SANJEEV SOOD vs Oriental Insurance Co.Ltd

THIS appeal has been directed against the order of the District Forum, Solan, dated 21.2.1997 whereby the respondents/opposite parties (hereinafter to be referred to as the Insurance Company) have been directed to pay to the appellant/complainant (hereinafter to be referred to as the complainant) a sum of Rs. 29.847/- as compensation alongwith interest @ 12% per annum from the date of filing the complaint till the date of payment and Rs. 1,000/- as cost of litigation.

THE relevant admitted facts are already stated in the Cross Appeal No. 146 of 1997 titled as m/s. Oriental insurance Company Ltd. v. Shri Sanjeev Sood, decided by us on 8.9.1998 which need not be repeated here. THE claim of the complainant has arisen on account of damage to the building due to storm which was admittedly insured with the Insurance Company for Rs. 3,00,000/-. Suffice it to say here that the District Forum has awarded an amount of Rs. 29,847/- as compensation calculated by the Surveyor on the basis of some average clause in the insurance policy. The amount of loss otherwise was calculated by the Surveyor as Rs. 73,696/-, but this amount was reduced to Rs. 29,847/- by applying ''average clause'', which may be reproduced below : "Average Clause: The cost of new building as per the present market value is Rs. 7,40,550/- and the sum insured for the building is Rs. 3,00,000/-. Average factor = 3,00,000/7,4055.0 = .405 Claim amount after applying average = 73,696 x .405 = 29,846.88 = 29/847/-"

The application of average clause in the present case by the Surveyor by reducing the amount from Rs. 73.696/- to Rs. 29.847/- appears to us wholly unintelligible.

MR. Rajeev Mehta, learned Counsel for the Insurance Company has, however, relied upon Clause 10 of the insurance policy with a view to support the report of the Surveyor, which may be quoted as under : "10. If the property hereby insured shall at the breaking out of any Insured Peril, be collectively of greater value than the sum insured thereon, then the insured shall be considered as being his own insurer for the difference, and shall bear a rateable proportion of the loss accordingly. Every item, if more than one, of the policy shall be separately subject to this condition."

In order to attract this provision, the following conditions should be satisfied : (i) the property insured shall at the breaking out of any Insured Peril, be collectively of greater value than the sum insured thereon; (ii) the insured shall be considered as being his own insurer for the difference; and (iii) the insured shall bear a rateable proportion of the loss accordingly. What is the rateable proportion of the loss which the insured shall have to bear? According to the New Shorter Oxford English Dictionary, the word "proportion" has been defined as "A portion, a part, a share, esp. in relation to whole". The word "rateable" has been defined as "Able to be rated or estimated, esp. in accordance with some scale. Liable to payment of local rates, rateable value the value formerly ascribed to a building for the assessment of the local rates to be levied on it".

IT is apparent from the perusal of Clauses 10 of the insurance policy that in case the value of the property is more than the sum insured, the insured shall be considered as being his own insurer for the amount of loss in excess of the insured amount and accordingly shall bear that portion of the loss which is in excess of the insured amount. No doubt, in the present case the market value of the building has been assessed at Rs. 7,40,550/- more than the sum insured of Rs. 3,00,000/-, but the loss assessed is only Rs. 73,696/- i.e. less than the sum insured. As such, this clause can have no application, as the question of the insured as being his own insurer for the difference between the value of the property and the sum insured and accordingly bearing rateable proportion of the loss, would not arise. Therefore, the reducing of the amount of Rs. 73,696/- to Rs. 29,847/- under the so-called average clause by the Surveyor is wholly erroneous and is due to the misinterpretation of the clause. Accordingly the complainant shall be entitled to an amount of Rs. 73,696/- instead of Rs. 29,847/- as assessed by the Surveyor. No other points were urged.

IN the light of what is discussed above, the appeal of the appellant/complainant is allowed and the order of the District Forum is set aside to the extent that the INsurance Company shall be liable to pay to the complainant a sum of Rs. 73,696/- as compensation instead of Rs. 29,847/- as ordered by the District Forum. The rate of interest and costs shall remain the same. The amount shall be paid by the INsurance Company within three weeks. Appeal allowed.