FIRST APPEAL No.29 of 2001

(From the Order dated 05.1.2001 in Complaint No. 109/SC/1998 of the State Commission, UP).

The Oriental Insurance Co. Ltd.

Oriental House,

A-25/27, Asaf Ali Road.

New Delhi. … Appellants

Versus

1. Rajendra Prasad Bansal,

Farah,

Distt. Mathura,

UP.

2. Sanjay Kumar Agarwal,

Farah,

Distt. Mathura,

UP.

3. The Branch Manager,

Syndicate Bank,

Farah Branch, Mathura. … Respondents.

BEFORE: HON’BLE MR. JUSTICE K.S. GUPTA, PRESIDING MEMBER.

HON’BLE MR. P.D. SHENOY, MEMBER

For the Appellant : Mr. Kishore Rawat, Adv.

For the Respondent: Mr. G.N. Rathi, Adv.

Dated the 13^th February, 2008.

ORDER

DR.P.D.SHENOY, MEMBER

The facts of the case in a nutshell are that the complainants are

the owners of tata truck of 1996 model which was insured for a period from 3.2.97 to 2.2.98 for a sum of Rs. 7,00,000/-. The truck was sent on 21.05.97 from Mathura to Agra for lifting the sand of the Chambal river. Since then the complainant’s truck and the driver disappeared. Whereabouts of driver and cleaner was not known. Accordingly, the Complainants lodged a report at PS Pinhat, Agra District. Surveyors of the insurance company visited the place, conducted the survey and submitted a report. The truck was financed by the Syndicate Bank, Farah Branch, Mathura for a sum of Rs. 4,50,000/- and upto 12^th May, 1999, complainant had deposited Rs. 75,079/-. As the claim was not settled despite issue of notice to the insurance company, the complainant approached the State Commission for redressal of his dispute. The State Commission after hearing the parties passed the following order:-

“The complainant is decreed for a sum of Rs. 7,00,000/- alongwith 18% per annum interest from three months after the submission of the claim to the insurance company till the date of payment. The amount firstly shall be paid by insurance company to Syndicate Bank, opposite party No. 5, to discharge its liability and remaining amount will be paid to complainant.

The complainants are also entitled to get a sum of Rs. 3000/- as cost of the proceedings.”

2. Aggrieved by the Order of the State Commission, the Oriental Insurance Company has filed this Appeal. Order passed by this Commission while admitting the Appeal reads as follows:-

“Admit. Issue notice to the Respondent on the point of interest only, returnable in month.

“The Appellant shall pay Rs. 6.00 lakhs to the Respondent along with interest at the rate of 12% for the period as directed by the State Commission. The balance amount as well as the balance amount of interest will remain stayed. The Appellant shall make the payment to the Respondent within six weeks’ time.”

3. Submissions of the Ld. Counsel for the Appellant:-

Mr. Kishore Rawat submitted that he has assailed the Order of the State Commission on the following grounds:-

(1) Insured truck was not stolen. On the other hand there was a criminal breach of trust between the master and servant.

(2) Compensation awarded is heavy.

(3) Rate of interest awarded is too high.

He further submitted that Order of Admission mentions that Appellant shall pay Rs. 6,00,000/- alongwith 12% interest to the complainant. If the Commission wanted that whole of the amount awarded by the State Commission i.e. 7,00,000/- was to be paid it would have mentioned so. The vehicle belong to 1996 model and it has run around 25,000 k.m. Surveyor has assessed the market value at Rs. 5,20,000/-. Hence the complainant is eligible for Rs. 5,20,000/- alongwith the interest @ 12% p.a. As the Complainant has already been paid Rs. 6,00,000/- alongwith 12% interest nothing more need to be paid.

4. Submissions of the Ld. Counsel for the respondent:-

Mr. G.N. Rathi, submitted that this revision petition was admitted on 20.02.2001 only to consider the rate of interest. Hence the appellant cannot plead for a review of this Order at present. The complainant had taken a loan of Rs. 4,50,000/- on 3.2.1997 and paid a sum of Rs. 70,000/- to the bank before the theft. Initially, the complainant claimed a sum of Rs. 9,83,739/-. Bank charged interest with quarterly rests, which ultimately worked out around 21.75% and the respondents had lost their source of income and were virtually on the roadside. The grant of interest at 18% per annum by the State Commission is on the lower side.

5. Findings:-

In this case this Commission had admitted this case as far back on 20.02.2001 and issued notice to the Respondent only on the point of interest. It does not lie in the mouth of the Ld. Counsel for the appellant to raise this issue and seek a review of this order after 7 years. The record shows that he has neither filed a review petition before the National Commission nor a special leave petition against this order. Now at this distance of time i.e. after nearly seven years he cannot seek oral review of this order. As an interim measure the Appellant was directed to pay Rs. 6,00,000/- to the respondent alongwith interest @ 12% per annuam for the period as directed by the State Commission. Within three months of the purchase of the vehicle the complainant has lost his vehicle and it is fact that he has lodged the complaint with the police as well as with the insurance company and the vehicle has remained untraced.

6. It is also not the case of the appellant that the State Commission has granted interest as well as compensation for mental agony. The Ld. Counsel for the respondent submitted before us that amount as ordered by the National Commission on 20.02.01 was directly paid through cheque to the bank which means the amount has gone to settle the of the bank. The rate of interest prevailing during 1997 was quite high and it is not disputed that the banks are in the habit of charging of interest at quarterly rests.

7. The Apex Court in the United India Insurance Company Ltd. Vs Fancy Traders, JT 2000 (10) S.C. 337 has held that the interest at the rate of 18% per annum is justifiable. In this case also the State Commission had directed that Rs. 7,00,000/- with interest at 18% per annum from three months after the submission of the claim to the insurance company till the date of payment should be paid by the insurance company directly to the Syndicate Bank to discharge its liability and remaining amount, if any, will be paid to the company. The complainant had taken loan for only Rs. 4,50,000/- as against the cost of the truck of Rs. 7,00,000/- by paying a margin money of Rs. 2,50,000/-

8. The Hon’ble Supreme Court in Sovintorg (India) Ltd. Vs. State Bank of India 1999-(086)-AIR-2963-SC has held that the appellant-company had a bank account with the respondent-bank wherein in the month of June, 1983 a cheque for Rs. One lakh was deposited by the appellant for collection and the proceeds thereof to be credited to its account. The appellant alleged that though the proceeds of the cheque were collected on June 17, 1983 yet they were not deposited in its account for over a period of seven years. Accordingly, the Complainant has claimed principal amount of 1,00,000/- with 24% interest alongwith claim for compensation for business losses and various types of damages to the tune of Rs. 2,00,000/- each. The State Commission had partly allowed the complaint by directing to pay respondent Rs. 1,00,000/- with interest @ 12% and the National Commission confirmed the order of the State Commission. The Hon’ble Supreme Court held that “the State Commission as well as National Commission were justified in awarding the interest to the appellant but in the circumstances of the case we feel that grant of interest @ 12% was inadequate as admittedly the appellant was deprived of the use of a sum of Rs. 1,00,000/- for over a period of seven years and during the aforesaid period the appellant had to suffer the winding up proceedings under the Companies Act, allegedly on the ground of financial crunch.” Therefore, the Hon’ble Supreme Court directed award of interest @ 15% per annum with quarterly interest from the date when the amount was received by it till the date of payment. The difference of the amount of account of enhacement of the rate of interest shall be paid to the appellant within a period of six weeks from the date of this judgment.”

9. The ratio of the above judgement is squarely applicable to this case except that the interest rate has to be higher because the complainant had borrowed the money at a higher rate of interest with the quarterly rests as has been explained earlier in this order.

10. In view of above we do not see any material irregularity or jurisdictional error in the order passed by the State Commission. Therefore, the revision petition is dismissed. As the appellant insurance company had paid a part of the amount to the respondent in pursuance of the order dated 20.02.2001, the balance amount shall be paid within a period of two weeks. The appellant shall also pay Rs. 10,000/- as costs to the respondents.

………………….J

( K.S. GUPTA )

PRESIDING MEMBER

……………………

( P.D. SHENOY)

MEMBER