UMA DUTT SHARMA vs National Insurance Company

THE complainant is an educated unemployed youth. He purchased a Swaraj Mazda Truck bearing Registration No. HIN 8097 for an amount of Rs. 2,20,000.00. In order to safeguard himself against the possibility of incurring losses due to accident, theft, pilferage etc. occurring in the course of the use of the aforesaid vehicle, the complainant took out on 27.6.1988 Commercial Vehicles Comprehensive Policy of Insurance with the respondents herein, National Insurance Company through its Manager, Himland Hotel Shimla. THE policy was for coverage of the whole amount i.e. Rs. 2,20,000.00 covering the period commencing from 27th of June, 1988 to 26th of June, 1989. In other words vehicle aforesaid was insured as a "Public Carrier". THE vehicle in question met with an accident after one month and twelve days of its purchase on 8.8.1.988. THE complainant had purchased the truck by getting it financed from the Himachal Pradesh Financial Corporation by borrowing loan to the tune of Rs. 1,65,000.00 which was subject to the payment along with interest @ 15% plus per annum.

SH. Baljinder Singh Loss assessor of the respondent''s Company assessed the loss and came to the conclusion vide his report dated 4.10.1988 that in case the total loss basis was to be the basis of settling the claim, then a sum of Rs. 1,99,500.00 should be paid to the complainant. According to the complainant, in case it is to be treated as total loss then there was no question of deducting any amount from the insured sum as there was no depreciation or very minimal depreciation in the vehicle. It is alleged that respondent did not settle the claim apparently for oblique motive of getting commission to which the complainant did not accede. It is then asserted that complainant visited not only respondent but also their Regional offices at Chandigarh and Delhi for about 20 to 30 times and ultimately on 7.1.1990 the respondent settled his claim for Rs. 1,49,625.00 to which he consented and gave a receipt in advance (Annexure A- 3) to the respondents. The respondents are also alleged to have obtained a receipt from the Himachal Pradesh Financial Corporation with regard to the payment of the said amount (A-4) in advance as the truck was hypothecated with them. It is asserted that respondent took possession of the salvage and got the registration of the vehicle transferred to its own name and gave wide publicity regarding the sale thereof in the news-paper of 23.1.1990 (A-5). Certificate of registration was also obtained in their name from the Registration Licensing Authority, Rajgarh. Respondents had also got the aforesaid vehicle surveyed regarding the estimated loss caused thereto from M/s. S.M. Co. Ltd. at Chandigarh who gave an estimate of Rs. 2,81,740.00 with the provision that there could also be revised estimate and the respondent''s Company was informed of this fact vide letter dated 29.8.1988. Despite the aforesaid settlement arrived at, it is alleged that respondents did not voluntarily pay the amount due to the complainant or to Himachal Pradesh Financial Corporation despite getting receipt (A-3) and requisite letter from the latter (A-4) till the filing of the complaint on 31.7.1990. Thus according to the complainant the respondent-Company has indulged in unfair trade practices and is falsely representing to the public that the services rendered by it are of particular standard vis-a-vis the discharging of their liabilities. However, according to the complainant there was ''deficiency in service''. Thus through this complaint the complainant has sought the following reliefs: - (a) His claim of Rs. 2.20 lacs which should have been paid within a month or two of the date of the accident, has not been till date. (b) Because of the non-payment of the claim of the complainant, the Himachal Pradesh Financial Corporation is charging penal interest and the interest burden alone has now swollen to about Rs. 1 lac and the total amount payable to the Himachal Pradesh Financial Corporation is about Rs. 2.50 lacs. (c) The complainant had suffered mental torture and harassment and had to spend on his various visits to Shimla, Parwanoo, Chandigarh and Delhi and is entitled to a sum of Rs. 1.20 lacs on these two counts.

Respondents resisted and contested the claim by raising various preliminary objections of jurisdiction, cause of action, and estopple. On merits averments with respect to the vehicle having been insured and facts pertaining to the assessment of the loss as evaluated by their Loss Assessor Sh. Baljinder Singh and ultimate settlement of the claim in the sum of Rs. 1,49,625.00 under the policy with the consent of the complainant and obtaining of the advance receipt dated 7.1.1990 have been admitted. For the respondents as there was some dispute for payment of premium as the vehicle was financed by the Himachal Pradesh Financial Corporation, Shimla, the claim was made as "non standard" i.e. complainant was entitled to payment of 75% of the assessed amount which amounts to Rs. 1,49,625.00 so accepted by the complainant and which is admissible and permissible under the policy itself. Survey done through M/s. S.M. Company Ltd. Chandigarh and estimate given by them has also not been refuted by the respondent. According to them there was no delay in settling the claim of the complainant inasmuch as the offer was made to the complainant which was accepted by him on 7th of January, 1990. In para-12 of the reply respondent-Company has shown its readiness and willingness to tender the settled claim amount before this Commission, which according to them was admissible and permissible under the policy itself. However, it has been contended that as the complainant has disputed this amount in his complaint before this Commission hence the payment could not be made. Moreover the dispute arises out of the terms and conditions of the policy and as such he can seek his remedy only in a competent Court of Civil jurisdiction and not before this Commission.

BOTH parties were afforded opportunity to produce their evidence by way of affidavits. None of them availed the right of examining the deponents. Arguments advanced by the learned Counsels for the parties have been heard at length and the record has also been examined thoroughly by us. From the above the following points emerge for the consideration of this Commission : - (1) Whether this Commission has jurisdiction to decide the dispute arising between the parties inter-sel (2) Whether the respondent can be held to have indulged in un-fair trade practice(s) as envisaged in the Section 2(1)(r) of the Consumer Protection Act, 1986? (3) Whether facts alleged in the complaint constituted "deficiency in service" on the part of the respondent? (4) Whether the complainant is entitled to be compensated for physical and mental harassment as alleged? (5) In case all the three points above are decided in favour of the complainant, to what amount the complainant is entitled to? (6) To what interest, if any, and at what rate the complainant is entitled to?

Before the dispute is decided point wise it would be pertinent to detail that during the pendancy of the complaint this Commission (our learned predecessor) directed the respondents to pay an amount of Rs. 1,49,625/- to Himachal Pradesh Financial Corporation, Shimla towards the account of the complainant regarding the loan raised for truck in question. The aforesaid amount was ordered to be deposited within a period of one month from the date of the order. This order was not complied with as is apparent from the order dated 9.5.1991 and consequent thereto a Show Cause Notice was issued to the respondent under Section 27 for taking action against the respondent in accordance with Law. Ultimately in response to the notice issued by this Commission the aforesaid amount was deposited by the respondent on 5.7.1991 with the Himachal Pradesh Financial Corporation.

POINT-I: - Narration of the facts, show that regarding the payment of premium arising from the accident of the truck in question had finally been settled in the sum of Rs. 1,49,625/- which was not paid to the complainant till the filing of the instant complaint. In the circumstances we are not impressed with the contention raised by Sh. Ravi Bakshi, learned Counsel appearing on behalf of the respondents, that merely because complainant has now disputed the settlement and has claimed the payment of premium on total loss basis, it amounts to repudiation of the contract, and this interpretation of the terms of the policy can only be adjudicated upon by a Civil Court of competent jurisdiction and this Commission has no jurisdiction to decide the lis. It is to be noted that complainant admits the settlement of claim finally with the consent/regarding which respondents in their reply have shown their inclination to pay the said amount even during the pendancy of the complaint) but for want of non-payment thereof, he has claimed his entitlement to the payment of premium on total loss basis which is not a disputed question but is a legal one which can be decided by this Commission as well. Non-payment of the settled amount of premium by the respondents for a sufficiently long time for what-so-ever reason it may be; does constitute a "deficiency in service" on the part of respondent-Company. This proposition is concluded by the Ruling given by National Commission in Umedi Lal Aggarwal v. United India Assurance Co. Ltd., (O.P. No. 3 and 4 of 1989 decided on 28.7.1989) I (1991) CPJ 3 (NC). This decision has been reiterated in the case of the New India Assurance Co. Ltd. v. M/s. Vipro Electronics Pvt. Ltd., I (1991) CPJ 335 (NC). In the former case it was observed that it is not possible to hold that the settlement of insurance claims will not be covered by the expression "Insurance" occurring in Section 2(1)(d) of the Act. It was laid down that whenever there is default or negligence in regard to such settlement of an insurance that will constitute a "deficiency in the service", on the part of the Insurance Company and it will be perfectly open to the concerned aggrieved consumer to seek appropriate relief under the Act. Also the Consumer Protection Act, 1986 "shortly here-in-after referred as the "Act".) is not in derogation of any other Law. The provisions thereof are supplementary in nature. The additional remedies which may be available to the consumers under the substantive Law may be availed by them. If consumer can take up his cause to Civil Court under the law of contract or any other law, the provisions of this Act would not act as an impediment to his otherwise seeking the remedy. Thus all facts and circumstances of this case considered together, it does not oust the jurisdiction of this Commission. The learned Counsel for the respondent next contended that as complainant is falling back on the terms of the policy claiming whole amount of Rs. 2,20,000/- instead of mutually settled amount, the entitlement of the complainant rests upon the interpetation of the terms of the policy and also the calculation of the amount of compensation. It is pointed out that on the fateful day the complainant had carried more weight in his truck than what was allowed as is apparent from Annexure-A-2. Even otherwise, according to them the complaint constitutes a disputed fact which this Commission can not decide and as such the remedy of the complainant to recover compensation/damages is to be by way of a Civil Suit and not through this Commission. Learned Counsel for the complainant has contended that though complainant had to accept Rs. 1,49,625/- in lieu of full and final settlement of his claim and he had issued receipt in advance and expressly concluded his part of the contract but as the respondent did not perform their part of the obligation. As such in view of the Section 39 read with Section 31 and 32 of the contract, he is now entitled to claim the entire amount under the terms of the policy pertaining to the truck in question. He further pointed out that respondent could not deduct a single penny out of the entire amount of Rs. 2,20,000/- under any pretext. Further as the respondents have failed to perform their promise it amounted to "deficiency in service". As such this Commission has got jurisdiction to take cognizance of the complaint. We have examined the arguments thoroughly. Section 39 of the Contract Act applies to ending a contract and not where a breach of contract is pleaded. Section 62, thereof deals with the effect of novation, rescission and alternation of the contract whereas Section 63 deals with the promise dispensing with or remitting performance of promise. In the instant case complainant pleaded the final settlement with his consent and acceptance thereof. He further pleaded performing his part of the contract. On the other hand respondents showed their willingness to pay the settled amount even after filing of the complaint and they pleaded certain other circumstances due to which they could not pay the settled amount. In other words, both parties did not end contract. There had been, thus, novation of contract and as such it can not be said that respondents had rescinded the contract. Thus there being novation of contract and an amount finally settled, the complainant can not now fall back upon original amount. Even otherwise the plaintiff was entitled to the calculation of the compensation, on nonstandard basis. Admittedly he was carrying 35 Qtls. of goods in his truck on the fateful day. It was in this view of the matter that Loss Surveyor Sh. Baljinder Singh, representative of the respondents, had calculated the amount of loss to which complainant was found entitled. The respondent taking into consideration all these facts had finally and amicably settled a particular amount. Thus in view of the matter we find that there are no disputed facts to be gone into by this Commission. Definitely there has been a "deficiency in service". As such this Commission has jurisdiction to decide the loss. Point-1 is decided accordingly.

POINTS 2 & 3 :- No definition of the term ''unfair trade practice'' has been given in the Act except that it has been mentioned that this expression shall have the same meaning as in Section 36- A of the Monopolies and Restrictive Trade Practices Act, 1969. It however has expressly excluded unfair trade practices adopted by the owner of an undertaking to which part A of chapter III of that Act applies or by any person acting on behalf of or for the benefit of such owner.

SECTION 36-A of the Act provides that "unfair trade practice" means trade practice which for the purpose of promoting the sale, use or supply of any goods or for the provision of any services, adopts one or more of the following practices and thereby causes loss or injury to the consumers of such goods or services, whether by eliminating or restricting competition or otherwise namely, (1) The practice of making any statement, whether orally or in writing or by visible representation which, (i) -- (ii) falsely represents that the services are of a particular standard, quality or grade; (iii) -- to (x) From the facts disclosed by the record and particularly the averments contained in the complaint filed by the complainant it is clear that respondent Company had fully investigated into the claim put forward by the complainant got survey conducted and had finally come to the conclusion that the latter is entitled to the receipt of an amount of Rs. 1,49,625/- in full and final settlement of his claim regarding the payment of premium in terms of the policy of the truck in question. The pleadings of the parties further disclose that respondent Company had obtained receipt dated 7.1.1990 (A-3) and also a letter from Himachal Pradesh Financial Corporation regarding the information as to the hypothecation of the truck in question with them. Order dated 9.1.1990 passed by this Commission also shows that payment of this amount was ordered to be made to Himachal Pradesh Financial Corporation towards the liquidation of the loan amount borrowed by the complainant from the former. Admittedly it has been deposited on 5.7.1991. It has particularly been averred by the complainant that respondents have represented to the public at large that the services provided by it are of a particular standard and that they are very goods at discharging their liabilities. Admittedly respondent-Company is a Nationalized Insurance Company which is bound to work in accordance with the provision of the Insurance Act. It is stated that there are four such Nationalized Insurance Companies including the respondents. Thus in a way said companies including the respondents have monopoly over the business of Insurance of the vehicles. Non-payment of a settled claim of premium to be the assured within a reasonable time does amount to false representation that the services of respondents are of a particular standard, quality or grade and amounts to unfair trade practice. In the instant case even the order passed by this Commission dated 9.1.1990 regarding deposit of the said settled amount was not complied with by the respondent till 5.7.1991. Thus respondents by their acts of omission and commission and conduct have shown that they indulged in unfair trade practice. And we hold so.

While deciding point-1 we have already observed that parties to the instant lis had amicably settled their dispute in the sum of Rs. 1,49,625/- which remained unpaid by the respondents to the complainant till 5.7.1991 despite the orders of this Commission. We have also observed that default or negligence in payment does amount to deficiency in service. As such we hold that facts disclosed by the record and averments made by the parties in their pleadings do constitute "deficiency in service". We hold so. Points 2 and 3 are decided accordingly.

ADMITTEDLY complainant is a resident of village Gajion P.O. Shargaon via Oach Ghat, District Sirmour. This fact is apparent from the policy of the vehicle in question itself. Further fact apparent there from is that vehicle in question was hypothecated vide agreement with Himachal Pradesh Financial Corporation, Shimla. The policy was signed at Parwanoo on 20.8.1988 by the authorized person for an on behalf of the respondents. Accident as earner pointed out took place on 8th of August, 1988 at about 5.00 P.M. near Kazari at Mani Majra Chandigarh as per the report of the loss Assessors (A-2). Advance receipt regarding the payment of premium by the respondent has admittedly been obtained from the complainant apart from receipt voucher of the insurance claim from Himachal Pradesh Financial Corporation on 2.1.1990 (A-4). Sale of salvage had been advertised by the respondents on 23.1.1990 (A-5). Ownership of the vehicle in question had been altered in favour of respondents by the Registration and Licensing Authority Rajgarh on 18.6.1990. ADMITTEDLY, Divisional Office of the respondent is at Shimla though policy was issued at its branch office at Parwanoo. Also Head Office of Himachal Pradesh Financial Corporation is located at Shimla. These facts are not in controversy. The case of the complainant is that he visited respondents'' office for 20 to 30 times for the receipt of the settled amount. Record discloses that ownership of the truck was transferred in the name of the respondents subsequent to the settlement. He had been also informed through advertisement regarding the sale of salvage without receipt of the premium so settled. He must have visited Shimla pursuading Himachal Pradesh Financial Corporation to await for the receipt of the settled amount towards the liquidation of his loan. Even otherwise he must have been worried by non-settlement of settled amount which was not being paid. Even according to the respondents of certain formalities were required to be fulfilled before settling the claim. The acts and conduct of the respondents show that they had caused physical and mental tension to the complainant because of non payment of his due claim. Factum of visits for 20 to 30 times in various offices of the respondents as now claimed but repudiated is seen from the respective affidavits of the parties. But the conduct of the respondents in not making the payment of mental worry of the complainant because of non-payment of instalments of the loan which he had borrowed from the Himachal Pradesh Financial Corporation does show that he must have visited all relevant quarters of the respondent-Company and he must have gone from pillar to post to recover the said amount and got it paid to his creditors in order to avoid further complication regarding payment of interest to his financier. Thus we are of the view that complainant''s averments in this respect are believable and those of the respondents are not credit worthy. We thus hold that complainant has not only physically but also mentally been harassed by the respondents due to their acts of omission and commission as also negligent conduct on their part Now the question arises as to what compensation the complainant is entitled to? Viewing the above said facts in their true prospective we are not in a position to calculate the exact amount of loss which the complainant could have sustained because of the respondents gross negligence. It can only be assessed on guess work. The complainant despite amicable settlement of the payment of premium on 9.1.90 has been compelled to lodge a complaint before this Commission. Even seeing the conduct of the respondents regarding the deposit of the amount pursuant to the order of this Commission we hold on guess work that complainant is entitled to be compensated to the tune of Rs. 10,000/- at the minimum. We hold so. Point- 4 is decided accordingly.

ADMITTEDLY amicable settlement of final claim was arrived at by the parties within the sum of Rs. 1,49,625/- in full and final settlement of the claim lodged by the complainant on 7.1.1990. This amount was payable within a reasonable time but it was not paid by the respondents despite the complainant''s performance of his part of the obligation regarding the change of ownership of the vehicle in question in the manner discussed above. He filed his complaint on 30.7.1990. Ultimately pursuant to the order passed by this Commission on 9.1.1991, the aforesaid amount was deposited on 5.7.1991 in compliance with the order passed by this Commission under distress order. Even otherwise the complaint has been resisted vehemently despite respondents willingness to abide by their contract. Complainant has put in a letter dated 19.11.1990. It shows that the truck in question was financed by the Himachal Pradesh Financial Corporation and a sum of Rs. 2,39,768/- due to them (Himachal Pradesh Financial Corporation) was inclusive of interest upto 1.12.1990. Complainant has also asserted payment of interest to the Corporation at more than 15% per annum on the amount due. In other wons on 1.12.1990 the aforesaid amount was due to the Corporation. The above said factum of payment of interest is unrebutted. Admittedly truck in question was purchased in June, 1988 and it was insured on 27.6.1988. According to him it was financed by the Himachal Pradesh Financial Corporation to the tune of Rs. 1,65,000/- and he was bound to pay interest on the wone said loan amount at the above said rate. Accident had taken place on 8.8.1988. The settlement was arrived at on 7.1.1990 i.e. after one year 5 months of the date of accident. Report of the Surveyor, a representative of the respondents was submitted on 4.10.1988. However, as per the respondents the loss was assessed ultimately on nonstandard basis treating the claim as such because the vehicle was carrying 6-70 kgs. more than the carrying capacity permitted in the registration book by the registration Authority vide letter of the Head Office dated 13.12.1989. Their case is that the complainant had concealed these facts from them. Here it is pertinent to note that registration book, challan indicating the load carried by the truck in question on the fateful day and other documents had been in possession of the respondents. This fact is also apparent from the Loss assessor''s report which has given details regarding the receipt of the spot report on 2.9.1988. It also showed that vehicle was loaded with appels bags and katta at the time of mishap and its weight was 35 Qtls. According to it the goods were being transported from Koti Budhog to Yamuna Nagar vide Log Book Sr. No. 34 dated 8.8.1988. In view of the said fact it can not be said that complainant had concealed the facts from the respondents. Aforesaid facts and circumstances show that the respondent have taken un-reasonable sufficiently long time in settling the claim of the complainant. After the receipt of the record on 4.9.1988, at the most it should have taken 3 to 6 month''s time to finalise the claim particularly when all material facts were within the knowledge of the respondents and they were also apprised of the factum of truck having been financed by the Himachal Pradesh Financial Corporation on loan advanced to the complainant of which the payment was subject to payment of interest. In that view of the matter, according to our considered opinion, the claim should have been settled or or before 31.3.1989. Resultantly the complainant has been made to pay interest on the amount due unnecessarily on the loan borrowed by him from Himachal Pradesh Financial Corporation from that date onwards. Thus we are of the opinion that respondents are liable for payment of interest on the settled amoum from 1.4.1989 onwards till 5.7.1991 @ 15% per annum, which comes to Rs. 50,498/- (Rs. Fifty Thousand Four Hundred Ninety-Eight Only). We hold complainant entitled to the aforesaid amount. As the settled amount has already been paid to the Financial Corporation towards the liquidation of his loan on 5.7.1991 complainant is not now entitled to the same. We hold so. Under discussion of point-4 we have already held that complainant is entitled to an amount of Rs. 10,000/- on account of compensation for physical and mental harassment. As such this amount is to be added to the interest to which complainant is now entitled to recover from the respondents.

IN addition to the above, we find that the complainant has suffered physical and mental torture particularly after he had put in the claim with the respondents i.e. if not from the date of accident or the submission of Loss assessor report than at least from 1.4.1989 till the payment of the settled amount. Thus taking into consideration the entire facts and circumstances we hold the complainant to be entitled to an amount of Rs. 2,000,00/- as costs. Points 5 & 6 are decided accordingly.

IN view of the discussion made above we hold the complainant entitled to the total amount of compensation etc. as under: - (i) On account of compensation for physical and mental harassment, 10,000.00 (ii) On account of interest 50,498.00 On costs 2,000.00 Total:- 62,498.00 Thus the direction which we pass against the respondent is to deposit the aforesaid amount within 15 days from the date of the receipt of the intimation of this order and in case of failure to do so, the respondent shall suffer damages @ Rs, 150/- per day till the entire amount is deposited. In addition, said respondents would also be liable for criminal liability as provided under the Act

Before parting we would like to express that the Insurance Companies in such like cases should expedite settlement of the claim of unfortunate persons who suffer losses because of unforeseen accidents whether these may be pertaining to death or injury of a person or loss that of property of the claimant. In the instant case we have taken a liberal view in the light of peculiar circumstances surrounding the instant case while holding that the respondent Insurance Company should have decide the claim of the insurer within 3 to 6 months from the date of the receipt of the loss assessors report. It is made clear that this may not be considered to be a precedent for other cases which require determination of the insurance claims.

AS none of the parties are present, they be intimated of the aforesaid order either personally or through their learned Counsels by sending the intimation under registered post or against due receipt Complaint allowed. _______________