New India Assurance Co. Ltd. vs BENGAL TODDER MILLS

THE revision petitioner herein New India Assurance Co. Ltd., had issued a policy of comprehensive insurance to the respondent herein undertaking to indemnify the respondent to the extent of Rs. 2,00,000/- in case any burglary takes place in the premises of the respondent.

A complaint was filed by the respondent before the District Forum, Calcutta alleging that even though a burglary took place in the premises of the complainant on 26.12.89 and a claim was duly made in respect thereof to the revision petitioner Company (insurer), the Insurance Company, after keeping the claim pending with them for a period of one year eight months communicated to the complainant a letter of repudiation disowning liability on the ground that policy clause 3(a) was attracted in the case and the Insurance Company was, therefore, exempted from liability. The complainant, thereupon approached the District Forum, Calcutta seeking relief under the Consumer Protection Act by way of award of compensation representing the full amount of loss sustained by the complainant in addition to damages for harassment, mental agony, etc. The District Forum conducted a detailed inquiry into the matter and by its order dated 23.6.95 held that the repudiation of the claim in toto by the Insurance Company was unjust aad the complainant was, therefore, entitled to recover a sum of Rs. 59,917/- being the quantum of loss estimated by the Surveyor appointed by the Insurance Company. The complaint petition was, therefore, accordingly disposed of with a direction to the Insurance Co. to pay to the complainant the said sum of Rs. 59,917/- in full and final settlement of the claim. No cost or compensation was awarded to the complainant in addition to the aforesaid amount.

On an appeal filed by the complainant before the State Commission seeking enhancement of the compensation awarded by the District Forum, the State Commission by its order now impugned before us held that in addition to the sum of Rs. 59.917/- assessed by the Surveyor as the loss suffered by the insured, the complainant was also entitled to recover compensation from the insurer for the delay on the part of the insurer in effecting the settlement of his claim. On this reasoning, the State Commission proceeded to award the complainant a sum of Rs. 3.25.000/- as compensation for the said delay by calculating Rs. 50,000/- per annum as the amount to be awarded to the complainant under that account from 1989 till 1996. It also enhanced the amount payable by the Insurance Co. towards the loss suffered by the complainant to Rs. 1,46,661.96 on the ground that the estimate of the loss made in the Surveyor''s Report could not be relied on as the Surveyor had omitted to take into account certain materials on record. In the result, the appeal filed by the complainant was allowed by the State Commission and it was directed that the Insurance Co. shall pay to the Banker of the complainant a sum of Rs. 1,46,619.90 with 18% interest per annum as representing the value of the goods that were lost as a consequence of the burglary and further paid directly to the complainant a compensation of Rs. 3,25,000/- towards harassment, mental agony, etc., caused by reason of delay in settling the claim.

AGGRIEVED by the said order passed by the State Commission this revision petition has been preferred by the New India Insurance Co. Detailed arguments were advanced before us by Mr. P.K. Seth, Advocate appearing for the revision petitioner-Insurance Co. and by Mr. Prabir Basu, learned Counsel who appeared for the complainants who sought to support the order passed by the State Commission. We have also gone through the relevant papers available on records inclusive of the orders passed by the District Forum and the State Commission. In our opinion, in determining the quantum of loss suffered by the insured at a figure of Rs. 1,46,619.90 which was far in excess of the sum of Rs. 59,917/- assessed by the Surveyor, the State Commission has acted totally arbitrarily inasmuch as there is absolutely no material referred to or relief on for supporting such an enhancement of the estimate of the quantum of loss. The Surveyor''s Report contains detailed reasons as to how he had arrived at the figure of Rs. 59,917/- as representing the amount of loss sustained by the insured. This report had been accepted by the District Forum as worthy of reliance and in the absence of any reasons being stated by the State Commission for arriving at a divergent conclusion, we are unable to see how the enhancement of the quantum of loss made by the State Commission can be sustained as correct or legal. We, therefore, hold that the Insurance Co. shall be liable to pay to the Banker of the complainant, namely, Vivekanand Branch (Calcutta) of the Punjab National Bank only the sum of Rs. 59.917/- with interest @ 18% per annum from 1.4.1990 (this date having been fixed by us after allowing a reasonable time of about four months to the insurer to take its decision on the claim preferred before it by the insured) until the date of actual payment. Pursuant to the interim order passed by this Commission, the Insurance Co. is stated to have paid to the complainant''s Bank a sum of Rs. 1,00,000/-. This amount will be given due credit and the calculation of the interest will be made after taking into account the said payment that has been made by the Insurance Co. to the complainant''s Bank. The Insurance Co. is given two months time from today to pay the balance amount also to the complainant''s Bank.

IN our opinion, the award of interest @ 18% per annum constitutes adequate compensation to the complainant for the delay in settling the claim. As a matter of fact, the District Forum had found that there was justification for the delay inasmuch as certain criminal proceedings had been instituted in respect of the incident of burglary in question and the INsurance Co. was justified in keeping in abeyance its decision on the question of settlement of the claim till those proceedings were decided by the Court. We do not fully agree with the said view expressed by the District Forum and that is why we have chosen to award interest to the complainant from the date of expiry of four months from the date of occurrence of the incident of theft. IN addition of the award of interest, we are of opinion that the complainant is not entitled to any additional amount from the INsurance Co. on the ground that because of the delay in settling the claim for harassment and mental agony were caused to the complainant. The revision petition is disposed of in the manner indicated above, namely, by reducing the amount payable to the complainant''s Bank to the sum of Rs. 59,917/- with interest @ 18% per annum from 1.4.1990 and by deleting the direction contained in the order passed by the State Commission for payment of compensation of Rs. 3,25,000/- to the complainant. No costs. Revision petition partly allowed.