UNITED INDIA INSURANCE COMPANY LTD. vs P.S.MANI

THIS appeal has been preferred by the United India Insurance Company Ltd., against the order dated June 13, 1991 passed by the State Commission, Bangalore directing the appellant, who was the opposite party in Complaint No. 103 of 1990 on the file of the State Commission, to pay Rs. 1,01,803/- to the complainant with interest thereon at the rate of 12 per cent per annum from 1.9.1989 till the date of payment and costs of Rs. 1,000/-.

THE complainant is the owner of a Rubber Plantation in Thotathady Village, Belthangadi Taluk of South Karnataka District, Karnataka. He had insured his rubber plants with the appellant company against fire among other eventualities. Under the contract of insurance, the company had undertaken that in the event of destruction of rubber plants by fire etc. in the plantation the insured would be reimbursed the replantation cost at the rate of Rs. 50/- per plant in respect of rubber plants which were upto three years of age and at Rs. 100/- per plant in respect of plants which were above three years in age. The complainant had paid the full premium demanded by the insurer and the policy issued to him was for the period from December 19,1988 to December 16,1989. On February 6,1989, there was a fire in the plantation of the complainant as a consequence of which 1424 rubber plants which were upto three years in age and 353 rubber plants which were above three years in age were destroyed. Thereupon, the complainant immediately preferred a claim to the insurer for reimbursement of the replantation cost of the said plants. On June 27, 1989, the appellant company offered to pay a compensation of Rs. 28,988/- only to the insured. The complainant did not accept the offer and requested the appellant company to reconsider the matter and to pay him Rs. 1,06,500/- as per the terms of the policy. The appellant company by its letter dated October 17, 1989 refused to pay the same. Subsequently, the appellant company made a revised offer to pay Rs. 60,024/- by letter dated April 20,1990. The complainant refused to accept this offer also and approached the State Commission with the complaint petition seeking recovery of Rs. 1,06,500/- from the Insurance Company with interest at the rate of 12 per cent per annum on the said sum from May 5,1989 upto the date of payment.

THE complaint was resisted by the appellant (opposite party) by contending inter alia that they had assessed the loss suffered by the complainant at only Rs. 60,024/- and since the dispute was only about the quantum, it could not be said to be a case of ''deficiency in service'' but was in reality only a claim for breach of contract. On this basis it was contended that the approach made by the complainant to the State Commission seeking relief under the Consumer Protection Act was misconceived. On the merits the respondent struck to the stand that the amount payable to the insurer under the terms of policy was only Rs. 60,024/-.

IN support of the objection raised against the jurisdiction of the State Commission to adjudicate upon the complaint, the appellant company relied on the decision of this Commission in Janta Machine Tools v. Oriental Insurance Company Ltd., 1991 (I) CPJ 234. This plea was rejected by the State Commission by pointing out that the decision in Janta Machine Tools case had turned on the special facts present therein namely, that there had been a detailed investigation by the Insurance Company of all the relevant facts and circumstances pertaining to the claim made by the insurer and a conclusion had been reached by it in good faith that the claim advanced by the insured was totally false and in those circumstances it could not be said that the repudiation of the claim by the insurer was either arbitrary or unreasonable and hence no deficiency in service could be spelt out. In our opinion the State Commission was perfectly right in distinguishing the ruling in Janta Machine Tools case as being based wholly on the special facts and circumstances of that particular case. That this is so, has been clearly pointed out by this Commission in the order passed in S. Bhagat Singh v. The Oriental Insurance Company Ltd. (Revision Petition No. 7 of 1991) decided on October 3, 1991. While dealing with a similar argument advanced in that case by the insurer, this Commission observed as follows: "9. It was next argued by the learned Counsel for the respondent that intricate questions of facts and law are involved in this case and lot of evidence is to be led and, therefore, it is proper that claim of the complainant be adjudicated upon by a Civil Court. For this argument reliance was placed upon I (1991) CPJ 234, Janta Machine Tools v. Oriental Insurance Company Ltd. In that case this Commission had remarked:

"Having regard to the facts and circumstances of this case and the nature of the controversy between the parties we consider that this is a matter that should be adjudicated before a Civil Court where the complainant as well as the respondent will have ample opportunities to examine witness at length, taken out commission for local inspection etc. and have an elaborate trial of the case". It may be mentioned here that similar argument was advanced before the State Commission. Strangely enough, that Commission accepted that argument and consequently only on that ground accepted the appeal and set aside the order of the District Forum. The case was not discussed on merits. We are of the opinion that the argument of the learned Counsel for the respondent company has no force. The matter has been discussed in detail in the decision of the Commission in S.K. Abdul Sukur v. State of Orissa and Ors., II (1991) CPJ, page 202 and we need not dilate upon this point. The observations in Janta Machine Tools case have to be understood against the background of the special facts relating thereto. It was nowhere laid down in that case that in all cases where examination and cross-examination of witnesses is involved, the proper forum for adjudication of the dispute involved in the case is only the Civil Court. It was remarked Din Abdul Sukur''s case (Supra) by this Commission:

"If jurisdiction is declined by the Redressal Forums set up under the Act in all such cases on the mere ground that examination and cross-examination of witnesses would be necessary, it would amount to unjust denial of the benefits of the Act to the aggrieved consumer by erroneous abdication of its jurisdiction by the Forums".

As noticed earlier, in the present case the facts are not much in dispute. No fact, counter to the fact stated by the complainant in his complaint has been averred by the respondent company. We, therefore, hold that the case quoted by the learned Counsel for the respondent is not applicable in the present case. Hence we hold that the State Commission was in error in declining to decide the appeal on the merits".

OBSERVATIONS to the same effect have been made in the orders passed by this Commission in the cases of Sushila Gautam v. National Insurance Company Ltd., (F.A. No. 50 of 1991) decided on October 3, 1991 and M/s. Raj Kamal and Company v. M/s. United India Insurance Company Ltd. and Ors. (O.P. No. 44 of 1991) decided on January 6, 1992. We may usefully extract paragraph 5 of the order passed in the latter case where the legal position has been fully explained� "5. Before proceeding further we may take up one argument advanced by the learned Counsel for the Insurance Company and its officers i.e. Respondents Nos. 1 to 4. He placed reliance upon a decision of the Commission rendered in Janta Machine Tools v. Oriental Insurance Company Ltd., II (1991) CPJ 235. In that case this Commission has remarked.

"From the facts disclosed by the record and particularly the averments contained in the counter affidavit filed by the first respondent it is seen that the Insurance Company had fully investigated into the claim put forward by the complainant, got surveys conducted and had finally come to the conclusion that the claim put forward by the complainant was false and accordingly informed the complainant that his claim was rejected. Thus this is not a case where the Insurance Company did not take prompt and necessary steps for deciding the claim under the policies of insurance. It may be that the complainant is not satisfied with the said rejection of his claim by the Insurance Company. Having regard to the facts and circumstances of this case and the nature of the controversy between the parties we consider that this is a matter that should be adjudicated before a Civil Court where the complainant as well as the respondent will have ample opportunities to examine witnesses at length, take out commission for local inspections etc., and have an elaborate trial of the case".

ON the basis of the above observations, learned Counsel for respondent Nos. 1 to 4 argued that there was no deficiency in the rendering of service by the Company and, therefore, the present complaint was not maintainable. However, in a latter case titled Life Insurance Corporation of India, A.P. v. Shri Bhavanam Srinivasa Reddy, II (1991) CPJ 189, it was remarked by this Commission: "Any unilateral repudiation of the contract by the Insurance Company on the allegation that there had been a suppression of relevant material by the insurer at the time of taking the policy of insurance will not disentitle the policy holder from approaching the Redressal Forums constituted under the Act seeking an adjudication of the question whether the said repudiation was justified in law. In such a case the Consumer Disputes Redressal Forum has not only the jurisdiction but also a duty to investigate into the question whether the charge made by the Insurance Company on the basis of which the alleged repudiation was made is well founded in fact In case it is found as a result of such investigation that the Insurance Company was justified in repudiating the contract, the complaint petition before the Forum will have to fall;

if, on the other hand, the Forum comes to the conclusion that the charge levelled by the Insurance Company is not substantiated and hence there was no justification for its purported action repudiating the contract of insurance, the contract of insurance will be treated as subsisting and an enquiry will be conducted into the merits as to whether there was any ''deficiency'' in service on the part of the Insurance Company so as to entitle complainant to grant of relief under the Act. Thus, it is clear that the jurisdiction of the statutory Redressal Forums to conduct an adjudication into the complaint is in no way affected by the unilateral repudiation of the contract of insurance by the insurer. In the decision rendered by this Commission in the New India Assurance Company Ltd., viz, v. M/s. Vipro Electronics Pvt. Ltd. Revision Petition No. 12 of 1990 [Reported in I (1991) CPJ 335] it has been held that the mere fact the insurer had repudiated his liability in respect of the claim put forward by the insured does not operate to take away the jurisdiction of the Redressal Forums constituted under the Act to investigate into the complaint filed by the insured".

Therefore, merely because the insurer has repudiated the insurance claim under the policy unilaterally, it is difficult to hold that the Redressal Forums constituted under the Consumer Protection Act, 1986 will have no jurisdiction to deal with the

SUCH a contention of the Insurance Company is accepted, then, in every case, the Insurance Company can get a report from the surveyors and repudiate the claim and thus oust the jurisdiction of the Redressal Forums. The Redressal Forums therefore, are bound to see whether or not the repudiation was made in good faith on valid and justifiable grounds. If the surveyor or surveyors choose to submit a wrong report and the Insurance Company repudiates the claims without applying their minds then the repudiation cannot be said to be justified. The report of the surveyor should show that the investigations have been proper, fair and thorough. It has to be remembered that the surveyor''s bread comes form their employers".

IN the light of the principles laid down in the foregoing rulings, we unhesitatingly uphold the finding recorded by the State Commission that it had full jurisdiction to entertain and adjudicate upon the complaint. On the merits, the appellant has not been able to make out any flaw or error in the reasoning or conclusion arrived at by the State Commission. The complainant had insured his plants against fire etc. for a total of Rs. 1,25,000/-. It was during the currency of the coverage under that policy that a fire took place in the plantations on 6.2,1989 resulting in the destruction of 1424 rubber plants which were upto three years in age and 353 rubber plants which were above three years in age. According to-Clause (3) of the policy issued by the appellant, the insured will be entitled to be paid as compensation an amount equal to the cost of replantation of the rubber plants which have been destroyed by fire. The Assistant Manager of the appellant company who was examined as a Witness (R.W.I) on its side has fairly admitted in cross-examination that the rates fixed by the Rubber Board as the replantation costs have to be adopted by the Insurance Company. In the face of this admission made by its own witness, it is futile for the appellant to contend that the State Commission should not have computed the compensation on the basis of the rates fixed by the Rubber Board as cost of replantation per plant.

THE appellant company had purported to assess the loss on the basis of the report submitted to it by the surveyor appointed by it. When the policy requires that the cost of replantation declared by the Rubber Board shall be the basis of the assessment of the loss sustained by the insurer, it was not open to the surveyor to deviate from this and adopt his own method for computing the cost of replantation of the plants which were destroyed. The State Commission was, therefore, perfectly justified in holding that the assessment of loss made by the Insurance Company solely on the basis of the computation made by the surveyor contrary to the terms of policy was manifestly unacceptable. It is not disputed that of the rubber trees which were destroyed in the fire 1424 trees were about one and half years old and 353 trees were about four and half years old at the time of their destruction. The State Commission has found that on a proper calculation made by adopting the rates fixed by the Rubber Board, the amount payable to the insurer comes to Rs.1,01,803/-. No exception can be taken to the said finding and it is hear by confirmed. The State Commission has allowed interest on the aforesaid amount only at the rate of 12 per cent per annum from 1.9,1989 onwards after allowing a margin of about six months from the date on which the claim was preferred by the insurer. This is hardly adequate to compensate the insured for the loss and inconvenience caused to him by the delay in the settlement of his claim. But since the insured has not come up in appeal before us, we are not called upon to pronounce on this question.

IN the result, the appeal fails and is dismissed. The appellant shall pay Rs, 2,500/- by way of costs to the respondent.