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STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, DELHI
Honble Mr. Justice R.N. Mittal, President; Dr. A.N. Saxena, Member
DEVINDER KUMAR JAIN—Complainant
versus
THE NEW INDIA ASSURANCE CO. LTD.—Opp. Party
C-462 of 1992—Decided on 30.7.1993
For the Complainant :Mr. Sanjay Kumar, Advocate.
For the Opp. Party :Mr. L.K. Tyagi & Mr. S.M. Suri, Advocates.
An insurance company cannot delay the settlement of a claim and then pressurize the insured to enter into a compromise. The insured is not estopped from claiming the balance amount if he has been forced to enter into the compromise due to the insurance company's delay.
Headnote:
CONSUMER PROTECTION ACT - SECTION 27 - INSURANCE - DELAY IN SETTLEMENT OF CLAIM - INTEREST AND DAMAGES AWARDED - ESTOPPEL - COMPROMISE - NO ESTOPPEL WHERE DELAY IN SETTLEMENT OF CLAIM BY INSURANCE COMPANY - INSURANCE COMPANY LIABLE TO PAY BALANCE AMOUNT, INTEREST, AND DAMAGES.
Fact of the Case:
Complainant purchased a mini truck in February 1991 and obtained comprehensive insurance for one year. The vehicle was stolen in November 1991. Complainant informed the insurance company about the theft and completed the formalities. However, the claim was not settled. In July 1992, the complainant was influenced by the insurance company to enter into a settlement and accept Rs. 1,85,000/-. The insurance company promised to issue a cheque within a week but failed to do so. The complainant served a legal demand notice on the insurance company. The insurance company paid Rs. 1,83,500/- to the complainant after the filing of the complaint.
Finding of the Court:
The court held that the insurance company was liable to pay the balance amount, interest, and damages to the complainant. The court found that the insurance company had delayed the settlement of the claim and had pressurized the complainant to enter into a compromise. The court also held that the complainant was not estopped from claiming the balance amount as he had been forced to enter into the compromise due to the insurance company's delay.
Issues: 1. Whether the complainant was estopped from claiming the balance amount due to the compromise? 2. What amount was the complainant entitled to from the insurance company?
Ratio Decidendi: 1. The court held that the complainant was not estopped from claiming the balance amount as he had been forced to enter into the compromise due to the insurance company's delay. The court relied on the observations of the National Commission in Col. Bhim Singh v. Regional Manager, National Ins. Co. Ltd. and Another, where it was held that the payment of insurance amounts, which are not in dispute, are often delayed with a view to coerce the insured into giving a receipt in full and final discharge of the claims of the insured amount. 2. The court held that the complainant was entitled to the balance amount of Rs. 22,945/-, interest on the amount of Rs. 2,06,445/- from 1.3.92 to 24.5.93, interest on the balance amount of Rs. 22,945/- from 25.5.93 till 30.7.93, and damages amounting to Rs. 5,000/- for mental harassment and agony.
Final Decision: The court partly accepted the complaint and directed the insurance company to pay the amount of Rs.74,500/- with interest @ 18% p.a. from 1.8.93 till the date of payment within three months, failing which action shall be taken against them u/Sec. 27 of the Consumer Protection Act. Costs Rs.2,000/-.
Mr. Justice R.N. Mittal, President—Briefly the facts are that the complainant purchased a mini truck Tata 407 Model 1991 in February 1991, after obtaining loan from Oriental Bank of Commerce, G.T. Karnal Road, Delhi. The loan carried interest @22% p.a. He got the vehicle insured comprehensively for a sum of Rs. 2,18,000/- vide policy dated 25.2.91 for a period of one year. The vehicle was stolen on the night intervening 30.11.91 and 1.12.91 from Rana Pratap Bagh, Delhi, where it had been parked during night. A complaint has lodged with the Police Station Model Town on 1.12.91.
2. The complainant informed the respondent about theft on the same date i.e. 1.12.91. Thereafter he completed the formalities and supplied the necessary documents to them. However, the claim was not settled by the respondent.
3. On 13.7.92, the complainant, it is pleaded, was influenced by the respondent to enter into a settlement and accept Rs. 1,85,000/-. Shri Chaman Lal, Sr.Divisional Manager of the respondent promised to issue the cheque for the said amount within a week's time. However, inspite of promises and assurances on behalf of the company no cheque has been issued in pursuance of the settlement till 31.8.92. He consequently served a legal demand notice on the respondent on 1.9.92 through his Counsel. It is alleged that the complainant is entitled to recover his full insurance amount of Rs. 2,18,000/- alongwith Rs. 2,000/- as expenses and rupees one lac as damages on account of mental torture and harassment.
4. The complaint has been contested by the respondent. On 19.5.93 it was stated by Mr. Tyagi, the learned Counsel for the respondent that in case the complainant submits R.C. Book alongwith no objection
certificate, the respondent would make the payment of Rs. 1,83,500/- to the complainant. Mr. Sanjay Kumar, the learned Counsel for the complainant submitted that he had no objection in accepting the payment under protest. The complainant, in pursuance of the undertaking by the Counsel for the respondent gave R.C. Book alongwith no objection certificate to the company and he was paid an amount of Rs. 1,83,500/-. Thus the claim of the claimant for the balance amount survives.
5. 5.The learned Counsel for the respondent has vehemently argued that in view of the compromise between the parties the complainant is estopped from claiming the balance amount. On the other hand the argument of the learned Counsel for the complainant is that when the complainant's claim was not settled by the respondent for a long time and the bank was pressing him for returning the loan, he thought that it would be better to compromise with the respondent but even after the compromise the decretal amount was not paid by the respondent. In the circumstances he is not estopped from claiming the balance amount.
6. We have duly considered the arguments. But we find substance in the contention of the complainant's Counsel. It was the duty of the respondent to have settled the claim of the complainant expeditiously, preferably within two to three months. When it was not done, he had to enter into a compromise by force of circumstances. After the compromise it was the duty of the respondent to have made the payment immediately. However, it was not done by them. The amount has been paid by them after more than six months of the filing of the complaint. It has been seen that the Insurance Companies, in order to pressurise the insured to enter into a compromise, do not make payment of the insured amounts on one pretext or the other. The same method was adopted by the respondent in this case. In the circumstances, in our view, the complainant is not estopped from claiming the balance amount from the respondent.
7. In the abovesaid view we are supported by the observations of the National Commission in Col. Bhim Singh v. Regional Manager, National Ins. Co. Ltd. and Another, I (1992) CPJ 205 (NC). It was observed in that case that the payment of insurance amounts, which are not in d
