BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
C.C. No. 17/2008
Between:
M/s. M.D.R. Constructions
Flat No. 602, Sri New Tirumala Towers
Revenue Board Colony, Asman Ghad
Dilsukhangar, Hyderabad
Rep. by its Managing Partner
K. Suresh Kumar Reddy *** Complainant
And
1) IFFCO Tokyo General Insurance Company Ltd.
2nd Floor, Uma Chambers, Panjagutta
Hyderabad-500 028.
Rep. by its Manager (Claims)
2) IFFCO Tokyo General Insurance Company Ltd.
IFFCO Office, 3rd Floor, 34, Nehru Place
Delhi – 110 019. *** Opposite Parties
Counsel for the Complainant: M/s. Prabhakar Sripada.
Counsel for the OPs: M/s. K.S.N. Murthy.
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SRI R.L. NARASIMHA RAO , MEMBER
MONDAY, THIS THE TWENTY FIRST DAY OF DECEMBER THOUSAND NINE
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
***
1) This complaint is filed against the insurance company to recover Rs. 23,96,483.94 towards loss caused to hydraulic excavator together with interest, compensation and costs.
2) The case of the complainant in brief is that it is a registered partnership firm doing contract works viz., laying and installation of all types of roads, bridges, construction of buildings, canals and all types of excavation works etc. It has purchased Volvo Hydraulic Excavator (hereinafter called the ‘machine’) availing loan facility and insured it with the opposite party- insurance company for the period between 28.5.2006 and 27.4.2007 for Rs. 49,51,000/-. The insured vehicle was hired by M/s. S.K.R. Constructions for their work at Sriramsagar project at Kacharam village of Karimnagar district. While so on 19.6.2006 while the excavator machine was being taken towards ramp for excavating further work, underneath earthen soil with boulders got loosened due to which it slipped down despite the efforts of the operator and was damaged. It was informed to the insurance company which in turn appointed Sri S. Bishan Singh, Insurance Surveyor & Loss Assessor. He visited the place, conducted sport survey and opined that it was due to loose soil it was slipped. On his instructions the damaged machine was sent to M/s. Vijay Engineering Equipment India Pvt. Ltd., for effecting repairs which got it repaired and claimed Rs. 23,96,483.94. Final survey was also conducted by one Sri D. R. Krishna Murthy who visited the work spot where the machine was got repaired and noted the damages. After the machine was got repaired, it had informed the insurance company to arrange for final inspection in order to shift it to the workplace. When it did not evoke any response, it sent a reminder on which the insurance company with an unsigned letter Dt. 11. 9.2006 informed that the claim was not admissible and was closed on the ground that the cause of accident was due to over-turning of the machine, not covered under the scope of the policy, besides no premium was calculated for such a peril. This was against the report of the surveyor. Therefore it claimed an amount of Rs. 23,96,483.94 towards loss with interest @ 18% p.a., from the date of accident till realization together with compensation of Rs. 2 lakhs and costs.
3) The insurance company resisted the case, however, it admitted the issuance of policy. It alleged that the peril was not covered nor premium was paid for such a peril. The complainant itself alleged that while it was on move, the excavator lost control and fell into the canal. The second surveyor in fact mentioned that there was change in the narration of the incident. so as to bring the loss under the purview of the policy. The panchanama etc. were manipulated. It also denied that the machine was got repaired through M/s. Vijay Engineering Equipment India Pvt. Ltd., on the instructions of the spot surveyor. Since the claim did not cover the peril it was rightly repudiated. In any case the surveyor estimated the loss at Rs. 19,80,542/-. There was no cause of action nor the claim was within limitation. The Commission had no jurisdiction and therefore prayed that the complaint be dismissed with costs.
4) The complainant in proof of its case filed the affidavit evidence of the Managing Partner and got Exs. A1 to A23 marked, while the insurance company filed the affidavit evidence of its Vice-President and got Exs. B1 to B4 marked.
5). The points that arise for consideration are :
i) Whether the peril complained is covered by the terms of the policy?
ii) Whether the complainant is entitled to any compensation? If so, to what amount?
iii) To what relief?
6) It is an undisputed fact that the complainant had insured an excavator under Ex. B1 for Rs. 49,51,000/- covering the period from 28.5.2006 to 27.4.2007. It is also not in dispute that while the excavator was functioning at Sriram Sagar Flood Flow canal work at Kacharam village due to loose soil the machine lost control and fell down from up side place. On a report both to the police as well as to the insurance company, the police conducted Panchanama under Ex. A5. The insurance company appointed a sport surveyor by name Sri S. Bishan Singh. The surveyor within two days submitted his report Ex. B2 Dt. 22. 6. 2006 to the insurance company after inspecting the spot. He mentioned the version of the insured by noting that due to loose soil the excavator machine lost control and fell down from up side place. He mentioned description of damages by stating that all the external and visible damages are noted down at the time of spot survey and any internal damages may be found at the time of final survey. The insured got the excavator repaired through M/s. Vijay Engineering Equipment India Pvt. Ltd., which according to it at the instance of the surveyor. An amount of Rs. 23,96,483.94 was incurred to get the vehicle repaired evidenced under bills Exs. A16 to A22.
7) Later the insurance company appointed another surveyor by name Sri D. R. Krishna Murthy for verification of facts and estimation of loss. He said to have examined one K. Suresh Kumar Reddy and the machine operator on 5.7.2006 who stated that the “machine after working at ground level and while going towards ramp, the underneath earthen soil with boulder got loosened and the machine got slowly slipped and rested on it’s left side and in the process some loose stones and boulders fell on the machine damaging cabin, radiator, cooler, bucket cylinder and engine oil got leaked off through silencer pipe.” Therefore he thought that there was difference in the narration of the accident. Then they got a detailed comments from the first surveyor. He stated that the “machine was overturned/fell down while it was working i.e., at the time of work being used as a tool of trade. Further he stated that the insured machine was simply clearing the stones from upper level to lower side with bucket. As such the statement Dt. 5.7.2006 of the insured’s representative and operator is far from reality.” From this he found that the statement of the insured was incorrect and in view of the IMT endorsement No. 47 since the loss or damage resulted from overturning arising out of the operation as a tool of such vehicle it had no liability and therefore repudiated the claim.
8) At the outset, we may state that it has become a habit for the insurance companies despite the fact that the Supreme Court deprecated the practice of appointing surveyor after surveyor till a report is received to its liking. The insurance companies, undaunted, appointing surveyor after surveyor by giving different nomenclatures like spot survey, preliminary survey, investigation, final survey etc. In fact if really the insurance company intended to find out the real cause for the damage, it could have directed the first surveyor himself to conduct reinvestigation and assess the loss. The intentions of the insurance company are very clear that for any reason the first surveyor endorses the claim of the insured, it would appoint another surveyor under the guise of final report and see to it that the first survey report become non-est or nullified. . The very same modus operandi was adopted in this case. In the spot survey report Ex. B2 the surveyor has categorically stated that due to loose soil the Valvo excavator machine lost control and fell down from up side place causing damages to both the insured machine. Though the insurance company could not prove that the complainant had changed its version in order to get over the insurance coverage taking cue from the report of the surveyor who stated that subsequently the complainant with a fraudulent intention, changed the narration of occurrence on which the said surveyor made observation as under :
“However, one I.V. (insured vehicle) shifted to the workshop, the insured understood that overturning risks were not opted by him under the policy at the time of taking policy and therefore, he had changed the accident version that it had overturned while moving from ground level towards ramp. I feel that some of the insurance experts might have fabricated the story on behalf of the insured so as to bring the loss under the purview of the policy.”
9) The first surveyor had taken photographs. The second surveyor who visited the spot on 27.6.2006 curiously under the guise of statements of K. Suresh Kumar Reddy and machine operator opined that the excavator over turned, fell down and damaged. By referring to the provisions of IMT 47 he opined that the insured was not liable to the amount as the peril overturning arising out of the operation as a tool of such vehicle was not covered by the terms of the policy. The insurance company filed Ex. B1 annexing endorsement IMT NO. 47. wherein it was mentioned:
“Mobile Units: Endorsement IMT 47 is to be used in respect of the following mobile units.
a) Mobile cranes
b) Mechanical Navies, Shovels, Grabs, Rippers and excavators.
c) Dragline Excavators
d) Mobile drilling rigs
e) Mobile plant.
Package policies issued to the above units can be extended to cover damage to the unit by overturning during operational use as a tool of trade at an additional rate of 0.5% of IDV of the vehicle subject to a minimum additional premium of Rs. 100/-.”
10) A reading of the above would indicate that it is all a matter of using expression for a particular incident When the complainant had at the earliest informed that the excavator fell down due to loose soil which was endorsed by the first surveyor, the insurance company obviously in order to evade the lawful amount due to the insured, appointed second surveyor to interpret the incident as though vehicle was over turned while the excavator bucket was in operation, and therefore not entitled to the amount. We do not agree with the said expression. The excavator fell down due to loose soil and damaged. It does not attract the clause which was derived by the insurance company. Therefore, we are of the opinion that the insurance company is liable to pay the amount spent by the complainant towards repairs of the vehicle. The repudiation was unjust.
11) The learned counsel for the opposite party insurance company relied a decision C. Pattabhirama Rao Vs. The New India Assurance Company Ltd. reported in AIR 2006 A.P. 173, and contended that if the peril is not covered the insured was not entitled to the amount. In that case the insurance company issued fire policy which did not cover loss from floods, and claim was made when property was destroyed due to floods. The court did not believe the contention that the insurance company handed over the flood policy instead of Fire Policy and held that the plaintiff was not entitled for any amount.
He also relied a decision in Bond Food Products Pvt. Ltd. Vs. M/s. Planters Airways Ltd. reported in AIR 2004 Madras 538. That was a case where there was damage to the consignment which was insured, however insurer has paid the amount. Later plaintiff executed letter of subrogation in favour of insurer to lay suit for recovery of amount paid as compensation. It was opined that since the consignment was damaged in transit and the compensation amount was paid by the insurer to the insured in consideration of letter of subrogation in favour of insurer to claim, the carrier was liable to indemnify the loss.
Yet another decision relied was M/s. National Insurance Company Ltd. Vs. M/s. Winner Chorates Pvt. Ltd. reported in 2003 (5) ALT 29 (NC) (CPA). In that case though the loss was due to fire but the incident was caused by mixing of wrong chemicals. After considering the material on record it was opined that there was no fire as commonly understood, but a chemical reaction had taken place inside the tank due to wrong mixing of chemicals and therefore peril was not covered.
Finally he relied on a decision of Supreme Court in United India Insurance Company Ltd. Vs. Roshan Lal Oil Mills Ltd. reported in 200-SCC-1019 wherein their Lordships opined that if the Commission does not consider the report of the surveyor it would end in serious miscarriage of justice.
12) Coming to the facts of the present case, the first surveyor who visited the spot had categorically stated that “ due to loose soil the Volvo Excavator machine lost control and fell down from up side place, causing damage to both the insured machine.”. He did not mention that the said peril does not cover. Obviously, to get over, another surveyor by name Sri D. R. Krishna Murthy was appointed who also visited the place, however used the very same words mentioned in Endorsement IMT 47 by stating that damage was resulted from over-turning. Therefore it would not cover the liability. The insurance company contended that the first surveyor has changed his version that the machine over turned/fell down while it was working i.e., at the time of work being used as a tool of trade and then it would amount to over- turning and not entitled to the claim. No doubt Section 64-UM clause-2 mandates the insurance company to appoint a surveyor to assess the loss. However, in order to appoint a second surveyor it had to obtain permission from the authority. It is settled law in New India Assurance Company Vs. Shree Shyam Cotspin Ltd reported in I (2009) CPJ 110 (NC) the National Commission held that insurance company cannot appoint another surveyor.
“We also like to observe that under Section 64 UM of the Insurance Act, if the insurance company is not satisfied with the assessment of loss made by the an approved surveyor then they can request the IRDA for appointment of another surveyor whose report would have been processed by the ‘Authority’ and then direction was to be given by them to insurer to pay a given amount. This was not done at all.”
We may state that under the guise of final survey the insurance company cannot go on appointing surveyors one after another in order to obtain a report to its liking and then repudiate the claim. We are of the opinion that the peril covers the policy in the instant case and therefore liable to pay compensation.
13) The complainant in order to prove the loss sustained by it filed the invoice issued by M/s. Vijay Engineering Equipment India Pvt. Ltd. In fact Sri D. R. Krishna Murthy second surveyor who visited the workshop noted the damages. The complainant had spent Rs. 23,96,483.94 evidenced under bills Exs. A16 to A22. Though in the counter it was mentioned that the surveyor has assessed the damages at Rs. 19,80,542 a perusal of Ex. B3 report does not show that the surveyor had estimated the damage. What all he mentioned was ‘Damage Details’ and the fact that they are being repaired at the workshop. On the other hand, he mentioned “ the insured has submitted a repair estimate for Rs. 29,31,626.25 from M/s. Vijay Engineering Equipment India P. Ltd.” He did not question the estimate. In fact he visited the machine at the workshop.
14) In the light of the fact that the complainant could prove that it got effected the repairs which fact was not controverted by the surveyors besides affirmed it, we are of the opinion that the complainant was entitled to the said amount. Though the complainant claimed a compensation of Rs. 2 lakhs it did not adduce any evidence as to the loss occasioned due to non-settlement of the claim by the insurance company. Since it is a partnership firm it ought to have filed its accounts to prove the said fact. Therefore, we are not inclined to award any compensation for mental agony etc.
15) In the result the complaint is allowed in part directing the insurance company to pay Rs. 23,96,483/- rounded off to Rs. 23,96,500/- with interest @ 9% p.a., from the date of repudiation till the date of realization with costs quantified at Rs. 10,000/-. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
APPENDIX OF EVIDENCE
COMPLAINANT: OPPOSITE PARTIES
None None.
Exhibits marked for complainant:
Exs.A-1 Copy of Partnership deed dt.6.3.2006.
Ex.A-2 Certificate of Registration of Firm dt.1.4.2006.
Ex.A-3 Copy of the Insurance Policy bearing No.32567272 issued by the opposite parties dt.28.4.2006.
Ex.A-4 Copy of intimation about the accident dt.20.6.2006.
Ex.A-5 Panchanama about the accident dt.20.6.2006.
Ex.A-6 Copy of the letter about the accident dt.19.6.2006.
Ex.A-7 Spot Survey report dt.22.6.2006 of S.Bishan Singh.
Ex.A-8 Letter addressed by the complainant to the opposite party dt.5.7.2006.
Ex.A-9 Letter addressed by the complainant to the opposite party dt.25.8.2006.
Ex.A-10 Letter addressed by the opposite party to the complainant dt.11.9.2006.
Ex.A-11 & A-12 Invoice/Delivery challans issued by Vijay Engineering Equipment India Pvt. Ltd.,
Ex.A-13 Letter addressed by the complainant to the opposite party dt.27.9.2006.
Ex.A-14 Letter addressed by the complainant to the opposite party dt.4.11.2006.
Ex.A-15 Letter addressed by the complainant to the opposite party dt.12.9.2006.
Ex.A-16 Service Bill issued by M/s Vijay Engineering Equipment India Pvt. Ltd., dt. 5.9.2006.
Ex.A-17 and A-18 Bills issued by M/s Gokul Crane Supplier,Hyderabad.
Ex.A-19 and A-20 Bills issued by Standard Auto Garage,Hyderabad.
Exs.A-21 and A-22 are the bills issued by Bhavana Arts, Hyderabad.
Ex. A-23 Letter addressed y the complainant dt.29.5.2006 to the Customer and payment schedule.
Exhibits marked for opposite party:
Ex.B-1 Copy of policy dt.28.4.2006 issued by the opposite party.
Ex.B-2 Private & Confidential Motor (Spot) Survey report issued B.Bishan Singh dt.22.6.2006.
Ex.B-3 Final Survey report dt.18.7.2006 issued by D.R.Krishna Murthy, Surveyor & Loss Assessor.
Ex.B-4 Letter addressed by the opposite party to the complainant dt.11.9.2006.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 21. 12. 2009.
*pnr
“UPLOAD – O.K.”
