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IN THE HIGH COURT OF KERALA AT ERNAKULAM
T.R. Ravi, J.
Sandhya Lal, W/o. Ajith - Appellant
Versus
Kotak Mahindra General Insurance Company Limited and Ors. – Respondents
WP(C) No. 27258 of 2020
Decided On : 03-09-2021
Marine Insurance Act- Section 60 - Insurance terms - value of goods saved from damage or destruction'. - concept of constructive total loss has been imported from the law relating to marine and fire insurance. Under the Marine Insurance Act, 1963, Section 56 provides that any loss other than a total loss is a partial loss and that a total loss can either be actual total loss or a constructive total loss. Section 57 says that where the subject-matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual total loss and that no notice of abandonment need be given.
Finding of the Court : Agreement between the parties provides that in case of the repair cost exceeding 75% of the IDV, it is to be treated as a constructive total loss. A constructive total loss, going by the principles stated above, requires abandonment of the subject insured. Abandonment of the subject insured necessarily calls for cancellation of the RC. So, the evaluation shown as without RC, is in respect of a constructive total loss. At the same time, when the RC is retained, the option is left to the insured to use the vehicle after repair. Therefore, there is no total loss involved
Result : Writ petition is dismissed
JUDGMENT :
The petitioner purchased a Hyundai Creta Car in September, 2015. The vehicle met with an accident on 29.12.2018. The car along with the passengers fell into a lake. The passengers escaped but the vehicle was considerably damaged. The vehicle was lifted and towed to the nearest service centre and an insurance claim was also laid with the 1st respondent insurer. The vehicle was covered by Exhibit P2 Policy Certificate. Since the cost of repair was assessed to be more than 75% of the Insured's Declared Value ('IDV', for short) of the vehicle, going by the terms of the policy, it was to be deemed to be constructive total loss. The sum assured in such cases is the value shown as IDV. According to the petitioner, she and her family had developed an emotional attachment to the vehicle and had hence requested the 1st respondent to return the vehicle to her after deducting the salvage value. The 1st respondent informed the petitioner that the value assessed by the approved surveyor is Rs.2 lakhs without Registration Certificate ('RC', for short) and Rs.5.5 lakhs with the RC. Since the petitioner did not give a positive response, the 1st respondent closed the claim on 15.5.2019. The petitioner had on 7.11.2019 requested to reopen the claim, which was refused by the 1st respondent. The vehicle was kept in the open yard of the service centre, causing further damage and depreciation in the value. On 3.2.2020, the petitioner filed a complaint before the 2nd respondent. The 2nd respondent passed Ext.P4 award on 28.10.2020, directing the insurer to settle the claim on "as is where is" condition taking the salvage value as Rs.3.75 lakhs with RC and Rs.80,000/-without RC. Aggrieved by Exhibit P4, the petitioner has filed this writ petition.
2. A counter affidavit has been filed on behalf of the respondents. It is stated that the accident which occurred on 29.12.2018 was reported to the respondent on 8.1.2019. The Surveyors appointed assessed the loss as Rs.6,61,067/-. On 2.2.2019, the respondent informed the petitioner that since the repair liability has been found to exceed 75% of the IDV of the vehicle, the settlement of claim is suggested on constructive total loss basis. It was stated in the letter that the available salvage quotes currently are Rs.5.5 lakhs with RC and Rs.2 lakhs without RC. The copy of the letter is produced as Exhibit R1(a). It is stated that the petitioner did not send any reply to Exhibit R1(a) and therefore, Ext.R1(b) reminder was sent on 19.3.2019, requesting the petitioner to forward the required documents along with a no objection Certificate from the bank and also to decide on the offer of settlement. Since the said letter was also not replied, by Ext.R1(c) letter dated 15.5.2019, the respondent informed the petitioner that they are closing the claim. About 7 months later, the petitioner approached the 2nd respondent. On the basis of the pleadings of the parties, the 2nd respondent directed a second survey to be conducted. Exhibit R1(d) is the survey report, wherein the net loss was assessed at Rs.9,76,017/-. The surveyor opined that the vehicle in "as is where is condition" will fetch Rs.3.75 lakhs with the RC and Rs.80,000/-without RC. The 2nd respondent accepted the Suveryor's report and issued Exhibit P4 directions. According to the insurer, the offer of settlement was the usual manner in which a case of constructive total loss is settled.
3. Heard Ms.Anjali Menon, Counsel for the petitioner and Sri.George Cherian, Senior Advocate, instructed by Ms.K.S.Santhi on behalf of the respondents.
4. The counsel for the petitioner contended that the valuation of the salvage is not proper. According to her, there cannot be a differential valuation depending on whether the RC is retained or cancelled. It is contended that the vehicle is a tangible goods and the RC is not a tangible goods, and there cannot be a valuation of an intangible component. It is contended that one cannot anticipate what will be the price t
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