JUSTICE V.K. JAIN (ORAL)

The complainant company took a Standard Fire & Special Perils Policy from the opposite party for the period from 1.9.2012 to 31.8.2013, in respect of the building, plant and machinery, electrical installations, furniture, fixtures, fittings and office equipment at 153, KLM & N, EPIP Extn., Kundli, Sonipat to the extent of Rs.26,75,00,000/-. A fire broke out in the aforesaid factory of the complainant on 31.5.2013, resulting in the alleged total loss of the entire building, plant and machinery, furniture/fixtures/fittings and stocks, etc. On intimation being given to the OP Mack Insurance Surveyors and Loss Assessors Pvt. Ltd. was appointed to assess the loss and the complainant lodged a claim under above-referred policy for a total sum of Rs.26,75,00,000/-.The claim was lodged on 4.6.2013. The insurer released an interim payment of Rs.6 crores to the complainant on 2.11.2013. The surveyor submitted his report dated 5.5.2014 to the insurer, assessing the loss to the complainant at Rs.17,21,28,308/-. Before receipt of the said report, the complainant vide letter dated  2.5.2014, pursuant to the discussion with the surveyor had agreed to accept a net adjusted loss of Rs.17,21,28,308/- towards full and final settlement of its claim, subject to the terms and conditions of the insurance policy held by it. However, vide Addendum dated 7.7.2014, the surveyor assessed the net adjusted loss in respect of the building at Rs.48,171,511.19 on the ground that the under insurance was to the extent of Rs.25.98% as against the earlier reported under insurance to the extent of Rs.17.755%. The insurer made an additional payment of Rs.10,67,56,258/- to the complainant on 9.9.2014. No interest for delayed payment of the claim was paid to the complainant. The complainant is, therefore, before this Commission seeking the following loss:-

“(a) Rs.52,83,308/- as the difference between the survey report and the actual sanctioned amount.

(b) Rs.1,28,17,664/- as interest @18.00% p.a. from 4.6.2013 to 2.11.2013.

(c) Rs.1,71,41,807/- as interest @ 18.00 p.a. from 3.11.2013 to 26.8.2014.

(d) Rs.50,00,000/- towards mental agony and harassment cause due to the deficiency in service of the opposite party.

(e) Rs.11,00,000/- towards legal costs.”

2.      The complaint has been resisted by the insurer which has taken a preliminary objection that the complainant is not a consumer as defined in the Consumer Protection Act. It is further alleged in the written version that having given  consent to accept full and final settlement of the claim vide consent letter dated 2.5.2014, the complainant cannot dispute the quantum of the compensation paid to it.

3.      Having taken instructions from Mr. Vinod Jain, Director of the complainant company, the learned counsel for the complainant states that the complainant is now pressing only for payment of interest on the amount of 10,67,56,258/-  as the payment was made more than 15 months after lodgement of the claim and the complainant had to pay huge interest to its bank in the meanwhile. In view of the aforesaid statement, I need not go into the question as to whether the insurer was justified in reducing the claim from Rs.17,21,28,308/- to Rs.16,68,45,000/-.

4.      As far as payment of compensation by way of interest is concerned, it has not been disputed in the written version that the claim was lodged on 4.6.2013. Though the date of appointment of the surveyor is not clear, it can be safely presumed that the surveyor was appointed by that date, since the insurer is under obligation to appoint the surveyor within 72 hours of the receipt of intimation from the insured as provided in Sub-Regulation (1) of Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests) Regulations, 2002.

5.      Regulation 9 of the above-referred regulations reads as under:-

“9.Claim procedure in respect of a general insurance policy -

 (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.

(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report:

Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.

(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.”

          It would thus been seen that the surveyor is required to submit his report within 30 days of his appointment unless in special circumstances of a particular case either due to its special and complicated nature, he obtains an extension for the submission of his report. However, in no case, he is entitled to take more than six months from the date of his appointment to furnish his report. This is not the case of the insurer that the particulars given by the insured were not complete or that it did not  render necessary cooperation to the surveyor. There is no allegation of any intimation in terms of Sub-Regulation (2) having been given to the insured. Though the insurer can ask for additional report on certain specifications issues, there is no averment in the written version of any such report having been sought by the insurer from the surveyor. In terms of Sub-Regulation (5), the insurer is required to offer a settlement to the complainant within 30 days of the receipt of the report. The payment to the insured has to be made within seven days of the acceptance of the offer. In case of delay in payment, the insurer is liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

6.      In the present case, the surveyor did not submit the report within six months of his appointment. Admittedly, there is no evidence even of the surveyor having taken extension for submission of his report in terms of Sub-Regulation (2) of Regulation 9. The insurer did not offer payment to the complainant within 30 days of the receipt of the report dated 5.5.2004. The Addendum came to be issued later on 7.7.2014. The insurer, therefore, did not follow the timeline prescribed in Sub-Regulation (3) of Regulation 9. The balance payment of Rs.10,67,56,258/- was not offered even within 30 days of the Addendum dated 7.7.2014, the said payment having been made only on 9.9.2014.

7.      There is no reason why an insured should suffer on account of delay on the part of the surveyor in submitting his report considering the fact that the surveyor is appointed by the insurer without consulting the insured and in any case, it is for the insurer to impress upon the surveyor to submit his report within the time limit prescribed in Regulation 9 (2) of the above-referred regulations. Had the insurer pursued the matter with the surveyor, the report would probably have been submitted within the time limit prescribed in Sub-Regulation (2) of Regulation 9. The insurer, therefore, must compensate the insured for this deficiency in the service if the payment of the claim has been delayed on account of the surveyor having taken more than the prescribed time for submission of his report.

8.      The matter can also be looked from another angle. Had the surveyor submitted his report in time and the settlement been offered within the time limit prescribed in the Regulations, the amount of 10,67,56,258/- to which the complainant was lawfully entitled continued to be used by the insurer. Having used the amount which lawfully belonged to the insured, the insurer must suitably compensate the insured by paying appropriate interest on that amount.

9.      Considering all the facts and circumstances of the case, the complaint is disposed of with the following directions:-

(i)      The opposite party shall pay simple interest @ 9% per annum to the complainant on the amount of Rs.10,67,56,258/- w.e.f. 11.1.2014 (six months + 30 days + 7 days from the appointment of surveyor) to 8.9.2014;

(ii)      The OP shall pay a sum of Rs.10,000/- as cost of litigation to the complainant;

(iii)     The payment in terms of this order shall be made within six weeks from today, failing which it shall carry interest @ 9% per annum from the aforesaid date.