NEW INDIA ASSURANCE CO. LTD vs Sal C.T. Scan Centre

THIS First Appeal has been filed by the New India Assurance Co. Ltd. (hereinafter referred to as the ''Appellant '') being aggrieved by the order of the State Consumer Disputes Redressal Commission,. Gujarat (hereinafter referred to as the ''State Commission '') which had allowed the complaint of SAL CT Scan Centre, Respondent herein and original complainant before the State Commission.

BRIEFLY , the facts of the case are that the Respondent who is running a diagnostic centre including operation of CT Scan machines, etc. had got its machinery and furniture insured with the Appellant/Insurance Company for the period from 8.7.2006 to 7.7.2007 for Rs. 78 lakh and after verification of the same, the policy was issued to the Respondent for which Respondent paid a premium of Rs. 7,004. During the validity of the policy, a fire broke out in the Respondent ''s premises causing damage to the CT Scan machine and furniture for which a claim was lodged with the Appellant/Insurance Company. A Surveyor was appointed who gave a report assessing the total loss to be Rs. 12,50,000 which was then offered as settlement of the insurance claim to the Respondent. Respondent was shocked and surprised with the low assessment made, since the machine which was insured for Rs. 78 lakh had been fully damaged. Respondent, therefore, approached the Appellant/Insurance Company to settle the claim for the actual amount. However, even thereafter, Appellant/Insurance Company offered and paid an amount of Rs. 15 lakh. After reinstatement and repair of the machine, Respondent again approached the Appellant for full and final settlement of the claim for a sum of Rs. 49,00,031 being the total payment made to the supplier who repaired and reinstated the machine for which the necessary bills and documents were also produced. However, since there was no satisfactory response for settlement of this claim based on the reinstatement value, Respondent filed a complaint before the State Commission seeking payment of the balance amount of Rs. 34,00,331 which was arbitrarily and illegally withheld by the Appellant/Insurance Company with interest @ 12% per annum. The above contentions were challenged by the Appellant/Insurance Company who stated that the claim was rightly settled in terms of the report of the Surveyor which had correctly assessed the value of the machine which was damaged in the fire.

THE State Commission after hearing the parties and on the basis of evidence filed before it observed that the Surveyor ''s report being contradictory and confusing with no clear basis for reaching its findings, cannot be considered as credible evidence to settle the claim. On the other hand, as per the documentary evidence produced before it by Respondent, it was apparent that the machine was seriously damaged and not repairable and the replacement expenses had cost Rs. 49,00,031. The State Commission therefore directed the Appellant/Insurance Company to pay the Respondent the remaining amount of Rs. 33,85,000 along with interest @ 9% p.a. within 30 days along with Rs. 15,000 as litigation cost.

BEING aggrieved, the present First Appeal has been filed by the Appellant/Insurance Company. Counsel for Appellant stated that the State Commission erred in over-assessing the value of the machine because it had been purchased second-hand by the Respondent for only Rs. 9 lakh. Therefore, the insurance claim was highly exaggerated and not based on the actual market value of the outdated machine. On a specific query by us, whether under these circumstances, the Appellant/Insurance Company was ready to replace the machine in settlement of the claim, Counsel for Appellant replied in the negative on the grounds that this being an outdated model, it was no longer available. We also specifically asked the Counsel for Appellant to clarify that if the value of the machine was only Rs. 9 lakh how did the Appellant/Insurance Company agree to pay Rs. 15 lakh based on the report of the Surveyor and also to explain why the machine purported to cost only Rs. 9 lakh was insured for Rs. 78 lakh and the premium for the same was accepted and taken by the Respondent/Insurance Company, particularly, since it is on record that the machine was insured after due physical and other verification. Counsel for Appellant was unable to give a satisfactory explanation and only reiterated the earlier statements made by him. Hon ''ble Supreme Court in Dharmendra Goel v. Oriental Insurance Co. Ltd., III (2008) CPJ 63 (SC)=IV (2008) ACC 750 (SC)=(2008) 8 SCC 279, has observed as follows: "It must be borne in mind that Section 146 of the Motors Vehicles Act, 1988 casts an obligation on the owner of a vehicle to take out an insurance policy as provided under Chapter 11 of the Act and any vehicle driven without taking such a policy invites a punishment under Section 196 thereof. It is therefore, obvious that in the light of this stringent provision and being in a dominant position the insurance companies often act in an unreasonable manner and after having accepted the value of a particular insured good disown that very figure on one pretext or the other when they are called upon to pay compensation. This ''take it or leave it '' attitude is clearly unwarranted not only as being bad in law but ethically indefensible. We are also unable to accept the submission that it was for the appellant to produce evidence to prove that the Surveyor ''s report was on the lower side in the light of the fact that a price had already been put on the vehicle by the company itself at the time of renewal of the policy. We accordingly hold that in these circumstances, the company was bound by the value put on the vehicle while renewing the policy on 13th February, 2002. " (Emphasis supplied)

The present case is squarely covered by the above judgment of the Hon ''ble Supreme Court. Since the Appellant/Insurance Company had insured the machinery/premises for Rs. 78 lakh, it cannot now take the plea that the machine had a cost of only Rs. 9 lakh. On the other hand, Respondent has been able to produce credible documentary evidence accepted by the State Commission that the reinstatement value of the machine after repairs was Rs. 49,00,031. Therefore respectfully following the judgment of the Hon ''ble Supreme Court and agreeing with the order of the State Commission which is based on a correct assessment of the facts as well as the law on the subject, we confirm the same. However, since an amount of Rs. 15 lakh has already been paid to the Respondent by the Appellant/Insurance Company, we direct the Appellant/Insurance Company to pay the Respondent, the remaining amount of Rs. 33,85,000 with interest @ 9% per annum within 30 days and Rs. 15,000 as litigation cost within 30 days from the date of receipt of this order. Appeal dismissed.