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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Subhash Chandra, Presiding Member
M/s Centex Fabrics -
Export Unit and Anr. – Complainants
versus
M/s National Insurance
Company Limited and Anr. – Opp. Parties
Consumer Case No.9 of 2014
Decided on 13.4.2023
Consumer Protection Act, 1986 – S.21[Consumer Protection Act, 2019 – S.58] - Services – Insurance – Repudiation of Claim – Rain – Delay in settlement of claim - It is manifest that there was considerable delay in the finalization of the claim. A period of 22 months cannot be justified on grounds of seeking of documents and clarifications. Notably, there was a gap of 8 months between the two ‘final’ reports of the surveyor. These delays amounted to applying coercion on the complainant as held in the citations relied upon by the complainant – Also, that there is no dispute with regard to the incident or the accidental nature of the incident and the cause of the loss. The opposite party has admitted the claim albeit for a sum that is disputed by the complainant. While the opposite party has advanced reasons to justify the compensation amounts in the two reports by the same surveyor, it has not explained the need for the same. The duration of time between the two reports is not a small one – thus, It is manifest that there was no ‘accord and satisfaction’ and it is a clear case of coercion in the signing of the discharge voucher – Also, it is evident that the opposite party has been deficient in service qua the complainant with regard to the claim of loss preferred under the insurance policy in question. It has abused its dominant position to coerce the complainant to accept the settlement of his claim for a sum of Rs 2,39,92.590/- against the sum of Rs 2.99 cr that had been recommended by the surveyor in the first instance. Salvage value of Rs 30,13,482/- has also been illegally deducted as also Surveyor’s fees of Rs 2,86,518/- i.e. a total of Rs 92,07,410/- has been wrongly deducted – On facts, Complaint is allowed. [Paras 6 to 12].
Result: Complaint allowed.
ORDER
Subhash Chandra, Member—This complaint under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) is filed against the opposite parties for against disallowance of the amount claimed under the Fire and Special Perils Policy obtained by it alleging deficiency in service by the opposite party.
2. The facts of the case as per the complainant in brief are that complainant no. 2 is engaged in the business of manufacture and export of shawls, scarfs, mufflers, stoles, upholstery etc. The complainant’s factory was covered by a Standard Fire and Special Policy (Floater Policy) dated 01.04.2011 for the period 01.04.2011 to 31.03.2012 for a sum of Rs.13,50,00,000/-. On account of torrential rain on the night of 12/13.08.2011 the factory was inundated by rain and flood water. On being informed the opposite parties appointed M/s N Kumar, Surveyors Pvt. Ltd. as Loss Assessors who, after inspecting the premises, submitted a report on 18.08.2011 estimating a loss of Rs.3.15 crores based on physical verification and stock statement, considering the extent of damage against the insured’s tentative estimate of loss of Rs.4,61,43,000/- net of salvage. Thereafter, M/s Sanjay Dwivedi and Associates were appointed surveyors by the opposite parties on 16.08.2011. They visited the factory premises on 19-20.08.2011 and submitted a final report dated 06.12.2012 estimating the loss as Rs.2,99,00,000/-. Complainant states that at the instance of the surveyor, he consented on 19.10.2012 to accept Rs.2,99,00,000/- in full and final settlement even though no surveyor’s report had been submitted. Thereafter on 25.06.2013, pursuant to the Surveyor’s e-mail dated 25.06.2013 seeking complainant’s prior consent before forwarding of report, the complainant again agreed to accept Rs.2,39,92,590/- crores instead of Rs.2,99,00,000/- consented to earlier, since he was facing cash crunch because of non-settlement of the claim. Subsequently, vide letter dated 28.06.2013 addressed to the opposite party no.1/ insurance company, the loss was revised to Rs.2,39,96,758/- after discussions with the opposite party no.1. On 10.09.2013, the opposite parties conveyed by email that the claim had been settled for Rs.2,39,92,590/- and the amount was electronically transferred to the complainant’s account on 05.09.2013. The complainant issued a protest letter by email on 11.09.2013 followed by a letter dated 30.09.2013. The acceptance of settlement of the claim is stated to be under protest by the complainant as there had been inordinate delay in settlement of the claim which was causing him financial hardship. As no details of calculations pertaining to the claim were provided, the complainants obtained the same under Right to Information Act (RTI) on 31.10.2013. The complainant is before this Commission with the following prayer:—
(i) To pay sum of different amount payable – Rs.3,15,00,000 less Rs.2,39,92,590 = Rs.75,07,410/- plus
(ii) To pay different of value of salvage amount illegally deducted = Rs.48,13,482 – Rs.18,00,000 = Rs.30,13,482/- plus
(iii) To pay surveyor fee wrongly and illegally deducted = Rs.2,85,518/ -
Total of (i) + (ii) + (iii) = Rs.1,08,07,410/- plus
(iv) To pay interest @ 18% on Rs.1,08,07,410/- from the date of loss i.e., from 12.08.2011 till realisation 12.01.2014 i.e., for 29 months = Rs.47,01,223/- plus
(v) To pay interest @18% on Rs.2, 39,92,590/- for 18 months (As the claim was delayed by 18 months keeping in view Regulation 9.2 and 9.5 of Insurance Regulatory and Development Authority (Protection of Policy Holders’ interest) regulations, 2002 = Rs.64,78,000/- plus
(vi) To pay compensation for harassment and financial loss = Rs.5,00,000/- plus
(vii) To pay costs of litigation = Rs.5,00,000/- plus
(viii) Grand total : Rs.2,29,86,633; and
(ix) Any other relief which this Hon’ble Forum deems fit may also be granted in favour of complainant
3. Resisting the complaint by way of a written statement dated 26.08.2014,
The insurance company’s coercive practices in settling claims amount to deficiency in service under consumer law.
A claimant must establish evidence of coercion in accepting insurance settlement to prevail in a deficiency of service claim under the Consumer Protection Act.
(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....
(1) Unfair Trade Practice – Successive Reductions indicates trend of unfair treatment that does deserve to be encouraged.(2) Insurance company is also regulated by IRDA regulations & reasonable perio....
The acceptance of an insurance settlement under protest does not forfeit the right to pursue further claims, affirming the consumer's right amid shortcomings in service.
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