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2022 Supreme(Online)(NCDRC) 1267
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
MR. JUSTICE RAM SURAT RAM MAURYA, PRESIDING MEMBER, DR. INDER JIT SINGH, MEMBER
M/S. PADMAJA LABORATORIES PRIVATE LIMITED – Appellant
Versus
UNITED INDIA INSURANCE COMPANY LTD. – Respondent
CONSUMER CASE NO. 89 OF 2018
For the Appellants/Petitioners: Mr. B.V.S. Halapathi Rao
For the Respondents: Mr. Ravi Bakshi, Ms. Sayma Feroz
Discrepancies in submitted stock records can justify insurance claim adjustments, affirming the insurer's rights in claim settlement processes.
Headnote:(A) Insurance Act, 1938 - Sections pertaining to insurance claims - Settlement and assessment of claim amount - Insured's calculated loss from insured fire incident was contested based on surveyor's findings and discrepancies in claims documents - Supreme Court precedents cited regarding insurer's rights to appoint a second surveyor and assess claims. (Paras 8, 10)
(B) Claim Assessment - The court reinforced that discrepancies in stock records provide a basis for claim adjustment while stressing legal compliance in claim negotiation and settlement. (Paras 8, 9)
Facts of the case:
The Insured company obtained an insurance policy and suffered a significant loss due to a factory fire, leading to a reduced claim amount by the insurer based on surveys and documentation discrepancies.
Findings of Court:
The court upheld the insurer's claim settlement which adjusted the original claim based on factual findings through independent assessment, affirming the legality of such deductions.
Issues: The main issue addressed was whether the insurer's deductions and adjustments in the claim amount were legally justified based on a second opinion from a Chartered Accountant.
Ratio Decidendi: The court concluded that discrepancies in the insured's claims warranted serious scrutiny, validating the insurer's decision to adjust the claim payout based on thorough review of various documentation including VAT Returns over other submitted statements.
Result: Complaint dismissed.
| Table of Content |
|---|
| 1. arguments surrounding the complaint and insurer's response. (Para 1 , 5 , 6 , 7) |
| 2. details of insurance policy and fire incident. (Para 3 , 4) |
| 3. evaluation of discrepancies in claim assessment. (Para 8 , 9) |
| 4. legal decision on the complaint's dismissal. (Para 10) |
1. Heard Mr. B.V.S. Halapathi Rao, Advocate, for the complainant and Mr. Ravi Bakshi, Advocate, for the opposite party.
2. M/s. Padmaja Laboratories Private Limited (the Insured) has filed above complaint, for directing United India Insurance Company Limited (the Insurer) to pay Rs.9999999/- with interest @18% per annum from 27.07.2011 till the date of payment, towards balance insurance claim, punitive damages and any other relief, which is deemed fit and proper in the facts and circumstances of the case.
3. The complainant stated that M/s. Padmaja Laboratories Private Limited (the Insured) was a company, registered under the Companies Act, 1956 and engaged in manufacturing and supplying the veterinary and poultry medicines and feed supplements. The Insured had Factory Licence of 10968 and Registration No.66481, Drug Control Licence No.30/AP/KR/96/F/CC and VAT Registration and TIN No.28810865472. The Insured took factory premises at Plot No. 158/4, D. No.2-134 & 135, Industrial Area, Chinnoutapalli Post, Gannavaram Mandalam, Krishna district, on lease, vide lease deed dated 01.08.2011, for manufacturing and storing raw material and final products. United India Insurance Company Limited (the Insurer) was a public insurance company and used to provide different insurance services to the public. The Insured obtained “Standard Fire And Special Perils Policy” No.151003/11/11/11/00000151 from United India Insurance Company Limited (the Insurer), for the period of 19.05.2011 to 18.05.2012, for a sum insured of Rs.2.5/- crores (i.e. Rs.50/- lakhs on Plant & Machinery, Rs. 1.7/- crores on raw materials, Rs.10/- lakhs on Stock in Process and Rs.20/- lakhs on Finished Goods, including packaging materials), stored at factory premises. The Insured had credit facility from State Bank of Hyderabad, MSME branch, Vijayawada and assets and stocks were hypothecated.
4. Major fire broke out at the factory premises of the Insured in morning of 27.07.2011. Nagaraju, Supervisor of Security Guard on duty informed the Managing Director, on telephone that smoke was emanating from the ventilators at first floor of the Feed Block building. The Security Guards and other staff tried to douse the fire but its spread soon and became out of control. They immediately informed Fire Service Station, at Gannavaram and Hanuman Junction, from where, fire tenders were deputed on the spot, who could control the fire in 3:20 hours. The Insured informed the fire incident to the local police station on 28.07.2011, where it was registered as FIR No.191 of 2011. The Insured informed the Insurer on telephone on 27.07.2011 about the fire incident at its factory premises as the loss. The Insurer appointed M. Purnachadra Rao, Surveyors & Loss Assessors, Guntur, as the surveyor on 27.07.2011, who visited the spot on 28.07.2011, 01.08.2011 and on subsequent dates, inspected the factory premises and took photographs. He noted that (i) Feed Block building, 1st & 2nd floors were affected with the fire. (ii) The machinery installed therein were burnt/charred. (iii) Electrical wiring, installation and fittings were gutted. (iv) Raw materials stored in the southern half of the building (separate room) was totally burnt to ashes. (v) The finished products ready for dispatch, lying in the corridor of the 1st floor of Feed Block was totally burnt. (vi) The finished goods lying in the middle of the preparatory hall also burnt totally. (vii) The medicines stock under process at eastern side of the preparatory hall was burnt and charred. (viii) The packaging materials lying at packing section (south west room) also burnt. (ix) Packaging materials, few raw materials and finished goods stored in the racks of the
