Case: Sikka Papers Limited Vs. National Insurance Company Ltd. &amp; Others

the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyors 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." 14. The last surveyor in his report dated May 15, 2000 assessed the loss thus : I) Working of Claim under Invoice No.60/184989 dated 13.01.2000 of M/s.CDSS : We have allowed Labour Charges at Rs.80,000. Rs.80,000 Octroi Charge Rs.16,200 Freight Charges Rs.16,000 Transit Insurance Rs. 3,500 ------------------ Rs.1,15,700 Works Contract Tax 4% 4,628 -- ----------------- Rs.1,20,328 II) Working of Claim under Invoice No.60/184990 dated 31/1/2000 of M/s. CDSS: 1) "Kit -Crank Shaft" - Part No.AR 388113400K9 - 1 No. Rs.13,80,895. 52 (vide Page 1, Sr.No.1 of Subject invoice) Add 4% Work contract Tax Rs. 55,235.83 ------------------------ Rs.14,36,131.35 The subjects Kit -Crank Shaft is comprising of set Main Bearings & connecting Rod Bearings, the reasonable total value for them is taken at Rs.1,35,131.35. Less Reasonable cost for set of main bearings & Connecting rod bearings Rs. 1,35,131.35 ------------------------- - Rs.13,01,000/- Thus , bifurcation of costs are as under:- Cost of Crank Shaft Rs.13,01,000 Cost of set of main bearings & Connecting rod bearings Rs. 1,35,131 --------- ---------- Rs.14,36,131.35 A) Assessment for Crank Shaft: Cost for Crank Shaft Rs.13,01,000 Less additional policy excess for the Crank shaft as per endorsement ..20% Rs. 2,60,200 ------------------- Net Loss Rs.10,40,800 B) Assessment for set of main bearings & connecting rod bearings:- Cost for the set Rs. 1,35,131.35 Less reasonable depreciation ..50% Rs. 67,565.67 ------------------------ Net Loss after depreciation Rs. 67,565.67 2) Gears - 2 Nos. @ Rs.2587.69 - Part No.3177095 (Vide Page 6,Sr. No.91 of subject Invoice) Rs. 7,763.07 Add 4% work contract Tax Rs. 310.52 Rs. 8,073.59 Less reasonable depreciation 50% Rs. 4,036.79 Net Loss after depreciation Rs. 4,036.80 Thus, net loss after depreciation for (1) & (2)= A + B + Gears above for items under Invoice No.60/184990 Rs.11,12,402.47 III) Working of claim under Invoice No. 60/184991 Dt. 31/01/2000 of M/s.CDSS Core Coolers (Oil collers) - 4 Nos. @ 54,205.42 - Part No.3627295 Rs. 2,16,821.68 Add 4% Work contract Tax Rs. 8,672.87 This is not a Limited life item and hence there is no any depreciation applicable for it under the policy Net Loss Rs. 2,25,494.55 Thus net loss under all the three Invoice as per claim bill works out to I) + II) + III) Rs.14,58,225.02 Less reasonable Salvage at scrap value Rs. 13,225.02 Rs.14,45,000.00 Less under-insurance -25.71% vide page No.13 Rs. 3,71,509 .50 Rs.10,73,490.50 Say Rs.10,73,491 Less Policy Excess Rs. 26,000 Net assessed Loss Rs.10,47,491/-" 15. The parts which had suffered due to wear and tear on account of constant use, although replaced could not form part of claim for reimbursement under the terms of policy and, therefore, surveyor in its report dated May 15, 2000 cannot be said to have wrongly rejected such claim. It is true that surveyors report is not the last word but then there must be legitimate reasons for departing from such report. In our view, the complainant has failed to show any reason justifying rejection of surveyors report dated May 15, 2000. re : question (two) 16. In the Dictionary of Insurance (Second Edn.) by C. Bennett, "under-insurance" is explained thus: "under-insurance occurs when the amount of insurance is less than the full value of property insured and means that the insured pays a smaller premium than that required as the rate is fixed on the basis of full values being insured. It leads to partial loss claims being scaled down by average (qv.)." The expression "average" is explained thus: "In non-marine property insurance if a sum insured is `subject to average, and the sum insured is less than the value at risk at the time of loss, the claim will be reduced in the same proportion. The measure combats under-insurance." 17. As per the invoice, the diesel generating set and the alternator was purchased by the complainant in the year 1997 for Rs.45,25,000/-. The complainant, however, got the insurance cover valuing diesel generating set (Rs.26,00,000/-) and alternator (Rs.9,00,000/-), in all for Rs.35,00,000/-. Apparently, therefore, there is an element of under-insurance. There is merit in the contention of learned counsel for the insurer that the value of the item is always declared by the insured at the time of issuance of the insurance policy while the element of under-insurance is calculated by the insurer at the time of assessment of loss.Although on behalf of the complainant, it was contended that under-insurance, if any, must be calculated at the time of issuance of policy and could not be deducted at the time of assessment of the loss but we find it difficult to accept the same. The policy provides that if the sum insured is less than the amount required to be insured, the insurer will pay only in such proportion as the sum insured bears to the amount insured. In accordance with the said provision in the policy if the surveyor applied the pro-rata formula and deducted 25.71% from the loss so assessed i.e. Rs.3,71,509.50 from the sum payable as under-insurance, such deduction cannot be faulted.18. We are, thus, of the view that the National Commission did not commit any error in accepting the Surveyors report dated May 15, 2000 as the assessment made there-under is proper and in accordance with the provisions of the policy.19. By way of footnote, we may observe that claim of Rs.10,00,000/- made by the complainant for mental harassment is wholly misconceived and untenable. The complainant is a company and, therefore, claim for mental harassment is not legally permissible. It is only the natural person who can claim damages for mental harassment and not the corporate entity.20. In all, we find that the consideration of the matter by the National Commission does not suffer from any legal flaw justifying interference by us.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]17. As per the invoice, the diesel generating set and the alternator was purchased by the complainant in the year 1997 for Rs.The complainant, however, got the insurance cover valuing diesel generating setin all for Rs.Apparently, therefore, there is an element ofThere is merit in the contention of learned counsel for the insurer that the value of the item is always declared by the insured at the time of issuance of the insurance policy while the element ofis calculated by the insurer at the time of assessment of loss.Although on behalf of the complainant, it was contended thatif any, must be calculated at the time of issuance of policy and could not be deducted at the time of assessment of the loss but we find it difficult to accept the same. The policy provides that if the sum insured is less than the amount required to be insured, the insurer will pay only in such proportion as the sum insured bears to the amount insured. In accordance with the said provision in the policy if the surveyor applied theformula and deducted 25.71% from the loss so assessed i.e. Rs.3,71,509.50 from the sum payable assuch deduction cannot be faulted.18. We are, thus, of the view that the National Commission did not commit any error in accepting the Surveyors report dated May 15, 2000 as the assessment made there-under is proper and in accordance with the provisions of the policy.19. By way of footnote, we may observe that claim of Rs.10,00,000/- made by the complainant for mental harassment is wholly misconceived and untenable. The complainant is a company and, therefore, claim for mental harassment is not legally permissible. It is only the natural person who can claim damages for mental harassment and not the corporate entity.20. In all, we find that the consideration of the matter by the National Commission does not suffer from any legal flaw justifying interference by us.