SHAKTI TRANSPORT CO. vs National Insurance Co. Ltd.

THE complainant is a partnership firm which is carrying on the business of transport. THE complainant firm has taken insurance of its Tata truck with the for Rs. 400,000/- on 16.1.91 i.e. from the day when the chassis was purchased. THEreafter the truck was registered with RTO on 8.2.91 after getting it passed. THE complainant has raised money by hypothecating the truck with the bank and paid the premium of Rs.8208/- as informed by the Insurance Company. It appears that the truck met with an accident on 2.8.91 i.e. within the period of 6 months from the date of insurance while going from Ahmedabad to Nadiad. According to the complainant due to the said accident, he had suffered damages of Rs. 106,059/- for which he had given the bills regarding spare parts and labour charges to the Surveyor. THE Surveyor has submitted two reports and has not assessed the full amount but has assessed Rs. 61,372/- for the spares, Rs. 23,680/- for labour charges and deducted 5% depreciation on spares, 50% depreciation on cost of rubber parts and Rs. 10,950/-for salvage of the spares and Rs. 1500/- as excess and, therefore, the amount payable will be about Rs. 72,250/-. THE Insurance Company has further raised an objection that the gross vehicle weight of the insured vehicle was 16200 Kgs. Whereas in the proposal form it was mentioned as 12 tons only and, therefore, the complainant has paid less premium and recording to condition of policy this claim becomes sub-standard claim and Insurance Company is entitled to deduct 25% from the amount of admissible claim. Deducting this 25% the Company has offered to the complainant Rs. 52,000/- in July 1992 and sent the voucher which contained the clause that said payment has to be accepted by way of full and final settlement. THE complainant was not prepared to accept. Rs. 52,000/- by way of full and final settlement. He was not agreeable with the assessment made by the Surveyor. Hence the amount was not accepted and this complaint has been filed. THE complainant has produced the bills and also filed an affidavit contending that he has actually spent the amount which he has claimed in the complaint.

THE learned Advocate for the complainant strenuously argued that even if we accept the assessment made by the Surveyor, deduction of 5% depreciation is not permissible because the truck was registered by the RTO on 8.2.91 and accident took place on 2.8.91 i.e. within a period of 6 months and, therefore, the Insurance Company cannot deduct depreciation. Ms. Smita Shah, learned Advocate appearing for the Insurance Company submits that the insurance was taken On 16.1.91 and, therefore, the accident can be said to have occurred after six months and the company is entitled to deduct 5% by way of depreciation. It may not be forgotten that the complainant had purchased the chassis and had taken insurance on the very day so that he can take the chassis for body building. Unless he gets the actual registration and vehicle is passed he cannot use it for commercial purpose for transportation. THErefore, there is some substance in the argument of the complainant that the truck cannot be said to have been used for commercial purpose for six months. While assessing the damage we will bear this fact also in mind. The learned Advocate for the complainant has vehemently urged that Insurance Company has no right to deduct Rs. 10,950/- for the salvage. The machineries which have been damaged have only scrap value and the complainant was always and is prepared to return this scrap parts because the cowl assembly which is valued at Rs. 41,290/- will not fetch anything except scrap. The Surveyor has not given description of the parts or that such a value will be available in the market. No evidence has been led by the Insurance Company. According to the learned Advocate it is not the function of the Surveyor to assess the salvage value and even if he wants to assess it he should assess it item wise considering the market value prevailing at that time. Hence this part of the assessment report has no value in the eye of law. In any view of the matter if the company assesses the damages the company should either be prepared to accept the salvage or the scrap value thereof. It cannot force the complainant by deducting the salvage value arbitrarily fixed by the Surveyor. We think that the argument has much weight and deduction of Rs, 10,950/-cannot be supported. It is merely an arbitrary value assessed by the Surveyor. If the complainant is prepared to return the salvage, the company can either accept it or may ask for the deduction of scrap value.

According to the learned Advocate of the complainant the scrap value of these spare parts at the most will be Rs.1000/-. Even if we accept the depreciation assessed @ 5%, the Surveyor has assessed the damages at Rs.83,175.50 which is admitted amount to which the complainant is entitled and he is also obliged to return the salvage or the scrap value of the spared which is about Rs. 1000/-. Ms. Shah, the learned Advocate for the Insurance Company relies upon para 10 of the guidelines issued by General Insurance Corporation in Claims Procedure Manual for settlement of non-standard claims. Clause. (1) thereof is in respect of under declaration of licensed carrying capacity which in this case will be 25% of the claim amount subject to maximum Rs. 20,000/-. Ms. Shah further submits that after 1.4.90 the tariff has been revised and the premium is payable on the gross weight of the transport vehicle and in this case admittedly the gross weight of the vehicle was 16200 kgs. However, in the proposal form it was mentioned as 12 tons which means 12000 kgs. and on that basis the policy has been issued.

THE learned Advocate for the complainant states that the proposal was filled in by the Insurance agent and if he has committed a mistake, his client cannot be made responsible for the same. We are unable to accept that argument. When the proposal has been signed by the complainant, unless the agent has been examined by the complainant, the same is binding on him. In any view of the matter, Ms. Shah is not contending that the policy is illegal or not operative. She says that according to the circular if applied in the changed tariff condition, the Insurance Company is entitled to deduct 25% from the admissible claim amount because the policy is undervalued. We shall have to accept this argument. However, even if 25% is allowed to be deducted, the amount of Rs. 52,250/- offered was less than the amount of actual damage to the complainant and he was not bound to accept the said amount with the condition of full and final settlement. We are, therefore, of the opinion that atleast the complainant is entitled to claim the actual damages less 25%. 2.2.94 However, Ms. Shah submits that under the conditions of policy, the company is not under obligation to pay cost of mudguard and lamps and, therefore, the Surveyor has sanctioned Rs. 41,290/- for the cowl assembly instead of Rs. 44,566/-. We are not very happy about this deduction which is contradictory in the sense if there is a total loss the complainant is entitled to get full amount which includes mudguards and head lamps. But being consumer, we shall have to accept the condition of contract between the parties and if the payment of the difference of Rs. 3276/- is not made, we cannot say that it is a deficiency in service.

THERE are also other deductions made by the Surveyor on the grounds which are not very much convincing. We are, therefore, of the opinion that if the amount of Rs. 83,175/- is awarded it will satisfy the interest of justice. Since the Insurance Company is entitled to deduct 25% from this amount, the complainant would be entitled to Rs. 63,175/-. This amount has not been paid to the complainant from 2.8.91. Since the opponent has sent the voucher on or about July 92, he will be entitled to claim interest from that date @ 18%. On account of non-payment of this amount, the complainant must have suffered in business and must have also suffered other damages including pain and suffering. We award Rs. 2000/- for the same. The complainant will also be entitled for cost which we award at Rs. 1000/- ORDER The Insurance Company shall pay Rs. 63,175/-with running interest 18% p.a. from July 1992 till the payment is made and shall also pay Rs.2000/-for pain and sufferingand interest which is quantified at Rs.1000/-. The payment shall be made within 4 weeks from the date of receipt of the copy of the order. If the salvage is not returned, the company will be entitled to deduct Rs.2000/- from the ordered amount. Complaint allowed. _______________