M/s Saurashtra Chemicals Ltd vs National Insurance Co. Ltd

Heard Mr. Vinay Mathur, Advocate and Mr. Nikhil Goel, Advocate, for the complainant and Mr. Abhishek Kumar Gola, Advocate, for the opposite party.

M/s. Saurashtra Chemicals Limited has filed aforementioned complaint for directing National Insurance Company Limited (the Insurer) to pay (i) Rs.7474694/- as balance insurance claim, (ii) Rs.25/- lacs as compensation for mental pain and harassment, (iii) Rs.12445365/- i.e. interest @18% per annum w.e.f. 26.01.2001 to 24.04.2010, on the balance insurance claim, (iv) interest @18% per annum on the entire insurance claim from 25.04.2010 till the date of payment, (v) to pay Rs.one lac as cost of the litigation and (iii) any other relief which is deemed fit and proper, in the facts and circumstances of the case.

The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-

(a) The complainant (hereinafter referred to as the Insured) was a company, incorporated under the Companies Act, 1956 and engaged in the business of manufacturing and sale of ‘Soda Ash’. Manufacturing plant of ‘Soda Ash’ was at Porbander, where the Insured had residential colony and dairy farm. Major raw material of ‘Soda Ash’ was salt. The Insured had its own salt manufacturing works namely (i) Sikka Salt Works, (ii) Vadinar Salt Works, (iii) Bedi Salt Works, (iv) Parodia Salt Works, (v) Gagwa Salt Works and (vi) Khijadia Salt Works and Limestone quarry/Bromide Plant, Porbander.

(b) National Insurance Company Limited (for short the Insurer) is a public insurance company, engaged in the business of providing different types of insurance services. The Insured obtained following Policies from the Insurer:- (i) Policy No.2000/3401031, being Fire and Special Perils Policy. This was valid from 02.07.2000 to 01.07.2001, for sum insured of Rs.2840000000/-. (ii) Policy No.2000/3401037, being Fire and special Perils Policy. This was valid from 02.07.2000 to 01.07.2001, for sum insured of Rs.975000000/-. (iii) Policy No.2000/3401034, being Fire and Special Perils Policy. This was valid from 02.07.2000 to 01.07.2001, for sum insured of Rs.34450000/-. In these policies, the risk specifically included loss on account of earthquake.

(c) State of Gujarat was rattled due to severe earthquake on 26.01.2001 at 8:45 AM, which caused huge damages to the buildings, plant and machinery of the Insured. The Insured informed the Insurer about the aforesaid damages. The Insurer appointed C. P. Mehta & Company, Marine Lines, Mumbai, for survey and assessment of loss on 29.01.2001. The Surveyor inspected the various locations, which were damaged due to earthquake from 31.01.2001 till 16.02.2001 and submitted his preliminary survey report dated 23.02.2001.

(d) The surveyor vide letter dated 27.02.2001 demanded the requisite papers for assessment of the loss. The Insured submitted his claim form in respect of loss of the property and loss of profit on 09.03.2001. In this claim, loss of Dairy Farm Porbander, Office equipment, in Usmanpur, Ahmedabad, Disc Antenna and Instrument, Porbander and Bromide Plant, Porbander were also included, although, these were not covered in the polices taken from the Insurer as such a revised claim form was supplied. The Insured again revised claim form on 27.04.2001, 01.06.2001, 28.01.2002 and 05.04.2002.

(e) In the meantime, there were various demands from the side of the Surveyor, which were supplied by the Insured time to time as per demand letter. The Surveyor submitted his Final Survey Report on 02.10.2008, in which, he assessed the loss of the property to Rs.26319511/- and loss of profit to Rs.13474006/-. Thereafter the Insurer sought for certain clarification by e-mail dated 12.05.2009. The surveyor replied the query of the Insurer vide e-mail dated 05.06.2009. Then again certain clarification was sought by the Insurer vide letter dated 23.06.2009, which was replied by the surveyor by letter dated 04.09.2009. The Insurer again vide letter dated 16.09.2009, made some queries. The Surveyor, the vide letter dated 15.10.2009, assessed loss of property to Rs.26199924/- and loss of profit to Rs.6118899/-. Thereafter the Insurer sent a discharge voucher to the Insured which was signed by the competent officer and the Insurer made payment of Rs.26199924/- through cheque dated 22.04.2010 and Rs.6105606/- through another cheque dated 22.04.2010.

(f) The Insured filed this complaint on 26.09.2011 for the difference amount between Final Survey Report dated 02.10.2008 and final payment made on 22.04.2010. Insured stated that it is clear from the communications annexed to the written statement that the surveyor never agreed to the assessment of loss taking under insurance as 25.44% or for daily standard output at 808 MT per day. The surveyor merely gave a calculation as desired by the Insurer while at the same time defended the original valuation of loss. The Insurer put undue pressure on the surveyor to tailor the report to the benefit of the Insurer despite the surveyor defending the findings in the said report. The said communications were not in the knowledge of the complainant at the time when the amount was settled or when this complaint was filed and the only came to the knowledge of the complainant when the written statement was filed by the Insurer. This itself makes out the Insured’s case of unfair practices adopted by the Insurer.

The Insurer filed its written reply on 17.09.2011 and contested the matter. It has been stated that the complaint is not maintainable inasmuch as the claim was settled in full and final and payment was made to the Insured, which was accepted by them. After about one year of receiving of the payment, this complaint has been filed which is not maintainable. After receiving the information, the Insurer appointed the surveyor namely C.P. Mehta & Company for assessment of loss on 29.01.2001. The Surveyor inspected the damaged portions of the factories during 29.01.2001 to 16.02.2001. Thereafter the Surveyor vide letter dated 27.02.2001 demanded various papers in order to assess the loss. However, the Insured could not supply the requisite papers in time, which were supplied till September, 2008. After considering the documents, the Surveyor submitted his final survey report dated 02.10.2008. On scrutiny of papers, the Insurer found some discrepancy in the final survey report. The scrutiny were brought to the notice of the surveyor, through e-mail dated 05.06.2009. The surveyor submitted his reply, but the Insurer was not satisfied with reply and again through letter dated 23.06.2009, fresh clarification was sought. Then the surveyor submitted a corrigendum report dated 04.09.2009. The Insurer then again wrote a letter dated 16.09.2009, pointed out that a remarkable variation in the final loss. Amount arrived at in the survey report was found as incorrect. The surveyor was requested to reassess the loss of profit strictly in terms of the policy. Then the surveyor wrote a letter dated 15.10.2009 in which loss of profit was assessed to Rs.6118899/-. The surveyor wrote another letter dated 16.10.2009 giving clarification of assessment of loss. The surveyor wrote another letter dated 30.10.2009 giving quantitative loss and by separate letter dated 30.10.2009 he assessed the loss of profit to Rs.6118899/- and material damage as Rs.26199924/-. The Insurer then informed the Insured for settlement of the claim for the aforesaid amount on 30.03.2010 which was accepted by the Insured, who also executed to discharge voucher towards full and final settlement of the claim. The Insured vide e-mail letter dated 23.04.2010 requested the Insurer to hand over the cheques to his insurance brokers namely M/s. Bharat Re-Insurance Brokers Pvt. Ltd. Accordingly, two cheques dated 22.04.2010 were handed over to the aforesaid broker on 24.04.2010. After expiry of more than one year in accepting the full and final settlement, this complaint has been filed which is not maintainable. There was no deficiency in service, negligence or delay on the part of the Insurer in settlement of the claim. Delay has occurred as the complainant himself supplied the papers to the surveyor till August, 2009. During this period there was a change in management of the Insured and new persons had taken over as such delay has occurred. It has been specifically denied that the Insured was coerced to accept a lesser amount and for that purpose the delay was caused. The Insured accepted the settlement amount without any protest. It is always open to the Insurer to settle the claim under Section 64 UM (2) of the Insurance Act, 1938. There is no compulsion for the Insurer to accept the surveyor’s report.

The Insured filed his rejoinder reply on 30.01.2013, in which the material facts as stated in the complaint have been reiterated. The complainant filed Affidavit of Evidence of V.N.Vyas.The Insurer filed Affidavit of Evidence of S. Sivasankar, Divisional Manager and Affidavit of Evidence of Shri Milan D. Mehta, the Surveyor. Both the parties filed their short synopsis.

We have considered the arguments of the counsel for the parties and examined the record. So far as maintainability of the complaint is concerned, Supreme Court in National Insurance Company Limited Vs. Boghara Polyfab Private Limited, (2009) 1 Supreme Court Cases 267 has held as follows:

“26. If the party which has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practised by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon.”

On examination of the discharge voucher filed as Annexure-R-1 to the written reply shows that the Insurer obtained signature on this discharge voucher on plain paper, which was subsequently got printed on the computer in the shape of discharge voucher. If the signature was obtained in the plain paper without disclosing the amount of settlement, then it cannot be said that the discharge voucher was voluntarily signed. Without knowing the amount of settlement, acceptance of some payment does not terminate the contract of insurance. In such circumstances, it cannot be held that the complaint is not maintainable.

The present complaint has been filed in respect of difference amount between the Final Survey Report dated 02.10.2008 and payment made on 23.04.2010. In Final Survey Report dated 02.10.2008, under insurance of 25% was applied while in the corrigendum report dated 15.10.2009 under insurance up to the extent of 25.44% was applied on the building, plant & machinery as the Insurer raised objection that reinstatement value has to be taken on the date of reinstatement and not prior to it. The loss occurred on 26.01.2001 while reinstatements/repairs were done up to 31.12.2002. In Final Survey Report dated 02.10.2008, reinstatement value as on 31.03.2001 was taken in to account. For example, the Insured claimed compensation at the rate of Rs.176.61 per sq.ft. but the Surveyor assessed the loss at the rate of Rs.350/- per sq.ft. The Surveyor assessed loss of profit for the period of 26.01.2001 to 31.10.2001, according to the policy. But for counting per day average loss, he had taken into account the production for the months of November, December and January. When the Insurer pointed out that during winter season, production of soda ash were higher and as loss of profit was not of the winter season then per day average loss was counted after ignoring the production of November, December and January and on average basis of remaining period, loss was worked out in the report dated 15.10.2009. We do not find that the Surveyor has committed any illegality in the report dated 15.10.2009. As such the claim for difference amount is not legally sustainable.

Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within 45 days, from the date of his appointment. The Insurer has been directed to make settlement within 30 days of receipt of Surveyor’s report. Regulation 9 (6) provides as follows:

Regulation-9(6). Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer of by the insured. In case of delay in the payment, the Insurer shall be liable to pay interest at a rate which is 2 per cent, above the bank rate prevalent at the beginning of the financial year, in which the claim is reviewed by it.

In view of Regulation-9, the claim has to be settled within six months from the date of occurrence of loss. In the present case, loss occurred on 26.01.2001, while settlement was made on 23.04.2010. As such, the Insured is entitled for interest @9% per annum from 26.07.2001 till 23.04.2010 on Rs.32318823/- (i.e. Rs.26199924/- + Rs.6118899/-) and from 24.04.2010 till the actual payment on the amount of interest so worked out.

ORDER

In view of the aforesaid discussions, the complaint is partly allowed. The Insurer is directed to pay interest @9% per annum from 26.07.2001 till 23.04.2010 on Rs.32318823/- (i.e. Rs.26199924/- + Rs.6118899/-) and from 24.04.2010 till the actual payment on the amount of interest so worked out.