MD HAFIZUDDIN Vs. UNITED INDIA INSURANCE COMPANY LTD

JUDGEMENT

(1.) IT is the case of the Complainant that he is the proprietor of M/s. M.H. Textiles having its registered office at Islam Nagar (Naya Tola), Bhikhanpur, Gumti No.3, Bhagalpur, Bihar, dealing in the business of manufacturing and sale of silk fabrics specially of export variety of various types. He was engaged in the said business for several years and was receiving orders from various big exporters of the country for supply of silk fabrics and materials from time to time. In the year 1994 one Mr. Jagdish S. Grover, Proprietor of M/s. Tartons, New Delhi, a big export firm, had placed orders with the Complainant firm for manufacture and supply of silk fabrics (Matka-Noil) worth Rs.60,01,000/-. For this, an agreement was executed between the parties on 6.8.1994. Shri Grover handed over silk yarns worth Rs.5 lakhs to the Complainant in advance. It was also agreed that Shri Grover would pay the amount of invoices from his cash credit account with Allahabad Bank, Bhagalpur Branch, Bihar.

(2.) ON execution of the aforesaid agreement, the Complainant requested the Allahabad Bank, University Branch, Bhagalpur, Bihar to enhance his cash credit limit. The same was accepted and the cash credit limit was enhanced upto Rs.32 lakhs and O.D. (Over Draft) of Rs.6 lakhs was also given to the Complainant to meet the said order. For this, the entire stock of the Complainant was hypothecated with the said Bank. As per the norms the Bank was having monthly check of the stocks as well as stock-book, ledger, cash book, etc. which were regularly maintained by the Complainant. As per the agreement, the Complainant was to deliver the goods to M/s. Tartons upto 30th November, 1994. The delivery schedule, thereafter, was extended upto 15th January, 1995, because of unavoidable circumstances and on the request of Mr. Grover. The material manufactured by the Complainant was kept in the godown. Because of deteriorating law and order situation in that area, as the Complainant did not afford to take any risk, and the goods were very costly, an insurance policy for a sum of Rs.60 lakhs against burglary; Rs.5 lakhs against furniture and fittings, was taken for the period from 26th December, 1994 to 25th December, 1995. The cover note of the insurance policy is produced on record (Annexure - D). He also took another policy against fire for the same period. The cover note is Annexure - D-1.

(3.) AS the Complainant was lying in the hospital his nephew sent a written information to the Divisional Manager of the Insurance Company at Bhagalpur about the occurrence of the incident. On receiving the information, the Insurance Company appointed Shri Naveen Chandra Jha as the Surveyor. Thereafter, the Insurance Company appointed M/s. Mookerjee Biswas & Pathak, Calcutta, as Surveyors, to assess the loss occurred to the Complainant. The Surveyor, Mr. Navin Chandra Jha visited the site on 7.1.1995 and submitted his report. As the Complainant was under severe financial stress due to interest burden of the bank which was increasing day-by-day, he wrote a number of letters to the Insurance Company for settlement of his claim. For some reason or the other, the Complainant was informed on 5th June, 1996 that the Surveyors would visit again 17th June, 1996 to carry out the balance inspection-cum-survey job. He remained present on 17th June, 1996, but nobody from the Insurance Company turned up. On his inquiry on 18th June, 1996, he was informed that the Surveyors would come in the first week of July, 1996. As the claim was kept pending for months together, the Complainant filed this complaint before this Commission on 4.3.1997, wherein it has been prayed that the Insurance Company be directed to pay Rs.38 lakhs for the loss suffered by it with compound interest with quarterly rests at the rate of 18.75% p.a. as per the prevailing bank rules; and, further, an amount of Rs.17 lakhs together with accrued interest at the rate of 18% p.a., Rs.5 lakhs for harassment, inconvenience, loss of business, mental agony; and Rs.1 lakh towards costs.