DR. SADHNA SHANKER, MEMBER 1. These cross appeals have been filed under section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as the ‘Act’) in challenge to the Order dated 23.03.2015 of the State Commission in complaint no. 05 of 2014, whereby the complaint was allowed. 2. We have heard the learned counsel for M/s E.R. Motors (hereinafter referred to as the ‘complainant’) and learned counsel for the respondent (hereinafter referred to as the ‘insurance company’) and perused the record including inter alia the Order dated 23.03.2015 of the State Commission. The complainant has filed appeal no. 357 of 2015 for enhancement of compensation while the insurance company has filed appeal no. 435 of 2015 seeking setting aside of the order dated 23.03.2015 of the State Commission. 3. The facts, in brief, are that the complainant had set up a service centre for providing service to vehicles, manufactured by Tata Motors, by obtaining finance of Rs. 45 lakh through cash credit limit from Punjab National Bank, Sulhi. The complainant constructed building and also purchased machinery and the plant for running the service station. He had also stock of spare parts, lubricants and other items, required for service / repair of vehicle. The building, the plant and machinery and the stock of spare parts, lubricants etc. were insured with the insurance company. It is alleged that the building and the plant and machinery were insured for a sum of Rs. 40 lakh each, while spare parts, lubricants etc. forming stock-in-trade, were insured for a sum of Rs. 60 lakh. The policy was valid for the period from 19.11.2012 to 18.11.2013. During the subsistence of the insurance policy, in the intervening night of 14th and 15th April, 2013 about 1.30 a.m., a fire broke out in the service centre of the complainant and the entire stock-in-trade worth Rs.74,71,263/-, the plant and machinery worth Rs. 14,15,100/- had been damaged. The building also sustained loss to the tune of Rs. 33,62,500/-. The police and the insurance company were informed about the fire incident. The insurance company appointed a surveyor, who assessed the loss at Rs.15,64,875/- towards building, Rs. 5,20,687/- towards the plant and machinery and Rs. 19,58,720/- for the stock-in-trade. It is further alleged that the complainant had received a letter from the bank intimating the complainant that the insurance company had finalized his claim and he should sign the discharge voucher but the amount which was paid by the insurance company was not mentioned in the letter. Hence, the complainant visited the bank where he was told that the insurance company had prepared to pay Rs. 35 lakh in all. The complainant alleged that he was forced to put his signature on the discharge voucher as he was rendered unemployed because of fire incident and the bank was insisting upon for early payment of loan. It is alleged that immediately after signing the discharge voucher, the complainant sent protest letter to the insurance company stating that the amount of Rs. 35 lakh being offered by the insurance company was meagre and the said amount was not acceptable to him. It is further alleged that this enraged the functionaries of the insurance company who further reduced the amount of claim to Rs. 31,53,008/- and asked him to submit discharge voucher, which he did not submit and sent another protest letter but the insurance company remitted the amount of Rs.31,53,008/- to the bank, which remitted the said amount against the complainant’s liability in the cash credit facility account. 4. Alleging deficiency in service on the part of the insurance company, the complainant filed a complaint seeking direction to the insurance company to pay the balance amount of loss sustained by him along with compensation. 5. The insurance company contested the complaint by filing reply stating that the complainant is not a ‘consumer’ within the meaning of section 2(1)(d) of the Act and the complaint is bad for non-joinder of necessary party. It is further stated that on the recommendation of the surveyor, the insurance company had approved Rs. 31,53,008/- and had released the same in the bank loan account of the complainant. It is further stated that the complaint involved complicated question of facts, which cannot be adjudicated by this Commission in summary proceedings and since clause 13 of the General Conditions of Standard Fire and Special Perils, provides for arbitration in case any dispute arises, the complaint is not maintainable and is liable to be dismissed. It is also stated that the State Commission did not have pecuniary jurisdiction to try the present complaint. It is further argued that there is no deficiency in service on the part of the insurance company. 6. The State Commission, vide its order dated 23.03.2015, allowed the complaint and directed the insurance company to pay an additional sum of Rs.25,84,220/- alongwith interest at the rate of 9% per annum from the date of filing of the complaint i.e. 26.02.2014 till payment. The State Commission also awarded Rs. 50,000/- towards compensation on account of mental harassment etc. and Rs.10,000/- as costs of litigation. 7. Being aggrieved by the order dated 23.03.2015 of the State Commission, both the parties have filed the instant appeals before this commission. 8. The main question for our consideration is as to whether the award passed by the State Commission is correct or not. 9. Before this Commission, the main contention of the learned counsel for the insurance company is regarding the assessment of loss relating to the damage to the building, the loss on account of damage to the plant and machinery and the loss on account of stock. 10. Before this Commission, learned counsel for the insurance company has argued that the State Commission has arbitrarily arrived at the value of the building based on assumption of the costs not having been more than Rs.1000/- per sq. ft. in the year 2010 and 2011 and has arbitrarily awarded only Rs. 50,000/- towards salvage value. It is further argued that as regards plant and machinery, as per the report of the spot survey, no remains of wheel balancing machine were found, and therefore, the spot surveyor recommended that no loss was caused to the same. As regards the loss to the stock, it is argued that the loss shown by the complainant in its revised VAT return was exaggerated one and no documentary evidence with respect to the purchase of the same was submitted to the concerned authorities. It was further argued that deduction on account of adjustment negotiations, estimations, measurements errors etc. have been done by the surveyor on account of trade practice. It was further argued that the assessment of loss as per the surveyor’s report was correct and the assessment made by the State Commission did not have any basis, therefore, the order dated 23.03.2015 of the State Commission is liable to be set aside. 11. Learned counsel for the complainant has pleaded that the entire amount of loss claimed at Rs. 49 lakh ought to have been granted to them. He also assailed the valuation of the building made by the State Commission as in the report submitted by him, the valuation was Rs. 2000/- per square ft. and the State Commission discarded the valuer’s report on the ground that the valuer was an architect and not a civil engineer and hence, he cannot be considered as an expert in the matter of construction of building. 12. For the proposition that the report of the surveyor is not a last word, the complainant relied on the decisions rendered in the cases of New India Assurance Co. Ltd. Vs. Pradeep Kumar (2009) 7 SCC 787, Bajaj Allianz General Insurance Co. Ltd. vs. Bhavineni Madhavi and Ors. 2015 (3) CPR 760 and The New India Assurance Co. Ltd. vs. Vinay Kumar Pandey, revision petition no. 3090 of 2013 (NC). 13. After hearing the submissions of learned counsel for both the parties and having gone through the record, it is seen that as regards the loss / damage to the building, the report of valuer dated 30.09.2013 gives a value of the building at Rs. 33,62,500/-, which has been done with the help of HPSR 2009 and on market rates. It is also seen that the surveyor has taken the value as submitted by the valuer and then reduced 40% of the value towards the cost adjustments, negotiations, estimations / measurements errors etc. and 15% on account of depreciation and further deduction of Rs. 1,50,000/- on account of salvage and arrived at a value of loss at Rs.15,64,875/-. Considering the fact that the surveyor has taken the valuer’s assessment to make deductions, the assessment of loss at Rs. 1000/- per sq. ft. by the State Commission is not warranted. It is also seen that the valuation, although signed by an architect, is done by an entity, which consists of Architect, Builders, Civil contractor, Engineer, Estimators. Therefore, the valuation done by the valuer of the building is a valid starting point for assessment of the loss, as has been done by the surveyor. In this regard, it is seen that a huge amount i.e. 40% has been deducted on account of above mentioned items which have no basis and are entirely an estimation. Deductions under the head of cost adjustments, negotiation etc. do not find any mention in the policy document. Therefore, this deduction from the value of the building does not appear to be just and appropriate. Therefore, we are of the view that towards the building, the complainant is entitled as under: Cost of building repairs / rebuilding as per valuation report Rs. 33,62,500/- Less LS 15% Depreciation Rs. 504,375/- Rs. 28,58,125/- Less : Salvage Rs. 1,50,000/- Rs. 27,08,125/- 14. As regards the loss on account of plant and machinery is concerned, the complainant has claimed an amount of Rs. 14,15,100/-. Out of this, major amount of Rs. 7,48,600/- is represented by wheel balancing machine. It is seen that the insurance company is relying on the observation of the spot surveyor that he did not see any sign of wheel balancing machine whereas the final surveyor has accounted for the wheel balancing machine in his calculation for loss to the plant and machinery. 15. Considering the fact that the final surveyor has accepted that the loss occurred to the wheel balancing, plant and machinery, there is no merit in the argument that the spot surveyor had opined that he could not see any existence of a wheel balancing machine especially in view of the argument of the learned counsel for the complainant that the same had been completely destroyed in the fire. Under the head of ‘Plant and Machinery’, 15% has been deducted towards the cost adjustment, negotiations, improvement factors etc., which has no basis and is a mere arbitrary deduction and is not covered by the policy document. No document as regards the market rates as argued by the learned counsel has also been furnished in regard to these deductions. Further, it is seen that 50% of the depreciation of the loss to plant and machinery has been made by the surveyor on account of being usable items tools etc. In this case, the fire has occurred within 05 months of the setting up of the enterprise of taking the insurance and as held by the State Commission, 15% of the depreciation would represent a more reasonable figure in terms of the time of the plant and machinery was in use. The loss on account of plant and machinery is, therefore, worked out as under: Cost of Plant and Machinery Rs. 12,89,628/- Less LS 15% Depreciation Rs. 1,93,444/- Rs. 10,96,183.80 Less : Salvage 5% Rs. 54,809/- Rs. 10,41,374.80 Hence, we are of the opinion that the complainant is entitled for Rs.10,41,375/- towards the plants and machinery. 16. As regards the stock, it is seen that the insured claimed an amount of Rs.60,09,487/-. The surveyor has done the calculation under the heading ‘AVERAGE CLAUSE’ on the basis of documents available with him, information submitted by the complainant and physical inspection, at Rs.20,81,819.88. He has also given a detailed analysis regarding the valuation of the stock figure arrived by him. It is seen that a deduction of 20% has been done on account of adjustment of estimation error, non-maintenance of stock register, non-submission of purchase invoices / vendors a/c, old/ non moving stock, non marketable stock, dead stock etc. This is again without any basis and is an estimation. He has then reduced 10% on account on semi effected stock and salvage. The loss on account of stock, therefore, works out as under: Stock (as valued by the surveyor) Rs. 20,81,819.88 LS% towards semi effected stock Rs. 2,08,181.98 Rs. 18,73,637.90 17. In view of the above discussion, we are of the view that the complainant is entitled for Rs.27,08,125/-, as loss towards building, plus Rs. 10,41,375/-, loss towards plant and machinery plus Rs. 18,73,638/-, being loss towards stock. Therefore, the complainant is entitled for Rs. 56,23,138/- under all the three heads. We are also of the opinion that the complainant is also entitled to interest at the rate of 9% per annum on the compensation amount from 15.10.2013 i.e. the date on which the insurance company required the complainant to sign the discharge voucher, till realisation. 18. It has been admitted that the complainant has already received a sum of Rs. 31,53,800/-. Therefore, the insurance company is liable to pay a sum of Rs. 24,69,338/- (Rs. 56,23,138/- minus Rs. 31,53,800/- = Rs. 24,69,338/-) along with interest at the rate of 9% per annum from 15.10.2013 till realization, to the complainant. - In view of the above, both the appeals are disposed of and the order dated 23.03.2015 of the State Commission is modified to the extent that the insurance company shall pay a sum of Rs. 24,69,338/- along with interest at the rate of 9% per annum from 15.10.2013 till its realization, within a period of eight weeks from today, failing which the rate of interest shall be enhanced to 12% per annum. The direction of the State Commission to grant Rs.50,000/- on account of mental agony is set aside.
- Parties to bear their own cost. Pending application(s) if any, stand disposed of.
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