TASTE’L FINE FOODS PVT. LTD. V. UNITED INDIA INSURANCE CO. LTD.
OFFICE AT: 1122, 2ND FLOOR, BUILDING NO.11,
SOLITAIRE CORPORATE PARK, ANDHERI KURLA ROAD,
ANDHERI (EAST),
MUMBAI-400093
Versus
1. UNITED INDIA INSURANCE CO. LTD.
OFFICE AT: UNIVERSAL INSURANCE BUILDING, SIR P.M.
ROAD FORT, GREATER
MUMBAI-400001
Case No: CONSUMER CASE NO. 2788 OF 2017
Date of Judgement: 03 Jan 2023
Judges:
For the Complainant : Mr. Arvind Nayar, Sr. Advocate with Mr. Aman Raj Gandhi, Advocate Mr. Parthasarathy Bose, Advocate Mr. Pranay Tuteja, Advocate
For the Opp.Party : Mr. A.K. De, Advocate Mr. Zahid Ali, Advocate Ms. Ananya De, Advocate
Facts
Arguments by Complainant
Arguments by Opposite Party
Download Court Copy: https://dreamlaw.in/wp-content/uploads/2024/01/5-2.pdf
Full Text of Judgment:
1. Complainant is a company registered under the provisions of Companies Act, 1956. The Opposite Party is Insurance Company, dealing with various type of Insurances, including fire Insurance.
2. The Complainant deals in manufacturing, processing packaging and storage of frozen Indian breads, frozen snacks, ready to cook/bake food, ambient staple ready to eat meals, ready to cook sauces, pastes and condiments. Almost all products manufactured by the Complainant are exported. The Complainant has two units
(i) for production of ready to eat products (hereinafter referred to as “Unit-1”) and (ii) for manufacturing and stocking of frozen food products (hereinafter referred to as “Unit-2”).
“(a) The Opponent be ordered to pay an amount of Rs.2,54,84,447/- (two crore fifty four lakh eighty four lakh four hundred forty seven only) to the Complainant, towards compensation for the loss arising due to fire, as particularly mentioned in clause 18 of the complaint above,
(b) The Opponent be further ordered to pay interest @ 18% per annum on the principal amount of compensation of Rs.1,72,81,539/- (one crore seventy lakh eighty one thousand five hundred thirty nine only), from the date of this complaint till its actual receipt by the Complainant,
(c) The Opponent be further ordered to pay the entire cost of the complaint to the Complainant,
(d) Any other order deemed fit and proper be passed.”
4. The Complaint was resisted by the Opposite Party by filing the written statement. The Opposite Party took the preliminary objection that the Complainant was not a “Consumer” within the meaning of Consumer Protection Act, 1986.
ultimately submitted a claim of Rs.1.72 crores. It is quite strange how the Surveyor had assessed the loss at Rs.16,44,128/-.
7. Learned Counsel for the Opposite Party submitted that the Complainant made exaggerated claim under each item. The Surveyor had made thorough assessment of each item of the claim and given elaborate reasoning for arriving at the loss. The Complainant was supplied with a copy of the Final Survey Report but the Complainant was not satisfied with the loss assessed by the Surveyor. Therefore, various joint meetings were held between the Complainant, Surveyor and the Opposite Party. After receipt of the Final Survey Report, the Complainant revised the claim twice and submitted additional documents to the Surveyor. The Opposite Party offered an amount of Rs.16,44,128/- as assessed by the Surveyor but the Opposite Party refused to accept the same.
9. Regarding maintainability, this Commission in Harsolia Motors v. National Insurance Co. Ltd. I, (2005) CPJ 27 (NC) decided on 03.12.2004 held that since an Insurance Policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the Insurer cannot be said to have been hired or availed for a commercial purpose. This Commission does possess the requisite jurisdiction to entertain a Consumer Complaint wherein there is allegation of deficiency in the services by the service provider. In view of the above, the Complaint is maintainable.
11. The Complainant alleged that the Surveyor as well as the Opposite Party ignored the Auditor’s Report dated 06.09.2015 to substantiate the purchases made by them. The main dispute related to the loss sustained by the Complainant. The incident of fire took place on 03.11.2015 and the Auditor’s Report is dated 06.09.2015. This report has nothing to do with the loss sustained due to fire.
information only for the purpose of reviewing the same.” From the aforesaid observation of the Surveyor, it is clear that the Surveyor found discrepancies in the aforesaid Auditor’s Report and the Complainant was asked to produce certain documents to support the Auditor’s Report, which the Complainant failed to do. The Surveyor, therefore, did not place much reliance on the Auditor’s Report, which in our view was justified.
13. The Complainant also alleged that the quantity of burnt and semi burnt food waste was approximately 60 to 70 metric tons. To verify whether the salvage was unfit for consumption, the Surveyor asked the Complainant to produce the report of the concerned authority. In this regard, Surveyor observed that “the Insured was requested to submit the copy of the letter of the respective authority informing them about the fire incident as well as the letter stating that the salvage is unfit for consumption and submit the authority’s inspection report, which is still awaited.” From the observation of the Surveyor, it is clear that the though the Complainant alleged that the quantity of burnt and semi brunt food waste was approximately 60 to 70 metric tons, they failed to produce any evidence to support their allegation. As the Complainant failed to provide any evidence, the Surveyor after detailed discussion, considered the lumpsum value of the salvage at Rs.90,000/-.
14. The Complainant alleged that the Surveyor wrongly disallowed claimed of Rs.3,15,948/- for disposal of salvage. Regarding destruction charges, the Surveyor observed that under the Policy, there was provision for payment of charges for removal of debris. Under the Policy, there was no provision for destruction charges. The Surveyor observed that since the loss was assessed based on market value of the stock, the destruction cost were not integral part of the original value of the stock and the same could not be considered while working out the loss. We have also gone through the Policy and found that there is no provision for destruction charges. The Surveyor, thus, rightly disallowed the same.
15. Regarding claim for packaging material not in use due to fire, the Surveyor observed that “these materials claimed were stored in unaffected Ambient Unit of Insured. Insured has claimed the cost of same on the basis that they cannot use the unaffected packing material due to their commercial inability as finished goods of these materials were lost in fire. Matter was discussed with the insured and their insurance intermediary and both were apprised about the facts. However, as the materials are not affected by fire and are in totally safe to use, the loss due to inability of Insured to use these materials is not covered under the scope of policy. The Surveyor had given specific reasons for disallowing the claim. As the packing material was safe and not damaged due to fire, the Surveyor was justified in disallowing the claim of Rs.26,79,214/- against packing material not in use due to fire.
“Insured provided an item wise list of packing material items claimed. We requested Insured to provide invoice supporting to verify the quantity and rate claimed and Insured in support provided their total purchase invoices of all items for last 6 months. On preliminary verification we observed certain discrepancies vis-a-vis claim amount and invoice details. We thus asked Insured/their insurance intermediary to correlate the invoice so submitted with their claim list. However, Insured’s representative could not do the same and in spite of our repeated requests they are unable to correlate their won invoices with their own claim.”
“‣ Specification wise or size wise purchases and consumption details were not submitted.
‣ Month wise consumption details were not available.
‣ Item wise export details vis a vis packing materials used in those export consignment not listed and submitted.
‣ Many of the items were in stocks for more than 6 months.
‣ Cross tally with the items purchases and used in export was not reconciled.
‣ If we consider the normal practice of packing inventory level of a month, then volume of exports vis a vis volume of purchase of packing materials was not tallying and justified.
‣ Considering the major quantum of packing material was regularly stored in Unit 1 (Ambient Unit) which is unaffected by fire incident, the insured could not justify of storing of such high quantum both in volume and value in manufacturing area and more so near to Cold room area which is used for manufacturing of product.
‣ Further in affected area, the packing activity portion was partially used.”
On the basis of the aforesaid discrepancies, the Surveyor observed that Insured/s claim of packing material was not substantiated by sufficient supporting evidence. Amongst other, the Surveyor observed that majority of the stock of packing materials were stored in Ambient Unit (Unit 1) which was not at all damaged due to the fire and hence the claim value for packing materials was higher than the actual possible loss. Accordingly, the Surveyor assessed the loss of packing materials at Rs.3 lakhs. On 19.10.2022, Learned Counsel for the Complainant was asked to show evidence regarding closing stock of packaging material. He stated that the stock registers were maintained electronically and there were no physical registers. Later, when further queried, he stated that he stands corrected and that hard copies of documents showing stocks and stock registers are maintained. He, however, failed to produce either the stock register or the hard copies of the documents showing stocks of packaging material allegedly maintained electronically to the Court. When asked to produce the stock registers later, he stated that records were not available as they got burnt in the fire. Moreover, the Complainant had not produced any evidence to show that the assessment made by the Surveyor was wrong. The argument is, therefore, rejected.
17. The Complainant also alleged that on the basis of preliminary Survey Report, the Opposite Party was ready to make interim payment of Rs.1 crore to the Complainant and in the Final Survey Report the Surveyor strangely assessed the loss at Rs.16,44,128/-. It is noteworthy that there is no interim survey report on record. The Complainant had also not stated as to when the interim survey report was filed by the Surveyor. The Opposite Party is also silent on the interim survey report. There is also no allegation that the Opposite Party had not produced the preliminary Survey report to the Complainant. The onus is on the Complainant to prove the allegation that on the basis of interim survey report the Opposite Party was ready to make payment of Rs.1 crore to the Complainant. The Complainant failed to discharge the onus of proof. The allegation of the Complainant is, therefore, rejected.
18. The Complainants also alleged that the Surveyor arbitrarily did not consider the raw material having value less than Rs.1000/-, totalling Rs.8,08,707/-. In this regard, the Surveyor observed that the insured had made large number of purchases on different dates, at various rates and in different quantities. Surveyor also observed that on verifying the data with the supporting documents, it was found that the rates drastically varied in various raw materials. In absence of sufficient clarification and documents from the Complainant, the Surveyor considered the rates as appeared in the actual invoice verified on sample basis. As the Surveyor found various discrepancies in raw material purchases and the Complainant failed to clarify the same, the Surveyor was justified considering the rates on sample basis. The allegation of the Complainant is, therefore, rejected.
“Additionally, in case of claim of semi-finished goods, we had requested Insured to provide the details of stage of production of items claimed, production register/planning details, basis of appointment, etc. to verify the cost of semi-finished stocks. However, insured arbitrarily considered 95% of finished goods rate cost as the cost of semi-finished goods. We discussed with Insured that it cannot be possible that a running factory will have all the semi-finished items at 95% complete stage. Insured till date has not provided substantive supporting to prove their contention.
Thus, in absence of supporting and details from Insured’s end, we have considered on the semi- finished cost rate at 50% of finished cost rate considered by us considering on an average 50% completion level.”
From the aforesaid observation of the Surveyor, it is clear that as the Complainant had not provided the details of stage of production of items. In absence of details relating to stage of production of items, the Surveyor was justified in considering the semi-finished cost rate at 50% of finished cost rate on an average of 50% completion level. The allegation of the Complainant that the Surveyor had not given any rationale to assessment of the value of semi-finished products is accordingly rejected.
20. It was also alleged on behalf of the Complainant that the Surveyor had arbitrarily observed that one container load could have maximum value of 5 to 6 lakhs only. In this regard, the Surveyor observed that “if one has to go with the volume and value, such one container load could at maximum can have the value of Rs.5 lacs to Rs.6 lacs only. Either in the Complaint or in the written arguments, the Complainant had not given as to what was the actual value of one container nor any evidence has been filed in this regard. The Complainant also failed to show any illegality in the assessment of value of one container. In the absence of anything contrary to the observation of the Surveyor, the value assessed by the Surveyor has to be accepted. The argument of the Complainant is, therefore, rejected.
21. For the foregoing discussion, we find that the Surveyor had discussed every aspect in detail and given reasons for assessment of loss. The Complainant failed to point out any illegality or arbitrariness in the Survey Report. The Surveyor assessed the loss at Rs.16,44,128/-. The Complainant is, therefore, entitled for an amount of Rs.16,44,128/-.
22. As regards interest, it is relevant to mention that though in the written statement it is stated by the Opposite Party that they offered Rs.16,44,128/-, there is no evidence on record in this regard. As per IRDA guidelines, the Opposite Party is bound to make payment within 30 days from the date of submission of Final Survey Report. The Final Survey Report was submitted on 21.06.2016. The Opposite Party was required to pay the amount within one month i.e. upto 21.07.2016. The interest, thus, would be calculated from 21.07.2016.
23. In the result, the Complaint is partly allowed. The Opposite Party is directed to pay an amount of Rs.16,44,128/- as assessed by the Surveyor with interest @ 6% p.a. from 21.07.2016 till realization. There will be no order as to costs. The order be complied within 8 weeks.