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Judgment
Avm J. Rajendra, Avsm, Vsm (Retd.), Member
The present First Appeal has been filed against the Order dated 25.10.2018 passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 616 of 2018, wherein the Complaint filed by the Complainant (Respondent herein) was allowed.
There was delay of 57 days in filing the present appeal. For the reasons stated in IA/3369/2019 the delay is condoned.
It is the case of the Complainant that he is the owner of vehicle Mercedes Benz GL-500 bearing Registration No.PB-05-AD-1000, Engine No.30347099, Chassis No.585404, Model 2010. He got insured the said car from the Appellant/OP on 22.09.2017, vide Insurance Policy No.233790/31/2018/308, by paying Rs.1,12,758/-. The said car met with an accident near Harike City, District Taran Taran (Punjab) on 24.12.2017, as it went over some stones placed on the road for diverting the traffic. The weather was bad as well as some construction was in progress on the road. Due to this, the engine chamber of the car was damaged as a result there was oil leakage. Due to traffic as well as being unaware of the oil leakage, the Complainant drove the car and safely parked 600 meters away from the place of accident. Intimation about the said accident was given to the Appellant, who sent a truck for towing the car to the workshop of Benz Motors, Ludhiana. After inspection, the mechanic of Benz Motors informed that the engine of the car was totally damaged and that new engine would be required for complete repairing of the car. He prepared an estimate of Rs.28,50,000/- as the repair cost. The Complainant forwarded the estimate to the Appellant. However, the Appellant avoided its liability to the estimate and offered to pay only Rs.53,500/- vide letter dated 21.07.2018. Since the date of accident, the car remained in the workshop of Benz Motors, Ludhiana for which the Complainant is paying Rs.6,000/- per month as parking charges. Being aggrieved due to non-adherence to insurance contract, the Complainant filed a Consumer Complaint before the State Commission seeking the following relief:
Repair cost of vehicle = Rs. 28,50,000/-
Mental agony = Rs. 5,00,000/-
harassment, litigation expenses = Rs. 25,000/-
Car valuation price low due to
not maintain charges = Rs. 15,00,000/-
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Total = Rs.48,75,000/-
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The Appellant/Opposite Party, in its Reply filed before the learned State Commission raised preliminary objections that the claim of the Complainant is under process and has not been repudiated, so the Complaint was pre-mature. It is well settled that cause of action in insurance matters accrues only after repudiation of the claim. It was admitted that the Complainant purchased a 'Private Car Package Policy for his Mercedes Benz car from 22.09.2017 to 21.09.2018 for an IDV of Rs.65,00,000/. Clause 2 (a) of the policy reads as under:
“2. The Company shall not be liable to make payment in respect of:
(a) Consequential loss, depreciation, wear and tear, mechanical or electrical break down, failures or breakages.
(b) xxxxxxx
(c) xxxxxx"
It was pleaded that on 24.12.2017, the Complainant drove the vehicle on the stones kept on the road to block the road and divert the traffic and the car went out of his control. At that stage, it was incumbent upon him to stop the car and examine the damage. Instead, he reversed and continued to drive the car. The complainant admitted to the Investigator that he was aware about the leakage of the engine oil, but he continued to drive till it came to a dead stop and engine got seized. Thus, the damage to the car is excluded under Clause-2 (a) of the policy.
In addition, in compliance with Clause-4, the Complainant was required to take steps to safeguard the vehicle from loss or damage and take actions to prevent further damage. However, by driving the car in such condition, he committed willful breach of Clause-4 of the policy. Thus, he is not entitled to any claim. It was further pleaded that, on receipt of Complainant’s intimation as regards the accident, M/s Royal Associates was appointed as Investigator. The firm conducted a detailed investigation into the incident and submitted its report dated 28.08.2018, along with photographs of the damaged car. The Investigator submitted an affidavit of the Complainant dated 19.05.2018 and a statement in Punjabi dated 15.03.2018 signed by Complainant and witnessed by his wife Ms Gurpreet Kaur Kang regarding the accident on 24.12.2017 and damage/loss sustained. The said Report and the affidavit prove the occurrence of accident in the manner as mentioned. The OPs also appointed Shri Ebadur Rehman as Surveyor to assess the damage and loss. He carefully inspected and submitted his preliminary report dated 24.02.2018, observing that he was not clear how a stone could have torn/dented the sump of the engine, resulting in loss of oil, which caused engine seizure, unless it was driven without oil for a substantial period. He also observed that there was no damage to the suspension or the bumper and only the sump was badly damaged. Vide letter dated 21.07.2018, the surveyor sought the Complainant to get the engine of the car removed. But, the Complainant did not cooperate. Thereafter, the surveyor submitted his Motor Survey Report dated 28.08.2018, observing that the occurrence of said accident of the insured car in daylight at 2.00 P.M. was a willful and negligent act of the Complainant and his demand for compensation is not under the purview of the policy. However, the surveyor assessed the damage and loss to the vehicle to the extent of Rs.51,060/-, which the OPs are willing to pay. The Complainant inflated the claim, just to bring the same within the pecuniary jurisdiction of this Commission. There is no deficiency in service on the part of the OPs. On merits, similar pleas as raised in the preliminary objections, were reiterated and it was prayed that the same be dismissed.
The State Commission, vide Order dated 25.10.2018, allowed the Complaint with the following directions to the OPs:
“i) to repair the car, in question, with genuine and Company parts and make it roadworthy to the full satisfaction of the complainant, at the expenses of the opposite parties; and
ii) to pay interest at the rate of 9% per annum on the amount of IDV of the car i.e. Rs.65,00,000/- from 11.04.2018, i.e. after three months from the date of accident, till making the car roadworthy to the full satisfaction of the complainant.”
Being aggrieved, the Appellant Insurance Company filed the present Appeal with the following prayers:
(A) Set aside the impugned order dated 25.10.2018 passed by the Hon’ble State Commission, in Complaint Case No. 616 of 2018.
(B) Allow the present First Appeal and award the cost of the Appeal to the Appellant.
(C) Pass any other or further order(s) as this Hon'ble Commission deems fit and proper in the facts and circumstances of the present case.”
In the Appeal, the Appellants/OPs have mainly taken the following grounds:
A. The policy covers damages in accidents on road. An accident is an unforeseen and unplanned event; or an unfortunate event resulting especially from ignorance. The insurers typically cover injuries or damages in accidents that are not the result of a deliberate intended act.
B. The Respondent admitted in his statement that he was aware of the damage to the engine and leakage of oil. He still chose to drive the car which enhanced the damage to the engine. As the subsequent loss was deliberate and not accidental, the same is not covered under the policy. As per exclusion No.2(a) "consequential loss, deprecation, wear and tear, mechanical or electrical breakdown, failures or breakages".
C. The State Commission erred in directing that the car should be repaired with the full satisfaction of the insured. The rule of indemnity clearly states that, the reinstatement/ repair should be to make the vehicle as near as possible as it existed before the damage, not to his satisfaction.
D. The damage to Engine parts are excluded under Clause 4 as set out herein below:
“4(a) The insured shall take all reasonable steps to safeguard the vehicle from loss or damage and to maintain it in efficient condition and the Company shall have at all times free and full access to examine the vehicle or any part thereof or any driver or employee of the insured. In the event of any accident or breakdown, the vehicle shall not be left unattended without proper precautions being taken to prevent further damage or loss and if the vehicle be driven before the necessary repairs are effected any extension of the damage to the vehicle shall be entirely at insured's own risk.”
E. If the car is driven before repair, the further damage is entirely at his own risk. Section 64 UM(2) of Insurance Act, 1938 reads as under:
“64 UM (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1938, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a license issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessors)”
F. The Respondent never had any grievances with the survey report and neither objected at time of inspection.
G. The State Commission wrongly awarded the higher interest on the IDV of the car at Rs.65,00,000/-. Whereas, it should have been on the actual loss. This will be a profit for the insured. He was also awarded interest from 11.04.2018 instead of institution of the case on 25.07.2018.
H. The State Commission exceeded its jurisdiction by awarding the interest till making the car roadworthy to the full satisfaction of the Complainant. It would be a heavy burden on the Appellant and set a bad precedent.
The Respondent/Complainant has not filed any Objections/ Reply to the present Appeal.
The learned Counsel for the Appellant argued that the Appellant has already paid Rs.6,84,370/- to the Respondent on 13.05.2019, towards interest @ 9% on Rs.65,00,000/- from 11.04.2018 to 11.06.2019, in compliance of the learned State Commission order dated 25.10.2018, as stay granted by the NCDRC was not complied at that stage. Proof of further payment of Rs.7,50,750/- with the State Commission in terms of the order dated 11.03.2019 and 19.07.2019 passed by the NCDRC was also filed. This is a case of premature complaint before the State Commission which got decided within 3 months from the date of filing wherein the State Commission failed to consider many material aspects of the case. The Surveyor had requested the insured to remove the engine and change the damage portion to inspect the engine and the damages and re-fix the engine, and agreed to pay the charges of removing, refitting of the engine and replacement. But the Respondent, instead of getting the vehicle repaired, was adamant for replacement of engine and paying Rs.28,50,000/- as repair cost, Rs.15 Lacs for the valuation of the vehicle and compensation of Rs.5,00,000/- and Rs.25,000/- for litigation expenses, making a total of Rs.48,75,000/- to bring the case within the jurisdiction of State Commission. The State Commission exceeded its jurisdiction and passed a whimsical order for repair of the car to full satisfaction of the Complainant and to pay interest @ 9% per annum on the amount of IDV that is Rs.65,00,000/- whereas no such a relief was even claimed by the respondent in its complaint. The order is without evidence and the State commission remarked that "spending an amount of Rs.53,500/- an engine of Mercedes Benz cannot be changed and also there is no repudiation letter" which became the basis in allowing the complaint and relief under para 14 of the order.
The learned Counsel for the Appellant relied on the Order in Civil Appeal no. 2519-2520 of 2019 in National Insurance Co Ltd Vs. Navdeep Singh and Ors wherein the insurer was directed to release the amount spent for physiotherapy, attendance charges and bills on six monthly basis to the father of the insured. The Hon’ble Supreme Court opined that such open ended liability fastened on the insurance company is not justifiable and the direction for granting compensation is not correct. The learned Counsel for the Appellant has also relied upon the judgment of the Hon’ble Supreme Court in Chief Administrator, HUDA & Anr. Vs Shakuntala Devi and Ors., Civil Appeal No.7335 of 2008, decided on 08.12.2016 wherein it has been held that award of interest would have been sufficient to compensate the Respondent for the loss suffered by him due to the delay in handing over the possession of the plot in question.
The Respondent, on the other hand argued the case in person in support of the Impugned Order dated 25.10.2018 passed by the State Commission and submitted that the Appeal has been filed on frivolous grounds to delay the Impugned Order. He has also asserted of the denial of the vehicle and harassment meted out to him.
We have examined the pleadings placed on record and the associated records and thoughtfully considered the arguments advanced by the learned Counsel for the Appellant and the Respondent in person.
There are three following issues involved in this Appeal:
(i) Whether the State Commission has the pecuniary jurisdiction to entertain the complaint.
(ii) Whether the claim of the Respondent falls under the exemption clause mentioned in Para 2(a) of the Policy and more particularly whether the loss can be said to be a ‘consequential loss’.
(iii) Whether the State Commission rightly awarded 9% interest on the amount of IDV of the Car i.e. Rs.65,00,000/- from 11.04.2018 i.e. after three months from the date of accident, till making the car roadworthy to the full satisfaction of the complainant or not.
Regarding the first issue, the Complaint has been filed before the State Commission on 25.07.2018 seeking claim amount of Rs.48,75,000/-. The State Commission had pecuniary jurisdiction to entertain the complaints where the value of the goods or services and compensations, if any, claimed exceeds Rs. 20 Lakhs but does not exceeding Rs. 1 Cr as per Section 17(a)(i) of the Consumer Protection Act, 1986 at the time of filing of the complaint on 25.07.2018. Thus, the State Commission had the pecuniary jurisdiction to decide the subject complaint.
As regards the issue whether the claim falls under the exemption in Section-I Para 2(a) of the Policy and whether the claim can be treated as a ‘consequential loss, the Appellant forcefully argued that in terms of the Section-I Para 2(a) the Private Car Package Policy issued by the Appellant and valid from 22.09.2017 to 21.09.2018 expressly makes the insurer not liable to make any payment towards consequential loss, wear and tear, depreciation, mechanical or electrical breakdown, failures or breakages of the vehicle. The present case falls within the ambit of exclusion and thus as the accident happened as a consequence of negligence by the Complainant due to running over some obstructions and thereafter knowing well that engine oil was leaking, continuing to drive the car for 600 meters till its engine seized. Therefore, the insurer liability is limited to external damage due the accident as determined by the surveyor. The damage to the engine, however, was consequent to specific acts of negligence on the part of the Complainant. Thus, the insurer rightly repudiated the claim towards the value of the engine.
On the other hand, it is specific contention of the Complainant that he drove the car safely and appropriately. The accident happened was beyond his control as there was bad weather, stones were placed on the road to divert the traffic, construction work was in progress, one way portion of the road was in use by traffic on both sides and there was heavy traffic. Due to these conditions, unexpectedly, he ran over some stones which caused damage to the bottom of the car and the engine. He could not have been able to leave the car on the road as neither it was safe nor feasible due to traffic. Therefore, while looking for reasonably safe location, he drove the car about 600 meters and he had no knowledge of the leakage of engine oil and that the car engine would seize within such short distance.
Except for the circumstances under which the car was driven for 600 meters after the accident, the other contentions pertaining to the insurance, location of the car, accident etc are admitted by both the parties.
It is a matter of common knowledge that a person driving the car in normal course would drive the vehicle with due care and caution, unless the contrary is established. It is reasonable to expect that a driver of the car that too the owner to not to leave the car in traffic and thus expose his car to higher risk and cause blockage of road. It is also not reasonably expected that such minor accident of running over some stones would cause damage to the engine, leakage of engine oil and further within 600 meters of driving to a safe location, the engine to seize. The surveyor who inspected the car himself observed that he was not clear as to how a stone could have torn/dented the sump of the engine, resulting in loss of oil, which caused engine seizure, unless it is driven without oil for substantial period. Therefore, while the car accident has been admitted, it has also been established that the car was driven only for 600 Meters after the accident. It cannot be said that the driver of the vehicle was negligent merely for driving the car for 600 meters, which any reasonable man would invariably do in the given circumstances to not to expose the car to higher risk, not to block the road and to take the car to safe parking. Had he not so relocated the car, which a reasonable man is expected to do towards protecting the asset, there is a scope for contrary implications and liability. Therefore, the contention of the Appellant that the claim of the Respondent falls under exclusion clause at Section-1 Para 2 (a) and the insurer has no liability is untenable.
With regard to the third issue, the Counsel for the Appellant relied upon the two judgments of the Hon’ble Supreme Court i.e. Chief Administrator, Huda & Anr. vs Shakuntala Devi and Ors (Supra) and National Insurance Co Ltd Vs. Navdeep Singh and Ors. (Supra). Both the judgments have limited application in the case. As regards the rate of interest and scope for compensation, the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in Civil Appeal No.6044 of 2019 decided on 7.4.2022 has held that:-
“We are of the opinion that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts. The Commission in the Order impugned has granted interest from the date of last deposit. We find that this does not amount to restitution. Following the decision in DLF Homes Panchkula Pvt. Ltd. Vs. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. Therefore, the Appeal filed by purchaser deserves to be partly allowed. The interest shall be payable from the dates of such deposits.
At the same time, we are of the opinion that the interest of 9% granted by the Commission is fair and just.”
In view of the facts of the case, the arguments advanced by the learned Counsel for Appellant and the Respondent in person and the established precedents by the Hon’ble Supreme Court in the matter, we consider that the award of interest @ 9% per annum on the IDV value of 65,00,000 by the learned State Commission is excessive. It is seen that, other than the engine there is no major damage to the car. The repair cost of the vehicle stated was Rs.28,50,000/-. Therefore, we consider it adequate to compensate the Complainant to the extent of reasonable interest on the repair value of the car as on the date of accident i.e. Rs.28,50,000/-.
In view of the foregoing, the Appeal is partly allowed. The order of the learned State Commission dated 25.10.2018 is modified only to the extent of the compensation amount as follows. The Appellants/Opposite Parties are directed: -
ORDER
A. To repair the car, in question, with genuine and Company parts and make it roadworthy to the full satisfaction of the complainant, at the expenses of the opposite parties.
B. To pay compensation in the form of interest @ 9% per annum on the repair cost of the vehicle i.e Rs.28,50,000/- from the date of offer of repair on 21.07.2018 till the realization of the amount. The Amounts already paid by the Appellant/Opposite Party shall be adjusted against total due. These payments shall be made within one month from the date of this order. In the event of delay in payment beyond one month, the interest applicable shall be @ 12% per annum for such extended period till the realization of the entire amount.
There shall be no order as to costs. All the pending Applications, if any, stand disposed of accordingly.
The Registry is directed to release the Statutory deposit amount, if any, in favour of the Appellant after due compliance of the order.