SANTOSH KUMAR DIXIT vs ORIENTAL INSURANCE COMPANY LIMITED

THIS is an appeal against the judgment and order dated 11.11.1992 passed by District Consumer Forum, Hardoi in Complaint Case No. 275/1992.

THE facts of the case stated in brief are that the complainant filed the complaint on the ground that he started a business of ready-made garments at Hardoi. He got the shop insured on 7.6.1991 for one year for a sum of Rs. 20,000/-. In the night of 18/19 October, 1991 there was a fire in which the entire clothes were gutted. When the complainant opened his shop on 19.10.1991 at 10.30 a.m. he came to know of this incident. He got a report of this incident lodged in the police station on 20.10.1991. THE Insurance Company was informed of this incident. A Surveyor was sent on 24.10.1991 who surveyed the spot and was satisfied that there was a fire in the shop. THE Surveyor asked for some money which the complainant did not agree. He also refused to sign the papers which the Surveyor wanted him to sign. THE complainant submitted a claim and when the claim was not settled the complainant gave a notice to the Insurance Company. As the claim has not been settled the complainant filed the complaint praying for Rs. 20,000/- as loss occasioned to him along with Rs. 5,000/- towards mental tension etc. and Rs. 1,500/- on account of cost. The case was contested by the Insurance Company, the opposite party. In the written version it was alleged that the Surveyor Sri Ajay Kapoor was appointed on 24.10.1991 who visited the spot and surveyed the shop. The Surveyor asked the complainant as to how the fire had taken place. When the complainant did not tell him the reason he became angry. It is wrong to say that the Surveyor demanded any money. It is further alleged that a letter dated 11.11.1991 was sent by the Insurance Company for getting the formalities completed. Another registered letter dated 9.12.1991 was also sent, in reply to which the complainant sent copies of the documents vide letter dated 27.12.1991. The Surveyor gave his report on 6.1.1992. According to the Surveyor the complaint of the complainant was fictitious as there was no loss of any kind in the shop. It is further alleged that the claim cannot be filed before the District Forum.

The learned District Forum, after considering the evidence of the parties, held that the Insurance Company has considered the claim of the complainant and the Surveyor had also filed his report. In view of these facts, it was held that the complaint is not maintainable before the District Forum and hence it dismissed the complaint.

AGGRIEVED against the order of the learned District Forum, the complainant has come in appeal and has challenged the correctness of the order passed by the District Forum. We have heard the learned Counsel for the parties. We have also perused the evidence on record.

THE only question which has to be considered in the present case is, whether there was any loss occasioned to the materials placed in the shop of the complainant on account of the fire. According to the learned Counsel for the Insurance Company there was no fire. Learned Counsel for the Insurance Company has placed reliance on the report of the Surveyor. A perusal of this report goes to show that the fire remained confined to a corner of the shop and it could not be ascertained as to how the fire took place in the shop when there was no electric connection in the shop nor there was any window etc. It is further mentioned in this report that Sri K.K. Yadav, Manager, Kendriya Sahkari Upbhokta Bhandar, Hardoi has stated that he also came to know of the fact and had seen some burnt clothes in the shop. It has further been mentioned that one person also stated that the shop got fire and some clothes were burnt. He also stated that the shop mostly remained closed and there was no business. THE statement of these persons which had been given to the Surveyor, have not been filed or any affidavit of those persons have been filed to show that the shop of the complainant remained closed and there was only a partial damage. THE Surveyor has also written that he deployed sources to find out the facts of the case. He was informed that the fire had been arranged by the complainant himself. It is an admitted fact that there was a fire in the shop of the complainant and the clothes were damaged. THE claim of the Surveyor that there was no electricity connection or there was no ventilation or window and how fire took place, is without any force. When the fire has actually taken place in the shop it is immaterial as to what was the cause of the fire. THE complainant has given his version of above loss of Rs. 20,000/-. THE Surveyor has not mentioned in his report, a copy of which has been supplied to this Commission, as to what was the extent of damage caused to the complainant. THErefore, no reliance can be placed on the report of the Surveyor, and the claim of the complainant is correct. As far as the dismissal of the case by the District Forum is concerned on the ground that the Surveyor had done his duty and the claim was rightly rejected and, therefore, there is no jurisdiction of the case is not correct. The District Forum as well as the Commission can see as to whether the claim of the complainant has been rightly rejected or not and they have jurisdiction to go behind the report of the Surveyor. The report of the Surveyor is not a sacroscant document which cannot be touched. Therefore, the view of the learned District Forum was not correct. Now the question of rate of interest arise. The learned Counsel for the Insurance Company has argued that the interest should be fixed @ 9% per annum. In support of his case, the learned Counsel for the Insurance Company has placed reliance on the case of Smt. Kaushnuma Begum & Ors. v. The New India Assurance Company Limited & Ors., I (2001) SLT 300=I (2001) ACC 151 (SC)=JT 2001 (1) SC 375. According to learned Counsel in this case the interest at the rate of 9% per annum has been directed to be paid. We have gone through this case. It has been held that how we have to fix up the rate of interest. Section 171 of the Motor Vehicles Act empowers the Tribunal to direct that ''in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as may be specified in this behalf''. Earlier, 12% was found to be the reasonable rate of simple interest. With a change in the economy and the policy of the Reserve Bank of India, the interest rate has been lowered. The Nationalised Banks are now granting interest at the rate of 9% on fixed deposits for one year. We, therefore, direct that the compensation amount fixed here-in-before shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants. The amount of Rs. 50,000/- paid by the Insurance Company under Section 140 shall be deducted from the principal amount as on the date of its payment, and interest would be recalculated on the balance amount of the principal sum from such date.

THUS we find that the Hon''ble Court has considered the provisions of Section 171 of the Motor Vehicles Act. The provisions of the Consumer Protection Act were not considered in that case and the interest at the rate of 9% per annum was allowed which is being granted now on fixed deposits by the Nationalised Banks. Learned Counsel for the complainant has argued that the Hon''ble Supreme Court has in all previous cases under Consumer Protection Act has confirmed the rate of interest at 18% per annum because this also represents the amount of damages which has to be given. According to learned Counsel the damages are granted in the form of interest and damages consist of many components. Learned Counsel for the complainant has a point in this argument. Under the Consumer Protection Act no rate of interest has been provided. The Hon''ble Supreme Court has granted interest under the provisions of Section 34 of the Civil Procedure Code. The Hon''ble Supreme Court in the case of Sovintorg (India) Limited v. State Bank of India, II (1999) CPJ 4 (SC)=VI (1999) SLT 545=(1999) 6 SCC 406, has held that the interest can be awarded as compensation or damages because it is based on equity, justice and good conscious. Reliance has been placed by the learned Counsel for the complainant on the case of Jit Ram Shiv Kumar v. National Insurance Company, III (2001) CPJ 5 (SC)=I (2001) SLT 660=2001 (I) Supreme 333. In that case the interest was awarded by the National Commission at 18% per annum on the principal amount. Thereafter an appeal was brought to the Supreme Court against the judgment of the National Commission. The Apex Court directed for deposit of principal amount along with 12% per annum interest. Thereafter, the Hon''ble Supreme Court passed the final order confirming the award of principal amount and interest as reported in 2001 CTJ 1. It was held in 2001 (I) Supreme 333 (supra), that liability to pay interest at 18% does not seize merely because principal amount along with 12% interest was deposited pursuant to interim order. The respondent was, therefore, held liable to pay interest at the rate of 18% per annum. THUS the Apex Court has held that 18% interest is to be paid in cases under Consumer Protection Act. That was a case against the Insurance Company which went to the Hon''ble Supreme Court against the judgment of the National Commission. THUS we find that in cases arising under the Consumer Protection Act, the Hon''ble Supreme Court has consistently taken a view that interest at the rate of 18% per annum has to be paid on the compensation amount. This rate of interest has been allowed by the Hon''ble Supreme Court keeping in view the facts that the claims which are pending before the Insurance Companies are not decided by the Insurance Companies within a reasonable time and the claims are repudiated on flimsy grounds. The complainant is harassed by the Insurance Company and he has to suffer mental torture and has to run to the office of the Insurance Company and has to wait for getting the insured amount after entering into litigation. All these factors are considered while granting compensation in the form of interest in such cases. However, the learned Counsel for the complainant has argued that the interest should be awarded at the rate of 18% per annum in view of the decision of the Hon''ble Supreme Court in the case of United India Insurance Company Limited v. Fancy Traders, VII (2000) SLT 365=JT 2000 (10) SC 337. The Hon''ble Supreme Court in this case held that the interest at the rate of 18% per annum is justifiable. The order of the Hon''ble Supreme Court is very short and is being reproduced below : "ORDER 1. Leave is granted. 2. Heard learned Counsel for the parties. 3. The net loss caused to the respondent due to fire was assessed at Rs. 4,72,146/- but the applicant paid only a sum of Rs. 2,75,146/- to the Bank of the respondent. The balance amount together with interest at the rate of 18% was ordered to be paid to the respondent by the State Commission. 4. Having regard to the facts and circumstances of the case, the High Court also did not interfere with the rate of interest awarded by the State Commission. We find no justification for our interference in the matter under Article 136 of the Constitution. 5. The appeal is accordingly dismissed. There shall be no order as to the costs."

IN a recent case, National INsurance Company v. Jit Ram Shiv Kumar, III (2000) CPJ 5 (SC)=VI (2000) SLT 624=2001 CTJ 1 (SC), the Hon''ble Apex Court had also considered the quantum of interest which should be awarded in the case of INsurance Company. IN that case before the Apex Court, it was held that the repudiation of the claim by the INsurance Company was wholly malafide. It was held that all the risks were covered by the insurance policy. The ship which was carrying the goods was lost on the high seas. Before the Hon''ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. The Hon''ble Supreme Court repelled the contention of the INsurance Company about the rate of interest in the following words : "So far as the question of quantum of interest is concerned, we see no infirmity in the order passed by the Commission except that the order of the Commission requires a little alteration so that the date 6.12.1987 is altered to 12.8.1987 in consonance with the judgment of the Commission itself."

Thus in view of the majority of decisions of the Hon''ble Supreme Court, it is now clear that the interest at the rate of 18% per annum is to be paid by the Insurance Company when it is found that the deficiency is on behalf of the Insurance Company.

In view of above discussions the appeal is liable to be allowed and the complaint is liable to be decreed. ORDER

THE appeal is allowed and the judgment and order of the learned District Forum are set aside. THE claim of the complainant is decreed for a sum of Rs. 20,000/- alongwith 18% per annum interest. THE interest shall be payable from 3 months after submission of the claim form till the date of payment. THE complainant/appellant shall also get a sum of Rs. 2,000/- as cost of the appeal. Let compliance of the order be made within a period of two months from the date of this order. Let copy as per rules be made available to the parties. Appeal allowed.