State Consumer Disputes Redressal Commission
United India Insurance Company Limited vs M/S Amandeep Steel And Agro Industries on 21 August, 2017
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH.
1) First Appeal No.832 of 2016
Date of institution : 28.10.2016
Reserved On : 07.08.2017
Date of decision : 21.08.2017
1.The United India Insurance Company Ltd., opposite Bus Stand, above Bank of India, Mandi Gobindgarh, District Fatehgarh Sahib, through its Regional Office, 136, Feroze Gandhi Market, Ludhiana, through its Asst. Manager (Legal) Shama Arora Mittal.
2. The United India Insurance Company Ltd., GT Road, opposite Bus Stand Khanna, District Ludhiana, through its Regional Office, 136, Feroze Gandhi Market, Ludhiana, through its Asst. Manager (Legal) Shama Arora Mittal. ....Appellants/Opposite Parties No.1 & 2
Versus
1. M/s Amandeep Steel and Agro Industries, Amloh Road, Disposal Works Road, Mandi Gobindgarh, Tehsil Amloh, District Fatehgarh Sahib, through its Partner Ranjit Singh S/o Sohan Singh.
....Respondent/Complainant
2. State Bank of Patiala Branch, G.T. Road, Mandi Gobindgarh, District Fatehgarh Sahib, through its Branch Manager.
....Respondent/Opposite Party No.3 2) First Appeal No.820 of 2016 Date of institution : 26.10.2016 Reserved On : 07.08.2017 Date of decision : 21.08.2017 M/s Amandeep Steel and Agro Industries, Amloh Road, Disposal Works Road, Mandi Gobindgarh, Tehsil Amloh, District Fatehgarh Sahib, through its Partner Ranjit Singh S/o Sohan Singh.
....Appellant/Complainant Versus
1. The United India Insurance Company Ltd., opposite Bus Stand, above Bank of India, Mandi Gobindgarh, District Fatehgarh Sahib, through its Branch Manager. First Appeal No.832 of 2016 2
2. The United India Insurance Company Ltd., G.T. Road, opposite Bus Stand, Khanna, District Ludhiana, through its Divisional Manager.
3. State Bank of Patiala, Branch G.T. Road, Mandi Gobindgarh, District Fategarh Sahib, through its Branch Manager.
First Appeals against the order dated 30.09.2016 of the District Consumer Disputes Redressal Forum, Fatehgarh Sahib.
Quorum:-
Hon'ble Mr. Justice Paramjeet Singh Dhaliwal, President Present:-
For the appellants : Sh. Munish Goel, Advocate For respondent No.1 : Sh. Tribhuwan Singla, Advocate For respondent No.2 : Ex parte.
JUSTICE PARAMJEET SINGH DHALIWAL, PRESIDENT This order will dispose of the above noted appeals, which have been preferred against the same order dated 30.09.2016 passed by District Consumer Disputes Redressal Forum, Fatehgarh Sahib (in short, "the District Forum"), whereby the complaint filed by the complainant, under Section 12 of the Consumer Protection Act, 1986, was accepted qua the appellants/opposite parties No.1 & 2 and they were directed to pay a sum of ₹20,00,000/- towards the rightful claim of the complainant, as he waived his right to claim more than the awarded amount. The complaint was dismissed against opposite party No.3. F.A. No.832 of 2016 has been filed by opposite parties No.1 & 2-Insurance Company for setting aside the impugned First Appeal No.832 of 2016 3 order, whereas F.A. No.820 of 2016 has been filed by the complainant for enhancement of the compensation.
2. Facts are taken from F.A. No.832 of 2016. It would be apposite to mention that hereinafter the parties will be referred, as have been arrayed before the District Forum.
Facts of the Complaint
3. Brief facts, as averred in the complaint, are that the complainant, M/s Amandeep Steel and Agro Industries, is a partnership firm and is dealing in manufacturing of iron goods and trading of iron material etc. For the said purpose, Cash Credit Limit of ₹55,00,000/- was got sanctioned by the complainant from its Banker opposite party No.3. Previously, the said limit was for ₹35,00,000/- for three years, which was later on increased. Opposite party No.3 got insured the complainant firm regarding its assets i.e. Engineering Workshop, Structural Steel Fabricators etc., hot cold rolling Mill etc. for ₹15,00,000/-, without consulting the complainant for assessing the value of assets and the same were under-assessed, in connivance with opposite parties No.1 &
2. Opposite party No.3 had got insured the assets of the complainant before enhancement of the limit to ₹55,00,000/-. On 06.06.2013 due to high intensity thunder storm and winds associated with heavy down fall, the main production hall of sheds, due to falling of trussed shed, rolling mill machinery, electrical items furnaces etc. had to bear the blunt of the same. Intimation regarding the same was given to the opposite parties on the same First Appeal No.832 of 2016 4 day and a DDR in this regard was also lodged with the police on 07.06.2013. It was further averred that after three months, a report was prepared by Sh. Arun Mehta, Surveyor and Loss Assessor, on 03.09.2013, which was not supplied to the complainant. He procured the said report through RTI Act after 20.09.2013. The loss caused to the complainant firm was assessed/prepared by Er. P.K. Shahi (B.E. Civil) on 10.06.2013 to the tune of ₹24,09,975/-. Apart from this, the loss to the tune of ₹10,00,000/- occurred to the machinery, furnace area, rolling mill etc, which was got prepared on the direction of the valuer/surveyor Arun Mehta. The replacement value of building and other assets was assessed on the date of loss i.e. ₹37,64,390/- in the report dated 03.09.2013 of Sh. Arun Mehta, Surveyor and Loss Assessor. The complainant approached the opposite parties for payment of the claim amount, but they refused to pay the same. It was further pleaded that though the loss occurred to the complainant was more than ₹20,00,000/-, but he claimed only ₹20,00,000/-. On account of the deficient and negligent act of the opposite parties, the complainant approached the District Forum, seeking the following directions to the opposite parties:
i) to pay the above said amount of loss and damages, along with interest at the rate of 18% per annum from 06.06.2013;
ii) to pay ₹5,000/-, as counsel fee; and
iii) to pay ₹500/-, as miscellaneous expenses.
Defence of the Opposite Parties First Appeal No.832 of 2016 5
4. In pursuance to the notices, the opposite parties appeared before the District Forum. Opposite parties No.1 & 2 filed joint reply to the complaint and opposite party No.3 filed separate reply thereto. Opposite parties No.1 & 2, in their reply, raised preliminary objections that the complainant purchased "Standard Fire and Special Peril Policy" No.200604/11/12/ 11/00000451, covering the building for a sum of ₹15,00,000/-, for the period 25.01.2013 to 24.01.2014. The surveyor assessed the total loss of constructed area as ₹37,64,390/- and depreciation at the rate of 32.50% was deducted for the building being 13 years old. The remaining value at the time of loss was ₹25,40,963/-. Further after applying average clause etc., the surveyor pointed out that the complainant was entitled to ₹2,33,638/-. It was further pleaded that opposite parties No.1 & 2 were ready to pay the claim amount, as per the assessment and as per the terms and conditions of the policy. On merits, it was pleaded that opposite party No.3-State Bank of Patiala sanctioned the cash credit limit of ₹55,00,000/- in favour of the complainant, but as per the policy, in question, the building was insured only for ₹15,00,000/-. The value of the building insured was undervalued. Sh. Arun Mehta, Surveyor and Loss Assessor, vide his detailed report, assessed the loss as ₹2,33,638/-. The complainant was duly intimated, vide letter dated 08.10.2013, to send the duly signed settlement intimation voucher, but he did not submit the same, even despite sending a reminder; as a result of which the payment could not be First Appeal No.832 of 2016 6 released to him. It was further pleaded that the report of Er. P.K. Shahi is not acceptable and is cryptic, which does not mention as to on what basis the claim was assessed. The claim can only be assessed, as per the terms and conditions of the policy. All other allegations of the complainants were denied and it was prayed that that complaint be dismissed with costs.
5. Opposite party No.3, in its reply, raised preliminary objection that the complainant is not its consumer, as he is indulging in commercial activities, by way of earning profits in the business. Opposite party No.3 relied upon the judgments mentioned in Para No.4 of its reply in this regard. The further objections taken were that the complaint is bad for non-joinder and mis-joinder of necessary parties. The complainant has no cause of action or locus standi to file this complaint. There was no deficiency in service or unfair trade practice on the part of opposite party No.3. On merits, it was pleaded that opposite party No.3 is the banker of the complainant firm, who availed Cash Credit Limit from it, initially for ₹35,00,000/-, which was got enhanced to ₹55,00,000/-. It was denied that opposite party No.3 guided the complainant to get insured his assets. Rather the complainant himself got the same insured. For the loss suffered by the complainant, the claim, if any, is to be settled by opposite parties No.1 & 2 directly and opposite party No.3 has no role in it. Other allegations of the complainant were denied and dismissal of the complaint was prayed.
First Appeal No.832 of 2016 7Finding of the District Forum
6. Both the sides produced evidence in support of their respective averments before the District Forum, which after going through the same and hearing learned counsel on their behalf, accepted the complaint against opposite parties No.1 & 2, vide impugned order. Hence, these appeals.
Contentions of the Parties
7. I have heard learned counsel for the parties and have carefully gone through the records of the case.
8. Learned counsel for opposite parties No.1 & 2- Insurance Company vehemently contended that the value of the building of the complainant, which was 13 years old, was ₹37,64,390/-. After applying deprecation at the rate of 32.50%, its value came to be ₹25,40,963/-. Since the building, in question, was undervalued, as per version of the complainant, for ₹15,00,000/-, so the average clause as per the policy conditions is applicable and by applying the same as well as excess clause at the rate of 5%, the claim has been recommended for a sum of ₹2,33,638/-, as per the survey report. It was further contended that the complainant is entitled to the compensation, strictly as per the report of the Surveyor and Loss Assessor Sh. Arun Mehta. Even if there was any under valuation of his building, then the complainant can claim his rights from the Bank. Opposite parties No.1 & 2 are ready to pay that above said amount, as assessed by the surveyor. It was further contended that the report of Surveyor, First Appeal No.832 of 2016 8 Shahi Planner, Ex.C-11, has been wrongly relied upon by the District Forum. The same is a non-speaking report and cannot be relied upon. The order passed by the District Forum is not correct and the same is liable to be set aside.
9. Per contra, learned counsel for the complainant vehemently contended that the loss occurred to the complainant was more than ₹37,00,000/-. In case the building is required to be re-constructed at present, its cost will be at least more than ₹37,00,000/-. Due to loss of the building, the complainant also suffered other consequential losses. Opposite party No.3-Bank was at fault for undervaluing the building and for getting the insurance policy for a lesser amount, in view of the fact the Cash Credit Limit obtained was by the complainant for ₹55,00,000/- from it, who further got insured the assets of the complainant. If the insurance company is not liable to pay the entire claim, then the Bank may be directed to pay the remaining amount or the same be adjusted towards the Cash Credit Limit availed by the complainant. The District Forum has awarded less compensation and the same is liable to be enhanced. The appeal filed by the insurance company is liable to be dismissed.
10. On the other hand, learned counsel for opposite party No.3 contended that the complainant is indulging in commercial activity and he is not consumer. The complainant himself got the Cash Credit Limit and the Bank is not responsible for any kind of under value of the building. Only the premium was deducted from First Appeal No.832 of 2016 9 the account of the complainant for getting the insurance policy. Once the fact of undervalue came to the notice of the complainant, he should have immediately informed the Bank and could have got rectified the same. However, once the insurance has been accepted and the premium has been deducted, then he is estopped by his act and conduct from taking this plea. There was no deficiency in service on the part of the Bank and the appeals are liable to be dismissed.
Consideration of Contentions
11. I have given thoughtful consideration to the contentions raised by the learned counsel for the parties.
12. Admittedly, the building/assets of the complainant was insured with opposite parties No.1 & 2 for ₹15,00,000/-, Ex.C-6. On 06.06.2013, the building of the complainant got damaged due to high intensity thunder storm and winds, associated with heavy downfall. Opposite parties No.1 & 2 appointed Sh. Arun Mehta, Surveyor and Loss Assessor, who submitted his detailed report Ex.OP-2/3. It is mentioned in this report the replacement value of the building, which was 13 years old, as on the date of loss was ₹37,64,390/- and after deducting depreciation at the rate of 32.50%, it came to be ₹25,40,963/-. It means that the building was undervalued. Where the building is undervalued, then the compensation is to be calculated on the basis of formula, which is applicable to average clause, as per the policy conditions. While First Appeal No.832 of 2016 10 applying the average clause, the compensation can be ascertained by applying the following formula:
Amount of claim x amount of policy / value of building on the date of accident.
The surveyor, Sh. Arun Mehta has correctly determined the compensation for the loss suffered by the complainant by way of this formula.
13. So far as the report of Shahi Planner, Ex.C-11, is concerned, the same cannot be accepted, as no reasons have been given in this report, as to at what basis the compensation has been assessed. He has only calculated the total covered area, by taking into consideration the total measurement of the building.
The District Forum wrongly relied upon the above report.
14. Considering the principles for determining the compensation, where the value of the property has been undervalued, I am of the opinion that the complainant was only entitled to the compensation for the loss, as assessed by Sh. Arun Mehta, Surveyor and Loss Assessor, vide his report Ex.C-12/OP- 2/3, as per which the complainant is entitled to ₹2,33,638/-. No doubt, in the Interim Survey Report dated 08.06.2013 of Sh.Arun Mehta, the estimated loss was mentioned as ₹3.75 lacs to 4 lacs, but in the final survey report Ex.C-12, Sh. Arun Mehta, after detailed scrutiny of the entire relevant material, correctly came to the conclusion that the entitlement of the complainant is to the tune of ₹2,33,638/-. The complainant has failed to lead any cogent First Appeal No.832 of 2016 11 evidence to prove that the final survey report Ex.C-12 is not reliable. The District Forum failed to take notice of all these material aspects of the matter. Therefore, the impugned order needs to be modified.
15. In view of my above discussion, the appeal (F.A. No.832 of 2016) is partly allowed and the impugned order is modified to the extent that opposite parties No.1 & 2 shall pay ₹2,33,638/- to the complainant, as per final survey report Ex.C- 12/Ex.OP-2/3, along with interest at the rate of 9% per annum from the date of lodging the claim till realization. The complainant is also entitled to ₹5,000/-, as litigation expenses and miscellaneous expenses.
16. So far as the compensation for mental agony and harassment is concerned, the same cannot be allowed to the complainant, being partnership firm (legal entity), in view of the ratio of the judgment of the Hon'ble Supreme Court in M/s Sikka Papers Limited v. National Insurance Co. Ltd. & Ors. III (2009) CPJ-90, in which, in Para No.19, it was held as under:
"19. By way of footnote, we may observe that claim of Rs.10,00,000/- made by the complainant for mental harassment is wholly misconceived and untenable. The complainant is a company and, therefore, claim for mental harassment is not legally permissible. It is only the natural person who can claim damages for mental harassment and not the corporate entity." First Appeal No.832 of 2016 12
17. So far as the appeal filed by the complainant i.e. F.A. No.820 of 2016 is concerned, the complainant did not raise any objection with regard to quantum of insurance at the time of effecting the insurance. Thus, he remained slept over his right for a long time and now, he cannot agitate that the Bank has mentioned the value of his property less than its actual value, which resulted into loss to him. It is settled that those, who sleep over their right for a long period, have no right to agitate the same after the long gap. In view of the findings recorded above, F.A. No.820 of 2016 is dismissed.
18. In F.A. No.832 of 2016, the appellants had deposited a sum of ₹25,000/- at the time of filing of the appeal. This amount, along with interest which has accrued thereon, if any, shall be remitted by the registry to the District Forum, after the expiry of 45 days of the sending of certified copy of the order to them. Respondent No.1/complainant may approach the District Forum for the release of the above amount and the District Forum may pass the appropriate order in this regard, in accordance with law.
19. The appeals could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE PARAMJEET SINGH DHALIWAL) PRESIDENT August 21, 2017.
(Gurmeet S)