NATIONAL CONSUMER
DISPUTES REDRESSAL COMMISSION
M/s. Tanda Textiles and Processing
Mills Pvt.
Ltd.,
Administrative
Office,
Village Fatehpur, P.O. Surapur,
Tehsil Akbarpur,
Distt. Ambedkar Nagar 9U.P.)
Through its
Managing Director
T.L. Ratra ………
Complainant
Vs.
1. United India Insurance Co. Ltd.
Branch Office:
II Floor, Rekab
ganj,
Faizabad-224 001 (U.P.)
Through its Branch Manager
2. United India Insurance Co. Ltd.
Divisional Office,
Station Road,
Gonda 9U.P.),
Through its Dvisional Manager,
3. United India Insurance Co. Ltd.
Regional Office,
Arif Chambers, IInd
Floor,
Kapoorthala Complex,
Aliganj,
Through: it’s A.G.M.
4. United India Insurance Co. Ltd.
Head Office:
24,
Chennai 500 014
Through its G.M. & Managing Director
5. The Pradeshiya
Industrial and
Investment
Corporation of U.P. Ltd.,
Picup Bhawan, Gomti Nagar,
Through its Regional
Manager.
6. Uttar Pradesh Financial
Corporation.
14/88, Civil Lines,
Through its Regional Manager
7. Bank of
Tanda
Branch,
Tanda, District Ambedkar Nagar
(U.P.)
Through:Its Senior Branch Manager .. Opposite Parties
BEFORE:
HON’BLE MR. JUSTICE
M.B. SHAH, PRESIDENT
Mrs. RAJYALAKSHMI RAO,
MEMBER
For the
Complainant : Mr. S.K. Sharma, Advocate.
For the
Opposite Party : Mr. A.K. Raina,
(Insurance
Company) Advocate.
Dated the 9th day of February, 2007
O R D E R
M.B. SHAH, J.,
PRESIDENT:
M/s. Tanda
Textiles and Processing Mills Pvt. Ltd., situated at Village Fatehpur, P.O. Surapur, Tehsil Akbarpur, District Ambedkar Nagar (U.P.) has filed
this Complaint against the United India Insurance Company Ltd. & Ors.
(Opposite Party Nos. 1 to 4 – hereinafter referred to as the Insurance Company)
for recovering a sum of Rs.22 lakhs with interest and
compensation of Rs.10 lakhs on the ground that the
Insurance Company failed to pay the said amount in spite of the fact that as
per the insurance policies taken by it, the Insurance Company is required to
reimburse the Complainant for the loss suffered by it due to fire. The
Complainant has taken insurance policies for a sum of Rs.10 lakhs
and Rs. 12 lakhs totalling Rs. 22 lakhs operative from 20.1.98.
The
other Opposite Parties are: The Pradeshiya Industrial
and Investment Corporation of U.P. Ltd (Opposite Party No.5), Uttar Pradesh
Financial Corporation (Opposite Party No.6) and Bank of Baroda (Opposite Party
No.7) from whom the Complainant has taken loan for clothes.
During the policy period, fire broke
out in the complainant's premises on 27th/28th January,
1998 due to electric short-circuit, which destroyed the stock valued at
Rs.25.51 lakhs.
Undisputedly, the Complainant has taken
the first policy for the fabric goods, owned and held in trust lying in its godown at Surahjpur for a sum of
Rs.10 lakhs. Premium was also paid for which cover
note was issued on 15.1.1998. Thereafter, second policy for a sum of Rs.12 lakhs was taken on 19.1.98 for which also cover note was
issued. It has also been stated that the Complainant is taking insurance policy
from the Insurance Company from time to time as per its requirement.
Ordinarily, the complainant used to have stock of cloth insured upto to Rs.10 lakhs. But on
account of great slump (during that period) in the cloth business, in the
preceding periods, processed cloth had piled up and was got insured for a
further sum of Rs.12 lakhs on estimation.
The
fire in the godowns of the factory was noticed by the
guard of the Company, who in turn informed the Directors of the Company living
in the residential portion within the factory premises. On being informed, the fire Services
Squad reached the factory premises within half an hour and, finally, extinguished
the fire completely. An FIR was lodged at the Police Station, Akbarpur in the morning of
It is
the contention of the Complainant that the stock of insured goods are processed
and maintained as per the Central Excise Rules for which prescribed registers
are required to be maintained. Those registers are checked and verified from
time to time by Sector Officer,
Preliminary Survey Report:
On
“Godown Location & Nature:
As Physically found
by us, the godown of stock finished goods where the
fire loss occurred is situated within the factory in West side of the main shed
and approachable from two directions (1) from open yard in South direction and
(2) from main shed in West direction. The room allocated for the purpose is
having a single steel door entry and no other door or windows are there.
The detailed map is available with the
insured which we verified. The same was found approved by the Supdt. Central Excise,
Source
of Electrification:
Presently the
factory is being run through own generation of power for which the assured is
having three DG Sets of 200 KVA (1 No.) & 125 KVA (02 Nos.) and the power
supply from UPSEB stands disconnected w.e.f. 08.11.97
as the matter is under dispute and a petition is pending in the High Court, Lucknow.
The
Occurrence:
As per the FIR
Lodged by the assured on 27/28.01.98 with P.S. – Akbarpur,
as told to us verbally, they as usual, started the pump to refill the overhead
water tank with the help of DG Set at 10 PM till 11 PM on 27.01.98 and as
assumed, the Godown switch board caught fire due to
electrical short circuiting in the duration and ignited the synthetic finished
fabric kept there which could only be noticed at about 2.00 AM on 28.01.98 by
the security personnel when they saw the smoke coming out of the building and
raised alarm for fire extinguishing but remained in-effective in spite of all
efforts including fire brigade called from Akbarpur.
The entire stock valuing Rs.25,00,000/- was burnt to
ashes and could not be saved due to delayed detection of fire.
Cause
and Nature:
As per the text in
the FIR, report to the Central Excise Deptt. Claim
form completed and handed over to us, the fire occurred in the godown of finished stock due to electrical short circuiting
in the switch board of the godown which remained energised during 10 PM to 11 PM on 27.01.98 as the pump
was” started to refill overhead water tank in factory premises”.
Thereafter, the Surveyors stated that
they had verified the Daily Stock Account Register, Grey Register, Map of the Godown and they observed:
1. The records
shown including copies of the FIR, Information to Fire people, Information to
the Central Excise Deptt. Confirm the mishap and loss
sustained by the insured.
2. The residue of
the burnt synthetic fabrics was available in the godown
which was washed away/drained out & spread in other areas due to fire extinguishing
operations.
3. The quantum of
loss cannot be judged from the residue which is in the shape of burnt ash.
4. The occurrence
of fire in the godown having extensive nature was
visible from the burnt and blackened walls and burnt steel door from inside.
5. The godown was
having electrical wiring and switchboard which were also burnt.
6. The security
guard Shri Shyambir Singh
was questioned by us who was told to be on duty and
noticed the fire. His statement was got recorded and enclosed herewith. The
version is indicative of a fire occurrence in the stated night. There were two
more guards named Ram Kumar and Ram Milan accompanying the above person but not
present during the survey,
hence, could not be
examined.
7. The smoke mark
was visible all around the godown and inside the
factory shed through ventilators which also confirmed the occurrence of fire.
Adequacy of Sum Insured.:
The stock held by
the insured on the eve of loss was in the shape of finished goods and the raw
material as per record was not in the stock since 25.1.98. The mill functioned
till 25.1.98 and thereafter remained closed on 26.1.98 on account of weekly
rest and thereafter due to non-availability of raw material. The stock held
thus was as under:
Sl.No. Item
Qty. Rate Value
1. Polyster/Cotton shirting 96641.01
Mtr.
16/- Rs.15,46,256.16
2. Polyster/Cotton suiting 3152.51
“ 27.60
Rs. 86,694.02
3. 100% Polyster
shirting 30599.25” 16.00
Rs. 4,89,588.00
4. 3000TC
5. Poly.viscose shirting 416.88”
22.28 Rs. 9,288.08
6. Khadi (Poly Vastra)-I 10236.75 “ 33.33 Rs.3,41,190.88
7. Khadi (Poly Vastra)-II 1720.12 “ 24.00 Rs. 41,282.88
TOTAL STOCK VALUE Rs.25,51,963.47
The sum insured of both Fire Policies 'C'
is Rs.22,00,000/- only and the stock value stands to
be Rs.25,51,963.47 which is indicative of an under-insurance.
THE DETAILS OF LOSS
As per the list
prepared by the insured and a carbon copy handed over to us during the survey,
the loss was total in the shape of burn finished stock of processed fabrics
held on date which we have listed under adequacy of the sum insured. The value
of fabrics burnt is Rs.25,51,963.47 and the residual
value being zero as fully destroyed in fire. The stock held was under insured
as compared to the Cumulative sum insured of two fire
'C' polices taken by the insured. The goods were belonging to others listed at Sl.Nos. 1, 2 (Tanda,
Gorakhpur etc.) Sl.
4, 5 (Elgin Mills Kanpur) Sl.6 to KVIC & rest to
insured.”
Thereafter, as the insurance company
failed to settle the claim, notice was issued to the Insurance Company on
22.5.1998. On receipt of the notice, after a lapse of 4 months, the Insurance
Company replied by its letter dated 11.9.1998 that steps were being taken in
regard to claim but nothing was done.
Thereafter, on 23.11.1998 the
Complainant filed this Original Petition praying that the Respondents be
directed to pay a sum of Rs.22 lakhs to the
Complainant for the loss suffered; Rs.20,000/- as damages; and, a compensation
of Rs.10 lakhs. It is also prayed that the Insurance
Company be directed to pay penal interest which is charged by the Banks, i.e Respondent Nos. 5, 6 and 7 after the fire accident, and
also to pay exemplary costs.
As
against this, it is contention of the Insurance Company that on the basis of
the final survey report the claim is repudiated on 9.2.1999 on the ground that the insured had
made deliberate efforts by using manipulation of alleged magnitude of fire and
also the huge stocks alleged to be lying in the godown,
and, therefore, it had forfeited all benefits in view of Conditions 1 and 8 of
the Fire Policy. Hence, we would first
refer to some part of final survey report.
Final Survey Report
It is the contention of the Insurance
Company that after receipt of the preliminary report, Vinod
Sharma, surveyor and investigator, was appointed for the survey of the
Complainant's firm, who submitted his report dated 13.8.1998, doubting the
incident of fire as well as the quantity of fabrics. The surveyor opined that
the following issues required consideration and on
“ISSUES WHICH REQUIRES YOUR EXPERT OPINION
1.
When there is a fire to cloth Appx.
1.44 lakhs Mtr. of
polyester which consists of cotton also, can it be totally reduced to ash as
reflected in the photographs? Nothing remains in the shape of unburnt/semi-burnt pressed bales of cloth.
2.
Will it be possible in case so much stock is burnt, and
there is a small damage to the building i.e. Walls and roof. As per our
verification, not even cement plaster cracks were observed to the walls and no
damage was noticed on the walls except the walls were blackened due to smoke.
No damage to roof was observed except blackening.
3.
Is it possible to store 1.44 lakhs
Sq.Mtr. in a room of having size 16'x20'x25'?
Photographs in this
respect are enclosed. You are requested to issue your expert opinion report to
enable us to make a fair analysis/assessment of the loss. “
Thereafter, he submitted final report on
XVI CONCLUSION
Though the
insured's books of accounts and records shows that the Insured was having
stocks worth Rs.25,71,028.23, qty. 144199.68 sqmtr. on Trust which includes stocks worth Rs.4,89,588/- Qty.
30599.25 Sq.Mtr. Which is owned by them and stocks
worth Rs.25,51,963.47 lying in godown
which was reportedly burnt in said fire. However, our findings, verification
and as per report of the investigator, report of M/s. NITRA it is concluded that
so much stocks as claimed by the Insured was not lying in the affected godown where the fire took place. By the physical evidence
of the fire and based on our experience, so
much stocks as claimed by the Insured would have literally blown the walls and
roof of the godown which was found damaged more by
the smoke rather than the heat. There was a very minor damage due to small
fire to the building. Since the Insured has already removed the stocks since
the stocks were not found to be involved in fire. WE ARE ASSESSING THE LOSS AS
'NIL' TO THE STOCK OF FABRICS because whatever stocks is burnt, which was later on found in the shape of ash, might be due to
stocks of some rags cutting of cloth along with the waste chemicals etc. As
such, we are recommending the claim as 'NO CLAIM'.
XVII Regarding findings
of evidence to prove that the Insured has taken away the stocks that there
cannot be any direct evidence in this case because apparently, Insured has managed with their customers who have already
taken away the stocks or in case of those parties whose stocks is not returned,
the Insured might have sold it as its own without returning the same to the customers. Few
parties to whom the Investigators contacted clearly indicates that they are
also helping the Insured in inflating the claim from the Insurers.
XVIII REMARKS
1. We would like to
mention that there is common practice in textile industries that no electric
point is provided in godowns. This has been confirmed
by various Units and also by M/s.
2. The rates mentioned
in the claim Bill are declared to excise Deptt. For
excise purposes. The Insured did not submit any purchase bills/other documents
in support of rates for its own stocks as well as for stocks of other parties.
Submissions:
As against this, it has been pointed out
by the learned counsel, appearing on behalf of the Complainant that the report
submitted by Vinod Sharma, the surveyor is totally
against the documentary evidence. He has pointed out that the stock of entire
goods processed is required to be maintained as per the Central Excise Rules.
Those stocks were checked and verified on a number of occasions. For this
purpose the stock register, duly verified and checked, is produced on record.
That stock register was also verified by the preliminary surveyors, M/s. Naqvi & Company. He submitted that the stock which was
burnt was subject to Central Excise Duty and therefore, the Central Excise
Department conducted inspection on 28th January, 1999 and 3rd
February, 1999 by the joint team of Superintendent Range, Superintendent and
Preventive team from Divisional Office, Faizabad as
well as by the Anti-Evasion and Preventive Staff of the Commissioner, Central
Excise from Zonal Head Quarter at Allahabad. Hence, there is no reason to
disbelieve the say of the Complainant.
Findings:
In our view, the contentions raised by the
Complainant require to be accepted for the following reasons:
(i) Preliminary
surveyor visited the site on
In
our view, if such is the approach of the final surveyor, then it would be
difficult to arrive at a conclusion that his report is just or reasonable.
.(ii).
In the final survey report, it
has been stated that he was assessing
the loss caused as ‘Nil’ to the stock of
fabrics because whatever stock was burnt, was later on found in the shape of ash, might be
due to stocks of some rags cutting of
cloth along with the waste chemicals etc. This finding of the final surveyor is
totally perverse and without any basis.
The
preliminary surveyor who went to the spot within a day after fire observed that
the residue of burnt
synthetic fabrics was
available in the godown which was washed away/drained out and spread
in other areas due to fire extinguishing operations. This finding is based on the
visit of the site by the preliminary surveyor at the relevant time which
is based on personal observation. Hence,
the said evidence cannot be ignored.
Similarly,
the findings recorded
by the final surveyor that even
though there is no direct evidence, it was apparent that the insured
had managed with their customers
and might have sold the stock on their
own without returning the same to the customers. Such presumption can hardly be a ground for
rejecting the claim as the said presumption is without any basis or foundation.
On the basis of such presumption regular accounts maintained by the Complainant
cannot be disbelieved. In any case, there is no justifiable ground in not
accepting the accounts of the stock maintained under the Central Excise Rules
.(iii).
It is also established on record
that the said Central Excise Form register was checked by the Central Excise
Inspector prior to the date of incident.
It would be difficult
to presume that the Excise
Inspector committed any wrong in
checking the record of stocks on
The
Complainant has produced on record the
Inquiry Report dated 1.2.1998, which was conducted by the Sector
Officer, Central Excise Department, Faizabad
wherein it has been mentioned that as per the RGI Register goods worth
Rs.25,51,963/- were burnt. It is specifically stated that from the circumstances
and enquiries, it appears that there was no foul play on the part
of the assessee and the incident has occurred due to short
circuit.
.(iv). Further, in support of his
contention and to falsify the say of the final Surveyor he has produced on
record the report by the
“Please refer to
your letter no.TTPM/98-99/Misc./4295 dated 16.3.1999 in reply to which our
observations & comments are as under:
-------------------------------------------------------------------------------------------
Sr. Particulars Burning Behaviour
-------------------------------------------------------------------------------------------
1. 100%
Polyester : Softy Flame, fibre shrinks and
hard
bead is formed with negligible
residue. It is
a petroleum product
being highly inflammable.
2. 100%
cotton : Burns
quickly with yellow flame with
paper like smell & small softy residue.
3. Polyester/Cotton : Polyester-cotton
burns quickly and
only softy cotton residue remains.
4. Polyester/ Viscose : Burns quickly with
smell of burnt
paper and leaves minor
negligible
residue after having burnt.
In case any other
information is required in connection with the above noted commodities in
respect of their burning behavior, we shall be pleased to give our
observations”.
The
aforesaid report completely supports the case of the Complainant. As stated in the aforesaid
report negligible residue remains in case of polyester viscos
and small softy residue remains in case of 100% cotton. Hence, the presumption raised by the
Surveyor on the ground that after the fire less residue was found, can hardly be a
ground for disbelieving the
Complainant’s version.
Hence,
we hold that the final Survey report is unjustified and it is based solely on
some assumptions or notions of the Surveyor that the insured might have
committed some fraud, which reflects his total negative approach. Such report
is required to be ignored and cannot be the basis for rejecting the claim.
In
our view, there is no justifiable reason to disbelieve: (a) the preliminary
Survey report; (b) the record maintained under the Central Excise Rules; (c)
the inspection which was carried out by the Central Excise Inspector on the
date of the incident and the inquiry
report submitted by the higher officers of the Central Excise Department after
the fire, and (d) in any case, there is no ground for disbelieving the regular books of
accounts maintained by the Complainant on some presumptions.
In
the result, this complaint is allowed.
Admittedly, the sum assured is Rs.22.00 lakhs.
As against this, the stock in the premises was for a sum of Rs.25,51,963/-. Therefore, to that extent, there would be under insurance by
11%. In this view of the matter, the Complainant is entitled to be reimbursed
for a sum of Rs.19,19,285/- [Rs.
22,00,000/- (-) 2,80,715 (11% of
Rs.25,51,963)] =. Hence, the Insurance Company is directed to pay a sum of
Rs.19,19,000/- with interest @ 10% from
Sd/-
....….............................J
(M.B. SHAH)
PRESIDENT
Sd/-
…..…..............................
(RAJYALAKSHMI RAO)
MEMBER