National Insurance Co. Ltd. vs Vasanthi Marine Foods Ltd.

The main issue to be decided in these three appeals is whether after the complainant had accepted the amounts offered by the Insurance Company in full and final settlement of the claims on different dates and after a gap of several months can the complainant raise the dispute asking for additional amounts.

As the facts and issues relating to these three first appeals are similar, we propose to pass a common order covering all the three appeals.

M/s. Vasanthi Marine Foods Ltd., (in short the ''complainant'') before the Andhra Pradesh State Consumer Disputes Redressal Commission is a Public Limited Company engaged in the business of prawn culture in Guntur district. The complainant had obtained Brakish Water Prawn insurance policies and cover note from the National Insurance Company Ltd. First Appeal No 528 of 2003 (arising out of Complaint No. 70 of 1998) :

Complainant had constructed 40 tanks and stocked the prawns and had insured the prawns by paying Rs. 5,98,949 as insurance premia. According to the complainant, the prawns died in the tanks resulting a loss of Rs. 41,55,289. When this was brought to the notice of insurance company a surveyor was appointed. It is alleged by the complainant that the insurance company took too much time in settling the claim. In the meantime, the bankers were pressing the complainant to re-pay the loan along with 18% interest per annum. The insurance company offered Rs. 15,69,583. It is the case of the complainant that, though the complainant is entitled to a sum of Rs. 41,55,289 he was paid only Rs. 15,69,583, therefore a complaint was filed for payment of the balance amount of Rs. 10,86,581 along with interest @ 18% per annum.

Aggrieved and dissatisfied by the order of Andhra Pradesh State Commission dated 12th March, 2003, directing the insurance company to reassess the loss on the basis of the survey report and pay the balance amount alongwith interest @ 9% per annum after deducting the amount already paid by the insurance company from the date of filing of the complaint till its realization, the insurance company has filed this appeal. First Appeal No 529 of 2003 (arising out of Complaint No. 71 of 1998) :

In this case the complainant had dug 35 ponds and obtained six policy cover notes by paying a sum of Rs. 3,83,906 on 31.3.1997 towards premia. The complainant had alleged that the prawns in the tanks died on account of virus. The complainant suffered total loss of Rs. 51,81,896. After a considerable delay, the insurance company paid a sum of Rs. 16,43,000 through three cheques. Therefore, he filed complaint before the State Commission claiming a sum of Rs. 19,57,631 together with interest.

These Complaint Nos. 70 and 71 were contested by the insurance company by stating that the insurance cover will commence after 30 days from the date of receipt of the premium as per the exclusion clause (n). Further, if the loss of prawns is less than 80% it has to be ignored as per the policy conditions. The insurance company further submitted that the claims were settled as the complainants had received the amount under discharge voucher in full and final settlement. Therefore, the complaints are not maintainable.

The State Commission observed that interim policy cover contains clauses ''a'' to ''m'' and there is no exclusion clause ''n'', when the policy was issued. The State Commission further observed that no insured person would accept the conditions that out of 4-1/2 months of coverage period, 30 days period should be excluded, as there is no guarantee that peril would not occur within the first 30 days of coverage.

It was urged before the State Commission by the insurance company that, on 22.4.1997, the complainant had addressed a letter to the insurance company stating that there was an agreement at the time of proposal for waiting peril of 30 days from the date of stocking. The State Commission came to the conclusion that the there was force in the contention of the complainant as no explanation was forthcoming why this Clause (n) was not incorporated in the printed policies when the insurance cover was issued. If there was an omission or oversight the same should have been detected immediately and rectified but there was no reason why the insurance company did not remember this clause till 22.4.1997, much after the peril had occurred, i.e., in December, 1996. Accordingly, the State Commission held that they had no hesitation to hold that this contention was invented for the first time at the time of consideration of the claim of the complaint with a negative mind.

It was further urged in the State Commission by the learned counsel for the complainant that the complainant was compelled to sign the vouchers styled as full and final settlement, though it was not up to the satisfaction as the bank was pressing for repayment of the dues.

The State Commission concluded that the settlement was not a fair one. Further the State Commission held that it is not in dispute that the complainant had taken loans from Vyasya Bank, Chirala. The contract rate of interest was 18% per annum and if not repaid on time, heavy penal interest would have been levied. Therefore, out of shear fear of having to pay penal interest the complainant could not resist the offer of the opposite parties. Therefore, the State Commission observed that they have no hesitation to hold that the settlement arrived between the parties was not a free or fair settlement and it is not binding on the complainants.

The State Commission directed the insurance company to reassess the loan on the basis of the surveyor''s report and the balance amount was directed to be paid with interest @ 9% per annum from the date of filing of complaint till its realization. In addition, the insurance company was also directed to pay cost of Rs. 10,000 to each complainants. Hence, this appeal. First Appeal No 530 of 2003 (arising out of Complaint No. 85 of 1998) :

The complainant had constructed 35 ponds for prawn culture and had obtained six cover notes by paying Rs. 3,11,713 towards premium. The case of the complainant is that the prawns died in the tanks on account of virus and the complainant suffered a total loss of Rs. 37,14,170, which was claimed from the insurance company. After considerable delay the insurance company offered and paid a sum of Rs. 16,04,385 out of the claimed amount. Complainant filed this complaint claiming an additional sum of Rs. 19,31,456 together with interest. The insurance company contended that the claims were settled as the complainant had received the amounts under discharge voucher in full and final settlement.

The main ground urged by the complainant in this case is that all the three surveyors have taken into consideration the input loss and they have not assessed the loss on valuation basis. The State Commission held that the input loss cannot be on a realistic basis for the assessing loss as the complainant had invested funds from time to time which bears interest and therefore, interest cost should have also been taken into consideration which would have resulted in assessing the loss on valuation basis.

The State Commission allowed the complaint by directing the insurance company to assess the loss on valuation basis and pay the balance amount with interest @ 9% per annum from the date of filing of the complaint till the date of realization.

The insurance company was also directed to pay Rs. 10,000 as cost in each case.

Aggrieved by the orders of the State Commission, the National Insurance Company has filed these appeals before us.

These appeals have been filed with a delay of 76 days. For the reasons stated in the application for condonation of delay, duly supported by an affidavit of the Deputy Manager of the insurance company, this delay is hereby condoned. Submission of the learned counsel for the appellant :

Mr. Atul Nanda, learned counsel submitted that in all these cases, the amount was paid by signing on the discharge vouchers clearly indicating that they are receiving the amounts in full and final settlement of their claims.

The learned counsel for the appellant submitted that there has been an abnormal delay in filing the complaints. He further submitted that there is no evidence on record to prove the contention of the complainant before the State Commission that the complainant was compelled to sign the discharge vouchers styled as full and final settlement as the bank was pressing hard for repayment of the loans and therefore, the complainant had no other go but to yield to the pressure tactics adopted by the insurance company.

Learned counsel further observed the averment made in the complaint at para 11, which reads as under : "The opposite parties have also stated that they will look into the matter for payment of additional amount as claimed by the complainant by referring to the Regional Office and also if necessary to the Head Office. They misrepresented the complainant in the said manner and extracted the discharge vouchers from them. Therefore, if anything written in the discharge vouchers is not binding, since the amount was accepted under protest."

He submitted that there was no such promise given by the insurance company. The complainant had not produced any proof to show that the Bank had pressurized for re-payment of loans and insurance company had coerced the complainant to accept their offer of settlement.

In support of his contention he quoted the judgment of the Supreme Court in United India Insurance Company Ltd. v. Ajmer Singh Cotton and General Mills and others, (1999) 6 SCC 400 . Submissions of the learned counsel for the respondent :

He relied upon pages 6 and 7 of the State Commission''s order wherein it was observed that the clause (n) was not incorporated in the printed policy stating that first 30 days after commencement of the insurance policy if the peril occurs the insurance company is not liable to pay, so the claim of the complainant is genuine. Secondly, the complainants were compelled to sign the discharge vouchers styled as full and final settlement though it was not to their satisfaction as the bank was pressing for its dues. The genuineness of the claim and decency of the complaint is proved by the letter issued by the complainant on 22.4.1997 to the Branch Manager of the insurance company stating that : "We have submitted proposal for insurance for prawn culture for all our ponds with you for crop seasons October, 1996 to February, 1997. As per the discussions at the time of submitting proposals we have agreed to the premium rates 5% and waiting period pending 30 days from the date of stocking. Mortality is reported in the pond Nos. 43 to 51 in between 10th and 12th of December, 1996. These ponds were stocked on 14.9.1996 and hence the claims were reported within 30 days waiting period. We have agreed to withdraw these claims as sic as per the 30 days waiting period. Even though this clause of 30 days was omitted by typing error in these policies, we have agreed to abide by this condition as discussed as the time of acceptance of proposal. We hereby withdraw these claims." Hence, he prayed that the appeals may be dismissed. Findings :

(i) The first issue to be decided is whether the insurance cover provided during the first 30 days of the period indicated in the policy. In this connection it is worthwhile to note the letter of the respondent-complainant addressed to the Branch Manager of the National Insurance Company Chirala on 22.4.1997 quoted supra.

This makes it crystal clear that there is no insurance cover for the loss of prawns during the first thirty days of the season from October, 1996 to February, 1997. Hence, the complainants are debarred from claiming indemnification for the loss during this period. (ii) The next issue is to be decided is whether the complainant had given discharge vouchers in full and final settlement of their claims. The discharge vouchers have the following words : "the sum of rupees.......... ...........being in full settlement and satisfaction of.................. claim under................Branch Policy No...................per S. S............ from...............to............ on. It is further understood that I/We subrogate to the Company all my/our rights, title and interest to and in any salvage. Rs........................ Director"

Each one of the discharge vouchers has the same words. The amounts received and other particulars were filled up and signed by the Director of the Company with the seal and stamp, hence, it cannot be said that these discharge vouchers were obtained fraudulently or any blank forms were signed by the complainants. These discharge vouchers did not have any word or phrases indicating that these were received "without prejudice or under protest".

(iii) Further, the claims were filed after the discharge vouchers were signed after a considerable gap of time. In F. A. No. 528 of 2003 (CD No. 70 of 1998) the discharge vouchers were signed on 23.12.1997, whereas the complaints were filed on 31.7.1998, i.e., after a period of seven months. In F. A. No. 529 of 2003 (CD No. 71 of 1998) the amount was paid through two cheques on 30th and 31.3.1998 whereas the complaints were filed on 30.7.1998 after a gap of four months. In F. A. No. 530 of 1998 (CD No. 85 of 1998) the discharge vouchers were signed on several dates ranging from 24.2.1997 to 31.3.1997 and the complaint was filed on 8.9.1998, i.e., after a period of 1-1/2 years.

If there was any coercion from the insurance company, during the interregnum from the date of discharge voucher till the date of filing of the complaint, they could have made several representations/sent several protest letters to the insurance company which has not been done. Complaints have not filed any letter of the Bank pressurizing the complainant to repay the money otherwise it will result in attachment of their property etc.

In this connection, it is worthwhile to go through the judgment of the Apex Court in Ajmer Singh Cotton and General Mills and others v. United Indian Insurance Co. Ltd. (supra) extract of which we are quoting in extenso : "The mere execution of the discharge voucher would not always deprive the consumer from preferring claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered. Despite execution of the discharge voucher, the consumer may be in a position to satisfy the Tribunal or the Commission under the Act that such discharge voucher or receipt had been obtained from him under the circumstances which can be termed as fraudulent or exercise of undue influence or by misrepresentation or the like. If in a given case the consumer satisfies the authority under the Act that the discharge voucher was obtained by fraud, misrepresentation, undue influence or the like, coercive bargaining compelled by circumstances, the authority before whom the complaint is made would be justified in granting appropriate relief. However, (sic so), where such discharge voucher is proved to have been obtained under any of the suspicious circumstances noted hereinabove, the Tribunal or the Commission would be justified in granting the appropriate relief under the circumstances of each case. The mere execution of the discharge voucher and acceptance of the insurance claim would not estop the insured from making further claim from the insurer but only under the circumstances as noticed earlier. The Consumer Disputes Redressal Forums and Commissions constituted under the Act shall also have the power to fasten liability against the insurance companies notwithstanding the issuance of the discharge voucher. Such a claim cannot be termed to be fastening the liability against the insurance companies over and above the liabilities payable under the contract of insurance envisaged in the policy of insurance. The claim preferred regarding the deficiency of service shall be deemed to be based upon the insurance policy, being covered by the provisions of Section 14 of the Act.

In the instant cases the discharge vouchers were admittedly executed voluntarily and complainants had not alleged their execution under fraud, undue influence the State Commission was justified in dismissing their complaints. The National Commission however granted relief solely on the ground of delay in the settlement of claim under the policies. The mere delay of a couple of months would not have authorized the National Commission to grant relief particularly when the insurer had not complained of such a delay at the time of acceptance of the insurance amount under the policy. We are not satisfied with the reasoning of the National Commission and are of the view that the State Commission was justified in dismissing the complaints though on different reasonings. The observations of the State Commission in Jivajeerao Cotton Mills Ltd. v. New India Assurance Co. Ltd. shall always be construed in the light of our findings in this judgment and the mere receipt of the amount without any protest would not always debar the claimant from filing the complaint."

During the hearing of this case the learned counsel for the respondent/complainant harped upon the following sentences in this : "Though the Commission has power to fasten liability against the insurance companies notwithstanding the issuance of the discharge voucher. If the discharge voucher was obtained by fraud, misrepresentation, undue influence or the like coercive bargaining compelled by circumstances, then only the Fora would be justified in granting appropriate relief."

We have no evidence before us indicating fraud, mis-representation, undue influence and coercive bargaining indulged in by the insurance company. The complainants are rich industrialists engaged in prawn culture on vast tracts of land and they cannot be easily pressurized to sign the discharge vouchers against their wishes, because, they are not hapless consumers.

Therefore, the judgment of the Apex Court quoted (supra) is squarely applicable to the case on hand. Accordingly, we allow these F. A. Nos. 528, 529 and 530 of 2003 and dismiss the complaints. However, in the facts and circumstances of the case, there shall be no order as to costs.