Insurer Cannot Reopen Adjudicated Claim By Introducing New Grounds Under Guise Of Reassessment: Delhi Consumer Commission
The District Consumer Disputes Redressal Commission-I (North District), Delhi, comprising President Divya Jyoti Jaipuriar and Members Ashwani Kumar Mehta and Harpreet Kaur Charya, has held Oriental Insurance Company Ltd. liable for deficiency in service for failing to comply with an earlier direction to correct an error in the assessment of an insurance claim and instead introducing a fresh under-insurance ground through a subsequent reassessment.
The Commission held that an insurer cannot use a direction for correcting a specific computational error as an opportunity to reopen an adjudicated claim by introducing new grounds for reducing its liability.
Facts
The complaint was filed by Sushil Gupta, proprietor of M/s Krishna Jute Company, against M/s Oriental Insurance Company Ltd. in connection with a fire insurance claim. A fire had occurred on April 21, 2008, causing damage to the complainant's stocks, machinery and other property.
The complainant had earlier approached the Commission alleging an error in the assessment of the quantity of damaged Hessian cloth. In its order dated November 24, 2015, the Commission found deficiency in service and directed the insurer to rectify the identified calculation error regarding the quantity of damaged bales within the stipulated period. The complainant was also granted liberty to approach the Commission in case of non-compliance.
Instead of merely correcting the identified error, the insurer relied upon a fresh reassessment prepared by Sanjay Dwivedi & Associates. The subsequent assessment introduced an alleged 34.67% under-insurance factor and assessed the total risk at ₹30,61,515. The complainant challenged the reassessment, contending that the insurer had travelled beyond the scope of the earlier order.
Contentions of the Insurer
The insurer contended that the complaint was misconceived and amounted to an abuse of the process of law. It submitted that it had complied with the earlier order by appointing a surveyor, who reassessed the claim after examining the relevant records. The insurer also relied upon judicial precedents to contend that due importance ought to be given to a surveyor's report.
Observations
The Commission observed that the liberty granted under the earlier order was neither uncertain nor unlimited and was confined to correcting the identified error in calculating the quantity of damaged cloth. It did not permit the insurer to reopen the claim or introduce a new ground for reducing its liability.
The Commission noted that the 34.67% under-insurance factor was not part of the original adjudication and was introduced only through the subsequent reassessment. Relying on Supreme Court precedents, including Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd., JSK Industries Pvt. Ltd. v. Oriental Insurance Co. Ltd. and Sri Venkateswara Syndicate v. Oriental Insurance Co. Ltd., the Commission held that the insurer could not travel beyond the scope of the earlier adjudication or treat the fresh reassessment as an opportunity to reopen the claim.
The Commission further held that an adjudicatory order cannot be rendered ineffective through a subsequent administrative or survey exercise and that compliance must be substantive and in the true spirit of the order.
Decision
Holding the insurer's conduct to constitute a continuing and independent deficiency in service, the Commission directed Oriental Insurance to pay ₹11,79,813.15, with 9% annual interest from July 1, 2009 till actual payment.
It further awarded ₹1 lakh for harassment and mental agony and ₹55,000 towards litigation costs, besides directing compliance with the earlier order's ₹50,000 compensation and ₹20,000 litigation expenses, with applicable interest. The insurer was also directed to deposit ₹1 lakh towards costs for misconduct with the Consumer Welfare Fund, Delhi.