VALLARUPALLI VANAJA vs NEW INDIA ASSURANCE CO. LTD.

THESE are a set of three Appeals; two Appeals F.A. 778 and 780 are filed by Vanaja and F.A. No. 779 of 2003 is filed by N. Viswanadham, father of Vanaja as their complaints in CD 37/ 99, 38/99 and 39/99 were dismissed by the State Commission by a common order dated 27.8.2003. The facts are similar in all cases and hence these are being disposed of by a common order. Both Vanaja and Viswanadham run poulty business. Young chicks are purchased from other parties and they are grown into matured birds by the appellants and then sold in the market The young chicks pass through various stages during their growth known as brooders, growers and layers and are shifted in the farm to different sheds respectively known as brooder sheds (young chicks are kept till they reach the age of 8 weeks ), Grower sheds (where birds are kept from 8 weeks age to 22 weeks age) and layer sheds (where they remain till they reach 72 weeks of age).

INSURANCE policies are taken from the respondent Company, New India Assurance Co. Ltd. to cover the risk of death of these birds during the period of their breeding. According to the terms of the policy, no claim is permitted within the first 15 days from the commencement of the policy. Liability of the Insurance Company for the subsequent period is also limited to 80% of the cost of the dead birds. There is no dispute between the parties about these conditions. The dispute is only about the liability of the Insurance Company for the death of the birds which occurred after the first 15 days. In the matter covered by F.A. No. 778, the facts are similar and Smt. Vanaja states that she purchased 12500 of 20 weeks of age from one E. Krishniah. In all 9138 are claimed to have died during the ages of 25 weeks, 26 weeks and 27 weeks and again in 39 weeks, 40th week, 41st week and 42nd week due to sunstroke. A claim of Rs. 5,48,280 was made against the respondent.

IN the matter covered by F.A. No. 779, the appellant Shri N. Viswanadham is the father of Smt. Vanaja. He claims that he purchased 10156 birds of 24 weeks old age of which in all 6764 birds died during the 3VA, 32nd and 33rd weeks due to cholera and in the 41st, 42nd, 43rd and 47th week due to sunstroke.

IN the matter covered by F.A. No. 780, Smt. Vanaja''s case is that she bought 15750 birds of 5 weeks age (brooders) from one Shri Krishniah, though her father N. Viswanadham, who himself is a poultry farmer (and who himself is also the appellant in F.A. 779/2003). The insurance policy was taken soon after their purchase and insurance premium was paid. Out of these birds, some birds died in their 10th week due to a disease called "Coxydiasis". Again in the 11th week some more died due to the same disease. Further in the 20th, 21st, 22nd and 23rd week more birds died due to sunstroke. It was stated by the appellants that the 1998 summer in the area was very severe with temperature varying from 42 Centigrade to 49 centigrade. In this particular case a total of 10,060 birds died and the Respondent Insurance Company was informed of the deaths as and when they took place. As the birds were insured for a peak value of Rs. 75 each in all a claim of Rs. 6,03,600 (i.e. 80% of the loss) was made against the respondent. In the two cases, F.A. No. 778 and FA No. 779 respectively, the Surveyor appointed by the Insurance Company recommended acceptance of the claim to the extent of Rs. 1,56,720 ( for 2737 birds) and Rs. 88,948 (for 1917 birds). However, subsequently the Insurance Company seems to have appointed an Investigator. However, as there was no reply from the Insurance Company, a legal notice was issued by the Complainant in all these cases on 28.9.1998. The respondent Insurance Company repudiated the claims on 18.12.1998 on the ground that; (i) the purchase vouchers submitted were found to be false; (ii) that the total number of birds shown as received is much more than the actual holding capacity of the sheds; (iii) that the appellants gave different stock figures (of birds) to different Insurance Companies; (iv) that the insurance policies have been taken for the same birds with different Insurance Companies on different dates; (v) that the birds were transferred from one shed to another without prior intimation to the Insurance Company in contravention of the policy; (vi) that the birds of different ages were mixed up in the sheds denying the opportunity for identification of the birds; and (vii) no proper records were maintained to show day-to-day mortality. Aggrieved by this repudiation, the complainants approached the State Commission which dismissed the petition, especially on ground that the complainants failed to adduce any evidence to show that the purchase of birds were genuine. The parties have come in appeal before us.

WE have examined the records and heard both the parties. The main argument of the respondent, Insurance Company is that the purchase of the birds of various ages by the complainants has been denied by the so-called sellers. In F.A. 778 and F.A. No. 780 the purchases were deemed to have been made from one Shri E. Krishniah of M/s, Venkateshwar Hatcheries on 1.2.1998 and on 29.1.1998 respectively. In both these cases, put together the complainants alleged that they purchased 28,250 birds. However, according to the report of Mr. B. V.N. Reddy, the Investigator, (Ex. B-8) Shri E. Krishniah has at Kaldari, West Godawari District, only a shed of capacity of 2100 birds and that Shri Krishniah has stated that he has not sold any birds to any one since January, 1997. The Investigation Report states that a letter issued by Shri E. Krishniah is enclosed to the report. However, no such letter from Shri Krishniah has been brought on record. In F.A. No. 779, the complainant avers that he purchased 10,150 birds of the age of 24 weeks from one Shri K Suryanaryans of M/s. Srinivasa Hatcheries, Vijayawada.

ACCORDING to the Investigator, Shri Suryanaryana has not sold the birds and the signature of Shri Suryanaryana does not tally with his alleged signatures. The argument of the respondent is that the insurance policy issued on the basis of trust and good faith and that since alleged purchases of subsequently have not been proved, they are under no obligation to any insurance claim. It is essentially on this ground that the State Commission dismissed the complaint. Most of the birds in all these three cases died during period first week of March till middle of June 1998. The period can be again sub-divided into two periods. The deaths in the month of March were due to Fowl cholera disease. After a healthy gap, deaths occurred again from middle of May to middle of June allegedly due to sunstroke. It has not been denied by the respondent that intimation of deaths have been given from time-to-time. Separate Surveyors have been appointed in each case to verify the first phase of the deaths i.e. due to Fowl cholera.

IN the case of F.A. 778 when G.V.V. Satyanarayana was appointed as Surveyor and he submitted his report on 30.4.1998. The report is on record and the Surveyor clearly states that he conducted surveys from 16.3.1998 to 23.3.1998 and again on 25.3.1998, i.e. in all he visited the premises and conducted his surveys on 9 days. The Surveyor clearly states "I have regularly visited the farm from 16.3.1998 to 23.3.1998 and physically counted the dead birds. I again inspected the farm on 25.3.1998 after controlling the mortality and physically counted the live birds existed." He has recommended that upto the period 23.3.1998,2737 birds have died and claims should be accepted for Rs. 1,56,720.

WE are unable to understand why no cogent reasons have been given by the respondents as to why this detailed Survey report has been rejected. The fact that the birds died in large numbers has not been challenged and must be taken as proved, especially since there is a doctor''s post-mortem report also. In this case, i.e. F.A. No. 778, the second phase of death started from 17.5.1998 and continued upto 13.6.1998. The complainants argue that these deaths are due to sunstroke and that this information has been eported regularly to the respondent, Insurance Company. We are unable to understand why Surveyor has not been appointed to cover this subsequent period by the respondent and no reasons have been adduced for the same. Investigator''s report on which the respondent exclusively relies has come into his hands only much later namely 28.10.1998. It is not at all clear as to what reasons impelled them not to immediately investigate the alleged losses from 17th May, 1998 to 13th June, 1998. The very fact that no cognizance has been taken of these deaths and that no Surveyor has been appointed itself is a case of gross negligence and amounts to deficiency in service in our opinion. Now coming to the question of source of purchase of birds, the Surveyor''s report states that as per the poultry record book the purchases were made from M/s. Vishaka Hatcheries Pvt. Ltd., Secunderabad. The insurance policy which is on record also shows the date of hatching as 20.9.1997 and that they were purchased from Vishaka Hatcheries Pvt. Ltd. The Investigator''s report, however, shows that these birds which were hatched on 20.9.1997 were purchased on 5.2.1998 from Shri E. Krishniah of Kaldari, West Godavari District. The poultry record which is on file shows that these birds were purchased on 1.2.1998. There are, thus discrepancies in the report of the Surveyor and the report of the Investigator which have not been reconciled, first one saying that purchases are from M/s. Vishaka Hatcheries Pvt. Ltd, Secunderabad and the other saying that it is from Shri E. Krishniah of Kaldari, West Godavari District.

THE appellant in her statement states that the purchases were made from Shri E. Krishniah of Visakha Hatcheries. It appears that E. Krishniah has poultries at Secunderabad as well as at Kaldari. The small size of the poultry sheds of Shri E. Krishniah of Kaldari relied upon by the respondent cannot be evidence to show that Shri Krishniah does not have other poultry shed at other places or that he has not sold the birds to the complainant. There could also be many other reasons as to why the real seller may not like to accept his sales. The findings recorded in the insurance policy at the time of the issuance of the policy cannot be easily discarded unless there is clear evidence that no purchases were in fact made. As stated above, the complainant''s poultry records, the insurance policy document itself, and the Surveyor''s report, all clearly show that the birds were in existence prior to the disease and the birds did in fact die. As required by the Insurance Company, a Poultry Doctor''s certificate in the form prescribed by the Insurance Company itself has been issued by one Dr. Narendra Babu on 1.4.1998 after his visit to the farm on 29.3.1998.

IN F.A. No. 779, the facts are slightly different. The deaths in this case started about five weeks earlier. The death started from 31st January, 1998 and deaths occurred in 3 phases. In the first phase from 31.1.1998 to 20.2.1998 in all 1972 birds died according to the complainant and the Surveyor one Shri Augusteen, in his report dated 17.5.1998, clearly admits this fact. At para '']'' of his report addressed to the Divisional Manager, New India Assurance Co. Ltd, Vijayawada, the Surveyor states : "You have paid one claim on the same batch previously relating to Fowl cholera disease with mortality of 1972 Nos. at the age of 33rd week." This corresponds to the above period and the Surveyor''s report shows that at least an internal decision must have been taken by the respondent to clear this claim. In the second phase, i.e. from 10.4.1998 to 23.4.1998, 2324 birds died in the 41st and 42nd weeks. This period is covered by the Surveyor''s report and the Surveyor confirms the death of these birds. Surveyor visited the premises during 14 days, i.e. from 11.4.1998 to 23.4.1998 and again on 30.4.1998. He further states "During the course of my investigation I have counted the dead birds and the same were buried in my and the insured''s presence.... The maintenance of poultry farm was found good and hygienic conditions are prevailing...The insured had given vaccine from time-to-time as per Hatchery Vaccine Schedule....As per the post-mortem report conducted by Dr. Narendra Babu Tanuku, the cause of outbreak is notified as Fowl cholera."

HAVING noted that the respondents had accepted the claim for 1972 birds, which died at the age upto 33rd week, the Surveyor recommended payment of a separate amount of Rs. 88,948 towards birds which died in the second phase, i.e. in the 41st and 42nd weeks. No cogent reasons have been adduced by the respondent, other than the vague report that too on a much later date of the Investigator, as to why the detailed Surveyor report has not been accepted. We are unable to understand why no reasons have been adduced as to why no Surveyor has been asked to survey the subsequent 2215 deaths due to sunstroke in the third period between 15.5.1998 and 4.6.1998.

NOW coming to the question of source of purchase, the insurance policy itself clearly shows that invoice Nos. 373,372 and 496 dated 4.7.1997 and invoice No. 488 dated 3.7.1997. In the Hatchery Register, the purchase is shown as from Srinivasa Hatcheries and the date has been shown as 26.10.1997 at one place and also on 15.12.1997 at a different page. In the Surveyor''s report, the source of supply of the breed is shown as Srinivasa Hatcheries Pvt. Ltd., Vijayawada. The Investigator in his report said that the purchase was made on 20.1.1998 from one Mr. K. Suryanaryana of Tanku, West Godavari District. Investigator''s report states that according to Mr. K. Suryanaryana that he has not sold birds to anyone. However, there is no such statement of Shri K. Suryanaryana on record. Investigation report further states that signature of Shri K. Suryanaryana did not tally and that the photo-copy of the original signature of Shri Suryanaryana is enclosed with the report. No such photocopy is available on record. As stated above, the report of the Investigator is given much after the alleged death and is dated 28.10.1998. An undated Surveyor''s report by one Mr. B. Subramaniya Shastry has been filed by the respondent on 2.2.2005 that on 11.6.1998 he conducted a physical counting and found very few dead birds. Not much reliance can be placed on this undated report filed so late in the day. A reference has also been made by the respondent to the report of Mr. P. V.S. Sitaraman, Surveyor Eluru, which according to him throws some doubt on the morals and nature of the insured. No such report is available on record. As regards F.A. 780, the claim is that 10,060 birds died during the periods 5.3.1998 to 18.3.1998 and again from 16.5.1998 to 12.6.1998 and a claim of Rs. 6,03,600 was made. While the Investigator''s report indicates that the reports of the Surveyor, G.V.B. Satyanaryan are under scrutiny by the Insurance Company, the Survey reports themselves relating to this case are not brought on record. The reasons are not known.

THE other arguments taken by the respondent are that the complainant did not maintain flock records properly or shown day-to-day mortality, culling, vaccination of birds, feed consumption, egg production, de-beaking, de-worming birds, etc. These are vague statements which are not of much evidentiary value. The insurance policy filed on record does not indicate that these are mandatory requirements in case of a claim.

AN other argument of the respondent is that the complainants have taken multiple insurances and made multiple claims. There is no substance in this claim too. The appellants have taken in addition to the three insurance policies involved in these three appeals, some other policies with the same respondent, namely New India Assurance Co. for different set of birds. In addition, he has taken one policy for 8200birds from M/s. United Insurance Co. Ltd. A photo-copy of the letter issued by the wife of Shri N. Vishwanatham to the Branch Manager, M/s. New India Assurance Co. Ltd. Bhimavaram Branch withdrawing her claim on the ground that they have another policy with the same company at the Eluru Divisional Office has been cited as an evidence. It appears that when the complainant realized that the claim was mistakenly made, the scheme was withdrawn. We do not feel that this has any relevance to the issue whether the present claim should be accepted or not. The Insurance Companies are also required to take the minimum precaution of verifying the initial stock of birds at the time of issuing the insurance policy. If they have issued any such insurance policy without even verifying the number of birds it can only be either by collusion or because of gross negligence. In either case they should bear the consequence of having issued an insurance policy wrongly or collusively. On the basis of some alleged discrepancies in the purchase vouchers one cannot deny that there were no birds at all. There is ample evidence on record in the form of detailed reports of the surveys conducted over a large number of days and the Veterinary Doctor who certified the deaths that the alleged deaths in fact had taken place. As brought out earlier, the deaths in the second phase allegedly caused by the sunstroke have not even been surveyed and if surveyed, no proper record has been brought on record.

UNDER the circumstances it has to be held that there has been a deficiency in service by the Insurance Company in not accepting the claim and the complainant''s need to be given relief. The question arises that as to what type of relief can be given. In the absence of proper and adequate basic material on record, one option is to remand the case to the State Commission for a fresh trial. However, the case relates to the period 1998 and remand may result in a further delay of few more years.

IN F.A. No. 779, out of a claim of deaths of 2328 birds in the 41st and 42nd weeks, the Surveyor has allowed 1917 deaths. This works out to allowing 82% of the claim of death. In F.A. No. 778, out of the total claimed deaths of 3214 in the 26th and 27th weeks, the Surveyor recommended accepting 2737 deaths. This accounts for accepting 85% of the deaths. We, therefore, propose to adopt the figure of 80% of total deaths as a reasonable figure.

THE Surveyor has further calculated the claim at the rate of Rs. 58 per bird for the deaths which took place at the age of 41st and 42nd weeks. We propose to adopt the same figure for birds which died in the 41st week or thereafter. For birds which died at less than 41 weeks, we adopt Rs. 75 per bird.

IN F. A. No. 778, out of the total claimed deaths of 9138 birds, 6808 are aged less than 41 weeks and 2330 are aged 41 and 42 weeks. In F.A. 780, all the dead birds (10,060) are aged less than 23 weeks. In F.A. 779, out of a total death of 6764 claimed, 1972 are less than 41 weeks and 4792 are aged more than 41 weeks. The liability of the insurer under the policies is also restricted to 80% of the deaths. In addition, we note that the Surveyors have deducted 1% of the total flock, as a possible excess. This would mean a total deduction of 41%, (20% + 20%+l%) from the claims made. 28. Taking all the factors we assess the value of claim payable as 51% of the claim, taking value of prime birds at Rs. 75 and of older birds at Rs. 58 per bird. On this basis the amounts payable by the respondent in F.A. No. 778, 779 and 780 are Rs. 3,80,987, Rs. 2,51,243 and Rs. 4,45,155 respectively. The respondent, M/s. New India Assurance Co. Ltd. is directed to pay these amounts to the appellants within one month of the receipt of this order failing which the amount would carry an interest of 8%. Appellants are allowed with cost of Rs. 5,000 in each of the appeals to be paid by the respondent to appellants.