M/S. ISHROSE INDUSTRIES vs DIVISIONAL MANAGER, NEW INDIA

This appeal has been filed under Section 19 read with Section 21(a)(ii) of the Consumer Protection Act, 1986, against the impugned order dated 2.6.2014, passed by the Punjab State Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred as ''State Commission'') in Consumer Complaint No. 49/2011, filed by the present appellant, vide which, the OP New India Assurance Company Ltd. was directed to make payment of Rs.9,68,088/- alongwith interest @ 12% per annum and Rs.2 lakhs as compensation and Rs.11,000/- as litigation expenses to the complainant for their alleged loss during fire in their building.

The facts of the case are that the appellant/complainant, Ishros Industries are running their business in a building which was insured with the OP insurance company vide Policy No. 360201/11/07/11/00000987 valid from 9.8.2007 to 8.8.2008 for a sum of Rs.70 lakhs. During the

policy period, there was a fire in the building on 2.5.2008, causing damage to their double storey building. The Municipal Fire-brigade reached the site and controlled the fire, but in the meantime, the entire first floor structure of ACC sheets was damaged and collapsed and the ground floor was also severely damaged. A police report was also recorded on 3.5.2008. The complainant lodged claim to the tune of Rs.55 lakhs with the insurance company. The complainant also enclosed an estimate made by Pragati Architect, Builders/ Designer, according to which the cost of re-construction of the first floor was Rs.47.91 lakhs and the cost of repair of the ground floor was Rs.33.95 lakhs, meaning thereby that a total sum of Rs.81.86 lakhs was assessed for the repair or re-construction of the building. The complainant also got the loss of the premises assessed from Kanwaljit Singh Sobti of M/s. Sobti and Associates, Engineers, Architects and Government approved valuers on 26.9.2008 and the said valuers assessed the value of the building as Rs.78.50 lakhs and estimated the loss for construction/repairs etc. as Rs.55 lakhs. Another building contractor, The Preet Construction gave an estimate of dismantling as Rs.65,000/-. On the other side, the insurance company appointed a surveyor Arun Mehta to make on-the-spot survey, who submitted their report on 25.5.2008. The insurance company appointed M/s. Consolidated Surveyor Ltd. to assess the loss and the said surveyor submitted their report on 30.12.2008, assessing loss as Rs.35.81 lakhs. The said surveyor stated in their report that the value at risk was assessed as Rs.97.98 lakhs, but since the insurance cover had been taken for Rs.70 lakhs only, the assessment of loss was reduced to Rs.25.48 lakhs, after taking into account the factor of under insurance. It is stated that the surveyor made another report dated 29.3.2009 as an addendum to the earlier report. However, the insurance company wrote a letter dated 6.5.2009 to the said surveyor, following which the surveyor made his assessment again as the building had been reinstated. The surveyor then made his report, vide letter dated 20.8.2009 in which he stated as follows: "This is in reference to the discussions held in the Divisional Office II, Ludhiana regarding the above stated loss. As discussed the assessment of the loss on the basis of the estimate of Sobti and Associates, has been carried out. The undersigned had visited the factory site on 18.08.2009 and minutely inspected the reinstated building and we have carried out the assessment of loss on the basis of actual repairs carried out by the insured. In the survey report the assessment of loss was carried out on the basis of insured''s estimate and the insured claimed that the building is a total loss assuming that the building is total loss the assessment was carried out. The revised assessment of the loss on the basis of the estimate of Sobti and Associates and our inspection of the building after the repairs is enclosed herewith as per Annexure. The rates of plastering, concrete work and finishing work i.e. paints etc. has been applied on the basis of CPWD schedule of rates of 2007. The insured suffered the loss in the year 2008, therefore, an appreciation of 10% has been allowed on the items assessed on schedule rates. The loss of rest of the items has been allowed on prevailing market rates and carrying cost, labor cost has been added to the rates. The salvage value of the metal scrap has been deducted at the prevailing market rate of the scrap.

The valuation of the building has also been revised and is enclosed herewith as an Annexure "B". The Boundary Wall and Plinth & Foundation of the building is not covered under the policy. Therefore, not considered for the valuation. The assessed loss is adjusted as under:

Sum Insured : Rs. 70,00,000.00

Value at Risk : Rs. 76,52,562.00

Assessed loss : Rs. 10,69,268.00

Adjusted loss = 70,00,000.00

------------------- x 10,69,268.00

76,52,262.00

9,78,088.00

Less Policy Excess = 10,000.00

_______________

Adjusted Loss =Rs.9,68,088.00

_______________

say Rs. 9,68,088.00 "

Based on the above report of the surveyor, the insurance company offered to make payment of Rs.9,68,088/- to the complainant in full and final settlement of the claim. However, the complainant filed the consumer complaint in question saying that the claim should be paid at Rs.49.50 lakhs. The State Commission vide impugned order dated 2.6.2014 directed the insurance company to make payment of Rs.9,68,088/- alongwith interest @ 12% per annum from 1.9.2009 till date and also to pay Rs.2 lakhs as compensation and Rs.11,000/- as litigation expenses. Being aggrieved against the said order of the State Commission, the complainants are before this Commission by way of the present appeal.

During hearing on the appeal, it was contended by the learned counsel for the appellant that they deserved to be provided compensation in accordance with the documents produced on record, as prepared by the professional valuers/architects etc. Even the surveyor appointed by the insurance company, Consolidated Surveyors had assessed the loss to be Rs.35.81 lakhs. The insurance company should therefore, have allowed their claim, as submitted before the insurance company.

The learned counsel for the respondent insurance company however, stated that they had already made payments as per the final assessment given by the surveyor, based on actual repairs

of the building. He has drawn attention to the order of the State Commission, saying that the same was a well-reasoned order, based on the documents on record and was in accordance with law.

I have examined the entire material on record and given a thoughtful consideration to the arguments advanced before me.

A perusal of the material on record produced on behalf of the parties and the arguments led by their respective counsel indicates that estimates of different amounts have been made by different valuers/assessors form time to time and placed on record. It is true that the surveyor appointed by the insurance company, Consolidated Service Pvt. Ltd. had initially made an assessment of Rs.35.81 lakhs, based on the estimates available before them. However, the letter dated 20.8.2009 from the said surveyors addressed to the insurance company clarifies the position in detail, as produced in the earlier part of this order. The surveyor has clarified that the assessment of the loss had been done by the said surveyor based on the estimates of Sobti and Associates. However, when the surveyor visited the factory site on 18.8.2009 and minutely inspected the requisite building, he carried out assessment of loss on the basis of actual repairs carried out by the insured. It is quite clear that the assessment made by the surveyor after the repairs had been carried out, must reflect the correct picture in so far as the entitlement of the insured for indemnification by the insurance company is concerned. The surveyor has made it very clear in their letter dated 20.8.2009 that they had applied the CPWD schedule of rates of 2007. Since the insured suffered the loss in the year 2008, the surveyor has taken into account appreciation of 10% on the items assessed at scheduled rates. The rest of the items had been allowed on the prevailing rates. Based on the assessment, the surveyor assessed the value at risk as Rs.76,52,562/-. Taking into the account the factor of under insurance, the surveyor computed the adjusted loss as Rs.9,78,088/- and after taking into account, the policy excess of Rs.10,000/-, the surveyor reached the final figure of Rs.9,68,088/-. The complainant has not been able to indicate as to how the assessment by the surveyor is wrong in any manner. A perusal of the order passed by the State Commission also indicates that in previous assessment, the documents had not been made available to him by the insured and he had carried out the assessment of the documents for some time on lump sum basis only. The assessment carried out later by the surveyor was based on the actual situation on the spot. The State Commission rightly concluded that the loss which had been assessed on the basis of actual repairs is more convincing than the loss assessed on the basis of estimates. The State Commission, therefore, accepted the complaint and gave directions to the insurance company to make payment of the assessed amount by the surveyor alongwith interest @ 12% per annum from 1.9.2009 till date. The State Commission also allowed a sum of Rs.2 lakhs as compensation to the appellant alongwith Rs.11,000/- as litigation expenses.

It is a settled legal preposition that while dealing with such cases, the report made by the surveyor is an important document and cannot be brushed aside lightly. It is stated by the Hon''ble Supreme Court in their order in " Sri Venkateswara Syndicate Vs Oriental Insurance Company Limited & Anr. (2009) 8 SCC 507) , that unless there was sufficient material to believe to the contrary, the report of the surveyor should be accepted.

Based on the discussion above, I do not find any illegality, irregularity or jurisdictional error passed by the State Commission and there is no justification for carrying out any modification in the same in the exercise of appellate jurisdiction. It is held, therefore, that there is no merit in this appeal and the same is ordered to be dismissed and the order passed by the State Commission upheld, with no order as to costs.