Orissa

Sambalpur

CC/6/2021

M/S SBM Nirman Construction Pvt. Ltd. - Complainant(s)

Versus

The New India Assurance Co. Ltd - Opp.Party(s)

P.K.Mishra , B.B.Pattanik & others

19 Sep 2022

ORDER

PRESIDENT, DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, SAMBALPUR

                             CONSUMER COMPLAINT NO. 06/2021

 

M/S SBM Nirman Construction Pvt. Ltd.,

At- Govindtola, PO/Ps- Dhanupali, Dist- Sambalpur.

Represented through Its Managing Director

Sunil Kumar Mohapatra,

Aged about 54 years, S/o- Late Duryodhan Mohanty,

R/O- Gobindtola, Po/Ps- Dhanupali

Dist- Sambalpur.                                                           ...………..Complainant

                                                Versus

 

The New India Assurance Co. Ltd.,

Cuttack District Branch(550401), infront of Arunadaya Market,

Link Road, Cuttack-753012. Represented through the

Senior Branch Manager, The The New India Assurance Co. Ltd.

At/Po-Budharaja, Ps- Ainthapali, Dist- Sambalpur.          …………...Opp.Party

Counsels:-

1. For the Complainant                   :-         Sri. P.K.Mishra, Advocate & Associates
2. For the O.P.s                                 :-         Sri. B.K.Purohit, Advocate

 

Date of Filing:18.01.2021,Date of Hearing :10.08.2022, Date of Judgement : 19.09.2022

  Presented by Dr. Ramakanta Satapathy, PRESIDENT,

1. The case of the Complainant is that the Complainant is a construction company and for construction work purchased a Sany SY220C-9 Hydraulic Excavator, M/c Sl. No. 19SEY022064961 from New Age Techsol, Bhubaneswar under hypothecation with H.D.F.C Bank ltd. The Excavator insured under contactor’s plant and Machinery Insurance Policy on 07.02.2019 with the O.P. having policy No. 55040144186500000066. The insurance was for the period 08.02.2019 to 07.02.2020. The O.P. issued policy bond and assured to cover the probable factors like earthquake, STFI cover etc. but no separate paper has been issued.

The Complainant while executing work of the Executive Engineer (R&B) Division, Jharsuguda vide Agreement No. 464 P1 of 2018-19 for the period 19.01.2019 to 18.03.2020 on 01.09.2019 at Patrapali, Kulabira worksite due to excessive torrential rain, rain water rushed to the site and slowly submerging rain muddy water driver tried his best to save the machine but could not save and ultimately left the machine and informed the O.P.

Being informed Manoj Hota, Surveyor and loss assessor of the O.P. on 02.09.2019 verified and saw that the machine partially submerged inside the muddy water and reported the loss. As asked duly filed up and signed claim form was submitted in 13.09.2019, on 13.09.2019 submitted estimate. The O.P. conducted final survey on 15.09.2019 and joint inspection on 16.09.2019. The O.P. assured to finalize the claim, only if, any one of the options given below is accepted.

1. Either to replace the damaged engine by a brand new fresh engine which would cost Rs. 19.70 lakhs +Rs.70,000/- fitting changes.
2. To replace the damaged engine by recon engine (Standby engine got assembled with replacement of new good parts into it) which costs Rs. 14.70 lakhs+Rs. 70,000/- fitting charges.
3. To repair  the machine with new selective spare parts which have been short listed and suggested by Mr. Singh the final surveyor in his mail dated 27.10.2019 at price Rs. 13.58 lakhs+1.5lakhs assembling and fitting charges.

It was expected that the machine will run 30,000 hours in ten years and the Complainant preferred the ‘b’ option, communicated the option to insurer on 11.11.2019.

On 13.11.2019 the O.P. insurance company informed that the liability as well as financial assessment of the loss can be ascertained after receiving the technical report of the surveyor. The Complainant waited for surveyor report. The Complainant with the knowledge of O.P. for replacement of the engine spent Rs. 14,69,347/- vide invoice No.SANY-19-20/1541 dated 23.11.2019 although got delivery challan on 10.11.2019. Each and every step was taken with the consultation of surveyor and experts opinion.

On 24.02.2020 the surveyor made a querry to the dealer that how the machine was shifted from accident side, about the difference of 1.73 hours in the hour meter reading, regarding precaution to minimize the loss and regarding the reason while the machine was cleaned and engine started before final survery. The dealer sent letter dated 24.02.2020 and intimated the final Surveyor Mr. H.P. Singh.

On 14.03.2020 the final surveyor submitted his report and categorically mentioned that engine oil and machine was drained and replaced to minimize the loss of insured machine.

The Complainant received letter No. 550401/CLAIM/2020/18596 dated 14.07.2020, the no CLAIM letter with reason that it is coming under ‘O’ and ‘E’ clause of the exception of the policy. ‘E’ clause is not applicable in his case. ‘O’ clause deals about “loss or damage directly or indirectly cause by or arising out of or aggravates by the willful act or negligence of the insured or his representative.” The repudiation of claim is arbitrary, illegal, unilateral and without any basis. The reports of the surveyors and experts were not supplied after repeated request also. The O.P. is guiltily of unfair trade practice by not furnishing the documents. The surveyor not submitted his report in time.

Being aggrieved with the letter of repudiation, the complainant preferred the complaint.

2. The O.P. insurance company after appearance submitted its version and submitted that  the present case is not a consumer dispute and there is no any deficiency on the part of the O.P. The O.P. admitted the policy and insured amount of Rs. 53.00lakhs, policy excess Rs. 53,000/- due to Act of God (AOG) perils, Rs. 53,000/- perils other than section 20% of the claim subject to minimum of Rs. 25,000/-. The other coverages are third party liability express freight (except Air freight) etc.

The O.P. referred the exceptions clauses (e), (o) and (m) to (q).

The O.P. admitted the intimation of the insured, damaged to the excavator on 01.09.2019, preliminary survey on 02.09.2019, reported the matter on 24.09.2019 to the insurer.

The final surveyor assessed the loss on two basis:

1. Assessment of the Recon Engine which was Rs. 15,51,947.00 and after deduction of Rs. 4,45,729.401 towards policy excess the amount came to Rs. 11,06,217.00 as present market price is Rs. 57.00lakhs but declared value is Rs.53.00lakhs due to underinsurance the final claim was assessed Rs. 10,28,588.29P.
2. Assessment of loss on repairing basis was Rs. 16,84,566/- for underinsurance the final assessment is Rs. 11,43,648.21P. After deducting policy excess Rs. 4,45,729/- salvage Rs. 8,837.40P. Subject to exception clauses ‘O’ and ‘E’.

The O.P. on receipt of survey report repudiated the claim on the following grounds:

1. Replacement of Engine oil of the machine was carried out before the arrival of the surveyor for inspection and the long book and service engineer report shows that the damaged engine ran for another 1.73 hours after the accident prior to service Engineer’s inspection and it is the negligence of insured.
2. The claim is coming under exceptions of the policy ‘O’ and ‘E’.

The no claim/repudiation is legal and justified.

3. Perused the documents filed by both the parties and the following issues are framed:
103606587.  

1. Whether this Complaint is not a Consumer dispute?
2. Whether the O.P. followed due procedure for settlement of claim?
3. What relief the Complainant is entitled to get?

Issue No. 1 Whether this Complaint is not a Consumer dispute?

Both the parties to the complaint admitted the execution of policy No. 55040144186500000066 and period of insurance as 08.02.2019 to 07.02.2020. The Complainant has paid Rs. 17,830/- to-wards premium Rs. 3210/- GST total Rs. 21,040/- to the O.P. Both the parties have entered in to contract of insurance with conditions and limitations. Accordingly, the complaint is a consumer dispute.

Issue No.2 Whether the O.P. followed due procedure for settlement of claim?

1. In order to protect the interest of the policy holder the Insurance Regulatory Authority of India prescribed the claim procedures. Appointment of Surveyor, collection of documents, submission of interim report and submission of final report and submission of final report are to be made by the surveyor within the time prescribed under the regulations. In the present complaint the details of the claim are follows date wise.

01.09.2019- 4P.M.- Date and time of loss.

02.09.2019- Date of survey.

13.09.2019- Claim submitted by the Complainant.

15.09.2019 & final survey conducted.

24.09.2019-Preliminary survey report.

14.03.2020-Final Survey report submitted.

14.07.2020- Repudiated the claim.

The I.R.D.A. Regulation 2017 in Regulation 15 clearly provide the claim procedures. In the preliminary survey report dated 24.09.2019 Er. Manoj Hota submitted that the machine while in operation in digging the soil engaged for road construction work suddenly due to heavy rain and subsequently flow of heavy rain and subsequent flow of heavy water near the operation side partially submerged inside the muddy water and the damage is consistent with reported cause/nature of loss. As per the regulation with 90 days the surveyor has to submit his final report. On 15.09.2019 and 16.09.2019 the final survey conducted, report submitted on 14.03.2020. Neither the O.P. submitted the date of report submission appointment of surveyor not it is pressed by the complainant. Date of final survey and date of report submission if both dates are taken, within 90 days the final report has not been submitted, which is a clear violation of the IRDA Regulation.

The Complainant on the quarry of the surveyor vide mail dated 24.02.2020 clearly narrated the fact of difference of HMR reading. When the machine was slowly submerging in to the rain muddy water the driver tried his best to save the machine from being drowned. The driver tried to save it by running the machine for more than 1.7 hours but could not save then left the machine and informed the customer. Second time HMR reading was not taken. Further in the final report the surveyor mentioned the explanation given by Complainant about draining of engine oil of the machine. The reason of drainage is to minise the loss to the machine. The surveyor also mentioned that in the drained oil some pieces of foreign materials are found. From the above observation of the surveyor it is very clear that the driver has taken due care and caution to save the machine but failed.

2. The insured opted for replacement of the damaged engine by a Recon Engine and on the basis of repairing the damages are to be assessed by the surveyor. The surveyor assessed the liability on repairing basis Rs. 11,43,684.21P.
3. From the delivery challan dated 10.11.2019 of New Age Techsol it reveals that the engine cost is Rs. 14,69,347/-. From time to time the Complainant with consultation with the surveyor opted for repairing basis assessment and replaced the machine with cost of Rs. 14,69,347/-. After that the O.P. repudiated the claim when the O.P. agreed to assess the loss. On repairing basis and when the machine is repaired, after long gap repudiated the claim, which proves the harassing attitude of the O.P. which amounts to deficiency in service.
4. The O.P. repudiated the claim taking the plea of ‘O’ and ‘E’clause of the exception policy. As the machine was engaged in road construction work at Patrapali on Kulabira road the exception clause ‘E’ is not applicable as it is admitted by the surveyor. Further as discussed supra the driver of the machine tried his best to save the machine from mud water but failed. So directly or indirectly the damage is due to  the driver can not be said. There is no negligence on the part of the representative of the Complainant and accordingly the ‘O’ clause of the exception is not applicable in this case.
5. From the aforesaid facts and circumstances conclusion can be drawn that the repudiation letter No. 550401/CLAIM/2020 1856 dated 14.07.2020 of the O.P. is not proper and the insurance authority not applied their mind in consonance with the report of the final surveyor. The decision of repudiation by the O.P. is arbitrary. The O.P. has delayed the decision making process, caused delay in submission of survey report as a result, the complainant is having a genuine claim debarred to get the claim, invested to-wards replacement of engine due to latches of the O.P. Deficiency in service is proved against the O.P.
6. The O.P. cited Khatema fibres Ltd. VS. New India Assurance Co. Ltd. & Others case of Hon’le Supreme Court of India, certainly concerned with an allegation of deficiency in service and can not make anatomy of forensic examination. The surveyor report analyses itself the procedures adopted what arbitrariness is made in the survey report and settlement of claim.

In the other hand the complainant cited L.I.C. of India Vs Bhupender Pal & others case decided by Hon’ble Himachal Pradesh SCDRC which is relating to Regulation 3 of the IRDA. In the present case it is not applicable.

The issue is answered against the O.P.

Issue No.3 What relief the Complainant is entitled to get?

In consultation with the surveyor the complainant has replaced the engine for Rs. 14,69,347/- although the surveyor assessed Rs. 11,43,684.21P. on replacement basis. The Sum insured in the machine is Rs. 53.00lakhs. The Complainant is entitled for the damage from the O.P. and accordingly it is ordered:

ORDER

          The Complaint is allowed on contest against the O.P. The O.P. is liable to pay Rs. 14,69,347/- with 7 % interest P.A. w.e.f. 01.09.2019 to the Complainant within one month of this order. Further the O.P. is liable to pay Rs. 70,000/- fitting charges, and compensation of Rs. 2.00lakhs. In case of non payment the entire amount will carry 12% interest P.A. till realisation. The O.P. is to pay litigation cost of Rs. 10,000/- to the complainant.

          Order pronounced in open court on this 19^th September 2022.

          Supply free copies to the parties.