Mumbai: The state consumer commission has directed The Oriental Insurance Company to pay Rs 7.79 lakhs with interest to an Andheri-based firm for the damage caused to his property during the Mumbai rain deluge of July 26, 2005. The order, passed on May 12, 2023, sets aside and modifies a district commission order that awarded only Rs 2.13 lakhs.
The state commission granted enhanced compensation, stating that the depreciation applied by the surveyor was unjust and improper. The insurance policy included a 'Reinstatement Value Policy' clause, which required the payment of the actual amount necessary for reinstating the premises. However, the surveyor had depreciated the claim value by 75 per cent, citing the building's age and poor maintenance. The commission noted that the insurance company's surveyor failed to provide the IRDA norms on which the deductions were based.
Appeal filed by Andheri based company
The order was issued by Justice S. P. Tavade, president, and S. T. Barne, judicial member of the State Consumer Disputes Redressal Commission (SCDRC), in response to an appeal filed by M/s Dye-Chem Manufacturing, an Andheri-based company, against The Oriental Insurance Co. Ltd. The appeal challenged a 2016 order issued by the District Consumer Disputes Redressal Commission in South Mumbai.
Dye-Chem, a private limited company, owned a plot of land with a ground plus two-story building occupied by itself and its sister concern, M/s Hema Apparels, engaged in garment exports. They had obtained a 'Fire and Special Peril Policy' from The Oriental Insurance Company for the building and compound wall, valued at Rs 77 lakh, valid from April 2005 to March 2006.
During the heavy rainfall and flooding on July 26, 2005, the area experienced continuous torrential rains, resulting in floodwaters reaching five to six feet and receding only after 12 hours. The building was submerged up to four feet inside. On August 1, 2005, the area experienced re-flooding, further damaging the building, electrical installations, and compound wall. Dye-Chem promptly notified Oriental about the deluge, providing photographs and written correspondence. Although a surveyor was appointed, the inspection was delayed due to heavy rains, and the next date was yet to be advised.
Accusations on Insurance company
Subsequently, the surveyor requested an estimate of the damage, which the complainant assessed at Rs 11.73 lakhs solely for building repairs. However, the insurance company only cleared a claim of Rs 2.13 lakhs in May 2006, without providing a survey report. Out of the approved amount, the complainant received only Rs 2.02 lakhs.
Dye-Chem accused the surveyors and insurance company of acting against its interests, noting that the surveyor failed to account for damages to the electrical installations. The surveyor, in turn, rejected a claim of Rs 3.94 lakhs, which accounted for damage to internal roads, and applied 75 per cent depreciation to the remaining claim amount of Rs 7.79 lakhs, citing the building's age and lack of maintenance.
The state commission stated that the surveyor had "committed an error" in considering a 75% depreciation, as extensive repairs amounting to Rs 25.31 lakhs were conducted on the building in 1986. The commission deemed the depreciation to be improper and unreasonable, emphasizing that the basis of the IRDA norms, on which it was applied, was not disclosed. "It cannot be ignored that the policy, issued based on the proposal form as per the RIV Clause, means and includes the actual amount required for the reinstatement of the premises," said the commission. Additionally, the commission stated that the insurance company had shown a deficiency in service by denying the actual required value for the loss sustained by the building on the RIV basis, as agreed upon by both parties. The company was directed to pay an additional Rs 10,000 for expenses at the district commission, with the order to be implemented within 60 days.