Oriental Insurance Co. Ltd. vs ANNAPPA ALLAPPA HUDDAR

THIS is an appeal filed under Section 17 of the Consumer Protection Act, 1986, by the opponent-Oriental Insurance Co. Ltd. against the order dated 25.3.1997 passed by the District Forum, Belgaum, in Complaint No. 140/1995 directing him to pay a sum of Rs. 80,000/- in all, less Rs. 20,280/- already deposited with the State Bank of India, Athani, in the khata of the complainant with interest @ 18% p.a. from the date of complaint within 30 days from the date of receipt of the copy of the order.

THE complainant who is a Practising Advocate and an agriculturist is the registered owner of Jeep bearing No. KA. 23/M.2015, which was insured with the opponent. On 30.4.1994 at about 4 p.m. the said vehicle met with an accident within the limits of Hosur Village in Saundatti Taluk, Belgaum. Due to the said accident, the inmates of the vehicle suffered grievous injuries and due to the sudden impact and turtling of the vehicle in the said accident, the said vehicle damaged considerably and substantially. THE said fact was intimated to the Insurance Company and also to the Police. THE Police registered the case in Muragod Police Station in Crime No. 89/1994 under Sections 279, 337 and 338, I.P.C. THE Police also conducted Panchanama and they valued the damages at Rs. 90,000/- approximately. THEreafter, on the basis of the report of the Surveyor who had valued the damage at Rs. 29,053.84, the claim of the complainant was turned down and a sum of Rs. 20,280/- was credited to the loan account of the complainant in the State Bank of India, Athani, to which the said vehicle was hypothecated. According to the complainant, this deposit was done without intimation to him. Hence, in the complaint, he has asked the following amount : On receipt of the notice from the District Forum, the opponent-Insurance Company filed its objection statement. It had admitted the insurance and also the accident as such of the vehicle. It has stated that immediately after receiving the intimation of the accident, the Company engaged the services of one Sanjog Chowgule, Surveyor, to visit the spot of the accident and the said Surveyor submitted his spot Survey Report estimating the damage at Rs. 29,128.50. Again, one Suresh Gull, Surveyor and Loss Assessor was directed to carry out the survey and to report as to the actual loss suffered by the complainant and he also estimated the loss at Rs. 29,053.84.

After the receipt of the Scrutiny Report and the documents from the complainant, the Insurance Company decided to settle the claim on non-standard basis by paying 75% of the amount of the actual loss to the complainant. As per the practice, the respondent then sent to the complainant a voucher for Rs. 20,280/- with letter dated 20.12.1994 requesting to send the voucher duly discharged for enabling the respondent to issue a cheque for that amount. Since the said vehicle was hypothecated to the State Bank of India, Athani, the said amount of Rs. 20,280/- was credited to the loan account of the complainant. It has disputed the claim amount of the complainant and further submitted that the complainant was not justified in approaching the District Forum without resorting first to the Arbitration Clause in the policy of insurance. On these grounds, the Insurance Company requested the District Forum to dismiss the complaint.

THE District Forum, on the basis of the materials placed by both the parties, has passed the above impugned order. Hence, this appeal has been filed by the Insurance Company. The learned Advocate Mr. Manoj Kumar, appearing on behalf of the appellant, submitted before us that the District Forum was not justified in entertaining the complaint without asking the complainant to make a request to the Insurance Company for referring the claim to the Arbitrator under the terms of the policy for enhancement of compensation. It is true, in the objection-statement before the District Forum, this contention was raised. But, before the District Forum, it is seen from the order that such a contention was not canvassed. Even in the memo of appeal, such a ground is not raised. The only ground raised in the memorandum of appeal is that the District Forum was not justified in entertaining the complaint when the respondent/complainant had accepted the said amount towards full and final discharge of his claim. The learned Advocate Mr. Manoj Kumar also submitted that the District Forum was not justified in awarding interest at the rate of 18% p.a.

WE heard the learned Advocate Mr. S.A. Deshpande on behalf of the respondent. He tried to support the judgment of the District Forum. He also submitted that it is not open to the appellant to contend that the complainant should have been directed to approach the Arbitrator in view of the fact that both the parties have subjected to the jurisdiction of the District Forum and the District Forum had entertained the dispute and passed an order and it may not be proper on the part of the appellant to take up this contention before this Commission since the order has gone against the Insurance Company. He has also submitted that the District Forum was justified in passing the order awarding compensation of Rs. 80,000/- to the complainant in view of the nature of the damage suffered by the vehicle and also on the basis of the materials placed by the complainant. We have considered the rival submissions of the Advocates very carefully. Mr. Manoj Kumar invited our attention to Clause No. 7 of the insurance policy, which reads as follows : "7. If any difference shall arise as to the quantum to be paid under the policy, (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision for an Arbitrator to be appointed in writing by the parties in difference, or if they cannot agree upon a single Arbitrator to the decision of two disinterested persons as Arbitrators of whom one shall be appointed in writing by each of the parties within two calendar months after having been required to do so in writing by the other party in accordance with the provisions of the Arbitration Act, 1940, as amended from time-to-time and for the time being in force. In case either party shall refuse or fail to appoint Arbitrator within two calendar months after receipt of notice in writing requiring an appointment the other party shall be at liberty to appoint sole Arbitrator and in case of disagreement between the Arbitrators, the difference shall be referred to the decision of an Umpire who shall have been appointed by them in writing before entering on the reference and who shall sit with the Arbitrators and preside at the meetings."

On the basis of the said Clause, he argued before us that when there was a difference regarding the quantum, the complainant ought to have asked the Insurance Company to refer the matter to the Arbitrator; without doing so, he has approached the District Forum with the complaint and the District Forum was not justified in entertaining such a complaint. In this connection he has placed reliance on the decision of the National Commission reported in III (1996) CPJ 183 (NC), Shri Ganesh Spinners v. United India Insurance Co. Ltd., in which the National Commission has observed as follows : "Inasmuch as the Insurance Company has taken its decision on the claim after due application of its mind to the facts and circumstances of the case and the said decision cannot be said to have been taken otherwise than in good faith, it is not possible to hold that there was any deficiency in service on the part of the insurer in determining the claim at only on a lower figure than the amount claimed by the complainant. Since the grievance of the complainant is that the amount assessed by the Insurance Company as the compensation due and payable to the complainant is grossly inadequate, the remedy of the complainant, in our opinion, is to take resort to the provision for arbitration contained in Clause 11 of the Fire Policy. Accordingly, we direct that the complainant may expeditiously address to the insurer for referring the claim for enhancement of the compensation to Arbitrator under Clause 11 of the policy and as such arbitration proceedings shall be comprehensive enough to include the full amount claimed by the complainant under all the heads in the present complaint petition. The arbitration proceedings will, of course, be governed by the Arbitration and Conciliation Act, 1996. On receipt of the communication from the complainant nominating his Arbitrator and requesting for making reference under Clause 11 of the policy the insurer shall nominate its Arbitrator and take all further steps in accordance with Clause 11 of the policy. We direct that the Arbitrators shall finalise the award within a period of four months from the date on which they enter on reference. The original petition is disposed of with these directions."

HE has also invited our attention to another decision of the National Commission reported in II (1998) CPJ 29 (NC), New Gulmarg Restaurant v. The New India Assurance Co. Ltd., wherein the National Commission has observed that repudiation of claim under the insurance policy on the basis of the report of the Surveyor who has investigated in proper, fair and thorough manner, does not give rise to consumer dispute.

WE heard the learned Advocate for the respondent on this point. In this connection, we can usefully refer to a decision of the Supreme Court reported in III (1996) CPJ 1 (SC), Fair Air Engineers Pvt. Ltd. & Anr. v. N.K. Modi. In the said decision, the Supreme Court, in paragraphs 15 and 16, has stated as follows : "15. Accordingly, it must be held that the provisions of the Act are to be construed widely to give effect to the object and purpose of the Act. It is seen that Section 3 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Mr. Suri, that the words "in derogation of the provisions of any other law for the time being in force" would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on consideration and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of Code of Civil Procedure, i.e., to avail of right of civil action in a competent Court of civil jurisdiction. Nonetheless, the Act provides the additional remedy. 16. It would, therefore, be clear that the Legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the Judicial Authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forum, State Commission and National Commission are Judicial Authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these Forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the Forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate Forum for adjudication of the disputes would be otherwise those given in the Act."

In view of the said decision, we are of the opinion that because of a clause mentioned in the insurance policy, the parties are not precluded from approaching the District Forum. Further, as mentioned above, though this contention was raised in the objection-statement, from the order of the District Forum it is seen, no such contention was canvassed before it. Further, in the appeal memo also, such a ground was not raised. However, since it was a question of law raised by the learned Advocate, we allowed him to contend and meet the contention with reference to the decision of the Supreme Court. This decision of the Supreme Court has been followed by the Madhya Pradesh State Consumer Disputes Redressal Commission reported in III (1999) CPJ 524, Vishwa Prakash v. Shri Raju Joseph & Anr., wherein the Commission has observed that mere existence of remedy by arbitration should not come in the way of an aggrieved party from seeking redressal under the Consumer Protection Act.

AS far as the quantum is concerned, the District Forum has taken into consideration the survey reports and Panchanama as well as other materials placed by the parties. Though the complainant has claimed a total sum of Rs. 1,51,165/- towards repair charges, it has awarded only Rs. 75,000/- on the basis of the materials placed before it. As far as the complainant''s prayer regarding towing the damaged vehicle is concerned, the District Forum has rejected the said claim on the ground that the complainant has not placed sufficient materials to allow the said amount.

THE complainant has asked for compensation of Rs. 30,000/- towards mental agony and sufferings. THE District Forum however has awarded a sum of Rs. 5,000/- for mental agony. It has observed that the opponent has not produced any material to show that before depositing the amount in the State Bank of India, Athani, to the account of the complainant, it was not brought to his notice. Hence the said amount of Rs. 5,000/- was awarded towards mental agony. As far as the claim of Rs. 10,000/- towards travelling expenses is concerned, the District Forum has observed that the com-plainant has not placed any material on the basis of which he has claimed the said amount. Hence, the said claim was also negatived by the District Forum. After assessing the entire materials placed before it and on the basis of the arguments advanced on both the sides, the District Forum has awarded a total amount of Rs. 80,000/- as compensation to the complainant. No ground is made out to interfere with the said order of the District Forum. Hence, we confirm the said amount of Rs. 80,000/-.

NOW, coming to the question of interest @ 18% p.a., in view of the decision rendered by the Supreme Court in United India Insurance Co. Ltd. v. M.K.J. Corporation, reported in III (1996) CPJ 8 (SC), the interest at the rate of 18% has to be reduced to 12%. This is what the Supreme Court, in paragraph 10 of the said judgment, has observed : "10. The next question is what rate of interest the insured-respondent is entitled to get ? In common parlance, when the insured-respondent is deprived of the right to enjoy his money or invest the money in business, necessarily the loss has to be compensated by way of payment of interest by the Insurance Company. We are informed that as per the directions of the Government of India the appellant-Insurance Company has no option but to invest the money in the securities specified by the Government of India under which the Insurance Company is securing interest on investment at the rate of 11.3% per annum. Under these circumstances, the appellant-Insurance Company is liable to pay interest @ 12% per annum from 1.1.1991 till date of payment."

WITH the above modification in the interest, this appeal is dismissed as devoid of merits. There will be no order as to costs in this appeal. Appeal dismissed.