2006 Supreme(SC) 859

2006(8) Supreme 461
SUPREME COURT OF INDIA
(From National Consumer Disputes Redressal Commission, New Delhi)
Dr. AR. Lakshmanan & Altamas Kabir, JJ.
M/s. Shobika Attire - Appellant
versus
New India Assurance Co. Ltd. & Anr. - Respondents
Civil Appeal No. 2066 of 2006
Decided on 15-9-2006
Counsel for the Parties :
For the Appellant : S. Dorairaj, V. Ramasubramanian, Arvind and V. Balachandran, Advocates.
For the Respondents : Pranab Kumar Mullick, Advocate.

IMPORTANT POINT
Where the insured has discharged the initial burden regarding destruction, damage of the showroom and the stocks therein by fire and riot in support of the claim under the insurance policy, it is then for the insurance company to disprove such claim with evidence, if any.

Headnote:Consumer Protection Act, 1986 - Section 23 - Insurance claim - Appellant firm, dealing in textile goods was covered by an insurance policy - At the relevant time, the firm had an insurance cover for all the stock in trade of textile items and garments - The policy expressly covered damages to the said stock in trade that might be caused due to riots, strike, malicious and terrorist damage - Appellant firm had been enjoying benefit of loans from 2nd respondent bank on hypothecation of stock in trade, value of which was not less than Rs. 2 crores at any given point of time - Communal unrest in the city of Coimbatore - Mob attacked and set fire to the showroom of appellants and also indulged in looting - Appellant firm lodged its claim with respondent insurance company for payment of compensation amounting to Rs. 2.20 crores - Respondent Insurance Company settled the claim for Rs. 1,02,16,173/ - Appellant firm filed a claim petition before the Consumer Commission for settlement of balance of the claim with interest - A further sum of Rs. 10,00,000/- was claimed towards hardship and mental agony caused to appellants due to deficiency in service on part of insurance company - Appellants had discharged the initial burden regarding destruction, damage of showroom and stocks therein - Insurance company failed to establish that claim of appellants was not justified and was not covered by policy of insurance - Respondent-insurance company directed to pay to appellants the balance amount of Rs. 97,83,827/- with interest @ 9% p.a. from the date of claim till payment.

       Held : It will appear that the aforesaid conclusion was arrived at by adopting a negative approach. The investigators reached the aforesaid conclusion merely by stating that the appellants had no material to strengthen their claim by providing unassailable evidence of looting. Such an approach cannot be supported since apart from claiming that the goods in the showroom had been looted and the attendant circumstances, the appellants were not in a position to supply any further evidence.(Para 20)

       That there was communal unrest in the city of Coimbatore on the date in question is not denied. That the mob attacked and set fire to the showroom of the appellants is also an established fact. That the showroom was attacked by a frenzied mob, which set fire to the elevated ground floor of the showroom and indulged in looting, is also established. At exactly what point of time the mob may have entered into the two basement levels is difficult to determine in the prevailing circumstances and it is quite possible that the looting had taken place before the police and the fire fighting personnel arrived at the site.(Para 21)

       There is nothing on record to indicate that the stock in trade had been removed from basement levels in anticipation of any such rioting. On the other hand, the bank has clearly supported the case of the appellants by informing the insurance company that the stock insured was for Rs.2 crores and the average stock at any point of time in the insured premises was more than Rs. 2 crores and the bank requested the insurance company to re-consider the claim of the appellant-firm.(Para 22)

       In our view, the appellants had discharged the initial burden regarding destruction, damage of the showroom and the stocks therein by fire and riot in support of the claim under the insurance policy and it was for the insurance company to disprove such claim with evidence, if any. In our view, the insurance company, despite the report of the investigator, failed to establish that the claim of the appellants was not justified and was not covered by the policy of insurance.(Para 24)

       Inasmuch as, the insurance company was within its rights to cause an inquiry into the incident and it approved the appellants claim of Rs.1,02,38,738/- based on the report of the investigator, we are unable to agree with the submission made on behalf of the appellants that apart from the actual claim, the appellants are also entitled to payment of compensation towards hardship, mental agony and harassment.(Para 25)

       We, therefore, allow the appeal and direct the respondent-insurance company to pay to the appellants the balance amount of Rs.97,83,827/- together with interest at the rate of 9% per annum from the date of the claim till payment.(Para 26)