NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

FIRST APPEAL NO. 117 OF 2005

(From the order dated 8.2.2005 in Complaint No.131/02 of the State Commission, Karnataka )

Abhay Neelawarne … Petitioner

Versus

The New India Assurance Company Ltd. & Anr. … Respondents

BEFORE :

HON’BLE MR. JUSTICE M.B. SHAH, PRESIDENT

HON’BLE DR. P.D. SHENOY, MEMBER

For the Petitioner : Mr. E.C. Vidyasagar & Mr. Vikas

Rojipura, Advocates

For the Respondent : Mr. K.L. Nandwani, Advocate

26.3.2008

O R D E R

M.B.SHAH, J. PRESIDENT

Being aggrieved and dissatisfied by the judgement and order dated 8^th February, 2005 passed in Complaint No.131/2002 by the Karnataka State Consumer Disputes Redressal Commission, Complainant has preferred this appeal. The appeal was admitted vide order dated 16.5.2005 for the limited purpose of granting interest on the amount payable by the Insurance Company.

Facts:

Facts in brief are that the Appellant purchased a new Maruti Suzuki Baleno car on 29.8.2000. The vehicle met with an accident on 27.2.2001. On the basis of the Surveyor’s report, the Branch Manager of the New India Assurance Company offered a sum of Rs.6.25 lakh as full and final settlement of the claim by letter dated 9^th April, 2001. Immediately on 16^th April, 2001 the Complainant informed that he was willing to accept Rs.6,25,000/- towards the settlement on total loss basis under protest. He also stated that he reserved his right to any lawful action in protecting his interests, both monetary and otherwise and recovery of the damages.

Thereafter, by letter dated 16^th April, 2001, Branch Manager informed the Complainant that as Complainant was not agreeable to accept Rs.6.25 lakh towards total loss of the claim, Complainant may proceed with the repairs of the vehicle in consultation with Mr. Kottary the Surveyor. On 18^th April, 2001, the Complainant wrote back that cost of repairs, exclusive of taxes and spare parts cost would be about Rs.12.50 lakh. The said estimate was based on physical inspection. He also suggested that if the Insurance Company was prepared to pay 100% of the repair bill then he had no objection in getting it repaired by purchasing the spare parts from Mandovi Motor’s Workshop. He, therefore, stated that his offer to accept Rs.6.25 lakh under protest was reasonable. He was prepared to take the said amount by reserving his right to question the quantum of compensation and was agreeable to transfer the said vehicle in favour of the Insurance Company.

As no reply was received, again Complainant wrote a letter on 31^st May, 2001 stating that delay goes a long way in explaining lethargic and deficient services and generic harassment pattern of the concerned officers of the Insurance Co.

Finally, as the claim was not settled, Appellant preferred the complaint before the State Commission. During the pendency of the complaint, the State Commission directed that the Insurance Company shall pay a sum of Rs.6.25 lakh which was previously offered by it. That amount was paid on 21.4.2003.

Thereafter, on the basis of the valuation of the car and the policy cover, the State Commission directed that the Complainant was entitled to recover the remaining amount of Rs.1,17,000/- on the total loss basis, on return of salvage and compensation of Rs.50,000/- and cost of Rs.3,000/-. It was also ordered that if there is failure to pay the said amount within six weeks from the date of the order, the amount shall carry interest @ 9% p.a.

Submissions:

Learned Counsel for the Appellant submitted that the conduct of the officers of the Insurance Company to compel the consumer to accept whatever amount was offered should be received by the consumer without any protest, is reprehensible as it takes away the right of the consumer to approach appropriate Court or Forum for claiming adequate reimbursement.

Findings:

Coercive bargaining:

In our view, the aforesaid submission is justified. An officer of the Insurance Company cannot harass the consumer by compelling him to sign a voucher and accept whatever amount of reimbursement is offered by the Insurance Company in full and final settlement of claim. Thereafter, the Insurance Companies, in most of the matters, contend that as the voucher for receiving the amount by way of full and final settlement is signed, complaint is not maintainable. In our view, this is nothing but taking undue advantage of unequal and weak status of contracting party who has lost either his vehicle or the goods or has lost his building or factory due to fire and the creditors of the consumers try to recover the amount of loan.

This type of coercive method adopted by the Insurance Company requires to be curtailed or stopped. At the time of taking premium agents move heaven and earth and see that the consumer pays the premium as early as possible. Thereafter, when the amount is required to be reimbursed all sorts of tactics are adopted by the Insurance Company to deny the insured his legitimate claim.

In any case, by such practice/practices the Insurance Company cannot be permitted to take away the legal right of the insured, seeking redressal of his grievances, either before the Civil Court or before the Consumer Fora.

Further, such disputes are raised despite the law being settled. As early as in 1986 the Apex Court discussed the concept of coercive bargaining in Central Water Transport Corporation Ltd. & Anr. Vs. Tarun Kanti Sengupta & Anr. (1986)3 SCC 156 and held that where a man has no choice, or rather no meaningful choice, but to give his consent to a contract or to sign on the dotted line in a prescribed or other form or to accept a set of rules as part of contract, however unfair, unreasonable and unconscionable a clause in that contract may be the courts will not enforce and will, when called upon to do so, strike down as unfair and unreasonable contract or an unfair or unreasonable clause in a contract entered into between the parties who are not equal in bargaining power. In arriving at the aforesaid conclusion the Court referred to Chitti on Contracts (25^th Edn. Vol.1, pr.4) wherein it has also been observed that the Courts have developed a number of devices for refusing to implement exemption clauses imposed by the economically stronger party on the weaker party.

Thereafter, in the United India Insurance Company Ltd. Vs. Ajmer Singh Cotton & General Mills & Ors. (1999) 6 SCC 400, the Court observed that mere execution of discharge voucher and acceptance of insurance claim would not estop insured from making further claim from the insurer under the circumstances which can be termed as exercise of undue influence or coercion or the like.

In the present case, fortunately, the Complainant resisted coercive demand to sign the voucher stating therein that he received the amount in full and final settlement of his case and he did not sign it. Therefore, the amount was not paid by the Insurance Company. Only few persons can resist such coercive demand when their property is damaged or destroyed. Finally, the amount was paid only after two orders were passed by the State Commission.

In this view of the matter and the settled law on the subject and considering the facts of the case, admittedly, there was delay in payment of Rs.6.25 lakh. The amount was paid on 21.4.2003 on the basis of the direction issued by the State Commission, which means the amount was withheld by the Insurance Company from 9^th April, 2001 till 21^st April 2003. For this period, the Insurance Company is required to pay interest on the said amount. Similarly, the Insurance Company has also withheld the amount of Rs.1,17,000/- till the date of the order passed by the State Commission, i.e. upto 8.2.2005. In this view of the matter, on this amount also the Insurance Company is required to pay interest from 21^st April, 2001 till 28^th Feburary, 2005.

In the result, the Insurance Company is directed to pay interest @ 10% p.a. on the amount of Rs.6.25 lakh for the period from 9^th April, 2001 to 21^st April, 2003 and also interest @ 10% p.a. on the amount of Rs.1,17,000/- from 21^st April 2001 till 28^th February, 2005. However, the award passed by the State Commission directing the Insurance Company to pay compensation of Rs.50,000/- is set aside because the payment of interest would take care of compensation part. The Appeal is partly allowed to the aforesaid extent. Respondents shall pay Rs.10,000/- as cost of litigation.

The Registry is directed to send copy of this order to Shri C.S. Rao, Chairman of Insurance Regulatory Development Authority, Hyderabad for taking appropriate action so that option/choice of the insured to approach the legal forum for just settlement of his claim is not curtailed or frustrated.

Sd/-

……………………………………..

( M.B. SHAH)

PRESIDENT

Sd/-

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(P.D. SHENOY)

MEMBER

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