V.Kuriyachan(Since Deceased) vs New India Assurance Co. Ltd

AVM J. Rajendra, AVSM VSM (Retd), Member

The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 23.07.2011 passed by the State Consumer Disputes Redressal Commission Kerala, (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 4 of 2006, wherein the Complaint filed by the Complainant (Appellant herein) was partly allowed.

Along with the present Appeal, an Application for condonation of delay of 36 days has also been filed by the Appellant. For the reasons stated in the Application, the delay is condoned.

For the Convenience the parties are being referred to as mentioned in the Complaint before the State Commission, V. Kuriyachan (since deceased) is identified as the Complainant and New India Assurance Co. Ltd. is referred to as the Opposite Party / Insurer.

Brief facts of the case are that the Complainant, being a manager partner of M/s. E.G. Granites, a metal crusher unit at Malamel, Perumannnor in Kollam District took ‘Contractors Plant and Machinery Insurance’ Policy from the Opposite Party/Insurance Company No. 760984/ 44/03/3004. The Policy was valid from 12.04.2003 to 11.04.2004. The machinery i.e., Krup Hammer H.M. 580 with Service Box was insured after the Complainant paid a premium of Rs.9,250/- and the total sum insured for the said machinery was Rs.15,00,000/-.

During the insurance policy period, the machine encountered an accident on 02.03.2004, wherein a crack was formed around the tension bolt thread area in the lower hammer part and the corresponding cylinder mating area. The Complainant promptly informed the OP and a claim was also filed immediately. However, on 20.10.2004, the OP repudiated the claim, stating that the damage occurred due to a mechanical breakdown.

The service Engineers of Alto COPCO inspected the machine and concluded that the damage resulted from a heavy boulder falling on the breaker, causing the working tool to jam between the boulders and leading to residual stresses and a crack. The engineers advised replacing the lower hammer part cylinder and piston, which amounted to Rs.15,12,145.95/- as per the invoice. Therefore, deficiency in service was alleged by the Complainant in repudiating the claim.

Being aggrieved due to the deficiency on the part of the OP/Insurer, the Complainant filed a Consumer Complaint (No. 4 of 2006) before the State Consumer Dispute Redressal Commission in Kerala. The Complainant sought compensation amounting to Rs. 23,55,060/- along with interest at the rate of 12% in relation to the insured Hydraulic breaker.

The OP/Insurer, in their written response, denied the Complainant's claim, stating that the damage sustained by the Hydraulic breaker was due to a mechanical breakdown, which is not covered by the insurance policy. The OP contested the Complainant's version of events, claiming that there was no proof to support the version that a heavy boulder fell on the machine. The OP also questioned the credibility of the story provided by the Service Engineer, suggesting it was formulated to conclude that the warranty was not applicable. It is a matter of record that the Surveyor appointed by the OP assessed the eligible compensation amount at Rs. 6,06,267/-

The State Commission allowed the Complaint and awarded sum of Rs.6,06,267/- along with @6% interest p.a. limited to two years since the matter was unnecessarily prolonged for no fault of this commission.

Being aggrieved by the impugned order of the State Commission, the Complainant (Appellant herein) has filed this present Appeal no. 413 of 2011 for enhance the compensation.

The Appellant-Complainant has filed the present Appeal before this Commission with the following prayer:

a) To enhance the amount of as Ordered by the Judgment dated 23.07.2011 in C.C. No. 4/2006 passed by the Kerala State Consumer Redressal Commission Vazhutacaud, Thrivananthapuram.

b) To Pass such other Orders as the Hon’ble Court may deem fit and proper under the circumstances of the case

We have gone through the Complaint and material available on record and the written submissions filed by both the parties. We have also heard the learned Counsel for both the Parties.

The Learned Counsel for the Appellant submitted that the amount awarded by the learned State Commission has since been paid. However, the Appellant is seeking for enhancement on two grounds. Firstly, the State Commission did not award any amount towards compensation for the loss of income, which was claimed at Rs.4,80,000/- along with interest for the delay in settling the insurance claim. The delay in settlement is considered a deficiency in service, entitling the Appellant to claim compensation. The compensation requested for @ Rs.20,000/- per month from the date of institution of the Complaint is justified. Secondly, the compensation awarded by the State Commission considered only two out of the three components of the machine in question. The machine was valued based on a total loss basis, including all the three components. However, the surveyor calculated the loss by reckoning the price of only two components and completely omitted the third component valued at Rs.1,75,000/-. Therefore, the Appellant seeks an enhancement of Rs.5,92,255/- along with interest at 12% from the date of institution of the complaint, in addition to costs.

The Learned Counsel for the Respondent argued that the Appellant has approached the Consumer fora with false and frivolous contentions, deliberately concealing material facts. The insurance policy is for Rs.10 lakhs for the whole machinery, which the Appellant conveniently concealed while claiming Rs.23,55,060-. It was a Reinstatement Value Insurance Policy, but the Appellant is claiming for a new machine at the cost of the Respondent, which goes against the principle of indemnity and is not provided by the insurance policy.

He also argued that Surveyor's report correctly assessed the damages, highlighting that damages were caused to the Lower Hammer part and Cylinder Assembly only, with no damage to the percussion piston. The Appellant's claim for replacement of the percussion piston is not valid. The Surveyor also considered the limited lifespan of the parts and the fact that the value of the entire unit was higher than the sum insured, leading to the application of 'underinsurance.' Therefore, the Appellant's claim for an additional amount is fanciful and unjustified, as it disregards the sum insured of Rs.10 Lakhs specified in the insurance policy. They argue that the Appellant is not entitled to any additional amount, and the Appeal should be dismissed with costs to the Respondent.

We have given thoughtful consideration to the pleadings and the arguments advanced by both the parties and have examined the material on record.

It is matter of record that the Report of the Surveyor has brought out the scope of damages occasioned to the equipment and the net compensation tenable in respect of the insurance policy under which the machine was insured from 12.04.2003 to 11.04.2004. The issues raised in respect of requirement to replace of the three parts of the machine was examined by the Surveyor (A-4) and we find the considerations made in the Report are appropriate. Thus, we find no reason to disagree with the said Survey Report dated 20.05.2004.

The claim of the Complainant for loss of income during the interim period is rejected for being alien to the Insurance contract between the parties.

In view of the foregoing, the order passed by the learned State Commission dated 23.07.2011 to the extent of awarding Rs. 6,06,267/- towards the sum assured to the Complainant is endorsed. However, it is an established fact that in respect of the damage to the equipment occurred on 02.03.2004, the report was made immediately to the insurance company by the Complainant and the claim was also submitted within a few days thereafter. The final survey of the equipment was carried out and the report was also notified on 20.05.2004. Considering these facts, the claim of Rs.6,06,267/- granted with interest @ 6% per annum limited to two years from the date of the order on 23.07.2011, should have been made effective from the day the claim was admissible to the Complainant i.e. from about six months after the date of submission of the claim to the OP/Insurer. Therefore, we consider it appropriate to make the Interest element @ 6% per annum on Rs. 6,06,267/- to be applicable from 01.09.2004.

ORDER

Based on the above discussion, we partly allow the Appeal to the extent that the Order dated 23.07.2011 passed by the learned State Commission is modified to the extent that the payment of Interest on Rs.6,06,267/- @ 6% per annum shall be applicable from 01.09.2004, instead of 24.07.2009. This Order shall be complied with within a period of three months from the date of receipt. If the Respondent fails to comply with the payment within three months, payment of Interest @ 8% on the total amount due will be applicable for such period.

No order as to costs.

All the pending Applications, if any, are disposed of accordingly.