NATIONAL CONSUMER
DISPUTES REDRESSAL COMMISSION
NEW DELHI
Execution
Petition No. 12 of 2006
In
M/s. Kundan Rice Mills Ltd. .. Complainant
Versus
National Insurance Co. Ltd. .. Opposite Party
BEFORE :
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.
Original
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”.
As
stated above, the order was passed on
Undisputedly,
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/-.
Submissions:
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.
Findings:
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.
……………………………………….J.
(M.B. SHAH)
PRESIDENT
.…………………………………………
(RAJYALAKSHMI RAO)
MEMBER