Rugs India vs Icici Lombard General Insurance Co.

THIS revision petition is directed against the order of the State Commission dated 19.4.2012 whereby the State Commission accepted the appeal of the respondent/opposite party against the order of the District Forum and dismissed the complaint.

BRIEFLY put, the facts relevant for the disposal of this revision petition are that the complainant - firm obtained an insurance policy from the opposite party for period from 15.6.2005 to 14.6.2006. On 8.5.2006 fire broke in the insured premises due to which the petitioner/complainant suffered loss. Incident was intimated to the insurance company. A surveyor was deputed who after conducting necessary survey and investigation assessed the loss suffered by the complainant to the tune of Rs.30,76,654/ -. Pursuant to the survey report the respondent/opposite party sent cheque for the even amount to the petitioner with a covering letter dated 01.09.2006, which reads thus:- "We are pleased to inform you that your claim referred above has been approved for full settlement amount of Rs.30,76,654/. We are hereby enclosing the Cheque of Rs.30,76,654/ - vide Cheque No.104140 dated 29 - August - 2006 drawn on ICICI Bank Ltd. We thank you for the opportunity to serve you and assured you best the services at all times."

The complainant encashed the cheque and sent a protest letter to the respondent which reads thus:- "Sir, We have received your cheque No.104140 of Rs.30,76,654.00 dated 29.08.2006 towards our above said claim. We have received your cheque under protest since our claim is for Rs.44,04,015.00. You are therefore requested to send/provide us copy of Surveyor Report alongwith copy of work sheet, how this amount has been arrived. Kindly provide the above information/document under Right to Information Act 2005 failing which we shall be compelled to take legal action under the said Act. We are enclosing herewith draft of Rs.50.00 in the favour of ICICI Lombard General Insurance Co. Ltd. No.084783 Dated 04.092006 payable at Mumbai towards fee payable to you for providing the information under the said Act."

THE respondent/opposite party failed to pay to the petitioner the difference of the claim of the petitioner to the tune of Rs.44,04,015/ - and the amount of the cheque. This led to the filing of the consumer complaint by the petitioner alleging deficiency in service on the part of the opposite party.

THE opposite party resisted the claim by filing the written statement wherein a plea was taken that the cheque for Rs. 30,76,654/ - was sent to the complainant in the full and final settlement of the claim and by accepting the cheque the complainant has agreed to settle the claim and as such it is estopped from reopening the matter. The District Forum on consideration of the pleadings of the parties and evidence found deficiency in service on the part of the opposite party and allowed the complaint with following directions:- "For the reasons recorded above, we accept the present complaint and direct the OPs to make the payment of Rs.8,90,000 -00 together with interest at the rate of 9% per cent from 29.8.2006 the date when the OPs made the payment earlier to the petitioner till realization and a sum of Rs.3300/ - as litigation expenses within a period of thirty days from the date of receipt of this order. Parties concerned be communicated of the order accordingly and file be consigned to the records after due compliance."

FEELING aggrieved by the order of the District Forum, respondent/opposite party preferred an appeal before the State Commission and the State Commission without referring to the merits of the case allowed the appeal on technical ground with following observations:- "On behalf of the appellant it has been argued that the amount of Rs.30,76,654/ - was paid to the complainant vide cheque No.104140 dated 29.8.2006 which was drawn from ICICI Bank Ltd. In favour of M/s Rugs India and therefore after receiving the aforesaid amount, the complainant has no right to reopen its claim."

SHRI Manoranjan Sharma Advocate, learned counsel for the petitioner has contended that the impugned order of the State Commission is based upon incorrect reading of the judgment of the Supreme Court in the matter of Bhagwati Prasad Pawan Kumar vs. Union of India (2006) 5 SCC 311. Expending on the argument learned counsel for the petitioner contended that the State Commission failed to appreciate that in Bhagwati Prasad Pawan Kumar case (supra) the Indian Railways had forwarded the cheque against the claim of the claimant of that case making it clear in the forwarding letter that in case the offer of the Railway was not acceptable the cheque should be returned forthwith failing which it would be deemed that the claimant has accepted the offer in full and final settlement of his claim. Learned counsel argued that in the instant case no such condition was mentioned in the covering letter of the cheque. Therefore the acceptance of cheque by the petitioner under protest cannot be termed as full and final settlement of the claim by the petitioner. Learned counsel for the petitioner thus urged us to accept the revision petition and set aside the impugned order of the State Commission and restore the order dated 29th October, 2007 passed by the District Forum, Panipat. Shri Amit Tyagi Advocate, learned counsel for the respondent on the contrary has argued in support of the impugned order. He has drawn our attention to the covering letter dated 01.09.2006 vide which the cheque for Rs.30,76,654/ - was sent to the petitioner - Company and argued that the letter clearly mentions that the aforesaid amount has been approved for full and final settlement claim of the petitioner and therefore by accepting the cheque the petitioner has entered into full and final settlement. As such the State Commission has rightly held that the petitioner is estopped from reopening its claim by filing the consumer complaint.

THE only question for determination in this revision petition is whether the acceptance of cheque of Rs.30,76,654/ - sent to the petitioner alongwith covering letter dated 01.09.2006 amounts to the acceptance of the amount in full and final settlement of the claim of the petitioner and that as a consequence, the petitioner is estopped from re -agitating his claim by filing the insurance claim?

IN order to find answer to the above question, it is necessary to have a careful look on the letter dated 01.09.2006 vide which the cheque of Rs.30,76,654/ - was sent to the petitioner. On reading of the contents of the aforesaid letter reproduced in para 2 of this order, we find that vide this letter, the respondent had informed the petitioner that they have approved a sum of Rs.30,76,654/ - for full settlement of his claim. This in our view only amounts to conveying the information about the amount approved against the insurance claim and it cannot be taken as an offer for full and final settlement of the dispute particularly when there is nothing on the record to suggest that prior to issue of this letter, any negotiation for amicable settlement of the claim between the parties was going on. It is pertinent to note that as per record within three days of said letter, the petitioner had written a protest letter dated 04.09.2006 asking the opposite party insurance company to send copy of the surveyor report alongwith copy of the calculation sheet indicating the manner in which the amount of loss has been quantified. The aforesaid conduct of the petitioner in immediately sending a protest letter is clear indication of the fact that he accepted the cheque as on account payment against its claim of Rs. 44,04,015/ - under protest. The State Commission in our view has misread the judgment of the Supreme Court in the matter of Bhagwati Prasad Kumar (supra) and it failed to appreciate that the aforesaid judgment is based upon the entirely different facts. In that case, Indian Railways had send the cheque to the claimant in full and final settlement of the claim making it clear that if the offer was not acceptable, the claimant should return the cheque. In the instant case, there is no such stipulation in the letter dated 01.09.2006. Therefore, use of words "claim has been approved for full settlement " cannot be termed as an offer given to the petitioner for full and final settlement of the insurance claim. Thus, in our view, the State Commission has committed a grave error in holding that acceptance of cheque sent by the insurance company amounts to offer of full and final settlement by the petitioner. Considered from the other angle, admittedly the petitioner had taken a standard fire and special peril policy from the opposite party on payment of premium. As per the insurance contract the opposite party has agreed to indemnify the petitioner for the loss, if any, caused because of fire besides other reasons. Admittedly, the petitioner has filed a claim of Rs.44,04,015/ - and that the respondent/opposite party on the basis of the report of assessor approved the payment of Rs.30,76,654/ - against the claim. Merely because, there was a mismatch between the amount claimed by the petitioner and the loss assessed by the Surveyor, the opposite party was not justified to withhold the payment and send the cheque of the approved amount with a rider that aforesaid amount was approved as full settlement of the claim. In all fairness, since the opposite party had entered into a contract to indemnify the petitioner for the loss suffered, it was required to remit the amount of loss quantified and approved by it on the basis of the assessor report unconditionally to the petitioner. By imposing the condition and using the words that the amount of Rs.30,76,654/ - was "approved in full settlement of the claim ", the opposite party has impliedly exerted pressure on the petitioner by indicating that the claimant should accept the amount as full settlement or have recourse to legal remedy. This offering of the cheque subject to the condition, in our view, amounts to unfair trade practice as also coercion. Thus the acceptance of the cheque sent alongwith the letter dated 01.09.2006 under protest by the petitioner is fully justified and cannot be taken as full and final settlement of insurance claim.

IN view of the discussion above, we are of the opinion that impugned order of the State Commission is based upon incorrect appreciation of facts and misreading of the judgment of the Supreme Court. Revision petition is, therefore, accepted and impugned order is set aside. Since the State Commission has not considered the merits of the appeal, we remand the matter back to the State Commission with direction to rehear the appeal and decide the same on merits.

PARTIES are directed to appear before the State Commission on 27.11.2013. Since this is an old matter, State Commission is requested to decide the appeal within three months.