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RAJASTHAN STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, JAIPUR
Hon’ble Mr. Justice S.K.M. Lodha, President;
Mr. Damodar Thanvi, Member; Mrs. Saria Khan, Member.
UMEDILAL AGRAWAL & ORS.—Appellants
versus
K.K. NAGPAL & ORS.—Respondents
Complaint Case No. 4/88—Decided on 21.2.1989
Counsel for the Parties :
For the Appellant :Mr. Sanwat Mal Mathur, Advocate.
For the Respondent:Mr. Vinod Tyagi, Advocate.
An insurer is liable to indemnify the insured for the loss suffered, as per the terms of the insurance policy, and is negligent in not settling the claim within a reasonable time.
Headnote:
CONSUMER PROTECTION ACT - INSURANCE - FIRE - INDEMNITY - DEFICIENCY IN SERVICE - COMPENSATION - INTEREST - INTERPRETATION OF POLICY CONDITIONS - MEASURE OF INDEMNITY - AVERAGE CLAUSE - VALUATION OF LOSS - NEGLIGENCE - DELAY IN SETTLEMENT OF CLAIM.
Fact of the Case:
The insured, Mangla Textiles, obtained a Traders Combined Policy from the insurer, United India Insurance Company Ltd., covering the stock of all types of cloth in their shop. On September 16, 1987, a fire broke out in the shop due to an electric short circuit, destroying the cloths. The insured filed a complaint with the State Commission under the Consumer Protection Act, claiming compensation for the loss and damages suffered.
Finding of the Court:
The State Commission held that the fire was caused by an electric short circuit and that the insurer was liable to indemnify the insured for the loss suffered. The Commission also found that the insurer was negligent in not settling the claim within a reasonable time and awarded compensation to the insured for the delay.
Issues: 1. Whether the fire was caused by an electric short circuit? 2. Whether the insurer was liable to indemnify the insured for the loss suffered? 3. Whether the insurer was negligent in not settling the claim within a reasonable time? 4. Whether the insured was entitled to compensation for the delay?
Ratio Decidendi: 1. The Commission relied on the survey report submitted by the insurer's surveyor, which concluded that the fire was caused by an electric short circuit. The Commission also considered the evidence of witnesses and the fact that the insurer had not challenged the insured's audit report, which showed that the value of the stock at the time of the fire was Rs. 4,58,718.55. 2. The Commission held that the insurer was liable to indemnify the insured for the loss suffered, as per the terms of the insurance policy. The Commission rejected the insurer's argument that the claim could not be settled due to underinsurance, as the policy did not contain any provision for such a deduction. 3. The Commission found that the insurer was negligent in not settling the claim within a reasonable time. The Commission noted that the fire occurred on September 16, 1987, and the complaint was filed on October 12, 1988, but the insurer had still not settled the claim. The Commission also considered the fact that the insurer had not produced any evidence to explain the delay. 4. The Commission awarded compensation to the insured for the delay in settling the claim, as provided under Section 14(1)(d) of the Consumer Protection Act.
Final Decision: The State Commission directed the insurer to settle the insured's claim by paying Rs. 3,86,562.00 as indemnity for the loss suffered and Rs. 13,438.00 as compensation for the delay in settling the claim. The Commission also ordered the insurer to take delivery of the salvage lying with the insured.
S.K.M. Lodha, President — Shri Umedilal Agarwal, partner, Mangla Textiles, Bazaza Bazar, Alwar (hereinafter referred to as’ the insured’) has filed this complaint under Sec. 12(1)(a) and S. 17(1)(a)(i) of the Consumer Protection Act (No. LXVIII of 1986) (which will, for the sake of brevity, be hereinafter referred to as ‘the Act’) against opposite parties No, 1 to 5 (hereinafter referred to as ‘the insurer’) claiming a sum of Rs. 9,98,600/- as compensation. The details of the compensation have been mentioned in para 6 of die complaint. It may be mentioned that amongst others a sum of Rs. 4 lakhs has been claimed as insurance amount; Rs. 78,000/- have been claimed as interest on the insurance amount for a period of 13 months, and Rs. 2,600/- has rent of the room in which salvage was stored for 13 months @ Rs. 200/- per month. The complaint is dated October 12,1983. The insured has a shop (insured premises) situated in Bazaza Bazar, Alwar. It obtained Tracers’ Combined Policy DR/85 No. 42805/140100/57/1/1577 dated 28.1.86 in lieu of Cover Note No. 693765 dated 22.12.86. We are concerned in this case with Section I of the policy, which is as under : -
“Section I. Contents. — (excluding money and valuables) : on stock of All Type cloth are covered.
(i) Furnitures, fixtures and fittings.
(ii) Stock in trade comprising of”
According to this, a stock of all types of cloths was insured to the extent of Rs. 4,00,000/-. The period of insurance was 22.10.86 to 21.10.87. The complainant has alleged that there was fire in the shop on account of electric short-circuit, by which the cloths lying in the shop were destroyed. According to it, the cloths that were lying in the shop were of Rs. 4,53,718.55. The insured (complainant) lodged the claim in accordance with Condition No. 5(b) of the Policy in time, i.e., within fourteen days and approached the insurer for payment of the insured amount but it was not paid. After correspondence, a notice through Advocate dated 21.9.88 was served upon the insurer, but neither any reply was given nor settlement of the claim was made. Ultimately, the complainant has filed this complaint as stated above. Along with the complaint, the insured has filed many documents. The relevant documents will be referred to hereinafter when necessary.
2. The name of opposite-party No. 5 was ordered to be deleted on the application of opposite party No. 5 vide order dated 3.1.89. A detailed reply dated December 30,1988 has been filed by the Advocate of the insurer on January 2,1989 contesting the claim on various grounds. Preliminary objections No. 1 to 6 were raised. They pertain to the maintainability of the complaint. They are as under;—
(1) (1)that the Consumer Protection (Rajasthan) Rules, 1987 framed under the Act were published in the Gazette of July 23,1987 and, thereafter, they came into force. The State Commission was established on May 26,1988. The fire was caused in the shop (insured premises) on Sept. 16,1987 which is the date of cause of action and so, it is of prior date from the date of the establishment of the Commission and for this reason, the complaint is, prima facie, liable to be dismissed, for, it cannot be maintained under the Act and the Rules framed thereunder;
(2) (2)that opposite party No. 5 has been unnecessarily impleaded in the complaint as there is no privity of contract between the complainant and him. The complaint, therefore, suffers from the defect of misjoinder of parties;
(3) (3)that no specific cause of action has been mentioned in the complaint against the opposite-parties, which may bring the same within the four-corners of the Act;
(4) (4)that no permission for filing the complaint was granted by the State Commission in respect of opposite-party No. 5. Opposite party No. 5 did not consent to it. In the alternative, the State Commission has got no territorial jurisdiction and cannot hear the complaint and on this ground, the complaint should be dismissed;
(5) (5)that the claim of the comp
