M. SHREESHA, PRESIDING MEMBER Challenge in these Revision Petitions under Section 21 (b) of the Consumer Protection Act (for short the Act) is to the order dated 24.1.2012 in First Appeal Nos. 478 & 479 of 2011 respectively on the file of State Consumer Disputes Redressal Commission, Chhattisgarh, Raipur (for short the State Commission). By the impugned order, the State Commission partly allowed the Appeals preferred by the Insurance Company and modified the order passed by the District Forum reducing the amount from 16,35,600/- to 11,65,365 in CC No. 153 of 2010 and from 2,75,740/- to 71,805/- in CC No. 152 of 2010. -1-

2. The brief facts as set out in the Complaint are that the Complainant Company, engaged in the execution of Civil Engineering Construction Works, was awarded a contract of construction of high level Bridge of 155 meters length across Sasti river including approach road of length 50 meters on either side of bridge, at Ballarpur Area for Western Coalfields Limited Nagpur. The Complainant in order to fulfil their obligation defined in the Contract Agreement, took Contractors All Risks Policies covering accidental risks and losses towards entire contract works including an additional cover towards removal of debris for a total sum of 226 lakhs plus 5 lakhs = 231 lakhs. A premium of 1,22,234/- was paid towards the said policy covering the risk period from 4.10.2005 to 3.1.2008.

3. While so, on 4 July, 2006, there was a flash flood with continuous rains, which led to th damaging of the foundation of the stage erected for span P1-P2. This resulted in losses to work done in casting of footing, erection and removal of staging & shuttering and fixing and removal of steel and other construction materials. These losses were covered under the C.A.R. Policy issued under the peril Act of God. The loss was intimated vide letter dated 26.9.2006, duly explaining the reasons for the delay in intimation and the Opposite Party/Insurance Company appointed a surveyor for assessment of the loss on 5.10.2006. The Surveyor visited the site of the accident on

9.10.2006 and took all the details with respect to stocks, damaged items, relevant drawings, documents, photographs etc. Additional documents vide letters dated 15.1.2007 and 21.6.2007 were demanded, which were immediately sent to the Insurance Company. The surveyor submitted his final assessment of loss of 2,75,740/-. On 21.10.2009 after 14 months of issuance of the survey report, the Insurance Company desired certain clarifications vide their letter dated 16.10.2009, which was immediately clarified by the Complainant vide letter dated 22.10.2009. As the Insurance Company did not respond or settle the claim after 22.10.2009, the Complainant Company approached the District Forum seeking direction to the Opposite Party to pay 4,00,000/- towards the claim amounts including interest of 12%, compensation and costs in CC No. 152 of 2009; and 16,35,600/-alongwith interest @ 10% and costs of litigation in CC No. 153 of 2009.

4. The Opposite Party/Insurance Company filed their written version stating that the Complainant ought to have given intimation and submitted the claim form within 14 days which they had not done as the incident had taken place on 4.7.2006, but the loss intimation was given only on 26.9.2006. Therefore, the amount of loss assessed by the surveyor under both the policies was not payable as per the policy conditions. The claim was repudiated by letter dated 10.3.2010 because of material breach of the Policy conditions and stated that there was no deficiency of service on their behalf.

5. Based on the evidence adduced, the District Forum allowed the Complaints directing the Opposite Party to pay 2,75,740/- with 6% simple interest from the date of filing of the Complaint i.e. 18.3.2010 together with costs of 6,000/- in CC No. 152 of 2010; and an amount of 16,35,000/- with simple interest @ 6% from 26.5.2009 till the date of realization together with costs of 6,000/-, in CC No. 153 of 2010.

6. Aggrieved by the said order, the Opposite Party/Insurance Company preferred FA Nos. 478 & 479 of 2011 before the State Commission.

7. The State Commission observed as follows:

12. Now the next question is whether any amount is reducible from the assessed amount under excess clause.

13. Learned counsel for the appellant has drawn our attention towards excess clause of both policies. He submitted that under the contract of C.A.R. policy the excess clause is as under : - Excesses for sections I & II Description Min Excess

1. Storage & Construction 5% C. Amt. 0

2. Maintenance Period Claims 5% C. Amt. 0

3. Major Perils (AOG) Claims 5% C. Amt. 0 For EQ Zone I & II Risks, Min. Excess For AOG Claims Shall Be Zone I : 50,000 Per Claim Zone II : 25 ,000 Per Claim If Policy AOG Excess Is Higher Than That Excess Will Be Applicable. And in C.P.M. policy the excess clause is : - Sr. Qty. Location Description of Items (type Yr. of Sum Excess AOG Manfr. Insured Excess 1 7 Nos. Any of Insureds Chain Pully blocks 50,000 750 2500 site at anywhere 2 12 Nos. In India Surveying instruments with all 2,50,000 3750 12500 laboratory Apparatus & all accessories (includes cube testing machine, lavelling instrument, theodolites etc. 3 40 Nos. Cranes upto 10 T capacity 2,00,000 3000 10000 4 300 MT Staging, Centering & Shuttering 12000000 180000 600000 Material In this clause excess has been clarified and he submitted that the amount as per the percentage of claim as mentioned in the excess clause was required to be deducted from the assessed amount and the District Forum has committed a mistake in not deducting this amount from the assessment of the surveyor, at the time of passing award. Earlier this Commission has decided this question between the same parties in a reported case, The and Oriental Insurance Co. Ltd. Vs. M/s. Uttam Construction Company, 2006 (2) CPR 126 this Commission in paragraph No.22, has held as under: - "22. Thus, from the material placed on record, it appears that the amount of 16 ,16,941/- as agreed to and proposed by the complainant was the actual loss caused to the complainant, there appears to be no reason to discard or disallow the same. The extent and details of loss given by the complainant are fully justified, even by the details of loss given in surveyors report dated 8.10.02 (Annexure C12). Therefore, the complainant under the CAR policy appears to be entitled to the above amount subject to excess clause i.e. deduction of 5% of the claim amount, which works out to 80 ,847.05 (rounded to 80 ,900/-). The complainant therefore entitled to 15 ,36,041/- (rounded to 15 ,36,100.00). Thus, the OP insurer is liable to pay to the complainant 15 ,36,100/- as compensation under the CAR policy."

14. Thus, the amount which has been mentioned in the excess clause is reducible from the assessed amount and it appears that the District Forum has committed a mistake in awarding entire amount of the assessment of the surveyor. The amount awarded by the District Forum in respect of CAR policy is 16,35,600/- and in that amount, excess clause of the policy 5% of the claimed amount was to be deducted. 5% of this amount comes out to be 81,780/-. Therefore, the complainant is entitled to 15 ,53,820/-.

15. Learned counsel for the respondent / complainant submitted that the surveyor in his report has already deducted 5% of the assessed amount and therefore there was no necessity of deducting any further amount. We do not find much force in this argument. Report of the surveyor says that though the heavy rains on 03.08.2006 resulted into heavy flood situation thereby washing away the earthen embankment of the bridge on Ballarpur side, it is equally possible the normal rains before 03.08.06 might also have caused some damage to the earthen embankment. Flood / inundation damages are the perils covered under the subject CAR policy. However, the rain water damages are not admissible under the policy. Then lastly it was observed that after discussions, a nominal deduction of 5% on account of rain water damage was considered fair and reasonable and an amount from the assessed amount of 6,98,370/- for loss of construction for earthen embankment, @ 5% amounting 34 ,918.50, was deducted. So far as another assessment under the same policy is concerned, there was no such deduction. From this, it appears that the 5% deduction which was made by the surveyor was on account of loss occurred under the peril which was not covered under the insurance policy, whereas the 5% of the claimed amount is deductible under the terms of the policy, as compulsory excess, so we find that the amount which has been assessed by the surveyor is required to be reduced by 5%.

16. So far as other policy is concerned, the percentage of excess has not been mentioned in the policy document itself. The surveyor in his report has specifically noted that the amount of loss as assessed above ( 2,75,740/-) is subject to an excess under the policy. It appears from the policy document that the excess amount in the head staging, centering and shuttering material is 1,80,000/- and therefore deducting this amount from the amount of assessment it comes out to be 95 ,740/-.

17. On account of late intimation to the Insurance Company the amount payable by the Insurance Company to the complainant was on nonstandard basis and therefore it appears reasonable to award 75% of the assessed amount, after deduction under excess clause. Thus, the amount payable by the Insurance Company to the complainant comes out to 11,65,365/- (75% of 15 ,53,820/-) in complaint case No.153/2010 and 71 ,805/- (75% of 95 ,740/-) in complaint case No.152/2010

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8. Dis-satisfied by the said Order, the Complainant preferred these Revision Petitions.

9. Learned counsel for the Revision Petitioner contended that the surveyor had already deducted 5% towards excess whereas the State Commission had once again deducted 5% and modified what had to be paid.

10. The brief point that falls for consideration is whether the State Commission was right in reducing the amounts awarded by the District Forum. It is pertinent to note that the Insurance Company did not prefer any Revision Petitions challenging the order of the State Commission. Therefore, the finding of fact of deficiency of service against the Insurance Company stands final. It is only to be decided whether deductions made by the State Commission were justified.

11. The facts not in dispute are the issuance of the Policy; sum insured; the period of coverage and also the flood which occurred on 5.8.2006 and which continued upto 9.8.2006. The learned counsel for the Respondent/Insurance Company contended that the Policy condition stipulates that intimation should be given in 14 days and that the Complainant did not adhere to the same and has, therefore, committed a breach of the policy conditions. The Complainant Company has given substantial reasons in their very first letter addressed to the Insurance Company explaining that the entire site remained under water for a very long period and only after receiving the reports from the site, a team of officers of the Construction Company visited the site and after taking stock of the losses, had made the claim.

12. It is also the case of the Revision Petitioner/Complainant that the delay in intimation is genuine and also that no such exclusion clause was supplied to them alongwith the Policy. Condition 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders Interests) Regulations, 2002, Claim procedure in respect of a general insurance policy, reads as follows:

9. Claim procedure in respect of a general insurance policy (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at . On receipt the earliest or within such extended time as may be allowed by the insurer of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In case where a surveyor has to be appointed for assessing a loss/claim, it shall be so done within 72 hours of the receipt of intimation from the insured

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13. In addition to the afore-mentioned, it is also the Complainants case that the insurer had not informed him about the rule or given the schedule with respect to lodging of the claim within 14 days.

14. It is relevant to mention here the IRDA Circular No. IRDA/HLTH/MISC/CIR /216/09/ 2011, dated 20.9.2011, whichreads as follows:

The current contractual obligation imposing the condition that the claims shall be intimated to the insurer with prescribed documents within a specified number of days is necessary for insurers for effecting various post claim activities like investigation, loss assessment, provisioning, claim settlement etc. However, this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances. The insurers decision to reject a claim shall be based on sound logic and valid grounds. It may be noted that such limitation clause does not work in isolation and is not absolute. One needs to see the merits and good spirit of the clause, without compromising on had claims . Rejection of claims on purely technical grounds in a mechanical fashion will result in policyholders losing confidence in the insurance industry, giving rise to excessive litigation

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15. It is pertinent to note that the surveyor had clearly stated that there is no breach of policy conditions exceptions and concluded as follows:

The cause of loss is one which is specifically covered under the policy and does not fall under any of the exclusions as the claim is admissible under the Policy

. 1. 2. 3.

16. In the light of the fact that there were floods and the area was indundated for a long time and genuine reasons were given by the insurer in their very first claim letter to the Insurance Company, the repudiation on this technical ground alone is totally unjustified.

17. The surveyor had assessed loss at 2,75,740/- in CC No. 152 of 2010 and 16,35,600/- in CC No. 153 of 2010. He has observed that both the policies are subject to excess and the insurers may keep this in mind while considering the claim.

18. The second point for consideration is with respect to 5% deduction under excess which has been made by the State Commission. A brief perusal of the Policy shows excesses for Section I & II as under:

EXCESS FOR SECTIONS I & II Description Min. Excess Storage & Construction 5 % C. Amt. 0 Maintenance Period Claims 5% C. Amt. 0 Major Perils (AOG) Claims 5% C. Amt. 9 For EQ Zone I & II Risks, Min. Excess For AOG Claims shall be Zone I : 50,000 Per Claim Zone II: 25,000 Per Claim If Policy AOG Excess is Higher Then That Excess Will Be Applicable

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19. The Surveyor in his Report said that both payments are subject to excess but the percentage of excess has not been mentioned. A brief perusal of the Policy filed before us under Specifications of Insured Items clearly states that higher excess is Nil and AOG Excess amount is as under: SPECIFICATIONS OF INSURED ITEMS Higher excess: Nil Sr. Qty. Location Description of ItemsYr. of Sum Excess AOG (type , Manufacturer, Manfr. Insured Excess Capacity) 1 7 Nos. Any of Insureds Chain Pully blocks 50,000 750 2500 site at anywhere 2 12 Nos. In India Surveying instruments with all 2,50,000 3750 12500 laboratory Apparatus & all accessories (includes cube testing machine, lavelling instrument, theodolites etc. 3 40 Nos. Cranes upto 10 T capacity 2,00,000 3000 10000 4 300 MT Staging, Centering & Shuttering 12000000 180000 600000 Material Premium: 27,000.00 +10.2% Service Tax 2,754.00 ______________ Net Premium:29,754.00 ______________

20. In view of the afore-mentioned excess clause, the contention of the learned counsel for the Revision Petitioner that excess of 5% has already been deducted by the surveyor is unsustainable. The Policy stipulates that if AOG is higher than that excess would be applicable. In the instant case, the flood which had occurred is Act of God (AOG) and 5% deducted by the State Commission towards excess is justified.

21. It is also observed from the record that there are latches on behalf of the Insurance Company with respect to delay in furnishing of the Survey Report and there is also a delay of 18 months in the repudiation of the claim which is dated 10.3.2010, whereas the Surveyor had filed his report way back on 14.6.2008 and this is contrary to the IRDA Rules stipulated in Rule No. 9(2)(3)(4)(5) & (6) which read as under:

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report. (3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report. Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim. (4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer. (5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be. (6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it

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22. At the cost of repetition, when there are specific latches by the Respondent/Insurance Company in not only delaying the submission of the Survey Report but also delaying the repudiation by 18 months contrary to the rules stipulated by the IRDA, repudiating the claim on grounds of non-intimation within 14 days specifically in the light of Rule-9 of IRDA despite substantial reasons given by the Petitioner/Complainant, does not speak well of the conduct of the Respondent/Insurance Company.

23. These Revision Petitions are allowed in part and the order of the State Commission is modified directing OP/Insurance Company to pay 15,53,820/- in CC No. 153 of 2010 and 95,740/- in CC No. 152 of 2010 (i.e. the amounts after deducting 5% excess) and confirming the rest of the order of the District Forum with respect to interest and costs. These amounts are directed to be paid within four weeks from the date of receipt of this order failing which the decretal amount shall attract interest at 12% p.a. from the date of filing of the Complaint till the date of realization. No order as to costs. ...................... M. SHREESHA PRESIDING MEMBER ......................J ANUP K THAKUR MEMBER