NEW INDIA ASSURANCE CO. LTD vs ADOLF FERNANDES & ORS

This appeal has been filed by New India Assurance Company Ltd. against the order dated 28.10.2009 of the State Consumer Disputes Redressal Commission, Goa-Panaji,(in short ''the State Commission''), in complaint No.38 of 2001.

In brief, facts of the case are that one Mr. Adolf Fernandes got fire insurance policy for his liquor shop at M/s. Adolfo Traders, Pavillion Grande, Shop No.5, Municipal Market, Margao, Goa from New India Assurance Company Ltd.- appellant in the present case. The fire policy no.141400/11/99/01051 was for a sum of Rs.15,00,000/- for the period from 25.8.1999 to 24.8.2000 and another fire policy was taken with policy number141400/11/00/122 for Rs. 20,00,000/- with validity from 11.5.2000 to 10.5.2001. The fire broke out on 29.6.2000 at M/s. Adolfo Traders, Pavillion Grande, Shop No.5, Municipal Market, Margao, Goa. New India Assurance Co. Ltd., the appellant in pursuance to the claim of respondent No.1, appointed spot surveyor, M/s. Indian Surveyors Pvt. Ltd. to carry out spot survey. The aforesaid spot surveyor submitted its preliminary survey report dated 5.11.2000 assessing the loss to the tune of Rs.9,57,516/-. Further the final surveyor, Mr. Nikhil V. Kothari, assessed the total loss to the tune of Rs.7,15,533/- only. Under the mortgage clause of the policy, the petitioner settled the claim full and final with the respondent No.5(Mortgagee- Canara Bank), based on the final survey report for Rs.7,15,533/-. This amount was adjusted against the loan account of the complainant by the Mortgagee-Canara Bank.

Respondent No.1 submitted a claim of Rs.35 lakh to the appellant, which was later on reduced to Rs.25 lakhs and finally further reduced to Rs.21 lakhs.

Respondent No.1 (Adolf Fernandes through LR''s Mrs. Shalini Fernandes) filed a consumer complaint before the State Commission for the deficiency in service in respect of assessment of the loss and payment of the claim under the policy. The State Commission vide its order dated 28.10.2009 directed the opposite party no.1 to pay to the complainant a sum of Rs.17,85,026/- along with interest @ 12% p.a from 25-09-2001 till final payment. Present appeal has been filed against this order of the State Commission.

We have heard the arguments advanced from both the sides and perused the records carefully.

Learned counsel for the appellant states that the claim under the policy can only be settled based on the licensed surveyor report. A surveyor takes into account the physical situation obtaining at the premises and assesses the loss based on accepted principles of insurance and accounting. The State Commission has totally accepted the claim lodged by the complainant without considering the facts, circumstances and recommendations given in the surveyor report. The learned State Commission greatly erred in ignoring the fact that the appellant Insurance Company in pursuance to the survey report has paid a sum of Rs.7,14,974/- after deducting a sum of Rs.559/- for short premium in full and final settlement of the claim. The State Commission has overlooked the fact that surveyor report is an important document and in the presence of the surveyor''s report the State Commission could not resort to other method of assessing the compensation without assigning any reason as to why the surveyor report was not acceptable.

The learned counsel also asserted that the State Commission has committed a grave error of law in ignoring the fact that the claim of respondent no.1 was settled for a sum of Rs.7,14,974/- in full and final settlement as assessed by the licensed surveyor. The aforesaid amount of Rs.7,14,974/- was received by respondent no.5 on behalf of respondent no.1 as per mortgaged clause of the terms and conditions of the policy. The appellant as well as respondent no.1 and respondent no.5 are governed by the terms and conditions of the contract of insurance entered into between the parties. Further, the State Commission has erred in ignoring the fact that the respondent no.5 being the financer of respondent no.1 had accepted a sum of Rs.7,14,974/- in full and final settlement being the mortgagee of respondent no.1 and as per the mortgage clause of the policy. Under the policy, the right to give discharge is vested in the mortgagee bank and the discharge was duly and properly given and discharge voucher dated 28.09.2001 was issued for a sum of Rs.7,14,974/- in full and final settlement of the claim of respondent no.1. It is also to be noted that the policy in question i.e. Fire Insurance Policy issued in the name of respondent no.1 was obtained by respondent no.5, who was the mortgagee of respondent no.1 to secure its credit interest. State Commission ought to have realised that if respondent no.1 had suffered loss to the tune of Rs.35,00,000/- due to fire then there was no basis for the aforesaid respondent to unilaterally lower his claim to the tune of Rs.25,00,000/-. It was also submitted that the amount as assessed by the licensed surveyor was according to the bills as presented and as per the verification of the aforesaid bills.

The learned counsel for the respondent submitted that the original claim was for Rs.35 lakhs, which was reduced to Rs. 25 lakhs on the basis of advice given by the local office of the appellant to get it passed urgently. The spot surveyor M/s. Indian Surveyors Pvt. Ltd.,who was the first surveyor to assess the loss had already given his report dated 05.11.2000 assessing the loss to be Rs.9,57,516/-, therefore, final surveyor, Mr. Nikhil V. Kothari''s report assessing the loss of Rs.17,15,533/-only cannot be justified because the final report should have taken into account the expenditure done by the respondent No.1 to repair the wall and electric fittings and purchase of new furniture. It is true that respondent no.5 (Canara Bank) is the mortgagee, but they should not have settled the insurance claim without the concurrence of the respondent no.1 who has never agreed for this settlement. The State Commission have discussed all the insured items in detail and then claim of Rs.25 lakhs has been accepted. The two fire polices were for Rs.35 lakhs (one for 15 lakhs and other for Rs.20 lakhs) and everything got burnt in the fire and therefore, the claim of Rs.25 lakhs is totally justified. In the final surveyor''s report dated 5/6.4.2001, claim for burnt and broken liquor bottles has been allowed only for Rs.5,50,889/- whereas no claim has been allowed for the stock shifted to house, which was for Rs.3,71,187/-. The surveyor had asked clarification from the complainant in this regard vide letter dated 11.1.2001, which was replied by the complainant clearly saying that the stock shifted to house was with burnt labels and was not saleable. The learned counsel argued that it could be well imagined that in a fire situation, not only the labels would be burnt but actual liquor would also become useless and nobody would like to purchase burnt bottles howsoever it may be repacked. The sale of such liquor would really amount to cheating with the purchasers. Learned counsel for the respondent also drew our attention to the fire report dated 29.06.200, which mentions the total loss of property as Rs.36 lakhs (insured Rs.35 lakhs and uninsured Rs.1 lakh).

From the records filed, it is clear that the details of two polices are as under:-

Policy Fire "B" Policy No. 141400/11/99/1051 Fire Policy "B" No. 141400/11/00/122

Period 25.08.1999 to 24.08.2000 11.05.2000 to 10.05.2001

Sum assured Rs.15 Lacs Rs.20.00 Lacs

Items covered IMFL, Country Liquor a. Stock of Country Liquor, IMFLRs.10 Lacs b. Furniture Fixtures, Fittings, Incl., Electric Fitting Rs.10.00 Lacs

After considering the arguments advanced by the counsels and after perusing the records, we reach to the conclusion that there was no irregularity or illegality in settling the insurance claim with the mortgagee, the Canara Bank (respondent no.5) as per the Mortgage clause of the policy. We find force in the assertion of the petitioner that surveyor report is an important document which cannot be brushed aside totally while deciding the claim in respect of the insured items. The surveyor report has only allowed the loss of Rs.5,50,889/-, for the stock, whereas, it has left out the loss relating to stock shifted to the house. In this stock all the labels were burnt and we agree with the assertion of learned counsel for the respondent that this stock was not saleable as nobody would purchase the burnt liquor stock and even if, it was sold after repacking, it will be cheating and loss of trust as the liquor itself would have been spoilt to a great extent. Hence, we are of the opinion that the stock shifted to the house, which was for Rs.3,71,187/- should also be treated as loss and should be paid to the respondent no.1.

So far as the electrical fittings are concerned, they are insured along with furnitures and fixtures for Rs.10 lakhs under policy no.141400/11/00/122. The surveyor has assessed the loss of electrical fittings to the tune of Rs.63,813/- on which depreciation has been allowed and the payable loss has been calculated as Rs.19,144/- only. The old furniture has been assessed for Rs.2,90,998/- on the basis of bills and on which 50% depreciation has been allowed and the final payable is Rs.1,45,000/-. Both the items are insured in a combined way to the tune of Rs.10 lakhs. The respondent no.1 has alleged vide letter dated 13.3.2001 addressed to Nikhil V.Kothari that list of items include 13 Cupboards, 4 Long Counters, Complete Wooden Ceiling, Staircase, Heavy Wooden door, Deluxe Name board, 1 Showcase, 2 Deluxe sitting chairs, 4 Electric Fans, electric Fridge and Micro-Wave Oven with cost of manufacture/purchase about Rs.4 lakhs whose receipts of payment got burnt in the fire. The repair/Renovation carried out in June 1999 was for Rs.4,20,300/-. For complete damage, full amount of insurance is normally claimed, however in this case the valuation of the items has been done by the surveyor based on the original bills. As the insurance was done only sometime back, the valuation of these items cannot be reduced further by depreciating their values, therefore, the whole assessment for electrical fittings, furniture and fixtures are allowed to the tune of Rs.63,813/- and Rs.2,90,998/- respectively. Thus against insurance of Rs.10 lakhs for electric fittings, furniture and fixtures, an amount of of Rs.3,54,811/- (Three Lakh Fifty Four Thousand Eight Hundred Eleven) should be allowed whereas Rs.1,64,643/- (Rupees One Lakh Sixty Four Thousand Six Hundred Forty Three) has been allowed. Accordingly the insurance company is required to pay remaining amount of Rs.1,90,168/- (Rupees One Lakh Ninety Thousand One Hundred Sixty Eight).

Based on the above discussions and analysis, appellant Insurance Company is liable to pay Rs.3,71,187 /- as cost of spoiled liquor in burnt bottles shifted to the house which was rendered unsaleable, and Rs.1,90,168/- as additional amount for electrical fittings, furniture and fixtures. Thus, the total additional amount payable by the appellant to the respondents becomes Rs.5,61,355/- (Rupees Five Lakh Sixty One Thousand Three Hundred Fifty Five).

Accordingly, Appeal is partly allowed and the order of the State Commission dated 28.10.2009 is set aside. The appellant is directed to pay Rs.5,61,355/- (Rupees Five Lakh Sixty One Thousand Three Hundred Fifty Five) along with interest @7% p.a. from 28.10.2009 to the respondent no.5 (Mortgagee- Canara bank), within one month, failing which the interest @12% p.a. will become payable from the date of this order till actual payment is made. Respondent no.5 (Mortgagee- Canara Bank), will adjust the amount against the loan account first (if any dues are still there) and then pay the remaining sum to the respondent no.1, within a period of 15 days of getting the amount from the insurance company.

No order as to costs.