Lalit Kr. Bagla And Anr. vs National Insurance Co. Ltd. And ...
2005 Latest Caselaw 354 Del

JUDGMENT

Manmohan Sarin, J.

1. Petitioners by this writ petition, seek a declaration that the respondents are duty bound to release the sum of at least Rs. 1,31,363/- (Rs. one lacs, thirty one thousand, three hundred sixty three) together with such other amount on account of delay in making the payment by the respondents. Other reliefs are restraint on the respondents from closing the file, as threatened by their letter of 5.4.2004 Petitioners also seek that the respondents be asked to honour the alleged commitment in the letter date 2.9.2003, wherein the cost of parts assessed is given as Rs. 1,79,500/- and not Rs. 1,36,550/-.

2. The controversy, which has arisen in the writ petition, relates to a claim under the insurance policy of a Honda Legend Saloon Car, manufactured in the year 1990. The car was imported into India in 1992. Petitioner No. 2 got the ownership transferred in his name on 16.11.2001. Petitioner No. 2 took insurance with respondent No. 1 in respect of the said vehicle by paying a net premium of Rs. 7,142/-. The insured declared value (IDV) was Rs. 2 lacs. It is stated that in April, 2003, vehicle met with an accident near crossing of Safdarjung Enclave and Africa Avenue, resulting in front portion being badly damaged. Petitioners submitted their claim on 18.4.2003. It is the petitioners' case that respondents have been unreasonably denying the processing of the insurance claim for getting the car repaired.

3. The writ petition was taken up for hearing on 25.1.2005, when Dr. Manmohan Sharma made submission on behalf of the petitioners. Respondent Nos. 1-3's case was presented by Mr. G.L. Chawla and respondent No. 4-Surveyer made submission in person. The matter was adjourned to 28.1.2005, to enable the petitioners' counsel to obtain instructions as to whether petitioners are desirous of having the vehicle repaired or to pursue their claim on cash loss basis. Petitioners were also directed to be present in Court. When the matter was taken up on 28.1.2005, neither petitioner No. 1 nor his representative was present. Instead of Dr. Manmohan Sharma, Mr. J.P. Sengh, Advocate, appeared. The attention of Mr. Sengh was drawn to the fact that on the last date, Dr. Manmohan Sharma had appeared and made submissions and the case was almost concluded and adjourned for purposes of petitioners' counsel seeking instructions to know the option which the petitioners wanted to avail. Mr. Sengh submitted that regular counsel, Mr. Mahesh Prasad did not have the occasion to fully brief Dr. Manmohan Sharma and accordingly certain aspects were left and in the interest of justice, he may be heard. Mr. Sengh was, accordingly, permitted to appear. He urged that the respondents have unreasonably delayed the processing of the claim, in particular, he referred to the respondents' letter dated 2.9.2003, wherein in para 2 while dealing with petitioners' letter of 14.8.2003, respondent Insurance Company had stated as under:-

It is observed that the repairer had agreed to labour charges for Rs. 25,600/- and their signature was obtained by the Surveyer at the foot of the Estimate. The cost of parts assessed is Rs. 1,79,500/- and not Rs. 1,36,550 as stated in your letter. Your are not at all considering the amount of depreciation to be borne by you which is to the tune of Rs. 73737/-.

4. Learned counsel for the respondents submitted that this was a mistake in communication and the respondents be permitted to place their counter affidavit, which was lying ready with them. Counter affidavit was permitted to be taken on record. Counter affidavit was also filed by respondent No. 4. The matter was adjourned to permit filing of the rejoinders on behalf of the petitioners and the matter was directed to be refortified on 15.2.2005. Records of respondent nos. 1 to 3 were also called for. On 15.2.2005, there was yet another change in counsel and Mr. P.K. Ray, Senior Advocate appeared on behalf of the petitioners. The practice of change of counsel midstream during the course of arguments needs to be discouraged. In this case, with a view to give fullest opportunity and to enable the petitioners to have the satisfaction that their case has been fully represented to their satisfaction, Mr. Ray was permitted to supplement the submission made.

5. Learned senior counsel Mr. Ray, submitted that respondents are simply attempting to resale from letter dated 2.9.2003 and the commitment recorded therein. Referring to the extract from letter of 2.9.2003, quoted above, he submitted that respondents had specifically admitted, the cost of parts assessed as Rs. 1,79,500/-, rather it seeks to clarify that it was not Rs. 1,36,550/-. Having done so, respondents are now seeking to put up a case that Rs. 1,79,500/- was the cost of parts, quoted by the Vendor and he assessment of the Surveyer was Rs. 1,36,550/-. He, therefore, submitted that while processing the petitioners' claim, the cost of parts should be taken as Rs. 1,79,500/-. The next plank of petitioners' submission is with regard to computation of the clam payable on the basis of cash loss. He assailed the respondents' practice of deducting 25% from the total amount assessed on cash loss basis, as being an unfair practice. The plea being that provision of deduction is already made for depreciation and no further deduction of 25%, should be made simply for processing the case on cash loss basis.

6. Let us first consider the petitioner's contention that the cost of parts assessed was Rs. 1,79,500/- and not Rs. 1,36,550. Respondent No. 3 in the counter affidavit has stated that the cost of parts was Rs. 1,36,550/- and inclusive of sales tax was Rs. 1,47,474/-. Petitioner had in the claim for repairing the vehicle given an estimate for repairs as under:-

  Total loss of parts              1,79,500.00
Labour charges                     71,390.00
                                 ____________
                           Total 2,50,890.00
                                 ____________
 

Additional amount of service tax, sales tax, which would make the total claim of Rs. 2,73,816/-.
 

7. The above claim was obviously against even the maximum limit of liability of Rs. 2 lacs, for which the vehicle was insured. The vehicle on inspection was found to be repairable by the Surveyer. The Surveyer had duly submitted his survey report dated 1.8.2003 to the respondent Insurance Company. The estimated cost of parts at Rs. 1,79,500/- was assessed as Rs. 1,36,550/- plus sales tax. The cost of parts was to be reduced by 50% for depreciation, the vehicle being more than 11 years old. The above recommendation and assessment by the Surveyer is borne out from the Surveyer's letter of 29.8.2003, addressed to the respondent Insurance Company. Para 2 of the said letter is as under:

That it is incorrect to say that we have allowed Rs. 73737.00 towards the cost of parts as against estimated amount of Rs. 179500. The fact is that we allowed Rs. 136550.00 + sales tax as against the estimate of Rs. 179500.00. We feel that insured is not all considering the amount of depreciation to be borne by him which is to be tune of Rs. 73737.00 as calculated by us in our survey report.

8. The Surveyer in fact had produced on record that the labour charges of Rs. 71,390/- were assessed at Rs. 25,600/-. He has produced on record the photocopy, where the labour charges of Rs. 25,600/- are recorded as having been assessed and the same is initialed by the Vendor's representative. In the wake of this, it is apparent that the communication dated 2.9.2003, did not correctly reflect the factual position, which stands verified on the basis of documents on record. In fact, petitioners have now chosen to take advantage of the error appearing in letter dated 2.9.2003. Petitioners were themselves conscious of the factual position. This becomes apparent from petitioners' letter dated 14.8.2003, annexed as Annexure P-7 to the petition. Petitioners in this letter in fact protested against the assessment and allowing of cost of parts at Rs. 73,737/- against Rs. 1,79,500/-, which was the estimated cost on the ground that the same was not realistic. This shows that petitioners were fully aware that the assessment by the Surveyer was Rs. 1,36,550 plus sales tax Rs. 10,924/, amounting to Rs. 1,47,474/-, 50% depreciation amount being Rs. 73,737/-. Petitioners labeled the above assessment as being unrealistic.

9. In these circumstances, it is idle for the petitioners to contend that the cost of parts assessed was Rs. 1,79,500/- less depreciation. As regards the quantum of labour charges, petitioners claimed that the assessment of labour charges at only Rs. 27,000/- as against Rs. 71,390/- was not acceptable to either the vendor or the petitioners. The surveyer has produced along with the affidavit an endorsement to the following effect, which is initialed by the vendor itself:

Labour charges Rs. 25,600, including repairing and painting plus cost of parts to be procured from vendor of spare parts from local market, cost of which is to be ascertained.

This is duly initialed by the Vendor. Accordingly, it cannot be said that what the Surveyer had assessed was unrealistic and not acceptable to the vendor.

10. From the foregoing, it would be seen that there is no merit in either of the petitioners' contention that the cost of parts had been assessed at Rs. 1,79,500 or that the assessment of labour charges was unrealistic and not acceptable to the vendor, the vendor having given the above endorsement.

11. Respondent Insurance Company is willing to reimburse the cost of replacement of parts to the extent of Rs. 73,733/- and the labour charges for repair at Rs. 26,888/- totalling Rs. 1,00,621/-, inclusive of tax is applicable. Considering that the vehicle being more than 10 years old, the estimate of repairs and the assessment as made by the Surveyer, I do not find the above reimbursement suffering from any apparent error or otherwise flawed, in the exercise of writ jurisdiction.

 

12. As regarding the amount under cash loss basis being very low, the basis of computation is as under 
  Cost of parts allowed
without sales tax                    136550.00
Less 50% depreciation                 68275.00
                                     __________
                                      68275.00
Add. Labour charges without
service tax and WCT                   24900.00
                                     __________
                                      93175.00
less cost of salvage                   5000.00
                                     __________
                                      88175.00
less 25% to settle the claim
on repair cash loss basis             22044.00
                                     __________
Net amount payable to
the petitioner                        66131.00
                                     __________
 

13. Respondents explained to the petitioners that insured declared value could be relevant only when the claim was being settled on total loss basis, such as, in the case of theft etc., or where the cost of repair exceeded 75% of the insured declared value. In the instant case, this was not the position and hence the claim could not be preferred on total loss basis. While computing the claim on cash loss basis, the insured gets certain benefits in terms of receiving the amount, as calculated without the insured having the responsibility to tender any account for repair or submit invoice therefore. It is on this account that a practice of deduction of 25% is uniformly applied. There is no apparent error or irrationality in the computation. In case, petitioners find the same as not suitable, they are free to have the vehicle repaired. Learned senior counsel for the petitioner has submitted that respondents have delayed the processing of claim, causing loss of use of vehicle and or depriving the petitioners of the amount receivable. I find that respondents cannot be blamed for the delay in settlement of claim. In case petitioners choose to claim amounts in excess of those reasonably assessed by the Surveyer, they cannot hold responsible. As parties had been heard on merits, I have not proceeded on the objections raised, as to the maintainability of the writ petition by respondents.

Writ petition has no merit and is dismissed. Petitioners are given two weeks' time to convey the option either for getting the vehicle repaired or availing the option for cash loss basis, as assessed by the respondents.