National Consumer Disputes Redressal
M/S. Tirupati Vinyl India Private ... vs United India Insurance Company Limited on 12 May, 2022
Author: R.K. Agrawal
Bench: R.K. Agrawal
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 495 OF 2013 (Against the Order dated 07/05/2013 in Complaint No. 65/2011 of the State Commission Rajasthan) 1. M/S. TIRUPATI VINYL INDIA PRIVATE LIMITED Through its Director Mr. Keshav Bihani, C/o. S-1, Usha Plaza, M.I. Road, JAIPUR-302001 RAJASTHAN ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE COMPANY LIMITED Through its Regional Office, 20, Mohan House, Transport Nagar, JAIPUR RAJASTHAN ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE R.K. AGRAWAL,PRESIDENT HON'BLE DR. S.M. KANTIKAR,MEMBER
For the Appellant : For the Appellant : Mr. Nimit Mathur, Advocate For the Respondent : For the Respondent : Mr. Shubham Arora, Advocate
Dated : 12 May 2022 ORDER
1. The present Appeal has been filed against the Order dated 07.05.2013 passed by the State Consumer Disputes Redressal Commission, Rajasthan at Jaipur (hereinafter to be referred to as "State Commission"), whereby the Complaint filed by the Complainant was partly allowed and the Respondent was directed to pay ₹16,40,262/- to the Complainant, being the full and final settlement after loss assessed by M/s Apex Assessors Pvt. Ltd/ the Second Surveyor. The Respondent was also directed to pay interest @9% on the above amount from 01.06.2010 till date of realisation along with ₹1,00,000/- payable towards mental agony and hardships.
2. Brief facts of the case as narrated in the Complaint are that the Complainant, a company incorporate under the Companies Act, 1956, is engaged in the business of manufacturing and selling of products made from plastic. Complainant had taken a "Standard Fire and Special Perils Policy" bearing Policy No. 140400/11/09/11/00000627 from the Respondent, United India Insurance Company Limited (hereinafter referred to as the Insurance Company) for a sum of ₹1,00,00,000/- from 26.08.2009 to 25.08.2010 for covering risk of "storage of Non-hazardeous goods subject to warranty that goods of Category I, II, III, Coin waste, Coin fibre, Caddies are not stored therein." Unfortunately, on 29.10.2009, fire broke in nearby Indian Oil Corporate Limited (IOCL) fuel Storage and Distribution terminal situated in the RICCO industrial Area. The fire continued for two hours resulting in huge loss of property and life. The factory of the Complainant being closely situated (50 meters away) caught fire and caused severe damage to the building and the goods kept therein. The Complainant informed the Respondent Insurance Company about the fire incident on 09.12.2009 and submitted a claim of ₹85,00,000/- alongwith statement of property destroyed and damaged. The Respondent appointed a surveyor being Mr. Shyam Lal Agarwal, who assessed the loss of ₹35,72,791/- [in the Complaint it is mentioned as ₹37,26,103/-] vide Survey Report dated 24.12.2009.
3. Pertinently, IOCL, on the insistence of the Ministry of Petroleum, Government of India had released an amount of ₹ 50 crores to be distributed to the units affected by the fire incident through RICCO. The Surveyor report prepared by Mr. Shyam Lal Agarwal was submitted before RICCO. In compliance of directions of the Hon'ble Rajasthan High Court, RICCO made payment of 40% of the amount assessed by the Surveyor in his report dated 24.12.2009, i.e., ₹ 14,63,953/- towards adhoc relief against damages caused due to IOC fire incident, was paid to the Complainant Company.
4. The Respondent Insurance Company, appointed another Surveyor being M/s Apex Assessors Pvt Ltd, who assessed the loss at ₹15,52,317/- vide survey report dated 03.10.2011. Despite that, the Respondent Insurance Company did not settle the Claim of the Complainant. Aggrieved by the actions of the Respondent Insurance Company, the Complainant filed Complaint before the State Commission alleging deficiency in service on the part of the Respondent Insurance Company with the following reliefs:-
"A. That the application of the Complainant Company should be accepted and the orders to be passed against the defendant company an amount of ₹37,26,103/- along with interest payable at the rate of 12% per annum till the date of payment for not settling the claim of the Complainant Company for more than two years time without any reason.
B. That the Complainant Company had to suffer heavy losses due to the non-settlement of the claim by the defendant insurance company for more than two years and had to face mental harassment and problems and also bad impact has been arrived on the goodwill of the Complainant Company. For the compensation of all this an order for grant of a compensation amount of ₹2,00,000/- should be passed in favour of the Complainant Company and against the defendant insurance company.
C. That the Complainant Company for the litigation expenses an order for the grant of an amount of ₹21,000/- should also be passed in favour of the Complainant Company and against the defendant insurance Company."
5. The Respondent Insurance Company contested the Complaint before the State Commission. Pertinently, Respondent has not controverted the facts of loss to the unit, however, contends that it had settled the claim for ₹16,40,262/- and accordingly discharge receipt was sent to the Complainant on 17.11.2011, but the Complainant refused to accept the amount. Therefore, Respondent alleged that there is no deficiency on its part. It was also submitted by the Respondent Insurance Company that the Complainant had received a sum of ₹14,63,953/- as ex-gratia payment from the Indian Oil Corporation for the same loss and therefore, this amount should be adjusted as the Complainant cannot be compensated twice for the same loss.
6. After hearing both the parties and perusal of material on record, the State Commission framed the following points for determination:
i. Whether the opposite party can adjust the ex-gratia amount received by the complainant;
ii. Whether the opposite party was justified in seeking an expert opinion on the report of Shyam Lal Agarwal;
iii. Whether any deficiency in service was proved on the part of opposite party;
7. The State Commission whilst dealing with the first issue, responded to the same in negative, holding that the Respondent cannot escape its contractual liability and that it is obliged to honour its contractual obligations, irrespective of the fact, whether the Complainant received ex-gratia assistance from any other source. The State Commission further held that the ex-gratia payment was made to the affected units by IOCL on humanitarian and compassionate grounds following the devastating fire, the immediate help given to the victims was for the hardship, mental agony, loss of livelihood, loss of business, etc. the Respondent while indemnifying the insured will not take into account the hardships which the victims had to undergo.
8. With respect to the second point of determination, the State Commission held that the Insurance Company has a right to seek other advice, if there are strong reasons to justify it and that the Insurance Company is not bound to accept the report of surveyor.
9. Lastly, the State Commission, whilst dealing with the third point held as under:
"Having gone through the record we find that surveyor Sh. Shyamlal Agarwal had submitted its report to the Opposite Party on 24.12.2009. The Opposite Party did not settle the claim for almost two years. It obtained the report of M/s Apex Assessors Pvt. Ltd. in October, 2011. The assessed amount was offered to the complainant on 15.11.2011. There is no explanation on record for delay of almost two years in settling the claim. Complaint was presented on 17.10.2011, thereafter the Opposite Party offered the amount to the Complainant. The inordinate delay of almost two years in settling the claim, in our opinion amounts to deficiency on the part of the opposite party. Secondly, if the complainant did not accept the claim amount it could have been deposited with the State Commission. We are not inclined to accept the argument of learned counsel for the Opposite Party that they will not incur any liability of interest as the amount was offered on 15.11.2011."
10. Aggrieved by this Order, the Appellant has filed the present Appeal before this Commission.
11. Mr. Nimit Mathur, learned Counsel appearing for the Appellant Company has strenuously argued that the survey report dated 03.10.2011 was submitted after two years of the fire incident and that the second surveyor had not visited the factory premises at any point of time and that the survey report only records analysis and opinion of the surveyor after passing of two years of the fire incident which had occurred on 29.10.2009. He further contends that the First Surveyor in his Report had stated that the full structure of the building got damaged which needs to be rebuilt and repairing is not at all possible, indicating that the damage caused to the building of the factory of the Appellant Company was huge and devastating. On the contrary, the Second Surveyor, without any justification and physical inspection submitted a fictional report thereby restricting the claim of the Appellant herein to a meagre amount.
12. He has placed reliance on judgment passed by the Hon'ble Supreme Court in "The New India Assurance Co. Ltd Vs M/s Protection Manufacturers Pvt Ltd [(2010) 7 SCC 386]" wherein, whilst referring to section 64-UM of the Insurance Act, 1938, it was held that the Insurance company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing a surveyor unilaterally. He also relied on judgment dated 19.01.2012 passed by this Commission in "M/s Jagannatha Poultries Vs New India Assurance Co. Ltd." [OP No. 73 of 2002], wherein, whilst relying on the view taken by the Hon'ble Supreme Court in The New India Assurance Co. Ltd Vs M/s Protection Manufacturers Pvt Ltd (Supra), this Commission discarded the appointment of Second Surveyor as not being in accordance with provisions of Section 64-UM of the Insurance Act, 1938. In view of the Judgment, he submitted that the Appellant Company is entitled to get the amount of ₹37,26,103/- as assessed by the First Surveyor Sh. Shyamlal Agarwal against the loss suffered by it.
13. Per contra the Mr. Shubham Arora, learned Counsel for the Respondent Insurance Company has submitted that there is no deficiency in service since vide letter dated 15.11.2011, the claim of the Complainant was accepted to the extent of ₹ 16,40,262/- and the discharge voucher as well as the full and final settlement claim along with want of KYC document, i.e., copy of Income Tax Returns, PAN, electricity bill were sought by the Respondent Insurance Company, however, the Complainant did not provide the required documents and instead preferred to file Consumer Complaint before the State Commission. He further submitted that the Respondent Insurance Company again informed the Complainant vide letter dated 29.11.2011, that the claim has been settled according to the latest estimate of the repairs/construction, which were provided by the Engineer of the Complainant itself, further keeping in mind that the subject factory building and plant was in a very poor condition, unoccupied, abandoned, poorly maintained and due to heavy manufacturing losses, the manufacturing activities were shut down wherein sanitary and electric fittings were not properly installed. In view of the circumstances as enlisted and after due assessment of reports of Shri Shaym Lal Agarwal and Shri Vinod Mehta (Chartered Accountant and registered valuer) the claim was settled at ₹16,40,262/- and therefore, there is no deficiency or any type of default in services provided by the Respondent Company. He prayed that the Appeal be dismissed.
14. We have heard Mr. Nimit Mathur, learned Counsel for the Appellant, Mr. Shubham Arora, learned Counsel appearing on behalf of the Respondent Insurance Company, perused the averments made in the Complaint, Written Version and have given a thoughtful consideration to the various pleas raised by the Parties.
15. As far as the appointment of second surveyor is concerned, the Hon'ble Supreme Court in "The New India Assurance Co. Ltd. vs. M/s. Protection Manufacturers Pvt. Ltd." (2010) 7 SCC 386, has discarded the report of the Second Surveyor by observing as under:-
"28. Mr Piyush Gupta then submitted that Section 64-UM of the Insurance Act, 1938, which provides for licensing of surveyors and loss assessors, would be attracted to the facts of this case and instead of appointing another surveyor, as was done in the instant case by the appointment of M/s J. Basheer & Associates, the Insurance Company ought to have gone to the Regulatory Authority under the Insurance Regulatory and Development Authority Act, 1999, and under sub-section (3) it was for the said Authority to call for an independent report from any other approved surveyor or loss assessor specified by it.
.......
43. The submissions of Mr Piyush Gupta in regard to Section 64-UM of the Insurance Act, 1938 are also of substance, as the appellant Insurance Company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing M/s J. Basheer & Associates for the said purpose unilaterally. The reports submitted by M/s J. Basheer & Associates are liable to be discarded on such ground as well."
16. This Commission had also dealt with the issue vide Order dated 19.01.2012 passed in Original Petition No. 73 of 2022 entitled "M/s. Jagannatha Poultries vs. New India Assurance Co. Ltd." and had held as under:
"Having considered the above submissions, we are of the considered opinion that while it is permissible to appoint a second surveyor to assess the loss but this must be for given reasons and only through the auspices of the Regulatory Authority i.e. IRDA. Counsel for the opposite party-Insurance Company fairly admitted that the reasons for appointing a second surveyor is not disclosed to the complainant though there may be valid reasons and the permission of the IRDA was not obtained for appointment of the second surveyor. Therefore, strictly speaking going by the view taken by the Supreme Court in the case of New India Assurance Co. Ltd., Vs. M/s. Protection Manufacturers Pvt. Ltd., (Supra) there is no escape from the conclusion that the appointment of second surveyor viz. S.C. Senapati was not in accordance with the provisions of Section 64-UM of the Act, and therefore the said report of such surveyor must be discarded and cannot form valid basis for the settlement of the insurance claim of the complainant. The plea of the counsel for the opposite party that the appointment of the second surveyor was necessitated on account of the glaring defect in the report of the first surveyor M/s. Mehta & Padamsey even if it has weight will not survive. Accordingly, we hold that the insurance company ought to have settled the claim of the complainant as per the assessment made by the first surveyor-M/s. Mehta & Padamsey Pvt. Ltd. i.e. at ₹ 65,76,317/-"
17. We are of the considered opinion that the present case is squarely covered by the principle laid down by the Hon'ble Supreme Court in "The New India Assurance Co. Ltd. vs. M/s. Protection Manufacturers Pvt. Ltd. (supra) and the Order passed by this Commission in "M/s. Jagannatha Poultries vs. New India Assurance Co. Ltd. (supra)". Consequently, the Respondent Insurance Company is directed to settle the claim of the Appellant Company as per the assessment made by the first surveyor - M/s. Shyamlal Agarwal, i.e., at ₹35,72,791/-
18. As far as the contention of the Insurance Company that they offered the assessed amount to the Appellant on 15.11.2011 but it did not come forward to accept the said amount and therefore, they are not liable to pay interest, is concerned, we agree with the view taken by the State Commission by holding that if the Complainant did not accept the claim amount it could have been deposited with the State Commission and the inordinate delay of almost 2 years in settling the claim, amounts to deficiency in service on the part of the Respondent Insurance Company, for which they are liable to pay interest on the assessed amount.
19. For the reasons stated hereinabove, the Appeal is partly allowed and the Respondent Insurance Company is directed pay a sum of ₹35,72,791/- to the Appellant Company alongwith interest @9% p.a. from the date of filing of the Complaint till realisation. The Order passed by the State Commission stands modified accordingly. Keeping in view the peculiar facts and circumstances of the case, there shall be no order as to costs.
......................J R.K. AGRAWAL PRESIDENT ...................... DR. S.M. KANTIKAR MEMBER