clothes in the premises bearing No. 13/520/1, R.T. Street, Cuddapah which obtained the insurance policy bearing No. 432700/600/1/48/SKP/91 dated 3.3.1999 for a sum of Rs. 8,20,000/- from the opposite parties which is valid up to 2.3.2000. While so fire broke out in the shop at 2.00 a.m. on 19.3.1999 due to short-circuit of electricity due to which the entire cloth material has turned into ashes. THE complainant made a complaint to the Fire Station as well as to the Police Station, Cuddaph and the opposite parties. THE Surveyor deputed by the opposite parties inspected the premises and arrived at the loss assessment at Rs. 5,52,544/-. THE Chartered Accountant-cum-Sales Tax Practitioner also estimated the loss. But the opposite parties without settling he claim went on dodging on some pretext or the other. Hence the complainant issued a legal notice and filed the complaint claiming a sum of Rs. 10,49,130/- with interest at 24 per cent per annum from the date of the incident till payment together with costs.

IN the written version filed by the opposite parties while admitting the policy as well as the fact that fire broke out accidentally on the early hours of 19.3.1999 but denied their liability beyond what was assessed by the final Surveyor Mr. B.S. Murthy. It is further stated that the Surveyor appointed by the opposite parties submitted his report on 30.4.1999 based on physical verification, volumetric analysis and oral submission of the complainant. As the survey report was done on ad hoc basis without verifying the purchase invoices and applying uniform rate of different materials did not represent correct picture, so they appointed Mr. B.S. Murthy for final survey and as per his report, the appellants offered Rs. 1,93,606/-. As such there is no negligence on their part. The complainant besides filing his affidavit of the proprietor also filed Exs. A-1 to A-9 while the opposite parties besides filing the affidavit of the Assistant General Manager, Regional Office, Greenlands, Hyderabad filed the report of Mr. B.S. Murthy marked Ex. B-1.

The point therefore that arises for consideration is whether there is any deficiency in service on the part of the opposite parties, if so to what extent ?

THE fact that fire broke out in the early hours on 19.3.1999 in the cloth shop of the complainant is not in dispute. THE only question is, whether the first Surveyor''s report wherein loss was assessed at Rs. 5,52,544/- should be accepted or the final survey report should be accepted. Ex. A-1 is the certificate issued by the Inspector of Police, Cuddapah stating that the cloth kept in the cloth shop was reduced to ashes. The Fire Attendance Certificate under Ex. A-2 also confirmed electric short circuit. In the survey report Ex. A-3 the first Surveyor observed that it is due to electrical short-circuit in the meter box wiring, sparks had fallen on the cloth stocked and caught fire and spread to the entire stock of clothes and furniture damaging them badly. He came to the conclusion that by verifying the purchase bills, several items of cloth were available at the time of the accident and he valued the opening stock as on 1.4.1998 at Rs. 5,72,777.80 Ps. Purchases up to 18.3.1999 as well as sales were noted. The value of balance of cloth was arrived at Rs. 5,15,712.22 Ps. As per physical inventory valuation basing on label price i.e., average selling total value of stock is arrived at Rs. 6,83,758.95 Ps. After deducting the profit margin at 12 per cent he arrived at the value of stocks as per physical volumetric calculations at Rs. 6,01,707.85 Ps. After deducting salvage etc., finally he came to the round figure of Rs. 5,52,500/- as the loss sustained by the complainant.

THE opposite parties deputed Chartered Accountants Gupta & Gopi to submit their report. Accordingly they estimated the loss at Rs. 5,00,000/- and submitted their report Ex. A-4. With the available details, they found that the value of opening stock at Rs. 5,72,778/-. THEy also added purchases as well as the sales, deducted 12 per cent margin of sales and came to the conclusion that the closing cost of the goods on the date of accident at Rs. 6,99,609/-. THEy also deducted 30 per cent and finally arrived at Rs. 5 lakhs. Not being satisfied with the said assessment, the opposite parties again appointed Mr. B.S. Murthy as final Surveyor. He went on deducting sometimes 15 per cent on the holding of the stock and some times different percentages. He found fault with the first Surveyor who assessed the loss considering the label price reducing 12 per cent gross profit. Even this Surveyor made deductions ranging from 10 per cent to 50 per cent on different items. Some kind of guesswork has to be resorted to in arriving at the loss suffered by the complainant in a situation like this when the actual material is not available for physical verification. THE aim and object of the opposite parties in appointing Mr. B.S. Murthy practically a third Surveyor is only to get over the report of the first Surveyor as well as the report of the Chartered Accountants. The National Commission has time and again pointed out that the Insurance Company cannot go on appointing Surveyors till they get a favourable report without justifiable cause. We are of the opiniion that there is absolutely no justification to appoint a third Surveyor having obtained two reports merely because they are not acceptable to the opposite parties. For these reasons we hold that there is deficiency in service on the part of the opposite parties. The report of the first Surveyor cannot be rejected. Even giving some margin to the report of the first Surveyor, a sum of Rs. 5,00,000/- as assessed by Gupta and Gopi, Chartered Accountants would be the minimum figure that should have been accepted while arriving at the assessment of loss suffered by the complainant.

UNDER these circumstances, we are of the opinion that the complainant is entitled to a sum of Rs. 5,00,000/- and this sum shall carry interest at 9 per cent per annum from the date of filing of the complaint till the date of payment.

IN the result the complaint is allowed in part to the extent indicated above with costs of Rs. 10,000/-. Time for payment six weeks. Complaint partly allowed.