1. COMPLAINT was filed impleading New India Assurance Co. Ltd., Saharanpur Branch as opposite party No. 1, Anil Kumar Gupta, preliminary Surveyor as opposite party No. 2, Sanjeev Soni, final Surveyor-cum-Investigator as opposite party No. 3 and Bank of India, financier as opposite party No. 4. Vide order dated 19th December, 2000, notice was ordered to be issued only to opposite party No. 1-Insurance Company Complainant who has been dealing in medicines, had purchased fire policy ''B'' bearing No. 11/10383, valid from 28.2.1998 to 27.2.1999 for a sum of Rs. 20,00,000 (Rs. 19,50,000 for all types of medicines, Rs. 30,000 for computer and Rs. 20,000 for furniture, fixture and fittings) from the opposite party-Insurance Company. Another policy-Misc. accidental insurance policy No. 46/7941 operative from 28.2.1998 to 27.2.1999 for a sum of Rs. 20,00,000 was further purchased by the complainant from the said Insurance Company. Complainant was appointed as sole distributor by M/s. Indo Chem Laboratory Pvt. Ltd. under the MOU dated 4.12.1998 effective from 1.12.1998. It was alleged that during the intervening night of 5/6.1.1999, godown of the complainant at 1, Choudhary Market, Malhipur Road, Saharanpur was burgled and medicines worth Rs. 20,12,235 were stolen therefrom. Theft was detected by Vinod Tyagi, manager of the complainant on 6.1.1999. Shri Tyagi lodged report of the theft with P.S. Sadar Bazar, Saharanpur on 6.1.1999 on the basis whereof FIR under Section 380, I.P.C. was registered. Insurance Company was intimated of the theft by the letter dated 6.1.1999. Formal claim was also lodged on 13/14.1.1999 with the Opposite party - Insurance Company. Insurance Company appointed Anil Kumar Gupta, preliminary Surveyor. It further appointed Sanjeev Soni as final Surveyor-cum-Investigator. On claim not being settled, complaint attributing deficiency in service was filed seeking direction to the Insurance Company to pay amount of Rs. 20,12,235 towards compensation with interest @ 24% p.a. and Rs. 20,00,000 as compensation towards mental and physical agony and cost.
2. OPPOSITE party 1-Insurance Company contested the complaint by filing written version. Issuance of two policies in question in favour of the complainant was not denied. It was also not denied that on receiving intimation regarding theft, the Insurance Company deputed preliminary Surveyor and final Surveyor-cum-Investigator. However, it was alleged that on investigation the police found that alleged theft was not committed in the godown. Preliminary Surveyor submitted the report dated 28th January, 1999. Final Surveyor-cum-Investigator also submitted the report dated 22nd January, 2001. For the reasons given in para No. 9 of the written version, the final Surveyor concluded that the claim was fraudulent. Considering the said two reports and the documents, the Insurance Company, therefore, disowned the liability to pay the claim being fraudulent. It was denied that medicines worth Rs. 20,12,235 were stored in the godown. It was stated that as the complainant was the agent of M/s. Indo Chem Private Limited the medicines were held by it in trust and it is not entitled to any compensation.
3. THE complainant filed rejoinder to the written version of the Insurance Company. It was alleged that when the complainant came to know that the officials of the Insurance Company had managed to get a false negative report dated 7.1.1999 from the police, the complainant filed an application before the DIG. for fresh investigation. D.I.G. entrusted the case to P.S. Kutabsher Thana for fresh investigation. During investigation the police collected ample evidence proving the occurrence of theft but it was unable to trace out the real culprit and to recover the stolen medicines. Final report submitted by the latter police station was accepted on 27.5.1999 by the Chief Judicial Magistrate, Saharanpur. It was further alleged that Sanjiv Soni, final Surveyor contacted Amar Nath Jindal, proprietor of the complainant, on telephone on 16.10.1999 at his residence and asked him to visit Hotel Shiva Continental, the Mall Mussoorie wherein he was staying in connection with the report. On 17.10.1999, the Surveyor again contacted him on telephone. Ultimately, on 18.10.1999 Shri Jindal met the Surveyor at the said hotel. The Surveyor demanded commission @ 20% of the recommended compensation to which he did not agree. When the Surveyor along with his family was to leave the hotel on 18.10.1999 he asked Shri Jindal to clear the hotel bill as he was short of funds. Under the compelling circumstances, he had to make the payment of Rs. 5,803 against bill No. 001669 dated 18.10.1999 to the hotel. It was pleaded that two reports dated 28.10.1999 and 22.1.2001 were arbitrary and were made as the complainant did not fulfil the illegal demand of the Surveyor(s).
4. AMAR Nath Jindal filed his affidavit by way of evidence. Affidavits of Mahanand Mishra, officer of the Insurance Company and Sanjeev Soni, Surveyor were filed on behalf of the opposite party-Insurance Company.
5. HAVING heard Amar Nath Jindal, proprietor of the complainant and Mr. P.K. Seth, Advocate for the Insurance Company, two points which mainly arise for determination are, (i) whether burglary had occurred in the insured godown on the intervening night of 5/6.1.1999; (ii) whether medicines worth Rs. 20,12,235 or of any lesser amount had been stolen from there?
6. IT is not in dispute that a report of theft was lodged by Vinod Tyagi, manager of the complainant with P.S. Sadar Bazar Thanna on 6.1.1999 on basis whereof an FIR under Section 380, IPC was registered. It is also not in dispute that on 7.1.1999 the police of the said Police Station found that such a theft had not taken place and thereafter on an application made by the complainant to DIG, Saharanpur, the case was transferred for fresh investigation to P.S. Kutabsahar which on investigation concluded that such theft had taken place in the insured godown but the police was unable to apprehend the culprits or recover the stolen medicines and the case was, therefore, allowed to be closed on 27.5.1999. [Copy of the] Proceedings culminating in acceptance of final report by the Chief Judicial Magistrate (at page-228) coupled with the affidavit of Amar Nath Jindal prove the theft.
7. COMING to said point No. (ii) above, aforesaid report dated 22.1.2001 of S. Soni and Co., Surveyor need be referred to. Under the caption ''Brief history of the insured'', it is stated that:
"Complainant purchased the medicines from M/s. Indochem Pvt. Ltd. and only a small amount of purchases were made from other companies and the complainant sells medicines to Govt. departments at fixed rates. Under the caption ''incident'' it is stated: Preliminary survey was conducted by A.K. Gupta. The following documents were sent to us by the preliminary Surveyor (copy enclosed as Appendix-B) 1. Copy of F. I. R. 2. Purchase invoices of the goods which were stolen. Date B. No. Supplier Amount 4.1.1999 295 Indochem 3,78,800 Pvt. Ltd. 4.12.1998 248 -do- 7,56,500 4.12.1998 249 -do- 8,17,500 3. List of stolen items with value amounting to Rs. 20,12,235. 4. Claim form duly filled up, claim amount Rs. 20,11,545 5. Copy of the stock register containing 47 pages."
8. PARAS 2 and 3 of the said survey report being material, are reproduced below:
"2. Verification of Books and Records (a) Verification of Purchase and Sale Bills in Purchase and Sale Register The insured provided us the complete books for the financial years 96-97, 97-98, 98-99 along with sales and purchase bills. We verified each and every purchase and sale bills in the purchase and sale register and found no discrepancies. The total of the purchase and sales register were checked with the Profit and Loss A/c of 96-97, 97-98 and 98-99 (upto the date of loss) and no discrepancies were found. The transportation challans were also submitted by the insured, but we could not cross verify them with the purchases as nothing was mentioned on transportation challans to identify them with the purchase invoices. Thus, the financial books were thoroughly checked by us with purchase and sale bills. (b) Verification of Purchase Indents The insured submitted the purchase indents issued by Government Departments. We tried to cross verify it with the sales bill, but we could not cross verify it. Since all the purchases indents submitted by the insured were in the name of M/s. Indochem Pvt. Ltd. OUR OBSERVATIONS After verifying completely the sales and purchases, we observe that: (a) The purchases were mostly made from M/s. Indochem Pvt. Ltd. (b) All the sales were made to the Government Hospitals and dispensaries against the purchase indents received from them. (c) All the purchase indents were in the name of M/s. Indochem Pvt. Ltd. (d) All the payments from the Government Hospital were in the name of M/s. Indochem Pvt. Ltd. except in few cases where the diversion letter were sent by Indochem Pvt. Ltd. to prepare the cheque in the name of the insured. (e) The insured had been charging only CST on the sales and had shown in the books that the cash had been deposited in the bank for Sale Tax payable. (f) All the payment to Indochem Pvt. Ltd. was made either in cash purchases received from Government Hospitals in the name of Indochem Pvt. Ltd. 3. VERIFICATION OF QUANTITATIVE DETAILS BY US 3(a) PREPARATION OF STOCK REGISTER The stock register submitted by the insured to the preliminary Surveyor was just for two months. We asked the insured to give us the stock register before that period but insured replied that they do not maintain stock register and hence they have no records. We tried ourselves to maintain the stock register. We got the list of the physical inventory of the stocks as on 1.4.1996 duly signed by the insured based on Audited Balance Sheet of 31.3.1996 initially given with the documents. Thereafter we started preparing the stock register, we had all the purchase bills and sales bills for the period 1.4.1996 to 5.1.1999, which we entered in the stock register quantity wise, date wise. The quantitative stock as on 5.1.1999 came as negative, which means sales were there without purchase. Which proves that the sale were either incorrect or bogus. Since there were no purchases for the same. 3(b) SUBMISSION OF THE STOCK REGISTER BY INSURED (AFTER THE LOSS) After appearing the negative stocks as on 5.1.1999, we asked the insured to submit the stock register for the period 1.4.1996 to 5.1.1999. After repeated request, the insured submitted the stock register, which they subsequently got prepared after the loss based on purchase, sale bills, opening stock figures based on Audited Balance Sheet. 3(d) VERIFICATION OF THE STOCK REGISTER SUBMITTED BY THE INSURED The stock register submitted by the insured was for the period 1.4.1996 to 31.3.1997, 1.4.1997 to 31.3.1998 and 1.4.1998 to 25.11.1999. The stock register was not completed upto the date of loss i.e. 5.1.1999. We ourselves calculated the stocks in the stock register from 25.11.1998 to 5.1.1999. Then started the verification part, we checked each and every purchase bills and sale bills in the stock register and wherever discrepancies were observed, they were corrected in the stock register to find out the exact quantities on the date of loss. The register was thoroughly checked for all the 3 years, we found certain discrepancy, which are mentioned below: 1. The stock register submitted by the insured was compared with the stock register prepared by ourselves and we found that insured had made some entries by way of challans in the stock register submitted by the insured. Subsequently the insured earlier had not submitted the challans and it was only with the stock register given by the insured had provided these challans. We feel that these challans were prepared by the insured subsequently and are an after-thought only, since they were not provided initially. The reason of appearance of negative stock in the stock register prepared by us was that the insured had not provided us these challans earlier. So, we could not enter these challans in the stock register prepared by us. Further, there was no entry of these challans in the financial books, we could not detect these challans in the books of accounts, hence it proves that the challans are FAKE. 2. We verified the stock register submitted by the insured and made correction wherever it was found wrong. After making these corrections, we found that some of the items appearing in the stock register were negative. The sales were correctly entered but there were mistakes in purchases. The appearance of negative items in the stocks register indicates that either sale is incorrect/bogus or purchase bills are not entered. 3(b) VERIFICATION OF CHAL-LANS FOR RECEIPT OF GOODS AND CHALLANS OF GOODS RETURN The insured had made some entries on the basis of challans for receipt of goods and for goods return in the stock register prepared and provided subsequent to the loss and quite late after providing the original requirements of documents. We tried to verify the authenticity of the challans and the following were noted: 1. There were no entries in the Financial Books of the insured regarding the above challans. 2. There were no proofs of the transportation. 3. There were no entries in the suppliers accounting statement of goods received back or sold. We asked the insured to explain about these challans, the insured gave us the following reply: 1. That the goods which are damaged or not in demand are returned by the way of challans and shown as goods return in the stock register. The value of these goods returned is computed and of the same value goods of another type are taken and entered in the stock register. No effect is taken in the financial books. 2. That only in the case of denial by supplier M/s. Indochem Pvt. Ltd. They would have intended to transfer the entry from physical stock register to financial books of the account by way of debit notes... " 3(c) EXPLANATION OF INSURED REGARDING APPEARANCE OF NEGATIVE ITEMS IN THE STOCK REGISTER We discussed with the insured, the reasons for appearing of negative items in the stock register. The insured noted down the date of appearance in one of the case and later on submitted the challan for receipt of goods saying that he had forgotten to enter this challan. Thus, we observed that the insured is using challans as the mechanism for receipt of goods wherever he required and used it as an answer to our query of negative stocks. If these challans were originally available he would have supplied the same to us initially..."
Para-7 of the report which too is material runs as under: "7. VERIFICATION OF THE BANK STATEMENTS The insured produced the stock statements submitted to the bank (copy enclosed as Appendix-1). The details of the stock statement is as under: Date Stock (Rs.) 30.1.1998 18,55,668 31.5.1998 18,23,000 31.7.1998 17,86,614 31.8.1998 18,04,570 30.9.1998 18,04,562 6.11.1998 19.91,053 8.12.1998 19,21,000 4.1.1999 19,25,500 1,99,11,967 We visited the Bank of India, Saharanpur and found that the above stock produced before us were same as submitted to the bank. The insured has also informed about the theft. But we don''t accept the above statements as authentic. The reason being that the bank allows the cash credit limits on the basis of the stock statements and they got rarely to verify the ownership of the goods kept at the godown..."
9. PARA No. 14 of the report dealing with loss assessment is as under:
"14. CALCULATION OF STOCK LOST BY THEFT We verified the stock register submitted by the insured completely till date of loss and made corrections in the register, wherever the entries were wrong. The stocks as per our calculation comes out to be Rs. 21,15,416. The stock claimed by the insured is Rs. 20,12,235. We compared the item wise stock calculated by us with the stock claimed by the insured and lower of two is allowed amounting Annexure-II which comes to Rs. 18,85,707. Gross Loss Assessed Amount (Rs.) (based on available books and records) Stock on the basis of books (Annexure-II being lower of two) 18,85,707.25 Less: Goods received after 1.12.98 from M/s. Indochem Pvt. Ltd. (being the Goods received in the capacity of Consignee agent) Annexure-II) 18,03,872.00 Less: Goods received through the challans for which no proof hence disallowed (Annexure-III) 43,385.75 Balance (as per Annexure-III) 38,449.50 Less: Stock physically verified 336.00 NET LOSS 38,113.50 (based on available books) We have assessed the loss on the basis of books and records in Annexures II and III to the tune of Rs. 18,57,707.25 but has been reduced to Rs. 38,113.50 on account of stocks received on challans, but disallowed being stock received has no proof for Rs. 43,385.76. Secondly, the stocks received after 1.12.1998 from Indochem being the goods received in the capacity of consignee agent, hence not insured''s stock is disallowed to the tune of Rs. 18,03,872. Since goods held in transit not covered and sale tax department records also proves the stocks not belonging to the insured."
10. MEDICINES stolen were allegedly supplied by M/s. Indochem Pvt. Ltd. on 4.1.1999 of Rs. 3,78,800, on 4.12.1998 of Rs. 7,56,500 and on 4.12.1998 of Rs. 8,17,500. Invoices of these purchases are at pages 68, 68A and 69 on the paper book. In these invoices the consignments are shown to have been despatched through Malik Transport Co., Meerut. Goods receipts dated 6.12.1998 at page 249 and dated 4.1.1999 at page 250 issued by the said transport company cover the medicines of the above invoices. Complainant has filed the writing dated 4.6.2002 from the Manager of the said Transport Co. in support of despatch of the medicines of the said invoices through above two GRS dated 6.12.1998 and 4.1.1999 and Transport Co. having received the transport charges from the complainant. As is manifest from abovesaid final survey report dated 22.1.2001, medicines were being sold and supplied to the Govt. departments at fixed rates against purchase indents. As may further be seen from the survey report the complainant was not maintaining any stock register. Those were prepared at the asking of the Surveyor. In the backdrop of this evidence/facts we are unable to agree with the conclusion reached by the Surveyor that either the purchases or sales were bogus or that the challans, use whereof was made for preparing the stock register by the complainant were fake. Much importance cannot be attached to the observations made under the heading. ''Verification of documents submitted by insured''-Verification from sales tax department of the report, as along with the survey report the copy of the letter dated 9.5.2000 from Vishram Singh, Sales Tax Officer has not been filed. Abovesaid deduction of the amount of Rs. 18,03,872 was made while computing the loss on ground of the medicines received after 1.12.1998 from M/s. Indochem Pvt. Ltd. being held in trust by the complainant. Agreement dated 1.12.1998 entered into between M/s. Indochem Pvt. Ltd. and the complainant is at pages 22 and 23 on the paper book. Clause No. (8) of the agreement provides that it will be the duty of complainant to keep the medicines supplied in safe custody and to get the stocks of medicines insured. Complainant had taken fire policy ''B'' bearing No. 11/10383 to cover the stocks of all kind of medicines to the tune of Rs. 19,50,000. Complainant alleges that the said amount was paid by it to M/s. Indochem Pvt. Ltd. Complainant had, thus, insurable interest in the medicines supplied by the said Co. It is not necessary that a person having insurable interest should also be the owner of the insured property. From the above discussion, it must follow that amount of Rs. 18,03,872 could not have been deducted while computing the loss/compensation. Abovementioned amount of Rs. 18,85,707.25 in para No. 14 of the final survey report was reached on verification of the accounts/ bills after making necessary corrections by the Surveyor. Surveyor was further not justified in making deduction therefrom of Rs. 43,385.75 received through the challans for which no proof was produced. Proof was there in the form of abovesaid invoices raised by M/s. Indochem Pvt. Ltd. and the G.Rs. issued by Malik Transport Company.
11. AFORESAID survey report dated 22.1.2001 was submitted after about two years of the occurrence by the Surveyor. Apex Court as also this Commission have repeatedly held that claim in such cases should be settled within two months of the occurrence. Complainant had been deprived of the use of money all these years and it is, thus, entitled to interest which we quantify @ 9% p.a. Holding the Insurance Company deficient in service the complaint has to be allowed for Rs. 18,85,707.25 along with interest at the said rate from after two months of the report of the Surveyor. Complainant is separately not entitled to any compensation for mental agony, etc.
12. CONSEQUENTLY, the complaint is partly allowed with direction to the opposite party-Insurance Company to pay amount of Rs. 18,85,707.25 as compensation along with interest @ 9% p.a. from 22.3.2001. Opposite party will further pay cost of Rs. 15,000 to the complainant. Awarded amount will be paid within 6 weeks from today subject to furnishing of ''No Objection'' from Bank of India, opposite party No. 4 by the complainant.
13. COPY of this order will also be sent by the Registry to opposite party No. 4 Bank. Complaint partly allowed.
