VINAYAKA COTTON CORPORATION vs National Insurance Company Ltd

THE complainant, Mr. M. Seetharamaiah, insured cotton barrels worth Rs. 4,50,000/- stored at the premises of Sri Dhanalakshmi Cotton Ginning Mill, Nallapadu Road, Guntur under Policy No. 550504/- 32002504/89 by paying premium of Rs. 5,344/- to the opposite party i.e., National Insurance Company Ltd. It was a Fire Policy ''C'' covering the stock of cotton barrels, seeds etc, from 3.4.1989 to 30.6.1989 (copy marked as Ex. A5). In a fire accident on 27.5.1989 at 7.20 p.m. there was a total damage of the stored cotton barrels. THE complainant immediately informed the opposite party and as per its requirement sent the duly filled in claim forms making claim for a sum of Rs. 4,16,354/- towards the value of the damaged stock. THE premises was inspected by the Surveyor but the claim was not paid. On 9.2.1990, the complainant received a letter from the opposite party stating that, the policy was not tenable in terms and conditions thereof and therefore, it was unable to entertain the claim. THE reply given by the opposite party did not disclose the grounds on which the claim was rejected. He, therefore, approached this Commission praying for directions to the opposite party to pay him a sum of Rs. 4,16,354/- with interest and award Rs. 50,000/- towards costs and damages.

IN the counter the opposite party questioned the claim of the complainant that cotton worth Rs. 4,50,000/- was stored in the premises on the day of the fire. On the basis of the Surveyor''s report it came to the conclusion that it was benami holding and that the complainant was keeping cotton barrels of other parties in the premises and that the business actually belonged to his brother. When the fire loss was reported, the opposite party immediately appointed an independent Surveyor Mr. M. Purnachandra Rao who submitted his report on 31.5.1989 (copy marked as Ex. B3) and concluded that the complainant could not establish that the above mentioned quantity of cotton was actually stored by it or belonged to it. The cause of fire was said to be a cigarette but thrown by some passerby, which was not very probable as it was not near the road and, therefore, it did not corroborate with the extent of loss claimed. The second report by Sri N.V.P. Sharma, Chartered Accountant and Valuer, dated 28.11.1989 (copy marked as Ex. B4) confirmed that the insurers had no liability under the policy because the complainant could not substantiate the loss as claimed by him through the available records or payment particulars for the kappas. On behalf of the complainant, his brother Sri M. Harikrishna, filed his afidavit and was cross-examined as PW 1. The proprietor of the complainant did not give an affidavit. Exs. Al to A7 were marked for the complainant. PW 1 stated that he started cotton business in 1982 and that Mr. M. Seetharamaiah (the proprietor of the complainant) was his brother and was looking after the present business. PW 1 admitted the earlier also he had insured with New India Assurance Company Ltd., and claimed Rs. 6 lakhs as loss from the said Insurance Company. However he denied the allegation that the Company has asked him to return the said amount as it was a false claim. He denied that he had given wrong information to the Surveyors and that he and his brother were themselves responsible for the fire. On behalf of the opposite party Exs. Bl to B6 were filed and RW 1 and RW 2 i.e. Mr. M. Poornachandra Rao and Mr. N.V.P. Sharma, Surveyor and Valuer respectively, were examined and also cross-examined on 18.7.1994. Subsequently on 13.2.1995 Mr. P. Meenakshi Sundaram, who conducted the investigation on behalf of the opposite party was also cross- examined as RW 3.

During the examination of RW 1 exhibits were numbered. Ex. B1 was the specimen copy of the fire policy. Ex. B2 is xerox copy of the Fire Policy No. 550504/32002504/89 which covered goods as per details for a sum of Rs. 4,50,000/-. RW 1 stated that it was a short policy for a period of about three months from 3.4.1989 to 30.6.1989. His preliminary survey report (xerox copy) was marked as Ex. B3. He surveyed the premises from the forenoon of 29.5.1989 till 30.5.1989 and he also went to Fire Brigade Station, Guntur. He stated that only one fire tender was engaged for extinguishing the fire and that it took only 15 minutes to extinguish the same. He introduced a bunch of photographs taken on the sight as Ex. B6. As per the photographs on the day of his visit to the sight, the heap belonging to the complainant was lying on the eastern side inside the compound wall starting from South-East corner. Within one or two feet of the complainant''s heap, the cotton boras heap of others were, also lying and their names were given in the report (Ex. B3). Strangely, even though the other heaps were so close they were not burnt; even the trees which were within the vicinity were neither charred nor burnt. He also signed their books of accounts and took xerox copies. He concluded that though there was some loss it was not to the extent claimed by the complainant and according to him the burnt cotton remains were only waste Zin-zems and not quality cotton. In cross-examination he averred that Ex. A6 (xerox copy of the Fire Report No. 51/89 dated 19.6.1989) showed that it took two hours to extinguish the fire but on his personal enquiry from the Fire Station he learnt that it took only 15 minutes. According to him the remains found on the premises were from waste cotton. According to the books of account, the cotton seed and cotton lint were valued at Rs. 4,64,305.72 Ps. basing on the market value on that date.

THE second Surveyor, Mr. N. V.P. Sharma, examined as RW 2, stated that after he scrutinised the account books he had come to the conclusion that the loss was not more than Rs. 2,500/- and as such there was no liability for the Insurance Company. He based his survey report on the detective agency report (xerox copy marked as Ex. B5) for which RW 1 requested the Insurance Company as he was not satisfied with the records available and the statements given by the complainant regarding the quantity of kappas purchased from farmers for ginning. He based his conclusions on the fact that though the list of farmers from whom the kappas were supposed to have been purchased was subsequently produced, there was no transport voucher or any other material to substantiate the same. According to him farmers did not come to the mill to sell their products and that it was the ginning mills which hired trucks to bring kappas from the farmers to the mills. RW 2 also asserted that the de-facto owner was the brother of the complainant and that he advised the Insurance Company not to pay the insurance claim. The detective Mr. P. Meenakshi Sundaram, examined as RW 3, stated in his deposition that after conducting a thorough investigation, he submitted his report (Ex. B5). As per the addresses given by the complainant from the records he wrote letters to 20 farmers with whom the complainant had allegedly conducted 23 transactions. He got replies from 12 farmers for 14 transactions and the remaining 8 did not reply. However, the handwriting in all the 12 letters were similar. Therefore, he suspected the genuineness of those transactions. Based on the books and records he concluded that only 14 purchases of kappas and 4 cotton lint sales were genuine. From the above facts we have to decide whether there was any deficiency in service on the part of the opposite party in repudiating the complainant''s claim by letter dated 9.2.1990 and whether the complainant was entitled to the amount claimed ?

WE find that the cotton ginning business was said to have been commenced on 13.2.1989 but the insurance was taken by complainant only on 3.4.1989 for a short period from 3.4.1989 to 30.6.1989 for Rs. 4,50,000/-. The cotton bales caught fire on 27.5.1989 at 7.20 p.m. and hence it was covered by the Fire Policy. However, the address and name of the insured given in the fire poly was Vinayaka Cotton Corporation at Kothapeta in Guntur but the fire took place in the premises of Shanalakshmi Ginning and Cotton Mill owned by the brother of the complainant where the bales were said to have been stored. The opposite party sent the two Surveyors Mr. Purnachandra Rao and Mr. N.V.P. Sharma promptly on 29.5.1989 to 30.5.1989 and 2.6.1989 respectively. They conducted preliminary and final surveys. On the suggestion of the Surveyor, Modern Detective Agency of Madras was asked to conduct investigation. The second Surveyor''s report was based on his own assessment of available records and material and also the report of the detective agency. Since it was a total loss, the loss could be assessed only based on books of accounts and records and their genuineness. It was observed that what was sold and what was ginned tallied within reasonable limit of accuracy. Therefore, it was concluded by the opposite party that no lint could have been present on the site which was supposed to have been burnt. The bank account was opened on 15.2.1989 and there was a balance of only Rs. 22,500/- The Surveyors found discrepancy between the figures quoted by the complainant and the bank account. Those two did not tally. The Police and Fire Brigade did not probe into the cause of fire. No FIR was filed. Then only issued certificate on the instructions of the insured. On the basis of the reports of two Surveyors and the detective agency the opposite party came to the conclusion that no cotton was stored at the premises of Vinayaka Cotton Corporation. In fact the letter written on the address by the Investigator was returned (Ex. B7) as the office did not function there at all. Cotton bales and seeds were burnt on the premises of Dhanalakshmi Cotton Ginning Mills Limited which was owned by complainant''s brother. The complainant could not produce satisfactory records and substantiate that 194 quintals of cotton and 57.44 quintals of cotton seed were stored in the premises on the day of fire. Cause of fire was also not very convincing and the Surveyor recommended that the loss was only Rs. 2,500/- and the opposite party need not pay anything. Opposite party, therefore, repudiated the claim on 9.2.1990. We, therefore, conclude that there was no deficiency in service on the part of the opposite party. They appointed two Surveyors and detective agency immediately and repudiated the claim based on their reports. The repudiation cannot be said to be unreasonable or arbitrary. In this we are supported by the decision of the National Commission in M/s. Janta Machine Tools v. Oriental Insurance Co. Ltd., I (1991) CPJ 508 (NC), and of the Punjab State Consumer Disputes Redressal Commission in Amrik Singh v. M/s. United India Insurance Co. Ltd., II (1993) CPJ 1144 where it was held that the rejection by the Insurance Company of the claim put forward by the complainant after obtaining and considering the Surveyor''s report could not be said to constitute a deficiency in service so as to give rise to cause of action for complaint under the Consumer Protection Act. We are, therefore, of the opinion that there was no deficiency in service on the part of the opposite party. The complaint is, therefore, dismissed. No costs. Complaint dismissed.