NATIONAL INSURANCE COMPANY LTD vs N.K.Financers

THESE two cross revision petitions have been preferred by the National Insurance Company Ltd. (for short ''''the Insurance Company '''') and the complainant, under Section 21 of the Consumer Protection Act, 1986 (for short ''''the Act '''') assailing the common order passed by the State Consumer Disputes Redressal Commission, UP at Lucknow (for short ''''the State Commission '''') in Appeals no. 2409/SC/04 and 137/SC/05. By the impugned order the State Commission, modifying the order passed by the District Consumer Disputes Redressal Forum, Bulandshahar, (for short ''''the District Forum '''') has directed the Insurance Company to pay to the complainant an amount of Rs.3,90,675/ - with interest @ 9% p.a. from 30.06.2003 i.e. after the expiry of three months from the date of surveyor ''s report. It has also been directed that if the said amount is not paid within the specified period, interest @ 15% p.a. shall be payable.

THE complainant, a financier, advanced loan of Rs.5,00,000/ - to one Jai Singh for purchase of Ashok Leyland truck on hire -purchase basis. The truck was registered on 06.12.1996. The complainant insured the truck with the Insurance Company declaring its value at Rs.6,00,000/ -. It was a comprehensive policy covering the period from 09.03.2000 to 08.03.2001. A premium of Rs.10,759/ - was paid. On the intervening 3 and 4 July 2000 night the vehicle was stolen. The police was informed. Information regarding theft was also given to the Insurance Company on 06.07.2000. Final untraceable report in respect of the vehicle, filed by the police, was accepted by the Magistrate on 23.12.2002. Thereafter, the complainant lodged its claim for compensation with the Insurance Company. The Insurance Company appointed a surveyor to assess the loss for the vehicle. It appears that on receipt of the surveyor ''s report, the Insurance Company offered to pay to the complainant a sum of Rs.2,85,000/ -, though the loss assessed by the surveyor on the basis of the market value of the vehicle at the time of theft was Rs.4,88,344/ -. The said amount seems to have been accepted by the Complainant. Being dissatisfied with the amount of compensation received, seemingly under pressure, the complainant filed a complaint before the District Forum under section 12 of the Act praying for compensation of Rs.6,00,000/ -. The District Forum directed the Insurance Company to pay to the complainant, as compensation, an amount of Rs.6,00,000/ - with interest @ 12% p.a. from 01.07.2003 and cost of proceedings, quantified at Rs.1000/ -.

BOTH the Insurance Company as well as the complainant preferred appeals against the said order before the State Commission. The complainant ''s grievance was that the interest had been awarded for a shorter period, whereas the Insurance Company contested the quantum of compensation. Allowing both the appeals, the State Commission has modified the order of the District Forum to the extent indicated above. Hence, the present Revision Petitions.

WE have heard Ld. Counsel for the parties. In the Revision Petitions, both the parties have questioned the correctness of the impugned order on several grounds but before us, only two issues have been raised viz., (i) basis for determination of the market value of the vehicle for assessment of loss and (ii) the period and rate of interest, payable on amount of compensation. It was urged by Ld. Counsel for the Petitioner Insurance Company that loss to the vehicle has to be assessed on the basis of its market value as on the date of accident or theft as the case may be, which would be directly relatable to the age of the vehicle. It is asserted that the rate of interest awarded is highly excessive. The stand of Ld. Counsel for the respondent/complainant, on the other hand, is that having accepted the declared value of the vehicle for the purpose of premium, the Insurance Company is bound to adopt the same base value for determining the compensation. Ld. Counsel submitted that interest @ 15 p.a. has been awarded by the State Commission in the event of the Insurance Company failed to pay the compensation within the specified period, otherwise the interest has been awarded @ 9% p.a., which cannot be said to be excessive.

WE are of the opinion, that in so far as the first issue is concerned, it is no more res integra. In Dharmendra Goel V. Oriental Insurance Company Ltd. (2008) 8 SCC 279, the Supreme Court has held that an insurance company, after having accepted the value of a particular vehicle at the time of issuing the insurance policy, could not disown that very value on one pretext or the other when they are called upon to pay compensation. The Hon ''ble Court has deprecated the attitude ''''take it or leave it '''', as being ethically indefensible. The Supreme Court observed as under: - ''''It must be borne in mind that Section 146 of the Motor Vehicles Act, 1988 casts an obligation on the owner of a vehicle to take out an insurance policy as provided under Chapter 11 of the Act and any vehicle driven without taking such a policy invites a punishment under Section 196 thereof. It is, therefore, obvious that in the light of this stringent provision and being in a dominant position the insurance companies often act in an unreasonable manner and after having accepted the value of a particular insured good disown that very figure on one pretext or the other when they are called upon to pay compensation. This ''''take it or leave it '''' attitude is clearly unwarranted not only as being bad in law but ethically indefensible. ''''

IN the light of the said authoritative pronouncement, the loss on account of theft of the vehicle had to be assessed by the surveyor by taking the base value of the vehicle at Rs.6,00,000/ -, i.e. the value of the vehicle declared at the time of renewing the policy and not the market value of the vehicle at the time of theft. As regards the rate of interest, @ 15% p.a., directed to be paid only in the event of Insurance Company not disbursing the amount of compensation awarded by the State Commission, bearing in mind the fact that a substantial part of compensation claimed on account of loss of vehicle was offered and accepted by the Complainant, we feel that it would be fair if the Insurance Company is directed to pay simple interest @ 9% p.a. on the balance amount of compensation to be computed in terms of this order minus the amount of Rs.2,85,000/ - already paid from the date of payment of Rs.2,85,000/ - to the complainant, till the date of actual payment of the balance amount.

CONSEQUENTLY , the revision petitions are allowed; the impugned order is set aside to the extent indicated above and the Insurance Company is directed to re -assess the loss on the vehicle, adopting the base value at Rs.6,00,000/ - instead of Rs.4,88,344/ -. The rate of depreciation thereon would be as per the relevant Rules. There would be no order as to costs.