Tamil Nadu

South Chennai

CC/381/2015

M/s.Crimson Metal Engineering Company Ltd., - Complainant(s)

Versus

M/s.United India Insurance Company Ltd., - Opp.Party(s)

M/s.K.Ramaswamy

25 Aug 2022

ORDER

Date of Complaint Filed : 10.09.2015

Date of Reservation      : 16.08.2022

Date of Order               : 25.08.2022

 

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

CHENNAI (SOUTH), CHENNAI-3.

 

PRESENT:    TMT. B. JIJAA, M.L.,                                            : PRESIDENT

                        THIRU. T.R. SIVAKUMHAR, B.A., B.L.,           :  MEMBER  I 

                        THIRU. S. NANDAGOPALAN., B.Sc., MBA.,    : MEMBER II

 

CONSUMER COMPLAINT No.381/2015

THURSDAY, THE 25^th DAY OF AUGUST 2022

 

M/S. Crimson Metal Engineering Company Ltd,

Rep by its Manager,

No.163/1, K.Sons Complex, 2nd floor,

Prakasam Road,

Broadway,

Chennai-108.                                                                                                                                                                     ... Complainant                       

 

..Vs..

M/S. United India insurance company Ltd,

Rep by its Divisional Manager,

New No.50, North Usman Road,

T.Nagar,

Chennai -17.                                                                                                                                                                  ...  Opposite Party

 

******

Counsel for the Complainant          : M/s. K. Ramaswamy

Counsel for the Opposite Party       : M/s. R.Ravichandran

 

        On perusal of records and after having heard the oral arguments of the Counsel for the Complainant and the Counsel for the Opposite Party, we delivered the following:

ORDER

Pronounced by Member-I, Thiru. T.R.Sivakumhar, B.A., B.L.,

1.      The Complainant has filed this complaint as against the Opposite Party under section 12 of the Consumer Protection Act, 1986 and prays to pay a sum of Rs.9,70,263/- to the Complainant being the balance amount of claim for loss suffered by it with interest at 12% p.a from date of complaint till the ate of realization of amount and to pay the cost of this complaint.

2.     The averments of Complaint in brief are as follows:-

The Complainant is the manufacturer of steel tubes supplying to its various customers who had obtained fire and special perils policy No. 011400/11/11/11/00000246 from the opposite party covering the risk of loss and damage caused by fire, lightening, explosion Implosion, aircraft damage, riot, strike and malicious damage, storm cyclone, tempest, hurricane, flood and inundation, impact damage and etc for the property situated at Karasur Road, Karasur village, pondichery. The sum insured consist of three values under the policy 1. Building Rs. 4,40,00,000/- plant and machinery valued Rs. 7,11,00,000/- and office equipments Rs. 7,00,000/- totally Rs. 11,58,00,000/-. The period of insurance one year effective from 10.09.2011 to 09.09.2012. The complainant paid premium of Rs. 50,759/ inclusive of service tax to the opposite party in consideration of risk accepted by them. Thus, the complainant is a consumer within the meaning of consumer protection act. The terms and condition of insurance policy are stated in the preamble clause which read as follows "In consideration of insured named in the schedule hereto having paid to the united india insurance company the full premium mentioned in the schedule. The company agrees subject to conditions and exclusions contained herein or endorsed or otherwise expressed hereon that if after payment of the premium property insured described in the said schedule or any part of such property be destroyed or damaged by any of the perils hereunder during the period of insurance named in the said schedule or of any subsequent period in respect of which the premium shall have paid and the company shall have accepted the premium required for the renewal of the policy, the company shall pay the insured the value of the property at the time of happening of its destruction or the amount of such damage or at its reinstate or replace such property or any part thereof". Thus the preamble clause contain in the policy is one of the important provision of terms and condition policy which promises to pay actual loss suffered by the insured in the event of damage or loss to the insured property. The other clauses such as exclusion clause, conditions, and warranties contained in the policy are subject the provision of preamble clause and the loss of insured to be settled by the insurer subject to the sum insured specified in the policy. On 29.12.2011 and 30.12.2011, there was heavy rain coupled with cyclone, storm, hurricane, flood, and inundation in and around factory premises which had resulted into extensive damage to the insured property of complainant. The said occurrence was duly reported to the opposite party. The opposite party deputed a surveyor who conducted preliminary survey pending finalization of final survey. The surveyor confirmed about the extensive damage caused by cyclone, storm in his preliminary report. Thereafter the surveyor had suggested the complaint to submit Gross Loss suffered. Accordingly the complainant evaluated Gross loss and submitted to the surveyor claiming value of property damaged due to storm, cyclone, tempest and etc at Rs.19,61,401/- toward replacement of spare parts, repair of building, and replacement of machinery and etc. The claim of Rs. 19,61,401/- was not questioned. The loss suffered by the complainant was not disputed by the surveyor or the insurer. The opposite party did not take steps to settle the claim of complainant as per insurance regulatory and development authority of policy holders interest regulation 2002. It was kept pending for more than 5 months. Further the time prescribed by the protection of policy holders interest regulation 2002. The complainant orally reminded several times through insurance brokers there was no response. Thereafter, the complainant demanded a copy of survey report of surveyor but the opposite party did not give a copy of survey report. It is relevant to note that actual loss suffered by the complainant at Rs. 19,61,401/- but claim was settled only at Rs. 9,91,138/- after deducting salvage value, policy excess, and under insurance against loss of Rs.19,61,401/-. This fact was suppressed by the opposite party on the dominant power by exercise of Undue Influence and mis-representation which can be termed as fraudulent. The insurance policy did not authorize the surveyor or insurer to deduct a sum of Rs.52,165/- in the name of policy excess, and Rs.1,83,557/- in the name of under insurance and Rs.24,700/- in the name of salvage value. The salvage value Rs. 24,700 and the under insurance value Rs.1,83,557/- and policy excess Rs.52,165/- cannot be deducted from the assessed loss. The procedure adopted by the surveyor was not laid down in the policy. The word policy excess and deductible franchise has lot of difference which is not distinguished by the surveyor. Further the surveyor had totally omitted a sum of Rs.7,09,841/- from the Gross Assessed Loss evaluated. The loss was admitted by the surveyor and also insurer and therefore the procedure adopted by the surveyor is bias and arbitrary with intent to minimize loss of insurer. The surveyor acted on the tone of insurer to reduce claim of insured which is not authorized by the policy condition. The policy was issued subject to RIV clause incorporated in the CRIMSON METAL ENTERING COMPANY policy which demands that actual loss suffered by the insured to be indemnified. The opposite party failed to pay actual loss Finding the attitude of the opposite party to be harassing the complainant received Rs.9,91,138/- against claim of Rs. 19,61,401/-. On the following day i.e., 13.09.2013 the complainant informed to the insurance company that claim amount was received UNDER PROTEST reserving right to claim balance amount of claim. the claim and requested the divisional manager to consider all relevant clauses contained in the policy in order to receive balance amount of Rs.9,70,263/- but there was no response from the opposite party. Hence the complainant issued a legal notice dated 13.07.2015 calling upon the opposite party to pay balance amount of claim. The said notice was received by the opposite party on 23-07-2015 and replied by notice dated 18.08.2015 to the effect disowning their liability to pay balance amount of claim Rs. 9,70,263/-. The Opposite Party failed and neglected to test the correctness of survey report of surveyor before settling claim of Complainant as per terms and conditions of insurance policy which amounted to Gross negligence constitutes deficiency in service on the part of the Opposite Party in the performance of service under taken to be rendered from Complainant. Hence this complaint.

 

3. Written Version filed by the Opposite Party in brief is as follows:-

The Complainant had taken the subject Insurance Policy namely Standard Fire and Special Insurance Policy from this Opposite Party during the relevant period, and that for the damages suffered by them due to rain, cyclone, etc on 29.12.2011 & 30.12.2011 the Complainant had made a claim for Rs.19,61,401/- under the said Insurance Policy. But what is not true and correct is the Complainant's grievance regarding the settlement of the claim that had been made by them, immediately after the receipt of the claim from the complainant they appointed Sri. R.Jagadeesan, Insurance Surveyor, to assess the loss suffered by the Complainant. The Surveyor thereupon visited the Factory of the Complainant situated at Karasur Village, Pondicherry and inspected the property and the nature and extent of damages suffered by the insured – property. The Surveyor held several rounds of discussions with the Complainant's officials and worked out the replacement and repair costs on the basis of the bills, quotations and documents and details furnished by the Complainant's officials. On the basis of the terms and conditions laid down in the subject-Insurance Policy the Surveyor assessed the loss in the Building at Rs.10,94,550/- in his survey Report dated 07.05.2012. At that stage the insured had repaired a substantial portion of the damaged Building and some more works remained to be completed. As the Complainant required "On Account" payment to complete the remaining works, As per the recommendation by the Surveyor, 70% of the assessed loss viz, Rs.7,49,020/- was released by them to the Complainant at that stage. The Surveyor once again inspected the property on 01.09.2012. After verifying the related Invoices, Bills etc., submitted by the Complainant the Surveyor submitted his final assessment of loss in his Final Survey Report dated 21.01.2013. On the basis of the said Documents and on the basis of the terms and conditions set out in the subject Insurance Policy, the Surveyor worked out the net amount payable to the Complainant at Rs.9,91,138/-. They had already paid a sum of Rs.7,49,020/- to the complainant "On Account” basis. They had therefore settled the balance amount towards full and final satisfaction of the Complainant's claim. The complainant had also received the same as full and final satisfaction of their claim without any demur while handing over the Discharge Voucher in that regard. The factual position being so, the several allegations made by the Complainant in their Complaint are unwarranted and contrary to truth. There was no delay in the settlement of the claim as alleged by the Complainant. In the given facts and circumstances of the matter, the claim has been processed and settled within reasonable time. The contention of the Complaint that preamble clause of the Insurance policy would and should control the operative clauses in the policy is also fundamentally wrong. In fact such a notion is putting the heels over the head. Anyhow, there is really no contradiction between the preamble and the operative clauses in the subject-Insurance Policy.  It is contrary to truth on the part of the complainant to state that they had received the amount "Under Protest". The Discharge Voucher delivered by them would clearly show that they had accepted the settlement without any demur. They wish to point out that the letter does not bear any date. If the letter was true and genuine, the Complainant would not have sent/delivered such an important letter without due Acknowledgement from this Opposite Party. They had not received any such letter. Even though, it may sound a bit repetitive, they want to submit the method in which the claim had been settled more clearly: The Surveyor assessed the loss after holding elaborate discussions with the Complainant's officers and only on the basis of the Quotations furnished by the Complainant for the costs of the materials as well as labour. In that manner the Surveyor assessed the loss in building as Rs.12,51,560/ on the basis/principle of Reinstatement Value clause in the Policy, the surveyor assessed the Salvage value at Rs.24,700/-. The Complainant had insured the property only at Rs.4,40,00,000/- but the value of the property (ie., the replacement cost of the building at that point of time) worked out to Rs.5,17,41,284/-. So it was obvious that the property was under-insured. As per the Policy the excess for AOG Perilis is 5% of the Claim amount subject to a minimum of Rs.10,000/-. Accordingly the Surveyor deducted Rs.52,165/- which is 5% of the Claim. The property has been insured by an insured for a value which was lower than its proper and correct value, and a lower amount of premium than what was warranted considering the proper and correct value of the property had been paid, then "average clause alone will be applied while settlement of any claim and settlement will be effected for pro rata value. This is a basic principle of insurance. In this matter also, because of under-insurance, the method explained supra had been followed.  The complainant's grievance in respect of "Policy excess" aspect is misconceived. In all types of insurance/Risk coverage business, the insured is expected/required to bear at least a minimal portion of the loss. The relevant clause in the Insurance Policy in this regards is known as "Policy excess" clause. As per the subject-Policy the insured is required to bear 5% of the loss. As the assessed loss in this matter was Rs.10,43,303/- 5% of same came to Rs.52,165/-.  The same was deducted by the Surveyor under "Policy excess" clause. The loss has been assessed by the Surveyor in a very fair and transparent manner and fully on the basis of Quotations and details furnished by the complainant. The application of "average clause", deduction that had been effected towards "Salvage value" and "Policy excess had also been legitimate and strictly in accordance with the terms and conditions of the Insurance Policy. Hence the complaint is to be dismissed.

4.      The Complainant submitted its Proof Affidavit and Written Arguments. On the side of the Complainant, documents Ex.A-1 to Ex.A-6  were marked.   

The Opposite Party submitted its Proof Affidavit and Written Arguments. On the side of the Opposite Party, documents Ex.B-1 to Ex.B-5 were marked.      

5.     Points for Consideration

1. Whether there is deficiency in service on the part of the Opposite Party?

2. Whether the Complainant is entitled for reliefs claimed?

3. To what other reliefs the Complainant is entitled to?

Point No 1:-

          It is an undisputed fact that the Complainant Company had availed Fire and special perils Policy No.011400/11/11/11/00000246 from the Opposite Party, covering Building, Plant and Machinery and equipments, for a sum assured of Rs.4,40,00,000/-,Rs.11,58,00,000/- and Rs.7,00,000/- respectively. It is also not in dispute that the said Insurance Policy covers for a period of one year, i.e from 10.09.2011 to 09.09.2012.

The disputes arose when the damage caused to the Insured property of the Complainant Company, the claim of Rs.19,61,401/- towards damages was not settled in full and only a sum of Rs.9,91,138/- alone was settled by the Opposite Party and hence the Complainant filed the present complaint seeking the difference amount of Rs.9,70,263/-.

         On careful reading of the complaint, Written Version and Exhibits marked on either side, due to heavy rain on 29.12.2011 and 30.12.2011 coupled with cyclone in and around the insured factory premises of the Complainant company was surrounded by flood and inundation, resulted into extensive damage to property insured under the policy. The Complainant company had claimed for a sum of Rs.19,61,401/- by submitting  the bills for damages sustained. From Ex-A2, the surveyor report dated 21.01.2013, the loss of damages assessed to a sum of Rs.10,43,303/- and after deducting 5% of policy excess to a sum of Rs.52,165/-, the net loss was assessed to a sum of Rs.9,91,138/-. From Ex.B-1, the Surveyor report dated 07.05.2012, the net loss was assessed to a sum of Rs.10,70,030/- and had recommended for 70% of the loss which is Rs.7,49,020/- on account payment to the Complainant Company, as the Complainant company completed most of the damaged building. And from Ex-B2 based on the recommendation made in Ex-B1 by the surveyor, a sum of Rs.7,49,020/- on account payment was sanctioned to be released and the balance amount was ordered to be released after completion of work. From Ex.B-4 claim note dated 11.02.2013, it is clear that a sum of Rs.7,49,020/- had already been settled out of the net loss of Rs.9,91,138/- and the balance of Rs.2,42,118/- to be released to the Complainant company towards full and final settlement. From Ex.B-5, the said balance amount of Rs.2,41,828/- was paid towards full and final discharge of claim under the policy, where in the seal and sign of the Authorised Signatory of the Complainant company was found and also the disbursement of Rs.7,49,020/- on account payment to the Complainant was found. Hence it is clear that the Complainant company had accepted for a sum of Rs.9,91,138/- and had received the entire payment as full and final settlement towards their claim made under the said policy, from the Opposite party. In the said circumstances, the contention of the Complainant that they have received the above payment of Rs.9,91,138/- under protest from the Opposite party and hence they are entitled for balance payment of Rs.9,70,263/- towards their claim of Rs.19,61,401/- though they had filed a letter dated 13.09.2013 sent to the Opposite Party, which was marked as Ex.A-3, no proof of dispatch or delivery has been filed by the Complainant and the said Ex.A-3 was reported as not received by the Counsel for the Opposite Party, hence the contention of the Complainant that only under protest they have received the payment of Rs.9,91,138/- is not legally sustainable and Ex.A-3, the letter dated 13.09.2013, is not legally acceptable.  The Judgement relied upon by the Complainant reported in CPJ (NC) (MAR) 2018 Page No.24, does not apply to the facts and circumstances of the instant case. Therefore, We are of the considered view that the Opposite party had not committed any deficiency of service. Accordingly, Point No.1 is answered.

Point No.2 & 3:-

    As discussed and decided Point No.1 against the Complainant, the Complainant is not entitled for the relief claimed in the complaint and /or for any other relief/s . Accordingly Point No.2 and 3 are answered.

In the result this complaint is dismissed. No cost.

Dictated to Steno-Typist, transcribed and typed by her, corrected and pronounced by us in the Open Commission, on 25^th day of August 2022. 

       

 

S. NANDAGOPALAN               T.R. SIVAKUMHAR                 B.JIJAA

         MEMBER II                       MEMBER I                        PRESIDENT

 List of documents filed on the side of the Complainant:-

Ex.A1	13.09.2011	Standard fire and special perils Policy No.00000246
Ex.A2	21.01.2013	Survey report of surveyor dated 21.01.2013
Ex.A3	13.09.2013	Letter from Complainant to Opposite Party intimating that claim received under protest
Ex.A4	13.07.2015	Legal notice sent from Complainant’s counsel to Opposite Party
Ex.A5	-	Copy of acknowledgement card
Ex.A6	18.08.2015	Copy of reply notice received from Opposite Party to Complainant

 

List of documents filed on the side of the Opposite Party:-

 

Ex.B1	07.05.2012	Copy of Survey report
Ex.B2	28.05.2012	Copy of Office Note
Ex.B3	21.01.2013	Copy of Survey Report
Ex.B4	11.02.2013	Copy of Claim Note
Ex.B5		Copy of Settlement Intimation Voucher

 

 

 

S. NANDAGOPALAN               T.R. SIVAKUMHAR                    B.JIJAA

         MEMBER II                       MEMBER I                         PRESIDENT