New India Assurance Company Limited Vs. Sampeta Ravi - Court Judgment

Excerpt:
consumer protection act, 1986 - sections 2(1)(g), 14(1)(d), 15 - cases referred: 1. amalendu sahoo v. oriental insurance company limited, ii (2010) cpj 9 (sc)=ii (2010) slt 672. (relied) [para 10] 2. saraf associated v. oriental insurance co. ltd. and anr., iv (2008) cpj 76 (nc). (relied) [para 12] comparative citation: 2011 (2) cpj 485d. appa rao, president: oral: 1. this is an appeal preferred by the opposite party against the order of the district consumer forum, khammam, directing it to pay rs. 87,200 with interest at 9% per annum, besides compensation of rs. 10,000 and costs of rs. 1,000. 2. the case of the complainant in brief is that he is the owner of an auto bearing no. ap 24 v-5645 for which an insurance policy was taken covering the period from 29.11.2005 to 28.11.2006 for a sum of rs. 87,200. while so, on 12.3.2006 it met with an accident for which a case was registered under crime no. 24/2006. when claim was made, the insurance company repudiated the same, and on that a notice was given for which the insurance company gave reply confirming repudiation of the claim on the ground that it was carrying ten passengers more than the limit prescribed. assailing the said repudiation, the complainant claimed a sum of rs. 2,00,000 with interest at 12% per annum together with compensation of rs. 25,000. 3. the insurance company resisted the case. while admitting the issuance of policy, it denied that the complainant was entitled to any amount. in fact on the date of accident, the vehicle was carrying ten persons un-authorisedly. when claim was made, one e.y. madhubabu was appointed as surveyor to assess the loss. he submitted his report estimating the loss atrs.22,500. later, it was resurveyed through one b. brahmaiah, who verified and found it to be correct. the vehicle was carrying persons more than the licensed capacity. it can carry only three persons in addition to the driver. the complainant was not entitled to any compensation, and therefore, prayed that the complaint be dismissed. 4. the complainant in proof of his case filed his affidavit evidence and got the documents marked as exs. a.1 to a.5, while the insurance company filed the affidavit evidence of its manager and got the documents marked as exs. b.1 to b.8. 5. the district forum after considering the evidence placed on record opined that the vehicle was insured forrs. 87,200 and that though the insured has exceeded the limit by carrying more than ten persons un-authorizedly he was entitled tors. 87,200 and accordingly directed the insurance company to payrs.87,200 with interest at 9% per annum from the date of filing of the complaint till the date of realization, besides compensation of rs. 10,000 and costs of rs. 1,000. 6. aggrieved by the said order, the insurance company preferred the appeal contending that the district forum did not appreciate either the facts or law in its correct perspective. it ought to have seen that there was no deficiency in service on its part. since the complainant had violated the terms and conditions of the policy he was not entitled to any compensation. 7. the point for consideration is whether the order of the district forum is vitiated by mis-appreciation of facts or law in this regard? 8. it is an undisputed fact that the complainant owned an auto insured with the appellant forrs. 87,200,vide ex. a.1 policy. it is also not in dispute that the said vehicle met with an accident on 12.3.2006 while carrying ten persons unauthorisedly. a criminal case was also registeredvide ex. a.2. the fact .remains that ten persons were travelling in the said auto while the carrying capacity was 3 plus 1 in all 4 persons. it is a case where the vehicle was overloaded beyond the licenced capacity. the complainant though taken a policy forrs. 87,200 claimedrs. 2,00,000 in the complaint. 9. in the light of undisputed evidenced by ex. a.2 that ten persons were travelling in the auto on the date of accident, the question is whether the complainant had violated the terms of the policy and consequently he was not entitled to any compensation? 10. the supreme court has an occasion to consider this question in amalendu sahoo v. oriental insurance company limited, reported in ii (2010) cpj 9 (sc)=ii (2010) slt 672. it was held that these violations were not fundamental in nature. therefore, it has given guidelines to the insurance company for settling the claim on non-standard basis. they are as follows:s.descriptionpercentage of settlementno.(i)under declaration ofdeduct 3 years difference inlicensed carryingpremium from the amountcapacityof claim or deduct 25% ofclaim amount whichever ishigher.(ii)overloading ofpay claims not exceedingvehicles beyond75% of admissible claim.licensed carryingcapacity.(iii)any other breach ofpay upto 75% of admissiblewarranty/conditionclaim.of policy includinglimitation as to use.a perusal of the above table shows that it comes under second item. in these cases the supreme court opined that the percentage of settlement should be “pay claims not exceeding 75% of admissible claim”. now the question is what could be the estimated claim. it may be stated that a surveyor by name e.y. madhu babu was appointed to assess the loss. while the estimation submitted by the complainant wasrs. 78,180, he assessed the damage atrs. 22,500. no doubt the surveyor while assessing against each of the item estimated by the complainant, has given his own amount, for which he did not show any basis. the complainant has filed bills which were filed by the very surveyor enclosing his report, ex. b.4. these bills come to rs. 35,398, though the estimation of the complainant wasrs.78,180. if it were to be so, the damage should be total. it was not the case of a total loss, since the very complainant filed bills amounting tors.35,398. neither the complainant nor the surveyor could dispute the bills that were filed by the complainant. we reiterate the complainant could not establish that he had spent about rs. 78,180 for getting it repaired. he having filed bills forrs. 35,398 he cannot claim more than the amount what he actually spent. 11. we may mention that the insurance company for the reasons best known appointed another surveyor d. brahmaiah contrary to section 64um of the insurance act, 1938. it did not take permission from the insurance regulating development authority. 12. the national commission in a decision reported in iv (2008) cpj 76 (nc), saraf associated v. oriental insurance co. ltd. and anr., held that second surveyor could be appointed only with the permission of authority. it may also be mentioned that in case if one goes by the provisions of the sub-section (3), section 64um of the insurance act, 1938, the 2nd surveyor cannot be appointed and only with the permission of authority or earlier the controller, the second surveyor could be appointed. 13. be that as it may, the second report except confirming the report of the first surveyors report did not substantiate it by giving any reason. in the light of the decision of the supreme court as unauthorized persons were travelling in the vehicle it could be settled on a non-standard basis. admittedly, the amount would come to rs.35,398. no doubt, from this amount the salvage value had to be deducted. the very insurance surveyor has deducted an amount ofrs. 604 towards salvage value andrs. 600 towards policy excess. he has given 10% depreciation for metal parts and 50% depreciation for rubber/plastic/nylon parts. in the light of the above, if 10% depreciation towards metal parts, and 50% depreciation towards rubber parts are deducted it would come tors. 6,000. if rs. 6,000 is deducted it would come tors. 29,398. assessing the amount net exceeding 75% an allowable claim would come tors. 29,398. we feel it reasonable and modest. 14. in the result, the appeal is allowed modifying the order of the district forum by directing the insurance company to pay rs. 29,398 with interest at 9% per annum from the date of filing of the complaint till the date of realization together with compensation ofrs. 5,000. the complainant is also entitled to costs ofrs. 2,000 in this appeal. the order of the district forum is modified in the above terms. time for compliance four weeks. appeal partly allowed.

Judgment:

D. Appa Rao, President:

Oral:

1. This is an appeal preferred by the opposite party against the order of the District Consumer Forum, Khammam, directing it to pay Rs. 87,200 with interest at 9% per annum, besides compensation of Rs. 10,000 and costs of Rs. 1,000.

2. The case of the complainant in brief is that he is the owner of an auto bearing No. AP 24 V-5645 for which an insurance policy was taken covering the period from 29.11.2005 to 28.11.2006 for a sum of Rs. 87,200. While so, on 12.3.2006 it met with an accident for which a case was registered under Crime No. 24/2006. When claim was made, the Insurance Company repudiated the same, and on that a notice was given for which the Insurance Company gave reply confirming repudiation of the claim on the ground that it was carrying ten passengers more than the limit prescribed. Assailing the said repudiation, the complainant claimed a sum of Rs. 2,00,000 with interest at 12% per annum together with compensation of Rs. 25,000.

3. The Insurance Company resisted the case. While admitting the issuance of policy, it denied that the complainant was entitled to any amount. In fact on the date of accident, the vehicle was carrying ten persons un-authorisedly. When claim was made, one E.Y. Madhubabu was appointed as Surveyor to assess the loss. He submitted his report estimating the loss atRs.22,500. Later, it was resurveyed through one B. Brahmaiah, who verified and found it to be correct. The vehicle was carrying persons more than the licensed capacity. It can carry only three persons in addition to the driver. The complainant was not entitled to any compensation, and therefore, prayed that the complaint be dismissed.

4. The complainant in proof of his case filed his affidavit evidence and got the documents marked as Exs. A.1 to A.5, while the Insurance Company filed the affidavit evidence of its Manager and got the documents marked as Exs. B.1 to B.8.

5. The District Forum after considering the evidence placed on record opined that the vehicle was insured forRs. 87,200 and that though the insured has exceeded the limit by carrying more than ten persons un-authorizedly he was entitled toRs. 87,200 and accordingly directed the Insurance Company to payRs.87,200 with interest at 9% per annum from the date of filing of the complaint till the date of realization, besides compensation of Rs. 10,000 and costs of Rs. 1,000.

6. Aggrieved by the said order, the Insurance Company preferred the appeal contending that the District Forum did not appreciate either the facts or law in its correct perspective. It ought to have seen that there was no deficiency in service on its part. Since the complainant had violated the terms and conditions of the policy he was not entitled to any compensation.

7. The point for consideration is whether the order of the District Forum is vitiated by mis-appreciation of facts or law in this regard?

8. It is an undisputed fact that the complainant owned an auto insured with the appellant forRs. 87,200,vide Ex. A.1 policy. It is also not in dispute that the said vehicle met with an accident on 12.3.2006 while carrying ten persons unauthorisedly. A criminal case was also registeredvide Ex. A.2. The fact .remains that ten persons were travelling in the said auto while the carrying capacity was 3 plus 1 in all 4 persons. It is a case where the vehicle was overloaded beyond the licenced capacity. The complainant though taken a policy forRs. 87,200 claimedRs. 2,00,000 in the complaint.

9. In the light of undisputed evidenced by Ex. A.2 that ten persons were travelling in the auto on the date of accident, the question is whether the complainant had violated the terms of the policy and consequently he was not entitled to any compensation?

10. The Supreme Court has an occasion to consider this question in Amalendu Sahoo v. Oriental Insurance Company Limited, reported in II (2010) CPJ 9 (SC)=II (2010) SLT 672. It was held that these violations were not fundamental in nature. Therefore, it has given guidelines to the Insurance Company for settling the claim on non-standard basis. They are as follows:

S.	Description	Percentage of settlement
No.
(i)	Under declaration of	Deduct 3 years difference in
	licensed carrying	premium from the amount
	capacity	of claim or deduct 25% of
	claim amount whichever is	higher.
(ii)	Overloading of	Pay claims not exceeding
	vehicles beyond	75% of admissible claim.
	licensed carrying
	capacity.
(iii)	Any other breach of	Pay upto 75% of admissible
	warranty/condition	claim.
	of policy including
	limitation as to use.

A perusal of the above table shows that it comes under second item. In these cases the Supreme Court opined that the percentage of settlement should be “pay claims not exceeding 75% of admissible claim”. Now the question is what could be the estimated claim. It may be stated that a Surveyor by name E.Y. Madhu Babu was appointed to assess the loss. While the estimation submitted by the complainant wasRs. 78,180, he assessed the damage atRs. 22,500. No doubt the Surveyor while assessing against each of the item estimated by the complainant, has given his own amount, for which he did not show any basis. The complainant has filed bills which were filed by the very Surveyor enclosing his report, Ex. B.4. These bills come to Rs. 35,398, though the estimation of the complainant wasRs.78,180. If it were to be so, the damage should be total. It was not the case of a total loss, since the very complainant filed bills amounting toRs.35,398. Neither the complainant nor the Surveyor could dispute the bills that were filed by the complainant. We reiterate the complainant could not establish that he had spent about Rs. 78,180 for getting it repaired. He having filed bills forRs. 35,398 he cannot claim more than the amount what he actually spent.

11. We may mention that the Insurance Company for the reasons best known appointed another Surveyor D. Brahmaiah contrary to Section 64UM of the Insurance Act, 1938. It did not take permission from the Insurance Regulating Development Authority.

12. The National Commission in a decision reported in IV (2008) CPJ 76 (NC), Saraf Associated v. Oriental Insurance Co. Ltd. and Anr., held that second Surveyor could be appointed only with the permission of authority. It may also be mentioned that in case if one goes by the provisions of the Sub-section (3), Section 64UM of the Insurance Act, 1938, the 2nd Surveyor cannot be appointed and only with the permission of Authority or earlier the Controller, the second Surveyor could be appointed.

13. Be that as it may, the second report except confirming the report of the first Surveyors report did not substantiate it by giving any reason. In the light of the decision of the Supreme Court as unauthorized persons were travelling in the vehicle it could be settled on a non-standard basis. Admittedly, the amount would come to Rs.35,398. No doubt, from this amount the salvage value had to be deducted. The very insurance Surveyor has deducted an amount ofRs. 604 towards salvage value andRs. 600 towards policy excess. He has given 10% depreciation for metal parts and 50% depreciation for rubber/plastic/nylon parts. In the light of the above, if 10% depreciation towards metal parts, and 50% depreciation towards rubber parts are deducted it would come toRs. 6,000. If Rs. 6,000 is deducted it would come toRs. 29,398. Assessing the amount net exceeding 75% an allowable claim would come toRs. 29,398. We feel it reasonable and modest.

14. In the result, the appeal is allowed modifying the order of the District Forum by directing the Insurance Company to pay Rs. 29,398 with interest at 9% per annum from the date of filing of the complaint till the date of realization together with compensation ofRs. 5,000. The complainant is also entitled to costs ofRs. 2,000 in this appeal. The order of the District Forum is modified in the above terms. Time for compliance four weeks.

Appeal partly allowed.