Claim amount was disputed - Commission ordered for payment of full amount of claim

ORIENTAL INSURANCE INSURANCE CO. LTD. Vs. RIZWAN EXPORT HOUSE[828/2018] DATED 21/01/2020
NATIONAL CONSUMER DISPUTE RESOLUTION COMMISSION

HELD THAT

Claim amount was disputed - Commission ordered for payment of full amount of claim.

BRIEF FACTS

1. The complainant in FA/828/2018 and FA/829/2018 had taken an Erection All Risk Policy from Oriental Insurance Co. Ltd., for a sum insured of more than Rs.32 crores which included insurance of the boundary wall of the factory of the complainant to the extent of Rs.35 lakhs.

2. The boundary wall of the factory of the complainants collapsed due to storm/typhoon on 5.8.2008.

3. A surveyor was appointed by the insurer to assess the loss to the complainants. The surveyor vide his report on 30.4.2010, assessed the loss to the complainants at Rs.5,76,516.12. After deduction of depreciation, salvage value and policy excess, he recommended payment of Rs.3,77,271.29 to the complainants. Vide his subsequent letter dated 17.6.2010, the surveyor intimated the insurer that the cost of reconstruction of the boundary wall would be about Rs.21 lakhs.

4. The claim having not been paid for want of documents, the complainant approached the concerned State Commission by way a consumer complaint.

5. The complaint was resisted by the insurer which admitted the policy issued by it as well as the damage to the wall. It was interalia stated in the written version filed by the insurer that since the documents demanded by the insurer were not supplied, the claim was closed.

6. The State Commission vide impugned order dated 13.2.2018 directed the insurer to pay a sum of Rs.5,76,516.12 to the complainants alongwith interest on that amount @ 7% p.a. from the institution of the complaint.

7. Being aggrieved from the order passed by the State Commission, the insurer is before this Commission by way of FA/828/2018. Since the complainant is also dissatisfied with the quantum of the compensation awarded by the State Commission, it has also challenged the order passed by the State Commission by way of FA/841/2018.

8. The complainants in FA/829/2018 and FA/842/2018 had also taken an Erection All Risk Policy to the extent of more than Rs.35 crores for the period from 31.3.2008 to 30.3.2009 which included insurance of the boundary wall of the factory to the extent of Rs.35 lakhs. The boundary wall of the factory of the aforesaid complainants also collapsed in the storm/typhoon on 5.8.2008. The surveyor appointed to inspect the premises of the complainants in FA/841/2018 was also appointed as the surveyor to assess the loss to the complainants in these matters. He vide his report dated 30.4.2010 assessed the gross loss to the complainants at Rs.6,11,700.96. After deduction of depreciation, salvage value and policy excess, he recommended payment of Rs.3,98,624.33 to the aforesaid complainants. The State Commission directed the insurer to pay Rs.6,11,700/- to the complainant with 7% per annum interest from the date of filing of the complaint, till the date of payment. Being aggrieved from the order passed by the State Commission, both the parties are before this Commission.

9. The insurer is disputing the amount awarded by the State Commission whereas the complainant wants enhancement of the said amount.

10. On 24.9.2018, this Commission recorded the statement of the learned counsel for the insurer not to dispute the assessment made by the surveyor. The challenge in the appeal was restricted to the difference between the amount awarded by the State Commission and the assessment made by the surveyor.

11. Similar order was passed in FA/828/2018 on 24.9.2018 where the insurer expressed its willingness to pay the sum of Rs.377271.29 to the complainant.

12. Thus the issue involved in these appeals is restricted to the quantum of compensation payable to the complainants on account of damage to the boundary wall of their respective factories.
THE NCDRC
13. The submission of the learned counsel for the complainants is that the major portion of the boundary wall having got destroyed when it collapsed due to storm/typhoon, the whole of the boundary wall was required to be reconstructed.

14. His submission is that since the surveyor himself had assessed the cost of reconstruction at Rs.21 lakhs, there is no reason why the said amount should not be awarded to the complainants.

15. In my opinion, the contention advanced by the learned counsel for the complainants cannot be accepted. It is evident from a perusal of the survey report that in case of Rizwan Export House, in the opinion of the surveyor, the boundary wall could have been repaired at the total cost of Rs.576516.12 which comprised Rs.446516.12 towards the cost of material required for reconstruction of the collapsed structure with same specifications as it was prior to loss and Rs.1,30,000/- towards labour charges. Though the surveyor has given an estimate of reconstruction of the whole of the boundary wall, he has not opined that the boundary wall was not capable of repairs and required reconstruction alone. No Civil Engineer was examined by the complainants before the State Commission nor was any report from a Civil Engineer was filed to prove that the boundary wall damaged due to storm/typhoon was incapable of repairs and was necessarily required to be reconstructed. Therefore, I have no hesitation in accepting the report of the surveyor in this regard and consequently hold that the gross assessment made by the complainant needs to be accepted without any modification. However, I find no justification for deduction of 5% of the material cost in case of re-repair of the boundary wall. Therefore, the said deduction has to be disallowed.

16. The surveyor has assessed the value of the salvage at Rs.135500/-. If the salvage is available with the complainant it can return the same to the insurer in which case deduction of the amount of Rs.135500/- towards value of the salvage will stand disallowed and the complainant would be entitled to the said amount from the insurer. As far as the policy excess is concerned, that has to be necessarily deducted the same being as per the terms of the insurance policy.

17. In the case of Sheikh Bhullan& Sons also, the surveyor report clearly shows that in the opinion of the surveyor, the boundary wall capable of being repaired at the total cost of Rs.611700.96 which comprised Rs.475700.96 towards the cost of material and Rs.1,36,000/- towards the labour charges. Again, there is no evidence on record to prove that the damaged boundary wall was incapable of being repaired and therefore necessarily required reconstruction.

No Civil Engineer was examined by Sheikh Bhullan& Sons to prove that the damaged boundary wall was incapable of being repaired. Therefore, the gross assessment made by the surveyor cannot be faulted with. However, the depreciation on the material cost cannot be allowed in this case also since there is no question of applying depreciation when only the repair work is to be carried out. As far as the salvage value is concerned, the complainant needs to be given an option to return the salvage to the insurer at the value assessed by the surveyor. If the salvage is returned to the insurer, the complainant would also be entitled to the amount of Rs.1,45,000/- which has been deducted as salvage value. The deduction on account of policy excess needs to be allowed the same being based upon the terms of the insurance policy.

18. Thus, Rijwan Exports shall be entitled to the principal amount of Rs.5,76,516.12 if the salvage is returned to the insurer. The insurer however, shall be entitled to a reduction of Rs.1,35,500/- from the aforesaid amount, if the salvage is retained by the complainant. Sheikh Bullan& Sons would be entitled to the principal amount of Rs.6,11,700.96 if the salvage is returned to the insurer. If however, the salvage is retained by the aforesaid complainant, the insurer shall be entitled to deduction of a sum of Rs.1,45,000/- from the aforesaid amount.

19. It is in terms of the Regulation 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations 2002, the claim ought to have been settled by the insurer within six months of its submission. The claim having not been settled within the aforesaid period, the complainant is entitled to appropriate interest for the period the payment of the claim is delayed. It is, therefore, directed that the complainant shall be entitled to simple interest @ 9% p.a. w.e.f. six months from the date of the submission of the complaint till the date of payment of the amount payable to the complainant in terms of this order.