Case: National Insurance Company Ltd Vs. M/s. Hareshwar Enterprises (P) Ltd. &amp; Ors

The respondent No.1 (insured) was the claimant before NCDRC. The plant and machinery in the factory owned by respondent No.1 was charged in favour of respondent No.2 as security, while the stock in trade was hypothecated in favour of respondent No.3 (Thane Jan Sahakari Bank) for discharge of loan obtained from them. Since the respondent No. 2 and 3 are entitled to adjust the claim towards their outstanding dues, they are arrayed as parties to the proceedings.2. Through the order dated 27.03.2009 impugned herein, the NCDRC has allowed the complaint in part and directed the insurer to pay the sum of Rs.79,34,703/- with interest at 12 % per annum. Out of the said amount, a sum of Rs.49,56,897/- is ordered to be apportioned in favour of respondent No.2 (Maharashtra State Financial Corporation) and the balance amount of Rs.29,77,806/- is ordered to be paid to the respondent No.3 (Thane Jan Sahakari Bank Limited). The total amount awarded is against the claim of Rs.1,25,25,319/- made by the respondent No.1 (Insured).3. The brief facts leading to the claim before the NCDRC is that the respondent No.1 was engaged in the business of manufacture of polyethylene, plastic films and other similar packaging materials. The respondent No.2 had advanced loan to the respondent No.1 against security of its building, plant and machinery. The respondent No.3 had also advanced money to the respondent No.1 for procurement of stock in trade, which was accordingly hypothecated to them. In order to cover the risk of fire, flood and earthquake to the factory building and also the plant and machinery, the respondent No.1 secured insurance policies from the appellant. One policy was to cover the risk during the period 05.02.1999 to 04.02.2000. Another policy in respect of the risk to the stock in trade was also secured which was for the period of 17.09.1999 to 16.09.2000. The respondent No.1 was accordingly carrying on its business in the factory premises while on 06.11.1999 fire broke out causing total destruction of the plant and machinery, raw material as also finished and unfinished goods. The respondent No.1 intimated the appellant regarding the fire incident on 07.11.1999.4. The appellant accordingly appointed M/s. H. Manna and Company and Virendra Padmasi Shah jointly as surveyors to assess the loss. The surveyors visited the site on 09.11.1999. On having obtained the documents and records submitted their interim report on 23.03.2000 and the final report on 13.03.2001 to the insurer. The surveyors through the said report had assessed the loss at Rs.1,06,00,000/- excluding the loss of business and other losses. The insurer, however, did not settle the claim nor repudiate the same. Instead, the insurer through their letter dated 22.06.2001 informed the respondent No.1 regarding appointment of Om Nityanand Enterprises as investigators to look into the claim. It is in that view, since the repeated request and demand ultimately made through the legal notice had not been complied with by the appellant, the respondent No.1 filed the complaint before the NCDRC. As already noted, the NCDRC after considering the matter in detail has arrived at its conclusion and has passed the order allowing part of the claim.

Court's reasoning:
6. Having noted the contention, on the provision as contained, there is no ambiguity whatsoever. However, what is required to be taken note is that the provision indicates that the complaint is required to be filed within two years from the date on which the cause of action has arisen.7. In contradistinction, in the instant case as noted the fire incident had occurred on 06.11.1999. The appellant had informed the insurer on 07.11.1999, where after the joint surveyors were appointed and on verification had submitted their final report on 13.03.2001. Despite said report, the insurer through their letter dated 22.06.2001 had appointed an investigator but did not proceed to either accept the claim or repudiate the same.8. If in the above context the fact situation herein is noticed, though the fire incident occurred on 06.11.1999, the same merely provided the cause of action for the first time to make the claim but the same did not remain static at that point. On the other hand, the process of joint survey though had concluded with its final report on 13.03.2001, the letter dated 22.06.2001 addressed by the insurer to the respondent No.1 regarding appointment of the investigator had created a fresh cause of action and kept the matter oscillating. Thereafter, the matter did not rest at that but there was repeated action being taken by the investigators seeking for details. When the same did not conclude in an appropriate manner, the respondent No.1 (Insured) got issued a legal notice dated 05.01.2003 to which reply was issued, when in fact the repudiation was gathered and the complaint was filed. Even if the date on which the process of intimation of appointment of the investigator through the letter dated 22.06.2001, received by the respondent No.1 is taken into consideration, from that date also the complaint filed on 26.03.2003 is within time. There was no need for the NCDRC to pass any separate order at the outset to hold the claim to be within limitation and then proceed when it is clear on the fact of it. As such the consideration of the complaint on merits by the NCDRC was justified. The contention therefore urged by Mr. Vishnu Mehra, learned counsel on that ground is accordingly rejected.9. On the merits of the claim, a perusal of the impugned order dated 27.03.2009 passed by the NCDRC indicates that the NCDRC has made detailed reference to the report submitted by the joint surveyors, dated 13.03.2001 and has ultimately allowed the claim, in part. In the surveyor report dated 13.03.2001 consideration was made to two parts; firstly, the assessment of loss relating to the stock of LDPE plastic, powder, granules, tubings and films as contained in clause 8.1 of the report. Next, the loss caused due to the destruction of plant and machinery is assessed in clause 8.2 and the sum of Rs.46,60,459/- being the depreciated value has been awarded for loss of plant and machinery. In respect of the said claim the respondent No.2 (Maharashtra State Financial Corporation) is interested. In that regard, the learned counsel for the appellant, as also the learned counsel for respondent No. 1 and 2 are agreed that there is no serious dispute with regard to the consideration made either by the surveyors or the NCDRC on the aspect of plant and machinery. The same having not been a major issue before the NCDRC, need not be gone into in these proceedings.11. In the said decision, it is no doubt held that though the assessment of loss by an approved surveyor is a prerequisite for payment or settlement of the claim, the surveyor report is not the last and final word. It is not that sacrosanct that it cannot be departed from and it is not conclusive. The approved surveyors report may be the basis or foundation for settlement of a claim by the insurer in respect of loss suffered by insured but such report is neither binding upon the insurer nor insured. On the said proposition, we are certain that there can be no quarrel. The surveyors report certainly can be taken note as a piece of evidence until more reliable evidence is brought on record to rebut the contents of the surveyors report.In the facts arising in the said case the insured was seeking to rely on the surveyors report to bind the insurer in view of the provisions contained in Section 64-UM (c) of the Insurance Act, 1938. The Insurer had however sought to rely on the investigation report. The State Commission refused to look into report of the private investigator. In that circumstance, this court was of the view that the State Commission should have given an opportunity to the insurer to prove the investigation report. In the said case, the very nature of the fire incident was in dispute from the very inception. The claimant had contended that the fire was caused by a short circuit, which was seriously disputed by the insurer and an investigation in that regard had been held. It is in that light, a conclusion was to be reached by the forum adjudicating the claim as to whether any fraud was committed in making the claim with reference to the very nature of the incident. In that circumstance, even though at the first instance, there was an investigation held by the police, the private investigation held by the insurer would have been relevant to decide the question. As such, in the said circumstance it was imperative that the investigators report was to be considered threadbare and a decision ought to have been arrived at.13. On the other hand, in the instant facts there is no serious dispute with regard to the fire incident. Even going by the contention put forth, it is noted that the loss caused by destruction of the plant and machinery in the fire incident is not much of an issue. The dispute raised insofar as the loss caused to the raw- materials/stock is by contending that the purchase of stock during the months of August, September and October 1999 is shown excessive as compared to the stock position from April to July 1999. In that circumstance, in the facts and circumstances herein whether the investigation report was an indispensable document or as to whether the survey report is exhaustive enough to arrive at a conclusion on that aspect is the issue.14. Having noted the said decisions, we are of the opinion that the same cannot alter the position in the instant case. On the proposition of law that the surveyors report cannot be considered as a sacrosanct document and that if there is any contrary evidence including investigation report, opportunity should be available to produce it as rebuttal material, we concur. However, the issue to be noted is as to whether the surveyors report in the instant case adverts to the consideration of stock position in an appropriate manner and in that circumstance whether an investigation report which is based on investigation that was started belatedly should take the centre stage. The fact remains that the surveyors report is the basic document which has statutory recognition and can be made the basis if it inspires the confidence of the adjudicating forum and if such forum does not find the need to place reliance on any other material, in the facts and circumstance arising in the case. If in that light, the surveyors report, on which reliance has been placed by the NCDRC is taken note insofar as the assessment relating to the loss due to destruction of stock, the consideration of the same has been adverted in clause 8.1.1 and the stock position as declared to the bank has been referred to in clause 8.1.3. The learned counsel for the appellant as also the learned counsel for the respondents has made detailed reference and taken us through details contained in the report.15. The consideration made by the surveyors to ascertain the correctness of the details relating to the stock indicates that reference is made to the value of the stock declared to the bank; value of the stock as per audited manufacturing account and balance sheet for the year ended 31.03.1999; the explanation offered for the purchase made during the months of August 1999 to October 1999. In that regard, the surveyors have also visited the source from which the LDPE was procured during September 1999 to 04.11.1999.16. Thus, a perusal of the surveyors report would indicate that the same is not perfunctory but has referred to all aspects, discarded what was not reliable and the assessment has been made thereafter. In that background, as noted, the fire incident had occurred on 06.11.1999 and the surveyors had visited the site on 09.01.1999 itself and the interim as also the final report were submitted on 23.03.2000 and 13.03.2001 to the insurer after due deliberations. The insurer did not take any steps immediately but after much delay appointed the investigator on 22.06.2001 and had not concluded the said process though the respondent No.1 had made repeated request. The insured had approached the NCDRC and it is in the said proceedings, for the first time the insurer seeks to rely on the investigators report. Therefore, in the facts and circumstances herein the surveyors report was submitted as the natural process, the conclusion reached therein is more plausible and reliable rather than the investigation report keeping in view the manner in which the insurer had proceeded in the matter. Hence, the reliance placed on the surveyors report by the NCDRC without giving credence to the investigation report in the facts and circumstances of the instant case cannot be faulted. In that view, the conclusion reached on this aspect by the NCDRC does not call for interference.