An insurance company's inordinate delay in finalizing a claim and issuing a repudiation letter, following the submission of a surveyor's report, constitutes a deficiency in service. Compensation must be limited to the losses substantiated by credible evidence, even if procedural lapses occur on both sides.

ORDER

JUSTICE 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.