NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
Execution Petition No. 12 of 2006
M/s. Kundan Rice Mills Ltd. .. Complainant
National Insurance Co. Ltd. .. Opposite Party
HON’BLE MR. JUSTICE M.B.SHAH, PRESIDENT.
MRS. RAJYALAKSHMI RAO, MEMBER.
For the Complainant : Mr. Kailash Vasdev, Senior Advocate
With Mr. Reetesh Singh and
Mr Prateek Kumar, Advocates.
For the Opposite Parties : Mr. Vishnu Mehra and
Ms. Sakshi Mittal, Advocates
M.B.SHAH, J. PRESIDENT:
In this execution petition the question which requires consideration is –
Whether the Complainant is entitled to recover interest at the rate of 10% p.a. on the sum awarded as directed, as the Insurance Company failed to pay the said amount within six weeks from the date of the order.
Petition No. 60 of 2002 was decided on
“In view of the above decision, we find no merit in the pleas taken by the OP an the grounds espoused for settling the claim on non-standard basis. We find that the ground taken for settling the claim on non-standard basis does not stand our scrutiny as per the material brought on record. In view of the above, the complaint is to be allowed and the Opposite Party, Insurance Company is directed to settle the claim to the full amount, of which 60% already stands paid on 14.8.2000. The remaining 40% amount shall be paid to the Complainant within 6 weeks of this Order otherwise Complainant shall be entitled to interest at the rate of 10% p.a. for the amount from 2 months from the receipt of the Surveyor’s report”.
stated above, the order was passed on
against the Order passed by this Commission, the Insurance Company preferred
Civil Appeal No. 3537 of 2005. Similarly, the Complainant also preferred Civil
Appeal No.3686 of 2005 before the
“Heard the learned Counsel on both sides.
We are satisfied that the Order of the National Commission is perfectly justified and require no interference. Both appeals are dismissed. No Order as to costs”.
After dismissal of the appeals, the Insurance Company by letter dated 9.6.2006 sent a cheque for Rs.31,24,540/- for the balance amount which included cost of Rs.10,000/-.
This application is filed by the Complainant contending that as per the Order passed by this Commission, the Insurance Co. was required to pay the remaining amount within six weeks from the date of the order and in case of failure it is required to pay the amount with interest at the rate of 10% p.a. from the date of the receipt of the Surveyor’s report. It is contended that this Commission directed that the Insurance Company shall pay the remaining 40% within six weeks (i.e. on or before 5th April, 2005). That amount was paid only in June, 2006, i.e. virtually after a period of 1 year and 2 months. Hence, the Insurance Company is bound to pay the interest as directed.
It is also submitted that there is no question of modifying the aforesaid Order, because : (a) it has attained finality as the civil appeals were dismissed by the Apex Court; and (b) in execution, this Commission has no jurisdiction to modify the final Order.
In addition, Mr.Kailash Vasudev, Senior Counsel appearing for the Complainant further submitted that in view of the Insurance Regulatory and Development Authority (Protection of Policyholders’ Interests)(Amendment) Regulations 2002”, in such cases, the Insurance Company is bound to comply with Regulation 9 which provides for settlement of the claim, at the most, within six months. Relevant clauses of Regulation 9, for payment of interest, are as under:
“(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be,
(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer sha1l be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.”
He, therefore, submitted that when the dispute was finally decided by this Commission, the Insurance Company was bound to pay the amount with interest at the rate which is 2% above the bank rate prevailing at the beginning of the financial year in which the claim was reviewed by the Insurance Company (repudiated by the Insurance Company). This has not been done.
Finally, it is his contention that the aforesaid part of the order cannot be said to be in any way penal, because payment of interest on the amount which was due and payable is in accordance with the Regulation 9(6.) and is also in accordance with various orders passed by this Commission. Hence, in any case, it is just and equitable.
As against this, learned Counsel Mr.Mehra appearing for the Insurance Company submitted that against the Order passed by this Commission, the Insurance Company had preferred appeal before the Apex Court and that appeal was decided only in May, 2006. Hence, within one month from the date of the Order passed by the Apex Court the amount was paid to the Complainant. Therefore, there is no question of paying any interest. In any case, he submitted that the direction given by this Commission that in case Insurance Company fails to pay the amount within 6 weeks from the date of the order it shall pay interest at the rate of 10% p.a. from the date of receipt of the Surveyor’s report would be penal part of the order, and, therefore, it should not be implemented.
At the outset, for the application of Regulations relied upon by the learned Senior Counsel for the Complainant, it is to be stated that Regulations came into force only in 2002 and, therefore, it would not have any retrospective effect. However, the principles behind the same are of general nature which are accepted by various judicial decisions.
On merits, firstly, it is to be stated that the Apex Court has not granted any interim order in favour of the Insurance Company. Mere filing of the appeal would not mean that the Insurance Company can take it for granted that the order passed by this Commission is not required to be complied with nor the period to make the payment, as directed, stands automatically extended. The Insurance Company has also not moved any application even for extension of time for making payment to the Complainant.
Secondly, Complainant was entitled to receive the amount within the reasonable time from the date of peril or from the date of Surveyor’s Report. However, that amount was not paid for reasons which, according to this Commission, were not justified and therefore, the direction was issued. The Complainant was required to wait for years together because the matter could not be decided within the reasonable time by this Commission and the amount remained with the Insurance Company. Undisputedly, the Complainant has taken Marine Insurance Policy for a sum of Rs.78,65,000/- with a view to export rice to Moscow. When the rice bags were at Kandla Port, they were extensively damaged due to cyclone on 9.6.1998. It has been pointed out that the Complainant suffered total loss of the consignment on 9.6.1998. Initially the claim was repudiated on 9.12.1998, but on 14.8.2000, 60% of the claim was paid without interest i.e. after more than two years from the date of loss. The remaining 40% was paid without interest on 9.6.2006 i.e. exactly eight years after the date of loss. In such a situation, the whole purpose of having insurance coverage is lost by such procedure adopted by the Insurance Company. Further, the amount which was not paid to the Complainant remains with the Insurance Company. Hence, it cannot be said that the implementation of the order would be, in any way, penal in nature.
Thirdly, it is also settled law that in execution, the Court or Commission has no jurisdiction to modify the order which has attained finality.
However, Mr. Mehra, learned counsel for the Insurance Company, submitted that the Complainant also filed an appeal against the order passed by this Commission for enhancement of compensation as well as for grant of interest. As the appeal filed by the Complainant is dismissed by the Apex Court, there is no question of awarding any interest.
In our view, this submission is without any substance, because we are neither modifying the order passed nor passing any fresh order directing the Insurance Company to pay the interest. We are only required to implement the order, as it is, which has attained finality.
For the aforesaid discussion, this Execution Petition is allowed. The Insurance Company is directed to comply with the order dated 25th February, 2005 passed by this Commission by paying interest amount @ 10% per annum as directed, within a period of eight weeks from the date of this Order. There shall be no order as to costs.