NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

FIRST APPEAL NO. 383 OF 2005

(From the order dated 17.06.2005 in Complaint No. 37/01 of the State Commission, Karnataka)

Oriental Insurance Co. Ltd. & Ors. … Appellants

Versus

The Government Tool Room and Training Centre …Respondent

BEFORE :

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

MRS. RAJYALAKSHMI RAO, MEMBER

For the Appellant : Mr. Joy Basu & Mr. Maibam N. Singh, Advocates

For the Respondent : Mr. Y.N. Ramanna, Advocate

17.05.2007

ORDER

M.B. SHAH, PRESIDENT

Heard the Learned Counsel for the parties.

This case illustrates how the Insurance Company can even harass the Government Department which is a part and parcel of Union of India, i.e. Industries and Commerce, the Government Tool Room and Training Centre.

The sole dispute in this first appeal is with regard to the discharge voucher signed by the Vice Chairman of the respondent with regard to the amount received from the Insurance Company as full and final settlement.

In the present case, it is to be stated that such contention is 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 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. Thereafter, in the United India Insurance Company Ltd. Vs. Ajmer Singh Cotton & General Mills & Ors. (1999) 6 SCC 400, wherein 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.

Before the State Commission, it was vehemently contended by the Insurance Company that the complaint was not maintainable for recovering the remaining amount because the Vice Chairman of the Government Tool Room and Training Centre has signed the voucher given by the Insurance Company as full and final settlement and therefore, complaint under the Consumer Protection Act is not maintainable.

It is to be stated that if the Government department is required to accept the amount for one or other reason and sign the document as full and final settlement, think of the fate of a consumer whose entire factory is gutted by fire; when the banks are insisting for repayment of the loan amount and the creditors are harassing the owner of the factory by various means. In that set of circumstances, if a person requires the money and signs the voucher as receipt of full and final of claim, it amounts coercive practice by the Insurance Company. Various such illustrations can be given but this is only to highlight that wrong practice followed by the Insurance Companies in not paying the single pie without having a discharge voucher stating that the amount is received by the claimant as full and final settlement of his claim. In our view, it is a coercive practice. And, it is suggested that the Insurance Companies may abandon this practice and do not try to snatch away the right of the insured to approach the legal forum for getting just and reasonable reimbursement.

(1) In support of its claim the Managing Director of the Government Tool Room and Training Centre, Bangalore, has filed an affidavit to the effect that Insurance Company informed that it was a standard format prescribed by them and unless and until voucher was signed, they would not release the fund. They also informed that it would be always open for the complainant to agitate the matter if they were not satisfied with the amount but so far as Insurance Company is concerned unless the voucher was signed the issue of release of funds could not be made.

It appears that this wrong practice is required to be given up by the Insurance Company or in any set of circumstances we would suggest to IRDA to keep control upon such unfair trade practice.

(2) It has been further stated that the Legal Department of the complainant, i.e. Govt. Tool Room and Training Centre advised the complainant that this acceptance of the money by signing the voucher would not prejudice the claim of the complainant. We have to state that such advice is an erroneous one. But wrong and erroneous advice by a counsel would be a sufficient ground for finding out the truth.

(3) Even the government department states on affidavit that the department was in dire/urgent need of funds to pay backlog salaries of their employees. This would be sufficient for holding that the voucher was not signed voluntarily but was signed under compulsion.

(4) Further, it is to be stated that after receipt of the amount on 7.7.2000, on 31.7.2000 complainant wrote letter to the Insurance Company that deduction of Rs. 10,32,500/- was unjustified. Not only that but even the receipt was a pre-paid stamped receipt for an amount of Rs.16,37,000/- and is taken prior to payment.

Considering the aforesaid aspects, in our view impugned order passed by the State Commission does not call for any interference. The First Appeal is dismissed. There shall be no order as to costs.

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.

……………………………………J.

(M.B. SHAH)

PRESIDENT

………………………………………

(RAJYALAKSHMI RAO)

MEMBER

P/19/Court-1