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Judgment
AVM J. RAJENDRA, AVSM, VSM (RETD.), PRESIDING MEMBER
This First Appeal under Section 51 of the Consumer Protection Act, 2019 (the Act") is filed by the OP against the State Consumer Disputes Redressal Commission Haryana (State Commission) vide Order dated 17.10.2023 in CC No.37 of 2018 allowing the Complaint and directing OP to pay Rs.34,51,917 as assessed by the surveyor along with interest @ 10% p.a. from the date of filing of the claim till the payment is made and Rs.50,000 as Compensation towards mental agony and Rs.25000 as litigation costs.
As per Registry report, there is 38 days delay in filing this Appeal. For reasons stated in I.A. No.1662 of 2024, the said delay is condoned.
For convenience, the parties in this matter are referred to as stated in the Consumer Complaint before the State Commission.
Brief facts of the case, as per the Complainant, are that the Complainant is an authorized Mahindra & Mahindra automobile dealer managed by Sh. Hari Singh. The Opposite Parties (OP) No.1 & 2 are the Insurers of the dealership premises and the OP-3 is the Financier. The dealership venture was insured from 09.04.2016 to 03.06.2017, covering stocks such as two-wheelers, spare parts, machinery, computers etc. On 28.05.2017, a fire was caused in the showroom due to a transformer short circuit. The fire brigade extinguished the blaze after two hours. The total loss claimed by the complainant was initially ₹60–65 lakhs and later revised to ₹39.86 lakhs, after 15% depreciation, including damage to stock, machinery, furniture and old vehicles. The surveyor appointed by the OP visited the site from 29.05.2017 to 15.07.2017 and assessed the loss. But the surveyor acted casually, reducing the claim by 90–95% without justification. OP-1 offered ₹3.25 lakhs and withheld the payment due to non-submission of discharge voucher by the complainant/OP-3. The claim was repudiated by the OPs on 20.11.2017. Being aggrieved, the Complainant filed a Consumer Complaint before the State Commission alleging delay, arbitrary deduction, failure to release even the assessed ₹3.25 lakhs, unfair trade practice by gross undervaluation of loss and sought relief of ₹39.86 lakhs for depreciated stock loss, and ₹2 lakhs as additional losses and ₹4 lakhs towards harassment and interest.
On being issued notice, OP-1 and OP-2 filed their Written Version and contended that the complaint is not maintainable due to disputed facts requiring detailed evidence. They relied on the surveyor report by M/s Rakesh Kapoor & Co.'s report dated 13.11.2017, which assessed total loss at ₹3.25 lakhs. They claimed that the Complainant failed to submit requisite documents and discharge voucher from OP-3 (financier). OP-1 and 2 denied allegations of unfair practices, asserting procedural compliance. The OP-3 (financier) did not participate in proceedings.
The learned State Commission vide order dated 17.10.2023 allowed the complaint with the following observations:
"10.In the light of the above observation and discussion, there are sufficient grounds to accept the complaint and while accepting the complaint, the O.P. is directed to refund of the amount of Rs.34,51,917/- as assessed by the surveyor along with interest @ 10% per annum from the date of filing of the complaint till the payment is made. In case, there will be a breach in making payment within the stipulated period of 45 days, in that eventuality, the complainant would further be entitled to get the interest @ 12% per annum, for the defaulting period. The complainant is also entitled of Rs.50,000/- (Fifty Thousand Only) for compensation of mental and physical agony. In addition, the complainant is also entitled of Rs.25,000/- as litigation charges. It is also made clear that for non-compliance, the provisions enshrined under section 72 of the C.P.Act would also be attractable."
Being aggrieved by the State Commission order dated 17.10.2023, OP-1 filed this Appeal No. 57 of 2024 seeking:
"A. Set aside the impugned Judgement & Order dated 17.10.2023 of the State Consumer Disputes Redressal Commission, Haryana, Panchkula in Consumer Complaint no.37/2018;
B. Pass any other and further order(s) as this Hon'ble Commission may be deem fit and proper in the facts and circumstances of the present case in the interest of justice."
In his arguments, learned Counsel for Appellants/OP-1 & 2 reiterated the written version filed before the State Commission and the grounds taken in the present First Appeal and argued that the impugned order of the State Commission awarding compensation of Rs.34,51,917 is ex facie unsustainable, being devoid of any reasoning or reference to the surveyor's report or relevant material on record. The State Commission failed to apply its mind while granting the award. He further argued that the Appellant promptly appointed a surveyor upon receiving intimation of the alleged fire loss. The surveyor undertook multiple site visits to assess the damage. Repeated requests were made, both by the surveyor and the Appellant, to the Complainant for furnishing requisite documents, but the Complainant failed to comply. He asserted that as per General Condition No. 6(a) of the insurance policy, the insured is obligated to provide all relevant documents and information. The surveyor assessed the net loss of Rs.3,25,850 but the State Commission assumed the loss of Rs.34,51,915 assessed by the surveyor without proper verified from the survey report. He argued that the impugned order is also violative of principles of natural justice as it failed to assess the loss as assessed by the Surveyor vide report dated 13.11.2017. He sought that this Commission to set aside the impugned order and allow the Appeal in the interest of justice.
Per contra, the learned counsel for the Complainant reiterated the facts from the complaint and argued in favour of the impugned order passed by the State Commission. He argued that the Complainant had obtained insurance Policy No. 420700/11/16/3100000136 from the OP for protection of its stocks of all kinds of Two Wheelers, Auto Parts, two computers and Accessories, Genset, Machinery, Electrical Fittings and other allied goods from 04.06.2016 to 03.06.2017. In the fire incident the Complainant suffered loss of Rs.39,86,882, after deducting 15% towards depreciation of the stock/spare parts etc. which the Complainant was not bound to deduct. He did so to show their bonafide. He argued that, the OP was apprised about incident and they appointed Mr NK Gupta, who visited the Showroom on 29.05.2017 and demanded some documents, which were provided. The Complainant was asked to separate the usable item from the damaged ones and the relevant details were provided to the surveyor as sought. After the survey, he got in touch with the OPs multiple times and he was assured that very soon the whole loss would be covered, and the claim would be disbursed. But, to their utter surprise, without providing any information or preparation of final report by the 1st surveyor, OP appointed 2nd surveyor who visited site on 09.06.2017 and on 15.07.2017 and asked them to submit fire report, police report, claim form, claim bill, balance sheet of previous 5 years etc. The Complainant submitted all required documents. He assessed the net loss respondent at Rs.3,25,850 which is not only unjustified but also on the lower side. The Complainant insured its stock and premium was duly paid. They held stocks worth Rs. 43,96,549 prior to the fire incident and parts/stocks of Rs.42,89,529.58 were damaged after the incident. But the claimant only claimed Rs. 39,86,882.14 as the said amount was calculated after deducting 15% depreciation of the stock which also show the bonafide of the claimant/respondent. He asserted that, when the Complainant approached the State Commission, it rightly directed the Appellant to pay Rs.34,51,917 as assessed and granted appropriate relief. He argued that the Appellant with the ill intention of not paying the amount ordered by the State Commission filed the present appeal before this commission. He asserted that the present Appeal he no merit and the same is liable to be dismissed with heavy costs.
We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by learned counsels for both the parties.
It is undisputed that the Complainant obtained an insurance policy from OPs valid from 09.04.2016 to 03.06.2017, covering stocks of two-wheelers, spare parts, machinery, computers etc. On 28.05.2017, fire broke out in the showroom and the loss claimed was ₹60–65 lakhs, which was revised to ₹39.86 lakhs after 15% depreciation including damage to stock, machinery, furniture and old vehicles. The surveyor assessed the loss as Rs.3,25,850. Thereafter, OP-1 offered ₹3.25 lakhs as payment, which was withheld due to the Complainant not submitting discharge voucher. The OP repudiated the claim on 20.11.2017. Being aggrieved by repudiation, the Complainant filed a Consumer Complaint before State Commission seeking payment of ₹39.86 lakhs towards depreciated stocks, ₹2 lakhs as additional losses and ₹4 lakhs towards mental harassment. Examination of the pleadings on record reveals that for some unexplained reason, notwithstanding multiple requests of the surveyor, Complainant failed to provide necessary details. In addition, despite specific surveyor's request not to remove the stocks from their position, without due justification, the Complainant relocated the same.
The surveyor evaluated the Total Loss in the fire incident as Rs.39,86,883, the Gross Assessed Loss as Rs.34,51,917 and the Net Adjusted Loss as Rs.3,25,850. The loss assessment summary is as below:
RK/NIC/Sirsa/420700/F/2017/11506
Schedule I
OM Motors Loss Assessment-Summary
| Particulars | Stocks | P/M | FFF | Total |
|---|---|---|---|---|
| Gross Claimed | 4,289,529 | 21,000 | 340,720 | 4,651,249 |
| Less: Depreciation | 643,429 | 3,150 | 34,072 | 680,651 |
| 3,646,100 | 17,850 | 306,648 | 3,970,598 | |
| Gross Assessed | 3,217,147 | 15,000 | 219,770 | 3,451,917 |
| Less: No Stock Movement Shown | 1,608,574 | 0 | 0 | 1,608,574 |
| Less: Items not covered | 0 | 0 | 22,500 | 22,500 |
| Less: No Support Documents Furnished | 804,287 | 7,500 | 98,635 | 910,422 |
| Less: Unjustified Accounts | 482,572 | 0 | 0 | 482,572 |
| 321,714 | 7,500 | 98,635 | 427,849 | |
| Less: Depreciation | 0 | 3,750 | 49,318 | 53,068 |
| 321,714 | 3,750 | 49,317 | 374,781 | |
| Less: Salvage | 21,714 | 750 | 9,317 | 31,781 |
| 300,000 | 3,000 | 40,000 | 343,000 | |
| Less: Policy Excess | 5% | 17,150 | ||
| Rs.3,25,850 |
Careful examination of the survey report reveals that, in the given circumstances, the surveyor had endeavoured to go into details of the case and bring out relevant and material aspects of the claim and rendered a detailed and comprehensive report dated 13.11.2017 determining the Net Assessed Loss within the terms of the policy. We are of the considered view that the report of the qualified and independent surveyor deserves due consideration. In catena of judgements the Hon'ble Supreme Court observed that the assessment made by a surveyor in such cases holds significant importance. The relevance of considering the Surveyor's Report was elucidated in Sri Venkateshwara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507, wherein the Hon'ble Supreme Court has observed:
"22.The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report. Scheme of Section 64-UM particularly, of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course. If for any valid reason the report of the Surveyor is not acceptable to the insurer may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated etc., it must specify cogent reasons, without which it is not free to appoint second Surveyor or Surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of Surveyor/Surveyors. There is no prohibition in the Insurance Act for appointment of second Surveyor by the Insurance Company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first Surveyor and the need to appoint second Surveyor.”
The Hon’ble Supreme Court in Khatema Fibres Ltd. v. New India Assurance Company Ltd., 2021 SCC OnLine SC 818, decided on 28.09.2021 has held that:
“32.It is true that even any inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law or which has been undertaken to be performed pursuant to a contract, will fall within the definition of the expression ‘deficiency’. But to come within the said parameter, the appellant should be able to establish (i) either that the Surveyor did not comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act, in terms of Section 64UM(1A) of the Insurance Act, 1938, as it stood then; or (ii) that the insurer acted arbitrarily in rejecting the whole or a part of the Surveyor’s Report in exercise of the discretion available under the Proviso to section 64UM(2) of the Insurance Act, 1938. ...
37.Two things flow out of the above discussion, They are (i) that the surveyor is governed by a code of conduct, the breach of which may give raise to an allegation of deficiency in service; and (ii) that the discretion vested in the insurer to reject the report of the surveyor in whole or in part, cannot be exercised arbitrarily or whimsically and that if so done, there could be an allegation of deficiency in service.
38.A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor’s report to forensic examination of its anatomy, just as a civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop.
In a recent case of National Insurance Co.Ltd. Vs. M/s Hareshwar Enterprises Pvt. Ltd. & Ors., Civil Appeal No.7033 of 2009 decided on 18.8.2021, 2021 SCC Online SC 628, the Hon’ble Supreme Court has been held as under :
“17...Therefore, in the facts and circumstances herein the surveyors report was submitted as the natural process, the conclusion reached therein is more plausible and reliable rather than the investigation report keeping in view the manner in which the insurer had proceeded in the matter. Hence, the reliance placed on the surveyor’s report by the NCDRC without giving credence to the investigation report in the facts and circumstances of the instant case cannot be faulted. In that view, the conclusion reached on this aspect by the NCDRC does not call for interference.”
“18.... Having considered this aspect, the rate of interest to be awarded in normal circumstance should be commensurate so as to enable the claimant for such benefit for the delayed payment. There is no specific reason for which the NCDRC has thought it fit to award interest at 12% per annum. Therefore, the normal bank rate or thereabout would justify the grant the grant of interest at 9% per annum. Accordingly, the amount as ordered by the NCDRC shall be payable with interest at 9% per annum instead of 12% per annum. To that extent, the order shall stand modified...”
In view of the foregoing, after due consideration of the entire facts and circumstances of the case, we consider it appropriate to rely upon the detailed and comprehensive surveyor report dated 13.11.2017 filed by the surveyor as regards the Net Assessed Value of the loss in the incident and reject the repudiation of the claim by the OP Insurer.
Accordingly, the order of the learned State Commission dated 17.10.2023 is modified as under:-
I. The Opposite Party is directed to pay the complainant Rs.3,25,850 along with simple interest @ 8% per annum from the date of repudiating the claim on 20.11.2017 till the date of final payment. This payment shall be made within a period of two months from the date of this order. In the event of delay, the simple interest applicable for the entire period shall be @ 10% per annum.
II. There shall be no order as to costs.
With these directions, First Appeal No.57 of 2024 is disposed of.
All pending Applications, if any, are also disposed of accordingly.