By Smt. C. S. Sulekha Beevi, President,

1. Complainant is the owner of the firm ’Central Electricals’ situated at Malappuram. The stock of his firm was insured with opposite party for an amount of Rs.40 lakhs. During the currency of the policy, on 16-7-2007, due to heavy rain there was flood in the area. The godown and office of the firm was totally submerged in water and the goods in the godown were damaged and lost in flood. The incident was reported to opposite party through State Bank of India from where the complainant had availed loan. Complainant preferred a claim with necessary documents. The surveyor deputed by opposite party inspected the premises and verified stock on 22-7-2007. Complainant sustained loss of an amount of Rs.11,18,836/- which included 12.5% vat paid on the stock of damaged goods. The loss is detailed by him as under:

"a) The damaged electrical goods which is not fit to for use 7,42,184.00

b) The electrical goods lost in the flood 2,09.152.00

c) Expense met by my firm to resume the articles from

the flooded Godown. 35,000.00

d) The damaged and lost furniture and interior decoration

of the office cum Godown. 1,32,000.00

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In Total Rs. 11,18,836.00

==========="

2. Apart from this, books of account, bill books and all related documents kept in the office were also lost. After the submission of the report by the Surveyor, complainant approached opposite party to enquire and receive the compensation. But he was send back several times by opposite party for one reason or the other. On 07-3-2008 opposite party issued a settlement intimation voucher for an amount of Rs.5,04,290/- which included the vat paid at the rate of 12.5% also. On receiving this, complainant met opposite party and requested to pay the amount arrived by opposite party. On discussions it was made clear by opposite party that only Rs.5,04,290/- will be paid towards the claim and that too only if complainant executes the discharge voucher in full and final settlement of the claim. The request of the complainant to let him receive, the amount under protest was not heeded to by opposite party. Complainant then issued a notice through his lawyer to opposite party on 10-3-2008 stating, that compelling him to sign the discharge voucher in full and final settlement when he was not satisfied with the compensation was illegal. He also requested opposite party to disclose the amount assessed by the surveyor. To this opposite party issued reply stating that opposite party was wiling and ready to pay Rs.5,04.290/- and that this amount could be paid only as fully and final settlement of the claim and cannot be paid after recording any protest. His financial situation was worse as he had to repay the loan to the Bank. On 07-5-2008 he again approached opposite party and requested to pay the amount after recording his protest and to allow him to sue for the balance. Opposite party refused and told him that the amount can be paid only if the complainant executes the discharge voucher in full and final settlement of the claim. It is stated that opposite party threatened him stating that even if the complainant sues for the balance, opposite party being a company will fight it upto the Supreme Court and that it would take years by the time of final decision is arrived in the matter. Complainant was spell bound due to fear. He thought of the situation if he does not repay the loan. The Bank will initiate proceedings under the SARFEAST Act which will result in total closure of his business. If there is delay in receiving the cheque he will have to pay interest and penal interest which will increase his financial burden. Complainant avers that due to the threat, coercion and undue influence by opposite party, he signed the discharge voucher and opposite party issued the cheque of Rs.5,04,290/- to the Bank. On the same day, complainant issued another notice through his lawyer detailing the situation of receiving the cheque. Opposite party replied raising untenable contentions. It is stated that complainant had signed the voucher only due to threat, coercion and undue influence on the part of opposite party and so the discharge voucher has no legal validity. Complainant claims Rs.11,18,836/- as compensation for the loss sustained by him. He alleges deficiency in service. Hence this complaint to direct opposite party to pay the balance of Rs.6,14,546/- and to allow interest @ 12% per annum upon the sum of 11,18,836/- along with compensation of Rs.10,000/- with costs.

3. In the reply version opposite party denied the averment in the complaint that the godown and office of the firm were fully submerged in water and that the goods in the godown were damaged and lost in the flood. It is admitted that due to the flood certain electrical goods were damaged. But the claim of the complainant for Rs.11,18,836/- is baseless. Opposite party also denies the statement that account books, bill books and such documents were lost in the flood. The averment that complainant approached opposite party office for receiving the compensation and he was send back several times is denied as false. Opposite party has specifically denied all the averments in the complaint stating that opposite party compelled, coerced and influenced the complainant to execute the discharge voucher. It is submitted that the amount of compensation of Rs.5,04,290/- was arrived by opposite party after applying all parameters, procedural formalities, policy conditions, perusal of documents and survey report. This amount was intimated to the complainant. The complainant was not ready to receive the amount. His dispute was limited to a sum of Rs.2,09.152/- towards the claim for the electrical goods lost in the flood. Opposite party did not accept this claim made by complainant due to want of proper evidence. That officials of opposite party office inspected the goods carefully and ruled out the possibility of articles being lost in the flood. That except the chance of goods being damaged there was no possibility of goods getting lost in the flood. That if any such articles are lost those items or remains could have been recovered from the nearby paddy field. As there was no such recovery opposite party could not accept the claim of Rs.2,09.152/- on this head made by the complainant. That the claim was processed bonafidely. Complainant was reluctant to accept the compensation and had issued a lawyer notice. Opposite party issued reply stating willingness to pay Rs.5,04,290/- as full and final settlement. That there is no law which allow the claimant to accept compensation of insurance claim under protest. Complainant had received the cheque without any sort of protest. There was no threat, coercion or undue influence on the part of opposite party. That there is no deficiency in service.

4. Evidence consists of the proof affidavit filed by complainant and Exts. A1 to A5 marked for him. Opposite party filed counter affidavit. Exts.B1 and B2 marked for opposite party. Both sides have not adduced any oral evidence.

5. Points for consideration:-

(i) Whether opposite party is deficient in service.

2. If so, reliefs and costs.

    

6. Point (i) & (ii):-

Complainant alleges that he was made to receive the cheque for Rs.5,04,290/- as full and final settlement of his claim under the fire insurance policy by threat, coercion and undue influence of opposite party. It is his case that he is entitled to receive Rs.11,18,836/- as compensation and that opposite party has not processed his claim properly.

7. The learned counsel Sri.K. Anil appearing on behalf of opposite party vehemently argued that, the complainant has signed the discharge voucher and received the amount of Rs.5,04,290/- in full and final settlement of the claim and therefore had no right to put forward any further claim upon the said peril and the policy. It is also submitted that there was no threat coercion or undue influence on the part of opposite party. In support of these contentions Ext.B1 and B2 were relied by opposite party.

8. Complainant does not dispute the execution of Ext.B1 discharge voucher. It is his case that it was not executed under free will and therefore does not have legal sanctity. Ext.B1 is seen executed on 07-5-2008. Two months prior to the execution of Ext.B1, the complainant has issued Ext.A1 lawyer notice to opposite party. In Ext.A1 it is seen stated that complainant has put forward his dissatisfaction of the tendered amount of Rs.5,04,290/-. He has requested opposite party to let him receive the amount after noting his protest and also has requested to disclose the amount assessed by the surveyor. The

relevant portion of Ext.A1 is reproduced as under:

"According to him you have not permitted him to receive the said amount by signing the voucher under protest without prejudice to his right to sue for the balance amount. Instead of that you compelled him to sign the voucher as the full and final settlement towards the discharge of flood claim on stock of electrical goods with full satisfaction on his account. Since my client had not agreeing the same you refused to make the payment also. The said action on your part that compelling him to sign the voucher with the full satisfaction against his will amounts to unfair trade practice. Since my client had insured the stock for an amount of Rs.40,00,000/- (Forty Lakhs) and he sustained the loss as narrated above you are bound to pay the said amount to my client. Even though my client had requested you to give him the details of the amount arrived by you and the details of the assessment made by the surveyor you refused to disclose the same.

In the circumstance sated Supra I hereby call upon you to pay the amount arrived by you to my client within seven days of the receipt of this notice without prejudice to his right to claim the balance and interest which he is legally entitled to get from."

9. On 18-3-2008 opposite party has issued reply to .Ext.A1 in which opposite party has reconfirmed the willingness to pay Rs.5,04,290/- only if complainant is ready to execute the discharge voucher in full and final settlement of the claim. It is only after waiting for a period of one month and more, after receiving Ext.A2 reply, has the complainant executed Ext.B1 discharge voucher. Again it is not in dispute that the complainant had to repay loan to the Bank. The situation of the complainant who has incurred heavy loss in business due to flood and also has to repay loan to the Bank can be imagined. Seen after receiving the cheque, for Rs.5,04,290/- on the same day, the complainant has issued Ext.A3 notice to opposite party informing his protest and dissatisfaction. It can be reasonably understood that the complainant had no other way but to execute the discharge voucher, if he had to get whatever amount at the earliest, in order to reduce his liability to the Bank. Interestingly, as per Ext.A7 survey report the amount assessed by the surveyor is higher which is Rs.7,06,809/-. An offer to release the compensation only on execution of discharge voucher as full and final settlement of claim even if the insured is unsatisfied with the quantum, and thus taking advantage of the financial crisis of the insured is nothing but coercive bargaining. Complainant has succeeded in bringing to light the coercive bargaining tactics adopted by opposite party to settle the claim for a lesser amount. It has been held by the Hon’ble Supreme Court in National Insurance Company Vs. Sektia Shoes 2008 CTJ 329 (SC) (CP) that,

"The mere execution of a discharge voucher would not always deprive the consumer from preferring a claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered."

"In a given case if the consumer satisfies the adjudicating authority that the discharge voucher in full and final settlement of the claim was obtained by fraud, misrepresentation, undue influence or coercive bargaining, the authority can certainly provide appropriate relief to him."

10. Applying the principle laid in the above decision which is squarely applicable to the facts of this case we have no hesitation to hold that the complaint has a right to prefer this complaint, even though he has signed the discharge voucher.

11. The second grievance of the complainant is regarding the quantum of compensation paid to him. Complainant claims Rs.11,18,836/-. The assessment made by the surveyor in Ext.A5 is Rs.7,06,809/-. But opposite party has paid only Rs.5,04,296/-. At the time of hearing the counsel for complainant was fair enough to submit that he was willing to limit his claim of compensation to the assessment made by surveyor. So we limit our task by analysing the question whether opposite party was justified in making a payment of Rs.5,04,296/- only, when the surveyor has assessed the net liability as Rs.7,06,809/-.

12. It was submitted on behalf of opposite party that the surveyor had assessed Rs.2,09,151.99 towards loss of electrical goods, lost in flood. That such assessment by surveyor is incorrect and not supported by evidence. It is the case of opposite party that except that goods were damaged there was no chance for the goods to get lost. That if any goods had floated away in the flood, there would have been some recovery. That there was no such recovery and so the assessment made by surveyor for loss of goods in the flood was rejected by opposite party. The surveyor who conducted inspection and verified documents has assessed Rs.2,09.151/- on this head. We have to say that apart from surmises opposite party has not placed any evidence to establish that goods were not lost due to the flood.

13. In page 10 of Ext.A5 the surveyor has stated in detail his findings regarding the loss of goods in the flood and he has given a table of details of assessment. The relevant portion is reproduced as under:

"Due to incessant rain flooding had occurred at many places in Malappuram District. Lowlying areas were mostly under water causing extensive damages which were reported in all news papers and broadcasted through information medias. The subject damage to the electrical goods in the electrical godown is one of them. Due to the incessant rain occurred in the night of 16-07-2007 water had flooded in the insured’s shop-cum-godown premises where Fenolex and Crompton Electrical goods have been stored at about 3 a.m. On 17-07-2007 causing extensive damage & loss to the stock. Since the subject premise is lowlying and there is an open field in front water had flooded rapidly drenching the entire stock. Not only that when the shutter of the shop was opened for recovering/salvaging operation many material lost in the flooded water because as stated before in front of the shop is an open field and salvaging activity started in the night as soon at it came to the notice. Thus the cause of loss is attributed to flooding/inundation occurred due to the heavy, incessant rain on 17-07-2007 at about 3 a.m. (natural calamity), a peril covered under the policy."

 

The surveyor who has inspected the premises at the earliest has recorded his observations and findings and has made assessment of loss basing upon the inspection. If opposite party wished to deviate from such assessment, then it should be supported by details of inspection conducted separately by opposite party, conduct of enquiry and necessary materials. So also opposite party ought to have called for an explanation or clarification from the surveyor and also given the complainant a further chance to submit evidence. Without taking any such steps opposite party cannot arbitrarily deviate from the assessment made by a qualified surveyor who is appointed under the provisions of the Insurance Act. In a catena of cases the Apex Court has held that the surveyor’s report cannot be dismissed summarily and that it has to be given it’s due importance. Once such report is approved by opposite party to be the basis or foundation for settlement of claim, then opposite party cannot deviate from the assessment unless such deviation is supported by cogent and adequate evidence. We therefore conclude that opposite party was not justified in deviating from the assessment made by the surveyor and settling the claim for a lesser amount and that too by adopting coercive bargaining tactics. It is established that the claim was not settled fairly and justly by opposite party. We hold opposite party deficient in service.

14. As already stated the complainant has expressed his willingness to receive the amount assessed by the surveyor which we consider is only to be allowed. Opposite party has paid Rs.5,04,290/-. So the complainant is entitled to receive balance of Rs.2,02,519/-. We also hold that he is entitled to interest @ 9% per annum upon this amount from the date of Ext.B1 discharge voucher till payment for the illegal retainment of legitimate amount.

15. In the result, we allow the complaint and order that opposite party shall pay to the complainant Rs.2,02,519/- (Rupees Two lakhs, Two thousand and five hundred and nineteen only) along with interest @ 9% per annum from 07-5-2008 till payment together with costs of Rs.1,000/- (Rupees one thousand only) within one month from the date of receipt of copy of this order.

Dated this 19th day of February, 2010.

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER

APPENDIX

Witness examined on the side of the complainant : Nil

Documents marked on the side of the complainant : Ext.A1 to A5

Ext.A1 : Lawyer notice dated, 10-3-2008 issued by complainant’s counsel to opposite party.

Ext.A2 : Reply notice dated, 18-3-2008 by opposite party’s advocate to complainant’s counsel.

Ext.A3 : True copy of the letter dated, 07-5-2008 by complainant to opposite party.

Ext.A4 : Reply letter dated, 16-5-2008 from opposite party to complainant.

Ext.A5 : Flood claim under standard fire & special perils policy given by opposite party to complainant.

Witness examined on the side of the opposite parties : Nil

Documents marked on the side of the opposite parties : Ext.B1 and B2

Ext.B1 : Discharge voucher from complainant to opposite party.

Ext.B2 : Photo copy of the letter dated, 06-5-2008 from opposite party to complainant.

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER