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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
AVM J. Rajendra, AVSM VSM (Retd.), Presiding Member
United India Insurance Company – Appellant
versus
H.P. Latha and Anr. – Respondents
First Appeal Nos.442 and 443 of 2019
Decided on 23.2.2024
Consumer Protection Act, 1986 – Section 19 [Consumer Protection Act, 2019 – Section 51] – Appeal – Services – Insurance – Repudiation of Claim – Insurance Act only mandates that while settling a claim, assistance of a surveyor should be taken but it does not go further and say that the insurer would be bound by whatever the surveyor has assessed or quantified; if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured – The option to accept or not to accept the report is with the insurer. However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured – The surveyor, after discussing with the insured along with investigator had taken only stock statement shown items and crossed verified with Police FIR and found the value to be Rs.34,83,166/-. He, on physical verification and assessment, found it to be Rs.8,68,520/-. It is, however, an admitted position of the surveyor’s itself that this is a case of total loss as the entire stocks and finished products were gutted. Therefore, clearly, the stand of the surveyor as regards valuation of the stock destroyed is untenable. It is also an established position that necessary records were brought out to the notice of the surveyor establishing that the value of the stocks at the premises which were burnt down to ashes was Rs.34,83,166/-. Therefore, there is no reason for the surveyor to limit the loss to only Rs.8,66,520/-. The Opposite Party is directed to pay Rs.10,54,500 to the Complainant along with simple interest at 6% per annum. [Paras 10 to 22].
Result: Appeal disposed off.
ORDER
These two appeals Nos. FA/442/2019 & FA/443/2019 have been filed under Section 19 of the Consumer Protection Act, 1986, by United India Insurance Co. Ltd. (the “Appellant”/”Opposite Party”-OP) against (1) HP Latha & (2) KK Kalyan Kumar (“Respondent”/”Complainant”) challenging the Impugned Order dated 11.10.2018 in CC/43/2017 to CC/44/2017 respectively passed by the learned State Consumer Dispute Redressal Commission, Karnataka (“State Commission”) which had partly allowed both the Complaints.
2. There is 88 days delay in filing both appeals and for reasons outlined in the Applications IA/4432/2019 and IA/4435/2019 respectively, the same is condoned.
3. Since the facts and questions of law involved in both Appeals are substantially similar, except for minor variations in dates, events, and policy numbers etc., these two Appeals are being disposed of by this common Order. For ease of reference, FA No. 442 of 2019 shall be taken as the lead case, and the facts drawn from CC No. 43/2017.
4. For Convenience, the parties in the present Appeal are being referred to as mentioned in the Complaint before the learned State Commission. The Complainant, Smt. H.P. Latha, Proprietor of M/s. KR. Aromatic Oils engaged in oil extraction business at her owned property, employing five laborers. “M/s. United India Insurance Co. Ltd.” is referred to as the Opposite Party/Insurer (OP) in this matter.
5. Brief facts of the case, as per the Complainant, are that she insured her business plant and machinery for Rs.15 Lakhs and stocks for Rs.46,55,000/-, totaling Rs.61,55,000/- with the OP, under Standard Fire and Special Perils Policy No.2414001115P105558503 for the period from 08.08.2015 to 07.08.2016. On 31.08.2015, around 1.00 AM hours, a fire occurred at the factory premises, resulting in complete destruction of the factory, including raw materials, machinery, and finished goods. The incident was reported to the fire brigade, police and the OP Insurance Company.
6. The OP’s surveyor conducted an investigation and assessed the loss at Rs.30,74,629/-. Subsequently, the OP paid insurance benefits of Rs.30,50,146/- to the Complainant on 03.03.2016, while the Complainant suffered a total loss of Rs.96 lakhs. Despite the surveyor assessing the total loss at 100%, the OP’s payment of Rs.30,50,146/- fell significantly short of the actual loss suffered. Consequently, the OP is liable to pay the remaining amount of Rs.31,04,854/-. The failure to pay this sum constitutes a deficiency on the part of the OP. Despite requests, demands, and notice, the OP has not fulfilled its obligation. As a result, the Complainant suffered significant mental pressure, agony, and financial loss, which constitutes unfair trade practice by the OP. Hence, aggrieved by this, she, through a General Power of Attorney (GPA), filed a Consumer Complaint (CC/43/2017) before the State Commission, seeking a direction for the OP to pay Rs.31,04,854/- along with interest at 21% p.a., compensation for mental agony, and costs.
7. Despite several notices the OP Insurer failed to appear before the State Commission. As a result, the OP proceeded ex-parte.
8. The learned State Commission vide order dated 11.10.2018, allowed the complaint with the following findings:—
“7. As against which the advocate for complainant submits that by considering the value of the stock and the loss which is assessed by the Surveyor to an extent of Rs.60,25,375/- reveals that most of the items covered under the policy were burnt. Therefore, the advocate for the complainant places reliance on a decision rendered by the Hon’ble Supreme Court of India in case of IA. Sharma v/s Oriental Insurance Co., Ltd., reported in I (2018) CPJ 6 (SC) is applicable. In the said decision at Para 11 it is observed as hereunder;
“11. To clarify the matter further, we may give another example. Supposing, the insurer owns two paintings of Rs.5,00,000/- each but pays premium for insurance cover of Rs. 1,00,000/- for both the painti
(1) Fresh Survey – if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, ....
(1) Hearsay – No documentary evidence in regard to financial stress of the insured has been brought on record and this assertion is merely a hearsay.(2) Sampling – A mere sampling of some bills canno....
Insurance companies cannot avoid liability by citing external compensations, and second surveyors must be appointed with regulatory oversight.
IMPORATNT POINT Appointment of Surveyor – Insured can also appoint a Surveyor or loss accessor.
Surveyor report The surveyor report is not based on legally justiciable reasons and facts and cannot be relied upon, being arbitrary and perverse.
Report of surveyor is an important document and a basis for consideration of the claim.
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