SUPREME COURT OF INDIA
Messrs Shobika Attire
Vs
New India Assurance Company Limited and Another
Appeal (Civil) 2066 of 2006
(Dr. Ar. Lakshmanan and Altamas Kabir, JJ)
15.09.2006
ALTAMAS KABIR, J.
This is an appeal under Section 23 of the Consumer
Protection Act, 1986 from an order dated 21st November, 2005 passed by
the National Consumer Disputes Redressal Commission, New Delhi (for short 'the
Commission') in Original Petition No. 91 of 1999, dismissing the said petition.
In order to appreciate the decision of the Commission, the facts of the case
are briefly set out hereinbelow:-
The appellant-firm, dealing in textile goods, has its showroom in the city of
Coimbatore. It was covered by an insurance policy with the New India Assurance
Company Limited, respondent No.1 herein, and at the relevant time had an
insurance cover for all the stock in trade of textile items and garments. The
said policy dated 11th March, 1997, expressly covered damages to the said stock
in trade that might be caused due to riots, strike, malicious and terrorist
damage.
From the materials on record, it appears that the appellant-firm had been
enjoying the benefit of loans from the 2nd respondent on the hypothecation of
the stock in trade, the value of which was not less than Rs.2 crores at any
given point of time. The furnitures, fixtures, fittings and glass plates of the
showroom were separately insured with M/s. National Insurance Company Limited.
Consequent upon a series of bomb blasts, which rocked the city of Coimbatore on
14th February, 1998, a group of armed rioters are alleged to have looted the
appellants' showroom and set fire to it. According to the appellants, the
entire stock of goods was either looted or reduced to ashes. The conflagration,
which was of a communal nature, also saw the house of the proprietary of the
appellant-firm being attacked by the rioters, causing her to flee with her
family across the state border to Palghat in Kerala to save their lives. It
appears that on the very next morning, a few officials of the New India
Assurance Company Limited along with their surveyors, M/s. Asawa & Co.,
inspected the damage at the appellants' showroom. However, it was only after
the communal passions began to subside that the proprietrix of the
appellant-firm was able to return to Coimbatore on 17th February, 1998 and to
lodge a complaint with the police regarding the incident. The officials of the
insurance company took possession of the salvaged stock and the same was kept
in the custody of their nominated surveyors, M/s. Asawa & Co. In addition
to the above, the insurance company also appointed one M/s. Standard Surveyors
(P) Ltd. to survey the loss. The said surveyors issued a questionnaire to the
appellants which was replied to by the appellants on 20th March, 1998 giving
details of the loss suffered by them together with various documents.
While the said formalities were proceeding, an anonymous information was said
to have been received by the insurance company indicating that the appellants
had themselves taken away some of the stock during the rioting. On the basis of
such information, an inquiry was ordered by the respondent-insurance company by
an investigator of M/s. Vasu Associates. The appellants and/or their officers
were not associated with the said inquiry.
On 20th March, 1998, the appellant-firm lodged its claim with the
respondent-insurance company for payment of compensation amounting to Rs.2.20
crores. It is the case of the appellants that under the guise of ascertaining
the correct picture, the respondent insurance-company for one reason or the
other failed to settle the claim.
In the meantime, at the instance of the National Insurance Company, which had
insured the fixtures, fittings and furnitures, M/s. Comtec, Surveyors, Valuers
and Assessors, filed their final report on 9th June, 1998 on the basis whereof
the National Insurance Company Ltd. approved the claim of the appellant for
Rs.20, 43, 605/-.
After the surveyors had submitted their report dated 11th September, 1998,
working out the damage at Rs. 1, 02, 38, 738/- excluding the stocks in the two
levels of the basement, the respondent-insurance company wrote to the
respondent-bank on 8th October, 1998 stating that the claim of the appellant-firm
had been approved for the aforesaid amount as assessed by the surveyors and the
settlement offer was full and final. The respondent-insurance company also
enclosed a cheque for a sum of Rs.1, 02, 16, 173/- after deducting a sum of
Rs.22, 565/- towards reinstatement of the sum insured from the date of loss
till the date of expiry of policy. The bank responded by informing the
respondent- insurance company on 9th October, 1998, that the stocks insured
were for Rs. 2 crores and the average stock at any point of time in the insured
premises was more than Rs. 2 crores. The respondent-bank requested the
insurance company to reconsider the claim of the appellant-firm in full to
enable it to reestablish its business. The appellants also wrote to the respondent-insurance
company on 5th November, 1998, indicating as to how they were entitled to whole
of the claim and sought settlement of the full claim to which they were
entitled. As there was no response from the respondent- insurance company, the
appellant-firm filed a claim petition before the Commission on 16th March,
1999, inter alia, praying for a direction upon the respondent-insurance company
to settle the balance of the claim of the appellants for a sum of Rs.97, 83,
827/- and interest at the rate of 18 per cent thereupon from the date of claim,
namely, 23rd March, 1998, till realization. A further sum of Rs.10, 00, 000/-
was also claimed towards hardship and mental agony caused to the appellants due
to deficiency of service on the part of the respondent-insurance company.
The respondent-insurance company filed its written statement relying upon the
investigation report dated 15th August, 1998, the surveyors report dated 11th
September, 1998, and the statements of Nagarajan - the Cashier, Pankajam and
Sivasubramaniam, who were working in the showroom of the appellant at the
relevant time as sales persons. The appellant filed a rejoinder statement and
the 2nd respondent bank also filed an affidavit dated 18th December, 2003,
supporting the case of the appellants. A further rejoinder dated 16th February,
2004, was filed on behalf of the appellants on the basis of the survey report
and the letter of the National Insurance Company accepting the claim of the
appellants in respect of the destroyed plate glass, furnitures, fixtures and
fittings.
After the filing of the affidavits of evidence on behalf of the respective
parties, the Commission by its Order dated 21st November, 2005, dismissed the
complaint filed by the appellant-firm upon holding that there was remote
possibility of the riotous mob having entered the 1st and 2nd levels of
basement as the only point of entry from the elevated ground floor was blocked
by fire, heat and smoke and particularly in the absence of any lights in the
basement area.
It is against such order of rejection of the appellants' claim, that the instant appeal has been filed.
On behalf of the appellants, it was reiterated that the entire showroom
comprised of the two basement levels as also the ground floor level were
ravaged by the mob of looters who firstly entered into the ground floor and
looted all the articles stored therein. The mob also broke the plate glass
windows and doors which were at the ground floor level and leading to the first
level of the basement floors and entered through the same to loot the basement
levels as well. The entire situation was such that it was not possible to
pinpoint with any amount of accuracy the exact time of the looting of the
different levels of the showroom. After the ground floor showroom was set on
fire and smoke started pouring into the basement levels, the employees of the
showroom who were at the basement levels rushed out through the staircase and
escaped from the showroom. There was no way in which the frenzied mob of
looters could be prevented from looting the stock in trade which was kept in
the entire showroom comprising of the ground floor and the two basement floors.
It is also the case of the appellants that the mob frenzy was so violent that
the proprietrix and her family had to flee to the neighbouring State of Kerala
in order to save their lives and could return to Coimbatore only after the
communal passions had died down.
Sales persons who were in the basement levels gave statements corroborating the
case made out on behalf of the appellants.
As against the above, the stand taken on behalf of the insurance company was
that soon after the mob set fire to the showroom on the ground floor, the
police and fire fighting personnel arrived at the scene and were present there
up to mid-night on 14th February, 1998, and in their presence no looting could
have taken place. It was also submitted that there was no evidence of damage by
fire in both the basement levels and there was also no evidence of the stock in
the two basement levels having been looted by the rioters on 14th February,
1998. Consequently, the surveyors, who had been assigned the task of making an
assessment of the damage and loss on account of such mob attack on the
appellants' showroom and looting by the rioters, had not taken into account the
claim of the appellants with regard to the stock in the two basement levels. In
fact, the surveyors arrived at a conclusion that the stock in the two basement
levels had not been looted on 14th February, 1998. In the surveyor's report, it
was indicated that there were no indications of the mob having entered the two
levels of basement and that the wooden racks and glass shelves, as also the
glass tops of the sales counters were absolutely intact. It was also indicated
that once the mob had set fire to the elevated ground floor, nobody could have
entered the basement levels and that since fire in the ground floor had been
started a little after 4.00 P.M. and the same was extinguished at around
mid-night, nobody could have entered the premises during this period when the
elevated ground floor was burning.
In view of the above, the surveyors only took into consideration the damage
caused to the stock in the elevated ground floor level and the insurance
company settled the claim for loss to the stock on the said basis. From the
statements of the sales persons who were in the two basement levels, it was
sought to be argued that no one from the mob had entered the two levels of the
basement as long as the employees were inside and it was doubtful as to whether
after they left whether anyone could have entered the two levels of the
basement in view of the conditions prevailing in the elevated ground floor.
From the submissions made on behalf of the parties, it is evident that in the
wake of a series of bomb blasts in the city of Coimbatore on 14th February,
1998, there was wide spread unrest in the city of Coimbatore coupled with mob
frenzy, arson and looting. Although, an attempt has been made on behalf of the
investigating agency to clinically examine the manner in which the incident
involving the appellants' firm had occurred, it is doubtful whether the
incident which occurred at the showroom of the appellants on 14th February,
1998 can be explained with such clinical precision as to when exactly the sales
persons in the two basement levels escaped from the showroom through the
elevated ground floor or when the police and fire fighting personnel arrived at
the site and when exactly the riotous mob took over the showroom. The
statements of the sales persons clearly indicate that when they were fleeing
the showroom they saw the mob trying to break through the plate-glass doors and
windows leading to the first level of the two basement floors. There is also no
denial of the fact that the said plate-glass doors and windows were in fact
broken and for which insurance coverage was paid by the National Insurance
Company on the basis of a report submitted by M/s. Comtec, Surveyors, Valuers
and Assessors.
The report submitted by the investigators, M/s. Vasu Associates, proceeds to a
large extent on surmises and the conclusion ultimately arrived at by them which
reads as follows does not inspire much confidence:-
"The owners themselves claim looting, because they did not find some of
the textile goods after the incident, but they have no material to strengthen
their claim by way of supplying us with substantial evidence which are
unassailable. In the absence of substantial evidence they themselves are not
for sure, it was looting. From what we have seen and heard, we are also of the
opinion that, there could not have been looting at all. Surveyors are also
convinced and therefore, they are not also inclined to assess the loss"
As will be evident from the above, it will appear that the aforesaid conclusion
was arrived at by adopting a negative approach. The investigators reached the
aforesaid conclusion merely by stating that the appellants had no material to
strengthen their claim by providing unassailable evidence of looting. Such an
approach cannot be supported since apart from claiming that the goods in the
showroom had been looted and the attendant circumstances, the appellants were
not in a position to supply any further evidence. That there was communal
unrest in the city of Coimbatore on the date in question is not denied. That
the mob attacked and set fire to the showroom of the appellants is also an
established fact. That the showroom was attacked by a frenzied mob, which set
fire to the elevated ground floor of the showroom and indulged in looting, is
also established. At exactly what point of time the mob may have entered into
the two basement levels is difficult to determine in the prevailing
circumstances and it is quite possible that the looting had taken place before
the police and the fire fighting personnel arrived at the site.
There is nothing on record to indicate that the stock in trade had been removed
from basement levels in anticipation of any such rioting. On the other hand,
the bank has clearly supported the case of the appellants by informing the
insurance company that the stock insured was for Rs.2 crores and the average
stock at any point of time in the insured premises was more than Rs. 2 crores
and the bank requested the insurance company to re-consider the claim of the
appellant-firm.
Although, M/s. Vasu Associates were engaged on a suspicion that the appellants
had themselves transported part of the goods from the showroom, there is no
real evidence in support thereof.
In our view, the appellants had discharged the initial burden regarding
destruction, damage of the showroom and the stocks therein by fire and riot in
support of the claim under the insurance policy and it was for the insurance
company to disprove such claim with evidence, if any. In our view, the
insurance company, despite the report of the investigator, failed to establish
that the claim of the appellants was not justified and was not covered by the
policy of insurance.
Inasmuch as, the insurance company was within its rights to cause an inquiry
into the incident and it approved the appellants' claim of Rs.1, 02, 38, 738/-
based on the report of the investigator, we are unable to agree with the
submission made on behalf of the appellants that apart from the actual claim,
the appellants are also entitled to payment of compensation towards hardship,
mental agony and harassment.
We, therefore, allow the appeal and direct the respondent-insurance company to
pay to the appellants the balance amount of Rs.97, 83, 827/- together with interest
at the rate of 9% per annum from the date of the claim till payment. Such
payment is to be made within a month from date
There will be no order as to costs