State Consumer Disputes Redressal Commission
Alankar Slimming & Cosmetic Clinic Pvt. ... vs The New India Assurance Co. Ltd. on 22 September, 2014
IN THE STATE COMMISSION : DELHI (Constituted under Section 9 of the Consumer Protection Act, 1986) Date of Decision : 22.09.2014 Complaint Case No.339/2012 Alankar Slimming & Cosmetic Clinic Pvt. Ltd. having its office at D-5, Hauz Khas New Delhi Complainant VERSUS The New India Assurance Co. Ltd. Regional Office-II, Claim Hub, Scope Minar, Laxmi Nagar, District Centre, Delhi-110092 Also at:- Universal Insurance Building Asaf Ali Road New Delhi Opposite Party CORAM S.A.Siddiqui, Member (Judicial) S.C.Jain, Member
1. Whether reporters of local newspaper be allowed to see the judgment?
2. To be referred to the reporter or not?
S.C.Jain, Member Judgment
1) The present complaint has been filed by the complainant under Section 17 of the Consumer Protection Act 1986 (hereinafter refer to as the Act).
2) Facts of the case are that the complainant is engaged in the business of weight lost clinics, beauty clinics, fitness clinics, academies and similar or related activities as per norms and methods developed by them. The complainant company at the relevant period was running many beauty & health care centres in different cities spread all other country and had insured their equipments and stock with the OP insurance company. Complainant had further stated that apart from the instant claim, they had never raised any claim on the OP insurance company.
3) The complainant had a health, beauty and fitness centres at 7/29-B, Ratan Castle, Tilak Nagar, Kanpur UP. The complainant had installed and kept at the said centre equipments worth Rs. 53,41,470/- and had taken standard fire and special perils policy from the respondent insurance company since May 2008. The insurance policy was renewed from time to time. At the relevant time, the complainant had a policy bearing No. 323200/11/09/11/00000206 with the OP insurance company for the period 26.05.2009 to 25.05.2010 and the total risk covered under the policy was for Rs. 53 Lac.
4) On the intervening night of 24.12.2009 & 25.12.2009 (during the subsistence of the said Insurance Policy) fire broke out in the aforementioned centre of the complainant company. It is stated that due to the fire, whole equipments worth Rs. 53,41,470/- were either totally burnt or badly affected. An FIR was registered with the Police Station and investigation was conducted. It is the case of the complainant that the fire which had taken place in the said centre was an accidental fire and therefore it caused loss and damage to the equipments and stock of the complainant. Immediately, thereafter, the complainant had filed a claim of Rs. 36,40,465/- which was later on revised to Rs. 31,99,636/-. On 14.10.2010, the complainant company had filed a letter giving all information to the respondent insurance company as well as annexed all documents in support of its claim, the complainant had vacated their premises at Kanpur on 25.03.2010 and all the correspondence in relation to the claim had always taken place from the Regd. Office at New Delhi. In view of the claim made by the complainant, the respondent insurance company had appointed a surveyor namely Sh. R.C.Bajpai.
5) The complainant asserts that this surveyor was biased from the very beginning and that the surveyor was expecting undue favour. It is the case of the complainant that it refused to oblige the surveyor and therefore the surveyor had given an incorrect report. It is submitted by the complainant that the surveyor had raised objection in the survey report which were non-existent and was only done to cause harm to the complainant. It is further stated that the objections were not also relevant to ascertain the damage of the complainant. It is further submitted that in the report of Sh. R.C.Bajpai, the surveyor had specifically mentioned that the assessment of loss calculated was subject to investigation/authentication of purchases to be conducted by the Insurance Company prior to disbursement of the claim. It is also stated by the complainant that no action was taken by the insurance company in compliance with the said report (i.e. it did not conduct any investigation or verification as stated in the surveyors report).
6) It is further contended that the complainant company had made several representations for change of the surveyor and ultimately another surveyor Sh. R.N.Sharma was appointed in terms of the said request. It is also stated that Sh. R.N.Sharma (Second Surveyor) had assessed a net loss of Rs. 25,60,747/- and had further stated in its report that the objections of Sh. R.C.Bajpai are unjustified and unwarranted, but inspite of this OP did not settled the claim and the complainant aggrieved by the conduct of the OP filed the present complaint praying therein to direct the OP to pay the claimed amount of Rs. 3199636/- along with 18% interest and has further prayed directing the OP to pay Rs. 5,00,000/- as compensation for mental agony, harassment and torture caused to the complainant along with Rs. 55,000/- towards cost of litigation.
7) Registered AD notice of the complaint was sent to OP, who appeared and contested their case. Both the parties filed their evidence by way of affidavit and also filed written arguments. Oral arguments heard. File perused.
8) The OP in its written statement has mainly raised the following objections a.
The case involves disputed questions of facts and requires detailed oral and documentary evidence;
b.
That the complainant is not a consumer under Section 2(1)(d) of the Consumer Protection Act as it has hired the services for fulfilling its commercial purpose;
c.
That the reports of the surveyor raised various abnormalities and therefore the claim should be rejected.
9) The objections raised by OP that the complainant is not a consumer under the provisions of the Consumer Protection Act 1986 and therefore the compliant is not maintainable, the complainant in their rejoinder has specifically denied this position and has relied on the judgment of the Honble Supreme Court of India in the case of Laxmi Engineering Works Vs PSG Industrial Institute (reported in 1995 (3) SCC 583) and the judgment and order of the Honble National Commission in the case of Harsholia Motors Vs National insurance Co. Ltd. in First Appeal No. 159, 160 and 161 of 2004. In the case of Laxmi Engineering Works (supra) the Honble Supreme Court of India has categorically laid down the law as to who would constitute a consumer.
The Honble Supreme Court has held as under:-
Broadly affirming the said view and more particularly with a view to obviate any confusion-the expression large scale is not a very precise expression-Parliament stepped in and added the explanation to Section 2(d)(I) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression commercial purpose-a case of exception to an exception. Let us elaborate: a person who buys a typewriter or a car and uses them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for commercial purpose would not yet take the purchaser out of the definition of expression consumer. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a consumer. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other word, if the buyer of goods uses them himself, i.e., by self-employment, for earning his livelihood, it would not be treated as a Commercial Purpose and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a commercial purpose, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., uses them by himself exclusively for the purpose of earning his livelihood and by means of self-employment make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.......
The aforesaid pronouncement of the Honble Supreme Court of India clarifies the position that what is to be considered is how the person uses the goods or services for. If the goods or services is used for itself, then the person would definitely fall within the definition of consumer under the Act. The Honble National Commission in its order dated 03.12.2004 in the case of Harsolia Motors (supra) held as under:-
Further, from the afore-said discussion, it is apparent that even taking wide meaning of the words for any commercial purposes it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or services hired in an activity which is not directly intended to generate profit, it would not be commercial purposes.
In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purposes. Policy is only for indemnification and actual loss. It is not intended to generate profit.
Applying the test laid down by the Honble Supreme Court and the Honble National Commission in the aforementioned cases, it is clear that the complainant fall within the definition of a consumer as defined under the Act. It is clear that the complainant has taken the insurance policy in question for its own use and not for the purpose of making any profit but for indemnification of future loss if occurred in future. Therefore, the contention of the Ld. Counsel for the OP that the complainant company is not a consumer is not sustainable.
We have also examined the facts of the case. Both the surveyor reports have categorically contended that the fire was accidental in nature and possibly caused due to electric short circuiting.
10) We have also gone through the report of the First Surveyor (Sh. R.C.Bajpai). The report of the First Surveyor, in our opinion, takes into consideration various unwarranted issued which does not concerns in any manner with the assessment of loss caused to the insured. The First Surveyor has elaborated at length the background of complainant (insured) which has no connection with the issue of assessment of loss or damage of the complainant. The first surveyor has also come to the conclusion that the OP insurance company should conduct investigation about the existence of the persons who had sold the equipments to the complainant. However, it does not dispute that the equipment were in the premises at the time when the fire had broken in the centre of the complainant company. In our view, the conclusions arrived at by the first surveyor report is wholly unwarranted and unnecessary.
11) The surveyor also directed the complainant to file revised estimate of repairs after shifting the equipments to Delhi vide letter dated 17.05.2010 and complainant submitted revised estimate vide letter dated 27.05.2010, 28.05.2010 and 29.05.2010 in respect of trademill from Cravetex Ltd., Cycles and Cross trainers and Therm (2 numbers). After the submission of revise estimate, complainant was entitled for the insurance claim of Rs. 31,99,636/- instead of Rs. 36,40,465/-.
Equipments worth Rs. 10,16,000/- were completely burnt and equipment wroth Rs. 2,00,000/- were not repairable, making total loss of Rs. 12,16,000/-. In addition to this equipments damaged, but repairable at an estimate of Rs. 19,64,622/- (Rs. 5,94,622/- repairable in India+Rs. 13,70,000/- reparable in Japan) were also damaged. But surveyor never taken into account the repair cost in its assessed amount inspite of the fact that photographs furnished by him clearly illustrate the effect of smoke and water on the Laser Hair Removal Machine costing about Rs. 24.75 Lac.
12) In any event of the matter, the OP insurance company had not conducted the process of verification/authentication as per the first surveyor report. It is obvious that the respondent insurance company had also not accepted the findings of the first surveyor report and had appointed a second surveyor. The second surveyor report specifically states that the objections of the first surveyor report is not justified and warranted. It also came to the conclusion that the objections do not have any bearing on the genuineness of the purchase of the equipments. We agree with the counsel for the complainant that the first surveyor report is based on unwarranted and irrelevant consideration and also based on surmises and conjectures. The second surveyor in its report gave analytical assessment of repairs based on the expert opinion and observations of M/s K.L.B. Instruments Co. Ltd. who are reputed Engineers and well versed with the working of machines damaged in fire. The second surveyor assessed the loss and repairing charges of the Laser Hair Removal Machine as follows:-
S. No. Description Assessed Amt. (Rs.)
1.
Delhi-Tokyo-Delhi freight and clearance charges 25,000.00 (held reasonable)
2. Cost of laser head 11,50,000.00
3. Cost of Fiber in scanner assembly 1,15,000.00
4. Service charges 50,000.00 Total 13,40,000.00 Less 25% towards depreciation for two years and 3 months @ 10% per year 3,35,000.00 Sub-Total 10,05,000.00 Less lump sum salvage value 1,000.00 Loss Assessed 10,04,000.00 The second surveyor Sh. R.N.Sharma in its report at Page 3 have revised the assessed los as was assessed by first surveyor and stated as under:-
in view of this, the loss assessed for damaged machines as assessed on page no. 49 to 51 of the survey report of Mr. R.C.Bajpai, would get revised as under:-
S.# Description Assessed Amt. (Rs.) A FULLY DAMAGED
1.
Amount already assessed by the surveyor Mr. R.C.Bajpai on page no. 49 of his survey report.
9,66,000.00
2. Loss assessed by us on Hair Removal laser machine.
10,04,000.00 B NOT REPARIABLE DUE TO NON AVAILABILITY OF SPARES
1. Loss on non repairable machine (Page No. 49 of Survey Report) 2,00,000.00 C SEMI DAMAGED EQUIPMENT Rs. 6,38,660/- Rs. 1,48,500 (Loss Assessed for Laser Machine by Mr. R.C.Bajpai at page no. 50 of his report) 5,35,160.00 FINALLY SECOND SURVEYOR BASED ON LOSS ASSESSED ON EQUIPMENT &CONSUMABLES BY MR. R.C.BAJPAI COUPLED WITH ITS OWN ASSESSMENT OF LOSS AND AMOUNT TO BE SPENT ON REPAIRS HAD FINALLY ASSESSED THE LOSS AS UNDER:-
S.No. Description Assessed Amt. (Rs.)
i) A. FULLY DAMAGED 19,70,000.00 B. NOT REPARIABLE DUE TO NON AVAILABILITY OF SPARES 2,00,000.00 C. SEMI DAMAGED EQUIPMENT 5,35,160.00 Sub-Total 27,05,160.00 Less salvage value of fully damaged machinery 60,000.00 Loss Assessed 26,45,160.00 Less under insurance @ 3.68% 97,342.00 Loss Adjusted 25,47,818.00
ii) Loss on consumables 19,054.00
iii) Loss minimisation expenses 3,875.00 Total loss Assessed 25,70,747.00 Less deductible excess as per policy 10,000.00 Net Assessment 25,60,747.00 As regard the genuineness of the firm and bill of M/s A.S.Marketing and M/s Perfect Sales, the second surveyor had given its findings as follows:-
-
The observations of the earlier surveyor Sh. R.C.Bajpai that the bills of machines of M/s A.S.Marketing are hand written and the firm is operating from residential premises are unjustified and unwarranted and have no bearing on the genuineness of purchase of equipment from the firm. The insured has been dealing with M/s A.S.Marketing since 2005, and have purchased equipment worth Rs. 2.37 Crores. Copies of account of M/s A.S.Marketing in their books of accounts for all these five years exhibiting the purchases and confirming the payment along with photo copies of the bills with statement of their bank accounts indicating the payments made duly confirmed by the vendor (copies enclosed).
-
As regard bills of Perfect Sales are concerned the prop. of M/s Perfect Sales, Mr. Rakesh Kumar is operating from his residence at Anand Parbat. He is a small time vendor and deals with the items required in Beauty Parlors. The insured had only one dealing with this firm. Since the firm was not accepting payment by cheque but was insisting on cash payment only, this was against the policy, the insured stopped further dealing with the firm.
-
In response to letter dated 24.04.2010 from the earlier surveyor Sh. R.C.Bajpai, Perfect Sales vide letter dated 12.07.2010, had confirmed the sales to him along with photo copy of the bill and copy of statement of account.
13) The second surveyor has categorically come to the conclusion that the complainant company is entitled to claim a sum of Rs. 25,60,747/-. In these circumstances, the OP insurance company could not have repudiated the claim of the complainant Honble National Commission in the case Titled as New India Assurance Co. Ltd. Vs Rabindra Narayan 1 (2010) CPJ 80 (NC) held that first surveyor being spot surveyor and held the appointment of second surveyor justified and, report of second surveyor was upheld and Honble National Commission ordered for payment of claim assessed by second surveyor. Similarly in the present case report of second surveyor is well reasoned and second surveyor have arrived at the assessed loss after cryptically and analytically examining each and every aspect of the claim, and, as the second surveyor was appointed by the OP themselves therefore we are inclined to accept the report/opinion of second surveyor.
14) It is important to mention that the complainant had filed a complaint before this commission on 14.09.2012 on the ground that the claim of the complainant has not been decided by the respondent insurance company within reasonable time. The respondent insurance company had repudiated the claim by way of a letter dated 28.12.2012. It seems that the said communication was sent to an address which was to the knowledge of the insurance company was not being operated by the complaint. The complainant had preferred the claim at the earliest possible opportunity. However, the OP insurance company had not disposed off the claim as is required.
15) If the OP insurance company had to rely on the first surveyor report, then it should have conducted investigation/verification as directed by the first surveyor report. The OP insurance company did not taken any steps in this regard. On the contrary, it had appointed a second surveyor then it had to comply with the report given by the second surveyor. It was no longer open to the OP insurance company to repudiate the claim of the complainant inspite of the categorical findings in the second surveyor report. The refusal to grant the claim of the complainant in terms of the second surveyor report dated 24.11.2011 in our view amounts to deficiency in service.
16) We also find merit in the contention of the counsel for the complainant that the fact that the second surveyor was appointed was due to the acceptance of the OP insurance company that the first surveyor was biased and therefore, the said report has to be completely rejected. It is well accepted that the insurance company cannot merely appoint the second surveyor, the fact that the second surveyor has been appointed clearly shows that the first surveyor report was rejected by the OP insurance company or OP was not satisfied with the report of first surveyor and while repudiating the claim on the finding of first surveyor, OP should have given reasoning for not accepting the report of second surveyor.
17) We therefore, find that the OP insurance company ought to have settled the claim of the complainant at least within 4 months from the date of making of the claim. The fact that OP insurance company did not settled the claim within reasonable period and as the claim was filed in the year 2010 but repudiation letter was given on 28.10.2012 i.e. after almost two & half years which amount to deficiency in providing service and we are of the view that the OP insurance company should have settled the claim of the complainant as early as maximum by March, 2012 in terms of the findings of the second surveyors report i.e. report dt. 24.11.2011 which was given after considering all the points raised in the first surveyors report and giving clarifications to all the doubts contained in the first surveyors report. The OP insurance company was therefore not justified in repudiating the claim of the complainant without taking into account the second surveyors report and had failed in its duty to pass the genuine claim of the complainant, we therefore order as follows:-
a.
The OP insurance company is directed to pay to the complainant a sum of Rs. 25,60,747/- towards the claim of the complainant as assessed by the surveyor with interest @ 10% p.a. from 25.03.2012 (i.e. after about four months from the date of submissions of the report by the second surveyor) till the date of payment.
b.
The OP is further directed to pay a sum of Rs. One Lac to the complainant for providing deficient services to the complainant as well as for causing harassment and mental agony, this amount will include costs of litigation also.
18) The order be complied with by the OP within 30 days from the receipt of these orders, and, if OP fails to comply the above orders the complainant shall be at liberty to approach this Commission under Section 25/27 of Consumer Protection Act.
19) Copy of the order be made available to the parties free of cost as per law and thereafter file be consigned to record room.
(S.A.SIDDIQUI) MEMBER (JUDICIAL) (S.C.JAIN) MEMBER FATIMA