National Consumer Disputes Redressal
Mrs. Vijaykunverba Sahib Of Morvi vs Oriental Insurance Co. Ltd. on 9 March, 2016
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 19 OF 2006 1. MRS. VIJAYKUNVERBA SAHIB OF MORVI 5th Floor in Ben Nevis Building, Morvi Compound 100, Bhulabhai Desai Road, Mumabi - 400 036. ...........Complainant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. A-25/27, ASAF ALI ROAD NEW DELHI - 110 022. 2. THE ORIENTAL INSURANCE CO LTD. AHMEDABAD RO, 3RD FLOOR, NAVJIVAN TRUST BUILDING BEHIND GUJARAT VIDYAPITH, ASHRAM ROAD, NAVJIVAN POST OFFICE AHMEDABAD - 380 014 GUJARAT 3. THE ORIENTAL INSURANCE CO LTD. MORVI BRANCH SARDAR ROAD, MOVI - 363 641 GUJARAT 4. THE ORIENTAL INSURANCE CO LTD. RAJKOT DIVISIONAL OFFICE 1, DHIRAJ BUILDING, OPPOSITE RNSB DHERABHAI ROAD, RAJKOT GUJARAT. ...........Opp.Party(s) BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. Joy Basu, Sr. Advocate with Mr. Saurajay Nanda, Advocate Mr. Abhinav, Advocate For the Opp.Party : Mr. Kishore Rawat, Advocate Dated : 09 Mar 2016 ORDER
The complainant, who belongs to the royal family of Morvi in Gujarat State, obtained a Standard Fire & Special Perils Policy with endorsement for damage due to earthquake, from the Opposite Party (OP) Insurance Company for the period from 10.05.1999 to 09.05.2000, for a sum insured of ₹9,23,33,000/- for the buildings situated in their Darbargadh Palace at Morvi, Gujarat. They also obtained a policy for the same period for sum insured of ₹2,00,00,000/- for furniture and 'contents'. The said policy was renewed for the next year, covering the period from 10.05.2000 to 09.05.2001, and the details of the coverage as stated in the policy schedule of the new Policy are as follows:- A. Darbargadh Palace ₹9,23,33,000/- B. Content ₹2,00,00,000/- C. New Construction ₹1,43,30,500/-
It is stated that the complainant's buildings and contents were severely damaged in an earthquake in Gujarat on 26.01.2001. An intimation was sent by the complainant to the insurers vide letter dated 30.01.2001. Vide another letter dated 16.02.2001, it was intimated that the complainant anticipated 'total loss' under the policy. The OP Insurance Company appointed Adarsh Associates and Mehta & Padamsey Surveyors Pvt. Ltd. as surveyors, who commenced the process of assessment of loss on 02.02.2001. The Complainant appointed a consultant, Structwel Designers & Consultants Pvt. Ltd. (hereinafter referred as 'Structwel') to provide all information and documentation to the surveyors with respect to the loss. The surveyors submitted joint interim survey report on 12.12.2001, vide which the net adjusted loss was assessed as ₹5,80,50,649/-. It was stated that an 'on account' payment of ₹3.5 crores may also be made to the insured. Thereafter, the said surveyors submitted the joint final survey report on 14.06.2002, vide which, the net adjusted loss was computed as ₹4,98,88,814/-. In the schedule attached with the said report, there is a mention of 8 different buildings in respect of which the damage has been assessed. In addition, the assessment was made for damage to main entrance gate, chhatri and parapet well and retaining wall. The complainant was generally agreeable to the said assessment as conveyed vide letter dated 05.06.2002 by Structwel to the surveyors.
2. However, the OP Insurance Company, after receipt of the interim survey report, sent a letter dated 24.04.2002 to the surveyors seeking certain comments/clarifications on the said report, saying that the surveyor had not taken into consideration the information given in the Annexure to the 'proposal form' for the previous policy. In the said proposal form, a break-up and specific coverage of the buildings/items had been given, but the surveyors had treated the total sum insured of ₹10,63,66,550/- as available for covering all the buildings/palaces and worked out the loss accordingly. The surveyor then carried out a reassessment of the loss and vide their letter dated 27.05.2003, computed the same as ₹3,07,50,148/-. The surveyors mentioned in the said letter that they had not considered certain blocks/structures mainly Mirror Palace, Marble Palace, Old Palace Office while making the fresh computation. The OP Insurance Company, vide their letter dated 19.05.2003, released an "on account" payment of ₹2,49,90,047/- to the complainant. The Insurance Company further offered payment of balance amount, i.e., ₹57,50,418/- vide their letter dated 24.12.2003 towards full and final settlement of the claim, but the said offer was rejected by the complainant, saying that under the current policy in force, the insurance cover had been taken for all buildings in the complex. They also took the stand that even in the previous policy, the entire area of Darbargadh Palace had been covered. The action of the OP in asking the surveyors to make reassessment of the loss was, therefore, arbitrary and unjustified.
3. The complainants have further taken the plea that the action of the OP in not paying the claim for 'contents' was not justified as the 'contents' were covered for a sum of ₹ 2 crores under the Policy. It had been brought out in the interim survey report also that there was damage to the 'contents' comprising furniture, artefacts, paintings etc.
4. The complaint has been resisted by the OP Insurance Company by filing a written statement in which they stated that the new policy was issued in continuation of the expiring policy, on the same terms and conditions. The expiring policy was based on a proposal form in which the complainant furnished the details of different structures covered and their respective areas, based upon which the premium was calculated and charged from the complainant. The assessment initially made by the surveyors was for all nine structures inside the Darbargadh Palace, whereas the cover was for only some structures under the Policy. The OP have maintained that the surveyors were not aware of the details of specific structures got covered by the complainant under the Policy. The OPs were within their rights to examine the report of the surveyor and call for clarifications and additional information as deemed necessary. The surveyor furnished revised assessment on 27.05.2003 which was worked out as ₹3,07,50,148/-. The OP approved the claim for the said amount and prior to that, an "on account" payment of ₹2.5 crores was approved and released to the complainant. The allegations made by the complainants regarding any deficiency in service on the part of the OPs were, therefore, not valid and hence, the complaint should be dismissed.
5. The core issue involved in the present case is whether the assessment initially made by the surveyor, covering all buildings/structures in the complex, is to be considered as justified, OR the reassessment done by them at the instance of OP Insurance Company by which certain buildings/structures were excluded, is appropriate. Another issue that requires consideration is whether the complainant is entitled for any compensation for damage to the 'contents' etc.
6. Both the parties were given opportunity to file their evidence affidavits and documents in support of their version. Both the parties filed their written submissions as well. Detailed arguments from the learned counsel of the parties were heard and given due consideration.
7. An issue was raised on behalf of the OP Insurance Company that the complaint was not maintainable on the ground of limitation, as it had been filed after the expiry of the statutory period of two years from the date of cause of action, as prescribed under section 24(A) of the Consumer Protection Act, 1986. The learned counsel for the OP Insurance Company has drawn our attention to letter dated 24.12.2003 sent by them to the complainant, asking for their clear consent towards full and final settlement of the claim, for a sum of ₹3,07,50,148/-, out of which a sum of ₹2,50,00,000/- had already been paid. The OP stated in the said letter that they shall release the remaining amount of ₹57,50,148/- on receipt of the said consent. According to the learned counsel for OP, the cause of action in the present case has to be taken from 24.12.2003, when the OP made final offer for payment to the complainant. This letter was followed by a reminder dated 10.02.2004 to the complainant, vide which they requested for return of the discharge voucher duly signed, otherwise the claim shall be treated as 'no claim'. The complainant replied to the said contention, saying that they received the letter dated 24.12.2003 on 28.02.2004 only. However, the reminder letter dated 10.02.2004 was received by them a bit earlier, i.e., on 25.02.2004. The complainant sent a letter on 01.03.2004 to the OP, saying that the offer was not acceptable to them and the claim should be reassessed. The learned counsel for the OP stated that the present complaint had been filed on 28.02.2006, which was beyond the period of 2 years from the cause of action. The learned counsel argued that even if the version of the complainant that they received the letter of the OP Insurance company on 25.02.2004 is believed, still the complaint had been filed with a delay of 3 days. It was obligatory on the complainant to file an application seeking condonation of the delay, but they had not done so. The complaint, therefore, deserves to be dismissed on the ground of limitation. On the other hand, the complainant took the plea that the OP sent them a letter dated 02.06.2004, giving reference to their letter dated 01.03.2004, saying that fresh assessment of loss had been done by the surveyors after due consultation with their representatives. They again requested the complainant to return the discharge voucher duly signed, so that they could make the payment of the balance amount. Further, the OP Insurance Company sent a letter to them on 15.06.2004, giving reference to the representation made by the complainant in her letter dated 25.05.2004 addressed to the Chairman-cum-MD of the OP, saying that they were inviting the comments of the surveyor on the said representation. The learned counsel for the complainant argued that since the OP had decided to ask for comments of the surveyors on the representation, the matter had still not been finally decided and hence, the cause of action had not arisen.
8. An examination of the material on record indicates that the plea of limitation taken by the OP during arguments does not find any mention in the written statement filed by the OP. Even in the written submissions filed by the OP on 15.01.2010, such a plea has not been mentioned. Also, there is weight in the arguments advanced on behalf of the complainant that since the OP decided to call for comments of the surveyor on their representation, the claim had not been finally decided by the OP. We, therefore, tend to agree with the contention of the complainant that there was no delay in filing the present complaint. Even if the plea of the OP that there was a delay of 3 days in filing the complaint from the receipt of intimation about the final decision of the OP about the claim, the said delay is insignificant and deserves to be ignored. We, therefore, hold that the complaint is not non-maintainable on the ground of limitation.
9. The next point that arises for our consideration is whether any claim for the 'contents' is payable under the Policy in question. It is true that the instant policy does mention the sum insured under the heading 'contents' as ₹2 crores. However, the stand taken by the OP Insurance Company that the complainant had not filed any claim, or basis thereof, before the surveyors and hence, the loss could not be assessed in this regard, seems to be valid. The complainant made a representation on 25.05.2004, saying that the rejection of their claims for 'contents' was not justifiable. The OP acknowledged the said letter, vide their letter dated 15.06.2004, saying that such loss could not be assessed as complainant had not filed any claim regarding 'contents'. In their letter dated 13.09.2004 to the OP, the complainant stated that their consultants had attempted to file such claim on various occasions. They had shown some damaged and destroyed rooms as well as the contents and provided them photographs. However, it is clear from record that the complainant did not file any specific claim with regard to the 'contents' before the OP, giving the details of items and the quantification of loss in this regard. The contention of the OP Insurance Company, therefore, that no amount was payable for damage to 'contents' is fully justified. It is held, therefore, that nothing is payable to the complainant on account of alleged damage for 'contents'.
10. Now, we come to the main issue involved in the case regarding the coverage, area and quantification of damage for the buildings situated inside the Darbargadh Palace. As mentioned already, the surveyors in their joint interim report and the final report carried out assessment of loss for the following structures, located in the premises of Darbargadh Palace:-
New Mehlat Block between New Mehlat & Kacheri hall Kacheri hall Marble Palace Mirror Palace Mamol mataji temple Old palace office Old guest house Stone Dome etc. Main Entrance Gate Retaining wall
11. In their final survey report, they stated that the valuation of the structures stated above was ₹46,71,23,263/-. Applying a depreciation of 75%, i.e., a sum of ₹35,03,42,447.30/-, they calculated the net amount as ₹11,67,80,815.76/-. The surveyors further stated that the sum insured available as per the Policy was ₹10,63,66,550/-, meaning thereby that there was an under insurance of 8.66%. After taking into consideration the cost of reconstruction/repairs and then making allowances for depreciation, salvage value and under insurance, the surveyor calculated the net adjusted loss as ₹4,98,88,814/-. It is significant to note that the total area covered in the 11 buildings, mentioned above, comes to 1,36,296 sq. ft., after totalling up the areas mentioned against respective items in the survey report.
12. The valuation made by the surveyors as stated above was later on revised at the instance of the OP Insurance Company, which asked them to consider the information given in the proposal form attached with the Policy for the year 1999-2000. Vide their letter dated 27.05.2003, the surveyors assessed the net amount as ₹3,07,50,148.49/- They also stated in the said letter that certain blocks/structures, mainly, mirror palace, marble palace and old palace office had not been considered in the revised computation of loss as these did not find mention in the proposal form. They also stated that other blocks had been given different nomenclature in the proposal form. The different items stated in the revised report of the surveyors have been described as follows:-
Hotel port usable area such as shites, kitchen, library, dining hall, sitting & conference hall Attached const. from well to lift room Hotel garden area such as fountain carvine door, round hall carvine wall on river side Remaining construction of Darbargarh Temple Retaining wall on river side School IT Office, high school Kacheri Hall Block of old entrance gate
13. The crucial point for consideration, therefore, is whether the assessment of loss initially made by the surveyors has to be given effect to, or the action of OP Insurance Company in allowing the claim based on the revised survey report in which certain buildings of the Darbargadh Palace were left out is to be taken as correct. A perusal of the copy of "proposal for insurance" attached with the previous policy valid from 10.05.99 to 09.05.2000 indicates that the insurance was obtained for a total area of 1,44,135 sq. ft. and the premium had been calculated and collected for that area. The various components of that area have been described as follows in the said proposal form:-
Temple 2242 sq.ft.
Hotel part 30202 sq. ft.
Burnt part 30000 sq. ft.
Remaining part of Darbargadh Palace 81,691 sq. ft.
TOTAL 1,44,135 sq. ft.
14. For the Hotel part, a valuation of ₹4.40 crores has been made for which the premium was calculated as ₹33,750/- per year. For the remaining construction of Darbargadh Palace, measuring 81691 sq. ft., the valuation has been computed as ₹4,08,55,001/- and the premium has been calculated as ₹30,634/- p.a. For the retaining wall, the valuation is ₹4,87,500/- and the premium has been calculated as ₹365.62 p.a. For other buildings, like school, IT Office, High school, the valuation has been made as ₹6,16,650/- and the premium is ₹4875/-. For furniture ('contents') the valuation is ₹2 crores and the premium is ₹15,000/-. The net premium calculated is ₹84038/-. It has been written in hand on the said proposal form that the value of all the buildings is ₹92,33,3000/- and the same value has been quoted in the previous policy as well as in the existing policy.
15. As stated already, the assessment made by the surveyors in their interim as well as final report says that they covered all the buildings in the Darbargadh Palace and the total area under all such buildings is 1,36,296 sq. ft. which is less than the area of 1,44,135 sq. ft. as per the previous policy. The fresh assessment made by the surveyors, when the OP Insurance Company asked them to rely upon the information contained in the proposal form for the previous policy, indicates that the surveyors did not include three buildings, viz., Marble Palace area 8,095 sq. ft., Mirror Palace area 11,870 sq. ft. and the Old Palace area 10,780 sq. ft. The total area of these three structures adds up to 8095 + 11870 + 10780 = 30,745 sq. ft. If this area is deducted from the total area mentioned in the original survey report, the remaining area under the buildings would be 1,36,296 - 30,745 = 1,05,551 sq. ft. only, which is much less than the area of 1,44,135 sq. ft. for which the insurance was taken initially. The OP Insurance Company has not been able to provide any reasonable explanation for the said anomaly. The surveyors have also indicated in their letters to the Insurance Company that they had meetings with the insured for clarifying the position, but the information in the proposal form did not tally with the nomenclature used by the insured. It can be presumed, therefore, that the area of 81,691 sq. ft. shown in the proposal form for the remaining part of Darbargadh Palace includes the buildings which have been left out by the surveyors in their final report. The valuation of construction done in this 81,691 sq. ft. has also been included in the calculation of premium in the said proposal form. It is made out, therefore, that the stand of the Insurance Company in excluding certain parts of Darbargadh Palace is without any reasonable justification.
16. The learned counsel for the complainant has drawn our attention to the judgments/orders made by the Hon'ble Supreme Court of India and this Commission in many cases, saying that the main purpose behind issuing an insurance policy should be kept in mind while taking a decision in settling such claims. He has referred to the judgment of the Hon'ble Apex Court in "B.V. Nagaraju vs Oriental Insurance Co. Ltd. [(1996) 4 SCC 647], stating that the main purpose of the policy was to indemnify the damage caused by the insured perils. Referring to order of the Hon'ble Apex Court in "United India Insurance Company Ltd. vs Pushpalaya Printers" [AIR 2004 SC 1700], the learned counsel stated that in the event of any ambiguity or two possible interpretations, one beneficial to the insured should be accepted consistent with the purpose for which the policy was taken. In "Asha Garg vs. United India Insurance Co. Ltd." [OP No. 164/2001 and others decided on 24.11.2005], this Commission made an observation that the insurance company, sometimes grant insurance cover without proper verification and thereafter they tried to avoid the claim on one pretext or the other. We broadly tend to agree with the contention raised by learned counsel for complainant, looking at the facts and circumstances of the present case. At the time of taking the previous policy, the Insurance Company should have taken care to provide exact description of all buildings in the complex or they should have stated clearly whether any buildings was being left out. In the absence of any such specific recital in the policy and keeping in view the fact that the insurance cover was for a total area of 1,44,135 sq. ft., we do feel that the claim should be allowed in accordance with the original report prepared by the surveyors appointed by the insurance company.
17. From the analysis contained in the preceding paragraph, it becomes clear that the revised computation of loss made by the surveyors at the instance of the OP Insurance Company, in which these buildings of the Darbargadh Palace were left out, was not based on any justifiable ground. It is held, therefore, that the complainants are entitled to receive compensation for damage to the buildings in accordance with the computation originally made by the surveyors in their joint final report submitted vide letter dated 12.06.2002. The OP Insurance Company is, therefore, held liable to make payment of ₹2,48,98,767/-(₹4,98,88,814/- minus ₹2,49,90,047/-) to the complainant. The complainant shall also be entitled to payment of interest @9% p.a. on the said amount, i.e., ₹2,48,98,767/- and such interest shall be payable with effect from 24.12.2003, the date on which the Insurance Company offered to pay the balance amount of ₹57,50,418/-. It is also held that the complainants are not entitled for being compensated for any loss to the 'contents', as they did not file any specific claim for this purpose. The payment in terms of this order shall be made by the OP Insurance Company within a period of six weeks from today. There shall be no order as to costs.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER