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TAMIL NADU STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, MADRAS
Hon’ble Thiru Justice S.A. Kader, President; Thiru R.N.
Manickam & Dr. Tmt. Ramani Mathuranayagam, Members
M/s. CHENDUR FORGINGS PVT. LTD.—Complainant
versus
THE DIVISIONAL MANAGER, THE ORIENTAL
INSURANCE CO. LTD. & ANR.—Opp. Parties
Counsel for the Parties :
For the Complainant :Mr. R. Balachander, Advocate.
For the Opp. Parties :Mr. K.S. Narasimhan, Advocate.
An insurance company cannot deduct a policy excess from a claim amount without a valid basis, and failure to do so amounts to deficiency in service.
Headnote:
CONSUMER PROTECTION ACT - SECTION 17, 12 - INSURANCE POLICY - CLAIM SETTLEMENT - DEFICIENCY IN SERVICE - INTERPRETATION OF POLICY TERMS AND CONDITIONS - ASSESSMENT OF LOSS - AWARD OF COMPENSATION AND INTEREST.
Fact of the Case:
The complainant, a manufacturing company, took out three insurance policies with the opposite party Oriental Insurance Company to cover its machineries, building, and stock. After a flood damaged the complainant's factory, the complainant filed a claim for the loss suffered. The insurance company settled the claims under two policies but disputed the claim under the third policy, Policy No. F/4396, covering building and machineries.
Finding of the Court:
The court found that the insurance company had failed to provide a satisfactory explanation for deducting a policy excess of Rs. 25,000/- from the claim amount assessed by the surveyor. The court held that this amounted to deficiency in service on the part of the insurance company.
Issues: 1. Whether there was any deficiency in service on the part of the insurance company in settling the claim under Policy No. F/4396? 2. Whether the complainant was entitled to compensation for the loss suffered?
Ratio Decidendi: The court held that the insurance company was liable to pay the complainant the full amount of the loss assessed by the surveyor, Rs. 48,750/-, as there was no valid basis for deducting the policy excess. The court also awarded interest on the amount from the date of expiry of 2 months from the date of the surveyor's report.
Final Decision: The court ordered the insurance company to pay the complainant Rs. 48,750/- with interest at 12% p.a. from 20.4.91 till payment and also to pay a sum of Rs. 1,000/- as costs to the complainant. The other claims of the complainant were rejected.
Mr. Justice S.A. Kader, President—This is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.
2. The complainant company is engaged in the manufacture of forging components meant for automobile and non-automobile sectors. It has imported and erected fabrication machinery. It has taken up policy of transitcum-erection insurance with the opposite party Oriental Insurance. After commissioning the machines, the complainant wrote to the second opposite party branch office for enhancing of the existing insurance policy so as to include the machineries and buildings and paid an additional premium of Rs. 9,209/- by cheque. The machineries, building etc., were totalling insured for a sum of Rs. 30,97,750/- against all risks including fare, floods etc. In the early hours of 2.11.90 there was a break of a tank bund due to heavy rain which inundated the factory of the complainant at Oggiem. Thoraipakkam. The second opposite party was duly informed and a Surveyor was appointed. A claim was made for a sum of Rs. 2,45,390/- as follows:
Building & machineries Rs. 67,000.00
Stock of components Rs. 1,57,490.00
Dies Rs. 20,900.00
Total Rs. 2,45,390.00
The first opposite party allowed the complainant only to Rs. 1,04,217-92 representing damages to the stock of components in respect of policy No. F/5084. The claim in respect of policy No. 4396 and policy No. F/ 5210 were not settled. Hence this claim for loss on account of non-payment of the balance in the sum of Rs. 1,41,172-08 interest thereon at Rs. 70,586/- and loss of earning power in the sum of Rs. 1,25,000/- totalling Rs. 3,36,758-08.
3. The opposite parties have filed a joint counter resisting the claim. It is pointed out that the complainant had taken 3 policies.
(1) F/5210 for Rs. 4,09,315/- covering machineries such as dies, air compressors, die grinders etc.
(2) Policy No. F/4396 covering building and machineries.
(3) Policy No. F/5084 covering stock and stock in process.
According to the opposite parties policy No. 5210 was settled at Rs. 9,875-74 and the complainant has accepted the same in full settlement. The claim in respect of policy No. F/ 5084 was settled at Rs. 1,04,217-92 and the complainant has executed a full and final discharge voucher. The claim in dispute is only with respect to policy No. F/4396. The complainant made a claim for Rs. 67,000/- under this policy. A Surveyor was appointed who assessed the damage at Rs. 28,750/- without prejudice. Two of the machineries were received after the policy and were not covered by the policy. It was also alleged that the machineries were kept in a shed with three sides left uncovered with A/c roofing. Hence the claim was refuted. There is no deficiency in service. The claim for loss, interest and loss of earning power are highly speculated and are tenable.
4. Exhs. Al to A14 and Bl to B6 are marked by consent. Proof Affidavits are filed. No oral evidence has been let in.
5. The point for consideration is whether therr has been any deficiency in service on the part of the opposite parties and to what relief, if any, is the complainant entitled?
6. Point: The complainant has not given full details in the complaint about the policies taken with the opposite parties Oriental Insurance Company. The opposite parties have given the details in their counter statement and there is no dispute thereabout. The three policies taken by the complainant are as follows:
(1) Policy No. F/5210 for Rs. 4,09,315/- covering machineries such as dies, air compressors, die grinders etc.
(2) Policy No. F/4396 covering building and machineries for Rs. 25,33,784/-.
(3) Policy No. F/5084 for Rs.65,00,000/- covering stock and stock in process.
7. According to the opposite parties, the claim in respect of policy No. 1 above bearing No. F/5210 was settled at Rs. 9,875-74 and the complainant has accepted the same in full settlement. Exh. B5 (a) is the voucher passed by the complainant therefor. Policy No. 3 above bearing No. F/5
