NEW INDIA ASSURANCE CO. LTD. vs MATCHLESS INVESTMENT FINANCE AND LEASING LTD.

THIS is an appeal against the order dated 3rd March, 1993 passed by the Consumer Disputes Redressal Commission, Maharashtra State at Bombay in Complaint No. 50 of 1992 by which it directed the opposite party (appellant herein) to settle the complainant''s claim of Rs. 1,47,400/- together with interest at the rate of 18% per annum from the date of the filing of the complaint i.e., 12th February, 1992 till payment.

THE facts as gathered from the record are that the complainant (respondent herein) is a contractor. At the time of taking insurance on 23rd March, 1990 the contract value was declared at Rs. 45 lacs. The same was increased from time to time upto Rs. 1.35 crores on 7th June, 1990 after obtaining the necessary permission for construction from Bombay Municipal Corporation and other concerned authorities. The enhanced value of the risk was accepted by the Insurance Company. On 15th June, 1990 there were heavy rains. The compound wall was damaged and collapsed causing loss of Rs. 1,47,500/- to the complainant. The complainant lodged a claim with the Insurance Company-appellant herein. The Insurance Company inquired from the complainant the total value of the proposed construction. The complainant vide letter dated the 10th October, 1990 (which is Annexure-III at page 31 of the paper book) informed that the total erected value would be Rs. 2.20 crores. The Surveyor assessed the loss at Rs. 1,13,135.27. After deducting the salvage value and 44.31% for under-insurance and less excess clause, the amount payable to the complainant was claculated at Rs. 48,550/-. A pre-receipt/ voucher was sent to the complainant (which is at page 43 of the paper book). The complainant agreed to accept Rs. 48,550/- in full satisfaction and discharge of his claim under the policy and signed the voucher on 28th February, 1991. The voucher was also signed by the Bank. That amount was paid to the complainant on 5th March, 1991. However, the complainant filed a complaint dated the 19th July, 1991 alleging that they have been cheated by the Insurance Company.

THE opposite party contested the complaint and pleaded that by his proposal dated the 27th November, 1989 the complainant made a proposal for obtaining the insurance of his commercial building under the Contractors All Risk Insurance Policy. Under the head ''SUM INSURED'' the complainant represented to the insurers that the contract value of the work was Rs. 45 lacs and represented that the estimated construction period was 12 months and sought the insurance cover for the period from 22nd November, 1989 to 21st November, 1990. Based on that proposal the policy of insurance was issued to the complainant. Subsequently, inspite of declaring the contract value as Rs. 45 lacs, the complainant went on asking for increased sum assured from time to time and lastly on 7th June, 1990 the sum assured was increased from Rs. 1.10 crores to Rs. 1.35 crores. When the claim occurred on 15th June, 1990 the Surveyor went into the question of the adequacy of the sum insured. In reply to the Surveyor''s query the complainant confirmed under his letter dated the 10th October, 1990 that the completed value of the contract work would be Rs. 2.20 crores. Thus, it was very clear that there was an under insurance of the property at the material time of the loss. Accordingly, the claim was proposed for settlement at Rs. 48,550/- in full and final settlement of the claim. On the basis of the discharge voucher signed by the complainant a cheque was sent to the complainant on 5th March, 1991. The cheque was accepted by the complainant. According to the Insurance Company there has been no negligence or deficiency in the service as the claim was promptly settled and that the complainant is also estopped from now challenging the settlement.

THE State Commission came to the conclusion that there was no logic in the assessment of loss made by the Surveyor as against the claim for Rs. 1,47,400/- and thus reduction of the valuation made by the Surveyor was arbitrary and imaginary. The State Commission held that the claim was reduced without any reason. It, therefore, passed the impugned order. Feeling aggrieved the Insurance Company has filed this first appeal. We have heard the learned Counsel for the parties and have gone through the records. As noticed above, immediately on receipt of the complainant''s claim the Insurance Company appointed a Surveyor to assess the loss. On the query of the Surveyor the complainant vide letter dated the 10th October, 1990 (which is at page 31 of the paper book) replied that the total erected value would Rs. 2.20 crores. The complainant had obtained the Contractors All Risk Insurance Policy (which is Annexure-II of the paper book). The relevant portion of which reads as follows: "Memo 1 Sum Insured: It is requirement of this insurance that the sum of insurance stated in the Schedule shall not be less than the completed value of the contract works on completion of construction inclusive of all materials, wage, freights, custom duties, construction cost and material or items supplied by the Principal and the insured undertakes to increase or decrease the amount of insurance in the event of any material fluctuation in the level of wages or prices. Provided always that such increase or decrease should take effect only after the same has been recorded on the policy by the Company, before the occurrence of any claim hereunder. If, in the event of the occurrence of a loss or damage it is found that the sum insured representing the completed value of contract works and/or of particular items involved is less than the amount required to be insured, the amount recoverable under the policy shall be reduced in such proportion as the sum insured bears to the amount required to be insured."

FROM the above it is clear that as against the cost of the completed value of the contract the sum insured by the complainant was Rs. 1,35,00,000/-. Thus, *he Insurance Company was entitled to deduct from the sums assessed by the Surveyor as loss, 44.31% on account of underinsurance. We have not been able to appreciate the view of the State Commission that the Insurance Company has not given any reason for reducing the loss assessed by the Surveyor.

MOREOVER , as noticed above the complainant as well as the co-insured Bank had signed the discharge voucher in full and final settlement without any protest. Thereafter the Insurance Company had sent a cheque to the complainant on 5th March, 1989. On the basis of the discharge voucher, that cheque has also been accepted by the complainant. From the various steps taken by the Insurance Company it is clear that the Insurance Company has not unduly delayed the settlement of the claim. The settlement of the claim cannot be said to be arbitrary. Thus, the Insurance Company cannot be held to be negligent or deficient in discharging its duties. For the foregoing reasons we accept the present appeal, set aside the impugned order and the dismiss the complaint filed by the opposite party-complainant. We leave the parties to bear their own costs throughout.