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Judgment
Subhash Chandra, Presiding Member
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.
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.
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.
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/-.
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 interim stage which was reduced to Rs.30,00,000/- by the opposite party. An amount of Rs.4,08,374/- was deducted by the opposite party as recoverable from the complainant who, it was alleged, had not declared multiple occupancy in the insured premises. In addition, a reinstatement premium of Rs 1,670/- was also indicated to be collected. The discharge voucher forwarded by the opposite party of Rs.74,86,439/- had also deducted an amount of Rs.4,08,374/- as the discharge voucher indicated Rs.70,00,000/- only.
The complainant submits that till date he has only received an amount of Rs.25,00,000/- and another instalment of Rs.44,86,439/- totalling to Rs.70,76,422/- only. Complainant has not signed the final discharge voucher since it is his case that the loss suffered by him amounts to Rs.1,72,00,000/-. The complainant has prayed that this Commission be pleased to:
(a) hold the opposite party guilty of being deficient in providing defect free and proper services to the complainant
(b) direct the opposite party thereby directing the opposite party to process and allow the entire claim of the complainant on the basis of the documents submitted to it to the tune of Rs 1,72,00,000/- and further pay to the complainant an amount of Rs 1,08,00,000/- viz. the balance amount, as an amount of Rs 70,76,422/- already received together with interest at the rate of 18% per annum from the date of the incident till the realization of the said amount under the policy number 111900/11/08/13/ 00002640
(c) to further direct the opposite party to pay to the complainant an amount of Rs 5,00,000 by way of compensation for the delay in processing the complainant’s claim and damages
(d) to direct the opposite party thereby directing the opposite party to pay to the complainant an amount of Rs 1,00,000/- by way of cost of this complaint
(e) that any other and further relief that this Hon’ble Commission may deem fit and proper in the circumstances of the case.
The opposite party has contested the complaint by way of a reply. It has been stated that there is no deficiency in the processing and settling of the insurance claim for Rs.74,86,439/- in full and final settlement of the claim. It is contended that the same has been processed as per the provisions of section 64 UM of the Insurance Act, 1938 and after a duly appointed surveyor had carried out a survey to assess the loss and ascertain the genuineness and quantum of loss. It is contended that the present complaint cannot be resolved in a summary proceeding before this Commission. It is also contended that the complainant is a private company engaged in commercial activities and is therefore not a ‘consumer’ under the Act. On merits, it is contended that the assessment by the surveyor has been correctly done with the necessary inputs of a technical expert in the field of instrumentation since electronic equipment were involved. It is contended that the claim of the complainant was exaggerated and the Surveyor’s report is a more realistic valuation of the loss.
Parties led their evidences. We have heard the learned counsel for both the parties and perused the records carefully.
On behalf of the complainants it was submitted that by way of IA No. 16175 of 2017 change in name of the complainant to M/s Aczet Private Limited had been brought on record through an amended memo of parties on 12.09.2018. It was averred that while the cumulative amount assured under the two policies was Rs.7,75,00,000/-, the claim preferred was only of Rs.1,72,10,000/-. It was argued that the preliminary survey report prepared by the opposite party on 08.01.2010 had indicated the loss to be valued between Rs.95,00,000/- to Rs.1,45,00,000/-. On the recommendation of the instrumentation expert, Mr Katkar, the approximate cost for the damages was estimated at Rs.1.50 crore. However, recommendations of the ‘expert’ are contested since the qualifications of the expert appointed by the surveyor were not shared with the complainant and there was no opportunity provided to the complainant to provide details or clarify issues with him. It was also averred that the appointment of the ‘expert’ was not as per the provisions of the Insurance Act, 1938 since as per section 56 (A) of the Insurance Act, IRDAI’s approval was required for the same. This had not been brought on record. Lastly, no reasons for the reduction of the value estimated in the preliminary report in the final report were provided, except for the assessment by the ‘expert’ appointed by the surveyors. It is, therefore, the complainant’s case that the Final Report cannot be accepted. On the contrary, it is averred that the claim of Rs.1,72,10,000/- based on the complainant’s assessment of loss be accepted as it is more realistic and closer to the preliminary assessment of loss of approximately Rs.1,45,00,000/-. This claim includes damage to accessories also which were part of the stock. Learned counsel for the complainant relied upon the decision of this Commission in National Insurance Co. Ltd. & Anr. Vs. Sanjay Kumar, II (2009) CPJ 223 (NC) where it was held that the insurer, if not satisfied by the assessment of loss by the Surveyor, can refer the matter to IRDA and that the insurer was not competent to call for the report of any expert. It was also held that repudiation based upon an expert’s report in such a case loses its merit. It was also held that as per section 64UM 1(A), 2, 3 and 4 of the Insurance Act, it was only for the IRDAI as the Regulator to call for an independent report from any other approved loss assessor specified by it. In the present case, as admitted by the opposite party, it was the surveyor who appointed the expert.
The opposite party has taken the stand that till the Final Report is available all assessments are tentative and not final. The Final Report is based on the Surveyor’s report, which, in turn, rests on the expert opinion obtained by the surveyor under section 64 UM of the Insurance Act. It is contended that the surveyor was authorised to appoint an expert and that the report based on his technical inputs should be accepted. It was contended that the Surveyor’s Report was mandated under the Insurance Act for any claim exceeding Rs.20,000/- and needed to be given due weightage. It is stated that reliance on Sanjay Kumar (supra) was misplaced as the case was distinguishable. Ld. Counsel for the opposite party relied upon the judgment of the Hon’ble Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Co. Ltd. & Anr. in CA No. 4487 of 2004 dated 24.08.2009, (2009) 8 SCC 507 wherein it was laid down that while the assistance of a surveyor in settling a claim is mandatory under the Insurance Act, 1938, the option to accept or not remained with the insurer. However, if a report is prepared in good faith, with due application of mind and in the absence of any error or ill motive, the insurance company cannot reject the report of Surveyors. Courts or other forums can intervene only if rejection is arbitrary and based on no acceptable reasons. It is, therefore, contended that the settlement of the claim has been done as per rules and on the basis of an expert based Surveyor’s report which does not warrant any interference.
With regard to the preliminary objections taken by the opposite party, the fact that a commercial entity obtains insurance cover in the course of his business cannot place him outside the pale of the definition of a ‘consumer’ under the Act. The contract of insurance is intended to indemnify the insured against loss on account of the perils specified in the insurance policy. A business entity having the need to indemnify its stocks or products or premises cannot, therefore, be held to not be a ‘consumer’ since he pays a consideration for a service. As far as the objection relating to the jurisdiction of this Commission is concerned, it has been well settled in the case of Lakshmi Engineering Works vs P S G Industrial Institute - 1995 SCC (3) 583 by the Hon’ble Supreme Court that commercial purpose needs to be defined on the basis of the specific case. In the present case, the business of dealing in electronic weighing machines and equipment does not bar the complainant from seeking relief against deficiency in service by the opposite party since a consideration was paid for it by way of premium.
On merits, it is it is evident from the foregoing that the assessment of the claim of the complainant has been done by the opposite party on the basis of the Final Report submitted by the Surveyors on 20.04.2011. It is admitted that this report is based upon the assessment or technical inputs of an expert appointed by the Surveyors themselves. It is also clear from section 64 UM of the Insurance Act, 1938 that while the Surveyor’s report is mandatory for a claim exceeding Rs.20,000/-, the appointment of an expert has to be done in consultation with the IRDAI. In the instant case, the appointment of an expert has been done by the Surveyor without approaching or obtaining the concurrence of the IRDAI. No reason has been provided by the opposite party for accepting the Final Report of the surveyor appointed by it which in turn relied upon the inputs of an expert appointed without consulting the IRDAI as required under the provisions of section 64 UM of the Insurance Act. It has merely been stated that the claim has been settled on the basis of the report of the surveyor which is based upon a technical expert’s inputs. Neither any justification has been provided for engaging the services of an expert nor details of the expert appointed and the basis of his arriving at the conclusion provided to the insured. It has also not been brought out in the final report.
In the absence of any concrete evidence to justify the assessment of the damage on account of the fire on the premises of the complainant to be valued differently from that claimed by him, the Final Report of the Surveyors is liable to be set aside. There was enough opportunity for the Surveyors to assess the loss on the basis of documentary evidence of invoices and other cost details. Even with the loss of documentary evidence in the fire, the cost of materials damaged on account of the fire could have been put together. Instead of doing the same, the Surveyors appear to have concentrated upon obtaining reports from and ‘expert’s including regarding the potential of the salvaged material being usable.
In view of the foregoing it is evident that the reasons for repudiating the claim of insurance of the complainant by the opposite party are arbitrary, perverse and not sustainable. The opposite party has been deficient in service under the insurance policies availed by the complainant. The complainant is entitled to the relief sought by him. I, therefore, find merit in the complaint which is accordingly allowed. The opposite party is directed to allow the entire claim of the complainant of Rs.1,72,00,000/-. However, Rs.76,76,422/- already paid by the opposite party to the complainant shall be deducted from this amount. The balance amount shall be paid to the complainant along with interest at the rate of 6% per annum from the date of submission of the claim till realisation within 2 months from the date of this order, failing which interest at the rate of 9% shall be payable.
The consumer complaint stands disposed of accordingly.