BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.

F.A. 1561/2007 against C.C. 216/2006, Dist. Forum, Ongole

Between:

The Senior Divisional Manager

The New India Assurance Company Ltd.

Opp. Nellore Bus-stand

Ongole, Prakasham Dist. *** Appellant/

Opposite Party.

And

Konda Srinivasa Rao

S/o. Narasimham

Age: 37, Opp. RTC Depot

Sabarigirisa Complex

Kurnool Road, Ongole

Prakasham Dist. *** Complainant/

Respondent/

Counsel for the Petitioner: M/s. Naresh Byrapaneni.

Counsel for the Respondent: M/s. V. Gourisankara Rao.

CORAM:

HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.

&

SMT.M.SHREESHA, LADY MEMBER.

WEDNESDAY, THIS THE NINETEENTH DAY OF MAY TWO THOUSAND TEN

ORAL ORDER: (Per Hon’ble Sri Justice D.Appa Rao, President.)

***

1) This is an appeal preferred by the insurance company against the order of the Dist. Forum directing it to pay 6,85,000/- with interest, compensation and costs.

2) The case of the complainant in brief is that he is the owner of bus bearing No. AP 27 U 5445 operating between Kandukur and Hyderabad and vice-versa The bus was insured with the appellant covering the period from 21.1.2004 to 20.1.2005 for Rs. 9 lakhs. While so on 30.11.2004 the bus met with accident at Veerapatnam where one of drivers escaped with injuries while the spare driver Sri Chenchaiah died and many passengers sustained injuries. On a report the police registered it as a case in Crime No. 83/2004 u/s 337 & 304A of IPC. He immediately informed about the accident to the insurance company which in turn deputed a surveyor who inspected the scene of accident, and he submitted her claim to a tune of Rs. 10 lakhs and informed the same to the insurance company. He got it repaired by spending Rs. 6,85,000/-. He submitted all the bills with all the relevant documents. Despite her repeated requests it was not settled. He was put to mental agony. Therefore, he prayed for an amount of Rs. 6,85,000/- with interest @ 18% p.a., from the date of accident till the date of payment together with compensation of Rs. 2 lakhs and costs.

3) The insurance company resisted the case. However, it admitted that the complainant had insured her bus, and the said bus met with accident on 30.11.2004. It had appointed a surveyor who on investigation found the following violations :

1. As per the permit 20 persons are allowed to travel in the bus whereas at the time of accident more than 25 persons were traveling in the vehicle.

2. As per policy also only 20 persons are allowed to travel in the vehicle whereas at the time of accident the bus was over-loaded.

3. Both the FIR and charge heet clearly reveals that about 27 persons were traveling at the time of accident including the driver.

Since he had violated the conditions of the policy it had repudiated and communicated the same by its letter Dt. 27.9.2006. There was no negligence on its part. Therefore it prayed for dismissal of the complaint with costs.

4) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A5 marked while the insurance company filed the affidavit evidence of its Divisional Manager and got Exs. B1 to B10 marked.

5) The Dist. Forum after considering the evidence placed on record opined that carrying passengers more than the requisite number could not be a fundamental breach to repudiate the claim. Since the complainant could prove that he had spent Rs. 6,85,000/- the said amount was awarded together with interest @ 9% p.a., from 30.1.2005 till the date of realization besides compensation and costs of Rs. 1,000/- each.

6) Aggrieved by the said decision, 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 no document was filed to substantiate the claim that he had spent Rs. 6,85,000/- towards repair of the vehicle. Since the terms of the policy was violated, he was not entitled to any compensation. No bills whatsoever was given to it and therefore prayed for dismissal of the complaint with costs.

7) The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?

8) At the outset we may state that during the hearing of the appeal the insurance company filed a petition to receive a copy of the report of the surveyor as additional evidence. The complainant resisted the said application on the ground that there is no reason why they could not file the said report before the Dist. Forum, and that in order to get over an adverse inference drawn by the Dist. Forum, belatedly this report was filed.

9) The insurance company while filing its counter mentioned about this report. May be it was filed belatedly. However, in order to do substantial justice and to adjudicate the claim, we are of the opinion that the same could be received and assigned it as Ex. B11. The petition is allowed accordingly.

10) It is an undisputed fact that the complainant insured the bus owned by her for Rs. 9 lakhs covering the period from 21.1.2004 to 20.1.2005 evidenced under Ex. B7. It was mentioned as “Passengers carrying commercial vehicle policy-B Package”. It could carry 20 passengers in all evidenced under permit Ex. B8 issued by Regional Transport Authority, Ongole. It is also not in dispute that the driver who drove vehicle has valid and effective driving license evidenced under Ex. B6. Admittedly the said bus met with accident on 30.11.2004 for which police registered a case in Crime No. 83/2004 u/s 337 & 304A of IPC vide FIR Ex. A1 The police after investigation filed charge heet mentioning that at the time of accident there were 24 passengers one spare driver and one cleaner. The complainant himself filed a list of passengers vide Ex. B1. On intimation the insurance company appointed Sri B. Ranga Mohan Rao, a surveyor. When the insurance company sought for certain clarifications from him, he submitted his report Dt. 26.7.2006, 2-1/2 years after the accident mentioning that:

“ The post repair inspection surveyor confirms that the insured vehicle placed with a disposal body. As per my survey report, nearly 50% of the body hell was damaged. The cost of the disposal body hell will be around Rs. 3 lakhs excluding glasses. Hence an amount of Rs. 1,50,000/- (i.e., 50% of the cost of disposal body hell) may be allowed towards body hell as the insured vehicle was replaced with a disposal body hell.

Hence I am submitting the loss assessment again as detailed below since a disposal body hell on proportionate basis is recommended, the loss on materials and the labour charges of Rs. 48,000/- is disallowed”

After giving depreciation etc. he recommended the net loss at Rs. 2,36,785/-. He did not mention as to the amount claimed by the complainant. The fact that he did not file any details was not even mentioned. All through the complainant represented that he had forwarded the bills, estimates etc. to the insurance company. The insurance company denied the said fact. Curiously the surveyor did not say so. He did not advert to any of these facts. It is not known why a period of 2-1/2 years was taken to repudiate the claim that too by suppressing the original surveyor’s report filed by the surveyor. The complainant has lost the opportunity of getting duplicate bills etc. to show that an amount of Rs. 6,85,000/- was spent towards repairs etc. The insurance company ought to have filed the original report in order to find out whether the surveyor has in fact has examined the mechanic to whom the complainant entrusted the vehicle to get the same repaired. The appellant insurance company intended to somehow repudiate the claim. In its letter Ex. A5 Dt. 27.9.2006 it mentioned:

“ Your vehicle (bus) was carrying 24 passengers along with 2 drivers and 1 cleaner (27 in all) at the time of accident as against the carrying capacity of 20 in all. We regret to inform you that your claim cannot be entertained as per terms and conditions of the policy and therefore, your claim is hereby repudiated due to over-loading of passengers.”

11) The insurance company did not explain the enormous delay in settling the claim. The Dist. Forum has relied a decision of National Commission in Sushanthkumar Ray Vs. Oriental Insurance Company Ltd. reported in 2003 (2) CPR 116 wherein it was held that two months period is reasonable for insurance company to settle the claim after receipt of report of surveyor. Unexplained delay beyond that period will amount to deficiency in service.

12) In the light of repudiation on the ground that the vehicle was carrying passengers in excess the question is whether the insurance company could repudiate the claim on the said ground. In fact as long back as in 1996 in B.V. Nagaraju v. M/s. Oriental Insurance Co. Ltd. Divisional Office, Hassan, reported in II (1996) CPJ 18 (SC)=I (1997) ACC 123 (SC)=1996 (4) SCC 647 the Hon’ble Supreme Court held that “Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves had gone to contribute to the causing of the accident.”

The Hon’ble Supreme Court in Amalendu Sahoo Vs. Oriental Insurance Company Ltd. reported in II (2010) CPJ 9 (SC) excerpted the guidelines issued by insurance company for settling the claim on non-standard basis.

13) In view of the above guidelines the insurance company was not justified in repudiating the claim in its entirety. It could have settled the claim on non-standard basis as stated above. The claim of the complainant is Rs. 6,85,000/-. Since the Hon’ble Supreme Court had opined that violation of such condition would entail the insurance company to settle the claim at 75%, we are of the opinion that the complainant is entitled to 75% of his claim on non-standard basis, which comes to an amount of Rs. 5,13,750/-.

14) In the result the appeal is allowed in part modifying the order of the Dist. Forum. The appellant insurance company is directed to pay Rs. 5,13,750/- with interest @ 9% -p.a., from 30. 1. 2005 till the date of realization besides compensation and costs awarded by the Dist. Forum. The complainant is also entitled to costs of Rs. 2,000/- in the appeal. Time for compliance four weeks.

1) _______________________________

PRESIDENT

2) ________________________________

MEMBER

Dt. 19. 5. 2010.

*pnr