State Consumer Disputes Redressal Commission
Mr. Hajilal H Pailwan vs M/S United India Insurance Company Ltd on 8 May, 2024
1 CC/7/2016
Date of Filing : 05.01.2016
Date of Disposal : 08.05.2024
BEFORE THE KARNATAKA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)
DATED THIS THE 08th DAY OF MAY 2024
PRESENT
Mr. K.B.SANGANNANAVAR : JUDICIAL MEMBER
Mrs. M.DIVYASHREE : LADY MEMBER
CC-NO.07/2016
Hajilal H Pailwan
No.697, Bijapur Road,
Ambedkar Circle,
Jamakandi-587301 . . ..Complainant/s
(By Adv.Sri.Narayanaswamy.G)
VS
1.
1. United India Insurance Company Ltd.,
Katagi Building, 1st Floor,
Kacheri Road, Jamkhandi-587301,
Rep. by its Brach Manager.
2. United India Insurance Company Ltd.,
P.B.No.60, Sangama Building,
Shri Siddeshwara Front Road,
Bijapur-596101.
Rep. by its Divisional Manager. ... Opposite party/s
(By Adv.Sri.B.C.Seetharama)
2 CC/7/2016
ORDER
BY Mr.K.B.SANGANNANAVAR : Pri.Dist & Session Judge (R) - JUDICIAL MEMBER.
1. This is a complaint filed U/s.12 of CPA 1986 to direct OPs.1 & 2 to pay an amount of Rs.40 lakhs being the insured declared value of the Hyundai Hydraullic Excavator machine as per the policy along with interest at 18% from the date of claim till realisation. Further direct OPs to pay Rs.20 lakhs towards consequential damages incurred and to pay Rs.2 lakhs for causing mental agony and Rs.50,000/- towards litigation cost.
2. The brief facts of the case of the complaint are stated as follows:
The Complainant is a Class-I Civil and Electrical Contractor, dealers, manufacturers and suppliers in building, electrical, hardware materials, steel and wood furniture. He had purchased R210-7 Hydraulic Excavator on 22.08.2011 for Rs.42,75,000/-, out of which, he had availed a loan of Rs.34 lakhs from L & T Finance ltd., Initially the said Hydraulic Excavator was insured with the L & T General Insurance company and thereafter, they renewed with OP.1 by paying a premium of Rs.45,468/-. OP.1 had issued Farmer S Package Insurance and issued Certificate of Insurance of Miscellaneous and Special Type of Vehicles for the period from 18.08.2012 to 17.08.2013 and in the said certificate declared IDV of Rs.40 lakhs. Subsequent to the purchase of
3 CC/7/2016 Hydraullic Excavator, the Hyundai Construction Equipment India Pvt., Ltd., had conducted operator training to one Mr.Riyaz Ahmed I Pathan, after successful training had certified that he understands all the parameters and operations of the machine as such fit for operating the machine. As per the work order issued by Karnataka Water Resources Board, for carrying reclamation of water logged areas coming under Morab Chinchali Nall in Raibag taluk, the R210-7 Hydraullic Excavator was put on work being operated by Mr.Riyaz Ahmed I Pathan, during the month of August 2012. On 01.09.2012 morning at around 6am Complainant had received call from his operator, who informed that on 31.08.2012, at about 10.30pm while carrying the work at Morab Chinchali village, after finishing the day‟s work when he got down the machine suddenly fire broke out from the engine and started spreading towards the cabin. Further it was also stated that the operator and the supervisor Naresh Datesha Jadav tried to put off the fire and in-spite of that the engine and the cabin of the machine was totally burnt. In this regard, the police case was lodged with Kudachi police station on 01.09.2012. The police conducted spot mahazar on the same day since the office of OP.1 was closed on Saturday and Sunday. The Complainant intimated 4 CC/7/2016 about the accident to OP.1 on 03.09.2012 at earliest point of time and accordingly submitted a claim.
The Complainant has stated that the machine was left for repair at Muneer Heavy Earth Moving Equipment, who is authorised dealer of Hyundai Construction Equipment India Pvt., Ltd., They issued a quotation towards the repair cost of the hydraulic machine at Rs.92,50,771/-. The OPs.1 & 2 appointed a surveyor by name Mr.D.Raghotham, Insurance Surveyor and Loss Assessor to inspect and carry out the survey of the damages caused to the hydraulic machine. The surveyor had addressed letter dtd.26.11.2012 to the Complainant to furnish all the documents for the compliance of the claim. The said surveyor after conducting the survey had initially orally offered for a settlement of Rs.18,30,000/- on net salvage basis, however the Complainant did not agree for the said settlement. At the instance of the company official, Complainant had addressed letter dtd.27.03.2014 to the surveyor Mr.D.Raghotham agreeing upon for the settlement along with cancellation of policy. OP.2 after receipt of the claim regarding the damage to the machine vide letter dtd.10.05.2013, had sought certain clarification besides also assured on receipt of all the necessary documents the claim will be processed immediately. However, despite offering clarification for the issues sought by the 5 CC/7/2016 company, OP remained silent and did not take initiative to look into the claim of the Complainant. The claim of the Complainant was prolonged by the OP insurance company on or the other pretext and finally OP.2 repudiated the claim vide letter dtd.25.03.2014 on flimsy and imaginary ground that the fire has been occurred intentionally and there was no accident of the nature that was claimed and damage caused due to fire to Hydraulic Excavator is contrived with a view to make an unlawful gain while causing wrongful loss to the company. The OPs only with an intention to defeat and deprive the Complainant of his legally entitled claim had repudiated the claim which act amount to deficiency in service. The cause of action for this complaint was arose on 25.03.2014 on which date initially claim of the Complainant came to be repudiated and subsequently on 05.04.2014 and 02.08.2014 the date on which the OP Insurance Company replied the legal notice of the Complainant. The Complainant is literally on the streets unable to repay the loan availed and also could not make out his livelihood due to debts. It is therefore, sought for direction against OPs to indemnify the burnt Hydraulic Excavator machine as per the IDV of Rs.40 lakhs along with interest at 18% from the date of claim till realisation and to pay Rs.20 lakhs towards consequential damages incurred 6 CC/7/2016 and to pay Rs.2 lakhs for causing mental agony and Rs.50,000/- towards litigation cost.
3. This complaint is filed on 05.01.2016 through advocate, came to be admitted and ordered notice against OPs, who put their appearance through their counsel and submits version, contending complaint is not maintainable in the eyes of law since Complainant has suppressed the material facts and has not approached with clean hands. However, admits issuance of the policy for the period between 18.08.2012 to 17.08.2013 in respect of R210-7 Hydraulic Excavator, wherein IDV is Rs.40 lakhs. The Complainant had reported on 03.09.2012 about the alleged fire accident to the said machine on 31.08.2012. Subsequently he submitted claim form on 04.11.2012. He violated basic terms and conditions of the policy. The OP having received the claim form from the Complainant, appointed duly licensed surveyor and loss assessor to assess the damage/loss caused to the insured machine and also engaged the services of Truth Labs in order investigate the cause of the alleged fire. After receipt of the survey report from the surveyor and investigation report from Truth labs, Bengaluru, it is observed that the fire was not because of an accident and it is only on account of intentional sabotage or mischievousness of the insured. In addition to that, the damages said to have been caused to the insured 7 CC/7/2016 vehicle are not due to electrical short circuit or an accident as alleged by the Complainant. It emerged from the investigation report and report of the surveyor that the damages caused was due to dishonest act of setting the equipment on fire. Considering all the materials collected and those made available by the Complainant, the OP took conscious decision to repudiate the claim by sending letter dtd.25.03.2014 to the Complainant. The cause for repudiation was also notified to the insured. The claim of the Complainant is not payable since it is not the accidental damages and it is a contrived one by the insured to claim amount from the OPs by creating non-existing liability. Any damage caused due to illegal act of the insured is not payable either under the terms of the policy or in common law. The Complainant has attempted to make an unlawful gain for himself at the cost of the OP by setting fire to the used Hydraulic Excavator. It was not an accidental fire. There are no bonafides in the complaint. The complaint is liable to be dismissed.
4. In view of rival contentions of the respective parties, the Commission held an enquiry by receiving affidavit evidence of the Complainant and documents from either side and after closure of enquiry, having heard the learned counsels on record for parties to 8 CC/7/2016 the complaint and on going through the materials on record, now to decide on the following points that arise for our consideration:
(1) Whether the Complainant proves that on 31.08.2012 at about 10.30pm insured R210-7 Hydraulic Excavator while carrying the work at Morab Chinchali village, after finishing the day‟s work, when Mr.Riyaz Ahmed I Pathan, the machine operator got down from the machine suddenly fire broke out from the engine and started spreading towards the cabin was completely burnt as alleged ? (2) Does Complainant prove OPs rendered deficiency in service by repudiating his claim ?
(3) Do OPs prove the damages caused to the R210-7 Hydraulic Excavator machine that was insured with them was not due to accidental fire and thus Complainant is liable to not pay the claim ?
(4) Do OPs prove there is no deficiency in service on their part in dealing with the claim of the Complainant ? (5) Does Complainant prove his entitlement of Rs.40 lakhs being the IDV as prayed ?
(6) Does Complainant prove, his entitlement of Rs.20 lakhs towards compensation/consequential damages, Rs.2 lakhs
9 CC/7/2016 for causing mental agony and Rs.50,000/- towards litigation cost as prayed ?
The findings on the above points are recorded as follows:
On points 1 & 2: In the Affirmative On points 3 & 4: In the Negative On points 5 & 6: Partly in the affirmative as per final order for the following:
REASONS
5. Point Nos.1 to 4: All these 4 points are taken together for discussion and determination to avoid repetition of certain facts and circumstances found from the enquiry and also to make it convenient for the commission to record findings.
6. It is an undisputed fact that the Complainant is insured and OPs.1 & 2 are insurer in respect of R210-7 Hydraulic Excavator which was purchased on 22.08.2011 for Rs.42,75,000/-. The Complainant has stated that he had availed loan of Rs.34 lakhs from L & T Finance ltd., to purchase this Hydraulic Excavator. He has obtained insurance policy from OPs for the period from 18.08.2012 to 17.08.2013 and the insured declared IDV of Rs.40 lakhs. In his complaint, he has stated that the Hydraulic Excavator was operated by Mr.Riyaz Ahmed I Pathan to whom the Hyundai
10 CC/7/2016 Construction Equipment India Pvt., Ltd., had conducted operator training and after successful training had certified that Mr.Riyaz Ahmed I Pathan understands all the parameters and operations of the machine and was found fit for operating the machine. It is not in dispute that, he had a certificate to that affect issued from Hyundai Construction Equipment India Pvt., Ltd., It is not in dispute that, the said Mr.Riyaz Ahmed I Pathan was holding a valid driving license at the time of operating the Excavator. The Complainant has stated that, he received information from his operator Mr.Riyaz Ahmed I Pathan on 01.09.2012 morning at around 6 am that on 31.08.2012 at about 10.30 pm while carrying the work at Morab Chinchali village, after finishing the day‟s work when he got down from the machine suddenly fire broke out from the engine and started spreading towards the cabin. Further it was also informed that, the operator and the supervisor Naresh Datesha Jadhav tried to put off the fire, by then the engine and the cabin of the machine were totally burnt. Thus, excavator that was purchased on 22.08.2011 was burnt in the fire accident on 31.08.2012. This incident was occurred within one year from the date of purchase of the vehicle. In so far as, the policy issued by OPs in respect of the excavator is concerned was in force, since the policy was issued for the period from 18.08.2012 to 17.08.2013. It 11 CC/7/2016 is found from the enquiry that the police complaint was lodged with Kudachi Police station on 01.09.2012 itself. Accordingly jurisdictional police did visited the spot and have drawn the mahazar of the spot.
7. The Complainant has produced the document/Tax Invoice dtd.22.08.2011 issued by Hyundai Construction Equipment India Pvt., Ltd., for Rs.42,75,000/- as per Ex-C1. He has produced Ex- C2/Account Statement from 28.05.2000 to 28.05.2013 to show term loan availed from L & T Finance ltd., at Rs.34 lakhs. The statement produced by him shows about his prompt payment of EMIs. Ex-C3 is Certificate of Insurance of Miscellaneous and Special type of Vehicles issued in the name of Complainant for the period from 18.08.2012 to17.08.2013. IDV is at Rs.40 lakhs. Ex- C4 is the certificate issued by Hyundai Muneer Heavy Earthmoving Equipment dtd.05.09.2011 certifying that they have conducted the operator training for Hyundai R210-7 Excavator Machine sl.no.N601D01484 to Mr.Riyaz Ahmed I Pathan, R/at Bharpeth Galli, Jamakhandi, Bijapur on 2nd, 3rd and 4th of September 2011. Further certified that, he understands all the parameters and operations of the machine and hence he is fit for operating the machine. Ex-C5 is the copy of DL issued by Licensing Authority, Jamakhandi KA48 in the name of Mr.Riyaz Ahmed I Pathan and he 12 CC/7/2016 is authorised to drive transport vehicle with effect from 24.04.2001, PSVBUS from 24.04.2001, LMV from 10.03.2000. The said DL issued is valid till 23.11.2013 with badge no.17. Ex- C6/Work order dtd.24.05.2012 in favour of the Complainant towards "Reclamation of water logged areas coming under Morab Chinchali naala in Raibag taluk, deepening of existing nala, work- indent-3195" issued by Executive Engineer, KNNL, GLBC-1, Ghataprabha. In this work order, could see, the tender price was at Rs.42,11,619.12. Ex-C7 is a complaint lodged before Kudachi police station as to the information what he had received from Mr.Riaz Ahmed Imamsab Pathan, the operator of the Excavator. Accordingly, the said police visited the place of incident and drew up spot mahajar between 14.15pm to 15.15pm. The police drew up this mahajar in the presence of two witnesses and is not disputed. They found that Hyundai R210-7 Hydrolic Excavator with sl.no.N601D01484 with engine no.63158406 with yellow colour is burnt in fire accident. They also noted down the presence of Complainant at the time drawing up the mahajar. Ex-C9 are the photographs to show the spot and burnt excavator.
8. The Complainant has produced Ex-C9/quotation obtained from authorised dealer as to repair the burnt vehicle, wherein, they have quoted total repair cost at Rs.91,63,667/-. In such circumstances, 13 CC/7/2016 considering the purchase price of the excavator at Rs.42,75,000/- and its IDV at Rs.40 lakhs, question of repair of the said excavator as quoted at Rs.91,63,667/- by Hyundai Construction Equipment India Ltd., Muneer Group was rightly not considered and it could be said such occasion does not arise at all. In other words, had Ops to concede the claim of complainant have to settle either at IDV for Rs.40 lakhs or on no salvage basis as their surveyor found in his initial survey report. However, as the insurer have repudiated the claim of the Complainant on the ground that it was not an accidental fire, but fire has been occurred intentionally to make an unlawful gain for himself at the cost of the OPs. After receipt of survey report from D.Raghotham and the report from Truth Labs, investigated that claim of the Complainant is not payable, since it is not the accidental damages and there are no bonafides in the complaint. In such circumstances, quite natural burden lies on the insurer to prove that the claim of insured was not bonafide, since it was not an accidental fire. In this regard, we have to examine other materials on record placed by parties, commencing from Ex-C11. "Survey of reported fire damages to Hyundai hydraulic excavator" submitted by D.Raghotham dtd.05.04.2013 marked as Ex-R4. It is found from enquiry before submitting this report, D.Raghotham on 26.11.2012 wrote a 14 CC/7/2016 letter/Ex-C11 to the Complainant "as per the instructions from the insurer, R210-7 hydraulic excavator machine has been inspected at M/s.Muneer Heavy Earth Moving Equipment, Hospet and he requested to furnish "copy of insurance policy, claim form - duly & completely filled, occurrence/incident report, copy of DL of the operator, copy of training certificate of the operator, technical report w.r.t cause of fire from the manufacturer, copy of purchase invoice, copy of maintenance and service records, copy of log book extract, details of previous breakdowns if any, parts catalogue - for verification and return thereafter." Accordingly the Complainant has submitted the claim form duly and completely filled along with other details. On 10.05.2013 as per Ex-C13, OPs wrote a letter to the Complainant that, once they receive all the necessary documents his claim will be processed immediately and they also sought explanation of the Complainant that „why there is delay of three days in reporting about the fire accident, you are supposed to report immediately to the concerned office whenever there is a claim.‟ As per Ex-C14, he has explained as OP‟s office was close on Saturday and Sunday, he had informed on 03.09.2012 that was on Monday. He has not informed to fire brigade as there was no fire station nearby, this reply in response to the Ex-C1/letter dtd.10.05.2013.
15 CC/7/2016
9. Let us examine the survey report marked as Ex-R4 submitted by D.Raghotham. He has conducted survey on 24.11.2012. The place of survey was M/s.Muneer Heavy Earthmoving Equipment, Sankalapur, Ballary Road, Hospet. The estimated loss which he has mentioned at Rs.91,63,667/-. The accident was reported to the Police, Kudachi police station who conducted spot mahajar. Accident was not reported to fire brigade. As per spot survey report, there was a sudden fire from the cabin. The machine has received the impact of the accident on its engine, fuel tank, valve bank cabin, hydraulic tank etc., As per the claim form, it was due to short circuit suddenly fire took place and machine got burnt. The surveyor also extracted the e-mail from the manufacturer "There is no such chance to take place of fire when the machine is in switched off condition. The electrical system cannot create such major fire. After assessing dealer inspection report confirming that there is no any technical problem in the machine, suspecting machine may be fired due to some external source." Thus, this email extract received from manufacturer would play a vital importance suspecting machine may be fired due to some external source. The surveyor in his report has mentioned as to the details of damages. He has assessed the loss caused due to this incident, Since the equipment being purchased on 22.08.2011, 10% 16 CC/7/2016 depreciation on metal parts and 50% depreciation on plastic/rubber parts have been deducted. Salvage value on repair basis fetch around Rs.2 lakhs. Liability on net of salvage loss basis, he has worked out insured declared value at Rs.40 lakhs - wreck value subject to realisation around Rs.21,50,000/-, remaining would be Rs.18,50,000/-. Out of which deducted Rs.20,000/- towards policy excess, thereby worked out to Rs.18,30,000/- towards liability on net of salvage loss basis. To find support, his report with summary has produced positive photographs. In his report has made as many as 12 observations, of which, 5th to 10th observations are in respect of "pre-inspection of the machine has been done, before issuing the above policy in the name of the Complainant in respect of excavator. The assessment has been made on verification of details of damages mentioned in the spot survey report. Machine serial number and engine number has been physically verified at the time of survey. Digital photographs enclosed. They have negotiated the salvage/wreck value with the insured to arrive at the liability on net of salvage loss basis enclosing consent letter. According to him wreck value is only a notional; disposal is left to the discretion of the insurers. Settlement of claim on net of salvage loss basis has been discussed with the officials of insurers." Thus, considering 17 CC/7/2016 this report coupled with his observations, in particular negotiating the salvage wreck value, the insurer to modify or allow on the net of salvage loss basis.
10. In our view in the absence of not examining the author of Truth Labs who have concluded in their report based on a thorough and in-depth inspection of the burnt hydraulic excavator reported to have got involved in an accident of fire on 31.08.2012 at about 10.30pm and the evidence collected which were subjected to forensic examinations as well as the documentary evidence collected and the interviews held with different people associated and having knowledge with the incident, it is concluded that "the fire could have on account of intentional sabotage or mischievousness and the possibility of the management having been aware of such acts cannot be ruled out" could not be said proved. As already stated at an initial stage, OP‟s surveyors and investigators were of the view that insurer have to indemnify the loss subject o policy terms and conditions and warranties and the fact that the Truth Lab expert is not examined suffice to hold that the insurer is not justified to repudiate the claim of complainant.
11. In Ex-R2/Motor claim form found the vehicle at the time of fire incident was parked vehicle and Mr.Riyaj Ahmed I Pathan aged about 43 years having been trained by Huyndai Equipment 18 CC/7/2016 authorised dealer to operate the excavator and he was operating the vehicle under employment of Complainant since two years. The fire incident was occurred on 31.08.2012 at 10.30pm incident was informed to the Complainant over phone and he immediately rushed to the spot and before rushing to the said spot was already informed to the concerned police. It has come in the enquiry as there was no fire station near the place of incident, was not informed also could be justifiable and we did not find any malafides in the act of complainant. The Complainant has explained that fire accident was informed to the insurer only on Monday, since Saturday and Sundays were holidays and in such circumstances, Complainant has to be held properly explained the delay of two days in informing the insurer and we did not find any malfide intention in informing on Monday which was the next working day for the insurer. Mr.Raghotham has submitted survey report on 05.04.2013. He visited the vehicle at M/s.Muneer Heavy Earth Moving Equipment, Hospet and had estimated loss at Rs.91,63,667/- and after his submission of report along with Ex- R5/photographs as taken from all angle in respect of Hyundai Crawler Excavator which could be seen as to how it was burnt in the fire accident. Mr.Raghotham, the authorised surveyor having been examined in detail submitted survey report and had 19 CC/7/2016 concluded liability on net of salvage loss basis at Rs.18,30,000/- and had also summarised the wreck value and as already stated above settlement of the claim on net of salvage loss basis has been discussed with the officials of the insurers and in their opinion settlement of claim on net of salvage loss basis is more economical for insurers. It is therefore, in the absence of cogent proof placed on record by insurers to prove Ex-R3/report submitted by Truth Labs that the fire could have been on account of intentional sabotage or mischievousness and the possibility of the management having been aware of such acts cannot be ruled out could not be acceptable, in considering the materials placed on record conjointly. The omissions on the part of insurer to settle the claim amounts to rendering deficiency of service, since the insurers have failed to establish intentional sabotage or mischievousness and the possibility of the management having been aware of such acts. It is therefore, Commission is of the considered view to accept the report submitted by Mr.Raghotham the authorised surveyor, who had recommended for settlement of the claim on net of salvage loss basis which in fact was discussed with the OPs and there was exchange of letters in between the Complainant and insurers in this regard which could be acceptable. In such conclusion, findings on points.1 & 2 would go 20 CC/7/2016 record without saying in favour of the Complainant and it goes without saying findings on points.3 & 4 would be record in the negative.
12. In view of findings recorded on points.1 to 4, the Complainant is held entitle for settlement of the claim. He has claimed at Rs.40 lakhs, which was the IDV and had claimed Rs.20 lakhs towards consequential damages incurred by him, but facts remain, the surveyor of the insurer having been conducted the survey had recommended for settlement at Rs.18,30,000/-. In fact it was also discussed with OPs for settlement at Rs.18,30,000/- on net of salvage loss basis since the Complainant at that point of time agreed for the said settlement had initiated complaint proceedings against OPs which could not be considered on par with IDV. In other words, it would be just and proper to settle the claim of the Complainant as per survey report submitted by Mr.Raghotham as found in Ex-R4 dtd.05.04.2013. Hence we hold Complainant is entitle for the claim of Rs.18,30,000/- on net of salvage loss basis and record finding on point.5 partly in the affirmative.
13. The Complainant has sought for loss of Rs.20 lakhs towards consequential damages incurred by him in view of inordinate delay in processing the claim which has resulted in financial loss and had sought for Rs.2 lakhs for causing mental agony along with 21 CC/7/2016 cost of litigation at Rs.50,000/-, since the Complainant has failed to place any materials to show the consequential damages incurred by him in view of inordinate delay in processing the clam resulted in financial loss, as such it would be just and proper to award consequential damages incurred by him at Rs.2 lakhs, Rs.1 lakh towards mental agony for rendering deficiency in service and Rs.50,000/- towards cost of litigation and recorded finding on point no.6 partly affirmative. In such conclusion, Commission proceed to allow the complaint in part and directed OPs.1 & 2 to pay Rs.18,30,000/- which is the liability on net of salvage loss basis along with interest at 9% p.a. from the date of repudiation till the date of payment and do pay Rs.2 lakhs towards consequential damages and Rs.1 lakh towards rendering deficiency in service and Rs.50,000/- as cost of litigation within 60 days from the date of receipt of the order, failing which, the amount so awarded shall carry interest at 7% p.a. from the date of default till payment.
14. Supply free copy of this order to both the parties.
Lady Member Judicial Member
*NS*