A.P. Sahi, President
1. The complainant firm, which is a proprietorship, was established in about the year 2005 engaged in the manufacture and trading of EVA footwear such as slippers, sandals, school bags made of PVC and rexine, etc. The firm also dealt in purchase of chemicals used for manufacturing the EVA compound that is then delivered to job workers for finishing the EVA footwear.
2. The complainant's unit, while running on 22.11.2006 in the late hours, seems to have caught fire that was witnessed at around 12.30am on 23.11.2006 at night. The police arrived at the site at about 1.00am and the fire had surged to such an extent that 4-5 fire tenders arrived at the site for dousing the fire in the basement. It took about 5 hours to control the fire. The cause of fire was possibly a short circuit. A fire report was also obtained and the case was registered with Police Station Narela on 23.11.2006.
3. The claim was set up by the complainant before the Insurance Co. for a sum of Rs. 92,49,580/-. M/s. S. Soni & Co., the Surveyors visited the premises on 27.11.2006, 28.11.2006 and on 07.12.2006. The loss was assessed and in order to verify the purchase bills, the Surveyor also visited different locations who were stated to be suppliers. The existence of the said suppliers were doubted and the Surveyor opined that the documents of the insured were not authentic and reliable. Accordingly, even though the incident of fire was confirmed, yet on verification, the claim was not found to be authentic and reliable. It was observed that on a physical verification basis, after deducting the salvage, the loss was Rs. 1,53,083.84p. The Surveyors report dated 26.07.2007 has been filed on record.
4. However, since the claim was not finalized the present complaint was filed on 10.12.2007.
5. During the pendency of the complaint, the Insurance Company filed its reply on 18.07.2008 and along with it, filed a Letter of Repudiation dated 02.05.2008. The claim had been repudiated on the ground that the complainant had not produced genuine documents and concealed the actual position and therefore had breached the principle of uberrimae fidei. The repudiation dated 02.05.2008 is extracted hereinunder:
BoIII|DG|claims|08/239 M/s. Ajay Plastic Industries. ―Without Prejudice‖ E-731 DSIDC Narela Ind. Area New Delhi - 110040 Dear Sir, Reg.- your fire claim No. 041703/11/07/11/90000002 under Policy No-041703/11/06/11/00000271 Claim submitted by you was examined and surveyor was appointed to enquire into the said loss and also to assess the loss. After going through all the documents, our surveyor has openioned that you had not produced the genuine records and documents to finalize the claim and concealed the actual position and violated the principal of utmost good faith which applies to the insured. After going through the survey report and records produced by surveyor, we are of the view that you have not produced the genuine record and documents.
In view of this ground the Competent authority has repudiated the liability. This is for your information.
Thanking you.
Your's faithfully (Br. Manager)
6. A rejoinder to the same was filed and the matter remained pending when pleadings were completed. However, it was almost after 7 years that on 05.01.2015, the Commission decided the complaint disposing it off with liberty to the complainant to submit all relevant papers with a direction to the Insurance Company to get it examined by the Surveyor who was to act accordingly. The Order dated 05.01.2015 disposing off the complaint is extracted hereinunder:
1. The complainant Jai Prakash who is carrying business under the name and style, Ajay Plastic Industries Ltd., obtained a Standard Fire and Special Perils Policy from the opposite party United India Assurance Co. Ltd., for a sum of Rs.90,00,000/- for the period from 22-06-2006 to 21-06-2007. In the night of 22-11-2006 a fire took place in the factory premises of the complainant and raw material as well as the finished products of the complainant comprising chappals, shoes, etc., are alleged to have been destroyed as well as damaged in the said fire. Information having been given to the insurance company, M/s. S. Soni & Co. was appointed as the surveyor to visit the premises of the complainant and assess the loss from the fire which had happened due to short circuiting. The complainant lodged a claim of Rs.92,49,580/- with the insurance company.
2. The complainant provided several documents including its account books and the purchase and sales bills before the surveyor appointed by the insurance company. The damaged stock found in the factory of the complainant was divided by the surveyor into two parts i.e. identifiable and non-identifiable stock. The surveyor also found some safe stock i.e. undamaged stock in the factory premises. The value of the damaged stock was assessed by the surveyor at Rs.4,75,648.71/- whereas the value of the safe stock was assessed at Rs.8,17,101.25/-.
3. Though the complainant provided the audit reports to the surveyor it was noticed by the surveyor that audit report for the year 2005-06 was not complete since the signature of the proprietor was missing from the audited balance sheets, which were signed only by the Chartered Accountant. The surveyor also found that the ratio of profit as per the audited balance sheets was extraordinarily high. Some other discrepancies in the audited balance sheets were pointed out by the surveyor in his report. It was also noticed by him that the opening stock shown in the year 2005-06 was much higher as compared to previous two years. The surveyor after considering the explanation and making verification prepared a revised trading account for the year 2005-06 and reported that the closing stock as per the revised trading account was Rs.66,23,384.33/- in the year 2005-06.
4. More importantly the surveyor found that several purchase bills did not bear telephone number, VAT number, etc., of the seller nor did they have the address of the suppliers. The report of the surveyor, as regards verification of the suppliers reads as under:
―18.1 Our visit to different parties location (suppliers) On verifying the purchase bills, we found that the insured had purchased from M/s. Aggarwal Plastics B-39, Inderlok, so we visited the Inderlok and reached at the address given in the purchase bills and found that the party does not exist at that address mentioned in the purchase bill. We also called the parties on their numbers, which was mentioned on the purchase bills but we came to know that the number mentioned in the purchase bills was not pertaining to those parties, from whom the insured had claimed to have purchase goods.
Similarly we also visited the site of another supplier M/s. Garg Trading Company situated at 313B, Inderlok, Delhi and found that no such company was existed at the above said address.
Similarly on going through the sales bills we found that no addresses of parties were mentioned on the sales bills. We then asked the insured to give the details of addresses of the parties along with the telephone numbers and the insured had provided us the details of few of the addresses and telephone numbers to whom goods were sold. We then visited the site of M/s. Rahul Footwear, 3815/15 Kanhiya Nagar, Tri Nagar. However, on reaching in the Kanhiya Nagar, we found that no such industry was located at above said address in street No.15.
We even paid a visit to the site at 3815, but at that address also, it was informed that there was no such industry at this location.
We then visited the site of M/s. Naresh Footwears situated at A-673, Shastri Nagar, Delhi and at this address, the owner of the house clarified that no such industries is located at A-673 in the name of M/s. Naresh Footwear.
In view of above facts we can say that the suppliers of the insured were not in existence at the address being given in the purchase bills. Moreover on calling the telephone no. mentioned on the purchase bills we found that these numbers were not pertaining to those parties, from whom the insured had claimed to have purchased the goods. Likewise we also observed that the sales parties were not in existence.
Apart from this, we also telephonically enquired from rest of the parties and found that most of the parties were not in existence or the no. mentioned in the purchase bills were not getting connected with those parties, which were mentioned in the purchase bills.
This proves and confirms that the records and documents of the insured are not authentic and reliable. Since the insured's intention was to mislead us, as is evident from the facts, being observed and found during our investigations.
25.0 Accounting and Investigation Adjustment During our verification of purchase bills for the period 01-04-06 to 27-11-2006 we have verified the purchase bills from the parties, from whom the insured had claimed to have the purchase. To verify the authenticity of purchase bills we conducted the investigations in relation to the purchase bills and found that most of the purchase bills were not authentic and genuine (Details already given in para No.18.0 & 18.1).
We also verified the payments made to party from Bank A/c Statement and cash book and we found that most of the payments were made to the parties in cash.
In our opinion, the entries passed by the insured in their cash book, purchase ledger accounts was nothing but it was the bookish entry so that purchase will be exaggerated and in the same proportion closing stock could be increased.
The amount of purchase which does not prove to be genuine during our investigation has been found as Rs.14216634/- (details are given in Annexure-VII) To arrive at the net of loss to analyse the reasons for difference in value of damaged stocks between various alternative methods, as per various records and physical verification basis, we concluded that the amount of purchase to the tune of Rs.14216634/- is not found to be authentic and genuine during our investigations since it was higher as compared to amount of damaged stocks before accounting and investigation adjustments, so the loss in all cases found to be Nil.
In view of above we can say that the records of the insured are not proper and authentic since the loss as per all the above said alternative methods found to be Nil after the adjustment of accounting and investigation entries.‖
5. The surveyor separately computed the alleged loss to the complainant on the basis of the stock record, trading account and bank stock statement. The loss was assessed at Rs.66,72,107.90/-, Rs.77,81,380.88/- and Rs.97,67,208.44/- respectively on the aforesaid basis.
6. The value of the salvage was assessed by the surveyor at Rs.3,65,000/-. He also found that value of the stock at risk was Rs.11,63,474.97/- whereas the sum insured was only Rs.90,00,000/-. However, the average clause did not apply in the present case. On the basis of physical verification the net loss to the complainant, after deduction of salvage and 10% on account of dead, slow moving and variation factor, was assessed at Rs.1,53,083.84/-.
7. The overall conclusion drawn by the surveyor reads as under:
Based on above observations, we conclude as under:
1. The fire broke out in the basement area of the premises located at E-731, DSIDC, Narela Industrial Area, New Delhi-110040.
2. After our appointment we immediately proceeded to the insured's site and enquired about the incident and asked about the occupancy of ground floor and other upper floors.
3. During our enquiry the insured informed us that ground floor is occupied by M/s. Advance Enterprises, whereas first and second floor was occupied by M/s. Bhushan plastics.
4. On going through the policy schedules, we found that the policy does not mention or specify the address of basement only. This specifies the address of entire premises in which three firms were running the business of same kind of activities. Moreover, the stocks found in the basement area were of much lower value as compared to the sum insured.
5. The insured was asked to immediately show and provide us the records and documents to finalize the claim; however, the insured provided us the records and documents in piecemeal even after a lapse of four months.
6. On verifying the audited balance sheets for the year 2005-06, we observed that the financial data reflected in the balance sheet was not found to be reliable due to reasons as cited in para No.12.0 of our survey report.
7. On our verification of purchase bills we observed that few of the purchase bills were not genuine since the telephone no was not proper or VAT no. etc. on some of the bills were missing therefrom, which created doubts to our mind and we then verified the payments of these parties and found that most of the payments were made in cash. So we conducted the detailed investigations and found that most of the purchases were not authentic and reliable and this proved that the records and documents produced by the insured were made available to mislead us while finalisation of the claim.
8. During our investigations, we found that the purchases to the tune of Rs.14216634/- was not authentic and reliable so the same has been deducted from the gross loss, which ultimately proved that there was no loss of stocks to the insured, since the amount of this purchase was found to be higher as compared to the value of the damaged stocks being arrived at different methods.
9. In view of the above said facts and observations, we can say that the insured had not produced the genuine records and documents to finalise the claim and concealed the actual position and violated the principle of utmost good faith, which applies to the insured at the time of loss occurred at factory and gross loss assessment based on such records comes to Rs.6672107.90/-
(as per stock record), Rs.7781380.88/- (As per trading account) and Rs.9767208.44/- (as per bank stock statement). However, the loss on physical verification basis after salvage comes to Rs.153083.84/-.‖
8. Since the claim was not paid, the complainant has approached this Commission seeking payment of Rs.90,00,000/- along with interest at the rate of 18% per annum from 23-11-2006 and compensation amounting to Rs.20,00,000/-.
9. During the pendency of the complaint the claim was repudiated by the insurance company on the following grounds:
―After going through all the documents, our surveyor has opinioned that you had not produced the genuine records and documents to finalize the claim and concealed the actual position and violated the principal of utmost good faith which applies to the insured. After going through the survey report and records produced by surveyor, we are of the view that you have not produced the genuine record and documents.
In view of this ground the competent authority has repudiated the liability.‖
10. The complaint has been resisted by the insurance company primarily on the ground that the claim is based on manipulated and fabricated record and, therefore, condition No.8 of the policy applies to the said claim.
It would, thus, be seen that even the claim assessed by the surveyor on the basis of physical verification of the stock has not been paid by the insurance company. This has happened primarily on the ground that the purchases shown by the complainant were reported to be fictitious, as the surveyor could not find the seller firms existing at the address made available to him and even could not contact them on the telephone numbers made available by the complainant or otherwise printed on the purchase bills.
11. The complainant has filed before this Commission, affidavits from (1) Shri Sudhir Kumar of Aggarwal Plastics, (2) Shri Bal Kishan of Shyam Trading, (3) Shri Mukesh Kumar of Advanced Enterprises, (4) Mrs. Sushma of Gard Trading Company, (5) Shri Kapil of Cem Traders, (6) Shri Amit Kumar of Gulshan Trading, (7) Ms. Sunita Devi of Freedom Industries, (8) Shri Sushil Kumar of Rohit Footwear, (9) Shri Ram Karan of Luxmi Enterprises and Traders and (10) Shri Sat Prakash of H.R. Co.. In their respective affidavits the aforesaid persons have stated that the complainant had purchased goods and the said sale was duly recorded in their account books. The amount of the goods alleged to have been purchased by them has also been given in the respective affidavits of the aforesaid persons. They have claimed that they had shifted their business place. The old business address as well as the new business address have been given by all of them except Mr. Mukesh Kumar, Sushma, Ram Karan, Amit Kumar, Sunita Devi and Sushil Kumar in their respective affidavits. These six persons do not claim any change of address. Mukesh Kumar has stated that he has shifted to another place due to sealing drive but has not disclosed that address. Ms. Sushma also has not disclosed her new address in the affidavit filed by her. Amit Kumar, however, has stated that he has shifted work as general store but again has not disclosed the address of the said general store. Sunita Devi has not at all disclosed her new business address in the affidavit filed by her and the same is the position of Sushil Kumar. Ram Karan has given the name of his new business but has not disclosed his new address.
12. The learned counsel for the complainant states on instructions from the complainant who is present before us that the complainant is ready to produce, before the surveyor, all the aforesaid deponents as well as other sellers mentioned in the report of the surveyor whose affidavits they have filed.
13. In our opinion, the complainant needs to be given a fair and reasonable opportunity to establish the genuineness of the purchases claimed by him. Therefore, we permit him to produce all the persons mentioned in Annexure - 7 to the report of the surveyor before either the same surveyor or a new surveyor to be appointed by the insurance company on the date, time and place to be informed to him by the insurance company/surveyor. The aforesaid persons will produce all such material as may be reasonably required by the surveyor, to satisfy him with respect to the genuineness of the sales claimed by them. The surveyor shall also be entitled to make such local inquiries as he may deem appropriate for the purpose of verification of the assertion made by the complainant and the above referred sellers. If after considering the documents produced by them and making such local inquiries as he may deem fit the surveyor is satisfied that all the purchases mentioned in Annexure - 7 to his report are genuine purchases, he will recommend an appropriate quantum of compensation based upon the physical verification of the stock found by him in the factory premises of the complainant. If, however, one or more purchases are found to be fraudulent or fictitious, the insurance company will be entitled to reject the entire claim altogether. The insurance company is directed to appoint/reappoint the surveyor and convey the date, time and place where the complainant has to produce the purchasers before the surveyor, within four weeks from today. The complainant shall produce the said purchasers before the surveyor on the date so fixed by the surveyor. The entire verification process shall be completed by the surveyor within four months from today and an appropriate decision on the basis of the report of the surveyor shall be taken by the insurance company within 45 days thereafter.
The complaint stands disposed of.
7. It appears that long thereafter the complainant moved M.A. No. 69 of 2023 in this disposed off complaint praying for reviving the same and hearing it on merits. This application was filed in February, 2023 with an affidavit supporting the same which is dated 07.02.2023. Paragraph 18 onwards of the said application along with the prayer is extracted hereinunder:
18. That on the basis of the aforesaid order passed by this Hon'ble Commission the complainant received a letter dated 14.5.2015 whereby it was informed to the complainant by the Opposite Party/ Insurance Company that they had deputed Mr. Rajesh Kumar Mer, Surveyor, loss Assessors, Investigators and Valuers who will do the needful for verification of bills as per Hon'ble NCDRC orders. A Copy of the letter dated 14.5.2015 by the Opposite Party/Insurance Company is annexed hereto and marked as Annexure - B.
19. That the complainant duly co-operated with the said surveyor and submitted all the documents to the said surveyor.
20. That it is submitted that the Opposite Party/Insurance Company informed to the complainant that the said surveyor has submitted his report. That the Opposite Party/Insurance Company did not supply the survey report of the said newly appointed surveyor Mr. Rajesh Kumar Mer, neither informed the contents of the said reports to the complainant.
That the Opposite Party also did not inform the Complainant as to what decision they have taken on the basis of the report of the Surveyor.
21. That the complainant thereafter contacted the Opposite Party/Insurance Company on several occasions and made several visits requesting the Opposite Party/Insurance Company to supply a copy of the survey report submitted by the said surveyor Mr. Rajesh Kumar Mer and the decision taken by the Opposite Party on the basis of the report of the Surveyor with regard to the claim of the Complainant.
22. That the complainant also issued a letter dated 12.3.2020 which was duly received at the office at Daryaganj, Delhi of the Opposite Party/Insurance Company wherein the complainant requested the Opposite Party/Insurance Company to issue the certified copy of the survey report.
23. That left with no alternative complainant through his Advocate issued a legal notice dated 6.7.2020 which was received by the Opposite Party/Insurance Company on 27.7.2020 calling upon the Opposite Party/Insurance Company to supply a copy of the survey report of Mr. Rajesh Kumar Mer. A copy of the legal notice dated 6.7.2020 along with the track report of India Post is filed herewith as Annexure - C.
24. It is submitted that till this date the Opposite Party/Insurance Company has failed to supply the copy of the survey report of the newly appointed surveyor Mr. Rajesh Kumar Mer prepared in terms of the order of this Hon'ble Commission dated 5.1.2015 and the decision taken by them on the basis of the report of the Surveyor.
25. That it is submitted that the proprietor of the complainant Shri Jai Prakash remain very sick during the intervening period. That thereafter because of the pandemic situation of Covid-19 the complainant could not take appropriate steps before this Hon'ble Commission with regard to his claim.
26. That the complainant is therefore filing the present application seeking direction upon the Opposite Party/Insurance Company to file and provide a copy of the survey report of Mr. Rajesh Kumar Mer and the decision taken by them on the basis of the report of the Surveyor, if any and also pray that the Consumer Complaint may be revived in view of the non-compliance of the categorical order dated 5.1.2015 passed by this Hon'ble Commission and the complaint may be adjudicated on merits.
27. That this Application is made bonafide and in the interest of justice.
PRAYER
It is therefore most respectfully prayed that this Hon'ble Commission may be pleased to issue direction upon the Opposite Party/Insurance Company to file and provide a copy of the survey report of Rajesh Kumar Mer and the decision taken by them on the basis of the report of the Surveyor, if any, and also pray that the Consumer Complaint may be revived / restored to it's original number in view of the non-compliance of the categorical order dated 5.1.2015 passed by this Hon'ble Commission and the consumer complaint may be heard and adjudicated on merits and may pass such further or other order or orders as to this Hon'ble Commission may deem fit and proper in the interest of justice.
8. Notices were issued on this application with a direction to serve it on the learned counsel for the Insurance Company vide an order dated 21.02.2023 which is extracted hereinunder:
Issue notice on MA/69/2023. Copy of the Application be served on the learned Counsel who appears for the Opposite Party. Fresh notice need not be issued.
Reply be filed within three weeks. Rejoinder be filed within three weeks.
List on 25.04.2023.
9. Directions for service were again given on 31.07.2023 and on 22.11.2023 learned counsel appeared for the OP. On 08.03.2024, the following order was passed:
While disposing of the complaint, this Commission, by the order dated 05.01.2015, directed the insurance company to re-appoint the surveyor who shall conduct a fresh survey and the liberty was given to the insurance company to take decision on the basis of fresh survey report. Now, the complainant has filed this MA for directing the insurance company to provide the copy of survey report of Surveyor Mr. Rajesh Kumar Mer to the complainant and copy of the decision taken by the opposite party. The opposite party is directed to supply the copy of the surveyor report as well as the decision taken by the opposite party on the survey report within a period of two weeks from the date of producing a certified copy of this order before the appropriate Branch Office. If the complainant is aggrieved by the fresh order of the insurance company, they are given liberty to amend the complaint.
List the matter for directions on 10.04.2024.
10. Liberty was given to amend the complaint.
11. On 10.04.2024, the following order was passed:
Proxy Counsel informs that Order dated 05.01.2015 has been partly complied with in as much as a fresh report of surveyor has been obtained but final decision has not been taken.
Issue notice to Chief Managing Director of United India Insurance Co. Ltd. to show cause as to why the Order dated 05.01.2015 has not been fully complied with. The Chief Managing Director shall appear in person on the next date of hearing.
List on 27.06.2024.
12. Reply to the M.A. No. 69 of 2023 was filed on 15.04.2024 vide Diary No. 14569.
13. The Insurance Company moved I.A. No. 7693/2024 bringing on record a copy of the Survey report dated 06.05.2015 and 09.08.2015 with a prayer for recall of the order dated 10.04.2024. The said application was accompanied by an affidavit which is dated 09.05.2024 and it also brought on record a fresh letter of repudiation dated 09.05.2024.
14. On 16.05.2024, this Commission passed the following order:
By the order dated 10.04.2024, Chief Managing Director of the OP had been directed to appear in person. The Chief Managing Director has filed IA/7693/2024 for recalling of the order. In the IA, it has been stated that in compliance of the order of this Commission, the opposite party has taken decision in the matter. In the facts of the case, we suspend the operation of the order dated 10.04.2024. The complainant may file reply in the IA before the next date of hearing i.e. 27.06.2024.
List the matter on 27.06.2024.
15. On 03.09.2024, this Commission passed an order observing that no useful purpose would be served in calling upon the complainant to file a fresh complaint in view of the fresh letter of repudiation dated 09.05.2024 and therefore the Commission revived the original complaint no. 125 of 2007 with permission to file an amended complaint.
16. The amended complaint was filed on 14.10.2024 vide a Diary No. 34792 whereby the repudiation dated 09.05.2024 was also challenged questioning the correctness of the survey reports dated 06.05.2015 and 09.08.2015.
17. To this, the Insurance Company filed a reply on 06.12.2024 vide Diary No. 40117 and a rejoinder to the same was filed by the complainant on 30.05.2025 vide Diary No. 15161.
18. Thereafter, written submissions have been filed on 18.08.2025 by the OP Insurance Company through Diary No. 22033 and by the complainant on 01.09.2025 through Diary No. 23293. With all these applications, pleadings and orders on record, the matter came up before us for final hearing on 11.03.2026 when we heard Mr. Sanjoy Kumar Ghosh, learned counsel for the complainant and Mr. Amit Kumar Singh, learned counsel for the Insurance Company at length.
19. At the outset, we may point out that the complaint had been finally disposed off by this Commission on 05.01.2015 and therefore nothing was pending before this Commission. However, M.A. No. 69 of 2023 was filed and entertained in February, 2023 when notices were issued on 21.02.2023. We may point out that this miscellaneous application was filed with the averments extracted hereinabove after almost 8 years of the disposal of the complaint.
We do not find any explanation worth the name in the entire application no. 69 of 2023 as to the filing of the application after 8 years, for the reason that the application itself discloses the process of a reassessment by the appointment of a new Surveyor Mr. Rajesh Kumar Mer which happened in 2015 itself. The complainant has stated that he duly cooperated with the Surveyor, but the copy of the Survey report was not given. According to the complainant after almost 5 years in 2020, notices were issued and a legal notice was issued on 06.07.2020 calling upon the Insurance Company as to why the Survey report had not been provided to the complainant.
20. The aforesaid facts clearly indicate that the complainant was well aware of the progress made in terms of the final order of this Commission dated 05.01.2015. There is no explanation as to what prompted him to file the application in 2023, except that the Covid period has been stated feebly in paragraph 25. We may record that we find no justification explained for entertaining the said miscellaneous application after 8 years in a disposed off matter, but the fact is that the said application was entertained by this Commission, and after contest and a reply having been filed to the same, the application was considered and the complaint was revived vide an order dated 03.09.2024, whereafter the complainant was given an opportunity to file an amended complaint that has been filed to which a reply has been filed by the Insurance Company and a rejoinder has also been filed on record.
21. What is noticeable is that the order dated 03.09.2024 had attained finality in the sense that the Insurance Company did not question the filing of M.A. No. 69 of 2023 in a disposed off complaint, and to the contrary acquiesced to the order dated 03.09.2024 whereby the complaint was revived and the amendment to the complaint was permitted. Thus, by virtue of this submission of the parties to the jurisdiction of this Commission and the complaint having been restored, the same became final in terms of the provisions of Section 24 of the Consumer Protection Act, 1986, which is extracted hereinunder:
24. Finality of orders.--Every order of a District Forum, the State Commission or the National Commission shall, if no appeal has been preferred against such order under the provisions of this Act, be final.
22. We may point out that the order dated 05.01.2015 had also become final and no appeal had been filed against it. Nonetheless, a miscellaneous application was entertained in the same complaint and the matter was re- opened with the consent of the parties without any challenge to the order dated 03.09.2024 as noted above. Mr. Amit Kumar Singh, learned counsel for the Insurance Company urged that the Insurance Company did not question this re-opening of the case and rather proceeded to contest the amended complaint itself. In these circumstances, we find that the complaint stood revived with the averments in the amendment and its reply by the Insurance Company and it is in this background that we have proceeded to hear the matter.
23. Thus, with this legal journey as narrated above, we have before us two Survey reports, the first is dated 26.07.2007 and the second set is dated 06.05.2015 and 09.08.2015.
24. As a result of this, we have two letters of repudiation, the first one dated 02.05.2008 that was pursuant to the survey report dated 26.07.2007 and the second letter of repudiation dated 09.05.2024 is pursuant to reports dated 06.05.2015 and 09.08.2015 that has been brought on record by the Insurance Company after the summoning of the officials of the Insurance Company and was filed through I.A. No. 7693 of 2024. Needless to repeat that this I.A. was supported by an affidavit dated 09.05.2024 which is incidentally the date of the fresh repudiation letter.
25. It is also noteworthy that even though the Survey reports are dated 06.05.2015 and 09.08.2015, yet the repudiation is dated 09.05.2024 that is almost after 9 years. The explanation given in paragraph 5 of I.A. No. 7693 of 2024 by the Insurance Company for this delay is as follows:
5. In the wake of the integration of the policy issuing office 041703 into the administrative structure of DO Daryaganj 041700, and the subsequent amalgamation of this entity into DO 2, a cascade of bureaucratic transformations ensued. Over the course of these organizational shifts, spanning a considerable span of time, the personnel directly involved in the handling and processing of the referenced file, including dealing officers and support staff, gradually transitioned out of their roles, either through retirement or the passage of time. Despite the collective and earnest endeavors of all stakeholders involved, ranging from diligent officials to conscientious administrators, the elusive file in question is mislplaced.
26. We may record that such an explanation does not inspire confidence and we do not find this to be an explanation for delivering a letter of repudiation after the officials were summoned by this Commission and after a span of 9 years. This in itself is a grave deficiency.
27. We have mentioned these facts for the simple reason that on the one hand the complainant took 8 years to file M.A. No. 69 of 2023 for reviving the complaint and on the other hand, the Insurance Company has come up with a letter of repudiation dated 09.05.2024 hopelessly after 9 years of the Survey carried out on 06.05.2015 and 09.08.2015 pursuant to the final order of this Commission dated 05.01.2015.
28. The aforesaid state of affairs therefore generates a very peculiar litigative history that has been continued before this Commission in the circumstances indicated above, which we are now called upon to finally determine.
29. The claim was of Rs. 92,49,580/- and as noticed in the order dated 05.01.2015, the value of the damaged stock was assessed by the Surveyor in the report dated 26.07.2007 to the tune of Rs. 4,75,648.71p. This valuation of the damaged stocks has been calculated by the Surveyor in paragraph 17 of the report dated 26.07.2007. The repudiation dated 02.05.2008 as noted above has recorded that genuine documents and records had not been furnished and therefore there was a breach of utmost good faith. The impact of the said repudiation was examined by this Commission while disposing off the complaint on 05.01.2015. This order has not been challenged by the Insurance Company and rather the Insurance Company acquiesced to the same and appointed Mr. Rajesh Kumar Mer as the Surveyor to carry out the exercise in terms of the order dated 05.01.2015. In the given circumstances, no finality can be attached to the repudiation dated 02.05.2008 and accordingly, the claim of the complainant had to be revisited by the fresh Surveyor. In such circumstances, it is the fresh exercise which came into existence eclipsing the impact of the repudiation dated 02.05.2008.
30. This second round of exercise in terms of the final order of this Commission dated 05.01.2015 commenced with the Survey report dated 06.05.2015 which is described as an Investigation report. The investigation was carried out in respect of the purchase bills, the authenticity whereof had been earlier doubted. The Investigator could not proceed further as most of the firms were neither verifiable and some of the companies had been closed.
Thus, the Investigator came to the conclusion that most of the purchase bills in order to support the statement of stocks as claimed by the complainant seemed to be fake. This was followed by the Investigation / Survey report dated 09.08.2015 wherealso while coordinating with the complainant through its Proprietor Mr. Jai Prakash and his son, it was reported that the conclusion remains same.
31. The complainant alleges that even though the exercise with the fresh Surveyor had been carried out and all information was given, yet the said reports of the Investigator / Surveyor dated 06.05.2015 and 09.08.2015 were never provided to the complainant.
32. It is urged by Mr. Ghosh that both these documents saw the light of the day for the first time after the Insurance officials had been called upon to appear before the Commission vide order dated 10.04.2024. These documents were filed along with I.A. No. 7693 of 2024 on 10.05.2024.
33. Not only this, it is more than evident that the said application was moved in the light of the order dated 10.04.2024 on 10.05.2024 and along with the same, apart from the aforesaid Survey reports, the fresh letter of repudiation dated 09.05.2024 was also attached which is of the same date as the affidavit of the said application.
34. We find this to be very strange and unacceptable that if the Survey / Investigation had been carried out in 2015 itself, there was no reason for the Insurance Company to have kept quiet and then after 9 years to issue the letter of repudiation, that too after this Commission had summoned the Insurance Company officials. We see no good ground for the issuance of the repudiation letter after 9 years and it does not inspire any confidence worth the name. We do not find any explanation as to why the copies of the reports dated 06.05.2015 and 09.08.2015 were not supplied to the complainant.
35. On the other hand, we also do not find any explanation on behalf of the complainant that in the background that he had participated and cooperated with the Surveyor in the fresh round of survey in 2015, then why did the complainant keep quiet and had not made any enquiries about the outcome of the said survey from 2015 onwards, and suddenly came up with a legal notice in 2020 and then filed an M.A. before this Commission in 2023.
36. Both the parties therefore have acted at leisure and casually. The complainant sat over the proceedings after having come to know that the survey had been conducted in 2015. The complainant could have approached the appropriate forum, but instead it chose to send a legal notice after 5 years and then file a miscellaneous application before this Commission in 2023. We will not say anything further because the said application was entertained and the complainant was allowed to amend the complaint to which the Insurance Company had acquiesced.
37. Nonetheless the fact remains that the Insurance Company also in the same comfortable way with no valid explanation filed a repudiation letter after 9 years of the survey. This is a clear deficiency in service. The IRDA Regulations that have been in force for long since 2002 and amended later on clearly provide a timeline for the finalisation of the claim. In the instant case, it is evident that the incident took place in the year 2006 and the complaint was filed in 2007 as the Insurance Company had failed to finalise the claim. It is while filing a reply to this complaint that a copy of the repudiation letters dated 02.05.2008 was filed. This was yet another deficiency on the part of the Insurance Company to have dispatched a repudiation letter on 02.05.2008 when the Survey report had already been furnished on 26.07.2007. There is no justification given as to why the Insurance Company moved in such a leisurely fashion violating all the timelines under the IRDA Regulations of repudiating the claim after almost 1 year of the filing of Survey report.
38. The said repudiation stood eclipsed as reasoned out hereinabove in the light of the order of this Commission dated 05.01.2015 and then once again the Insurance Company has come up with a repudiation letter after 9 years of the filing of the Investigator / Surveyor report as referred to above. These two factors therefore leave no room for doubt that the Insurance Company has violated the timeline norms and acted upon a survey report which was never supplied to the complainant which is yet another deficiency with the emergence of a letter of repudiation after 9 years.
39. At the same time, we cannot ignore the repetitive findings of the Surveyors and Investigators which do not differ in their content substantially while holding that most of the purchase bills of stocks on verification were not found to be genuine.
40. It is for the said reason that the first Surveyor M/s. Soni & Co. had evaluated the worth of the damaged stocks in paragraph 17 as follows:
41. It is this figure of Rs. 4,75,648.71p that appears to us to be an undisputed sort of an amount which can be said to be the loss suffered by the complainant.
42. We do not find the second repudiation dated 09.05.2024 worth acceptance because of the huge and inordinate delay with which it was issued and filed, and is a clear deficiency on the part of the Insurance Company. Nonetheless the complainant also has walked into the space of time through a miscellaneous application that has been entertained and was not challenged by the Insurance Company. However, this approach of the complainant cannot in any way entitle him to the claim of Rs. 92 lakhs and odd made by him as whatever material has been indicated in the Surveyors report dated 26.07.2007 cannot be brushed aside.
43. In order to strike a middle path and in order to resolve this dispute where we find that there was a loss due to fire, we award the sum of Rs. 4,75,648.71p as damages to the complainant in lieu of the insurance coverages and also keeping in view the deficiency of the Insurance Company in the manner in which it has proceeded and has been noted by us hereinabove. All combined, the said amount would be payable to the complainant within two months from today together with 6% per annum with effect from 03.09.2024 till the date of actual payment. We have chosen this date as it is on the said date that the complaint was allowed to be amended which amounts to entertaining and lodging of a fresh complaint. Accordingly, in our opinion, this would be the best median date for calculation of interest. In the background of this shabbily conducted litigation that was burdened on this Commission and is being finally resolved by us, we find this to be the only justified solution.
44. We would have imposed exemplary cost on the Insurance Company for having come up with a repudiation after 9 years in the background above, but we have restrained ourselves on account of the conduct of the complainant who also was equally irresponsible in filing the miscellaneous application after 8 years, the facts whereof have been detailed by us.
45. The complaint therefore stands disposed off and partly allowed with the above directions.
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