NEW INDIA ASSURANCE COMPANY LIMITED vs CLASSIC PRINTERS

THIS appeal is directed against the order of the District Forum, Mumbai Suburban District passed in Complaint No. 177 of 1996, directing the appellant Insurance Company to pay Rs. 2,22,000/-with 18% interest there on from 6.2.1995 till payment, plus other charges in all amounting to Rs. 6,500/-. The main contention of the appellant-Insurance Company is that there was failure on the part of the complainant to submit the documents in regard to the vehicle and that the complainant changed his stance from time to time and there was, therefore, repudiation of the claim of the complainant to some extent and in that light, the complaint deserves to be dismissed. Since the claim is founded on deficiency in service on the part of the appellant, we are inclined to traverse through the facts of the case and the documents tendered on record.

THE complainant purchased a brand new Premier 137-D passenger car bearing No. MH 02-K-9262 for the total price of Rs. 2,32,915/-. Since it was a new car, the complainant took out comprehensive insurance under Policy No. 31/ 16584 for the period 22.7.1994 to 21.7.1995. THE said vehicle met with an accident on 4.2.1995. THE vehicle was stationary at the traffic signal at the Cross of Warden Road and Peddar Road and the tourist bus coming in high speed dashed into two to three vehicles including this insured vehicle. THEre was extensive damage and the accident was reported to Gamdevi Police Station under Crime No. 64/95. It seems that the complainant/proprietor also sustained injuries. THE accident was reported to the appellant Insurance Company on 6.2.1995. THE vehicle was taken into custody by the Gamdevi Police Station and thereafter, it was transferred to safe custody of M/s. Spectra Motors Limited. For that purpose, the complainant had spent Rs. 1,100/- towards this transport. THE appellant Insurance Company deputed Surveyor-M/s. J.D. Engineer, who examined the vehicle on 11.3.1995 and 15.3.1995 and in his detailed report found that the vehicle was beyond repairs and could be declared as a total loss. THE Surveyor deducted 10% of the original price towards depreciation and advised the complainant to agree to settle the claim for Rs. 2,10,000/-. THE consent letter was signed by the complainant on 26.4.1995. However, later on complainant gathered that the proper depreciation could be only 5% and not 10%, as the vehicle was new and the accident took place between 6 months to one year. THE complainant accordingly wrote letter to the Insurance Company and it is claimed that the complainant visited the office of the Insurance Company on about 20 occasions, but to his great dismay, the claim was not settled and paid of by the appellant-Insurance Company. By another letter dated 15.6.1995, the complainant agreed to the settlement of the claim for Rs. 2,17,000/-. At one stage the complainant asked for replacement by new vehicle and agreed to pay the additional difference of the price. When he found that the Insurance Company was not inclined to settle the matter, he gave the letter dated 16.11.1995, inter-alia noticing the Insurance Company that if the claim is not settled, he will be required to approach the Redressal Forum. By this time, about 9 months period has been over and we find that the claim was not settled. THE complainant has contended that he consented to the settlement of Rs. 2,17,000/- in good faith and as per the advice of the Surveyor and also to avoid any delay in settlement. But as the settlement did not come about within a reasonable period, he knocked the door of the appellant-Insurance Company. THE appellant agreed to settle the claim for Rs. 2,17,000/- subject to deduction of the price of the stolen parts. It is alleged that there was gross delay on the part of the appellant in settling the claim and hence the claim as per the complaint. The appellant-Insurance Company raised several defences. The appellant contended that M/s. Apple Industries Limited is the real beneficiary under the policy and that the complainant settled the claim with the Surveyor for Rs. 2,17,000/- on the specific condition that salvage of the damaged vehicle would belong to the appellant and that the complainant would be responsible for the missing parts. The documents were received very late, some time in the month of October, 1995. The appellant reiterated to settle the claim at Rs. 2,10,000/- subject to complainant surrendering the salvage. The necessary voucher was sent, but the same was not returned or surrendered by the complainant. The complainant on the other hand, put up the revised claim of Rs. 2,17,000/ -. At one stage in his letter dated 12th May, 1995 he demanded the new car and agreed to pay the difference in the price and also further agreed for 5% depreciation and in that light the complainant is not entitled to the amount. The Insurance Company further provided for reference to the arbitration and the claim regarding quantum cannot be considered without award passed in the arbitration proceedings. This is the term of the insurance policy and that must be acted upon before any claim could be settled. The appellant therefore, repudiated the claim and prayed for the dismissal of the complaint.

The District Forum rejected all the contentions raised on behalf of the Insurance Company. We may refer to the issue of arbitration and in that regard the Insurance Company has relied on the ratio laid down by the National Commission, that when arbitration clause is mentioned, the Redressal Forum should not proceed with the complaint and that there could not be any delay. However, in this case we find that the Insurance Company agreed to the amount of Rs. 2,10,000/- on the basis of the consent letter dated 26.4.1995. The complainant then showed his willingness to accept Rs. 2,17,000/- and this was also partly agreed upon by the appellant Insurance Company by their letter dated 27.11.1995. However, we further find that the appellant-Insurance Company has not tendered any document to show that the appellant issued notice to the complainant and called upon him to appoint the Arbitrator. The relevant Clause 7 of the policy is to the effect that if there is dispute as regards quantum, such a question should be referred to a Single Arbitrator who has to be appointed in writing by the parties within two calendar months. In case either party refuses to appoint Arbitrator, which in this case is complainant, the Insurance Company was at liberty to appoint Sole Arbitrator and get the 1claim settled. Surprinsingly, the appellant Insurance Company has not tendered any document to show that they wrote to the complainant and further appointed an Arbitrator in terms of Clause 7 of the policy. The conducton the part of the Insurance Company would clearly spell out that such an arbitration was never in the contemplation of the Insurance Company. This defence is raised by way of an after-thought and we are unable to support any legal infirmity in not appointing the Arbitrator. The claim of the complainant, therefore, cannot fail on that ground.

NOW, coming to the question of the insurance claim, the learned Counsel for the appellant has contended that the complainant did not deposit the vehicle with the Garage nominated by the appellant-Insurance Company. For this purpose, reliance is placed on letter dated 20th November, 1995, wherein the Insurance Company directed the complainant to deposit the vehicle at Shree Nivas Auto Garage, Andheri Ghatkopar Link Road, Sakinaka, Bombay-400 072. On the other hand, the learned Counsel for the respondent/complainant has contended that right from the time the vehicle was transferred to the custody of M/s. Spectra Motors Garage, there was not even the slightest objection by the Insurance Company about the vehicle being deposited with that Garage. We find a lot of substance in this regard, because the Surveyor has also carried out the survey in the Spectra Motor Garage. The report clearly indicates that the Surveyor carried out the survey of the accident to the vehicle at the Spectra Motors. The letter dated 20th November, 1995 seems to be sequel to letter sent by the complainant on 16.11.1995, wherein the complainant threatened the legal action against the Insurance Company. We, therefore, find that the appellant-Insurance Company cannot take advantage by contending that the Insurance Company is not liable for any damage or deterioration to the car deposited with M/s. Spectra Motors. The Surveyor must have recorded all the parts and we find that in the report of the Surveyor, there is not lengthy mention of missing parts. The appellant-insurance Company cannot say that since the vehicle was not in the custody of the Garage nominated by the appellant, the appellant cannot be held liable for the missing parts. Apart from that, the District Forum has rightly relied on the clause in the insurance policy that if a vehicle could not be removed on account of the disability of the driver, a reasonable cost of protection and removal of the vehicle to the nearest Garage should be borne by the appellant-Insurance Company. We are, therefore, of the view that the Insurance Company cannot take refuge behind the requirement that the vehicle should have been deposited with the Garage mentioned in the letter dated 20.11.1995. It is stated that the vehicle is still at the place, where it was inspected. The appellant Insurance Company cannot base its claim that the vehicle has not been properly attended to by the complainant. For the salvage, therefore, we are unable to accede to the arguments of the learned Counsel for the Insurance Company that the salvage amount should be deducted from the policy claim. The learned Counsel for the complainant has urged that the Insurance Company is at all times at liberty to take possession of the salvage.

WE may refer to the letters sent by the complainant dated 12.5.1995 and 15.6.1995. WE also refer to the letters sent by the Insurance Company on 16.11.1995, 20.11.1995 and 27.11.1995. Although the complainant has claimed the amount of Rs. 2,17,000/- or in the alternative, new car, the Insurance Company has agreed that the claim of Rs. 2,60,000/- subject to salvage being handed over to the appellant Insurance Company. The valuation of Rs. 1,30,000/- in the report of the Surveyor would not have any bearing, because the vehicle is in the custody of M/s. Spectra Motors, which is in the knowledge of the Insurance Company. The appellant-Insurance Company shall be entitled to the salvage of the vehicle as and where basis, because the Insurance Company is responsible for the vehicle being left with M/s. Spectra Motors right from die date of accident. If the appellant-Insurance Company has decided to rely on the letter wherein the complainant consented to settle the claim for Rs. 2,17,000/-, then it was the bounden duty of the appellant-Insurance Company to pay the amount forthwith and to get back the possession of salvage. Nodiing is done in that regard. On the other hand, the appellant-Insurance Company has been totally silent with respect to the claim right upto October, November, 1995. The District Forum has rightly held that there was gross delay on the part of the appellant-Insurance Company in processing and settling the claim. We, therefore, feel that the delay on the part of the Insurance Company should be adequately penalised. This is a case of clear deficiency on the part of the Insurance Company. Even if the period of 3 months is taken for reckoning, as is generally provided, the delay of more than 8-9 months cannot be condoned. We, therefore, read deficiency on the part of the appellant-Insurance Company in settling the claim. The District Forum has rightly concluded that the complainant is entitled to the claim mentioned in the order. We make it clear that in such claims, the Insurance Company must move promptly and not leave the claimant in lurch requiring him to visit the Insurance Company off and on for settlement of the claim. Unreasonable delay in settlement of the claim can certainly give rise to the non transparency in the settlement of the claim. The Insurance Company is accountable for settlement of the claim as expeditiously as possible. Here we find that the claim has been unnecessarily delayed, when the Insurance Company thought it fit to rely on the consent letter dated 22.3.1995 addressed to the Surveyor. We, therefore, hold that the appeal is devoid of merit. Accordingly, we pass the following order : ORDER "Appeal is dismissed. The appellant Insurance Company should pay further cost of Rs. 10,000/- to the respondent/complainant for being dragged to the State Commission in appeal. The respondent/complainant is entitled to the amount deposited with the State Commission, if he has not withdrawn earlier."

Appeal dismissed.