28th day of October 2024
CC 410/16 filed on 26/07/2016
Complainant : Haridasan, S/o Rajani, Residing at Kundil House,
Mezhathur Post, Thrithala, Palakkad – 679 534.
(By Advs. K.P. Vijayakrishnan, Melepattambi &
Savitha P., Thrissur)
Opposite Parties : 1) Shriram General Insurance Company Ltd., E8,
EPIP, RIICO Industrial Area, Sitapura, Jaipur,
Rajasthan – 302 022.
Rep. by its Managing Director.
2) Shriram General Insurance Company No. 31/23/5,
1st Floor, Achutha Menon Road,
Thrissur – Poonkunnam Road, Thrissur – 680 002.
Thrissur, Rep. by its Manager.
(OP 1 & 2 By Adv. Mariamma K Ittoop, Thrissur )
O R D E R
By Sri. C.T. Sabu, President :
1) The facts of the case in brief are as follows:
The complainant is the registered owner (RC) of a motor vehicle bearing registration number KZ 07-AQ-2224 (Tipper Lorry). The opposite party insurance company insured the vehicle under policy number 100003/31/14/5992/94 from 11/01/2014 to 10/01/2015. The said insurance policy provides full coverage for any damages caused to the vehicle. The complainant's livelihood depends on the income generated from the operation of this vehicle, and its regular use is essential for his subsistence. On 19/07/2014, while the Tipper Lorry was being operated at M/s Popular Crusher Unit, Akkikavu, it was involved in a road traffic accident. As a result of the accident, the vehicle sustained damages as detailed in the survey report prepared by a Surveyor, Loss Assessor, and Valuer of motor vehicles. According to the surveyor's report, the estimated cost of repairs to rectify the damages amounts to Rs. 8,78,275/- (Rupees eight lakhs seventy-eight thousand two hundred seventy-five only). As per the insurance policy terms, the opposite parties (the insurance company) are legally obligated to pay the complainant the amount necessary to cover the repair costs resulting from the accident, which occurred during the policy's validity period. The policy was active and in force on the date of the accident.
The complainant has made multiple attempts to contact the opposite parties to seek the release of the amount mentioned above, but the opposite parties have been reluctant to settle the claim without providing any justification. Due to the lack of response, the complainant, through legal counsel, issued a notice to the 1st opposite party on 08/12/2014 via registered post with acknowledgement due. The opposite party received the notice on 15/12/2014. Despite receipt of the notice, no payment has been made, and the opposite party gave no response.
As a result of the opposite parties' high-handed actions, the complainant has suffered mental agony and monetary loss, for which the opposite parties are liable to provide compensation. Despite repeated demands, the opposite parties failed to respond, which is arbitrary and unilateral and amounts to a deficiency in service.
In light of the above, the complainant respectfully prays that this Honourable Commission may be pleased to pass an order directing the opposite parties to:
- Pay an amount of Rs. 8,78,275/- (Rupees eight lakhs seventy-eight thousand two hundred seventy-five only) for the damages sustained in the accident, as per the surveyor's report.
- Pay an additional amount of Rs. 1,00,000/- (Rupees one lakh only) as compensation for the mental agony caused to the complainant.
- Pay Rs. 3,000/- (Rupees three thousand only) towards the survey charges incurred by the complainant.
- Award the costs of these proceedings.
- Grant any other relief deemed appropriate by this Honourable Commission.
2) On receiving the complaint, the Commission issued proper notice to the opposite parties. The opposite parties appeared jointly through their counsel and filed a detailed version denying the averments stated in the complaint. The opposite parties admit that the vehicle bearing registration number KL 07 AQ 2224 was covered under a valid insurance policy issued by them in the complainant's name from 11/01/2014 to 10/01/2015. Their liability, however, is strictly limited to the terms and conditions of the said insurance policy. The Opposite Parties deny the complainant's claim that Rs. 8,78,275/- is required to rectify the damages to the vehicle. As mentioned in the complainant's petition, this figure is based on an estimate provided by the surveyor that does not reflect the actual cost of repairs. The surveyor assessed the damages based on the complainant's interest, and the opposite parties are only liable to pay the actual expenses incurred by the complainant, not the inflated estimate. Furthermore, the opposite parties state that the total cost of repairs is higher than the Insured Declared Value (IDV) of the vehicle. The vehicle, which is a 2004 model registered on 22/01/2004, was thoroughly inspected by M/s Libra Insurance Surveyors and Loss Assessors Pvt. Ltd., who assessed the total loss at Rs. 1,40,000/-. The complainant's claim that the repair costs exceed this amount is without merit and is solely an attempt to extract an undeserved financial gain.
The opposite parties further deny that the complainant contacted them multiple times regarding this matter. In fact, the opposite parties have always been willing to settle the claim based on the actual repair costs incurred by the complainant. The complainant, however, refused to accept this amount. The opposite parties contend that the complainant has filed this petition with fraudulent intent in an attempt to derive undue financial benefit from the insurance company. Therefore, the opposite parties pray that this Honourable Commission dismiss the complainant's petition with costs.
3) The points for consideration are as follows:
a. Is there any deficiency in service or unfair trade practice?
b. If so, what is the relief and cost?
4) When the case came for evidence, the complainant filed the proof affidavit, in which they affirmed and explained all the averments of the complaint in detail. They produced 5 documents, marked as Exhibit P1 to P5. Ext. P1 is the Survey report of loss and Bill of expenses dtd. 30/11/2014 issued by V. Radhakrishnan, Surveyar, Loss Assessor and Valuer (Motor) to complainant. Original along with photographs of Vehicle No. KL 07 AQ 2224. Ext. P2 is the Certificate dtd. 16/02/15 issued from CI of Police, Kunnamkulam to complainant – original. Ext. P3 is the Certificate cum Policy Schedule, Policy No.10003/31/14/599284 for the period from 11/01/2014 to 10/01/2015 of AQ Vehicle No. KL 7 AQ 2224- Original. Ext. P4 (series) are the Lawyer notice dtd. 08/12/14 issued by complainant’s counsel to the opposite parties with postal receipt and AD card. Ext. P5 is the OP (Arb) No. 559/2016 filed before the Hon’ble District Court Thrissur by the opposite parties. From complainant’s side License approved surveyor was examined as PW1.
The opposite parties submitted the proof affidavit in which they affirmed and explained all the contentions in tune with their version in detail. The produced documents marked Exhibit R1 to R8. Ext. R1 is the copy of Certificate cum Policy Schedule of Policy No. 10003/31/14/599284 issued by the opposite parties. Ext. R2 is the Motor Insurance Claim Form submitted by the complainant. Ext. R3 (SP) is the Survey Report dtd. 31/10/14 (original) submitted by S. Mahendran, DME. Ext. R4 is the copy of Estimate and labour charges to repair accident vehicle No. KL 07AQ 2224 by Chandra Automobiles and Engineering Works. Ext. R4 (a) is the copy of Motor Claim Approval Sheet. Ext. R5 is the copy of letter dtd. 26/11/14 sent by the opposite party to the complainant and I-summary of Loans for Vehicle No. KL 07 AQ 2224 and II Statement of Accounts for the period ending 15/10/16 issued by the opposite parties. Ext. R6 is the print out I- summary of Loans for vehicle No. KL 07 AQ 2224 and II Statement of Accounts for the period ending 15/10/16 issued by the opposite parties. Ext. R7 is the copy of letter dtd.26/08/16 sent by Adv. Anup Vijay to the complainant. Ext. R8 is the copy of Loan cum Hypothecation Agreement. One witness was examined as RW1.
5) The Commission perused the documents and evidence submitted and finds the following:
The complainant's vehicle was insured with the opposite parties under a valid insurance policy covering the period from 11/01/2014 to 10/01/2015, as confirmed by both Ext. R1 and Ext. P3. The policy was in force at the time of the accident, which occurred on 19/07/2014. The main issue in this case revolves around the amount of compensation payable under the policy for the repair of the vehicle. The complainant submitted a repair estimate of Rs. 8,78,275/- (Rupees eight lakhs seventy-eight thousand two hundred seventy-five only) as per the survey conducted by V.R. Radhakrishnan (Ext. P1). This estimate was based on the evaluation provided by Archana Motors, an Authorized Service Centre for Tata Motors. On the other hand, after conducting their survey, the opposite parties assessed the loss at Rs. 1,40,000/- (Ext. R3), leading to the present dispute over the correct amount payable for the repairs.
Validity of the Estimates and Authorized Repairs: The first issue for consideration is whether the estimate provided by the complainant is reasonable and justified. It is noted that Archana Motors is an Authorized Service Centre for Tata Motors, as evidenced by the deposition of RW1 and the complainant's surveyor's report. This fact is of utmost importance. Repairs conducted at authorized service centres ensure that genuine parts are used and that the vehicle is restored to the manufacturer's standards. The complainant has a right to have his vehicle repaired at a place where the quality and safety of the repairs are assured, and the insurance company is obligated to honour the estimate provided by such an authorized service centre.
The opposite parties, however, have contended that their surveyor assessed the damages at Rs. 1,40,000/-, which they claim is the correct amount payable. They have also raised concerns about the high estimate provided by Archana Motors. However, it is settled law that an insurer cannot disregard the repair estimate of an authorized dealer without valid reasons. In this case, no substantial reasons have been provided to justify the rejection of the estimate given by Archana Motors, and there is no evidence to suggest that the repairs could be done for less than the amount claimed by the complainant. Therefore, the opposite parties' survey report undervaluing the claim cannot be accepted.
Furthermore, it is observed that the insurance premium is calculated considering factors such as the vehicle's depreciation, age, and value at the time of policy issuance. The policy premium reflects the risk the insurer assumes, including any depreciation applicable to the vehicle's value. Adding additional depreciation to the repair costs, as the opposite parties seem to suggest, is unjustified. If the opposite parties intended to impose further deductions based on depreciation, this should have been explicitly stated in the policy terms and conditions. Since no such provision exists, the complainant's claim cannot be reduced on this ground.
Policy Limit and Liability: While the total cost of repairs is higher than the assured sum, the policy assures a maximum coverage of Rs. 5,65,235/- as IDV or Rs. 7,50,000/- in respect of any one claim or series of claims arising out of one event as per the Limit of Liability Clause of policy Ext. R1/Ext.P3. This is the limit of liability for the opposite parties under the insurance contract terms. Hence, the opposite parties are legally bound to pay the full assured amount, the maximum liability under the policy, given that the repair costs exceed this amount.
Hypothecation Agreement and Premium Payment: The complainant has further highlighted that the vehicle, which serves as his primary source of livelihood, was hypothecated to the finance company. It is unreasonable to expect the complainant to continue paying the premiums when the vehicle has been rendered non-operational due to the accident. As the financer, the insurer was fully aware of the situation and should have acted more diligently to resolve the claim to enable the complainant to resume his livelihood.
Arbitrary Adjustment in Settlement Process: The Opposite Parties arbitrarily adjusted the claim by releasing only Rs. 1,40,000/-, as per Ext. R5 and R6 were directed toward the hypothecation. It is important to note that Ext. R5 and R6 are statements from the loan account of the opposite parties' own finance company, and these adjustments were made without duly informing the complainant. Furthermore, the opposite parties acted in bad faith by insisting that unless the complainant signs and returns the form acknowledging the Rs. 1,40,000/- settlement, his claim would be treated as a "No Claim," and they would presume that the complainant is no longer interested in pursuing the claim. This tactic is unacceptable and aimed at coercing the complainant into accepting a lower settlement than what is rightfully due under the policy. Such conduct demonstrates a clear violation of the insurance company's duty to act fairly and transparently.
Moreover, as per Ext. P5, the original petition filed under the Arbitration and Conciliation Act in the District Court, Thrissur, the opposite parties failed to disclose the adjusted Rs. 1,40,000/- and did not produce any evidence proving that such a payment was indeed made. This further demonstrates the opposite parties' attempt to withhold critical information, thus undermining the complainant's rights under the policy.
Mental Agony and Deficiency in Service: The opposite parties' handling of the complainant's claim has been arbitrary and unjust. The insurance policy assured a total coverage amount of Rs. 7,50,000/-, and the complainant is entitled to the full amount under the terms of the policy, not just a partial payment. The opposite parties' actions, including the arbitrary adjustment of the claim toward hypothecation and using the Rs.1,40,000/- settlement offer as leverage, clearly demonstrate a deficiency in service and a breach of their contractual obligations.
Furthermore, the opposite parties' refusal to honour the repair estimate provided by the authorized service centre and their undervaluation of the claim reflects a failure to adhere to the terms of the insurance contract. An insurance company has a duty to settle claims fairly and promptly, and the opposite parties' failure to do so has caused unnecessary distress and financial hardship to the complainant.
The Commission finds that the complainant is entitled to compensation for the mental agony and financial loss suffered due to the opposite parties' conduct, which constitutes a clear breach of duty and deficiency in service.
6) In the result, the complaint is allowed, and the opposite parties are jointly and severally directed to pay the complainant ;
- a sum of Rs. 7,50,000/- (Rupees Seven Lakh Fifty Thousand only), the maximum assured sum under the insurance policy, with 9% interest per annum from the date of complaint till realization,
- a sum of Rs. 50,000/- (Rupees Fifty Thousand only) as compensation for the mental agony and financial hardship caused by the complainant due to the delay in settlement, and
- a sum of Rs. 20,000/- (Rupees Twenty thousand only) as cost towards the proceedings.
The order shall be complied with within 30 days of receiving a copy of this order. In the event of non-compliance, the complainant shall be entitled to interest at the rate of 9% per annum on the entire amount awarded from the date of complaint until realization.
Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Commission this the 28th day of October 2024.
Sd/- Sd/- Sd/-
Sreeja S. Ram Mohan R C. T. Sabu
Member Member President
Appendix
Complainant’s Exhibits :
Ext. P1 Survey report of loss and Bill of expenses dtd. 30/11/2014 issued by V.
Radhakrishnan, Surveyar, Loss Assessor and Valuer (Motor) to
complainant. Original along with photographs of Vehicle No. KL 07
AQ 2224.
Ext. P2 Certificate dtd. 16/02/15 issued from CI of Police, Kunnamkulam to
complainant – original.
Ext. P3 Certificate cum Policy Schedule, Policy No.10003/31/14/599284 for the
period from 11/01/2014 to 10/01/2015 of AQ Vehicle No. KL 7 AQ
2224- Original.
Ext. P4 (series) Lawyer notice dtd. 08/12/14 issued by complainant’s counsel to
the opposite parties with postal receipt and AD card.
Ext. P5 OP (Arb) No. 559/2016 filed before the Hon’ble District Court Thrissur by the opposite parties
Complainant’s Witnesses :
PW 1 Radhakrishnan V
Opposite parties’ Exhibits :
Ext. R1 copy of Certificate cum Policy Schedule of Policy No.
10003/31/14/599284 issued by the opposite parties.
Ext. R2 Motor Insurance Claim Form submitted by the complainant.
Ext. R3 (SP) Survey Report dtd. 31/10/14 (original) submitted by
S. Mahendran, DME.
Ext. R4 copy of Estimate and labour charges to repair accident vehicle No. KL
07AQ 2224 by Chandra Automobiles and Engineering Works.
Ext. R4 (a) copy of Motor Claim Approval Sheet.
Ext. R5 copy of letter dtd. 26/11/14 sent by the opposite party to the
complainant and I-summary of Loans for Vehicle No. KL 07 AQ 2224
and II Statement of Accounts for the period ending 15/10/16 issued by
the opposite parties.
Ext. R6 print out I- summary of Loans for vehicle No. KL 07 AQ 2224 and II
Statement of Accounts for the period ending 15/10/16 issued by the
opposite parties.
Ext. R7 copy of letter dtd.26/08/16 sent by Adv. Anup Vijay to the complainant.
Ext. R8 copy of Loan cum Hypothecation Agreement
Opposite parties’ Exhibits :
RW 1Mahindran
Id/-
President
