State Consumer Disputes Redressal Commission
Virgo Industries vs United India Insurance Co. Ltd. on 19 December, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, DAKSHIN MARG, SECTOR 37-A, CHANDIGARH.
Consumer Complaint No.18 of 2012
Date of institution : 27.02.2012
Date of decision : 19.12.2013
Virgo Industries, 828, Industrial Area, Phase-II, Ram Darbar,
Chandigarh-160 002 (India) through its partner Shri Tilak Raj.
.......Complainant
Versus
1. United India Insurance Company Ltd., opposite Sainik Rest
House, Railway Road, Ropar, through its Branch Manager.
2. United India Insurance Company Ltd., SCO No.123-124,
Sector 17B, Chandigarh through its Chief Regional Manager.
...... Opposite Parties
Consumer Complaint under Section 17 of
the Consumer Protection Act, 1986.
Quorum:-
Hon'ble Mr. Justice Gurdev Singh, President.
Shri Baldev Singh Sekhon, Member.
Present:-
For the complainant : Shri Hitesh Kansal, Advocate. For the opposite parties: Shri D.P. Gupta, Advocate. JUSTICE GURDEV SINGH, PRESIDENT :
This complaint has been filed by Virgo Industries, a partnership firm, through its partner, Tilak Raj, under Section 17 of the Consumer Protection Act, 1986 (in short, "the Act") for the issuance of following directions to the opposite parties-Insurance Company:-
i) to release the balance claim amount of Rs.22,18,923/-;
after deducting Rs.45,76,710/- from the total amount of Rs.67,95,033/-, as assessed by the Surveyor, along with Consumer Complaint No.18 of 2012. 2 interest at the rate of 15% per annum from the date of loss i.e. 31.7.2010 till the payment of that amount;
ii) to pay a compensation of Rs.5,00,000/- for causing unnecessary harassment, agony, deprivation and hardship to him;
iii) to pay Rs.5,500/- as cost of litigation.
It has been averred therein that the complainant is engaged in the business of manufacturing Sunmica and impregnating plant in Village Rampur Jattan, District Sirmour (Himachal Pradesh). It had taken Standard Fire and Special Perils Policy (in short, "the policy") from the opposite parties for the period 4.5.2010 to 3.5.2011 for a sum of Rs.18.20 Crores, vide which the building, plant/machinery, accessories and stocks were got insured by making the payment of Rs.41,496/- as premium. On 31.7.2010 due to flood, there was inundation of water in the area in which huge loss was caused to the stocks regarding which intimation was given to the Insurance Company, which appointed Protocol Surveyors and Engineers Pvt. Ltd., as the Surveyor. That Surveyor visited the spot and all the documents with regard to the occurrence and the loss sustained by it were provided then and there and from time to time also, as and when demanded by him. It suffered a total loss of Rs.1,17,32,877/-; Rs.28,36,080/- on account of the loss to the lying stocks, Rs.60,30,479/- on account of loss to standing stocks and Rs.28,66,318/- on account of loss to Craft Paper. It had been requesting the Insurance Company time and again to settle the claim but it failed to do so. The Insurance Company failed to adhere to Consumer Complaint No.18 of 2012. 3 the regulations of I.R.D.A. as the Surveyor was not supposed to take more than six months for submitting his report and the claim was to be settled within 30 days of the receipt of that report. Ultimately it was given an understanding that the Surveyor had assessed the loss at Rs.67,95,033/- against the claim made by it. The Insurance Company being in a dominating position made the partner of the complainant to sign letter/discharge voucher for accepting Rs.45,76,110/-. When it was asked from the Insurance Company as to how that figure had been arrived at, it instead of giving any satisfactory reply started coercing it to receive that amount, failing which it would have to bear the consequences. It was made to understand that it was a practice of signing the discharge voucher before hand and without signing such a voucher, even a single penny is not paid. Moreover, on account of the non-settlement of the claim for such a long period, it was under financial constraint/crisis and it had already suffered huge loss on account of non-sanctioning of the genuine claim. It was on account of undue influence exerted by the Insurance Company that it sent e-mail dated 8.11.2011 stating that, "as desired by you vide your mail dated 7.11.2011, we are ready to accept an amount of Rs.45.78 lacs against our flood/inundation loss claim". No reason was furnished by the Insurance Company for not paying the assessed amount of Rs.67,95,033/-. It was under compelling circumstances that the discharge voucher was signed under protest. A protest letter was sent on the very next date i.e. 24.11.2011, of the receipt of the cheque. In spite of that protest letter, the Insurance Company did Consumer Complaint No.18 of 2012. 4 not inform it about the reason for not paying the balance amount and the same position prevailed in spite of the service of the legal notice dated 17.1.2012. These acts on the part of the Insurance Company amounts to deficiency in service and unfair trade practice.
2. The complaint was contested by the Insurance Company and a detailed written reply was filed. In the written reply it admitted that the policy was so taken by the complainant and intimation regarding the loss to the stocks due to inundation of water was received on 31.7.2010 and the Surveyor, as mentioned in the complaint, was appointed, who assessed the loss. It also admitted that against the insurance claim made by the complainant, a sum of Rs.45,78,78,603/- was paid. While denying the other averments made in the complaint, it pleaded that no such loss of Rs.1,17,32,877/- was suffered by the complainant. The Surveyor in his report had recommended that affected stocks was 62.5% of vertical rolls of 35061 kilograms, 20% of horizontal rolls of 94536 koligrams and 70% of Craft Paper of 119910 kilograms and after considering that percentage, it was found that there was affected stocks/salvage of 83937 kilograms of craft paper, 18907.20 kilograms of horizontal rolls and 21913 kilograms of vertical rolls. However, while making the calculations the Surveyor committed the mistake. 62.5% vertical rolls comes to 21913 kilograms and not 25542.70 kilograms. It was in view of that mistake, as per the assessment of the Surveyor, the affected stocks/salvage was worked out at 1,24,757.20 kilograms. Under the same policy, the claim was made by the complainant about the loss to the stocks in Consumer Complaint No.18 of 2012. 5 same peril on 8.9.2010, in which the tenders were invited for the disposal of affected stocks/salvage and as per the agreement, the same was disposed of by the complainant at the rate of Rs.20 per kilogram. It was in view of that, that it was thought reasonable and appropriate to apply the said rate of salvage in the present case also. The Surveyor made wrong calculation in respect of the price of the salvage also. The total loss, as per the Surveyor, would have been Rs.77,39,079/-, out of which 5% was reduced as dead stocks and the balance loss comes to Rs.73,52,125/-. Out of that, sum of Rs.24,95,144/- was deducted and the balance comes to Rs.48,56,981/-. After applying the under insurance to the extent of 0.77%, this amount comes to Rs.48,19,582/-. As per the policy conditions, 5% of the said amount was to be reduced as excess clause and that 5% comes to Rs.2,40,979/-. Therefore, the balance amount payable was Rs.45,78,603/-. A sum of Rs.2493/- was to be deducted as reinstatement premium and after deducting that amount the net payable amount comes to Rs.45,76,110/-. The complainant itself had given a letter dated 8.11.2011 that it was ready to accept Rs.45.78 lacs against the loss. Even e-mail to that effect was also sent. That request of the complainant was duly considered and the amount of Rs.45,76,110/- was paid to it and after receiving that amount voucher was duly executed that the said amount was received without any protest and as full and final settlement. The delay on the part of the Surveyor in submitting the report was on account of non-furnishing of requisite information/documents by the complainant itself. The matter regarding the disposal of the salvage Consumer Complaint No.18 of 2012. 6 in respect of the other claim was pending and that issue was settled only on 27.5.2011. After taking the rate of salvage in that claim case the Surveyor made the calculations. It has wrongly been stated by the complainant in the complaint that under the financial constraint, he was compelled to receive the above said amount against its claim. As per the financial year ending on 31.3.2009, there was a profit of 12,04,20,911/- to the complainant and for the financial year ending on 31.3.2010, it had a profit of Rs.19,73,81,529/-. The complainant is estopped from claiming any more amount than already received by it as it was in pursuance of his own request made, vide letter dated 8.11.2011, that the said amount was paid and received by him against the claim. He cannot claim any amount in excess of the amount, which was found towards the insurance claim after making necessary corrections in the calculations made by the Surveyor. The policy was taken for commercial purpose and, as such, the complainant stands excluded from the definition of the 'consumer' as contained in the Act. Moreover, the decision of the complaint involves determination of complicated questions of law and facts, which requires leading of detailed evidence regarding the quantity or evaluation of the stocks of various items lying in the premises of the complainant at the time of the loss and as to which stocks were affected and which remained unaffected. All that exercise cannot be done in the summary jurisdiction under the Act and, as such, the complaint is not maintainable. The complainant has not come to the Commission with clean hands and concealed the material facts. It admitted that it had kept the salvage and the Consumer Complaint No.18 of 2012. 7 value of the salvage was agreed by him to be Rs.24,95,144/-. It prayed for the dismissal of the complaint.
3. In support of the averments made in the complaint, the complainant proved on record the affidavit of Tilak Raj, Ex.CA and documents Ex.C-1 to Ex.C-9. On the other hand, the Insurance Company proved on record the affidavit of Tirloki Nath Puri, Senior Branch Manager Ex.O-A and the documents Ex.O-1 to Ex.O-11.
4. We have carefully gone through the averments of the parties, the evidence produced by them in support of those averments and have heard learned counsel on their behalf at length.
5. It was submitted by the learned counsel for the complainant that the insurance claim of the complainant was liable to be allowed to the extent of Rs.67,95,033/-, which was the loss assessed by the Surveyor and whose report was proved on the record as Ex.O-2. There was no such mistake in making the calculations by the Surveyor, as alleged by the Insurance Company, and, as such, there was no ground for making any reduction in that amount. The salvage value was correctly mentioned in that report and it could not have been taken as in the other claim case, as pleaded by the Insurance Company. From the evidence produced by the complainant, it stands proved that the sum of Rs.45,76,110/- was received by the complainant only as part payment towards the insurance claim and it never received that amount in full and final settlement of the claim. Immediately after the receipt of that amount, a protest was lodged by the complainant by writing the letter Ex.C-6. The said amount was paid, vide voucher dated 23.11.2011 Consumer Complaint No.18 of 2012. 8 and the protest letter was written on 24.11.2011. Therefore, it cannot be said that the said amount was received by the complainant in full and final settlement of his claim. The Insurance Company is liable to pay the balance amount. For the acts of omission and commission, so proved on the record, it can easily be inferred that Insurance Company was deficient in service and unfair trade practice. The claim was not settled for such a long time and on that account the complainant suffered mental agony and harassment for which it is entitled to the compensation as claimed in the complaint. In support of his submissions, he cited the following judgments:-
i) IV(2006) CPJ 84 (NC) (NEW INDIA ASSURANCE CO.
LTD. v. KAMAL NAYAN);
ii) IV(2006) CPJ 86 (NC) (DEEN DAYAL CHAMOLI v.
NATIONAL INSURANCE CO.);
iii) Judgment dated 28.10.2013 passed in Revision Petition
No.2786 of 2008 by Hon'ble National Commission (M/s Sri Sarbati Steel Tubes Limited v. The Oriental Insurance Co. Ltd.);
iv) Judgment dated 13.11.2013 passed in Revision Petition No.2874 of 2012 by Hon'ble National Commission (Rugs India (100 per cent EOU) v. M/s ICICI Lombard General Insurance Co.);
v) 2012(1) CLT 326 (M/s Shital International v. United India Insurance Company Ltd.);
Consumer Complaint No.18 of 2012. 9
vi) IV (2008) CPJ 337 (TECHNO ECONOMIC SERVICE
PRIVATE LIMITED v. NEW INDIA ASSURANCE
COMPANY LIMITED).
6. On the other hand, it was argued by the learned counsel for the Insurance Company that no doubt the Surveyor assessed the loss at Rs.67,95,033/- but after making the deductions, which were permissible as per the terms of the insurance policy and on account of the consent of the complainant to keep the salvage with it, the net amount payable was Rs.45,76,110/- and the same amount was paid to the complainant. If there was any delay on the part of the Surveyor to submit the report, it was on account of the non- furnishing of the documents and the information by the complainant in time. Moreover, the question of the value of the salvage was pending between the parties in another claim made under this very insurance policy for the same occurrence. After that rate was settled the claim was processed and the amount payable under the policy was determined. From the evidence, it stands proved that it was the voluntary act of the complainant itself to receive the above said amount towards the insurance claim, which clearly means that the said amount was received in full and final settlement of the claim. There is nothing on the record to conclude that the complainant was in any way coerced or any undue influence was exercised upon it to receive that amount. The lodging of the protest immediately after the receipt of the voucher is of no help to the complainant and it cannot be concluded therefrom that it was pressurized or coerced or any type of undue influence was exercised upon it to receive the Consumer Complaint No.18 of 2012. 10 amount in full and final settlement of its claim. It cannot be said that the Insurance Company is guilty of any such act, which amounts to deficiency in service or unfair trade practice on its part and, as such, the complainant is not entitled to any compensation nor is entitled to any amount towards the insurance claim in excess of the amount already received by it.
7. The first and the foremost point to be determined for deciding the present complaint is, whether the complainant received the sum of Rs.45,76,110/- towards the insurance claim made by it in full and final settlement of that claim? If that question is answered against the complainant, nothing else remains to be determined. No doubt, there was some delay on the part of the Insurance Company to settle the claim. It is very much apparent from the report of the Surveyor Ex.O-2 that the instructions for assessing the loss were conveyed to him on 2.8.2010 whereas he submitted the report on 18.4.2011. As per the Regulations framed by the I.R.D.A. (Protection of Policy-holders Interest) Regulations, 2002, he was required to make his report within six months but in case there was delay, the above said Regulations permit the allowing of interest in excess at the rate of 2% per annum. If the Insurance Company ables to prove that the amount had already been received by the complainant in full and final settlement of the claim, then it cannot be held that there was any such deficiency in service or unfair trade practice on account of this delay on the part of the Surveyor or the Insurance Company.
Consumer Complaint No.18 of 2012. 11
8. In support of the averments, made in the complaint, affidavit of Tilak Raj Ex.CA has been proved on the record. He deposed therein that it was under compelled circumstances and on account of the dominating position of the Insurance Company that he was put under undue influence to send the letter and the e-mail that he was ready to accept the amount of Rs.45.78 lacs against the loss claim. He has also deposed that the complainant was under financial constraint/crisis and it suffered huge loss on account of non- sanctioning of the genuine loss. Keeping in view the averments made by the Insurance Company and the balance sheets proved on the record as Ex.O-10 and Ex.O-11, and which have not been rebutted by the complainant by producing any evidence, it cannot be said that it was under financial constraint, as during the relevant years profits were made by it in Crores. If the profits were running into Crores, the loss or want of few lacs will not amount to financial constraints. The question arises, whether the complainant on his own had made the offer to the Insurance Company to receive the amount or he was asked to receive that amount? It is very much clear from the affidavit of Tirloki Nath Puri Ex.OA that the complainant itself had written the letter dated 8.11.2011 after it was informed of the calculations and the loss payable under the policy and it was satisfied with the same. He also explained the reasons for delay in the non-settlement of the claim. He specifically deposed that the complainant was not supplying the requisite information/documents to the Surveyor and the matter regarding the disposal of the salvage of another similar claim of the complainant Consumer Complaint No.18 of 2012. 12 was pending and the complainant was very much aware of that fact. The letter dated 8.11.2011 written by the complainant to the Insurance Company was proved on the record as Ex.O-6. In that letter, it was mentioned that they were ready to accept the amount of Rs.45.78 lacs against their flood/inundation loss claim. That willingness was also conveyed by the complainant to the Insurance Company on e-mail, which is proved on the record as Ex.O-7. From the evidence produced by the Insurance Company, it stands proved that this offer was made by the complainant after the amount payable under the insurance policy was made known to it. After a number of days the Claim Disbursement Voucher Ex.C4/Ex.O8 was prepared and it was on 23.11.2011 that the cheque of Rs.45,76,110/- was received by the complainant by putting his signatures on that voucher. No protest was lodged by him at that time.
9. The complainant proved on record the letter dated 24.11.2011 Ex.C-6, which was written by him to the Insurance Company regarding this insurance claim. He stated in that letter that they were surprised to find that the Company asked them to sign a consent letter/disbursement voucher for Rs.45,76,110/- against the estimated total loss of Rs.1.17 Crores. It was also mentioned therein that it was on account of the understanding given to them that the Surveyor had assessed the loss to the tune of Rs.67,95,033/- that the cheque was received by them under protest, as they had already suffered a huge loss on account of non- sanctioning of the actual loss and the delaying tactics adopted by the Consumer Complaint No.18 of 2012. 13 Insurance Company. The Insurance Company was requested to pay the balance amount, along with interest at the rate of 18% per annum.
10. In Techno Economic Service Private Limited's case (supra), in which the judgment of the Hon'ble National Commission reported in II(2002) CPJ 57 (M/s Morinda Co-operative Sugar Mills Limited v. The New India Assurance Company Limited and Others) was relied, it was held that if there was a protest letter within few days since the alleged settlement of the insurance claim between the parties, then payment made by the Insurance Company and accepted by the insured could not be said to be accepted in full and final settlement and, as such, consumer complaint is maintainable for the recovery of the remaining amount of compensation.
11. The facts of the present case are different. No doubt, the letter of protest was written on the very next day of the receipt of the above said amount but it was only on the initiative of the complainant that the said amount was paid to it. The wording of the letter dated 8.11.2011 Ex.O-6 and the e-mail Ex.O-7 makes it very much clear that the offer was made by the complainant itself to accept the amount against its insurance claim. If it wanted that it was to receive that amount only in part satisfaction of the claim, it should have clearly written that fact in the letter and the e-mail. It was after the expiry of 15 days that the cheque was given to them and that time must have been taken by the Insurance Company to decide whether to accept the offer so made by the complainant or not. When such is the position, then making of a protest after the receipt Consumer Complaint No.18 of 2012. 14 of the cheque will not amount to the exercise of any such duress or undue influence by the Insurance Company or that the said amount was not received by the complainant in full and final settlement of the claim. In the result, the above posed question is answered against the complainant and in favour of the Insurance Company. Therefore, it cannot be said that there is any deficiency in service on the part of the Insurance Company or any unfair trade practice on its part. There is no merit in the complaint and the same is hereby dismissed.
12. The arguments in this case were heard on 13.12.2013 and the order was reserved. Now, the order be communicated to the parties.
13. The complaint could not be decided within the statutory period due to heavy pendency of court cases.
(JUSTICE GURDEV SINGH) PRESIDENT (BALDEV SINGH SEKHON) MEMBER December 19, 2013 Bansal