Superficial Investigation Of Matter Warrants Remand For New Decision: NCDRC

The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker, in an appeal by United India Insurance held that when the matter has not been examined in depth by the State Commission, it justifies the remand for a fresh decision after allowing both parties to present their evidence and arguments.

Brief Facts of the Case

The complainant company, got an insurance from United India Insurance/ insurer for its unit and stock under a Standard Fire and Special Risks Policy for over 20 years has renewed the policy for a sum of Rs. 2,50,00,000.0. Subsequently, a fire incident occurred in the packing segment of the factory, which was severe. This fire was reported by a watchman who called the fire brigade and put out the fire while it was burning. The matter was thereafter taken to the police and a registered case was opened. On estimation of loss the complainant felt a cumulative loss at an amount of Rs. 56 lakhs and reported the same to the insurer. The insurer appointed a surveyor who estimated the loss at Rs . 54, 26,299. The complainant had to provide a duly filled up and signed claim form together with other documents including a letter by fire personnel. The surveyor's report later substantiated a claim of Rs. 46,69,643. However, the claim was rejected by the insurer through a repudiation note, alleging that the complainant violated certain policy conditions especially by concealing the true cause of the fire and stating that it was not as a result of a short circuit. Aggrieved, the complainant filed a complaint before the State Commission of Telangana which allowed the complaint. It directed the insurer to pay Rs.46,69,643 together with interest @9% along with a cost of Rs.5,000.

Contentions of the Insurer

The insurer challenged the complaint arguing that it lacks grounds both in law and reality. The insurer questioned the complainant company's claim that the fire originated from a short circuit at the transformer which involved approximately 100 feet of service cable and reached the packing area by crossing three poles. According to the insurer, a letter from the Central Power Distribution Company indicated that the transformer worked well and experienced no power disruptions. In addition a communication from the Central Power Distribution Company indicated that the transformer functioned as expected and no short circuit had occurred. The insurer insisted that the complainant fabricated the reason behind the fire as a short circuit arising from the general transformer and recommended withdrawing the claims.

Observations by the National Commission

The National Commission observed that the key issue is whether there is a deficiency in service by the insurer. From the surveyor's report which forms the basis of the complainant's case, it was observed that the fire incident originated from a short circuit in the public transformer. Instead, the insurer relied on the report of its investigator and a letter from the Central Power Distribution Company which alledged that the transformer was in good condition and no short circuit had occured. The commission observed that the State Commission pointed out that while the insurer denied the cause the fire, they never countered it with another reason. The commission also observed that the State Commission did not address the insurer's report and evidence specially where the State Commission placed the burden on the insurer despite the evidence presented by it to counter the complainant's allegations. As such, the commission observed that the State Commission did not consider all the material available to it and proceeded to dismiss the claim because the case should be reheard while parties are given a chance to tender their evidence. Dependence was made on the decision of National Insurance Company Ltd. vs. Harjeet Rice Mills. As a result, the appeal was granted, the State Commission's order was set aside, and the matter was sent back for reconsideration, with instructions for expedited handling.

Case Title: United India Insurance Co. Ltd. Vs. M/S. Jaycot Industries

Case Number: F.A. No. 1809/2017

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