IN THE DISTRICT CONSUMERS’ DISPUTES REDRESSAL FORUM AT MYSORE<br /> <br /> PRESENT: 1. Shri.D.Krishnappa<br /> B.A., L.L.B - President <br /> <br /> <br /> 2. Smt.Y.V.Uma Shenoi<br /> M.Sc., B.Ed., - Member<br /> <br /> 3. Shri.Shivakumar.J.,<br /> B.A., L.L.B - Member<br /> <br /> CC 339/08 DATED 04.02.2009<br /> <br /> ORDER<br /> <br /> Complainant Amit Kumar.M., Director, M/s Karnataka Diagnostic and Research Services Pvt Ltd., No.L25/2A, Irwin Road, <br /> Mysore-570001.<br /> (By Sri.M.Sanjay Jain, Advocate)<br /> <br /> Vs. <br /> Opposite Party The Branch Manager, Bajaj Allianz General Insurance Company Limited, No.363, Sri Hari Complex, Seetha Vilas Road, Mysore-570024.<br /> (By Smt.K.L.S., Advocate)<br /> <br /> Nature of complaint : Deficiency in service<br /> Date of filing of complaint : 04.11.2009<br /> Date of appearance of O.P. : 27.11.2009<br /> Date of order : 04.02.2009<br /> Duration of Proceeding : 2 MONTHS 7 DAYS<br /> <br /> <br /> <br /> PRESIDENT <br /> <br /> <br /> <br /> MEMBER<br /> <br /> <br /> MEMBER<br /> <br /> <br /> <br /> Sri.D.Krishnappa,<br /> President<br /> <br /> 1. The grievance of the complainant against the opposite party in brief is, that he is having a Diagnostics Laboratory and Imaging Centre at Mysore called M/s Karnataka Diagnostic and Research Services Pvt. Ltd., That he has procured Asteion VF Helical CT Scanner with accessories in the year 2005 for Rs.1,71,00,000/-. That he has insured the said equipment along with other machineries and equipments with the opposite party under a comprehensive policy for an amount of Rs.55,00,000/- and has got the policy renewed for the year 2007-08 by paying the premium of Rs.86,714/-. Originally he had insured C.T. Scanner for a sum of Rs.75,00,000/- in the year 2006. There was a breakdown of machinery due to failure of C.T. Scanner tube on 16.10.2007. The same was intimated to the opposite party on 17.10.2007 and he got it replaced for a sum of Rs.14,79,000/-. That the opposite party has failed to admit the claim based on the report of the surveyor that the C.T. Scanner tube is of a limited life and as such volunteered to reduce the amount of insurance to an extent of Rs.15,00,000/- as the component had limited life. The C.T. Scanner had broken down on 05.05.2008 at 10.30 pm and intimated the opposite party on 06.05.2008, the Branch Manager and their surveyor visited the Centre on 06.05.2008 for inspection. It is ascertained that the equipment has failed and had to be replaced with a new one. That he got the equipment that is INV-HV Generator on 07.05.2008 at the cost of Rs.12,48,000/-. This breakdown has caused him loss of Rs.12,58,825/- that he submitted a claim to the opposite party on 12.05.2008 for Rs.12,58,825/- with necessary documents. The opposite party has sent a letter to him on 08.08.2008 admitting the loss of damaged component INV-HV Generator assessing the final amount payable to him as Rs.7,46,016/- after allowing depreciation at 12% per year for 2 ½ years. The opposite party considering that the equipment is of limited life allowed depreciation at 12% per year, which gives no meaning and therefore calling the act of the opposite party as deficient in not honouring his claim has stated that the equipment is not of limited life and its life is in par with that of the main equipment and thereby has prayed for a direction to the opposite party to pay him Rs.12,58,825/- with interest at 12% p.a. and damages for mental agony and to award litigation cost.<br /> <br /> 2. The opposite party has appeared through his advocate and filed version contending that the diagnostic centre run by the complainant is of a commercial nature, therefore this Forum has no jurisdiction to entertain the complaint. It is further contended that there is arbitration clause, which has not been exercised by the complainant and therefore on that ground also, the complaint is not maintainable. Further, the opposite party admitting the insurance of equipment by the complainant with them has stated that he had appointed a surveyor, who has assessed the amount payable as Rs.7,48,935/- and shown his willingness to pay it to the complainant declining the exorbitant claim made by the complainant. That the complainant has enjoyed some part of life span of the complainant and new one will give additional life span, for which the complainant has to bear from his own pocket, therefore justified the surveyor in giving depreciation to the equipment. The opposite party further admitting that the equipment cannot be repaired and it has to be replaced only with a new one stated to had availed service of an expert by name Mr. D.Raghuram who had visited the premises who has also given his report with regard to the life span of the equipment and extent of indemnify, but the complainant despite receipt of the report has filed this complaint and therefore stated that considering the equipment, which has broken down has limited life have through the assessor assessed the value after depreciation and stating that they are not liable to pay as claimed by the complainant, has prayed for dismissal of the complaint.<br /> <br /> 3. In the course of enquiry into the complaint, the complainant and one Vishwanath for opposite party have filed their affidavit evidence reproducing what they have stated in their respective complaint and version. The opposite party have also got filed affidavit of one D.Raghuram who has been subjected to cross-examination by the counsel for the complainant. The complainant has produced the letters of the opposite party addressed to them, besides copies of quotations in having had purchased equipments. Both parties have produced copy of electronic equipment insurance policy conditions. The opposite party has also produced report of surveyor / loss assessor. Heard the counsel for both the parties and also perused the written arguments filed by them. <br /> <br /> 4. On perusal of the above material, following points for determination arise.<br /> 1. Whether the complainant proves that the offer of the opposite party to indemnify the loss he suffered only to an extent of Rs.7,46,016/- is improper and that amounts to deficiency in the service of the opposite party ?<br /> 2. To what relief the complainant is entitled to?<br /> <br /> 5. Our findings are as under:-<br /> Point no.1 : In the Affirmative.<br /> Point no.2 : See the final order.<br /> <br /> REASONS<br /> <br /> 6. Point no. 1:- The opposite party has taken a stand that the complainant is running diagnostic centre for commercial purpose and that the equipments purchased by him were for his commercial purpose, as such this Forum has no jurisdiction to decide the complaint, which is of a commercial nature and she also argued that there is an arbitration clause in the contract in between the complainant and the opposite party while taking insurance on the machineries, the complainant is required to get his dispute decided through an arbitrator and that being so, the complaint is not maintainable. Whereas, the counsel appearing for the complainant refuting the arguments of the counsel for the opposite party submitted that this Forum has jurisdiction and therefore, the complaint is maintainable. The counsel representing the opposite party in support of her arguments has relied upon decisions reported in IV (2007) CPJ page 312 NC, I (2007) CPJ page 51 NC, and few more decisions on the same point. But, it could be seen that this dispute has not arisen between the purchaser and supplier of machineries and equipments, but has arisen between the insured and the insurer. If the complaint were to be between the supplier of machineries and the purchaser, the supplier could have taken such a stand regarding maintainability, but that is not so. In the case before us, the complainant admittedly insured the equipments with opposite party against certain damages or contingencies happening, by paying premium and when the insurer refuses to indemnify the loss on happening a contingency, the complainant can approach this Forum in such a proceeding, the opposite party, the insurer cannot be permitted to take such a stand and therefore we find no merits in the arguments of the counsel for the opposite party.<br /> <br /> 7. Coming to the arbitration clause in the agreement between the complainant and the opposite party, no doubt, there is a provision for settling the dispute through an arbitrator, but in view of section 3 of the Consumer Protection Act, it is not mandatory for the complainant to seek the redressal of the difference through an arbitrator and therefore, the complaint filed by the complainant without resorting to the arbitration clause is maintainable. Hence, there is no force in the contention of the opposite party and counsel in this regard and the same is rejected.<br /> <br /> 8. Coming to the merits of the case there is no dispute between the parties with regard to the liability of the opposite party and entitlement of the complainant. There has been difference of opinion between the complainant and the opposite party with regard to the life of the equipment that has broken down. The complainant has contended as if the life of the broken out equipment is permanent with that of main machine itself. But the opposite party disputed the said fact and contended the equipment is of a limited life. In that regard, the opposite party has got examined an expert who has stated the life of the equipment is between 8 to 9 years. The surveyor appointed by the opposite party to assess the loss has also in his report stated that life of the broken out equipment is limited / short and stated it is about 8 years. The evidence of the expert of the opposite party and report of the loss assessor with regard to age span of broken out equipment has not been seriously disputed by the complainant and therefore, the same has remained uncontroverted. In the course of arguments, it also came to be settled and agreed that the broken out equipment had limited life and it is not more than 8 to 9 years. As such, the only point remains to be decided is with regard to policy excess and the percentage of depreciation allowed by the surveyor needs to be considered to know whether it is just or improper. <br /> <br /> 9. There is no dispute that the equipment in question was purchased by the complainant for Rs.12,48,000/- and it was insured with the opposite party with other accessories for the year 2006-07 for Rs.75,00,000/- and the insurance was renewed for the year 2007-08 for a sum of Rs.55,00,000/-, which is inclusive of this equipment and other accessories. But, we should bear in mind that none of the parties are able to tell us the actual premium paid towards this single equipment, as the complainant has paid total premium for the equipment in question with other accessories. They have also not placed any material before us to show what is the depreciation that is allowed in the value of the asteion VF Helical CT scanner, which is the equipment in question. Therefore, it is not possible to arrive at the exact depreciation in the value allowed when the insurance was renewed for the year 2007-08. It is not in dispute that the scanner in question has resulted in total loss, which has become absolete and that could not be repaired and that the opposite party has conceded for replacement of that equipment with a new one. As already stated by us the cost of the equipment as stated above is not in dispute, therefore the complainant has claimed total cost of the equipment at Rs.12,48,000/- minus policy excess of Rs.1,32,165/-. Whereas the opposite party has disputed the claim of the complainant and basing on the report of the surveyor have offered to pay Rs.7,46,016/- after allowing 12% depreciation for 2 ½ years during which the equipment was used amounting to Rs.3,74,400/-, then policy excess of Rs.1,32,165/- less reinstatement premium of Rs.2,919/-. The counsel appearing for the complainant questioned the correctness of the report of the surveyor and by refuting the contention of the opposite party submitted that the opposite party is liable to reimburse the entire cost of the equipment.<br /> <br /> 10. Both parties have submitted the conditions of electronic equipment insurance policy. The conditions which is captioned as basis of indemnity provides for indemnifying the damaged electronic equipments of 3 types namely; an equipment which is repairable, an equipment which is destroyed and thirdly an equipment which has resulted in total loss or has become absolete. Clause (a) which deals with indemnifying repairable electronic item provides for replacement of damaged part or parts by allowing depreciation. Similarly in clause (b) which deals with destroyed equipments reimbursement is provided, also by allowing depreciation. Whereas in 3rd category where the insured article has resulted in total loss or absolete the condition do not provide for allowing depreciation, but speaks of reimbursement of the entire cost of the equipment. Therefore, in a case where the equipment has resulted in total loss and has become absolete the insurance company in our view has to reimburse the entire cost of the equipment minus the policy excess. In the case on hand, no doubt as already stated by us the value of the insured articles were valued at Rs.75,00,000/-. Again, when the insurance is renewed for the year 2007-08 the equipments were valued at Rs.55,00,000/- on which premium amount is paid. But was already stated by us above, there is no specify reference to the value of the equipment in question. Therefore, we have no option but to presume that the value of the other machineries, which are insured have been given depreciation when the insurance was renewed, but not the equipment in question. As otherwise, the conditions of insurance to these electronic equipments would have also provided for allowing depreciation after lapse of some time or after it was put to use for some time. Thus clause (c) of the basis of indemnity as provided under the conditions since provide no scope for allowing the depreciation the insurer is required to reimburse the actual cost and other expenses. The opposite party in our view therefore has to reimburse the cost of the equipment in question without allowing any depreciation. Even, the proportionate depreciation cannot be worked out in this case in the absence of materials placed by the opposite party, what we mean to say is this scanner with other accessories which were insured for Rs.75,00,000/- for the year 2006-07 came to be insured only for Rs.55,00,000/- for the subsequent year. If the opposite party was in a position to bifurcate the value of the scanner at the time of the insurance, we could have said that the scanner has been valued for subsequent insurance after giving depreciation and proportionate depreciation could have been allowed. But, that has not been done and condition of the policy with regard to the electronic items which has become absolete do not allow depreciation. Thus, the complainant in our view is entitled for the cost of the equipment minus the policy excess. As such, the report of the surveyor, which runs against the conditions of the policy cannot be accepted and therefore we find no merits in the contention of the opposite party who has offered to reimburse a sum of Rs.7,46,116/-. By considering the merits of the case from this angle, for the aforesaid reasons, the complainant is entitled for Rs.11,15,835/- out of which Rs.2,919/- should be deducted towards premium and by adding Rs.7,500/- towards local freight charges to the remaining amounts which works out to Rs.11,20,416/-. Hence, we are constrained to hold that the opposite party has caused deficiency in their service and thus we answer point no.1 in the affirmative and pass the following order:-<br /> ORDER<br /> <br /> 1. The Complaint is allowed.<br /> 2. The opposite party is directed to pay Rs.11,20,416/- to the complainant within 60 days from the date of this order, failing which it shall pay interest at 8% p.a. from the date of this order till the date of payment.<br /> 3. The opposite party shall also pay Rs.5,000/- towards mental agony and inconvenience caused to the complainant.<br /> 4. Lastly, the opposite party shall also pay cost of Rs.1,000/- to the complainant.<br /> 5. Give a copy of this order to each party according to Rules.<br /> (Dictated to the Stenographer, transcribed by her, transcript revised by us and then pronounced in the open Forum on this the day 4TH February 2009)<br /> <br /> <br /> <br /> (D.Krishnappa) <br /> President <br /> <br /> <br /> <br /> (Y.V.Uma Shenoi)<br /> Member<br /> <br /> <br /> <br /> (Shivakumar.J.)<br /> Member<br /> <br />