UNITED INDIA INSURANCE COMPANY vs SOHAN SINGH CHAHAL

THIS appeal is by United India Insurance Company and the challenge is to the order of District Forum, Ropar dated September 30, 1997. A direction was given to the Insurance Company to pay a sum of Rs. 25,932/- with 18% per annum interest from April 4,1997 till payment alongwith Rs. 5,000/- as costs of the proceedings to the complainant Sohan Singh Chahal.

SOHAN Singh-complainant, owner of Contessa Car bearing Registration No. PB-II-E- 1385 took an insurance cover from the United India Insurance Company. During the pendency of the policy in July, 1996 an accident took place. Claim was lodged with the Insurance Company. Surveyor assessed the loss at Rs. 25,932/- excluding the value of the salvage. However, the claim was repudiated on the ground that the driver was not holding a valid driving licence. This led the complainant to approach the District Forum and the Insurance Company took up the plea that the driver was not possessing a valid driving licence. Both the parties led their evidence on affidavits and documents. The District Forum held repudiation illegal and deficiency in rendering service and allowed the complaint as stated above. Learned Counsel for the appellant has argued that since there was no endorsement on the driving licence to drive as paid driver, the Insurance Company was not liable. Reference was made to Section 3 of the old Motor Vehicles Act. Since the Act was amended in 1988, no useful purpose would be served to rely upon the old provisions of the Motor Vehicles Act. Section 3 of the Motor Vehicles Act, 1988 does not impose such a condition that there should be endorsement on the driving licence to enable such a driver to work as a paid driver. The contention is therefore, repelled.

Learned Counsel for the appellant has further argued that the District Forum was not justified in granting additional compensation of Rs. 5,000/- in addition to the grant of interest on the insured amount. In support of this contention, reference has been made to the decision of the Andhra Pradesh State Commission in Oriental Insurance Company Limited v. Bhimavarapu Venkat Reddy, 1997 (1) CPC 63. The ratio of the aforesaid decision cannot be applied to the case in hand. Although this Commission has also held that double compensation - one in the form of interest and other on estimation cannot be granted. However, in the present case a sum of Rs. 5,000/- has been granted towards interest and not towards compensation in addition to the compensation by way of interest. As far as the costs of proceedings are concerned, there is specific provision under Section 14(1)(i) of the Consumer Protection Act. Hence this contention cannot be accepted.

FINALLY, it is argued that grant of 18% interest on the insured amount is against, the decision of the Supreme Court in United India Insurance Company v. M.K.J. Corporation, III (1996) CPJ 8 (SC). There is force in this contention. The Supreme Court has held that compensation by way of interest against the nationalized Insurance Companies cannot be granted more than 12% per annum. To that extent the order of the District Forum deserves to be modified. For the reasons recorded above, this appeal is partly allowed. The order of the District Forum is modified only to the extent of grant of interest on the insured amount of Rs. 25,932/-. The Insurance Company will pay interest @ 12% per annum with effect from April 4,1997. With respect to the other reliefs the order of the District Forum is modified. Appeal partly allowed.