NCDRC Upholds Surveyor’s Loss Assessment, Orders New India Assurance To Pay 9% Interest For Delayed Fire Claim Settlement
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), New Delhi, has partly allowed a consumer complaint filed by M.K. Aggarwal Hosiery (P) Ltd. and directed New India Assurance Co. Ltd. to pay interest and litigation costs for delayed settlement of a fire insurance claim, while upholding the surveyor’s assessment of loss as fair and justified. The Bench comprised Justice A.P. Sahi (President) and Member Bharatkumar Pandya.
Background
The complainant, a Ludhiana-based manufacturer of synthetic knitted printed fabrics and blankets, had obtained a Standard Fire & Special Perils Policy for ₹10 crore and a Floater Fire Policy for ₹4.5 crore from the insurer. In the intervening night of 26/27 April 2009, a major accidental fire broke out around 3:45 a.m., causing extensive destruction to stock, plant, machinery and portions of the building. Reports from the fire brigade and police confirmed that the incident was accidental. The complainant filed a claim of ₹8,08,71,327. New India Assurance appointed M/s Rohit Kumar & Co. as surveyor, who assessed the loss at ₹5,50,42,530, taking into account depreciation, salvage and under-insurance. On 15 June 2011, the insurer disbursed ₹5,49,45,964, but only upon the complainant signing an unconditional discharge voucher. The complainant asserted before the Commission that the discharge voucher was signed under financial compulsion, as its accounts were on the verge of being declared NPA and it faced substantial monthly interest burdens. Alleging coercion, deficiency in service, arbitrary deductions and undue delay, the complainant sought the balance amount along with interest and compensation.
Contentions
Complainant’s case: The complainant alleged that the insurer had substantially delayed the settlement despite timely cooperation. It contended that the surveyor’s assessment was significantly lower than the actual loss of ₹8.08 crore and that the machinery destroyed was mostly new, with stock records regularly maintained and verified by auditors and banks. The complainant reiterated that the discharge voucher was signed under pressure, as the insurer refused to release the admitted amount unless the voucher was executed without protest.
Insurer’s defence: New India Assurance maintained that the settlement strictly followed the surveyor’s detailed analysis, which applied standard principles of depreciation and under-insurance. It argued that the complainant had supplied documents in a piecemeal manner, causing delays, and had not reinstated damaged structures, preventing settlement on reinstatement-value basis. The insurer also claimed that the discharge voucher constituted a valid and voluntary full and final settlement.
Findings of the Commission
The NCDRC held that although signing a discharge voucher does not automatically bar a consumer complaint, the complainant in this case failed to establish any coercion. The Commission also noted that there was a nearly 14-month delay in filing the complaint after executing the voucher, which undermined the allegation of pressure.
The Commission found that the complainant had neither specifically challenged the surveyor’s calculations nor produced any substantive material to justify the higher claimed loss. The judgment records that the survey report was detailed, reasoned and based on an accepted methodology, particularly because no stock register had been maintained. In such circumstances, the use of the Modified Trading Account method was considered appropriate. Since the complainant had not reinstated the damaged building or machinery, the surveyor was also correct in computing the loss on market-value basis rather than reinstatement-value basis.
The NCDRC therefore upheld the surveyor's assessment and rejected the complainant’s additional claim of approximately ₹2.59 crore, noting that no error, arbitrariness or flaw in the surveyor’s reasoning had been demonstrated.
Direction on Delay
However, the Commission found merit in the allegation of delay on part of the insurer. It held that New India Assurance had not settled the claim within a reasonable period after the survey report and was thus liable to compensate for the delay. The Commission directed payment of:
9% simple interest on ₹5,49,45,964 for the period 16.10.2010 to 15.06.2011, and
₹50,000 as litigation cost, payable within two months.
In case of default, the interest rate would escalate to 12%. The NCDRC ultimately partly allowed the complaint, upholding the surveyor’s loss assessment and rejecting the demand for additional compensation, but directing the insurer to compensate the complainant for delayed settlement with interest and costs.
Cause Title: M.K. Aggarwal Hosiery (P) Ltd. vs. New India Assurance Company Ltd.
Case No: CC 269/2012
Coram: Justice A.P. Sahi (President), Member Bharatkumar Pandya.
