National Consumer Disputes Redressal
M/S. V.K. Gupta & Associates & 3 Ors. vs New India Assurance Co. Ltd. on 18 January, 2018
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 1435 OF 2016 1. M/S. V.K. GUPTA & ASSOCIATES & 3 ORS. Off. S.C.O. 263, Sector 14, Panchkula 134113 Haryana 2. Vinay Gupta Off. S.C.O. 263, Sector 14, Panchkula 134113 Haryana 3. Dimple Gupta Off. S.C.O. 263, Sector 14, Panchkula 134113 Haryana 4. Saksham Gupta Off. S.C.O. 263, Sector 14, Panchkula 134113 Haryana ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE CO. LTD. Branch Office-352301, Nangal Chowk Ropar -140001 Punjab ...........Opp.Party(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Complainant : Mr. Sukumar Pattjoshi, Sr. Advocate
With Mr. Somesh Kumar Dubey, Advocate For the Opp.Party : Ms. Awantika Manohar, Advocate
Dated : 18 Jan 2018 ORDER
1. This complaint has been filed by the complainant, M/s. V.K. Gupta & Associates & Ors. against the opposite party.
2. The brief facts of the complaint are that the complainant, namely, M/s. V.K.Gupta & Associates, Engineers & contractors (hereinafter referred to as Complainant) is a partnership firm since 2001. The present case is regarding the work of construction of a bridge over Dundi nallah near Manali (HP) awarded by the Border Road Organisation (BRO). On 29.11.2011, the complainant took "Contractors All Risks Insurance" (CAR) Policy No.35230144110300000002 from the OP in lieu of the agreed premium. Unfortunately on 03.08.2012 at around 10.00 p.m. a flash flood caused by heavy intensity of cloud burst over the Dhundi Peaks flooded the Seri rivulet, a tributary to river Beas, caused havoc to the complainant's undergoing project of pre-stressed bridge being constructed on Dhundi nallah. On 04.08.2012, immediately after receiving the information from the site, the complainant on lodged its insurance claim under the aforesaid policy with the respondent/OP. On 14.08.2012, the Regional Office of the OP appointed Mr.Baldev Singh Chawla- B-52, Shekhar Apartment, Mayur Vihar, Phase I, New Delhi as independent surveyor and loss assessor to assess the damage under the "Contractors All Risks Insurance" (CAR) Policy.
3. On the basis of the surveyor report Insurance Company settled the claim with the complainant for Rs.74,25,064/- and the Insurance Company transferred amount of Rs.59,11,032/- on 04.09.2014 by RTGS. The complainant first accepted the settlement and signed the discharge voucher later on he protested by writing letters to the Insurance Company and also filed the present consumer complaint. The complainant has alleged that first of all the total loss was more than Rs.3 crore, however, the surveyor vide his report dated 21.11.2013 assessed the loss at Rs.95,99,693/-. Later on the Insurance Company objected to this assessment and sought clarification from the surveyor vide its letter dated 09.05.2014 on various aspects including the loss assessed for contractors plant and machinery, which was roughly Rs.8,18,077/-. Later on surveyor submitted its revised report on 20.07.2014 wherein the loss was assessed at Rs.87,81,616/-. Even from this assessment the Insurance Company did not allow the loss in respect of "store materials loss (total) in use on ongoing civil constructions in progress", which was for Rs.12,69,779/-. Ultimately the Insurance Company got the discharge voucher signed from the complainant for settlement of the claim wherein it was mentioned that the complainant accepts the settlement for Rs.74,25,064/- and after deducting Rs.15,14,032/- as balance premium amount, a sum of Rs.59,11,032/-was credited to the account of the complainant. It has been alleged in the complaint that the basis of deduction of the amount approved by the surveyor in respect of "store materials loss (total) in use on ongoing civil constructions in progress" is not clear and this material was physically stored and even the same has been recorded by the surveyor. Thus, this amount should not have been deducted.
4. It was further alleged by the complainant that the surveyor modified his report on the pressure from the Insurance Company and did not allow any amount against the loss of insured contractor's plant and machinery. It has also been alleged that the balance premium of Rs.15,14,032/- has been arbitrarily deducted from the alleged settlement amount.
5. The opposite party appeared after notice and has filed written statement. The claim of the complainant has been denied on the ground that the contractors' plant and machinery was not covered under the insurance as no separate premium was paid for this coverage. The balance premium of Rs.15,14,032/- was to be paid by the complainant as per the policy conditions and as per the rules of the Insurance Company. With respect to the "store materials loss (total) in use on ongoing civil constructions in progress" it was stated that this material does not match with the record maintained by the Border Road Organisation (BRO) and no BRO code was assigned to this item. Based on these grounds, it was requested to dismiss the complaint.
6. Both the parties have filed their evidence affidavit. Both the learned counsel for the parties were heard and material on record was perused.
7. Learned counsel for the complainant stated that the surveyor has changed his report on the stance of the Insurance Company because the first report was submitted on 21.11.2013 and on the basis of the letter of the Insurance Company dated 09.05.2014 the surveyor revised his report and submitted the revised report on 26.07.2014. The learned counsel emphasised that the cover page of the Insurance policy itself mentioned at Sr. No.3 the "Contractor" plant and machinery (memo 4) as per list enclosed". This means that there was a list enclosed along with the policy. However, the complete documents were not received by the complainant and therefore, the complainant further wrote a letter to the Insurance Company to give the details of break-up insurance for different items. The Insurance Company vide its letter dated 23.4.2013 informed the break-up of insurance coverage for different items wherein it is clearly mentioned that plant and machinery is covered for Rs.25,00,000/-. Hence, it is clear that plant and machinery is covered under the policy and therefore, the surveyor on the advice of the Insurance Company has wrongly changed his report for not allowing any claim under the plant and machinery.
8. Learned counsel for the complainant pointed out that IRDA Regulations also stipulate that even if the insurance claim is settled by the Insurance Company the insured can file a complaint with a consumer forum if the insured is not satisfied with the settlement. In support of his argument, the learned counsel referred to the judgment of Ramdas Sales Corporation Vs. New India Assurance Company Ltd., CC 79 of 2007, decided on 10.02.2016 (NC) wherein it has been observed:-
"3. The learned counsel for the complainant has placed before us a Circular No.IRDA/NL/CIR/Misc/173/09/2015 dated 24.09.2015 issued by Insurance Regulatory Development Authority of India (IRDA) to all the General Insurance Companies, with regard to the use of discharge vouchers in settlement of claim. The said circular reads as under:-
"The Insurance Companies are using 'discharge voucher' or "settlement intimation voucher" or in some other name, so that the claim is closed and does not remain outstanding in their books. However, of late, the Authority has been receiving complaints from aggrieved policyholders that the said instrument of discharge voucher is being used by the insurers in the judicial fora with the plea that the full and final discharge given by the policyholders extinguish their rights to contest the claim before the Courts.
While the Authority notes that the insurers need to keep their books of accounts in order, it is also necessary to note that insurer shall not use the instrument of discharge voucher as a means of estoppel against the aggrieved policy holders when such policy holder approaches judicial fora.
Accordingly insurers are hereby advised as under:
Where the liability and quantum of claim under a policy is established, the insurers shall not withhold claim amounts. However, it would be clearly understood that execution of such vouchers does not foreclose the rights of policy holder to seek higher compensation before any judicial fora or any other fora established by law.
All insurers are directed to comply with the above instructions."
9. It is contended by the learned counsel for the complainant that in view of the aforesaid circular, which is binding upon the insurer, the plea of estoppel cannot be pressed by the Insurance Company.
10. Learned counsel further pleaded that though the IRDA Regulation is of later date, but this Commission has accepted the principle of this circular from retrospective effect. To support his view, he cited the judgment of this Commission in Ramdas Sales Corporation Vs. New India Assurance Company Ltd., CC 79 of 2007, decided on 10.02.2016 (NC).
11. It was further pointed out by the learned counsel that as per the IRDA Regulations, the insured is entitled to get 2% interest over and above the bank rate on the settlement amount if the claim is decided late. Learned counsel mentioned that the complainant is entitled to interest on the settlement amount which the Insurance Company has not paid.
12. Objecting to the depreciation @ 50% for materials, the learned counsel states that the surveyor has not given any reasoning for applying 50% depreciation on materials which are basically cement, iron, concrete, etc. which are not likely to depreciate at this rate.
13. On the other hand the learned counsel for the opposite party stated that initial claim of the complainant was Rs.3,93,40,946/- but in the complaint the claim has been inflated to Rs.5,94,04,539/-. This only means that the complainant is cooking up the claims. The learned counsel further clarified that the balance premium of Rs.15,14,032/- was required to be deducted as per the provisions of the policy and as per the rules of the Insurance Company. This was not the normal premium by the reinstatement premium. The complainant has consented for deduction of this premium as would be clear from the discharge voucher. The complainant has neither objected to this premium before the settlement nor even after the settlement.
14. So far as the question of plant and machinery is concerned, the learned counsel for the opposite party argued that as no premium was paid for this insurance there can be no insured plant and machinery. Learned counsel further stated that even in the cover page of the policy this column has been left blank with no amount mentioned against the column. It was stated that only the materials were covered under the policy and not the plant and machinery.
15. It was further asserted by the learned counsel that the Insurance Company was fully justified in not allowing the assessment done by the surveyor for the stored materials as the same did not match with the account of material kept with BRO. All the materials entering the site are required to be noted and entered in the record of the BRO, but these materials are not listed in their record. Hence, loss of this material if any cannot be indemnified and their existence is prima facie in doubt. Learned counsel for the opposite party further pointed out that after the full and final settlement of the claim as per the discharge voucher the complainant has no right to file a complaint case as the contract of insurance has already come to an end when the settlement amount is accepted by the complainant.
16. The contention of the learned counsel for the opposite party was that the surveyor has applied depreciation @ 50% for the material already used and this is as per the prevalent surveying practices. Out of the 2 spans of the bridge, the surveyor has clearly recorded in his report that one span was totally washed away but the second span was only damaged and it was not totally lost. Therefore, the surveyor has taken 50% of the loss of the first span to be the loss for the second span, which seems quite reasonable.
17. I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and have examined the material on record. Coming to the issue of settlement voucher it is seen that the complainants have duly signed this voucher and they have accepted Rs.59,11,032/- fully knowing that a deduction of Rs.15,14,032/- has been made from the total settlement amount of Rs.74,25,064/- for the balance premium. Based on the circular dated 24.09.2015 of the IRDA, it seems that even if the settlement voucher has been signed, the complainant may pursue the complaint. In the present case, after accepting the settlement amount, the complainants have already written to the Insurance Company stating their dissatisfaction and the manner in which the amount of Rs.15,14,032/- has been deducted. Thus, the complainant has protested after receiving the settlement amount. Thus, on the basis of the IRDA Regulations, complaint needs to be considered on merits in the present case.
18. Now coming to the first question of the deduction of balance insurance premium of Rs.15,14,032/-, it is seen that the complainants have signed the voucher wherein it is clearly stated that the deduction of Rs.15,14,032/- is being made for balance premium. The complainants may have requested the Insurance Company to clarify the method of calculation of this premium. The Insurance premium is taken by the Insurance Company on the basis of their rules and regulations and as per the guidelines of IRDA. It was the duty of the complainants to satisfy themselves that they were paying the right premium. Payment of premium is not a subject matter to be decided by a consumer forum as this is a matter of contract between the insured and the insurer. Therefore, this Commission would not like to interfere with the amount deducted for the balance premium in the final settlement. However, the complainant may file RTI application and get the details of the premium paid and if the complainant is not satisfied and finds that the deduction of Rs.15,14,032/- is not as per the rules of the Insurance Company, then he may file a fresh complaint.
19. The second question is related to coverage of plant and machinery. Column 3 of the Insurance cover page mentions "Contractors Plant and Machinery (Memo 4) as per list enclosed". This column has not been disabled by putting a cross or by any such mark. Moreover, the Insurance Company vide its letter dated 23.04.2013 has intimated the break-up of insurance amount wherein for plant and machinery Rs.25,00,000/- has been allocated. Thus in my view, the plant and machinery seems to be covered under the policy. Thus in this regard an amount of Rs. Rs.8,18,077/- seems to be a justified claim, which was earlier allowed by the surveyor, but later on it was disallowed.
20. In relation to the material kept in the store that has not been allowed by the Insurance Company, both parties have, in a way, not disagreed that this material does not conform to the record maintained by the BRO. This casts doubt on the existence of the material itself even though the loss for the same has been assessed by the surveyor. As every material entering the site is required to be noted and accounted for by BRO and as this material does not figure in their record, I do not find this to be a justified claim by the complainant and the insurance company has rightly deducted this amount from the assessment of the surveyor.
21. Coming to the question of 50% depreciation, I intend not to interfere with the assessment of the surveyor as the surveyor was a qualified and licenced surveyor and no aspersions have been cast against the surveyor by the complainants in this regard. As no counter technical report or any guidelines have been put up by the complainant, deficiency alleged by the complainant in this regard is without any basis and the same cannot be accepted.
22. Now finally the question of interest is to be taken up. The incident had occurred on 03.08.2012 and the surveyor report was finalised on 26.07.2014. Finally settlement amount of the claim has been credited to the account of the complainant on 04.09.2014. Hon'ble Supreme Court in the matter of Chengalrayan Cooperative Sugar Mills Vs. Oriental Insurance Co. Ltd. & Anr., (2000) 10 SCC 213 has modified the order of the National Commission wherein the interest was granted from the date of order of the National Commission to the effect that the interest shall be applicable from the date of filing of the claim before the National Commission. Law laid down has been summarised in the following head note:-
"B. Consumer Protection Act, 1986-Ss. 22, 18 and 14- Interest- Interest on the amount of compensation -Date from which should be awarded- Appellant filing claim before National Commission for compensation for insured gunnies destroyed in fire- National Commission, quantifying the compensation and awarding interest thereon @18 per cent from the date of its order- Supreme Court, while retaining the rate, directing the interest to be paid rather from the date of filing of the claim before the National Commission- Interest- Interest on compensation- Date from which to start."
23. Accordingly, on the basis of the above principles laid down by the Hon'ble Supreme Court, no interest is payable on the amount of settlement, which was already paid before filing of the present complaint case. However, if any additional claim is allowed in the present complaint, same will carry interest from the date of filing of the claim.
24. Based on the above discussion, the present consumer complaint No.1435 of 2016 is partly allowed and the opposite party/Insurance Company is directed to pay Rs.8,18,077/- (Rupees eight lakhs eighteen thousand seventy seven only) to the complainant along with interest @ 7% p.a. from the date of filing of the complaint i.e. 01.09.2016 till actual payment. The opposite party Insurance Company shall pay Rs.20,000/- (Rupees twenty thousand only) to the complainant as cost of litigation.
...................... PREM NARAIN PRESIDING MEMBER