Sona Ceramic vs NEW INDIA ASSURANCE CO LTD

THIS complaint was filed in this Commission on 29.10.2002. Sona Ceramic, the complainant, a partnership firm, suffered loss due to earthquake of more than 7.6 on Richter scale on 26.01.2001, which caused damage to its building, machinery, etc., at Rajkot in Gujarat,. The complainant had obtained insurance policy from 23.05.2000 to 22.05.2001 from the New India Assurance Co. Ltd., OP. Risk cover in the insurance policy was Rs.1.35 crores. The complainant suffered severe damages to the tune of about 45 lakhs. The break -up of the same is given below : - JUDGEMENT_104_LAWS(NCD)5_2015.htm

THE complainant has already received from the OP a sum of Rs.7,74,000/ - on 05.10.2001. Now, it has claimed a sum of Rs.37,09,689/ -plus Rs.10,01,616/ - (interest @ 18% p.a., from 01.05.2001, till the date of complaint), total being Rs.47,11,305/ -, with costs and pendent lite for the said loss. It is averred that the building was erected at a cost of Rs.1.69 crores. Its valuation report dated 01.12.1999 has been placed on record. Mr.A.S.Surani, Approved Valuer has assessed the above said loss. All the loss has been accounted in the ledger pages which are placed before this Commission. After the earthquake, there was no power supply for a very long period and the complainant company had to run its 250 KVA Generator. There is damage to the kiln to the tune of Rs.6.88 lakhs.

THE District Industrial Centre had made at its own assessment regarding the damage to the Unit. It came to the conclusion that the complainant has suffered a loss in the sum of Rs.41.25 lakhs. Its certificate dated 23.03.2001 has been annexed with this complaint. The Regional Manager of the Insurance Company at Ahmedabad has given the split details of the complaint on 03.08.2001. The OP appointed Surveyors, M/s. Desai and Trivedi, who arrived at a figure to the tune of Rs.231/2 lakhs, i.e., only about half of the claim made by the complainant. However, at the advice of the Surveyors, the OP approved the claim to the tune of Rs.7,74,000/ -. It is contended that the compensation is on the lower side. The claim of Rs.27,09,750/ - has remained unpaid, for which the present complaint has been filed.

AGAIN , the complaint was lodged within a month, i.e., in and around March, 2001, after the earthquake, by the complainant. It was only in July, 2001 end, that the Surveyors of the Insurance Company visited the site of the complainant and the above said payment was cleared in October, 2001. It is prayed that unpaid claim be awarded to the complainant. The OP had repudiated the claim of the complainant, which is invalid.

THE OP listed the following defences. The Insurer/OP deputed M/s. V. Trivedi N Co., along with previous Surveyor, M/s. Hitarth Desai and Associates, Joint Surveyors, who assessed the loss. The Surveyors, vide their joint survey report, dated 20.08.2001 arrived at a net payable loss of Rs.8,15,441/ -, after under insurance, depreciation and salvage value, as applicable. Compulsory excess of 5% and reinstatement premium were deducted and the net payable amount of Rs.7,74,000/ - was thus approved. The Joint Surveyors had assessed the actual loss after going through the estimates submitted by the insurer from M/s. Dipak Buddhadev and M/s. A.S.Surani. The claim made by the complainant is on the higher side. The complainant has filed the petition claiming the amount that has been spent by the complainant for betterment of property. Consequently, the amount spent subsequently for repairs and / or betterment of property than what it was before the loss suffered is not payable under the policy. The complainant was paid the amount, which was reasonable, fair and admissible, under the law of insurance.

IT was further averred that the complainant has already received payment of Rs.7,74,000/ -, in full and final settlement of his claim against the insurance policy. The said claim was received after approving the Surveyor report and the voucher was sent to the complainant along with cheque in the sum of Rs.7,74,000/ - on 05.10.2001. However, on 18.10.2001, the complainant sent a letter stating that they were accepting the payment, under protest. The Surveyor noted the above facts in their report, as under : - "(1) There are very minor horizontal and vertical cracks in the walls of factory shed building.

(2) No part or whole of any of factory shed / building has collapsed or destructed in the said earthquake.

(3) No part of whole of any of the roof structure has collapsed in the said earthquake.

(4) No part or whole of kiln structure such as side walls, top roof has collapsed or destructed in the said earthquake.

(5) No stocks of goods such raw / green, final/finished goods, goods in process in the kiln has been crushed, pressed, sandwiched, damaged or destructed due to collapse of building or kiln structure.

(6) Kiln, machinery and accessories as well as stocks cannot be damaged to such an extent as declared by you only by vibrations, tremors and shaking of earth during earthquake, when no part or whole of any of building structure kiln has collapsed or destroyed.

(7) Any damage to the building walls such as cracks is to be repaired by filing the cracks only and no partial major or full reconstruction of the same is absolutely necessary". All these allegations have been denied.

WE have heard the counsel for the parties. The learned counsel for the complainant placed reliance on the report of independent Approved Valuer and Chartered Engineer, Sh. A.S.Surani, who, vide his report, dated 17.02.2001came to the conclusion that total loss in the sum of Rs.17,40,500/ - only had occurred. Mr. Surani is not an independent witness. He is engaged by a private company. It cannot be said beyond doubt that he is a guileless witness. Consequently, we are unable to pin any value to his report which carries exiguous value.

HOWEVER , the most telling and important argument urged by the counsel for the complainant is that the OP has appointed 2 or 3 Surveyors and as such, their evidence is not reliable and trust -worthy. In this context, he has invited our attention towards the preliminary interim survey report dated June, 2001 given by M/s.Hitharth Desai and Associates, which mentions, as under : - "Note : as per the Loss Estimated by the Insured, gross amount of loss and claim may exceed Rs.10,00,000/ -. Awaiting appointment for Final Survey. I issue my preliminary / Interim survey report. As above".

THEREAFTER , there is a joint report of M/s. V. Trivedi N. Co. and Hitarth Desai and Associates, which mentions the loss at Rs.7,74,669/ -.

COUNSEL for the complainant made a vain attempt to convince the Commission that there is another report wherein the loss was assessed at Rs.23.50 lakhs. However, he could not produce concrete evidence in this respect. These are the oral assertions which are not bolstered by any cogent and plausible evidence.

HOWEVER , it is difficult to fathom, why, a second surveyor was appointed in this case. The reports of the surveyors are contradictory. There should be some reason to discard the findings given by the first surveyor. It is surprising that the first Surveyor participated in the joint survey, with another surveyor. This also casts a film of doubt over the bonafides of Hitarth Desai and Associates. The law has crystalline clarity in this context. In New India Assurance Co. Ltd. Vs. Protection Manufacturers Pvt. Ltd., 2010 7 SCC 386, it was held that in view of Section 64UM (3) which provides power only with Authority, i.e. IRDA, and not the insurer. The OP could not have appointed the second surveyor, hence, the appointment and report of second surveyor are nonest.

IN Sri Venkateswara Syndicate Vs. Oriental Insurance Co. Ltd. and Anr., , it was held, at para Nos. 31, 32, and 33, as under : - "31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or 17damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured.

There is no disputing the fact that the Surveyor/ Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report.

Scheme of Section 64 -UM particularly, of sub -sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course. If for any valid reason the report of the Surveyor is not acceptable to the insurer may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated etc., it must specify cogent reasons, without which it is not free to appoint second Surveyor or Surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of Surveyor/Surveyors. There is no prohibition in the Insurance Act for 18 appointment of second Surveyor by the Insurance Company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first Surveyor and the need to appoint second Surveyor.

SIMILAR view was taken in Jagnnatha Poultries Vs. New India Assurance Co. Ltd.,2012 92 ALR 763and Adarsh Chemicals and Fertilisers Ltd., and Anr. Vs. United India Insurance Co. Ltd., 2013 4 CPJ 322.

IN light of this discussion, we will accept the report of the first Surveyor assessed in the sum of Rs.10,00,000/ -. The complainant is entitled to a sum of Rs.10,00,000/ - minus Rs.7,74,000/ -, equivalent to Rs.2,26,000/ -. Consequently, the OP is directed to pay to the complainant, a sum of Rs.2,26,000/ -, with interest @ 9% p.a., from the date of incident, i.e. 26.01.2001, till its realization. As the OP has acted in a malafide way and tried to belittle the claim of the complainant, therefore, we impose costs in the sum of Rs.50,000/ -, which be paid to the complainant, within 90 days from the date of receipt of this order, otherwise, after expiry of 90 days, it will carry interest @ 9% p.a., till its realization.