N. Subash Chander Reddy Vs. United India Insurance Co. Ltd. and Another - Court Judgment

Excerpt:
consumer protection act, 1986 - sections 14, 12 and 17 - case referred: 1992 (1) cpr 431. (relied) [para 4] comparative citation: 1995 (2) cpj 244a. venkatarami reddy, president: 1. the complainant is the owner of a “bec model 460” drilling rig mounted on truck atl 8500. the said machine was insured with the opposite party during the period 5.4.90 to 4.4.91 for a sum of rs. 8,50,000/-. when the rig machine was operating in ranchi area of bihar state, on 27.5.90 the rig was in transit in pithoria of sibal area. due to failure of brakes in ghats area it fell down into the valley and caught fire, bunt, leaving scrap impossible of repairs. mr. p. satyanarayana, the driver of the rig lorry reported on the same day about the accident to kanka police station and a panchanama was conducted by the police on 28.5.90. the complainant came to know of the accident on the morning on 28.5.90. immediately, he contacted the divisional office and reported the matter and a surveyor was appointed for conducting preliminary survey. survey was conducted and report was filed in the divisional office at ranchi by the surveyor. the road transport authority also visited the vehicle and filed a report in which it was mentioned that the vehicle burnt beyond repairs. at the request of the divisional office, the complainant paid rs. 7500/- and shifted the vehicle to madras auto works, unloaded in the premises on payment of monthly rent of rs. 850/- and the same was informed to the divisional office on 5.6.90. according to the complainant on 29.6.90, the divisional manager sent a letter to the complainant to submit estimate of repairs, the name of the garage proposed to repair, r.c. book, driving licence and permit for the purpose of final survey. the claim form was also submitted on 27.8.90 but the opposite party did not take any suitable steps to settle the matter finally. the first opposite party sent a letter on 20.11.90 to one sri s.k. sharma to conduct the final survey and to contact the divisional office at ranchi. accordingly, one mr. suryadutt of calcutta conducted the final survey and submitted a report. he estimated the loss on repair basis at rs. 4,46,375.00, total loss basis at rs. 3,25,000/- and on cash loss basis at rs. 2,75,000/-. initially, the complainant sent a letter on 28.9.91 to accept the third option of receiving rs. 2.75 lakhs. but, as there is delay on the part of the opposite party in settling the claim by letter dated 28.9.91 he withdrew the option. thereafter, the opposite parties on 30.9.91 sent vouchers for rs. 2.75 lakhs. but the amount has not been received by the complainant and as he specifically mentioned that the acceptance is subject to settlement of claim in a court of law. the complainant, therefore, claimed a sum of rs. 8,50,000/- towards the loss of vehicle atl 8500 with a compressor, rig, accessories fitted therein etc. with interest at 18% p.a. from the date of accident till realisation. he also claimed compensation of rs. 80,000/- towards mental agony. 2. in the counter filed by the insurance company, it admitted that there is insurance coverage for the vehicle but it pleaded that the complainant did not disclose that the vehicle was under hypothecation to andhra bank and also under hire purchase agreement. he exaggerated the value of vehicle to rs. 8,50,000/- when its real value is rs. 5,50,000/- and after depreciation its market value is only rs. 4,00,000/-. he did not also state the correct weight of the vehicle. it was stated that the spot surveyor, sri gyan chandra, appointed conducted survey and submitted his report on 29.5.90. the complainant submitted his claim form without enclosing the relevant papers on 20.6.90. after receipt of the claim form, sri surya dutt conducted final survey and submitted his report on 15.12.90 estimating the loss in three categories. the first category is repair basis costing about rs. 4,46,375/- the second category is total loss basis costing about rs. 3,23,000/- and the third category is cash loss basis (with salvages) at rs. 2,75,000/-. due to non-submission of invoices, panchanama, permit, r.c. book and the drivers license of the person driving the vehicle, the opposite party-insurance company wrote a letter on 27.6.91 for submission of invoices and on 19.7.91 for submission of panchanama. on 20.7.91, the complainant wrote a letter stating that the entry no. 567 dated 28.5.90 of police station diary was the panchanama. he also stated in the letter dated 23.8.91 that the permit was not issued, and a xerox copy of r.c. book was enclosed. it is their case that the delay was due to non-complying with submission of invoices, panchanama etc. by the complainant. the complainant on 4.3.1991 had given consent to receive damages on total loss basis at rs. 3,25,000/- but again went back through letter dated 29.5.91, and gave consent to settle the damages at rs. 2,75,000/- on cash loss basis. when the matter is under active consideration to settle the claim of the complainant in accordance with cash loss basis, on 31.9.91 the complainant stated that to avoid delay, he accepted rs. 2.75 lakhs on cash loss basis as he was paying huge interest to the bank and that if there was no settlement in 10 days, he would initiate proceedings in the court. when vouchers were sent, the complainant signed the same under protest on 14.10.91 and accepted only as a part payment. therefore, no amount was sent. according to the united india insurance company limited, there was no avoidable delay on its part in settling the claim. therefore, there is no deficiency of service. 3. along with the complaint, the complainant filed policy on 5.4.90, panchanama of police dated 28.5.90, r.t.a, report dated 2.6.90, letter of complaint dated 5.6.90, letters by divisional manager, dated 29.6.90, claim form dated 18.6.90; letter addressed by the divisional manager, united india insurance company limited, nizamabad branch to the motor technical department, h.r.o. hyderabad dated 11.7.90. the letter sent by divisional manager to sri s.k. sharma 20.11.90, the letter dated 28.9.1991 written by the complainant to the divisional manager, united india insurance company limited; saying that the claim was delayed though he accepted the proposal for rs. 2.75 lakhs and he will be forced to approach the court of law. on 30.9.91 a letter was written by divisional manager of opposite insurance company to the complainant intimating that his claim was settled at rs. 2.75 lakhs and that a voucher in duplicate was sent for his signature after discharging; a letter written by the complainant on 14.10.91 to the asstt. divisional manager of the united india insurance company limited were filed. additional material papers were also filed by the complainant showing the quotation/proforma invoice from borewell equipment company dated 13.6.90 wherein the price of various parts of the drilling rig were quoted amounting to rs. 5,36,734.53ps. a letter was filed by the complainant addressed to him by the kirloskar pneumatic company limited showing that the price of 600 cfm at 100 psig rotary vane compressor was quoted at rs. 5,22,500/-. a quotation was quoted by the simpson and company limited to be rs. 2.5 lakhs for purchase of ford truck fs 16c exclusive of sales tax and delivery charges. evidently, these prices mentioned in the additional material papers are the prices of new compressor and also new vehicle. the opposite party united india insurance company limited filed the surveyors report dated 15.12.1990; letter from the first opposite party addressed to the andhra bank dated 14.2.91; letters of the complainant to the first opposite party dated 4.3.91 and 29.5.91 whereby in the first letter he opted for total loss and in the later he opted for total cash loss. a letter dated 19.7.91 was addressed by the insurance company to the complainant to produce police panchanama. a letter dated 23.8.91 was filed by the insurance company to show that the complainant has written that permit was not issued by the road transport authority as it is a non-transport vehicle and the complainant submitted xerox copy of r.c. book. no oral evidence was adduced. 4. it was held in oriental insurance company limited v. suresh arjun karnade, 1992 (1) cpr page 431, by the national consumer disputes redressal commission as follows:— “a policy of insurance is a contract for indemnification against loss and the insurance company is liable only to indemnify the insured against the loss actually suffered by him i.e. the market value of the vehicle with accessories at the time of loss or damage.” hence the complainant is entitled in principle to the value of the vehicle at the time of loss or damage either the value of the vehicle after depreciation whichever is less. there is no evidence adduced on behalf of the complainant to show what exactly is the value of the rig vehicle as on the date of the accident. invoices filed by him in the additional material papers are merely quotations for a new compressor etc. and other new parts, of the rig. they do not in any way show or throw light on the value of the vehicle on the date of the accident. the only material on record to show the market value of the vehicle is final surveyors report dated 15.12.90 in which he assessed the loss under three categories namely repair basis, total loss basis and cash loss basis. he gave particulars with regard to replacement and repair basis and estimated 50% of the cost of the parts on list prices of new parts. in the estimate on total loss basis, he evaluated the prices as on the date of the loss after taking into consideration the new prices. therefore, the surveyor adopted the correct method in arriving at the loss on the date of the accident. he suggested in the cash loss basis rs. 2.75 lakhs and the salvage to be retained by the insured. hence on the material available on record, we are satisfied that the surveyor correctly assessed the cash loss at rs. 2.75 lakhs, and in fact at one stage, the complainant accepted the same and subsequently went back on the ground that there is delay on the part of the insurance company in paying the amount agreed. we, are therefore, satisfied that rs. 2.75 lakhs assessed by the final surveyor towards cash loss basis is quite reasonable and proper having regard to the circumstances of the case. 5. it is next submitted that the accident took place on 27.5.90 and it was reported to the united india insurance company limited on 28.5.90 and a spot surveyor was appointed and spot survey was conducted on 29.5.90 but the complainants claim was not settled even after submission of the claim on 20.6.90. it is the case of the complainant that final surveyor was appointed on 15.2.90 only and he submitted a report. even after the complainant gave his consent to total loss basis on 4.3.91 thereafter on cash basis on 29.5.91 until 30.9.91 the insurance company did not send any voucher. it is therefore the case of the complainant that there is delay in settling the claim. the normal period for settling the claim is about three to four months after the accident. in the instant case, the accident occurred in may, 1990. the opposite party — united india insurance company limited, ought to have settled the claim within a maximum period of four months from the month of may i.e. by the end of september, 90. since there is delay in settling the claim we consider that the complainant is entitled to payment of interest. 6. during the pendency of the complaint, the complainant filed i.a. no. 99/92 seeking direction to the united india insurance company limited to pay a sum of rs. 2.75 lakhs, as agreed and informed by letter dated 30.9.91. this commission on 28.3.1992 directed the insurance company to pay an amount of rs. 2,00,000/- in the andhra bank, nizamabad in the name of the complainant, within four weeks from that day. it is submitted that the amount was paid within the time stipulated. hence we direct the opposite parties i.e., united india insurance company limited to pay interest on rs. 2.75 lakhs from 1.9.90 till the end of april, 1992 at the rate of 15% p.a. and from may, 1992 pay further sum of rs. 75,000/- with interest at the rate of 15% p.a. on rs. 75,000/- till the date of payment. 7. in the result, the complaint is allowed in part and the opposite parties, i.e. united india insurance company limited is directed to pay interest on the amount of rs. 2.75 lakhs from 1.9.90 till the end of april, 1992 at the rate of 15% p.a. and pay a sum of rs. 75,000/- with interest from may, 1992 at, the rate of 15% p.a. on rs. 75,000/- till the date of payment.