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ANDHRA PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, HYDERABAD
Hon’ble Mr. Justice S. Parvatha Rao, President;
Mr. K. Ranga Rao & Dr. (Mrs.) Mamata Lakshmanna, Members
LAGADAPATI CHANDRASEKHAR—Complainant
versus
NEW INDIA ASSURANCE COMPANY LTD.—Opposite Party
C.D. No. 225 of 1991—Decided on 2.2.1999
Counsel for the Parties :
For the Complainant :Mr. M.V.S. Suresh Kumar, Advocate.
For the Opposite Party :Mr. Kota Subba Rao, Advocate.
The repudiation of liability by an insurance company cannot be said to be deficiency in service if it is made after applying the mind to the various aspects of the case and is not arbitrary or unreasonable.
Headnote:
CONSUMER PROTECTION ACT - INSURANCE - MARINE HULL INSURANCE - DELAY IN REPUDIATION OF CLAIM - DEFICIENCY IN SERVICE - COMPENSATION AWARDED - CONSUMER DISPUTES REDRESSAL COMMISSION, ANDHRA PRADESH.
Fact of the Case:
The complainant, a fishing boat owner, insured his boat with the opposite party, an insurance company, for a period from 24.12.1987 to 23.3.1988. On 2.3.1988, the boat sank in the sea while conducting fishing operations. The complainant filed a claim with the insurance company, which appointed an investigator to investigate the claim. The investigator submitted a report stating that the complainant's claim was fraudulent. The insurance company repudiated the claim. The complainant filed a complaint with the Consumer Disputes Redressal Commission, alleging deficiency in service on the part of the insurance company.
Finding of the Court:
The Commission held that there was no deficiency in service on the part of the insurance company in repudiating the claim, as the company had applied its mind to the various aspects of the case and had come to the conclusion that the claim was not genuine. However, the Commission held that there was deficiency in service on the part of the insurance company in repudiating the claim with abnormal delay.
Issues: 1. Whether there was deficiency in service on the part of the insurance company in repudiating the claim? 2. Whether the insurance company was liable to pay compensation to the complainant for the delay in repudiating the claim?
Ratio Decidendi: 1. The Commission held that there was no deficiency in service on the part of the insurance company in repudiating the claim, as the company had applied its mind to the various aspects of the case and had come to the conclusion that the claim was not genuine. The Commission relied on the decision of the National Commission in Parees Offset Pvt. Ltd. v. United India Insurance Co. Ltd. & Ors., II (1995) CPJ 9 (NC), wherein it was held that the repudiation of liability by an insurance company cannot be said to be deficiency in service if it is made after applying the mind to the various aspects of the case and is not arbitrary or unreasonable. 2. The Commission held that there was deficiency in service on the part of the insurance company in repudiating the claim with abnormal delay. The Commission noted that the investigator took nearly two years to complete his investigation and submit his report, and that the insurance company did not file the repudiation letter.
Final Decision: The Commission allowed the complaint in part and directed the insurance company to pay compensation of Rs. 20,000/- to the complainant within two months from the date of the order, failing which the company would have to pay interest on the said amount at the rate of 15% per annum from the date of the order till the date of payment. The rest of the claim of the complainant was negatived without prejudice to the rights of the complainant to approach the Civil Court for appropriate reliefs.
Mr. K. Ranga Rao, Member—This is a complaint filed under Section 17(a) read with Section 12 of the Consumer Protection Act, 1986 with the following allegations.
2. The complainant is a resident of Kakinada in East Godavari District and the owner of the mechanised fishing Pablotype boat bearing No. KKD 1681 which was constructed in 1986. The said boat was registered at Kakinada Port and the complainant has been paying the registration charges every year. The complainant insured the said boat with the New India Assurance Company Limited Branch at Kakinada (opposite party) and obtained a Marine Hull Insurance Policy No. 82581/2/0269/131 for the period from 24.12.1987 to 23.3.1988 for a sum of Rs. 1,00,000/- and the premium is Rs. 1,073/-. After coming to know .that there is potentiality for fishing in Bhairavapalem of Kakinada the complainant after making necessary preparations for fishing, conducted operations on the evening of 1.3.1988. Again on the next day i.e. on 2.3.1988 at about 3.00 p.m. he sent his boat for fishing operations after the driver checked the level of engine oil, propeller, shafts, etc., of the boat and confirmed the suitability for fishing operations. The boat got good amount of fish and prawns in the 1st and 2nd hauls till 11.30 a.m. on that day and when they started 3rd haul at about 12.00 noon on that day there was a sudden change in the weather and the intensity of the "sologam wind" increased gradually resulting in the sea becoming rough and raising of currents severely. When the boat was started for going to Kakinada, a big wave hit the boat on its right side and the boat turned turtle on its left side suddenly. The crew was thrown into the sea. The boat completely sank in the sea at about 2.00 p.m. The crew was rescued by another crew of Royya type boat of Sri Bandana Tatabbai of Kakinada. The complainant immediately informed the Port Office at Kakinada about the accident. He also informed the opposite party by way of a telegram on the same day. He also orally informed the opposite party about the accident. He tried his best to trace the boat with the help of the salvage party viz. Dharmadi Appa Rao and party on 3.8.1988 and 4.8.1988 but in vain. He submitted all his documents to the Surveyor appointed by the opposite party. The Surveyor submitted a report to the opposite party with the statements of his crew and others and recommended for settling the claim of the complainant. The Divisional Manager of the opposite party informed the complainant when he met him in his office that he directed further investigation in the matter. One D. Appa Rao who was appointed as Investigator investigated into the matter and sent a report. The complainant came to know that the opposite party appointed another Investigator by name Metcalfe survey company to investigate the matter, but so far the claim of the complainant was not settled. Therefore there is deficiency in service on the part of the opposite party. The opposite party is liable to pay the policy amount of Rs. 1,00,000/- with interest @ 12% per annum from 2.3.1988 till the date of realisation. Hence the complainant prays for a direction to this opposite party to pay a sum of Rs. 1,00,000/-, with interest @ 12% per annum from 2.3.1988 till the date of realisation, compensation of Rs. 25,000/- and costs.
3. The opposite party filed its version/ counter contending that the complaint is far from truth on the facts of the case, that there is neither deficiency of service nor unfair trade practice on the part of the opposite party, that the complainant is not a consumer, that in view of the investigation report of Metcalfe & Hodgkinson (Pvt.) Ltd., Visakhapatnam stating that the complainant’s claim is fraudulent, the opposite party repudiated the claim of the complainant and that there is no liability to indemnify the complainant’s claim. It is also stated in the counter that the complainant has to prove that his boat KKD 1681 was in a sea worth condition for
