State Consumer Disputes Redressal Commission
M/S Pooja Marketing vs Oriental Insu.Co.Ltd. on 2 June, 2017
Daily Order M. P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PLOT NO.76, ARERA HILLS, BHOPAL CONSUMER COMPLAINT NO. 47/2013 FILED ON 31.12.2013 DECIDED ON 02.06.2017 M/S POOJA MARKETING, THROUGH PARTNER, PREM CHAND NAHAR, Z-19, OPPOSITE CHITTOD COMPLEX, M. P. NAGAR, ZONE-I, BHOPAL (M.P.) ... COMPLAINANT Versus 1. THE BRANCH MANAGER, THE ORIENTAL INSURANCE CO.LTD. E-5/10, SANKALP, RAVI SHANKAR NAGAR, OPPOSITE HABIBGUNJ POLICE STATION, BHOPAL (M.P.) 2. THE SENIOR MANAGER, PUNJAB NATIONAL BANK, HABIBGUNJ BRANCH, BHOPAL (M.P.) ... OPPOSITE PARTIES. BEFORE : HON'BLE SHRI SUBHASH JAIN : PRESIDING MEMBER
HON'BLE SHRI S. D. AGARWAL : MEMBER COUNSEL FOR PARTIES: Shri Mahavir Bhatnagar, learned counsel for the complainant. Ms. Preetima Shrivastava, learned counsel for opposite party no.1. Shri Somendra Saxena, learned counsel for opposite party no.2. O R D E R (Passed On 02.06.2017)
The following order of the Commission was delivered by Shri Subhash Jain, Member:
The complainant has filed this complaint under Section 17 of the Consumer Protection Act, 1986 against the opposite party the Oriental Insurance Company Limited and the Punjab National Bank alleging deficiency in service in not settling the claim made by the complainant for the loss by fire in his insured premises.
2. The brief facts of the case as narrated by the complainant are that the complainant has an office under the name and style M/S Pooja Marketing at -2- Zone-I, M.P.Nagar, Bhopal from where he carries wholesale business for sale of electric appliances such as refrigerator, washing machine, TV etc. The complainant is also distributor of various home appliances in Bhopal and nearby areas. The complainant also has a godown no. 60 at Plot No. 189, Jinsi, Bhopal. The complainant obtained a Standard Fire & Special Perils policy bearing number 152801/11/2012/160 for the period 02.12.2011 to 01.12.2012. The coverage of risk was for fire and earthquake and location of the risk covered was godown of the complainant. The goods which were insured with the opposite party no.1 insurance company were financed, and hypothecated to the opposite party no.2 the Punjab National Bank by way of cash credit for Rs.200.00 lacs. During the policy period i.e. on 13.11.2012, on Deepawali day at about 11.30pm the fire broke out in the insured premises/godown. After receiving information when complainant reached the godown he found that fire had already spread through the entire godown and the fire-brigade was called. Due to extensive fire the entire stock of refrigerators, washing machines, air conditioners, microwave ovens, CTV, LED and LCD along with other home appliances were badly damaged. The stock kept in the godown at the time of fire was valued at Rs.1,36,29,067/- and eventually the complete stock gutted in fire.
3. It is further alleged that the incident of fire was immediately intimated to the opposite party no.1, the insurance company and the claim was lodged with the insurance company to the tune of Rs.1,57,69,589.31. The opposite party no.1 appointed surveyor and loss accessor S.Soni & Co. who conducted the survey and opined vide report dated 13.03.2013 that the complainant suffered loss of Rs.1,12,94,709.43 which is a fair indemnity and may be paid subject to terms and conditions of the policy. The opposite party no.1 insurance company collected from the complainant all the necessary documents such as stock register, bills and bank statement. The bank statement issued by the opposite party no.2 clearly revealed that the complainant sustained a loss for Rs.1,56,82,445.73 but the opposite party no.`1 the insurance company settled -3- the same for an amount of Rs.1,10,40,095/- The said amount was directly credited to the CC account of the complainant maintained by the opposite party no.2 bank. It is further alleged that from the clause 22.3 of the survey report it is crystal clear that the damaged stock as per bank stock statement is Rs.1,56,82,445.73. When the opposite party no.1, the insurance company settled the claim for Rs.1,10,40,095/- and released the payment in favour of bank, the complainant approached the insurance company seeking clarification as to how inadequate amount has been settled. The insurance company assured that certain deductions have been done and since the matter pertains to high value claim, therefore the complete docket has been sent to the higher authorities. The complainant on the assurance of the insurance company executed discharge voucher on 25.07.2013. It is alleged that the opposite party no.1 insurance company applied undue influence and force for settlement of claim on the said figure and assured the balance amount to be paid in near future. The complainant in anticipation of being paid the balance amount executed the discharge voucher.
4. The complainant also alleged that on perusing the survey report, it was found that the opposite party no.1 insurance company without consent and knowledge of the complainant deducted major portion of the claim illegally against the terms and conditions of the policy. The complainant therefore sent a letter dated 30.09.2013 to the insurance company showing his annoyance and discomfort in not properly settling the claim as per terms and conditions of the policy and requested to pay the balance amount. The complainant has also challenged the survey report stating that the surveyor appointed by the insurance company adopted three methods of calculating the loss in the following terms:
i. Trading Account Method Rs.1,36,29,067.00
ii. Bank Stock Statement Rs.1,56,82,445.73
iii. Stock Register and Physical Verification Method Rs.1,30,13,180.24
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It is alleged that the surveyor in the interest of the insurance company adopted physical verification method for calculating the loss as it was the lowest whereas the surveyor ought to have adopted a method which would have given maximum monetary benefit to the complainant under the policy. It is further alleged that at the time of settlement of the claim the opposite party illegally demanded a sum of Rs.49,169/- towards difference of premium for three years from non-hazardous to hazardous risk which was paid as the claim was on the verge of the settlement. The amount which was not required to be deleted and has been illegally deducted by the surveyor under the following heads:
Vat Tax Rs.18,14,200.54 Dead Stock Factor @ 5% Rs. 6,50,651.00 Excess 5% Rs. 5,90,326.81 Difference of amount towards Damaged stock as per the Bank Stock Statement and paid by the Opposite party no.1. Rs.11,19,713.00 Premium for hazardous risk for 3 yrs Rs. 49,169.00 Rs. 42,24,060.35
5. The surveyor has wrongly assessed the loss on the basis of physical verification method and have deducted vat @13%. The complainant purchased the goods from various companies by paying vat tax. It is further alleged that terms and conditions of the policy issued by the insurance company nowhere contemplates any such deductions which has been illegally done by the surveyor. The complainant therefore by filing this complaint sought relief to the tune of Rs.42,24,060.35 the amount of illegally deduction with interest @ 12% p.a., Rs.5,00,000/- as compensation towards harassment and mental torture and Rs.30,000/- as cost of litigation. The complainant has filed documents and affidavit in support of his claim.
6. The opposite party no.1 the Oriental Insurance Company has filed its reply and has also raised certain preliminary objections. It is submitted that the complaint is not maintainable against the insurance company as there is no -5- deficiency in service on the part of the insurance company as the company has settled the claim and the complainant has duly accepted claim amount in full and final settlement by signing discharge voucher. The Commission has no jurisdiction to entertain the complaint as dispute is not more than Rs.20lacs. The complaint is not maintainable within the purview of the Consumer Protection Act, 1986 as the complainant is a commercial organization and is not doing the business for livelihood. The letter sent by the complainant was received on 04.10.2013 i.e. after two months and ten days from the date of receiving the amount was after thought with intention to snatch more money from the company and to take undue benefit under the policy of insurance after receiving the amount in full and final settlement of the claim.
7. It has been further submitted that Surveyor and Loss Accessor is a Government approved independent surveyor and not an employee of the company and therefore his report is independent and cannot be questioned. It has been totally denied that the surveyor has illegally without any justification has carried out deductions which are not in accordance with the terms and conditions of the policy. It is denied that that the insurance company compelled and forced the complainant to receive the amount lesser than assessed by the surveyor. It has been further submitted that there is no deficiency in service on the part of the insurance company as the company has settled the claim and make payment of Rs.1,10,40,095/- which complainant has accepted in full and final settlement of his claim. Thus the complaint be dismissed with cost.
8. The opposite party no.2 bank has also filed reply stating that the dispute is in between the complainant and the opposite party no.1 the insurance company. The complainant has CC account with the bank. The insurance company settled the claim of the complainant to the tune of Rs.1,10,40,095/- which was deposited in his CC account with the bank. The complainant has challenged the surveyor's report, alleged deficiency in service on the part of the insurance company in not settling the claim. The complainant not sought any -6- relief from the opposite party no.2 bank. Therefore, the complaint so far it relates to opposite party no.2 be dismissed.
9. Learned counsel for complainant has mainly argued that the surveyor has illegally and without any justification has carried out deductions under different heads such as Vat Tax, Dead Stock Factor, Excess 5%, premium for hazardous risk and difference of amount towards damaged stock which comes to Rs.42,24,060.35/- is not in accordance with the terms and conditions of the policy. The terms and conditions of the policy issued nowhere contemplates such deductions therefore, the complainant is entitled to receive Rs.42,24,060.35/-
10. Learned counsel for opposite party no.1 the insurance company has argued that the complaint is not maintainable as the company has finally settled the claim for which the complainant was fully agreed and satisfied and he voluntarily signed the discharge voucher with full and final settlement of the claim without any protest and accepted the amount. Learned counsel for opposite party no. 2 bank has argued that the complainant have a CC account with their bank and the insurance company after settling the claim has paid the amount which was deposited in the CC account of the complainant with the bank. The dispute is in between the complainant and the insurance company and the bank is nowhere liable for any deficiency in service as the complainant has not claimed any relief from the bank.
11. The questions which arise for our consideration in this complaint are 1) Whether the complainant is a consumer? 2) Whether the complaint is maintainable under the Consumer Protection Act, 1986? 3) Whether there is deficiency in service on the part of the insurance company in not making payment of adequate amount and 4) Relief.
12. After hearing learned counsel for parties and on going through the complaint, documents, reply of opposite parties and other evidentiary material we find that it is an admitted position that the complainant carries on wholesale -7- business of electrical appliances and he obtained a Standard Fire and Special Perils policy for a period of one year i.e. from 02.12.2011 to 01.12.2012 for a sum insured of Rs.1,60,00,000/- for the entire stock kept in godown where fire broke out on 13.11.2012 i.e. the Deepawali day at about 11.30 pm. Learned counsel for opposite party insurance company took defence that the complaint is not maintainable within the purview of the Consumer Protection Act, 1986 as the complainant is a commercial organization and is not doing the business for livelihood. Here the complainant had obtained insurance policy for covering the risk of electrical appliances kept in his godown of which he was doing wholesale business, thus the complainant availed services of the insurance company. The decision of the National Commission in Harsolia Motors Vs National Insurance Company Limited I (2005) CPJ 27 (NC) on this point is very clear wherein the National Commission has held that "Hiring of services of insurance company by complainants who are carrying on commercial activities cannot be held to be a commercial purpose- Policy is taken for reimbursement or indemnity for loss which may be suffered due to various perils- No question of trading or carrying on commerce in insurance policy- Contract of insurance generally belongs to general category of contract of indemnity- Services may be for any connected commercial activity, yet it would be within purview of the Consumer Protection Act, 1986."
13. So far as the second submission of learned counsel for opposite party insurance company is concerned that this Commission has no jurisdiction to entertain the complaint as dispute is not more than Rs.20lacs, whereas from the complaint itself it is clear that the complainant had claimed the amount of Rs. 42,24,060.35/- for the certain deductions of the claim which were made by the surveyor. So far as the third submission of the insurance company is concerned that the complaint is not maintainable against the insurance company as there is no deficiency in service on the part of the insurance company as the company has settled the claim and the complainant has duly accepted claim amount in full -8- and final settlement by signing discharge voucher. The complainant has specifically mentioned in his complaint that the insurance company compelled and forced the complainant to receive the amount lesser than assessed by the surveyor and to execute the discharge voucher and misrepresent the facts that the balance amount shall be paid after seeking due permission from the Regional Office. When the balance amount was not paid, the complainant sent a letter through Email on 01.08.2013 requesting to send all the details and all documents along with copy of surveyor's report which was never sent. Then on 30.09.2013 sent a protest letter (At page 50 of the paper-book) to the insurance company which was received by the insurance company on 04.10.2013 wherein it has been clearly written that earlier it was stated that the details and breakup of the payment shall be intimated within one month but till date nothing has been received from your end. The complainant through this letter raised objection regarding payment of Rs.1,10,40,095/- against the claim of Rs.1,57,69,589/- and has clearly written that I am totally dissatisfied towards the payment of claim given to me and the said amount was accepted by me on the assurance that the remaining amount shall be paid within one month but till date it has not been paid. The insurance company not replied to this letter also. Thus it cannot be said that the complainant has accepted the amount in full and final settlement of the claim and therefore the objection of the counsel for opposite party insurance company is of no help.
14. In view of the above it is clear that the complainant is a consumer and the complaint is maintainable under the provisions of the Consumer Protection Act, 1986
15. Now the third question is whether there is any deficiency in service on the part of the insurance company is concerned, the Surveyor S. Soni & Co. vide its report dated 13.03.2013 which is at page 20 to 39 in the paper book has finally opined that "In my opinion the insured had suffered a loss of -9- Rs.1,12,94,709.43 which is a fair indemnity to them and may be paid to them subject to terms and conditions of the policy". The Surveyor assessed the loss on three basis (i) Physical Verification Method (ii) Trading Account Method and (iii) As per Bank Stock Statement and in clause 23 of his report, he compared the assessment of loss by alternative method. Clause 23 of his report is as under:
23.0 COMPARISON OF LOSS BY ALTERNATIVE METHOD Based on the above calculations of loss on alternative methods we compare the loss as under:
Trading Account Method Bank stock statement Stock Register & Physical Verification Method Rs.13,629,067.00 Rs.15,682,445.73 13,013,180.24 From the comparison of the above table it could be ascertained that loss as per physical verification method is lowest.
Hence we have adopted conservative approach and considered loss assessment as per physical verification method of Rs.13,013,180.24 and the same is most appropriate in the given set of circumstances of the case.
Thereafter in clause 28 of his report he had given summary loss assessment.
Gross Losss Assessed Trade Discount Dead Stock Factor @5% Salvage Average Clause Net Loss Assessed(Rs) 13413550.87 400370.63 650659.00 555985.00 NIL 11806536.24 Less: Excess Clause @5% as per policy
-590326.81 Add Fire Fighting Expenses 78500.00 Net Loss Payable 11294709.43
16. From the above summary it is clear that he assessed the net loss payable to Rs.1,12,94,709.43. In clause 29 of his report under the heading Vat paid on destroyed goods he has written "However the insured had not reversed the VAT till date hence we are assessing the loss excluding VAT. If the VAT authorities raised any notice and the insured paid reverse the VAT and provide the proof, the same may be payable in addition to the loss assessed now. We are also computing the loss including VAT in Annexure-I and the gross loss including VAT comes to Rs.1,51,81,197.13 and the VAT amount comes to -10- Rs.17,46,509.47." From the above it is clear that the Surveyor assessed the net loss payable Rs.1,12,94,709.43 and VAT amount to Rs.17,46,509.47.
17. The insurance company after receiving the Surveyor's report not paid the amount to the complainant as per net loss payable as assessed by the Surveyor Rs. 1,12,94,709.43 and took a step further and send the claim to the Regional Office, Indore (Page105-106 of the paper-book). The Regional Manager again after making certain deductions recommended the claim to Head Office for approval of Rs.1,12,75,632.92. Again the officials of the head office made certain deductions and recommended the claim for approval of Rs.1,10,40,095.48 which was approved by the Deputy General Manager and thereafter the said amount of Rs.1,10,40,095.48 was paid to the complainant. The Regional Office and Head Office failed to give any justification that why and how the net amount as assessed by the surveyor was reduced again and again meaning thereby at every stage. Here we would like to mention that the Surveyor appeared before us and in very straight forward manner submitted that the insurance company cannot deduct any amount from the amount assessed by him. This act of the insurance company clearly shows deficiency in service on their part.
18. That here it shall be worth mentioning, that from the perusal of the survey report it is seen that the surveyor has assessed the loss amounting to Rs. 1,12,94,709.43 but after deduction by the higher officials/authorities of the insurance company, the amount assessed by the surveyor has been reduced to Rs.1,10,40,095.48 and the said amount was paid to the complainant by way of disbursement voucher. In this way, the insurance company has paid an amount of Rs.2,54,613.75 less than what has been assessed by the surveyor. No convincing reasons have been assigned by the counsel and the Regional Manager of the insurance company for the said deductions.
19. So far as the question of deductions made by the surveyor under Dead Stock Factor and Excess Clause is concerned, there is nothing in the -11- terms and conditions of the policy supplied to complainant, regarding deductions made under Dead Stock Factor and Excess Clause. Counsel for insurance company and the Regional Manager Shri K. John Prasad who appeared in all the hearings were repeatedly asked to explain the deductions made in the survey report under the VAT, Dead Stock Factor and Excess Clause but they failed to do so. Thus we are of the opinion that the Surveyor has wrongly deducted the amount under Dead Stock Factor to the tune of Rs.6,50,659/- and under Excess Clause Rs.5,90,326.81.
20. So far as the question of deduction made by the Insurance Company under VAT is concerned, the Surveyor has clearly opined that "However the insured had not reversed the VAT till date hence we are assessing the loss excluding VAT. If the VAT authorities raised any notice and the insured paid reverse the VAT and provide the proof, the same may be payable in addition to the loss assessed now. We are also computing the loss including VAT in Annexure-I and the gross loss including VAT comes to Rs.1,51,81,197.13 and the VAT amount comes to Rs.17,46,509.47." However, the insurance company also failed to establish that why the deduction under the VAT has been made whereas the complainant has filed different copies of notices from Commercial Tax Department and copy of notices under Section 23(1) of MPVAT Act,2002 for demand of payment of tax, interest, penalty, or any other dues payable under the Madhya Pradesh VAT Act, 2002 wherein penalty has also been imposed on him. Here we would like to say again that the Surveyor in his report has clearly stated that if the VAT authorities raised any notice and the insured paid reverse the VAT and provide the proof, the same may be payable in addition to loss assessed and he assessed the VAT amount to Rs.17,46,509.47. From the provisions of the MPVAT Act, it is very clear that the amount of Sales Tax or VAT collected by the selling dealer in his invoice forms part of purchase price in the hands of the purchasing dealer.
-12-21. The Hon'ble High Court of A.P. in the case of Central Wines Vs Special CTO (1982) 49 STC, page 83 has held that:
Valuable Consideration: "Price" is the amount of consideration which a seller charges the buyer for parting with the title to the goods. It comprises of the amount which the dealer himself had to pay for the purchase of the goods, the expenditure which he had to incur for transporting these from the place of purchase to the place of sale, the duties, if any, levied on the particular goods purchased by him, the octroy duty which he may have had to pay during the course of the transport of the goods and his own margin of profit after meeting the handling charges including interest on the capital invested. The entire amount of consideration including the sales tax component which the purchaser pays constitutes the price of the goods."
22. The said judgment has been affirmed by the Supreme Court reported in (1987) 65 STC Page 48. Similarly, the National Commission in Vivek Gupta Vs Today Homes & Infrastructure Pvt. Ltd. II (2017) CPJ 262 (NC) has held that service tax and VAT cannot be excluded to sale price in order to determine the value of service in terms of provisions of the Consumer Protection Act, 1986. Thus we find that the surveyor has wrongly made deductions under the head of VAT and the complainant is entitled to get the amount deducted under the VAT.
23. So far as the claim of the complainant of Rs.11,19,713/- towards difference of amount towards damaged stock as per bank stock statement is concerned counsel for complainant repeatedly asked to explain the details, statement regarding his but he failed to explain the genuineness of such claim and on the last date of hearing he fairly conceded that he is not claiming that much amount. So far as the claim of the complainant for Rs.49,169/- towards premium for hazardous risk for three years is concerned, we failed to understand that why complainant is claiming that amount. That is the amount towards -13- premium for hazardous risk for three years and he is bound to pay to the insurance company if the stock contains hazardous articles/appliances.
24. In view of the above facts and circumstances that the Surveyor and the insurer both have wrongly deducted certain amounts from the legitimate claim of the complainant. The surveyor has deducted the amount under VAT, Dead Stock Factor and Excess Clause whereas the insurance company straight forward reduced the loss assessed by the Surveyor from Rs. 1,12,94,709.43 to 1,10,40,095.48. The defence was taken that deductions were made according to terms and conditions of the policy whereas opposite party insurance company failed to show such terms and conditions of the policy. During hearing of the case, learned counsel for the insurance company placed before us a copy of different policy to strengthen their claim. The National Commission in HDFC Ergo General Insurance Company Limited Vs Rachhpal Singh 2013 (1) CPR 326 (NC) has held that Insurance company is duty bound to supply terms and conditions of the policy to the insured. Here in the present case the terms and conditions of the policy are silent towards deductions made by the surveyor. Here we would like to mention that the Surveyor has also not assigned reasons as to how he made deductions under VAT, Dead Stock Factor and Excess Clause. It is well settled that though report of surveyor is an important pied of evidence but it is not sacrosanct and cannot be believed if not supported by cogent evidence.
25. The Hon'ble Supreme Court in New India Assurance Company Limited Vs Pradeep Kumar IV (2009) CPJ 46 (SC) has held that the surveyor's report is not the last and final word for settling an insurance claim. It is not that sacrosanct or conclusive that it cannot be departed from. The National Commission in case of National Insurance Company Limited Vs Giriraj Proteins IV(2012) CPJ 151 (NC) has held that Report of surveyor is not the last and final word. It is not a conclusive proof and can -14- be ignored if it is perverse or arbitrary based on mere inferences or surmises and/or in suspicion.
26. So far as the question of terms of insurance contract is concerned, it is too well settled position of law that the terms of the policy are to be very strictly constituted and the Forums are expected to give paramount importance to the terms of insurance contract entered into between the parties. It is equally true that where the terms of policy are capable to two interpretation then the interpretation favoring the insured must be accepted. There is a catena of cases wherein the Hon'ble Supreme Court and the National Commission has propounded the law on this subject. We feel it needless to quote them. Thus, it goes without saying that the Forums adjudicating a consumer dispute pertaining to the contract of insurance cannot add or substract anything to the terms of contract.
27. In a contract of insurance where a particular term of the policy is silent for the consequences over certain point, the Forum shall have to take it as it is. Meaning thereby that neither the insurer nor its Surveyor can be permitted to substitute its own notion over and above the stipulated specific term of the contract. In such a situation if the insurer on the pretext of the report of Surveyor wants to substitute its own whims to derive financial advantage, that can never be permitted at any cost.
28. The conduct of the surveyor who misinterprets the policy conditions or presumes a fact to exist is an arbitrary act which deserved condemnation. It being wholly arbitrary cannot be approved by this Commission and such report thereby renders itself to be ignored. The conduct of the insurer or of the surveyor who suomoto supplements anything of its own, this very act is indicative of glaring example of arbitrariness on the part of the surveyor and thereby of insurer. This leaves us in no doubt that such a report straight way deserves to be ignored and such a report cannot be made use to support the contentions of the insurer.
-15-29. In view of the above discussion we are of the view that the insurance company has committed deficiency in service in making deductions in the amount as assessed by the surveyor and under the different heads like VAT, Dead Stock Factor and Excess Clause and in our opinion the complainant is entitled to get the amount deducted under VAT, Dead Stock Factor, Excess Clause. The Surveyor has assessed the net loss payable Rs.1,12,94,709.43 and the insurance company reduced the said amount to Rs.1,10,40,095.68 and had paid the same to the complainant, the difference of such amount comes to Rs.2,54,613.75 the complainant is also entitled to get this amount from the insurance company. The amount under VAT which surveyor has assessed is Rs. 17,46,509.47, the amount deducted under Dead Stock Factor is Rs.6,50,659.00 and the amount deducted under Excess Clause is Rs.5,90,326.81, the total of which comes to Rs. 32,42,109.03. In our opinion the complainant is entitled to get this much amount from the opposite party no.1 the insurance company.
30. In the result, the complaint is allowed and the opposite party insurance company is directed to pay Rs. Rs. 32,42,109.03 to complainant along with interest @ 6% p.a. from the date of filing of complaint i.e. 31.12.2013 till payment within a period of one month from the date of order failing which the amount shall carry interest @ 8% p.a. The insurance company shall also pay to complainant Rs.10,000/- as cost of the proceedings.