Bench: M Shah, R Rao
R.S. Industries And Smt. Rem Mittal, Partner W/O. Shri M.K. Mittal vs National Insurance Co. Ltd. And The Divisonal Manager on 19/3/2007
ORDER
M.B. Shah, J. (President)
1. This case also illustrates to what extent there is mal-administration of food stocks which are required to be distributed under the welfare scheme through Public Distribution System at subsidized rates. It also illustrates how fraud can be perpetuated with the active participation of the concerned Government Officers?
2. In this case, an improbable story is cooked up by the Complainants that there was a theft of 12,654 paddy bags, each bag weighing 1 quintal and on that basis a claim for reimbursement was filed before the Insurance Company for a sum of Rs. 50,57,749/-. Surveyors arrived at the conclusion that the claim was bogus. Hence, the Insurance Company repudiated the claim. We entirely agree with the report submitted by the Surveyors. The story of theft of such a large quantity of levy rice is totally unbelievable.
3. This Original Petition is filed by M/s. R.S. Mills, Complainants, contending that it is a partnership firm and running a rice mill and are dealers of grains of all kinds. Complainants took three insurance policies : (i) w.e.f. 19.12.1993 for a sum of Rs. 55 lakhs; (ii) for a sum of Rs. 35 lakhs; and (iii) for a sum of Rs. 20 lakhs, from the Opposite Party National Insurance Co. Ltd. Two policies were taken against burglary on stock of rice and paddy bags. It is contended that they noticed a burglary on 11.3.1994 of 12,654 paddy bags, each bag weighing 1 quintal. For this purpose an FIR was lodged at Police Station, Banda, Shahjahanpur and information to this effect was also given to the Insurance Company. As the claim was repudiated, this complaint was filed in September, 1997.
4. Learned Counsel for the Complainants submitted that the Complainants' case is genuine and that the incident of theft is believed by the Criminal Court, and, therefore, the Complainants were acquitted for the offence punishable under Section 406/409 of the I.P.C. Hence, the repudiation by the Insurance Company is totally unjustified.
5. For appreciating the contention of the Complainants, we would first refer to the FIR lodged on 11.3.94 by the Complainants. The relevant portion of the FIR is as under:
A Chowkidar guard was left behind to look after the mill. Today at about 10 AM I came and saw that the lock of the godown of the mill was broken out of which the bags of rice and paddy were found missing. The exact number of which will be given later on after counting. While coming in the way I came to know that the lock of the godown of S.R.Mills the partner of which is Shri Rajiv Agarwal was also found broken and the rice and paddy bags were removed. Rajiv Agarwal has also come to the police station. Therefore the report of both be kindly recorded and legal action be taken.
6. Thereafter, Anant Ram, Marketing Inspector, Banda, Sahahjanpur, lodged an FIR against the Complainants for criminal breach of trust on 19.3.1994 wherein it is, inter alia, pointed as under:
I am to inform that the FIR of theft that had taken place in the mill premises has been lodged on 11.3. 1994 with you by M/s. S.R. Mills and Mis. R.S. Industries, Puranpur Road, Banda. The information was not ledged personally at local office but has been sent vide letter under Registered Post dated 15.3.1994 and the same has been received by this office on 17.3.1994. As such, the reporting of the incident by Registered letter on 15.3.1994 after the FIR makes the activities doubtful because as per the details below, Government rice (levy rice) was stored at the mills. 5687 bags, quantity 5456-61-500 for 1993-94 year and 750 bags quantity 726-66-00 for year 1991-92 common arwa rice and 6487 bags of rice quantity 6183-27-500 qtls. was stored at M/s. S.R. Mills and at M/s. R.S. Industries, 9617 bags quantity 9175-15-00 common arwa rice was stored. The lodging of single FIR by both these rice mills about the incident of theft occurred at different places makes it clear that the fraud to grab the levy rice has been planned by both the mills in collusion with each other, the value of which comes to about Rs. 1 crore. It is also pertinent to mention that the theft of 16054 bags belonging to Government at the same time at these two mills is not possible under any circumstances. Besides above, 1620 bags BT new and useful 72 wooden crates and 3815 bags new BT were also stored at the premises of S.R. Mills and M/s. R.S. Industries respectively. No intimation of gunny bags and quantity of rice stolen has been furnished by the mills to this office till date. The same makes the genuineness of mills doubtful and the incident of theft appears to have been concocted by the mills/millers. Kindly register the FIR against the owner/partners of both these mills to save loss to the Government in the interest of State Govt. and take legal action. Further evidence in this regard will be furnished to you as and when the same is received.
7. Meantime, the Insurance Company appointed Mr.S.K.Aggarwal, Surveyor and Loss Assessor, Lucknow who submitted his report on 22.3.1994 wherein he arrived at the conclusion that:
In my opinion, until now, there looks to be fraud committed by the Insured. However, it requires more investigation. In my opinion, a high level of investigation should be arranged by the Insurer to get the correct information.
8. On the basis of the said report, the Insurance Company appointed Mr.Des Raj Gakhar, an Investigator who submitted his final report on 24.9.1994. The report is exhaustive and clearly establishes that the case made out by the Complainants is false and bogus. Some relevant portion of the said report is reproduced below:
One Balwant Singh, Land Lord, who is residing with his family just opposite the Mill across the road, was also contacted. He categorically stated in confidence that burglary had not taken place but he had been seeing loaded trucks coming out of the Mill in opon during the day time This continued for about a month preceding the alleged burglary.
On return to Shahjahanpur on 6.8.94 late in the evening, Shri Ranbir Siongh Chauhan, now Circle Officer, Roza who is investigating the case in FIR No. 52-A dated 19.3.94 against all the four partners of M/s. R.S. Industries for misappropriating the Govt. money paid for levy rice, was contacted and the case was discussed with him if he had been able to find out the disposal of the rice-misappropriated. He told that during the course of investigation conducted by him he received information that the rice of R.S. Industries had been booked from Railway Station Dudhia Khurd to Assam and Maharashtra. He had gone to Railway Station Dudhia Khurd and made enquiries. It was found tht the rice had been booked from Railway Station Dudhia on the following dates and for the Stations as mentioned against each date:
Date
No. of Wagons Booked
Station to which booked
8.2.1994
4 Wagons
New Gowhati
9.2.1994
2 Wagons
New Gowhati
19.2.1994
4 Wagons
4 Wagons
Karim Ganj (Assam)
Asarwa (Western Railway)
23.2.1994
3 Wagons
1 Wagon
Dhjarma Nagar (Assam)
Karim Ganj (Assam)
3.3.1994
5 Wagons
3 Wagons
-----------
26 Wagons
New Gowhati
Asarwa (Western Railway)
9. He has also observed that:
Shri Anant Ram, the then Marketing Inspector Banda now under suspension was summoned to Delhi and was examined on 27.8.1994. He stated that he remained posted at Banda from August, 1993 till May 1994 when he was suspended. He was looking after the Rice Mills on Puranpur Road. The Incharge of the Office during this period was Sh. R.P. Pandey, who too was suspended after the incident. Shri Ashok Kumar, Senior Marketing Inspector took over charge of the office from Shri Pandey.
Explaining the procedure, Shri Anant Ram stated that the Miller purchase Paddy from the Market/Land Lords and converts it into rice in his mill. After hulling rice, the Miller, informs the Marketing Office through a letter. Thereafter, the Marketing Inspector visits the Mill, approves the quality of the Rice lying in open and then ear-marks 60% of the Rice for purchase by the Govt. which is filled in the Govt. Bandana (Gunny bags), putting the Govt. mark and lot No. on each bag. This Rice is categorized as levy Rice, which is purchased by the Food & Civil Supplies Department of U. P. Government for the Central pool at the rates fixed by the Central Govt. Levy rice is stocked with the Miller in his Mill premises under his Superdari. The Miller then prepares the bill, gets it passed by the Incharge of the Marketing Office and thereafter gets the payment from the Regional Accounts Officer, Bareilly. In the bill, the Miller is required to sign a certificate as provided in the bill itself, which required to sign a certificate as provided in the bill itself, which is an undertaking by the Miller that the quantity of the Rice mentioned in the bill has been stocked in his Mill and he will be responsible for the safe custody of the rice lying under his lock and key as per quantity and quality mentioned in the bill till it is removed by the Govt. The remaining 40% of the rice is meant for the Miller to sell in the market after obtaining a Release Certificate from the Marketing Inspector. While applying for Release Certificate the Miller has to mention in the application the quantity to be released, the name of the purchaser, his licence No. , Truck No. and the destination. Simultaneously, the Miller has to give an application to the Mandi Samiti for getting a Gate Pass.
On being asked, Shri Anant Ram, also stated that as per Scheme, the Marketing Inspector is required to check Govt. stock in the Mill daily, Incharge of the office once a week, the Dy. Regional Marketing Officer fortnightly and the Regional Marketing Officer has to check once in a month. He, however, stated that since the Mill was lying closed for sometime before the loss came to his notice, he could not check the Govt. rice stocked in the Mill.
10. Finally, the Investigator, inter alia, concluded as under:
The case regarding burglary was registered at Police Station Banda on 11.3.1994. It was investigated for three days on 11.3.94, 13.3.94 and 20.3.94, whereafter the local police submitted a final report in the Court on 22.3.1994 for cancellation of the case (F.I.R.), establishing on the basis of evidence and local enquiries that the burglary did not take place as alleged by the Insured and that the report was false.
FIR regarding burglary lodged at Police Station Banda on 11.3. 1994 is in itself very doubtful because it is a strange coincidence as mentioned in the FIR that when Sh.Girdhari lal, partner of M/s. R.S. Industries was going to lodge the report, Shri Rajeev Agarwal, partner of M/s. S. R.Mills met him on the way who told him that burglary had taken place in their Mill also and both went to the Police Station and lodged a joint report. This is not a coincidence but a planned act, especially when both these firms had connived and exported rice unauthorisedly from Railway Station Mailani to Bihar resulting in registration of two cases against them at Railway Police Station Mailani which were transferred to Police Station, Banda where two fresh cases FIR Nos. 165/93 and 166/93 were registered against both the firms u/s 3/7 of Essential Commodities Act as mentioned in detail in para No. 26 of this report.
It is also strange that while the levy rice, alleged by the Insured to have been stolen, belonged to the U.P. Government in Food & Civil Supplies Department who had paid about Rs. 48 lakhs to the Insured and the rice was in the custody of the Insured, he did not inform the Food Department immediately when he lodged the report at Police Station Banda on 11.3.94, although the office of the Marketing Inspector, Food Department Banda is hardly one Kilometer from the Police Station, but informed the Marketing Inspector after 5 days on 15.3.94 and that too by registered letter received on 17.3.94 and not personally. Shri Girdhari Lal, partner of M/s. R.S. Industries, while he informed the Marketing Inspector Banda about the burglary vide his letter dt. 15.3.94 wrote in this letter that the theft continued for several days (para 22 of the report refers). Is it not highly improbable that the burglars visited the place of occurrence for committing burglary for several days again and again with Trucks and so much labour for loading several thousands bags of rice and nobody noticed the broken locks and shutters for so many days when the burglars were coming regularly in both the Mills because such a huge quantity could not be stolen in a single night.
As mentioned in para 21 above, Shri Anwarul-Haq, Deputy Collector, Shahjahanpur had made enquiries into this affair and he has clearly written in his report that the Rice was not stolen but removed by the Insured Firm. His report was perused which is on record.
11. From the aforesaid report it is apparent that it was a pre-planned fraud to mis-appropriate the levy rice. The Complainants saw that the rice bags were sent to various places at Assam and Maharashtra through railway wagons.
12. Further, it is to be stated that the Investigator, Mr.Des Raj Gakhar, appointed by the Insurance Company reported that one Shri Chota Khan who was an employee of the Complainants, has given details as to how the fraud took place and who had taken away the levy rice in various trucks. He has specifically pointed out that FIR for the alleged burglary was registered after the last truck was loaded on 3.3.1994. He has given all the details as to how the goods were transported from the mill premises to various places.
13. In our view, the Investigator's report is exhaustive and is reliable.
14. Learned Counsel appearing for the Complainants relied upon the order passed by the Chief Judicial Magistrate acquitting the Complainants for the offences committed under Sections 406/409 of the IPC.
15. In our view, that judgment in criminal matter for misappropriation of the levied rice would have no bearing in deciding the civil matters. In criminal case, benefit of doubt is given. Therefore, that would not be a ground for holding that the story of theft cooked up by the Complainants, is reliable.
16. It is also apparent that the Marketing Inspector was required to check the Government Stock in the mill daily, but he failed to discharge his duties.
17. Enquiry was also held by the Deputy Collector who had made inquiries into the said incident and he has clearly reported that the rice was not stolen but removed by the insured.
18. From the facts stated above, it is clear that the Complainants in a preplanned manner committed fraud with the Government and thereafter intended to commit fraud with the Insurance Company and also with this Commission by apparently stating concocted improbable story of theft of such large quantity of levy rice bags which were meant for poor persons. For this fraud, the Complainants should be directed to pay appropriate costs. The claim is filed for more than Rs. 50 lakhs. Hence, adequate costs is required to be imposed as provided under Section 14(1)(i) of the Consumer Protection Act so that in future others may be deterred from filing such fraudulent claim and the Commission's time is not wasted.
19. In this view of the matter, it would be proper to direct the Complainants to pay Rs. 2 lakhs (Rupees two lakhs), as costs. The Complainants are directed to deposit the said amount by way of bank draft within a period of four weeks, from the date of receipt of copy of this order, with the Registrar of this Commission. Thereafter, the Registrar shall deposit the said amount of Rs. 2 lakhs in the Consumer Legal Aid Account maintained by the Registry of the National Consumer Disputes Redressal Commission. If the Complainants fail to deposit the sum, the Registrar is directed to inform the Insurance Company so that the Insurance Company may file appropriate application for execution.
20. The complaint is dismissed accordingly.
