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1993 Supreme(Bom) 128
IN THE HIGH COURT OF BOMBAY
(BOMBAY)
Justice G.G. Loney, President, M.G. Gavai Smt. Ellen Dharkar, Members.
Mrs. Fooja Gyanchandra Joshi... Complainant.
Versus
M/s. United India Insurance Co.... Opposite-party.
Complaint No. 540 of 1992, decided on 9-3-1993.
DELAY IN SETTLEMENT OF INSURANCE CLAIM AMOUNTS TO DEFICIENCY IN SERVICE AND THE INSURANCE COMPANY IS LIABLE TO PAY THE CLAIM AMOUNT WITH INTEREST.
Headnote:
CONSUMER PROTECTION ACT, 1986 - INSURANCE - POLICY - DELAY IN SETTLEMENT OF CLAIM - DEFICIENCY IN SERVICE - COMPENSATION - INTEREST - SECTION 2(1)(g), 2(1)(r), 14, 15 - CONSUMER DISPUTES REDRESSAL COMMISSION, MAHARASHTRA - ORDER DATED 26-02-1993 IN COMPLAINT CASE NO. 104 OF 1992 - M/S. SUREN ENTERPRISES V. M/S. UNITED INDIA INSURANCE CO. LTD. - HELD, THE INSURANCE COMPANY IS LIABLE TO PAY THE CLAIM AMOUNT WITH 18% INTEREST P.A. FROM THE DATE OF THE INCIDENT.
Fact of the Case:
THE COMPLAINANT, A PROPRIETOR OF A FIRM DEALING IN EXPORT OF READY-MADE GARMENTS, OBTAINED AN INSURANCE POLICY FROM THE OPPOSITE PARTY. ON 20TH SEPTEMBER 1970, THERE WAS A FIRE AT THE PLACE WHERE THE STOCK OF THE COMPLAINANT WAS KEPT. THE STOCK WAS BURNT IN FIRE. THE COMPLAINANT LODGED THE CLAIM WITH THE OPPOSITE PARTY. THE OPPOSITE PARTY, AFTER A DELAY OF NEARLY 1½ YEARS, SENT A VOUCHER TO THE COMPLAINANT, SETTLING HER CLAIM FOR RS. 69,205/- AS AGAINST THE CLAIM OF RS. 3,95,727/-. THE COMPLAINANT, THEREFORE, FILED A COMPLAINT, CLAIMING A TOTAL AMOUNT OF RS. 9,18,613.25, INCLUSIVE OF INTEREST, LOSS OF BUSINESS AND LEGAL CHARGES.
Finding of the Court:
THE COURT HELD THAT THE COMPLAINT WAS MAINTAINABLE AS THE COMPLAINANT WAS A "CONSUMER" OF THE "SERVICE" OF THE OPPOSITE PARTY FOR THE PURPOSE OF INSURANCE, SINCE THE COMPLAINANT HAD PAID THE REQUISITE AMOUNT OF PREMIUM TO THE OPPOSITE PARTY. THE COURT FURTHER HELD THAT THE OPPOSITE PARTY HAD FAILED TO PROVE THAT THE VALUE OF THE GOODS DAMAGED IN FIRE WAS ONLY RS. 1,00,000/-. THE COURT ALSO HELD THAT THE REDUCTION IN VALUE OF THE INSURED GOODS WAS NOT JUSTIFIED IN THIS CASE. THE COURT FURTHER HELD THAT THE DELAY OF THREE YEARS IN SETTLEMENT OF THE COMPLAINANT'S CLAIM WAS POSITIVELY AN ACT OF DEFICIENCY IN THE SERVICE OF THE OPPOSITE PARTY, WHICH CAUSED BUSINESS LOSS TO THE COMPLAINANT.
Issues: (1) WHETHER THE COMPLAINT IS MAINTAINABLE? (2) WHAT IS THE LOSS SUFFERED BY THE COMPLAINANT? (3) WHETHER THERE HAS BEEN NEGLIGENCE ON THE PART OF THE OPPOSITE PARTY TO SETTLE THE COMPLAINANT'S CLAIM?
Ratio Decidendi: THE COURT RELIED ON THE FOLLOWING PRINCIPLES: * THE NATIONAL COMMISSION HAS ALREADY HELD IN SEVERAL CASES THAT, DESPITE THE ARBITRATION CLAUSE, THE COMPLAINT AS REGARDS DEFICIENCY IN THE SERVICE OF INSURANCE CLAIM IS MAINTAINABLE UNDER THE PROVISIONS OF THE CONSUMER PROTECTION ACT. * FAILURE TO SETTLE AN INSURANCE CLAIM WITHIN REASONABLE TIME AMOUNTS TO DELAY IN SETTLEMENT OF THE INSURANCE, A DEFICIENCY IN SERVICE OF THE INSURANCE COMPANY. * THE INSURANCE COMPANY HAS ARBITRARILY AND UNFAIRLY REDUCED THE COMPLAINANT'S CLAIM AND DID NOT SETTLE THE CLAIM FOR A PERIOD OF THREE YEARS AND, THEREFORE, IN OUR CONSIDERED VIEW, THE COMPLAINANT IS ENTITLED TO THE SETTLEMENT OF HER CLAIM OF RS. 3,95,727/- WITH INTEREST @ 18% PER ANNUM FROM 1-4-1991, I.E. AFTER A PERIOD OF SIX MONTHS, WHICH NORMALLY REQUIRED TO SETTLE THE CLAIM.
Final Decision: THE COURT ALLOWED THE COMPLAINT AND DIRECTED THE OPPOSITE PARTY TO SETTLE THE COMPLAINANT'S CLAIM FOR RS. 3,95,727.00, TOGETHER WITH INTEREST AT THE RATE OF 18% PER ANNUM FROM 1-4-1991, WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. THE COMPLAINANT WAS ALSO AWARDED RS. 500/- AS COSTS.
2. The opposite party filed written version, dated 27th January 1993, denying the claim of the complainant. According to the opposite party, although the Insurance Policy was for Rs. 4,00,000/-, actual goods lost in fire were of the lesser amount. It is also stated by the opposite party that the delay has been caused due to the report of the Surveyor, which was received on 17th December 1991. The opposite party also submitted that the discharge voucher for Rs. 69,205/- was sent to the complainant towards the amount of loss assessed by the Surveyor. In short, the case of the opposite party is that whatever loss has been assessed by the Surveyor was only payable to the complainant.
3. We have gone through the allegations of the complainant and written version filed by the opposite party and also heard the complainant in person and Shri Chile for the opposite party. The points, which arise for our consideration, are :—
(1) Whether the complaint is maintainable?
(2) What is the loss suffered by the complainant?
(3) Whether there has been negligence on the part of the opposite party to settle the complainant's claim?
As regards Point No. (1), the complainant's stock was insured by the Insurance Company for Rs. 4,00,000/- under the Policy in question, is an admitted fact. Similarly, the complainant's insured goods/stock were destroyed in fire, is also an admitted fact. It is therefore, clear that the complainant was a "Consumer" of the "Service" of the opposite party for the purpose of Insurance, since the complainant had paid the requisite amount of premium to the opposite party. The only objection of the opposite party is that the matter should have been referred to the Arbitrator as per provisions of the Condition No. 13 of the Fire Policy. The National Commission has already held in several cases that, despite the Arbitration
