Kusum Jain vs National Insurance Co. Ltd.

Subhash Chandra, Presiding Member

This Revision Petition under the Consumer Protection Act, 1986 (in short, ‘the Act’) assails order dated 15.12.2016 of the State Consumer Disputes Redressal Commission, Rajasthan, Circuit Bench, Udaipur (in short, the ‘State Commission’) in appeal No. 269 of 2012 allowing appeal of the respondent and setting aside the order dated 28.08.2012 of the District Consumer Disputes Redressal Forum, Bansawara (in short, ‘the District Forum’) in complaint no.78 of 2012. It is averred that the impugned order of the State Commission has set aside the order of the District Forum, whereby compensation for damages and repairs had been awarded in respect of an insured car which had met with an accident.

In brief, the facts of the case of the petitioner are that on 18.05.2011, she bought a Volkswagen Polo Car from M/s. Rajesh Motors Private Limited., Udaipur and obtained an Insurance Policy valid till 17.05.2012. On 05.02.2012, the car met with an accident while being driven by the husband of the petitioner. The car is alleged to have fallen into a pit which resulted in leakage of oil from the chamber and the car stopped due to the same. The vehicle was towed to the service centre and on 06.02.2012 an estimate of Rs.3,24,168.08 for repair of the vehicle was prepared by the Service Centre. The insurance company was informed and the survey of the vehicle was done on 20.02.2012. The petitioner got the car repaired and paid Rs.3,32,000/- towards repairs. The claim of the petitioner was estimated by the respondent insurance company on 10.04.2012 at Rs.9983/- on the ground that the engine of the vehicle had ‘seized’ on account of being driven without engine oil in the chamber and that this resulted in a consequential damage which was not covered under insurance. The Petitioner filed a complaint No.78 of 2012, before the District Forum which held that there was no undue delay in communicating the information regarding the accident to the respondent insurance company and that the claimed amount of Rs.3,24,168.08/- was within the insured amount of Rs.5,42,851/- and, therefore, the repudiation of the claim constituted a deficiency in service. It accordingly awarded Rs.3,32,168/- with interest @ 9 % per annum from 03.07.2012 with compensation of Rs.5,000/- and litigation expenses of Rs.1,500/- to be paid within two months. This order was appealed before the State Commission which concurred with the report of the Surveyor that the vehicle had been driven after oil from the chamber had leaked which resulted in the seizure of the engine and, therefore, constituted a consequential loss which was not admissible under the terms and conditions of the policy. The contention of the complainant was that the vehicle had been towed on 05.02.2012 to Udaipur and was not driven after the accident, so as to result in seizure of the engine. The State Commission, however, concluded that:

“this accident seems to be suspicious. The story has been cooked up. The car did not went into any trench but it was a small pot hole as shown in the photograph. The tyre of the car cannot go deep into pot hole and damage to the chamber seems unlikely. Even, if it is believed that the chamber was damaged and oil leaked out, and the vehicle was towed-down then there was no possibility of any damage to the engine. The engine could seize only when the car was driven without oil. It seems that there were other reasons of damage to the car engine, and the story of accident has been planted. The photographs show only minor damages to the car. If the car went down in a deep trench than it would have been a different story.

Company was not immediately informed. Car was removed from the scene of accident. No sport survey could be done.”

Aggrieved by this order the complainant is before this Commission praying for setting-aside of the order of the State Commission.

I have heard learned counsel for both the parties and perused the material available on record. The complainant’s case is that the vehicle had been damaged on account of falling into a pit due to which the engine oil of the car leaked and the car got stuck immediately, and was impossible to be driven. It was, therefore, towed to the service centre in Udaipur, where an estimate of Rs.3,24,168/- was prepared. Complainant contends that the impugned order is based on conjecture and surmises that the accident seems to be suspicious without assigning any proper reason for the same and that the claim of the respondent that the car was damaged due to negligence of the petitioner’s husband who was driving the car is stated to be baseless, as the car could not be driven after leakage of the oil. It is contended that the District Forum in its order has concluded that the petitioner did not commit any delay in communicating the incident of accident.

According to the complainant, the statement of the mechanic that once the oil chamber is damaged and the oil has leaked, the engine gets choked and there was no possibility of driving the car has been ignored. The order of the State Commission is stated to be unsustainable, as it is devoid of facts. It is argued that deficiency in service in the denial of the claim of the petitioner, despite the evidence on record, is established.

The respondent, on the other hand, has contended that information regarding the accident of the vehicle on 05.02.2012 was not intimated to it the same day as per clause 1 of the Policy to enable an assessment of the situation and damages. It is also stated that the damage to the engine of the car in question was on account of the seizure of the engine due to leakage of oil from the chamber which was evidently on account of the car being driven for some distance since mere leakage of the oil would not resulted in seizure of the engine unless it was used after the oil had drained out. It is contended that as per the photographs of the accident side, the vehicle had only gone into a pot hole which was not a deep pot hole in which the vehicle could not have been damaged to the extent that the oil would have leaked out. It has, therefore, expressed doubt on the veracity of the accident in which the vehicle was reported to have suffered damages.

It is the contention of the respondent insurance company that the claim has been admitted for minor damages as per the policy while disallowing the claim towards the repair of the engine on account of seizure. The respondent has relied upon the judgments of this Commission in Balendra Gautam vs. Oriental Insurance Company Limited III (2002) CPJ 244 (NC) in RP No.1282 of 2000 dated 28.02.2002 which held that, “seizure of the engine is not the direct result of the accident but only an avoidable off-shoot of the collision. This is not covered by the terms of the policy”. Reliance is also placed on Tata AIG General Insurance Company Ltd. Vs. Ring Road Honda & Anr., I (2019) CPJ 482 (NC) in Revision Petition No.1463 of 2009, wherein it was held that “Damage to engine was not on account of accident but driving car further, with loss of oil-Engine  seizure is a consequential loss which is not covered under terms and conditions of Policy– Insurance  Company was right in rejecting claim for consequential damages as per terms and conditions of existing policy”, which, in turn, relied upon Balendra Gautam, (supra) and held that engine seizure was “a consequence not covered by terms of the policy”.

From the facts and circumstances of this case and as per the material on record, it is seen that there was a delay of one day in intimating the respondent insurance company of the accident and the respondent could not assess the cause of damage with reference to the location of the pit in which the vehicle was stated to have fallen. Secondly, the cause of the seizure of the engine as stated by the complainant to have been due to leakage of oil is not supported by any expert opinion. On the contrary, the respondent insurance company has placed on record two judgments which held that seizure of engine due to loss and engine / lubricant oil is due to driving the vehicle without the oil.

The case of the complainant is that the vehicle had fallen into a pit which damaged the chamber of the engine in a manner that its engine seized due to loss of engine oil. This could have been corroborated, if the location of the accident site was able to corroborate that there was indeed a pit that was deep enough for the chamber to be damaged while being driven over it. This opportunity has been denied by the complainant to the respondent insurance company since the vehicle was towed and brought to the Service Centre as per the petitioner’s own submission. There is, therefore, a violation of condition No.1 of the insurance company which states that:-

“Notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damage in the event of the claim and thereafter the insured shall give all such information and assistance as the company shall require”.

The report of the surveyor dated 20.02.2012 states that:-

“From the observation of dismantled engine made it appears that the vehicle was run for considerable time after impact on the chamber, drainage of oil, leading to seizure of engine and scoring on the reciprocating/ rotating surfaces. This is a contravention with the relevant Policy Condition No.4 of the policy and hence the extension / aggravation of losses id outside ambit of the policy”.

In view of the foregoing, the order of the State Commission is found to be based upon the report of the surveyor and the assessment based on condition Nos.1-4 of the policy. The averments of the complainant are that the order is without basis and cannot be considered as the impugned order sets out reasons for arriving at its conclusion. On the other hand, the order of the District Forum has mainly concluded that there was no delay in reporting of the accident to the respondent insurance company and that the claim was within the amount of insurance covered and, therefore, should be allowed.

In view of the fact that the seizure of engine has been held by this Commission in Balendra Gautam, (supra) to constitute consequential damage, the State Commission’s conclusion does not warrant any interference. Accordingly, the revision petition is found to be without merits, and, is accordingly dismissed. Parties shall bear their own costs. All pending I.As stand dismissed with this order.