Shop Gutted In Fire: District Commission Orders United India Insurance To Pay Rs. 9.24 Lakhs As Compensation

As per the Commission's directive, the Insurance Company is obligated to pay the complainant an amount of Rs. 8,79,855/- along with an interest of 9% per annum. Additionally, the Insurance Company is required to provide Rs. 30,000/- as compensation for causing mental agony to the complainant, and Rs. 15,000/- as litigation costs.

Brief Facts:

The Complainant had purchased the stock Insurance policy under Standard Fire and Special Perils Policy for an insurance sum of Rs 40 Lakhs for a year and the required premium was paid by the complainant. As per the complainant, in September 2019 when the complainant was preparing for the upcoming festive season then on one fateful night, the shop of the complainant was gutted in big fire accident which was investigated and reported to be due to short circuit in immediate neighboring shop which is separated with wooden partition only. The fire was got extinguished by the fire brigade with great effort and the accident was also reported in leading newspapers and the complainant suffered huge loss. The incident was timely reported to the Insurance Company which appointed their surveyor who visited the site of fire accident and took the version of the complainant and recorded statement and asked the complainant for the requisite documents. There were many goods whose bills were destroyed in the fire.

As per the bills, the purchase for the period of 1.4.2019 to 9.9.2019 was Rs.21,37,199.34/- and of sale was Rs.26,90,911.20/-. It is also submitted that the complainant with bona fide intentions gave each and every detail of the accident and loss incurred, documents as asked by the said surveyor was provided without any delay. Thereafter, the surveyor has submitted his report and assessed the claim of complainant as NIL on the grounds that there is no closing stock shown in the income tax return for the FY 2018-19.

The Complainant had purchased a stock insurance policy under the Standard Fire and Special Perils Policy, insuring for Rs. 40 Lakhs for one year, and paid the premium. In September 2019, a devastating fire accident occurred at his shop which was caused by a short circuit in the neighboring shop, which was separated from the Complainant's shop only by a wooden partition. The Complainant suffered significant losses as a result of the fire.

The Complainant reported the matter to the Insurance Company just after the incident which appointed a surveyor to investigate. The surveyor visited the site of the fire accident, recorded the Complainant's statement, and requested relevant documents. Due to the fire, many goods' bills were destroyed. The available bills indicated purchases of Rs. 21,37,199.34 and sales of Rs. 26,90,911.20 from April 1, 2019, to September 9, 2019.

The Complainant cooperated with the surveyor, providing all necessary details and documents without any delay. However, despite the cooperation, the surveyor's report assessed the claim as NIL, citing the absence of closing stock in the income tax return for FY 2018-19.

Contentions of the Parties:

The Complainant contested that the insurance claim cannot be rejected merely because the ITR for FY 2018-19 showed NIL stocks. He provided the ITRs for the last three years and other sales and purchase records, including GST returns, to support the existence of the stocks. He claimed that the Insurance Company cannot use a single document as a technicality to avoid their responsibility. The NIL stock in the ITR was due to a human error, and the Income Tax Act allows for the revision of such errors. The Complainant corrected the ITR for FY 2018-19, which the Insurance Company acknowledged. Therefore, he argued that there is no valid reason for the Insurance Company to deny the claim.

The Insurance Company contested the claim, pointing out discrepancies in the Complainant's trading accounts. It questioned the origin of the figure of Rs. 36,93,680/- used by the Complainant in their trading account for 9th September 2019, as the previous ITR for FY 2018-19 showed NIL stock. The Insurance Company also doubted whether the goods provided to the surveyor for assessment were the actual stock at the time of the incident or if they were obtained later to inflate the claim. It argued that the Complainant failed to prove that the goods given to the surveyor were the actual stock at the time of the incident. The Insurance Company denied the claim amount of Rs. 36,14,240/- and contended that the Complainant's revised ITR and GST returns did not align with their claims.

Observations of the Commission:

The District Commission allowed the complaint and observed that there is no valid reason to challenge the surveyor's report regarding the assessment of damages caused by the fire incident. It highlighted that the surveyor estimated the loss to be Rs. 22,09,312.17, and the insurer's liability for the damaged stock was calculated as Rs. 8,79,855. The Commission relied on NCDRC’s decision New India Assurance Company Ltd. vs. Rabindra Narayan, which stated that the surveyor's report is crucial evidence and should be given significant weight unless there is concrete and reliable evidence proving otherwise.

The Commission concluded that it had no choice but to believe the surveyor's assessment as accurate, as the surveyor had meticulously examined all the damage on-site as the Insurance Company failed to counter the surveyor's report with any substantial documentary evidence, apart from IT reports showing Nil closing stock, which was later updated.

Case Title: Jindal Sales vs United India Insurance Co. Ltd.

Counsel for Complainant: Shri Nitin Verma, Advocate

Counsel for Opposite Party: Shri Shakti Paul Sharma, Advocate

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