Subhash Chandra, Presiding Member
1. This complaint under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) is filed against the opposite parties for against disallowance of the amount claimed under the Fire and Special Perils Policy obtained by it alleging deficiency in service by the opposite party.
2. The facts of the case as per the complainant in brief are that complainant no. 2 is engaged in the business of manufacture and export of shawls, scarfs, mufflers, stoles, upholstery etc. The complainant’s factory was covered by a Standard Fire and Special Policy (Floater Policy) dated 01.04.2011 for the period 01.04.2011 to 31.03.2012 for a sum of Rs.13,50,00,000/-. On account of torrential rain on the night of 12/13.08.2011 the factory was inundated by rain and flood water. On being informed the opposite parties appointed M/s N Kumar, Surveyors Pvt. Ltd. as Loss Assessors who, after inspecting the premises, submitted a report on 18.08.2011 estimating a loss of Rs.3.15 crores based on physical verification and stock statement, considering the extent of damage against the insured’s tentative estimate of loss of Rs.4,61,43,000/- net of salvage. Thereafter, M/s Sanjay Dwivedi and Associates were appointed surveyors by the opposite parties on 16.08.2011. They visited the factory premises on 19-20.08.2011 and submitted a final report dated 06.12.2012 estimating the loss as Rs.2,99,00,000/-. Complainant states that at the instance of the surveyor, he consented on 19.10.2012 to accept Rs.2,99,00,000/- in full and final settlement even though no surveyor’s report had been submitted. Thereafter on 25.06.2013, pursuant to the Surveyor’s e-mail dated 25.06.2013 seeking complainant’s prior consent before forwarding of report, the complainant again agreed to accept Rs.2,39,92,590/- crores instead of Rs.2,99,00,000/- consented to earlier, since he was facing cash crunch because of non-settlement of the claim. Subsequently, vide letter dated 28.06.2013 addressed to the opposite party no.1/ insurance company, the loss was revised to Rs.2,39,96,758/- after discussions with the opposite party no.1. On 10.09.2013, the opposite parties conveyed by email that the claim had been settled for Rs.2,39,92,590/- and the amount was electronically transferred to the complainant’s account on 05.09.2013. The complainant issued a protest letter by email on 11.09.2013 followed by a letter dated 30.09.2013. The acceptance of settlement of the claim is stated to be under protest by the complainant as there had been inordinate delay in settlement of the claim which was causing him financial hardship. As no details of calculations pertaining to the claim were provided, the complainants obtained the same under Right to Information Act (RTI) on 31.10.2013. The complainant is before this Commission with the following prayer:
(i) To pay sum of different amount payable – Rs.3,15,00,000 less Rs.2,39,92,590 = Rs.75,07,410/- plus
(ii) To pay different of value of salvage amount illegally deducted = Rs.48,13,482 – Rs.18,00,000 = Rs.30,13,482/- plus
(iii) To pay surveyor fee wrongly and illegally deducted = Rs.2,85,518/ -
Total of (i) + (ii) + (iii) = Rs.1,08,07,410/- plus
(iv) To pay interest @ 18% on Rs.1,08,07,410/- from the date of loss i.e., from 12.08.2011 till realisation 12.01.2014 i.e., for 29 months = Rs.47,01,223/- plus
(v) To pay interest @18% on Rs.2, 39,92,590/- for 18 months (As the claim was delayed by 18 months keeping in view Regulation 9.2 and 9.5 of Insurance Regulatory and Development Authority (Protection of Policy Holders’ interest) regulations, 2002 = Rs.64,78,000/- plus
(vi) To pay compensation for harassment and financial loss = Rs.5,00,000/- plus
(vii) To pay costs of litigation = Rs.5,00,000/- plus
(viii) Grand total : Rs.2,29,86,633; and
(ix) Any other relief which this Hon’ble Forum deems fit may also be granted in favour of complainant
3. Resisting the complaint by way of a written statement dated 26.08.2014, the opposite party contends that the complaint is not maintainable as there is no deficiency of service under section 2(1)(g) of the Act. In view of the unqualified discharge voucher executed by the complainant for Rs 2,39,92,590/- it is stated that the complainant is not entitled to any relief as held by the Hon’ble Supreme Court in Ajmer Singh Cotton General Mills Vs. United India Insurance Co. Ltd. (1999) 6 SCC 400. It is contended that there is no allegation in the complaint that the discharge voucher was executed under undue influence or fraud as per the Hon’ble Supreme Court in New India Assurance Co. Ltd. Vs. Sri Venkata Padmavathi R&B Rice Mill, (2000) 10 SCC 334. It is also contended that the Hon’ble Supreme Court has held in State of West Bengal Vs. Gopal Chander Paul, 1995 (3) SCC 324 that once parties have arrived at a settlement in a dispute under a contract amicably, it was not open for a party to unilaterally treat the settlement as non-est and invoke the arbitration clause. It is contended that the complainant is a commercial organisation and not a consumer under section 2(1)(d) of the Act and that the services of insurance were obtained for commercial purpose and not to earn livelihood. The complaint is alleged to have been filed to settle a commercial dispute which cannot be done in light of the Hon’ble Supreme Court’s judgment in Bombay Dyeing and Manufacturing Vs. Union of India, OP No. 66/2001. It is submitted that a Surveyor was appointed as required by law and his report has been gone by. Reliance is placed on this Commission’s order in Champala Verma Vs. Oriental Insurance Co. Ltd., III (2008) CPJ 93 that held that the report of a surveyor has to be given due weightage and the Consumer Fora cannot go into the question of quantum as it involves detailed investigation not possible in summary proceedings. On merits, it is submitted that the complainant failed to provide the costing for manufacturing of all types of damaged material despite opportunity. It also failed to segregate affected stocks for nearly 6 months which delayed assessment of salvage value and minimization of loss. It is contended that salvage value of Rs 51 lakhs was accepted by the complainant. The complainant is alleged to have adopted a rate in the claim as on the date of loss which was higher than the average rate/considered rate for valuation in the stock valuation. Deduction of salvage value of Rs 48,13,482/- and excess @ 5% from the assessed loss is also justified by the opposite party. It is also stated that the loss in terms of pieces was 2,25,000 and not 2,53,222 as claimed by the complainant and accordingly the claim was revised. The complaint is therefore, recommended to be disallowed.
4. Parties led their evidence by way of affidavit, filed rejoinder and written submissions. I have heard the learned counsel for both the parties and carefully considered the material on record.
5. The case of the complainant is that the opposite party coerced him into accepting an amount against the loan claim filed by delaying the settlement and using the Surveyor appointed by it to pressurize him into first accepting a lower amount and then giving prior consent for a further reduced amount. The complainant states that the assessment of loss was manipulated since it was first reduced to Rs.2,96,25,758/- and thereafter was further reduced to Rs. 2,39,92,590/- by the surveyor on the grounds that the insured had agreed to accept the salvage value estimated at Rs.51 lakh to be Rs.18 lakh, although no document to substantiate this argument has been provided. It is contended that the salvage value was wrongly reduced from Rs 48,13,482/- to Rs 18,00,000/- (i.e. difference of Rs 30,13,482/-) and surveyor’s fee of Rs 2,86,518/- was also illegally deducted. Reduction of claim to Rs. 2,39,92,590/- as stated by the surveyor, is based on a “diplomatic persuasion” of the complainant. It is the complainant’s case that as the claim had not been settled for over 22 months, the complainants were coerced to accept the full and final settlement. It is contended that the surveyor initially obtained a letter dated 19.10.2012 from the complainant accepting Rs.2,99,00,000/- in settlement and thereafter submitted his report dated 31.10.2012 to the opposite party. Even then the said amount was not released by the opposite parties who prevailed upon the complainants through the surveyors for further reduction. The final revised assessment was further reduced to Rs.2,39,92,590/- on 28.06.2013. The complainants have stated that in view of their financial difficulties they accepted the settlement offered but immediately, by e mail dated 11.09.2013 and through a letter by post on 30.09.2013, registered their protest against the settlement of the claim. It is contended that the complainants did not give full and final discharge voucher at their own volition but under duress. It is stated that mandatory IRDA regulations to protect the insured have been violated by the opposite parties (Regulations 9.2, 9.3 and 9.5) and that the second proposal of Rs.2.39 crores is barred by law and therefore, its acceptance by the complainant has no legal effect.
6. It is contended that the complaint is maintainable for deficiency in service and unfair trade practice since insurance was not obtained for commercial purpose but for reimbursement/indemnity for the loss which may be suffered due to various perils which has been held by this Commission in Harsolia Motors Vs. National Insurance Co. Ltd., I (2007) CPJ 27 (NC) and several other cases to be permissible. The complainant has relied upon the judgment of the Hon’ble Supreme Court in the case of National Insurance Company Ltd., vs Sehtia Shes – II (2008) CPJ 16 (SC) wherein, relying upon Ajmer Singh Cotton General Mills, it was held that “in case there is discharge voucher obtained by the Insurer there has to be an adjudication by the Foras as to whether the discharge voucher was signed voluntarily or under coercion”. Reliance is is also placed upon Niharika Maurya Vs. National Insurance Co. Ltd. & Ors., II (2011) CPJ 241 (NC) which held that ” Mere execution of discharge voucher and acceptance of the insurance claim would not estop the insured from making further claim. …petitioner immediately after accepting the amount filed the complaint which shows that she had accepted the amount either on misrepresentation or misunderstanding aur because she needed the money.” The complainant relies on this Commission’s order in Oriental Insurance Co. Ltd. & Ors. Vs Govt. Tool Room & Training Centre, I (2008) CPJ 267 (NC) wherein the appeal of the insurance company was dismissed and it was held that ”… if a person requires the money and signs the voucher as receipt of full and final claim, it amounts to coercive practice by the Insurance Company.” He also relies upon Nand Kishore Jaiswal Vs. National Insurance Co. Ltd. III (2009) CPJ 194 (NC) which held that “The Insurance Company and the insured are not having equal financial clout as the insured is a weaker party who can be arm twisted to accept the amount as well a final settlement” and Karam Industries & Ors. Vs. Oriental insurance Co. Ltd., IV (2007) CPJ 104 (NC) where it was observed that “ two months’ time was sufficient to settle the claim and in case there was delay in settling the claim and complainants were made to sign the discharge voucher to accept a particular amount, it was a case of coercion.” The complaint contends that the loss occurred on 12/13.08.2011 and the surveyor’s report was dated 13.10.2012 followed by another report dated 28.06.2013 which amounts to a clear case of inordinate delay amounting to coercion apart from the fact that the second report itself was illegal. Hence, it is submitted that the complaint be allowed as prayed.
7. As to the preliminary objections of the opposite party that the claim was not maintainable as it was for a commercial purpose, it is apparent that the insurance policy was obtained to indemnify the complainant against perils in the course of its activities and was validly obtained under the Insurance Act. I do not find any merit in the arguments of the opposite party.
8. It is manifest that there was considerable delay in the finalization of the claim. A period of 22 months cannot be justified on grounds of seeking of documents and clarifications. Notably, there was a gap of 8 months between the two ‘final’ reports of the surveyor. These delays amounted to applying coercion on the complainant as held in the citations relied upon by the complainant. The fact that the complainant sent an email on 11.09.2013 in protest in response to email dated 10.09.2013 from the opposite party informing settlement of the claim amount of 2,39,92,590/- transferred by RTGS on 05.09.2013 is evidence of the immediate protest that the complainant lodged. The acceptance of the discharge voucher cannot, therefore, be considered to be one of accord and satisfaction and voluntary but rather one that was accepted under financial duress and coercion.
9. From the foregoing it is also manifest that there is no dispute with regard to the incident or the accidental nature of the incident and the cause of the loss. The opposite party has admitted the claim albeit for a sum that is disputed by the complainant. While the opposite party has advanced reasons to justify the compensation amounts in the two reports by the same surveyor, it has not explained the need for the same. The duration of time between the two reports is not a small one. The first report whereby the loss was assessed at Rs 2.99 crore was dated 31.10.2012 whereas the second report was dated 28.06.2013. Admittedly, during this period the claim amount was not handed over to the complainant. No explanation for this delay has also been provided. Rather, the report dated 28.06.2013 of the Surveyor states as under:
“18. As we didn’t find any reason to disallow the loss claimed by the insured, we diplomatically spoke to them about their reporting of initial loss of 22500 pcs which actually came to 253222 pcs on counting. The insured immediately showed us the letter of theirs wherein it is mentioned that quantity was tentative and final figure would come on actual counting and the same was subsequently counted by us.
19. We had broken the ice with insured and made him to understand that in the absence of counting of wet cartons by preliminary surveyor, the approximate quantity was not certified thus with persuasion the insured had agreed to give consent for loss of 22500 pieces.”
[Emphasis added]
10. The opposite party while relying upon the report of the Surveyor has not justified the need for revisiting the findings in the survey report. As held by the Hon’ble Supreme Court in New India Assurance Co. Ltd. Vs. Pradeep Kumar (2009) 7 SCC 787 while the report of a surveyor is an important document under section 64 UM of the Insurance Act, 1938, it is also not sacrosanct that it cannot be departed from. The opposite party could have departed from the report or disregarded the recommendation. However, it is clear that the opposite party used the agency of the surveyor to get the complainant to accept the lower figure of Rs 2,39,92,590/- through ‘diplomatic persuasion’. It is manifest that there was no ‘accord and satisfaction’ and it is a clear case of coercion in the signing of the discharge voucher.
11. For the foregoing reasons, it is evident that the opposite party has been deficient in service qua the complainant with regard to the claim of loss preferred under the insurance policy in question. It has abused its dominant position to coerce the complainant to accept the settlement of his claim for a sum of Rs 2,39,92.590/- against the sum of Rs 2.99 cr that had been recommended by the surveyor in the first instance. Salvage value of Rs 30,13,482/- has also been illegally deducted as also Surveyor’s fees of Rs 2,86,518/- i.e. a total of Rs 92,07,410/- has been wrongly deducted. The complaint is, therefore, liable to succeed.
12. For the reasons stated above, I find merit in the complaint which is hereby allowed. The opposite party is directed to pay a sum of Rs.92,07,410/- along with interest @ 6% from 10.09.2013, the date of settlement of the claim within a period of 8 weeks failing which the rate of interest shall be 9% till the date of realization.
