National Consumer Disputes Redressal
Diwaliben Vasharambhai Sikotaria vs New India Assurance Co. Ltd. on 24 March, 2005
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION NO. 21 OF 2001 Diwaliben Vasharambhai Sikotaria Complainant Versus New India Assurance Co. Ltd. Opposite Party BEFORE: HONBLE MR.JUSTICE M.B. SHAH, PRESIDENT DR. P.D. SHENOY, MEMBER For the Complainant : Mr.Vivek Sood, Advocate For the Opp. Party : Mr. P.K. Seth, Advocate 24.03.2005 ORDER
M.B. SHAH, J., PRESIDENT The complainant, is a widow belonging to socially and economically backward class, was the owner of a wooden barge having registered tonnage which was built in the year 1990. The said barge was registered at Port of Varaval and the market value of the said barge was assessed at Rs.95 lakhs. Admittedly, the complainant was having an insurance policy for the said barge since 1984 onwards. On 22.1.1998, the barge sank near the coast of Iraq and 9 crew members died. The insurance company was informed and thereafter a claim was filed with the insurance company. As the insured amount was not paid, this complaint was filed on 15.1.2001 wherein it was claimed that the insurance company be directed to pay a sum of Rs.1,85,57,000/- with interest @ 18% on the sum of Rs.1,04,70,000/- from the date of the complaint till the payment or realization. The claim was divided into two parts. One claim was for Rs.95,000/- for barge and Rs.4,50,000/- for 9 crew members @ Rs.50,000/- for the death of each crew member. That claim was on the basis of the second policy issued by the opp.party insurance company. Other claim was for miscellaneous expenses as mentioned in Exhibit A-10.
Undisputedly, the policy dated 3.4.1997 issued by the New India Assurance Co. Ltd. is a valued policy w.e.f. 1.3.1997 to 25.2.1998.
Valuation is based upon the survey report of Mr. G.P Dave & Sons.
Prior to the aforesaid report dated 30.12.1995, in 1994 also the insurance company has obtained survey report dated 7.2.1994 wherein valuation for the barge was arrived at Rs.70 lakhs.
It is also an admitted fact that on 5.2.1998, the Divisional Manager of the insurance company has written a letter to the complainant with regard to a telephonic talk on 25.1.1998 and subsequent discussion which they had at Veraval Branch for notifying to all concerned authority with regard to the casualty. That copy was sent to Govt.
insurance fund wherein it has been specifically mentioned as under
:
The above vessel is gone for total loss and your share is 60%. The value of the vessel is Rs.95/- lacs. Kindly register the claim and take due note of the same.
Despite this, for the aforesaid loss, insurance company by its letter dated 4.2.2000 informed the complainant that insurance company was prepared to pay Rs.70 lakhs as full and final settlement. In the said letter, it has been inter-alia stated as under:
The above vessel has been insured for the following period as per details given below :
S.No . Period of cover Sum insured Cover details Remarks
1. 17.2.90 to 16.6.91 Rs. 30 lacs wide cover vessel valued at Rs.35 lacs insured for Rs. 30 lacs
2. 25.10.91 to 24.7.92 Rs. 30 lacs ---do--- -----do-----
3. 1.3.94 to 29.2.95 Rs. 70 lacs wide cover
4. 1.3.95 to 28.2.96 Rs. 70 lacs Total loss only
5. 1.3.96 to 28.2.97 Rs. 95 lacs ---do---
6. 1.3.97 to 28.2.98 Rs. 95 lacs ---do---
From the above it is noted that the vessel has remained uninsured for a period of time, though we understand that during the period 1993, it was insured with United India.
On going through the insurance history, initially the vessel had been covered on wider term basis for a value of Rs.30 lacs (as against the valuation of Rs.35 lacs) and subsequently covered into restricted basis for a higher sum i.e. Rs.70 lacs, effective 01/03/94 based on the valuation report Shri Bipin G. Sanghvi, who has estimated the value of hull structure to be Rs.62 lacs and engine Rs.8 lacs.
We further notice that once again in the year 1995 a valuation was carried out by Shri G.P. Dave & Sons, at the request of owner.
There is no evidence on record that the insurance company has called for any valuation report in support of an increase in sum insured. He has assessed the value of the vessel at Rs.95 lacs. (Hull structure Rs.65 lacs, Machinery & Auxiliaries Rs.27 lacs and Accessories Rs.3 lacs), vide his report dated 30.12.1995. However, from the description we notice that only hull structure have undergone certain changes, that too on account of routine maintenance but Machineries and Auxiliaries have remained the same. You will agree that machineries over the years will only depreciate in value. We note that the hull value remained almost same even with modification as assessed by the surveyor but the values of engine/machinery/accessories increased by about Rs.22 lacs.
Accordingly, we are not in a position to understand the basis on which the valuation has been done by Shri Dave. Further, though the valuation has been done in November 1995 increase in sum insured has been effected only on 1st March 1996.
We agree that the Hull and Machinery policies are agreed value policies, but at the same time they are also policies based on principle of indemnity. In case it is established that the value proposed for insurance is much higher than the market value, it tantamounts to misrepresentation of material fact, whereby the insurer has a right to avoid liability.
We also notice from the report that the vessel was constructed with the financial assistance of Gujarat Maritime Board and as on date the outstanding amount stands at Rs.25.50 lacs. Further, you and your family members have availed of loan from Veraval Co-op. Bank against the vessel and your house. The total amount outstanding is to the tune of Rs.16 lacs. In addition your family has availed of personal loans from relatives and the outstanding as at December 99 is to the tune of Rs.5.25 lacs. Thus the total commitment from your family to various interests are about Rs.48 lacs. We also note that the Veraval Co-op. Bank has filed a case for recovery of the loan amount.
Based on the above, we are of the view that the claim in question, if admitted can only be considered for an amount of Rs.70 lacs as assessed by the earlier surveyor as no improvement has been done on the vessel as analysed by the subsequent survey report.
Kindly let us have your comments on the above in order for us to proceed further.
As the complainant was not agreeable to accept Rs.70 lakhs as offered, the insurance company failed to pay any amount and, therefore, a complaint was filed.
When the matter came up for hearing on 14.5.2004, by an interim order we directed as under
:
Considering the dispute involved and the fact that hearing of the matter is likely to take some time, insurance company is directed to pay directly by Account Payee Cheque Rs.70 lakhs in the name of complainants within a period of 6 weeks from today, on receipt of duly signed receipt by all the complainants. This payment by the insurance company and acceptance by the complainants would be without prejudice to the rights and contentions of the parties including the complainants.
Learned counsel appearing on behalf of the petitioner states that on the basis of the said order, the insurance company has paid the said amount in July 2004.
Considering the facts stated above, it is apparent that complainant has taken value assured insurance policy and that is in conformity with the Marine Insurance Act, 1963. Valuation for the barge was carried out by the insurance company from time to time and the complainant was paying insurance premium on the said basis from 1984 onwards. As stated above, for the valuation purpose, survey was carried out and the surveyor has reported on 7.2.1994 its valuation at Rs.70 lakhs.
Thereafter, other survey was carried out in December 1995 and the surveyor valued it at Rs.95 lakhs. On that basis, the complainant has paid the premium and taken the insurance policy. Further, it is not disputed by the insurance company that insurance policy was a value-based insurance policy. Even the Branch Manager by his letter dated 4.2.2000 has informed the complainant that :
we agree that the hull and machinery policies are agreed value policies but there are policies based on principle of indemnity.
In our view, the second part is illegally and erroneously added by the Branch Manager who wrote the letter. There is no such condition in the policy. Once agreed valued policy is taken and that too when valuation is based on the value assessed by the surveyor and thereafter premium is accepted accordingly by the Insurance Company, it is not open to the Insurance Company to add subsequently a condition and hold that policy was based on principle of indemnity. Such valuation is conclusive.
This is made clear by Sections 29 and 30 of the Marine Insurance Act, 1963, which read as under:
29. Valued policy - (1) A policy may be either valued or unvalued.
(2) A valued policy is a policy which specifies the agreed value of the subject-matter insured.
(3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is as between the insurer and the assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.
(4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.
30. Unvalued policy An unvalued policy is a policy which does not specify the value of the subject matter insured, but subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained, in the manner hereinbefore explained.
From the above two sections, it is clear that a policy may be either valued or unvalued and the valued policies are policies which specify the agreed value of the subject matter insured. The only exception which is carved out is in sub-section (3) of clause 29, as quoted above, is with regard to fraud.
In the absence of fraud, the value fixed by the policy is conclusive of the insurable value of the subject insured. In the present case, there is no question of any fraud by the surveyor while fixing the market value of the barge.
Further, if surveyor has committed any mistake at the time of assessing the value, it is for the insurance company to take action against the said surveyor.
Admittedly, there is no fraud committed by the insured. She has taken insurance from 1994 onwards on the basis of the valuation of the barge varying from time to time. With regard to the other policy for the death of the crew members, there is no dispute. In this view of the matter, this complaint is allowed. The insurance company is directed to pay Rs.95 lakhs for the so valued insured barge and to pay Rs.4,50,000/- for the death of the crew members based on the second policy for the same. In all, insurance company is liable to pay Rs.99,50,000/-.
Admittedly, on the basis of the interim order, insurance company has paid Rs.70 lakhs.
Hence, it is directed that insurance company shall pay interest on the said Rs.70 lakhs @ 10% from 4.2.2000 till the date of its payment. We have taken the date 4.2.2000 because on the said date the insurance company has informed the complainant, as stated above, that insurance company would be liable to pay Rs.70 lakhs only. The insurance company is also directed to pay the remaining amount of Rs.29,50,000/- with interest @ 10% from 4.2.2000 till its payment. The insurance company shall pay the same within a period of 2 months from today.
The insurance company is also directed to pay Rs.20,000/- as costs and shall be paid to NCDRC Bar Association (Legal Aid).
The complaint stands disposed of accordingly.
J. (M.B. SHAH) PRESIDENT (P. D. SHENOY) MEMBER