RAMESH KHAITAN vs National Insurance Co. Ltd.

THIS is an original complaint arising out of a dispute regarding non-settlement of the insurance claim in respect of a damaged car which was insured with the National Insurance Company. The fact of the case in brief is stated below.

THE complainant, Mr. Ramesh Khaitan purchased a CEILO, (GIE) passenger car at Rs. 6,11,863/- on 5.8.1997 by borrowing finance from Citi Bank. He took the insurance policy for the said car with the National Insurance Company Ltd. bearing No. 101900/610129/99. THE said car faced with an accident on 13.12.1997 and caught fire, resulting in total loss of that car. After the accident the complainant communicated the information to the O.P. 4 on 15.12.1997. THE O.P. 4 sent him the claim form on 16.12.1997, which was duly filled up by the complainant and he demanded 6 lacs from the O.Ps.-company for total loss of the said vehicle and also communicated the said claim to the company on 18.12.1997. THE complainant alleged that the company kept mum and did not communicate any response to him till 18.8.1998 about the fate of the said claim in spite of several requests made by the petitioner/complainant. Issuing a letter dated 19.9.1998 O.P. 4 informed and instructed the petitioner to keep the damaged car in his own possession till finalisation of the claim. According to that letter, the petitioner kept the salvaged and burnt car at the Garage on monthly rent basis. Afterwards the complainant again made several correspondences (vide letter dated: 22.10.1998, 4.1.1999, 29.1.1999 and 4.2.1999). On 2.11.1998 the petitioner sent a letter of confirmation to the O.P. 4 for his information that the loan agreement between him and Citi Bank has been terminated due to full and final settlement with the Bank and the copy of the NOC from the Bank was attached with the said letter. On 5.2.1999 Mr. P.K. Gosh, Manager of the National Insurance Company Ltd. communicated a letter to the complainant that the necessary steps were to be taken by the O.Ps. THEn one letter was communicated by O.P. 2 to the petitioner on 21.4.1999, through which petitioner came to know that the complaint was lying at their Technical Department, at the Head office and they would decide the matter on receipt of necessary clarifications from their Calcutta Range Office. THE petitioner further states in his complaint that in spite of exertion of full effort from his ends, he could neither realise the disbursement of his claim from O.Ps. till filing of this case before the State Commission, that is 29.11.1999, nor he received any positive information about the fate of the claim, which he submitted in the office of the O.P. 4 on 19.12.1997. As a result he has incurred irreparable financial losses and injuries. He further alleges that the O.Ps. have failed and deliberately neglected to provide their service to settle the claim and to disburse the claim-amount even after the lapse of two and half years since 19.12.1997. It is prayed by him that the company direct the opposite parties to disburse the claim to the tune of Rs. 6 lacs, the value of the said car and alleging deficiency in service on the part of the opposite parties also be claimed a cost of Rs. 3,17,250/-, along with the interest @ 15% p.a. on total sum of claim and damages since January, 1998 till the realisation of entire amount of claim and damages. On careful perusal of all the papers we notice that there is no dispute that the complainant purchased a CEILO (GIE) passenger car with manual transmission at Rs. 6,11,863/- on 5.8.1997 by borrowing finance from the Citi Bank and got it insured with the National Insurance Company, which met with an accident on 13.12.1997. The policy was effective from 13.11.1997 to 12.12.1998.

It is submitted by the petitioner that during the accident it caught fire resulting in total loss of the said CEILO car. But it is curious enough that after the accident no F.I.R. was lodged with the police station and did not report to Fire Brigade. On the whole the complainant did not adduce any evidence in this regard. The opposite parties also did not submit the Surveyor''s report before this Commission. The petitioner submits that the opposite parties appointed one Surveyor and after inspection, the Surveyor filed his report to the opposite parties. But the O.Ps. did not file it before this Commission. We notice that learned Counsel for the opposite parties took time on 14.6.2002 for filing written objection, but this one also not filed by the O.Ps. till 12.12.2003, the date fixed for final hearing. So we cannot draw a conclusion as to whether it is case of total loss or the vehicle could be repaired, there is no iota of clear evidence.

AFTER the accident the fact was brought to the notice of Divisional Manager, National Insurance Company Ltd. (O.P. 4) on 15.12.1997. By sending a claim form on 16.12.1997 upon the petitioner O.P. 4 requested him to fill up the said form. The petitioner duly filled up the said claim form demanding Rs. 6 lacs from the O.Ps. for the total loss of the said car and communicated the form to the O.P. on 18.12.1997. We observe that after receiving these documents the O.P. 4 kept mum and did not communicate any response or reply to the petitioner for a long period. In the meantime, though the petitioner made several correspondences with the O.P. 4 regarding settlement of his claim, no positive result (vide letters dated 17.4.1998 and 1.7.1998) was made till 19.8.1998. On 19.8.1998 the O.P. 4 issuing a letter, informed and instructed the petitioner to keep the damaged car in his own possession till the finalisation of the claim. From the Memorandum of Appeal, we notice that as per the instruction of the O.P. 4, the petitioner kept the burnt car at a garage on monthly rent @ of Rs. 2,000/- since 15.12.1997. Afterwards the petitioner also sent several reminders to the O.P. 4 regarding the settlement of his claim (vide letters dated 22.10.1998, 4.1.1999, 29.1.1999, 4.2.1999), but no reply was received. On 5.2.1999 Manager of the National Insurance Company communicated a letter to the petitioner that necessary steps were to be taken by the O.Ps. In reply to the petitioner''s another letter dated 30.3.1999, the O.Ps. informed him that his claim was lying to their Head Office and they would decide the matter on receipt of necessary clarifications from their Calcutta Range Office. Alleging the deficiency in service of the O.Ps., learned Counsel for the petitioner submits that in spite of exertion of full effort from his end he could neither realise the disbursement of claim from the O.Ps. till 29.11.1999 (the date of filing the case) nor he received any positive response about the fate of his claim.

WE are convinced by the argument advanced by the learned Counsel for the petitioner and notice that O.Ps. have failed and deliberately neglected to provide their services to settle the claim even after the lapse of two and half years since 19.12.1997, when the demand of his claim was received by the O.P. 4 from the petitioner. As the Surveyor''s report is not before us it is not possible to know when the Surveyor was appointed to assess the loss and on which date the Surveyor submitted his report to the O.Ps. Moreover the petitioner did not mention those dates in his petition. WE are of the clear view that for such exorbitant delay to settle his claim the petitioner was compelled to approach before a Court of Law. Learned Counsel for the O.Ps. submits that the claim of the petitioner has been settled for an amount of Rs. 4,85,000/- and that was duly informed to the petitioner vide letter No. 101900/MCL/dated 20.12.1999, but the petitioner refused to accept this. In this context we find that the petitioner has preferred the original petition before this Commission on 29.11.1999. Before filing this case he made several correspondences with the O.Ps. regarding his claim settlement since 17.4.1998. But the O.Ps. did not pay any heed to his request. After filing the case the O.Ps. informed the petitioner by issuing a letter dated 20.12.1999, that his claim (which was received by the O.P.-company on 19.12.1997) had been settled for an amount of Rs. 4,85,000/-. We find much substance in the argument advanced by the petitioner that really the O.Ps. took a long time to settle his claim.

IN this regard Hon''ble Supreme Court has held in its judgment reported in III (1996) CPJ 8 (SC), that the reasonable period of taking a decision of the claim by the insurer is three months. IN the present case we find that the petitioner lodged his claim on 18.12.1997 by furnishing all the particulars, but the O.Ps. had settled his claim after a long delay i.e., on 20.12.1999, after filing the case.

IN this context, we are of the view that the O.Ps. have deliberately neglected to provide their service to settle the claim and to disburse the claimed amount to the petitioner. For such deficiency in service on their part the O.Ps. are liable to pay the interest from 18.6.1998 that is after six months of submitting the claim form and other formalities by the petitioner. The next question is: what rate of interest the insured petitioner is entitled to get? In regard to the rate of interest to be awarded, we have seen that the Hon''ble Supreme Court in its above mentioned judgment upheld the rate of 12% p.a. the period for which this interest rate was made applicable commenced in 1995. This rate of 12% p.a. was quite in order in the context of interest rates prevailing in the market during the material time and also taking into account the fact that the interest rate should have a penal element. In the present matter the material period was from 19.12.1997 to 29.11.1999. Taking into account the prevalent market interest rates during that period we think that an interest rate of 10% p.a. would be just and proper. So the O.Ps. are liable to pay the interest @ 10% p.a. for the period since 18.6.1998 to 19.12.1999.

The next and the moot question is : what value of the damaged car the insured-petitioner is entitled to get? Though the petitioner claimed that during the accident the said car caught fire, resulting in total loss, but he could not establish this by filing an iota of evidence. He neither lodged an F.I.R. with the Police Station nor informed the Fire Brigade. Regarding depreciation of value of the said car it is observed by us that the car in question was of 1997 model and it was also purchased on 5.8.1997 at Rs. 6,11,863/- including insurance, road tax and registration charges. From the Proforma Invoice of K.B. Motors (Pvt.) Ltd. it is observed by us that the actual value of the car was Rs. 5,84,955/-. The said car met with an accident after 4 months and 10 days from the date of its purchase i.e., 13.12.1997. According to the Terms and Conditions of the National Insurance Act that up to 6 (six) months the percentage of depreciation of value is NIL. But in this context the petitioner, had failed to prove that the said car suffered total loss due to the accident as he did not adduce any evidence (F.I.R., Fire Brigade Report) regarding this. However, after hearing the learned Counsel for the petitioner as well as the O.Ps., and going through the records of the case we are of the view that the petitioner is entitled to get Rs. 4,85,000/- (four lacs and eighty-five thousand) which had already been offered by the company.

THOUGH the petitioner claimed that he kept the damaged and burnt car in a garage on rental basis according to the direction of the company, yet in this context he did not submit any receipt of garage rent. So, in our opinion the petitioner is not entitled to get the garage rent which he claimed in his petition. Considering all the circumstances we are not inclined to insist upon the O.Ps. for payment of Rs. 3,17,250/- as damage charge claimed by the petitioner. Hence it is ordered that the O.Ps. shall pay Rs. 4,85,000/- (four lacs and eighty-five thousand) with an interest @ 10% p.a. for the period since 18.6.1998 to 19.12.1999 within 3 months after issue of this order. This original case is allowed in part on contest. With the above observation the case is disposed of. Complaint partly allowed.