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Judgment
This appeal under section 19 of The Consumer Protection Act, 1986 is in challenge to the Order dated 26.11.2018 of the State Commission in complaint no. 81 of 2013.
We have heard the learned counsel for the appellant (the ‘complainant’) and for the respondents no. 1 and no. 2 (the ‘insurance co.’) and have perused the record.
The matter relates to an insurance claim. The State Commission has dismissed the complaint on the preliminary issue of pecuniary jurisdiction.
Here Section 17 (a)(i) of the Act 1986, which deals with the pecuniary jurisdiction of the State Commission, may first be reproduced for reference:
Jurisdiction of the State Commission.-Subject to the other provisions of this Act, the State Commission shall have jurisdiction-
(a) to entertain-
(i) complaints where the value of the goods or services and compensation, if any, claimed [exceeds rupees twenty lakhs but does not exceed rupees one crore]
The State Commission has observed that the subject policy had been taken for a sum insured of Rs. 40.50 crore. It has taken the same to be the value of the services. Since this exceeds Rs. 1 crore, the State Commission has held the complaint to be beyond its pecuniary jurisdiction. Its appraisal on this point is reproduced below:
In terms of Section 17 of the Consumer Protection Act, 1986, State Commission has jurisdiction to entertain complaints where the value of the goods or services and compensation, if any, claimed exceeds Rs.20,00,000/- but does not exceed Rs. 1,00,00,000/-.
It appears from the policy document that the subject policy was taken for a sum insured of Rs.40,50,000/- (Sec.1). Since by means of insurance policy, the Insured hires the services of the Insurer, value of service, in its true purport, it seems, happens to be the sum insured of the policy concerned.
Looking from this aspect, it appears that the present case is nothing but a square peg in the round hole. We have got no jurisdiction to entertain this complaint as the value of service far exceeds our pecuniary jurisdiction to adjudicate the present dispute.
Learned counsel for the complainant submits that in the present case a sum of Rs.9,23,875/- was paid as the premium and the compensation claimed before the State Commission was for a sum of Rs. 25,51,811/-. The total premium paid plus compensation claimed was Rs.34,75,686/-, which is within the pecuniary jurisdiction of the State Commission. To support the method of computing the value of the services and compensation claimed in such cases he draws attention to the Order dated 11.01.2018 of this Commission passed in R.P. No. 1794 of 2017 M/s Maharani of India Vs. United India Insurance Co. Ltd. wherein this Commission had inter alia observed as under:
When an insurance policy is taken by a person he pays a premium to the insurer for hiring or availing its services. It is the premium paid by the insured to the insurer and not the extent of the sum insured which constitutes the agreed consideration and therefore in my opinion, it is the premium paid to the insurer which when added to the compensation claimed in the complaint would determine the pecuniary jurisdiction of this Commission. The extent of the sum assured would have no bearing on determination of the pecuniary jurisdiction of a consumer forum.
Admittedly in the present case if the premium paid by the petitioner / complainant to the respondent is added to the compensation claimed by it, the aggregate does not come to more than Rs.20 lakhs. The District Forum, therefore, did possess the requisite pecuniary jurisdiction to entertain and decide the complaint.
Learned counsel also draws attention to the Order dated 16.04.2018 of this Commission passed in C.C. No. 3404 of 2017 Vaaan Infra Pvt. Ltd. Vs. Liberty Videocon General Insurance & Ors. wherein this Commission had inter alia observed as under:
The above issue is no more res integra. The Coordinate Bench of this Commission in RP No. 1794 of 2017 M/s Maharani of India through Yudhishthira Kapur, Partner Vs. Branch Manager, United India Insurance Co. Ltd., while dealing with the same issue has observed as under:
“The question which arises for consideration in this petition is as to what would be the value of the service hired or availed by the petitioner/complainant. In CC No.97 of 2016 Ambrish Kumar Shukla & Ors. Vs. Ferrous Infrastructure Pvt. Ltd. dated 7.10.2016, a three-Members Bench of this Commission observed that if for instance a person purchases a machine for more than 1 crore a manufacturing defect is found in the machine and the cost of removing the said defect is Rs.10 lakhs, it is the aggregate of the sale consideration paid by the consumer for the machine and compensation if any claimed in the complaint which would determine the pecuniary jurisdiction of the consumer forum. It was further observed that if, for instance, a house is sold for more than Rs.1 crore, certain defects are found in the house and the cost of removing those defects is Rs.5 lakhs, the complaint would have to be filed before this Commission, the value of the service itself being more than Rs.1 crore. Thus this Commission took the view that the consideration agreed to be paid by the consumers should be taken as the value of the goods or the services as the case may be and for the purpose of determining the pecuniary jurisdiction the amount of compensation as claimed in the complaint needs to be added to the agreed consideration.
When an insurance policy is taken by a person he pays a premium to the insurer for hiring or availing its services. It is the premium paid by the insured to the insurer and not the extent of the sum insured which constitutes the agreed consideration and therefore in my opinion, it is the premium paid to the insurer which when added to the compensation claimed in the complaint would determine the pecuniary jurisdiction of this Commission. The extent of the sum assured would have no bearing on determination of the pecuniary jurisdiction of a consumer forum.”
The aforesaid judgment has been reiterated by the Coordinate Bench of this Commission in First Appeal No. 2028 of 2017 M/s Shree Shyam Poultries Vs. The Chief Regional Manager, United India Insurance Co. Ltd. decided on 13.02.2018.
I have carefully gone through the judgment of the Coordinate Bench referred to above and find no reason to take a different view. Admittedly in the present case, the premium paid by the complainant is Rs.10,763/- and the loss suffered by him is to the tune of Rs.41.00 lakhs. If we add up the aforesaid amount and also add the exemplary damage of Rs.10.00 lakhs claimed and 18% interest on Rs.41.00 lakhs from the date of fire till the filing of complaint till November 2017, the amount claimed is far below Rs.1.00 crore. This Commission, therefore, in view of Section 21 (a) of the Act does not have pecuniary jurisdiction to entertain the present complaint and this matter falls within the pecuniary jurisdiction of the State Commission.
Submission is that the State Commission has erred in taking the sum insured to be the value of the services.
Learned counsel for the insurance co. agrees that there has been misapplication of the provision of Section 17(a)(i) on the part of the State Commission. Submission is that the case may be remanded back to the State Commission for a decision on merits.
A reading of the provision contained in the Act 1986 shows that the ‘value of the services and the compensation if any claimed’ have to be totalled to see whether a complaint falls within the pecuniary jurisdiction of the State Commission.
The State Commission has taken the ‘sum insured’ as the ‘value of the services’. (It has not ventured into the arena of ‘compensation claimed’.)
The way of computing in such cases was explained earlier by this Commission in its Orders dated 11.01.2018 and dated 16.04.2018, which have been cited by the learned counsel for the complainant. Going by the same, the ‘premium paid’ is the ‘consideration’ and is to be taken as the ‘value of the services’. The ‘compensation claimed’ has to be added to the ‘value of the services’. In the instant case the total of ‘premium paid’ and ‘compensation claimed’ comes to Rs.34,75,686/-, which exceeds Rs. 20 lakh but does not exceed Rs. 1 crore, and, accordingly, the complaint falls within the pecuniary jurisdiction of the State Commission.
Looking at it another way, in very simple language ‘premium’ is paid to insure maximum upto the ‘sum insured’ in the eventuality of an insured peril occurring in the future. In the event of the insured peril actually occurring, in a given case the ‘value of the services’ will be the ‘claimed loss’ i.e. the actual loss which the insured claims to have occurred. The ‘claimed loss’ taken together with the ‘compensation claimed’ in addition thereto, under various heads in whichever way it be, will determine the pecuniary jurisdiction. This way, too, the amount comes to Rs. 25,51,811/-, which falls within the jurisdiction of the State Commission.
We are not entering into a detailed critique in the present context since both learned counsel agree that the matter be decided on merit by the State Commission and since by both methods of computation the State Commission’s jurisdiction is not ousted and in both the ‘sum insured’ (which the State Commission has taken as the ‘value of the services’) is not materially relevant.
Sequel to the discussion above we set aside the impugned Order dated 26.11.2018 of the State Commission and remand the case back to the State Commission with the observation that the complaint is within the pecuniary jurisdiction of the State Commission and with the request that the State Commission may decide the complaint on its merits as per the law. The parties are directed to appear before the State Commission on 31.03.2023.
The Registry is requested to send a copy each of this Order to the parties in the appeal and to their learned counsel immediately. It is also requested to send a copy of this Order to the State Commission by the fastest mode available. The stenographer is requested to upload this Order on the website of this Commission immediately.