Judgment:
D.D. BAHUGUNA, MEMBER
D.D. Bahuguna, Member - Both these appeals arise out of the judgment and order dated 29-5-1997 passed by District Consumer Forum, Rae Bareili in Complaint Case No. 104/1996. Briefly stated the facts of the case are as follows.
The complainant, M/s. Raj Enterprises through its partner Sri Subhash Bhargava of Industrial Estate, Sultanpur Road, Rae Bareili had taken an insurance policy from the opposite party No. 1, National Insurance Company Ltd. for a period from 15-12-1990 to 14-12-1991. The total sum assured was for Rs. 5, 75, 000/- which includes Rs. 25, 000/- for generator and Rs. 5, 50, 000/- for raw material, finished and semi-finished goods. On the night of 29-4-1991 a theft took place in the factory promises and the material worth Rs. 3, 00, 000/- was stolen. An F.I.R. of the incidence was lodged with the Mill Area police station, Rae Bareili on the next date. The opposite party insurance company, was also informed of the incidence on 30-4-1991. The complainant also met opposite party No. 1 on that date and the insurance company assured that a surveyor would be appointed to investigate and assess the damage caused to the complainant by the theft. The police submitted a final report in the court who accepted the same. Again the complainant met the opposite party, insurance company, who informed that Mr. Ramesh Chandra Agarwal, Chartered Accountant of Allahabad has been appointed as surveyor. On 5-2-1991 through a letter the complainant informed the opposite party, insurance company, that the surveyor has not so far come and another surveyor may be appointed, but no reply was received. Thereafter the complainant personally contacted the opposite party, insurance company, but with no result. Again registered letters were sent to the surveyor and the opposite party, insurance company, by the complainant informing them that the claim has not been settled and the report of the surveyor has not been submitted. On 30-3-1992 and 9-6-1992 the complainant sent registered letters to both the surveyor and the opposite party and submitted certain documents like copy of the F.I.R. list of the stolen items, burglary claim form, insurance policy, final report of the police etc. However, the opposite party did not do anything resulting into harassment to the complainant. No reply of the letters written by the complainant was received from the opposite party No. 1. The complainant, therefore, lodged a claim before the District Consumer Forum and prayed for the award of a sum of Rs. 3, 00, 000/- alongwith interest at the rate of 18% per annum from 30-4-1991 till the date of payment as damages caused because of the theft, Rs. 50, 000/- as compensation for mental and physical harassment and Rs. 5, 000/- as cost of the proceedings.
In the written version before the learned District Forum, the opposite party, National Insurance Company Ltd., stated that since the particulars in regard to the insurance are not available, therefore, the same shall be submitted when made available. The rest of the allegations of the complainant were refuted in the written statement. It is also stated that the complainant has not submitted to the opposite party necessary documents like the statement of stocks. FIR etc. No theft had taken place in the premises of the complainant's factory. In the written statement in para 15 it has also been stated that the surveyor was not appointed. There was no deficiency on the part of the insurance company and, therefore, the complainant is not liable for any relief.
In the additional written statement filed by the Branch Manager of the opposite party, it was stated that the complainant had not deposited the receipt of the premium in the office of the insurance company nor was the receipt submitted by the complainant before the District Forum. Therefore, the insurance company is not liable to make good the loss caused to the complainant. The complainant had not given the list of the items allegedly stolen and the claim is a fraudulent one. On police investigation, it was found that no theft had taken place. The complainant had lodged a F.I.R. after the alleged incident and later on the appellants appointed a surveyor. He did not cooperate with the surveyor and did not furnish the documents required by the insurance company. The documents furnished by the complainant after one year were not initially sent to the surveyor nor they were enclosed with the F.I.R.
The District Consumer Forum, after hearing both the parties, came to the conclusion that the theft had taken place in the premises of the complainant's factory at the relevant time. It, therefore, decreed the complaint and directed the opposite party to pay to the complainant a sum of Rs. 3, 00, 000/- alongwith interest at the rate of 12% per annum from the date of theft till the date of payment. A compensation of Rs. 5, 000/- was also awarded alongwith cost of Rs. 1, 000/-.Aggrieved of this order of the District Consumer Forum, both the opposite parties insurance company and the complainant have come in appeals No. 1086/SC/1997 and 1082/SC/1997 respectively.
We have heard the learned Counsel for the two parties. The learned Counsel for the appellant insurance company has argued that the premium for the policy was not paid and the receipt given to the opposite party was not a genuine one. The alleged incidence took place in the year 1991 and the claim was filed before the Forum in the year 1996 and therefore the claim was barred by limitation. It was also argued that the complainant had not furnished the information to the insurance company and the delay was on account of the fault of the complainant. Since there was insurance, there could have been no question of settling the claim of the complainant.
On the other hand learned counsel for the appellant/complainant has argued that the surveyor appointed had not submitted any report to the insurance company and no repudiation of the claim was made by the insurance company. Therefore, the claim is not barred by limitation.
We first take up the point whether the insurance policy was in force at the time of alleged theft. The learned Counsel for the appellant/insurance company has argued that insurance was not affected. We are not inclined to believe this version. Annexure 4 of the objections filed by the complainant is the copy of the document which shows that the insurance policy was in effect from 15-12-1990 to 14-12-1991. The renewal premium charged was Rs. 1093/-. The receipt number given in the copy of schedule is 40731 dated 18-12-1990. The date of proposal and declaration are indicated as 15-12-1990. All these entries are from the same typewriter. Therefore, by no stretch of imagination the receipt No. 40731 of 18-12-1990 can be called to be "forged". The opposite party has not produced any document to disprove that the insurance was not operative. Moreover, the opposite parties initially stated in the written version before the District Forum that the surveyor was not appointed, but in the additional written statement filed by the Branch Manager of the opposite party, it was admitted that the surveyor was appointed. This additional written statement is not supported by any affidavit. Even there is no affidavit in support of the contentions made in the original written statement. This aspect of the matter has also been dealt with by the District Consumer Forum. We, therefore, reject the plea of the opposite party, insurance company, that there was no insurance. As a matter of fact, the insurance policy had been taken and the same was effective at the relevant time.
In regard to the plea raised by the learned counsel for the appellant/insurance company that the claim lodged before the District Forum was time barred, it is worthwhile to mention that the complainant had lodged the claim before the District Consumer Forum and the insurance company kept silent on the subject and did not either settle or repudiate the claim of the complainant. It was only in the written statement filed by the opposite parties that the intentions of the insurance company were made clear that they did not settle the claim because there was no insurance. The learned Counsel has placed reliance on the case law reported in Alagu Meenal v. Sarvana, G. and Others (II 1997, CPJ 115 (N.C.)). In this case the National Commission held that the complaint was barred by limitation. The reason was no explanation for delay has been given by the complainant. In this case the delay was on the part of the insurance company and not on the part of the complainant. The complainant had given information of the incidence to the insurance company and the claim was sought and even the surveyor was appointed but the insurance company remained silent. The insurance company should have either settled the claim or repudiated the same. Therefore, the case law cited above is not applicable in the instant case where the delay is solely on the part of the insurance company.
The learned Counsel has cited the case law reported in the case Corporation Bank and Anr. v. Naveen J. Shah (2000 (2) Supreme Court Cases p. 620). In this case the Hon'ble Apex Court has held that the claim should have been filed within a reasonable time of three years provided under Limitation Act for filing money claim. The period of three years can be considered a reasonable time for filing money claim. The Hon'ble Supreme Court in the case has observed that the complaint in that case was filed after unreasonably long delay. The claim, if at all, was to be made, ought to have been made within a reasonable time. What is reasonable time to lay a claim depends upon the facts of each case. When compared to the facts of the instant case, we find that the facts of the case before the Hon'ble Apex Court were quite different. In the instant case before us, it is clear that the cause of action will arise from the date the claim lodged before the insurance company has not been settled. It was only in the written statement of the opposite party that it was made clear by the insurance company that they did not settle the claim. As a matter of fact the complainant had informed the insurance company of the loss in time. The insurance company's surveyor did not carry out any survey. The complainant has been writing time and again to the insurance company for settlement of the claim but till the date of filing of the complaint there was no reply whatsoever in regard to the settlement of the claim or otherwise. In the circumstances there was no delay on the part of the complainant. Whatever delay has occurred was totally on the part of the insurance company. Cause of action therefore continued for filing the complaint. The National Commission in the case Ozma Shipping Company v. Oriental Insurance Company Ltd. (II 2001 CTJ 44 (N.C.)) has held that the question of limitation could not have been raised by the respondent when the insurance company had never formally repudiated the claim. The National Commission in this case held as under :
"The present complaint has been filed on 16-5-1995 and since the cause of action continued since the respondent finally offered to pay the claim vide letter dated 7th July, 1994 to the complainant. Even otherwise, the claim was made in time and never formally repudiated by the Insurance Company. Letter dated 7-7-1994 is the admission of the claim and that leads lease of life to the complaint. Prior to amendment in Consumer Protection Act the claims were governed by General Law of Limitation. Hence, we answer the question of limitation raised by the respondents in the negative".
In view of this finding, the claim is not barred by limitation as alleged by the learned Counsel for the insurance company.
In the initial written statement filed by the opposite party, it was stated that the surveyor had not been appointed but in the additional written statement the insurance company has stated that the surveyor was appointed and the complainant did not co-operate. It has also been stated that as per police report, the theft had not taken place. We have perused the records. Annexure 7 of the objections filed by the respondent clearly indicates that the theft had taken place but the goods stolen could not be recovered and the culprits could not be apprehended. This is the final report which was accepted by the Court. Therefore, there is no ground to believe the version of the opposite party, insurance company, that theft had not taken place. As is clear from the final report, since the surveyor did not carry out the survey, therefore, no other version put forward by the opposite party can be accepted. The opposite party has blown hot and cold together by stating first that the surveyor was not appointed and again by stating that the surveyor was appointed. In para 18 of the Memo of Appeal, the opposite party has clearly stated that the surveyor did not at all cooperate with the opposite party and cheated them and had not conducted the survey and thereby did not supply the report despite repeated demands. This action of the opposite party is liable to be condemned. A perusal of the record goes to show that regular correspondence were made by the complainant with the opposite parties and documents furnished as would be evident from Annexure Nos. 1 to 9. These are copies of the documents addressed with letters requesting the surveyor and the opposite parties to expedite the settlement of the claim. Even statement of stocks and the costs of items stolen have also been given. We are, therefore, of the view that the opposite party committed gross deficiency of service by not settling the claim of the complainant.
The learned Counsel for the opposite party has argued that in addition to interest awarded at 12% per annum, compensation of Rs. 5000/- has also been awarded. In this case there has been abnormal delay on the part of the opposite party, insurance company. The complainant has informed the opposite party on 30-4-1991 and the opposite party did not settle the claim of the complainant or repudiate it till the filing of the complaint in 1995. The National Commission in the case of Jagdish Singh v. National Insurance Company Limited (1994 (I) CPR 467) has held that inordinate delay of three years in settling the claim was unjustified on the part of the insurance company. The Commission had held that "deficiency of service on the part of the opposite party, insurance company, in settling the claim of the complainant insured on the insurance policy and of unjustified and inordinate delay of three years which necessarily mean higher construction cost and must have caused business loss to the complainant". The National Commission in this case allowed compensation of Rs. 25, 000/-. In the present case also the complainant has suffered a lot as would be evident from the copies of the correspondence available in the appeal record. Therefore, the complainant has rightly been awarded compensation of Rs. 5, 000/-.The learned Counsel for the appellant/respondent has argued that the interest at the rate of 12% awarded by the District Forum is not adequate and the same should have been 18% per annum and Appeal No. 1982/1997 has been filed against the judgment and order of the learned District Consumer Forum for this purpose. On the other hand the learned Counsel for the opposite party/insurance company has argued that the interest should be at the rate of 9% per annum only. In support of his case, the learned Counsel for the Insurance Company has placed reliance on the case of Smt. Kaushnuma Begum and Ors. v. The New India Assurance Company Limited and Ors. (JT 2001 (I) S.C. 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 Vehicle 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 Vehicle 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 the 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 (1999 6 S.C.C. 406 : 1999 (II) C.C.C. 34 (S.C.)) has held that the interest can be awarded as compensation or damages because it is based on equity, justice and good conscience. Reliance has been placed by the learned Counsel for the complainant on the case of Jeet Ram Sheo Kumar v. National Insurance Company (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 alongwith 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 National Insurance Co. v. Jeet Ram (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 alongwith 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 interests 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 (JT 2000 (10) S.C. 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 cost."
"In a recent case, National Insurance Company v. Jeet Ram Sheo Kumar (supra), 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 mala fide. 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.
The District Consumer Forum has awarded interest with effect from the date of incidence, i.e. 29-4-1991. As a matter of fact the Forum should have taken into consideration the fact that the insurance company normally takes three months time in disposing of the claim. Therefore, the interest should have been awarded with effect from 1-8-1991 till the date of payment. In view of this, judgment and order of the learned District Forum are liable to be modified to this extent and the rest portions are liable to be confirmed.
Order:
Both the appeals are partly allowed and the judgment and order of the learned District Forum are modified to the extent that the rate of interest awarded will be at the rate of 18% per annum instead of 12% per annum with effect from 1-8-1991 and not with effect from 29-4-1991. With these modifications the rest portion of the judgment and order of the learned District Forum shall remain intact. There will be no order as to the costs.
The original judgment shall be kept in the records of Appeal No. 1082/SC/1997 and a certified copy thereof shall be kept in the records of file No. 1086/SC/1997 which shall also be governed by this judgment.
Let copy as per rules be made available to the parties.
Both Appeals are partly allowed.