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MADHYA PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BHOPAL
Honble Mrs. Saroj Rajwade & Mr. N.K. Vaidya, Members
RAKESH KUMAR DWIVEDI––Appellant
versus
BRANCH MANAGER,
UNITED INDIA INSURANCE CO. & ANR.—Respondents
Appeal No. 851 of 1995—Decided on 4.3.1998
Counsel for the Parties :
For the Appellant :Mr. N.P. Dwivedi, Advocate.
For the Respondents:Mr. G.K. Shriwastava, Advocate.
The existence of an arbitration clause in an insurance policy does not preclude an aggrieved consumer from seeking redress before the Consumer Forums.
Headnote:
INSURANCE - ARBITRATION CLAUSE - CONSUMER PROTECTION ACT - DEFICIENCY IN SERVICE - DELAY IN SETTLEMENT OF CLAIM - ARBITRATION CLAUSE IN INSURANCE POLICY DOES NOT TAKE AWAY THE RIGHT OF A CONSUMER TO SEEK REMEDY BEFORE A CONSUMER FORUM - INSURANCE COMPANY GUILTY OF DEFICIENCY IN SERVICE FOR TAKING ONE YEAR OR MORE TO INFORM THE APPELLANT OF THEIR DECISION TO ACCEPT LIABILITY - INSURANCE COMPANY MUST PAY THE CLAIM IN FULL AND COMPENSATE THE APPELLANT FOR DEFICIENCY IN SERVICE.
Fact of the Case:
Appellant's truck met with an accident during the currency of the insurance policy. Appellant filed a complaint before the District Forum alleging that the respondent-Insurance Company took one year to settle his claim and that the claim was settled arbitrarily. The District Forum directed the appellant to obtain relief through reference to Arbitrator.
Finding of the Court:
The State Commission set aside the order of the District Forum and held that the existence of an arbitration clause in the insurance policy does not preclude an aggrieved consumer from seeking redress before the Consumer Forums. The Commission also held that the Insurance Company was guilty of deficiency in service for taking one year or more to inform the appellant of their decision to accept liability and for settling the claim arbitrarily.
Issues: 1. Whether the arbitration clause in the insurance policy takes away the right of a consumer to seek remedy before a Consumer Forum? 2. Whether the Insurance Company was guilty of deficiency in service for taking one year or more to inform the appellant of their decision to accept liability? 3. Whether the Insurance Company was guilty of deficiency in service for settling the claim arbitrarily?
Ratio Decidendi: 1. The arbitration clause in an insurance policy does not take away the right of a consumer to seek remedy before a Consumer Forum. 2. An Insurance Company is guilty of deficiency in service for taking one year or more to inform the appellant of their decision to accept liability. 3. An Insurance Company is guilty of deficiency in service for settling the claim arbitrarily.
Final Decision: The appeal was allowed. The order of the District Forum was set aside. The Insurance Company was directed to pay Rs. 50,194/- to the appellant as final settlement of claim and Rs. 2,000/- as compensation within one month of the date of order.
Mrs. Saroj Rajwade, Member — This appeal has arisen from order dated 28.11.1995 passed by Consumer Disputes Redressal Forum (for short District Forum) Betul in Complaint No. 10/95 by which the District Forum ordered that the case be sent for arbitration as per Section 8 of the insurance policy.
2. The facts of the case in brief are that appellant had his truck insured with the respondent-Insurance Company. Insurance policy number was 190104/31/21/897/93 and it was valid for the period 11.12.1993 to 10.12.1994. Insurance policy was comprehensive and was issued in Betul. During the currency of the policy the truck met with an accident on 24.12.1993 on Paratwada-Sami Road. The accident was reported to Divisional Manager, Amrawati because that was nearest branch of respondent to the spot of accident. Divisional Manager, Amrawati sent a Surveyor on spot immediately. The Surveyor took photographs as per standard procedure and then instructed appellant (complainant in District Forum) to take the truck after necessary repairs on spot to workshop in Paratwada for repairs. Appellant did accordingly. After receipt of the report from Surveyor, the Divisional Manager, Amrawati sent a Surveyor for final survey, who again took photographs and also carefully scrutinized the various changed parts and the expenditure incurred. Appellant/ complainant in his complaint before District Forum stated that he spent Rs. 50,194/- and produced the receipts, etc. to Divisional Manager, Amrawati. Appellant further stated that Divisional Manager, Amrawati continued to assure him that his case would be finalised soon. However, nothing happened for one year and then on 17.1.1995, respondent informed the appellant that they have finalised the claim to the extent of Rs. 14,041/- which they are prepared to pay. If that was agreeable, the appellant should send a receipt to enable the respondent to make payment. In his complaint appellant/complainant brought to the notice of District Forum that respondent appointed another Surveyor who brought down the acceptable claim to Rs. 14,041/-. He did this sitting at Bhopal without seeing vehicle or visiting the spot.
3. In the appeal, the appellant has challenged the order on the ground that arbitration clause does not take away the right of a consumer to seek remedy before a competent Forum. Appellant has produced several citations in support of this assertion. Counsel for appellant also challenged the correctness of changes made by third Surveyor sitting in Bhopal as also the long delay in settling his claim. We shall deal with the issues raised before us now.
4. We have heard both the parties and have also perused the records. We shall first consider the correctness of the order of the District Forum by which appellant was directed to obtain relief through reference to Arbitrator.
5. It is not disputed that there is a clause in the insurance policy about referring any disputed matter for arbitration. However, it is also a common knowledge that arbitration proceedings take a long time. Also Arbitrator has to be paid fees. Even then the award has to be filed before a Court, having jurisdiction. The Court hears the matter in full and if it finds no grounds to set aside the award, it has to pass a judgment. All this take a long time. This dilatory process is totally dispensed with in the proceedings in the Consumer Forum. Also there are other issues like deficiency in service to a consumer by opposite party, which can only be decided quickly in Consumer Forum. Consumer Act thus provides a quick and cheap, inexpensive, judicious and expeditious remedy for the redressal of grievances of consumer and therefore, discretion of Consumer Forums should in all fairness must be exercised in favour of the consumer and against referring matter for arbitration. In the case National Insurance Company v. T.K. Raja & Anr., the State Commission of Tamilnadu has referred to the judgment of National Consumer Disputes Redressal Commission
