NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
ORIGINAL PETITION NO. 35 OF 2003
M/s. R.R. International
Through its Proprietor Premvir Singh
Situated near Lakdi Fazalpur,
Moradabad – 244 001 …Complainant
M/s. New India Assurance Co.
H.O. 87, Mahatma Gandhi Marg
Mumbai – 400 001
Through its Sr. Divisional Manager,
Divisional Office No. 2, 105 Shanit Nagar,
Moradabad (U.P.) … Opp. Party
HON’BLE MR. JUSTICE K.S. CHAUDHARI,
HON’BLE MR. SURESH CHANDRA, MEMBER
For the Complainant : Ms. Sandhya Goswami, Advocate
For the Opp. Pary. : Mr. K.L. Nandwani, Advocate
PRONOUNCED ON 8th January, 2013
O R D E R
PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER
Complainant filed complaint on 28.1.2003 and alleged that complainant purchased two fire polices and other polices in regard to the various properties situated and located at various places from opposite party. It was further alleged that the dispute between the complainant and the opposite party pertains to two Fire policies, namely; (i) Fire Policy No. 1142180103474; and (ii) No. 1142180103476. First policy pertains to the building situated at Lakdi Fazalpur, Moradabad covering fire for a total sum of Rs.202.15 lakhs and second policy pertains to the building, etc. adjacent to old Maida Mill, Lakdi Fazalpur, Moradabad, also being a fire policy ‘C’ extended to cover FSTI for a sum of Rs.182.70 lakhs. During the subsistence of the policy period, complainant suffered huge loss on 30.8.2000 on account of inundation occurred due to rains and caused a total loss in terms of building, stocks, FFF electrical fittings, etc. Complainant immediately intimated opposite party regarding this loss and opposite party appointed and deputed a Surveyor, Shri V.P. Maheshwari to assess loss suffered by the complainant. The Surveyor carried out detailed survey and submitted his report to the opposite party in respect of both the policies. Under the first policy, the complainant claimed a loss of Rs.31,77,584.16 and under second policy, the complainant claimed loss of Rs.10,09,071.09, as per details mentioned in para 7 of the complainant. The Surveyor took 1½ year to carry out detailed survey and survey was carried out at the time when the building was ravaged and devastated and the report was an accurate and factual assessment of the losses suffered. Opposite party did not make good the loss suffered by the complainant and all of a sudden and in a most arbitrary manner with a view to completely defeat the lawful claim of the complainant appointed another surveyor M/s. Adarsh Associates on 16.3.2002. The second surveyor had no factual basis to proceed in evaluating the losses after two years. It was further alleged that complainant obtained polices on 25.4.2000 and opposite party sold fire policy under the old fire tariff which were not valid on the date of the policy as by a notification dated 29.3.2000 by the Regional Office which was effective from 31.3.2000 and the tariff rate of this policy was lowered to 1.25% inclusive of FSTI in place of the former rate of 2.25% and in this way, opposite party charged a sum of Rs.52,853/- extra which amounts to criminal misappropriation and gross deficiency of service. It was further alleged that on the basis of second illegal and arbitrary survey report, opposite party evaluated the losses suffered by the complainant to the tune of Rs.7,40,825.31 and opposite party disposed of complainant’s claim for Rs.4,44,000/-. Complainant submitted grievances before the Hon’ble Ombudman (Insurance) for the State of U.P. and Uttaranchal Regional but claim of the complainant was returned by Ombudman on the ground that the amount claimed was beyond their pecuniary jurisdiction, hence, complainant filed this complaint within limitation and prayed that claim of Rs.41,86,655.25 under both the polices may be allowed with interest @ 18% p.a. and excess premium charged by the opposite party may also be refunded.
2. Opposite party submitted written statement and alleged that claim filed by the complainant is not maintainable as services of the opposite party have been hired for the commercial purposes and complainant is not a consumer. Complainant is estopped by his act and conduct to file the present complaint as the complainant had participated in the investigation and assessment of loss by the second surveyor along with the first surveyor without any protest and now complainant cannot agitate and say that the report is not acceptable to him. It was further alleged that necessity for the appointment of the second surveyor arose as the first surveyor had permitted extensive improvement which were carried out by the complainant in the existing building basically for waterproof treatment by laying Agra stones at complete flooring and upto the required heights in walls of basement as well as recasting of new RCC slab over Agra stone. It was further alleged that during the extensive discussions complainant agreed with the view that they are entitled only for reasonable costs of the building as per original specifications which the opposite party had offered to him. It was further alleged that first surveyor included such items which were not covered under the terms of the policy which necessitated appointment of second surveyor. It was further alleged that present case requires extensive evidence to reach the final conclusion as there is a huge difference of assessment in the report of both the surveyors. Every item claimed by the complainant is to be proved by bills and other material evidence which will require examination and cross-examination of number of witnesses and in such circumstances the Civil Court is the proper forum for adjudication of this complaint. It was further alleged that time consumed in assessment occurred due to delay on the part of complainant himself in not providing documents in time. However, it was admitted that Mr. Maheshwari inspected the building material after fire, but submitted that extensive improvements like Agra stone cannot be permitted by the opposite party when they were not in the original building at the time of insurance. Opposite party offered correct amount of Rs.4.41 lakhs after deducting the depreciation and deduction for uncalled items and prayed that complainant is not entitled to get amount more than Rs.4.41 lakhs after completion of the formalities and prayed for dismissal of complaint.
3. Complainant filed rejoinder and alleged that opposite party charged premium more than due and issued Policy ‘C’ instead of ‘Standard Fire Policy applicable on the date of insurance. It was further alleged that complainant neither accepted appointment of second surveyor nor his report and cheques offered in pursuance thereof by the opposite party. Complainant never agreed either orally or in writing that they are only entitled for reasonable repair costs of the building. It was further alleged that appointment of second surveyor was a malafide act just to cover up the assessment report of the first surveyor which is liable to ignored. No cogent grounds or reasons have been given by the opposite party for appointment of second surveyor. Mr Maheshwari neither admitted nor signed second assessment report given by the second surveyor. Mr. Maheshwari’s report is binding and must be respected to by the opposite party. It was denied that Civil Court is the proper Forum to adjudicate the complaint.
4. Complainant filed affidavit of Shri Premvir Singh in his evidence and opposite party filed affidavit of Shri Kamlesh Kumar Sangal in its evidence and parties also filed documents.
5. Heard learned Counsel for the parties and perused record.
6. Learned Counsel for the complainant submitted that complainant is entitled to get claim as per first surveyor report. On the other hand, learned Counsel for the opposite party submitted that claim filed by the complainant is not maintainable as services of the opposite party have been hired for commercial purposes and complainant is not a consumer. He further argued that complainant is entitled to get only Rs.4.41 lakhs as opined by second surveyor and complainant is estopped from challenging second survey report as first survey report is not as per terms of policy and complainant himself participated in second survey.
7. As per written statement, complainant is entitled to get Rs.4.41 lakhs by order dated 29.10.2003. This Commission directed opposite party to pay Rs.7,40,825/- loss suffered as per survey report and learned Counsel for the complainant admitted that this amount has already been received by the complainant. 8.
Heard learned Counsel for the parties and perused record.
9. Learned Counsel for the opposite party submitted that claim filed by the complainant is not maintainable as services of opposite party have been hired for commercial purposes and thus complainant does not fall within the purview of consumer. This argument is devoid of force in the light of judgment in the case of Harsolia Motors Vs. M/s. National Insurance Co. Ltd. – (2006) 5 CPR 1 (NC) in which it was held that “a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit”. In the light of aforesaid judgment it becomes clear that availing service of insurance company does not amount to taking services for commercial purposes and, hence, complainant is a consumer within the purview of Consumer Protection Act, 1986.
10. Learned Counsel for the opposite party further argued that opposite party appointed second surveyor who assessed loss of Rs.7,40,825/- and as complainant participated in second survey, he is estopped from challenging second survey report and complainant is not entitled to get more than the amount assessed by the second surveyor. On the other hand, learned Counsel for the complainant submitted that appointment of second surveyor was a malafide act on the part of opposite party just to defeat the lawful claim of the complainant and complainant is not estopped from challenging second surveyor report merely by assisting second surveyor in assessment of loss.
11. Admittedly, loss to the building and stock was caused on 30.8.2000 on account of inundation occurred due to heavy rains and first surveyor inspected insured premises on various dates, namely; 6.9.2000, 8.9.2000, 10.9.2000, 25.9.2000, 3.2.2001, 5.2.2001, 16.3.2001, 14.7.2001 and 16.8.2001 and first surveyor submitted report on 30.8.2000 whereas second surveyor inspected insured premises on 3.4.02 and submitted report on 8.6.02. Thus, it becomes clear that second surveyor had no occasion to inspect insured premises just after loss and he inspected insured premises after 19 months of loss.
12. It is not clear from the record when and under what circumstances second surveyor was appointed by opposite party because no letter of appointment of second surveyor has been placed on record to ascertain on which date and under what compelling circumstances second surveyor was appointed.
13. Opposite party has placed photocopy of office note pertaining to reason for reassessment. Perusal of this office note clearly reveals that this office note does not contain any date and on reading office note it becomes clear that this office note has been prepared after second survey report to justify payment as per second surveyor’s report which was not accepted by the complainant and complainant refused to accept the claim cheques as referred in the office report. On second page of this office note on 28.5.2003 some officer has directed to put up file for appointment of Advocate which makes it clear that this office note was prepared after second surveyor’s report. If opposite party was not satisfied with the first surveyor’s report, it should have given valid reasons for not accepting first surveyor’s report and only after that second surveyor should have been appointed which has not been done in this case and in such circumstances, report of second surveyor cannot be considered to defeat the claim of the complainant.
14. Learned Counsel for the complainant submitted that insurance company had no right to appoint second surveyor at its sweet will to defeat lawful claim of the complainant.
15. Learned Counsel for the opposite party placed reliance on (2009) 8 SCC 507 – Sri Venkateswara Syndicate Vs. Oriental Insurance Co. & Anr. in which it was held by Apex Court that the proviso to sub-section (2) of Section 64-UM of the Insurance Act permits an insurer to obtain a second or further report where considered appropriate or expedient in the circumstances of the case based upon which the claim could be settled for a different amount than as assessed earlier. In the same judgment it has also been observed that insurer cannot appoint a second surveyor just as a matter of course. If for any valid reason the report of the surveyor is not acceptable to the insurer, may be for the reason, if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated, etc., it must specify cogent reasons without which it is not free to appoint the second surveyor or surveyors till it gets a report which would satisfy its interest. It was further observed that for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured. It was also observed that reports of surveyors are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. The insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the officer concerned of the insurance company. If the reports are prepared in a good faith, with due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the surveyors.
16. In the light of the above judgment of Hon’ble Apex Court, the insurance company certainly has a right to appoint second surveyor but second surveyor can be appointed only for the valid and cogent reasons with the allegation of non-application of mind, error or ill motive in preparation of report by the first surveyor. In the present case opposite party has not placed any document containing cogent and valid reasons and imputing error, ill motive, non-application of mind by the first surveyor in preparing report. In such circumstances, there was no occasion for the opposite party to appoint second surveyor in disregard of first surveyor’s report. In such circumstances, the aforesaid citation does not support to the opposite party but rather supports to complainant. Learned Counsel for the opposite party also placed reliance on 2005 (5) SCALE 606 – National Insurance Co. Ltd. Vs. Harjeet Rice Mills in which Hon’ble Apex Court while setting aside order of High Court remanded the matter to the State Commission for proper decision on all the questions and de novo investigation. This case is not applicable to the case in hand and does not help to the cause of opposite party for appointment of second surveyor.
17. On the other hand, learned Counsel for the complainant placed reliance on III (2002) CPJ 194 (NC) – New India Assurance Co. Ltd. Vs. Chitramala TV Repair Centre in which it was held that State Commission rightly observed that there was no justification for appointment of second surveyor by the Insurance Company. He also placed reliance on III (2003) CPJ 24 ( Pb. St. Comm., Chandigarh) – United India Insurance Company Ltd. Vs. Sindhi Sweets & Ors. in which it was held that where no reasons were assigned for appointment of second surveyor, report of first surveyor is to be relied on. He also placed reliance on III (2003) CPJ 709 (J&K St.Comm., Srinagar) – Manohar Nath Pandita Vs. Oriental Insurance Co. Ltd. in which it held that as there was no justification for appointment of second surveyor and second surveyor was deputed deliberately to over shadow the report of first surveyor, report of first surveyor is to be relied on. Thus, it becomes clear that in the absence of any cogent and valid reasons for appointment of the second surveyor, report of second survey which has been conducted after 19 months of loss cannot be relied on to restrict the claim of complainant to the tune of loss assessed by second surveyor.
18. Even otherwise, on the merits also loss assessed by the first and second surveyors in respect of both the policies are as under:
First Surveyor Second Surveyor
Gross Net assessed
Assessed loss loss
Loss to stock/Packing 2,94,320.73
Basement 3,11,614.00 2,55,866.42
materials 1,30,623.89 1,30,623.89
Loss of building 11,59,000.00
Building 3,06,000.00 3,06,000.00
Loss to Fur., Fix & Fitting 88,000.00
Less: Excess clause 1,00,000.00
FFF 88,000.00 88,000.00
Total 8,36,238.09 7,80,490.31
Less: Excess clause 1,00,000.00
First Surveyor Second Surveyor
Loss to Fur., Fix & Fitting 37,000.00
Loss of building 4,00,000.00
Less: Excess clause 1,00,000.00
Less: Policy excess 1,00,000.00
Net assessed loss 60,305.00
19. Perusal of both survey reports in first policy reveals that as far loss to furniture, fixture & fitting, both the surveyors have assessed loss of Rs. 88,000/-. As far loss to stock and packing material, first surveyor has assessed loss of Rs.2,94,320.73 whereas second surveyor has assessed loss of Rs. 3,86,490.31. Meaning thereby the second surveyor has assessed around Rs.92,169.58 excess loss. As far loss of building is concerned, the first surveyor has assessed loss of Rs.11,59,000/- whereas second surveyor has assessed loss of only Rs.3,06,000.00. The second surveyor has mentioned in his report that insured has carried out extensive improvement, alteration of previously existing specifications of the basement, extensive repairing work including the pressure grouting and water proofing measures for the floor and walls of basement by providing Agra stone cladding/layers and relaying of RCC floor on top. Learned Counsel for the opposite party submitted that stock of Agra stone has been used in repairs of the basement whereas there was no Agra stone in the basement before loss. On the other hand, learned Counsel for the complainant submitted that even before loss there was Agra stone flooring in the basement. It cannot be ascertained by perusal of policy whether there was Agra stone or not in the basement but as Agra stone has been used it should be presumed that originally there was Agra stone in the basement. In such circumstances, expenses incurred on flooring of Agra stone are to be allowed. First surveyor has allowed Rs.3,62,280/- “for One layer of 5” thick R.C.C. protecting the stone treatment with chemical plastering in 1:2:4”. Apparently, 5” thick layer of RCC was not required on Agra stone when layer of Agra stone was provided after water proofing treatment and in such circumstances expenditure of Rs.3,62,280/- incurred on 5th thick layer of RCC in first policy for improvement of building is to be disallowed and rest of the amount as per first surveyor’s report is to be allowed. Thus, complainant is entitled to get Rs.10,79,040/- under the first policy.
20. Perusal of second policy reveals that first surveyor assessed loss of Rs.37,000/- regarding furniture, fixtures and fitting and the same loss has been assessed by second surveyor. First surveyor assessed loss of Rs.4,00,000/- in building whereas second surveyor has assessed loss of Rs.1,23,305/-. In this policy also first surveyor allowed loss of Rs.1,44,000/- on 5th thick RCC layer on the stone treatment. This should not be allowed as discussed above in first policy. In such circumstances, complainant is entitled to get Rs.1,93,000/- under the second policy.
21. Consequently, complainant is entitled to get Rs.10,79,040/- in first policy and Rs.1,93,000/- in second policy totalling Rs.12,72,040/- from the opposite party.
22. Learned Counsel for the opposite party submitted that as complainant has participated in second surveyor, complainant is estopped from challenging second survey report. Learned Counsel for the opposite party has failed to substantiate this argument with support of any law laid down by this Commission or Apex Court.
Merely by participation in second survey, the complainant is not estopped from challenging second survey report which is apparently not based on sound reasoning. First survey report has been supported by bills and vouchers of expenditure incurred on repairs whereas second survey report is based on estimates. Merely by cooperating to second surveyor in assessing loss complainant cannot be deprived of loss estimated by first surveyor.
23. Consequently, complaint filed by the complainant against the opposite party is partially allowed and complainant is entitled to get a sum of Rs. 12,72,040/- from the opposite party. Opposite party has already paid a sum of Rs.7,40,825/-. In such circumstances, complainant is entitled to get remaining amount of Rs.5,31,215/- with 9% per annum interest from 28.1.2003 till realization of money. Complainant is also entitled to get litigation expenses of Rs.10,000/-.
( K.S. CHAUDHARI, J)
( SURESH CHANDRA)