New India Assurance Co. Ltd vs Ashok Kumar Tiwari

This first appeal has been filed by the appellant M/s. The New India Assurance Co. Ltd. against the order dated 24.02.2016 of the State Consumer Disputes Redressal Commission, Chhattisgarh, (in short 'the State Commission') passed in CC No.2015/02.

Brief facts of the case are that the complainant/respondent No.1 in October, 2013 fixed a deal to purchase a second hand 2010 model, Tata LPT 3118, a goods carrier truck bearing No.CG05D1258 from the owner of the truck. Price of the truck was Rs.15,60,000, against which complainant paid Rs.2,60,000/-. The balance amount was financed by the respondent No.2. The truck was insured with the opposite party No.1/appellant for a sum of Rs.15,00,000/- under policy No.45180031130100006298. Policy was valid from 26.08.2013 to 25.8.2014. As far as opposite party No.2 was concerned, complainant had to pay the amount in total 45 installments of Rs.38,711/- within the period of 10.12.2013 to 10.8.2017. On the fateful day 25.2.2014, truck met with an accident, with another truck, which hit it with immense force and it got burnt and was destroyed completely. On the very next day, information in writing was given to the opposite party No.1. But opposite party No.1 was not settling the claim made by complainant. The act by opposite party No.1 was prejudicing the complainant as because of that, he was not able to repay the instalments to opposite party no.2, whereas it was threatening him for legal proceedings against him. Total amount due to the opposite party No.2 was Rs.13,56,778/-.

Aggrieved, respondent No.1/complainant filed a consumer complaint before the State Commission bearing No.2015/02. The complaint was resisted by the opposite party No.1/appellant herein, by filing the written statement. Opposite party No.2 did not file the written statement before the State Commission. The State Commission vide its order dated 24.02.2016 allowed the complaint as under:-

"33. In the perspective of the aforesaid perusal, the complaint of the complainant is partially accepted and it is ordered that:

The non-applicant No.1 shall pay a sum of Rs.11,25,000/- (Rupees eleven lac twenty five thousand) as a compensation to the complainant within a period of 45 days from the date of order.

The non-applicant No.1 shall also pay an interest @9% per annum on the aforesaid amount of Rs.11,25,000/- (Rupees eleven lac twenty five thousand) to the complainant from the date of institution of the complaint i.e. 20.01.2015 till the date of its realization.

The non-applicant No.1 shall also pay a sum of Rs.5,000/- (Rupees five thousand only) as the cost of the suit."

Hence the present appeal by opposite party No.1/Insurance Company.

Heard the learned counsel for both the parties and perused the record. The learned counsel for the appellant stated that the State Commission has wrongly interpreted the various judgments referred in the order. In case where the vehicle had suffered total loss, the vehicle could not have been got repaired for a sum of Rs.1,11,300/-. The vehicle after its repair was being run by the respondent/complainant. It has nowhere come in the pleadings that the vehicle was lying in a Junk state. Since the vehicle has been got repaired for a sum of Rs.1,11,300/-, as such, the State Commission committed error by directing the appellant to settle the claim on non-standard basis. The said amount was only payable in case the vehicle suffered total loss and was beyond repairs and was converted into scrap. Since the vehicle after its repair is being run, then in that eventuality the State Commission was not empowered to award amount more than the amount actually spent or at the most the amount assessed by the surveyor.

The learned counsel for the appellant further stated that the State Commission has committed error by overlooking the report of the surveyor. The respondent/complainant had never objected to the assessment made by the surveyor. In terms of the settled law laid down by the Apex Court that in the absence of any infirmity in the report of the surveyor, the same cannot be over looked. The surveyor after examining the vehicle and noticing the various parts which were damaged had made the assessment.

Learned counsel for the appellant mentioned that the complainant has not supplied any bills of repair and the claim of repair only can be settled if the bills are filed.

On the other hand the learned counsel for the respondent No.1/complainant stated that even the surveyor has observed in his report that in the fire most of the parts were totally burnt and even melted. The observation of the surveyor itself speaks that it was a case of total loss. Learned counsel stated that the complainant has spent Rs.1,39,000/- for repairs, but still vehicle is not completely repaired and worthy of running. The State Commission has agreed that it was a case of total loss, however, 75% of the IDV has been allowed by the State Commission. There is no error in the order of the State Commission and the same may be maintained.

Learned counsel for the respondent No.2 stated that he supports the case of the complainant as the vehicle has been lost and the complainant has to repay the loan, which is more than the awarded amount by the State Commission.

I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and have examined the material on record. Insurance claims are normally settled on the basis of the reports submitted by the surveyor. In the present case also, a surveyor is appointed and he has submitted his report dated 14.01.2015 wherein the surveyor has assessed the loss to the tune of Rs.4,36,800/-. The report of the surveyor is an important document and forms the basis of settlement of the insurance claim. The report of the surveyor cannot be rejected without any cogent reasons. The reason given by the State Commission for not accepting the surveyor report is as follows:-

"31. As per the Surveyor Report, it appears that the complainant's vehicle had been fully burnt and the assessment was made only on the basis of replacing the second hand parts, hence, the assessment of the damage made on behalf of the surveyor, is unsustainable."

First of all, the surveyor has not accepted in his report that this was a case of total loss. Neither the preliminary surveyor nor the final surveyor has mentioned that this is a case of total loss. Thus, the observation of the State Commission that this was a case of total loss is not borne out by the survey reports. The repair estimate has been examined by the final surveyor and he has assessed the loss to the tune of Rs.4,36,800/-. It is true that the surveyor had asked the complainant to go for a second hand engine. The complainant agreed for the same. In the insurance, the replacement of any part is required to be allowed by similar part as it existed on the date of accident. The vehicle was a 2010 model and the accident has happened on 25.02.2014, therefore, if a new part is provided then the depreciation for four years will have to be provided for. However, these calculations are not available on the record. The engine is a vital part of the vehicle and the surveyor should have allowed the new engine, however, the amount admissible would have been calculated after allowing for four years' depreciation. Instead of that, the surveyor has allowed the second hand engine. It is seen that in the estimate, Rs,4,81,430/- is mentioned for engine assembly. The surveyor has allowed only, Rs.1,65,000/- Engine being a vital component of the vehicle, I am of the view that the total amount of Rs.4,81,430/- should be allowed. Thus, an amount of Rs.3,16,430/- needs to be added to the net loss assessed by the surveyor. Thus, the complainant would be entitled to get Rs.7,53,230/-.

The State Commission has not given any reasoning for awarding 75% of the IDV for settlement of the insurance claim. In fact when the surveyor's report is available, the ad hoc settlement of the claim is not required. The claims are settled on non-standard basis when any of the policy conditions are violated. Moreover, when the repair charges are more than 75% of the IDV then case can be considered as case of total loss. In the present case, the surveyor has assessed the total net loss of Rs.4,36,800/- which is much below 75% of the IDV. The estimate submitted by a private workshop cannot be taken as a basis for settling the claim when a clear survey report is available and the surveyor has examined the estimate.

Based on the above discussion, the first appeal No.292 of 2016 is partly allowed and the order of the State Commission dated 24.02.2016 is modified to the extent that instead of Rs.11,25,000/-, the opposite party/appellant herein would be liable to pay Rs.7,53,230/- to the complainant. With this modification, the order of the State Commission is upheld.