NEW INDIA ASSURANCE CO. LTD. vs M/S. SAVLA TWISTERS PVT. LTD. & ANR.

This First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short "the Act") by the New India Assurance Company Ltd. (for short "the Insurance Company"), the sole Opposite Party in the Complaint, is directed against the order dated 12-06-2012, passed by the State Consumer Disputes Redressal Commission, Gujarat, at Ahmedabad in Complaint No.259 of 2002.

By the impugned order, while allowing the Complaint filed by Respondent No.1 herein, namely, Salva Twisters Pvt. Ltd. (for short "the Insured") through the Secretary, Surat Citizen Counsel Trust, Respondent No.2 in this Appeal, alleging deficiency in service on the part of the Insurance Company in offering only a part of the claim made by the Insured for indemnification of the loss suffered by it on account of the fire, which took place in the insured premises on 02-08-2000, the State Commission has directed the Insurance Company to pay to the Insured the balance claim, amounting to a sum of Rs.17,79,005/-, along with interest on the said amount, @ 9% per annum from the date of the Complaint i.e.04-06-2002 till realization; Rs.15,000/- as compensation for the mental agony and Rs.10,000/- as cost of litigation.

Since the factum of the fire having taken place at the insured premises on the afore-stated date as also the premises in question being covered under the Fire & Special Perils Policy, issued by the Insurance Company, valid during the relevant period, is not in dispute, we deem it unnecessary to burden this order by narration of the facts in extenso. For the purpose of this Appeal, it would suffice to note that on receiving intimation about the incident, the Insurance Company appointed one J. S. Sharma as the Surveyor to assess the loss suffered by the Insured. On conducting survey of the affected premises on 03-08-2000, 06-08-2000 and 16-09-2000 the Surveyor submitted three reports dated 09-02-2001, 12-07-2001 and 07-09-2001, assessing the loss suffered by the insured at Rs.8,32,992/-, Rs.8,31,932/- and Rs.7,00,366/- respectively, as against the total claim of Rs.17,79,005/- preferred by the insured. Accepting the final report dated 07-09-2001, vide their letter dated 23-01-2002, the Insurance Company offered a sum of Rs.7,00,322/- to the Insured as full and final settlement of his claim. The Insured was asked to sign and return the voucher, offering the said amount. Obviously, the offer made by the Insurance Company was not accepted by the Insured.

Having failed to convince the Insurance Company for release of the total amount claimed by him, the Insured filed the Complaint before the State Commission, in which the afore-noted directions have been issued. Hence, the present Appeal.

Mr. Kapil Chawla, learned counsel appearing for the Insurance Company has strenuously argued that the impugned order suffers from the vice of non-application of mind, because the State Commission has accepted the claim, preferred by the Insured, without examining each of the claims on merit. It is also submitted that the State Commission has also erred in not taking into consideration the salvage value of some of the items, included in the aforesaid claim, the details whereof were available in the complaint.

Per contra, Mr. V. M. Pancholi, learned counsel appearing for the Insured, while supporting the order impugned, has submitted that as a matter of fact the alleged illegality on account of non-application of mind lies at the door of the Insurance Company, inasmuch as the aforesaid offer for payment of Rs.7,00,322/- made by the Insurance Company, was based solely on the last report submitted by the Surveyor on 07-09-2001, after a lapse of more than three months, without indicating any reason for rejection of the balance claim made by the Insured. According to the Learned Counsel, before rejecting the balance claim, the Insurance Company had not afforded any opportunity to the Insured to justify its claim and hence, the decision of the Insurance Company to reject the balance claim was violative of the principles of natural justice as well.

Having heard the learned counsel at some length and perused the documents on record, including the afore-stated three survey reports, assessing the loss at three different figures, in our view, it was obligatory upon the Insurance Company not only to seek explanation from the Insured on the points raised by the Surveyor, it was also required to independently examine the claim before offering a part of the claim to the Insured and asking for its acknowledgement as full and final settlement of its claim. We are of the view that having failed to undertake this exercise and rejecting the balance claim mechanically on the basis of one of the reports by the same Surveyor, clearly amounted to deficiency in service on the part of the Insurance Company and, the State Commission was fully justified in rejecting the stand of the Insurance Company and accepting the opinion of Experts, obtained by the Insured from the Principal, College of Engineering, Surat; the report of an Architect relating to the condition of the Building and the Chartered Accountant regarding the stock position, etc.. Thus, we do not find any illegality in the order of the State Commission in so far its finding on deficiency in service on the part of the Insurance Company is concerned. We affirm the same, accordingly.

Nevertheless, in our opinion, the State Commission erred in accepting the claim preferred by the Insured in toto without examining each of the claims on merits. Having come to the said conclusion the option available to us is to remit the case back to the State Commission for fresh adjudication on the claim preferred by the Insured, over and above the amount of Rs.7,00,322/- (already offered by the Insurance Company to the Insured). However, regard being had to the fact that the fire incident had taken place about 17 years ago and part of the compensation was offered by the Insurance Company, albeit without indicating any reason for rejection of the balance claim, it would be inappropriate, rather, travesty of justice if, at this juncture, the issue of quantification of compensation is remanded back to the State Commission. Under the circumstances, we deem it expedient and in the interest of justice to ourselves examine the claim preferred by the Insured, details whereof have been mentioned in Paragraph 18 of the complaint. Having carefully perused the details of each of the claims, we are of the view that in addition to the salvage value of the material and the depreciation, as determined by the Surveyor, appointed by the Insurance Company, in his final report dated 07-09-2001, relied upon by the Insurance Company, the Insured would not be entitled to reimbursement of the expenses, amounting to Rs.57,392/-, under the head-''expenses recoverable'' as part of its total claim of Rs.17,79,005/-.

Resultantly, the Appeal is partly allowed to the extent indicated above. To put it plainly, the compensation as awarded by the State Commission shall stand reduced by the aforesaid amounts. On the amount so computed, the Insured shall be entitled to interest @ of 6% per annum from the date of filing of the complaint till actual realization. We order accordingly.

Vide order dated 29-01-2013, the State Commission was directed to release to the Insured a sum of Rs.7,00,366/- out of the amount deposited by the Insurance Company in terms of Interim Order dated 12-10-2012. We direct that deficiency in the amount payable to the Insured in terms of this order, if any, shall be made good by the Insurance Company by remitting the same by way of demand draft in the name of the Insured, within four weeks from the date of receipt of a copy of this order, failing which the said amount shall carry interest @ 9% per annum from the date of this order till actual realization.

The Appeal stands disposed of in the above terms, leaving the parties to bear their own costs.