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DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Mr. S.A. Siddiqui, Member (Judicial) and Mr. S.C. Jain, Member
DEMM AUTO ENGINEERING WORKS - Appellant
Versus
NEW INDIA ASSURANCE CO. LTD. - Respondent
Complaint Case No. 221 of 2008
Decided on : 02-07-2014
The main legal point established in the judgment is the requirement for genuine assessment of insurance claims, the relevance of the Surveyor's report, and the consequences of mala fide rejection of claims by insurance companies.
Headnote:
C.P.Act - Insurance Claim Rejection - 17 of C.P.Act, 1986 - [17 of C.P.Act, 1986] - The court discussed the provisions of the C.P.Act, 1986 and the insurance policy in detail. It highlighted the requirement of the insured stock to be within the insured premises and the consequences of shifting the damaged stock without informing the insurance company. The court emphasized the importance of the Surveyor's report and its relevance in assessing the insurance claim. The judgment focused on the mala fide rejection of the claim and the deficiency of service by the insurance company.
Fact of the Case:
The complainant, M/s. DEMM Auto Engineering Works, filed a complaint under Section 17 of C.P.Act, 1986 for directions to the insurance company to pay for the loss and damages incurred due to a fire incident. The insurance claim was rejected on the grounds that the affected stock was kept outside the insured premises and was shifted to another location without informing the insurance company.
Finding of the Court:
The court found that the rejection of the insurance claim was mala fide and amounted to a deficiency of service by the insurance company. It emphasized the genuine nature of the claim and the compelling circumstances under which the stock was shifted to another location for safety.
Issues: The main issues revolved around the rejection of the insurance claim, the location of the affected stock, and the conduct of the insurance company in assessing the loss.
Ratio Decidendi: The court held that there was no deliberate violation of the insurance policy terms and the rejection of the claim was ill-conceived and mala fide. It emphasized the importance of the Surveyor's report in assessing the loss and awarded the complainant the insurance claim amount along with compensation and interest.
Final Decision: The complaint was partly allowed, and the insurance company was directed to pay the insurance claim amount, professional fees, compensation, and litigation costs to the complainant within a specified timeframe.
JUDGMENT
Mr. S.A. Siddiqui, Member (Judicial)- This complaint has been filed under Section 17 of C.P.Act, 1986 (hereinafter called the Act) for directions to OP to pay a sum of Rs. 34,52,596 towards re-imbursement of the loss, Rs. 56,536 as fees paid to Surveyor and Rs. 2 lac towards compensation for harassment, mental pain and agony and Rs. 1 lac towards costs of litigation. Besides this, interest @ 15% per annum has also been claimed from the date of filing of petition till realisation on the amount of re-imbursement.
2. Relevant facts of the complaint are that complainant M/s. DEMM Auto Engineering Works is a partnership concern engaged in selling auto-parts for heavy commercial vehicles. For business purpose complainant operates a shop at Kashmere Gate, bearing Shop No. 50, First Floor, Chadha Building, Guru Nanak Auto Market, Kashmere Gate, Delhi 110006. Auto parts stock for sale are stored/kept in the shop. For purposes of financial security complainant obtained a 'standard Fire and Special Perils Insurance Policy covering stock of all kinds of auto parts bearing No. 354101/11/06/11/00000472 for the period of one year from 12.10.2006 to 11.10.2007 for Rs. 70,00,000. The auto parts stock was under hypothecation of Punjab National Bank, Sukhrali, Gurgaon.
3. Unfortunately on 13.5.2007 around 9.00 p.m. a massive fire broke out in Chhadha Building, engulfing entire Guru Nanak Market which included the insured premises/shop of the complainant as well. Local Fire Brigade was pressed in service which took several hours to bring the fire under control. The local police was also informed and matter was reported in local media also. Due to this devastating fire entire packed material lying at the insured premises for despatch to customers was destroyed due to heat and water. During the course of extinguishing the fire, packed material was thrown down from the first floor of the building by fire fighting people. Complainant informed OP regarding the incident of fire over phone and thereafter lodged insurance claim vide its letter reference No. DEM/6/2007-2008 dated 14.5.2007. The Punjab National Bank also informed the OP through letter dated 14.5.2007. The entire material thrown from the first floor was scattered on the road and got mixed up with the stock of other shop owners. The complainant employed his men to locate its own material and put it in gunny bags. With a view of safety and security the affected auto parts stock was transported to Gurgaon as there was no space available to keep the material for safe custody. Shifting of the material was also necessary to save it from theft and other kinds of perils. Intimation of shifting of the damaged material was also given over telephone to the OP on the same date.
4. The OP M/s. New India Assurance Co. Ltd. appointed M/s. HRC Associates, an approved Surveyor and Assessor to carry out the necessary survey for assessment of the loss. The Surveyor visited the affected site. He was also informed about the shifting of the material and was taken to Gurgaon where the affected/damaged material was stored. The Surveyor carried out the survey work, took extensive photographs and inspected the damaged material. He made inquiries from the complainant, complainant's partner, staff and other witnesses. The Surveyor was also provided with all necessary information and documents required by him. Value of the affected property was well above Rs. 52,94,510. Despite several visits to the Surveyor's office as well as to the office of OPs the assessment of loss was not done by the Surveyor. The complainant, therefore, sent a letter dated 20.9.2007 to IRDA with copy to the General Manager of OP. Several more letters were sent but in vain. The complainant was told that the OP has appointed another Surveyor namely M/s. S.S. Sharma and Associates to do the survey work. This Surveyor visited the complainant's place on 22.12.2007 (seven months later). He again inspected the damaged material lying at Gurgaon an
