RELIANCE GENERAL INSURANCE CO. LTD. vs Anish Sebastian

REVISION petition No. 4607 of 2013 has been filed against the judgment dated 06.09.2013 in Appeal No. 4 of 2013 of the Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram (''the State Commission'').

THE brief facts of the case as per the respondent/complainant are that on 16.07.2011 respondent''s wife was driving the car bearing No. KL 13 K 1771 owned by the respondent and as there was heavy down pour, when the vehicle reached at the Temple Gate, Thalassery the car suddenly stopped. The respondent''s wife attempted to re -start the car, but that attempt was failed.

LATER on when the vehicle was examined by an expert, after taking it to the workshop, it was found that water had entered into the engine due to which the car suffered damage. The car was insured with the petitioner/insurance company vide policy No. 2205702311002543 covering the period from 15.10.2010 to 14.10.2011. Hence, the respondent raised a claim before the petitioner. The petitioner repudiated the claim by saying that the damage suffered by the insured vehicle was a consequential damage and not covered under the purview of the policy. As the car in unable to use, and the same is lying idle in the workshop.

THE petitioner/insurance company illegally repudiated the claim submitted by the respondent. The respondent suffered mental agony and financial loss. As the respondent was unable to use the car, he was put to untold hardships. The petitioner/insurance company was liable to compensate the respondent by way of compensation as well as pay the value of the car. Hence, in the interest of justice, it was humbly prayed that the District Forum may kind enough to accept this complaint on file and summons may be issued to the petitioner/insurance company to pass an order against the insurance company after trial:

"a. To pay Rs. 2,70,000/ - as damage sustained to the respondent;

b. Rs. 30,000/ - as compensation to the respondent;

c. Cost of litigation with interest @ 9% per annum from the date of repudiation, i.e., on 15.09.2011 till the date of deposit of the amount before the District Forum; and

d. Any such other relief as the District Forum may deem fit and proper during the trial of the stage."

THE petitioner/opposite party/insurance company in their reply before the District Forum denied all the facts of the complaint that when the vehicle was examined by an expert after taking it to the workshop, it was found that water had entered into the engine, hence, the car suffered damages etc., are also not correct hence, denied.

THE insurance company submitted that the respondent submitted a claim form and the damage was not tallying with the cause mentioned in the claim form. Further, the alleged damages are not the direct damages, but only consequential damages, not covered under the purview of the policy. The investigation conducted by the insurance company revealed that the vehicle fell in a gutter full of water, due to which the water entered into the engine the vehicle stopped there. The vehicle was re -started and run resulting in engine damage. The reason for the alleged damage was due to the running of the vehicle after the initial damage, which happened due to negligence of the driver after the alleged accident. The driver ought not to have re -started the vehicle and run the vehicle without any repair. Under these circumstances the insurance company had no other option but to repudiate the claim. The contention of the petitioner is that the insurance company had undertaken to indemnify the total and full loss that may occur. Indemnity is subject to the terms and conditions of the policy and deductions. The respondent was not entitled to travel beyond the scope of terms and conditions stipulated in the policy.

THE assessment of loss is subject to the terms and conditions of the policy. The value to be assessed is not the market value throughout the policy without any further depreciation. The method of calculation of the premium and the payment of the loss is not one and same as alleged in the complaint. The calculation of loss is subject to depreciation and deduction of certain components specifically excluded by the terms and conditions. Hence, the respondent cannot put on the stand that he is entitled for compensation as claimed by him.

THE District Consumer Disputes Redressal Forum, Kannur (''the District Forum'') vide its order dated 07.11.2012 while allowing the complaint has observed as under: "Therefore an adverse inference has to be drawn against opposite party especially in the light of the fact that opposite party did not take initiative to find out truth of actual cause of damage by examining the subject matter after dismantling the engine.

.............................................It could not be done since there was no NOC from company. So it is clear that in order to find out the truth of the cause of damage, examination by dismantling the vehicle was essentially necessary. But opposite party was not ready to do so. They were not interested to give NOC. Thus it is crystal clear that the repudiation of claim was done by the opposite party without realizing the truth. Hence the repudiation can only be considered as unjust, unreasonable and undoubtedly deficiency in service. So opposite party is liable to meet the consequences.

The assessment of surveyor Rs. 1,09,187/ - as the net claim amount is a reasonable amount. Suppose the vehicle was repaired then and there the question of IDV Rs. 2,70,000/ - does not arise at all. But the vehicle was not repaired due to the unreasonable stand taken by the Insurance Company. PW2/Surveyor gives evidence that "on 28.7.2011 the vehicle was examined. In case if the vehicle gets repaired now the said vehicle will be damaged more. Presently, the vehicle is not in running conditions". According to this evidence the alleged vehicle has been kept idle without running more than another one year. Under such circumstances if the amount of IDV Rs. 2,70,000/ - if not allowed as damages we fear, that would be a denial of natural justice. Hence we are of opinion that the complainant is entitled for an amount of Rs. 2,70,000/ - as damages. Other losses being not proved by adducing evidence by complainant we are not in a position to allow any compensation but opposite party is liable to pay also Rs. 1000/ - as cost of this proceedings.

In the result, the complaint is allowed directing the opposite party to pay Rs. 2,70,000/ - (Rupees Two lakhs Seventy thousand only) as damages along with Rs. 1,000/ - (Rupees One thousand only) as cost of this proceedings to the complainant within one month from the date of receipt of this order, failing which the complainant is also entitled to get interest @9% p.a from the date of order. On payment of the amount opposite party shall be entitled for the salvage. Complainant is at liberty to execute the order after the expiry of one month as per the provisions of consumer protection Act".

Aggrieved by the order of the District Forum, the petitioner/insurance company filed an appeal before the State Commission. The State Commission while dismissing the appeal held that:

"The contention of the appellant that the damage is consequential damage is unfounded when a vehicle is getting stuck while running. It is natural that the driver will at least make an attempt to re -start the vehicle. While doing so the insured is losing all his rights to get claim is not acceptable. There is no evidence, the vehicle was driven after the first stop of vehicle during heavy rain. Re -starting of the vehicle is the cause of damage will not stand without explaining the reason for the vehicle struck off at the first instance. Moreover the report of the Surveyor is also negating this contention of the appellant. Further the appellant''s contention that the granting of IDV without considering depreciation is also not of any real substance. The surveyor has assessed and reported the damage to an extent of Rs. 1,09,187/ -, had the vehicle been repaired then and there. The denial of claim and repudiation of insurance claim resulted the lying of vehicle in the workshop in the damaged condition has deteriorated the entire value of the vehicle. Hence the complainant is entitled for entire value of the vehicle. The IDV was not objected at the time of insuring the vehicle by the insurance company and they have no right to challenge the value when a claim comes. Moreover even without evaluating the cause of damage and scope of repairs, even without opening and dismantling the vehicle, the blanket refusal is not justified. The vehicle ought to have been dismantled and the cause ought to have been established by the insurer, while denying the claim. In addition to this the opposite party has not mounted the box and clarified the true position also, disentitle them to turn down the insurance claim by the appellant. In the circumstances we do not find any valid grounds to interfere in the order of Lower Forum. And therefore we dismiss the appeal.

In the result, the appeal is dismissed without cost and upheld the order of Lower Forum. There is no cost".

HENCE , the present revision petition.

WE have heard the learned counsels for the parties and have carefully gone through the records of the case. Learned counsel for the petitioner has stated that the State Commission has failed to observe that it is the admission of the respondent that in its complaint that on the date of loss there was heavy down pour of rain and the vehicle stopped suddenly and thereafter attempt was made to restart the vehicle but it failed. It is also admitted that during examination of vehicle by the expert in the workshop it was found that the water had entered into the engine which caused damage to the vehicle. Hence, the said loss is not covered under the insurance policy in question since the same has not been caused by any external accidental means but the same has occurred being a consequential event of driving the vehicle despite heavy water on the road. The State Commission has failed to observe that a kind of loss not prescribed under the insurance policy is not covered under the insurance. It was further submitted that in order to provide coverage to hydro static loss, i.e., the loss arising out of water entering into the engine of the vehicle, an add -on cover is required to be taken by giving additional premium. However, in this particular policy no such add -on cover was even taken to covey such type of loss. Hence, the petitioner is not liable to indemnify the loss occurred to the insured vehicle.

THE State Commission has grossly failed to observe that the vehicle was not dismantled at the behest of the respondent himself since the petitioner has never restrained the respondent from getting the vehicle repaired. Instead the petitioner, after analysing the claim has stated its stand of repudiation as per terms and conditions. Further, the State Commission has also failed to appreciate the established principle that the liability of the insurance company is restricted to the assessment done by the surveyor until the survey report is disputed. Hence, lying of the vehicle un -repaired in the workshop cannot be attributed to this petitioner but the same is attributable to the callous attitude of the respondent who let the vehicle lying there.

LEARNED counsel for the respondent on the other hand contented that the exact cause of the damage could not be ascertained. Even as per the survey report as the petitioner had not given no objection certificate for the repair the repairer could not start the repair work. He further contended that the orders of the lower Fora were absolutely right as the vehicle was damaged due to water entering into the engine and there was no question of "consequential damage". Nowhere has the petitioner elaborated on what constitutes "consequential damage", either in the repudiation letter or in the terms and conditions of the insurance policy. The fact remains that due to excessive rain roads were flooded and water entered into the engine of the car and as a result, she could not restart the car and it was still lying at the workshop un -repaired as the petitioner had not given permission for the dismantling and repair of the car. We have gone through the insurance policy on record which is a Reliance Private Car Package Policy. The period of the policy is 15.10.2010 to 14.10.2011. The IDV of the vehicle is Rs. 2,70,000/ -. As per the policy the company will indemnify the insured against loss or damage to the vehicle insured hereunder and/or its accessories whilst thereon (i) by fire explosion self -ignition or lighting; (ii) by burglary housebreaking or theft; (iii) by riot and strike; (iv) by earthquake (fire and shock damage); (v) by flood, typhoon, hurricane, storm, tempest inundation, cyclone, hailstorm frost; (vi) by accidental external means; (vii) my malicious act; (viii) by terrorist activity; (ix) whilst in transit by road rail inland -waterway lift elevator or air; and (x) by landslide rockslide.

THE terms and conditions of the policy also state that the IDV of the vehicle and accessories if any fitted to the vehicle is to be fixed on the basis of the manufacturers'' listed selling price of the brand and model as the vehicle insured at the commencement of insurance/renewal and adjusted for depreciation as per schedule. Hence, it is presumed that the IDV of Rs. 2,70,000/ - is after adjustment of depreciation. The terms and conditions of the policy states that the IDV shall be treated as the market value throughout the policy period without any further depreciation for the purpose of total loss/constructive total loss claims.

CLAUSE 4 of the terms and conditions of the policy reads that "the insured may authorise the repair of the vehicle necessitated by damage for which the company may be liable under this policy provided that: "a. The estimated cost of such repair including replacements, if any does not exceed 500/ -;

a. The company is furnished forthwith with a detailed estimate of the cost of repairs; and

a. The insured shall give the company every assistance to see that such repair is necessary and the charges are reasonable."

Further, the general exceptions provided that:

"i. Any accidental loss or damage to any property whatsoever or any loss or expenses whatsoever resulting or arising there from or any consequential loss;

i. Any liability of whatsoever nature directly or indirectly caused by or contributed to by arising from or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel. For the purpose of this exception combustion shall include any self -sustaining process of nuclear fission."

It is an admitted case that the vehicle was got stuck due to excessive rain in the flooded street at the temple gate, Thalassery and the car suddenly stopped and an attempt to restart the car but it did not start. Later on it was examined by an expert after taking the vehicle to the workshop where it was found that the water had entered into the engine. Hence, damage to the vehicle had occurred due to flooding of the street due to excessive downpour. As per clause 4, the company was intimated regarding the damage of the car and a surveyor was sent by the company and he estimated the cost of repair at Rs. 1,89,832.52. It would appear from the papers on record that the insurance company on receipt of surveyor''s report did not request or allow the respondent to get the car repaired as envisaged under clause 4. On the other hand, they repudiated the claim that the insured vehicle suffered "consequential damage" which was not covered under the purview of the policy. The term consequential damage has not been spelt out in the terms and conditions attached to the policy nor could their counsel bring to our notice the clause which stated that additional premium had to be paid to cover the same. As per the written statement, the petitioner stated that the alleged damages are not the direct damages but only consequential damages, not covered under the purview of the policy. The investigation conducted by the opposite party revealed that the vehicle fell in a gutter with full of water. Due to which water had entered into the engine and the vehicle stopped. The vehicle was re -started and run after the engine damage. The reason for the present alleged damage was due to the running of the vehicle after the initial damage, which happened due to negligence of the driver after the alleged accident. The driver ought not to have re -started the vehicle and run the vehicle without any repair. Under these circumstances the opposite party has no other option but to repudiate the claim.

THE issue now to be decided is that what is the consequential damage. In contract law, consequential damages are commonly referred as special damages or expectation damages, are type of damages that arise as a result of a breach by one part. While direct damages focus on the costs associated directly with the contract itself, consequential damage focus on the costs outside of the contract. These are typically: "Lost Profits

Lost Products

Lost revenues

Lost time

Damage to reputation

Reduction in value."

THE clause included in the said insurance policy is not specific and hence, are unenforceable, this is because it does not explain the limitation of damage. Even if "consequential damage" in this case is taken to be the allegation that the respondent restarted the vehicle and ran it after the initial damage resulting in water entering the engine and damaging the same, the petitioner has not given any evidence to support its case. As per the version of the respondent the car did not restart. Any normal person, stuck in water and with the water entering the car, would make an attempt to restart the car and drive out of the water. This cannot be termed as ''negligence of the driver'' resulting in ''consequential damage''. The State Commission has correctly come to the conclusion that the contention of the petitioner that the vehicle suffered consequential damage is unfounded when the vehicle was stuck while running. It is but natural that the driver will make an attempt to restart the vehicle. There is no evidence that the vehicle was driven after the first stop of vehicle due to heavy rain or that re -starting of the vehicle was the cause of the damage. The surveyor in his report has assessed and reported the damage to an extent of Rs. 1,09,187/ - after allowing for depreciation. We agree with the State Commission that denial of claim and repudiation of insurance claim has resulted in lying of vehicle in the workshop in a damaged condition has rendered the vehicle in unusable to the respondents. Hence, the respondent/complainant are entitled for compensation for the same. Hence, the State Commission has not erred in coming to the conclusion that the respondent/complainant is entitled for the entire value of the vehicle which as per the insurance policy was Rs. 2,70,000/ - taking into account the maximum depreciation allowed under the policy, i.e., 50% for the vehicle as also to the accessories and its part.

IN view of the discussion above, we find that there is no jurisdictional error or material irregularity in the impugned order which may call for interference in exercise of powers under section 21 (b) of the Consumer Protection Act, 1986. Accordingly, the revision petition is dismissed, with no order as to cost.