NEW INDIA ASSURANCE CO. LTD. vs GEETANJALI SILK HOUSE

BY this Order we intend to dispose of the above two appeals as both have arisen out of the Order passed by the State Consumer Disputes Redressal Commission, Bihar at Patna, in Complaint Case No. 49 of 1991. The complaint was filed by M/s. Geetanjali Silk House (respondent No. 1 in appeal No. 189 of 1993 and appellant in Appeal No. 313 of 1993) against the New India Assurance Co. Ltd. who had been arrayed as opposite party No.1 in the complaint and who is now appellant in Appeal No. 189 of 1993. The opposite party No.2 was the State Bank of India Who is respondent No. 2 herein in both the appeals. The State Commission by the impugned order directed the insurance Company to pay Rs. 57,549/- with interest at the rate of 18% from 8th April, 1991 on which date the insurance Company had made the payment of Rs. 50,472/- only to the State Bank of India. The complainant was also awarded Rs. 10,000/- as compensation for the harassment caused to him on account of delay in settlement of the claim.

THE facts as gathered from the record are that the complainant is carrying on cloth business at Patna. He had taken a loan from the State Bank of India. The complainant took an insurance policy for his shop for a sum of Rs. 2,50,000/- against fire and other risks on 9th May, 1989 for a period of one year. A fire broke out in the shop of the complainant on 25th March, 1990 by short circuit of electricity causing a loss of Rs. 2,36,000/-. The complainant filed a claim with the Insurance Company. The further contention of the complainant is that the Surveyor appointed by the Insurance Company to examine and survey the loss. The Surveyor impressed upon the complainant to take up the salvaged goods which were either partly burnt up clothes or discoloured clothes or which were lying in wet condition and further impressed that if he wanted quick settlement and payment he should agree for the settlement at Rs. 50,472/-, complainant agreed to it. However, the Insurance Company did not allow the complainant to make use of the salvage on the ground that it might be re-examined by other Surveyor or Investigators. Due to the inordinate delay the salvaged goods got completely rotten and became valueless, and therefore, the Insurance Company is liable to pay the price for the salvaged goods as well. The Insurance Company sent discharge voucher for Rs. 50,472/- to the State Bank of India (opposite party No. 2) who signed the same in full satisfaction of the claim. The complainant had requested the Bank not to sign the discharge voucher unless the value of salvaged goods and loss for the inordinate delay was paid. However, the Bank had acted against his instructions and signed the discharge voucher and accepted the payment of Rs. 50,472/- only against the total loss of Rs. 2,35,000/- Thus the claim for the loss of Rs. 1,85,528/- (i.e. Rs.2,35,000/-Rs. 50,472/-) is prayed for by the complainant against both the opposite parties.

BOTH the parties contested the claim. The opposite party No. 1 i.e. the Insurance Company, pleaded that the claim was settled at Rs. 50,472/- and the intimation was given by the Insurance Company to the State Bank of India who had taken the policy on account of Avadh Kishore Prasad (Proprietor of complainant firm). The opposite party No. 2 accepted the amount and granted the receipt. Even if Shri Avadh Kishore Prasad is taken to be co-insured, the acceptance of the settled claim by one will bind the other.

IT was further pleaded that Shri Avadh Kishore Prasad did not maintain books of account, purchases and profit account. However the loss so assessed on the basis of physical inspection of damage on the declared value of the insured after discussions and verification and the final assessment of the loss of stock was assessed at Rs. 50,472/-. Due care was taken to ascertain the loss by more than one agency and there was no deliberate design to delay the settlement and harass the party, inspite of lack of relevant papers as required in assessment of loss, the claim was settled. The insured having accepted the settlement and discharged the voucher, the account holder cannot agitate the matter and persuade the insurer to reopen the entire matter. The opposite party No. 2, State Bank of India pleaded that the complainant was granted a loan of Rs. 24,000/- on 22nd February, 1986 which according to the terms of the agreement was to be repaid back in 48 months. The complainant failed to liquidate the loan and consequently the Bank had to file Certificate Case No. 761/90-91 against the complainant for the recovery of the said loan amount with interest. It was admitted by the State Bank of India that it has taken the insurance policy from opposite party No. 1 on 5th September, 1989. Following the lodgement of the claim with opposite party No. 1 by the answering opposite party a sum of Rs. 50,472/- was remitted to the answering party. It was received under protest with a noting made in the receipt which reads as under: "Claim amount does not represent full and final settlement of the claim".

AFTER receiving the said amount, the loan account of the complainant was closed. After liquidating the outstanding, Rs. 28,829.83 was paid to the complainant by a bankers cheque No. 378548 dated 11th May, 1991. The answering party was within its right to receive the amount receivable by the complainant from the Insurance Company and apply the same towards the liquidation of the loan amount which is admitted to have been received by the complainant. Hence the complainant has no cause of action against the answering party.

THE Surveyors appointed found that the loss which had occurred to the complainant on account of the fire amounting to Rs. 66,562/-excluding the value of salvage proceeds which was assessed at Rs. 41,450/-. The State Commission found that it was not understood how the loss of Rs. 66,562/- was reduced to Rs. 50,472/-to be paid to the complainant. The State Commission also believed the version of the complainant on account of the delay permitting the complainant to remove the salvaged goods which had been rendered completely useless. The State Commission thus came to the conclusion that the complainant who was entitled to Rs. 66,562/-plus Rs. 41,449/-=Rs. 1,08,011/- as Rs. 50,472/-has been paid by the Insurance Company to the Bankers of the complainant, the State Commission has awarded Rs. 57,549/- to the complainant. That sum was ordered to carry interest at the rate of 18% per annum from 8th April, 1991 on which date the payment of Rs. 50,472/- was made to the Bankers. In addition to that, the Commission also awarded Rs. 10,000/- to the complainant for harassment caused to him for the delay in settlement of the claim which deprived him of the use of the money for business or other purposes. Feeling aggrieved against that order both the parties have filed the above appeals. We have heard the learned Counsel for the appellant in Appeal No. 189 of 1993 and have gone through the records. It may be mentioned that none has appeared for appellant in Appeal No. 189 of 1993 as well as for respondent No. 2 in both the appeals.

FROM the record it is clear that at one stage the complainant had agreed to accept the sum of Rs. 50,472/- and that amount had been duly paid to the Bankers of the complainant after the later had discharged the voucher which is at page 18 of the paper-book No. 189 of 1993 without any objection and therefore it cannot be said that the Insurance Company has committed any deficiency in the rendering of service. The said sum was tendered to the Bankers of the complainant after the execution of the discharge voucher and the Bank has accepted that amount. There is no allegation that the complainant or the Bank were coerced in any way to accept the sum of Rs. 50,472/-. Of course, after the complainant had agreed to accept the amount there was some delay on the part of the Insurance Company but even thereafter the Bankers executed the discharge voucher in full satisfaction of the claim and agreed to receive Rs. 50,472/-. The delay appears to be due to the fact that after the report of the Surveyors the Insurance Company appointed an Investigator, whose report is dated 10th June, 1991. The date on the discharge voucher is not legible but in the margin of the discharge voucher somebody has mentioned that the amount was paid on 8th April, 1991.

THE complainant''s case is that he had asked the Bank that he was not agreeable to the payment of Rs. 50,472/''- only against the claim which the Bankers had accepted. However, that letter was written to the Bankers by the complainant on 27th August, 1991 long after the date when the Bankers liquidated the loan account of the complainant and remitted to him the balance amount i.e. Rs. 28,829.83 vide cheque dated 11th May, 1991. Thereafter, in the circumstances the Bank cannot be said to be guilty of any negligence. If the complainant wanted to give any instructions to the Bank it ought to have been given before the Insurance Company paid the amount. In the light of the above discussion we accept the contention of the Insurance Company that there has been no deficiency in service or imperfection in the rendering of service of Insurance Company. Hence, we accept the Appeal No. 189 of 93 and set aside the Order of the State Commission, while the Appeal No. 313 of 1993 filed by the complainant fails.

BEFORE parting with this order we make it clear that as there is dispute between the insured and the insurer in respect of the claim payable under the policy the complainant is given liberty to seek his remedy before an arbitrator appointed under the terms of the policy or in a Civil Court. In case the complainant files a suit before a Civil Court we are confident that the Civil Court will take into consideration while computing the period of limitation the time spent by the complainant in prosecuting the proceedings under the Consumer Protection Act, 1986. In both the appeals we leave the parties to bear their respective costs.