An insurance company is liable to pay the insured the insured value of the car, with interest, in case of a total loss, if there is gross negligence and deficiency of service on the part of the insurance company in settling the claim.

JUDGMENT - Mrs. A.S. VIJAYAKAR, Member :---This is an appeal against the order of the State Commission, Tamil Nadu at Madras, in the Complaint No. 152 of 1992 by which the insurance company, i.e., the appellant herein, was directed to pay the respondent Rs. 5,50,000/- with interest thereon at the rate of 9 per cent from 4-1-1990 till payment Rs. 1,000/- towards costs was also awarded.

2. The facts of the case as found by the State Commission are that the respondent is the owner of a Mercedez Benz car bearing registration No. TSB 4514. He has taken a policy of comprehensive insurance for the aforesaid car under policy No. 500200/51012606 with the opposite party, insurance company, for a sum of Rs. 5,50,000/- though the market value was about Rs. 10,00,000/-. While the policy was in force the car met with an accident on 3-10-1989 near Guntarur in which the driver met with instantaneous death and the complainant and his employee, Raghuraman, who were travelling in the car, were injured. The matter was reported to the opposite party, appellant herein and relevant papers were submitted on 4-10-1989. One Bhairavamurthy was appointed surveyor by the opposite party, insurance company, who surveyed the vehicle on 19-2-1990 and gave his report on 30-4-1990. His report grossly undervalued the loss and the complainant questioned the correctness of the report and wrote to the Manager of the opposite party. Thereupon the opposite party appointed G. Ramamurthy to conduct a resurvey. The re-survey was done in the month of September, 1990 and the report was submitted in January, 1991. In spite of the letters of the complainant dated 19-3-1991, 24-4-1991, telex dated 26-6-1991 and another letter dated 5-9-1991, the claim was not settled. Hence the complainant claimed the insured value of the car, Rs. 5,50,000/-, with interest thereon.

3. According to the appellant insurance company, after the first surveyor's report, where the loss was assessed under 3 modes:

(a) total loss Rs. 3,50,000/-; (b) repair loss Rs. 3,46,000/-; (c) cash loss Rs. 2,00,000; the respondent insured was not satisfied and so a second surveyor was appointed. The second surveyor in his report dated 1st January, 1991, assessed the loss under 3 modes: (a) repair basis Rs. 5,96,915.44; (b) total loss basis (subject to salvage value as disposal) Rs. 5,50,000/-; and (c) cash loss basis of Rs. 3,00,000/-, to this the respondent agreed on Rs. 3,00,000/- by letter dated 17-11-1990 and the appellant duly accepted the offer. But since there was a vast difference in the figures arrived at by the first surveyor and the second surveyor as regards the market value of the car, the appellant requested the respondent-complainant vide letter dated 10-5-1991 to submit to the appellant insurer the purchase invoice of the car, which the respondent was said to have purchased from the State Trading Corporation, so that with the date of purchase and value of purchase the two divergent figures arrived at by the two surveyors could be reconciled, and this would facilitate early settlement of the claim.

But the respondent-complainant, instead of complying with this, filed the complaint before the State Commission on 26-9-1991.

4. The State Commission gave its consideration to the following points:

(1) Whether there was any deficiency of service or negligence on the part of the opposite party?

(2) Whether the claim is not maintainable?

(3) To what amount of compensation, if any is the complainant entitled?

After an exhaustive examination of the above-mentioned points, the State Commission came to the conclusion that there was gross negligence and deficiency of service on the part of the opposite party in settling the claim for insurance for the sum of Rs. 5,50,000/-. The accident had occurred on 3-10-1989 and till 10-5-1991 the claim was not settled even after the complainant-respondent had agreed to accept Rs. 3,00,000/- on full loss basis on 17-11-1990. On 10-5-1991, the insurance company asked for more inf

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