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Judgment
Subhash Chandra, Presiding Member
This common order shall dispose of First Appeal No.397 of 2017 and First Appeal No.114 of 2017 since both these Appeals emanate from common impugned order. First Appeal No.397 of 2017 has been filed by the Complainant and First Appeal No.114 of 2017 has been filed by the Opposite Parties No.3 and 4. The State Commission has jointly and severally directed the Respondents to comply with the impugned order. For reasons of convenience, the facts are being taken from First Appeal No.397 of 2017 which is taken as the lead case.
This Appeal under Section 19 read with Section 21 of the Consumer Protection Act, 1986 (for short the Act) assails the order dated 15.11.2016 in Consumer Complaint No.07/131 of the State Consumer Disputes Redressal Commission, Maharashtra (for short the State Commission) partly allowing the complaint filed by the Complainant. The Complainant is aggrieved by the inadequate relief granted and has approached this Commission with the prayers:
a. The appeal be allowed and that the impugned order pronounced on 15th November 2016 but issued on 31st January 2017 by the Honble State Commission, Maharashtra in CC No.131 of 2007 be modified and relief sought by the Complainant in CC No.131 of 2007 be allowed in full.
b. Cost of Appeal be provided for.
c. Any other and further relief which the Honble National Commission may be pleased to grant.
The brief facts of the case are that the Complainant, which is a registered Housing Society comprising of 174 members housed in 10 buildings, had renewed its Standard Fire and Special Perils Policy (in short, the Policy) for the period from 25.07.2004 to 24.07.2005 with the Respondent No.1, the Insurance Company. A cheque No.008230 for premium of ₹18,910/- dated 17.07.2005 drawn on Respondent No.3 the Bank, Titwala Branch was issued. Policy No.130300/11/05/00854 was issued by the Insurance Company along with a receipt No.1/2005/31329 dated 22.07.2005. On account of torrential rains in Mumbai on 26.07.2005 there was significant damage caused to the society building and the compound wall and the Respondent No.1 was duly informed. A claim was preferred by the Complainant for ₹37,33,000/-. However, the same was not entertained and the Respondent No.1 intimated the Complainant that the Policy had not been renewed since the cheque towards the renewal of the policy had been returned by the Bank Respondent No.3 due to insufficiency of funds. Therefore, the Policy that had been issued to the Complainant stood cancelled.
On checking with the Respondent No.3, it was learnt by the Appellant that the cheque had been returned not on account of insufficient funds but on account of breakdown of internet service leading to stoppage of banking operations on account of torrential rains resulting in floods and that the cheque had been returned with the request to be presented again to the Bank.
Respondent No.3 also wrote a letter dated 11.08.2005 to Respondent No.1 that the cheque could not be processed because of torrential rains and therefore, the cheque had been returned to the Respondent No.1 on 02.08.2005 with the remark that the cheque be presented again. Respondent No.3 the Bank also issued a bank statement for the period from 01.07.2005 to 10.08.2005 showing that during the entire period the Complainants account had requisite balance for the payment of the said cheque. However, the Respondent No.1 failed to appoint a surveyor to assess the damage forcing the Complainant to approach a civil contractor to estimate the loss and to obtain an estimate for repairs. An estimate of ₹35,50,000/-was obtained from one M/s Kartik Constructions on 15.09.2005 which was furnished to the Respondent No.1 on 07.11.2011. An estimate of ₹4,83,000/- pertaining to damage to electrical equipment was also obtained from one ME Electrical Works and furnished to Respondent No.1. On 31.11.2006 Respondent No.1 issued a letter to Surveyor Mr. Suratkar, a copy of which was endorsed to the Complainant directing them to furnish the report in the matter. However, no further action was taken thereafter.
The complaint before the State Commission was contested by the Respondent No.1 who took the stand that they had been informed by the Respondent No.3 that the balance available in the account was insufficient to debit the premium towards the renewal of the said policy. During the pendency of the case before the State Commission, the Complainant obtained another quotation from one Nandkishor Udas, Architect and Engineer on the panel of the Honble High Court who estimated the loss at ₹43,47,503/-. Appellant sought amendment of the complaint which was permitted. The State Commission vide the impugned order gave its finding as below:
[8] On careful perusal of the record none of the Opponents could lead the evidence that the cheque was dishonoured as alleged for want of sufficient funds. It was desirable for the Insurance Company to strengthen their stand to bring on record memo of the dishonoured cheque and also for the Opponent Bank to demonstrate that the cheque was cleared on certain date and it was debited to the account of the complainant. Both the Opponents have miserably failed to support their respective contentions.
[9] The complainant have not adhered to the norms laid down in Insurance Act, 1938 for failure of Insurance company to appoint the surveyor. However, it was also not available on record that as to what prevented the complainant society to take up the issue at logical end by obtaining survey report, if any, since according to them surveyor was appointed by the opponent Insurance company. It was possible for the complainant that in case of denial of survey report, under the provision of Right to Information Act, such report could have been obtained. In this regard reliance can be placed upon the ruling of the Honble Supreme Court in the celebrated authority reported in Sri Venkateswara Syndicate vs. Oriental Insurance Company Ltd. and Anr. Civil Appeal No.4487 of 2004, decided on 24/8/2009.
[10] Insurance Company is fully aware that the claim has been pending for quite long time and they have also received survey report carried out by the surveyor appointed by the complainant. No satisfactory ground is coming forward as to how cancellation of renewed insurance policy is justified on the ground of non entity of the reason put forth. We are therefore of the opinion that the Insurance Company acted arbitrary without verifying the credible ground either from complainant or opponent Bank prior to cancelling the renewed policy. It appears that just to disown the liability the Insurance Company acted upon the non existing ground. At the same time, Opponent Bank even could not produce the record either for dishonour or honouring cheque as the account statement relied upon by them nowhere reflect the debit entry against the dishonour cheque even at a subsequent date. Both the opponents have indulged into blame game each other as against the interest of the complainant. Neither of the Opponents have clarified the fate of the allegedly dishonoured cheque. (Since the complainants have not received the returned dishonour cheque in original). In such a circumstances, this is a negligence on the part of Bank and Insurance Company of handling the cheque meant for encashment and adjustment of premium.
[11] The Survey Report brought on record by the complainant claiming damage of Rs.43,47,503/- cannot be considered and taken into account for the simple reason that the surveyor appointed by the complainant does not confirm the provisions of section 64 VM(1) (a) (c ) of Insurance Act, 1938 as he is not a licensed surveyor by I.R.D.A. Therefore, this report cannot be called as credible to consider the claim on account of the alleged damages. However, at the same time, we are of the view that Insurance Company and Bank are liable for lacklustre and negligent attitude while dealing with the cheque meant for adjustment of renewal of premium. On this count alone both these opponents are deficient in rendering services to the complainant. Moreover, indecisiveness of the Insurance Company to decide the insurance claim either way for long time per-se, amounts to deficiency of service. Therefore, reasonable compensation which we quantify to Rs.5 lakh to be paid to the complainant society by both the opponents jointly and severally would meet the ends of justice. On these grounds we allow the complaint and pass following order-
ORDER
1] Complaint is partly allowed with costs quantified to Rs.25,000/- [Rupees Twenty Five Thousand only] to be paid jointly and severally by the opponent Nos. 1 to 4 to the complainant.
2] Opponent Nos. 1 to 4 jointly and severally are directed to pay compensation of Rs.5,00,000/- (Rupees Five Lakh only) to the complainant within a period of 60 days. Non compliance result in payment of interest @ 9% p.a. on the amount ordered to be paid after the expiry of 60 days till realization.
3] One set of complaint compilation be retained and rest be returned to the complainant.
Certified copy of the order be furnished to both the parties free of cost.
(Emphasis added)
We have heard learned counsel for both the parties and perused the material on record.
The impugned order has been challenged on the ground that the Appellant did not give advance notice to Respondent No.1 for appointment of an independent Surveyor. The Appellant is also alleged to have erred in not taking the issue to its logical end by seeking production of Surveyors report appointed by the Respondent No.1. The order of the State Commission is also challenged on the ground that the report reproduced by the Appellant cannot be relied upon since the Surveyor appointed by the Appellant does not conform to the provisions of section 64 VM (1) (a) (c) of the Insurance Act, 1938. Per contra, on behalf of the Appellant, it is argued that since Respondent No.1 failed to ensure that the Surveyor appointed by it (Mr. Suratkar) provided a report in the matter and instead took a view that the policy itself was void ab initio, the Appellant was left with no alternative but to appoint a qualified Architect and Engineer on the panel of High Court in order to prepare an estimate of loss. It is contended that the cheque for renewal of the policy had been isued on 17.07.2005, i.e., a week before the policy was to be renewed and that the impugned order had held that the Insurance Company had failed to provide evidence that the cheque had been dishonoured for want of sufficient funds. The prayer of the Appellant is that although the Respondents No.1 & 3 have been rightly held to be liable for deficiency in service, the amount assessed by the State Commission is grossly inadequate and requires to be enhanced.
We have heard the learned Counsel for the parties and perused the records.
Both the Respondents filed their short synopsis of arguments. On behalf of the Insurance Company, it was contended that although the policy renewal had been issued in good faith but it was cancelled upon the intimation by Respondent No.3 that there was insufficient amount in the account of the Complainant Society. Reliance was placed on the provisions of the Insurance Act, 1938 that a policy can be issued only against receipt of premium and that the cancellation of the policy issued by it was justified under the law. It was contended that on account of lapse of time, it was not in a position to produce the endorsement of the Bank stating that the available balance was insufficient for the premium to be enchased.
On its part, Respondent No.3 contended that it had not returned the cheque on the ground of insufficient balance but on account of the fact that the torrential rains and consequent flooding had led to collapse of Internet services and reiterated that it had only asked for the cheque to be represented again. Therefore, it was contended that the liability could not be fixed on it as has been done by the State Commission since the policy was cancelled by the Respondent No.1 for reasons that had not been conveyed by Respondent No.3 and therefore, only Respondent No.1 should be held liable.
Section 64 VB of the Insurance Act, 1938 reads as under:
64VB. No risk to be assumed unless premium is received in advance(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.
(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.
Explanation. Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be.
The cheque dated 17.07.2005 for the premium was handed over by the Respondent No.3 to Respondent No.1. Accordingly, it had issued renewal of the Policy on 25.07.2005. Admittedly, the cheque had not been encashed on this date. As per Section 64VB, while an insurer is mandated not to accept risk unless and until the premium payable is received by him, the Insurance Act also provides or is guaranteed to be paid by such person in such manner prescribed manner. Respondent No.3 cannot be faulted for not having made the payment of premium by cheque in advance. It is also evident from the record that the Respondent No.1 had issued renewal of the Policy on 25.07.2005 which was cancelled on 02.08.2005 on the ground that there was insufficient balance in the Appellants bank account. However, it has failed to substantiate its argument that Respondent No.3 had intimated insufficiency of balance by way of any communication. No document to substantiate this agreement has been brought on record. Respondent No.3 has categorically stated and also produced the bank statement of Appellant for the period to July to August 2005 to substantiate its statement that there was sufficient balance available in the bank account of the Appellant. It is also evident that Respondent No.1 had appointed had appointed one Mr.Suratkar as the Surveyor who assessed the loss incurred by the Appellant on account of incessant rains and consequent floods on 25.07.2005. Respondent No.1 and 2 have neither brought the report of the Surveyor on record nor considered the estimate provided by the Appellant in order to arrive at a reasonable amount to indemnify the loss of the Appellant. The State Commission, while accepting the liability of the Respondent No.1 has arrived at a figure of ₹5,00,000/- for the damages and ₹5,00,000/- towards compensation without any reasons to justify the quantification of such a liability. The impugned order is liable to be set aside on this ground alone.
In view of the foregoing discussion, it is evident that the Appellant had taken due care to renew the Standard Fire and Special Perils Policy and issued cheque to the Respondent No.1 well in time. This is evident from the fact that a receipt for the same was issued on 22.07.2005 and the policy was also issued by Respondent No.1. The contention of Respondents No.1 & 2 that the issue of any policy without crediting of the premium amount renders the Policy void ab initio, cannot be accepted since it had itself chosen to issue the policy against the cheque which it had acknowledged. Having not followed the provisions of Section 64 VM (1) (a) (c) of the Insurance Act 1938, it is now seeking to transfer the liability to the Respondent No.3 on the ground that it had conveyed lack of sufficient balance in the Appellants bank account. The onus of proving this is squarely upon Respondent No.1 which it has failed to discharge by producing any evidence that the Respondent No.3 (Bank) conveyed shortage of funds in the Appellants account. Respondent No.1 has also been not been able to clarify as to why it appointed Surveyor (Mr.Suratkar) when, in its view, the policy was void ab initio on account of non- receipt of the premium. The contentions of the Respondent No.1, therefore, cannot be accepted since it is trying to blow hot and cold at the same time. The assessment of the State Commission of the damages of ₹5,00,000/- and estimated cost of ₹5,00,000/- cannot be accepted since it has not relied upon any basis to arrive at this figure, especially since it permitted the amendment of the complaint to include the cost of electrical repairs of ₹4,83,000/-. The contention of the State Commission that the Appellant had not given any prior notice to the Respondent regarding appointment of Surveyor does not merit consideration since the Insurance Act does not provide for such a notice. The onus of appointing a Surveyor and obtaining an estimate of loss lies squarely upon the Respondent No.1 the Insurance Company which it has failed to do even though it appointed a Surveyor and an intimation of it had been provided to the Complainant. No reason as to why the Surveyors report was not brought on record has been provided by the Respondent No.1.
The Honble Supreme Court has held in Venkateswara Syndicate (supra) that in claims of insurance exceeding ₹20,000/- appointment of a Surveyor is mandatorily required. It has also held that the Insurance Company cannot go on appointing different surveyors in order to obtain a favorable report. While the onus of ascertaining the estimate of loss is put on the Insurance Company through the agency of a Surveyor under the Act, it has also been held by Supreme Court in New India Assurance Company Limited vs Pradeep Kumar (2009) 7 SCC 787 that a report of a Surveyor is not that sacrosanct that it cannot be departed from. In view of the fact that Respondent No.1 in the instant case failed to obtain a report from its Surveyor in order to assess the loss and in view of the fact that it had renewed the insurance policy on 25.07.2005, it cannot be permitted to resile from its liability under this policy at this stage, especially since it has not been able to establish, with any documentary evidence, the reason for declaring the insurance policy void. Reliance of Respondent No.1 on National Insurance Co. Ltd. Vs. Seema Malhotra (2001) 3 SCC 151 is of no avail to it since the ratio of that judgment is clearly distinguishable as in that case the cheque of the insured had been returned dishonoured whereas in the instant case, the cheque had been directed to be presented again.
The estimate of loss of ₹43,47,503/- prepared by Nandkishor Udas on the panel of High Court is considered to be a fair estimate of loss and in the absence of any report of its own Surveyor having not been brought on record by the Respondent No.1 is considered to be a valid basis for quantifying the loss incurred by the Appellant. Since insurance is a policy of indemnity, 80% of this value which works out to ₹34,78,002.40ps. is the amount that is considered to be a fair and equitable amount.
In view of the aforesaid discussion and in the facts and circumstances of the case, Appeal No.397 of 2017 is allowed and the order of the State Commission is upheld as modified below;
(i) Respondents No.1 and 2 are jointly and severally directed to pay to the Complainant a sum of ₹34,78,002.40ps. along with interest @ 9% p.a. from the date of repudiation of the claim till the date of this order within eight weeks, failing which the applicable rate of interest shall be 12% p.a. till realization;
(ii) Respondents shall also jointly and severally pay a sum of ₹50,000/- to the Complainant as litigation costs.
First Appeal No.114 of 2017 is dismissed.
Pending IAs, if any, stand disposed of with this order.