Sher Singh Shobta vs NATIONAL INSURANCE CO. LTD

VINEETA Rai These are two cross-appeals. While First Appeal No.454 of 2007 has been filed by Sher Singh Shobta, Complainant before the Himachal Pradesh State Consumer Disputes Redressal Commission, Shimla (hereinafter referred to as the State Commission), being aggrieved by the lesser amount awarded to him by the State Commission, First Appeal No. 550 of 2007 has been filed by National Insurance Company Ltd., Respondent before the State Commission, being aggrieved by the order of the State Commission which had partly allowed the complaint of Sher Singh Shobta and directed the National Insurance Company Ltd. to pay him Rs.2,28,000/- in settlement of his insurance claim subject to return of salvage on "as is where is " basis alongwith compensation of Rs.1,00,000/- and Rs.10,000/- as litigation costs. The State Commission had also directed the National Insurance Company Ltd. to fix responsibility on the officer who had delayed in settling the insurance claim and directed that the interest amount of Rs.1,48,578/- be recovered from the defaulting officer. Since both the appeals arise from a common order of the State Commission, we also propose to dispose of these appeals by a single order by taking the facts from First Appeal No. 454 of 2007. The parties will be referred to in the manner in which they were referred to in the complaint i.e. Sher Singh Shobta as Complainant and National Insurance Company Ltd. as Opposite Party.

BRIEFLY stated, the facts of the case are that the Complainant who was owner of a Tata truck bearing registration no. HP-07 1429 had got the said truck insured from 01.11.1996 to 31.10.1997 with the Opposite Party/Insurance Company for a sum of Rs.3,80,000/-. The aforesaid truck met with an accident on 30.04.1997 near Darlaghat in Solan District, when it fell 1700 feet into a deep gorge resulting in its total loss. Complainant immediately informed the Opposite Party/Insurance Company about the accident and an FIR was also lodged on the same day at Police Station Darlaghat. Opposite Party/Insurance Company appointed a Surveyor, who inspected the site as also the vehicle and submitted a report to the Opposite Party/Insurance Company. Thereafter, the Complainant recovered the salvage from the spot of the accident which took over a month at a cost of Rs.50,000/- for carrying it to Shimla, where it is still lying in a store since it cannot be used. The storage charge is being borne by the Complainant till date. Although the Complainant informed the Opposite Party/Insurance Company about the accident and the total loss of the vehicle stating that it was not repairable, Opposite Party/Insurance Company did not settle the claim. Complainant, therefore, issued a legal notice requesting for settlement of the claim within 15 days but still received no response. Since Complainant was deprived of his livelihood and had also to pay back the loan which he had taken from H.P. Financial Corporation at high rate of interest for the vehicle, he filed a complaint before the State Commission on grounds of deficiency in service and requested that the Opposite Party/Insurance Company be directed to pay him a sum of Rs.6,55,000/- as per the following details : (1) Insured amount of vehicle (being cost of total loss) Rs.3,80,000 (2) Liability of payment to Financer Rs.1,00,000 (3) Recovery of salvage and carriage thereof to Shimla Rs.50,000 (4) Rent of store where salvage is kept and other misc. expenses from the date of accident Rs.25,000 (5) Damages for loss of business and mental harassment due to deficiency in service Rs.1,00,000 Total Rs.6,55,000/-

Opposite Party/Insurance Company on being served denied that there was any deficiency in service. It was contended that the Complainant himself was responsible for the delay in the settlement of insurance claim as he did not supply the required documents, including the original driving license of the driver. Further, the vehicle was got inspected through a Technical Surveyor - M/s Esquire Technocrats, who vide their report dated 05.08.1997 assessed the damage to the vehicle at Rs.1,48,578.28 ps. but the Complainant was adamant that it should be assessed on total loss basis and demanded the full sum insured. Opposite Party/Insurance Company had informed the Complainant that subject to supply of required documents, the claim would be settled as per the amount assessed by the Surveyor, which he failed to do and instead filed a complaint before the State Commission.

WHEN the case was first heard by the State Commission, it allowed the complaint and directed the Opposite Party/Insurance Company to pay the Complainant Rs.3,80,000/- together with interest. The said order was challenged by the Opposite Party/Insurance Company before the National Commission, which remanded the case to the State Commission to decide it afresh as the impugned order was not signed by the then President of the State Commission. Thereafter the State Commission after hearing the case, partly allowed the complaint and directed the Opposite Party/Insurance Company to settle the claim and pay the Complainant Rs.2,28,000/- by permitting depreciation at 40% keeping in view the age of the vehicle together with interest @ 9% per annum from the date of institution of the complaint i.e. 05.11.1997, subject to return of salvage on "as is where is " basis alongwith the R.C. of the vehicle. In case the Opposite Party/Insurance Company wanted the R.C. to be transferred in its name, Complainant would do the needful at the cost and expense of the former whenever required in writing. Since there was inordinate delay in settling the claim, the State Commission directed the Opposite Party/Insurance Company to pay Rs.1,00,000/- as compensation for non-settlement of the claim within reasonable time alongwith litigation costs of Rs.10,000/-. The relevant part of the order of the State Commission is reproduced: "8. We have thoroughly examined Annexure R.2. It is not at all satisfactory. Substantive items in it have been mostly disallowed or have been found to be not covered. Above all, the cost of labour/repairs have been put to less than half by the Surveyor. On what basis and for what reasons, nothing is mentioned by him in the report. Why majority of the claim has been disallowed, there is no reason given and none could be explained by the learned Counsel for the Insurance Company. It hardly needs to be mentioned in this behalf that Surveyor is an expert appointed by the Government of India who possesses the expertise in the line of loss assessment. It is well known that in order to enable the authority/court/semi judicial authority to read evidence of an expert, he has to support everything by some reason/logic, howsoever brief it may be. We are sorry to observe that though claims have been disallowed, but no reasons are given. Even the costs of parts have been reduced. Even price of parts which were required to be replaced, have been reduced in most of the cases. In the end of R-2, there is a mention that prices recommended for new parts were according to manufacturer ''s list price but no such price list is attached. Whether such enquiry was made from authorized dealer of the Company or elsewhere, not a word has been said by the Surveyor. And on this aspect we are of the view that the Surveyor acted more as an employee of the opposite party, rather than acting as an independent expert. ... "

Hence, the present cross-appeals.

LEARNED Counsels for both parties made oral submissions. Counsel for the Complainant brought to our attention the report of the Surveyor - M/s Esquire Technocrats deputed by the Opposite Party/Insurance Company and which in its report listed out the extensive damage caused to the vehicle clearly indicating that almost every part of the vehicle was damaged, including the chassis, the engine and other key components. Since the vehicle had admittedly fallen into a 1700 feet deep ravine, the vehicle was totally damaged and could not be repaired. The Surveyor while listing out the specific damage in respect of almost every part of the vehicle erred in concluding that the vehicle could be fully repaired on the basis of some estimates of repairs and after deducting almost 50% towards depreciation and thus recommending that the net loss was, therefore, only of Rs.1,48,578.28 ps. The vehicle had been insured for Rs.3,80,000/- just 9 months prior to the accident and, therefore, deducting such a high depreciation was also not justified. The State Commission had concluded that the cost of repairs had been grossly under-valued but erred in not concluding that the vehicle was in fact a total loss and thus not repairable.

COUNSEL for the Opposite Party/Insurance Company stated that the loss of the vehicle was assessed after an on the spot survey by a Technical Surveyor and this clearly indicated that it was not a case of total loss and the vehicle could have been repaired. Therefore, the order of the State Commission directing that the claim should be settled for an amount higher than that assessed by the Surveyor i.e. Rs.2,28,000/- and also directing the Opposite Party/Insurance Company to pay compensation of Rs.1,00,000/- and litigation costs of Rs.10,000/- was both harsh and punitive particularly since the delay in settling the claim was attributable to the Complainant who did not make available the necessary documents required to settle the claim. Further, the State Commission had not taken into account the depreciation to the vehicle which had been used for several months prior to the accident. In fact at the time of the accident the value of the vehicle had rightly been assessed at Rs.1,48,578/- after deducting 50% depreciation on the rubber and plastic parts and 40% on metal parts.

WE have heard learned Counsels for both parties and have also gone through the evidence on record. The facts pertaining to the insurance of the vehicle, its meeting with an accident and the extensive damage caused to it are not in dispute as clearly indicated in the report of the Surveyor appointed by the Opposite Party/Insurance Company. After having perused the survey report, we are, however, not in agreement with the conclusion of the Surveyor that despite this extensive damage the vehicle was repairable and that after deducting depreciation of 50% and 40% on rubber/plastic parts and metal parts respectively, the total net loss comes to Rs.1,48,578/-. From a perusal of the damages listed out by the Surveyor, we note that almost every part of the vehicle was severely damaged, including the chassis, the engine and over 66 other important components of the vehicle. Under the circumstances, it is difficult to appreciate how the vehicle which has suffered such extensive damage could be repaired and made roadworthy. We are also unable to appreciate how the Surveyor has deducted 50% and 40% on account of depreciation of rubber and metal parts respectively since the vehicle had been insured just 9 months prior to the accident and at that time the Insured Declared Value of the vehicle was Rs.3,80,000/-. Once having insured the vehicle for this amount, such a high percentage of depreciation is totally unjustified. This issue has been squarely settled by a judgment of the Hon ''ble Supreme Court in DharmendraGoel Vs. Oriental Insurance Company Limited [(2008) 8 SCC 279], wherein it has been held that the Insurance Company after having accepted the value of a particular vehicle could not disown that very figure on one pretext or other when they are called upon to pay compensation. This ''take it or leave it '' attitude was clearly unwarranted not only as being bad in law but ethically indefensible. The Insurance Company was bound by the value put on the vehicle while taking the insurance policy. The above ruling is fully applicable in the present case. The Insurance Company having once accepted the market value of the vehicle at Rs.3,80,000/- at the time of insuring the vehicle and since the vehicle had been used for only 9 months, at the most the depreciation of 10% would have been reasonable and not the depreciation of 40% as ruled by the State Commission based on the age of the vehicle. Respectfully following the judgment of the Hon ''ble Supreme Court in DharmendraGoel (supra) and keeping in view the facts of the case as discussed in the foregoing paragraphs, we are of the view that the insurance claim should be settled for an amount of Rs.3,42,000/- i.e. after deducting 10% towards depreciation from the insured sum of Rs.3,80,000/-. This amount should be paid with 9% per annum from the date of complaint i.e. 05.11.1997. We are, however, of the view that compensation of Rs.1,00,000/- awarded by the State Commission is on the higher side and reduce the same to Rs.50,000/-. We also set aside the order of the State Commission directing that the interest on the insured amount be recovered from an officer of the Opposite Party/Insurance Company who delayed in settling the claim.

TO sum up, First Appeal No. 454 of 2007 filed by the Complainant is partly allowed and the Opposite Party/Insurance Company is directed to pay him sum of Rs.3,42,000/- alongwith interest @ 9% per annum from the date of the complaint i.e. 05.11.1997 as also compensation of Rs.50,000/- and litigation costs of Rs.10,000/- within a period of three months from the date of receipt of copy of this order. First Appeal No.550 of 2007 filed by the Opposite Party/Insurance Company is dismissed. No costs.