Kerala

StateCommission

A/575/2018

UNITED INDIA INSURANCE CO LTD - Complainant(s)

Versus

PEECEE PLYWOODS - Opp.Party(s)

LAKSHMANAN T J

21 Nov 2019

ORDER

 

             KERALA STATE CONSUMER DISPUTES REDRESSALCOMMISSION

       SISUVIHARLANE, VAZHUTHACADU,  THIRUVANANTHAPURAM.

 

APPEAL. No.575/2018

 

JUDGEMENT DATED:21.11.2019

                            

       

PRESENT:        

 

         Hon’ble Justice Shri.  K. Surendra Mohan,                   President

         Smt. Beena Kumari. A.                                             Member 

 

 

 

United India Insurance Co. Ltd.,     :         Appellant/1^st Opposite party

Rep. by its Branch Manager,

Branch Office, 2^nd floor,

Fashion Towers, Caltex,

Kannur-2.

(By Adv: Sri. Lakshmanan T.J)

                                                          Vs.

 

1. Pee Cee Plywoods,                             :         Respondents/Complainant/2^nd 

    Keeriyad P.O., Chirakkal,                                        Opp. Party

    Kannur District, Rep. by its

    Managing Partner

    P. Sainudheen,

    S/o. P.C. Assainar Haji,

   “Bishara”, P.O.Kanhirode,

   Kannur Dist.-670 592.

 

2. The Federal bank Ltd.,

    Valapatanam Branch, Kannur-10.

    Through its Branch Manager.

  (R1 by Adv:Sri. F.C. John)

                                                ORDER

 

Justice Shri K. Surendra Mohan,   President.

This appeal is filed by the 1^st opposite party in CC No. 220/2011against the order dated  29-06-2018 of the Consumer Disputes Redressal Forum, Kannoor ( hereinafter referred to as the District Forum for        short).  As per the order appealed against the District Forum has found that there was deficiency in service on the part of the appellants and has directed payment of  a total amount of Rs. 4,51,738/- less the amount already paid with interest @ 8% p.a. from  the date of complaint. A compensation of         Rs. 10,000/- and litigation costs of Rs. 5,000/- has also been ordered. According to the appellant the order of the District Forum is wrong and liable to be set aside.

          2. The short facts of the case are summarized as follows:

          The 1^st respondent, a partnership firm represented by its family partner, is engaged in the manufacturing of plywood and allied  products.  The firm had insured its factory and other installations with the appellant under Exbt. A1 Fire and Special Perils Policy for the period from               25-07-2009 to 24-09-2010.  Since the 1^st respondent had availed financial assistance  from the 2^nd respondent bank, the policy was availed through the said respondent.  The total sum assured was Rs. 1,30,50,000/-.  On   29-04-2010 early in the morning at about 3.30 a.m. a fire mishap occurred causing extensive damage to the factory and other installations.  According to the 1^st respondent the fire wood stocked  there as well as the entire root of the two storied building having an area  of 15 x20 meters, pipes  of the boiler, materials like face veneer, core venial , block board frames, half finished  plywood, electric motors etc.  were damaged causing a loss to the tune of Rs. 13,00.000/- .  The fire and rescue officials prepared a fire Brigade  Report assessing the damage at Rs. 13,00,000/-.  The insurance surveyor also inspected the property and prepared a report, at the instance of the Appellant.  Though the claim made by the   1^st respondent was for an amount of Rs. 12,00,000/-, the appellant sanctioned only an amount of     Rs. 50,762/-.  The 1^st respondent filed the complaint before the District Forum  alleging that the amount sanctioned was too low,  that he was entitled to an amount of Rs. 12,00,000/- under the insurance policy and that, there was deficiency in service on the part of the appellant.  According to the complainant the action of the appellant had caused hardships, mental agony, loss of money and time to the 1^st  respondent.

          3. The appellant as well as the 2^nd respondent filed separate versions, contesting the complaint. 

The appellant contended that they had already settled the claim of the 1^st respondent  on the basis of the survey report and as per the terms and conditions of the policy, and had paid an amount of Rs. 50,762/- in full and final settlement  of the 1^st respondent’s claim.  Therefore no further amounts were due or payable to the 1^st respondent.  It was further alleged that the 1^st respondent had  taken the policy undervaluing  his property.  Therefore the appellant was entitled to compute the loss on the basis of such valuation  and to reduce the amounts claimed in proportion to the valuation shown.  The allegation of deficiency in service was denied.

          4. The  2^nd respondent contended that the 1^st respondent was  their customer, a person to whom they had  advanced money.  They had insured  the premises under a valid  insurance policy issued by the appellant.  The 2^nd respondent had  no role  in allowing or disallowing  the claim of the 1^st respondent, therefore the 2^nd  respondent was an unnecessary party in the proceedings.

          5. On the basis of the above pleadings both parties let in evidence.  The evidence in the case consists of the oral testimonies of PWs1 and 2 and Exbts. A1 to A11 documents on the side of the 1^st respondent/complainant.  On the side of the appellant/1^st opposite party  Exbts. B1 to  B12  documents were marked and DWs1 and 2 were examined as witnesses.

          6. The District Forum considered the contentions advanced by the rival parties in the light of the evidence on record and found that, Exbt. B1 survey report of the insurance surveyor had not assessed the loss properly. Placing reliance on Exbt. A4 report of the Fire and Rescue Officials, the District Forum came to the conclusion that there was deficiency in service on the part of the appellant.  Therefore, the claim  of the 1^st respondent has been allowed in part.  It is aggrieved by the said order that this appeal is filed.

          7. Counsel for the appellant vehemently argued that the complaint itself  was not maintainable for the reason that this is a case in which the insurance company had settled the insurance claim.  The complaint of the 1^st respondent is against the quantum of  settlement made, which cannot be termed as a consumer dispute.  Since the loss caused was assessed, by availing the services  of a Surveyor there cannot be any deficiency in service. The appellant had sanctioned the claim, accepting the report of the surveyor.  Therefore it is contended that  the District Forum erred  in allowing  the complaint and granting relief.

          8. Per contra, the counsel for the 1^st respondent attacked   the report of the surveyor pointing out that, though the survey was conducted on       30-04-2010, on the next day  of the fire, Exbt. B1 survey report is dated 31-01-2011, 9 months after the inspection. There is no explanation for the delay.  According to the counsel, in the present case, there has been no settlement of the 1^st respondent’s claim.  Though a claim settlement form was issued by the appellant to the 1^st respondent with a request to accept the settlement amount  by signing  the same and returning it, the 1^st respondent had refused to do so.  Thereafter, the appellant had deposited the  amount into the account of the 1^st respondent with the 2^nd respondent  bank, without any authority.  The said action  cannot be  accepted as a settlement of the claim.  Therefore, it is contended that there was gross deficiency in service on the part of the appellant.  Order of the District Forum is fully justified in the circumstances and does not call for any interference in Appeal.

9.  We have carefully gone through the records of the case and considered the contentions  advanced before us anxiously.  It is not in dispute that, the fire mishap had actually occurred and that, the 1^st respondent had suffered substantial damage and loss.  The fact that the 1^st respondent had the cover of a valid insurance policy is not disputed.   After the fire occurred on 29-04-2010 the insurance surveyor had conducted survey on 30-04-2010.  However, the survey report Exbt. P1, is dated 31-01-2010, 9 months after  the inspection.  As per the survey report, the loss has been  quantified at Rs. 50,752/-.  The said amount has not been accepted by the appellant. However, according to the 1^st respondent his loss is much more.

10. The 1^st contention of the counsel for the appellant is that, since loss was assessed and quantified by an insurance surveyor, whose report has been accepted by the appellant, the claim of the 1^st respondent has been settled.  Therefore a complaint against such a settled claim is not maintainable.  In the above context it is worth noticing that, though the surveyor had conducted the inspection  on 30-04-2010, his report has come only on 31-01-2011 for which delay, there is no explanation.

 

          11. Further, the amounts arrived at by the surveyor has not been accepted by the 1^st respondent.  Though a communication was  issued by the appellant to the 1^st respondent  on 21-03-2011 enclosing

Exbt. A6 settlement intimation voucher, to be signed and returned by him, he did not do so.  Instead,  he had caused the issue of a notice through his lawyer demanding settlement of the claim made by him. In spite of the dispute of the 1^st respondent regarding the proposed settlement, the appellant had deposited the amount of Rs. 50,762/- with the 2^nd respondent bank.  Such unilateral action on the part of the appellant cannot be accepted as a valid settlement of the claim made by the 1^st respondent. The counsel for the appellant has placed reliance on the decision of the National Consumer         Disputes        Redressal           Commission in

Arora Knitting Industries (P) Ltd., Vs. United India Ins. Co. Ltd., 2003 CCJ 1389.  In the said case, the complainant received the settlement amount. However, he raised a dispute and caused the issue of a legal notice only 6 months thereafter.  It was only 6 months thereafter he preferred the complaint.    In sharp contrast in the present case, the proposed settlement was disputed by the 1^st respondent and he had caused the issue of a notice through his lawyer without delay.  Therefore, the facts in this case are different and do not attract the dictum of the decision on which reliance is placed.  Hence, there was no settlement in this case as alleged. In this case, the appellant/Insurance company had only made an offer for settlement, which was not accepted by the 1^st respondent.

          12. The 2nd contention put forward is that since the claim in this case was settled  on the basis of an assessment of the loss made by a qualified  surveyor there is no deficiency in service.  The counsel for the appellant has placed reliance on a decision of the Apex Court  in Revneet Singh Bagga  v. M/s. KLM Royal Dutch Airlines & Anr (2000 SAR (Civil) 40  in support of his contention.  The counsel has placed reliance particularly on the observations made by the court in para 6 of the Judgment which reads as follows:

 6. The deficiency in service cannot  be alleged without attributing fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be  performed by a person in pursuance of a contract or otherwise in relation to any service.   The burden of proving the deficiency in service is upon the person who alleges it.  The complainant has, on facts, been found to have not established any willful fault, imperfection, shortcoming or inadequacy in the service of the respondent.  The deficiency in service has to be  distinguished  from the tortuous acts of the respondent.  In the absence of deficiency in service the aggrieved person may have a remedy under the common law to file a suit for damages but cannot insist for grant of relief under the Act for the alleged acts of  commission and omission attributable to the respondent which otherwise do not  amount  to deficiency in service. In case of bonafide disputes no willful fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of  performance in the service can be informed.  If on facts it is found that the person or authority rendering service had taken all precautions and considered all relevant facts and circumstances in the course of the transaction and  that their action or the final decision was in good faith, it cannot be said that there had been any deficiency in service.  If the action of the respondent is found to be in good faith, there is no deficiency  of service  entitling the aggrieved person to claim relief under the Act.  The rendering of deficient service  has to be considered  and decided in each case according to the facts of that case for which no hard and fast rule can be laid down.  Inefficiency, lack of due care, absence of bonafide, rashness, haste or omission and the like may be the factors to ascertain the deficiency in rendering the service.

What the Apex Court has laid down is that, the burden of proving deficiency in service is upon the person who alleges it.  Therefore, he should establish ‘a wilful fault, imperfection, short coming or inadequacy’ in the service of the respondent. If it is found that the person or the authority who was rendering service had taken all precautions  and  considered all relevant facts and circumstances  and had taken a final decision in good faith, there cannot be any deficiency in service.

          13. However, in the present case the Fire Force Brigade has in its report. Exbt. A4 described the extent of damage caused  to the 1^st respondent.  Though the insurance surveyor had conducted a survey on 30-04-2010 his report came only after a long delay.  However, he has reported in Exbt. B1 that, substantial damage had been caused to the respondent as a result of the fire.  According to the surveyor the damage caused to the building was only of Rs. 2,22,550/- though the amount claimed by the 1^st respondent was Rs. 2,75,000/-.  The surveyor has thereafter proceeded to hold that the actual value of the building was Rs. 39,50,700/-.   He has no explanation as to what was the basis on which the said value was arrived at.  On the basis on the above valuation made by him he has found that the value of the building given by the 1^st respondent as Rs 8,00,000/- at the time of taking the insurance policy amounted to undervaluation.  At the same time even according to the surveyor,  the building is old, reported to have been purchased and modernized  by the 1^st respondent.  It is for the same old building that the surveyor has fixed a value of Rs. 39,50,700/-, to support his finding of  undervaluation.  At the same time, he has described the structure as a shed with  a building at one portion thereof  which according to him is 40 or 50 years old.  It is clear from the report of the surveyor as well as the evidence adduced by the appellant that his findings regarding undervaluation on the part of the 1^st respondent was without any basis.   Therefore, this is not a case in which the appellant has exercised due diligence or care in rendering the services  expected of  them.  The surveyor in this case, has not fixed the value of the building on the basis of any acceptable method.  Therefore the finding that the 1^st opposite party had not valid his building properly  is without any justification and has been rightly rejected  by the District Forum.  The depreciation fixed by the surveyor as well as the  loss assessed are untenable and unacceptable.   This is not a case where  the appellant was entitled to apply the principle of “under insurance”.

          14. We further notice that, the 1^st respondent had insured  his building, machinery and other installations for a total amount of Rs. 1,30,50,000/-.  Apart from the damage to his building, many other installations had also  suffered damage in the fire.  Such damage has also been assessed by the Fire Force as well as the Surveyor.  Therefore, it was only appropriate that the claims made by him  under the other heads  were also compensated.  However, as rightly found by the District
Forum the surveyor has not considered the losses suffered by the 1^st respondent due to the damage under other heads.  It is therefore held that the surveyor has not made a proper assessment of the losses suffered by the 1^st respondent with respect to all his installations.

          15. The report of the surveyor cannot therefore be held to be a proper and complete assessment of all losses suffered by the 1^st respondent.  The action of the appellant is scaling down the claim of the 1^st respondent to   Rs. 50,762/- is wrong and against the policy conditions.   In view of the above, we agree with the finding of the District Forum that the action of the appellant in this case amounts to deficiency in service and is actionable under the provisions of the Consumer Protection Act 1986. 

          16. The counsel for the appellant has placed reliance on the decision of the Supreme Court  in Sikka Papers Ltd. & Ors. National Insurance Co. Ltd. Ors. ( 2009 SAR (Civil) 788) in support of his contention. The principle of under insurance has been applied in this case.  In the said decision a diesel generating set and alternator  were purchased by the complainant for an amount of Rs. 45,25,000/-.  However, the machinery was insured only for an amount of Rs. 35,00,000/-.  It was held in the said case that there was ‘under insurance’.  However, in the present case a shed with a building at one corner thereof, which is described as  40-50 years old has been valued at Rs. 39,50,700/- without any basis.  The surveyor has no explanation as to what was the basis on which the valuation was arrived at.  It is obvious that the said valuation was made only for the purpose of supporting the allegations of ‘under valuation’ put forward as a ground for reducing the claim of the 1^st  respondent. There is no evidence or materials on record to support the valuation adopted by the surveyor.  Therefore, in this case there is nothing on record to show that the building was undervalued.

           In view of the above, the facts of this case do not attract the principle of ‘under insurance’, on which reliance is placed  by the insurance company to reduce the claim of the opposite party.  Therefore, the District Forum was fully justified in proceeding to reject the conclusions of the surveyor, and  Exbt. B1 report.

          17.The  District Forum has placed reliance on the assessment made by the surveyor as well as the Fire Force in Exbt. A4 report to award compensation in this case. The surveyor has assessed the damages to the building at   Rs. 2,00,000/-.  The other items of damage have been rejected on the ground that there was no claim by the 1^st respondent.  The amounts awarded as compensation for damage  to  firewood, demage  caused to machinery as well as the other items are supported by Exbt. A4 and B1 reports.  Therefore, we do not find any infirmity in the quantum of compensation that has been granted.  The counsel for the 1^st respondent contented that, Exbt. B1 report was delayed beyond all reasonable expectations.  The delay also denied the 1^st respondent an opportunity to have the loss assessed by an independent surveyor.   The counsel is justified in his submission and we take note of the said aspect also.  Taking into account all the above aspects, we are of the considered view that the District Forum was fully justified in  granting the compensation in this case.  We do not find any grounds to interfere with the same in this Appeal, as sought for by the appellant.

          18. For the foregoing reasons, this appeal fails and is accordingly  dismissed.

 

                                                           K. Surendra Mohan, President.

 

 

                                                          Beena Kumari. A. Member