National Consumer Disputes Redressal
Shiv-Vani Oil & Gas Exploration ... vs The Chairman & Managing Director, ... on 19 January, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER COMPLAINT NO. 96 OF 2007 Shiv-Vani Oil & Gas Exploration Services Ltd. F-213/C, Lado Sarai, M.B. Road, New Delhi-110030 Through Mr. B. G. Daga Authorized Representative Complainant Versus 1. The Chairman & Managing Director United India Insurance Co. Ltd. 24, Whites Road, Madras- 600014 2. Assistant General Manager, United India Insurance Co. Ltd. 8th Floor, Kanchangunga Building 28, Barakhamba Road, New Delhi 3. Divisional Manager, Divisional Office No. 24, 501, (5th Floor), Kailash Building 26, Kasturba Gandhi Marg New Delhi- 110001 Opposite Parties BEFORE HONBLE MR. JUSTICE V.K.JAIN, PRESIDING MEMBER HONBLE DR. B.C. GUPTA, MEMBER For the Complainant : Ms. K. Radha, Advocate Ms. K. Karunashree, Advocate For Opposite Parties : Mr. A. K. De, Advocate Mr. Rajesh Dwivedi, Advocate Mr. Zahid Ali, Advocate DATED: 19.01.2015 JUDGMENT
JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL) The petitioner Company took a Marine Hull Comprehensive Package Policy dated 10.04.2003 from the opposite parties, United India Insurance Co. Ltd. in respect of coverage of 32 small Rigs in operations at Namsai in Arunachal Pradesh for the period from 10.04.2003 to 09.04.2004, for a total sum of Rs. 4.33 crores. The complainant also took an all risks policy dated 22.03.2003 for coverage of the Seismic units with accessories, for the period from 22.03.2003 to 21.03.2004, for Rs. 5 Crores. The case of the complainant Company is that on 21.11.2003 about 15 cadres of ADF/Ulfa armed with weapons entered into the operation areas, threatened to kill the staff working there and damaged several costly equipments, besides taking away some equipments and accessories of seismic survey. The complainant Company claims to have suffered a loss of Rs. 12,00,792/- in the aforesaid incident which was reported to the police and registered vide case no. 79/2003. In another similar incident on 23.11.2003, around 30/35 cadres of terrorists outfit attacked another Seismic area, threatened to kill the staff and took away several equipments and accessories from the area of operation. The complainant Company claims to have suffered a loss of Rs. 1,32,91,174/- in the second incident which was duly reported to the police and registered vide case no. 80/2003. On intimation being given to the Insurance Company, a surveyor was appointed. The said surveyor vide his first report dated 27.05.2006, pertaining to the incident of 21.11.2003 computed the loss at Rs. 71,12,592/- after depreciation. In the second report, which is dated 01.06.2006, and pertained to the incident of 21.11.2003, the surveyor recommended payment of Rs. 3,39,506/-. He thereafter deducted excess amount of Rs. 2.5 lakhs and recommended payment of claim to the extent of Rs. 68,62,592/-. However, even the aforesaid amount was not paid to the complainant which led to filing of this complaint seeking the following reliefs:-
1. Pass a decree/order in favour of the complainant with a direction to the Respondent to indemnify to the Complainant a sum of Rs. 1,44,91,966/- as claimed for the loss sustained by the complainant and/or
2. Pass an order directing the Respondent to pay to the Complainant an interest @ 15% p.a. on Rs. 1,44,91,966/- from the date of loss to the date of realization of the said amount.
3. Pass an order/orders directing the Respondent to pay to the Complainant a sum of Rs.
50,000/- by way of compensation for mental agony and physical harassment caused to the complainant due to the lackadaisical attitude adopted by the Respondent and/or
4. Pass an order/order directing the Respondent to pay to the Complainant a sum of Rs.
50,000/- by way of compensation for mental agony and physical harassment caused to the complainant due to the lackadaisical attitude adopted by the Respondent and/or
5. Pass an order/orders directing the Respondent to pay to the Complainant a sum of Rs. 50,000/- by way of litigation cost.
2. The Insurance Company filed written version in which the incidents claimed by the complainant Company were not denied. It was stated in the reply that pursuant to the reports of the surveyor dated 27.05.2006 and 01.06.2006, they offered a sum of Rs. 68,28,415/- to the complainant in full and final settlement of its claim and that amount had already been paid to the complainant during pendency of this complaint. It would be pertinent to note here that in terms of the order of this Commission dated 16.05.2008, the Insurance Company paid the aforesaid sum of Rs. 68,28,415/- to the complainant.
3. A perusal of the report of the surveyor dated 27.05.2006 in respect of the terrorists attack on 23.11.2003 would show that though the complainants had claimed loss of Rs. 1,32,91,174/-, it had accepted the said claim at Rs. 1,21,61,086/-.
The report further shows that though the complainant wanted depreciation to be applied at the rate of 4.75% per annum as per its fixed asset Register, the surveyor applied much higher depreciation. The report of the surveyor as regards application of the depreciation reads as under:-
A. DEPRECIATION:
Insured has confirmed Rate of Depreciation @ 4.75% per annum, which can be verified from the FIXED ASSETS REGISTER (Plant & Machiner-Drilling Rig) as on 30th June 2003, copy is enclosed.
But after our thorough enquiries and examinations we have accepted the depreciation rates considering the following:-
1.
The area of working is covered with thick tropical forests, boulder covered surface and rocky/hilly terrain. The area is fraught with seasonal creeks and thick undergrowth.
2. Type and specification of the equipments
3. Procedures of utilization of equipments for acquiring Seismic Data So based on the above applicable Depreciation Rates considered as:
a.
Shot Pro-2 Assly: Electronic equipments, supplied in February03 and in continuous use for 10 months in outdoors. So considered Depreciation Rate is @ 10.00 % per year for one year, which we feel is logical Accepted Cost is Rs. 7,56,865.00 and the Depreciated Cost will be Rs. 6,89,279.00.
b.
Aram Aries RAM:
Electronic equipment, supplied in September03 and in continuous use for 2 months in outdoors, so a normal Depreciation Rate 10.00% has been considered due to its application, which we feel is logical.
Accepted Cost is Rs.
16,31,535.00 and the Depreciated Cost will be Rs. 14,68,382.00.
c.
Batteries: Supplied in February03 and are normal consumables, so considered total Depreciation Rate 25.00% Accepted Cost is Rs. 11,367.00 and the Depreciated Cost will be Rs. 8,525.00 d.
Geophones Strings: 10 Marsh originally supplied in September01 and in use at Insured Rajamundry site. Subsequently converted to 12 Marsh in March03 after reconditioning. The Geophones are planted in the ground at 3 meter apart for Seismic Test. So considering yearly depreciation rate @ 25.00% and the total depreciation rate for two years will be 50.00%.
Accepted Cost is Rs. 92,38,195.00 and the Depreciated Cost will be Rs. 46,19,098.00 e.
Aram Rev. Cable: Are unarmoured flexible rubber Cables and in use since March03 in boulder covered surface and rocky/hilly terrain. So Depreciation Rate considered 50% for eight months, which we feel logical.
Accepted Cost is Rs. 5,30,816.00 and the Depreciated Cost will be Rs. 2,65,408.00.
4. The above referred report does not disclose on what basis the surveyor applied depreciation at the rate of 10% per annum in respect of Short Pro-2 Assly. This is not the case of the Insurance Company that the aforesaid rate of depreciation was based upon some guidelines framed by IRDA or even by the Insurance Company.
The aforesaid rate of depreciation is not stated to be the rate specified under Income Tax Act and Rules.
In our opinion, in the absence of any rules/guidelines on the subject, the surveyor could not have applied depreciation at the rate of 10% per annum only on the ground that the aforesaid equipment was in continuous use for 10 months in outdoors.
The exactly same was the position in respect of Aram Aries RAM. As regards the batteries, the depreciation is applied at the rate of 25% per annum without finding out what was the normal life of the battery. The depreciation in respect of the Geophones Strings was applied at the rate of 25% per annum, on the ground that the aforesaid equipments were planted in the ground at 3 meter apart for seismic test. Again, no rule/guideline is claimed either in the report of the surveyor or in the reply filed by the Insurance Company. In respect of the Aram Rev. Cable, the surveyor applied depreciation at the rate of 50% for eight months on the ground that it was in use in boulder covered surface and rocks/hilly terrain. Again, no rule/guidelines pertinent to depreciation of such component is referred either in the report of the surveyor or in the reply filed by the Insurance Company.
5. On a perusal of the second inspection report which pertains to the incident of 21.11.2003, the surveyor accepted the price of Rs. 12,09,689/-, but applied the depreciation at the rate of 10% per annum, subject to maximum of 50% per annum thereby coming to the assessed loss of Rs. 6,04,845/-. Considering the under insurance, the loss to the complainant was computed at Rs. 5,56,006/-. After making deductions against terrorists act amounting to Rs. 2,16,500, the surveyor recommended payment of a sum of Rs. 3,39,506/- to the complainant.
6. In our opinion, in the absence of any rules/guidelines framed either by IRDA or by the Insurance Company itself, the depreciation should have been applied at the rates prescribed in the Income Tax Act and Rules. The rate of deprecation to be applied while computing the loss to the insured, cannot be left to the subjective discretion of the surveyor, unguided by any guidelines or rules or regulations. If the rate of depreciation to be applied in respect of a particular part/machinery is left to the subjective discretion of the surveyor, that may result in the surveyor becoming arbitrary and autocratic. If IRDA has not framed any rules/guidelines on this subject as is claimed by the learned counsel for the parties, the Insurance Company can prescribe its own rules of depreciation and make them a part of the Insurance policy itself so as to bind the insured. But, if it is not done, the rates of depreciation have to be based on some objective norms which, in the absence of any other norms can only be the rules of depreciation contained in the Income Tax Act and Rules, in respect of the machinery/component in question.
7. As regards deductions made by the surveyor under the heading excess, the learned counsel for the Insurance Company could not draw our attention to any clause in the Insurance Policies allowing such a deduction. The Insurance Policies which are available in our paper book contain no provision for any deduction in a case of loss or damage due to terrorists attack. As per the terms of the policy, the Insurance Company had agreed to indemnify the insured for loss, destruction or damage by fire, riots, strike, terrorists activity, theft or accident etc. caused any time during the period of the Insurance.
Therefore, in the absence of the provision of deductions on account of terrorists acts, the surveyor was not justified in making deductions which he made after computing the loss suffered by the complainant Company.
8. Since it is not known as to what are the rates of depreciation prescribed in the Income Tax Act and Rules framed thereunder in respect of the machinery/components etc. stolen/damage during the incidents of 21.11.2003 and 23.11.2003, the matter needs to be remitted back to the Insurance Company for re-computing the loss to the complainant Company, after applying the rates of depreciation prescribed under the Income Tax Act and Rules framed thereunder, as against the rates of depreciation applied by the surveyor. We direct the Insurance Company to re-compute the loss to the complainant Company accordingly within a period of 6 weeks from today.
9. Since the Insurance Company, instead of paying the claim within a reasonable time, chose to pay the same only during pendency of the complainant before this Commission, we also direct the said Company to pay interest to the complainant at the rate of 9% per annum w.e.f. 6 months of the date of lodging of the complaint till the date the amount in question was paid by the Insurance Company to the complainant during pendency of this complaint. If any additional amount becomes payable to the complainant consequent to re-computing of the loss in the light of this order, the Insurance Company shall pay interest on that amount at the rate of 9% per annum w.e.f. 6 months of the date of lodging of the claim till the date the aforesaid payment is made. This order applies in respect of both the claims i.e. the claim subject matter of the survey report dated 27.05.2006 as well as the claim which was subject matter of the second survey report dated 01.06.2006. One copy of this order be also sent to the IRDA for information and considering framing appropriate guidelines as regards application of depreciation in such matters.
V.K.JAIN, J PRESIDING MEMBER .
DR. B.C. GUPTA MEMBER PSM/26