United India Insurance Co. Ltd vs M/S Park Leather Industries Ltd

UNITED INDIA INSURANCE CO. LTD. AND ANOTHER …..... Appellants

Versus

M/S. PARK LEATHER INDUSTRIES LTD. .….. Respondent

JUDGMENT

SANJAY KUMAR, J

1. United India Insurance Co. Ltd. is in appeal under Section 23 of

the Consumer Protection Act, 1986, against the judgment dated 01.08.2022

passed by the National Consumer Disputes Redressal Commission, New

Delhi (for brevity, ‘NCDRC’), in Consumer Complaint No. 171 of 2008 filed

by the respondent herein, viz., M/s. Park Leather Industries Ltd., Agra.

2. While issuing notice in the appeal on 06.02.2023, this Court

stayed the operation of the impugned judgment, subject to the the appellant

depositing 50% of the amount awarded within a time frame. Upon such 1 deposit being made, the same was directed to be invested in a fixed deposit

with auto-renewal facility. Thereupon, the appellant deposited ₹57,12,874/-

with the Registry and the same was placed in a fixed deposit. As on date,

the deposit value stands at ₹63,60,833/-.

3. The respondent filed the subject complaint before the NCDRC

under Section 21(a)(1) of the Consumer Protection Act, 1986. Therein, it

stated that it had taken a comprehensive insurance policy from the appellant

against fire and special perils and the policy was operative from 30.06.2005

to 29.06.2006. While so, due to heavy rainfall during the night of 01.08.2005,

the factory shed of the respondent collapsed, causing damage to plant &

machinery, stocks and buildings. In consequence, the respondent raised an

insurance claim for ₹91,00,000/- The appellant appointed a surveyor to

quantify the damage suffered by the respondent and he assessed the loss

suffered at ₹8,89,176/-. However, the appellant ultimately repudiated the

claim of the respondent under its letter dated 19.12.2006, stating that the

loss suffered was not due to the insured peril of ‘inundation’ and would,

therefore, fall outside the purview of the policy.

4. Aggrieved by such repudiation, the respondent had approached

the NCDRC. It reiterated its claim for the loss suffered by it due to inundation,

quantified at ₹91,50,000/-, along with interest and costs. The appellant

2 contested the case, pointing out in its reply that its surveyor had assessed

the loss at ₹8,89,176/- but it was determined that the loss might have

occurred due to gradual weakening of the walls and seepage, which would

not be covered by the insurance policy. The appellant, accordingly, asserted

that there was no deficiency in service on its part. The respondent filed a

rejoinder to the appellant’s reply. Therein, for the first time, the respondent

stated that it had engaged an independent surveyor who had confirmed that

the damage was caused by inundation and assessed the loss at

₹46,97,085/-. The respondent stated that its premises were renovated in

2003 and the insured shed/factory buildings were in sound condition,

obviating the possibility of collapse due to weakening of walls or seepage.

5. By the impugned judgment, the NCDRC held that the appellant

was liable to compensate the respondent under the insurance policy for the

damage and loss suffered by it. As regards the quantum of compensation,

the NCDRC stated, in paragraph 24 of the judgment, as under:

‘Regarding the question of compensation, the Surveyor appointed by the Complainant assessed the loss at Rs.46,97,085/-. In the written statement, filed by the Insurance Company they have not stated that the assessment made by the Surveyor deputed by the Complainant was wrong. Since the Insurance Company has not disputed the assessment made by the Surveyor appointed by the Complainant, the Complainant is entitled to the said amount of Rs.46,97,085/-.’

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6. The NCDRC, accordingly, directed the appellant to pay

₹46,97,085/- to the respondent with interest thereon @ 9 per cent p.a. from

the date of repudiation till the date of realization. In the event, the order was

not complied with in 8 weeks, the appellant was directed to pay enhanced

interest @ 12 per cent p.a.

7. Learned counsel for the appellant fairly states that the appellant

is not contesting its liability to pay compensation under the insurance policy,

as decided by the NCDRC. He would, however, state that the issue of the

quantum of compensation has not been dealt with properly by the NCDRC.

We find merit in this contention.

8. Paragraph 24, extracted supra, demonstrates that the NCDRC

decided the quantum of compensation only on the premise that the appellant

had not denied, in its written statement, the assessment made by the

respondent’s surveyor. However, the NCDRC completely lost sight of the fact

that the aforestated figure of ₹46,97,085/- was sourced from the surveyor’s

report which was produced by the respondent, for the first time, along with

its rejoinder. Therefore, the appellant could not have denied it in its written

statement, which was filed earlier in point of time.

9. Having noted that the surveyor appointed by the appellant had

assessed the damage at a much lesser figure, i.e., ₹8,89,176/-, the NCDRC

4 could not have assumed that the appellant had mutely accepted the

enhanced estimation of ₹46,97,085/-, as per the unilateral assessment made

by the surveyor appointed by the respondent. It is not in dispute that this

assessment was undertaken by the respondent’s surveyor without putting

the appellant on notice and without its participation.

10. In any event, it is patently clear that the NCDRC did not

independently apply its mind to the quantification of the claim and blindly

acted upon the alleged failure of the appellant to deny the assessment in the

surveyor’s report produced by the respondent. This impression, as pointed

out earlier, was unfounded and erroneous. It would, therefore, be just and

proper that the NCDRC undertakes that exercise now, by allowing the parties

to adduce evidence in that regard, and then decide the amount that would

be payable to the respondent under the insurance policy.

11. The appeal is accordingly allowed to that extent and the matter

is remitted to the NCDRC for consideration afresh of the quantum of

compensation that would be payable to the respondent under the subject

insurance policy for the damage and loss suffered by the respondent due to

the collapse of the factory shed on 01.08.2005. Given the antiquity of this

case, we would request the NCDRC to give it priority and dispose of the

same expeditiously.

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12. The amount deposited by the appellant with the Registry,

presently invested in a fixed deposit, shall abide by the final decision of the

NCDRC. The Registry is directed to forthwith transfer the sum of

₹63,60,833/-, along with the interest accrued thereon, to the National

Consumer Disputes Redressal Commission, New Delhi, under proper

acknowledgement. The amount shall thereupon be invested in a fixed

deposit with a nationalized bank with auto-renewal facility and shall await the

final decision of the National Consumer Disputes Redressal Commission,

New Delhi, in Consumer Case No. 171 of 2008.

Parties shall bear their own costs.

................................, J Sanjay Kumar

................................, J Augustine George Masih

April 7, 2025;

New Delhi.

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