BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSIONAT HYDERABAD.
FA 577 of 2011 against C.C. 276/2010, Dist. Forum, Vijayawada
Between:
Bajaj Allianz General Insurance Company Ltd.
D.No. 40-1-10, Upstairs,
Kusalava, Hyundai Showroom
2nd Floor, M.G. Road
Labbipet, Vijayawada-10. *** Appellant/
O.P. No. 1
And
1) Smt. Bavineni Madhavi
W/o. Srinivasa Rao
Plot No. 8, Padmaja Nagar
Tadigadapa, Penamaluru Mandal
Krishna Dist. **** Respondent/
Complainant
2) Varun Motors Pvt. Ltd.
D.No. 48-17-4/1
Ring Road
Vijayawada-520 008. *** Respondent/
O.P. No. 2
Counsel for the Appellant: M/s. N. Mohana Krishna
Counsel for the Resp: M/s. V. Gourishankara Rao &
YVN Charyulu (R1)
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
SMT. M. SHREESHA, MEMBER
&
SRI S. BHUJANGA RAO, MEMBER
THURSDAY, THE TWENTY SIXTH DAY OF JULY TWO THOUSAND TWELVE
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
***
1) This is an appeal preferred by O.P. No. 1 insurance company against the order of the Dist. Forum directing it to pay Rs. 4,74,000/- with interest @ 9% p.a., from 21.12.2010 till the date of payment together with costs of Rs. 2,000/-.
2) The case of the complainant in brief is that she purchased a Maruthi Swift car on 21.1.2010 from Op2 an authorised dealer for a sum of Rs. 5,24,774/-. It was insured with the appellant insurance company for a sum of Rs. 4,99,010/- covering the period from 21.1.2010 to 20.1.2011. While so, the car met with an accident on 30.9.2010. After intimating the said fact to the insurance company the vehicle was kept with Op2 for estimation of damage. Accordingly it estimated at Rs. 5,29,063/-. Since it was a total damage it became scrap. The insurance company by its letter dt. 10.11.2010 assessed the loss, subject to terms and conditions of the policy as was not exceeded 75% of the IDV, and it cannot be treated as constructive total loss. It has sought consent for repairs and submit the bills for processing the claim. The insurance company was liable to pay the entire amount covered under the policy. She was not aware as to the report of the surveyor. However, she came to learn that it was deducting 25% of the IDV. On that she got issued legal notice seeking Rs. 4,99,010/- with interest @ 24% p.a., for which it gave a false reply. Therefore she filed the complaint claiming Rs. 4,99,010/- with interest @ 24% p.a., from 30.9.2010 till the date of payment and costs.
3) The appellant insurance company resisted the case. While admitting the issuance of policy, it alleged that immediately on receipt of intimation, it has appointed a surveyor who assessed the loss at Rs. 2,79,316/- basing on which it had addressed letters to give consent for repairs and also submit the bills however the complainant did not do so. The complainant intended the entire amount to be paid on total loss basis. As per Section-I of the policy terms and conditions any vehicle will be treated as total loss only when the repair cost is more than 75% of the IDV. It has given proper reply to the notice got issued by the complainant. The complainant was not entitled for the entire amount for which she had taken the policy. If the entire amount was to be paid she could have as well purchase a new vehicle than to get it repaired. As per condition No. 3 the company may as its own opinion repair, reinstate or replace the car or part thereof or its accessories or may pay in cash the amount of loss or damage shall not exceed total loss. In regard to partial losses other than total loss, actual and reasonable cost of repair or replacement of parts lost or damaged would be made subject to depreciation as per limits specified. Both parties are bound by the terms of contract, and therefore the claim of the complainant was vexatious and therefore prayed for dismissal of the complaint with costs.
4) Op2 the authorised dealer did not choose to contest the matter.
5) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A10 marked while the appellant insurance company filed the affidavit evidence of its Senior Legal Executive and got Exs. B1 to B3 marked.
6) The Dist. Forum after considering the evidence placed on record opined that the authorised agent found that the car was totally damaged and the policy having been issued for Rs. 4,99,010/- a deducting of 5% could be given and assessed the loss at Rs. 4,74,000/- and directed the same to be paid with interest @ 9% p.a., from 21.12.2010 till the date of payment together with costs of Rs. 2,000/-.
7) Aggrieved by the said order, the insurance company preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective. It ought to have seen that an independent IRDA licensed surveyor assessed the damage at Rs. 2,79,316/-. The damage suffered was 56% of the IDV. As per Section-I of the terms of the policy any vehicle will be treated as total loss when the repair costs is more than 75% of the IDV. In case of other than total loss the actual or reasonable cost of repair assessed by the surveyor after deducting depreciation and policy excess would be paid to the insured. The bills are un-scrutinized, and therefore the complainant was entitled to the amount as assessed by the surveyor and rest of the order be set-aside.
8) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?
9) It is an undisputed fact that the complainant purchased a Maruthi Swift car for a sum of Rs. 5,24,774/- on 21.1.2010 and got it insured for Rs. 4,99,010/- vide Ex. A3 = (Ex. B2) being the value declared by her. During the period of policy, it met with an accident on 30.9.2010, eight months after commencement of the policy. The car was taken to the authorised dealer Op2 as per the instructions of the insurance company. The authorised service centre estimated the damages at Rs. 5,29,063/- which includes VAT @ 14.5%, service tax @ 10% and Education Cess @ 3%. The total value of the parts came to Rs. 3,75,316/-, labour charges at Rs. 90,850/- on which above taxes were added.
10) Sri AVSC Bose, Surveyor & Loss assessor was deputed to estimate the damage and by his report dt. 27.1.2011 Ex. B3 after four months assessed the loss at Rs. 2,79,316/-. The summary reads as follows:
Net loss on spare parts 2,28,552
Net loss on labour 62,264
------------
2,90,816
Less: Policy excess 500
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2,90,316
Less: Salvage value 11,000
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Net loss assessed 2,79,316
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Finally he recommended “the insured may be paid Rs. 2,79,316/- towards loss to his vehicle in the above said accident. Claim may be settled on cash loss basis deducting taxes and deducting cash loss discount. However, the final discretion was left to the insurer. The damage parts may fetch Rs. 11,000/- already deducted. Engine and chassis No. were physically verified and noted. All the original records were verified and found in order. The said cause of accident is corroborating with the damage sustained by the vehicle. ”
11) Evidently Section-I of the terms and conditions of the policy stipulates that the insured vehicle shall be treated as total loss if the aggregate cost of retrieval or repair of the vehicle, subject to terms and conditions of the policy, exceeds 75% of the IDV of the vehicle. It may also be mentioned herein that Section 3 of the policy reads as follows :
“The company may at its own option repair, reinstate, or replace the motor car or part thereof and/or its accessories or may pay in cash the amount of the loss or damage and the liability of the company shall not exceed:
a) For total loss/constructive total loss of the vehicle the insured’s declared value IDV of the vehicle (including accessories thereon) as specified in the schedule as the value of the wreck.
b) For partial losses i.e., losses other than total loss/constructive total loss of the vehicle – actual and reasonable cost of repair and/or replacement of parts lost or damaged subject to depreciation as per limits specified.
It is no doubt that the terms and conditions mention in the policy represent the contract between the parties. Obviously the insured cannot claim more than what is covered as per terms of the policy.
12) The question is whether the complainant is entitled to the amount on total loss basis. Even the very estimate given by Op2 marked as Ex. A4 shows that the amount would come to Rs. 5,29,063/-. The total value of the parts came to Rs. 3,75,316/-, labour charges at Rs. 90,850/- on which VAT @ 14.5%, service tax @ 10% and education cess @ 3% were added.
13) Recently the National Commission in the New India Assurance Company Ltd. Vs. Devrajbhai Mephabhai Bhojani by its judgement dt. 12.7.2012 in R.P. No. 1571/2012 opined that the insurance company was bound by the value put on the vehicle while issuing policy. To arrive at such conclusion it relied the decision of the Hon’ble Supreme Court Dharmendra Goel Vs. Oriental Insurance Company reported in (2008) 8 SCC 279 wherein their Lordships held that “Insurance Company after having accepted the value of particular insured good, disown that very figure on one pretext or other when they are called to pay compensation. This “take it or leave it” attitude is unwarranted being bad in law and ethically indefensible”.
Same questions pertaining to interpretation of terms and conditions were also cropped up in the above case. While considering the report of the surveyor who assessed the loss at Rs. 1,75,000/- as against IDV of Rs. 4,64,000/- it was held that:
It is true that survey report is an important document and cannot be brushed aside, but contract of insurance is more important where in terms and conditions of insurance policy are agreed between the parties and they are to be read as it is. Appellant has produced private car package policy along with terms, conditions and warranties for private car at page no.20 to 23 of main file. Wherein, the policy condition is very clear that “IDV shall be treated as market value throughout the policy period without any further depreciation for the purpose of total loss claims.
9. In view of the above condition, appellant is entitled for total loss amount which was agreed and decided by both sides i.e. Rs.4,64,400/- throughout the policy period without any further depreciation. As per condition no.3 of policy, it is an option available with insurance company that in case of claims, “the company may at its own option repair, reinstate or replace the vehicle.” So reading this condition as it is, insurance company is supposed to replace the vehicle but certainly cannot offer the amount of replacement value of vehicle. If insurance company wants to pay the amount, then it has to offer the market value IDV of vehicle (Rs.4,64,400/-) as agreed between the parties at the time of agreement. As per terms of policy, IDV of obsolete model of vehicle is to be determined on basis of an understanding between the insurer and insured. Insured vehicle was obsolete model and at the time of agreement, insurance company has accepted the market value of vehicle in question @ Rs.4,64,400/- and got the premium on said amount. So now insurance company cannot fall back and say that replacement value or market value of vehicle is Rs.1,75,000/-.
14) The above said decision squarely applies to the case on hand. In fact the Dist. Forum had deducted 5% towards salvage. The Dist. Forum observed that ‘’rate of depreciation for all other parts including wooden parts will be as per the following schedule. Age of vehicle - % of depreciation not exceeding 6 months ‘nil’. Exceeding six months but not exceeding 1 year 5%. Though the earlier term does not warrant deduction of depreciation or salvage the Dist. Forum granted 5% by virtue of above. The complainant did not question when the Dist. Forum granted 5% depreciation/salvage from the IDV.
15) In the light of the fact that the price of the vehicle had already been agreed by both the parties at Rs. 4,99,010/- at the time of issuing policy we accordingly hold that in these circumstances, the insurance company was bound by the value put on the vehicle while issuing policy following the law laid down by the Supreme Court in the cited judgment (supra). Therefore the Dist. Forum was justified in awarding Rs. 4,74,000/- as per the policy conditions with interest @ 9% p.a., from 21.12.2010 till the date of payment together with costs of Rs. 2,000/-. We do not see any mis-appreciation of fact or law by the Dist. Forum in this regard. We do not see any merit in the appeal.
16) In the result the appeal is dismissed with costs computed at Rs. 10,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
26/07/2012
*pnr
UP LOAD – O.K.
