Eight years after a garment factory caught fire, the State Consumer Commission directed an insurance company to pay Rs 22 lakh to a garment manufacturer. Of this, Rs 21 lakh is to be paid as claim and Rs 1 lakh for causing harassment and mental agony to the complainant — the garment manufacturer.
The Lajpat Nagar-based garment company which used to manufacture knitwear and readymade garments. In November 2006, the manufacturer had taken taken a Rs 2.2-crore fire policy for one year through Punjab National Bank (PNB). However, just a month later, in December, a fire broke out on the factory premises.
According to the complainant, the insurance company, Bajaj Allianz General Insurance Company, and PNB were informed of the fire immediately. However, garment manufacturer claimed that a insurance surveyor visited the site more than 24 hours after the incident, by which time, garments — finished and semi-finished — had been destroyed in the water used by the fire brigade to douse the fire.
According to the manufacturer, the surveyor inspected the factory for about four hours. Information, details and various documents including purchase orders, export invoices and the costs of reconditioning were all duly submitted. The insurance company finally sent a cheque for Rs 2.59 lakh as the “full and final settlement”. No reasons or details were given by the insurance company as to why this amount was fixed, the complainant told the commission.
Interestingly, more than a year later, the claim amount was “whimsically and arbitrarily” revised by Bajaj Insurance to
Rs 5.24 lakh “without giving any valid and cogent reasons”, the manufacturer claimed. But, the complainant argued that it were entitled to an indemnification for Rs 22 lakh.
Bajaj Insurance, however, claimed that the fire was caused due to lack of adequate electrical safety measures at the factory. The company also claimed that the loss was assessed by a duly authorised and an IRDA-accredited surveyor, and the payment was made accordingly.
Noting that neither Bajaj Insurance nor PNB had filed their evidence, the consumer court said the complainant’s claim stood “un-controverted and un-rebutted”. The commission also referred to the report by the Fire department, which had estimated a loss of nearly Rs 35 lakh.
Appreciating the effort of the complainant to minimise the losses, Judicial Member SA Siddiqui said, “We find merit that efforts were made by the complainant to rectify the damaged garments to make them usable and sale-able. Thus, the complainant attempted to reduce and minimise the loss.”
The consumer commission also found it “strange” that the claim amount was enhanced “without giving reasons” from
Rs 2.59 lakh to Rs 5.24 lakh.
Observing that the surveyor appointed by the insurance company had failed to exercise his due diligence and the report prepared by him in assessing the loss was not genuine and fair, the consumer commission directed Bajaj Insurance to pay Rs 21.27 lakh as claim and Rs 1 lakh as compensation to the garment manufacturer.