Supreme Court - Daily Orders
The New India Assurance Company Ltd. vs Bagadiya Brothers Pvt. Ltd. on 4 August, 2023
Author: B.V. Nagarathna
Bench: B.V. Nagarathna
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4572/2023
THE NEW INDIA ASSURANCE COMPANY LTD. APPELLANT(S)
VERSUS
BAGADIYA BROTHERS PVT. LTD. RESPONDENT(S)
O R D E R
The present Appeal arises out of Order dated 18.04.2023 passed by the National Consumer Disputes Redressal Commission, New Delhi, (hereinafter referred to as “the NCDRC” for the sake of convenience) in Consumer Case No. 1919 of 2017.
Briefly stated the facts of this matter are that the Respondent-Insured, is a company registered as per the provisions of the Companies Act, 1956, and engaged in the business of export of various goods such as iron-ore fines, mill scales, rice bran, de-oiled cakes, soya bean extracts, maize, sugar, rice and wheat. The Appellant-Insurer, on the other hand, is a public insurance company and is engaged in the business of providing insurance services to the general public.
The respondent-insured obtained a “Standard Fire and Special Perils Policy” No.45120111130100000165, for the period from Signature Not Verified 01.11.2013 to 31.10.2014, for a sum of rupees Eighty Crores, on the Digitally signed by RADHA SHARMA Date: 2023.08.19 14:06:35 IST Reason: stock of iron ore fines at Dhamra and Pradip Ports and iron ore 1 mill scale in Visakhapatnam and Gangawaram Ports stocked within the boundary wall, for fire and allied risks plus STFI and EQ & Floater extra.
On 12.10.2014, a strong cyclone by the name "Hudhud" hit the east coast of India. The said cyclone caused extensive damage to the city of Visakhapatnam and the neighbouring cities. The cyclone which was followed by torrential rains, damaged the stock of Iron Ore Mills Scale stored and covered with tarpaulin, within the boundaries in Visakhapatnam.
The insured informed the insurer about the incident and loss caused to it, on 14.10.2014 and estimated a loss of Rs.2,64,19,000/-. The Insurer appointed Flourish Insurance Surveyor and Loss Assessors Pvt. Ltd, Visakhapatnam, as the surveyor for the survey and assessment of loss on 04.12.2014. The surveyor inspected the spot on 04.12.2014 and 08.12.2014, took photographs and prepared an inventory. The surveyor asked the Insured to supply audited stock records from 01.04.2014 to 11.10.2014 and a volumetric analysis of the Iron Ore Mills Scale stored at Visakhapatnam Port and other documents for assessment of the loss. The Insured supplied the surveyor with the requisite details of the stock and documents i.e., Tax Invoices of the purchased goods, debit notes issued by the suppliers of the goods, and Certificate of Chartered Account verifying the stock as of 11.10.2014, Stock Movement Register, Quality assessment report, closing value of the stock as on 31.03.2014 etc. The surveyor submitted Final Survey Report dated 15.11.2015, without supplying its copy to the Insured, 2 in which, he found that washed away Iron Ore Mills Scale stored within the boundaries of Visakhapatnam Port was 6782.39 MT but he deducted 15%, as an adjustment for variation in Volumetric Analysis; 22.50%, as handling loss due to inherent nature of Mill Scale; 10%, as loss due to continued rainfall after cyclone and 10%, as Compaction loss due to moisture. He assessed a net loss of 2882.52 MT. On the basis of the lowest purchase rate of Rs. 5268.82 per MT, he assessed Gross Loss to be Rs. 1,51,87,463/- and Net Loss at Rs. 1,44,28,090/-. The insurer settled the claim for Rs. 1,39,99,214/- and transferred that amount through NEFT in the account of the insured on 31.03.2016.
After repeated requests, the Insurer supplied the insured with a copy of the Final Survey Report on 10.12.2016. It is only then that the insured found that various deductions to the extent of 57.50% were made. Being aggrieved, the insured vide Letter dated 20.01.2017 protested against the deductions made and challenged the quantum of loss calculated by the Surveyor, however, the insurer did not respond. The insured then sent a Legal Notice dated 25.03.2017 to the insurer, for the payment of the balance amount of Rs. 1,24,19,786/- along with interest being the balance amount of the claim deducted by the insurer. Despite the service of the notice, the Insurer did not respond.
As a result, the insured was constrained to file a Consumer Complaint bearing no. 1919/2017 before the NCDRC alleging deficiency in service on the part of the Insurer. The insured sought for the release of Rs. 1,19,90,910 being the balance amount 3 deducted by the insurer and interest @ 21% per annum on the sum of Rs. 1.44 Crores/- from 15.11.2015 i.e., the date of the surveyor’s report till 29.03.2016, the date of release of the payment. The insured also sought interest @ 21% per annum on the sum of Rs. 1,19,90,910/- being the balance amount deducted from 15.11.2015 i.e., the date of the surveyor’s report till the date of actual payment. The insurer sought Rs. 25,00,000/- as litigation costs and Rs. 50,00,000/- towards mental agony, harassment and financial loss caused due to borrowing money from the market at high-interest rates for making payment of the lost goods.
The NCDRC vide Order dated 18.04.2023 partly allowed the complaint preferred by the insured and directed the insurer to pay 35% of 6782.39 metric tons of iron ore after deducting 5% under the excess clause at the same rate on which the insured was paid, along with interest @ 9% per annum from 15.04.2015 till the date of payment. The insurer was also directed to pay interest @ 9% per annum on Rs. 1,40,00,000/- from 15.04.2015 till 31.03.2016, thereafter, on the amount of interest @ 9% per annum till the date of the actual payment. The above directions were to be complied with within two months.
The NCDRC in its Order observed that as per law, a Consumer Commission is not debarred from examining the surveyor’s report objectively. The surveyor's report is an expert opinion, as such, its legality can be examined on the basis of facts and evidence of the case. The NCDRC noted that in the present case, the insured had not challenged the assessment of gross loss of iron ore Mills Scale 4 to the extent of 6782.39 MT due to the cyclone and torrential rains, rather, the insured has challenged the deductions made by the surveyor. The NCDRC observed that the surveyor had deducted 15%, as an adjustment for variation in Volumetric Analysis. The surveyor relied upon the papers of the insured and assessed the total quantity of Iron Ore Mills Scale, stored at Visakhapatnam Port on the date of loss as 48197.5550 MT. Volumetric analysis was given of the Iron Ore Mills Scale, which was left after the loss as it was collected in heaps. If the surveyor was reducing 15% from the quantity of volumetric analysis then it will be reduced from the stock, which remained there after washing away the materials. The quantity of washed-away material will then increase by 15%. Thus, the reduction of 15% in lost material was without application of mind.
The NCDRC further observed that the Insured had been in the business of export of Iron Ore Mills Scale for several years and as per the documents produced by the Insured, the handling loss was to the extent of 0.12% only, however, the surveyor had reduced 22.50% as handling loss, ignoring the record in this respect. The NCDRC thus, found that the reduction of at least 35% on the above heads was illegal and based on conjectures and surmises. The NCDRC observed that the Insured had reported the loss to the Insurer on 14.10.2014 and citing Regulation 9 of the Insurance Regulatory and Development Authority (Protection of Policyholder's Interest) Regulations, 2002, it was observed by the NCDRC that the Insurer was liable to settle the claim within six months of 5 reporting the loss, failing which the Insurer will be liable to pay interest @ 2% above the market rate. Thus, the insurer was liable to pay interest from 15.04.2015.
We have heard Mr. J.P.N. Shahi learned counsel for the appellant and Mr. G. L. Vishwanath learned senior counsel for the respondent-caveator at length and perused the impugned order as well as the material on record.
We find that the surveyor, who was appointed by the appellant- Insurer had submitted his report on 15.11.2015, a copy of which was received by the appellant’s company at Visakhapatnam on 02.12.2015 and thereafter by the Branch Office at Bhilai on 01.03.2016. Learned counsel for the appellant submitted that the amount of Rs.1,40,00,000/-(Rupees One Crore and Forty Lakhs only) awarded to the respondent-caveator herein ought not to have carried interest at the rate of 9% from 15.04.2015 till 31.03.2016. It was submitted that on 31.03.2016 the amount of Rs.1,40,00,000/-(Rupees One Crore and Forty Lakhs only) was paid and the short delay in the payment of the same was on account of the consideration of the report of the surveyor and the transmission of the same from Visakhapatnam to the Branch Office at Bhilai. Therefore, the NCDRC was not right in awarding interest at the rate of 9% per annum.
Per contra, learned senior counsel appearing for the respondent very fairly submitted that the award of interest at 9% per annum on Rs.1,40,00,000/-(Rupees One Crore and Forty Lakhs only) from 15.04.2015 till 31.03.2016 may be appropriately considered and ordered.
6 We find sufficient force in the submission of the learned counsel for the appellant with regard to this aspect of the matter and therefore, the award of the NCDRC insofar as awarding interest at the rate of 9% per annum on Rs.1,40,00,000/- awarded as compensation to the respondent from 15.04.2015 till 31.03.2016 is set aside.
Learned counsel for the appellant next submitted that the NCDRC was not right in interfering with the report of the surveyor inasmuch as it has now directed to pay 35% of 6782.39 metric tons iron ore after deducting 5% under excess clause at the same rate on which the complainant was paid with interest at 9% per annum from 15.04.2015 till the date of payment. Appellant’s counsel drew our attention to the judgment of this Court in Khatema Fibers Limited vs. New India Insurance Company Limited (Civil Appeal No.9050/2018 disposed of on 28.09.2015), wherein the approach of the NCDRC in the matter of consideration of surveyor’s report has been specifically adverted to in paragraphs 36 to 38. He submitted that if the surveyor has properly submitted the report then the Consumer Forum cannot sit in judgment over such a report, on the premise that there is a deficiency in service and substitute the findings arrived at by the surveyor and grant additional compensation. In this regard, it was contended that although the surveyor had recommended Rs.1,40,00,000/-(Rupees One Crore and Forty Lakhs only) to be paid to the respondent and ultimately the insurer has paid Rs.1,39,99,214/-(Rupees One Crore Thirty Nine Lakhs Ninety Nine Thousand Two Hundred and Fourteen only) it was based on the 7 recommendation of the surveyor and therefore, NCDRC could not have awarded any further damages or compensation to the respondent herein.
Submissions were made by learned senior counsel for respondent with regard to the award of additional compensation to the respondent by NCDRC by pointing out that the surveyor was not right in deducting 57.5% of 6782.39 metric tons iron ore on the ground that the same was arbitrarily deducted in addition to 5% on excess clause and therefore 62.50% while assessing the loss. According to learned senior counsel, the NCDRC appropriately considered the said aspect of the matter and found that excess deduction had been made and therefore it was reduced to 35% of 6782.39 metric tons iron ore and the same would not call for any interference.
Our attention was also drawn to the fact that the respondent herein had issued a legal notice by way of protest to the Insurance Company which was not replied to and therefore, there was deficiency in service which constrained the respondent to file the consumer complaint before NCDRC by alleging deficiency in service.
We find force in the submission of learned senior counsel appearing for the respondent inasmuch as on perusal of the surveyor’s report, we find that in light of what has been stated in his notes on adjustments, the table showing the assessment of loss has in fact assessed the deduction at a higher rate then what was actually necessary. By taking into consideration the facts and circumstances of the case, particularly the fact that the loss was with regard to the iron ore stocked which had been washed away and 8 also other loss which had been caused due to the rainfall and cyclone (Hudhud) that occurred in the east coast of Orissa in the year 2014, we find no merit in the submission of the learned counsel for the appellant insofar as the award of the additional compensation is concerned.
As the Insurance Company had failed to respond to the notices and protest petitions issued on behalf of the respondent with regard to the excessive deductions made by the surveyor, the same amounted to deficiency in service. We find that, had the Insurance Company responded to the same, possibly, the insured respondent herein would not have approached the NCDRC. Therefore, we find that the NCDRC was justified in entertaining the complaint on the premise that there was deficiency in service. Hence, that portion of the compensation awarded to the respondent herein is sustained.
Consequently, the appeal is allowed in part.
No costs.
Pending application(s), if any, shall stand disposed of.
……………………………………………………J. (B.V. NAGARATHNA) ……………………………………………………J. (UJJAL BHUYAN) NEW DELHI;
AUGUST 4, 2023 9 ITEM NO.30 COURT NO.15 SECTION XVII-A S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CIVIL APPEAL NO. 4572/2023 THE NEW INDIA ASSURANCE COMPANY LTD. Appellant(s) VERSUS BAGADIYA BROTHERS PVT. LTD. Respondent(s)
(FOR ADMISSION and IA No.138160/2023-STAY APPLICATION ) Date : 04-08-2023 This appeal was called on for hearing today. CORAM :
HON'BLE MRS. JUSTICE B.V. NAGARATHNA HON'BLE MR. JUSTICE UJJAL BHUYAN For Appellant(s) Mr. Mritunjay Kumar Sinha, AOR Mr. J.P.N.Shahi, Adv.
Mrs. Vimal Sinha, Adv.
For Respondent(s) Mr. G L Vishwanath, Sr. Adv.
Mr. Naveen Chawla, Adv.
Mr. Mayank Bughani, Adv.
Mr. Rishabh Kumar Thakur, Adv. Mr. T. Mahipal, AOR UPON hearing the counsel the Court made the following O R D E R The Civil Appeal is allowed in part in terms of the signed order.
Pending application(s), if any, shall stand disposed of.
(RADHA SHARMA) (MALEKAR NAGARAJ)
COURT MASTER (SH) COURT MASTER (NSH)
(Signed order is placed on the file.)
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