NEO INTEX MILLS LTD. vs Oriental Insurance Co. Ltd.

THIS action has come up for admission before us today. We perused the averments in the complaints and also the documents filed along with it.

SUCH perusal reveals the following factors. The complainant has a textile mill at Kattuvelampatti Village, Natham Taluk. The complainant had insured its mill buildings, machinery and stock in process etc., with the opposite party Insurance Company and obtained Fire Policies bearing Nos. F/01255 of 1996 and F/01256 of 1996. The period of the two policies was between 5.2.1996 and 4.2.1997.

During the currency of the policies on 19.3.1996 at about 10 a.m., fire it is said, broke out in the mills on account of clashes between groups of workers employed in the complainant mills. Consequently, there was considerable damage to the buildings, machinery and stock in process covered by the two policies of insurance.

THE complainant preferred a claim to the opposite party to the tune of Rs. 68,99,053/-. THE dispute with respect to the claim made was referred to arbitration by the complainant and the opposite party. Ultimately, an award was passed on 11.9.1997 by the Arbitrator for a sum of Rs. 68,99,053/- subject to salvage and depreciation as agreed to between the Surveyor and the claimant, complainant. The opposite party, it appears, filed a petition to set aside the award so passed before the competent Civil Forum. The petition so filed, it is said, was not numbered and brought before any Civil Court for further proceedings. The opposite party did not even make payment of the award made by the Arbitrator. The complainant was, therefore, forced to file E.P. 47/1998 in the Court of Subordinate Judge, Dindigul, to execute the award. The opposite party filed a petition in the said E.P. seeking stay of execution of the proceedings on the ground that the opposite party had filed a petition to set aside the award.

IN such a situation, the opposite party, it appears, wrote a letter dated 20.11.1998 to the complainant stating that the net claim amount payable to the complainant would be Rs. 46,17,810/- and if the complainant agreed to receive the amount, the INsurance Company, was prepared to settle the claim provided a full discharge voucher from the complainant and its bankers is filed apart from withdrawing E.P. 47/1998 pending before the Court of Subordinate Judge, Dindigul. The copy of the discharge voucher executed by the complainant is not filed herewith. In order to understand whether the discharge voucher was executed by the complainant under protest, we wanted the copy of the discharge voucher to be produced. Learned Counsel representing the complainant said that he is not having a copy of the discharge voucher. He, however, told across the bar that the full discharge voucher had been executed by the complainant without any sort of a protest whatever. The complainant would state that interest @ 21% p.a. had to be paid on the settled claim amount of Rs. 46,17,810/- from 19.3.1996, the date of accident till payment namely, 2.2.1999. The amount of interest, as claimed by them, when demanded, was not paid by the opposite party, Insurance Company. The refusal to pay interest on the part of the Insurance Company, the complainant would say, would tantamount to deficiency in service. The interest claimed actually comes to Rs. 27,88,000/-. However, the claim is restricted to Rs. 9,50,000/-.

WE heard the arguments of learned Counsel Mr. S. Raghavan, representing the complainant. According to him the fact that the complainant executed a full discharge voucher to the opposite party does not mean that he is estopped from instituting a complaint for the deficiency in service on the part of the opposite party, Insurance Company, in the sense of not paying the interest amount as claimed by the complainant. The tenability or otherwise of such a submission may fall into the arena of discussion hereafter.

LEARNED Counsel drew our attention to the decision in the case of M/s. National Insurance Company Ltd. v. New Bharat Rice Mills, 1986-99 National Commission and Supreme Court on Consumer Cases - Part III page 4141. The question that came up for consideration before the National Commission was as to whether the complainant who had executed a discharge voucher in favour of the Insurance Company in full settlement of the claims will be entitled to institute a complaint before the Fora constituted under the Act for the deficiency in service on the part of the Insurance Company. On the facts and in the circumstances of the case, the National Commission took the view that the complainant was entitled to launch a complaint before the Fora constituted under the Act. The principles laid down in the said decision is of no universal application. The facts of each case may differ and the Fora constituted under the Act is given the discretion either to entertain or to reject the complaint depending upon the circumstances warranted by the facts of the case on hand. We may also refer to another decision emerging from the National Commission in the case of Jiyajeerao Cotton Mills Ltd. v. New India Assurance Co. Ltd., 1986-96 National Commission and Supreme Court on Consumer Cases 1727 (NS). The order passed by the National Commission in the said case is very short and crisp consisting of few lines and it would be better to reproduce the entirety of the order and it runs as under : "In this case the complainant has brought a claim against the Insurance Company on the ground that there has been an illegal deduction of a sum of Rs. 15 lakhs and odd while settling his claim in respect of a certain policy of insurance against fire risks. The records disclose that the Insurance Company had settled the claim long ago and that the dispute now is as to whether the deduction of certain amounts by the Insurance Company while settling the claim was proper in law. This is a matter in respect of which the petitioner should seek his redress before a Civil Court inasmuch as there has been no deficiency in service on the part of the Insurance Company. The receipt passed to the Insurance Company by the petitioner does not indicate that the payment was received by the petitioner under protest. It is however alleged by the petitioner that the amount was received by the Company under protest. This is a matter which the petitioner Company may agitate before the Civil Court for a proper adjudication after taking evidence. This petition is hereby dismissed. It is made clear that the dismissal of this petition will not operate to the prejudice of the petitioner in the matter of pursuing any other remedy that may be open to it in law."

We may profitably refer to certain salient provisions as adumbrated in the Arbitration and Conciliation Act, 1996 (Act 26 of 1996) [for short, the Act, 1996] for giving a legal fitment to the factual matrix of the instant case on hand. Admittedly, the dispute between the complainant and the opposite party Insurance Company had been referred to for settlement by way of an Arbitrator. Admittedly, after both the parties participated in the arbitration proceedings, the Umpire passed an award in a sum of Rs. 46,17,810/- to be paid by the opposite party to the complainant. The award so passed by the Umpire shall be final and binding on all the parties and persons claiming under them subject to the provisions as adumbrated under Section 35 in Chapter VIII of the Act, 1996.

SECTION 36 contains the Enforcement provisions. It prescribes that "Where the time for making an application to set aside the arbitral award under SECTION 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court." In the case on hand, the opposite party Insurance Company appeared to have filed an application before the competent Forum to set aside the award so passed by the Umpire. Since the application was kept pending without being numbered as stated by the complainant, there was no other alternative for the complainant to execute the award so passed by the Umpire and as a matter of fact, he filed Execution Petition No. 47/1998 before the Judge of Subordinate Court, Dindigul and in the execution petition so filed, as already indicated, the opposite party Insurance Company also filed an application for stay on the ground that the petition they have filed for setting aside an award is also pending. In such a situation, the matter between the complainant and the opposite party had been amicably settled by the opposite party making a payment of Rs. 46,17,810/- to the complainant and the complainant, in turn, agreeing to receive the same in full satisfaction of all the claims against the opposite party Insurance Company on the fulfilment of two conditions on his part (1) withdrawal of the E.P.; and (2) the execution of a full discharge voucher by him and his bankers. The complainant also fulfilled the twin conditions and accepted the said amount in full satisfaction of all the claims he had against the opposite party Insurance Company.

SUCH being the case, it cannot at all be stated that there was any deficiency in service on the part of the opposite party, Insurance Company. If the complainant is having any claim as against the opposite party towards the payment of interest on the amount settled, he has to go before the Civil Court only as has been stated by the National Commission in the case of Jiyajeerao Cotton Mills Ltd. (supra). Pertinent it is also to refer to, at this juncture, the salient provisions adumbrated under Section 42 of the Act, 1996. The said section is relatable to jurisdiction. It runs as under : "42. Jurisdiction-Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."

(Emphasis supplied) The provisions of Section 42 of the Act, 1996, as extracted above, needs no further elucidation and the said section prescribes that all subsequent applications arising out of the agreement and arbitral proceedings shall be made before the competent Civil Court and in no other Court. The section also starts with a non-obstante clause, namely, notwithstanding anything contained elsewhere in this part or in any other law for the time being in force. In such state of affairs, it is impermissible for the complainant to knock at the doors of this Commission for any relief whatever. For the reasons as above, the complaint deserves to be rejected in limine and the same is accordingly rejected. Complaint dismissed.