Nannuri Venkatesan vs NEW INDIA ASSURANCE CO LTD

THE complainant is the appellant. The complainant has filed this complaint against the opposite party directing him to pay the value of the vehicle i.e., Rs. 39,250 for total loss of the vehicle with interest at 18% p.a. and Rs. 5,000 as compensation.

THE case of the complainant is as follows: The complainant purchased a new Hero Honda motor cycle on 19.4.2002 bearing Regn. No. PY 01 S 4719 and the same was insured with the opposite party for the said value for the period from 19.4.2002 to 18.4.2003. On 25.8.2002 at about 2.15 p.m., the motor cycle was stolen when the complainant left the same in front of JIPMER hospital. Thereafter, he lodged a complaint before D Nagar PS on 28.8.2002. The complainant filed the claim before the opposite party. On 2.12.2002, the police had issued a Non -traceable Certificate. The opposite party has taken four months for processing the application and on 23.1.2003, the opposite party sanctioned a sum of Rs. 33,000. When the complainant asked for the reason for reduction of the amount, the opposite party informed that it was arrived at after deducting the depreciation value of the vehicle. As the amount sanctioned was very low, the complainant requested the opposite party to consider its decision. But the opposite party did not hike the amount. The depreciation as per the insurance policy for the total loss due to theft was fixed at zero % for the first six months and, therefore, the complainant is entitled to entire amount. When the complainant informed the opposite party that he will receive the amount under protest, the opposite party did not accept it. The delay in settling the claim caused hardship to the complainant. The complainant issued notice to the opposite party. But the opposite party did not come forward to pay the amount of Rs. 33,000 under protest. Then on negotiations, the opposite party raised the amount to Rs. 36,000. But, they refused to pay the same under protest. The complainant issued notice on 10.4.2003 demanding the sanctioned amount of Rs. 36,000 under protest. The opposite party did not reply. The complainant was put to extreme hardship due to deficiency of service. Therefore, the complainant is entitled to the amount claimed in the complaint.

The case of the opposite party is as follows: The complainant had given the complaint to the police only on 28.8.2002 though the alleged theft occurred on 25.8.2002. The complainant cannot find fault with the opposite party for taking four months time for processing the claim. The formal claim form was submitted by the complainant on 23.9.2002. The opposite party took steps to investigate the alleged loss. The Investigator, M. Muralimaran submitted his report only on 17.12.2002 confirming the theft. The Surveyor submitted a report on 19.12.2002. The complainant was able to obtain certificate of un -detectability for the loss of the vehicle only in December, 2002 and, therefore, there is no merit in the contention that there was delay on the part of the opposite party in processing the claim. The opposite party has valued the usual norms in settling the damage claim. There is no fault in offering a sum of Rs. 33,000 after deducting the depreciation value. As per policy condition No. 3, the company may at its own option repair, reinstate or replace the motor vehicle or part thereof or may pay the cash amount of the loss or damage and the liability of the company shall not exceed the actual value of the parts damaged or loss less depreciation plus reasonable cost of fitting and shall in no case exceed the insured amount of the value of the motor vehicle at the time of loss or damage whichever is less. There is nothing wrong in acting on the report of the Surveyor, who had estimated the value at Rs. 33,000. The Surveyor took the market trend of the used motor cycle into consideration. Further, the zero percent depreciation is applicable only in respect of parts replaced for partial loss or damage caused by the accidents occurred within six months of the registration of the vehicle. There is no deficiency in service provided by the opposite party. The opposite party denied the allegation that when the complainant met the opposite party, the opposite party had raised the sanctioned amount to Rs. 36,000.

NO oral evidence was adduced by both parties. Exs. C1 to C9 were marked on the side of the complainant and Exs. R1 to R10 were marked on the side of the opposite party. The District Forum on considering the above materials passed order on 4.8.2004 directing the parties to refer the dispute to the Arbitration. Aggrieved by the said order, the complainant preferred Appeal No. 13 of 2004 before the State Commission. The State Commission by order dated 17.2.2005 remanded the complaint directing the District Forum to decide the dispute involved in the complaint. After remand, the District Forum on consideration of materials has given a finding that there is no deficiency in service on the part of the opposite party in processing the claim of the complainant and that the opinion given by the Surveyor is justifiable one and ultimately the complaint was dismissed without cost. Aggrieved by the said decision, the complainant Gain has come forward with this appeal.

THE points for determination are : (1) Whether there is any deficiency in service on the part of the opposite party in settling the claim of the complainant? (2) Whether the complainant is entitled to compensation, if so, to what quantum?

Point No. 1 : It is not in dispute at the complainant purchased the Hero Honda vehicle on 19.4.2002. Ex. C1 is the certificate of Registration. Ex. C2 is the Insurance Policy which will show that the vehicle was insured with the opposite party. Ex. R.10 is the copy of the Certificate of Insurance Policy. It is seen that the vehicle was insured for Rs. 39,250. It is the case of the complainant that the vehicle was stolen on 25.8.2002. Ex. C3 is the copy of the FIR lodged by the complainant. It is admitted that the police after investigation has come to the conclusion that the case is untraceable. Ex. C4 is the notice issued by the police to the complainant dated 2.12.2002. Before receipt of the above notice, the complainant submitted claim intimation letter under Ex. R1 on 29.8.2002 to the opposite party. Ex. R2 is the Damage Claim Form sent by the complainant to the opposite party. The complainant has claimed Rs. 39,250 under the above claim. Ex. R4 is the letter sent by the complainant dated 15.12.2002 to the opposite party. It is the case of the opposite party that a Surveyor was appointed to investigate the claim. Ex. R5 is the Investigation Report dated 17.12.2002. The fact that the vehicle was stolen and that it is not traceable is admitted in the above report. Ex. R6 is the Valuation Report submitted by the Surveyor dated 19.12.2002. The Surveyor has stated that on considering the market trend of used motor cycle, he is of the opinion that the above vehicle might worth about Rs. 33,000 if the above mentioned vehicle maintained in good condition on the date of theft.

THE Insurance Company considering the claim of the complainant has sent a communication under Ex. C5 dated 23.1.2003 sanctioning a sum of Rs. 33,000. The complainant not satisfied with the above amount, issued notice on 29.1.2003 to the opposite party demanding them to pay the insured value i.e., Rs. 39,250. Under Ex. C7 dated 13.3.2003, the Insurance Company has issued reply notice stating that as per rules and conditions as contemplated in the Insurance Policy they had sanctioned a sum of Rs. 33,000. The complainant issued another notice Ex. C8 dated 10.4.2003 stating that the opposite party on negotiations had raised the amount to Rs. 35,000 and then finally offered Rs. 36,000 and that the complainant is ready to receive the sanctioned amount of Rs. 36,000 under protest. It is not in dispute that no reply was issued by the opposite party to the above notice, Ex. C8.

THE learned Counsel for the appellant contended that the District Forum has committed error in accepting the report of the surveyor which is bereft of any particulars or data for fixing the amount. There is considerable force in the above contention of the appellant. But the learned Counsel for the respondent contended that the report of the Surveyor cannot be brushed aside in view of the decision of National Commission and that it is not open to the complainant to challenge the Surveyor report and that the complainant has not adduced any rebuttal evidence to reject the opinion of the Surveyor. It is no doubt, true that the report of Surveyor would play important role in assessing the value of the vehicle. The National Commission in the decision reported in IV (2003) CPJ 81 (NC)=2004 (8) CLD 394 between New Horizon Sugar Mills Ltd. v. United India Insurance, has held that the report of the Surveyor, who is appointed under the provisions of the Insurance Company Act have to be given greater importance as has been held by the Honble Supreme Court. The above decision will not assist the case of the opposite party in any way since the Surveyor has not given any reason for determining the value at Rs. 33,000. It is vaguely stated that the amount is fixed taking into consideration the market trend. It is not known as to what would have been the market trend on the date of the alleged theft of the vehicle. The Surveyor has not specifically stated that the market value of the vehicle would be Rs. 33,000 only. The Surveyor had no occasion to inspect the vehicle since it was stolen. The learned Counsel for the complainant relies upon a decision reported in II (1992) CPJ 560 between Anandmanohar Parchure v. National Insurance Co. Ltd. & Anr., to substantiate his plea that the Surveyor report cannot be taken into consideration. In the above decision, the Bombay State Commission has held that there was no necessity to approach the Surveyor since there was a total loss due to theft of the motor vehicle. In the decision reported in 2004 (8) CLD 394 relied upon by the respondent, it is stated that there was fire accident in the complainant mill causing extensive damage and the Surveyor obtained opinion of expert who has suggested that the damage was caused by mechanical failure. We fail to understand as to how the above decision will assist the case of the respondent. The Surveyor has not even stated in his report, Ex. R6 as to what type of used motor cycle were inspected by him. In the absence of any particulars, the opinion given by the Surveyor cannot be accepted.

IT is significant to note that the opposite party while issuing the reply notice, Ex. C7, did not place any reliance on the Surveyor report. It is only stated in Ex. C7 that as per rules and condition No. 3 of the policy, they sanctioned the amount and estimated the value at Rs. 33,000. The Surveyor submitted his report on 19.12.2002. The opposite party should have been in possession of the report when they issued reply notice, Ex. C7. In the absence of any reference to the Surveyor report in Ex. C7, we are unable to accept the contention of the respondent that based by the Surveyors report and condition No. 3, the amount was arrived at Rs. 33,000. For the reasons stated above, we hold that the Surveyor report would not and could not form any basis for fixing the value of the vehicle at Rs. 33,000.

IT is contended by the appellant that as per the insurance policy, he is entitled to the insured value of the vehicle i.e., Rs. 39,250 especially when the vehicle was stolen within six months of the date of purchase and that no depreciation is allowed if the vehicle is stolen within six months. For proper appreciation of the contention of the appellants, it would be useful to refer to the insurance policy. Section 1 in the policy relates to loss or damage applicable to all class of vehicle. Rule 1 states that the company will indemnify the insured against loss or damage to the motor vehicle or its accessories. (b) By burglary, house breaking or theft. The other sub -clauses (1) are omitted as they are not relevant to this case. Section 1 i.e., loss or damage which is applicable to all class of vehicles is subject to deduction for depreciation at the rates mentioned below in respect of parts replaced. The above proviso will not apply to this case. Sub -clause (3) in Section 1 will apply to other parts (not applicable to private car and motor cycle policy). It is stated that the depreciation for the age of vehicle upto six months is nil and for the age of vehicle between six months and one year is 5%. It is clearly stated that the above depreciation will not be applicable to private car and motor cycle policies. Relying upon the clause, it is contended by the opposite party that the depreciation schedule contained in the above section will apply only to partial loss or parts damaged. In support of the same, the learned Counsel for the opposite party relies upon a decision reported in New India Assurance Company Ltd. v. C.M. Mathew, II (2003) CPJ 582=(2003) 3 CLD 829, State Commission, Delhi. In the above decision, the indemnify clause and depreciation clause which are similar to the clause contained in Ex. R 10 are also extracted. The State Commission, Delhi has held that the depreciation rates relate to only parts replaced and as such would not be applicable to case of total loss of vehicle on account of theft. The facts of the above case will show that the car/vehicle was stolen within six months of its purchase. The State Commission, Delhi relying upon a decision of National Commission in New India Assurance Co. Ltd. v. Vimala Devi, reported in 1986 -2002 Consumer 6506 has allowed 10% depreciation on the insured value of the vehicle. The learned Counsel for the appellant/appellant relied upon number of decisions to substantiate his case that in the case of total loss due to theft of vehicle, the insured is entitled to the estimated value of the vehicle. In the decision reported in II (1992) CPJ 560, the Bombay State Commission has observed that there was no necessity to approach the Surveyor since there was a total loss due to theft of the vehicle. The Insurance Policy in that was issued for Rs. 80,000. The State Commission has held that for no reason, the claim of the complainant has been reduced to Rs. 10,000. The Bombay State Commission has taken the view that in the case of total loss due to theft of the vehicle, the insured is entitled to the insured value of the vehicle i.e., 80,000.

THE State Commission, Calcutta in the decision reported in Om Prakash Saraogi v. The Oriental Insurance Co. Ltd., I (1999) CPJ 253=1998 (2) CPR 491, has taken the view that the insured is entitled to full value of stolen car as it is a total loss after deduction of depreciation value. In that case, the care was stolen 4 years after purchase.

THE Gujarat State Commission in a decision reported in M/s. Shakarbhai Ramdas Marfatia v. The Oriental Insurance Co. Ltd., XI - XII 1993 (3) CPR 609, has held that whenever there is a total loss or theft of vehicle, the Insurance Company is supposed to pay the estimated value or market value whichever is less. The State Commission has also held that if the Insurance Company wants to take benefit of market value, the burden lies on it to prove it. The State Commission, West Bengal in a decision reported in Satya Narayan Kamal Kumar v. United India Insurance Co. Ltd., I (1998) CPJ 239=1998 (2) CPR 419, has awarded the estimated value of the vehicle since it is a case of total loss.

THE State Commission, Chandigarh in a decision reported in National Insurance Co. Ltd. v. Nirpreet Singh, II (2001) CPJ 135 has held that the car was stolen within six months of purchase and that there cannot be any depreciation in the value of the car and accordingly, the award of District Forum in directing the Insurance Company to pay Rs. 1,60,000 on the basis of Surveyor report has to be confirmed.

IN another decision reported in Mrs. Kiran Bedi v. National Insurance Company & Another, II (2001) CPJ 530, the State Commission, Chandigarh has held that there is no need to appoint any Surveyor for assessing the valuation of the stolen truck and that the valuation of the truck should be assessed at the amount at which it was insured with the opposite party and after allowing 5% of depreciation, the State Commission has directed the Insurance Company to pay Rs. 5,70,000. The State Commission, Delhi in a decision reported in T.C. Khosla v. 1st Maruti Leasing Inc. & Others, III (1995) CPJ 175=X -1995 (3) CPR 321, has held that the car was used for more than one year and six months and, therefore, the Commission allowed depreciation at 10%.

THE State Commission, Ahmedabad in a decision reported in Consumer Protection Council & Another v. Chairman Cum Managing Director, New India Insurance Co. Ltd. & Others, 1994 (1) CPR 839 has held that when the truck has been insured for Rs. 3 lakh, prima facie, it should be believed that when the policy was taken, the value of the truck was Rs. 3 lakh and that there is no evidence to show that after the truck was insured, the market value has gone down. It was contended before the State Commission that the truck has been used for more than one year and that some depreciation should be deducted from the market value and that the Insurance Company has not produced any evidence to show the market value of 1989 model truck in the year 1990 and ultimately, the State Commission has awarded Rs. 3 lakhs as damages.

IN Sardar Vikkarsingh v. Divisional/Branch Manager, United India Insurance Co. Ltd., I (1999) CPJ 611, the State Commission Bhopal has awarded the insured value of the vehicle i.e., Rs. 2 lakh as compensation. The facts of the above case will show that the vehicle was insured for the period from 9.9.1991 to 8.9.1992 and the vehicle was stolen on 31.3.1992. Therefore, the Commission has held that the complainant was entitled to claim reimbursement of entire amount of loss. The National Commission, in the decision reported in New India Assurance Co. Ltd. v. Mrs. Inderjeet Kaur, III (2002) CPJ 238 (NC), has held that right from the day of policy which was taken on 15.7.1998 til the date of theft i.e., 14.6.1999, the truck was in use and that, therefore, it cannot be said that the truck did not suffer any depreciation and the depreciation of 5% was allowed.

THE dispute involved in this case has to be resolved and settled in the light of the principles laid down in the decisions referred to above. As already stated, the question whether depreciation has to be allowed in the case of total loss of vehicle due to theft will depend upon the terms and conditions of particular insurance policy. In this case, the stand of the opposite party is that as per condition 3 of the Insurance Policy i.e., Ex. R10, the Insurance Company has determined the value basing upon the report of the surveyor. In this context, it would be useful to extract the relevant clause contained in Ex. R10: ''3. The company may at its own option repair, reinstate or replace the Motor Vehicle or part thereof and/or accessories or may pay in cash the amount of the loss or damage and the liability of the company shall not exceed the actual value of the parts damaged or loss less depreciation plus the reasonable cost of fitting and shall in no case exceed the Insureds estimate of the value of the Motor Vehicle (including accessories thereof) at as specified in the Schedule or the value of the motor vehicle (including accessories thereof) at the time of the loss or damage whichever is less.''

The District Forum also relies upon the above clause and the report of the Surveyor to negative the claim of the complainant. It is contended on behalf of the complainant, the word, depreciation occurred in the above Clause 3 has not been defined anywhere in the policy and that, therefore, the above clause will not apply to this case. As already stated, the report of Surveyor is bereft of any particulars. He has not allowed the depreciation. On the other hand, he relied upon the market trend of the vehicle. No materials are placed to show that the Surveyor enquired the dealers of motor cycle. The report of the Surveyor does not disclose that market value has been determined on making inquiry with the dealers. On bare reading of Clause 3, it is not clear whether the above clause will apply to total loss of the vehicle. On the other hand, there is another clause in Ex. R 10 i.e., IMT 75. The above clause reads thus: ''It is also hereby expressly understood and agreed that total loss claims shall continue to be settled on the basis of insureds estimated value or the market value whichever is less subject otherwise to the terms, exceptions, conditions and limitations of the policy.'' It is manifestly clear from the above clause that the total loss claim will continue to be settled on the basis of insured estimated value or the market value whichever is less subject to other conditions. It is admitted that the vehicle was stolen within six months of the date of purchase. The burden is upon the opposite party to prove the market value of the vehicle on the date of theft. But in the reply statement filed by the Insurance Company, it is clearly stated that a sum of Rs. 33,000 was sanctioned after deducting a sum of Rs. 6,250 towards depreciation value of the vehicle and that the opposite party has followed the usual norms in settling the owners damage claims. What are the usual terms in settling the claims are not detailed in the reply version. Since the vehicle had been stolen within four months after the date of purchase, there would not be any considerable decrease in the price of the vehicle. The opposite party has not filed any document to show that the market value of this type of motor cycle was less than the estimated value given in the policy on the date of theft. What is the percentage of depreciation allowed by the Insurance Company is not clearly stated in the reply version. It is significant to note that in Ex. R8, the communication sent by the opposite party to their branch office, it is stated that the Competent Authority has sanctioned the claim on the recommendation on the total loss theft basis. In the communication, Ex. R9, sent by the opposite party to the complainant it is not stated that the amount has been sanctioned as per the market value of the vehicle on the date of theft. It is not even stated that the depreciation has been calculated. Inasmuch as, it is not shown that the market value of the vehicle was less than the estimated value of the policy, the Insurance Company is not justified in sanctioning only a sum of Rs. 33,000. It is not even stated in the communication that market value of the vehicle on the date of theft has been taken into consideration in calculating the depriciation. The opposite party has not even filed the affidavit of the Surveyor to prove that the market value of the vehicle was Rs. 33,000 only on the date of theft. In the absence of any such materials, we are of the considered view that the opposite party is not justified in disallowing the claim of the complainant for the estimated value of the vehicle as per the policy.

IN view of what is stated above, we hold that the complainant is entitled to the estimated value of the vehicle as per policy i.e., Rs. 39,250. Now, the question is whether the complainant is entitled to compensation as claimed in the complaint. It is contended by the complainant that there is abnormal delay in settling the claim of the complainant. It is seen that Non -traceable Certificate was furnished only on 4.12.2002 and the amount of Rs. 33,000 was sanctioned and the same was communicated to the complainant on 23.1.2003. Therefore, it cannot be said there is delay in settling the claim for Rs. 33,000. The learned Counsel for the opposite party relied upon a judgment of Supreme Court reported in United India Insurance Company Limited v. M.K.J. Corporation, III (1996) CPJ 8 (SC). The Apex Court has held that a reasonable time of two months would be justified to take a decision that the claim required to be settled or rejected in accordance with the policy. In view of the above decision, it cannot be said that the opposite party has taken abnormal time in settling the claim for Rs. 33,000. But the above finding would not absolve the Insurance Company of their liability in paying the entire amount to the complainant. It is seen that the complaint issued notice under Ex. C8 to the opposite party stating that the opposite party has raised the settled amount to Rs. 35,000 and then finally offered to pay Rs. 36,000 and that even the said amount has not been sanctioned. But the opposite party has not issued a reply to the above notice. Even after issue of notices, the Insurance Company has not come forward to settle the claim of the complainant for the entire amount. Therefore, it has to be held that there is deficiency in service on the part of opposite party in not sanctioning the estimated value of the vehicle as per the policy. Therefore, it is just and proper to award interest at 12% from the date of the complaint. As interest is awarded on the principal amount, there is no need to award any compensation for deficiency in service. The learned Counsel for the opposite party contended that the Consumer Forum has no jurisdiction to go the question of pricing. The learned Counsel relies upon a decision reported in Vidya Sagar & Others v. Chandigarh Housing Board & Others, II (2002) CPJ 41 (NC)=2002 CCJ 1084. The learned Counsel for the opposite party relies upon another decision reported in C. Narasimha Rao v. K.R. Neelakandan & Another, I (1994) CPJ 160 (NC)=1994 (1) CPR 459 (NC), wherein it is stated that when the complainants claim is not based upon deficiency in service and they are seeking to recover money, the complaint is not cognizable by the Consumer Forum. The National Commission in a decision reported in Indian Airlines v. Shri Rajeshkumar Upadhyay, 1991 (1) MWN (CP) 117 (NC) has held that Consumer Forums are invested jurisdiction to award compensation only for any loss or injury suffered by the consumer due to negligence of opposite party. The above decisions will not in any way strengthen the stand taken by the opposite party. We hold that the opposite party failed to settle the claim of the complainant as per the policy for the estimated value of the vehicle mentioned in the policy. It is seen that the Insurance Company has directed the complainant to return the documents such as R.C. and keys etc. The complainant if it is in possession of keys and R.C. and other documents will deliver the same to the Insurance Company on receiving the amount. If the above documents are not available or traceable, the complainant will furnish letter stating the loss of the documents and keys. On this point, we hold that the complainant is entitled to Rs. 39,250 with interest at 12% p.a. from the date of the complaint.

POINT No. 2 : In view of our finding on point No. 1, the complainant is entitled to the value of the vehicle, i.e., Rs. 39,250 with interest at 12% p.a. We hold that the complainant is not entitled to Rs. 5,000 as compensation as claimed in the complaint.

IN the result, the appeal is allowed in part. * The order of the District Forum is set aside. * The opposite party is directed to pay Rs. 39,250 to the complainant with interest at 12% p.a. from the date of the complaint. * The complainant is entitled to cost of Rs. 2,000 from the opposite party.