Ravi Kumar vs ORIENTAL INSURANCE COMPANY LIMITED

RAVI Kumar, Complainant in this complaint filed under the provisions of Consumer Protection Act claims a sum Rs. 8,78,392/- as per details given in the complaint as damages suffered by him on account of accident caused to the truck which was insured with the Opposite Party for a total sum of Rs. 3,50,000/-. The accident took place on April 3, 1993. Truck No. HIC-727 which was insured, after meeting with accident, fell into a deep Khad. First Information Report was lodged in Police Station Ram Ban. Simultaneously intimation was given to the Opposite Party, the Insurance Company. A Surveyor was appointed to visit the spot and he reported total loss of the truck. Second Surveyor was appointed who assessed Rs. 2,85,000/- as damages on July 24, 1993. The amount was not paid to the Complainant by the Company, in spite of several reminders. In order to avoid litigation, the Complainant agreed to the aforesaid amount before the Surveyor. The period of insurance as contemplated under the policy was from April 15, 1992 to April 14, 1993. Particulars of policy are given in the complaint. Further details of the amount claimed were also given, such as recovery of salvage of the damaged truck Rs. 6,000/-, amount paid to the Surveyor Col. Sehgal Rs. 3,800/-, toll tax paid Rs. 592/-, carriage for bringing the truck to Gurdaspur and for storage at me rate of Rs. 2,000 /-per month Rs. 35,000/-, appreciation in the price of the new truck Rs. 33,000/-, mental agony and harassment Rs. 1,00,000/-and loss of earning at the rate of Rs. 700/- per day from April 3, 1993 to September 16, 1994, date of filing of complaint Rs. 3,50,000/ -. The Complainant also prayed for interest on the amount to be awarded at the rate of 24% per annum ftill payment.

THE Opposite Party contested the claim by filing written statement, inter alia, raising preliminary objections that under the terms of the Insurance Policy, Annexure R1, no claim was payable and that disputed questions of fact were involved and the Complainant should be left to seek remedy in Civil Court. THE truck of the Complainant at the relevant time was carrying load beyond the capacity certified and registered by the Registering Authority. THE excessive load was to the extent of 20.15 quintals. On merits, it was asserted that there was violation of the terms and conditions of the policy and the Statute in the matter of overloading of the truck and the case was covered under the general exceptions and limitations as per terms of the policy. THE Insurance Company was not bound by any report made by the second Surveyor who had agreed with the Complainant to the amount mentioned in the report. Annexure P-1 filed by the Complainant was not a complete Insurance Policy. Specimen of the Insurance Policy, Annexure R1, was produced. Reference was made to the provisions of Sections 2(14)(15) and 77 of the Motor Vehicles Act, 1988 to assert that on account of overloading of the truck, there was breach of the provisions which absolved the Insurance Company. Intimation of accident was duly given to the Insurance Company and ultimately on July 24, 1993 from the report of second Surveyor Col. R.K. Sehgal (Retired), the Insurance Company came to know vide report, Annexure R2, that the truck was over-loaded. Receipt of legal notice was admitted. The Complainant filed replication indicating that Insurance Policy copy of which is Annexure R1 was not supplied to him before the accident. No such disputed questions were involved. F.C.I''s food grains were being carried in the truck which was insured with the Opposite Party and the claim of the F.C.I, was settled. It did not lie in the mouth of the Insurance Company to deny its liability qua damage to the truck. With regard to the over-loading of the truck, alternatively claim was made on the basis of guidelines issued in the Manual of the Insurance Company i.e., to the extent of 75%.

Both the parties relied upon the affidavits filed with their pleadings and the documents.

WE have heard learn Counsel for the parties at great length and with their assistance, we have gone through the pleadings, affidavits as well as documents. Learned Counsel for the Insurance Company has argued that disputed questions of facts are involved in this case and the Complainant should be relegated to his remedy to the Civil Court. Elaborating, it has been argued that truck was over-loaded and on that account the accident occurred and it fell into a ditch. This contention in the facts of the present case cannot be accepted. Broad facts are not disputed between the parties that truck in dispute No. HIC 727 was insured with the Insurance Company for Rs. 3,50,000/- and it fell into a ditch on its journey to Sri Nagar while carrying food grains belonging to the Food Corporation of India. According to the claimant''s allegations, after the accident the truck fell into a ditch. The claimant produced affidavits of Shri Munishwar Nagpal and Rajinder Kumar. Out of them Shri Rajinder Kumar was employed as a Driver. Shri Rajinder Kumar deposed that it had been raining on the day of the accident. The road was blocked on account of land slides. After the way was clear, he proceeded with the truck. He had checked the brakes, air in the tyres and the lights etc. There was mud and water on the road when it was drizzling. He tried his best to stop the truck but it fell into the ''Khad''. The accident was caused due to the failure of the brakes at the last moment due to mud and water entering into the brake lining. No evidence regarding any other cause of accident has been produced by the Insurance Company that it could be held that there is any dispute regarding the cause of the accident. What has been pleaded by the Insurance Company is that the truck at the relevant time was over-loaded and on that count liability of the Insurance Company was being denied. It may be observed that no plea was taken in the written statement and hence no affidavit has been produced that the accident in fact occurred on account of over-loading of the truck or that over-loading was to that extent that perse it could be held to be the cause of the accident. The question as to whether on account of mere over-loading the Insurance Company''s liability is wiped out will be separately decided. At this stage suffice it to say that it was not pleaded by the Insurance Company nor there is any evidence as stated above that the accident was caused on account of over-loading. Thus in the facts of the present case, the complaint does not deserve to be dismissed on this short ground to relegate the complainant to the Civil Court. It will not be out of place to mention here that food grain of Food Corporation of India which was being carried in the truck in dispute was also insured with the Insurance Company, the Opposite Party and that Company had settled the claim of the Food Corporation of India.

THE claim of the complainant was repudiated by the Insurance Company only in the written statement for the first time i.e., in December, 1994. THE accident occurred on April 3, 1993 and immediately First Information Report of the accident was lodged, copy of which has been produced by the claimant as Annexure P-2. Intimation was given to the Insurance Company and a Surveyor was appointed. THE second Surveyor made a report on 24.7.1993. It will be useful to reproduce the extracts from report on which reliance is also being placed by both the parties. "4. We also note that the insured vehicle was carrying a load of 108.65 Qtls. of rice/ against the authorised load carrying capacity of 88.50 Qtls. THE insurers may decide whether the liability exists in full or in part, this being a non-standard case due to the contravention in policy conditions."

xx xx xx xx "11. Our recommendations: In our opinion, it would be fair to settle the loss and damage for net a sum of Rs. 2,85,000/- in case the insurers were admitting the liability in full. In case it is otherwise, the insurers may negotiate the same if they may so desire."

The claimant after referring to the report aforesaid claims the amount of compensation whereas the stand of the Insurance Company is that on account of over-loading, its liability ceased and the Surveyor was not competent to settle the claim at Rs. 2,85,000/- as full and final settlement. It was opened to the Insurance Company to repudiate entirely its liability. Shri R.K. Chhibber, learned Counsel for the Insurance Company referred to the decision of the National Commission in Gopal Dutt and Jai Singh v. The Branch Manager, New India Assurance Company, III (1992) CPJ 59 (NC). That was a case of passenger vehicle meant for carrying 43 passengers whereas at the relevant time of accident, it was carrying 127 passengers. It was held that it was a case of use of vehicle otherwise than the manner provided by the Act and thus the Insurance Company was clearly absolved of liability under the policy by virtue of the general exception clause. The contention of the learned Counsel for the Insurance Company is that under the Motor Vehicles Act similar provisions exist in the matter of registration and grant of permits for Public Carriers as well as a Stage Carriages and hence anology of the decision in Gopal Dutt and Jai Singh''s case should be applied to the case in hand. He referred to such provisions of the Motor vehicles Act providing procedure for the grant of Stage carriage. It is not considered necessary to refer in detail to such provisions of the Act. Suffice it to say that subsequently, the National Commission taking into consideration policy decision of the Insurance Companies has held that in case of some breach of the provisions of Motor Vehicles Act, in the matter of using such motor vehicles there should be proportionate reduction in the amount of damages. Reference be made to the decision in Lakshmanbhai Nagindas Parmar v. United India Insurance Company, III (1993) CPJ 1529. That was the case where the Passenger Rickshaw was found to have additional passengers than permitted under the Motor Vehicles Act at the time of the accident. One of the conditions of the Insurance Company was thus violated. While making reference to the earlier decision by the Gujarat State Commission in Jagdish Harilal Thakkar v. New India Assurance Company Limited, II (1992) CPJ 497 (Gujarat State Commission), it was held that taking additional passengers is not a fundamental breach which will absolve all liabilities. Further reference was made to the non-standard claim allowable under the Policy adopted by the Insurance Company in such matters and to make payment of 75%. It was observed as under: "...According to the instructions issued by the Insurance Company such type of breach is considered to be Non-Standard claim for which they have adopted a policy to make payment of 75%. We have given full reasoning to arrive at this decision. Therefore, we do not repeat the same."

IN the present case, the complainant while filing replication has also relied upon the policy adopted by the INsurance Company as provided in the Procedural Manual of Motor Claims (own damage and third party) Annexure ''C''. Item No. 10 refers to Non-Standard claims, extracts thereof is as under: "10. Non-Standard Claims: Following types of claims shall be considered as Non-Standard and shall be settled as indicated below after recording the reasons: Sr. No. Description Percentage of Settlement 1.Under declaration of licensed carrying Deduct 3 years'' different in premium from the amount of claim or deduct 25% of claim amount, whichever is higher 2.Over-loading of vehicles beyond licensed carrying capacity Pay claims not exceeding 75% of admissible claim 3.Any other breach of warranty / condition of policy including limitation as to use Pay upto 75% of admissible claim For breach of warranties/conditions which do not involve any serving in premiums or any additional exposure to the insurers, such claims be considered as Standard Claims e.g. Route Permit."

THE aforesaid instructions/guidelines dearly cover the case in hand as admittedly the truck in dispute was over-loaded above the licensed carrying capacity. That being the position, the Insurance Company was liable to the extent of 75%. THE National Commission had already relied upon such instructions as discussed above. As already noticed above, the accident occurred in April 1993 and the report of the Surveyor was made in July 1993 specifically mentioning that it was a case of over-loading and if the Insurance Company was accepting its liability in entirety to settle the case at Rs. 2,85,000/- otherwise to negotiate with the insured to the extent of its liability. The Insurance Company did not take any action on this report for about six months. Even if the Insurance Company intended to repudiate the claim, there was sufficient time. There is no reason much less cogent to explain the delay. Thus repudiation by the Insurance Company, in the written statement when the Complainant was constrained to file the complaint, cannot be held to be a bona fide act to deny the relief to the claimant, and to force him to approach the Civil Court. It is a clear case of deficiency in service on the part of the Insurance Company in not settling the claim of the Complainant with respect to the damages caused to the truck. The Complainant is therefore, entitled to the compensation.

It was a case of complete damage to the truck. Since admittedly, there was overloading of the truck as being Non-Standard claim, the Insurance Company is liable to the extent of 75%. The Surveyor assessed the damages at a sum of Rs. 2,85,000/-. The liability of the Insurance Company would be to the extent of 75% of the amount insured which will come to Rs. 2,62,500/-. Apart from the above, the Complainant has spent a sum of Rs. 6,000/- for taking out the salvage of the truck from the ditch as per receipt produced. He is entitled to this amount as well. A sum of Rs. 3,800/- was paid to the Surveyor as his fee. The Complainant is also entitled to this amount. Another sum of Rs. 5,000/- was spent on taking the salvaged truck to the place of business of the Complainant from the place of accident. He is entitled to this amount as also. A sum of Rs. 592 /- was paid as toll tax while carrying the salvage of the truck. The Complainant is entitled to this amount as well. The total of the aforesaid amount would be Rs. 2,77,892/-. The Complainant further claims a sum of Rs. 2,000/- as storage charges, for keeping the salvage of the truck in safe custody. In our view, the Complainant is not entitled to this amount in this case. Till the claim of the Complainant is settled, the truck or its salvage remained the property of the Complainant and for storage of his own property he is not entitled to any damages. Learned Counsel for the Complainant referred to the decision of Delhi Commission in Sanjay Mohan v. Oriental Insurance Co. Ltd., II (1993) CPJ 1140. The argument was addressed before the Commission that immediately after the accident the damaged goods (salvage) became the property of the Insurance Company and the Complainant would be entitled to storage damages. The Commission granted storage damages. However, reasons are not recorded therein. As stated above, on account of accident, automatically the damaged salvage or the damaged vehicle will not become property of the Insurance Company. It is only on payment of insured amount that the Company would be owner thereof and the storage charges if any before that will be borne by the original owner of the insured vehicle.

THE Complainant also claims a sum of Rs. 1,00,000/- on account of loss of earning capacity and appreciation in the price of a new truck. In support of its claim, learned Counsel for the Complainant cited a decision of National Commission in Jagdish Singh v. National Insurance Company Limited, I (1994) CPJ 172 (NC). That was a case where building under construction collapsed and the compensation was to be assessed. THEre was inordinate delay in settlement of the claim that a consolidated sum of Rs. 25,000/- as compensation was allowed on that account. THE ratio of the decision aforesaid cannot be applied to the case in hand. THE case of the building under construction which had been insured would be entirely different whereas in a case of truck which had been totally damaged the liability there and then occurs and if there is a delay in settling of the claim, the claimant can be compensated by way of granting interest on the amount found due and not separately any amount as compensation for speculative business or appreciation in the price of the new truck. Thus on the amount as found due to the claimant as above, he would be entitled to interest at the rate of 18% per annum from the date of accident till payment. THE claimant would also get a sum of Rs. 5000/- as litigation expenses. Directions are given to the Insurance Company-Opposite Party to make the payment as above to the Complainant within a period of two months from the receipt of copy of the order, otherwise action would be taken under Section 27 of the Consumer Protection Act. Copies of the judgment be supplied to the parties concerned free of costs. Complaint allowed with costs.