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CASE NO.: Appeal (civil)  2066 of 2006

PETITIONER: M/S.SHOBIKA ATTIRE

RESPONDENT: NEW INDIA ASSURANCE CO. LTD. and ANR.

DATE OF JUDGMENT: 15/09/2006

BENCH: Dr. AR. Lakshmanan & Altamas Kabir

JUDGMENT: J U D G M E N T

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

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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

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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

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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

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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.