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NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION, NEW DELHI
Honble Mr. Justice V. Balakrishna Eradi, President; Mrs. A.S. Vijayakar,
Member; Mr. Y. Krishan, Member; Mr. Justice B.S. Yadav, Member
SRI VENKATA PADMAVATHI RAW & BOILED RICEMILL—Complainant
versus
THE NEW INDIA ASSURANCE CO. LTD. & ANR.—Opposite Parties
Original Petition No. 43 of 1991—Decided on 10.4.1992
For the Complainant:Mr. C.S. Vaidyanathan & Mr. P. Nagesh, Advocates.
For the Opposite Parties:Mr. P.K. Seth, Advocate.
The Insurance Company is liable to pay the insured the amount of loss sustained against the insured stocks as assessed by the first Surveyor.
Headnote:
INSURANCE - CLAIM SETTLEMENT - DELAY - DEFICIENCY IN SERVICE - INSURANCE COMPANY'S LIABILITY - ASSESSMENT OF LOSS - EXTENT OF DAMAGE - VALUATION OF STOCKS - SURVEYORS' REPORTS - INTERPRETATION - INTEREST ON DELAYED PAYMENT.
Fact of the Case:
The complainant insured stocks of rice in Mills, godowns, and on the open drying platform for Rs. 27.50 lacs under a policy taken out on December 29, 1989. In May 1990, a cyclone and heavy rains caused damage to the stocks. The Insurance Company appointed four Surveyors to assess the loss. The Surveyors' reports showed wide variations in the assessment of the quantum of loss. The complainant filed a complaint before the Consumer Commission alleging deficiency in service in settling the claim.
Finding of the Court:
The Consumer Commission found that the Insurance Company had adopted unfair means to defeat the claim of the complainant. The Commission held that the assessment of the extent of damage to the stocks made by the last Surveyor was arbitrary and did not justify the substantial variation therein from the extent of damage indicated in the first preliminary survey report. The Commission also held that it would be just and fair to accept the valuation of the loss made by the first Surveyor.
Issues: 1. Whether the Insurance Company was guilty of deficiency in service in settling the claim? 2. Whether the assessment of the extent of damage to the stocks made by the last Surveyor was arbitrary? 3. Whether the valuation of the loss made by the first Surveyor was just and fair?
Ratio Decidendi: 1. The Insurance Company's repudiation of the claim without establishing the collusion and fraud alleged against the insured amounted to deficiency in service. 2. The assessment of the extent of damage to the stocks made by the last Surveyor was arbitrary and did not justify the substantial variation therein from the extent of damage indicated in the first preliminary survey report. 3. The valuation of the loss made by the first Surveyor was just and fair.
Final Decision: The Consumer Commission allowed the petition and directed the Insurance Company to pay to the complainant Rs. 23.30 lakhs towards the loss sustained against the insured stocks. The Commission also awarded costs of Rs. 2,500/- to the complainant.
Mr. Y. Krishan, Member—The complainant insured stocks of rice in Mills, godowns and on the open drying platform of the Mill for Rs. 27.50 lacs under a policy taken out on December 29,1989. It covered risks rising from flood and cyclone. The policy was operative for a period of one year i.e. from 31.12.1989 to 30.12.1990. In May, 1990 there was a cyclone and heavy rains and floods from the 8th to 13th which according to the complainant caused a lot of damage to the Mills and the stocks of rice and paddy, in the Mills, godowns and the open drying platform. On the 9th May, 1990 the Insurance Co. on notice, immediately appointed a Surveyor who submitted a preliminary report dated 10.5.90 (sic) (survey conducted on 11th and 12th May, 1990). According to the Surveyor the cause of damage was cyclone followed by heavy down-pour of rain (heavy gale blew off asbestos sheet roofing, the rain water fell directly on the paddy and rice bags and on the rice kept for drying. They were submerged in water and the entire paddy, rice and broken rice became wet, unsuitable for human consumption and started emitting foul smell. He gave an estimate of the quantities of paddy and rice damaged after verification with the relevant records.
2. This was followed by final survey by two Surveyors jointly who were appointed by the Insurance Company. The two Surveyors were: (a) M/s. Vardhman Insurance Services Pvt. Ltd. Madras and (b) Shri Nageswara Rao. Vardhman Insurance Service Pvt. Ltd. conducted their survey on 16,18, 28 to 31st May, 1990 and Shri Nageswara Rao conducted his survey on 30th and 31st May, 1990. Mr. Nageswara Rao submitted his report on the 5th November, 1990 and M/s. Vardhman Insurance Services Pvt. Ltd. submitted their report on the 12th November, 1990.
3. M/s. Vardhman Insurance Services Pvt. Ltd. assessed the insurance liability at 23.30 lacs (round) and Shri Nageswara Rao, the second valuer assessed the loss at 5.25 (round).
4. Because of the division of opinion between the joint Surveyors, the Opposite Party Insurance Company appointed a fourth Surveyor M/s. Mehta and Padamsey Surveyors and Loss Assessors to undertake a survey, which was conducted on 9th, 10th of February and 14th, 15th of March, 1991, and they submitted their survey' report on 18th March, 1991. It appears from the report that they only investigated and reassessed the loss and damage caused by the flood on the basis of records. These Surveyors stated that "it would not be wise to comment upon the report of Vardhman Insurance Services Pvt. Ltd.". They, however, made some critical comments about the report of the second joint Surveyor Shri Nageswara Rao. In particular they pointed out that the Surveyor Shri Nageswara Rao had not commented upon the destruction of paddy, that he made a report after the lapse of about 6 months from the date of occurrence of the event and made observations contrary to the certificates issued by the statutory authorities etc.
5. The fourth Surveyor assessed the loss at 14.80 lacs and recommended full and final settlement at 14.16 lacs.
6. The complainant insured agreed to accept the same on the 15th March, 1991.
7. Apart from the surveys, on the 10th May, 1990 the Branch Manager and the Assistant Administrative Officer of the Respondent Insurance Company, Kakinada went to the rice Mill, took the stock position as on 9th May, 1990.
8. The Executive Officer, Gram Panchayat, Turangi, on 13th May, 1990 sent notice to the complainant that paddy, rice, bran etc. stocked at the Mil had been wetted by cyclone and flood and were damaged and emitting foul smell and there was possibility of an attack of cholera spreading to the village. He, therefore, desired that paddy, rice etc. should be shifted immediately outside the village. The Executive Officer of the Gram Panchayat, Turangi on 29th May, 1990 issued the certificate about the dumping of damaged stocks in the Salt Canal from 16.5.1990 to 24.5.1990 in the presence of his staff.
9. On 13th May, 1990,
