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PUNJAB STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CHANDIGARH
Honble Mr. Justice A.L. Bahri, President &
Mr. Ram Lal Gupta & Mrs. Gurkanwal Kaur, Members
FRIENDS RICE & GENERAL MILLS—Complainant
versus
NATIONAL INSURANCE CO. LTD.—Respondent
O.C. No. 6 of 1996—Decided on 28.5.1996
Counsel for the Parties :
For the Complainant :Mr. I.S. Rangpuri, Advocate.
For the Respondent:Mr Pardeep Bedi, Advocate.
Unexplained and unnecessary delay in deciding the claim filed by the insured on the part of the insurer is deficiency of service under Section 2(1)(g) of the Consumer Protection Act, 1986.
Headnote:
INSURANCE - REPUDIATION OF CLAIM - DELAY IN SETTLEMENT - DEFICIENCY OF SERVICE - LIABILITY OF INSURANCE COMPANY - CONSUMER PROTECTION ACT, 1986, SECTION 2(1)(G).
Fact of the Case:
The complainant, an insured, filed a complaint against the insurance company for repudiating its claim for loss of food grains due to flooding. The insurance company contended that the policy only covered stocks lying outside the godown and not inside the godown.
Finding of the Court:
The court held that the insurance company was guilty of deficiency of service as it took more than one and a half years to settle the claim and failed to provide any explanation for the delay. The court also held that the repudiation letter issued by the insurance company was in direct conflict with the insurance policy and was passed in a cavalier and mechanical manner.
Issues: 1. Whether the insurance company was guilty of deficiency of service in repudiating the claim and delaying the settlement process? 2. Whether the insurance company was liable to indemnify the loss caused to the complainant's stocks lying inside the godown?
Ratio Decidendi: 1. The court relied on its previous judgments, which held that unexplained and unnecessary delay in deciding the claim filed by the insured on the part of the insurer is deficiency of service under Section 2(1)(g) of the Consumer Protection Act, 1986. 2. The court held that the insurance policy issued by the insurance company covered the stocks lying inside the godown and the repudiation letter was in direct conflict with the policy.
Final Decision: The court partially allowed the complaint and ordered the insurance company to pay and indemnify the loss of Rs. 5 lacs caused to the complainant's stocks lying inside the godown on account of flooding. The court also awarded interest @ 18% per annum on the amount of Rs. 5 lacs from the date of loss till the date of payment and costs of Rs. 5,000/-.
Mr. Justice Ram Lal Gupta, Member—Challenging the repudiation letter dated 13.2.1995 (Annexure C-5), naturally, the insured M/s. Friends Rice and General Mills, Qadian is the complainant before us.
2. The facts in brief at which the parties are not at much variance, lie in narrow compass. The complainant-firm obtained the Insurance Policy (Annexure C-l) dated 3.11.1992 valid for the period from 3.11.1992 to 3.11.1993 paying a sum of Rs. 13,850/- in cash as premium covering the risk on account of paddy, rice, Basmati, Bardana packed in gunny bags at/or loose stored in godown in process block at/or godown at/or open pertaining to the insured's shelter Kl Class Construction, covering the risk of Rs. 25 lakhs for fire including terrorist action and flood and the said amount of Rs. 13,850/- has been stated to be paid in the policy (Annexure C-l) as under :
Fire @ 3.83
including T.R.
Rs.
9575.00
Flood 10%
Rs.
5000.00
Rs.
14,575.00
Less 5%
Rs.
725.00
Rs.
13,850.00
3. On account or the audit objection, a sum of Rs. 2410/- demanded vide letter dated 9.5.1994 was also deposited by the complainant-firm with the Opposite Party National Insurance Company and hence the total premium paid was of Rs. 16,269/-. During the month of July, 1993, as the ill-luck would have been, the area was flooded on account of heavy rains and the food grain stock lying in the godown was washed away. The complainant-firm lodged the complaint and the surveyor deputed by the Insurance Company assessed the loss. Ultimately, the complainant was served with the impugned repudiation letter Annexure C-5 dated 13.2.1995.
4. On the notice being served, the Insurance Company filed written statement, containing its version, primarily stating that a selective cover for flood was granted i.e. only stocks lying in open for the sum insured of Rs. 5 lakhs were covered. The stocks lying in the godown were not covered under the ambit of the policy. It is admitted that as per the report of M/s. Consolidated Surveyors Pvt. Ltd., deputed by the Insurance Company, the loss was assessed at Rs. 9,52,554.94 and out of this loss, the damage to the rice bran to the tune of Rs. 50,000/- was not payable as the item rice bran was not covered by the policy. It is stated that after obtaining vigilance report, the claim filed by the complainant was repudiated and so was intimated to it.
5. On the opportunity being afforded, both the parties have rested contended with the filing of certain correspondence and no affidavit either in support of the complaint or the written statement was filed.
6. We have heard the learned Counsel for the parties and scanned the pleadings and documents filed in support thereof. By placing reliance on the judgments of the Hon'ble National Commission and other State Commissions, this Commission in a catena of judgments has held that if there is unexplained and unnecessary delay in deciding the claim filed by the insured on the part of the insurer that per se is deficiency of service as defined under Section 2(1)(g) of the Consumer Protection Act, 1986 and this Commission has further opined that the period taken by the Insurance Company beyond three months in settlement of the claim is reflection of delay on its part and would be, if remain unexplained per se enough for holding it guilty of the charge of deficiency of service and sufficient enough to allow the claim filed by the insured. Suffice it to mention OC No. 44/1994 "M/s. Shree Vallabh Oil Mills (Pvt.) Limited v. The Oriental Insurance Company Limited and Others" decided on 10.3.1994, OC No. 28/1995 "Kaprinas Pharmaceuticals & Chemicals Ltd. v. United India Insurance Company Ltd. & Others" decided on 18.10.1995, OC No. 27/1995 "Kali Charan v. New India Assurance Company" decided on 9.11.1995 and OC No. 41/1995 "Devinder Kumar v. Life Insurance Corporation of India and Others" decided on 7.3.1996 by this Commission. The undisputed facts are that occurrence of flood took place on 10th of July, 1993, and in July, 1993 itself
