BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
C.C.No. 74 OF 2010
Between:
M. Rama Krishna Reddy
S/o. M. V. Subba Reddy
Age: 70 years, Contractor
R/o. 7-1-212/A/40,
Plot No. 55, 1st Floor
Shivbagh Colony
Ameerpet, Hyderabad-500 016.
Complainant
A N D
1. United India Insurance Company Ltd.
Divisional Office, Dwaraka Towers
7 Roads, Kadapa-516 001.
2. United India Insurance Company Ltd.
Regional Office, United India Towers
P.B. No. 1020, H.No. 3-5-817 & 818
Basheerbagh, Hyderabad.
Opposite Parties
Counsel for the Complainant M/s. Dr. A. M. Krishna
Counsel for the Opposite Parties M/s Somanchi Venkateswarlu
QUORUM:
SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER
&
SRI THOTA ASHOK KUMAR, HON’BLE MEMBER
MONDAY THE FIFTEENTH DAY OF OCTOBER
TWO THOUSAND TWELVE
Oral Order ( As per R.Lakshminarsimha Rao, Member)
***
1. The complaint is filed against United India Insurance Co., Ltd claiming a sum of `20,20,120/- towards the insurance claim, interest to the tune of `10,90,864/-, compensation of `20 lakhs and a sum of `25,000/- towards costs.
2. The averments of the complaint are that the complainant is a well reputed and leading contractor and carried on many contract works of the government and successfully handed over to various departments. He was awarded a contract work with super structure and sub-structure covering the construction of high level bridge across Taliperu river/vagu at Bhadrachalam- Chandurpatla road in Khammam district. He insured the said work with the opposite party insurance company as per Contractor all risk policy for insurable interests of `5 crores and odd. The said policy was valid for construction during 20.2.2004 to 18.8.2006 and maintenance period was from 20.8.2005 to 19.8.2007. He claimed to have paid the policy amount and obtained insurance policy. On 5.7.2006 due to cyclone floods some material was washed away and the plant and machinery was also submerged. He therefore made the claim to the insurance company. It appointed a surveyor by name Mr. G. Venkata Rama Raju who submitted his final report assessing the damages. He however did not accept the revised estimated loss sustained by the complainant. Though the insured’s plant, machinery and stock suffered in the peril covered by the policy, the opposite party insurance company with a fraudulent motive based on a fabricated report submitted by Mr. P. V. Rajeswara Rao, Chartered Engineer repudiated the claim of the complainant. Aggrieved by the said repudiation he filed the present complaint claiming `51,35,984/-.
3. The claim was resisted by the opposite party insurance company on the premise that it had no knowledge of the manner in which the incident was occurred in early hours on 5.7.2006 due to cyclone and that it had appointed surveyor G.Venkta Rama Raju who visited the site on 15.7.2006 and submitted his report on 3.10.2006 and he recommended total net liability for `7,96,885/-. It is contended that P.V.Rajeswara Rao, Chartered Engineer visited peril site and collected evidence and he had interaction with the complainant and assessed the loss to the tune of `3,98,848/- which falls within policy excess.
4. It is contended that as per the terms and conditions of the insurance policy, the claim not exceeding of `5 lakh has to be borne by the complainant on each claim and the claim lodged by the complainant and assessed by the surveyor is covered by the excess clause. The surveyor G.Venkata Rama Raju erroneously recommended the liability to the extent of `7,96,885/- without perusing the stock register of the material stated to have been damaged. There was no register showing machinery used at work site. Therefore the opposite party appointed P.V.Rajeswara Rao approved valuer who submitted his report on 19.6.2007 assessing the loss at `3,98,848/-. As the claim is within the reach of policy excess, the opposite party repudiated the claim. There was no deficiency in service on the part of the opposite party and prayed for dismissal of the complaint.
5. The complainant has filed his affidavit along with the complaint and the documents, Exs.A1 to A8.
6. On behalf of the opposite parties, the Deputy Manager of the opposite party no.2 has filed his affidavit and the documents ExB1 to B3
7. The points for consideration are ;
1. Whether the opposite parties have rendered deficient service?
2. To what relief?
8. POINT NO.1; The first opposite party issued insurance policy bearing number 0509004404403000000027 in favour of the complainant covering construction of high level bridge across river, Talliperu, near Bhadrachalam, Khammam. The insurance policy would show the risk and the date of commencement of risk etc., for the period from 20.02.2004 till 18.08.2006 . The maintenance period was from 20.08.2005 till 19.08.2007. The complainant reported loss due to flood and the second opposite party-insurance company appointed surveyor, Venkata Rama Raju. The surveyor filed report assessing the loss to the tune of `7,96,885/- and having not satisfied with the assessment of the loss, the second opposite party deputed a charted engineer who also assessed the loss at `3,98,848/- which is quite different from the amount assessed by the previous surveyor. Thus, the occurrence of the flood and consequent damage to the bridge is not disputed. The only dispute between the parties is in regard to the quantum of the amount as to be assessed in terms of damage caused to the bridge.
9. The opposite party-insurance company has felt the assessment of the loss made by the surveyor is arbitrary and on higher side whereas the complainant would contend that the surveyor had not properly assessed the loss and he had not considered the revised estimated loss . Feeling dissatisfied with the assessment of loss made by the surveyor, the opposite party-insurance company deputed P.V Rajeshwer Rao, a chartered engineer who assessed the loss to the tune of Rs. 3,98,848/-. The complainant attributed fraudulent motive to the opposite party-insurance company for not accepting the assessment of the loss made by the Surveyor B.V.Rama Raju and for appointing the Chartered Engineer for reassessment of the damage caused to the bridge.
10. The dispute in regard to the claim has been narrowed down to the assessment of the loss made by the surveyor and the Chartered Engineer. The second opposite party, through its letter dated 26.8.2008 informed the complainant the cause for appointing the Chartered Engineer is failure of the surveyor to adjust the loss properly by omitting a) depreciation, b) adequacy of insurance and applicability of average, c) applicability exclusions viz., service roads etc. and d) the stock position. The opposite parties contended that service roads are not part of the contract price. The complainant claims illegality and violation of terms of the insurance policy on the part of the opposite party whereas the opposite parties would submit that the omissions made by the first surveyor contributed to arbitrary assessment of the damage.
11. There is no dispute of the fact that the first surveyor had omitted to consider the items pointed out by the second opposite party in its letter dated 26.8.2008 addressed to the complainant. The first surveyor has submitted his report covering the work and nature of the work. The second opposite party through its letter dated 11.10.2007 informed the complainant the loss assessed was assessed by the Chartered Engineer at Rs.3,98,848/- and as the claim was within the policy excess, they had repudiated the claim. The complainant acknowledging receipt of the repudiation letter, addressed letter dated 25.10.2007 informing the opposite parties that the Chartered Engineer had not visited the site nor collected any material evidence or had any interaction with him as also that he had not furnished documents to him. He had attributed unfairness to the opposite parties in getting assessment of the loss by the Chartered Engineer, to the tune of `3,98,848/- so as to conveniently get the claim within policy excess for which the opposite parties had given reply on 26.8.2008 giving reasons for deviating from the opinion and assessment made by the first surveyor.
12. The second surveyor has assessed the loss at page no.2 of his report as under:
LOSS ASSESSMENT:
1. Approach Road: Total length of Approach Rod is 400 Metres. Surveyor has assessed Rs.10,00,000/- for the same.
He has given a salvage of R.1,55,000 – and assessed a loss of Rs.8,45,000/-
The given below aspects are to be taken while finalising the loss.
- Depreciation for usage
- Adequacy of the insurance
- As per policy conditions any service Road which has been completed or put to usage is not covered by the policy.
- As per the contract the service roads are not part of the contract price and the contractor have to make them a their cost and risk. (See point 62 Roads:) of Contract. So they are not covered by the policy so the loss for approach roads is not payable.
- Hence, as per policy it is not covered.
However loss assessment is carried out for any other purpose such as legal and not settlement.
Depreciation: Any road which has been put into usage shall have to be depreciated by 50%. Hence after depreciation the value shall be Rs.8,45,000/2 = Rs.4,22,500/-
2. Cement; 282 Bags @ 165/- per bag works out to Rs.48,860/-
3. Steel: Loss of Steel 1045 KGS @ Rs.29/- per Kg Rs. 30,305/- (In the stock statement at page No.9 of the Surveyor, the quantity procured and the quantity issued and consumer being the same, there can be any balance. The surveyor has given 1045 Kgs as stock at the site which is not justifiable)
4. Shuttering Material: Loss of 4660.4 Kgs of shuttering material @ Rs.40/- per kg words out to Rs.1,86,416/-. It has to be depreciated by 50% and hence the loss shall be Rs. 93,203/-.
5. Tie Roads: 52 Nos. @Rs.750/- works out Rs.39,000/-. It has to be depreciated by 50% and hence the loss shall be Rs. 19,500/-.
6. Brackets: 47 Noc. @ 550/- woks out of Rs.25,850/-. It has to be depreciated by 50% and hence the loss shall be Rs.12,925/-
7. Cribs: 2 Nos. @ Rs.3,640/- works out to Rs.7,280/-. It has to be depreciated by 50%
And hence the loss shall be Rs.3,640/-.
8. Metal: The Sureyor assessed a loss of Rs.94,520/- and it remains the same as there is
no depreciation or inadequacy.
9. Sand: 495 Cubic meters @ 175/- per cubic meter works out to Rs.86,625/- and it
remains the same as there is no depreciation or inadequacy.
10. Debris Removal: Cost in the pit P8 has been assessed as 123 Cu.M @ Rs.150/- per
Cu.M.works out to Rs.18,450/-. Since the debris is loose soil rate of Rs. 150/-
Should be taken as Rs.75/- only per Cu.M and hence works out of Rs.9,225/-.
SUMMARY OF LOSS ASSESSMENT
| Activity | Amount in Rs. |
| Cement | 48860 |
| Steel | 30345 |
| Shuttering Material | 93208 |
| Tie Rods | 19500 |
| Brackets | 12925 |
| Cribs | 3640 |
| Metal | 94520 |
| Sand | 86625 |
| Debris Removal | 9225 |
| Total | 398848 |
13. As against the assessment of the loss made by the second surveyor the complainant though different from the amount arrived at by the first surveyor fell back on his report to claim the amount assessed as the amount assessed by the second surveyor would completely bring his claim within the ambit of policy excess whereof no amount is payable by the opposite parties. The first surveyor has assessed the loss under the various heads as the second surveyor did and the material portion of his report reads as under:
LOSS ASSESMENT:
1. Approach Road/ Service Road/ Divestion
The service/Approach road about 245 m length completely washed away due to floods and had to be relaid.
The measurements 245 m x 12 / 8 x 1.o m = 2450m3
0.4 m boulders = 0.3 mts 40 m.m. metal = 0.3 m morram with proper consolidation
Cost of 2450 m3 road laying cost @ Rs. 250/- per m3 = Rs. 6,12,500.00
155m length road partially damaged for which repairs
With materials required considered at Rs. 1500 per BM = Rs. 2,32,500.00
--------------------
Rs. 8,45,000.00
2. Cement284 bags @ Rs. 165/- per bag
3. Steel 10 mm 184 Kgs
Steel 12 mm 286 Kgs
Steel 6 mm 565 Kgs
------
1045 Kgs
--------
1045 Kgs of steel in the form of out rods
And bending rods costing @ Rs. 28.00 per Kg Rs. 30,305.00
3. Shuttering materials
Size 1.22 m x 1.00 m = 28 = 1769.0 Kgs
Size 1.22 m x 0.90 m = 32 = 1756.8 Kgs
Size 1.22 m x 0.60 m = 31 = 1134 Kgs
-------
4660.4 Kgs
--------
4660.4 Kgs of shuttering sheets costing
@Rs. 40\- [er Kg = 1,86,416.00
Tie rods 52 No.s
Costing each Rs.750/- = Rs. 39,000.00
Brackets 47 Nos.
Costing each Rs.550/- = Rs. 25,850.00
CRIBS 2 Nos.
Costing @
Rs. 3,640/- = Rs. 7,280.00
------------
Rs. 2, 58,546.00
Less 30% depreciation Rs. 77,563.80
---------------
Rs. 1, 80,882.20
---------------
Since the under insurance clause is applicable the proportionate liability
1, 80,982.20
= --------------- x 15, 00,000 = Rs. 1, 75,105.00
15, 50,171.00
Rounded to Rs. 1, 75,125.00
5. Metal
20 MM 96 m3 @ Rs. 630 per m3
12 MM 74 m3 @ Rs. 460 per m3
6. Sand
495 m3 sand @ Rs. 175/- per m3
Note: Though the sand is available in river bed. But the department people rejected river bed sand and asked to use only Godavari river sand which is 6 KM away from work site. Hence the sand cost is considered as per actual landing cost.
7. The excavated pit p8
Silt/sand filled during floods removal i.e.
Total it comes to 123 Cum costing @ Rs. 150 Rs. 18,450.00
Note: The silt removal cost considered at Rs. 150 per m3 because the solt had to removed in water by using helmets and oxygen connections
-----------------
Total Rs. 12, 96,885.00
-----------------
Note: The rates considered above are actual prevailing rates and landing costs. The depreciation on shuttering iron materials imposed 30% since they are old and being used for the past 2 ½ years.
Salvages: There is no salvage value since the loss considered only totally washed away
Items.
THE TOTAL LAIBILITY OF THE INSURER:
The total loss arrived = Rs. 12,96,885.00
Less Policy excess for
A.O.G Perils (Major perils = Rs. 5,00,000.00
-----------------
Rs. 7,96,885.00
------------------
Rounded to Rs. 7,96,885/-
The total nett liability recommend for Rs. 7,96,885/-
14. It is a fact supported with acceptable force that the first surveyor had omitted to consider the items as regards to a) depreciation, b) adequacy of insurance and applicability of average, c) applicability exclusions viz., service roads etc. and d) the stock position. The second surveyor had taken into consideration the following aspects by finalizing the loss, 1) depreciation for usage, 2) adequacy of insurance, 3) as per policy conditions any roads which has been completed are put to usage is not covered by the policy, 4) as per the contract the service roads are not part of the contract price and they are not covered by the terms of the policy. The exclusions mentioned at page 2 of the terms and conditions of the policy, as to the items mentioned in Section I are :
The Company, shall not, however, be liable for –
a) The first amount of the loss arising out of each and every occurrence shown as Excess in the Schedule;
b) Loss discovered only at the time of taking an inventory;
c) Normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use of obsolescence or otherwise, rust, scratching of painted or polished surfaces or breaking of glass;
d) Loss or damage due to faulty design;
e) The cost of replacement, repair or rectification of defective material and/or workmanship, but this exclusion shall be limited to the items immediately affected and shall not be deemed to exclude loss of or damage to correctly executed items resulting from an accident due to such defective material and/or workmanship;
f) The cost necessary for rectification or correction of any error during construction unless resulting in physical loss or damage;
g) Loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidence of debt, notes, securities, cheques, packing materials such as cases, boxes, crates;
h) Any damage or penalties on account of the Insured’s non-fulfilment of the terms of delivery or completion under his Contract of construction or of any obligations assumed there under or lack of performance including consequential loss of any kind or description or for any aesthetic defects or operational deficiencies;
i) Loss of or damage to vehicles licensed for general road use or water borne vessels or Machinery/Equipment mounted or operated or fixed on floating vessels/craft/barges or aircraft.
15. The learned counsel for the opposite parties has relied upon Rules, Regulations, terms and conditions of Contractors All Risks Insurance Policy to contend that temporary access roles have not been covered by the terms of the insurance policy. Clause 9 of the insurance policy provides for indemnification of the insured “only for unforeseen accidental loss or damage to temporary access roads insured under the policy, if such loss or damage occurs prior to such roads being completed or taken into use for their purpose by the contractor, whichever takes place first”. Thus clause 9 of the insurance policy would support the case of the opposite parties that the service roads which have been completed and put in use are not covered by the terms of the policy.
16. It cannot be disputed that the opposite party insurance company has valid reasons to depute the second surveyor by taking a different opinion from what was ascertained by the first surveyor. At the same time it is to be noted that the complainant has stated that the second surveyor had not contacted him nor visited the site nor collected any material evidence or had any interaction with him as also that he had not furnished documents to him. He had attributed unfairness to the opposite parties in getting assessment of the loss by the Chartered Engineer, to the tune of `3,98,848/- so as to conveniently get the claim within policy excess for which the opposite parties had given reply on 26.8.2008 giving reasons for deviating from the opinion and assessment made by the first surveyor. The policy excess is a mandatory factor for arriving at the amount payable to the complainant by the opposite parties. Both surveyors had assessed the loss. As assessed by the second surveyor, the loss caused to the complainant was to the tune of `3,98,848/- which does not warrant any interference as the policy excess mentioned in the insurance policy is `5 lakhs.
Insofar as the assessment of the loss made by the first surveyor on which the complainant has placed much reliance for his claim is to the extent of `12,96,885/-. The surveyor had taken into consideration of the approach roads which had been put in use and thus not covered by the ambit of terms of the insurance policy. He had assessed the damage caused to the approach roads to the extent of Rs.8,45,000/-. As per clause 9 of the terms of the insurance policy, damage caused to the approach roads is not amenable for assessment and coverage of risk as such the amount of `8,45,000/- if deducted from the total loss assessed at Rs.12,96,883/-, the amount payable to the complainant comes to `4,81,883/- which is less than the policy excess of Rs.5 lakhs and thus no amount can be claimed by the complainant in terms of the insurance policy. We do not find any arbitrariness in repudiating the claim by the opposite parties. By considering either of the surveyors’ report the complainants cannot claim any amount in terms of the insurance policy.
In the result the complaint is dismissed. The parties shall bear their own costs.
MEMBER
MEMBER
Dt.15.10.2012
KMK*
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
NIL
EXHIBITS MARKED
For complainant
Ex.A1 Copy of Insurance Policy
Ex.A2 Copy of Survey Report
Ex.A3 Copy of letter of complainant to O.P. dt.1.10.2007
Ex.A4 Copy of no-claim letter of O.P. to complainant dt.30.08.2007
Ex.A5 Copy of letter dt.29.09.2007 of complainant to O.P.
Ex.A6 Copy of letter dt.25.10.2007 of complainant to O.P.
Ex.A7 Copy of letter dt.26.08.2008 of O.P.
Ex.A8 Copy of letter fo complainant dt.19.08.2006
For opposite parties
Ex.B1 Copy of Surveyor’s Report
Ex.B2 Copy of Contractors All Risk Insurance Policy
Ex.B3 Copy of All India Tariff on Contractor’s All Risks Insurance
MEMBER
MEMBER
