NEW INDIA ASSURANCE COMPANY LTD. vs M/S. INDO AMERICAN COM. LTD.

This appeal has been filed by the appellant against the order dated 22.01.2009 passed by the State Consumer Disputes Redressal Commission, Delhi (in short "the State Commission) in Complaint No. C-127/2005 - M/s. Indo American Com. Ltd. Vs. New India Assurance Co. Ltd. & Anr. by which, complaint was allowed.

Brief facts of the case are that the complainant/respondent company is carrying on the business of Full Fledged Money Changer (FFMC) under License No. FFMC.EC.DEL/41/95 granted by the Reserve Bank of India. On expressing interest by the complainant of getting its day to day business risk relating to transaction of money changing, the Opposite Party/Appellant vide its letter dated 12th November 2001 offered a comprehensive premium rates and salient features of the policies through which they intended to cover the risks according to the complainants

needs. The complainant vide its letter dated 5th December, 2001 categorically requested for inclusion of two features in the policy particularly coverage of risk of forged and dishonoured cheques / pay order / drafts / credit cards and other banking instruments as it was a specific and categorical requirement of the complainant company to get such risks covered in the policy. Accordingly the complainant filled a proposal form issued by the O.P Company and insured itself for the period 09-12-2001 to 08-12-2002 covering a total risk of Rs. 6.00 Crores and covering a single transaction up to a limit of Rs. 30.00 Lakhs. Clause-8 of Schedule to the said insurance policy covered the risks in respect of fraud, forgery with respect to buying selling of foreign currency in exchange of cheques and other banking instruments up to Rs. 30.00 Lakhs. One M/s. Vision Computers projected themselves as a very well reputed and financially sound concern and showed interest in purchasing foreign currency, from the complainant company, as they were often required to buy foreign exchange owing to their extensive traveling. The complainant before entering into any business transaction conducted various personal meetings at Directors level, examined its balance sheet, bank statement and scrutinized volumes of their other dealings before extending them the facility of buying foreign exchange from the complainant company against the company cheques issued by the said Vision Computers. Initially the cheques issued by Vision Computers were honoured by the bank during the period 2nd Jan to 12th Feb 2002. However, from 13th Feb 2002 to 16th Feb 2002 within a span of four days M/s. Vision Computers committed fraud worth Rs. 27,17,590/- and the cheques were returned by the bank with the remarks "Account Closed". Complainant intimated to OP about the factum of fraud and forgery committed by M/s. Vision Computers and FIR was also lodged. Complainant supplied required information time to time to the surveyor. Inspite of protracted correspondence OP vide letter dated 5.6.2003 repudiated claim on the ground that loss was caused on account of dishonour of cheque which was not result of fraud, forgery. Again complainant requested OP to reconsider claim, but OP vide its letter dated 23.12.2004 intimated that policy did not cover risk of dishonour cheque. Alleging deficiency on the part of OP, complainant filed complaint before State Commission. OP resisted complaint and submitted that complainant is not a legal entity and thus has no locus standi to file the present complaint, in as much as, no document to this effect has been filed and moreover the complaint has also not been filed by an authorized person. Further the complaint is barred by limitation as the claim was repudiated vide letter dated 05-06-2003 whereas the complaint was filed in September 2005. Also the complainant has committed flagrant breaches of the terms of the policy and did not take reasonable care as per terms and conditions of the policy and on its own took risk while giving large credits to M/s. Vision Computers without checking its antecedents and without fulfilling the verification of documentary requirements of foreign exchange as per RBI Guidelines. Also the complainant failed to initiate any civil or criminal proceedings against Vision Computers for recovering the amount. It was further submitted that as per the report dated 30-11-2002 of the Surveyor the cheques in question were dishonoured by the bank for insufficient funds and therefore, the Surveyor in his report stated that, we are of the view that the loss does not fall within the scope of the policy of insurance under which the claim has been lodged by the insured. Surveyor further observed that M/s. Vision Computers never denied the outstanding due to the complainant and both the parties had entered into an agreement for settlement and even paid to the complainant substantial part of the outstanding amounts. It, therefore, opined that there did not appear to be a case of fraud or forgery but mere dishonour of cheques by way of civil business debt. The Surveyor therefore did not make any assessment of loss allegedly suffered by the complainant. The O.P-Insurance Company, however, admitted that the Insurance Technical Services submitted its investigation report dated 20-01-2003 that the complainant had recovered a sum of Rs. 7,88,260/- from the total outstanding of Rs. 35,05,580/- on 13-02-2002 and thus the complainant had suffered a net loss of Rs. 27,17,590/- on account of dishonour of cheques. Denying any deficiency on their part, prayed for dismissal of complaint. Learned State Commission after hearing both the parties allowed

complaint and directed OP to pay Rs.27,17,590/- with 12% p.a. interest along with Rs.25,000/- as cost of litigation against which, this appeal has been filed.

Heard learned Counsel for the parties and perused record.

Learned Counsel for the appellant submitted that complaint was barred by limitation and inspite of specific plea in the written statement, learned State Commission committed error in not deciding plea of limitation and allowing complaint; hence, appeal be allowed and impugned order be set aside and matter may be remanded back to the learned State Commission and amount deposited may be returned. On the other hand, learned Counsel for the respondent submitted that plea of limitation can be decided by this Commission and order passed by learned State Commission is in accordance with law; hence, appeal be dismissed.

It is not disputed that OP took specific plea in written statement that complaint was barred by limitation as claim was repudiated vide order dated 5.6.2003 whereas complaint was filed in September, 2005. Perusal of impugned order reveals that learned State Commission after referring objection of OP in the written statement has not dealt with this objection. Learned State Commission was required to decide this issue firstly and if come to the conclusion that complaint was within limitation could have proceeded further and allowed complaint and thus committed error in allowing complaint without considering objection of limitation raised by OP.

Learned Counsel for the respondent submitted that this objection may be considered here as it will delay the matter. Learned State Commission was under an obligation to decide firstly limitation aspect and when learned State Commission failed to decide this objection, this Commission in appeal cannot decide this issue first time and matter has to be remanded back to learned State Commission to decide this aspect first and then to decide complaint. In such circumstances, matter is to be remanded back to learned State Commission for deciding complaint afresh including objection of limitation.

Consequently, appeal filed by the appellant is allowed and the impugned order dated 22.01.2009 passed by learned State Commission in Complaint No. C-127/2005 - M/s. Indo American Com. Ltd. Vs. New India Assurance Co. Ltd. & Anr. is set aside and matter is remanded back to learned State Commission to decide complaint afresh after considering objection of limitation raised by OP after giving an opportunity of being heard to the parties.

This Commission while admitting appeal vide order dated 19.3.2009 asked appellant to deposit Rs. 5,00,000/- with State Commission. This order was modified by the order dated 7.8.2009 and appellant was directed to deposit balance amount awarded by State Commission and it appears that balance Rs.30,34,554/- was deposited by appellant with this Commission and by order dated 29.1.2010 this Commission permitted respondent to withdraw the amount deposited with this Commission as well State Commission on furnishing security with condition that when respondent is required to refund the amount after disposal of appeal, it will refund amount with 9% p.a. interest. As impugned order has been set aside and matter is being remanded back to learned State Commission for deciding complaint afresh, respondent is directed to refund amount withdrawn in pursuance to order dated 29.1.2010 along with 9% p.a. interest on or before the date of appearance before State Commission.

Parties are directed to appear before State Commission on 8.8.2016. Learned State Commission is expected to decide complaint within 6 months from the date of first appearance. Parties to bear their costs.