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HARYANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CHANDIGARH
Hon’ble Mr. Justice M.R. Agnihotri, President;
S. Kulwant Singh & Mrs. Sushil Paul, Members
RAJ LEATHER CLOTH INDUSTRIES PVT. LTD.—Complainant
versus
ORIENTIAL INSURANCE COMPANY LTD.—Opposite Party
Complaint Case Nos. 80 & 81 of 1993— Decided on 12.4.1996
Counsel for the Parties :
For the Complainant:Mr. L.M. Suri, Sr. Advocate with Mr. Deepak Suri, Advocate.
For the Opposite Party:Mr. R.K. Chhibbar, Sr. Advocate with Mr. Anand Chhibbar, Advocate.
The Insurance Company is liable for deficiency in service if it unnecessarily delays the settlement of a claim under an insurance policy.
Headnote:
CONSUMER PROTECTION ACT - INSURANCE POLICY - DELAY IN SETTLEMENT OF CLAIM - DEFICIENCY IN SERVICE - COMPENSATION AWARDED: The Insurance Company is liable to pay compensation for the delay in settling the claim of the complainant under the fire insurance policy due to deficiency in service.
Fact of the Case:
The complainant, a company engaged in the business of manufacturing and sale of Foam, had taken out a fire insurance policy from the Oriental Insurance Company for its factory and machinery. On 3rd June, 1992, a fire broke out at the factory causing extensive damage. The complainant reported the incident to the Insurance Company and lodged an FIR with the Police Station. The Insurance Company appointed a Surveyor to investigate the matter and settle the claim. The Surveyor visited the factory premises and asked the complainant to furnish certain documents. The complainant complied with the request. The Surveyor recommended a settlement of the claim by paying Rs. 16 lacs. The complainant accepted the offer. However, the Insurance Company did not settle the claim and appointed successive Surveyors to assess the loss. The complainant filed a complaint with the Consumer Commission alleging deficiency in service on the part of the Insurance Company.
Finding of the Court:
The Consumer Commission held that the Insurance Company was liable for deficiency in service as it unnecessarily delayed the settlement of the claim. The Commission relied on the Surveyor's report which recommended a settlement of the claim by paying Rs. 16 lacs. The Commission also held that the Insurance Company's objection regarding the payment of premium through Bank guarantee was not tenable as it had accepted the premium in the present case. The Commission further held that the complainant was not required to approach the Civil Court as the claim was simple and based on the insurance policy.
Issues: 1. Whether the Insurance Company was liable for deficiency in service due to delay in settling the claim? 2. Whether the Insurance Company's objection regarding the payment of premium through Bank guarantee was tenable? 3. Whether the complainant was required to approach the Civil Court instead of invoking the jurisdiction under the Consumer Protection Act?
Ratio Decidendi: 1. The Insurance Company was liable for deficiency in service as it unnecessarily delayed the settlement of the claim. The Surveyor's report recommended a settlement of the claim by paying Rs. 16 lacs, which was accepted by the complainant. However, the Insurance Company did not settle the claim and appointed successive Surveyors to assess the loss. 2. The Insurance Company's objection regarding the payment of premium through Bank guarantee was not tenable as it had accepted the premium in the present case. 3. The complainant was not required to approach the Civil Court as the claim was simple and based on the insurance policy.
Final Decision: The Consumer Commission allowed the complaints and directed the Insurance Company to pay to the complainant Rs. 16 lacs along with 15% interest thereon from 3rd June, 1992, the date the fire broke out, till the date of payment. The complainant was also awarded costs of both the complaints.
Mr. Justice M.R. Agnihotri, President— This order shall dispose of two complaints No. 80 of 1993 and No. 81 of 1993, as issues of facts and law are identical in both the complaints and in view of the agreement of the parties by order dated 3rd of March, 1994 passed by this Commission, both the complaints have already been clubbed together for trial.
2. Complainant-M/s. Raj Leather Cloth Industries Pvt. Ltd. is a Company incorporated under the Companies Act, 1956 having its registered office at New Delhi and its factory at 20th Mile Stone, G.T. Road, Village Badhkhalsa, Distt. Sonepat. The Company is engaged in the business of manufacturing and sale of Foam for which it has taken out a fire insurance policy from the Oriental Insurance Company, Panchkula branch vide Policy No. 11/92/00192, for the period 1st of August, 1991 to 31st of July, 1992. This policy was for insurance of machinery and the building of the Company for Rs. 15,02,000/- and Rs. 7,75,000/- respectively. Another fire insurance policy No. 11 /93/00019 covering the building of the factory for a sum of Rs. 12,08,000/- and for machinery for Rs. 16,18,300/- for the period 2nd of June, 1992 to 1st of June, 1993 was also taken out from the Panckula branch of the Insurance Company. The premium for both the insurance policies was paid by the complainant- Company through the Haryana Financial Corporation
3. According to the complainant, on 3rd of June, 1992 fire broke out at the factory and works premises of the Company, causing extensive damage. On that very day the complainant reported the incident of fire to the Insurance Company at 8.00 p.m. and also lodged First Information Report with the Police Station. Information was also given to the Fire Brigade, Municipal Committee, Sonepat as well as to the Haryana Financial Corporation. Thereupon the Insurance Company appointed M/s. A.K. Govil and Associates as Surveyors to investigate the matter and settle the claim of the complainant. In pursuance thereto, the Surveyors visited the factory premises on 6th of June, 1992 and after inspecting the premises asked the complainant-Company to furnish copies of certain documents. Some additional information was also sought by the Surveyors, which was supplied by the complainant. The complainant had claimed from the Insurance Company compensation for the loss as under:
“(i) Loss and damage to the building: Rs. 3,57,000/-
(ii) Loss and damage to the plant & machinery Rs. 17,20,660/-
(iii) Loss and damage to raw material and semi- finished goods Rs. 23,43,748/-
The total loss claimed was Rs. 44,21,408/- and the Surveyor M/s. A.K. Govil got a claim form filled in from the complainant on or about 9.1.93”
Thereafter the Surveyors approached the complainant on or about 9th of January, 1993 and offered to settle the claim regarding the building, plant, machinery etc. by paying an amount of Rs. 16 lacs. This was accepted by the complainant and the Surveyors forwarded their report to the Insurance Company accordingly. For about 4 months thereafter, the complainant did not receive any communication from the Insurance Company. In early May, 1993, one Mr. H.S. Chadha, Investigator of the Insurance Company again visited the factory premises and thereafter asked for certain documents which the complainant had already handed over to the 1st Surveyor. A couple of months latter, yet another Surveyor Mr. R.C. Chug came to inspect the factory premises and wanted some additional documents for further clarification, which was made available by the complainant. Despite all this, the claim of the complainant was not settled by the Insurance Company. Considering this delay in settling the claim on the part of the Insurance Company as negligent and deficient in rendering service to the complainant, the Company has invoked the provisions of the Consumer Protection Act by filing these complaints in the original jurisdiction of this Commission on 16th of November, 1993. In these complaints, the amount claimed a
