PER MR SUBHASH CHANDRA, MEMBER

1.     This complaint has been filed under section 21(a) (i) of the Consumer Protection Act, 1986 (in short, the ‘Act’) alleging deficiency in service and unfair trade practice in respect of a Fire Insurance Policy taken by the complainant to cover its building, plant and machinery, furniture, fixtures and stocks at its unit in 14, GIDC Industrial Estate, Kadi, District Mehsana, Gujarat 382715, which was repudiated by the opposite party.

2.     Briefly, the facts of the case are that the complainant, a leading manufacturer of sanitary ware and bath fittings in India, had purchased an Insurance Policy No. 300900/11/14/3100002790 (in short, the ‘policy’) effective from 01.03.2015 to midnight of 29.02.2016 for a sum of Rs 2,14,50,000/- to insure its building, plant and machinery, furniture, fixtures and stocks at its unit in Kadi, District Mehsana, Gujarat (in short, the ‘insured premises’). On 29.02.2016 at 11.05 pm an accidental fire broke out at the insured premises and the staff of the complainant called the Fire Department of Kadi Municipality for despatching the fire brigade. According to the complainant, three fire tenders were despatched at 11.45 pm and the fire was doused. On 01.03.2016 the Opposite Party was intimated about the fire incident. An estimated loss of Rs.3,50,00,000/- was projected. The opposite party appointed a surveyor, Mr Jigar Trivedi, who visited the premises on 02.03.2016. Subsequently, another surveyor Mr G Satapathy, was appointed who surveyed the premises in March 2016 and submitted a report on 25.08.2016. In December 2017, the opposite party appointed another surveyor, Mr A.K. Ajmera as an investigator who submitted an interim report on 30.05.2018 followed by a final report in July 2018. During this period, the complainant made several efforts with the opposite party for the settlement of its claim.

3.     The opposite party on 20.12.2018 informed the complainant that the claim submitted had certain deficiencies and that the time of the fire was not established at 11.05 pm on 29.02.2016; there was no confirmation on record about how the Fire Station and Police Station received information and in view of the discrepancies in the statements of various officials regarding the phone calls made, the time of loss and manner of intimation could not be established. The complainant vide letter dated 09.01.2019 clarified in detail the issues raised. However, by its letter dated 25.01.2019 the opposite party repudiated the claim on the same grounds mentioned in its letter dated 20.12.2018. It was conveyed that the complainant had not provided the desired information to the surveyor and thereby not complied with conditions 6, 1 and 8 of the Standard Fire Perils Policy.

4.     The complainant took up the matter with the Fire Station, Kadi Municipality who certified on 03.06.2019 that a distress fire call at the godown of the complainant was indeed received by them at 11.05 pm on 29.02.2016 and that three fire tenders having registration numbers GJ 2G 7191 driven by Mr Jitender Rami, GJ 2G 7270 driven by Mr Shailesh G Patel and GJ 2G 7271 driven by Mr Shaileshbhai G. Patel were deployed who doused the fire. This certificate was however not considered by the opposite party which reiterated its previous repudiation on 25.07.2019. A legal notice dated 27.09.2019 was then issued by the complainant seeking settlement of the claim along with 18% interest for the delay within 14 days. As there was no response from the opposite party, the complainant is before this Commission with the following prayer:

(a)    Direct the opposite parties to refund to the complainants a sum of Rs.2,14,50,000/- payable to the complainant towards their insurance claim;

(b)      Award interest @ 18% per annum on the insurance amount of Rs.2,14,50,000/- from the date of intimating the opposite party about the fire incident, i.e., 01.03.2016 till the date of payment;

(c)      Direct the opposite party to pay litigation expenses incurred by the complainants in pursuing instant complaint; and

(d)      Pass any such other or further order(s) as this Hon’ble Commission may deem fit and proper in the interest of justice and in the facts and circumstances of this case.

5.     The complaint has been contested by the opposite party by way of a reply/written version. While denying all the contentions and averments of the complainant, the opposite party has taken the preliminary objection that the complainant is a commercial entity and therefore not a ‘consumer’ under the Act as services of the opposite party was taken for a commercial purpose. Jurisdiction of this Commission is disputed on grounds that substantial evidence will be required which is not possible in summary proceedings. Negligence, deficiency in service, unfair trade practice or any shortcoming in services are denied. The estimated loss of Rs.3,50,00,000/- is stated to be highly exaggerated and the appointment of Mr A.K. Ajmera to investigate the incident is justified on the ground that there were serious anomalies in the claim. It is stated that the investigation revealed that two pages of the Station House Diary of the Police Station, Kadi for the period from 2100 hours on 29.02.2016 were missing from the Entry Register. It is also stated that the statement of 4 officials of the complainant about the time of fire information did not match/was incorrect and only one statement matched; that call details of the complainant’s BSNL landline and Vodafone bill for February 2016 do not confirm calls to the Fire Station, Kadi and that the Fire Report (Certificate) dated 18.04.2016 is not correct. Lastly, the insured’s statement dated 03.03.2016 regarding the time of fire (11.05pm) and fire-fighting commencing from 11.40pm is stated to be not correct and the time of fire intimation noted in the fire report and that the call records of BSNL/Vodafone do not match. It is contended that the insured is required as per condition 6(i)(b) of the policy to “produce, procure and give to the company at its cost particulars, proofs and information with respect to the claim” and that “No claim under the policy shall be payable unless the terms of this condition have been complied with”. It is also stated that Condition 1 that “this Policy shall be voidable in the event of misrepresentation, mis-description or non-disclosure of any material particular” is also applicable as also Condition 8 which reads as “If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or anyone acting on his behalf to obtain any benefit under the policy…all the benefits under this policy shall be forfeited”. As the explanations of the complainant were not convincing and the veracity of the certificate of the Kadi Municipality dated 03.06.2019 is vehemently denied, the complaint was repudiated.

6.     It is denied by the opposite party that the policy was valid till 29.02.2016. The complainant had extended the policy for one month on 01.03.2016 after the fire incident for the period 01.03.2016 to 31.03.2016 through policy no. 300900/11/15/3100002690 and there was no continuity of insurance cover. The time of the fire incident being critical, the opposite party was compelled to appoint an investigator. It is contended by the opposite party that as there was no deficiency in service and/or negligence, there was no liability on part of his part and therefore the complainant was not justified.

7.     Parties led their evidence. Written synopses of arguments were also filed by both the parties. We have heard the learned counsel for the parties and given thoughtful consideration to the documents and evidence on record.

8.     Learned counsel for the complainant argued that the contract of insurance is based on uberimma fides (utmost good faith) on part of both parties and that complainant has acted as per this. He has countered the grounds advanced by the opposite party as unsubstantiated allegations of the abuse of process of law. The insurance is stated to have not been obtained for a commercial purpose to generate profit but to indemnify actual loss. Reliance is placed on Laxmi Engineering Works Vs. PSG Industrial Institute (1995) 3 SCC 583 wherein the Hon’ble Supreme Court laid down that ‘commercial purpose’ would mean any activity carried on with a view to earn profits which was relied upon by this Commission in Harsolia Motors Vs. National Insurance Co. Ltd. 2005 (I) CPJ 27 (NC). On the issue of jurisdiction of this Commission, learned counsel relies upon the Hon’ble Supreme Court’s judgment in Dr. J.J. Merchant & Ors. Vs. Srinath Chaturvedi (2002) 6 SCC 635. It is also argued that the surveyor’s report is not the last and final word as held in several judgments such as New India Assurance Co. Vs. Pradeep Kumar (2009) 7 SCC 787 by the Hon’ble Supreme Court and repeatedly relied upon by this Commission in New India Assurance Co. Ltd., vs Sambhaji, order dated 12.12.2019 in Revision Petiton no.2732 of 2013, Super Seeds Pvt. Ltd., vs Oriental Insurance Co. Ltd., and Ors; order dated 02.08.2019 in First Appeal no.41 of 2009 and United India Insurance Co. Ltd., vs Satish Kumar Gupta order dated 16.10.2019 in Revision Petition no. 2598 of 2012. The alleged break in insurance is denied as the policy in force covered the time of the fire accident. Lastly, it is argued that in his report the surveyor, Mr G. Satapathy, upheld the claim of the complainant and he has not diluted his report on affidavit before this Commission. No reason for disregarding this report is given by the opposite party. Reliance is placed on Sri Venkateswara Syndicate Vs. Oriental Insurance Co. Ltd. (2009) 8 SCC 507 and M.K.U. Pvt. Ltd. Vs. United India Insurance Co. 2019 SCC Online NCDRC in CC 132 of 2008. 

9.     On behalf of the opposite party, learned counsel argued on the lines of the reply/written statement and contended that the claim was based on misrepresentation and was fraudulent. The investigator’s report had brought out that there were inconsistencies in the facts relating to the incident of the fire and that the complainant had failed to substantiate the facts to the satisfaction of the opposite party.  It is contended that an investigator was required to be appointed as there were anomalies in the report of the surveyor.

10.   From the record it is evident that a Standard Fire Special Peril Policy had been purchased by the complainant on 01.03.2015 for the period 01.03.2015 to midnight of 29.02.2016 covering building including boundary wall and internal roads, plinth and foundation, compound wall, paving and civil structures, plant and machinery including electrical installations and other factory equipment, pipes and cables outside the premises including common utilities, furniture, fixtures and fittings including computers and other office equipment’s and category II stocks, stocks of tiles and ceramic printing ink. Premium for the same has also been paid. A fire on the insured premises occurred on 29.02.2016 night. The surveyor of the opposite party confirms the fire and extensive loss. The report of the Surveyor Mr G Satapathy and Co., Chartered Accountants, Mumbai dated 25.08.2016 is based on their survey at the insured’s premises on 03.03.2016 and subsequently on 23.08.2016. The report is based on assessment of the fire loss as well as verification of the required documents and reinstatement. Representative of the complainant were present during inspection and all the required documents were submitted by the insured during the visit. Risks that were covered under the policy include earthquake and fire and shock. After a detailed inspection the premises and the godown, the report specifically mentions that the details of the occurrence of the fire are as given below:

“As ascertained by us fire broke out in the insured go-down at about 11.00 p m on 29.02.2016 and gutted the entire stock in the go down. The first also caused extensive damage to the go down building, plant and machinery and FFF. Fire brigade was informed and the fire brigade arrived to douse the fire.

As per the fire brigade report book no.02 and fire report no.44 of Kadi Municipality, Kadi fire and emergency service fire broke out at the ink go down of Somany Ceramics Limited at about 11.05 p m on 29.02.2016, located at plot no. K 1 – 24/5 at GIDC, Kadi Industrial Estate and the fire brigade doused/ controlled the fire by about 3.30 a m on 01.03.2016.

As per the statement of contract security guard Dashrathji Meganji Thakore his shift time is from 11 p m to 07.00 a m. After he came for duty on 29.02.2016 at about 11.05 p m he saw smoke in the window of the ink go down and therefore, he went near the window and saw fire inside the ink go down and immediately rushed to the third gate of the company for help and informed about the fire over intercom to Jashwantsinh Hirsinh Jhala (Company guard) who was on duty at the main gate of the company. He then informed over mobile phone to the HR Manager Shri Diganbhai Joshi whose mobile no. is 9687879999 and he resides in the staff quarters in the company premises and he immediately rushed to the place of fire. In the mean while the security guard on duty Shri Dashrathji Meganji Thakore used two fire extinguishers, kept at the go down to put out the fire. Mr Jashwantsinh Hirsinh Jhala also used the fire extinguishers to put out the fire. Shri Anupambhai Nayak, other contract security guard also reached the place of the incident and used the fire extinguishers to put out the fire.

Then the H R Manager Shri Diganbhai Joshi called up H R executive of the company Shri Harshadbhai Patel in his mobile no. 9714105859 and informed him about the fire in the ink go down and asked him to intimate the fire brigade and the police station, Kadi. Thereafter Mr Harshadbhai Patel, who was in his village at that time got the phone to the fire brigade made by Shri Amitbhain Patel and after collecting the number of the brigade, Kadi from him he also called the fire brigade. Thereafter the fire brigade came with water tanker at about 11.40 p m and initiated action for putting out the fire and the fire brigade used the water tankers for putting out the fire and the fire was brought under control by about 3.30 a m on 01.03.2016.

During this period H R Manager informed the factory manager Shri Anubhai Patel on his mobile about the incident of fire and thereafter he started from his residence in Isanpur, Ahmedabad at about 1.00 a m and reached the spot and helped the fire brigade in controlling the fire. Executive of H R Division Shri Harshadbhai Patel also reached the place of the incident and the following employees of the company assembled at the place of incident.

        The report also mentions that:

“as per the certificate of Kadinagar Palika dated12.03.2016 after receiving he news of breaking out of fire in the ink go down of Somany Ceramics Ltd., in the night of 29.02.2016 Nagar Palika immediately sent fire fighter no. GJ 2G 7270, GJ 2G 7191 and GJ 2G 7271 and doused the fire.

As per Janva Jog entry no. 45/16 dated 01.03.2016 station diary entry no.SD no.13/16 dated 01.03.2016, 1330 hours the informant is Patel Arunbhai Dharamshibhai, Somany Staff Colony, 14, GIDC, Kadi, Factory Manager and investigator and designation is Dharmendra Kumar Lalchand, Beat – 2. The informant has submitted that fire broke out in the go down of Somany Ceramics Ltd., at about 29.02.2016. He tried to put out the fire with fire extinguishers, kept in the company but the fire could not be controlled and therefore Kadi fire brigade was informed and fire brigade arrived at the spot and could bring the fire under control by about 03.30 a m. The fire caused extensive damage to the stocks of the company. The damage is estimated at about Rs.3.00 crores.

As per the report of Mobile Inspection Van, Office of District Police Superintendent, Mehsana, Unit – Mehsana:-

Type of offence – Damage due to fire

1. Police Statin – Kadi Police Station;
2. CR No. J J 45/ 16;
3. Date of incident – 29.02.2016, 23.05 hrs;
4. Date of information of the offence -01.03.2016, 1330 hrs
5. Place : Plot no. 24/05, GIDC
6. Date of visit – 11.03.2016, Kadi District Mehsana.

Details of the incident in brief – As informed by Shri Dharmendra Kumar L Yadav, HC, B No.0342 the facts of the case are that, the informant of this incident Patel Arunbhai Dharamshibhai is working in Somany Ceramics Ltd., and due to the fact that fire broke out in the ink go down of the company, ink drums are burnt and damage has been caused in the go down.

Action at the place of incident, report/ suggestion: - In respect of the aforesaid details Dharmendra Kumar L Yadav, HC B no. 0342 investigate the place of incident.

11.   The report also notes that panchanama was drawn and samples were collected. It also notes that there was damage to the adjoining factory of M/s Akash Marketing, K 1/24/6, GIDC, Kadi, M/s Gaurav Industry, K 1/24/7 GIDC, Kadi and also. It has specifically stated that the survey/ inspection was carried out on 03.03.2017 at about 12 p m in the presence of senior officers of Somany Ceramics Limited, 14 GIDC Industrial Estate, Kadi, District Mehsana, Gujarat 382 715 and Mr Rohit Kotwal and two other officers of Unison Insurance Broking Services Pvt. Ltd. The extent of damage has been noted in detail. The fire damage to the building is stated to be severe and the stocks were found completely gutted and reduced to ashes with no salvage value. Invoices for the purchase of the imported and indigenous damaged stocks were verified along with account of Punjab National Bank and HDFC Bank, vendor ledger, etc. Cause of loss has been concluded as follows:

On the basis of fire brigade report book no. 2, fire report no. 44 dated 29.02.2016 of Kadi Municipality, police panchnama, police report and all the other documents, as mentioned in point 5 above the cause of loss in our opinion is financial losses, sustained by the insured due to damage to the insured items and the loss is covered under the terms and conditions of the policy.

12.   Assessment of loss is also worked out separately for the building, plant and machinery, stocks and deductions allowed for under insurance and salvage value for the damaged building and machinery is estimated at Rs.50,000/-. The total estimated loss has been worked out to Rs.2,11,95,347/-. Under insurance of Rs.92,074/- is allowed on the same. A further deduction as per the policy 5% for excess of Rs.10,59,768/- has been allowed. Loss to be considered for indemnification works out to be Rs.2,00,43,505/- against the insured claim for Rs.3.50 crores and the loss is assessed at Rs.2.12 crores.

13.   The opposite party has not provided any reasons for the appointment of independent surveyor/ investigator when the report of surveyor appointed by it was already available. It is only stated in the affidavit in evidence filed that the opposite party noted ‘serious anomalies’ about the happening of the incident and needed to get a clear picture of the alleged incident. It is. However, not forthcoming from any document what these serious anomalies were since the report of the two surveyors appointed by the opposite party itself did not point out any such anomalies. From the record it is apparent that the opposite party has come to the conclusion that the loss was void since the investigator Mr A K Ajmera, in his final investigation report dated 27.07.2018, has pointed out serious anomalies. It is pursuant to this observation that it was concluded that the loss was not justified by the complainant and consequently that there was non-compliance/ breach of condition nos. 6, 1 and 8 of the insurance policy leading to the repudiation of the claim.

14.   Since the repudiation is based upon the investigation report of the surveyor/ investigator, it would be useful to examine the same. This report has the following conclusions:

        F:         Conclusions:

36.     Statement given by insured’s officials – Mr Dipesh V Pandya, Mr Digant N Joshi, Mr Harshadkumar Patel and Mr Arunkumar Patel to police station, Kadi about time of fire information received to them doesn’t match and/ or not correct;

          Only one statement of Mr Sunil S Poranik confirm that time of fire message received at around 00.30 hours on 01.03.2016 (Correct time is 00.27.08 hours on 01.03.2016)

37.     Information receipt of insured’s BSNL Landline number dated 29.02.2016 and 01.03.206 and Vodafone Bill of February 2016, statement does not show any call details which confirm that direct fire intimation had been given to KFES officials by Mobile and/ or BSNL Landline Numbers.

38.     Fire report (certificate) dated 18.04.2016 showing in the night about 11.05 hours dated 29.02.2016 is not correct.

39.     Insured’s statement dated 03.03.2016 – Time of Fire approximately 11.05 p m on dated 29.06.2016 and fire fighting started at 11.40 pm on dated 29.06.2016 is not correct.

40.     The time (11.45 p m) of fire intimation was noted in fire report no.44 does not confirm/ match with call statement/ record of Vodafone and insured’s BSNL Landline numbers till midnight (29.02.2016 – 00.00 hours 01.03.2016).   

15.   The investigator’s conclusion is that there was discrepancy in the time of the fire as the information received by the police station does not match and the statements of the employees of the complainant were incorrect, except for one statement. This conclusion, however, does not refer to the time of information of the incident or the first information to the Fire Brigade Kadi which would have been the first responding agency to whom information was given by the employees of the complainant. While it is evident from the certificates issued by Kadi Municipal Corporation and the Fire Brigade that the Fire tenders were dispatched to the site of the incident on 29.02.2016, the investigator has concluded that these reports are incorrect. No basis is provided for arriving at this conclusion, except to infer on the basis of call records of BSNL and Vodafone. The letter is not confirmed as the call records have not been provided. Based on the investigator/surveyor’s report dated 23.08.2016, the opposite party has concluded that the information provided by the Kadi Municipality and the Fire Brigade cannot be relied upon. It also appears that this conclusion is based on the unavailability of the information of the police station since there are two pages missing from the Police Station House Diary for the period 2100 hours on 29.02.2016. Reliance is also placed on the call records of the insureds BSNL landline and Vodafone bill of February 2016 and an inference drawn that the statement does not show any call details which confirms that direct fire intimation had been given to the fire authorities. However, it is also stated by the investigator Mr A K Ajmera in his report that the Vodafone mobile company did not provide the full detailed call records of the mobile number and that an e-mail dated 09.02.2018 and 25.02.2018 it was informed that, “with regards to your request, we would like to inform you that we are unable to provide you Vodafone invoice copy of February 2016 to March 2016”. The conclusion of the investigator that the call details do not show call details which confirm that direct fire intimation had been given to KFES officials by mobile is therefore not sustainable. Further, the conclusion that Fire Report Certificate dated 18.04.2016 is not correct and that the insured statement dated 03.03.2016 that the time of fire was approximately 11.05 p m on 29.06.2016 and the fire-fighting efforts started at 11.40 p m is not correct do not appear to be based on any cogent evidence. These conclusions are instead surmises and inferences drawn by the investigator.

16.   In Brij Mohan Singh Vs. Priya Brat Narain Sinha and Ors., - 1965 SCR (3) 861 which upheld the likelihood of correctness of an entry by a public servant in the discharge of an official duty. Therefore, the certificate issued by the Fire Brigade with reference to the incident of the fire needs to be given due weightage. The opposite party has not provided any reason for this document being inadmissible except to disconnect the same on the assumption that there was no direct intimation to the Fire Brigade of Kadi Municipality. It has relied upon call records of BSNL and Vodafone although the letter has specifically stated that its call records cannot be shared, therefore, this ground for repudiation cannot be accepted.

17.   As regard the appointment of an investigator/ surveyor after the second surveyor had submitted a report, the Hon’ble Supreme Court has held in Sri Venkateswara Syndicate vs Oriental Insurance Company Ltd., and Anr., – (2009) 8 SCC 507 in Civil Appeal no.4487 of 2004 dated 24.08.2009 that while the report of a surveyor can be rejected by the insurer for fresh estimation of loss, insurer must specify cogent and satisfactory reasons for not accepting the report of the first surveyor under section 64 UM of the Insurance Act, 1938 and that if the report has inherent defects or is found to be arbitrary, excessive or exaggerated in nature, a surveyor can be appointed. However, there must be sufficient grounds to disagree with the findings of the surveyor/ surveyors. In the instant case, the opposite party has not brought out any cogent reasons for rejecting the report of its surveyor Mr G Satapathy except to state that it found serious anomalies which have not been spelt out. The opposite party does not mention what these anomalies are. The order reasons in the repudiation letter indicate that these are not based on facts or are supported by evidences but are conjectures and surmises. As this report is the basis for arriving at the conclusion that conditions no. 6 (b) (1) (8) of the policy stand vitiated, it is apparent that the report of the surveyor/ investigator Mr A K Ajmera was obtained in order to find reasons to reject the claim.

18.   In view of the foregoing, it is apparent that the incident of the fire, which in itself is not in dispute, occurred during the currency of the insurance policy and that the loss incurred by the complainant was as determined by Mr G Satapathy vide his report dated 25.08.2016 amounting to Rs.2,00,43,505/- inclusive of various elements of the policy. This amount has been arrived at after a fair evaluation of documents and evidences on site and is in any case less than the claim of Rs.3.50 crores preferred by the complainant.

19.   In view of the above, we, find merit in the complaint and allow the same with the following directions:

(i)     The opposite party shall pay an amount of Rs.2,00,43,505/- to the complainant with 6% interest per annum from the date of submission of the claim till realisation.

(ii)    The order shall be complied within eight weeks failing which interest at the rate of 9% per annum shall be payable.

20.   The consumer complaint stands disposed of with these directions.