INDER SINGH CHAUHAN vs United India Insurance Co. Ltd.

THIS is an appeal against the judgment and order dated 27.6.1992 passed by District Consumer Forum, Tehri Garhwal, in Complaint Case No. 16/92.

THE facts of the case stated in brief are that the complainant is owner of bus No. UAW- 9993. He purchased this vehicle after financial assistance and got it insured with United India Insurance Company. THE policy was with effect from 19.12.1989 to 18.12.1990. This bus met with an accident on 21.9.1990. THE complainant demanded the compensation. THE Surveyor assessed the amount of damages Rs. 1,25,500/-. THE complainant has been paid a sum of Rs. 93,375/-. 3.THE opposite party in its written version has alleged that the driver of bus did not have a valid licence to drive the vehicle and as such there was violation of the terms of the insurance policy. THE amount due has been paid. 4.THE learned District Consumer Forum after considering the case of the parties, came to the conclusion that as the claim has been settled in full and final settlement, therefore, no amount is due and the complaint was dismissed. 5.Aggrieved against the order of the learned District Consumer Forum, the complainant has come in appeal and has challenged the correctness of the order passed by the learned District Forum. 6.We have heard the learned Counsel for the opposite party Mr. Vineet Srivastava. None was present from the side of the appellant, even though the Counsel for the appellant was present on the last date of hearing. THE learned Counsel for the opposite party has argued that as the payment has been made in full and final settlement, therefore, no case is made out by the complainant. A perusal of the receipt which has been filed by the Insurance Company will go to show that the amount has been paid to the Financier i.e., Swami Financier. THE financier has issued a receipt of Rs. 93,375/- in full and final discharge of the claim upon the said particulars.. It may be considered that the amount was payable to the complainant and not to the financier, even if the amount which was due to the financier from the complainant and that amount has been paid by the Insurance Company to the financier then it will not amount to full and final discharge towards the amount claimed by the complainant. THE financier had no authority to issue the receipt on behalf of the complainant in full and final discharge of the claim made by the complainant. Only the complainant could have given a receipt in full and final discharge of the claim. THErefore, this receipt issued by the financier will not bind the complainant and the complainant can always bring his claim for recovery of extra amount which has not been paid by the Insurance Company to the complainant. 7. In the ground of appeal, the complainant has alleged that the Surveyor had assessed the loss at Rs. 1,26,500/- and the same fact was mentioned in the complaint also which is reproduced in the judgment and the complaint. In para 7 of the complaint, it has been mentioned that in the final survey which was done by the Surveyor, the loss was settled at Rs. 1,26,500/- and in para 9 it has been mentioned that the Insurance Company had not paid the entire amount but only a sum of Rs. 93,375/- was paid leaving a balance of Rs. 33,125/-. THE complainant had prayed for recovery of this much amount alongwith interest at the rate of 18% per annum on the total amount which was due on account of compensation.

THE learned District Consumer Forum had not allowed the recovery of Rs. 33,125/ - and also did not allow any interest and dismissed the complaint on the wrong presumption that the complainant has accepted the amount paid by the Insurance Company in full and final discharge of the claim. As seen in the earlier part of the judgment, the receipt has been issued in full and final settlement by the financier and not the complainant, therefore, the complainant is not bound by this receipt. As the Surveyor had assessed and settled the loss at Rs. 1,26,500/-. THEre is no justification for the Insurance Company in deducting Rs. 33,125/- from the amount which was payable to the complainant. THErefore, in view of the facts on the record, the complainant is entitled to this much amount of Rs. 33,125/- besides the amount already paid to the financier. THE complainant is also entitled to the interest on the amount of Rs. 93,375/- from 1.1.1991 till 26.11.1991. Interest on Rs. 33,125/- is also payable from 1.1.1991 till the date of payment.

Now the rate of interest arises. Learned Counsel for the Insurance Company has argued that the interest should be fixed at the rate of 12% per annum. In support of his argument he has placed reliance on the case of United India Insurance Company Limited v. M/s. M.K.J. Corporation, III (1996) CPJ 8 (SC)=1996-1999 Consumer 4781 (NS), in which it was held that the rate of interest in the case of Insurance Company should be 12% per annum. However, the learned Counsel for the appellant has argued that the interest is to be awarded at the rate of 18% per annum in view of the decision of the Hon''ble Supreme Court in the case of United India Insurance Company Limited v. Fancy Traders, VII (2000) SLT 365=JT 2000 (10) SC 337. THE Hon''ble Supreme Court in this case has held that the interest at the rate of 18% per annum is justifiable. THE order of the Hon''ble Supreme Court is very short and is being reproduced below "ORDER (1) Leave is granted. (2) Heard learned Counsel for the parties. (3) THE net loss caused to the respondent due to fire was assessed at Rs. 4,72,146/- but the applicant paid only a sum of Rs. 2,75,146/ - to the Bank of the respondent. THE balance amount together with interest at the rate of 18% was ordered to be paid to the respondent by the State Commission. (4) Having regard to the facts and circumstances of the case, the High Court also did not interfere with the rate of interest awarded by the State Commission. We find no justification for our interference in the matter under Article 136 of the Constitution. (5) THE appeal is accordingly dismissed. THEre shall be no order as to costs."

In a more recent case, National Insurance Company v. Ram Sheo Kumar, Civil Appeal No. 3110/1993, alongwith Appeal No. 4430/1993 decided on 23rd September, 1999, the Hon''ble Apex Court had also considered the quantum of interest which should be awarded in the case of Insurance Company. In that case before the Apex Court, it was held that the repudiation of the claim by the Insurance Company was wholly malafide, It was held that all the risks were covered by the insurance policy. THE ship which was carrying the goods was lost on the highseas. Before the Hon''ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. THE Hon''ble Supreme Court repelled the contention of the Insurance Company about the rate of interest in the following words : "So far as the question of quantum of interest is concerned, we see no infirmity in the order passed of the Commission requires a little alteration so that the date 6.12.1987 is altered to 12.8.1987 in consonance with the judgment of the Commission itself."

Thus in view of the latest decision of the Hon''ble Supreme Court, it is now clear that the'' interest at the rate of 18 % per annum is to be paid by the Insurance Company when it is found that the deficiency is on behalf of the Insurance Company. THE appeal is, therefore, liable to be allowed.

ORDER THE appeal is partly allowed and the opposite party-Insurance Company is directed to pay a sum of Rs. 33,125/- alongwith interest at the rate of 18% per annum from 1.1.1991 till the date of payment. Interest at the rate of 18% per annum shall also be paid by the Insurance Company on Rs. 93,375/- from 1.1.1991 till 26.11.1991. THE Insurance Company shall pay a sum of Rs. 2,000/- as cost to the appellant. Let compliance of this order be made within a period of two months from the date of this order. Let copy be made available to the parties as per rules. Appeal partly allowed with costs.