UNITED INDIA INSURANCE CO. LTD. vs NARESH KUMAR

THIS is an appeal against the Order dated 10th June, 1993 passed by the State Consumer Disputes Redressal Commission, Haryana (for short the State Commission) by which it accepted the complaint filed by the present respondent No. 1, Naresh Kumar and directed the present appellant who had been arrayed as opposite party No. 1 in the complaint to pay to the complainant the insured sum of Rs. 1,25,000/-with interest at the rate of 18% per annum from the date of the loss till the date of realisation. The respondent No. 2 herein is the State Bank of India, Industrial Area Branch, Panipat which had been arrayed as opposite party No. 2 in the complaint. The parties will be referred to as they were arrayed in the complaint.

THE complainant is a partner of the registered firm, M/s. Garg Textile of Panipat. In the course of the business the complainant had taken as cash credit loan from the State Bank of India. The Bank had a floating charge upon the raw materials of the concern upto the finishing stage. The terms of the loan made it obligatory upon the complainant to insure all the relevant stock and goods. Consequently, the Bank on behalf of the complainant took out an insurance policy for the sum of Rs. 1,25,000/- from the opposite party No. 1 United India Insurance Co. Ltd. (for short Insurance Company). The required premium of Rs. 2,436/- was tendered and accepted by the Insurance Company. According to the complainant the insurance covered the stocks of handloom products including yarn ,Durries and other goods of like nature pertaining to the insured trade, finished or unfinished whilst stored and lying in the insured''s premises. On the night intervening 13th/14th June, 1992 a fire broke out in the factory premises of the complainant resulting in a total destruction of the material lying in the factory. The case of the complainant is that he suffered financial loss to the tune of Rs. 20 lakhs and the same was immediately notified to the insurer and a First Information Report was also lodged on 14th June, 1992 itself. A Surveyor was appointed by the insurer who visited the factory premises. However, after considerable delay, vide letter dated 4th November, 1992 the insurer repudiated the claim on the express ground that shoddy yarn stored in the premises of the complainant was not covered under the policy. Despite further protestations the insurer did not offer any redress. Consequently a complaint was filed on the 24th November, 1992 seeking the insured amount with interest and damages amounting to Rs. 1 lac. In the counter filed by the Insurance Company, certain preliminary objections were taken but those were not pressed before the State Commission nor those were pressed before us, and, therefore, it is not necessary to refer to them. On merits the basic plea taken was that the loss of the complainant was different from that which was covered under the policy. It was pleaded that the shoddy yarn which was destroyed in the premises was not covered by the policy as it was not handloom product. It was also pleaded that the relevant stock register, cash book, ledger and other account books were not produced before the Surveyor and thus the report of the Surveyor was delayed. It was also pleaded that the non-production of those books violated condition No. 6 of the policy.

OPPOSITE Party No. 2 i.e. the State Bank of India also filed a counter supporting the complainant. The stand taken by it was that the insurance policy fully covered the fire risk of all the stock and types of the products like yarn, fabric and other goods of like nature lying on the insured premises. It was admitted that stocks worth Rs. 138,375/- and odd were lying in the factory on 26th May, 1992 and therefore, it was pleaded that the insurer was liable to pay Rs. 1.25 lakhs alongwith interest.

IN support of the complaint, Shri Naresh Kumar placed on record his affidavit alongwith the insurance cover note and other documents, the authenticity of which was not challenged by the opposite party. Mr. Naresh Kumar was cross-examined on behalf of the Insurance Company and as remarked by the State Commission without eliciting anything in its favour. In rebuttal the Insurance Company put in the affidavit of Shri H.V. Tiwari, Assistant Administrative Officer of the Insurer and Shri T.S. Bhayana, Surveyor. The report of the survey was also placed on record. Both the deponents were cross-examined on behalf of the complainant.

AFTER consideration of all the evidence and documents placed on record the State Commission came to the opinion that all the materials stored in the premises of the complainant including shoddy yarn were the subject matter of the Bank''s floating charge upon them and it was this risk which the Bank had expressly got insured.

THE State Commission concluded its findings as follows: ''To conclude it has to be necessarily held that the rejection of the complainant''s claim was patently arbitrary and unwarranted if not mala fide. The terms of the insurance cover squarely included the destroyed stocks and the report of the Surveyor was wholly warped by a mis-quoting of the details of the Insurance cover either deliberately or otherwise lending support to the complainant''s stand that this was done owing to extraneous consideration. The cross-examination of the insurer''s own witnesses shows up their stand in a patently lurid light. That there is a patent and glaring deficiency in the insurance services undertaken to be rendered is written large on the face of the record". On the basis of the above findings, the State Commission passed the impugned Order and awarded sums as noticed above to the complainant. Feeling aggrieved the Insurance Company has come before us by way of this Appeal.

Before us it was not argued that the shoddy yarn which was destroyed in the fire was not covered under the Insurance Policy. Otherwise also we have carefully gone through the order of the State Commission and we do not find anything to hold that the risk of shoddy yarn was not covered under the policy.

IT was forcefully contended on behalf of the appellant-Insurance Company that the insured violated Condition No. 6(B) of the Insurance Policy. The relevant portion of the Clause reads as follows: "Particulars of all other insurances, if any. The insured shall also at all time at his own expense produce, procure and give to the Company all such further particulars, plans, specification books, vouchers, invoices, duplicates or copies, thereof, documents, proofs and information with respect to the claim and the origin and cause of the insured perils and the circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonably required by or on behalf of the Company together with a declaration on oath or in other legal form of the truth of the claims and of any matters connected therewith".

IT was urged on behalf of the appellant that the complainant did not produce account books like cash book, ledger, stock register etc. when demanded by the Surveyor. The claim of the insured was not repudiated on the ground that the insured had violated any condition of the insurance policy. The repudiation letter is at page 37 of the paper book and the relevant portion of it reads as follows : "Consequent upon the survey report of Mr. T.S. Bhayana that stocks shoddy yarn is not covered under the policy, hence your claim is repudiated and filed as no claim, which please note." Naresh Kumar, complainant, during his cross-examination has stated that the Surveyor had not asked for the accounts books and stock registers from him.

The complainant must be submitting his monthly accounts to the Bank and the Bank has admitted that on 26th May, 1992 stocks worth Rs. 1

8,375/- AND odd were lying in the factory. It would not be out of place to mention here that before the State Commission it was not urged on behalf of the Insurance Company that the claim of the complainant was prejudiced by the non-production of the accounts books etc. Of course, in the memorANDum of appeal in paragraph 8 it is alleged that violation of the Policy Condition No. 6 was assailed before the State Commission which has ignored it. Except while narrating the pleas of the parties the Order of the State Commission does not at all contain any discussion about non-production of the stock register, account books AND other essential documents. As noticed above, the claim was not repudiated on the ground of the non-production of 4he account books but on a different ground.

AS the stocks were hypothecated with the Bank, statements must be available with the Bank and the Surveyor could have perused them if he required them for preparing his report. It appears that the Surveyor was not particular about the account books as he was of the opinion that the loss was not covered under the Policy. Hence we hold that no condition of the policy I was violated. In the light of the above discussions we do not find any force in the present appeal and dismiss the same. No costs.