M. Shreesha ORDER
M. Shreesha, Member
1. Aggrieved by the order dated 16.04.2015 in CC No. 48 of 2006 passed by the State Consumer Disputes Redressal Commission, Tamil Nadu (for short the "State Commission"), New India Assurance Company Ltd. (for short "the Insurance Company") preferred the present First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"). By the impugned order, the State Commission has allowed the Complaint in part directing the Insurance Company to pay a sum of 54,46,940/- with interest @ 9% p.a. from 04.08.2006 till the date of payment together with compensation of 25,000/- and costs of 10,000/-.
2. The facts in brief are that the Complainant is an SSI Unit trading in edible oil and availed the financial assistance from the Second Opposite Party, hereinafter referred to as "the Bank" and insured for a period covering from 13.08.2005 to 12.08.2006. It is stated that the Complainant's Unit is equipped with two underground sump tanks, four rectangular tanks and two over-head tanks connected with necessary pipelines for the purpose of loading and unloading oils. It is also having packing machines and filtering machines along-with necessary electrical fittings, located in a plot area of approximately 10,000 sq. ft. protected on all sides with 8 ft. high compound wall, a main steel panelled gate and also a wicket gate. It is averred that the factory premises was well secured in all respects.
3. While so, there was heavy incessant rains on 26th and 27th October, 2005 due to which there was a flood and the rain water entered into the Complainant's factory premises eroding the soil in the underground sump and damaging the pipeline connected to the storage tank thereby damaging the entire stock of R.B.D. Pamolein Oil around 1,37,549 kgs worth 55,77,058/- and also packing materials worth 1,20,000/- which got washed away with the flood causing heavy losses. It was also pleaded that assets of unit worth about 1,50,000/- were also ruined thereby causing a total loss of 60,47,058/- due to inundation. The same was intimated to the Insurance Company on 28.10.2005 through phonogram, telephone and telegram and on 29.10.2005 and followed by a detailed Complaint in writing. A Police Complaint was lodged on 01.11.2005. The Surveyor inspected the unit on 29.10.2005 and vide letter dated 03.11.2005 called upon the Complainant to furnish the Claim Forum together with other documents as required by the officer of the Insurance Company with the request to settle the claim early. On 24.11.2005, the Unit was inspected by another officer by name Mr. R. Selvaraj and the Complainant once again submitted all the necessary documents i.e. lease agreement copy, EB card, sales tax registration certificates, stock register etc. On 29.12.2005 M/s. J.B. Boda Surveyors Pvt. Ltd., inspected the unit and submitted their Report on 30.12.2005 erroneously stating that the incident occurred on 26th and 27th December, 2005 whereas the actual incident occurred on 26th and 27th October, 2005. The documents required by the Surveyor were once again submitted on 05.01.2006 with the request to furnish the claim at the earliest. On 03.01.2006 nearly 70 days after the incident, the officers of the Insurance company collected samples of remnants at the bottom of the storage tank for testing. The Test Report alleged to have been obtained by the Insurance Company states that the analysis reveals that the sample collection was not meeting the required specifications. The Complainant averred that when the entire stock of the oil stored in the tank was washed out because of the floods on 26th and 27th of October, 2005 the remnants collected after 70 days will not meet the required standards and this analysis is not of any use.
4. On 30.02.2006, the Complainant requested the Insurance Company to settle the Claim and also got issued a legal notice on 12.04.2006 but there was no response. Hence the Complaint seeking directions to the Insurance Company to pay the claim amount of 60,47,058/- along with interest @ 18% p.a. and other costs. The direction was also prayed to the Bank to waive the entire interest charged from the date of incident i.e. 26th and 27th October, 2005.
5. The Insurance Company filed their Written Version admitting to the issuance of the Policy covering the period 13.08.2005 to 12.08.2006 for a sum assured of 66,00,000/-, but contended that the Complainant did not take care and caution to engage a watchman or security guard to safeguard their premises and, therefore, violated the terms and conditions of the Policy. It was denied that any Complaint was given on 28.10.2005 through phonogram or telegram. It was stated that the letter dated 29.10.2005 was received by the Insurance Company only on 31.10.2005 and they deputed the Surveyor and thereafter appointed an independent Surveyor M/s. J.B. Boda Surveyors Pvt. Ltd. who stated that the storage tanks were empty as there was no transaction at the premises for several months and it is only to cover their business loss that the Complainant has filed this false Complaint. It is also averred that the Police Complaint was lodged belatedly on 01.11.2005 and that the Complainant did not submit required documents despite letters dated 30.04.2006, 12.05.2006 and 17.05.2006 calling upon the Complainant to submit all the original purchase bills, sale bills, stock register, cash book, day book, ledger, accounts details, invoices, product descriptions of last three years, but the Complainant did not comply. The test conducted on the factory premises on the available specimen of oil shows that the oil was contaminated on having been kept for a long period of time and did not conform to PFA specifications. In the absence of any quality certificate in respect of the various purchases of the stock inwarded into storage tank, long storage of the product without affecting any sale, mixing of product of stores from various supplies etc. has downgraded the quality and, therefore, the claim was declared fraudulent.
6. It was further pleaded that there was no rain on the specified dates i.e. 26th and 27th October, 2005; there was no transaction of business for the past several months; no stock statements were produced by the Complainant; there was glaring defects in the documents submitted and, therefore, there is no deficiency of service on their behalf in repudiating the claim.
7. The bank filed their Written Version stating that it is an unnecessary party to the Complaint and that the Complainant has availed cash credit facility of 60 lakhs and executed security documents for the same.
8. The State Commission based on the evidence adduced allowed the Complaint in part with the afore-noted directions.
9. Learned Counsel appearing for the Appellant/Insurance Company vehemently contended that the non-settlement was justified as the Official Surveyor M/s. J.B. Boda Surveyors Pvt. Ltd. visited the factory on 29.12.2005 and observed that the stock record/books of accounts were not available in the premises during his visit; that the supporting documents and stock registers were not made available to the Surveyor; that the samples collected on 03.01.2006 and tested in the laboratory showed that the oil was stored in the Bank for a very long time and did not conform to PFA specifications; despite repeated communications the Complainant did not furnish the relevant documents and that the Survey Report was filed before the State Commission on 15.12.2011 and that Survey Report dated 23.03.2009 assessed the loss to 21,27,332/-.
10. At the outset the contention of the Insurance Company that there was no such rains on 26th and 27th October, 2005 is unsustainable as the Preliminary Surveyor in his Report confirmed that there was very heavy rainfall/floods and inundation in that area on those two dates and even the Final Surveyor in his cause of loss has stated the same. The Preliminary Surveyor has observed as follows:-
"Details of Loss:
Due to the continuous rain the factory was surrounded by water. Due to the water pressure the underground tank which was empty has been lifted. The pipeline connecting the underground tank and the storage tank was bend and twisted. The pipeline has broken the A/c sheet roof and at the ball wall joint it was cut off. Since the pipeline was cut off, the palmoline oil of 137.549 tones which was stored in the first storage tank has been leaked out and washed away by the running water. The other tank was at the back of the first tank which was empty. The oil was stored only in the first tank.
The rate of 1 litre of palmoline oil is 39.60/- and the value of 137.549 tones of oil which was lost is 54,46,940/-.
On the event date of 27.10.05 no one was inside the factory. The watchman who was staying inside the factory has been admitted in the hospital due to illness.
The operator one Mr. Narayanan visited the factory on 28.10.05 and noticed the breakage in the pipeline and traces of oil on the ground. He immediately reported the incident to the proprietor A.M. Srihati, who rushed to the factory and noticed the loss. He immediately informed the insurer and also the bankers.
On my visit I have noticed the underground tank which has been lifted due to water pressure. The damaged pipeline was also examined and the broken pipeline at the ball valve was also noticed by me. Traces of oil was also seen on the ground. I have also enquired nearby persons and some people confirmed traces of oil along with the water. But there was no panic about the huge quantity of lost oil. Probably the incident might have happened in the night of 26.10.05. The stock book has been verified and the stock also confirmed the quantity. The bank statement is also verified.
Insured is maintaining the stock from August onwards awaiting for better price to sell in the market. There was no major transaction either in trading or in processing from May 2005 onwards.
The stock of oil on the event date other than the above lost oil is 3859 kgs of sunflower oil and 16,690 kgs of soyabean oil which were stored in the shop floor tank. The value of stock as on event date is 58,36,220/-."
(Emphasis Supplied).
11. From the afore-noted report it is evident that the underground tank and the pipeline were damaged, traces of oil were seen on the ground, stock book and bank statements were verified and that the Insured was maintaining the stock from August for better sale price and the stock of oil on the date of event was 3859 kgs. of sunflower oil and 16,690 kgs of soyabean oil which were stored in the shop floor tank the value of which was 58,36,220/-.
12. It is pertinent to mention that M/s. J.B. Boda Surveyors Pvt. Ltd. has stated that the Insurance Company had arranged analysis of the sealed samples which were handed over to him during the Survey. This was done in the lab of M/s. Interek Caleb Brett India Pvt. Ltd. and according to their report dated 30.01.2006, the sample of RBD Palmolein did not conform to PFA requirement. It is further observed by him that Mr. V.G. Selvaraja, an Investigator from Chennai was appointed soon after the appointment of Preliminary Surveyor. It is relevant to mention that M/s. J.B. Boda Surveyors Pvt. Ltd. have themselves noted that as their appointment was two months after the incident the opportunity of observing vital evidences/collect relevant information/documents was missed which could have been possible if the inspection was done soon after the incident. Therefore, we are of the view that the analysis which was done 70 days after the date of incident specially when the loss was on account of heavy floods and inundation caused because of damaged tanks and pipelines, the report that the oil was contaminated due to being stored for a very long period, of time, cannot be sustained.
13. The stand of the Insurance Company that no reasonable care was taken and there was no watchman present at the premises is also untenable as in the Preliminary Survey Report (Ex. A-24) it is stated that the watchman who was stated to be in the factory was admitted in the Hospital due to illness and, therefore, it cannot be said that the Insured did not take reasonable care regarding that aspect.
14. The other contention of the Insurance Company that there was deliberate delay on the part of the Complainant in informing them is totally untenable keeping in view the letter sent by them on 29.10.2005 (Ex. A-3 and A-4) and also the Police Complaint (Ex. A-5) is dated 31.10.2005 when the incident itself occurred on account of the floods on 26th and 27th October, 2005. Viewed from any angle, the intimation on 29.10.2005 cannot be construed to be a deliberate delay on behalf of the Complainant.
15. With respect to the quantum of loss, we find it a fit case to place reliance on the letter sent by the Manager, State Bank of India, addressed to the Insurance Company (Ex. A-15) that the Unit was inspected by their officials and the purchase invoice No. 63 dated 03.08.2005 for the value of 3,81,724/- and stocks of RBD Palmolein of quantity of 1,38,629 kgs and also soyabean oil quantity of 16690 kgs were verified by the officers of the Bank and, therefore, we find that the State Commission has rightly observed that the quantum of loss can be based on this letter given by the Bank which has hypothecated the stock.
16. It is also pertinent to note that the Complaint was filed before the State Commission on 04.08.2006, whereas the Report of M/s. J.B. Boda Surveyors Pvt. Ltd., dated 23.03.2009 was filed before the State Commission only after the Complainant had requested for it, on 15.12.2011. This act of the Insurance Company in filing the Survey Report after 5 and half years of filing of the Complaint is deprecated. We find no illegality in the observation made by the State Commission that the report of M/s. J.B. Boda Surveyors Pvt. Ltd. is based on assumptions and technicalities and does not reflect the factual loss. At this juncture, we find it a fit case to place reliance on the Judgement of the Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. & Anr. MANU/SC/1500/2009 : (2009) 8 SCC 507 in which the Hon'ble Apex Court has deprecated the stand of the Insurance Company in appointing one Surveyor after the other without given specific cogent and satisfactory reasons. Even in the instant case the Preliminary Survey was done on 30.10.2005 and thereafter an Investigator was appointed and still thereafter M/s. J.B. Boda Surveyors Pvt. Ltd., was appointed whose report is dated 23.03.2009 and at the cost of repetition the same was filed before the State Commission only on 15.12.2011, five and half years after the Complainant has filed the Complaint. This is contrary to Regulation 9 of IRDA which stipulates that the Surveyor has to file its Report within 30 days from his appointment. New India Assurance Company Ltd. Vs. Luxra Enterprises Private Ltd. & Anr. MANU/SC/0644/2019 : (2019) 6 SCC 36, the Hon'ble Apex Court has clearly laid down that rejection of report of its own Surveyor by the Insurance Company in the absence of any valid reason or proof that the report was arbitrary or excessive cannot be sustained. Though, the Learned Counsel for the Insurance Company has relied on Section 64(um) of the Insurance Act 1938 to state there was no prohibition in the Insurance Act for appointment of another Surveyor, in this instant case there was no cogent reason given by the Insurance Company to appoint one Investigator and again another Surveyor. Hence, we are of the view that both the afore-noted judgements rendered by the Hon'ble Supreme Court in Sri Venkateswara Syndicate and in Luxra Enterprises Pvt. Ltd. (mentioned supra) squarely apply to the facts of this case.
17. For all the afore-noted reasons, we see no illegality or infirmity in the order of the State Commission and hence this Appeal is dismissed. The statutory amount shall stand transferred to the Consumer Legal Aid Fund. The amount deposited by the Insurance Company before this Commission in compliance of the order dated 06.08.2015 shall stand released to the Complainant forthwith and needless to add, the same shall stand adjusted from the decretal amount.
18. The Appeal stands disposed of accordingly.
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