NATIONAL INSURANCE CO. LTD. vs Rajan Sood

BY this order we propose to decide the above noted two revision petitions filed by the petitioner against the common order of the State Commission dated 03.10.2012 in cross appeals No. 58/2012 and 62/2012 preferred by the parties against the order of District Forum Shimla in complaint no. 205/2008.

BRIEFLY put facts relevant for the disposal of these revision petitions are that respondent complainant was residing in a two room set as a tenant in the building located at Jubbal owned by Ram Prakash Chauhan. In December 2005, the complainant took the house holder insurance policy in respect of his household articles for a sum of Rs. 4.00 lacs. The insurance policy was effective from 23.12.2005 to 26.12.2006. On 15.08.2006 fire broke out in the building on account of leakage of gas from the gas cylinder of neighbour. Consequently, the portion in the building within the tenancy of the complainant was gutted in fire and entire household goods of the complainant were destroyed. FIR in this regard was registered with the police. The petitioner/opposite party was also informed about the loss in fire accident. The surveyor appointed by the opposite party visited the premises and all relevant documents were furnished by the complainant. The Surveyor vide his report dated 09.01.2007 assessed the loss caused due to fire to the tune of Rs. 1,76,000/ -. The claim of the complainant, however, was not settled. After lapse of one year when the complainant visited the office of the opposite party to find out the fate of his insurance claim, his signatures were obtained on several documents and blank papers on the pretext that it was necessary to finalize the insurance claim. Thereafter on 23.01.2008, the opposite party sent a cheque of Rs. 1,67,515/ - alongwith covering letter. It is claimed that the opposite party advised the complainant to accept the aforesaid payment and the complainant was told that his case was being forwarded to the zonal office for seeking opinion regarding the payment of balance payment. On the aforesaid representation, the complainant encashed the cheque. Thereafter, despite of several visits to the office of the opposite party, balance payment of Rs. 2,33,000/ - was not made. Claiming this to be deficiency in service and unfair trade practice, the respondent complainant filed the consumer complaint. The petitioner opposite party contested the complaint and pleaded that the insurance claim of the respondent stood already settled in terms of the letter of consent of the complainant whereby he accepted the sum of Rs. 1,67,000/ - in full and final settlement of his claim. It is the case of the petitioner/opposite party that aforesaid payment was made on the basis of surveyor report which assessed the loss caused to the complainant at Rs. 1,67,000/ -.

LEARNED District Forum on consideration of record and the evidence adduced by the parties allowed the consumer complaint. Operative portion of the order of the District Forum is reproduced thus: "In this view of the matter complaint stands allowed and opposite party is directed to pay Rs. 89,985/ - remainder loss amount to the complainant with interest @ 9% per annum from the date of filing of the complaint till payment is made. Further, opposite party is also directed to pay Rs. 5000/ - for causing harassment and inconvenience to the complainant and the cost of litigation is quantified to the tune of Rs. 2500/ -. A copy of this order shall be made available to the parties free of cost as per procedure. The file after due completion be consigned to record room."

BEING aggrieved of the order of the District Forum, the petitioner preferred appeal no. 62/2012 seeking dismissal of the complaint and the respondent complainant preferred appeal no. 58/2012 seeking enhancement of the award amount. The State Commission vide common order allowed the appeal of the complainant and enhanced the amount of compensation to Rs. 4.00 lacs with interest @ 9% p.a. from the date of filing of complaint. The appeal filed by the petitioner was dismissed. Aggrieved of the dismissal of his appeal and enhancement of compensation in the appeal preferred by the respondent, the petitioner has preferred the revision petition.

NOTICE of the revision petitions was issued to the respondent complainant who failed to put in appearance despite service. Accordingly, the respondent complainant was proceeded ex parte.

SHRI Kishore Rawat, Advocate for the petitioner has contended that impugned order of the State Commission is not sustainable for the reason that State Commission has over looked the fact that before filing of the complaint, the respondent complainant had received a sum of Rs. 1,67,515/ - in full and final satisfaction of his claim and executed discharge voucher on 15.08.2008. It is contended that when the complainant has settled the insurance claim amicably, he is estopped from reagitating the issue by filing a consumer complaint. Learned counsel for the petitioner has relied on judgments of this Commission in the matters of Haryana State Co -Operative Supply & Marketing Federation Ltd. Vs. Iffco Tokio General Insurance Co. Ltd. & Anr. [ : II (2013) CPJ 364 (NC) and Shree Balaji Woollen Mills Vs. Oriental Insurance Co. Ltd. [ : II (2013) CPJ 366 (NC).

WE have considered the submissions made on behalf of the petitioner and perused the record. The respondent did not appear and has been proceeded ex parte. Admittedly, in the instant case, the complainant did receive a cheque of Rs. 1,67,515/ - against his insurance claim and signed the settlement voucher. Although, it is well -settled that once the insured has received the amount in full and final settlement of his insurance claim and signed the discharge voucher, he cannot be permitted to reagitate his claim unless the insured is able to establish that the discharge voucher was obtained by the opposite party under undue influence, fraud, misrepresentation or coercion. We have to first decide on the facts and circumstances of this case and evidence placed on record as to whether the petitioner has established beyond doubt that the receipt signed by the respondent/complainant was really meant to be a full and final settlement discharge voucher.

IN the matter of National Insurance Co. Ltd. Vs. M/s. Boghara Polyfab Pvt. Ltd. while dealing with the question whether the discharge voucher signed by the complainant would debar the claimant from agitating the issue, the Hon''ble Supreme Court observed thus: "We may next examine some related and incidental issues. Firstly, we may refer to the consequences of discharge of a contract. When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remains -neither any right to seek performance nor any obligation to perform. In short, there cannot be any dispute. Consequently, there cannot obviously be reference to arbitration of any dispute arising from a discharged contract. Whether the contract has been discharged by performance or not is a mixed question of fact and law, and if there is a dispute in regard to that question, that is arbitrable. But there is an exception. Where both parties to a contract confirm in writing that the contract has been fully and finally discharged by performance of all obligations and there are no outstanding claims or disputes, courts will not refer any subsequent claim or dispute to arbitration. Similarly, where one of the parties to the contract issues a full and final discharge voucher (or no due certificate as the case may be) confirming that he has received the payment in full and final satisfaction of all claims, and he has no outstanding claim, that amounts to discharge of the contract by acceptance of performance and the party issuing the discharge voucher/certificate cannot thereafter make any fresh claim or revive any settled claim. Nor can he seek reference to arbitration in respect of any claim. When we refer to a discharge of contract by an agreement signed by both parties or by execution of a full and final discharge voucher/receipt by one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party who has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud/coercion/undue influence practiced by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement/voucher is rendered void and cannot be acted upon. Consequently, any dispute raised by such party would be arbitrable.

Obtaining of undated receipts -in -advance in regard to regular/routine payments by government departments and corporate sector is an accepted practice which has come to stay due to administrative exigencies and accounting necessities. The reason for insisting upon undated voucher/receipt is that as on the date of execution of such voucher/receipt, payment is not made. The payment is made only on a future date long after obtaining the receipt. If the date of execution of the receipt is mentioned in the receipt and the payment is released long thereafter, the receipt acknowledging the amount as having been received on a much earlier date will be absurd and meaningless. Therefore, undated receipts are taken so that it can be used in respect of subsequent payments by incorporating the appropriate date. But many a time, matters are dealt with so casually, that the date is not filled even when payment is made. Be that as it may. But what is of some concern is the routine insistence by some government Departments, statutory Corporations and government Companies for issue of undated no due certificates'' or a full and final settlements vouchers'' acknowledging receipt of a sum which is smaller than the claim in full and final settlement of all claims, as a condition precedent for releasing even the admitted dues. Such a procedure requiring the claimant to issue an undated receipt (acknowledging receipt of a sum smaller than his claim) in full and final settlement, as a condition for releasing an admitted lesser amount, is unfair, irregular and illegal and requires to be deprecated".

National Commission while dealing with similar issue in the matter of National Insurance Co. Ltd. Vs. Vasavi Traders (supra) observed thus: "The complainant has submitted in his complaint that after 7 days of receipt of Rs. 3,45,968/ -, the complainant had approached the Insurance Company (O.P. 1) and demanded the balance amount which was declined and he was asked to approach O.P. 2. He further submitted that since the entire stock was burnt and the business had come to a stand still and because of financial crisis and heavy loss of interest the complainant was constrained to sign on the discharge voucher, which was in a printed format. Therefore, he had no option but to file a complaint for the balance amount. This we feel is an act of coercive bargaining indulged in by the insurance company. A distressed insured person who has lost all means of earning his livelihood in a catastrophic fire has no other choice but to accept any amount as an initial payment in the first instance".

(Emphasis provided)

FROM reading of the above judgments, it is clear that whether or not the discharge voucher/receipt signed by the party should amount to valid discharge of the liability of the other party, is a question of fact. If the signatory to the discharge voucher/receipt is able to establish that he was compelled to sign the discharge voucher because of the fraud, misrepresentation, pressure tactics or coercion etc. by the opposite party, he would still be entitled to raise the issue in judicial forum dehors having signed the discharge voucher.

THE question which needs determination is whether signatures of the respondent complainant were obtained on the discharge voucher by practicing coercion, fraud or misrepresentation. In order to find answer to this question, it would be appropriate and useful to have a look on the Discharge Voucher which reads thus: "Loss No. 36900005/06

Received this 17th Day of Jan 2008 from National Insurance Co. Ltd. a sum of Rupees One Lac Sixty Seven Thousand Five Hundred Fifteen in full satisfaction and discharge of all claim upon them under policy No. 360001236/05 in respect of fire loss which occurred on the 15th Day of Aug 2006

Rs.. 1,67,515/ -"

On reading of the above, although it is evident that respondent has signed the discharge voucher in full and final settlement of his insurance claim, the plea of the complainant is that he signed the settlement voucher because of misrepresentation on the part of the officials of the petitioner company that the matter pertaining to the balance of his insurance claim has been referred for the opinion to Zonal Office. The exact plea as submitted in para 5 of the complaint is as under: "On enquiry from the office of the OP company, it was stated that he should accept payment of the sum of Rs. 1,67,515/ - for the time being and the case had been forwarded to the zonal office for seeing opinion regarding payment of the balance sum. On this representation the complainant encashed the cheque given by the OP company. Thereafter the complainant kept visiting the office of the OP Company for receipt of the balance sum of Rs. 2,33,000/ -. On every occasion the complainant was put of on the pretext for the respondent of Zonal Office was awaited".

THE State Commission while accepting the appeal of the respondent/complainant for enhancing the compensation has examined this issue in great detail and has recorded the reasons in support of the impugned order. We consider it appropriate to reproduce its observations contained in paras 9 to 15 thus: - "9. In the present case, it is not in dispute that the complainant had got his household articles insured in the sum of 4.00 lacs. Valuation of each and every item was indicated at the time of insurance. Value of some of the items was more than the amount, for which insurance was got done, as is made out from the statement attached with the surveyor''s report. Also, it is not in dispute that the entire building was gutted in fire and as a result of that all the household insured items were completely destroyed.

Incident of fire had taken place about eight months after the insurance was got done. Since this was a case of insurance based on insured''s own declared value, which was less than the price for which he had purchased the articles, excess clause was not applicable and this fact is noticed even by the surveyor in his report, Annexure OP -3. Under these circumstances, the surveyor ought not to have reduced the value of the insured articles even on account of depreciation. Not only that he made cut on account of depreciation but made it twice. First he reduced the amount of every item of insured goods and then reduced the amount by certain percentage varying from 20 to 50. This, as already stated, was not permissible because the insurance was got done on the basis of insured declared value.

Reduction in the amount of insured household articles, which were gutted in fire, in an arbitrary manner, is not only an act of deficiency in service but also amounts to unfair trade practice. So would be the case when an insured is put into a compelling situation to accept an amount of money lesser than the amount actually due by delaying the payment, as was done in the present case. Surveyor visited the spot on 17.08.2006. He submitted the report on 09.01.2007 and thus took more than four months to prepare the report. Opposite party, i.e. the insurer took one year after the submission of the report to pay the insurance money.

According to the reply filed by the opposite party, claim was settled when the complainant filed a consent letter. In a case like this, where all the insured household articles had been destroyed in fire, even according to the surveyor''s report, and the insurance was done on insured declared value and also there was no technical hitch in paying the insurance claim, where was the need for the consent of the complainant to settle the claim. The very act of the opposite party in seeking the consent of the complainant and delaying the claim by about one -and -a -half year shows that the complainant felt coerced to agree for a lesser amount of money than actually due to him on account of insurance claim. Moreover no consent letter of the complainant has been produced.

It has been pointed out that the complainant himself reported to the police, while lodging the report, soon after the occurrence of the incident, that the value of his own wearing apparels as also the wearing apparels of his wife, was 3,000/ - each, or say a total of 6,000/ -. It is true that in the F.I.R., it is written like that but even in surveyor''s report, Annexure OP -3, it is written that the figure cannot be taken to be true.

Clothes of the complainant and his wife were insured for 30,000/ - each. In the rejoinder complainant has explained that because of the fire incident, he was not in a fit state of mind and because of that he could not state the value of the wearing apparels of himself and his wife correctly and that in fact the value of the apparels was 30,000/ - each. There should be no reason to disbelieve this plea of the complainant. Value of the clothes of the children is recorded as 20,000/ - in the police report and the same value is given even in the surveyor''s report. Now when the value of the clothes of the children was 20,000/ -, it cannot be said that the value of complainant''s own clothes and those of his wife was only 3,000/ - each.

In view of the above stated position, appeal filed by the opposite party, i.e. National Insurance Company Ltd., is dismissed. Appeal filed by the complainant is allowed and it is ordered that the opposite party (National Insurance Company Ltd.) shall pay the entire amount of 4.00 lacs with interest @ 9% per annum per annum, from the date of the complaint, to the date of the payment of aforesaid amount of money. Both the appeals stand disposed of accordingly".

(Emphasis provided)

WE agree with the view taken by the State Commission in the given facts and circumstances of this case. We may note that the facts and circumstances of the two cases referred to and relied on by the petitioner (supra) are quite different and as such the judgments of this Commission in those cases cannot be applied to the instant case. In this regard, the observations of this Commission in para 5 of the first case of Haryana State Co -Operative Supply & Marketing are reproduced thus: - "5. We have considered the submissions made by learned counsel and also perused the record. It is not in dispute that the petitioner received the demand draft dated 5.2.2009 for Rs. 4,72,263/ - along with a covering letter dated 19.2.2009 from the respondents. Contents of the letter in question which have been reproduced by the State Commission in its impugned order have not been denied by the petitioner It is specifically written in its letter that the opposite parties were enclosing the demand draft in question towards full and final settlement of the claim of the petitioner and for this purpose they had also attached a discharge voucher which the petitioner was requested to sign and send back to the respondents as acknowledgement towards full and final settlement. Admittedly, the petitioner encahsed the demand draft in question although they did not sign and send back the discharge voucher in question. Here, if we accept the contention of the learned counsel, the petitioner should not have encashed the demand draft in case the offer of full and final settlement was not acceptable to them and they should have written back to the respondents about the inadequacy of the offer. Rather than writing back and expressing their protest, the petitioner chose to deposit the demand draft and yet later on send their protest against the amount. In view of this, the petitioner by its own conduct forfeited its right to plead that it did not accept the offer in full and final settlement of its claim against the opposite party........"

(Emphasis provided)

In the other case of Shree Balaji Woollen Mills, the observations made in paras 13 & 14 of the judgment of this Commission are reproduced thus: - "13..............The petitioner has placed on record a letter dated 06.10.2009 addressed by him to the Senior Branch Manager of the insurance company which reads thus:

"Date 06.10.2009The Sr. Branch ManagerOriental Ins. Co. Ltd.G.T. Road, Panipat

Sub: Fire loss on dt. 28.04.2009

Dear Sir,

With reference to the above, we hereby agree to accept claim amount of fire loss of Rs. 31,22,661/ - in full and final settlement of our claim.

An early action in the matter will be highly solicited.

Thanking you,

Yours faithfullyFor Shree Balaji Woolen MillsSd/ -Partner"

From this document, it is apparent that the petitioner himself has voluntarily initiated the process of settlement of claim and as such it cannot be said that he was coerced or compelled by the insurance company to settle his claims. Further, from the perusal of the copy of the surveyor report placed on record, it is evident that surveyor has quantified the loss suffered by the petitioner in respect of both the claim at Rs. 32,01,729.25P. The amount of the loss quantified by the surveyor is more or less matching with the amount of the cheque given to the petitioner in full and final settlement of his claim against the Discharge Voucher signed by the petitioner on 23.11.2009. Therefore, we are of the view that the State Commission was right in concluding that the petitioner has voluntarily accepted the cheque of Rs. 31,12,992/ - in full and final settlement of his claims which are subject matter of this revision."

(Emphasis provided)

AS would be clear from the observations of this Commission in those two cases reproduced above, in the first case of Haryana Federation (supra), the Insurance Co. had sent specific offer of full and final settlement and for this purpose, the Insurance Co. had sent a covering letter along with the discharge voucher and it was specified that the demand draft in question was enclosed along with discharge voucher towards full and final settlement of the claim of the petitioner. Since the petitioner/complainant chose to encash the demand draft, it was held that he had by his own conduct accepted the offer and proceeded to receive the amount in furtherance of that acceptance. The insurance company in that case had proved the receipt of the offer by the complainant/petitioner along with the demand draft and discharge voucher. In the other case of Shree Balaji Woollen Mills, the process of settlement of claim was voluntarily initiated by the petitioner/complainant itself and then acceptance of the cheque on account of settlement of the claim was held to be voluntarily acceptance of that amount towards full and final settlement. In view of these facts, the pleas taken by the petitioners/complainants in both the cases were rejected and their petitions dismissed.

AS discussed above, the facts and circumstances of the instant case are different. Although receipts/voucher signed by the complainant indicate that the payment has been taken by the complainant in full and final settlement of discharge of his claim, the aforesaid discharge voucher cannot be said to have been signed by the petitioner of his own volition. Admittedly, the fire accident took place on 15.08.2006 resulting in total loss of household goods of the complainant. The claim was filed promptly and despite that insurance company sat over the insurance claim till 23.01.2008 and suddenly offered him a cheque of Rs. 1,67,515/ - in full and final settlement of his claim. From the above circumstances, it is clear that the complainant who had lost household goods in fire accident and had been waiting for settlement of his claim for more than a year, accepted the cheque offered by the petitioner/company in full and final settlement under coercion to salvage a part of the loss suffered by him. Thus, the settlement relied upon by the petitioner is not a settlement based on free consent. As such, the petitioner cannot take advantage of the same. Otherwise also, the petitioner insurance company has not pointed out any evidence which may indicate that before the issue of the said cheque, any settlement negotiation was going on between the parties or any consent letter from the complainant for full and final settlement of the claim was obtained. In this context, the observations made by the State Commission in para 12 of the impugned order are very important. In view of this, it is clear that the claim of the petitioner Co. in para 4 of its written statement to the effect that "the complainant has given the consent for the settlement of the claim and after considering the same, the same was approved" is not correct. In the circumstances, we hold that the receipt in question signed by the respondent/complainant was not a discharge voucher signed voluntarily by the respondent/complainant in full and final settlement of his claim by the complainant but the receipt signed by him was under coercion and in pursuance of misrepresentation and false assurances given by representatives of the petitioner company to consider the remaining claim separately. In this context, it may not be out of place to mention that it is customary on the part of the insurance companies to invariably mention as a matter of routine that whatever they are offering is in full satisfaction of the pending claim of the party concerned. However, a formal offer to that effect followed by a discharge voucher by the insured are essential to treat it as a full and final settlement case so as to bar the insured from raising a further claim. In the instant case, there is neither a formal letter of offer from the petitioner company nor a prior consent given by the complainant agreeing to accept an amount which was substantially lower than his claim. Simply because the complainant encashed the cheque received by him after a long period of wait from the petitioner, cannot be allowed to stand against him to prove that he had accepted the part payment in full and final settlement of his claim of Rs. 4 lakhs on account of total loss of the insured articles. As stated above, the State Commission has considered these important aspects of this case and has passed a well -reasoned order which is quite just and fair in the peculiar facts and circumstances of this case.

IN view of the above, we do not find any infirmity or illegality in the impugned order which would call for our interference with it. We, therefore, dismiss the revision petitions but with no order as to costs.