NEW INDIA ASSURANCE COMPANY LIMTED vs Annumahanthi Veera Swamy Patnaik

MR. Justice Ashok Bhan, President-The New India Assurance Company Limited-petitioner herein, which was the opposite party before the District Consumer Disputes Redressal Forum, Vizianagaram (for short ''the District Forum'') has filed the present Revision Petition against the Order dated 6.1.2006 passed by the A. P. State Consumer Disputes Redressal Commission, Hyderabad (for short, ''the State Commission'') wherein and whereunder the Appeal of the respondents was allowed.

SHORTLY stated, the facts leading to the filing of the present complaint are:

COMPLAINANT-respondents herein, who were the owners of a building bearing Door No. 656, Trinadh Mahal, Vullithota Street, Rajahmundry, insured the said building with the petitioner-Insurance Company for Rs. 10,00,000 under Fire Policy dated 24.6.1996 which was valid from 24.6.1996 to 23.6.1997. It is stated in the complaint that as per the terms and conditions of the Policy, if the property is destroyed or damaged by fire, lightening, explosion, riots and strikes, storm, cyclone, typhoon and floods, the Insurance Company will pay the insured value of the property destroyed or damaged. That on 6.11.1996, due to cyclone, the insured property got damaged and the respondents, accordingly, filed a claim of Rs. 5,00,000 with the petitioner-Insurance Company which was repudiated on 31.3.1997 on the ground that as per the Report of the Surveyor, the insured building is in a deteriorated condition and did not sustain any kind of loss on account of cyclone. Thus, being aggrieved, respondents filed the complaint before the District Forum.

ON being served, petitioner-Insurance Company filed its counter stating that as per the Surveyor''s Report, the insured building was in a deteriorated condition with cracked walls, exposed bricks, country/tiled roof which had collapsed long time ago with some plants which were rooted inside the building premises. That the Policy was taken by the respondents long ago and is being renewed from time-to-time. That having utmost good faith, the Policy was renewed and it was the duty of the respondents to disclose the true condition of the building. That the District Forum had no territorial jurisdiction to deal with the complaint as the Policy was issued at Visakhapatnam and the insured property is situated at Rajahmundry. Thus, denying the allegations made in the complaint, petitioner prayed for dismissal of the complaint.

DISTRICT Forum, after taking into consideration, the pleadings and the evidence led by the parties, dismissed the complaint fixing the Advocate Fee at Rs. 3,000.

BEING aggrieved by the Order passed by the District Forum, respondents/complainants filed the Appeal before the State Commission. The State Commission allowed the Appeal, set aside the Order of the District Forum and directed the petitioner-Insurance Company to pay the claim amount of Rs.4,50,000 together with compensation of Rs.25,000. The Order was directed to be complied with within 2 weeks. It was held that based on the facts and circumstances of the case and the fact that 6.11.1996 cyclone was declared as a national calamity and that the Policy is an old Policy renewed time and again, there is no reason to disbelieve that the insured building was damaged due to cyclone.

BEING aggrieved by the Order passed by the State Commission, petitioner-Insurance Company has filed this Revision Petition.

COUNSEL for the parties have been heard at length.

THIS Revision Petition was admitted limited to the point of quantum only. The operation of the Impugned Order was stayed subject to deposit of Rs. 2,00,000 with the District Forum within a period of 4 weeks from 14.7.2006 which has been deposited by the respondent.

UNDISPUTED facts are that the respondents got their building bearing Door No. 656, Trinadh Mahal, Vullithota Street, Rajahmundry, insured with the petitioner-Insurance Company for a sum of Rs. 10,00,000 under Fire Policy on 24.6.1996 which was valid from 24.6.1996 to 23.6.1997. As per the terms and conditions of the Policy, if the property was destroyed or damaged by fire, lightening, explosion, riots and strikes, storm, cyclone, typhoon and floods, the petitioner Insurance Company will pay the insured value of the property that is destroyed or damaged. On 6.11.1996, the insured property was damaged on account of cyclone and the respondents preferred a claim for Rs. 5,00,000 which was repudiated by the petitioner on 31.3.1997 stating that their Surveyor stated in his Report that the building was in a deteriorated condition and did not sustain any kind of loss on account of cyclone. It is also not disputed before us that the cyclone dated 6.11.1996 was declared as national calamity. That the respondents had taken the Policy much earlier which was being renewed from time-to-time.

WE have gone through the Report of the Surveyor as well as the Affidavit filed by Shri V. S. R. Prasad Rao, Chartered Engineer and approved Valuer and Loss Assessor, who was produced as a Third Party witness by the respondents/complainants. Learned Counsel appearing for the petitioner contends that as per Survey Report, the building was in a deteriorated condition with cracked walls, exposed bricks, country/tiled roof which collapsed long ago with some plants which were well rooted inside the building premises. That since the Policy was being renewed from time-to-time, the petitioner in utmost good faith, renewed the Policy and that the respondents should have disclosed the condition of the building while getting the Policy renewed.

LEARNED Counsel appearing for the petitioner also raised the contention that District Forum did not have the territorial jurisdiction to deal with the complaint as the Policy had been issued at Visakhapatnam and the insured property was situated at Rajahmundry. The State Commission has rejected the contention raised by the petitioner regarding the territorial jurisdiction by observing that the District Forum had the jurisdiction in view of the amendment in Section 11(2) of the Consumer Protection Act, 1986 (for short ''the Act''). As per amended Notification, the complaint could be filed wherever the opposite party or each of the opposite party resides or carries on business or has a branch office. Since, at the headquarters where the District Forum is situated, there is a branch office of the petitioner where the District Forum had the jurisdiction to adjudicate on the complaint. This apart, this Revision Petition was admitted limited to the point of quantum only. Therefore, we need not go into this question as the Revision Petition was admitted on quantum only. Otherwise also, this point was not seriously contested.

HON''ble the Supreme Court of India in Dharamendra Goel v. Oriental Insurance Company Limited, reported in IV (2008) ACC 750 (SC)=(2008) 8 SCC 279, has observed that the Insurance Company, after having accepted the value of the particular insured goods, cannot disown that very figure on one pretext or the other when they are called upon to pay compensation. That this "Take It Or Leave It" attitude is clearly unwarranted not only as being bad in law but ethically indefensible. Rejecting the contention, Hon''ble Supreme Court held that the Insurance Company, having put to price of the insured goods itself at the time of renewal of the Policy, cannot put a different value when called upon to pay compensation. Paragraph 7 of the Judgment, reads as under: "7. It must be borne in mind that Section 146 of the Motors Vehicles Act, 1988 casts an obligation on the owner of a vehicle to take out an insurance policy as provided under Chapter 11 of the Act and any vehicle driven without taking such a policy invites a punishment under Section 196 thereof. It is, therefore, obvious that in the light of this stringent provision and being in a dominant position the insurance companies often act in an unreasonable manner and after having accepted the value of a particular insured goods disown that very figure on one pretext or the other when they are called upon to pay compensation. This ''take it or leave it'' attitude is clearly unwarranted not only as being bad in law but ethically indefensible. We are also unable to accept the submission that it was for the appellant to produce evidence to prove that the Surveyor''s report was on the lower side in the light of the fact that a price had already been put on the vehicle by the company itself at the time of renewal of the policy. We accordingly hold that in these circumstances, the company was bound by the value put on the vehicle while renewing the policy on 13.2.2002."

(Emphasis supplied)

WE respectfully follow the Judgment and hold that in the present case, the Insurance Company could not contest on the value of the property after evaluating and insuring it for a particular value.

WE have gone through the Report of the Surveyor very carefully. As per this Report, representatives of the insured as well as tenant Shri A. V. Raghupati Raju appeared and stated that on 6.11.1996, in the night at about 9.00 p.m., there was a storm and cyclone and due to heavy pressure of gales, the residential building belonging to the complainants was hit by eccentric load of wind pressure as a result of which the building got damaged at various places. The Surveyor, without discussing or evaluating the loss, rejected the testimony by observing that since the building was old and in a deteriorated condition, the damage was due to normal wear and tear and not due to cyclone. In conclusion, the Surveyor concluded as under: "Conclution: Undersigned has advised Insured''s representative to submit the estimation according to their opinion., but there is no response, from Insured''s representative., also it was said to be the damages are due to normal wear and tear and but not due to cyclone. Hence the subject claim may be treated as NO claim due to there was not identified any kind of loss due to Cyclone., and the loss I have verified in the building was identified as normal wear and tear. This report is issued without prejudice subject to the terms and conditions of the policy."

AS against this, the respondents submitted the claim along with the Report of Shri V. S. R. Prasad Rao, Chartered Engineer, who in his detailed Report has stated that the building was damaged due to cyclone and it would require Rs. 6,00,000 for the proposed repairs/renovation and alterations to the existing damaged building. It was reported by him that the building was damaged due to cyclone on 6.11.1996 which was a major one in the Godavary Delta area and wrecked havoc affecting over 7 lakh people. That the said cyclone was declared by the Government of India as a national calamity.

THE State Commission has agreed with the Report submitted by Shri V. S. R. Prasad Rao, Chartered Engineer and, in our view, rightly. The Surveyor had not assessed the loss caused to the building at all whereas Shri V. S. R. Prasad Rao had assessed the loss caused as well as came to the conclusion that the loss was due to the cyclone on 6.11.1996. Surveyor has not even stated as to whether loss was due to cyclone or not. He simply came to the conclusion that loss was due to wear and tear as the building was very old. In case, the building was in such a dilapidated condition, then, it would have been destroyed completely in the cyclone. We have no hesitation in accepting the Report submitted by Shri V. S. R. Prasad Rao, Chartered Engineer in preference to the Report submitted by the Surveyor.

FOR the reasons stated above, we find no infirmity in the Order passed by the State Commission and fully concur with the same. Accordingly, the Revision Petition is dismissed being devoid of merits with costs which are assessed at Rs. 10,000. The sum of Rs. 2,00,000 deposited by the petitioner with the District Forum be released to the respondent along with the accrued interest thereon. The petitioner is directed to pay the balance amount along with the compensation and the costs of Rs. 2,500 imposed by the State Commission as well as the costs of Rs. 10,000 imposed by us to the respondents within 8 weeks from today failing which the petitioner shall pay interest on the balance amount of Rs. 2,50,000 @ 9% p.a. from the date of filing of the Complaint. R.P. dismissed.