Bommidala Purnaiah H... v. New India Assurance ...

stored its stock of tobacco in the godown of M/s Tobacco Enterprises of India. For covering the risk of its tobacco stock stored/lying in non-kutcha construction building situated in the premises of M/s. Tobacco Enterprises of India, the Complainant obtained two Standard Fire and Special Perils Policies, i.e., Policy No. 62100311120100000041 for the period of insurance from 09.04.2012, (03:04:29 pm) to 08.10.2012 (11;59:59 pm) for total sum insured of ₹5,00,00,000/- (Rupees Five Crore only) andPolicy No. 62100311120100000040 for the period of insurance from 09.04.2012, (12:14:45 pm) to 08.04.2013 (11;59:59 pm) for total sum insured of ₹2,00,00,000/- (Rupees Two Crore only), from Opposite Party Insurance Company after paying premium of ₹1,89,493/- (Rupees One Lac Eighty Nine Thousand Four Hundred Ninety-Three only) and ₹1,33,737/- (Rupees One Lac Thirty Three Thousand Seven Hundred Thirty Seven only)

respectively.Unfortunately, during the currency of the Policies, i.e., on 10.08.2012 around 2:00 AM fire accident took place in the premises of Tobacco Enterprises India Ltd. due to short circuit of electricity.The incident was reported to the Local Police, who registered a case bearing Cr. No. 357 of 2012.The Police immediately contacted Clue Team to visit the scene of fire incident and the Clue Team examined the fire accident site and seized partly burnt loose tobacco leaves and other materials and forwarded these items to the Director, Forensic Science Laboratories, Hyderabad (hereinafter referred to as the FSL), for Analysis.The Police also informed the Station Fire Officer, Guntur, The Factories Department, Govt. of Andhra Pradesh and Electrical Inspectorate, Govt. of Andhra Pradesh, for visiting the fire spot and furnishing the report.The Complainant informed the Opposite Party Insurance Company about the Fire Incident and told that his stock of tobacco worth ₹6,04,97,423/- stored in the godown had been totally damaged.The Opposite Party Insurance Company appointed Unik Insurance Surveyor and Loss Assessors (P) Ltd. (hereinafter referred to as the Surveyor) to assess the loss.

The Electrical Inspectorate, Govt. of Andhra Pradesh vide letter dated 18.08.2012 informed that "as per investigation it is found that on 09.08.2012 there was a heavy rain in the area and power failure several times. Due to fluctuations in the voltage, the insulation of the wires may be damaged and short circuit occurred. Due to short circuit the tobacco boxes and bundles stored in the godown caught fire. Hence it is confirmed that the fire accident occurred due to short circuit."

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The Factories Department, Government of Andhra Pradesh vide its report dated 09.08.2012 informed that "all the workers left the factory and godown were kept

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locked. Around 10:30 PM heavy wind and rainfall were there in that area and power failure occurred several times. On intervening night of 10.08.2012 at about 00:30 hrs. one security person noticed the fire at the godown no. 4 by that time fire sparked throughout the godown and all the stocks in the godown caught fire."

The State Disaster Response & Fire Services Department vide Fire Attendance Certificate dated 03.10.2012 confirmed the fire incident on 10.08.2012 and under the Remarks Column it was mentioned that "the Management has provided mandatory open spaces all round the building for the fire maneuverability of the Fire Vehicles and management may be advised to provide installations, viz. Fire Extinguishers of Hose Reel, Wet Riser, Yard Hydrand, Automatic detection Alarm System, Automatic Sprinklers system, Underground static storage tank with required pumps etc. As per National Building Code : 2005 within 30 days." which proves that all efforts were put and steps were taken to fight with the fire accident.

6.

The Forensic Science Laboratories (FSL) Hyderabad in its report dated 06.10.2012 informed that "Physical examination chemical tests and instrumental analysis - Gas- Chromatography-Head Space were conducted and analyzed that as per the above- mentioned methods but neither inflammable hydrocarbons nor explosive are found in them. Therefore, it is clear from the FSL report that there was no external substance or any other extraneous fire accelerants were present at the fire accident site."

7.

After investigation and based on the report of concerned technical authorities and evidence collected, the Police submitted its final report dated 02.02.2013 in Cr. No. 357 of 2012 and found that there is no fault on the part of the Management and the incident occurred due to the electrical short-circuit and there is no foul play in this case and it is a fit case to drop further action.

8.

After visiting the accident site on 13.08.2012, 04.10.2012, 17.03.2013, 23.05.2013 and 28.09.2013 and going through the Reports submitted by Police, FSL, Hyderabad, Electrical Inspectorate, Fire Department and Factories Department, Government of Andhra Pradesh, the Surveyor submitted its Survey Report to the Opposite Party Insurance Company.Despite requesting for the Surveyor's Report, it was never made available to the Complainant.

9.

The Complainant requested several times to the Opposite Party Insurance Company for settlement of its Claim but the Opposite Party Insurance Company ignored the Reports submitted by the Police, FSL, Hyderabad, Electrical Inspectorate, Fire Department and Factories Department Government of Andhra Pradesh and repudiated the Claim of the Complainant vide letter dated 27.01.2015 which reads as under:-

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"M/s Bommmidalal Purnaiah Holdings (P) LTD. Indian Bank Building, IST Floor, Ring Road, Guntur.

Guntur, Andhra Pradesh- 522002 Dear Sir

Re: Insured: Bommidala Purnaiah Holidings (P) Ltd. Date of loss: 10 August 2012 Policy No.6210031120100000040 & 41, Claim No. 62130031120190000014 & 14. I write with reference to your captioned claim made under the captioned policies. We have now had the opportunity to consider the material in respect of this claim, and on the basis of this material; we decline liability in respect of the captioned claims for the reasons set out below.

As you are no doubt aware, stock belonging to VST Industries Ltd was also stored in your premises and the said stock was separately insured under a Standard Fire and Special Perils Policy Bearing number 050300/11/11/14/00000192 issued by United India Insurance. The insurance company in the said case appointed Professional Surveyors and Loss Adjusters Pvt Ltd to assess the claim, and also appointed Truth Labs, Hyderabad, to undertaking a forensic investigation. We have therefore, considered the matter in its entirety taking into account the report of the State Forensic Lab, the report of the Surveyor Unik Insurance Surveyors & Loss Assessors Pvt. Ltd, the police report, the report of Professional Surveyors and Loss Adjusters Pvt. Ltd and the report of Truth Labs.

Therefore, the surveyor has also clearly made his observations on the breach of conditions and admissibility subject to the issue of causation and the findings of Truth Labs, as noted in the part of the report quoted above.

Further, we must also point out that we have considered the report of Truth Labs as against that of the AP FSL, and find that the samples before AP FSL were wrong. The sampling is critical, and we believe that the AP FSL, did not have proper samples for their testing purposes. As far as the Electrical Engineer's report, this is not based on any

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technical investigation and we do not believe the said report can be considered. In the circumstances and based on the material to hand, we believe that the Truth Labs report is the only credible piece of evidence that deals with causation in the present case. Truth Labs have attributed the casus to extraneous fire accelerants. No explanation has been provided to us of the presence of such hydrocarbons. There is no suggestion of sabotage or any other source. We can only at this stage that is ultimately your premises, you are assumed to be the master of such premises, and these premises are under your control and supervision. In the absence of any cogent or sustainable explanation from you, we can only come to the conclusion that fire accelerants were brought into the premises with your knowledge.

We refer in particular to 2 settled principles of insurance (a) an assured cannot by his own deliberate act bring about the event upon which the insurance money is payable, because it is presumed that the insurance was never intended to cover that kind of loss, but only a loss occasioned by a fortuitous peril; and (b) on a principle of public policy applicable to all claims, an assured is not entitled to recover a benefit or indemnity in respect of his wrong. In the circumstances of this case, we believe that both principles are applicable in this case.

We also refer to General Condition 8 of the Policy that stipulates the forfeiture of all benefits, under the Policy if it is found that the claim was in any way fraudulent. The said condition is in the following terms:

GC8: "If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under this policy shall be forfeited."

The salient points set out in the report by Truth Labs of 25 January 2013 are as follows:

1. As to the tests carried out on the samples collected, the report states that:

"The results of chemical analysis indicated unusual presence of lower hydrocarbons

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in all the samples suggesting that ignitable volatile substances such as kerosene/diesel oil could have been responsible for the initiation of fire. The fresh and unburnt samples did not contain any traces of hydrocarbons confirmed that the stocks in the fire originated area only were offered due to extraneous fire accelerants. (copy of report enclosed)"

2. As to the theory of short circuit, the report states that:

"There were no electrical appliances inside godown No. 4 other than the 100 tube lights which were switched off at about 7 p.m. before closure on that day of incident. The tube lights fittings were maintained satisfactorily as per the maintenance records. Forensic microscopic examination of electrical wires, switches, light fittings and circuit breakers confirmed that there was no possibility of fire originating due to short-circuit in the power lines."

3. While ruling out short circuit and spontaneous combustion, the report states that "the most probable cause of fire was due to use of extraneous fire accelerants such as kerosene" and that it was not possible to ascertain how the extraneous accelerants got into the premises.

We must point out that Truth Labs is an independent lab that has issued the report on the basis of chemical tests. In all fairness the surveyor appointed in your case, i.e. Unik Insurance Surveyor & Loss Assessors Pvt. Ltd, also considered the findings of Truth Labs. It is relevant to extract the following from the Final Survey Report of the surveyor dated 29 December 2013:

"14. Warranties and Clauses:

To the best our knowledge, no breach of warranties, terms and conditions contained in the policy was observed except as observed by Investigator M/s Truth Lab appointed by United India Insurance Co. Ltd.

15. Admissibility of claim:

Subject to observations made under para cause of loss, the claim reported under the policy for the loss suffered by the insured in respect of their properties was due to operation of an insured peril during the policy period and this does not fall under the exclusions. Hence, the claim is admissible under the policy issued." In the circumstances of this case, we believe that GC8 would be applicable to the

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captioned claim, with the effect that all benefits under the Policy (which would include the claims made by you) being forfeited. We are left with no option but to conclude that the insuring clause does not trigger and in any event GC8 is attracted. Accordingly, on these ground alone, we regrettably decline your captioned claims. Please note that the foregoing points are illustrative and not exhaustive of our position and the coverage points available to us, whether under or in relation to the Policy. Nothing contained herein should be construed as waiver of our right to amend in any manner the grounds states above or to assert additional or different grounds for disclaiming or restricting coverage, whether based on material now available or which may be discovered in the future. Our rights are fully reserved in this regard. Yours faithfully

Sd/-

(S. DAS)

CHIEF REGIONAL MANAGER" The Complainant again sent another representation dated 30.05.2015 requesting the Opposite Party Insurance Company to settle its genuine Claim in the light of Reports submitted by Government Agencies, i.e., FSL, Hyderabad, Police, Electrical Inspectorate, Fire Department and Factories Department but the Opposite Party Insurance Company reiterated the same ground as was taken in repudiation letter dated 27.01.2015.Alleging deficiency in service and Unfair Trade Practice on the part of the Opposite Party Insurance Company, the Complainant has filed the present Complaint seeking following Reliefs:-

"a) Pass an order to the tune of ₹6,04,97,423.00 (Rupees Six Crore Four Lacs Ninety Seven Thousand Four Hundred Twenty Three only) against the Opposite Party for the estimated loss in the fire accident suffered by the Complainant with 18% interest from the day of accident till the payments.

b) Pass an order to compensate the damage suffered by the Complainant as the complainant is paying compound interest at the rate of 18.41% to the concerned Andhra Bank and has already paid amount of ₹3,34,18,818.00 (Rupees Three Crore Thirty Four Lacs Eighteen Thousand Eight Hundred Eighteen only) as interest till July 2015 towards the estimated loss.

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c) Pass any other or further relief (s), which this Hon'ble Commission deems just and proper in view of the facts and circumstances of the case which shall be in the interest of justice, fair play and equity."

The Opposite Party Insurance Company contested the Complaint by filing its Written Statement. In the Written Statement, the Opposite Party Insurance Company stated that on the basis of the Reports submitted by Police, FSL, Hyderabad, Electrical Inspectorate, Fire Department and Factories Department, Government of Andhra Pradesh, their Surveyor assessed the net loss of ₹3,84,05,000/- (Rupees Three Crore Eighty Four Lakh and Five Thousand only) and submitted its report to the Opposite Party Insurance Company.

12.

It was also stated that at the place of loss, M/s VST Industries also stored their stock which had insurance coverage from United India Assurance Co. Ltd.As such the United India Assurance Co. Ltd. appointed their Surveyor, i.e., Professional Surveyor and Loss Adjusters Pvt. Ltd. to assess the claim and also appointed M/s. Truth Lab, to undertake a forensic investigation.The Opposite Party Insurance Company also examined the Reports submitted by the Surveyor and Investigator appointed by United India Insurance Company.

13.

After examining the Surveyor Report submitted by the Surveyor, the Opposite Party Insurance Company sought some clarifications from the Surveyor but he failed to provide the same.The Surveyor also failed to minutely examine the observations made by M/s. Truth Lab, i.e., investigator appointed by United India Insurance Company Limited.M/s. Truth Lab has collected the samples through experts appointed by them and in their investigation report it was reported that "The results of chemical analysis indicated unusual presence of lower hydrocarbons in all the samples suggesting that ignitable volatile substances such as kerosene/diesel oil could have been responsible for the initiation of fire. The fresh and unburnt samples did not contain any traces of hydrocarbons confirmed that the stocks in the fire originated area only were offered due to extraneous fire accelerants" and the possibility of electrical short-circuit was denied by reporting "There were no electrical appliances inside godown No. 4 other than the 100 tube lights which were switched off at about 7 p.m. before closure on that day of incident. The tube lights fittings were maintained satisfactorily as per the maintenance records. Forensic microscopic examination of electrical wires, switches, light fittings and circuit breakers confirmed that there was no possibility of fire originating due to short-circuit in the power lines." While ruling out short circuit and spontaneous combustion according to them, the most probable cause of fire was due to use of extraneous fire accelerants such as kerosene" and that it was not possible to ascertain how the extraneous accelerants got into the premises.

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It was also stated that the Opposite Party Insurance Company got examined all the Reports from an Expert M/s. Pinkerton, who after examining the Reports submitted by FSL Report of Hyderabad, Police, Electrical Inspectorate, Fire Brigade, Police Final Report and Truth Lab Report concluded that AP FSL were not involved in the samplings and had opined that the samples produced before FSL Hyderabad were totally wrong.In respect of Electrical Engineer's Report they opined that Electrical Engineer's Report is not based on any technical investigation and hence cannot be given any consideration at all.In respect of the Truth Lab Report it was stated that they have collected ten number of samples from in and around debris which is though not sufficient but a fair one and opined that the credibility of the report of Truth Lab is more as compared to that of the Police.It was further stated that after examining in detail the above reports they repudiated the claim of the Complainant on the grounds mentioned in letter dated 27.01.2015.It was further stated that there was no Deficiency in Service on their part and it was prayed that the Complaint be dismissed with costs.

15.

We have heard Mr. Nitesh Rana, learned Counsel appearing on behalf of the Complainant, Mr. Navdeep Singh, learned Counsel appearing on behalf of the Opposite Party Insurance Company and have gone through the material available on Record and given a thoughtful consideration to the arguments advanced by the Parties.

16.

Mr. Nitesh Rana, learned Counsel appearing on behalf of the Complainant submitted that from the Final Report of the Police in Cr. No. 357 of 2012, which is based on the findings of various Government Agencies, i.e., FSL, Hyderabad, Electrical Inspectorate, Fire Department and Factories Department Government of Andhra Pradesh, it is clear that there is no fault on the part of the management and the fire incident occurred due to the electrical short-circuit and there is no foul play in this case. However, the Opposite Party Insurance Company ignoring the Surveyor's Report and the Reports submitted by various Government Agencies, repudiated their genuine claim by relying upon Investigation Report of Private Investigator, i.e., M/s. Truth Lab which was appointed by the United India Insurance Company for investigation of a claim filed by their client M/s. VST Industries Ltd. More importantly, the VST Industries Ltd. has already received the insurance claim. This is a clear case of Deficiency in Service and Unfair Trade Practice on the part of the Opposite Party Insurance Company. They prayed that the Consumer Complaint be allowed and the Reliefs as sought under the Prayer Clause of the Complaint be awarded.

17.

Per contra, Mr. Navdeep Singh, learned Counsel appearing on behalf of the Opposite Party Insurance Company submitted that after examining the Surveyor Report, the Opposite Party Insurance Company sought some clarifications from the Surveyor but he failed to provide the same. The Surveyor also failed to minutely examine the

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observations made by M/s. Truth Lab. They got examined all the Reports from an Expert M/s. Pinkerton, who after examining the Reports submitted by FSL Hyderabad, Electrical Inspectorate, Fire Brigade, Police Final Report and Truth Lab Report opined that the credibility of the report of Truth Lab is more as compared to that of the Police. It was also submitted that the samples were not collected by FSL, Hyderabad but the samples were collected by Police and later on submitted to FSL, whereas M/s. Truth Lab appointed qualified persons for collecting the sample. Therefore, they put reliance on the report submitted by M/s. Truth Lab. In its Investigation Report, M/s. Truth Lab ruled out short circuit and spontaneous combustion and opined that the most probable cause of fire was due to use of extraneous fire accelerants such as kerosene. Therefore, the Opposite Party Insurance Company repudiated the claim of the Complainant. It was further submitted that the Contract of Insurance is based upon the principal of utmost good faith and each contracting party is expected to correctly define its status. Any contract which has been obtained by fraud or misrepresentation is void in terms of provisions of contract act and also in terms of the law laid down by Hon'ble Supreme Court. It was further submitted that the Complainant by unlawful means have tried to make unlawful gain and loss has occurred due to willful acts as such the loss was rightly repudiated vide letter dated 27.01.2015. It was further submitted that there was no Deficiency in Service on their part and it was prayed that the Complaint be dismissed with costs. It is not in dispute that for the Tobacco Stocks stored / lying in non-kutcha construction building situated in the premises of M/s. Tobacco Enterprises of India, the Complainant had obtained two Standard Fire and Special Perils for a total sum insured of ₹5,00,00,000/- and ₹2,00,00,000/- from Opposite Party Insurance Company after paying the requisite premium. The Fire incident took place on 10.08.2012 at 2:00 am in the morning in the premises of M/s. Tobacco Enterprises of India due to short-circuit of electricity. The incident was reported to the local Police who registered a case bearing No. Cr. No. 357 of 2012. Investigations were started and partly burnt loose tobacco leaves alongwith other materials were seized by the Investigation Team. The seized partly burnt loose tobacco leaves alongwith other material were forwarded to the Director, Forensic Science Laboratory (FSL) Hyderabad, who gave his report that Physical Examination, chemical tests and instrumental analysis Gas-Chromatography-Head Space were conducted and analyzed but neither inflammable hydrocarbons nor explosive are found in them. Therefore, it is clear from the FSL report that there was no external substance or any other extraneous fire accelerants were present at the fire accident site.

19.

The Electrical Inspectorate, Govt. of Andhra Pradesh in its Investigation Report found that on 09.08.2012 there was a heavy rain in the area and power failure several times.Due

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to fluctuations in the voltage, the insulation of the wires may be damaged and short circuit occurred.Due to short circuit the tobacco boxes and bundles stored in the godown caught fire.It confirmed that fire accident occurred due to short circuit. The Factories Department, Government of Andhra Pradesh in its Report held that all the workers left the factory and godown were kept locked.Around 10:30 pm heavy wind and rainfall were there in that area and power failure occurred several times. On intervening night of 10.08.2012 at about 00:30 hrs. one security person noticed the fire at the godown no. 4, by that time fire sparked throughout the godown and all the stocks in the godown caught fire.

21.

Further, the State Disaster Response & Fire Services Department confirmed the fire incident on 10.08.2012 and remarked that the Management has provided mandatory open spaces all round the building for the fire maneuverability of the Fire Vehicles and advised to provide installations, viz. Fire Extinguishers of Hose Reel, Wet Riser, Yard Hydrand, Automatic detection Alarm System, Automatic Sprinklers system etc.

22.

The Police submitted its Final Report on 02.02.2013 stating therein that there was no fault on the part of the Management and the incident occurred due to the electrical short- circuit and there was no foul play in this case and had recommended to drop further action in the matter.The incident of Fire was reported to the Opposite Party Insurance Company informing that the stock of Tobacco worth ₹6,04,97,423/- stored in the godown had been totally damaged.The Opposite Party Insurance Company had appointed M/s. Unik Insurance Surveyor and Loss Assessors (P) Ltd. to assess the loss, who had assessed the loss at ₹3,84,05,000/-.The Opposite Party Insurance Company did not accept the Report given by M/s. Unik Insurance Surveyor and Loss Assessors (P) Ltd. and instead relied upon the report of M/s. Professional Surveyor and Loss Adjusters Pvt. Ltd. appointed by United India Insurance Company Ltd., who had insured the stocks of M/s. VST Industries Ltd., which was kept in the premises of M/s. Tobacco Enterprises of India, where the fire took place.The forensic investigation undertaken by M/s. Truth Lab, appointed by United India Insurance Company, wherein it had been indicated that unusual presence of lower hydrocarbons in all the samples suggesting that ignitable volatile substances such as kerosene/diesel oil could have been responsible for the initiation of fire, was made the basis for repudiating the Claim of the Complainant.

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It is not in dispute that even though M/s. Truth Lab appointed by United India Insurance Company regarding the claim of loss filed by M/s. VST Industries, had reported of volatile substances such as kerosene/diesel oil which could have been responsible for the initiation of fire, yet United India Insurance Company had sanctioned the claim of loss made by M/s. VST Industries Limited arising out of the same incident of fire.It is very strange that the Report of the Surveyor and the Forensic Expert of M/s. United India Insurance Company Ltd. in respect of the claim of loss of stock of Tobacco kept by M/s. VST Industries has been made the basis for repudiating the Claim made by the Complainant herein by M/s. New India Insurance Company Limited but M/s. United India Insurance Company Limited had accepted the claim made by M/s. VST Industries Limited in respect of the same fire and loss of stock of Tobacco kept in the same premises.Thus, the stand taken by Opposite Party Insurance Company in the present case for repudiating the Claim cannot be said to be justified in the eyes of Law.

24.

Needless to mention here that the Report of Unik Insurance Surveyor and Loss Assessors

(P) Ltd., i.e., the Surveyor appointed by the Opposite Party Insurance Company had not been rejected. Thus, it was incumbent upon the Opposite Party Insurance Company to act on the basis of the said Surveyor's Report, the extraneous materials which did not relate to the Complainant could not have been taken into consideration at all.

25.

Reference can be made to the decisions made by the Hon'ble Supreme Court in the cases of "Venkateswara Syndicate vs. Oriental Insurance Co. Ltd. & Ors." (2009) 8 SCC 507, and "New India Assurance Co. Ltd. vs. Luxra Enterprises Pvt. Ltd. & Ors." (2019) 6

SCC 36.

26.

Thus, from the aforesaid facts, it is absolutely clear that the Opposite Party Insurance Company was not at all justified in repudiating the Claim made by the Complainant.The repudiation letter dated 27.01.2015 issued by the Opposite Party Insurance Company, therefore, cannot be sustained and is, therefore, set aside.

27.

In view of the foregoing discussions we are of the considered view that the Complainant is entitled to the full Claim of Insurance made for loss due to fire alongwith interest, which we quantify @12% p.a. from the date of filing of the till the date of payment.The rate of interest @12% p.a. is being awarded on the ground that the Complainant had taken loan from a Nationalised Bank and has been paying overdue interest on it.

28.

Consumer Complaint No. 715 of 2015

The Opposite Party Insurance Company is directed to pay

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₹6,04,97,423/- (Rupees Six Crore Four Lacs Ninety Seven Thousand Four Hundred Twenty Three only) to the Complainants alongwith interest @12% p.a. from the date of filing of the Claim till the date of payment within six weeks from today.

Consumer Complaint No. 716 of 2015

The Opposite Party Insurance Company is directed to pay ₹4,64,04,000/- (Rupees Four Crore Sixty Four Lacs Four Thousand only) to the Complainants alongwith interest @12% p.a. from the date of filing of the Claim till the date of payment within six weeks from today.

30.

The Consumer Complaints allowed in above terms. Pending Applications, if any, stand disposed off.

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......................J

R.K. AGRAWAL

PRESIDENT

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DR. S.M. KANTIKAR

MEMBER

......................

BINOY KUMAR

MEMBER

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