National Insurance Co. Ltd vs Richardson & Crudas Co. Ltd

This set of 11 Revision Petitions, under Section 21(b) of the Consumer Protection Act, 1986 (for short “the Actâ€), by National Insurance Co.

Ltd. (for short “the Insurance Companyâ€), the sole Opposite Party in the Complaints under the Act, is directed against a common order dated

16.09.2017, passed by the Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Nagpur (for short “the State

Commissionâ€) in First Appeals No. 591, 709, 710, 711, 712, 713, 714, 715, 716, 717 and 718 of 2008. By the impugned order, the State Commission

has dismissed the Appeals, preferred by the Insurance Company.

The Appeals had been filed by the Insurance Company against two sets of orders, dated 16.06.2008 and 23.07.2008, passed by the Additional

District Consumer Disputes Redressal Forum, Nagpur (for short “the District Forumâ€) in Complaint Cases No. 32, 24, 25, 26, 27, 28, 29, 30, 31,

33 and 34 of 2008 respectively. By the said orders, while partly allowing the Complaints, preferred by the Respondent/Complainant, alleging deficiency

in service on the part of the Insurance Company in not settling the claims made for indemnification of losses suffered by it on account of theft of

electrical apparatus, like conductors and insulators etc., resulting in falling down of the towers, being used for erecting 400 KV transmission lines from

Durgapur to Jamshedpur, covering a distance of 159 Kms., the District Forum had directed the Insurance Company to pay to the Complainant the

amounts, ranging between 3,10,311/- and 7,29,516/-along with interest @ 9% p.a. for the periods as indicated in the said orders, as also litigation costs,

quantified at 2,000/- in each of the Complaints.

Since all the Complaints involve common issues, in similar factual background, and the State Commission has also disposed of the Appeals by a

common order, these Revision Petitions are being disposed of by this common order. For the sake of convenience, Revision Petition No. 534 of 2018

is treated as the lead case and the facts enumerated hereinafter are also taken from the said Revision Petition.

Succinctly put, the material facts, leading to the filing of the present Revision Petitions, are that:

4.1 In order to have the insurance cover for the risks involved in erection of 400 KV transmission lines between Durgapur and Jamshedpur, covering a

distance of approx. 160 kms., and the sophisticated apparatus being used for the said purpose, including SESR “Moose†Conductors, Insulators,

Towers etc., the Complainant had taken an insurance policy from the Insurance Company, in the assured sum of 577.74 lakhs. The total premium of

2,99,073/- was paid on the said policy. The policy, which was initially valid for the period 29.12.1988 to 28.07.1991, was being renewed from time to

time by paying the requisite premium to the Insurance Company. During the subsistence of the said policy, which was valid till 07.01.1995, some

unknown miscreants had stolen conductors, hardwire fitting insulator etc., spanning a stretch of 1.38 Km., resulting in fall of towers carrying the

transmission lines, causing substantial loss to the Complainant.

On coming to know about the incident on 15.01.1994, the Complainant lodged the report with the Police on the same day. An FIR, under the relevant

provisions of the IPC, was registered on 16.01.1994. On 17.01.1994, the incident was intimated by the Complainant to the Insurance Company, which

appointed its Surveyor to assess the loss caused to the Complainant. Vide report dated 13.01.1995, the said Surveyor assessed the loss caused to the

Complainant at 5,72,535/-.

Despite submission of the said report, the claim made by the Complainant was neither settled nor repudiated by the Insurance Company. Instead, the

Insurance Company seems to have engaged the services of another Surveyor, viz. Commercial Investigation Bureau, who appears to have submitted

several reports to the Insurance Company. Finally, vide their report dated 24.10.1996, they opined that since the “towers had not been

designed/erected to withstand the conditions arising out of theft, then how the losses due to conditions resulting in incident of thefts leading to collapse

of towers are claimed by the Insuredâ€​.

4.2 On receipt of the report, the Insurance Company processed the claim and assessed the loss at 3,13,796/-. Though it is claimed by the Insurance

Company that the said amount was offered to the Insured/Complainant, but there is no evidence on record to that effect.

4.3 In the aforesaid background, alleging deficiency in service on the part of the Insurance Company in not indemnifying it for the loss suffered on

account of the afore-stated incident, the Complainant filed the Complaints before the State Commission. The Complainant had prayed therein for

issuance of a direction to the Insurance Company to pay to it the amounts assessed by its First Surveyor together with interest @ 18% p.a. as also

10,000/- each as litigation costs. However, on account of enhancement of pecuniary jurisdiction of the District Forum, the State Commission

transferred the Complaints to the District Forum vide its order dated 01.02.2008.

Upon notice by the District Forum, the Insurance Company contested the Complaints by filing its Written Versions.

On appraisal of the evidence adduced by the parties, the District Forum, vide its aforesaid two sets of orders, partly allowed the Complaints, with

the afore-stated directions to the Insurance Company.

Aggrieved, the Insurance Company carried the matter further in Appeals to the State Commission. Vide its order dated 03.10.2012, the State

Commission affirmed the orders passed by the District Forum and consequently dismissed the Appeals.

The said order of the State Commission was challenged by the Insurance Company before this Commission by filing Revision Petitions No. 1554

â€" 1566 of 2013. Since the grounds relating to maintainability of the Complaints; non-joinder of necessary parties; and jurisdiction of the District

Forum, were not urged by the Insurance Company in its Appeals before the State Commission and the State Commission had dealt with all these

grounds, vide order dated 30.08.2013 this Commission allowed the aforesaid Revision Petitions and remanded back the Appeals to the State

Commission, with a direction to confine its order only to the extent of grounds taken in the Appeals. Pertinently, these grounds were taken by the

Insurance Company in its written statement filed before the District Forum but the District Forum had rejected all these objections and allowed the

Complaints but the Insurance Company had not assailed the order of the District Forum on the said grounds.

In the aforesaid factual background, on appreciation of the actual grounds raised by the Insurance Company in each of the Appeals memo, viz.

Grounds 8(C), 8(D), 8(E) and 8(F), which related to alleged failure on the part of the District Forum in not appreciating that: (i) the towers erected by

the Petitioner had inherent defect, inasmuch it had been erected with lesser Factor of Safety (FOS), i.e. 1.5 instead of 2; (ii) there being inherent

defect in the towers, as per the calculations made available by the Complainant and filed on record, the Insurance Company had offered a sum of

3,13,796/- to the Complainant, who refused to accept the same and, consequently, the direction given to the Insurance Company to pay to the

Complainant a sum of 5,50,711/- along with interest @ 9% p.a. was bad in law; (iii) the reply of the Insurance Company and the documents filed on

record, coupled with the failure on the part of the Complainant to furnish final Police report to the Insurance Company; and (iv) there was no

deficiency in service, unfair trade practice, negligence and delay on the part of the Insurance Company in settling the claims, as also certain other

general grounds, the State Commission has held that the District Forum had rightly assessed the amount payable in each of the Complaints to the

Complainant and, consequently, dismissed all the Appeals, preferred by the Insurance Company. Certain significant and relevant findings returned by

the State Commission are extracted below:

“17. It is pertinent to note that first surveyor appointed by the appellant to conduct the survey, after conducting survey submitted report, on the

basis of which the respondent claimed the amounts towards loss sustained by it.

The first surveyor in his report filed on record, has not said anything about FOS or about defective design. The first surveyor was also an expert in

the field, who was appointed by appellant. Moreover, no reason is given by the appellant why it appointed second surveyor, when the first survey

report was in detail and there was no shortcoming in his said first report. Moreover, the policy in question does not show the exclusion on the ground

of the defect of power safety factor in the conductor line. It is also not the case of the appellant that it was not a Broken Wire Condition, which was

constructed by the respondent for installation of the transmission line with the help of towers.

Moreover, the appellant has not repudiated the claim on the ground that there was inherent defect in the FOS being less than 2. It is also pertinent

to note that till filing of the consumer complaint before District Forum the claims were not settled by the appellant and only after the complaints were

filed, the second surveyor/investigator was appointed by appellant and thereafter the claims were settled for the amounts less than amounts

recommended by the first surveyor. We find that the appointment of second surveyor is illegal when first surveyor report was in detail and there was

no reason for appointment of second surveyor. Thus, we hold that the appellant has not justified its refusal of payment as per first surveyor report on

the ground that FOS being 1.5 is an inherent defect.

As per the report of second surveyor, the towers were not designed for any impact load, which may result due to theft/snapping. However, no

agreement was produced before the Forum below to show actual design of towers or to show FOS more than 1.5. The policy also does not show

about particular design of towers to be installed, so as to bear impact load as a result of theft/snapping, if any, took place. Hence, the appellant cannot

raise a ground that as the towers were not of proper design to bear the impact load, the respondent is not entitled to make a claim about the loss

suffered due to damage caused to the appellants as a result of theft of conductors and other material. Thus, ground raised in “Para 8 D†of the

appeal memo, as reproduced above, is devoid of merits.

We find that the non-settlement of the claim by the appellant for such a long period of three & half years, itself constitutes deficiency in service on

the part of the appellant and that the appellant did not settle the claim on the basis of clear report of first surveyor, which also constitutes deficiency in

service on the part of the appellant. Thus, there is no merit in ground No. 8 F raised in all appeals.â€​

Hence, the present Revision Petitions.

Assailing the impugned order, Mr. Kishore Rawat, Learned Counsel appearing for the Insurance Company, has strenuously urged that the State

Commission has committed material irregularity in arriving at the conclusion that the appointment of the Second Surveyor was illegal, inasmuch as, in

the absence of any comment by the First Surveyor on the FOS, the Insurance Company was within its rights to get the matter investigated further in

view of the Exclusion Clause in the policy. It is also submitted that in any case, under Section 64UM(2) of the Insurance Act, 1938, the Insurance

Company can always disagree with the assessment of loss made by its Surveyor and, in the instant case, there was valid reason for not agreeing with

the assessment of loss made by the First Surveyor. It is also pleaded that the Insurance Company has not repudiated the claim on the ground that

there was inherent defect in the FOS, as observed by the Second Surveyor/Investigator but has only deducted the cost of repairs of foundation of

tower and the labour charges as stipulated in the Exclusion Clause.

Having bestowed our anxious consideration to the facts at hand, we are of the opinion that all the Revision Petitions are bereft of any merit. We

are constrained to observe that these cases show utter lack of sensitivity on the part of the Insurance Company in sitting over the claims made by the

Complainant as far back as in the year 1994, inspite of the fact that its First Surveyor had assessed the loss and submitted his report in January 1995;

and on receipt of the final report of the so called ‘Investigator’ in October 1996, the loss assessed by the Insurance Company itself has

admittedly not so far been paid to the Insured/Complainant. Though it was pleaded on behalf of the Insurance Company that the amount of loss

assessed by it had been offered to the Complainant but on our repeated questioning, Learned Counsel appearing for the Insurance Company candidly

admits that there is no documentary evidence on record to show that the Insurance Company had offered the amount, assessed by it to, to the

Complainant. Offer was oral. It is true that proviso to Section 64UM(2) of the Insurance Act clothes the Insurance Company with the right to settle

the claim for an amount different from that assessed by the Surveyor.

It is also true that the said provision permits the Insurance Company to obtain a second or further report, where it is considered appropriate or

expedient in the circumstances of a case, based on which the claim could be settled for a different amount than as assessed by the Surveyor earlier

but it is equally well-settled that an Insurance Company cannot appoint a Second Surveyor just as a matter of course. If for any valid reason the report

of the Surveyor is not acceptable, it may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated etc., it

must specify cogent reasons, without which it is not free to appoint the Second Surveyor. In other words, there must be sufficient ground to disagree

with the findings of the Surveyor/Surveyors. Hence, for appointing a Second Surveyor or Surveyors, it has to give satisfactory reasons for not

accepting the report of the First Surveyor and the need to appoint second Surveyor [See: Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd.

and Anr., (2009) 8 SCC 507 ].

Thus, it needs little emphasis that the reason(s) for appointment of a Second Surveyor must be available on record and atleast on demand must be

disclosed to the Insured. Admittedly, except for pleading that the Second Surveyor was only an ‘Investigator’, no other reason is forthcoming in

the instant case for not accepting the report of the First Surveyor. We are in complete agreement with the Fora below that rejection of First

Surveyor’s report was illegal. In view of the afore-going, we do not find any jurisdictional error in the concurrent finding of fact reached at by both

the Forums below to the effect that there was deficiency in service on the part of the Insurance Company in sitting over the claims made by the

Insured for indemnification of the loss suffered by them due to afore-stated incident, which took place over two decades ago, for over three years,

warranting interference in the Limited Revisionary Jurisdiction vested in this Commission.

For the afore-going reasons, all the Revision Petitions fail and are dismissed accordingly in limine.