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

The complainant, Sikka Paper Limited, is a limited company engaged in the manufacture of paper having a paper mill unit in District Muzaffarnagar (U.P.). For want of regular and continuous supply of electricity from the Uttar State Electricity Board, the complainant purchased the Diesel Generating Set of 1000 KVA of Kirloskar Cumins Limited with alternator of 1250 KVA for the smooth running of its unit. The said diesel generating set along with alternator was got insured by the complainant for a period from April 8, 1999 to April 7, 2000 for Rs.35,00,000/- vide insurance policy No. 451902/46/99/415. The complainant paid a premium amount of Rs.55,860/- to the insurer.3. On December 25, 1999, the said generating set broke down and it could not start again despite efforts. The concerned officers of the insurer were intimated in this regard by the complainant and they were requested for arranging immediate survey of the insured generating set. The first surveyor appointed by the insurer is said to have completed his inspection on December 26, 1999 and advised the complainant to send the engine to the authorized repairers viz., Cumins Diesel Sale and Service (India) Limited, Pune. On December 30, 1999, another surveyor is said to have inspected the diesel generating set and identified the damages and the complainant with the consent of the insurer, sent the diesel generating set for repairs to authorized repairers at Pune. The authorized repairers gave the estimate of expenses of repairs to the tune of Rs.27,00,395/- and repaired the diesel generating set. The complainant is said to have paid Rs. 25,00,000/- to the repairers.4. The case of the complainant is that all bills acquired and directed by the insurer and their appointed surveyors and as required by the policy were handed over to the insurer and the complainant was told that the actual expenses incurred by them in the repairs of the diesel generating set as well as reinstatement charges would be paid but later on they agreed to reimburse Rs.8,07,110/- only. Constrained thereby, the complainant approached the National Commission and claimed a sum of Rs.25,00,000/- towards repairs of diesel generating set; Rs.10,00,000/- for mental harassment and damages along with interest and costs. The complainant alleged that the insurer failed to discharge their obligations under the insurance policy and with mala fide intention to defeat and delay its legitimate claim, adopted all unwarranted and illegal devices.5. The insurer resisted the complaint and set up the plea that claim of Rs.8,07,110/- was accepted as per the surveyors report dated May 15, 2000; the surveyor considered the damage caused as a result of the accident to the various parts of the diesel generating set and wherever he found that replacement was required, he provided for the same. The insurer stated that the surveyor assessed the damages on the basis of only those items which were affected in accidental damage and the balance items not following the scope of the policy were disallowed. It was the case of the insurer that the parts which did not suffer any damage as a result of accident were not liable to be replaced at the expense of the insurer. The insurer also averred that the surveyor in its report dated May 15, 2000 after considering the damage caused to the diesel generating set has allowed amounts for carrying out the necessary replacement of parts damaged in accident after deducting the depreciation. The deduction at the rate of 25.71% as under-insurance was also sought to be justified. The insurer denied the claim towards mental harassment.6. The National Commission, inter alia, considered the matterare also unable to accept the figure given by the Complainant for purchase of the Engine as well as while it meets the `capacity requirement but not of `kind i.e. a cumin engine thus not meeting the requirement of the Terms of Policy as reproduced earlier under the head `Sum Insured. We find that the third Surveyor has taken pains to explain each and every part of the repairs, freight etc. and his assessment of loss is as per terms of the Policy which alone can form the basis of payment to the Complainant. We also see further material on record that estimates of Rs.25 lakhs for repairs relate to replacement of several parts not affected by the incident but to prolong the life of the Engine. Full reimbursement has been made for replacement of crankshaft, Main bearings, connecting Rod bearing, oil coolers and Gears but not for cylinder liners, Piston and Pistons rings as they are expendibles, to the extent that they are subject to wear and tear on account of constant use. The latter contingency is not covered by terms of the policy, hence cannot be allowed.In the light of above discussions, we direct the Opposite Party to pay to the Complainant an amount of Rs.10,47,491/- as assessed by the third Surveyor along with interest @ 12% from 1.3.2000 i.e. after two months of the receipt of the report of the second Surveyor, till the date of payment after adjusting for the payment already made. The Opposite Party shall also pay cost of Rs. 5000/- to the

Court's reasoning:
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.