UNITED INDIA INSURANCE CO. LTD. & 2 ORS. vs MANJIT KAUR & ANR

IA/6405/2015

The delay of 7 days in filing the revision petition is condoned. The application stands disposed of. RP/2382/2015

Late Shri Rajwinder Singh, husband of the complainant owned a car, namely, Ford Fiesta, bearing No.PB-19-E-2907, which he had got insured with the petitioner company for the period from 15.12.2010 to 14.12.2011 for the declared value of Rs.5,60,000/-. The aforesaid vehicle when being driven by the husband of the complainant, met with an accident, in which the vehicle was badly damaged and the driver succumbed to the injuries sustained in the said accident. The vehicle was taken to M/s. Goyal Motors, which estimated the cost of repair at Rs.4,92,518.36/-. The surveyor appointed by the petitioner company, applying the depreciation provided in the insurance policy, assessed the cost of repair at Rs.1,91,633.11. However, since the complainant, due to financial constraints expressed her inability to get the vehicle repaired, the surveyor making the assessment on Cash Loss Basis, recommending the payment of Rs.1,25,000/- to the complainant. Since the aforesaid assessment was not acceptable to the complainant, she approached the concerned District Forum by way of a complaint, seeking compensation to the extent of Rs.5,60,000/-.

The complaint was resisted by the insurance company, primarily on the ground that the assessment was made in the presence of the father of the deceased insured, as per the terms and conditions of the insurance policy and accordingly they had approved a claim of Rs.1,23,900/ - on cash loss basis subject to the terms mentioned in the letter dated 20.09.2012, which they sent to the complainant.

The District Forum vide its order dated 14.05.2013 directed the insurance company to pay a sum of Rs.5,59,900/- to the complainant after deducting 15% towards depreciation and cost of the salvage along with interest 9% per annum from the date of the accident. The insurance company was also directed to pay Rs.2 Lacs to the complainant on account of death of the owner-cum-driver along with interest 9% per annum on that amount from the date of the accident. Another sum of Rs.10,000/- was awarded to the complainant as compensation for the mental and physical harassment.

Being aggrieved from the order passed by the District Forum, the insurance company approached the concerned State Commission by way of an appeal. The said appeal having been dismissed vide the impugned order dated 25.05.2015, the insurance company is before this Commission by way of this revision petition.

The main dispute in this case is as to whether the insured vehicle was required to be treated as a Complete Constructive Total Loss (CTL) or not. The relevant portion of the insurance policy in this regard reads as under:- "The insured vehicle shall be treated as a CTL if the aggregate cost of retrieval and/or repair of the vehicle, subject to terms and conditions of the policy, exceeds 75% of the IDV of the vehicle."

The contention of the learned counsel for the petitioner is that the vehicle is to be treated as a CTL only if the cost is retrieval of repair to the insurance policy after applying the depreciation in terms of the insurance policy, exceeds 75% of the IDV of the vehicle. I however find no merit in this contention. In my opinion, the above referred clause envisages the insured vehicle is to be treated as a CTL if the total cost of its repair or retrieval thereupon of the contribution of the insurance company exceeds 75% of the IDV of the vehicle. Had the intention been to treat the insured vehicle as a CTL only in a case where the cost of repair to the insurance company been more than 75% of the IDV of the vehicle, the above referred clause would have been worded altogether differently. The clause as it appears in the insurance policy clearly means that if the total cost of repair or retrieval of the vehicle irrespective of who bears the said cost, exceeds 75% of the IDV of the vehicle, the insurance company has no option but to treat as a Constructive Total Loss (CTL). In the present case, the total cost of repair/retrieval of the vehicle as per estimate given by M/s Goyal Motors exceeded 75% of the IDV of the vehicle and therefore, the insurance company was required to treat as a Constructive Total Loss, unless it is shown that the said estimate was not a fair and correct estimate of such repairs.

The learned counsel for the petitioner points out that the total cost of repair or retrieval may not exceed 75% of the IDV of the vehicle even if the depreciation in terms of the insurance policy is not applied. On a perusal of the assessment made by the surveyor, I find that he has arbitrarily assessed the cost of parts as well as the cost of labour, without taking any estimate or quotation from the market. The complainant having obtained an estimate from the M/s. Goyal Motors, the surveyor, in my view, could have reduced the said estimate only on the basis of alternative quotations/estimates/price list and not on the basis of his own estimate of the cost of the parts and the cost of repairs. The surveyor reduced the cost of most of the parts without even indicating on what basis he had made the said deduction. This, in my opinion, renders the assessment made by the surveyor wholly arbitrary and irrational. Either he should have obtained quotation/price list from the market as regard the price of the parts of the motor parts or he should have obtained estimate from some other workshop indicating the cost of the parts. Similarly, he reduced the estimate of labour cost given by the M/s Goyal Motors, without finding out from the market whether any garage was ready to repair the vehicle at a lesser cost or not. Such a course of action in my view was wholly unwarranted. Therefore, from whatever angle I look at it, the cost of repair of the vehicle exceeded 75% of the IDV of the vehicle.

For the reasons stated hereinabove, I have no hesitation in holding that the fora below were right in taking a view that the insurance company was required to pay IDV of the vehicle to the complainant. The District Forum and the State Commission have made a deduction of 15% from the IDV of the vehicle. I do not find any provision in the insurance policy for making such a deduction. In fact, the policy provides that IDV shall be treated as a market value throughout the policy period without any further depreciation for the purposes of total loss of Constructive Total Loss claims. However, since the complainant has not challenged the orders passed by the fora below, I will not be justified in increasing the quantum of the amount payable to the complainant.

However, I am inclined to give an option to the petitioner company to retain the salvage of the vehicle, subject to its making payment to the complainant without any deduction from the IDV of the vehicle.

The fora below have awarded interest to the complainant from the date of the accident, which in my mind is not justified. The aforesaid direction is therefore modified by directing the petitioner company to pay an interest only from the date of filing of the complaint.

For the reasons stated hereinabove, the revision petition is disposed of with the direction that the petitioner company shall either pay the IDV of the vehicle along with 9% interest per annum on that amount from the date of filing of the complaint and retain the salvage of the vehicle or it shall pay IDV of the vehicle after making a deduction of 15% in terms of the orders of the fora below along with interest on that amount @ 9% per annum from the date of the complaint till the date of payment and in that case the salvage of the vehicle shall belong to the complainant. The payment of Rs.2 Lacs on account of death of the driver of the vehicle shall also be made to the complainant unless already paid along with interest on that amount @ 9% per annum from the date of the complaint. No order as to costs.