NEW INDIA ASSURANCE COMPANY LIMITED vs Laxman singh

THE above referred appeals have been filed against the judgment and order dated 19.4.1993 passed by District Consumer Forum, Dehradoon in Complaint Case No. 829/92. Hence they are being taken up together and disposed off by a common judgment.

THE facts of the case stated in brief are that Truck No. UGY-8505 belonging to the complainant Sri Laxman Singh was insured with the New India Assurance Company Limited from 26.11.1990 to 25.11.1991 for a sum of Rs. 2,60,000/-. This truck met with an accident on 9.7.1991 for which a claim was filed. THE complainant filed a claim of Rs. 96,534/- with interest at the rate of 24% per annum. According to the complainant, he had spent a sum of Rs. 1,22,894/- in repairing the truck for which the claim was made. THE Surveyor assessed the damage at Rs. 63,208/- but the claim was repudiated on 13.10.1992. The opposite party in the written version admitted the accident but alleged that after the enquiry, it was disclosed that about 17 passengers were travelling in the truck at the time of accident out of which 12 persons were admitted to the hospital and six had died. As the terms and conditions of the insurance policy were contravened, hence the claim was repudiated. The opposite party also disputed the amount spent in repairs.

The learned District Consumer Forum after considering the case of the parties and perused the evidence on record came to the conclusion that there was a deficiency on behalf of the Insurance Company, hence it decreed the claim for a sum of Rs. 75,000/- alongwith interest at the rate of 15% per annum with effect from 16.5.1993. The time for payment was given upto 15th May, 1993. Both these parties have filed appeal.

AGGRIEVED against the order of the learned District Forum, the Insurance Company has come in appeal and has challenged the correctness of the order passed by the learned District Consumer Forum. We have heard the learned Counsel for the parties. The learned Counsel for the Insurance Company has argued that there were 17 persons sitting in the truck at the time of accident, hence according to the terms of the policy, this is a violation of terms and conditions of the policy. According to the learned Counsel, only upto six passengers are permitted to travel. In the present case, there is no evidence on record to show whether the truck when it met with an accident was overloaded with the goods. There is no mention of these facts in the judgment of the learned District Forum. Only this fact is mentioned that goods were loaded in the truck. Therefore, it cannot be said that at the time of accident of the truck, it was overloaded and this contributed to the accident. There is no evidence on record to show that on account of presence of 17 passengers, the truck met with an accident. The presence of passengers in the truck cannot be said to be the cause of accident. There is no nexus between the accident and the presence of persons in the truck.

THE National Commission in the case of United India Insurance Company v. Surjeet Singh, ASI, III (1999) CPJ 79 (NC)=2000 NCJ 113, found that the cause of accident is not attributable to excess passengers in the vehicle. The Hon''ble Supreme Court in the case of B.V. Nagaraju v. Oriental Insurance Company Limited, II (1996) CPJ 28 (SC), has held that in case 9 passengers were carried in the vehicle instead of 6 passengers, the breach of terms and conditions of policy is not sufficient to wipe-out the right of the claimant to claim the damages as if there is no relation of the breach of condition with the accident. Thus in view of the law laid down by the Hon''ble Supreme Court, it is clear that the accident which has been taken place must have some relation with the breach of terms of the policy. In the present case, there is no evidence on record to show that the presence of 17 passengers was responsible for the cause of accident. Thus we find that the deficiency was on the part of the Insurance Company, hence the order of the learned District Forum is perfectly correct and needs no interference. The appeal of the Insurance Company is liable to be dismissed.

THE learned Counsel for the complainant has also filed Appeal No. 766/SC/93 for enhancement of compensation. According to the learned Counsel for the complainant, the complainant had spent a sum of Rs. 15,000/- for taking out the truck from the khud in which it fell. According to the learned Counsel this amount was allowed by the Surveyor. A copy of the report of Surveyor is on record. A perusal of it goes to show that the report of the Surveyor of Modest Assessors and Investigators (P) Ltd. the survey was made on 31.7.1991 and 6.8.1991. THE cause of accident has been given and the damages which were mentioned by the spot Surveyor who inspected soon after the accident was also given in detailed. On page 5 of the report, it has been mentioned that the vehicle has slipped in the steep hill and deep khud and the complainant has placed of the records the cost of recovery of the salvage. It was stated that the location was difficult enough to retrieve safely the entire salvage without any pilferage and for all this exercise it was obvious to entail a good deal of money. He further says that the insured claimed an amount of Rs. 15,000/- (as per receipt attached) for this purpose. THE insurers at their discretion may consider an additional amount of Rs. 7,000/- towards the retrieving charges being the claim minimization expenses. Thus the Investigator has found that the vehicle was retrieved from deep khud and the hill was steep. This shows that a lot of money would have been spent in retrieving the vehicle. THE complainant has attached the receipt of Rs. 15,000/- for this job and there is no reason to differ from this amount. THE estimate given by the Surveyor of Rs. 7,000/- is not based on any evidence. THE Surveyor should have contacted the person who has issued this receipt in order to verify the claim. Thus on this account, the Insurance Company is liable to pay Rs. 15,000/- to the complainant.

THE learned Counsel has further argued that the insurer has made deductions of 50% from the amount assessed by it. THE truck was insured on 26.11.1990 for a sum of Rs. 2,69,000/-. This vehicle was purchased in the year 1987. At the time of accident, the vehicle was about four years old. Because the accident took place on 9.7.1991 and was running in the 5th year, the depreciation is 10% per year. THErefore, the depreciation which has been calculated by the Surveyor at 50% cannot be said to be on the higher side as the vehicle was running in the 5th year. It has been argued by the learned Counsel for the claimant that the interest has been awarded by the District Consumer Forum from 16.5.1993. It may be mentioned that the accident took place on 9.7.1991 and the claim petition was moved by the claimant. It is not clear from the evidence on record as to when the claim petition was moved by the claimant. The trend of decision of the Hon''ble Supreme Court is that the claim is to be processed and completed within a period of three months from the date of submission. If the claim is not processed within three months then the interest is payable by the Insurance Company. Therefore, we direct that the Insurance Company shall pay interest of the claim from the expiry of three months from the date of submission of the claim before the Insurance Company till the date of payment.

It has further been argued that rate of interest has been awarded only at the rate of 15% per annum while it should have been 18% per annum.

THE learned Counsel for the Insurance Company has argued that the interest should be fixed at the rate of 12% per annum. In support of his argument he has placed reliance on the case of United India Insurance Company Ltd. v. M/s. M.K.J. Corporation, III (1996) CPJ 8 (SC)=1996-1999 Consumer 4781 (NS), in which it was held that the rate of interest in the case of Insurance Company should be 12% per annum. However, the learned Counsel for the complainant has argued that the interest should be awarded at the rate of 18% per annum in view of the decision of the Hon''ble Supreme Court in the case of United India Insurance Company Limited v. Fancy Traders, VII (2000) SLT 365=JT 2000 (10) SC 337. THE Hon''ble Supreme Court in this case has held that the interest at the rate of 18% per annum is justifiable. THE order of the Hon''ble Supreme Court is very short and is being reproduced below : "Order (1) Leave is granted. (2) Heard learned Counsel for the parties. (3) THE net loss caused to the respondent due to fire was assessed at Rs. 4,72,146/- but the applicant paid only a sum of Rs. 2,75,146/- to the Bank of the respondent. THE balance amount together with interest at the rate of 18% was ordered to be paid to the respondent by the State Commission. (4) Having regard to the facts and circumstances of the case, the High Court also did not interfere with the rate of interest awarded by the State Commission. We find no justification for our interference in the matter under Article 136 of the Constitution. (5) THE appeal is accordingly dismissed. THEre shall be no order as to costs." In a more recent case, National Insurance Company v. Ram Sheo Kumar, Civil Appeal No. 3110/1993, alongwith Appeal No. 4430/1993 decided on 23rd September, 1999 the Hon''ble Apex Court had also considered the quantum of interest which should be awarded in the case of Insurance Company. In that case before the Apex Court, it was held that the repudiation of the claim by the Insurance Company was wholly mala fide. It was held that all the risks were covered by the insurance policy. The ship which was carrying the goods was lost on the high seas. Before the Hon''ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. The Hon''ble Supreme Court repelled the contention of the Insurance Company about the rate of interest in the following words : "So far as the question of quantum of interest is concerned, we see no infirmity in the order passed by the Commission except that the order of the Commission requires a little alteration so that the date 6.12.1987 is altered to 12.8.1987 in consonance with the judgment of the Commission itself."

THUS in view of the latest decision of the Hon''ble Supreme Court, it is now clear that the interest at the rate of 18% per annum is to be paid by the Insurance Company when it is found that the deficiency is on behalf of the Insurance Company. Thus, in view of what has been said above, the appeal of the complainant is liable to be partly allowed and he will get additional sum of Rs. 15,000/-. Thus the claimant is entitled to an amount of Rs. 90,000/- from the Insurance Company at the rate of 18% per annum interest from the expiry of three months from the date of lodging of the claim upto the date of payment. Order The Appeal No. 740/SC/1993 filed by the Insurance Company is dismissed while the Appeal No. 766/SC/1993 filed by the complainant is partly allowed as indicated above. The complainant will get a sum of Rs. 90,000/- in all from the Insurance Company at the rate of 18% per annum interest from the expiry of three months from the date of submission of the claim till the date of making payment. The complainant shall also get a sum of Rs. 3,000/- towards cost of appeal is from the Insurance Company. Let compliance of this order be made within a period of two months from the date of this order. This judgment shall be kept in the file of Appeal No. 740/SC/1993 and a certified copy of it shall be placed on the file of Appeal No. 766/SC/1993. Let copy of this order be made available to the parties as per rules. A. No. 740/SC/1993 dismissed & A.No. 766/SC/1993 partly allowed.