UNITED INDIA INSURANCE CO. vs JAHANGIR SPINNERS PVT. LTD.

THESE two first appeals captioned above arise out of the same order dated 4th January, 1994 passed by the State Consumer Disputes Redressal Commission, Punjab at Chandigarh. The facts leading to the controversy may be recapitulated as under :

M /s. Jahangir Spinners Pvt Ltd., hereinafter called ''the complainant'' is engaged in the business of spinning woolen yarn at Amritsar. The complainant got its stocks, building and machinery insured with the United India Insurance Company Ltd., hereinafter called the ''Insurance Company'' vide three different policies of the value of Rs. 12.00 lakhs, Rs. 12.00 lakhs, and Rs. 32.00 lakhs for the periods from 25.5.1992 to 24.9.1993,2.2.1992 to 1.2.1993 and 6.9.1992 to 5.5.1993, covering risk of stocks, building and machinery. On 28th September, 1992 a devastating fire broke ou t at the factory premises of the complainant. On the same date, the matter was reported to the police and on 30th September, 1992 intimation of loss covered by ''Fire Cover Notes'' was sent by the complainant to the Divisional Manager of the Insurance Company at Amritsar. The Insurance Company deputed a Surveyor to assess the loss and he submitted its report on 7th January, 1993 assessing total loss of stocks, building and machinery at Rs. 43,62,767/-. On 30th January, 1993 the complainant requested the Insurance Company for settlement and payment of the claim. It was followed by a letter dated 22nd February, 1993 to expedite the payment. Another reminder on 16th June, 1993 was sent to the Insurance Company pressing them to settle the claim and make the payment. On 12th August, 1993 and 30th of August, 1993 payments of Rs. 31,95,290/-and Rs. 10,44,399/- respectively were received by the complainant. The complainant was not satisfied with the amounts paid by the Insurance Company that is why it approached the State Commission, Punjab at Chandigarh, attributing deficiency of service in releasing the amount in time and withholding the payment of interest on account of delayed payment and for deducting Rs. 1,23,078/- without assigning any reason. Needless to say that the claim was contested on behalf of the Insurance Company by filing written version. The plea raised by the Insurance Company was that the complainant had received the claim amount as full and final discharge and as such the complainant was not entitled to claim any interest on account of delayed payment. It was further pleaded that the disputed amount of Rs. 1,23,078/-was deducted after taking written consent from the complainant on 6.8.1993 and the complainant could not raise any grouse on that score.

AFTER hearing the learned Counsel for the parties and perusing the record of the case, the State Commission partly allowed the claim and held that the Insurance Company was negligent and deficient in the discharge of service and directed the Insurance Company to pay interest at the rate of 18% per annum on the amounts of Rs. 31,95,290 /- and Rs. 10,44,399 /- from the date of loss i.e. 28th September, 1992 till 12th August, 1993 and 30th August, 1993 respectively. So far as the claim of the complainant for refund of Rs. 1,23,078/- was concerned, the State Commission observed that the complainant could be at liberty to claim the amount in an appropriate Forum available at law, including Civil Court.

BOTH the parties being aggrieved of the orders of the State Commission, have filed appeals which are under disposal. We propose to dispose of both the appeals by this Common order. First Appeal No. 303 of 1994 : This appeal has been filed by the Insurance Company assailing the order of the State Commission. The first contention raised by Mr. Yogesh Malhotra, Counsel appearing on behalf of the appellant, was that the State Commission failed to appreciate that the full and final settlement is a settlement for all intents and purposes and the respondent could not be allowed to resile from it as it had taken the benefit of it. The full amount payable under the terms of the policy was duly paid to the respondent and was accepted by him unconditionally. The complainant could not maintain a claim for interest for the delayed payments. In support of its contention, he relied upon two decisions of this Commission i.e. New India Assurance Co. Ltd. v. Achhar Kumar Garg reported as I (1996) CP] 140 (NC), and Dalip Kumar Wamanrao Daryapurkar v. National Insurance Co. Ltd. reported as III (1996) CPJ 29 (NC).

ON the other hand Counsel for the complainant urged that the State Commission while deciding the point relied upon a decision of this Commission rendered in Col. Bhim Singh v. Regional Manager, National Insurance Co. Ltd. and Anr. reported as I (1992) CPJ 205 (NC). The view taken by the State Commission is in confirmity with the view taken by this Commission in a number of cases. In support of his contention he also relied upon two decisions of this Commission i.e. Ginni Filaments Ltd. v. New India Assurance Co. Ltd. &Anr., 1998 1 CPJ 54 (NC), and S. Vellinayagain and Co. v. New India Assurance Co. Ltd., 1992 1 CPJ 313 (NC).

WE have given our thoughtful consideration to the controversy involved on this point. While returning a finding on this point, the State Commission relied upon a decision of this Commission rendered in the case of Col. Bhim Singh v. Regional Manager, National Insurance Co. Ltd. and Anr. (supra). The relevant paras relied upon by the State Commission are reproduced for the sake of convenience : "5. A number of cases have come to the notice of this Commission where there have been inordinate delays in finalisation / payment of the claims of the insured. We have reason to suspect that the payment of insured amounts, which are not in dispute, are often delayed with a view to coerce the insured into giving a receipt in full and final discharge of the claims of the insured. In fact in Case No. F. A. 30 of 1991, Mimjula Ben v. L.I.C. of India it is in evidence that the insured widow was told that until she gave a receipt for the full and final settlement of the Corporation would not be prepared to make ex gratia payment 6. We are, therefore, inclined to accept the statement of the petitioner that he did not give the discharge, at the time of receiving of cheque for Rs. 2 lacs, willingly and voluntarily and that he had no choice but to give discharge as desired by the Insurance Company. This is particularly so because there had already been 30 months delay in settling his claim and he had justified apprehension that unless he gave the discharge ''in full and final settlement'', he would have to wait for the insured amount also indefinitely. 7. It is, however, necessary to examine the legal scope and significance of such a discharge ''in full and final settlement'' as this question has been croping up repeatedly in the cases before this Commission : "''Full and final settlement'' means termination of liability under a contract and under the contract of insurance policy in this case. In fact, the expression ''in full and final settlement'' is equivalent to ''discharge''. Discharge is termination liability under a contract by executing an instrument of receipt for payment. In other words discharge in respect of a policy of insurance would be discharge of the liability under that policy. This would not discharge the insurer from any other liability that he might have incurred outside the terms of the contract of insurance." 8. Liability for damages or compensation or loss suffered by a consumer due to the negligence of a vendor, supplier etc. is a liability arising not under the contract of insurance but under the Consumer Protection Act. Again the liability for compensation under Section 14(1)(a) of the Consumer Protection Act is in the nature of a liability in torts and not under a contract. 9. The discharge furnished by the complainant is obviously a discharge for the contractual payment under the policy of the insurance and therefore, this discharge does not extinguish his right to claim compensation for any damage, loss or injury suffered by him due to the negligence of the opposite party as provided in Section 14(1)(d) of the Act."

The view taken by this Commission in Col. Bhim Singh''s case (supra) has been consistently maintained and followed by this Commission in the subsequent decisions, such as M/s. Asa Singh Cotton Factory v. United India Insurance Co. and Ors., 1993 3 CPJ 203 (NC), Ginni Filaments Ltd. v. Nero India Assurance Co. Ltd. and Am. (supra).

IN the case of New India Assurance Co. Ltd. v. Achhar Kumar Garg, (supra), strongly relied upon by the Counsel for the appellant, it was held that "there was no avoidable delay in the settlement of insurance claim by tine Insurance Company. The Insurance Company had immediately surveyed and assessed the loss and the complainant earlier consented for the settlement at Rs. 1,47,000/- on repair basis and thereafter made a representation to consider his claim on total loss basis and denied having agreed for the said amount". In those circumstances this Commission returned the finding that there was no deficiency on the part of the Insurance Company and the complainant accepted the amount in full and final settlement and he could not maintain a complaint before the FORA under the Consumer Protection Act.

SIMILARLY , in the case of Dalip Kumar Wamanrao Daryapurkar v. National Insurance Co. Ltd. (supra), this Commission held that, "On the basis of the written undertaking, the Insurance Company had withheld the amount which was alleged to be due by the complainant to the Banks. Thus it cannot be said that the Insurance Company committed any negligence while not disbursing the remaining amount of loss assessed by the Surveyor". On the basis of this finding, this Commission took the view that the complainant having accepted the claim in full and final settlement, could not maintain a complaint under the Consumer Protection Act. In view of the above discussion, we find no merit in the contention raised on behalf of the appellant. We confirm the finding of the State Commission in this respect.

THE next point urged on behalf of the appellant, was that the State Commission failed to appreciate the fact that the amount claimed could only be settled after 6th August, 1993 on which date, the respondent authorised the appellant to deduct the additional premium amount of Rs. 1,23,078/- from the claimed amount. The appellant, therefore, had settled the claim of the respondent on 12th August, 1993 and 30th August, 1993 by paying a sum of Rs. 31,65,290/- and Rs. 10,44,377/- respectively without any delay whatsoever.

WE have considered this contention too. In our opinion, the contention has no force. The Surveyor submitted his report on 7th January, 1993 assessing the total loss of stocks, building and machinery at Rs. 43,62,767/ -. If an amount of Rs. 1,23,078/-was due to the Insurance Company on account of difference in premium, the Insurance Company could have adjusted the amount from the amount assessed by the Surveyor and would have paid the balance amount. There was no justification for the Insurance Company to withhold the entire claim on the plea that the complainant had not agreed to pay the amount of Rs. 1,23,078/- nor had consented to the adjustment of Rs. 1,23,078/-upto 6th of August, 1993. In our opinion, the stand taken by the Insurance Company was unjustified and unreasonable. They had withheld the payment of the claim on unjustifiable grounds. The contention raised on behalf of the appellant is repelled. It was further contended by Mr. Malhotra that the State Commission had allowed the interest from the date of loss which is not in confirmity with the decision of this Commission and also the decision of the Supreme Court. We have examined this aspect. In our opinion, this contention has merit. This Commission has taken a view in a number of cases that the interest would start accruing two months after the submission of the report of the Surveyor. The view taken by this Commission is in conformity with the view taken by the Supreme Court in the case of United India Insurance Co. Ltd. . (SC). Lastly, it was submitted that the State Commission had allowed interest at the rate of 18% whereas this Commission in the case of S. Vellinayagam &Co. v. New India Assurance Co. Ltd. (supra), had allowed interest at the rate of 13.5%. He also relied upon the Supreme Court in the case of M.K.J. Corporation (supra), wherein it was ruled that the rate of interest payable by the Insurance Company would be 12% per annum.

WE find force in this contention and relying upon the judgment of the Supreme Court referred to above, we hold that the complainant is entitled to interest at the rate of 12% per annum. First Appeal No. 347 of 1994 :

THIS appeal has been filed by the complainant assailing the order of the State Commission. The grievance of the complainant is that the State Commission erred in law as well as on facts while rejecting the claim of the appellant for payment of Rs. 1,23,078/-. It was urged that the State Commission completely overlooked the fact that the letter consenting to deduct amount of Rs. 1,23,078/- was given under coercion is clear from the fact that the letter was given just a week earlier from the date the compensation was paid. It was evident that had £he appellant not given the consent letter, the Insurance Company would not have handed over the cheque for compensation. He had no option but to issue consent letter as asked by the Insurance Company. The State Commission while dealing with this aspect of the case observed that: "Relying upon Central Inland Water Transport Corpn. Ltd: v. Brojo Nath, AIR 1986 SC 1571, Sh. Rajan Gupta, with all vehemence at his command, has urged that the consent (Annexure Rl) qua deduction of the amount of Rs. 1,23,078/-was obtained by the respondent-Insurance Company under coercion and it is an unconscionable bargain. When confronted with the allegations made in the complaint, the learned Counsel could not successfully point out tine allegations, constituting the plea of unconscionable bargain. Moreso, no evidence was adduced by the complainant-Company before us and for the reasons best known to it, it has not taken preliminary care even to file a bare affidavit. The tall claim of the learned Counsel sans merit, in the face of categoric and unambiguous consent given by the complainant-Company vide Annexure Rl, authorising the respondent-Insurance Company to deduct Rs. 1,23,078/-. Hence, we show our inability to grant the amount of Rs. 1,23,078/-, as claimed by the complainant-Company. Moreso, it has been repeatedly held by this Commission and tine National Commission that it is none of the provinces of the Consumer Foras to enter the labyrinth of intricate issues of fact and law requiring voluminous evidence which are best to be left appropriately in the hands of the Civil Court. If authority is needed for the proposition, the same is available in plenty. Reference may instructively be made to the binding observations of the National Commission in Pana Lal v. Bank of India and Ors., 1992 2 CPJ 487 and A. Jayachandra Kumar v. Chairman State Bank of India and Anr., 1992 2 CPJ 517. More particularly, the same view has been expressed in the particular context of insurance claims in Janta Machine Tools v. Oriental Insurance Co. Ltd., 1991 1 CPJ 234; Janki Devi v. The New India Assurance Co. Ltd., 1992 2 CPJ 640; Continental Chemical Limited v. Oriental Insurance Co. and Anr., 1991 2 CPJ 354; Pradeep Bleaching Works v. Branch Manager, United India Assurance Co. Ltd. and Ors., 1991 2 CPJ 437"

We have carefully considered the finding of the State Commission. In our opinion, the finding arrived at is in confirmity with law laid down by this Commission in various decisions. We are not pursuaded to take a contrary view. In view of this, we find no merit in this contention and it is rejected. No other point was urged before us on behalf of the appellant in this appeal. As a result, we partly allow the appeal filed on behalf of the Insurance Company and hold that the complainant is entitled to interest from a date two months after the submission of the report by the Surveyor. In this case the date of submission of the report is 7th January, 1993. In other words, interest payable would start from 7.3.1993. We also hold that the complainant shall be entitled to interest at the rate of 12% instead of 18% granted by the State Commission. The order of the State Commission is modified to the extent indicated above. The appeal filed by the complainant stands dismissed. In the peculiar circumstances of this case, we leave the parties to bear their own costs in these two appeals. Appeal No. 303 of 1994 partly allowed. Appeal No. 347 of 1994 dismissed.