New India Assurance Co. Ltd.Vs Kapil Kumar Jangid

Avm J. Rajendra, Avsm, Vsm (Retd.) Member

The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 01.10.2019 passed by the learned State Consumer Disputes Redressal Commission, Rajasthan (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 13 of 2017, wherein the Complaint filed by the Complainant (Respondent herein) was Allowed.

For the sake of Convenience, the parties in the present matter being referred to as mentioned in the Complaint before the State Commission. Shri Kapil Kumar Jangid is identified as the Complainant and the New India Assurance Co. Ltd is referred as the Opposite Party/Insurer (OP).

Brief facts of the case as per the Complainant are that he is the registered owner of vehicle No. RJ-18-EA-0537, which also has a compressor fitted on it. The Complainant uses this vehicle for boring well as his livelihood. A Commercial Vehicle Package Policy was obtained by the Complainant vide policy Number 33010031140100001489, providing coverage of Rs. 60 lakhs (Rs. 13 lakhs for Vehicle and Rs. 47 lakhs for the Compressor).

This policy was in effect from 13.05.2014 to 12.05.2015 and the premium of Rs. 26,279 was paid. On 13.01.2015, during the validity of the policy, the compressor on the vehicle caught fire. The Complainant promptly reported the loss to the police and obtained a certificate from the concerned gram panchayat. The Complainant also informed the OP about the loss. The OP/Insurer appointed Shri Suraj Prakash as the Spot Surveyor, who visited the site on the next day on 14.01.2015. Subsequently, the OP appointed Shri Rakesh Soni on 25.01.2015 as the Final Surveyor, who assessed the loss and liability to be Rs.54,50,685. However, the OP did not make the payment due and instead appointed an investigator to look into the claim. Thereafter, the OP repudiated the claim, on grounds that the claim was not genuine and that the incident had in fact occurred on 01.01.2015, prior to the purchase of the compressor by the Complainant.

Being aggrieved due to repudiation of claim, alleging deficiency in service on the part of the OP/Insurer, the Complainant filed a consumer complaint (No. 13 of 2017) before the State Commission with the following prayer: -

A. The Hon’ble State Consumer Dispute Redressal Commission, Rajasthan at Jaipur Rajasthan may be pleased to allow the complaint of the humble complainant and order to the defendants as under: -

B. The defendants may be ordered to pay a sum of Rs.60,00,000/- I.D. Value of the insured vehicle with interest @18% p.a. from the date of accident till the actual payment is made.

C. The defendants may further be Ordered to pay a lump sum amount for Rs.5,00,000/- as compensation for mental agony suffered by the humble complainant and Rs.1,00,000/- for the cost and counsel fees.

D. Any other order which this Hon’ble State Consumer Dispute Redressal Commission, Rajasthan deems fit to be passed in favour of the humble complainant may be ordered to.

The OPs/Insurer contested the claim and pointed that the compressor had previously been insured by Future Generali Insurance Company and was owned by Ms Kaushaliya Devi, the Complainant's mother. The incident of the compressor catching fire had occurred on 01.01.2015 while it was carrying 700 liters of diesel. Suspicion arose because, at the site, the electric cable line located just 4 feet above the compressor remained undamaged. The investigation further revealed that the compressor was officially transferred to the name of the Complainant on 01.01.2015, the very day of the incident, by execution of a power of attorney on the same day. The OPs asserted that these documents were completely fabricated, and that the Complainant had concocted a false claim of fire and loss on 13.01.2015. Therefore, the claim should be rejected.

The learned State Commission partly allowed the complaint with following observation: -

The Contention of the non-applicant is that insurance premium was paid on 09.01.2015 but it is a common practice that when two contracting parties are having good relations, many times payment are made after receipt of the insurance policy. Hence, no fault can be found if the payment has been made on 09.01.2005 and it was the issue between Rajesh Motors and the complainant but the facts remain the same that compressor was duly insured on 05.01.2015.

The non-applicant has further submitted that report of Rajesh Goyal engineer whose conclusion is that vehicle was burn on 01.01.2015 but this report has no evidentiary value as site visit was made on 18.1.2016 after one year of the incident whereas the spot surveyor who has visited the spot next day of the incident has found the accident genuine.

In view of the above the non-applicants are deficient. The complaint is allowed and non-applicants are directed to pay the Rs.54,50,685/- to the complainant along with 9% interest from the date of submission of claim. The complainant is further entitled to get Rs.70,000/- as cost of proceedings which should be paid to the complainant within one month otherwise it will carry 9% interest from the date of the order.”

Aggrieved by the impugned order of the State Commission, the Appellant has filed this present Appeal seeking the following:

(a).  To call for titles Kapil Kumar Jangad Vs. The New India Assurance Co. Ltd. Decided vide impugned order dated 01.10.2019 and after perusing the same set aside the same and the present appeal filed by the appellant be accepted with cost and complaint as filed by respondent be dismissed

(b) Pass any other/further order as this Commission may deem fit, just and proper in the facts and circumstances of the case in favour of the appellant.

In the Appeal, the Appellant raised the following main issues:

(a) The Respondent did not act in good faith and obtained the insurance cover by fraudulent means. The sale agreement and power of attorney are sham documents. The coverage for the compressor was not renewed after its expiry in 2014. The entire claim is inadmissible due to misrepresentation and fraud

(b) The sale agreement and power of attorney lack basic details. The authenticity of cash transaction is questionable, and fraudulently manipulated to make the claim. The endorsement for compressor in the policy of the rig machine, without receiving the premium, reveals malfeasance.

(c) An insurance contract is based on the principle of utmost good faith, which was violated through fraud. The State Commission erroneously allowed the claim, even though the damage claimed was unproved. The physical impossibility of the events described in the claim, such as the fire reaching the overhead electrical cable and a tree located 30 feet away were ignored. Thus, as the claim was based on false documents.

(d). The State Commission overlooked contradictions in the Respondent's statements to investigators and the police. The sequence of events presented contradicts the narrative and was fabricated to gain an unlawful advantage.

Upon notice on the memo of the present Appeal, the Respondent/Complainant did not file any reply. However, the Complainant reiterated the version in the original complaint and claimed that the repudiation of the claim without any cogent reason falls within the definition of “Deficiency in Service” and this has caused a great deal of mental torture to the Complainant.

In his arguments, the learned Counsel for the Appellant contended that this is a case of playing fraud with the insurer by way of entering into insurance contract in a fraudulent manner as well as by postponing the date of loss to 13.01.2015, when in fact the incident occasioned on 01.01.2015 itself. The Compressor, which is the major item damaged, was neither owned by the Respondent nor was it insured on 01.01.2015 when actual fire took place. They hatched a plan for wrongful gain by making a claim for an item on which they have no insurable interest. The claim was correctly repudiated vide letter dated 28.04.2016 giving detailed and justifiable reasons. He argued that the fire loss to Ashok Leyland Rig Machine with mounted Compressor took place on 01.01.2015 and Smt. Kaushaliya Devi was the owner and it was not insured as on that day. The Respondent was not the owner on 1-01-2015 and made a false insurance claim on 13.01.2015. The item could not have been legally sold to him by his mother Smt Kaushaliya Devi as the same was hypothecated to IndusInd Bank and an NOC/permission was required to transfer ownership of an asset from its financer. No such discharge/permission/NOC was taken establishing that the alleged sale was false and fabricated. The said compressor could not have been legally sold until the hypothecation of the bank is discharged. He further argued that, as per the opinion of an expert Mr Rajesh Goyal, the fire loss took place on 01.01.2015 and not on 13.01.2015. The Report of Mr Rajesh Goyal is corroborated by the inputs from M/s Jaipur Vidyut Vitran Nigam Ltd (JVVNL) Jamwaramgarh (Rajasthan) that 135 meters of electric wire was replaced by them on 02.01.2015 at the request of one consumer Mr Nathu Singh. This cable was running over the truck and compressor which caught fire on 01.01.2015. The Compressor owned by Smt. Kaushalya Devi, was initially insured with M/s Future Generali India from 04.07.2013 to 03.07.2014. This was not renewed after 03.07.2014 and the insurance coverage for the Compressor was obtained in the name of Mr Kapil Kumar Jangid by fraudulent manipulation. There was break in insurance of the Compressor and its pre-inspection was a must for insurance, which was not done. This proves the malafide intention of the Respondent. The sale agreement is dubious as it was without basic required details. The documents allegedly executed by Smt Kaushalya Devi are contradictory to each other. If the agreement to sale has been executed, no GPA was required after that. If GPA was required, Mr Kapil Kumar Jangid was not owner and hence he had no insurable interest. The Sale Agreement and Special Power of Attorney were notarized at SI No. 11/2015 & 12/2015 respectively. As sale is completed with execution of the agreement, the Special Power of Attorney cannot be executed after completion of sale. He argued that, 135 meters of new electricity wire was changed by JVVNL on 02.01.2015 as this wire got burnt on 01.01.2015. The Electrical cable line was just 4 ft above the Compressor on the vehicle. As per records of the spot surveyor on 14.01.2015, the overhead electrical wires were entirely intact, which is not possible if a fire of this magnitude had taken place. That establishes that the fire took place on 01.01.2015. Further, the metallic items with melting point of about 1400-1500 degree Celsius would not have cooled off by very next day, as found by the spot surveyor. He asserted that it is beyond doubt that the Rig Machine with mounted Compressor had caught fire on 01.01.2015 and not on 13.01.2015 as claimed. The Respondent had no insurable interest in the Compressor. He sought that the order of the learned State Commission be set aside with exemplary costs.

On the other hand, the learned Counsel for the Respondent/ Complainant argued that the Complainant had insured his vehicle RJ-18-EA-0537 for Rs.13,00,000 from 13.05.2014 to 12-05-2015. A Compressor which was in his mother’s name and was earlier insured with Future Generali Insurance Co from 04.07.2013 to 03.07.2014 was also fitted over the vehicle. This Compressor was also insured with the Appellants for Rs. 47,00,000 making the total cover to Rs.60,00,000 from 13.05.2014 to 12.05.2015 and an endorsement to this effect was made by the Appellants on the cover note. The Appellants inspected the vehicle on 02.01.2015 and after being fully satisfied of the credentials of the property, the premium was charged, contract was entered into and endorsement was made. The Appellants charged premium for the gap period also. Now they are estopped to raise any objection at this stage. Thus, both the vehicle and the Compressor were duly insured on the date of accident. At the time of insuring the Compressor, the Appellants asked the Complainant to get the its ownership in his name and to get the power of attorney and sale deed executed. The Complainant got both the documents executed in his favour duly notarized on 01.01.2015. He further argued that the insured vehicle caught fire on 13.01.2015 and an FIR was filed in PS Jamawa Ramgarh and the Appellants were duly informed. A certificate from the Sarpanch was also obtained. The Appellants appointed Shri Suraj Prakash Mangal, Surveyor to conduct spot survey. The report was submitted on 20.01.2015. A final survey was also conducted after 12 days of incident by Shri Rakesh Soni, Surveyor and in the report the surveyor had assessed the loss as Rs.54,50,685.30 vide report dated 15.04.2015. While Appellants were bound to pay the amount assessed by the surveyor, in violation of the provisions of IRDA they appointed an investigator without any permission of IRDA. Intriguingly, the investigator sought information from Police Station as regards a fire incidence between 01.01.2015 to 13.01.2015 and obtained a negative report. He, however, found some information of electric wire burning and changing of the wires on 02.01.2015. On the basis of this report, it was alleged that the incidence took place on 01.01.2015. This has been made the only basis for repudiation of the genuine claim of the complainant Whereas, the subscriber of the said electric supply later on given an affidavit in favour of the Respondent that there was a short circuit in his own premises on 02.02.2015 and thus the cable was changed. Therefore, the repudiation of the claim by the Appellant is on false and frivolous grounds. He further argued that on 01.012015, the sale deed and Power of Attorney were executed; on 02.01.2015 the endorsement was made; on 03.01.2015 petrol was filled in Jaipur; and on 05.01.2015 endorsement was made in Jaipur; on 08.01.2015 petrol was filled in Jaipur. The said endorsements was recorded by Appellant after due verification of the vehicle on 02.01.2015 at Pilani and at Jaipur on 05.01.2015. The allegation that the accident happened on 01.01.2015 and the same is being reflected as 13.01.2015 is false and entirely unsubstantiated. While the surveyors recommended the claim of the Complainant, the same was repudiated based on conjectures and surmises with no support of any kind of evidence. The accident took place on 13.01.2015 and the Complainant has legal insurable interest. The so called expert opinion has no evidentiary value as it was prepared in his office after the lapse of one year after the incident on 19.01.2016, with imaginary details about the diesel storage capacity, temperature, cable burning etc, at the behest of the Appellants with the sole intention of repudiating the claim. The Appellants resorted to repudiation of a genuine insurance claim under false grounds. The order of the learned State Commission, Rajasthan is just, proper and sustainable in law.

We have examined the pleadings placed on record, associated documents and rendered thoughtful attention to the arguments advanced by the learned counsels for both the parties.

The matter pertains to a Consumer Complaint filed on 03.02.2017 contending that Complainant is the owner of vehicle No. RJ 18 EA 0537 with a Compressor fitted and engaged in boring well activity. On 13.01.2015, the vehicle with compressor caught fire. The loss was informed to the police as well as to the insurer. The Appellant appointed a Spot Surveyor Shri Suraj Prakash Mangal who visited the site on 14.01.2015. The Appellant then appointed a Final Surveyor Shri Rakesh Soni, who assessed the loss as Rs.54,50,685.30. However, the Appellant failed to pay the amount and again appointed an investigator and, based on the investigator report, repudiated the claim citing that the claim is not genuine and that the fire incident had taken on 01.01.2015 prior to purchase of the Compressor by the Complainant. The Compressor caught fire on 01.01.2015 when it was carrying about 700 litres diesel. As per the spot of the accident, the electric cable was just 4’ overhead the compressor was not burnt. This raised suspicion to the insurer on the incident itself and on investigation it was revealed that the Compressor was in fact transferred in the name of the Complainant only on 01.01.2015 and on the same day power of attorney was also executed. This also raised doubts on the genuineness of the fire incident as well as the claim.

It is undisputed that vehicle was insured for Rs. 13 lakhs and compressor was insured for Rs. 47 lakhs. The compressor was insured on 05.01.2015. On 13.01.2015 it is stated to have caught fire and got damaged. A report was lodged with police, a certificate from gram panchayat was taken and loss was immediately reported to the OPs. On 14.01.2015 a spot survey was conducted and at that time the vehicle and Compressor were found heated and no suspicion on the incident was recorded by the spot surveyor. Shri Rakesh Soni, the final surveyor assessed the loss and liability as Rs.54,50,685. However, the OP did not make the payment and instead appointed an investigator to look into the claim. Thereafter, the OP repudiated the claim, on grounds that the claim was not genuine and that the incident had in fact occurred on 01.01.2015, prior to the purchase of the compressor by the Complainant and the compressor was transferred in the name of complainant only on 01.01.2015. It was also pointed that on 02.01.2015, the overhead cable passing through the place where the vehicle got burnt and was changed. As on 01.01.2015 when the cable was burnt in the same accident in which the compressor and the vehicle got burnt, the compressor was not in the name of the complainant. It was transferred to his name subsequently and a fictitious claim was filed showing the incident of 13.01.2015.

These contentions are prima-facie untenable because, if the compressor was burnt on that day, there was no occasion for the insurer to insure it subsequently. It is an admitted position of the Appellants that the insurance contract was entered into on 05.01.2015 and the incident occasioned on 13.01.2015. Absence of burning of the overhead cable may give rise to some suspicion about the incident. But, it cannot take the place of conclusive proof. Towards negating allegation of the OPs, the Complainant had submitted an affidavit of Shri Nathu Singh which stated that there was an incident of fire due to short circuit on 02.01.2015. The Complainant further corroborated his claim by submitting a bill for filling petrol in the same vehicle on 08.01.2015. While the OPs claimed that the premium for insurance was paid on 09.01.2015 and it is common practice amongst contracting parties with good relation to make payment after the receipt of the insurance policy, the fact, however, remains that the compressor was duly insured on 05.01.2015. Also, the report of Shri Rajesh Goyal concluding that the vehicle was burnt on 01.01.2015 has very limited or no evidentiary value as he made visit to site on 18.1.2016, one year after the incident. Whereas, the spot surveyor, who visited the scene the very next day of the incident had found the accident genuine. Therefore, the contentions of the OPs are untenable.

The present case is fit to put reliance on the Order of Hon’ble Supreme Court in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited and Another, (2009) 8 SCC 507, decided on 24.08.2009, wherein it was held that:

"32. There is no disputing the fact that the surveyor / surveyors are appointed by the insurance company under the provisions of the 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...

In our considered view, the Insurance Act only mandates that while settling a claim, assistance of a surveyor should be taken but it does not go further and say that the insurer would be bound by whatever the surveyor has assessed or quantified; if for any reason, the insurer if of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured."

The option to accept or not to accept the report is with the insurer. However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. We hasten to add, if the reports are prepared in good faith, with due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the surveyors."

In Khatema Fibres Ltd. v. New India Assurance Company Ltd., 2021 SCC OnLine SC 818, Decided on 28.09.2021 wherein it was 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.

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.

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.”

Based on careful perusal of material on record, deliberations above and the established precedents of the Hon’ble Supreme Court, we do not find any merit in the present Appeal and the same is, therefore, dismissed.

All pending application, if any, stand disposed of.

The Registry is directed to release the statutory deposit amount, if any due, in favour of the Appellants after compliance of this order.