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Sumangala Steel Ltd. - Appellant
Versus
Oriental Insurance Co. Ltd. - Respondent
Decided On : 02/21/1994
O.P. No. 369 of 1993
Advocates Appeared :
A.P.S. Kasturi Rangan,V. Sambasivam
Headnote:Consumer Protection Act, 1986 - Section 17 read with Section 12 and Section 2(I)(g) Deficiency in service - Complainant insured his machinery with opposite party - Furnace transformer suffered break down and got repaired in the factory of manufacture at Bombay - Loss assessed by surveyor at Rs. 12,72,910.45 Opposite party did not pay full amount but paid Rs. 3,67,676 after making proportionate deduction on account of under insurance and delay in payment of part of premium - Complainant accepted amount under protest - Complaint filed - Claim resisted by opposite party contending that complainant accepted amount in full and final settlement and complaint not maintainable - Question of adequacy or inadequacy of compensation can be agitated in court of competent civil jurisdiction - Insured can agitate his claim before Commission where amount of compensation fixed unreasonable as it amounts to deficiency in service - Loss assessed by surveyor acceptable to both parties Loss sustained by complainant is Rs. 12,58,000 - Question of under insurance or over insurance to be considered with reference to date of insurance - Insured cannot be held liable for subsequent increase or decease in value of article - No record produced by opposite party to show that value of transformer way Rs. 32,03,410/- - Opposite party not entitled to deduct amount on account of delayed payment of premium as balance premium paid .and accepted - Deficiency in Service - Where loss sustained by insured is more than sum insured he is entitled to entire sum insured - Complaint allowed - Opposite party directed to pay balance amount.
Held: Assuming without admitting that there was any, under insurance, the question is whether the average clause will be applicable in such a case where the loss sustained by the complainant is more than the amount of insurance. The point is covered by a direct decision of Allahabad Bench of High Court in The General Assurance Society Ltd. v. Mohd. Salim (AIR 1965 All 561 DB). It has been held therein that this average clause would come into play only if it was proved, that the loss sustained by the insured was less than the sum insured. Where the loss was much more than the sum insured the trial Court was right in granting to the insured a decree for recovery of the whole sum insured in spite of the average clause. The amount of insurance in this case of the transformer is Rs. 10,29,000/- while the loss sustained as assessed by the surveyor and accepted by both the parties is Rs. 12,72,910-45. The average clause has therefore no application. Unfortunately the insurer has not looked into this position of law. (Para 11)
The balance of premium has been paid and accepted by the opposite party without a murmur and it is not now entitled to deduct the compensation payable on the ground of delayed payment of the premium. This deduction must also fail. This is also deficiency on the part of the opposite party. (Para 12)
As laid down in, the decision of Allahabad cited above in 17ze General Assurance Society Ltd. v. Mohd. Salim where the loss sustained by the insured is more than the sum insured he is entitled to the entire sum insured. Accordingly, the complainant is entitled to the insured amount of Rs. 10,29,0001- and nothing more. (Para 13)
IMPORTANT POINT
Where loss sustained by the insured is more than the sum insured, he is entitled to the entire sum insured.
S.A. Kader, President-This is a complaint under Section 17 read with Section .12 of the Consumer Protection Act.
2. The complainant is a manufacturer of steel ingots having its factory at Industrial Estate, Pondicherry. It took a Machinery Insurance Policy from the opposite party for a total sum of Rs.17,00,402/- for the period from 11.9.87 to 10.9.89. According to the complainant, the officers of the opposite party visited the factory and satisfied themselves about the value-and condition of the various machineries. On 23.6.89 there was a major breakdown of the transformer purchased from M/s. Cromption Greaves, and the opposite party and the manufacturer were daily informed. The engineers of the manufacturer came and examined the transformer and wanted the machinery removed to Bombay for major repairs. Accordingly, the transformer was sent to Bombay by road on 22.8.89. After negotiating with the manufacturer the complainant finally paid a sum of Rs.18,51,988/- to Mis. Cromption Greaves for the repairs done. The surveyor appointed by the opposite party assessed the loss at Rs.12,72,910-45 apparently excluding the charges paid by the complainant for making modifications, in the transformer. Though the assessment made by the Surveyor is open to challenge the complainant was ready and willing to accept the Surveyor's assessment of the loss and received Rs.12,72,910-45 as compensation. However, the opposite party by its letter dated 5.3.93 informed the complainant that only a sum of Rs.3,67,6761 - was payable, consequent to deductions made on applying the average clause and for alleged deficit in premium. The complainant received the said amount of Rs.3,67,676/- under protest. According to the complainant there was no case of under insurance. The value of the machinery fixed by the surveyor as in 1991 is untenable. As per the certificate issued by the manufacturer, the value of the machinery on the date of breakdown was only Rs.14,53,920/- which was about 10 months after the inception of the policy and hence the value of the machinery ought to have been much less at the time of the policy. The opposite party demanded a premium of Rs.22,000/- and was paid. Subsequently it claimed Rs.1,871/- which was also paid by the complainant. The deduction made by the opposite party is unjust and unreasonable and amounts to gross deficiency of service and negligence. Hence this claim for the payment of Rs.9,05,243-55 after deducting the amount received with interest thereon at 24 % p.a. and for compensation in the sum of Rs.1,00,000/-.
3. The claim is resisted by the opposite party. It is contended that the complainant has received e Rs.3,67,676/- on 5.3.93 in full and final settleament of the claim and the complainant is not therefore entitled to maintain this complaint. It is further contended that any adequacy or inadequacy of the compensation, if at all, has to be agitated only in Civil Court and not before this Commission. On merits it is admitted that there was a policy of machinery insurance for the period from 11.9.88 to 10.9.89. But it is denied that the• t officers of the opposite party inspected the machinery and satisfied themselves of the value given. There is no such duty cast on the officers of the opposite party. The premium was fixed at Rs.22,000/- and was paid by the complainant. The opposite party called upon the complainant to submit additional bills for fixing the final premium and an additional sum of Rs.1,871/- was payable. It was paid only on 30.6.89 and 9 months after the commencement of the policy of insurance. The opposite party-arranged special inspection by Mis. Paramount Surveyors.
Subsequently the opposite party requested Mr. Shankar Dhawan, Chartered Engineer, Surveyor. Assessor and Value to value the loss. This particular machinery which broke down was insured for Rs.10,29,600/-. But the complainant preferred a claim for Rs.19,01,940-20. M/s. Crompton Greaves submitted the Replacement cost of a similar new Tra
