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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Subhash Chandra, Presiding Member
M/s Sumit Chemicals Pvt. Ltd. – Complainant
versus
M/s National Insurance Co. Ltd. – Opp. Party
Consumer Case No.10 of 2014
Decided on 18.4.2023
Consumer Protection Act, 1986 – S.21(1)(a)(i)[Consumer Protection Act, 2019 – S.58(1)(a)(i)] – Services – Insurance – Repudiation of Claim – Fire Policy – Plea of Coercion – Protest of claim – Estoppel - If can be raised at the belated stage - The complainant has averred that he was incurring cost on account of interest per day of Rs.45,000/-, this has not been disputed by the opposite party. The opposite party has stated that in its written submissions that the entire factory and plant and machinery had been totally destroyed and even the stocks could not be inventorised on account of fire. The plea of coercion is therefore, not a bald plea but one that is based on facts. It is evident from the record that the complainant had been repeatedly pursuing the matter with the opposite party to expedite the settlement of his claim. It is therefore, manifest that the complainant was under severe financial stress and it therefore, had little or no option but to accept the compensation that was offered by the opposite party, in this case ofRs.5,98,44,082/- - Thus, It is evident from the records that the complainant did not accept the settlement and that he lodged a protest immediately after receiving the compensation of Rs.5,98,44,082/- on 24.05.2013 by email on 30.05.2012 the letter of protest - It is also evident, that in order to lodge a protest he required the details of the calculations that were done by the surveyor which were not made available to him by the opposite party until he invoked the Right of Information Act. It is only thereafter he has been able to file this complaint after seeking clarification from the opposite party with respect to the same. It is therefore, manifest that the complainant has accepted the discharge voucher on account of financial stress or in the absence of the full details of calculation by the surveyor. Under such circumstances lodging of protest would not have been possible and it would be unfair and unjust to non-suit the complainant on the grounds of estoppel for these reasons – Also on facts, The claim of the complainant is for payment of Rs.11,63,38,758/- for stocks, plant, machinery and factory building. As per the surveyor’s report dated 01.12.2012 an amount of Rs.5,98,44,082/- has been the assessed loss. However, as per the policy terms and conditions the complainant is entitled to sum insured in two policies which amounts to Rs.5,25,00,000/- + Rs.8,00,00,000 = Rs.13,25,00,000/-. As admitted by the opposite party, the loss was estimated at Rs.9,60,54,212/- Therefore, Considering the amount of Rs.5,98,44,082/- was accepted under protest on 24.05.2013, and the opposite party states that loss was assessed at Rs. 9,60,54,212/- the claim of the complainant is now for Rs.3,62,10,130/- (Rs.9,60,54,212 – Rs.5,98,44,082/-) – Complaint is allowed. [Paras 5 to 23].
Result: Complaint allowed.
ORDER
The complainant which is a private limited company engaged in the business of manufacturing of various chemicals has filed this complaint under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) alleging deficiency in service relating to a claim under Fire Insurance Policy by which the claim was settled for a lower amount than claimed by the opposite party.
2. The relevant facts of the case according to the complainant are that it had obtained a fire insurance policy no. 451600/11/11/3300000091 dated 23.01.2012 for the period 13.12.2011 to 12.12.2012 covering building, boundary wall, plant and machinery (including accessories) and furniture, fixtures and fittings for its unit at 50 Uptron Estate, Panki Industrial Area, Site no.1, Kanpur against fire and allied perils for various sums totaling to Rs.5,25,00,000/- against a payment of Rs.34,745/- towards insurance premium. Another fire insurance policy on floater basis bearing no. 451600/11/11/3300000092 dated 23.01.2012 for the period 13.12.2011 to 12.12.2012 covering stock of raw materials, goods in process, including the finished, unfinished goods, zinc related chemicals and packaging material were also covered for fire and allied perils for a sum of Rs.8,00,00,000/- against an insurance premium of Rs.58,238/-. The insured property was hypothecated to Canara Bank. On 17.01.2012 at around 06.00 am a fire incident in the second floor of the insured factory was noticed. Fire brigade was informed about the same and the fire was controlled after about 12 hours with the use of several fire engines. The opposite party was also informed and they deputed M/s Surveyors India on 17.01.2012 itself to conduct the preliminary survey and assess the loss. Another surveyor, Mr. Vinod Sharma, was appointed on 18.01.2012 who visited the site on 19.01.2012. The details sought were provided by the complainant. A claim form for Rs.11,63,38,758/- was submitted to the opposite party. The complainant requested the surveyor for release of 75% of the insured amount as an interim on account payment on 24.01.2012. The request was repeated on 29.02.2012 and on 02.03.2012 Canara Bank was also requested to intervene with the opposite party on their behalf. Further efforts were made by way of letters dated 28.02.2012 and 31.03.2012, in view of the severe financial loss being experienced. It is submitted by the complainant that the entire factory, building, plant and machinery and stocks had been destroyed resulting in complete close down of the factory. As the complaint was not settled by July 2012, the opposite party was again requested on 06.08.2012 to expedite the approval and the surveyors were also requested to expedite their report. On 06.09.2012 and 26.09.2012 further information and documents sought by the surveyor were provided to them. On 08.05.2013 the opposite party conveyed that the claim has been approved for Rs.5,98,44,082/- subject to submission of proof of deposit of Rs.23,65,526/- towards CENVAT. The complainant submits that Rs.26,31,955/- was deposited on 09.05.2013 and the proof of deposit was conveyed to the opposite party.
3. The complainant submits that since the delay in the settlement had caused considerable financial loss and he was incurring Rs.45,000/- per day interest on the bank loan, the discharge voucher sent by the opposite party was signed on 24.05.2013 in order to receive whatever amount was being offered towards the claim. Thereafter, the complainant sought details of calculations of the settlement amount and the opposite party on 30.05.2013 conveyed only the amount assessed on buildings, plant and machinery, stocks without the working details. The complainant wrote to the opposite party for the balance amount on the ground that the surveyor had not accepted the loss on many items and deducted amounts arbitrarily which was not accepted by the opposite party through some correspondence between May 2013 and October 2013. Thereafter, the complainant h
The insurance company’s coercive practices in settling claims amount to deficiency in service under consumer law.
The court established that a consumer can claim under the Consumer Protection Act for insurance disputes, even with commercial intent, emphasizing assessment fairness by the appointed Surveyor.
A claimant must establish evidence of coercion in accepting insurance settlement to prevail in a deficiency of service claim under the Consumer Protection Act.
Insurance claims must be assessed justly, with surveyor reports not being conclusive and subject to scrutiny.
Discharge vouchers Discharge vouchers were signed and tendered on 22.01.2004 and 04.02.2004. This subsequent act of discharge, therefore, disentitles the claimants for any interest as claimed.
Insured is entitled to interest at 9% for delays beyond stipulated time frames following an accepted insurance claim settlement.
Assessment - In absence of details relating to stage of production of items, the Surveyor was justified in considering the semi-finished cost rate at 50% of finished cost rate on an average of 50% co....
(1) Survey Report - The Survey Report is an important document and cannot be ignored while settling claims.(2) Coercive practice - Complainant has not issued the Discharge Voucher of his own free wil....
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