BEFORE THE DAKSHINA KANNADA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT MANGALORE

Dated this the 30^th September 2009

COMPLAINT NO.38/2009

(Admitted on 16.02.2009)

PRESENT:              1. Smt. Asha Shetty, B.A. L.L.B., President                                                                                                                                                                                                                                                                                                                                   

                                                                                2. Smt. Sulochana V. Rao, Member

                                                                                3. Sri. K. Ramachandra, Member

BETWEEN:

Sri.Suresh Suvarna,

So. Rama Puthran,

Aged about 65 years,

RA.Suvarna Kripa,

Near Alake Bridge,

Mangalore.                              …….. COMPLAINANT

(Advocate for the Complainant: Sri.S.K.Ullal)

          VERSUS

United India Assurance Co. Ltd.,

Divisional Office,

Ram Bhavan Complex,

Post Box No.705, Kodialbail,

Mangalore  575 003,

Represented by Divisional Manager.…. OPPOSITE PARTY

(Advocate for the Opposite Party: Sri.M.S. Jain)

                                      ***************

ORDER DELIVERED BY PRESIDENT SMT. ASHA SHETTY:

1.       The facts of the complaint in brief are as follows:

This complaint is filed under Section 12 of the Consumer Protection Act alleging deficiency in service against the Opposite Party claiming certain reliefs. 

The Complainant is the absolute and registered owner of the mechanized fishing boat by name “Suvarna Kiran” bearing registration Mark-F-MNG 446.  The aforesaid vessel was insured with the Opposite Party as per policy No.070802/22/07/01/00000013 valid from 19.10.2007 to 18.10.2008 for a sum of Rs.6,00,000/-.  It is submitted that the above said boat was purchased for eking out his livelihood.

On 10.3.2008, at about 9 p.m., when the Complainant’s vessel was proceeding in Mangalore Sea Bar met with an accident and suffered extensive damage.  Thereafter the said boat was hauled up for repair at Mangalore, who had estimated the cost of repair at Rs.6,24,160/- excluding the cost of spare parts of the engine.  The spare parts had estimated for repairing the engine at Rs.47,535/- in total Rs.6,71,695/- was valued.  It is submitted that since the cost of the repair is more than the value of the boat, it amounts to constructive total loss.  Considering the constructive total loss, the Complainant filed a claim before the Opposite Party but the Opposite Party not agreed with constructive total loss and the Opposite Party offered Rs.1,95,000/-.  Since the Complainant is a physically handicapped person, apart from being old and ailing, he had borrowed the money from Canara Bank for the purpose of the said boat.  In the event of non-payment of the amount due to the bank he would have to pay overdue interest therefore under the compelling circumstances the Complainant had no other option received the sum of Rs.1,95,000/- and thereafter issued a letter by protesting the above sum. 

It is contended that the amount received by the Complainant is insufficient to get the damaged boat repaired and make it seaworthy.  The said boat still remains unrepaired in the said boat yard.  Even after sending the letter under protest the Opposite Party not acted so as to release the amount.  Hence the Complainant issued a legal notice and contended that the amount paid by the Opposite Party is not justified which amounts to deficiency in service hence the above complaint is filed before this Hon'ble Forum under Section 12 of the Consumer Protection Act 1986 (herein after referred to as ‘the Act’) seeking direction from this Hon'ble Forum to the Opposite Party to pay Rs.4,05,000/- being the balance amount along with interest at 18% p.a., from 10.3.2008 till 20.1.2009 and further Rs.75,000/- claimed as damages.

2.       Version notice served to the Opposite Party by RPAD. 

Opposite Party appeared through their counsel filed version and admitted that the above said vessel was insured with the Opposite Party.  It is stated that on receipt of the intimation the Opposite Party deputed licensed Marine Surveyor to investigate the matter and the Surveyor visited on 11.3.2008 and discussed with the insured, the insured boat was hauled up on 13.3.2008 and the damage in the mishap found that the hull had broken up at various locations and all the strengthening members like frames, beams and stringers were loosened and machinery was salvaged.  The surveyor after complying with all necessary formalities and after inspection forwarded his report on 11.4.2008 with an observation that “since the estimated repair cost exceeds the sum insured, the subject case should be treated as “Constructive Total Loss” and the net salvage assessed at Rs.3,95,000/-.  The surveyor in his survey has further observed that the recovered items like engine, gear box, power take off were found to be water logged and external parts like fuel pump, water pump, pipes etc. were found rusted/damaged due to sea water entry.  However, to reinstate the engine and gear box, overhauling with replacement of spare parts the surveyor has estimated the salvage realizable as 80,000/-, Rs.1,10,000/- and Rs.3,95,000/-.  And he has further observed to reinstate the engine and gear box, overhauling with replacement of few internal spares he assessed at Rs.1,90,000/- to rebuild the vessel.  On receipt of the above report by considering the above after deducting Rs.10,000/- as excess Rs.1,95,000/- offered for settling the claim.  The Complainant received the above said amount towards full and final settlement of his claim on the basis of constructive total loss, after considering the salvage value for Rs.3,95,000/-.  The Complainant having voluntarily agreed to settle the claim and having received Rs.1,95,000/- and filed a false case in order to make wrongful gain there is no deficiency in service as alleged in the complaint and contended that the settlement offered by the Opposite Party is just and valid and prayed for dismissal of the complaint.

3.       In view of the above said facts, the points now that arise for our consideration in this case are as under:

1. Whether the Complainant proves that the Opposite Party has committed deficiency in service?

2. If so, whether the Complainant is entitled for the reliefs claimed?

3. What order?

4.         In support of the complaint, Sri.Suresh Suvarna (CW1) filed affidavit reiterating what has been stated in the complaint and answered the interrogatories served on him.   Ex C1 to C11 were marked for the Complainant as listed in the annexure.   One CAP. Prakash R Rao (RW1), Licenced Marine Surveyor and Consultant (Steller Marine Technical Services) filed counter affidavit and answered the interrogatories served on him.  Ex R1 to R11 were marked for the Opposite Party as listed in the annexure.   Both parties produced notes of arguments along with citations.

          We have considered the notes/oral arguments submitted by the learned counsels and also considered the materials that was placed before the Hon'ble Forum and answer the points are as follows:                         

          Point No.(i): Affirmative.

          Point No.(ii) & (iii): As per the final order.    

Reasons

5.  Point No. (i) to (iii):

In the present case, the facts which are not in dispute is that the Complainant is the registered owner of a mechanized fishing boat by name ‘Suvarna Kiran’ bearing Registration Mark F-MNG 446.  The aforesaid vessel was insured with the Opposite Party for a sum of Rs.6,00,000/- as per policy No.070802/22/07/01/00000013 valid from 19.10.2007 to 18.7.2008 for a sum of Rs.6.00 lakhs (as per Ex R1).

Now the point in dispute between the parties before the FORA is that as according to the Complainant when the Hull of the Complainant was proceeding in Mangalore Sea Bar met with an accident and suffered extensive damage and the same was saved and hauled up for repair in the boat yard Mangalore, who had estimated the cost of repair for Rs.6,24,160/- excluding the cost of the spare parts of the engine. The engine repairer had estimated the cost of spare parts at Rs.47,535/-.  The total estimate cost of the repair of the Complainant’s boat was of Rs.6,71,695/- apart from the cost of the salvage.  It is contended that the Opposite Party Company deputed a surveyor and the surveyor considered that it is a total constructive loss.  Inspite of that the Opposite Party company by ignoring the above said report offered Rs.1,95,000/- and the same has been received by the Complainant under compelled circumstances and thereafter protested the claim and came up with this complaint stating that the settlement offered by the Opposite Party company is not correct and the boat is not repairable and it is lying in the yard and he suffered constructive total loss. 

The Opposite Party on the other hand contended that it is not a constructive total loss, on receipt of survey and loss assessment report dated 11.4.2008 after complying with the formalities has processed the claim after discussion with the Complainant.  The Complainant considered the value of the salvage as valued by the surveyor at Rs.3,95,000/- and has voluntarily agreed to receive Rs.1,95,000/- in full and final settlement of his claim, by voluntarily addressing a letter dated 2.9.2008, in pursuance of the said letter the Opposite Party had disbursed a sum of Rs.1,95,000./- in favour of the Complainant and contended that there is no deficiency. 

In the given case, the evidence of the parties as well as the documents produced by the parties in particularly the survey report dated 11.4.2008, (i.e., Ex R3) wherein the surveyor inspected and noted the vessel that the same was found broken into pieces.  The damage caused to the vessel was noted by the surveyor at page 5 para 6 of the report as follows:-

1. The site of beaching was about 0.5 Km from the coast line.
2. The wooden hull at the stem was broken and water entering the forward portion.
3. The vessel was listed heavily to port side and the gunwale touching the water lever near the wheelhouse.
4. The engine room was flooded and the engine and its accessories submerged in water.
5. The maximum depth of water was about 3 feet.
6. The FRP lamination peeled off at various locations.

The surveyor further stated in page No.7 point No.8.1, 6^th point, wherein he has stated that evidence of water ingress into engine.  Further in 7^th page para 8.5 under the sub-head salvage attempts.  The surveyor observed that “the vessel sustained damages, resulting in water ingress into the boat.  The water ingress can be dealt with only by dewatering hand pump.  If the water ingress is high the hand pump cannot cope.  However prior reaching coast, the engine stopped due to flooding.  After engine stops, manual efforts would be futile.  Hence, crew abandoned the ship after tying ropes to the bollards in the event of vessel being towed to a safe place.  Flooded boats are not normally towed as both tug and tow can sink.  But still, the insured took the risk and got the vessel towed to a safe place”.  The above observation made by the surveyor shows that the assured took best effort to minimize the loss is to be appreciated.  The surveyor further observed that the Complainant managed to salvage the machinery i.e., engine, gear box, the propeller and the winch.  Further in page No.9 sub para 9 under the head “loss consideration” is stated that taking into account marine (sea and current), weather, structural factors, the mishap emerges as accidental and fortuitous in nature.  The Hull had broken up at various locations and all the strengthening members like frames, beams and stringers were loosened and machinery (engine, gear box, propeller and winch salvaged and after considering the above he had come to the conclusion with a bold letter by stating that the loss is considered as “constructive total loss”.  When the surveyor considered the loss in his report that it is a constructive total loss and also the evidence of the Complainant and the estimate issued by the repairer shows that the estimated repair cost exceeds the sum insured and the subject case should be treated as constructive total loss and further the photographs pertaining to the vessel attached to the survey report i.e., 13 in number shows the different view of the vessel/hull.  By looking into the photographs we can believe that the vessel showing damaged stem, hull planks, deck planks and gunwale.  The damage is extensive damage.  The closer view of the damaged port clearly reveals that the hull planks and peeled off FRP laminations and the front view of the damaged gunwale, deck planks and frames became two pieces and by looking into bare eyes one can make out that the vessel cannot be reconditioned and the observation made by the surveyor appears to be a constructive total loss is acceptable. 

No doubt in the given case, the insured accepted Rs.1,95,000/- but it is undisputed fact that the Complainant availed bank loan for the above said vessel.  If at all the Complainant is not accepting the above said amount definitely the Complainant is burdened with the penal interest and other interest.  Under such compelled circumstances, even if the assured receives the money, the Opposite Party Company cannot take advantages of the situation by stating that the claim of the Complainant was settled by way of full and final settlement is not acceptable.  What we have to consider is that the state of mind of the insured after the vessel/hull met with an accident, we can say the weak states of the assured who has lost his vessel is one sided and the recovery of the loan amount by the financial institutions is in another side.  Under such circumstances, the assured may not be in state of mind to decide the amount paid by the Opposite Party company is justifiable or not.  In a natural course if the Complainant/ assured does not accept the amount whatever offered by the Opposite Party Company at the moment, the more sufferer will be the assured because the loan taken by him will not stop there itself.  Under such circumstances, in our opinion it is not correct to say that just because the Complainant received Rs.1,95,000/- in this case the Complainant is estopped from filing complaint.  The genuine grievances of the Complainant/assured is to be considered first.  Just because under compelled circumstances, the amount is received the same cannot be taken advantage by the Opposite Party Company in a case of total loss of the vessel/hull.  The defence taken by the Opposite Party Company in this aspect is hereby overruled and the complaint filed by the Complainant is maintainable. 

Apart from the above issue in the given case, we have specifically noted that the surveyor appointed in the above claim submitted the report and specifically stated that the loss considered as constructive total loss and later in page No.10 turn round and said the net charges to rebuilt the boat is of Rs.1,90,000/- is really a strange statement given by the surveyor in this case.  Because in page No.11 of the survey report the salvage calculated Rs.80,000/- towards the hull and accessories and the salvage value of engine, gear box at Rs.1,10,000/- so the total value of salvage realizable comes to Rs.1,90,000/-.  Nevertheless the surveyor considered the net salvage realizable is Rs.3,95,000/-.  We are really surprise to note this point because there is no explanation regarding the net salvage realizable and what are included in net salvage is not forthcoming in his report.  But in his oral evidence the surveyor enumerated seven items which is not mentioned in the report.  But as per his report only the engine gear box etc. were salvages but he admits that all these are rusted and damaged due to the entry of the sea water.  And further there is no reason or explanation is forwarded by the surveyor how he arrived the figure of Rs.1,90,000/- net charge for rebuilding the vessel as against the amount of Rs.7,09,106.20 as assessed by the repairer.  The surveyor appointed in this case is one sided and which cannot be accepted that the gross amount payable is Rs.2,05,000/- as per his report.  In a case where the surveyor is deputed, it becomes the duty of the surveyor being a competent person assigned to do so, to study the veracity of the statements given by the assured/other persons and has to make the recommendations to the underwriters with substantial technical backings and after analyzing the various factors he is expected to ascertain whether the cause of loss alleged by the assured is probable under the given circumstances and also whether the proximate cause of the loss alleged by the assured is an insured peril under the policy and if so, were there any lapses on the part of the assured, likely to have prejudiced the liability of the underwriters and if so what were the nature of such lapses etc. shall be ascertained and taken photograph of the damages and consider the estimate and discuss with the repairer and submit itemwise remarks to the underwriters.  But in the given case the surveyor is not consistent in his report but the photographs produced by the surveyor and the evidence filed by the Complainant reveals that the vessel/hull is not repairable and it is a total constructive loss.

The Opposite Party raised the another contention that the Complainant has not examined boat builder who has drawn the estimate.  In the given case, the examining boat builder does not arise because the surveyor has already considered in his report that the hull was met with an accident and considered as constructive total loss. It is the case of the Opposite Party that it is not a constructive total loss.  Under such circumstances, the Opposite Party Company should have summoned the repairer who has issued the estimate and considered by the surveyor in order to show that the hull can be repaired.  In a case of accident the primary responsibility is lies on the insurer to repair the hull.  In case of failure to take that responsibility the Complainant will get the responsibility to repair the hull.  If the estimate given by the repairer is not correct or the hull can be repaired, the Opposite Party Company definitely should have proved the above aspect by examining independent witness i.e., the independent authorized repairer of the marine hull before this FORA in order to prove their case.

 In view of the above discussions, it is proved that till this date the hull/vessel was not repaired from the date of accident and if at all the hull can be repaired the Opposite Party company could have taken the responsibility to repair the hull as per their valuation arrived by them.  No such attempt was made by the Opposite Party Company.  Simply throwing the burden on the Complainant/insured by considering the weak status of contracting party who is lost the hull due to accident.  In this particular case, the Opposite Party has miserably failed to prove that the vessel is repairable.  In the absence of any evidence to that effect we consider that the vessel/hull is not in repairable condition and hence the hull is considered as constructive total loss and the Opposite Party company i.e., United India Assurance Company Limited is liable to pay Rs.6,00,000/- by deducting the amount paid and the salvage amount to the Complainant along with interest at 10% p.a. from the date of accident till the date of payment and also pay Rs.1,000/- as cost of the proceedings.  Payment shall be made within 30 days from the date of this order.

6.       In the result, we pass the following:                  

ORDER

The complaint is allowed. Opposite Party company i.e., United India Assurance Company Limited is hereby directed to pay Rs.6,00,000/- (Rupees six lakhs only) by deducting the salvage amount and the amount already paid to the Complainant along with interest at 10% p.a. from the date of accident till the date of payment and also pay Rs.1,000/- (Rupees one thousand only) as cost of the proceedings.  Payment shall be made within 30 days from the date of this order.

Copy of this order as per statutory requirements, be forward to the parties free of costs and file shall be consigned to record room.

(Dictated to the Stenographer typed by her, revised and pronounced in the open court on this the 30^th day of September 2009.)

PRESIDENT

                                 (SMT. ASHA SHETTY)

         MEMBER                                        MEMBER

(SMT.SULOCHANA V.RAO)          (SRI. K.RAMACHANDRA)

APPENDIX

Witnesses examined on behalf of the Complainant:

CW1 – Sri.Suresh Suvarna – Complainant.

Documents marked on behalf of the Complainant:

Ex C1 – 28.06.2006: Xerox copy of the registration certificate.

Ex C2 –                  : Copy of the Insurance Policy.

Ex C3 – 17.03.2008: Copy of the statement given by the tindel.

Ex C4 – 11.03.2008: Copy of the complaint given to Asst. Director of Fisheries.

Ex C5 – 11.03.2008: Copy of the complaint given to the Opposite Party.

Ex C6 – 11.03.2008: Copy of the complaint given to the Port Officer.

Ex C7 – 04.09.2008: Copy of the letter issued to the Opposite Party.

Ex C8 – 20.03.2008: Copy of quotation issued by Mangalore Marine Spares.

Ex C9 – 20.03.2008: Copy of estimate of damage issued by Nagaraj Acharya.

Ex C10 – 26.11.2008: Copy of the legal notice.

Ex C11 –                 : Postal acknowledgement.

Witnesses examined on behalf of the Opposite Party:

RW1 – CAP. Prakash R Rao, Licenced Marine Surveyor and Consultant (Steller Marine Technical Services)

Documents marked on behalf of the Opposite Party:       

Ex R1 –               : Policy No.070802/22/7/01/00000013 – Hull and Machinery – Period of Insurance from 10.10.2007 to 18.10.2008 with terms and conditions.

Ex R2 – 11.03.2008: Letter of the Complainant to the Opposite Party intimating the accident.

Ex R3 – 11.04.2008: Survey and Loss Assessment Report by M/s. Steller Marine Technical Services (Marine Surveyors and Consultants).

Ex R4 – 02.09.2008: Letter addressed by the Complainant to the Opposite Party agreeing to receive a sum of Rs.1,95,000/- in full and final settlement of claim.

Ex R5 – 02.09.2008: Disbursement voucher in full discharge of claim upon Insurance Company under Insurance policy.

Ex R6 – 10.09.2008: Postal cover despatched by the Complainant.

Ex R7 – 06.10.2008: Reply by the Opposite Party to the letter of the Complainant dated 4.9.2008.

Ex R8 – 14.02.2009: Reply notice issued by the Opposite Party with postal acknowledgement.

Ex R9 – 20.03.2008: Quotation by M/s.Mangalore Marine Spares.

Ex R10 – 20.03.2008: Estimate by Nagaraja Acharya, Boat Builder Labour Contractor.

Ex R11 – 17.03.2008: Statement of Tindel Sri.Jagadish Salian.

Dated:30.09.2009                            PRESIDENT