T.M. BASHEER vs BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD.

COMPLAINT for a direction to the opposite party for settling the claim and for disbursement of the insured amount Rs. 6,40,050/-.

THE allegations in brief are, that the complainant purchased a Daewoo Ceilo Car from M/s. Benz Automobiles (P) Ltd., Ernakulam on 29.1.1997; the car was insured with the opposite party under Ext. A2 policy for an amount of Rs. 6,40,050/- on 29.1.1997, the premium was also paid accordingly and the period of the policy was from 29.1.1997 to 28.1.1998. For purchasing the car he availed a hire purchase loan of Rs. 5,43,000/- which had to be repayed in 36 instalments, each instalment being Rs. 20,623/-; he has paid the whole amount and No Objection Certificate Ext. A11 was obtained. At about 3 a.m. on 12.1.1998 the car was destroyed by fire when the same was parked in the car porch of his house. As per the information given by him South Police, Alappuzha registered Crime No. 9/98. In view of the said occurrence, he filed Ext. R2 claim on 27.1.1998 before the opposite party. R.W. 2 Surveyor was deputed who filed Ext. R3 spot survey report. THEreafter R.W. 3 Surveyor filed Ext. R5 survey report. Though the complainant was co-operating with the opposite party for the settlement of claim, they did not settle the claim. THE opposite party was delaying the settlement by assigning unsustainable reasons. Since within reasonable time the claim was not settled he send Ext. A9 Lawyer''s Notice on 4.3.1998 for which he got Ext. A10 reply stating that they are considering the claim in terms of the conditions of the policy. THEre is deficiency of service and, therefore, he wanted direction to the opposite party for redressal of his grievance. In the version filed by the opposite party they contend that complaint is not maintainable, there is no deficiency of service as alleged. They admit that the complainant had insured the car for an estimated value of Rs. 6,40,050/- on 29.1.1997 and the certificate-cum-policy schedule is Ext. R1, they maintain, that though the estimated value is Rs. 6,40,050/- as per the terms and conditions of the policy the opposite party has reserved the right as to the manner of settlement of the claim arising under the policy; and the opposite party has the option to repair, reinstate or replace motor car, or pay in cash the amount of loss or damages, but the liability of the opposite party would not exceed the actual value of the parts damaged or lost, less depreciation and they are bound to settle the claim only for the actual loss or the estimated value whichever is less. Pursuant to the claim they appointed R.W. 2 Surveyor who conducted spot survey and filed Ext. R3 report. R.W. 3, the Surveyor had filed Ext. R5 survey report estimating the loss and the other details; as per the report the liability of the opposite party is only to pay Rs. 2,80,000/- after deducting the salvage value. R.W. 4 filed Ext. R6 report stating the value of a used car of the same make is between Rs. 2,75,000/- to 2,85,000/-. The price of the car declined and the showroom price itself came down. Therefore, the claim for the estimated value is not sustainable. They contended, as the opposite party had taken all steps for settling the claim, there is no deficiency of service as alleged.

Complainant has got himself examined as P.W. 1 and on behalf of the opposite parties R.W. 1 to R.W. 6 were examined. Complainant produced Exts. A1 to A10. The opposite party produced Exts. R1 to R8. The points that could arise for consideration are : (1) Whether the petition is maintain-able ? (2) Whether there is deficiency of service ? If so, what is the amount for which the claim is to be settled ? (3) What, if any, is the compensation to which the complainant is entitled to ? (4) Reliefs and costs ?

Point No. 1 :

INASMUCH as Ext. A2 policy and Ext. R1 certificate-cum-policy schedule evidence that the complainant insured his Cielo Car with the opposite party and the premium for the same was collected by the opposite party, it is clear that the complainant has availed the service of the opposite party for consideration, consequently he is a consumer and is entitled to prefer the complaint on the allegation of deficiency of service. There is another contention for the opposite party that since detailed investigation and complicated question of law and facts arise the matter has to be relegated to a Civil Court. A complaint alleging deficiency of service on the ground that the claim is not settled, the same being a consumer dispute; and the scope of the enquiry since is only as to deficiency of service, the parties cannot be referred to Civil Court; such questions have to be adjudicated by the Fora created under the Consumer Protection Act, 1986. Though the complainant alleged to his having availed a loan by hire-purchase agreement he has produced Ext. A11 No Objection Certificate evidencing the discharge of the loan. In view of the above the opposite parties cannot question the maintainability of the complaint. Point found in favour of the complainant. Point Nos. 2 and 3 : The fact that the complainant insured the vehicle in question with the opposite party for an estimated value of Rs. 6,40,050/- is not disputed. The complainant''s case is, on 12.1.1998 when the car was parked in the car porch of his residence, at about 3 a.m. the same was destroyed by fire and he made a report before the South Police Station, Alappuzha which registered Crime 9/98. Pursuant to the said occurrence he made Ext. R2 claim before the opposite party on 27.1.1998. His grievance is, till date of filing this complaint the claim is not settled. Whereas the complainant would claim that he is entitled to the insured amount Rs. 6,40,050/-, the opposite party would seek to maintain that the complainant is entitled only to the market value of the vehicle as on the date of the peril, which is only Rs. 2,30,000/- after deducting the salvage value of Rs. 10,000/-. It is also their case that the complainant was not ready to accept the offer of Rs. 2,80,000/- on the settlement of the claim. It is urged on behalf of the opposite party, that it was on account of the aforesaid conduct of the complainant that the claim could not be settled. That the car was destroyed by fire is not disputed. Having regard to the nature of defence as stated above, the first question to be considered would be what is the amount for which the claim has to be settled, then the question would arise whether the failure of the opposite party to settle the claim within a reasonable time would amount to deficiency of service.

R.W. 2 filed Ext. R3 spot survey report wherein he states that he found the car gutted by fire. He describes the condition of the vehicle at his visit. The same would show that the car was in a burnt condition. Thereafter the opposite party deputed R.W. 3 Surveyor who filed Ext. R5 report in which he gives a detailed statement as to the value of the parts to the replaced and ultimately he reports that the value of 1996 model ceilo car registered in 1997 in the pre accident condition is only Rs. 2,80,000/-. He is of the view that the claim can be settled for an amount of Rs. 2,80,000/-. The repair charges, he estimates at Rs. 4,80,000/-. In considering this aspect the question whether the assessment must be on a total loss basis will have relevance. Condition No. 3 in Ext. R1 states that the Company may at its own option repair or replace the motor vehicle or part thereof and/accessories or may pay in cash the amount of the loss or damage, the liability of the Company shall not exceed the actual value of the parts damaged or loss less depreciation plus the reasonable cost of fitting, and shall in no case exceed the insured''s estimate of the value of the motor car. Thus, the opposite party has the option either to reinstate the car or replace it, or pay the pre accident value, but that cannot be in excess of the estimated value in the policy of insurance. Having found that the insurer had the discretion, incidentally the question would arise whether the present case of the opposite party on the total loss basis can be supported. In that regard Ext. R6 report filed by Ext. R.W. 4 has get relevance. R.W. 4 is a Graduate in Engineering and MBA, Surveyor, Loss Assessor and Valuer. He was deputed to report as to the market value of used car of the same make as on 12.1.1998. He reports that 96 model DMC Ceilo car would fetch a price of Rs. 2,75,000/- to Rs. 2,85,000/-. As R.W. 4 he states, he made enquiries with the dealers of such cars. He supports the estimate in his evidence. R.W. 5 is an employee of CarbondiOxide which is the dealer of Cielo cars said that they are dealing with DCM DAEWOO Ceilo Car, the price of the car was revised during January, 1996 to February, 1998, he gives the details of the revision and states, after the first week of 1998 the price of the car came down. He swears that the show-room price of such car on 12.1.1998 was Rs. 5,17,395/-. His evidence shows that during January, 1996 to August, 1996 the price of the car was Rs. 6,03,826/-, thereafter in March, 1997 the price was revised to Rs. 6,29,223/-, again the price was revised to Rs. 6,70,000/. It is then that the price came down to Rs. 5,17,345/-. He filed Ext. R8. Ext. R8 states that as on 12.1.1998 the show-room price of Ceilo car was Rs. 5,17,395/-. His evidence is supported by Ext. R8. What is evident from the evidence of Ext. R5 along with Ext. R8 is there was decline in price of the Ceilo car, naturally that would reflect on the market value of used car also on 12.1.1998. It is against the said backdrop that the evidence of R.W. 4 and Ext. R6 has to be appreciated. There is no counter evidence as to this aspect. Therefore, as on the date of peril the market value of the used Ceilo car of the model in question was between Rs. 2,75,000/- to Rs. 2,85,000/-. The report of R.W. 3, Ext. R5 that the price of the used car in the market during the relevant date thus gets support from the evidence of R.W. 4 and Ext. R6. This is particularly so as the evidence of R.W. 5 and Ext. R8 would show that there was fall in the ex-show room price of the said Ceilo car during the relevant period. Having found that the market value of the used car is as afore indicated, now it is necessary to advert to argument on behalf of the complainant who sought to maintain that the market value of the Ceilo car can only be the show room price of the car less depreciation. As has already noted as per Ext. R8 and evidence of R.W. 5 the ex-show room price at the date of the peril Rs. 5,17,395/-. Now as to what should be the market value to be reckoned in a claim of this nature has to be adverted to. Page 284 of the Seth''s Law Relating to Traffic Offences and Accidents Claims, 2nd Edition it is stated "If there is a total loss, the amount payable to the assured will be value of thing insured at the time of the loss, but if there has only been a partial loss, the correct measure of indemnity is the difference between the value of the damaged property before and after loss". As to the amount required for repair, the opposite party produced Ext. R4, a detailed estimate from Daewoo which estimates the charge of repair at Rs. 8,81,228/-, whereas even the estimated value is only Rs. 6,40,050/-. When Ext. R5 along with Ext. R4 and evidence on R.W. 3 is taken, it is clear that the repair of the vehicle is uneconomical, so the assessment can only be on total loss basis. Now the question for consideration is, whether it should be ex-show room price minus depreciation that should be treated as the price of the vehicle or the market value of the used vehicle of the same model on the date of peril. In deciding the said question, the learned Counsel of the complainant maintained that in such matters when two interpretations are possible the one in favour of the insured has to be adopted. Reliance was made on the decision of the Supreme Court in B.V. v. Oriental Insurance Company Ltd., II (1996) CPJ 28 (SC)=1996 NCJ 609 (SC), wherein the question that arose for decision was whether extra passengers being carried in the goods vehicle could have contributed to the accident and having found that it did not contribute to accident, the Supreme Court held the exclusion clause in the insurance policy has to be read down. The said decision cannot have application to the facts of this case. In the decision of the National Commission in Oriental Insurance Co. Ltd. v. M/s. Shakrbhai Ramdas Marfatia, II (1997) CPJ 17 (NC)=1998 NCJ 190, the estimated value though was Rs. 3,80,000/- the insured has awarded to Rs. 1,75,000/- by the State Commission. The view of the State Commission was accepted by the National Commission. Then the learned Counsel sought to maintain, when the terms of the policy is ambiguous or doubtful the same has to be interpreted in favour of the insurer. The relevant Clause 3 in Ext. R1 does not admit of any doubt, neither is the same vague so that two interpretations are possible enabling one in favour of the complainant being accepted. There is no scope for the application of the said principle. As to this aspect the learned Counsel for the opposite party relied on page 252 of Modern Insurance Law, 3rd Edition by John Birds, wherein it is stated : "In respect of goods, the measure of what the insured has lost will prima facie be the market value of the property lost at the time and place of loss, in other words, its second hand or resale value". The decision of the National Commission in Oriental Insurance Co. Ltd. v. Suresh Arjun Karande, II (1992) CPJ 484 (NC)=1992 (1) CPR 431, is on the point. There the point that arose for determination was what was the market value of a vehicle of the make and model as on the date of the peril. There also the assessment had to be on total loss basis. In para-3 of the said decision at page 432 the National Commission held "The Surveyor should have ascertained what was the value in the market of a second hand (used) vehicle of the particular make and model as on the date which the accident took place. This will be quite different from the value of different parts, put together". Thus the decision of the National Commission clearly shows that it is second hand value of a used car as on the date of the peril that has to be reckoned in fixing the market value. In view of the aforesaid statement of law the value fixed by R.W. 3 since gets corroboration from the evidence of R.W. 4 and his report Ext. R6, the market value of the car of the type in question is Rs. 2,80,000/-. A faint attempt was made by the learned Counsel for the opposite party to maintain that from the said amount the value of depreciation has to be deducted. The said stand is opposed to what is pleaded by him in paras 13 and 14 of the version. In para 13 he has stated that the complainant was not ready to accept the offer of Rs. 2,80,000/- for settlement of the claim made by the opposite party. Again the same is repeated in para 14 wherein it is stated that the insured vehicle could not have fetched more than Rs. 2,80,000/- in the open market as on the date of the peril. Then it is clear that market value of the vehicle as on the date of peril was Rs. 2,80,000/-; and having found that the value to be paid is on the total loss basis the claim ought to have been settled for Rs. 2,80,000/-. Now the question is for consideration is whether there is deficiency of service in not settling the claim. Ext. R5 report was on 11.3.1998, but till the filing of the version, the claim was not settled, if settled that was not intimated. Though there is a statement in the version that the opposite party has made such an offer, there is nothing to show such an offer was intimated to the complainant and he declined to accept the same. The learned Counsel for the opposite party sought to maintain that he was orally intimated; in support of the same he pointed out even according to the complainant he had made visits to the office of the opposite party. Simply because the complainant had made visits which according to the complainant was to make enquiry as to his claim, that need not prove that the opposite party made an offer and the complainant declined to accept the same. In such matters the insurer should have made written intimation as to the same. There being no such intimation there is delay in settling the claim. This is more so, in view of the decision of the National Commission in United India Insurance Co. & Anr. v. M/s. Jahangir Spinners (P) Ltd., I (1999) CPJ 5 (NC)=1998 NCJ 668, wherein the National Commission held that settlement and payment of the insurance claim after more than two months of the submission of the report by the Surveyor would amount to negligence and deficiency of service. Therefore, the failure of the opposite party in settling the claim in time would amount to deficiency of service.

NOW coming to the question of compensation on account of the deficiency, award of interest in lieu of compensation on the amount, in the circumstance, would be just and proper. The rate of interest in such circumstance has to be at 12%. In the decision in III (1996) CPJ 8 (SC), United India Insurance Co. Ltd. v. M.K.J. Corporation, the Supreme Court held, the rate of interest to which the Insurance Company could be made liable is 12%. Therefore, the amount to which the complainant is eligible is Rs. 2,80,000/- and the same would carry interest at 12% from 11.5.1998, that is from the date of expiry of two months from the date of filing Ext. R5 survey report. The finding in these points is, there is deficiency of service, and the complainant is eligible for an amount of Rs. 2,80,000/- with interest at 12% from 11.5.1998. Points found accordingly. Point No. 4 :

IN view of the aforesaid findings the complainant is entitled to a direction to the opposite party to pay an amount of Rs. 2,80,000/- towards the claim under Ext. A2 policy with interest at 12% from 11.5.1998 till date of payment or recovery since the complainant succeeds atleast in part the complainant is entitled to costs which we fix at Rs. 3,000/-. Point found accordingly. In the result the opposite parties are directed to pay Rs. 2,80,000/- (Rs. two lakhs eighty thousand only) with interest at 12% from 11.5.1998 till payment or recovery. The said amount shall be paid within a period of three months from the date of this order. The complainant is also entitled to his costs Rs. 3,000/- (Rs. three thousand only). Complaint allowed with costs.