National Consumer Disputes Redressal
M/S Rama Associates Ltd. vs New India Assurance Co. Ltd. on 13 November, 2013
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 262 OF 2008 (From the order dated 24.04.2008 in Complaint No.196/99 of the Delhi State Consumer Disputes Redressal Commission) M/s Rama Associates Ltd. Essel House B-10, Lawrence Road Industrial Area New Delhi-110035 ... Appellant Versus New India Assurance Co. Ltd. Through its Sr. Divisional Manager 97, Bajaj House 4th Floor, Nehru Place New Delhi-110019 Respondent FIRST APPEAL NO. 263 OF 2008 (From the order dated 24.04.2008 in Complaint No.197/99 of the Delhi State Consumer Disputes Redressal Commission) M/s Rama Associates Ltd. Essel House B-10, Lawrence Road Industrial Area New Delhi-110035 ... Appellant Versus New India Assurance Co. Ltd. Through its Sr. Divisional Manager 97, Bajaj House 4th Floor, Nehru Place New Delhi-110019 Respondent BEFORE HONBLE MR. JUSTICE D.K. JAIN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER HONBLE MR. VINAY KUMAR, MEMBER For the Appellant : Ms. Deepa Chacko, Advocate For the Respondent : Ms. Meenakshi Midha, Advocate Pronounced 13th November, 2013 ORDER
PER VINEETA RAI, MEMBER
1. M/s Rama Associates Ltd., Appellant herein and Original Complainant before the Delhi State Consumer Disputes Redressal Commission (hereinafter referred to as the State Commission) have filed these two appeals against a common order of the State Commission passed in two complaints of the same date i.e. Complaints No. C-196/1999 and C-197/1999. Since the parties as also the cause of complaints are the same/similar, we also propose to dispose of these appeals by a common order by taking the facts from First Appeal No.262 of 2008.
2. FACTS:-
Appellant/Complainant in his two complaints filed before the State Commission had contended that it is an exporter of Indian long grain rice to various destinations abroad, for which it had obtained an open marine insurance policy from the Respondent/Insurance Company for a sum of Rs.15 Crores, which was later on revised to Rs.20 Crore on payment of additional premium, for the period from 06.09.1995 to 05.09.1996 to cover the consignments of rice exported by it against all manner of risks, including against physical loss/damage, jettison risk etc. which might occur while transporting the rice by road/barges and from the port godowns to loading on board the vessel within a 80 km radius.
On 29.11.1995 during the validity period of the insurance policy, Appellant/Complainant had dispatched a boat containing 3837 bags of rice for onward export to Switzerland and which was to be loaded onto a vessel at Kakinada Port through different boats by using a sling.
During the process of loading, after 3629 bags were safely loaded on the vessel, the weather suddenly deteriorated, the sea became rough and the boat containing the remaining 208 bags of rice got flooded and became wet, because of which these bags were declared unfit for being loaded and were, therefore, returned to the shore. In addition to the above, 568 bags containing 28.400 MT of rice fell into the sea and were lost while these were being loaded on the vessel by different boats at different times. Appellant/Complainant immediately lodged a claim with the Respondent/Insurance Company, who appointed a Surveyor. The Surveyor vide its report dated 14.02.1996 assessed the loss at Rs.85,001/- in respect of only the wet bags and the claim was not settled for the total loss which was Rs.4,32,960/-. In November, 1997 Respondent/Insurance Company appointed another Surveyor, who after investigations/enquiries submitted a detailed report recommending settlement of the claim for the net loss which had occurred amounting to Rs.4,00,310.25. However, vide its letter dated 10.02.1999 the Respondent/Insurance Company disregarding the report of its own Surveyor repudiated the claim on the ground that the proximate cause of loss was rough weather which has been excluded by an express warranty in the insurance policy.
In the second complaint, Appellant/Complainant contended that during the validity period of the insurance policy it had sent a boat with 2402 bags of rice to be loaded onto a vessel for export to Singapore.
On this occasion also at about 4.00 p.m. after 148 bags were loaded the weather suddenly deteriorated and the sea became very rough resulting in the flooding of the cargo boat. 630 bags of rice were jettisoned into the sea to lighten the boat and to avoid total loss. The remaining 572 bags were brought back to the shore but were found to be wet.
Another 811 bags of rice fell into the sea and were lost during the course of loading on the vessel by different boats on various dates and times. Appellant/Complainant lodged a claim with the Respondent/Insurance Company in respect of the jettisoned, lost and wet bags. The Surveyor assessed the net loss at Rs.4,73,124/-.
However, in this case too, the Respondent/Insurance Company repudiated the claim on similar grounds as the first complaint, namely, that the proximate cause for loss was willfully loading the boats in rough weather which has been excluded by an express warranty in the insurance policy. Appellant/Complainant, therefore, filed a complaint on grounds of deficiency before the State Commission and requested that the Respondent/Insurance Company be directed to settle the claims as per the report of the Surveyor alongwith 18% interest from 03.11.1995 as also compensation of Rs.1,00,000/- for mental pain and harassment and litigation costs of Rs.20,000/-.
3. Respondent/Insurance Company on being served filed a written rejoinder denying any deficiency in service and stated that the loss occurred due to the willful act and negligence on the part of Appellant/Complainant, who had deliberately undertaken the loading of rice by the boats to the vessel during rough weather, which was excluded by an express warranty clause in the insurance policy.
4. The State Commission, after hearing the parties, allowed the complaints and directed the Respondent/Insurance Company to pay the Appellant/Complainant a total amount of Rs.9,06,084/- towards the loss in respect of claims made in both complaints as assessed by the Surveyor.
Rs.1,00,000/- was awarded as compensation for mental agony and harassment and Rs.10,000/- as litigation costs. The relevant part of the order of the State Commission reads as follows :
15. In the instant case the OP has failed to discharge the onus to prove that the loading or unloading was willfully or deliberately done in the weather conditions which were not suitable and with an ulterior motive to have a wrongful claim against insurance policy. In this regard the report of the Surveyor come handy and it has particularly stated that the weather conditions were not such that loading and unloading could not be operated.
16. Cumulative effect of all these facts and circumstances prove that the claim of the complainant was wrongfully repudiated and without any basis and there being no convincing evidence as suspicion howsoever strong it may be cannot take place of proof that the loading was done intentionally or deliberately when the weather conditions were not suitable. No person of ordinary prudence would take such step if he knows the weather conditions are most unsuitable and consignment may be damaged completely.
While this order was accepted by the Respondent/Insurance Company, who paid the decreetal amount in November, 2008, it has been challenged by the Appellant/Complainant on the ground that the actual loss as reflected in both complaints was Rs.11,73,301/- and not Rs.9,06,084/- as awarded by the State Commission. The State Commission also erred in not awarding interest on the insured amount.
5. Learned Counsel for both parties made oral submissions.
6. Counsel for the Appellant/Complainant brought to our notice the report of the Surveyor (J.B. Boda Surveyors Pvt. Ltd.), whose survey report had been accepted by the State Commission. In this connection, she stated that while the Surveyor had concluded after investigations that the loss in all the 5 claims as projected by the Appellant/Complainant was correct and had quantified the monetary loss in respect of 3 of the claims amounting to Rs.9,06,084/-, perhaps through oversight the Surveyor failed to quantify the monetary loss in respect of 2 claims i.e. Claim No.21/310502/96/002 and Claim No. 21/310802/96/077 amounting to Rs.2,45,518/-. It is perhaps because of this reason that the State Commission also did not include the monetary loss in respect of 2 claims while calculating the actual insurance amount, which it directed should be paid to the Appellant/Complainant. The actual amount payable is Rs.11,73,301/-. Thus, Respondent/Insurance Company still has to pay Rs.2,67,217/- to the Appellant/Complainant Counsel for the Appellant/Complainant further stated that the Respondent/Insurance Company was clearly guilty of deficiency in service in not only repudiating the just claim of the Appellant on flimsy grounds i.e. that the weather conditions were unfavourable while the loading was undertaken, which was clearly disproved by credible evidence on record but also the inordinate delay in settling the claim. Therefore, compensation for deficiency in service was justified. The State Commission while taking cognizance of this fact had awarded a token compensation of Rs.1,00,000/- but had erred in not granting interest on the insured amount. It is well accepted that when an Insuree is deprived of the right to enjoy its money or investing money in business because of delay in settling the claim, it has to be compensated by way of payment of interest by the Insurance Company. In this connection, learned Counsel cited a judgment of Honble Supreme Court in United India Insurance Co. Ltd. V. M.K.J. Corporation [III (1996) CPJ 8 (SC)], wherein the Apex Court has ruled as under :-
9. The next question is : what rate of interest the insured-respondent is entitled to get?
In common parlance, when the insured-respondent is deprived of right to enjoy his money or invest the money in business, necessarily the loss has to be compensated by way of payment of interest by the Insurance Company. We are informed that as per the directions of the Government of India the appellant-Insurance Company has no option but to invest the money in the securities specified by the Government of India under which the Insurance Company is securing interest on investment at the rate of 11.3% per annum. Under these circumstances, the appellant-Insurance Company is liable to pay interest @ 12% per annum from January 1, 1991 till date of payment. It is then contended that as per the policy, the respondent is entitled to consequential loss as per the independent policy. The Commission no doubt did not give any independent reason for the same but all the claims were heard and disposed of together. Under these circumstances, we are of the view that the claims must be deemed to have been rejected.
It was contended that applying the same principle in the present case, Respondent/Insurance Company is liable to pay interest on the amount of Rs.9,06,084/- @ 12% from 09.03.1998 i.e. two months after the second surveyor had given its report till November, 2008 when the said amount was paid to the Appellant/Complainant in compliance with the order of the State Commission. In respect of Rs.2,67,217/-, which is yet to be paid to the Appellant/Complainant, the Respondent/Insurance Company is liable to pay interest on the same rate from the date of the order of the State Commission i.e. 24.04.2008 till October, 2013.
7. Counsel for the Respondent/Insurance Company, after going through the survey report and taking instructions from the Respondent/Insurance Company, fairly concedes that since the survey report had been accepted by the State Commission and no appeal against the same had been filed by the Respondent/Insurance Company, it would be willing to pay the additional amount of Rs.2,67,217/- over and above the amount of Rs.9,06,084/- already paid to the Appellant/Complainant in terms of the order of the State Commission as also compensation of Rs.1,00,000/-. However, interest on these amounts may not be pressed.
8. We have heard learned Counsel for both parties and have gone through the evidence on record, including the survey report.
After going through the same, we agree with the contention of Counsel for the Appellant/Complainant that the Surveyor had after investigations confirmed that all the 5 insurance claims were correct and also that the weather at the time of loading was not adverse.
We also note that it is factually correct that the Surveyor had quantified the monetary loss in respect of only 3 of the claims amounting to Rs.9,06,084/- and not for 2 claims wherein the loss was Rs.2,45,518/-. In view of these facts, which has also now been accepted by the Respondent/Insurance Company, we confirm that the total amount to be paid to the Appellant/Complainant by the Respondent/Insurance Company is Rs.11,73,301/- and not Rs.9,06,084/- as erroneously awarded by the State Commission. In view of the action of the Respondent/Insurance Company in repudiating the claim on grounds of weather being adverse, which was disproved by credible evidence on record, we also agree with the conclusion of the State Commission that there was deficiency in service in wrongly repudiating the claim and, therefore, the compensation of Rs.1,00,000/- is justified.
9. So far as payment of interest on Rs.11,73,301/- is concerned, respectfully following the judgment of the Honble Supreme Court in M.K.J. Corporation (supra), we agree that the Appellant/Complainant is entitled to interest on the insured amount from the dates that they became due. However, the rate of interest at 12% sought by the Appellant/Complainant and which was prevalent in 1993, when the complaint in M.K.J. Corporation (supra) was filed, was much higher than the rate of interest prevalent on investments made in Government securities in 1999, when the present complaints had been filed before the State Commission and was around 9%. In 2008 the rate of interest on such securities has further come down to about 6%. Therefore, in view of these facts, we direct that the Respondent/Insurance Company should pay interest at the rate 9% per annum on the sum of Rs.9,06,084/- from March, 1998 i.e. two months after the second surveyor had given its report till November, 2008 when the decreetal amount was paid to the Appellant/Complainant by the Respondent/Insurance Company. Interest at 9% calculated on this amount for the above period is Rs.8,56,249/-. So far as the sum of Rs.2,67,217/- is concerned, which is still to be paid to the Appellant/Complainant by the Respondent/Insurance Company, interest at 6% on this amount is to be calculated from April, 2008 when the said amount became due, till October, 2013, which comes to Rs.88,181/-.
10. To sum up, we partly modify the order of the State Commission and direct the Respondent/Insurance Company to pay the Appellant/Complainant a sum of Rs.2,67,217/- in addition to Rs.9,06,084/- already paid to the Appellant/Complainant in terms of the order of the State Commission in 2008.
Further, as indicated above in the foregoing paragraphs, Respondent/Insurance Company is in addition directed to pay the Appellant/Complainant Rs.8,56,249/- being the interest on Rs.9,06,084/- as also Rs.88,181/- being the interest on Rs.2,67,217/-. Thus, the total amount to be paid by the Respondent/Insurance Company to the Appellant/Complainant comes to Rs.12,11,647/-. Respondent/Insurance Company is directed to pay this amount to the Appellant/Complainant within a period of two months from the date of receipt of copy of this order. The order of the State Commission relating to the award of compensation and litigation costs remains unaltered. The First Appeals stand accepted in the above terms.
Sd/-
(D.K. JAIN, J.) PRESIDENT Sd/-
(VINEETA RAI) MEMBER Sd/-
(VINAY KUMAR) MEMBER Mukesh