IMPORTANT POINT
Depreciation – State Commission erred in arbitrarily reducing the depreciation value of the machines duly determined by the surveyor, from 80% to 40%, that too without assigning any reasons for such consideration.

ORDER

AVM J. Rajendra, AVSM, VSM (Retd.), Member—The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Order dated 10.12.2014 passed by the learned Tamil Nadu State Consumer Disputes Redressal Commission Chennai (hereinafter referred to as “the State Commission”), in Consumer Complaint No. 57 of 2012, wherein the Complaint filed by the Respondent was partly allowed.

2. For the sake of convenience, the parties in the present matter being referred to as mentioned in the Complaint before the State Commission. “M/s. Duroflex Private Ltd” is identified as Complainant/ Respondent and “The Oriental Insurance Company Ltd.” is referred to as the Appellant/Opposite Parties/Insurer.

3. Brief facts of the case are that on 19.10.2009 at about 03.20 AM Fire broke out at the Complainant’s manufacturing unit situated at Kumaranapalli Village, Denkanikottal Taluk, Krishnagiri District, TN during Deepavali festival and the cause of fire was bursting of crackers in vicinity and the splinters falling on the roof of the factory. The complainant covered the establishment under the Standard Fire and Special Perils Insurance Policy Nos.441901/11/2009/406 and 441901/11/2009/466.

4. The policy pertains to Plant and Machinery and Building, and the total sum insured was Rs.9,88,00,000/- towards plant, Machinery and Building. The annual premium of Rs.3,67,019/- was paid. The Plant, Machinery and Building is insured on market Value basis. The stocks in process were insured for Rs.4,50,00,000/- and the premium paid is Rs.1,86,827/-. Total premium paid was is Rs.5,53,846/- for both the policies, for insuring the property at Market value. The List of machineries annexed to the insurance policies and insurance surveyor report reveals that the plant and Machinery and Building were insured at Market value. Consequent to the Fire Accident, the OP had deputed an insurance Surveyor from Coimbatore to assess the loss and submit a Report. Though the Surveyor immediately visited the premises, he submitted his Report dated 16.06.2010 after a lapse of nine months. After the fire accident, to confirm the adequacy of sum insured for the buildings, the OP had also appointed a government approved valuer, who valued the building assets at Rs.4,29,97,345/- excluding the quilting section building. As regards the buildings destroyed in fire, the Govt approved valuer has taken depreciation at 13.5% in his report dated 01.11.2009. Whereas, the insurance surveyor in his report dated 16.06.2010 has taken 27% depreciation for buildings, which exposes the anomalies in the depreciation norms adopted by the OP and their double standards.

5. After the Fire accident the OP did not settle the insurance claim for over 12 months and only after repeated follow-ups and personal liaison, they came forward and belatedly settled about 24% of the originally claimed amount. The Fire Accident completely destroyed the buildings in the quilting Section and gutted the electrical fittings and machinery which had to be completely scraped. Consequently, production in quilting Department stopped and the semi-finished Mattresses had to be sent outside for quilting. There was no choice except to rebuild the Quilting Dept and replace it with new machinery, without delay. However, this process of reconstruction and production took three months. Cost of Civil work alone was Rs.32,82,178/-. Consequent to the fire accident they submitted claim on 04.11.2009 for Rs.1,57,26,600/- of which Rs.41,49,027/- was for Quilting building; Rs.91,41,180/- towards Plant & machinery; Rs.6,23,397/- for electrical erections; and Rs.18,12,996/- towards stock. Whereas, the OP belatedly settled a part of the insurance claim for Rs.37,37,853/-, while there is a shortfall of Rs.1,19,88,747/-. The cost of new Quilting machine is Rs.82,93,275/-. However the said quilting machine was insured at Rs.85 lakhs towards replacement cost of the machine. The OP had settled part cla