PAVANKUMAR NANDKISHOR AGRAWAL vs BRANCH MANAGER, ORIENTAL INSURANCE COMPANY

The Complainant has filed this First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"), against Oriental Insurance Company (for short "the Insurance Company"), questioning the correctness of order dated 04.09.2013 passed by the Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Aurangabad, in Complaint Case No. 23 of 2011. By the impugned order, the claim made by the Complainant against the

Insurance Company, for indemnification of the loss suffered by him on account of the accident of the insured vehicle, along with compensation for not settling the claim expeditiously, has been partly allowed.

The material facts, necessary for the purpose of this Appeal, are as follows:- On 27.03.2009, the Complainant purchased a new Mitsubishi Pajero (SUV) vehicle, with financial assistance from one Shri Ramkrishna Urban Co-operative Credit Society Ltd., Ahmednagar. The vehicle was insured with the Insurance Company under Private Car Package Policy for an insured declared value (IDV) of 19,24,000/-. Total premium amounting to 52,556/- was paid. The policy was valid for the period from 26.03.2009 to 25.03.2010. Unfortunately, on 22.10.2009, the vehicle met with an accident, resulting in the death of one of the family members of the Complainant on the spot. The other occupants of the vehicle also sustained injuries. The vehicle was extensively damaged. Intimation regarding the accident was given to the Insurance Company on the next day i.e. 23.10.2009, with a request to appoint a surveyor for conducting inspection of the damaged vehicle. As instructed by the Insurance Company, on 26.10.2009, the Complainant deposited a sum of 1571/- as surveyor''s charges. On 25.11.2009, the vehicle was shifted to an authorized workshop, namely, J. Williams & Company at Pune. An estimate of cost of repairs, prepared by the workshop, was submitted by the Complainant with the Insurance Company on 07.01.2010. As there was no response to the claim, the Complainant issued two reminders, dated 27.09.2010 and 13.01.2011, to the Insurance Company requesting it to settle the claim on ''cash loss basis'', as repair of the vehicle was not viable. Awaiting settlement of its claim, on 02.09.2011, the Complainant obtained an estimate of loss from the same workshop. It was assessed at 23,13,587/-. While assessing the loss, vide its letter dated 02.09.2011, the said J. Williams & Company, suggested to the Complainant that due to massive damage to the vehicle, it is beyond economical repairs. The Complainant was also requested to speed up its decision as the vehicle was lying at their premises since December 2009 and their parking charges were building up to his account. However, as the estimated loss was more than IDV the Complainant again requested the Insurance Company to settle the claim on the basis of IDV, i.e. 19,24,000/-. Ultimately responding to Complainant''s letter dated 13.01.2011, on 21.07.2011, the Insurance Company requested the Complainant to get the vehicle repaired and furnish the cash memo/purchase receipts and on his confirmation that the vehicle has been repaired, they will appoint a surveyor for re-inspection of the vehicle.

The Insurance Company having failed to settle the claim, on 04.10.2011, the Complainant got a legal notice issued to it, seeking settlement of his claim. Since there was no response to the said legal notice, the Complainant was constrained to file the Complaint in the State Commission, praying for a direction to the Insurance Company, to inter-alia , pay the following amounts:

(i) IDV of the vehicle i.e. 19,24,000/- with interest @ 9% from the date of accident till the date of payment;

(ii) Parking charges @ 100/- per day from 25.11.2009 till the date of payment of compensation;

(iii) Interest on the EMI, paid by him to the Financer from the date of accident till the date of final settlement of claim;

(iv) An amount of 5,00,000/- towards mental agony and

(v) An amount of 10,000/- towards cost of litigation etc."

In its written version, while denying the allegation of any deficiency in service on its part, it was stated by the Insurance Company that on receipt of intimation about the accident, one Ram Bahadur Singh of Mumbai was appointed as the surveyor to assess the loss caused to the vehicle. As the surveyor had recommended the assessment of loss on ''repair basis'', the Complainant was asked to get the vehicle repaired. However, the Complainant insisted on settlement of claim on ''cash loss basis'', and therefore, his claim was not settled.

The State Commission came to the conclusion that by not settling the legitimate claim of the Complainant on ''cash loss basis'', the Insurance Company was not only deficient in rendering service, it also indulged in unfair trade practice. Finally, The State Commission, directed the Insurance Company to settle the claim on the following terms:- ".........the opponent Insurance Company is liable to pay the insurance claim of the complainant on cash loss basis as per the survey report dated 12/05/2011 with certain modification. In the said report the surveyor has calculated the total loss at 11,60,261.42 and by making deduction at 25% towards over all deduction from the said amount without any explanation to that effect worked the loss @ 8,69,196/- only. Hence, we do not accept the said deduction as it has no basis. However, deduction towards policy excess at 1000/- is acceptable and hence by deducting amount of 1000/- from the total assessed amount of loss of 11,60,261.42/- we hold the amount of 11 ,59,261.42 say 11 ,59,000/- (11,60,261.42 - 1000/-) as payble to the complainant with reasonable amount of interest. The complainant has also claimed parking charges at 100/- per day towards the said vehicle which he had to pay to J. Williams and Company as the insurance claim was not settled in time by the opponent Insurance Company. However, from the invoice issued by the J. Williams and Company regarding parking charges it is observed that it had charged 54,750/- for the period from 7/01/2010 to 07/01/2013 i.e. for 1095/- which is at 50/- per day. But as the opponent Insurance Company by its letter dated 21/07/2011 had informed the complainant to get the vehicle repaired, the opponent Insurance Company can be made liable to pay such parking charges only upto 21/07/2011 i.e. for 559 days @ 50/- per day which works out to 27,950/- say 28,000/-. The complainant is also entitled for reasonable compensation towards mental harassment and also cost of litigation."

Consequently, the State Commission directed the Insurance Company to pay to the Complainant a sum of 11,59,000/- for the loss suffered by him on account of the damage to the vehicle, along with interest @ 6% p.a. from the date of filing of the complaint, i.e. 19.10.2011, till realization of the entire amount within a period of 30 days; a sum of 28,000/- towards parking charges; a compensation of 5000/- towards mental and physical harassment and 2000/- as cost of litigation.

Still dissatisfied with the award of the said compensation, the Complainant has filed this Appeal, praying for enhancement of compensation. The Insurance Company, however, appears to be satisfied, as it has not challenged the impugned order. Hence, the findings of deficiency in service on its part and its practicing unfair trade practice, have attained finality.

Thus, the question surviving for consideration is whether, in the light of the afore-stated factual matrix, adequate compensation has been awarded to the Complainant?

It is well settled that the word ''compensation'' is of wide connotation. It not only constitutes the value of the goods or services or only the actual loss or damage suffered by a consumer, it also encompasses a just compensation for the injustice suffered by him due to deficiency in service in sale of goods or rendering of services, as the case may be. It is equally trite that just compensation is adequate compensation, which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well settled principles relating to award of compensation. Undoubtedly, it is not intended to be a bonanza or largesse.

At this juncture, before we advert to the facts at hand, it would be profitable to refer to the relevant provisions contained in the Insurance Regulatory and Development Authority (Protection of Policy Holders'' Interests) Regulations, 2002, framed, inter-alia , under Sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999. Regulation 9 lays down the claim procedure in respect of general insurance policy, and prescribes the time limit to be adhered to, for processing the claim from the stage commencing with the issue of notice of loss by the Insured, arising under a contract of insurance, till the rejection or acceptance of the claim. Manifestly, it is a time bound exercise. Sub-regulations (5) and (6) of the said Regulation, which are material for adjudication on the issue, formulated above, read as follows:- "(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer by the insured. In the case of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2 per cent above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it." (Emphasis supplied).

It is plain from a bare reading of the said provisions that the Insurer is bound to accept or reject the claim within 30 days from the receipt of the survey report. If the claim is to be rejected, reasons therefor have to be recorded in writing and communicated to the Insured within the said period, otherwise offer for settlement in terms of the report has to be made within the said time. Further, if the insured accepts the offer of settlement, payment of the amount due has to be made within seven days from the date of acceptance of offer, failing which the Insurer is liable to pay interest at the prescribed rate.

Keeping in view the said statutory provision, we advert to the facts at hand. It is not in dispute that information relating to the accident, on 22.10.2009, was communicated to the Insurance Company on 23.10.2009; the claim for the loss was submitted on 07.01.2010; two reminders were received by the Insurance Company from the Complainant on 29.09.2010 and 13.01.2011 and it was only on 21.07.2011 that, for the first time, the Insurance Company responded to Complainant''s reminder, received by it six months ago, on 13.01.2011, when it asked the Complainant to have the vehicle repaired. In its written version, it was averred by the Insurance Company that on receipt of the claim, it had appointed one Ram Bahadur Singh of Mumbai as its surveyor, to assess the loss caused to the vehicle, and after collecting the necessary information, he had recommended assessment of loss on ''repair basis. Although, it can be gathered from the order of the State Commission that the Surveyor had submitted report dated

05.2011, but, regretfully, the dates of his appointment and communication of his report to the Complainant are conspicuously absent in para 13 of the written version. At the risk of repetition, we may note that, as desired by the Insurance Company, the Complainant had deposited 1,571/- as Surveyor''s charges as far back as on 26.10.2009. We are constrained to observe that the facts of the case, clearly demonstrate the ignorance of the Insurance Company for the afore-noted statutory Regulations, and a tardy and indifferent attitude of its functionaries. As noted above, it is nowhere stated in the written version that on receipt of the report of its surveyor, any offer for settlement of the claim, preferred by him, was ever made to the Complainant. On the contrary, vide letter dated 21.07.2011, without any reference to the report of the surveyor, the Insurance Company insisted that in the first instance, the vehicle should be got repaired by the Complainant at his own expense and thereafter on his submitting the cash memo/purchase receipts, "final surveyor will be made available for re-inspection".

Therefore, apart from the fact that there is nothing on record to show that the Insurance Company had in fact appointed a surveyor for assessing the loss, within 72 hours of the receipt of intimation from the Complainant about the accident, as stipulated in Sub-regulation (1) of Regulation 9, admittedly, it did not offer any settlement to him within 30 days of receipt of the report from the said Ram Bahadur Singh, as stipulated in Sub-regulation (5) of the said Regulation. Since there was no offer in terms of the said provisions, Sub-regulation (6) did not spring into motion, thus, depriving the Complainant of his right to accept the offer and receive the amount offered within a short period of 7 days of his acceptance. The Insurance Company having failed to comply with the provisions of Sub-regulation (5), in our view, the benefit of rate of interest, as prescribed in Sub-regulation (6) of Regulation must accrue to the benefit of the Complainant.

Additionally, the Complainant has also placed on record, a statement of his account, stated to have been issued by Shri Ramakrishna Urban Co-operative Credit Society Ltd, Ahmednagar, which shows that he was required to pay interest @14% p.a. on the loan amount raised by him for purchase of the vehicle. The case of the Complainant was that had his claim been settled by the Insurance Company expeditiously, he would have settled the said loan account, considerably reducing his liability towards the Society. The plea was that because of non-settlement of his

claim by the Insurance Company, he has been burdened with a huge liability of interest at a very high rate.

Having regard to the afore-noted factual scenario, and the fact that the finding of "deficiency" against the Insurance Company, has attained finality, we are of the opinion, that the compensation of 5,000/- awarded by the State Commission to the Complainant for mental and physical harassment suffered by him at the hands of the Insurance Company, as also the rate of interest @ 6% p.a. on the compensation for the loss on account of damage to the vehicle, is not adequate. However, in so far as the quantum of compensation towards the loss of the vehicle is concerned, we endorse the decision of the State Commission. Therefore, bearing in mind all these facts and the conduct of the Insurance Company in delaying the processing of the claim of the Complainant, in our opinion, award of further compensation of 2,00,000/- towards the mental and physical harassment, caused to the Complainant, and enhancement of rate of interest from 6% p.a., as awarded by the State Commission, to 9% p.a., would be just and fair. We order accordingly.

Resultantly, the Appeal is partly allowed and the impugned order is modified to the extent, indicated above. Since the amount awarded by the State Commission is stated to have already been paid, the additional amount, due in terms of this order, shall be paid by the Insurance Company to the Complainant within four weeks of receipt of a copy of this order. The Complainant will also be entitled to costs, quantified at 10,000/-.