Judgment And Order (CAV)
Ramesh Bawri, Senior Member:-
1. The complainant has filed this complaint petition stating that he is the proprietor of M/s N P Textiles. He got his shop insured with the opposite party insurance company. Unfortunately his shop was gutted by fire in the month of September, 2008. He filed a claim of Rs. 43 lakhs for the loss and damage suffered in the incident. The opposite parties refused to settle the claim and intimated the complainant that the cheque for premium of Rs. 15,200 issued in favour of the insurance company was dishonoured and the insurance policy which was issued due to oversight was cancelled and the company was not liable to compensate the loss. The insurance claim having been repudiated, the complainant lodged the present complaint for payment of compensation.
2. The opposite parties have filed a showcause reply raising a preliminary issue that the Commission does not have jurisdiction to entertain and try the instant complaint. Further it is contended that adjudication of this complaint involves elaborate trial and oral evidenceto prove the documents and as such the dispute cannot be adjudicated in summary proceedings before a consumer forum, and, therefore, the claim should be tried by a competent civil court only. In the showcause the opposite parties admitted the facts that the complainant approached the opposite parties for insuring his business establishment (shop) under My Business My Choice package policy. They admitted receipt of a cheque of Rs. 15,200 from the complainant towards payment of premium. They also admitted that on receipt of the said cheque they issued a policy bearing no 2200012908 but they denied that the said cheque was ever encashed. The opposite parties claimed that by a communication dated 22.10.2008, they informed the complainant that the said cheque was dishonoured. Clarifying the position the opposite parties stated that by bonafide mistake due to oversight and wrong entry in the system a letter was issued to the complainant on 22.10.2008 informing that the cheque issued by the complainant towards payment of premium has been dishonoured and as a result, the policy in question stood cancelled from the inception relieving the opposite parties from the liability to pay compensation. Further contention is that upon receipt of the claim, the opposite parties appointed a surveyor for assessing the loss. The surveyor, after making spot inquiry and examining the documents submitted the final report dated 20.03.2009 assessing the loss at Rs.6,61,059 only. However as stated in the showcause, the opposite parties have not yet communicated the final decision to the complainant and kept it still open for discussion andsettlement of claim as per the terms and conditions of the policy.
3. We have heard Smt. A.R. Kalwar, learned counsel for the complainant and also Mrs. P.D.B Baruah, learned counsel for the opposite parties.
4. First of all we propose to consider and decide the preliminary issue raised by the opposite party. The said preliminary issue goes to the root of the entire matter. In fact, this Commission is called upon to decide as to whether the complainant is a consumer as defined under Section 2 (1)(d) (ii) of the Consumer Protection Act, 1986 (hereinafter referred to as C.P.Act only). The opposite parties are fair enough in making averments in the showcause to the effect that they received a cheque of Rs. 15,200 from the complainant on 17.05.2008 towards payment of premium and issued the insurance policy. So far so good. In the meantime, the complainants shop was gutted by fire in the early morning of 01.09.2008. The opposite parties appointed a surveyor and got the matter inquired for assessing the loss. While the inquiry was in progress, the opposite parties addressed a letter dated 22.10.2008 to the complainant informing him that the cheque for payment of premium was dishonoured and it was not encashed. By the same letter the complainant was informed that the policy in question stood cancelled.
5. Here in this context it is surprising to note that the opposite parties slept over a period of five months since they received a cheque on 17.05.2008 which was allegedly dishonoured and remained silent although the cheque could not be encashed. If the cheque was dishonoured, it was incumbent upon the opposite parties to inform the said fact and ask for corrective measure, the opposite parties could have sent legal notice and proceeded against the complainant under the Negotiable Instruments Act. Even the dishonoured cheque was not returned to the complainant for replacement and taking corrective steps. The opposite parties have not taken any step against the complainant under the NI Act. There is not even a whisper in the showcause reply to that effect. The opposite parties, for the first time, after 21 days from the date of the incident of fire on 01.09.2008 suddenly woke up to intimate the complainant on 22.10.2008 that the cheque for payment of insurance premium was dishonoured and the policy was cancelled as the said cheque could not be encashed. The opposite parties have taken no plea that before cancellation of the insurance policy any notice was sent to the complainant. We have, therefore, no manner of doubt that the policy was cancelled unilaterally without giving any notice and affording an opportunity of being heard to the complainant which goes against the basic principle of natural justice. The conduct shown by the opposite parties in cancelling the policy long after 21 days of the incident, of breaking out of fire and gutting of complainants shop belies the explanation given by the opposite parties that the policy in question was issued due to bonafide mistake and through oversight resulted from purported wrong entry in the system. There is no taker of this explanation for the simple reason that the opposite party, for the first time, after the incident of fire, came out with allegation of cheque being dishonoured. Can it be a believable story that an insurance company would retain a dishonoured cheque for a long time without notifying it to the person who issued the same and taking no action against him Definitely not.
6. Here is a case where the opposite parties took the extreme illegal act of cancellation of policy in violation of the principles of natural justice. The illegal order of cancellation of insurance policy is to be treated as non est in the eye of law. The insurance policy must, therefore, be accepted as still in force. The contract of insurance between the complainant and the opposite parties in the eye of law subsists and it cannot be thrown away as being cancelled at the sweet will or desire of the insurer. It must obviously be held that the insured complainant is still a consumer within the meaning of Section 2 (1)(d) (ii) of the C P Act and as a consumer, he can lodge a complaint. This Commission has both pecuniary and territorial jurisdiction to adjudicate the dispute raised by the complainant.
7. The Opposite Parties have also raised objections to this Commissions jurisdiction over the Complaint Petition in view of the purported complicated nature of the case, asking us to send the Complainant to seek his remedy before a civil court of competent jurisdiction. First of all there is nothing complicated about this complaint. Complaints such as these are regular fodder for consideration before us. If every case like the present one were to be relegated to the civil court, we wonder whether Consumer Fora would be left with any case to decide, not to forget that we would also failing in exercising the jurisdiction vested in us and be guilty of dereliction of duty.
8. Secondly, a mere reference to the following decisions of the Honourable Supreme Court in is enough to dispel the misconceived notions of the O.P.s in this respect.As far back as in the year 1995 in Indian Medical Association v. V.P. Shantha [(1995) 6 SCC 651 para 37] the contention of the appellant that, as the case involved complicated question of facts, the Honourable National Commission ought to have directed the complainant to approach the Civil Court was rejected by the Honourable Supreme Court.
Again, more than a decade ago, in Dr. J.J. Merchant and Ors. vs Shrinath Chaturvedi (2002) 6 SCC 635 a three Judge Bench of the Apex Court went even further and held that
... under the Act the National Commission is required to be headed by a retired Judge of this Court and the State Commission is required to be headed by a retired High Court Judge. They are competent to decide complicated issues of law or facts. Hence, it would not be proper to hold that in cases where negligence of experts is alleged, consumers should be directed to approach the Civil Court.
It was next contended that such complicated questions of facts cannot be decided in summary proceedings. In our view, this submission also requires to be rejected because under the Act, for summary or speedy trial, exhaustive procedure in conformity with the principles of natural justice is provided. Therefore, merely because it is mentioned that Commission or Forum is required to have summary trial would hardly be a ground for directing the consumer to approach the Civil Court.
9. In view of this long settled law, it is very unfortunate that the Appellants are still harping on relegating the Complainant to seek his remedy in a civil court, alleging that the matter is complicated. Besdies being an affront to the decisions of the highest court of our country, even though maybe unintentionally, it goes to show the State Commission headed by a retired High Court judge in poor light and implies that a civil court can understand and adjudicate a complicated matter like the present one, whereas the State Commission cannot. Large organisations like that of the Appellant can afford to raise all sorts of objections, perhaps in their effort to prolong the litigation and even tire out the consumer, but the hapless consumer cannot afford this luxury. We therefore cannot view such sterotyped objections with a kind eye and hope and trust that they will be more considerate and disciplined before rasing such thoughtless arguments in future. The very objective of the Consumer Protection Act is to divert the flow of litigation from civil courts to consumer fora and not the other way round. The preliminary objections of the opposite parties are, therefore, not sustainable under the law and accordingly the same stand rejected.
10. The opposite parties suggested the following issues for disposal of the complaint case
(i) Whether the policy issued to the complainant by the Tata General Insurance Company Ltd is genuine or not
(ii) Whether the time taken by the surveyor in assessing the loss was unavoidable and whether there was any delay in submission of all the relevant documents by the complainant
(iii) Whether the refusal on the part of the opposite party in settling the claim made by the complainant in the said policy is justified or is it in accordance with the terms and conditions of the insurance policy
(iv) Whether the loss sustained in the accident by the complainant is proper and legitimate in nature
(v) Whether the opposite party (insurance company) is duty bound to make payment as per the scheme of the policy and as per the assessment made by the surveyor along with interest to the complainant
(vi) Whether the assessment made by the police during the spot enquiry was reasonable and sound
(vii) Whether the opposite party deliberately tries to put the blame upon the complainant in order to avoid making payment to the claim amount
(viii) Whether the claim made by the complainant is reasonable and justified
11. The suggested issues no (i) and (ii) have already been discussed and decided in the affirmative while answering the preliminary issues raised by the opposite parties. As regards the suggested question no (iii) we find no comment/observation in the final report of the Surveyor and the revised final report to the effect that due to delay on the part of the complainant in submitting all the relevant documents there was an unavoidable delay in submitting the reports by the surveyor. However, the surveyor found some discrepancies in the documents submitted by the complainant. This has some relevance to suggested issue no (iv) and that is why the surveyor re assessed the loss and submitted a revised final report. They have accepted the surveyors revised assessment of loss at Rs. 6,61,059 only which is reflected from the statements made in paragraph 13 of the showcause reply to the effect that the surveyor after taking into consideration all the anomalies and based on the available records in the revised assessment rightly assessed the loss at Rs. 6,61,059 (Rupees six lakhs sixty one thousand and fifty nine) only after deducting the salvage and other deductible as per policy. Further it is stated in the showcause that the opposite party has offered to pay the amount assessed by the surveyor to the complainant during discussion held in Kolkata on 13th October, 2009 but the complainant refused to accept the same.
12. As against the above contention, the complainant has made no comments on the surveyors report either accepting or rejecting it. He has not even made a reference to the fact of appointment of a surveyor and submitting of report assessing the loss and recommending compensation. He remained satisfied simply stating in paragraph 13 of his reply to the opposite partys showcause that the figures claimed by your humble complainant is totally justified and not inflated nor imaginary and due to burning by accident all the supporting documents has duly being destored (sic) by fire and it is due to the natural causes only. (Drafting of the quoted statement is not made happily). From this statement it is easily discernable that the complainant has not challenged the surveyors report but the complainant without making a reference to the surveyors report claimed the following amounts
1. Stock Rs. 40,80,905.00
2. Furniture Rs. 2,49,873.00
3. Cash Rs. 26,193.00
4. Mental tension and agony Rs. 10,00.000.00
5. Loss of business Rs. 10,00,000.00
6. Loss of business reputation Rs. 5,00,000.00
TOTAL Rs. 68,56,971.00
13. As against this, in his first Report dated 20.03.2009 the Surveyor, while finding that the Insurer was indeed liable for the loss, assessed the loss at Rs. 21,83,746.00.Thereafter, as admitted by the Opposite Parties themselves in their show cause in paragraph 11 On receipt of the Survey report dated 20.03.09 and perusal of the same a few important discrepancies in the documents submitted by the claimant in support of the claim were pointed out to the Surveyor for his comments and consideration. The Surveyor on noticing the discrepancies pointed out by the Opposite Parties accordingly reviewed the report and re assessed the loss by taking into account all the discrepancies in the documents and information supplied by the claimant and submitted an addendum report which was received by the opposite parties on 08.09.09
14. The revised loss was accordingly assessed at Rs, 6,61,059 by the Surveyor vide his revised second Report dated 24.04.2009. This amount the Insurance Company is ready to pay but this is not acceptable to the Complainant.
15. We are thus required to see what would be the fair amount that is payable by the Insurance Company based on the records, but before this we must remark that the actions of the Insurance Company and the Surveyor are very strange, to say the least. The records clearly give us the impression that when the Insurance Company was not satisfied by the first survey report it guided the Surveyor in the manner in which the loss should be assessed and he obligingly did so. Non neutrality of the Surveyor is unfortunately writ large in this case, it is clear that the second report was not prepared on his own volition but under advice/instructions of the Insurance Company which is quite unfortunate.
16. In Sri Venkateswara Syndicate vs Oriental Insurance Co. Ltd. [(2009) 8 SCC 507] the Honourable Supreme Court held as follows
22) 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 damage 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 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.
23) Section 64 UM(2) of the Insurance Act, 1938, reads that No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimates to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968 shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report on the loss that has occurred from a person who holds a license issued under this Section to act as a surveyor. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of surveyor should be taken but it does not go further and say that the insurer would be bound whatever the surveyor has assessed or quantified, if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured.
From this it is clear that, undoubtedly, an Insurance Company is not bound by the Surveyors Report if there are valid reasons for not doing so. However, in such event it can appoint another surveyor. We do not see any provision that it can guide the original Surveyor regarding the manner in which his report should be prepared and then obtain another report from the same Surveyor in accordance with and to to suit the Insurance Companys own views.
17. Be that as it may, the assessment of loss is on two counts i.e stock and furniture. The detailed break up and comparative statement of the Surveyors assessment of loss (in Rupees) is as follows. This has been prepared by us based on the Reports but in chart form to give a much clearer picture.
|No.||Stock||1st Report||2nd Report|
|1||Stock on 30.08.08||2560030||744000|
|2||Less dead stock 5 percent||128001||93000|
|4||Less salvage value 10 percent||243203||65000|
|6||Less 5 percent to be borne by the Insured||109439||29300|
|8||Cost of material and labour||254290||254290|
|9||Less 10 percent on estimate being high||25429||25429|
|11||Less depreciation 40 percent||91544||91544|
|13||Less Salvage value 20 percent||27465||27465|
|15||Less 5 percent to be borne by the Insured||5493||5493|
19. It is clear that both reports are majorly based on presumptions and conjectures. Hence, neither one can be fully relied upon and we have to devise our own method to bring this matter to a fair and just conclusion as no other records can ever be forthcoming inasmuch as books of accounts, stocks registers etc are stated to have been gutted in the fire.
20. In respect of stock we find from the Income Tax Returns filed by the Complainant that he has shown a closing stock of Rs. 17,95,135 in his trading account for the year ended 31.03.08, which is the nearest date prior to the date of loss i.e 01.09.2008. In our considered view, this figure would give us the fairest approximation of the actual stock as on the date of the fire.
21. At the same time, we are not oblivious of the fact that this return was filed long after the fire incident and an inflation of the stock value cannot be ruled out. Having further scrutinized the Income Tax Return as on 31.03.08 we find that while the other figures are in sync with those of earlier years, the following amounts have strangely been credited for the first time in the Balance Sheet
a) Gift : Rs 1,00,000
b) Unsecured loss : Rs 2,13,500
c) Advance against sale grand : Rs 3,50,000
Total : Rs. 6,63,500
It may be noted that although there are also fresh loans from Banks to the tune of Rs. 2,57,238 these cannot be questioned. The other figures are broadly the same as in earlier years and therefore reliable.
22. While making it clear that in our efforts to achieve the ends of justice we are perforce dealing with the matter partly through reasoning and partly in the realm of conjecture, to be fair to the Insurance Company and without casting any aspersions on the Complainant, we are of the opinion that this amount of Rs. 6,63,500 appears to have been introduced in order to inflate the stock value amount and therefore needs to be deducted from the declared closing stock of Rs. 17,95,135 to arrive at the true stock value of Rs. 11,31,635.
23. We shall therefore proceed to assess the fair amount that the Insurance Company should pay to the Complainant on this basis. However before that we are once again constrained to state that neither the Surveyor nor the Insurance Company has been totally fair, just, reasonable or rational in their assessment of loss. How could they deduct 5 percent of the stock value from the computation on account of its being presumed dead stock Dead stock or Live stock, stock is stock and has cost the Complainant money to purchase. Such a deduction is preposterous in our view and such brazen illegalities go to show the Insurance Company and Surveyor in very poor light.
24. Secondly, the Surveyor has deducted 5 percent of the ascertained loss as having to be borne by the Insured. The Opposite parties have produced no document before us to show us that such a provision exists in the Insurance Policy and we are therefore disinclined to accept such a deduction.
25. With regard to the furniture, we are again surprised that while on the one hand the Surveyor has assessed the loss on the basis of cost of material and labour to repair the furniture, at the same time he has deducted salvage value at the rate of 20 percent. If this was to be done, he should have first assessed the furniture as a total loss. The Insurance Company cannot eat its cake and have it too. We shall therefore allow no such deduction.
26. On the basis of our remarks above, the loss is assessed as follows
|No.||Stock||Assessed by us|
|1||Stock on 30.08.08||1131635|
|2||Less salvage value 10 percent||113163|
|4||Cost of material and labour||254290|
|5||Less 10 percent on estimate being high||25429|
|8||Less depreciation 40 percent||91544|
|10||Grand Total Payable||1155789|
28. In view of the discussion above we direct the Opposite parties to pay to the Complainant the sum of Rs. 10,18,472 for loss of stock and Rs. 1,37,317 for loss of furniture, totaling Rs. 11,55,789 against his insured claim along with interest at the rate of 12 percent thereon from 01.03.2009 (i.e six months from the date of fire) till the date of payment, such interest being inclusive of compensation for deficiency in service on the part of the Opposite parties and resultant harassment and loss to the Complainant, with 2(two) months from today, failing which the entire amount including the interest awarded till date will carry further interest at 12 percent p.a.
29. The complaint case is disposed of with the directions above. As usual, copies of this order to be given free of cost to all parties.