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Judgment
Prem Narain, J
The present consumer complaint has been filed by Sportking Synthetics against the opposite party - United India Insurance Co. Ltd., and Anr. (in short, 'the insurance company').
The brief facts relevant for the disposal of the present complaint are that the complainant took three policies from the opposite party insurance company (i) the first policy was for a sum of Rs.50,00,00,000/- vide policy no.200700/11/09/11/00000019 valid from 01.04.2009 to 31.03.2010; (ii) the second policy was for a sum of Rs.205,50,00,000/- vide policy no. 200700/11/09/11/00000020 valid from 01.04.2009 to 31.03.2010; and (iii) the third policy for a sum of Rs.60,00,00,000/- vide policy no. 200700/11/09/07/00000026 valid from 01.04.2009 to 31.03.2010.
On 27th June 2009, at about 11.30 p m Shri Mohinder Singh Yadav, Finishing Supervisor who was on night duty, during routine checking, when he reached near the packing section gate, he found fire flames in the packing section. He immediately called few workers and with the help of fire extinguishers tried to control the fire. Security was also informed at the factory gate about the fire. The fire was uncontrollable and it spread to adjoining finished goods godown and stores godown. Within no time the fire took a serious magnitude and the entire packing section, finished goods godown and stores godown were involved in fire. Senior officers of the management were also informed and meanwhile fire tenders also reached the premises to control the fire. Finally the fire could be controlled in around 3 hours' time. Complainant reported the incident of fire to the police station Sahnewal. Fire department was also informed which took necessary steps. The fire department subsequently issued a fire report and was paid a sum of Rs.7600/- with regard to their charges. Complainant filed the claim form with the opposite party - insurance company giving the details of the loss suffered by them for Rs.3,36,02,215/-.
On 14.07.2009 the opposite party appointed Shri Vinod Sharma as surveyor who surveyed the premises and submitted the preliminary survey report dated 14.07.2009. The said surveyor submitted the final survey report on 29.12.2009. The opposite party kept the complainant in total dark and did not intimate the outcome of the survey and also did not supply them with the copy of the survey report. On repeated communications and request made by the complainant to settle their claim, the opposite party finally on 30.03.2010 through their representative informed the complainant over telephone that they have settled the claim of the complainant at Rs.1,48,42,708/-. It was stated by the opposite party - insurance company that a cheque of Rs.1,48,30,023/- after deducting premium of Rs.12,685/- will be released to the complainant only after they sign the claim settlement voucher. The complainant accordingly signed the voucher and cheque for Rs.1,48,30,023/- was received. The complainant sent a protest letter to the insurance company on the very next day, i.e., 01.04.2010 against the receipt of such a settlement voucher and categorically stated that the said settlement voucher is signed under compelling circumstances and the receipt of payment against the said voucher shall be treated as provisional payment received under protest.
It has been alleged that while the settlement voucher was sent to the insurance company, the surveyor report was not made available to the complainant. Complainant after filing the application under RTI Act got the copy of the surveyor's report on 14.05.2010. When the voucher was signed the complainant had not seen the surveyor's report and the complainant was kept in the dark. However, after seeing the surveyor's report, it was found that there were many lacunae in the report of the surveyor and therefore, the complaint has been filed for the payment of the remaining amount of the claim. The following prayers have been made in the complaint:
Declare that the opposite party has rendered deficiency service to the complainant;
To appoint a fresh surveyor to reassess the claim of the complainant in a fair and just manner;
Award a sum of Rs.1,87,59,507/- being the balance claim amount due to the complainant together with interest @ 18% per annum from September 2009 (being 3 months from the date of loss) till filing of the complaint and further to pay the said sum with interest @ 18% per annum from the date of this complaint till the date of realisation;
Award interest @ 18% per annum on the amount of Rs.1,48,30,023/- from September 2009 (being 3 months from the date of loss) till 03.04.2010;
Award a sum of Rs.9,37,975/- being 5% of the principal amount claimed towards exemplary damage;
Award cost connected with this proceeding to the complainant;
Further and other reliefs as may be deemed fit and proper by the Hon'ble Commission.
Upon notice, the opposite party appeared and filed the written statement denying all the allegations made by the complainant. It was accepted that there was a fire in the premises of the complainant and the insurance company has already paid the amount as assessed by the surveyor as full and final settlement to the complainant. As the complainant has signed the voucher without any protest, it was requested to dismiss the complaint.
Both the parties filed their evidence in support of their assertions made in the respective pleadings. Evidence has been filed by way of affidavit as well as by way of questions and answers that have been taken on record.
Heard the learned counsel for the parties and perused the material on record. Learned counsel for the complainant stated that the total claim filed before the Insurance Company was for Rs.3,36,02,215/-, however, the insurance company has settled the claim for Rs.1,48,30,023/-. The complainant has stated that the voucher was signed under compelling circumstances as the complainant required urgent finance for their factory. On the very next day of signing of the voucher, a protest letter was sent on 01.04.2010 that it should be treated only as a part payment of the claim and the amount has been accepted with protest. Learned counsel has also alleged that the insurance company kept the complainant in dark till the settlement of the claim as the surveyor report was not supplied by the insurance company to the complainant. Ultimately, the complainant got the copy of the survey report under RTI Act.
There are many deficiencies in the surveyor's report which require rectification. Learned counsel questioned the method of valuation of the stocks. It was stated that on the one hand the surveyor has admitted that physical inventorisation was not possible and due to these factors he has assessed the loss for packing material on the basis of stock register. However, the same principle has not been applied for the valuation of yarn where the assessment has been done on the basis of volumetric analysis and not on the basis of stock register. In this regard, the learned counsel further mentioned that as per the terms of the policy, the complainant has to declare the value of the stock on the basis of market value. However, the assessment has been done on the basis of latest invoices for 3-4 months. It was submitted that assessment should have been made as per the market value.
The learned counsel for the complainant has further raised the issue of dead stock. The surveyor has taken 2.5% for the dead stock in the case of yarn which is quite substantial. It was asserted that this assumption of taking 2.5% as dead stock does not have any basis and in fact the dead stock was much less.
It was further contended by the learned counsel that the salvage has not been correctly assessed by the surveyor. It has been alleged that on the advice of the surveyor, advertisement was issued for disposal of the salvage. The maximum value received was Rs.6.51 lakhs though the actual stock was saleable only for Rs.3-4 lakhs. However, the surveyor has deducted Rs.8.35 lakhs for the salvage. The salvage was ultimately sold for Rs.4.11 lakhs.
Apart from the above points relating to stock, the learned counsel also took up the valuation of loss to the building. The learned counsel stated that the unit rate for valuation has not been taken on the basis of the schedule rate rather the surveyor has worked out the unit rate on the basis of annual expenditure bills.
It was contended by the learned counsel for the complainant that for assessing the damage to the building, it should have been calculated on the basis of reinstatement basis. However, the surveyor has calculated the loss to the building by using the unit rate calculated on the basis of annual expenditure bills which is not a correct method of evaluating the loss in the case of building.
Coming to the plant and machinery, the learned counsel stated that the surveyor has deducted a flat 20% for improvement. Learned counsel argued that if the technology improves then better machines are available and as the policy also allows reinstatement, there should not have been any question of deduction for improvement.
It was argued by the learned counsel that the surveyor has committed great illegality in not considering the loss of Rs.18,77,840/- claimed by the complainant under the heading 'partially affected stock of work in progress", whereas the surveyor in his preliminary as well as final report has admitted that the reduction of rate for sale for the affected yarn. The lower realisation of affected stocks lying in WIP amounting to Rs.18.78 lakh is not considered/ assessed.
The learned counsel for the complainant later stated that there is no bar in filing the complaint for enhancement of the payment under the policy after signing the voucher as has been held by the Hon'ble Supreme Court in the case of United India Insurance vs Ajmer Singh Cotton General Mills and Others - (1999) 6 Supreme Court Case 400 decided on 12.08.1999, wherein it has been held that:
"The mere execution of the discharge voucher would not always deprive the consumer from preferring claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered. Despite execution of the discharge voucher, the consumer may be in a position to satisfy the Tribunal or the Commission under the Act that such discharge voucher or receipt had been obtained from him under the circumstances which can be termed as fraudulent or exercise of undue influence or by misrepresentation or the like. If in a given case the consumer satisfies the authority under the Act that the discharge voucher was obtained by fraud, misrepresentation, undue influence or the lice, coercive bargaining compelled by circumstances, the authority before whom the complaint is made would be justified in granting appropriate relief".
Lastly, the learned counsel pleaded that the factory remained closed for three days. Consequently, loss to the tune of Rs.5.00 lakh was suffered by the complainant, however nothing has been considered in this regard and no payment has been made.
On the other hand, the learned counsel for the opposite party stated that they have followed all the due procedure in assessing the claim of the complainant. It was stated that the surveyor Mr Vinod Sharma has filed the preliminary report on 14.07.2009 and later on he has submitted his final report on 29.12.2009. The report by the surveyor is a detailed report and the insurance company cannot grant anything more than the recommendation given by the surveyor. The complainant very well knew that Mr Vinod Sharma was appointed surveyor, however, no objection has been raised in respect of the qualification or capabilities of the surveyor. The surveyor has carried out the survey on the basis of various existing surveying practices and on established norms and the assessment cannot be done on the basis of methods suggested by the complainant.
Learned counsel for the opposite party has further contended that the surveyors are appointed under the provisions of the Insurance Act, 1938, and their reports are considered for settlement of the claim. Their reports cannot be rejected without any cogent reasons. Learned counsel has further argued that the complainant has accepted the payment of Rs.1,48,30,023/- without any protest and has signed the voucher for full and final settlement of the claim. He cannot now raise any objection to the settlement by writing a protest letter later.
Learned counsel has stated that settlement by signing the voucher can only be challenged on three grounds, viz., misrepresentation, coercion or undue influence and fraud. In this regard, the learned counsel also referred to the judgment of the Hon'ble Supreme Court in the case of United India Insurance vs Ajmer Singh Cotton General (supra) wherein it has been clearly observed that the Tribunal can only enhance the claim even after settlement of the claim by discharge voucher if the complainant is able to prove that the voucher was got signed on the basis of fraud, mis-representation or undue influence.
However, he further argued that neither misrepresentation nor undue influence nor fraud has been alleged by the complainant in the present case, therefore, full and final settlement by way of discharge of the voucher cannot be questioned before this Commission.
Learned counsel for the opposite party has further explained that the reinstatement value policy does not mean replacement with new machinery or building but actually means that machinery or building shall be considered for replacement/ reinstatement to its condition as it was at the time of accident. The policy states as under:
"Reinstatement value policies
It is hereby declared and agreed that in the event of the property insured under (item nos.____ of____ ) within the policy being destroyed or damaged, the basis upon which the amount payment under (each of the said items of) the policy is to be calculated shall be cost of replacing or reinstating on the same site or any other site with property of the same kind or type but not superior to or more extensive than the insured property when new as on date of the loss, subject to the following Special Provisions and subject also to the terms and conditions of the policy excepts in so far as the same may be varied hereby."
I have carefully considered the arguments advanced by the learned counsel for the parties and have examined the record. First of all, it is seen that the complainant received the amount of Rs.1,48,30,023/- by signing the discharge voucher on 31.03.2010. The version of the complainant is that the complainant received this amount as part payment against the total claim submitted to the insurance company. On the other hand, the claim of the insurance company is that it was full and final settlement and no representation for total amount can be considered unless the complainant proves any misrepresentation, undue influence, coercion or fraud in getting the signature of the complainant which is not the case in the present complaint. The insurance company has settled the claim on the basis of the final report dated 29.12.2009 submitted by the surveyor who is a qualified and licensed surveyor. The surveyors are appointed under the provisions of the Insurance Act, 1938 and their report cannot be brushed aside without any cogent reason. The Hon'ble Supreme Court in the case of Sri. Venkateshwara Syndicate Vs. Oriental Insurance Company Limited And Another, (2009) 8 SCC 507 has held that:-
"31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or 17damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured.
There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of 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."
It is true that the complainant has raised the objections to the report of the surveyor in the present complaint. However, the major objections are in respect of the method of valuation of the stocks, building, plant and machinery. The surveyor has given a clear reason for adopting the volumetric analysis for assessment of the loss in respect of the yarn. Clearly, the stock was already burnt and only ashes were left. In this scenario, the best method to obtain the valuation was to be adopted by the surveyor and the surveyor in his wisdom has used the method of volumetric analysis because there were visible marks of stacking for assessing the height of the stack. Perhaps this may not be possible in the case of packaging material and therefore stock register was used. There is no set procedure in the Insurance Act, 1938, and the surveyor has used the prevailing method of assessment as per the accepted norms. Hence, I don't find any substance in this assertion of the complainant that the method of valuation for the yarn has been wrongly taken to be volumetric analysis.
Similarly, for valuation of stocks, clearly the market value cannot be taken as the loss that has been suffered by the complainant as this loss is of his cost price. Hence, the surveyor has rightly used the invoices and no deficiency is seen in this regard. The surveyor has given the following explanation for valuation which seems logical and practical:
"Further, insured is not maintaining any records for market value of stocks on daily basis, which could have justified the Declaration Policy.
Under the circumstances though insured has taken declaration policy but in the absence of records and because of non-filing of declaration. We have considered this policy as normal fire policy. Insured has claimed market rates, i.e., selling rate, which includes profit also.
Therefore, we have assessed the loss on cost of finished stocks. For arriving at cost price, we have first calculated value of stocks on market rate (last invoice rate) and thereafter, we have deducted gross profit for Rs.2009-2010 (upto June 2009), i.e., 18.36% last year i.e., 2008-2009 GP was 14.66% for affected unit".
Coming to the dead stock, this Commission would not like to interfere in the assessment of the dead stock by the surveyor as the surveyor has inspected the site and the remaining stocks as well as has examined the stock register. He has thus assessed the dead stock to be 2.5%. The complainant has not given any details of the dead stocks.
The complainant has alleged that the surveyor has not assessed the loss claimed for Rs.18,77,840/- for practically damaged work-in-progress stocks. The surveyor has assessed the total work-in-progress stocks and therefore, it cannot be said that this loss has not been considered.
In respect of the salvage value it is seen that the complainant has agreed for the amount of Rs.8.35 lakhs for salvage as mentioned in the surveyor's report. Therefore, after having agreed, the complainant cannot raise this question again in the complaint.
Obviously, the insurance company would like to indemnify the loss which is assessed at a minimum level and therefore, in the case of loss to the building, the surveyor has rightly relied for determining the unit rate for assessing the valuation on the basis of previous expenditure bills. This is also in line with the fact that the building is to be assessed as on the date of accident.
So far as deduction of 20% for improvement in the case of loss assessed for plant and machinery is concerned, it is clear from the reinstatement clause that plant and machinery is required to be assessed at the time of the accident. Even if there is an automatic improvement in the technology of the machinery over the existing machinery, some allowance is to be made for the improvement in the machinery and thus the surveyor has taken it as 20%. The complainant has not filed any proof that this should be less than 20%. The surveyor has to assess the quality, quantity and improvement in the machinery to arrive at a figure for deduction and this is the subjective decision of the surveyor. This Commission would not sit over the judgment of the surveyor because the surveyor is a technically qualified and licensed surveyor who has independently assessed the loss.
The other objections raised by the complainant in respect of the value of stocks (work-in-progress) are also not tenable on the same grounds as for the stocks. Obviously, the insurance company is not concerned with the loss suffered by the complainant for keeping the factory closed for 3 days, hence, I don't find any merit in this assertion of the complainant that the insurance company has to pay a sum of Rs.5.00 lakh as indemnification of loss for keeping the factory closed for three days.
The complainant has prayed in the complaint that the surveyor be changed for reassessing the loss. Once the final report has been submitted by the surveyor and the amount assessed by the surveyor has already been taken by complainant by signing the discharge voucher, there seems to be no occasion for appointing another surveyor.
So far as the interest on the amount of Rs.1,48,30,023/- (amount of full and final settlement by signing the voucher) from September 2009 to 03.04.2010 is concerned, it is seen that firstly, there is no such agreement in the policy contract and secondly, interest in such cases can be awarded from the date of filing of the complaint if the amount was not paid before filing of the complaint. The Hon'ble Supreme Court in the case of Chengalrayan Cooperative Sugar Mills Vs. Oriental Insurance Co. Ltd. & Anr., (2000) 10 SCC 213 has modified the order of the National Commission wherein the interest was granted from the date of order of the National Commission to the effect that the interest shall be applicable from the date of filing of the complaint before the National Commission. The Hon'ble Apex Court has observed:
"6. We however, feel that the interest ought to have been awarded from the date on which the claim was filed before the National Commission. Consequently, while maintaining the order of the National Commission for payment of Rs.11,69,994 to the appellant as the value of the gunny bags, we direct that this amount shall be paid within two months from today and that too, with interest at the rate of 18 per cent per annum from the date of filing of the claim before the National Commission till the date of actual payment."
On the basis of the above discussion, I do not find any merit in the present consumer complaint. Accordingly, the consumer complaint no.141 of 2010 is dismissed. Parties to bear their own costs.