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2022 Supreme(Online)(NCDRC) 1349
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
SUBHASH CHANDRA, PRESIDING MEMBER
M/s CITIZEN SCALE (INDIA) PVT. LTD. – Appellant
Versus
M/s NEW INDIA ASSURANCE CO. LTD. – Respondent
Consumer Case No. 272 of 2013
For the Appellants/Petitioners: Mr Manoj P Mhatre
For the Respondents: Mr P K Seth
Insurance claims must be assessed as per regulatory standards; arbitrary reductions by insurers without proper justification amount to deficiency of service.
Headnote:(A) Consumer Protection Act, 1986 - Section 12 - Deficiency in service - Claim repudiation under fire insurance policy - Complainant's insurance claim for fire damage was wrongfully limited by the insurer; required to honor the claim based on proper assessment - Claim of Rs.1,72,10,000/- was substantiated and needs to be paid minus previous payments - Interest awarded from submission of the claim till realization. (Paras 1, 14)
(B) Insurance Act, 1938 - Section 64 UM - The appointment of technical experts in claim assessment must comply with regulatory approvals; failure to consult IRDAI renders report invalid. (Paras 11, 12)
Facts of the case:
The complainant, M/s CITIZEN SCALE (INDIA) PVT. LTD., experienced fire damage leading to a claim of Rs.1,72,10,000/- under two insurance policies, but was offered a settlement of Rs.74,86,439/- which he contested as inadequate due to poor service by the insurer.
Findings of Court:
The report from the insurer's surveyor failed to justify a lower valuation of loss than claimed, resulting in arbitrary denial of service. The court found merit in the complaint and allowed compensation.
Issues: Whether the insurer showed deficiency of service in processing the fire claim and if the claim's full amount should be paid.
Ratio Decidendi: The insurer is required to provide fair assessments and cannot arbitrarily reduce the claim amount without valid justification, especially regarding compliance with regulatory requirements for expert assessments. The insurer was found deficient in service.
Result: The complaint was allowed; the opposite party directed to pay the entire claim of Rs.1,72,00,000/- minus previous payments, with interest.
| Table of Content |
|---|
| 1. claim lodged under fire insurance for damages. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. insurer contests deficiency in service allegations. (Para 7 , 8) |
| 3. regulatory compliance in claim assessment is vital. (Para 9 , 10 , 11) |
| 4. inadequate justification for reduced claim is perverse. (Para 12 , 13) |
| 5. complaint allows full claim minus previous payments. (Para 14 , 15) |
1. This complaint has been filed under section 12 of the Consumer Protection Act, 1986 (in short, the Act) alleging deficiency in service in repudiation of his claim preferred before the opposite party under the Standard Fire and Special Perils policies arising from an incident of a fire accident in his premises.
2. The facts of the case, in brief, are that the complainant who is in the business of electronic weighing scales and balances had obtained two policies for Standard Fire and Special Perils from the opposite party in March 2009. The policies related to stocks and for building with plinth, foundation, furniture, fixtures, and electronic equipments respectively. The two policies covered his premises at Citizen House, Plot 50 AB, Government Industrial Estate, Charkop Naka, Kandivali, Mumbai 400 067 for the period 30.03.2009 to 29.03.2010. Policy number 111900/11/08/13/00002640 for stocks was issued for a value of Rs.3.25 crores and policy number 111900/11/08/11/00002369 for building, furniture and equipment was for Rs 4.50 crores. On 24.12.2009 there was an accident of fire in the premises of the insured at about 12.05 pm. The complainant informed the opposite party the same day and the opposite party appointed M/s B P Shah and Associates as Surveyors. Mr Nabade and Mr Vasant Kumar, representatives of the Surveyors, visited the insured premises on the same date. The complainant provided copies of the balance sheet for 2006-07, 2007-08 and 2008-09 along with the stock registers which showed the storage of stocks valued at approximately Rs 2.00 crores. Complainant also provided details of other documents sought by the Surveyors from time to time.
3. The Surveyors engaged the services of one Mr Katkar who was stated to be an instrumentation expert. However, the details of this expert were not provided to the complainant. The complainant had submitted a claim for Rs.1,72,10,000/- to the opposite party as a composite claim under both the policies. According to the complainant, the claim pertains to damage to electronic weighing scales and their parts along with the damage to the building, furniture and fixtures. The opposite party also deputed an officer Mr V.R. Nawate and Mr Santosh Kumar on 25.06.2010 to count the damaged goods. In the meanwhile, the opposite party also engaged another surveyor Mr Jagdish N. Vakil who also visited the premises and investigated the claim on various occasions. It was subsequently informed by the surveyors, M/s BP Shah and Associates, that the said Mr J N Vakil was their associate.
4. As per the Preliminary Survey Report dated 08.01.2010 prepared by the opposite party, an estimated loss ranging between Rs.95,00,000/- and Rs.1,45,00,000/- was arrived at. The estimated loss, including cost of repairs as per the instrumentation expert Mr Katkar, was Rs.80,00,000/-. On the basis of the overall interim survey report, the surveyors recommended an interim part payment of Rs.50,00,000/- out of the total liability of Rs.1,50,00,000/-.
5. The Final Survey Report dated 20.04.2011 processed the complainant’s claim under the two policies for an amount of Rs.74,86,439/-. This settlement has not been accepted by the complainant. It is alleged that the amount proposed by way of settlement by the opposite party indicates gross deficiency in service and unfair trade practice since it limits the claim arbitrarily. The Final Survey Report dated 20.04.2011 indicates that the complainant has not carried out reinstatement and no invoices are submitted. This is despite the Surveyors recommending an interim part payment of Rs.50,00,000/- at the
