S.T. Vallinayagam Pillai vs Oriental Insurance Company Ltd. … on 19 July, 2006

National Consumer Disputes Redressal
S.T. Vallinayagam Pillai vs Oriental Insurance Company Ltd. … on 19 July, 2006
Equivalent citations: IV (2006) CPJ 322 NC
Bench: K G Member, R Rao


Rajyalakshmi Rao, Member

1. The present appeal is filed by the appellant Shri S.T. Vallinayagam Pillai, who is the original complainant whose complaint of deficiency in service against Oriental Insurance Co. Ltd. has been dismissed by the order dated 29.9.1998 by the State Commission, Chennai in O.P. No. 118/1997.

2. Brief facts of the case are:

Appellant is a Jewellery Mart firm in Tenkasi. He had insured the stock in trade both gold and silver for Rs. 14 lakh with the respondents, Oriental Insurance Company for a period of 21.12.1994 to 20.12.1995. The appellant’s shop was closed at 10 p.m. on 22.10.1995 and was opened on 24.10.1995 by 11 a.m. by the appellant’s partner V. Muthusamy. 23.10.1995, being Deepawali day, the shop was not opened. When the shop was opened on 24.10.1995 it was found that the shop was burgled and the burglary must have happened between 10 p.m. on 22.10.1995 and 11 a.m. of 24.10.1995.

3. It is appellant’s case that the burglars looted the entire gold and silver ornaments and jewelleries kept in the show case such as (i) Mangal Sutra; (ii) Gold Rings; (iii) Gold Stud pair; (iv) Gold chain; and (v) silverware worth Rs. 5,72,721.30. The complaint was lodged with the Tenkasi Police and respondent was also informed by a telegram and also by a letter dated 25.10.1995. On 25.10.1995 respondents’ Surveyor visited the appellant’s shop and made investigation and gave a report on 10.2.1996. In his report which is placed on at page 66, details are given as under:

  Books of Accounts Ledger, day book, stock
maintained        book, sales register and other
                  subsidiary ledgers. On examining
                  the above, we have satisfied with the
                  books of account were properly
                  maintained till date.
Stock             On perusal of stock records stock
                  taking is done by the proprietor
                  every day and the stock record is
                  duly maintained by him. Stock
                  statement as on 31.3.95 is herewith
Purchase bills    We have examined all purchase bills
                  (both gold and silver) from 1.4.95 to
                  22.10.95 and the above bills were
                  genuine. Certified copies of the
                  above are herewith enclosed.
Outward           We have examined the
Voucher/Bill      vouchers/bill for outward, raw
                  materials which are given to gold
                  smith and silversmith for conversion
                  of finished goods and the certified
                  copies of the above are herewith
Inward Voucher/   Inward voucher receipts for finished
Receipts          goods received from goldsmith were
                  checked and the certified copies of the
                  above are herewith enclosed.
Daily Sales       We have checked daily sales register
Register          with sales bills from 1.4.1995 to
                  22.10.1995 and it was properly

4. In addition, the monthly-wise cooly (making charges) paid to goldsmit hs along with the audited statements of the financial year ending 31.3.1994 to 31.3.1995 were examined by the surveyor who assessed the loss due to theft as under:

  Theft items    Quantity  Weight    Cost
                         Gm.Mg.    excluding
                                   Rs. Ps.
1. Thirumanga  24        43.350    18,982.60
2. Ring        322       516.500   2,26,165.70
3. Stud        133       550.700   2,41,143.30
4. Chain       19        172.100     75,359.70
5. Silver                1500.000    11,070.00
   Ornaments                       ___________
                         Total     5,72,721.30

5. After the case was registered Tenkasi police had investigated the complaint of theft and one person was arrested on 8.2.1996 from whom 19.500 gm. gold was seized. This gold was worth Rs. 9,700 and it was given to the appellant. The said report by Inspector of Police certified that regarding remaining gold, silver and cash, they were unable to trace in the above case. The respondent vide letter dated 5.2.1997 asked the appellant to submit the following particulars at the earliest to pass the claim:

1. Details of the purchase of the old ornaments from family members of the partners in the month of December 1996 including documentary proof, if any.

2. The Chartered Accountant Mr. Ravi has physically verified the stock of Jewellery/Silver ornaments at your premises on 24.12.1996. You have also submitted the purchases/sales during the period between 22.10.19,95 and 24.10.1996. The stock in the custody of Goldsmith on those two days i.e. 22.10.95 and 24.12.96 is also known. With these figures, we would be able to reconcile and arrive at the stock in trade as on 22.10.95. This was discussed in detail with your representative and he has agreed to prepare one such reconciliation statement and forward to us soon.

6. Mr. Ravi, a Chartered Accountant, appointed by the Insurance Company submitted his report on 7.2.1997. To arrive at the stock on the date of theft, he physically verified the stock at the shop on 24.12.1996 and worked backwards taking into account the purchases/sales between 24.10.1995 (the date of the theft) and 24.12.1996 from the books. Based on this, he arrived at the balance of gold as on 24.10.1995 at 2981.540 gm. However, this did not tally with the balance of stock as on 24.12.1995 as per books of account, which showed it as 3345.336 gm. The State Commission took this difference in stock into account, while arriving at a decision against the complainant.

7. However, as desired by the Insurance Company the complainant filed a reconciliation statement and satisfactorily accounted that in actual fact there is no difference in stock except for one gram of gold. The reconciliation statement given below would show that Mr. Ravi, the Chartered Accountant, did not take into account 364.796 gm. of gold. This tallies with the alleged stock difference of 363.796 gm. except to the extent of one gram.

Reconciliation Statement
Conculation As shown As per Difference Remkarks R.M.

made to arrive  by Auditor  Books                 Readymade
stock of Gold   Mr. Ravi                          Jewellery
RM as on

Add                         256.580   +256.580    Standard Bar
Stock of                                          Completely
Standard                                          omitted by
Bar on                                            the auditor
24.12.1996                                        as he verified
233.280+23.300)                                   only jewels.

Sales after     2725.300    2735.00   +9.700      The sale on
the date of                                       the date of
burglary                                          physical
                                                  going on when
                                                  Mr. Ravi
                                                  omitted by him

Less: Purchases 3878.240    3877.960  +0.280      Actual Copper
after the date                                    content
of Burglary to
the date of
by Mr. Ravi
on 24.12.1996

Stock of Gold   3345.336    3247.100  +98.239     Stock of Gold
RM as per Books                                   with goldsmith
before the date                                   on 24.10.1994
of burglary                                       omitted by

Difference      363.796     1.000     +364.796    Total stock as
                                                  per Book:
                                                  3345.336 stockas
                                                  per Mr. Ravi


8. As regards silver, Mr. Ravi, the Chartered Accountant, based on his method arrived at a stock of 5416.950 gm. as on 24.10.1995 whereas as per books of account, the stock on that date was 4760.55 gm. Thus there is apparently a difference (excess) of 650.400 gm. in the stock of silver. However, the appellant satisfactorily explained the reason for this difference. According to him, when the Auditor, Mr. Ravi visited the shop on 24.12.1996 a new model “KOLUSE” (waist band) supplied by one of the appellant’s suppliers, Dharamrajan and Company, weighing 651 gm. was in the show-case. The appellant did not add this in the stock as it was a new item sent by the supplier whereas Mr. Ravi added this in the stock. In support of this, a letter dated 20.12.1996 given by Dharamrajan and Company is filed as Exhibit A-14 and it is argued that this letter was shown to the auditor at that time itself and the difference in silver was explained to him. In view of this, we hold that the case of the appellant cannot be rejected on the ground of difference in stock, since the alleged difference has been satisfactorily explained by the appellant.

9. From the record, it is clear that the claim was rejected by the respondents on 14.8.1997 on the ground that charge-sheet has been filed against the culprit Raja for having stolen only 19.5 gm. of gold and that the said gold recovered from the said culprit was handed over to the appellant and that the final investigation report of the police in the proper format has not been submitted by the appellant. On careful perusal of the report, we find that the FIR was filed on the date of theft itself, i.e. on 24.10.1995. The FIR clearly shows the amount of stolen property as gold jewellery worth Rs. 5,77,192.50, silver ornaments worth Rs. 10,500 and cash worth Rs. 466.50. The details of the culprit are shown as “Not known”. It is a different matter that 4 months later the police arrested one Raja and recovered from him 19.5 gm. of gold. However, it is seen that the police have filed an amended charge-sheet on 8.11.1997 wherein it was mentioned that further investigation is in progress and steps are being taken to arrest the real culprits. However, filing of this additional charge-sheet or recovery of only 19.5 gm. of gold from an arrested person earlier is not relevant for a decision on the issue before us.

10. The Surveyor appointed by the respondents vide his report dated March 29, 1996 clearly assessed the loss at Rs. 5,72,721.80 taking into account the value of 19.50 gm. of gold jewellery recovered and applying the average clause, he assessed the loss at Rs. 5,42,161. The subsequent report dated 7.2.1997 of the Chartered Accountant appointed by the respondents showed some apparent difference in the stock of gold and silver jewellery as on the date of burglary. However, these differences have been fully reconciled except to the extent of 1 gm. of gold. Under these circumstances, we find there is merit in the case of the appellant. There was no justification for the Insurance Company to reject the claim especially after the appellant reconciled the difference in stock. This clearly amounts to deficiency in service by the respondents. The burglary had taken place way back at the end of 1995. On one pretext or the other the respondents Insurance Company has been faulting the appellant and rejected the claim on flimsy grounds.

11. In view of the above said discussion, the appeal is allowed and the respondents are directed to pay Rs. 5,42,161 along with interest 8% p.a. from 1.4.1996, i.e. six months after the burglary and cost of Rs. 10,000 within two months from the date of receipt of this order.

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