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Judgment
This complaint under the Consumer Protection Act, 1986 (in short, the ‘Act’) has been filed seeking the enhancement of an insurance claim filed with the opposite party with compensation alleging deficiency in service. The complainant is a proprietorship firm which had obtained a Standard Fire and Special Peril Insurance Policy (in short, the ‘Policy”) from the opposite party for Rs 3.10 crores for his premises which was completely damaged in a fire due to an electrical short circuit on 13.02.2013.
The facts as per the complainant are that he has a grain cleaning and colour sortex unit at C-98, Additional MIDC, Latur since 2012 with imported plant and machinery worth Rs 2.25 crores covered by the Policy dated 23.11.2012. The fire incident on 13.02.2013 destroyed machinery, building and godown though the fire brigade was summoned. An FIR No. 2/2013 was registered with the Police and opposite party informed the same day. Cunningham & Lindsey International Pvt. Ltd. was appointed surveyors on 14.02.2013 and various documents shared with them per correspondence. The complainant filed a claim for Rs 2,86,00,000/-.The imported Sortex machine was inspected by the suppliers, M/s Buhler (India) along with other machines and it was assessed by them that the machines were extensively damaged the repair of which would cost the same as a new machine. On 25.02.2013, one G. Chandrashekhar, an investigation consultant was appointed by the opposite party who sent samples for verification to establish the cause of the fire. An inspection was also undertaken by one Rajesh D. Pandey, Government Contractor on 24.04.2013.
The complainant repaired the godown which was the adjoining building but states that the main building was not repairable and could not be done. It is stated that the delay in settlement of the claim resulted in further damage to the machinery due to exposure to the elements. Despite being provided names of 3 consultants by the complainant to assess damage to the steel structure and shed, opposite party appointed another consultant, M/s Delcos Consultants India Pvt. Ltd, Pune. Details were provided by complainant to them also. Despite the fact that it was visually apparent that the steel structure had been destroyed in the fire, the report of M/s Delcos dated 16.10.2013 was that it was intact.
The State Bank of India issued a notice under the SARFAESI Act, 2002 to the complainant for settlement of dues which put the complainant under pressure. On 03.12.2013 the claim was settled for Rs.1,12,39,656/- which was consented to by the complainant not voluntarily but under coercion and undue pressure due to the delaying tactics of the opposite party. The discharge voucher was signed and on 28.12.2013 the claim was transferred to the complainant’s account with the State Bank of India.
The complainant states that the opposite party committed deficiency in service by not completely indemnifying the complainant to the loss especially when the claim was fully covered under the policy. The total loss was Rs 2,86,00,000/- and the opposite party assessed it as Rs 1,12,39,656/- holding that some parts of the machinery were intact or not severely damaged, whereas they had been reduced to scrap. It is stated that consent had been obtained by undue influence and coercion through pressure by getting notices from the Bank issued, inordinate delay in settling the claim much beyond the stated period of 30 days in the policy. It is contended that the surveyor erred in undervaluing the machinery and structure which had been used only for 7 to 8 months prior to the fire. The remittance of the claim amount to the loan account of the Bank left the complainant with no funds to try and revive the unit. Therefore the complainant is now before us alleging wrongful denial of the balance claim with the following prayer:
a) the complaint may kindly be allowed
b) the opposite party be directed to pay to the complainant a sum of Rs 1,73,60,344/- towards the compensation as per the insurance claim with 18% interest from the date of incidents i.e. from 13.02.2013 till realization of the said amount
c) the opposite party be directed to pay to the complainant Rs 5,00,000 towards the mental torture and agony caused by the wrongful acts of the opposite parties
d) the opposite parties be directed to pay to the complainant Rs 2,50,000 towards the professional cost of litigation
e) any other relief deemed fit may please be granted.
In his written reply dated 28.1.2016, the opposite party denied the averments of the complainant and contended that the complainant was not a ‘consumer’ and that there was no deficiency in service by the opposite party since the issue was of indemnity and not proving loss. It is stated that repudiation of a claim based on the report of an independent surveyor appointed under section 64 UM of the Insurance Act, 1938 does not constitute ‘deficiency in service’ when there is proper ‘accord and satisfaction’ borne out by the discharge voucher executed by the complainant. It is stated that it is settled law that a discharge voucher executed voluntarily without demur cannot be questioned in summary proceedings under the Act. It is averred that policies of insurance are to be construed as they are without re-writing the contract even on equitable consideration. The complaint is stated to be bad for non-joinder of necessary parties as allegations are made against the Bankers who are not impleaded.
On merits, it is stated that the quantum of loss of Rs 1,12,39,656/- was arrived at based on the final assessment by the surveyor Cunningham & Lindsey on 17.12.2013 that the nature and extent of damage was “minor damage to building and major damage to plant and machinery”. The gross loss for plant and machinery was Rs 1,33,18,395/- and for building it was Rs 6,24,901/-. Accordingly, the gross loss assessed was Rs 1,39,43,296/- and after adjusting loss of Rs 1,18,44,786/- on depreciated basis, the net loss was calculated as Rs 1,12,52,546/-. It is denied that there is any ‘sister concern’ relationship between the Bank and the opposite party and that the settlement of the claim makes the issue no longer res integra.
Parties led their evidence and filed the rejoinder and written synopsis of arguments. I have heard the learned counsels for both the parties and carefully considered the material on record.
The complainant has argued that there was inordinate delay in settlement of the claim by the opposite party, over 8 months as against the promised 30 days. It is argued that the claim of Rs 31,33,128/- for the steel structure was settled for only Rs 2,09,130/- and the claim of Rs 95,00,000/- for the Sortex machine was settled for Rs.96,24,969/-, for Buhler’s Machinery for Rs 12,32,000/- against claim of Rs 20,56,660/- and for other machineries for varying amounts that were less than the amount claimed. Similarly, for the building a sum of Rs 4,74,901/- was allowed against Rs 36,00,000/- claimed. It is argued that the delay in the settlement and notice under SARFAESI Act, 2002 from the Bank put him under pressure to accept the discharge voucher. Complainant states that the opposite party deducted depreciation @ 3% and 7.5% and underinsurance @ 8.15% which was not as per policy terms. He also states that he was not provided the opportunity to prefer a second claim and that the claim amount was released to the bank against the loan where after another notice for a further amount of Rs 1,77,73,690/- was issued. Reliance is placed on the following judgments/orders in relation to the acceptance of claim settlement amount under duress/coercion:
(i) Oriental Insurance Co. Ltd. & Ors. Vs. The Government Tool Room & Training Centre, (2007) SCC OnLine NCDRC 41
(ii) National Insurance Co. Ltd., Divisional Office, Himland Hotel Vs. Rajan Sood s/o Prem Sagar Sood, (2014) SCC OnLine NCDRC 443
(iii) World Exports Pvt. Ltd. Vs. United India Insurance Co. Ltd, (2015) SCC OnLine Del 13951
(iv) M/s Harsolia Motors Vs. M/s National Insurance Co. Ltd., (2004) SCC OnLine NCDRC 11
(v) New India Assurance Co. Ltd. & Anr. Vs. Tirath Singh Awatar Singh Bhatia, First Appeal No. 1034 of 2015
Opposite party has argued that the complainant was not a consumer since the policy was a business-to-business transaction and the complainant has not established that he is a consumer under section 2(1)(d) of the Act by proving that the services were availed exclusively for the purpose of earning his livelihood as per the judgment of the Supreme Court in Shrikant G. Mantri Vs Punjab National Bank, CA No. 11397 of 2016 dated 22.02.2022. It is argued that the complaint is an attempt by the complainant to re-open a claim settled on a bona fide basis and after a full satisfaction and accord evidenced by the voluntary execution of a discharge voucher which is an abuse of the process of law. He has relied upon the judgments of the Supreme Court in New India Assurance Co. Ltd. Vs. Genus Power Infrastructure Ltd, CA No. 19784 of 2014 dated 04.12.2014 and United India Insurance Co. Ltd. Vs. Antique Art Exports Pvt. Ltd., CA No. 3284 of 2019 dated 28.03.2019 which upheld the appeal against discharge voucher and ‘accord and satisfaction’ in favour of the insurer. It is argued that the cases relied upon by the complainant do not have precedentiary value in light of the subsequent rulings of the Hon’ble Apex Court. It is argued that the complaint was filed on 02.05.2014 which was more than 4 months after the discharge voucher and therefore the argument that the same was obtained by coercion is not valid. The opposite party lastly relies on the judgment of the Hon’ble Supreme Court in Khatema Fibres Ltd. Vs New India Assurance Co. Ltd, CA no. 9050 of 2018 dated 28.09.2021 which held that when a claim is admitted as loss assessed by the surveyor, while a civil court could consider minute details, before a consumer forum, deficiency on the part of the service provider has to be necessarily established which has not been done in the instant case.
On the preliminary objection of the opposite party that the complainant is not a ‘consumer’ under section 2(1)(d) of the Act, it is settled law as per Paramount Digital Colour Lab vs Agfa India Pvt. Ltd., - III (2018) CPJ 12 (SC) wherein it was held that while each case ought to be judged based on the peculiar facts and circumstances of that case, a decision whether a person was a ‘consumer’ under the ambit of section 2(1)(d) of the Act would depend on whether the person is engaged in the business for the purposes of earning his livelihood by means of ‘self-employment’. In the instant case, the complainant was the proprietor of the complainant unit and had been engaged in the business for self-employment. Therefore, the complaint is held to be valid.
It is evident from the record that there is no dispute with regard to the cause of the fire. The complainant, however, contends that the policy should have been settled within 30 days but was willfully protracted to over 8 months so as to put him under pressure. He has claimed interest @18% for this period also. He also submits that the delay and the Bank’s notice under the SARFAESI Act, 2002 placed him under pressure to accept the settlement offered by the opposite party under protest. However, while evidence of the Bank’s notice has been brought on record, there is no evidence that the discharge voucher was signed under protest. There is no correspondence with the opposite party on record to suggest that the discharge was not of accord and satisfaction immediately protested thereafter. There is no correspondence to establish that the report of the Surveyor was challenged before agreeing to sign the discharge voucher. Although the IRDA on 17.12.2013 deprecated the practice of “coercive bargaining” by insurance companies and the Hon’ble Supreme Court in its judgment in the case of United India Insurance Co. Ltd. Vs Antique Art Exports Pvt. Ltd., Civil Appeal no. 3284 of 2019 as well as in National Insurance Co. Ltd., vs Baghara Polyfab Pvt. Ltd., 2009 (1) SCC 267 has held that in cases where loss claim settlements are accepted by the insured under protest, there should be evidence to establish that the protest was ‘immediate’ in terms of time the protest is registered in. In the present case, there is no evidence of this. The discharge voucher was signed on 24.12.2013 and thereafter the present complaint has been filed on 02.05.2014 i.e. after 150 days. The averment of signing the discharge voucher under coercion and protest is therefore not substantiated by any action on the part of the complainant.
From the foregoing it is apparent that the complainant has not been able to establish the reasons for the delay of five months of filing the complaint from the date he signed the discharge voucher. In a case where there is no ‘accord and satisfaction’ and the discharge voucher is signed under coercion, there are a catena of judgments to justify the challenge to such a discharge voucher if the complainant is able to establish that the discharge voucher was protested immediately. In the instant case, there is no evidence of either a protest letter or any other document that establishes that the complainant accepted the claim amount under protest. The complaint has been filed after a period of 5 months from the date of signing of the discharge voucher and acceptance of the claim. Therefore, it cannot be said that the claim was accepted under protest. Accordingly, the complaint is liable to be disallowed.
In the light of the foregoing discussion, I do not find merit in the complaint. Accordingly, the complaint is disallowed with no order as to costs.