Order Date: Not Specified
Order Name: Oriental Insurance Company Ltd. vs. M/S. S. P. Singla Construction Pvt. Ltd
Case No.: F.A.No. 943/2016
In a recent ruling, the National Consumer Disputes Redressal Commission (NCDRC), led by Dr. Sadhna Shanker, addressed a significant issue concerning insurance claims. The Commission held that an insured party cannot file two separate claim forms for the same incident, as doing so does not alter the nature of the occurrence or the resulting loss.
### Case Background
M/S. S. P. Singla Construction Pvt. Ltd., a company engaged in bridge construction, had taken a “Contractors All Risk Insurance Policy” from Oriental Insurance. In September 2011, floods in the river Sone caused substantial damage, washing away two temporary steel bridges and plain cement concrete. The company informed the insurer but did not receive an immediate response. After persistent follow-ups, the insurer conducted a loss assessment survey. Although the surveyor validated the claim, they applied excessive under-insurance and two excess clauses, reducing the claim to zero. Dissatisfied, the company filed a complaint with the State Commission of Punjab, which ruled in their favor. The insurer was directed to pay Rs.72,83,400 with 12% interest for deficiency and Rs.11,000 for litigation expenses. The insurer then appealed to the National Commission.
### Insurer’s Arguments
The insurer contended that the complainant, being a commercial entity, did not qualify as a ‘consumer’ under the Consumer Protection Act, making the complaint invalid. They argued that their surveyor’s assessment of ‘nil’ liability was based on the policy terms, and hence, they were not obligated to pay any amount. Furthermore, the insurer claimed there was no deficiency in their service.
### National Commission’s Observations
The National Commission examined whether there were two separate occurrences leading to distinct losses. The review of the surveyor’s report, River Water Level Data, and a Newspaper Report revealed that the river Sone experienced a flash flood, with high water levels during the specified period. The company could only assess its losses after the water receded, which included the washing away of two bridges. The surveyor’s report also referred to this as one ‘occurrence.’ Therefore, the Commission concluded that this was a single occurrence resulting in the loss of two bridges.
Filing two separate claim forms did not change the nature of the occurrence and loss. As a result, the State Commission’s decision on this point was upheld. Since there was only one occurrence, applying the excess clause twice was deemed inappropriate. Regarding under-insurance, the surveyor reviewed the insured’s work contract and the escalation clause but did not justify ignoring the escalation clause in calculating the under-insurance percentage. The Commission agreed with the State Commission that under-insurance should be considered at 9% instead of 21.07%.
It was noted that a survey report is not final and can be contested with sufficient reasons, referencing the Supreme Court’s judgment in New India Assurance Co. Ltd. v. Pradeep Kumar. The Commission found an interest rate of 9% per annum on the awarded amount to be appropriate, considering the loss and injury suffered by the company.
### Final Ruling
The National Commission modified the State Commission’s order, directing the insurer to pay Rs. 72,83,400 along with 9% interest per annum until payment, and Rs. 11,000 as litigation expenses.
### Takeaway
The key takeaway from this judgment is that for insurance claims, the nature of the occurrence is crucial. Filing multiple claims for the same incident does not change the fundamental nature of the loss. This ruling underlines the importance of accurate assessment and honest representation in insurance claims.
