National Consumer Disputes Redressal
Oriental Insurance Co. Ltd. vs Soma Block Prints Pvt. Ltd. on 21 September, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 40 OF 2018 (Against the Order dated 14/11/2017 in Complaint No. 37/2012 of the State Commission Rajasthan) 1. ORIENTAL INSURANCE CO. LTD. THROUFGH ITS AUTHORIZED SIGNATORY.
ORIENTAL INSURANCE CO.LTD., HEAD OFFICE: A-25/27, ASAF ALI ROAD. NEW DELHI-110002 ...........Appellant(s) Versus 1. SOMA BLOCK PRINTS PVT. LTD. THROUGH ITS AUTHORIZED REPRESENTATIVE.
R/O. SOMA HOUSE, KHATIPURA. JAIPUR. RAJASTHAN. ...........Respondent(s)
BEFORE: HON'BLE MRS. JUSTICE DEEPA SHARMA,PRESIDING MEMBER
For the Appellant : Mr.Rajesh K Gupta, Advocate For the Respondent : Ms. Ankita Chaudhary, Advocate
Dated : 21 Sep 2022 ORDER
JUSITCE DEEPA SHARMA, PRESIDING MEMEBR
The present complaint has been filed against the order of the State Commission dated 14.11.2017 whereby the complaint of the respondent being complaint no. 37 of 2012 was allowed.
2. The undisputed facts of the case are that respondent is a company incorporated under the Companies Act having its registered office at Soma House, Khatipura, Jaipur and had filed the complaint before the State Commission through the Authorised person. The respondent / Company ( hereinafter referred to as 'insured') who has filed the complaint before the State Commission was selling product in the name of "Soma Shop" and was having one of his shop at K/44, Connaught Place, opposite Plaza Cinema, New Delhi. The insured obtained a policy from the Appellant / Insurance Company (hereinafter referred to as 'Insurer' ) for the period 01.04.2010 to 31.03.2011 covering all the risks of arson, fire break, terrorist activities, earth quake etc at an insurance premium of Rs.7807/- and insured stocks worth Rs.40,00,000/-, furniture with all fittings worth Rs.3,00,000/- and other contents worth Rs.5,00,000/- and thus insured total property of Rs.48,00,000/-. The policy no. 243308/11/2011/8 was issued to the insured. After some time, the insured fitted glass doors at the said shop for beautification purpose valuing Rs.3,00,000/-. It paid additional premium of Rs.3309/- and it was insured under policy no.2443308/48/2010/04 in respect of same shop. Both the policies were thus of total value of Rs.51,00,000/- covering all kind of risks. It is also not in dispute that before the issuance of said two insurance policies, on behalf of insurer, the competent officers had physically inspected the accounts and business place of the insured. There was a fire in the night of 11th May, 2010 in the said shop and air condition plant, furniture, computer counter, glass gates, partition displayed items and also products stored for sale in the said shop got damaged in the fire. The fire department was immediately informed and they reached at the spot within minutes and extinguished the fire at the spot. Two fire tenders had reached the spot. The claim of Rs.47,22,583/- was submitted to the insurance company on the next date i.e.12.05.2010. After deducting the salvage value of Rs.2,90,000/-, the loss was valued at Rs.44,32,583/-. The surveyor was appointed immediately by the insurer on the same day i.e. 12.05.2010 who visited the place of incident on the same day and inspected the shop in the presence of Suresh Nayar, Director of Soma Shop, General Manager Sh.S.C.Gupta, Manager Prashant and staff Pradeep and guard Shivan. The surveyor submitted its report dated 11.01.2011 to the insurer. The surveyor had assessed the loss of stocks at Rs.4,00,000/- and other loss at Rs.2,54,373/- and in aggregate, loss was calculated at Rs.6,54,373/- and after deducting Rs.10,000/- as excess clause, the surveyor had finally assessed loss at Rs.6,44,373/- and accordingly submitted its report to the insurer. The insurer vide its letter dated 24.03.2011 wrote a letter to the insured along with discharge voucher to send the duly signed discharge voucher back. Aggrieved by the fact that loss was not properly assessed by the insurer, the complainant had filed its claim before the State Commission.
3. It was submitted by the complainant that as per IRDA Regulations, 2002 it was the duty of the respondent to provide prospectus after submitting proposal form but the same was not done by the insurer. It is further submitted that neither the surveyor nor the insurer had submitted its report within the period provided under the rules formulated under IRDA and despite their repeated requests to the insurer and panel surveyor for determination and payment of claim amount, nothing was done till 24.03.2011 when the letter of determination of the amount of Rs.6,44,373/- was received from the insurer. It was contended that all the information sought for by the insurance company was provided time to time. It was submitted that after removing the completely burnt stocks and other items, furniture, computers, table, chairs, broken glass, gates of computer counter, ash etc., the restoration work of the shop was done. It is further submitted that as per the instructions of the insurance company, the bills were provided. The loss of Rs.47,22,583/- had been suffered by the insured. It was only after 10 months of the incident that insurance company determined their claim. On these contentions, it is contended that insurance company has violated the IRDA guidelines and that the surveyor report is not correct and prayed for compensation of sum of Rs.47,22,583/- with 12% interest along with cost of litigation and other suitable reliefs.
4. The claim had been contested by the insurer on the grounds that surveyor at the spot had noted that not much damage had occurred to the stocks lying at the spot. The machines and some part of the counter got damaged. It was further submitted that 90-95% goods were found unaffected from fire and were in perfect condition but the complainant is presuming the loss of the entire stocks. The surveyor had informed the officials of the insured present at the spot to prepare an inventory of the damaged goods and the complete details be provided to the surveyor but the same was not done by the insured. The letter dated 21.05.2010 was, therefore, written by the surveyor asking the insured to give the item wise details of the loss of goods in the fire. It is also submitted that there was loss of 5% of the stocks. It is also submitted that photographs were taken at the spot by the surveyor which also clearly show that there was not much loss and the stock was not totally damaged in the fire and only part of the goods were destroyed. The goods stored in the portion of the main shop remained unaffected from fire and were intact. It is contended that surveyor had correctly recorded the loss occurred in the fire. It is further contended that insurer is ready to make the payment of the loss as calculated by the surveyor and that complaint has no merit and is liable to be dismissed.
5. The parties led their evidences before the State Commission. The surveyor was also examined. After hearing the arguments of the learned counsel for the parties and perusing the documents, learned State Commission has held as under :
"It is an admitted position that shop of the complainant situated at Delhi was insured. It is also an admitted position that during midnight of 11.05.2010 and 12.05.2010 fire taken place in the said shop.
It is also admitted position that information was given to the insurance company on 12.05.2010 and survey was appointed. As per IRDA Guidelines Surveyor should have submitted Survey Report within one month or 30 days while Survey Report was given on 11 January means it was given after lapse of 8 months. Surveyor went at the spot. The complainant was to re-start his shop and it could not have kept the shop in the same condition for long period. Admittedly he repaired the shop and the damaged goods instead of keeping another place remitted to Jaipur. The complainant has filed detailed account and also bills and vouchers of the goods lying in the shop and goods worth Rs.43,26,639/- said to have been stored in the shop. Further, furniture, AC, Glass showcase was there in the shop and causing loss to them due to fire is natural. Had surveyor wanted he could have come Jaipur and inspect the goods but he did not do so rather directly submitted his report. The surveyor has submitted report presuming 10% loss of the goods and there is no justified basis thereof.
In this situation the Report submitted by the Surveyor cannot be held as correct. The complainant has sought claim of Rs.47,22,583/- . The complainant could not be able to give details of goods to the insurance company and the goods damaged some portion thereof certainly might have been usable. It is just to grant 75% of claim amount on non standard basis.
ORDER
Hence, order is passed for payment of Rs.35,41,937/- in place of Rs.47,22,583/- together with interest @ 9% p.a. from the date of filing of the complaint dated 22.5.2012. Further, it is ordered to pay compensation Rs.50000/- for mental agony and Rs.25000/- as cost within one month from the date of order. In case compensation of mental agony and cost is not paid within one month then interest @ 9% on the said amount too shall be payable."
6. This order is impugned before me. The main argument of the learned counsel for the Appellant is that main shop remained intact. It is argued that insured had shifted the entire goods lying in the shop to Jaipur without informing the surveyor or the insurer or without their permission and, therefore, there was no evidence as to the quantity of stocks in the said shop at the time of fire. It is further contended that insured had not cooperated and did not provide requisite information despite repeated demands by the surveyor. It is argued that photographs on record clearly show that not much damage had occurred to the stocks lying in the shop. It is further submitted that it was the duty of the insured to provide the details of the loss which it had failed to do and in that circumstance, the surveyor had no option but to carry out the assessment of loss on the basis of physical verification. Shifting of the entire stock to Jaipur also made it difficult for the surveyor to assess the loss. It is submitted that in view of these facts, surveyor had not committed any error and had assessed the loss on the physical verification of the site. It is also submitted that surveyor is an independent witness appointed by the Insurance Regulatory Authority under license as per Section 64 UM (2) of the Insurance Act, 1938 and their report has to be given due importance and unless there are sufficient grounds, their reports cannot be rejected. Reliance is placed on the findings of the Hon'ble Supreme Court in the case of Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd. & Anr. (2009) 8 SCC 507. Reliance is also placed on the findings of the Hon'ble Supreme Court in the case of Khatima Fibres Ltd. VS. New India Assurance Company Ltd. and Anr. 2021 SCC Online SCC 818.
7. Learned counsel for the respondent insured has argued that surveyor visited the spot on 12.05.2010 and submitted its report dated 11.01.2011. It is submitted that time and again, the insured had been requesting the Appellant to determine and pay the claim but there was no reply and it was for the first time that they had received a letter dated 24.03.2011 wherein they learnt that their claim had been determined at a much low rate. Thereafter, several letters dated 14.03.201, 28.03.2011, 09.07.2011, 11.08.2011, 07.09.2011, 15.09.2011, 04.10.2011 were written to the insurer to know the basis of loss at such low rate but no satisfactory reply was received. It is further contended that complainant had handed over an invoice of Rs.78,354/- of M/s Glacier Aircon Pvt. Ltd. to the surveyor but the surveyor did not look into it and only sanctioned Rs.25,000/- against it. The insured had also prepared a factual report of completely damaged items and provided the same to the insurance company. It is also submitted that rent of the shop was Rs.1,50,000/- and besides that it had to pay monthly salary of its employees to the tune of Rs.43,826/- and closing of shop was causing loss to it and since the inspection of the site had been done by the insurance company, it had shifted the entire stocks to Jaipur and informed the insurance company about it as well. The surveyor was duty bound to inspect the sale register of the insured through which he could have known about the quantity of stocks lying in the shop. It is submitted that most of the goods were damaged in fire and large number of goods were also destroyed by the water cannons while extinguishing the fire. The information, documents and bills sought by the insurance company were provided to them from time to time. After instructions and inspection of the damaged shop, the burnt stocks and other items were shifted in order to restart the business. The inventory was also provided to the insurance company. It is submitted that there is violation of IRDA guidelines and the surveyor report was not submitted within one month from the date of incident and insurance company remained sleeping over it for 10 months, and it took them 10 months to determine their claim. It amounts to deficiency in service and, therefore, the State Commission has rightly granted relief to the complainant on non standard basis Reliance is also place on the findings of Bombay High Court in the case of Maa Ashish Textiles Industries Pvt. Ltd. Vs. National Insurance Company Limited 2019 SCC Online Bom 887 and reliance is also placed on the findings of this Commission in Gupta Polyster Pvt.Ltd. Vs. National Insurance Company Ltd.& Anr. 2015 SCC Online NCDRC 1781. On these contentions, it is contented that Appeal is liable to be dismissed.
8. I have heard the arguments and perused the record.
9. Admittedly, the fire had taken place during the existence of the valid policies and, therefore, the stocks and the other articles insured under these two policies were duly covered. The first argument of the learned counsel that Appellant is that State Commission has wrongly awarded a sum of Rs.35,41,937/- because the main shop remained intact and major portion of the stock also remained intact. It was also argued that there was no evidence on record to determine the quantity of the goods lying in the store wherein the fire had taken place. The State Commission also considered this point and has considered the evidences on record. There is no dispute that as soon as the fire had broke out in the store room, the fire brigade was duly informed and fire brigade reached at the pot and used water cannons to douse the fire. It is to be kept in mind that stocks consisted of clothes and even if there was no fire on the main shop, the water cannons used for dousing the fire by the fire brigade certainly must have damaged those clothes which did not catch fire but got wet in the act of extinguishing the fire. Learned counsel for the respondent has drawn my attention to the documents which were part of the State Commission's record and not filed by the Appellant along with the Appeal but subsequently filed by the respondent in order to substantiate his contention that details of each and every item which got damaged, fully burnt, half burnt and spoiled by smoke and water, was duly supplied to the insurance company. It is further contended that details of entire stock lying at the time of incident in the shop and store was also given along with relevant documents to the insurance company. Even the surveyor in his report has observed that entire stocks lying in the store room was completely burnt and the items kept / displayed near the store room on its either side were also affected due to fire and water used in fire fighting. Nothing had stopped the surveyor to segregate the items which were totally burnt, partially burnt and not affected at the time when he visited the spot. It certainly was his duty to assess the loss. It is apparent that surveyor after his visit on the date of inspection did not make any communication that the respondent / complainant and it is also apparent that whenever demanded, the information was given to the surveyor. The main thrust of the arguments of the learned counsel for the Appellant is that surveyor did not get the opportunity to do so since the insured had removed the entire stocks from the shop and shifted it to Jaipur. The damaged stock was shifted to Jaipur in August 2010 while the date of incident is 11.05.2010. It is almost after three months that the stocks which got damaged in the incident had been shifted by the respondent to Jaipur. It is not out of place to mention that Appellant is located at Jaipur and policy had been issued from Jaipur. If the Appellant wanted to really check the stocks, it was available to them at Jaipur itself. Morevoer, as per the IRDA guidelines, the surveyor was to be submit its report within 30 days and the same had not been done. The complainant has submitted that there was no communication from the surveyor during this period and that they had to start their shop again which is situated at prime place i.e. in Connaught Place and that they were suffering losses due to their inability to run the shop. The Appellant has not placed on record any letter written by the surveyor to insured during this period or that he ever visited till 16.08.2010 for determining the actual loss of the stocks at the site. Learned counsel for the Appellant has relied on the findings of the Hon'ble Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd (supra). The relevant paragraph reads as under:
"15. To appreciate the issues raised in this civil appeal, we extract relevant Section by omitting what is not necessary for the purpose of this case. Section 64-UM(2) of the Insurance Act, 1938 is as under :
"64- UM(2) - No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessors):
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.
(3) The Authority may, at any time, in respect of any claim of the nature referred to in sub-section (2), call for an independent report from any other approved surveyor or loss assessor specified by him and such surveyor or loss assessor shall furnish such report to the Authority within such time as may be specified by the Authority or if no time limit has been specified by him within reasonable time and the cost of, or incidental to, such report shall be borne by the insurer.
(4) The Authority may, on receipt of a report referred to in sub- section (3), issue such directions as he may consider necessary with regard to the settlement of the claim including any direction to settle a claim at a figure less than, or more than, that at which it is proposed to settle it or it was settled and the insurer shall be bound to comply with such directions:
Provided that where the Authority issues a direction for settling a claim at a figure lower than that at which it has already been settled, the insurer shall be deemed to comply with such direction if he satisfies the Authority that all reasonable steps with due regard to the question whether the expenditure involved is not disproportionate to the amount required to be recovered, have been taken with due despatch by him:
Provided further that no direction for the payment of a lesser sum shall be made where the amount of the claim has already been paid and the Authority is of opinion that the recovery of the amount paid in excess would cause undue hardship to the insured:
Provided also that nothing in this section shall relieve the insurer from any liability, civil or criminal, to which he would have been subject but for the provisions of this sub-section."
The Hon'ble Supreme Court has also held that findings of the surveyor is to be given due credit and it cannot be rejected. Reliance is also placed on paragraph no. 32 of the above judgment of the Hon'ble Supreme Court , which reads as under:
"32. There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report.
10. Reliance is also placed on the findings of the Hon'ble Supreme Court in the case of Khatima Fibres Ltd. VS. New India Assurance Company Ltd. and Anr. (supra), wherein the Hon'ble Supreme Court has made the following observations:
" 38. A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor's report to forensic examination of its anatomy, just as a civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop."
11. It is argued that unless there is inadequacy, nature and manner of performance of the duty of the surveyor, its report cannot be rejected and, therefore, State Commission has committed illegality and infirmity in rejecting the claim of the surveyor.
12. On the other hand, learned counsel for the complainant has placed reliance on Regulation 9 (2) of IRDA ( Protection of Policy Holder's Interests) Regulations, 2022 ( in short, the 'Regulations'') and has submitted that surveyor was duty bound to communicate his findings to the insured within 30 days and surveyor had not done so and, therefore, has acted in violation of 9 (2) of Regulations. It is further argued that surveyor can seek extension of time only after due intimation to the insured and insurer and the surveyor in this case has not done so and, therefore, has violated the regulation and acted contrary to the duties assigned to him. Reliance has also been placed on the findings of the Bombay High Court in Maa Ashish Textile Industries Private Limited ( supra ) wherein Bombay High Court has placed reliance on Regulation 9 (2 ), (3), (4), (5) and (6) of wherein it has been held that surveyor appointed by the insurer shall communicate his findings to the insured within 30 days of his appointment.
13. In this case, the surveyor was appointed on 11.05.2010 and he visited site on 12.05.2010 and he submitted his report only in January 2011 i.e. after about eight months. The surveyor certainly was required to submit his claim within 30 days and in any circumstance submit its report within 30 days and extension can only be sought with information to the insured. In the present case, the surveyor has not only violated Regulation (2) but it had also not done the needful and made no efforts to physically verify the actual loss by segregating the damaged goods. Therefore the State Commission has rightly relied upon the documents submitted by the complainant before the State Commission and also supplied to the surveyor, while giving its findings. From the facts and circumstances of this case, the State Commission has rightly rejected the calculation done by the surveyor in his report and relying on the documents supplied by the complainant, granted the compensation on non standard basis. The State Commission besides granting compensation in form of interest @ 9% also paid compensation of Rs.50,000/- towards mental agony. The Hon'ble Supreme Court in DLF Homes PanchkulaPvt Limited Vs. D.S.Dhanda Etc. Etc. (2020) 16 SCC 318has clearly held that once the compensation in the form of interest has been awarded, the compensation on different heads should not be granted.
14. In view of the above discussion, Appeal is partly allowed and following directions are issued:
i. The Appellant Insurance company shall pay Rs.35,41,937/- along with interest @ 9% p.a. from the date of filing of complaint i.e. 22.05.2012 till the date of payment;
ii. Cost of litigation of Rs.25,000/- as awarded by the State Commission. iii. While disposing of the present Appeal, the insurance company is directed to pay Rs.50,000/- as cost of litigation to the respondent. iv. The payment shall be made within 3 months from the date of order failing which the appellant shall be liable to pay interest at the rate of 12% p.a. 15. With these directions, the Appeal stands disposed of. ......................J DEEPA SHARMA PRESIDING MEMBER