NEW INDIA ASSURANCE CO LTD vs Raj Karan Singh

THIS appeal arises out of the order of the State Consumer Disputes Redressal Commission, U.P. which has directed the opposite party, Insurance Company to pay to the complainant a sum of Rs. 2,74,500/ - along with interest at the rate of 18% p.a. with costs of Rs. 5,000/ -.

THE brief facts which lead to the filing of the complaint are as under : The complainant got his truck insured for Rs. 4 lakhs vide policy No. 3112140013554 effective from 9.1.1991 to 8.1.1992. On 12.4.1991 the truck met with accident and six persons died on the spot. The truck was completely damaged. An F.I.R. was lodged on 12.4.1991 itself and the police submitted their report on 2.11.1991. A claim was lodged with the Insurance Company on 20.4.1991 for an amount of Rs. 2,75,115.37. The Insurance Company had appointed Surveyors who submitted their report to the Insurance Company. Since there was no response from the Insurance Company for a considerable length of time, the complainant had to approach the State Commission with the following claims.

(i) Award of Rs. 2,75,115.37 with interest at the rate of 18% till the date of payment; (ii) A compensation of Rs. 50,000/ - for mental agony; (iii) Costs of Rs. 5,000/ -; (iv) An amount of Rs. 50/ - per day for rent as the truck was lying in garage; and (v) Rs. 25,000/ - for removing the truck from the workshop of the opposite party No. 3.

The opposite party, Insurance Company, has filed its written version in which it had admitted the fact of the truck being insured from 9.1.1991 to 8.1.1992. The main contention of the Insurance Company is that the truck was carrying passengers and was being used in utter violation of the policy conditions, as the policy of insurance allows only the employees not exceeding six in number to travel. As per the Surveyor, the truck was carrying 9 persons and as per the Investigator who was appointed by the Insurance Company later, it was carrying 11 passengers. Both the parties have filed their affidavits in support of their contentions. The State Commission, after hearing both the parties has returned its finding, as to whether there has been any violation of the terms and conditions of the policy as contended by the opposite party, in the following terms. The State Commission has come to the conclusion, on the basis of the spot survey conducted by the Surveyor and on the basis of the report of the police, that the persons travelling in truck were 7 and not 11 as has been stated in the report of the Investigator. Thus, depending on both the reports the State Commission has returned the finding that the number of persons travelling were 7 only. The State Commission relied upon the judgment of the Honble Supreme Court in the case of B.V. Nagaraju v. Oriental Insurance Co. Ltd., reported in II (1996) CPJ 28 (SC), wherein the Honble Supreme Court has held as under : ''It is plain from the terms of the insurance policy that the insured vehicle was entitled to carry six workmen excluding the driver. If those six persons when travelling in the vehicle are assumed not to have increased any risk from the point of view of the Insurance Company on occurring of an accident, how could those added persons be said to have contributed to the causing of it is the poser, keeping apart the load it was carrying. Here it is nobodys case that the driver of the insured vehicle was responsible for the accident. In fact, it was not disputed that the oncoming vehicle had collided headon against the insured vehicle, which resulted in the damage. Merely by lifting a person or two, or even three, by the driver or the cleaner of the vehicle, without the knowledge of the owner, cannot be said to be such a fundamental breach that the owner should, in all events, be denied indemnification. The misuse of the vehicle was somewhat irregular though, but not so fundamental in nature so as to put an end to the contract, unless some factors existed which, by themselves, had gone to contribute to the causing of the accident. In the instant case, however, we find no such contributory factor.''

It is further held by the Honble Supreme Court that : ''The National Commission went for the strict construction of the exclusion clause. The reasoning that the extra passengers being carried in the goods vehicle could not have contributed, in any manner, to the occurring of the accident, was barely noticed and rejected sans any plausible account, even when the claim confining the damage to the vehicle only was limited in nature. We, thus, are of the view that in accord with the Skandias case, the aforesaid exclusion terms of the insurance policy must be read down so as to serve the main purpose of the policy that it indemnify the damage caused to the vehicle, which we hereby do.''

THUS , on the basis of the above decision and discussion, the State Commission directed the Insurance Company to pay to the complainant a sum of Rs. 2,74,500/ -. As far as the other claims are concerned, viz., for mental agony, for rental charges, for shifting of the vehicle, the State Commission disallowed them as there was no tangible evidence. However, the State Commission held the Insurance Company guilty of deficiency in service in not settling the claim for one -and -half years, i.e. from 12.4.1991, i.e. the date of accident till 28.11.1992, the date of filing of the complaint before State Commission and decided to award interest. Upon hearing both the Counsels on this point and keeping in view the decisions of the Honble Supreme Court in the cases of Sovintorg (India) Ltd. v. State Bank of India, II (1999) CPJ 4 (SC)=VI =(1999) 6 SCC 406, it was held that the interest can be awarded as compensation or damages because it is based on equity, justice and good conscience. In the case of United India Insurance Co. Ltd. v. Fancy Traders, reported as VII =JT 2000 (1) SC 337, the Honble Supreme Court has held that the rate of interest at 18% p.a. is justifiable. To the same effect is the case of M/s. National Insurance Co. Ltd. v. Jeet Ram Sheo Kumar, III (2000) CPJ 5 (SC)=VI =2001 CTJ 1 (SC). Keeping the aforesaid decisions in view the State Commission has come to the conclusion that interest at 18% will also cover the loss caused to the complainant and awarded interest at the rate of 18% p.a. from 1.8.1991 till the date of payment on the amount of Rs. 2,74,500/ - as assessed by the Surveyor. As mentioned above, the State Commission also awarded Rs. 5,000/ - as costs. Feeling aggrieved by the order of the State Commission, the opposite party, Insurance Company, came in appeal before us.

NOTICES for todays hearing were sent by registered post to all the parties. Only respondent No. 2 is present before us. respondent Nos. 4 and 5 are Surveyors. They are neither proper nor necessary parties. It is stated that respondent No. 4 has since died. We have heard the learned Counsel for the appellant as well as the learned Counsel for the respondent No. 2. We have perused the impugned order. We have not been shown any legal infirmity in the impugned order except that the award of 18% interest which we also feel is on the higher side. Accordingly, the impugned order is modified to the extent that the interest on the amount of Rs. 2,74,500/ - shall be reduced from 18% to 12% p.a. simple. The rest of the order of the State Commission is sustained. It is further clarified that the appellant will be entitled to receive the salvage. The revision petition is disposed of in the above terms with no order as to costs. Revision Petition dismissed.