R.K. AGRAWAL, J., PRESIDENT

1. The present Appeal has been filed against the Order dated 12.11.2013 passed by the State Consumer Disputes Redressal Commission Sikkim, Gangtok (hereinafter referred to as State Commission), whereby the Complaint filed by the Complainant before the State Commission was partly allowed and Opposite Party Bajaj Allianz General Insurance Company Ltd. was directed to pay ₹18,26,000/- alongwith interest @10% p.a. from the date of the claim until payment of the amount.

    

2. Brief facts of the case are that the Complainant/Respondent is the proprietor of a firm named “M/s Ess Ell Pee Gee”, which has the Distributorship of Indian Oil Corporation Limited for distribution and sale of Liquefied Petroleum Gas (LPG) in cylinders for household consumers and commercial use for residents of Sikkim.The Complainant / Respondent was using Property situated at Samdur Busty above Forest Check Post, Ranipool, East District of Sikkim, as Godown for storage of LPG Cylinders.The Complainant/ Respondent for covering the risk of fire and other hazards of nature including earthquake for the Godown, obtained Standard Fire and Special Perils Policy from Opposite Party Bajaj Allianz General Insurance Co. Ltd. (hereinafter referred to as the Opposite Party Insurance Company) on 25.06.2005 and has been renewing it thereafter periodically on expiration of its term.The Complainant/Respondent renewed the said Policy for its Godown vide Policy No. OG-12-2404-4001-00000357 for total sum assured ₹47,26,000/- (₹21,76,000/- for building (super structure) including boundary wall, stocks of Godown gas and front gate and add-on cover of ₹25,50,000/- for earthquake with plinth and foundation) which was valid from 10.08.2011 to 09.08.2012.During the currency of the Policy, i.e., on 18.09.2011, a massive earthquake took place in Sikkim due to which the Godown of the Complainant got severally damaged and it developed several cracks all over its structure.Thereafter in the Monsoon Session of 2012 in Sikkim, there was heavy down pour and on 03.06.2012, there was massive land slide and rock slide in and around the Godown, due to which retaining wall/boundary wall of the insured site, i.e., LPG Godown of the Complainant from East, North and South side was completely damaged and made the Godown unsafe for its further use without its proper repair.The Complainant preferred a claim bearing No. OC-13-2404-400-0000013 under the Policy with the Opposite Party Insurance Company for repair of such loss and damage caused to her Godown.It is the say of the Complainant that on the direction of the Opposite Party Insurance Company, she got prepared ‘Estimate’ of loss and damage to her insured property from qualified Engineers in Sikkim Public Works Department.The Engineer of Sikkim Public Work Department, Government of Sikkim estimated the loss to the tune of ₹61.43 lakh.Since the risk covered under the Policy was ₹47,26,000/-, she restricted her claim to ₹47,26,000/- and submitted the Estimated loss of damage to the Opposite Party Insurance Company.It is the say of the Complainant/Respondent that she received letter dated 05.11.2012 followed by two reminder letters dated 16.11.2012 and 05.12.2012 from the Opposite Party Insurance Company from which she was offered ₹2,10,475/- towards full and final settlement of her claim.Since the offered amount, i.e., ₹2,10,475/- against total damage of ₹61,43,000/-, was meager she rejected the offer and sent legal Notice to the Opposite Party Insurance Company for appointment of an Arbitrator to adjudicate the dispute of her insurance claim with Opposite Party Insurance Company.The Opposite Party Insurance Company vide letter dated 21.01.2013 rejected her request for appointment of Arbitrator.In the meantime, vide letter dated 18.12.2012, the Opposite Party Insurance Company repudiated her claim for non-acceptance of the offer of settlement.Alleging deficiency in service on the part of the Opposite Party Insurance Company, Complainant filed a Complaint before the State Commission.

    

3. The Appellant Insurance Company contested the Complaint before the State Commission by filing Written Statement.The Appellant Insurance Company stated that the total sum insured of the Policy is ₹25,50,000/- (₹18,26,000/- for building (super structure) including boundary wall + ₹3,00,000/- for stocks of Godown gas + ₹50,000/- for front gate + ₹3,74,500/- for Add-on cover for earthquake with plinth and foundation, i.e., in total ₹25,50,000/-) but the Complainant cunningly and intentionally with malafide intention added two amounts of policy together making the sum insured higher for her wrongful gain.The Appellant Insurance Company denied the claim of the Complainant that the LPG Godown got severely damaged due to the earthquake, and the retaining wall of the LPG Godown got damaged due to landslide and rockslide and stated that the damage to the retaining wall was not new or fresh but old and pre-existing ones and, therefore, not covered under the terms and conditions of the Policy.They never directed the Complainant to get prepared the estimate of losses and damages to the insured properties from qualified Engineers in Sikkim and the Complainant got prepared estimate of losses on her own by the Engineer but they are not licensed and approved by IRDA surveyors, therefore, the estimate of loss is not acceptable being highly exorbitant and in excess of the sum insured under the Policy.The Appellant Insurance Company got assessed the loss by an IRDA approved surveyor, i.e., Mr. Indrani Bhattarcherjee of Silliguri who assessed the loss at ₹2,10,745/- and this amount was offered to the Complainant but she rejected the offer, therefore, there is no deficiency in service on their part.It was also stated that before this Claim also the Complainant had lodged a claim for debris clearance caused by failure of the retaining wall that had obstructed the entry in the Godown and such damage had not been repaired by the Complainant.For these reasons, the claim for retaining wall was not considered as being not covered under the Policy and the loss of the boundary wall caused by the landslide assessed at ₹2,10,745/-, it is the only liability upon the Appellant Insurance Company.

    

4. After hearing both the Parties and perusal of material on record, the State Commission restricted the dispute to the claim within the limits of the losses and damages under “Standard Fire and Special Perils Policy” having insured value at ₹21,76,000/- and framed the following issues:-

   “(i)     the survey report and estimates of damages prepared by the Engineers of the SPWD under Government of Sikkim being not recognized Surveyors under the IRDA, said to be mandated under Section 64UM of the Insurance Act, 1938, was not valid and;

   (ii)      the claim against damages to the retaining wall was not permissible as those were pre-existing damages which had not been repaired and no fresh ones were observed by the Surveyors deputed by the Respondents.”

    

5. Regarding (i) issue the State Commission observed as under:-

   “The next is the question as to whether the survey and assessment conducted by the engineers of the Building and Housing Department, Government of Sikkim, would be valid or not. This question had squarely fallen for our consideration in Consumer Complaint No.02 of 2012 in the matter of Dr. Kumar Bhandari vs. Bajaj Allianz General Insurance Co. Ltd. & Anr. By our decision dated 01-04-2013, we have rejected the contention that Section 64 UM of the Insurance Act, 1938 mandates that only the estimates prepared by surveyors recognized under the IRDA would be valid and, that as per the settled position in terms of the decisions of the National Commission the report of the surveyors only deserves to be given due weightage and further that such report is an important document which should not be rejected or brushed aside without compelling evidence to the contrary. On a bare reading of Section 64UM of the insurance Act, 1938, we find that it is only a regulatory provision governing the present case undeniably the estimates, Exhibit 3, is prepared by Engineers of Government of Sikkim which by itself is a proof of their competences to assess losses and damages of the kind involved in the case. The contention, therefore, does not appear to be sound and is accordingly rejected as such.”

    

6. The State Commission decided the (ii) issue by observing as under:-

   “In the case under consideration before us also, the same principle would apply and, therefore, we reject the plea accordingly. In the first instance, we do not find any evidence to support the contention that the damage was pre-existing except the surveyor’s report, which too is said to have been prepared in a survey conducted without notice to the claimant. Even assuming that the damage was pre-existing, we find that, as already noted above, the Respondents, had issued the policy in full knowledge of the existence of such damage and thus had accepted the risk. Under such circumstances, the contention raised on behalf of the Respondents stand rejected as not sustainable.”

    

7. The State Commission partly allowed the Complaint by observing as under:-

   “Having thus found the rejection of the claim to be unsustainable, the question that would then arise is what would be the sum that the claimant will be entitled to as damages for the losses suffered by her. The answer, in our view, is not far to fetch. As found already, neither the Respondents nor the surveyor appointed by them have questioned the estimates, Annexure 4, prepared by State Government Engineers. They have rather relied upon it by awarding compensation based upon portions thereof. It is therefore, to be deemed that the estimates, Annexure 4, is correct. Although the total value of the claim is on the entire assured sum of Rs.47,26,000/- the claimant admittedly would be entitled only to the sum of Rs.18,26,000/- which is the losses assessed against damages in respect of “building including wall” contained in third  column of the first component for “Standard Fire Special Perils Policy” described in Annexure 1 to the Policy.”

    

8. Aggrieved by the impugned Order passed by the State Commission, the Appellant Insurance Company has filed the present Appeal before this Commission.

    

9. I have heard Ms. Suman Bagga, learned Counsel for the Insurance Company, Mr. Sunil Mathews, learned Counsel for the Respondent/Complainant, perused the Impugned Order dated 12.11.2013 passed by the State Commission and the material available on record.

    

10. Ms. Suman Bagga, learned Counsel for the Insurance Company submitted that the State Commission has erroneously rejected the assessment made by the IRDA approved surveyor, Mr. Indrani Bhattacharjee, who assessed the net loss of ₹2,10,745/- in accordance with the terms and conditions of the Policy and the State Commission wrongly allowed the Complaint by relying upon the estimate of the prepared by Engineer of Sikkim Public Work Department, Government of Sikkim and directed the Opposite Party Insurance Company to pay a sum of ₹18,26,000/- alongwith interest @10% from the date of claim till the payment.  She prayed that the Impugned Order dated 12.11.2013 passed by the State Commission be set aside and Appeal be allowed with costs.

     

11. Per contra, Mr. Sunil Mathews, learned Counsel for the Respondent/Complainant submitted that it is not mandatory that only the estimates prepared by surveyors recognised under the IRDA would be valid.  As per Section 64UM of the Insurance Act, 1938, it is only a regulatory provision governing the activities of the surveyors.  Therefore, the estimates of loss prepared by the Engineer of Government of Sikkim can be taken into consideration. He supported the Order passed by the State Commission as according to him the State Commission had passed a well-reasoned and justified order in the interests of justice, which is based on a correct and rightful appreciation of evidence and material available on record and does not call for any interference.

     

12. I have given thoughtful consideration to the pleas raised by both the Parties.

     

13. It is not in dispute that the estimate of loss was prepared by Engineers of SPWD, Government of Sikkim, who are undoubtedly experts / competent to assess the loss and damages of the kind involved in the case.The estimate of loss prepared by them cannot be brushed aside simply for the technical reason that they are not licensed Surveyors/Loss Assessors. The Surveyor’s Report is not the final word and it is not binding upon the insured or insurer.A reference can be made to the Judgment passed by the Hon’ble Supreme Court in “New India Assurance Co. Ltd. v. Pradeep Kumar, (2009) 7 SCC 787” in which it has been held as under:-

    “21.   Section 64-UM(2) of the Act, 1938 reads:

     

    64-UM. (2) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as ‘approved surveyor or loss assessor’):

     

    Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor.”

     

    The object of the aforesaid provision is that where the claim in respect of loss required to be paid by the insurer is ₹20,000 or more, the loss must first be assessed by an approved surveyor (or loss assessor) before it is admitted for payment or settlement by the insurer. The proviso appended thereto, however, makes it clear that insurer may settle the claim for the loss suffered by insured at any amount or pay to the insured any amount different from the amount assessed by the approved surveyor (or loss assessor).

     

    22.     In other words although the assessment of loss by the approved surveyor is a prerequisite for payment or settlement of claim of twenty thousand rupees or more by insurer, but surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor's report may be the basis or foundation for settlement of a claim by the insurer in respect of the loss suffered by the insured but surely such report is neither binding upon the insurer nor insured.”

     

14. As far as the issue “the damage to the retaining wall of the insured godown was pre-existing and old one and as such the claim was not payable”, is concerned, the State Commission has rightly held “In the first instance, we do not find any evidence to support the contention that the damage was pre-existing except the surveyor’s report, which too is said to have been prepared in a survey conducted without notice to the claimant. Even assuming that the damage was pre-existing, we find that, as already noted above, the Respondents, had issued the policy in full knowledge of the existence of such damage and thus had accepted the risk. Under such circumstances, the contention raised on behalf of the Respondents stand rejected as not sustainable.”  The view taken by the State Commission is fully supported by the observations made by the Hon’ble Supreme Court in “United India Insurance Co. Ltd. Vs. M/s. Kiran Combers and Spinners” (2007) 1 SCC 373], in which it has been held as under:

    “9.     ………Normally when the company insures any factory, then their Officers and the Engineers used to inspect the building to find out whether there is any defect in the construction or the construction is of poor quality. In the present case, the Company certified that it is a first class construction, then for some defect which has not been noticed by the Company, no benefit could be given to the Company for such defect……”

     

15. In view of above discussion, the Order dated 12.11.2013 passed by the State Commission cannot be said to be erroneous.The State Commission has dealt with all the issues in detail and passed a well-reasoned Order after appreciation of evidence and material available on record.  I do not find any illegality or perversity in it.  The Order passed by the State Commission is upheld and the Appeal is dismissed.