Oriental Insurance Co. Ltd. vs M.L.BHAT

BOTH the appeals mentioned in the above title are directed against the same order dated 6.5.96 of District Forum-I and these are being disposed of together.

SHRI M.L. Bhat and his brother SHRI P.K. Bhat, hereinafter referred to as the complainants, obtained a house-holders insurance policy for Rs. 3 lakhs on 2.7.91 from Batwara, SHRI Nagar Branch of Oriental Insurance Company Limited, (opposite party for short). The policy covered risk against burglary, fire and theft. Burglary took place in the house on 2.6.92 regarding which FIR was lodged at P.S. Pulwama the same day. The complainants filed their claim with the Insurance Company. The Company deputed Mr. M.K. Wali as Surveyor. The complainants furnished various documents required by the Surveyor on 18.6.92. The opposite party, however, failed to settle the claim. Two letters were written by the complainants on 13.12.93 and 22.3.94. The Insurance Company informed the complainants on 11.4.94 that claim amounting to Rs. 1,54,386/-had been approved. A cheque for the said amount was sent by the Insurance Company to the complainants on 15.4.94 which was received by the complainants under protest. The grievance of the complainants was that the amount insured under the policy had been arbitrarily reduced and even the reduced amount had been given after more than 22 months of the occurrence of the loss. The complainants filed a complaint before District Forum-I on 18.5.94 claiming the amount which had been reduced by the Insurance Company, interest @ 19% p.a. and compensation in addition to the payment of interest. The case was contested. On a consideration of the material before it the District Forum Held that case to be one of deficiency in service on the part of the Insurance Company, found no justification for reducing the amount by 40% on account of alleged depreciation and, accordingly, directed the Insurance Company to pay the balance 40% amount alongwith interest @18% p.a. from 2.8.92 to 15.4.94 and further interest at the same rate on the balance amount for the period 2.8.92 till the date of payment besides Rs.500/-as costs. Hence these appeals. We have heard Mr. N.L. Nandwani, Advocate for the Insurance Company and Mr. Ramesh Bhandari, Advocate for the complainants and have gone through the records.

Mr. K.L. Nandwani has contended that the FORA constituted under the Consumer Protection Act, 1986 has no jurisdiction in the present case. He referred to Section 1(2) of the Act and pointed out that the Consumer Protection Act, 1986 extends to the whole of India except the State of Jammu and Kashmir. He submitted that an independent Act is in force in the State of Jammu & Kashmir and there are material points of difference in the provisions of the present Act and the aforesaid Jammu & Kashmir Act. It was further submitted by Mr. Nandwani that the property insured was situated at Sri Nagar, the policy had been obtained from Sri Nagar Branch of the Insurance Company and the alleged loss had taken place at Sri Nagar. Entertaining the proceedings with regard to such a claim according to Mr. Nandwani would amount to giving extra territorial jurisdiction to the Consumer Protection Act, 1986 which would be in contravention of Section 1(2) restricting the application of the Act to the whole of India except the State of Jammu & Kashmir. Mr. Nandwani further submitted that being an objection regarding jurisdiction and a legal one, he is entitled to raise the same even though such an objection had not been raised before the District Forum.

THE stand of Mr. Ramesh Bhandari, on the other hand, is that these proceedings have been filed in accordance with the provisions of Section 11 of the Consumer Protection Act, 1986 and Head Office/Branch Office of the Insurance Company is situated in Delhi. THE case, according to Mr. Ramesh Bhandari is covered u/Section 11 (2)(a) and Sub-clause (c) thereof relating to cause of action is not attracted. After careful consideration, we are of the view that the FORA under the Act had jurisdiction to deal with the matter. The only opposite party arrayed in the complaint was the Oriental Insurance Co. Ltd., Oriental House, Asaf Ali Road, New Delhi, which Mr. Nandwani conceded is the Registered Head Office of the Insurance Company. Sub-clause (a) of Section 11 of the C.P. Act, 1986 is attracted as the Company is deemed to reside at the place w here its registered office is situated. In the alternative, the Company, admittedly, has branch office in Delhi, by amendment of 1993 Sue-clause (a) of Section 11(2) of me C.P. Act, was amended and it was expressly provided mat the place where the opposite party carries on business or has a branch office shall have jurisdiction to deal with the cases under the Act. The various sub-clauses i.e. (a), (b) and (c) of Section 11(2) have to be read disjunctively as in between these clauses the word occurring is ''or''. It follows that Sub-clause (c) relating to cause of action arising wholly or in part has no application to the facts of this case. the matter can be viewed from another angle. The Insurance Company which had issued the insurance policy and which is allegedly guilty of deficiency in service, is within the jurisdiction of the FORA constituted under the Act. The claim in question was processed in the regional office of the Insurance Company at Chandigarh and the Head Office at Delhi. The amount for which the Company had accorded its approval, had also been sent to the complainants from the aforesaid offices. For all these reasons, in our view, the complainants cannot be non-suited on the ground urged by Mr. Nandwani. We hold that the FORA constituted under the C.P. Act had jurisdiction to deal with the matter-

COPY of the report of the Surveyor has not been produced by the Insurance Company before the District Forum. The same has, however, been filed in appeal. According to the Surveyor, the gross amount of loss was Rs. 3,00,920/-. He commended depreciation @ 20% and the net amount payable to the insured was found to be Rs. 2,40,736/-. Some correspondence ensued between Insurance Company and the Surveyor and ultimately by his letter dated 17.7.93, the Surveyor recommended 10% depreciation to be deducted instead of 20% recommended earlier. It appears that the Insurance Company did not accept the above recommendation and decided to reduce the amount on account of depreciation by 48%. We asked Mr. Nandwani, learned Counsel for the Insurance Company to disclose the basis for applying the aforesaid depreciation. All that Mr. Nandwani could reply was that it was in accordance with the practice being followed in such cases. We are not impressed. In our view, there can be nothing more arbitrary than applying reduction of 48% of the claim on the alleged ground of depreciation, the time lag, between the declaration of the value of the goods insured and the date of loss being 11 months. The Surveyor appointed by the Insurance Company had recommended depreciation of 10%. It is well known that the nature of goods including silver, carpets and even shawls etc. do not depreciate in value. In any case, the depreciation recommended by the Surveyor appeared to be fair and reasonable and no reason has been shown to us why it was necessary to depart from that recommendation and apply a huge cut of 48%. In our view, therefore, the complainants were entitled to settlement of claim for Rs. 2,70,818/-. Having already been paid Rs. 1,54,386/-the complainants are entitled to further payment of Rs. 1,16,432/-. According to Mr. Nandwani, final clarificatory letter sent by the Surveyor is dated 14.1.94. The Insurance Company was entitled to take two months to take a final decision and, therefore, interest, if at all, should be allowed from 15.3.94 till 15.4 94 when sum of Rs. 1,54,386/-was paid and the direction of the District Forum to pay interest from 2.6.92 on the whole amount allowed should be set-aside. Mr. Nandwani also contended that the rate of interest permitted by the Supreme Court was 12% p.a. For both these propositions he relies on a recent decision in United India Insurance Co. Ltd. v. M.K.J. Corporation, III (1996) CPJ 8 (SC). Learned Counsel for the complainants, on the other hand, submitted that the National Commission had invariably granted interest @ 18% p.a. We are bound by the decision of the Supreme Court and, accordingly, allow interest @ 12% p.a. on Rs. 1,54,386/-for the period 15.3.94 to 15.4.94 as well as a further sum of Rs. 1,16,432/-together with interest @ 12% p.a. from 15.3.94 till the date of payment. In view of the award of interest we do not think that any additional. amount need be allowed towards compensation. The parties shall bear their own costs in the respective appeals. Both these appeals are disposed of in these terms. A copy of this order be communicated to the parties as well as District Forum-I. Appeals disposed of. ___________