Manish Kumar vs New India Assurance Co. Ltd. & 2 Ors

V.K. Jain, J

The appellant/complainant obtained an insurance policy from the respondent company to the extent of Rs.5 lakhs in respect of a bus owned by him. The insurance cover was taken for the period from 18.1.2006 to 17.1.2007. The said bus was put on fire by miscreants in an incident of arson on 5.4.2006. A claim for reimbursement in terms of the insurance policy was lodged by the complainant / appellant with the respondent and he also submitted an estimate of Rs.4,50,000/- for repair of the bus.

An inspection was carried out by the surveyor appointed by the insurer. The surveyor assessed the loss at Rs.4,93,500/- which after deduction of the salvage came to Rs.398500/- The surveyor as per the order of the District Forum, estimated the loss at Rs.4,18,500/- after adding salvage storage and advertisements expenses amounting to Rs.20,000.

The State Commission vide its order dated 2.3.2016 directed the insurer to pay a sum of Rs.418500/- to the complainant alongwith interest @ 12% p.a. for the period from 9.4.2006 to 26.10.2007, compensation quantified at Rs.1 lakh and the cost of litigation quantified at Rs.5,000/-. The salvage in terms of the order of the District Forum was to remain with the complainant.

The complainant did not challenge the order passed by the District Forum. The insurer however challenged the same by way of an appeal preferred before the concerned State Commission. The State Commission vide impugned order dated 2.3.2016 directed as under:-

"On considering the submissions of parties and on perusal of the order passed by the District Forum as also the material available on record, it appears that the District Forum has not considered all aspects of the matter in right perspective. Admittedly, the accident of burning of vehicle by mob happened on 05.04.06 during policy period insuring the vehicle for Rs.500000/-. It is also admitted position that the vehicle had been declared to be a total loss by the surveyor who assessed loss for Rs.4,18,500/-. We are of the opinion that the company itself had accepted the value of the vehicle Rs.5,00,000/- on 18.01.06. The District Forum has allowed Rs.4,18,500/- on total loss basis it means that the salvage will be handed over to the Insurance Company. The Company has objected for allowing Rs.1,00,000/- compensation and interest 12% from 09.04.06 to 26.10.07. In our view it does not seem proper to allow interest upon interest and compensation of Rs.1,00,000/- for physical harassment and mental agony. We allow 9% P. A. interest from 09.04.06 to 26.10.07, in place of 12% interest, compensation amount Rs.25,000/- and litigation cost Rs.10,000/-. If this amount has not been paid to the complainant within 30 days from the date of District Forum order 10% P. A. interest will be payable to the complainant in place of 12% interest. With this modification, the District Forum order is affirmed and the appeal is partly allowed."

Being aggrieved from the order passed by the State Commission, the petitioner is before this Commission by way of this revision petition.

Admittedly, the insurer had accepted the Insured Declared Value of Rs.5 lakhs for the vehicle in question, at the commencement of the insurance policy on 18.1.2006. The vehicle having been set on fire within a period of less than three months from the commencement of the policy, the insurer was liable to pay the entire IDV of Rs.5 lakhs to the complainant subject to the insurer retaining the salvage or deducting the salvage value from the IDV of the vehicle. If the salvage was to be retained by the insurer, it was to pay Rs.5 lakhs to the complainant. If the salvage was to be retained by the complainant, the insurer should have paid Rs.4,25,000/- to him. However, the District Forum having awarded Rs.4,18,500/- and the said order having not been challenged by the complainant he is entitled to the aforesaid amount of Rs.4,18,500/- and is also entitled to retain the salvage. The District Forum awarded interest @ 12% p.a. for the period from 9.4.2006 to 26.10.2007. The said order having not been challenged the complainant would be entitled to interest only for the period 9.4.2006 to 26.10.2007, in addition to the interest awarded by the District Forum from the date of its order till the date of payment. However, considering all the facts and circumstances of the case, the District Forum in my opinion, was not justified in awarding interest @ 12% p.a. and the same ought to have been restricted to 9% p.a. as was rightly done by the State Commission. Since the complainant has been awarded interest, there was no justification for awarding compensation in addition to the interest.

For the reasons stated hereinabove, the revision petition is disposed of with the following directions:-

(i) The petitioner/ complainant will be entitled to a sum of Rs.4,18,500/-. He shall also be entitled to retain the salvage of the vehicle

(ii) The complainant shall be entitled to interest @ 9% p.a. for the period 9.4.2006 to 26.10.2007 and then for the period from 2.3.2016 when the District Forum decided the complaint till the date the aforesaid amount is actually paid to the complainant, unless already paid.

(iii) In case the principal amount awarded by the District Forum was deposited by the insurer either with the said Forum or with the State Commission, the interest w.e.f. 2.3.2016 shall be payable only till that date but the interest earned on the amount so deposited by the insurer would be payable to the complainant.