VFC INDUSTRIES PVT. LIMITED Vs. NEW INDIA ASSURANCE COMPANY LIMITED
LAWS(NCD)-2022-8-3
NCDRC
Decided on August 05,2022

Vfc Industries Pvt. Limited Appellant
VERSUS
NEW INDIA ASSURANCE COMPANY LIMITED Respondents




JUDGEMENT

- (1.) Heard Mr. Joy Basu, Senior Advocate, assisted by Mr. Saurajay Nanda, Advocate, for the complainant and Mr. Vishnu Mehra, Advocate, for the opposite party.
(2.) VFC Industries Pvt. Ltd. (the Insured) has filed above complaint, for directing New India Assurance Company Limited (the Insurer) to pay (i) Rs.75893911.00 with interest @18.25% per annum from April, 2006 till the date of realization, as the part insurance claim, (ii) Rs.3794695.00 as exemplary damages, (iii) interest @18.25% per annum on Rs.94909909.00 from April, 2006 till 26/2/2008, (iv) cost of litigation and (v) any other relief which is deemed fit and proper in the facts and circumstances of the case.
(3.) The facts as stated in the complaint and emerged from the documents attached with it are as follows:- (a) VFC Industries Pvt. Ltd. (the Insured) was a company, registered under Indian Companies Act, 1956 and engaged in manufacture and sale/export of packaging material, having its factory at Survey No.3, village Baska, Taluka Halol, district Panchmahal. Its products inter alia include multi-colour folding box board mono, display cartons, flexible packaging, sleeves and pouches amongst others. The Insured had two divisions, namely carton division and flexible packaging division. It had consistent financial and commercial track record with its products having an excellent reputation in market both local and foreign. (b) New India Assurance Company Limited (the opposite party) (the insurer) was a public insurance company and engaged in the business of providing insurance services. The Insured obtained four policies from the Insurer i.e. (i) Standard Fire and Special Perils Policy No.220300/11/05/00018 for the period of 1/4/2005 to 31/3/2006, for sum insured of Rs.2.50 crores on Main Process Building and New PVC Film Manufacturing Building, (ii) Standard Fire and Special Perils Policy No. 220300/11/05/00019, for the period of 1/4/2005 to 31/3/2006, for sum insured of Rs.26.50 crores on Plant and Machinery in Main Process Building and New PVC Film Manufacturing Building, (iii) Standard Fire and Special Perils Policy No.220300/11/05/00020 for period of 1/4/2005 to 31/3/2006, for sum insured of Rs.7.50 crores on Stocks Finished goods, raw materials and other material in Main Process Building and raw materials in New PVC Film Manufacturing Building and (iv) Standard Fire and Special Perils Policy No.220300/11/05/00021 for period of 1/4/2005 to 31/3/2006, for sum insured of Rs.6.00 crores on Stock and Stock in process in Main Process Building. (c) On 7/12/2005 around 22:00 hours, Security Supervisor of the Insured, noticed unusual brightness, in the dispatch area situated in the Main Process Building and upon investigation, he found that there was fire in Bonded Stock Room in Main Process Building. The workers tried to douse the fire with fire extinguishers but the fire soon took devastating nature and became uncontrolled. They immediately informed Fire Service Station Kalol about the fire incident on telephone. Messages of fire were also given to Baroda Municipal Corporation, Gujarat State Fertilizers and Chemicals Ltd., Godhra Nagar Palika, Gujarat Oil Refinery and local police, from where, several fire tenders were deputed on the spot, which doused the fire till 14:00 hours on the next day. (d) The Insured informed the Insurer about fire incident on 7/12/2005. The Insurer appointed Sirish Desai and Associate as the preliminary surveyor, who inspected the spot and submitted Preliminary Survey Report dtd. 14/12/2005, confirming cause of fire as accidental electric short circuit and estimated loss of Rs.29.75 crores. The Insurer appointed J.P. Mistry Surveyor, Mumbai as the surveyor on 8/12/2005. The surveyor inspected the premises on 13/12/2005 and 14/12/2005, took photographs, prepared inventory, recorded statements of Ramesh Ramprasan Tripathi, Security Supervisor and other witnesses. He asked for various documents from the Insured for assessment of loss. The Insured submitted claim form and gave all the papers as required by the surveyor. In the meantime, the Insurer appointed Sheth Doctor and Associates, Charted Accountant, Mumbai on 31/1/2006 to assist the surveyor J.P. Mistry, in assessing the loss of Stock. The surveyor J.P. Mistry submitted Interim Survey Report dtd. 12/3/2006, assessing loss of Building to Rs.12357000.00, loss of Plant and Machinery to Rs.147500000.00 and loss of Stock to Rs.40000000.00 and recommended for 'on account payment' of Rs.13.00 crores. The competent authority of the Insurer examined the report and made payment of Rs.7.50 crores on 28/5/2006. (e) In the meantime, Mr. Narendra L. Moorjani, Ex-G.M. of the Insured made a complaint dtd. 27/6/2006 to the Insurer that claim in respect of Stock was exaggerated. The Insurer then appointed Srivatsan Surveyor Private Ltd., Mumbai, on 19/7/2006 a second surveyor for assessment of loss of Stock and asked the surveyor J.P. Mistry to confine his final survey report in respect of loss of Building, Plant and Machinery. The surveyor J.P. Mistry submitted Final Survey Report dtd. 26/2/2007, in respect of loss of Building, Plant and Machinery and assessed loss of Building to Rs.13447000.00 and Plant and Machinery to Rs.203900939.00. (f) Srivatsan Surveyor made inquiries at the factory premises on 27/7/2006, 8/9/2006 to 12/9/2006. He collected various papers from the Insured, in order to assess the loss of Stock. Sheth Doctor and Associates, Charted Accountant, Mumbai submitted his Report of Assessment of Loss of Inventories dtd. 11/4/2007 assessing loss of Stock to Rs.77838000.00. Srivatsan Surveyor examined this report also and submitted his Survey Report dtd. 24/4/2007, assessing the loss of Stock to Rs.77842057.00. The Insurer, vide letter dtd. 2/5/2007 called for some information from Srivatsan Surveyor, who replied vide letter dtd. 7/5/2007. The Insurer, vide letter dtd. 18/10/2007 called for some explanation from Sheth Doctor and Associates, which was replied by him vide letter dtd. 11/12/2007. It is alleged that under pressure Srivatsan Surveyor submitted his revised Report dtd. 2/2/2008, assessing the loss of Stock to Rs.40786231.00. The Insurer again vide email dtd. 8/2/2008, called for some more explanation on the revised report, which was replied, vide email dtd. 10/2/2008. (g) The Insurer vide letter dtd. 5/3/2007 called for following explanations from the surveyor J.P. Mistry on his report dtd. 26/2/2007 i.e. (i) From the RIV a reduction of 25% has been considered on all the damaged machines uniformly to take care of negotiations and technology improvements. What was justification on across the board for reduction of 25% in RIV adopted? (ii) Assessment of machinery under Item-22- Loss of this machinery has been adjusted to Rs.1.70 crores. This machinery was manufactured in 1972 and purchased by the Insured in November, 1985. 75% depreciation could have been considered for this machine, while 66% depreciation was given on it; and (iii) Machine No.1- SAM-South Korean make- As per invoice, basic cost of this machinery was USD1550000/-. In break-up given for this machinery for RIV calculation, basic cost is considered to USD1571000/-. The surveyor J.P. Mistry gave his reply through letter dtd. 6/3/2007. The Insurer then wrote another letter dtd. 28/6/2007 to the surveyor J.P. Mistry, raising objection in respect of valuation of the building and the machineries. The surveyor J.P. Mistry replied this letter vide his letter dtd. 3/7/2007. The Insurer, then wrote another letter dtd. 12/7/2007 to the surveyor J.P. Mistry, raising some fresh grounds to the assessment of loss to Building, Plant and Machinery, which was replied by him on 25/7/2007. (h) In spite of various letters, when J.P. Mistry did not revise his Final Survey Report dtd. 26/2/2007, the Insurer took opinion of Bhatawadekar and Company on the report dtd. 26/2/2007. Bhatawadekar and Company, Mumbai, vide his letter dtd. 17/9/2007 confirmed the genuineness of Final Survey Report dtd. 26/2/2007, specifically stating that the costs as assessed by Mistry were lower than his assessment. However, he observed that when import of second-hand machine was permitted by the government, then taking quotations of new machines for determination of the value of machines purchased in second hand was not proper. The insurer appointed Bhatawadekar and Company, Mumbai as Joint Surveyor with J.P. Mistry and wrote a letter to the surveyor J.P. Mistry, for resurvey, which was refused by him vide letter dtd. 14/1/2008. Bhatawadekar and Company submitted its Final Survey Report dtd. 31/1/2008, assessing loss of Plant and Machinery to Rs.129236678.00. In the meantime, the Insured through various letters requested for settlement of the claim as he was facing financial problems. The Insurer sent a discharge voucher on 27/2/2008, for full and final settlement. As the Insured was under financial stress, he signed discharge voucher and then Rs.94909909.00 was paid on 28/2/2008 as full and final settlement of the claim. The Insured wrote protest letters dtd. 26/2/2008, for further payment of Rs.40796231.00 as the balance claim for Stock and 28/2/2008, for further payment of Rs.75893911.00 as the balance claim for Building, Plant and Machinery. (i) The Insured filed this complaint on 12/4/2008, alleging deficiency in service and stating that on the basis of discharge voucher, the legal claim cannot be foreclosed. The discharge voucher was signed as the settlement of the claim was unreasonable delayed and due to fire incident, the Insured was suffering from financial difficulties. The Insurer in an arbitrary and highhanded manner, by stopping payment of the professional fee of the surveyor exercised undue pressure upon them for changing their survey report, which was refused by the surveyor J.P. Mistry but Srivatsan Surveyor submitted a Report dtd. 2/2/2008, assessing the loss of Stock to Rs.40786231.00, which was illegal. ;


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