Punjab

Rupnagar

CC/15/36

Saini Garments - Complainant(s)

Versus

The IFFCO Tokio General Insurance - Opp.Party(s)

Sh. Kapil Kumar Dhawan, Adv

14 Dec 2015

ORDER

ORDER

                                      MRS. NEENA SANDHU, PRESIDENT

                   M/s Saini Garments through its proprietor, Sh. Baldev Singh, has filed the instant complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter referred to as ‘the Act’) against the Opposite Parties (hereinafter referred to as ‘the O.Ps.’) praying for issuance of direction to them to pay Rs.20,00,000/- as insured value  of the goods along with interest @ 12% P.A. from the date of accident till its realization and also to pay litigation expenses.

 

2.                Briefly stated, the facts of the complaint are that  a shop under the name & style—‘ Saini Garments’ is being run at Model Town, Village Kirpalpur, Tehsil Nalagarh, District Solan (HP), through its proprietor,  who had got the goods lying in it insured with the O.P. No. 1, through the O.P. No.2, for the period from 11.11.2013 to 10.11.2014 midnight by paying the premium of Rs.4550/-. As per the said policy, the sum insured for loss due to Fire and Allied, Burglary & other, money and for personal accident was Rs.20 lacs, Rs.20 lacs, Rs.1,50,000/- & Rs.10 lacs respectively. On the fateful day of 15.4.2014, the said shop set on fire and the whole things lying in it, including fittings etc., were burnt totally. The said fire was extinguished with the help of fire brigade. On 15.4.2014, report to that effect was lodged with the Police Station, Nalagarh and immediately thereafter, information regarding the same was also given to the office of O.P. No.1. All the documents, as  required by the O.P. No.1, including the bills, were submitted to it. The O.P. No.1 had appointed surveyor, who visited the spot and noted down the loss but submitted a wrong report on 22.5.2014. The total loss caused to the complainant came to be more than Rs.20 Lacs but the O.P. No.1 has,  wrongly & illegally, held the claim as ‘No Claim” vide its letter dated 30.12.2014, which amounts to clear cut deficiency in service & unfair trade practice on its part. Hence, this complaint. 

 

 3.               On being put to notice, a joint written version was filed on behalf of the O.Ps. admitting therein that the complainant had obtained one Trade Suvidha insurance policy in the name of M/s Saini Garments from their Ropar Branch office,  vide No. 4731273 for the period from 11.11.2013 to 10.11.2014, strictly subject to its terms & conditions and that during subsistence of the said policy, the complainant had intimated one loss to stock of garments on 15.4.2014, due to alleged fire. It is stated that the competent authority had deputed one independent IRDA approved surveyor, namely, M/s R.L. Aggarwal Surveyor Limited, to assess the loss. The said surveyor had written letter dated 25.4.2014 to the complainant vide which he had demanded:-

1. Claim form duly filled in,

2. Claim Form,

3. As discussed and agreed, please provide rack wise storage   

    details of the stock as per your memory held by you in the

    shop at the time of fire,

4. Valuation of stock as detailed under Sr. No.3 above along

    with the copies of the purchase Bills in support of rates

     used in valuation of the stock. During the discussions, you had informed us that all Bills have been burnt in the subject fire. We request you to obtain the duplicate copies of the same from your suppliers,

5. Copies of the Balance Sheets for last three Financial

    Years,

6. Trading account as on 15.4.2014,

7. Copy of Police FIR.

 

                   But the complainant had not complied with the same and had  not  provided the duly filled in claim form and the claim bill, but had provided the copies of the Balance Sheets duly certified by the Chartered Accountant, according to which, the accounting position was as under:

	31.3.2014	31.3.2013	31.3.2012
Sale	2999450.00	2399450.00	1899450.00
Purchased	2822066.50	2120260.00	1908580.00
Closing profit	2396527.00	1546527.00	888561.00
Gross profit	1007883.50	937156.00	680681.00
Closing stock equivalent to months of sales	9.59	7.73	5.61
Purchased to sales ratio	94.75	88.36	100.48
Average purchased to sales ratio		94.14
% gross profit ratio	33.59	39.06	35.84
Average gross profit ratio		35.97

 

 

The insured had also provided the Trading Account as on 15.4.2014, according to which, during the period from 1.4.2014 to 15.4.2014 i.e. in 15 days, the sale was Rs.30,49,450/- and the purhcase was Rs.29,64,710/- which, in our opinion, was highly exaggerated, because the average monthly sale during the last three financial years as per the balance sheets provided was Rs.2,87,439/- and the average monthly purchase was Rs.2,73,212/-. The insured failed to clarify the same inspite of repeated telephonic talks. It was also observed that while the net profit as per the audited Balance Sheet, as on 31.3.2012, tallies with the income tax Return filed by the Insured, the net profit as per the audited Balance Sheet as on 31.3.2013 did not tally with the Income Tax return filed by it, while the net profit as per the audited balance sheet was Rs.3,06,826/-, the same as per the Income Tax return field was Rs.2,26,000/-. As such, the balance sheets, as provided by the insured, cannot be relied upon. During visit to the insured, it was informed that all the purchase and sale bills, were kept in the Cash Counter and the same reduced to ashes and it would not be possible to obtain the duplicate bills since the stock was being purchased from local as well as outside distributors. The value of stock as per insured as on date of loss was approx. Rs.24,00,000/-, but the insured failed to provide any documentary evidence in that regard. On the basis of the average monthly Sale and Purchase, during the Financial Years 2011-2012 and 2012-2013, the answering O.Ps. had prepared a Trading Account for the period from 01.04.2013 to 15.4.2014, as under, wherein, the average Gross Profit ratio was considered at 35.75% after making the adjustment in the Gross Profit as per the Balance Sheet as on 31.3.2013 and the Income Tax return filed by the insured. In the said Trading Account, the value of Closing Stock was arrived at as a balance figure. The average monthly Sale and Purchase, during the financial years 2011-2012 and 2012-2013 came to be Rs.1,79,120.83 and Rs.1,67,868.33 respectively.

TRADING ACCOUNT FOR THE FOR THE PERIOD FROM 01.04.2013 TO 15.4.2014

Opening stock	1546527.00	Sale	2239010.42
Purchase	2098354.17	Closing stock	2206316.97
33.75% Gross PROFIT	800446.224
	4445327.39		4445327.39

 

 

The replacement value of furniture, fixtures & fittings as per the Asset schedule attached to the Balance Sheets as on 31.3.2014 was estimated to be approx Rs.4,50,000/-.

 

9.1     VALUE AT RISK

The Value at risk and applicable under insurance was worked out as under:-

Sr. No.	DESCRIPTION	AMOUNT
1	Value of stock as on 15.4.2014 as per trading account	2206316.97
	LESS:10% Dead Stock	220631.70
2	Value of furniture fixtures & fittings	450000.00	1985685.27
	LESS 50% depreciation	225000.00
			225000.00
3	Value at risk		2210685.27
4	Sum insured		2000000.00
5	% under insurance		9.53

 

It is further stated that as the requirement raised by surveyor vide aforesaid letter was not complied with, therefore, the competent authority of the insurance company issued reminder vide letter dated 29.4.2014 to comply with the same. Even the surveyor had also given reminder vide letter dated 18.6.2014 for compliance of the demand raised by him, but the complainant failed to provide the requisite documents and the surveyor submitted his report dated 6.12.2014 to the insurance company recommending therein as under:-

      “ The loss amount as per the FIR is Rs.10,00,000/- and as per the Fire Brigade Report is Rs.15,00,000/- which is based on the information provided by the insured to the Police and the Fire Brigade.

      The amount assessed by us at Rs.18,90,338/- is based on the copies of the Balance Sheets provided by the insured, which, in our opinion, for the reasons as stated above, cannot be relied upon. Further, during our inspection, it was observed that many of the shelves in the racks were empty which is evidence from the fact that these shelve had not been burnt and from the remains it was not possible to ascertain the quantity of damaged stock. The insured also could not provide us with the quantitative details of the stock held by him at the time of loss based on his memory.

      In view of the above, the exact amount of loss suffered by the insured cannot be ascertained and we therefore recommend closure of the claim file as NO CLAIM.”

 

                   Thus, the claim file of the complainant along with report submitted by the surveyor was duly considered by the competent authority and the claim of the complainant was found to be not tenable on the following grounds:

                         .   Claim was reported for alleged loss of stock of

                             garments due to fire on 15.4.2014.

                         .   The surveyor has not been provided with the quantitative details of the stock held by you and the time of loss.

                         .   Surveyor observed that many of the shelves in the racks were empty which is evidence from the fact that these shelves had not been burnt and from the remains, it was not possible to ascertain the quantity of the damaged stock.

                         .   We bring to your kind attention “Claim Procedure and Requirements” (Sr. No. 5 of ‘General Conditions’) of policy wordings which stipulated as “The written statement of claim alongwith supporting documentation (Estimate, vouchers, invoices, proof, investigation reports and like) prepared at your expense alongwith particulars of other insurances covering the same risks must be delivered to us.”

Accordingly, the claim of the complainant was closed as “No Claim” and he was duly informed vide letter dated 30.12.2014. Thus, there has been no deficiency in service or adoption of any unfair trade practice on the part of the answering O.Ps., as the claim of the complainant was processed as per the terms & conditions of the policy. Rest of the allegations made in the complaint were also denied and a prayer was made for dismissal of the same.

 

4.                On being called upon to do so, Sh. Baldev Singh, proprietor of the complainant firm tendered his affidavit Ex. C1, photocopies of documents Ex.C2 to Ex.C88 and closed the evidence. On the other hand, the learned counsel for the O.Ps. tendered affidavit of Sh. O.P. Aggarwal, surveyor, Ex.OP-1, affidavit of Sh. Sanket Gupta, Vice President Claims Ex. OP2, photocopies of documents Ex.OP-3 to Ex. OP-8 and closed the evidence.

 

5.                We have heard the learned counsel for the parties and gone through the record of the file carefully.

 

6.                The learned counsel for the complainant submitted that due to breaking of fire in the complainant shop, the stock lying therein, which was duly insured with the O.P. No.1, got totally burnt and the proprietor of the said shop had suffered loss of more than Rs.20,00,000/-. Accordingly, he lodged the claim with the O.P. No.1 and submitted all the requisite documents for indemnification of the loss to the tune of Rs.20,00,000/-, but it has, wrongly & illegally, closed the claim file as ‘No Claim’ vide letter dated 30.12.2014. Therefore, the O.Ps. be directed to pay the amount for the loss occurred to the insured goods alongwith interest. They be also directed to pay compensation and litigations expenses of this complaint.

 

7.                The learned counsel for the O.Ps. submitted that after receipt of the information on 15.4.2014, regarding occurrence of loss to the stock of goods lying in the insured shop, surveyor, namely, M/s R.L. Aggarwal Surveyor Ltd., was appointed, who, vide its letter dated 25.4.2014, demanded certain documents from the complainant for settling the claim, but instead of providing the said documents, the complainant provided the duly signed copies of the balance sheets duly certified by the chartered account. As per the trading account as on 15.4.2014, during the period from 1.4.2014 to 15.4.2014 i.e. for a period of 15 days, the sale was for Rs.30,49,450/- and the purchase was for Rs.29,64,710/-, which was highly exaggerated because the average monthly sale during the last 3 financial years, as per the balance sheets provided was Rs.2,87,439/- and the average monthly purchase was Rs.2,73,212/-. The insured has not been able to clarify the same inspite of repeated telephonic talks. The net profit as per the audit balance sheet as on 31.3.2013 did not tally with the income tax return for the relevant period. As per audit balance sheet, the net profit was Rs.3,06,826/- whereas in the income tax return the same was written as Rs.2,26,000/-, thus, the surveyor rightly opined that the said balance sheets could not be relied upon and had demanded certain documents from the complainant, but the same were not provided. For that reason, on the recommendation of the surveyor, the insurance company has rightly closed the claim file as ‘No Claim’. As such, there is no deficiency in service on the part of the O.Ps. and the present complaint is liable to be dismissed.

 

8.                Admittedly, as per insurance policy (Ex.C2/OP-6) , which was issued by the O.P. No. 1 in the name of ‘Saini Garments’ i.e. the complainant firm, loss due to fire and allied was covered for a sum of Rs.20,00,000/-, for the period from 11.11.2013 to 10.11.2014. It is also an admitted fact that a fire had broken in the said shop on 15.4.2014 and upon receipt of intimation about the same, the O.P. No. 1 had appointed surveyor, who had submitted its report dated 06.12.2014 (Ex. OP-7). In the said report, the surveyor has stated that the loss of amount mentioned in the FIR is Rs.10,00,000/- and in the Fire Brigade Report is Rs.15,00,000/-, but he has assessed the loss to the tune of Rs.18,90,338/- on the basis of the copies of the balance sheets, provided by the insured. However, he has recommended closure of claim file as ‘No Claim’ stating that the said balance sheets cannot be relied upon and as the insured had not provided the quantitative details of the stock held by him at the time of loss, as such, the exact amount of loss suffered by the insured cannot be ascertained. Therefore, the short question which arises for consideration is as to whether the insurance company was justified in closing the claim as ‘No Claim’. In the FIR and Fire Brigade Report the amount of loss suffered was mentioned as Rs.1,00,000/- & Rs.1,50,000/- respectively,

but the said figures cannot be said to be the exact ones as the same were just tentative figures and not based on any document, whereas the surveyor had assessed the loss to the tune of Rs.18,90,338/- on the basis of copies of balance sheets, duly certified by the chartered accountant. It cannot be presumed that the concerned chartered accountant had certified the said balance sheets without verifying the actual & factual position and merely on the ground that the figures of income mentioned in the balance sheet and the Income Tax Return, pertaining to the previous financial year, do not tally with each other, the insurance company was not justified in closing the claim file as ‘No Claim’ particularly when the loss caused to the complainant firm was admitted and from the copies of various purchase bills (Ex. C11 to C76) placed on record, it is proved that the complainant had made purchases during the years 2013-2014, from time to time, from various cloth merchants and that the stock was lying in the said shop, on the relevant date of occurrence of loss. With these facts & circumstances, we do not hesitate to conclude that the O.P. No.1 has wrongly closed the claim of the complainant as ‘No Claim’ and hold that the insurance company i.e. O.P. No.1 is liable to indemnify the complainant to the tune of Rs.18,90,338/-, as assessed by the surveyor. As the said amount has not been paid to the complainant till date, therefore it is also liable to pay interest on the said amount w.e.f. the date of repudiation i.e. 30.12.2014 till realization, alongwith litigation expenses. So far as the complaint filed against the O.P. No.2 is concerned, the same is liable to be dismissed against her because the complainant had merely purchased the insurance policy in question through her and the claim, if any, under the policy is to be paid by the insurance company i.e. the O.P. No. 1 only.

9.                In view of the aforesaid discussion, we dismiss the complaint against the O.P. No.2 and allow the same against the O.P. No.1, who is directed in the following manner:-

i)       To pay the claim amount of Rs.18,90,338/- alongwith

          interest @ 9 P.A. w.e.f. 30.12.2014 till realization,

 

                   ii)      To pay Rs.5000/- as litigation expenses.   

 

 

The O.P. No. 1 is further directed to comply with the order within a period of 45 days from the date of receipt of certified copy of this order.

10.              The certified copies of this order be supplied to the parties forthwith, free of costs, as permissible under the rules and the file be indexed & consigned to the Record Room.

 

ANNOUNCED                                                                       (NEENA SANDHU)

Dated 14.12.2015                                       PRESIDENT

 

 

                                                (SHAVINDER KAUR)

                                                                     MEMBER.