PER SHRI. S.S. PATIL - HON’BLE MEMBER :
1)This is the complaint regarding the deficiency in service on the part of Opposite Party as it partly allowed and partly rejected the insurance claim of the Complainant without any plausible reason. The facts of the complaint as stated by the Complainant are that, the Complainant is a partnership firm carrying on the business of running lodging hotel at Kurla. The Complainant has taken a Standard Fire and Special Perils Policy bearing No.111900/11/04/02149 valid from 17/03/2005 to 16/03/2006. The insured amount being Rs.5,70,000/-.
2) On 26/07/2005, there was a deluge of heavy rains in the Mumbai city. Particularly the suburbs of the city were mostly affected causing complete water lagging condition. The water level at Complainant’s hotel was about 8’ from the ground level. This caused tremendous damage to the Complainant’s hotel.
3) The Complainant has further abruptly stated that it filed a claim of Rs.5,48,000/- for the damage caused to his hotel, with the Opposite Party. The Complainant also furnished the required documents to the Opposite Party. However, the Opposite Party by its letter dtd.23/03/07 communicated to the Complainant that, as per assessment of the surveyor, only a claim of Rs.3,600/- was approved and rest of the claim is rejected.
4) Aggrieved by the said offer, the Complainant complained to the grievance cell of the Opposite Party. In the letter dtd.17/04/07, the Opposite Party has given the reason that the surveyor had assessed the loss to the tune of Rs.1,91,900/-. However, the value of the property was assessed as Rs.80,00,000/- but the sum insured of this policy was only Rs.5,70,000/-. It is a case of under insurance to the extent of Rs.1,78,300/-. Hence, this amount was deducted from the loss assessed i.e. Rs.1,91,900/- by the surveyor. It comes to Rs.13,600/- only. As per the excess clause of policy again a sum of Rs.10,000/- was deducted from the amount of Rs.13,600/-. Therefore, only Rs.3,600/- are payable to the Complainant. Accordingly the above calculations were informed to the Complainant. Therefore, the act of the Opposite Party to deduct Rs.1,78,000/- on account of under insurance clause is not correct.
5) It is the contention of the Complainant that it (Complainant) is the tenant in respect of the property wherein its hotel is situated. Therefore, the valuation by the surveyor is irrelevant. The surveyor has observed in his letter “that the cost of the hotel is Rs.80,00,000/- which is higher than the insured value hence, under insurance clause is applicable.” The Complainant has averred that the surveyor has not adopted any recognized method of valuation but, he has valued the property on the basis of enquiry with the local people. Therefore, application of under insurance clause is illegal and bad in law.
6) The Complainant stated that it is entitled to the amount of Rs.8,60,360/- (as Rs.5,48,000/- as the insurance claim for the losses sustained in the peril and Rs.3,12,300/- being the amount of interest till 20/10/08) with interest @18%. The Complainant has also prayed for the cost of this complaint.
The Complainant has attached the xerox copies of the following documents in support of its complaint policy schedule bearing No.11/900/91/04/02149, letters dtd.22/03/07, 14/04/07, 26/03/07, 17/04/07, 07/05/07, 22/06/07, Letter from Kalra to the Opposite Party, date only 22 is seen on the rubber stamp of the Opposite Party, Letter dtd.23/07/07, dtd. /08/07. (date is missing).
7) The complaint was admitted and notice was served on the Opposite Party. Opposite Party filed its written statement wherein it stated that there is no any deficiency in service on its part. However, it admitted by the Opposite Party that the Complainant was having an insurance policy and it (Complainant) had lodged an insurance claim for the damage due to flood on 26/07/05. Thereupon, the Opposite Party immediately appointed the surveyor and as per the survey report, a claim of Rs.3,600/- was to be paid to the Complainant.
8) The Opposite Party has further submitted that there is an under insurance of 92%. The Opposite Party has further stated that the claim is to be settled according to the terms & conditions of the insurance policy. (However, in this case, the Opposite Party has not filed any terms and conditions of the policy and has not mentioned as to how the claims is under insurance by 92%).
9) The Opposite Party has further denied of the tenancy of the premises.
10) It is further contended by the Opposite Party that the Complainant has failed to satisfy the surveyor by producing documentary evidence in support of his contention. The Opposite Party has further stated that insurance is only a compensation for genuine loss and is not a profit making instrument. Finally the Opposite Party has requested to dismiss the complaint.
11) The Opposite Party has attached xerox copies of the letters dtd.17/04/07, 23/03/07, Survey Report dtd.03/06/06, Letter dtd.24/08/07, 22/06/07, Letter addressed to the Complainant by Opposite Party having no date on this letter, Letter from the Surveyor to the Opposite Party, date –Nil-, Letter dtd.04/08/08. Thereafter the Complainant has filed its affidavit in evidence and written argument wherein, the Complainant has reiterated the facts and raised the points as mentioned in its complaint. The Opposite Party also submitted its written argument wherein it reiterated the facts and points mentioned in the written statement.
12) We heard the Ld.Advocate of the Complainant. The Opposite Party and his Ld.Advocate are absent at the time of oral argument. We perused all the documents filed by both the parties and our observations are as follows.
13) The Complainant had a Standard Fire & Special Perils Policy obtained from the Opposite Party, Policy No.111900/11/04/02149 valid from 17/03/2005 to 16/03/2006. During the validity of this policy, there was a deluge in Mumbai city and adjourning area thereby paralyzing the city for more than a week. During this deluge the lodging premises of the Opposite Party situated at ground floor of Satnam building, L.B.S. Road, Kurla (W), Mumbai, was badly affected causing damage to the contents of the ground floor of the building. However, the Complainant has failed to state as to what items were actually damaged, what was the extent of damage and what was their valuation. The Complainant has only averred in para 4 of the complaint directly that, on account of the damage caused to property of the Complainant he lodged the claim of Rs.5,48,000/-, with the Opposite Party. This averment is not supported by any copy of the claim form or any other document whatsoever in support of this figure. Therefore we minutely scrutinized the survey report in this respect. The survey report states that there was a rain water inside the hotel rooms at ground floor upto the height of 7 ft. from the ground level. The surveyor had immediately visited the place affected i.e. on 28/07/05. It was stated in this report that the walls, doors & other thing in the hotel room were found damaged.
14) The surveyor has quantified the loss as under
Quotation of Furniture
Sr.No. | Particulars | Quantity | Rates | Amount |
1 | Repairs of Double bed | 10 | 3000 | 30,000/- |
2 | Dressing Tables | 10 | 1000 | 10,000/- |
3 | Office Counter Table & Sofa | Job | L.S. | 10,000/- |
4 | Repairs of sofa | Job | L.S. | 5,000/- |
Total: 55,000/- |
Less: Depr. & Salvage 27,500/- |
Net Total: 27,500/- |
Quotation of Electrical Work – Not Covered
Sr.No. | Particulars | Amount |
1 | Repairing rewinding 48” ceiling fans – 5 | 1,200/- |
2 | 2 Motor pump 3 phase 1 HP & Starter & Labour charges | 11,000/- |
3 | Replacement of Switchboard for 10 rooms with materials & labour charges | 12,000/- |
4 |
Tube lights replacement | 6,000/- |
5 | Wall fan Repairing Rewinding | 300/- |
6 | 2 Switch replacement | 500/- |
Total: 25,600/- |
Less: Dep. & Salvage 10,240/- |
Net Total: 15,360/- |
Sr.No. | Particulars | Quantity | Rates | Amount |
1 | Doors replacement with using old frame (only moving door was replaced) | 13 | 7,500 | 97,500/- |
2 | Bathroom toilet doors | 08 | 3,000 | 24,000/- |
3 | Windows | 08 05 | 3,500
6,500 | 28,000/- 32,500/- |
4 | Plastering to walls, inside & outside the building walls | 2000 sq.ft. | 22 pr.ft. | 44,500/- |
5 | Paint to room walls from inside | 40000 sq.ft. | 12 pr.ft. | 48,000/- |
Total : 2,74,000/- |
Less: Depr. & Salvage 1,09,600/- |
Net Total: 1,64,400/- |
Though the above table shows that the Net total loss is Rs.1,64,400/-, the Grand total loss assessed by the surveyor is Rs.1,91,900/-. As per the surveyor, the property being under insured, he has come to the conclusion that, as per his equation the actual loss assessed is only Rs.13,600/-.
Actual Assessed loss Sum insured
i.e.Rs.1,91,900/- x Rs.5,70,000/- = Rs.13,600 Loss assessed
Rs.80,00,000/- Rs.13,600/- minus as per policy excess clause Rs.10,000/- = The amount of Rs.3,600/- is only payable.
15) As per the survey report, the Opposite Party is ready to pay the sum of Rs.3,600/- to the Complainant but the Complainant is not agreed to this and the Complainant has come to this Forum. In this respect the important point is that, the Opposite Party has reduced the claim of the Complainant for ‘under insurance’. However, the Opposite Party has miserably failed to produce the terms and conditions relating to this term ‘under insurance’. In absence of the terms and conditions, the Opposite Party has calculated the loss assessed in Rs.13,600/- in place of Rs.1,91,900/-. Therefore, in our view, the Opposite Party has not explained the term ‘under insurance’. From the averments in the written statement it is seen that as per Opposite Party the value of building is Rs.80,00,000/- but the sum insured is only Rs.5,70,000/-. Therefore, it is under insurance. In absence of the document defining the term “under insurance” the calculations done by the surveyor in this respect is not acceptable. Moreover the surveyor has not given any exact criteria of valuating the insured premises. He has just casually stated that, “on enquiring from the area the undersigned came to know that the cost of the hotel is not less than Rs.80,00,000/-.” Therefore, the valuation of the insured premises, done by the surveyor is casual. It is seen from the averment of the Complainant that its interest in the building is only as a tenant. The Complainant does not own the building. Therefore, the Complainant has insured only that much property i.e. interest which he has in the property. Therefore, in our candid view the point regarding ‘under insurance’ does not hold water.
16) The sum insured is Rs.5,70,000/- and the insured interest of the Complainant in the property is upto Rs.5,70,000/-, and hence, the Complainant is entitled to only upto Rs.5,70,000/- subject to the actual loss assessed.
17) With the above said observations, we also scrutinized the loss assessed by the surveyor. Form the report of the licensed surveyor, it is seen that the damage was caused to the following items.
10 Double beds, 10 Dressing Tables, Office Counter table, Sofa, 5 Fans, 2 Motor Pumps, Switch boards, Table lights, Wall Fans, Electric Switches, Doors without door frames, Toilet, Bathroom doors without door frames, Windows, Plastering to walls and painting.
The surveyor has stated that the expenses towards electrical work are not covered. It is not stated under what terms, these expenses are not covered. The surveyor also deducted salvage amount from these expenses. It is not considered by the surveyor that the expenses shown by him only are the repair expenses. In repair expenses, how the surveyor can deduct the salvage value ? what is the salvage in repair works ? what are the salvage in painting & plastering the walls ? There can be a depreciation but the surveyor/Opposite Party cannot deduct Rs.1,09,600/-, such a huge amount against depreciation. Therefore, as an ordinary prudent persons taking into consideration, the survey report of the licensed surveyor only, we consider the quantum of damage to the property of the Complainant is as follows -
1) Furniture work Quotation .. .. Rs. 55,000/-
Less: depreciation 10% Rs. 5,500/-
----------------
Rs. 49,500/-
=========
2) Electrical wok .. .. .. Rs. 25,600/-
Less: depreciation 10% Rs. 5,560/-
----------------
Rs. 23,040/-
=========
3) Doors, Windows Plastering & Painting Rs.2,74,000/-
Less: depreciation 10% Rs. 5,500/-
----------------
Rs.2,46,600/-
=========
Total Loss Rs.3,19,140/-
18) The surveyor and ultimately, the Opposite Party has also deducted Rs.10,000/- against the policy clause. In this respect also, the Opposite Party has miserably failed to point out, what is this policy clause. It has not produced any terms and conditions governing this deduction. Therefore, this deduction of Rs.10,000/- cannot be justified. The main aim of the insurance is to put the insured in a position where he was before the peril. In other words it is the assurance given by the insurer to reinstate the insured financially in position where he was on 26/07/08 at 3.00 p.m., before the peril ensued.
19) No doubt the passing of the claim is certainly governed by the terms and conditions of the policy. The source of the terms & conditions is the Opposite Party. But the Opposite Party in this case has failed to bring these documents on record. Under such circumstances, we have to adhere to the principles as stated in para 19 above. In view of the above observations, the Complainant is entitled for the reimbursement of his insurance claim of Rs.3,19,140/-. However, the Opposite Party has not applied the mind and sanctioned only a meager amount of Rs.3,600/-, which would have been expended only in removing the dirt’s of stagnated water from the premises.
20) It also appears form the papers that the Opposite Party has not settled the claim till 22/03/07. The peril occurred on 26/07/05. The surveyor has visited on 28/07/05. It was expected from the Opposite Party to settle the claim and take decision within one month of the visit of the surveyor. The surveyor’s report itself is dtd.03/06/06 i.e. after 10 long months of his visit, he prepared his survey report and after more than 19 months, the Opposite Party has conveyed its decision. This certainly indicates that the Opposite Party is not diligent in settling the claim of the Complainant and this is definitely a deficiency in service on the part of Opposite Party.
21) Therefore, in view of the above observations we pass the following order –
O R D E R
i.Complaint No.215/2008 is partly allowed.
ii Opposite Party is directed to reimburse an amount of Rs.3,19,140/- (Rs.Three Lac Nineteen Thousand One
Hundred Forty Only) towards the loss caused to the Complainant’s property during the peril on 26/07/05, with
interest @ 9% p.a. on this amount from 01/09/2005 till its realization.
iii.Opposite Party is also directed to pay Rs.5,000/- (Rs. Five Thousand Only) to the Complainant towards the cost
of this complaint.
iv.Opposite Party is directed to comply with the above order within 30 days from the receipt of this order.
v.Certified copies of this order be furnished to the parties free of cost.
