New India Assurance Co. Ltd vs Pradeep Kumar

New India Assurance Company Limited ..Appellant

Versus

Pradeep Kumar ..Respondent

JUDGEMENT

R.M. LODHA, J.

In this appeal, by special leave, the appellant, New

India Assurance Company Ltd. (for short, `insurance company')

has challenged the order dated September 14, 2001, passed

by the National Consumer Disputes Redressal Commission

(for short `National Commission'). By its order the National

Commission dismissed the revision petition filed by the

insurance company under Section 21(b) of The Consumer Protection Act, 1986 (for short, `Act 1986') and affirmed the

concurrent orders of State Commission for Redressal of

Consumer Disputes, Uttar Pradesh, Lucknow (for short, `State

Commission') and Resident Consumer Disputes Redressal

Forum, Uttarkashi, (for short `District Forum') whereby the

insurance company has been directed to pay a sum of Rs.

1,58,409/- along with interest at the rate of 12% per annum to

the respondent Pradeep Kumar (for short `complainant').

2. The complainant is the owner of a heavy motor

vehicle (open body truck) bearing registration no. UP-07 F-

9095. The vehicle was registered on January 2, 1997 and

was insured vide Policy No. 31/04825 effective for the period

from November 8, 1997 to November 7, 1998. The said

vehicle loaded with potatoes met with an accident on

September 29, 1998, at Suman Kayari, near Nain Bagh, District

Tehri (Garhwal). The vehicle fell down into khud 300 feet

deep below the road. As a result of the accident, Murari

Rawat, driver of the truck, died. The accident was reported at

Police Station Patwar, Kharsot on September 30, 1998.

3. The complainant claimed the expenses incurred by

him for repair of the truck from the insurance company and

2 the interest paid by him to the State Bank of India, Uttarkashi

as he obtained loan from that bank for repair of the truck. A

legal notice is also said to have been sent by the

complainant to the insurance company but of no avail. The

complainant then approached the District Forum alleging

deficiency in service by the insurance company and claimed

an amount of Rs.1,58,409/- along with interest at rate of 18%

per annum.

4. The insurance company in its reply to the

complaint, stated that after receipt of intimation regarding the

accident, vehicle was surveyed by Surveyor, Manoj Kumar

Aggarwal and was taken to Himalaya Motor Workshop,

Dehradun by the owner. The vehicle was again surveyed by

approved surveyor Vivek Arora as the complainant had

complained that earlier Surveyor, Manoj Kumar Aggarwal,

had not made thorough investigation. The survey was then

conducted by Vivek Arora. As the insurance company was

not satisfied with the survey report submitted by Vivek Arora, it

got the vehicle surveyed again by another approved surveyor,

B.B. Garg. B.B. Garg had estimated the damages to the

vehicle to the extent of Rs.63,771/-. The insurance company,

3 then, approached the complainant for payment of this amount

but he refused to accept the same.

5. It appears that before the District Forum, the

complainant had filed the affidavits of the persons from whom

the spare parts were purchased, repair work was got done and

charges paid to them. The complainant also submitted the

vouchers and bills of various spare parts and the payment

made towards labour charges. On the other hand, on behalf

of the insurance company, affidavit of one Pradeep Ghai was

filed along with survey reports of Vivek Arora and B.B. Garg.

6. The District Forum, upon consideration of the

matter, held that there was deficiency in service on the part of

the insurance company and ordered them to pay a sum of

Rs.1,58,409/- along with interest at the rate of 12% per annum

with cost of Rs.1,000/-. The District Forum also gave an

option to the insurance company that it may pay the insured

amount of Rs.6 lakhs to the complainant after transferring the

vehicle in its name, if it so desired.

7. The insurance company carried the order of the

District Forum in appeal to the State Commission but without

any success. The concurrent orders of the consumer fora

4 were challenged by the insurance company, as noticed above,

to the National Commission but there also they failed.

8. We heard Mr. P.K. Seth, learned counsel for the

insurance company and Mr. N.S. Jain, learned counsel for the

complainant.

9. Mr. P.K. Seth, learned counsel for the insurance

company heavily relied upon Section 64-UM(2) of The

Insurance Act, 1938 (for short, `the Act 1938') and submitted

that the loss assessed by the approved surveyors appointed

in view of the provisions of Section 64-UM was binding, more

so, in the absence of any evidence on record to establish that

the loss assessed by the approved surveyors was not correct

and justified. He would submit that as per the scheme of the

insurance, the loss caused to the vehicle has to be first

assessed by approved surveyor and only thereafter the

vehicle could have been repaired by the owner. He submitted

that the complainant failed to make out any case as to why the

survey reports of the Approved Surveyors Vivek Arora and

B.B. Garg should be rejected. The learned counsel for the

insurance company would also urge that the insurance

company was not liable to indemnify for new parts.

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10. We are unable to accept the contentions of the

learned counsel for the insurance company. That the vehicle

that was insured with the insurance company met with an

accident and fell down into the khud 300 feet deep below the

road is not in dispute. The survey reports of Vivek Arora as

well as B.B. Garg, upon which reliance has been placed by the

insurance company show that the vehicle got extensively

damaged in this accident. Its Assembly, Bonnet, Cabin, Tool

Box, Body, Chasis, Diesel Tank, Pressure Regulator, Pressure

Pipe, Brake Booster, Steering Wheel, Head Lights, Main Leaf

LHS Front, Front shockers, Steering Worm, Air Cleaner, Cross

Member Rear 2nd, Propeller Shafts, Front Axle, Silencer,

Engine Chamber etc. had sustained major damage. The

approved surveyors in their reports have recorded their

satisfaction that the aforementioned damages to the said

vehicle would have occurred in that mishap. Vivek Arora in his

survey report also noted that the damages noticed to the said

vehicle were in conformity with the description of the accident

mentioned in the claim form and details of damages noted by

the spot surveyor. Curiously, the spot survey report

conducted by Manoj Kumar Aggarwal has been withheld by

6 the insurance company. At Item No.11, under the Head

"summary of assessment" in the survey report by Vivek Arora,

original estimate is recorded thus:

"Original Estimate Total Labour Charges Rs.1,30,440/-

Total cost of spare parts Rs.0,36,090/-

------------------------

Total Rs.1,66,580/-"

------------------------

The enclosures with the survey report at item No.2 records:

"Estimate: Original and Suppl. 3 pages"

But this enclosure has been suppressed by the insurance

company. The vehicle was removed by the complainant to

the workshop only after the survey was conducted by Manoj

Kumar Aggarwal (approved surveyor nominated by the

insurance company for spot survey).

11. However, Vivek Arora in his survey report made the

following assessment for the reasons best known to him:

"Total Labour Charges: Rs.52,000.00 Total cost of spare parts Rs.11,874.37 Less:Depreciation No.10% & 50% Rs. 3,669.58 Excess if any - Salvage value (Appx.) Rs. 1,000.00 Appx. Net Loss Rs.59,304.82"

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12. The insurance company got the survey done again

through B.B. Garg (Approved Surveyor) who made an

additional assessment of Rs.3,512.72 to the assessment made

by Vivek Arora.

13. On the face of the vouchers and bills for parts as

well as labour charges submitted by the complainant, all the

three consumer fora accepted the complainant's claim and did

not accept these survey reports. Pertinently, the vehicle

was not even 2 year old at the time of accident.

14. Section 64-UM(2) of the Act 1938 reads:

"No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):

Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."

8 15. The object of the aforesaid provision is that where

the claim in respect of loss required to be paid by the insurer

is Rs.20,000/- or more, the loss must first be assessed by an

approved surveyor ( or loss assessor) before it is admitted for

payment or settlement by the insurer. Proviso appended

thereto, however, makes it clear that insurer may settle the

claim for the loss suffered by insured at any amount or pay to

the insured any amount different from the amount assessed

by the approved surveyor (or loss assessor). In other words

although the assessment of loss by the approved surveyor is

a pre-requisite for payment or settlement of claim of twenty

thousand rupees or more by insurer, but surveyor's report is

not the last and final word. It is not that sacrosanct that it

cannot be departed from; it is not conclusive. The approved

surveyor's report may be basis or foundation for settlement of

a claim by the insurer in respect of the loss suffered by the

insured but surely such report is neither binding upon the

insurer nor insured.

16. So far as the case in hand is concerned, the claim

of the complainant has been accepted by the consumer fora

as it was duly supported by original vouchers, bills and

9 receipts. It has been held that the actual expenses incurred by

the complainant comes to Rs.1,39,438/- in getting the truck

repaired apart from the expenses on account of haulage of

truck and carrying it to the workshop. Taking into account

actual expenses incurred and the interest that the complainant

had to pay to the bank from which the loan was obtained for

that amount, the District Forum awarded a sum of

Rs.1,58,409/- to the complainant and insurance company was

directed to make that payment along with interest at the rate of

12% per annum. At the first blush, we had some doubt

whether the interest paid by the complainant to the bank could

have been awarded, but on deeper scrutiny we found that no

such ground has been set up in the appeal. As a matter of

fact, this aspect was not even raised before the National

Commission.

17. The appeal is devoid of any substance. The

insurance company would have been well advised in not

spending public money unnecessarily on avoidable and wholly

frivolous litigation such as this.

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18. The appeal has no merit and is liable to be

dismissed and is dismissed with costs which we quantify at

Rs.15,000/-.

......................

J (D.K. Jain)

......................J (R.M. Lodha)

New Delhi, April 9, 2009

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