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KARNATAKA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BANGALORE
Honble Mr. Justice D.R. Vithal Rao, President; Mr. Susheela Cheluvaraju &
Mr. Kumar Gowda, Members
RAM NATH KAW—Appellant
versus
THE ORIENTAL INSURANCE CO. LTD. & ORS.—Opposite Parties
Complaint No. 57 of 1994—Decided on 12.8.1996
An insurance company is liable to pay interest on the amount settled in favor of the complainant for the delayed period, where the insurance company deliberately delays the settlement of the claim.
Headnote:
INSURANCE - DELAY IN SETTLEMENT OF CLAIM - INTEREST ON DELAYED AMOUNT - CONSUMER PROTECTION ACT, 1986, SECTION 17, 12 - INSURANCE ACT, 1938, SECTION 64UM(1) - Where the insurance company delayed the settlement of the claim for an unreasonable period, the complainant is entitled to interest on the amount settled in his favor for the delayed period.
Fact of the Case:
The complainant had insured his residential house and household articles for a period from 22.1.1991 to 21.1.1992. Due to the prevailing circumstances in the State of Jammu and Kashmir in 1991, the complainant was compelled to leave his place on 2.7.90. Subsequently, he was informed that his household articles were stolen on 24.6.91 and the house itself was burnt down on 13.7.91. The complainant filed claims before the insurance company, which settled the claim for a sum of Rs. 3,64,359/- on 25.1.94 in full and final settlement of the claim.
Finding of the Court:
The court found that the insurance company had delayed the settlement of the claim without any reason and that the complainant was entitled to interest on the amount settled in his favor for the delayed period.
Issues: Whether the insurance company was liable to pay interest on the amount settled in favor of the complainant for the delayed period.
Ratio Decidendi: The court relied on the principle laid down by the National Commission in R.K. Industries v. New India Assurance Company Ltd., reported in II (1995) CPJ 87 (NC), which held that where the insurance company deliberately delays the settlement of the claim, the complainant is entitled to payment of interest on the said amount for the period of delay in settling and payment of the claim.
Final Decision: The court allowed the complaint in part and directed the insurance company to pay interest at the rate of 18% p.a. on the amount of Rs. 3,64,359/- from 1.8.92 till 25.1.94. The insurance company was also directed to pay a sum of Rs. 2,500/- towards costs of the proceeding.
Mr. Justice D.R. Vithal Rao, President — In this complaint, under Section 17 read with Section 12 of the Act, the complainant has sought compensation in a sum of Rs. 5,12,723/- from the opposite party, the Oriental Insurance Company Ltd.
2. The complainant, a resident of Srinagar city in the State of Jammu and Kashmir had insured his residential house and the household articles for the period from 22.1.1991 to 21.1.1992 covering the risks in respect of the building for an amount of Rs. 6,00,000/- and the valuables contained therein for an amount of Rs. 2,50,000/-.
3. The complainant under the disturbing circumstances that were. prevalent in the year 1991 in the State of Jammu & Kashmir was to leave his place, and so, he left Srinagar under these compelling circumstances on 2.7.90.
4. The complainant subsequently was informed that his household articles were stolen away on 24.6.91 and the house itself came to be burnt down on 13.7.91.
5. The complainant immediately thereafter made complaint of the occurrence to the concerned police at Srinagar and also filed claims before the opposite party at Srinagar.
6. The opposite party, on receipt of the claims from the complainant, assessed the loss to the house property at Rs. 2,31,641/- and with regard to the loss of movable articles at Rs. 1,31,570/-. Though it averred to settle the claim of the complainant for both the loss at Rs. 3,64,359/- by its letter dated 9.11.1993 but failed to make the payment of the said amount. The complainant perused the matter with the authorities who ultimately agreed to settled the claim of the complainant at Rs. 3,64,359/- and made the payment of the said sum on 25.1.94, on obtaining a discharge voucher from the complainant for having received the said sum in full and final settlement of the claim of the complainant.
7. The complainant further averred that having regard to the adverse circumstances in which the was placed, he was compelled to accept the said amount of Rs. 3,64,359/- in full and final settlement of the claim.
8. The complainant nextly averred there was inordinate delay in settling the claim of the complainant, in consequence of which, he was put to untold misery. So, the complainant, on the basis of these averments sought compensation in a sum of Rs. 5,12,723/- from the opposite party, the Insurance Company.
9. The opposite party filed its version. Admitted the fact of the complainant having taken householders policy as averred by him. It also admitted that the complainant during the currency of the policy, suffered loss by burning of his house and the looting of the movable articles contained in the said house.
10. The opposite party also admitted the fact that it has settled the claim for a sum of Rs. 3,64,359/- on 25.1.94 in full and final settlement of the claim of the complainant. The opposite party nextly averred that the complainant has no right to claim any further amount when he had accepted the said amount in full and final settlement of his claim and passed a discharge voucher.
11. During enquiry, the complainant filed his affidavit in evidence. Got Exs. C 1 to C 62 marked in evidence. The opposite party filed its affidavit and got Exs. R 1 and R 2 marked in evidence
12. We heard the learned Counsel for the parties. Perused the pleadings and the material on record.
13. It is an admitted fact that the complainant has received a sum of Rs. 3,64,359/- on 25.1.94 in full and final settlement of his claim regarding the loss to his house property and burglary of the household articles contained therein. The complainant has passed a discharge voucher on receipt of the said sum as per Ex. R2.
14. The occurrence of the looting of the articles and the burning of the house took place on 24.6.91 and on 13.7.91. It is also no disputed, the complainant immediately thereafter filed the claims with the opposite party. Therefore, it is clear that the complainant filed the claims before the opposite party by about the end of July 1991.
15. It is an adm
