ASHOK BANERJEE vs Divisional Manager, New India Assurance Co. Ltd.

DEFICIENCY in insurance service is grievance of the complainant.

''S car met with an accident on 2.1.1991. The date iS within the period of inSurance for which riSk haS been covered by oppoSite party No. 1 being from 23rd May, 1990 to 22nd May, 1991. Complainant intimated the inSurer about the accident and ultimately the claim being Settled, complainant waS called upon to give the full and final payment voucher and receive the cheque. In place of claim over RS. 34,000/-Supported by billS, complainant waS paid a paltry Sum of about RS. 20,000/-. Complainant iSSued reminderS for the balance amount and no reply having been received from the oppoSite partieS, Complaint haS been filed alleging deficiency in inSurance Service. It iS true that complainant haS alleged that for Settlement of hiS claim he had to run to the inSurer Several timeS in phaSeS. However, we find that within four monthS only the claim haS been Settled. ThuS, it cannot be Said that there iS any deficiency in Service in Settling the claim.

The diSpute iS relating to the quantum of amount payable for the damageS. ThiS would not normally come within the Scope of negligence unleSS it would have been So unreaSonable that it would not be ordinarily accepted. In Such a caSe, oppoSite party would have been accountable to SatiSfy a redreSSal agency under the Act that the view taken by it for coming to the concluSion about the quantum iS reSonable.

WHETHER the amount is reasonable or not, can be adjudicated properly by a Civil Court ordinarily. However, where there is arbitration clause, the dispute is to be adjudicated by an arbitrator. Once a dispute is made in regard to the quantum, the insurer is required to appoint an arbitrator. The policy clearly provides for arbitration. It reads as follows : "If any difference shall arise as to the quantum to be paid under this policy (liability being otherwise admitted) such difference shall independently of all other questions, be referred to the decision of arbitrator, to be appointed in writing by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two disinterested persons as arbitrators of whom he shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other party in accordance with the porvisions of the Arbitraion Act, 1940, as amended from time to time and for the time being in force. In case either party shall refuse or fail to appoint arbitrator within two calendar months after receipt of notice in writing requiring appointment the other party shall be at liberty to appoint sole arbitrator, and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings. It is clearly agreed and understood that no difference or dispute shall be referable to arbitration as hereinbefore provided. If the Company has disputed or not accepted liability under in respect of this policy. It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage shall be first obtained. It is also hereby further expressly agreed and declared that if the Company shall disclaim liability to the Insured for any claim hereunder and such claim shall not within 12 calendar months from the date of such disclaimer have been made the subject matter of a suit in a Court of law, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder."

Since complainant raised a dispute relating to the quantum and intimated the fact to the Branch Manager, it was not open to the insurer to sit over the claim on the basis that the claim was frivolous on account of the conduct of the complainant. Case of the insurer in this regard is that the amount has been settled after consultation with the complainant and complainant has received the amount giving a full and final payment certificate. Thus, complainant would be stopped from challenging the same. If we give any finding in this regard, that may prejudice either party. However, sitting over a demand for higher amount without appointing an arbitrator is a deficiency in insurance service. As per the term of the policy quoted above, whenever there is a dispute about the quantum, the dispute is to be adjudicated by arbitration. Insurer being a Government company and subsidiary of a statutory body rendering service to the insured as a welfare measure which is a State activity, all officers of the insurer are to remember this. They should not become judges of their own cause. They should leave the matter as a fair insurer to the arbitrator to adjudicate. Wherever a n officer does not appoint an arbitratoron receiving information from the insured that he is not satisfied with the claim he ought to take steps for appointing the arbitrator in satisfaction of the terms in the policy. Non-compliance of the terms of the policy which the insurer could have done, is a deficiency in service since that is a part of insurance service to be rendered by the insurer. It goes without saying that in absence of reasonable explanation when the claim of the complainant has been terms as false, there is a deficiency in service which amounts to negligence of the insurer to this extent for noncompliance of the terms of the policy.

THE term in the policy is not before us and we have extracted the term above from another policy of another insurer covering a different period. THErefore, insurer is to take note of the term in the policy relating to arbitration and discharge its part of obligation by appointing arbitrator or intimating the complainant why an arbitrator cannot be appointed by it. We make it clear that by making a grievance that the complainant is not satisfied with the amount settled a dispute has been raised and an arbitrator is to be appointed. Decision of the Branch Manger not to appoint an arbitrator is a deficiency in service which is outcome of negligence since he has become judge of his own cause. Intimation of appointment of the arbitrator or discharge of the obligation as per the terms of the policy within 15th of January, 1993 and intimating the complainant of the same within the same period would not call for any compensation. If this condition is not satisfied, complainant shall be entitled to compensation at the rate of Rs. 100/-per day till an arbitrator is appointed. Once an arbitrator is appointed, the provisions of the Arbitration Act shall be applicable. In result, the complaint is disposed of with the direction aforesaid. Complaint disposed of.