National Consumer Disputes Redressal
National Insurance Co. Ltd. vs Roxy Color Lab on 3 February, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 116 OF 2012 (Against the Order dated 30/01/2012 in Complaint No. 17/2011 of the State Commission Chandigarh) 1. NATIONAL INSURANCE CO. LTD. Regional Office-II at 4th Floor, Tower-IV, Jeevan Bharti Building, Coonaught Place, New Delhi-110001 ...........Appellant(s) Versus 1. ROXY COLOR LAB Through its partner Sh. Pravin Kumar Gupta, S/o Late Sh. Nand Lal Gupta, SCO No. 1026-1027, 1st Floor,Sector-22 Chandigarh U.T. 160022 ...........Respondent(s) FIRST APPEAL NO. 178 OF 2012 (Against the Order dated 30/01/2012 in Complaint No. 17/2011 of the State Commission Chandigarh) 1. ROXY COLOR LAB through its Partner Shri Praveen Gupta, S/o Late Shri Nand Lal GuptaSCO No. 1026-1027, 1st Floor, Sector-22, Chandigarh-160022 ...........Appellant(s) Versus 1. NATIONAL INSURANCE CO. LTD. & ANR. Regional Office -II, Through its Regional Manager, SCO Nos. 337-340, Sector-35-B, Chandigarh-160036 2. THE NATIONAL INSURANCE COMPANY LIMITED, Direct Agents Branch, Through its Branch Manager, SCO No. 57, 2nd Floor, Sector-26, Madhya Marg, Chandigarh-160019 ...........Respondent(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER For the Appellant : For National Insurance Co. Ltd. : Mr. Yogesh Malhotra, Advocate For the Respondent : For Roxy Color Lab : Mrs. Girija Wadhwa, Advocate Dated : 03 Feb 2022 ORDER C.VISWANATH, PRESIDING MEMBER
1. Cross Appeals have been filed by the Appellants under Section 19 of the Consumer Protection Act, 1986 against the Order passed by the State Consumer Disputes Redressal Commission, U.T. Chandigarh (hereinafter referred to as the "State Commission") in Complaint No.17/2011 dated 30.01.2012.
First Appeal No. 178 of 2012 has been filed by the Appellant/Roxy Color Lab with a delay of 30 days as per the report of the Registry. For the reasons stated in the application IA/01/2012 in the interest of justice, the delay is condoned.
2. The case of the Complainant is that the its Digital Colour Laboratory, including plant and machinery, office equipment, raw-materials, goods held in trust and trade, were covered by Standard Fire & Special Insurance Policies bearing distinct Nos.420102/11/08/3100000052 and 420102/11/08/3100000182 from 08.07.2008 to 07.07.2009 and 06.01.2009 to 05.01.2010 respectively. The total risk cover was Rs.96 lakhs. Policy No. 420102/11/08/3100000052 was earlier being serviced by another Branch Office of the Opposite Parties and was renewed by Opposite Party No.2. While renewing Policy No. 420102/11/08/3100000052, without having got the fresh Proposal Form signed from the Complainant, the nature of loss assessment for the Policy was unilaterally changed by the Opposite Parties from the earlier "Reinstatement Basis" to "Market Value Basis" without their approval or knowledge.
3. A major fire took place on 09.04.2009 at the Complainant's premises. The Opposite Parties were duly informed by telephone on 09.04.2009 and also vide letter dated 10.04.2009. The Opposite Parties appointed Cunningham Lindsey International Private Limited, New Delhi, a loss assessment company, to assess the loss of the Complainant. All the necessary documents, as sought by the Surveyor, were supplied by the Complainant and the same was informed to the Opposite Parties on 13.08.2009. Ad-interim relief of Rs.30 lakhs was released to the Complainant, vide Inter Office Memo dated 14.10.2009 by the Opposite Parties. The Complainant sought final settlement of its Fire claim, vide letter dated 05.11.2009. The Surveyors, however, vide letter dated 17.11.2009, sought further details after about 07 months after accrual of the claim. The Surveyor submitted a final report to the Opposite Parties on 03.02.2010 and assessed the claim at Rs.48,43,268/-. After adjusting the On Account Relief of Rs.30 lakhs, paid by way of an interim measure, the balance payable was Rs.18,43,268/-. The assessment was made on Market Value Basis, instead of Reinstatement Basis clause wherein no depreciation was deductible, thus causing a loss of Rs.19,61,749/- to the Complainant. Later the Surveyors, vide Addendum dated 01.04.2010 to the Final Report dated 03.02.2010, informed the Opposite Parties that the Final Assessment of loss stood reduced to Rs.48,01,272/- and the balance payable was Rs.18,01,272/- only. This was communicated by the Opposite Parties, vide letter dated 08.06.2010 to the Complainant. After much correspondence, the Opposite Parties, vide letter dated 27.07.2010, after over 15 months issued two cheques for Rs.4,78,153/- and Rs.13,17,500/- totalling to Rs.17,95,653/- to the Complainant, short by a sum of Rs.5619/-. In view of the aforesaid acts of omissions and commissions on the part of the Opposite Parties, amounting to deficiency of service and unfair trade practice, a Complaint was filed before the State Commission with the following prayers:-
(A) Admit the present consumer complaint and issue notice thereof to the Opposite Parties;
(B) Allow the present consumer complaint and direct the Opposite Parties to make the payment of the value of loss on Reinstatement Basis to the complainant being a sum of Rs.19,61,749/-;
(C) Allow the present consumer complaint and direct the Opposite Parties to make the payment of interest @ 15% per annum on the sum of Rs.19,61,749/- w.e.f. 01.08.2009 till actual realization; amount as on date being Rs.4,59,532/-.
(D) Allow the present consumer complaint and direct the Opposite Parties to make the payment of interest on the sum of interim Relief of Rs.30,00,000/- as received by the Complainant; w.e.f. 01.08.2009 till 15.10.2009 @ 15% per annum, amount being Rs.93,698/-;
(E) Allow the present consumer complaint and direct the Opposite Parties to make the payment of interest @ 15% per annum on the sum of Rs.17,95,653/- as received by the complainant; w.e.f. 01.08.2009 till 30.07.2010, amount being Rs.4,20,625/-;
(F) Allow the present consumer complaint and direct the Opposite Parties to make the payment of the consolidated sum of Rs.5,00,000/- as compensation for physical & mental harassment caused to the complainant as also on account of Punitive Damages;
(G) Allow the present consumer complaint and direct the Opposite Parties to make the payment of the sum of Rs.40,000/- as Costs of Litigation as also Rs.2000/- as paid by the complainant for filing the present consumer complaint.
(H) Any other relief as deemed fit & proper in the circumstances of the present consumer complaint may kindly also be granted to the Complainant; in the interest of justice, fair play & equity."
4. The Complaint was resisted by the Opposite Parties. The Opposite Parties admitted issuance of the Insurance Policies. It was stated that the Complainant had not produced any evidence in respect of his claim for the Policy effective from 08.07.2008 was on Reinstatement Basis. The Complainant was not a consumer as per Section 2(1)(d) of the Consumer Protection Act, 1986 as it was running a large-scale business of photographic lab and employed several technicians and earning huge profits. The Complaint was, therefore, not maintainable. The OPs had granted an interim relief of Rs.30 lakhs to the Complainant on humanitarian grounds. It was further stated that the Surveyor assessed the loss at Rs.48,01,271/- on Market Value Basis and recommended payment of Rs.18,01,272/- towards full and final settlement after deducting Rs.30 lakhs paid as interim relief. The amount was released on receipt of the Discharge Disbursement Vouchers and the Complainant never raised any objection regarding the Reinstatement Clause during the existence of the Policy and objected only after expiry of the Policy on 8.7.2009. The Complainant itself caused delay in submitting the required documents as sought by the Surveyor and the processing of the claim, therefore, took some time. Payment of Rs.18,01,272/- was made to the Complainant vide two cheques and short payment of Rs.5619/- was denied. There was no deficiency on their part nor any unfair trade practice.
5. The State Commission after hearing the Counsel for the Parties and perusing the record, passed the following order:-
"1. The Opposite Parties are directed to settle the claim of the complainant in relation to the policy bearing No.420102/11/08/3100000052 on reinstatement basis and pay Rs.19,53,745/-, which were wrongly deducted, by them, as depreciation charges, with interest @ 8% P.A. w.e.f. 15.10.2009 i.e. the date when the amount of interim relief, in the sum of Rs.9,95,506/- lacs was paid.
2. The Opposite Parties are directed to pay interest @ 8% P.A. to the complainant from 15.10.2009 till 27.7.2010, on the amount of Rs.5,97,726/- which was paid to it, with delay of more than 8 months on 27.7.2010.
3. The Opposite Parties are directed to pay Rs.20,000/- to the complainant for physical harassment and mental agony, suffered by it.
4. The Opposite Parties are directed to pay Rs.10,000/- to the complainant as cost of litigation.
The aforesaid order, be complied with, by the Opposite Parties, within 30 days, from the date of receipt of a certified copy of this order, failing which, penal interest @ 12% P.a. shall be paid thereon, from the date of default till its realization, besides costs of Rs.10,000/-."
6. Aggrieved by the orders of the State Commission, two cross Appeals were filed by the Complainant as well as the Opposite Parties.
7. The Opposite Parties filed FA/116/2012 to set aside the impugned order dated 30.01.2012 passed by the State Consumer Disputes Redressal Commission, U.T. Chandigarh in Consumer Complaint No.17 of 2011 titled Roxy Color Lab Vs. National Insurance Co. Ltd. While on the other hand, the Complainant had filed FA/178/2012 for modification and enhancement of the relief as already granted by the State Commission in Consumer Complaint No.17 of 2011 and to allow the Consumer Complaint with costs throughout.
8. Heard the Learned Counsel for the Parties and carefully perused the record.
9. Facts of the case are that the Complainant obtained a Standard Fire & Special Insurance Policy bearing No.420102/11/08/3100000052 for a sum of Rs.50 lakhs and Policy No. 420102/11/08/3100000182 for a total sum of Rs.46 lakhs. There is no dispute as to the fact that fire broke out in the Complainant's premises on 09.04.2009 causing damage to the machinery, furniture and fixtures, raw-materials etc. The Complainant telephonically informed of the same immediately and later, vide letter dated 10.04.2009, about the incident. Mr. Vinay Mittal, Surveyor conducted spot inspection of the premises in the presence of the Respondents on 09.04.2009 itself and submitted report dated 11.4.2009. Thereupon the Insurance Company appointed Cunningham Lindsey International Private Limited, New Delhi to conduct survey and assess the loss. The Surveyors submitted their Interim Report on 19.6.2009 after consideration of the information furnished by the Complainant and recommended On Account Payment of Rs.30 lakhs to the Complainant Company. The Opposite Parties sought clarification on the Interim Report which was submitted by the Surveyor on 09.07.2009 and 21.07.2009. On 15.10.2009, On Account Payment of Rs.30 lakhs was made by the Opposite Parties to the Complainant by way of two cheques. Final Surveyor Report was submitted on 03.02.2010 assessing the loss on Market Value basis at Rs.48,43,268/-. After adjusting the interim payment of Rs.30 lakhs already made to the Complainant, the Surveyor assessed the balance amount payable at Rs.18,43,268/-. An addendum was issued assessing the loss at Rs.48,01,272/- and balance payable amount to the Complainant was assessed at Rs.1801272/-. On 27.07.2010, on receipt of the Discharge Vouchers, balance payment of Rs.18,01,272/- was made to the Complainant towards full and final settlement of the claim.
10. The validity of the Insurance Policies has not been challenged by the Opposite Parties. The incident of fire is also admitted. The Opposite Parties have raised objection as to the maintainability of the Consumer Complaint on the ground that the Complainant is a Company involved in commercial activities and is not a Consumer as defined under the Consumer Protection Act, 1986. So far as maintainability of the Complaint is concerned, this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] has held that since an Insurance Policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint is maintainable.
11. The other issue is regarding the assessment made on Market Value Basis vs. Reinstatement Basis. The Insurance Policy No.420102/11/08/3100000052 for the period from 08.07.2008 to 07.07.2009 was renewed for Rs.50 lakhs on Market Value Basis whereas the previous Policies from 2005 to 2008 were taken on Reinstatement Basis. It was stated by the Opposite Parties that the Policy was issued on Market Value Basis to suit the specific requirements of the Complainant. As seen from the record, no evidence has been placed by the Opposite Parties for the change of the Policy coverage from Reinstatement Basis on Market Value Basis, either at the behest of the Complainant or under intimation to the Complainant, while taking the Policy from 08.07.2008 to 07.07.2009.
12. The State Commission, therefore, held that the conversion of the Policy from reinstatement basis to market value basis without the consent of the Complainant was against clause 4 of the guidelines of Insurance Regulatory and Development Authority (Protection of Policy Holder's Interest) Regulations, 2002 (for short IRDA). Thus, the Opposite Parties had wrongly settled the claim of the Complainant, on market value basis, by deducting an amount of Rs.19,53,745/- as depreciation value (as is evident from Annexure OP-30 Addendum to Final Report). Had the Opposite Parties settled the claim of the Policy on reinstatement basis, the aforesaid depreciation would not have been deducted. The Complainant was, therefore, entitled to get amount of Rs.19,53,745/-, which was wrongly deducted by the Opposite Parties.
13. Relevant Clauses of IRDA (Protection of Policy Holder's Interest) Regulations, 2002 read as follows: -
Regulation 3(4) Violated by the Insurer:-
"Where, for any reason, the proposal and other connected papers are not filed by the prospect, a certificate may be incorporated at the end of proposal form from the prospect that the contents of the form and documents have been filly explained to him and that he has fully understood the significance of the proposed contract."
Regulation 4(4) Violated by the Insurer:-
"Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall respect with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover."
14. No fresh proposal form had been taken by the Opposite Parties/Insurer while renewing the Policy from 08.07.2008 making changes in the Policy from 'Market Value Basis' to 'Reimbursement Basis.' The Complainant/Insured was not made aware of the change and no evidence to this effect has been placed by the Opposite Parties. In view of violation of Regulations of IRDA as above, the State Commission was justified in holding that the Complainant was entitled to get an amount of Rs.19,53,745/-, which was wrongly deducted by the Opposite Parties. IRDA Regulations 9(2) clearly lays down that "In no case shall a surveyor take more than six months from the date of his appointment to furnish his report". State Commission also rightly awarded interest for the delayed payments. The interest for the delayed payment granted by the State Commission is also justified.
15. In view of the above, we see no reason to interfere with the order passed by the State Commission and uphold the same. Both the Appeals stand dismissed.
...................... C. VISWANATH PRESIDING MEMBER ......................J RAM SURAT RAM MAURYA MEMBER