State Consumer Disputes Redressal Commission
Gauhati Grain Traders vs The Oriental Insurance Co. Ltd. on 3 July, 2004
IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION IN THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION MEGHALAYA, SHILLONG C.P. NO.2 (M) OF 2001 Gauhati Grain Traders Shillong ........ Complainant -Vs- The Oriental Insurance Co. Ltd. Shillong & Ors. ........ Opposite Parties B E F O R E THE HON'BLE MR. JUSTICE N.S. SINGH, PRESIDENT THE LEARNED MEMBER SHRI RAMESH BAWRI THE LEARNED MEMBER SMT. A.S. RANGAD For the Complainant : Shri L. Lyngdoh Advocate For the Opposite Parties : Smt. T. Yangi Advocate Date of Order : 3.7.2004 O R D E R
Ramesh Bawri, Member - The Complainant firm, a wholesale dealer in food grains, insured its Stock-in-Trade, whilst contained in its shop and its godown, both situated at G.S. Road, Shillong, in the same building, by two separate policies, with The Oriental Insurance Co. Ltd., the Opposite Parties, (hereinafter referred to as `Oriental' or `Insurance Co.')
2. The stock contained in the shop was insured for a sum of Rs.15 lakhs for the period from 19.6.98 to 18.6.99 vide Fire Policy `A' No.322406/99/135 (which we will henceforth refer to as the `Shop Policy'). The godown stock was covered for a sum of Rs.20 lakhs vide Fire Policy `C' No.322406/99/190 covering the period 22.7.98 to 21.7.99, (hereafter, `the Godown Policy'). Both policies were issued by Oriental upon payment of the requisite premium and validity of these policies is not under dispute.
3. The undisputable facts of the case as revealed by the records are that in the early morning of 25.12.98 a fire broke out in the shop and godown premises of the Complainant which were covered under the aforesaid policies. This fact was immediately reported by the Complainant to Oriental over phone and subsequently by letter on 28.12.98. On 26.12.98 itself Shri S. Das Purkayastha, Surveyor and Loss Assessor, (hereinafter referred to as the `Preliminary Surveyor') visited the gutted premises under instructions from Oriental for the purpose of instituting enquiry, investigation and preliminary survey of the loss caused by the fire under the aforesaid policies and on 12.1.99 he submitted his preliminary report to Oriental.
4. On 26.11.98 Oriental also appointed M/s S.P. Incorporates, Guwahati, Surveyors, Loss Assessment and Valuers (hereinafter referred to as the `First Surveyor') to conduct egular survey of the loss. The first Surveyor, along with his associates conducted the Survey and assessment between 27.12.98 and 31.12.98 when the Complainant produced all required information, documents, and records as were available and required by the Surveyor. The first Surveyor submitted his final fire Survey Report to the Insurance Co. on 25.6.99 but neither the contents of the report not its copy was made available to the Complainant.
5. Even after receipt of the Survey report the Insurance Co. did not settle the claim of the Complainant despite the repeated requests made to Oriental vide its letters dated 12.8.99, 24.8.99 and 11.11.99. However, after almost one year of the incident, on 16.12.99 Oriental intimated its decision to make a lump sum payment of Rs.6,50,000/- against the shop policy, and a lump sum payment of Rs.8,50,000/-
against the godown policy, pending finalization of the claim of the complainant which was said to be under process. This total interim payment of Rs.15 lacs was received by the Complainant on 5.1.2000.
6. Thereafter, all of a sudden, the Complainant learnt from Oriental that they had deputed a new Surveyor, Shri M. Sarma (hereinafter `the 2nd Surveyor') to reassess the loss, after a lapse of nearly one year. The said Surveyor submitted a fresh report to Oriental on 24.2.2000 whereupon the complainant lodged a protest with Oriental and requested them to settle the full claim immediately in view of their financial crisis and problems in running their day to day business.
7. The complainant continued to write to Oriental vide their protest / reminder letters dated 24.4.2000, 12.5.2000. 6.7.2000 and 18.8.2000. Ultimately vide their letter dated 22nd August, 2000, Oriental informed the complainant that their claim under both the policies had been approved at Rs.26,41,541/- in full and final settlement, without specifying the amount against each individual policy. After deducting the interim payment of Rs.15,00,000/- already made, Oriental also sent a discharge voucher for the balance Rs. 11,41,541/- to the Complainant.
8. Upon being requested by the Complainant, on 13.9.2000 Oriental gave the break-up of the approved amount together with two separate vouchers, one amounting to Rs.7,57,645/- against the shop policy and another for Rs.3,83,896/- against the godown policy. Although, according to the Complainant, the details of the settlement under both the policies as reflected in Oriental's letter dated 13th Sept, 2000were absolutely inadequate and not in conformity with the actual loss suffered by the complainant, on 18.9.2000 the complainant signed and returned the discharge voucher for s.7,57,645/- against the shop policy despite which the Insurance Co. did not make any payment. Instead of issuing the Cheque under the shop policy claim for which discharge voucher had already been signed and returned by the Complainant, on 19.9.00 Oriental asked the complainant to also send the other discharge voucher for Rs.3,83,896/-.
9. On the one hand, vide its letters dated 22.9.00 and 30.10.00 the complainant kept on requesting the Insurance Co. to arrange immediate payment of the admitted sum of Rs.7,57,645/- against the shop policy, together with interest from the date of loss, as they were undergoing severe financial hardships and needed the money urgently; it also objected to the deduction of the sums of Rs.22680/- and Rs.12823/- from its claim. Further, the Insurance Co. was also requested to make payment of the undisputed amount of Rs.3,83,896/- against the Godown policy, without prejudice to its claim for the balance amount under the policy. The Complainant alleged in its letter dated 22.9.00, "It appears that you want to put undue pressure on us to ccept both the claims whether we are satisfied or not."
10. On the other hand, vide its letters dated 19.9.00, 13,10.00, 27.10.00 and 31.10.00, Oriental kept on pressing for the return of the other discharge voucher for Rs.383896/-
from the Complainant and resisted payment of the discharged sum of Rs.757645/-, even going to the extent of asking the Complainant to explain its reasons for not accepting the amount offered to it against the Godown policy, forgetting that the Surveyor's Reports had not even been furnished to the Complainant and in their absence it was not possible for it to give any cogent reasons for non- acceptance of the offered sum. Lastly, upon receipt of letter dated 7.11.2000 from the Complainant, the Insurance Co. did issue a cheque for Rs.7,57,645/- to the Complainant on 14.11.00.
11. Immediately thereupon, on 16.11.2000 the complainant lodged a protest with Oriental for non-payment of interest on account of delay in payment of their claim against the shop policy and also protested the deductions made on account of under-assessment of Rs.56852/-, recovery of Rs.22680/-
as premium and of Rs.12823/- as reinstatement of sum insured. The Complainant categorically stated as follows:
" We had received a sum of Rs 7,57,645/- as claim against above mentioned policy. We have received this amount under protest and not as full and final payment though you claim it as full and final settlement. We have already informed you vide our letter dated 7.11.00, 30.10.00 and 22.9.00 that we are entitled to get interest from the date of claim on account of undue delay made by you in settling our above claim. "
12. This was followed by a reminder on 25.4.01. By a separate letter dated 24.4.01 the Complainant again requested Oriental to pay its claim against the Godown Policy. On 2.6.2001 the Complainant also requested the Insurance Co. to supply copies of the reports of both the Surveyors to enable the complainant to consider the offer made by Oriental under the Godown policy but vide letter dated 6.6.01 the Insurance Co. refused to supply the copies of the Survey reports to the Complainant in the following words:
" Since survey reports are confidential and for the use of insurers, we regret that we will not be able to provide you with a copy of the same."
13. Finding no alternative, the Complainant approached this Commission for redressal of its grievances on 4.7.2001. The Complainant alleged that all the aforesaid actions and inactions on the part of Oriental constituted gross deficiency in service arising from negligence as well as adoption of unfair trade practices. The Complainant has asserted its right to be compensated under the Consumer Protection Act, 1986 (`the Act') by this Commission and has claimed payment of Rs.92,355/- being the balance amount payable against the shop policy and Rs.11,50,000/- as the balance amount against the godown policy, together with interest on account of delay in payment, both on the amounts already released by Oriental and also on the claims yet to be paid.
14. Oriental filed its affidavit-cum-showcause and stated that they had been processing and studying the case in detail which was a time-taking process as the claim involved a substantial amount of money and hence it took them time to settle the claims. They denied that they were guilty of any deficiency in service as they had settled the claim keeping in view the reports of the Surveyors. They reiterated that Survey Reports were classified and confidential documents meant for the use of Insurers and their legal advisors only. According to them the Second Surveyor was deputed to clear certain doubts and information in the Report of the first Surveyor. They also denied that there was any further amount payable to the Complainant either in respect of its Insurance Claim or as interest on account of delay in payment of the claim as, according to them, "there is no system of payment of interest on the claim."
15. We have heard at length the learned Counsels for both sides. During the course of hearing, upon direction issued by this Commission, the learned Counsel for Oriental also produced both the first and second survey reports for our examination.
16. According to the Complainant's Counsel, the actions of the Insurance Co. in appointing the second Surveyor after a lapse of many months from the date of the incident at the back of the complainant are with an ulterior motive and amount to an unfair trade practice. He submits that the Insurance Co. unreasonably delayed the settlement of the claim despite the receipt of several reminder letters and in view thereof the Complainant is entitled to be compensated for the delay in payment. Learned Counsel also states that the undue influence exerted by Oriental to sign the discharge voucher against the Shop Policy and the withholding of the cheque of Rs.7,57,645/- by the Insurance Co. until the Complainant signed the second discharge voucher in full and final settlement of the claim amounted to unfair trade practices as was the refusal of the Insurance Co. to supply copies of the Surveyors' Reports to them.
He lastly insists that the claim ought to have been paid in full by Oriental.
17. On the other hand, learned Counsel for Oriental has reiterated the stand taken by the Insurance Co. in its show-cause reply and denied any negligence, deficiency in service or unfair trade practice on their part. She has vehemently asserted that the Complainant is not entitled to any relief on any count.
18. The questions which arise for determination in this complaint petition are:-
a) Whether Oriental was justified in appointing the second Surveyor after the first Surveyor had already submitted his final report and whether reliance could be placed on the second Surveyor's Report?
(b) Whether the Complainant was entitled to copies of the survey reports and whether Oriental could rely thereupon without even furnishing to the Complainant copies thereof?
(c) Whether the Insurance Company could withhold payment of the admitted sum until the Complainant furnished a discharge note admitting the payment to be full and final ?
(d) Whether the Complainant is disentitled to any compensation on account of delay in payment of the claim having already executed the discharge voucher?
(e) Whether the Complainant is entitled to any relief and, if so, to what extent?
19. Before entering into the merits of the Complaint itself, it would be beneficial to examine the law, the judicial pronouncements already made by the various judicial authorities on these issues, including those which have been cited before us by the learned Counsel for the Complainant, supplemented by our own views on each issue:
Issue (a): Whether Oriental was justified in appointing the second Surveyor after the first Surveyor had already submitted his final report and whether reliance could be placed on the second Surveyor's Report?
20. In National Insurance Co.
Ltd. -vs- New Patiala Trading Co. [I (2003) CPJ 33 (NC)] the National Commission has held:
"Scheme of Section 64UM, (of the Insurance Act,1938) particularly of sub-section (3) and (4), would show that insurer cannot appoint second surveyor just as a matter of course. If the report of the surveyor or loss assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second surveyor. Appointment by the insurer of a second surveyor itself would be a reflection on the conduct of the first surveyor. Surveyor or loss assessor is duty bound to give a correct report. If the insurer-Insurance Co. finds that surveyor or loss assessor has not considered certain relevant points or has considered irrelevant points or for any other account it has reservation about the report, it can certainly require the surveyor or loss assessor to give his views and then come to its own conclusion, but insurer cannot certainly appoint a second surveyor-cum-loss assessor to counter or even contradict or rebut the report of the first surveyor. It is a statute which prescribes licensed surveyor or loss assessor who is to be appointed to assess the loss where it is equal to or more than Rs.20,000/-. Prima facie, therefore, credence will have to be given to the report of such approved surveyor or loss assessor."
21. In a recent decision of the National Commission reported in (2004) 9 CLD 884 (National Insurance Co. Ltd. -vs- Sardar Gurmit Singh) it has been reiterated that Surveyors are appointed by Insurance Companies under the provisions of the Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessments made by them.
22. The National Commission has emphasized in its order which is reported in (2003) 1 CLD 208 [Purar Textiles (P) Ltd. -Vs- New India Assurance Co. Ltd.] that Insurance Companies cannot go on appointing Surveyor one after the other endlessly till such time one of them carries out some fishing enquiries and raises some adverse inference against the insured to suit the requirements of the Insurance Companies. In the facts of that case the National Commission directed that the claim be settled on the basis on the assessment made by the first Surveyor.
23. Sri Lyngdoh has relied upon III (1994) CPJ 475 (Narendra Kumar Jain -vs- Branch Manager, New India Assurance Co. Ltd.) where Justice S.N. Phukan, President of the State Commission, Assam (as his Lordship then also was) held that on the very fact that another Surveyor went to the place of fire occurrence after 15 months, his report cannot be accepted, especially when the grounds on which the earlier Survey reports were rejected by the Insurance Co. were not proved by them by producing their records. The Commission therefore rejected the later Survey Report and accepted the earlier one where the Surveyor had visited the spot immediately when the fire incident occurred.
24. Yet another decision of the National Commission which Sri Lyngdoh has cited before us is the Oriental Insurance Co. Ltd. -vs- M/s Khemani Electronics [1994 (1) CPR 29]. There the National Commission refused to place any reliance upon a later survey report which was submitted about one year after the incident.
25. The Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000 which have been framed by the Insurance Regulatory and Development Authority and came into effect from 24.11.2000 have laid down the duties and responsibilities of a Surveyor and Loss Assessor in the following manner, vide Regulation 13 thereof: "13. (1) A surveyor and loss assessor shall, for a major part of the working time, investigate, manage, quantify, validate and deal with losses (whether insured or not) arising from any contingency, and report thereon, and carry out the work with competence, objectivity and professional integrity by strictly adhering to the code of conduct expected of such surveyor and loss assessor.
(2) The following, shall, inter alia, be the duties and responsibilities of a surveyor and loss assessor:-
(i) declaring whether he has any interest in the subject- matter in question or whether it pertains to any of his relatives, business partners or through material shareholding;
Explanation- For the purpose of this clause `relatives' shall mean any of the relatives as mentioned in Schedule 1A to the Companies Act, 1956;
(ii) maintaining confidentiality and neutrality without jeopardising the liability of the insurer and claim of the insured;
(iii) conducting inspection and re-inspection of the property in question suffering a loss;
(iv) examining, inquiring, investigating, verifying and checking upon the causes and the circumstances of the loss in question including extent of loss, nature of ownership and insurable interest;
(v) conducting spot and final surveys, as and when necessary and comment upon franchise, excess/under insurance and any other related matter;
(vi) estimating, measuring and determining the quantum and description of the subject under loss;
(vii) advising the insurer and the insured about loss minimisation, loss control, security and safety measures, wherever appropriate, to avoid further losses;
(viii) commenting on the admissibility of the loss as also observance of warranty conditions under the policy contract;
(ix) surveying and assessing the loss on behalf of insurer or insured;
(x) assessing liability under the contract of insurance;
(xi) pointing out discrepancy, if any, in the policy wordings;
(xii) satisfying queries of the insured/insurer and of persons connected thereto in respect of the claim/loss;
(xiii) recommending applicability of depreciation and the percentage and quantum of depreciation;
(xiv) giving reasons for repudiation of claim, in case the claim is not covered by policy terms and conditions;
(xv) taking expert opinion, wherever required;
(xvi) commenting on salvage and its disposal wherever necessary.
(3) A surveyor or loss assessor shall submit his report to the insurer as expeditiously as possible, but not later than 30 days of his appointment:
Provided that in exceptional cases, the aforementioned period can be extended with the consent of the insured and the insurer."
Although the Regulations were enforced from 24.11.00, we are of the view that the duties and responsibilities of the Surveyors laid down therein may be safely taken to be the responsibilities which existed even prior to 24.11.00, albeit in an uncodified form. In our view, unless a surveyor appointed by an Insurance Co. fails to carry out his duties and responsibilities enumerated above, the appointment of a second surveyor is unwarranted.
Issue (b): Whether the Complainant was entitled to copies of the survey reports and whether Oriental could rely thereupon without furnishing to the Complainant copies thereof?
26. Here it would be beneficial to look at Regulation 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders Interests) Regulations, 2002 which have been framed under the provisions of Section 114 A of the Insurance Act, 1938 read with Sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 and reads as follows:
" 9. Claim procedure in respect of a general insurance policy (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/claim, it shall be so done within 72 hours of the receipt of intimation from the insured.
(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires (underlining ours). Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report.
In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.
(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report:
Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured.
If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be (6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it."
27. From Regulation 9(2) itself it is abundantly clear that the Insured Party is entitled to a copy of the Surveyors Report and the Insurance Co. cannot be heard to say that it is a privileged, classified or secret document. Of course it needs to be mentioned here that the above-quoted Regulations were notified on 26.4.02 but we are not aware whether these have yet come into force by publication in the official Gazette. In any event, these Regulations would apply only to contracts of insurance effected after these come into force and therefore cannot be held to be directly applicable to the instant case. Yet we have drawn attention to these Regulations to emphasise what, in our view, has all along been the uncodified procedure which has now found expression in writing.
28. In Delhi Transport Corpn. -Vs- DTC Mazdoor Congress (AIR 1991 SC 101) a Constitution Bench of the Supreme Court held in para 199:
"It has also been held consistently by this Court that the Government carries on various trades and business activity through the instrumentality of the State such as Government Company or Public Corporation. Such Government Company or Public Corporation being State instrumentalities are State within the meaning of Art. 12 of the Constitution and as such they are subject to the observance of fundamental rights embodied in Part III as well as to conform to the directive principles in Part IV of the Constitution It is now well settled that the `audi alteram partem' rule which in essence, enforces the equality clause in Article 14 of the Constitution is applicable not only to quasi-judicial orders but to administrative orders affecting prejudicially the party in question unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here."
29. It is a well-settled rule of natural justice that no authority at the time of passing an order shall rely upon a document, copy of which has not been given to the person against whom the order is to be passed. It cannot be disputed that every person whose rights are being affected must be furnished with the information upon which any action is based and must be supplied with copies of the documents relied upon. Non-supply of such documents would violate the principles of natural justice and, in our view, such actions on the part of an instrumentality of the State, being prejudicial to the Complainant, would also constitute deficiency in service. The survey report cannot be said to be a document relating to the affairs of State nor would disclosure thereof be against the interest of the State or public interest and an Insurance Co. therefore has no right to withhold the survey report on the ground that it is a privileged document.
30. In AIR 1988 SC 719 ( National Insurance Co. Ltd. -vs- Jugal Kishore) it has been stated by the Supreme Court that the obligation of Instrumentalities of the State to act fairly can never be over-emphasized and it is the duty of the party which is in possession of a document which would be helpful in doing justice in the cause to produce the said document before a Tribunal or Court. In our opinion, there exists a similar duty to supply copies of such documents to the affected parties before the Insurance Companies can be said to have acted fairly.
Issue (c): Whether the Insurance Company could withhold payment of the admitted sum until the Complainant furnished a discharge note admitting the payment to be full and final?
31. It would be sufficient to recall here the following observations made by the National Commission in Madras Petro Chem Ltd. -Vs- National Insurance Co. Ltd. [(2003) 1 CLD 51]:
"In the case of K.L. Malhotra -Vs- Oriental Insurance Co. (Revision Petition No.532 of 1998) National Commission has taken a view that where insurance company had taken a decision that certain amount is due under the terms of the insurance policy it had to pay that amount to the insured and cannot insist that the amount will not be paid unless full and final settlement receipt is given to the insurance company".
Issue (d): Whether the Complainant is dis-entitled to any compensation on account of delay in payment of the claim having already executed the discharge voucher?
32. Learned Counsel for the Complainant has drawn our attention to the decision of the National Commission in Ginni Filaments Ltd. -vs- New India Assurance Co. Ltd. & Anr [1996(2) CPR 102] where it has been laid down that even after giving a full and final discharge receipt, a complainant can claim interest as compensation under the Act, in cases of delayed settlement of claim where there is deficiency in service due to negligence.
33. We find that in United India Insurance -vs- Ajmer Singh Cotton and General Mills and Ors [ (1999) 6 SCC 400 ] the Supreme Court has conclusively held:
" We have heard learned counsel for the parties and perused the record. It is true that the award of interest is not specifically authorised under the Consumer Protection Act, 1986(hereinafter called "the Act") but in view of our judgment in Sovintorg (India) Ltd. v. State Bank of India we are of the opinion that in appropriate cases the forum and the commissions under the Act are authorised to grant reasonable interest under the facts and circumstances of each case.
The mere execution of the discharge voucher would not always deprive the consumer from preferring claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered. Despite execution of the discharge voucher, the consumer may be in a position to satisfy the Tribunal or the Commission under the Act that such discharge voucher or receipt had been obtained from him under the circumstances which can be termed as fraudulent or exercise of undue influence or by misrepresentation or the like. If in a given case the consumer satisfies the authority under the Act that the discharge voucher was obtained by fraud , misrepresentation, undue influence or the like, coercive bargaining compelled by circumstances, the authority before whom the complaint is made would be justified in granting appropriate relief. However (sic, so), where such discharge voucher is proved to have been obtained under any of the suspicious circumstances noted hereinabove, the Tribunal or the commission would be justified in granting the appropriate relief under the circumstances of each case. The mere execution of the discharge voucher and acceptance of the insurance claim would not estop the insured from making further claim from the insurer but only under the circumstances as noticed earlier. The Consumer Disputes Redressal Forums and Commissions constituted under the Act shall also have the power to fasten liability against the insurance companies not withstanding the issuance of the discharge voucher. Such a claim cannot be termed to be fastening the liability against the insurance companies over and above the liabilities payable under the contract of insurance envisaged in the policy of insurance. The claim preferred regarding the deficiency of service shall be deemed to be based upon the insurance policy, being covered by the provisions of Section 14 of the Act."
34. Another case where a similar argument was raised by Oriental is M/s Karam Industries and Ors. -Vs- the Oriental Insurance Co. Ltd. [2003 (2) CPR 60 (NC)]. There the National Commission laid cannot also be denied that Oriental is an Instrumentality of the down that a consumer is not estopped from making further claims against the Insurance Co. in cases of unexplained delay in settlement of claim, even after executing a receipt indicating full and final discharge of their claim against the Insurance Co. when it appeared to be a case of coercion and undue pressure.
35. In the recent case of New India Assurance Co. Ltd. -Vs- Shiv Khanna [2004 (2) CPR 14 (NC)] the Apex Commission has held that if settlement of a claim is protested within a reasonable period by the claimant then there is a ground to reopen the issue and the complainant was within his rights to prefer a claim before the Consumer Forum alleging deficiency in service. The Commission held that two weeks was a reasonable period for lodging a protest with the Insurance Co.
Issue (e): Whether the Complainant is entitled to any relief and, if so, to what extent?
36. As has been emphasized by the National Commission in M/s Raj Kamal & Co. -vs- M/s United India Insurance Co. Ltd. (Page 1688, NC and SC on Consumer Cases 1986-1996), on receipt of the report of the surveyor, it is for the Insurance Co. to examine the report and the documents produced by the Insured before the surveyor, apply its mind and then come to an independent finding whether the claims of the insured were inflated or not. Repudiation of a claim without such proper application of mind is not justified.
37. In the case of United India Insurance Co. Ltd. -Vs- M.K.J. Corporation [III (1996) CPJ 8 (SC)] the Apex Court has held that 2 months is a reasonable period of time for an Insurance Co. either to settle or to reject a claim lodged with them, after the Surveyor has submitted his report. The Apex Court also held the Insurance Co. liable for payment of interest at 12% p.a. from 2 months after the date of submission of the Surveyor's report till the date of payment.
38. Sri Lyngdoh has relied on the decision of the National Commission in Mau Aima Sahkari Katai Mills Ltd. -vs- United India Insurance Co.
Ltd. & Anr [III(1993) CPJ 375 (NC)] where it has been held that for delay in payment of the claim the Insurance Company is liable to pay interest in proven cases of deficiency in service due to negligence.
39. Sri Lyngdoh has also cited before us the judgment of the Apex Court reported in (1999) 6 SCC 406 [Sovintorg ( India) Ltd. -vs- State Bank of India, New Delhi where it has been unequivocally held:
" The general provision of Section 34 (of the CPC) being based upon justice, equity and good conscience would authorise the Redressal Forums and Commissions to also grant interest appropriately under the circumstance of each case. Interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable grounds."
40. Based on the various decisions of the Hon'ble Supreme Court and the National Commission referred to by us above and also upon our own considered opinions, our firm conclusions on the various points of law as are necessary for a just decision on the points of controversy between the parties, are as follows:
a) Prima facie, credence has to be given by the Insurer to the report of the approved surveyor.
b) However, if the Insurer has reservations about a Surveyors report it may arrive at its own conclusions but only after proper application of mind and recording of reasons which are to be communicated to the Insured.
c) An Insurer cannot appoint a second surveyor to counter or rebut the report of the first Surveyor.
d) No reliance can be placed on a later survey undertaken much after the incident.
e) The insured is entitled to a copy of the surveyors report.
f) No reliance can be placed by the insurer on any survey report for the purpose of reducing / repudiating a claim if a copy of the report is not furnished to the insured.
g) A surveyor is obliged to satisfy the queries of the insured in respect of a claim/loss.
h) A surveyor is to communicate his findings to the Insurer within 30 days of his appointment which period can, in exceptional cases, be extended with the consent of the insured and the insurer.
i) Ordinarily, an insurer should either offer a settlement of the claim to the insured or communicate its rejection with reasons within 30 days of receipt of the survey report or additional survey report as the case may be.
j) If an Insurance Co. neither settles nor rejects a claim within 2 months of receipt of the Surveyors report it may be held liable for payment of compensation to the insured, including payment of interest.
k) An insurer cannot withhold payment of the admitted amount against a claim even if full and final settlement receipt is not furnished by the insured.
l) Mere execution of a discharge voucher and acceptance of an insurance claim would not estop the insured from making further claims against the insurer when such discharge voucher/receipt is obtained by the insurer by fraud, misrepresentation, undue influence, coercive bargaining compelled by circumstances and the like.
m) If settlement of a claim is protested within a reasonable period even after payment the insured is within his rights to prefer a claim before the consumer fora alleging deficiency in service.
n) In appropriate cases, where delay in payment or other deficiency in service is proved, the Consumer fora are authorised to grant proper relief, including award of reasonable interest, to the insured.
41. Now let us apply the aforesaid legal conclusions to the facts and circumstances of the case, issue by issue, and arrive at our findings.
Issue(a):
42. On the first issue regarding appointment of the second Surveyor it is not disputed that M/s S.P. Incorporates, Surveyors, were appointed by Oriental to assess the loss under both the policies. They did the Survey and assessment during the period from 26.12.98 upto 25.6.99 when they submitted their final fire survey report. Even thereafter they continued to be associated with the survey process and submitted their clarification on their survey report to Oriental on 19.11.99. It was only thereafter that Shri M. Sarma, Surveyor was instructed by Oriental to examine the claim docket and make necessary enquiries as regards the claim of the Complainant and he submitted his report on 24.2.2000, more than one year after the fire incident.
43. We find nothing in the records to show that the First Surveyors have not fulfilled the duties and responsibilities as laid down in Regulation 13 of the Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations 2000. Further, on the own admission of the Insurance Co., the 2nd surveyor was deputed to "clear certain doubts and information in the Report of the1st surveyor." From the contents of the 2nd Report too it is clear that it is more in the nature of a re-appraisal of the 1st Report rather than an independent assessment. We have already held that an Insurer cannot appoint a second surveyor to counter or rebut the report of the 1st surveyor, which has happened in this case. Therefore in the light of the position of law stated above, we are of the view that Oriental was not justified in appointing the second surveyor after the first surveyor had submitted his report. We also conclude that no reliance can be placed on the report of the second surveyor as it was submitted more than one year after the fire occurred. Moreover, as will be seen later, it is based on surmises and conjectures.
Issue (b):
44. In view of the legal authorities cited above and the conclusions that we have drawn therefrom, we are of the firm opinion that the Complainant was entitled to copies of the Survey Reports and that Oriental could neither rely on these reports nor unilaterally slash the claims of the Complainant, purportedly on the basis of the survey reports, without even furnishing copies thereof to the Complainant.
Issue (c):
45. It is clear from the above discussion that the action of the Insurance Co. in withholding payment of the admitted sum until the complainant furnished a discharge note admitting the payment to be full and final constitutes negligence and deficiency in service on their part.
Issue (d):
46. The main argument of Smt.Yangi the learned counsel for Oriental has been that the Complainant is not entitled to any interest on account of the delay in payment of its claim against the shop policy as the Complainant accepted the payments made to it by Oriental without any protest. This argument is strongly refuted by Sri Lyngdoh, learned counsel appearing for the Complainant. He has drawn our attention to the letters dated 30.10.00 and 7.11.00 written by the Complainant to Oriental. In their letter of 30.10.00 they have clearly stated "However, once again we request you to please make the payment of claims under policy No.322406/1/6/11/99/137, for Rs.757645/- (balance payment) along with interest from the date of loss within 7 days of receipt of this letter, failing which we will be compelled to hand over the papers to our legal advisor for appropriate action at your cost." 47. It needs to be borne in mind that the balance payment of Rs.757645/- referred to above, against the shop policy, was paid by Oriental only on 14.11.00, after receipt of the aforesaid letters of protest and as such, in our opinion, the acceptance of the amount by the Complainant was always without prejudice to its claim for interest which was raised prior to the date of payment. Moreover, from the correspondence exchanged between the Complainant and Oriental which we have referred to in the earlier paragraphs, particularly the Complainant's letter dated 22.9.00 which too was written before Oriental released the cheque for Rs.757645/- against the Shop Policy it is clear that Oriental was exerting undue pressure on the Complainant to accept payment of the sum of Rs.757645/-
against the Shop Policy as full and final payment and the Complainant accepted the amount under duress as it was in urgent need of finance.
48. With the law in this regard having already been settled by the Supreme Court, as noted above, we therefore reach the finding that the complainant is not disentitled to compensation on account of delay in the payment of the claim by the mere fact of executing the discharge voucher against the shop policy. As far as the godown policy is concerned this question has not even arisen for decision as the complainant has not executed any discharge voucher in that respect.
Issue (e):
49. In the instant case, no evidence has been adduced before us by Oriental to show that it had examined the first Surveyor's Report and applied its mind independently and found any defect in the Report or in the assessment made therein.
The final offer made by the Insurance Co. was far less than the assessment made by the first Surveyor and the claim made by the Complainant.The Insurance Co. has also failed to show any reason whatsoever for not accepting the first report. We hold that this was a case of partial repudiation of a claim without proper application of mind on the part of the Insurance Co. In view of the above we are fully satisfied that the claim ought to be settled on the basis of the first surveyors report.
50. All the above discussion leads us to the irresistible conclusion that there has been gross negligence and deficiency in service on the part of the Insurance Co. which has caused loss, injury, suffering and harassment to the Complainant which calls for suitable compensation.
51. We however do not intend to let the matter rest here. For an even more comprehensive adjudication of the matter on merits we have examined the two survey reports in depth in order to find out the quantum and the reasons for the difference in the assessment of loss by the first and second Surveyors. We shall deal separately with the two policies. In respect of the Shop Policy the records reveal the following figures:
1.
Sum Insured Rs.1500000
2. Claimed Amount Rs.1500000
3. Liability assessed by 1st Surveyor Rs.1475000
4. Liability assessed by 2nd Surveyor Rs.1472600
5. Amount paid by Insurance Co.:
16.12.99 Rs. 650000 14.11.00 Rs. 757645
-----------
Total Paid Rs.1407645
6. Balance payable on basis of 1st Surveyor's Report Rs. 67355
52. In respect of the Shop Policy, it will be seen that the first Surveyor has assessed the liability of the Insurance Co. at Rs.14,75,000/- and the second surveyor has assessed it at Rs.14,72,600/-.There is hardly any difference between the two assessments. Yet from Oriental's letter dated 13.9.00 written to the Complainant it is seen that, surprisingly and without any explanation, it has taken the assessed figure at Rs.1443148/- and made even further deductions therefrom to arrive at a liability of Rs.1407645/- in the following manner.
Assessment : Rs.1443148 Less: Recovery of premium :
as per Audit Rs.
22680
-----------
Rs.1420468 Less: Reinstatement of sum:
insured for 176 days Rs. 12823 Sum Payable : Rs.1407645
53. As regards the deduction of the sum of Rs.22680/- with the remarks - "Less: recovery of premium as per audit" the Insurance Co. has been unable to elucidate these remarks. We also find that no such deduction has been assessed by the Surveyor. Moreover, as correctly pointed out by Shri Lyngdoh, learned Counsel for the Complainant, such deduction being presumably made effectively in order to charge and recover a higher rate of premium is not justified in law at this belated stage after the lapse of the validity of the fire policies. Such was also the pronouncement of the Apex Court, under similar circumstances, in Hanil Eva Textiles Ltd. -vs- Oriental Insurance Co. Ltd. and Ors [(2001) 1 SCC 269 ] which Sri Lyngdoh has brought to our notice.
54. We find that the assessed figure of Rs.1443148/- is patently incorrect and the Insurance Co. has offered no justification for this reduction even when compared with the 2nd Report. Further, the deductions of Rs.22680/- and Rs.12823/- are not substantiated either by the Survey Reports or the conditions of Policy or any other document on record and hence we find such deductions unjustifiable. We have already held that the assessment of loss has to be on the basis of the first Surveyors Report. Hence the amount payable by Oriental against the Shop Policy is determined to be Rs.14,75,000/- on the basis of the first Surveyors Report.
55. The figure relevant to the Godown Policy are as follows:
1.
Sum Insured Rs.2000000
2. Claimed Amount Rs.2000000
3. Liability assessed by 1st Surveyor Rs.1953780
4. Liability assessed by 2nd Surveyor Rs.1303799
5. Amount paid by Insurance Co.:
16.12.99 Rs. 850000 31.10.01 Rs. 383896
- ---------
Total Paid Rs.1233896
6. Balance payable on basis of 1st Surveyor's Report Rs.
719884
56. As can be seen from the above, the real bone of contention is in respect of the godown policy. There the 2nd Surveyor's assessment of loss was Rs.1303799/- against the 1st Surveyor's assessment of Rs.1953780/-. We have tried to further understand the reason for this large difference which is shown below in tabular form.
1st Surveyor's assessment:
Value of inventory Rs.1972980 Less : Value of salvageable goods Rs. 19200
- ---------
Assessed liability Rs.1953780 2nd Surveyor's assessment:
Value of inventory Rs.2150209 Less : Value of salvageable goods Rs. 737738
-----------
Ascertained loss Rs.1412471 Less : For self-insurance Rs. 98672
-----------
Rs.1313799 Less : For Policy excess Rs. 10000
-----------
Assessed liability Rs.1303799 From the above it is abundantly clear that the major difference between the two assessors lies in the valuation of the salvageable goods. The 1st Surveyor has found it to be Rs.19200/- whereas the 2nd Surveyor assessed it to be Rs.737738/-.
57. We must bear in mind that the 1st Surveyor visited the scene on 27.12.98 immediately after the fire incident and he has stated in his report:
"Nothing of the stock could be saved from the fire. The stock pile of goods charred off in the outer cover and high jet waters from the hoses have done the next part of the damages as all goods were soaked badly with water. Heaps and heaps of goods stalked in an array were found in charred condition and all heavily pungent with infestation of bacterial and fungal attacks. Here in the Insured's godown, being of two different levels with split flooring and plinth being of higher elevation than that of floor, all the waters poured in above two floors drained below and there was a water level of nearly 3 feet deep till upto our arrival on 27.12.99 (sic 27.12.98). Entire stock sunk in water and badly damaged."
"Due the high jet of hose waters entire goods were soaked badly with water. The vegetable fats (M. Oil, Ghee, etc.) that burst out in 1st and 2nd floor poured down and entire lot of goods were sunk in water and fats (oils). Except for 14 tins of oils, 30 tins refine oil and 4 tins of V. Ghee everything was damaged beyond salvaging".
"During the course of survey and disposal of the debris following tins of fats and other consumables found salvageable at reduced price. The tins of fats though apparently in non-leaky condition the external label etc. were blackened with burn. The inner contents may be sold at a reduced price. Following salvageable list is forwarded.
Sl. Item Qnty Condition Rate Amount No. Rs. Rs.
1. M. Oil 14 tins Tins blackened 400 5600
2. R. Oil 30 tins Tins blackened 400 12000
3. Veg. Ghee 4 tins Tins blackened 400 1600
----------
Rs.
19200
----------
Total salvageability including the cost of cleaning and recovery etc is assessed at Rs. 19200/-."
58. As against this, the 2nd Surveyor undertook survey one year after the incident. Obviously there could be no physical inspection of the gutted and damaged stock after this long gap. It is further evident from the 2nd Surveyor's Report that his assessment was purely on the basis of surmises and conjectures and not on any physical evaluation, as his report reads as follows:
"The extent to which the stocks in gunny bags could have been wet because of the stagnant water on the floor would depend upon the factors of surface tension, osmosis, factors affecting solubility of solid in liquids and the co-efficient of absorption of materials."
"It thus appears possible that the stocks held in the godown would have been damaged by the rising dampness. Damage to the stocks held underneath the wooden ceiling would have been compounded by the water raining down overhead. Thus it is expected that 2/3 of the stocks held in the godown would have been damaged by water. The stocks of edible oil would be undamaged. The amount of loss on stock held in the godown is therefore ascertained as follows:
Total value of stocks held in the godown as on 24.12.98 Rs.2150209 Less: Estimated Value of salvageable Stocks:
Description Pre-fire Extent of Sound- Amount of Stock value Rs. ness after fire % Edible Oil 31,609 100 31609 Others 2118600 33.33 706129 Rs.737738
----------
Ascertained loss on Stock in Godown: Rs.1412471
59. Whereas the 1st Surveyor found that the entire stock other than Edible oils (i.e. Dal, Sugar and other food grains contained in bags) was damaged beyond salvage, the 2nd Surveyor " `expected' that 2/3 of the stocks held in the godown would have been damaged by water" and therefore took the value of 1/3 of the stock as being non-affected by the fire. No credence can be given to this summary assessment made by the 2nd Surveyor as this is based on pure guess-work and is without any rational basis. Thus we find that if this part of the 2nd Surveyor's assessment is discounted, which we indeed propose to do, there are indeed no major differences between the 2 Surveyors' reports and both are broadly in agreement and the Complainant's claim reveals itself as being further justified.
60. In the view that we have taken, the complainant is entitled to payment of its claim on the basis of the first surveyors assessment i.e. a loss of Rs. 1953780/- and not on the basis of the assessment made by the second surveyor. Here too the Insurance Co. has made further deductions of the sum of Rs. 30345/- being recovery of the premium as per audit and the sum of Rs. 13482/- being reinstatement of sum insured, as well as under-assessment of Rs.26076/- even when compared with the 2nd Report as in the case of the shop policy, which too are similarly unsubstantiated and therefore cannot be allowed to be deducted. In our assessment, the payable sum thus stands at Rs. 1953780/-, as determined by the first surveyor.
61. Now, coming to the question of assessment of compensation to the complainant for the loss, injury and harassment caused to it by the negligence of the Insurance Co. in the rendering of its services, we are to bear in mind that Section 14(1) of the Consumer Protection Act inter alia provides that if the Forum is satisfied that any of the allegations contained in the Complaint about the services are proved it shall issue an order to the Opposite Party directing him to do one or more of the following things, namely,
(i) under clause (e) of Sec. 14(1), to remove the defects or deficiencies in the services in question and (ii) under clause (d) of Sec. 14(1), to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to negligence of the Opposite Party.
62. In our view, when the Forum awards interest to a party, such interest is in fact by way of compensation to the consumer for any loss or injury suffered by the Consumer due to negligence of the Opposite Party, in terms of Sec. 14(1) (d) of the C.P. Act as mentioned above, as there is no separate provision for grant of interest under the Consumer Protection Act. If interest as is generally awarded under the Consumer Protection Act were to be viewed only in the sense of being a return or compensation for the use or retention of another's money, then at most it would only compensate the direct monetary loss suffered by a consumer but would not compensate him for the injury caused to him, which is also required to be done as per the provisions of Sec. 14(1)(d) of the C.P. Act.
63. It is thus clear that under the Act, as there is no specific provision for payment of interest, the award of interest at a particular rate is in fact an award of compensation to a consumer for loss or injury suffered by him due to the negligence of the Opposite Party- it is not an award of interest simpliciter. Therefore, under the C.P. Act payment of interest can be said to be the general method and the rate of interest the measure by which the loss and injury is determined and compensation awarded to an entitled consumer by the Consumer Redressal Agencies. We are fortified in this conclusion by the decision of the National Commission in Ghaziabad Development Authority -Vs- Dr. N.K. Gupta reported in (2002) 258 ITR 337.
64. In the view that we have taken, the Complainant was entitled to a total sum of Rs. 3428780/- against the two policies. Out of this Oriental paid a sum of Rs. 15 lacs on 16.12.99, Rs. 757645/- on 14.11.00 and Rs. 383896/- on 31.10.01 leaving a sum of Rs.787239/- yet to be paid by them. The first surveyor submitted his report on 25.6.99 and the Insurance Co. ought to have paid the claim, as assessed by the first surveyor, latest by 25.8.99. Therefore, in the light of the position of law stated above, the Insured is also entitled to be compensated for the delay in payment of the claim beyond 2 months from the date of submission of the Surveyor's Report.
65. Justice therefore demands that we also award interest to the complainant from 1.9.99 till the date of payment on the sum of Rs. 3428780/-, as reduced from time to time when the aforesaid installments were released by Oriental, till the date of full payment. In our considered opinion interest at the rate of 12% p.a. would be fair and just compensation to the complainant for the loss, injury and harassment suffered by him due to the negligent services of the Insurance Co.
66. In view of all the above discussions we have no hesitation in holding that there is proven deficiency in service on the part of the Opposite Party, Oriental Insurance Co. Ltd., and we direct them to pay to the Complainant the sum of Rs.7,87,239/- being the balance amount now payable to them on the basis of the insurers liability as determined by the first Surveyor, having deducted therefrom the amounts already released by the Insurance Company.
We are also satisfied that the Complainant suffered loss, injury and mental harassment both on account of delay in payment of part of their claims and also for total non-payment of another part, all due to the negligence of the Opposite Party. We therefore further direct the Insurance Company to pay compensation in the form of interest at 12% p.a. to the Complainant, to be calculated in the following manner:
From 1.9.99 to 15.12.99 on Rs.3428780/-
From 16.12.99 to 13.11.00 on Rs.1928780/-
From 14.11.00 to 31.10.01 on Rs.1171135/-
From 1.11.01 to date of payment on Rs.
787239/-
The opposite party is also directed to pay a sum of Rs.5000/-
towards the cost of the present proceedings to the Complainant. The total amount payable under this order shall be paid within 30 days from the date of receipt of a certified copy of the order by the Insurance Company, failing which the entire sum shall carry further interest at the rate of 12% p.a. from the date of order till the date of actual payment. It is further made clear that the Insurance Company is at liberty to deposit the money with the office of the Commission in the form of cheque/bank draft and liberty is also granted to the Complainant to withdraw the same upon being duly identified by a learned Advocate.
The Complaint petition is disposed of with the aforesaid directions.
(Member) (Member) (President)