National Insurance Company Limited vs Subrata Sarkar

The present Appeal Execution has been filed by National Insurance Co. Ltd. (hereinafter referred to as the Appellant/Judgment Debtor) against the Order dated 20.12.2017 passed by the West Bengal State Consumer Disputes Redressal Commission (hereinafter referred to as State Commission), whereby the Appellant/Judgment Debtor was directed to pay 1,25,631/-, which it had deducted towards 'Tax Deducted at Source' from the interest on compensation directed to be paid to the Complainant/Decree Holder.

Brief facts of the case are that upon not settling the insurance claim in respect of the Insurance Policy issued by the Appellant/Judgment Debtor Insurance Company, the Complainant/Decree Holder filed a Consumer Complaint before the State Commission. The State Commission vide Order dated 18.03.2011 allowed the Complaint and directed the Appellant/Judgment Debtor to pay an amount of 19,48,087/- to the Complainant with interest @10% p.a. from the date of submission of the First Surveyor's Report till the date of realization together with compensation of 20,000/- and cost of 5,000/-. A default interest of 10% was also awarded in case the payment was not made within 45 days from the date of passing the Order.

Feeling aggrieved, the Appellant/Judgment Debtor filed First Appeal No. 286/2011 before this Commission, which was partly allowed vide Order dated 16.12.2016 in following terms:-

"19. For all the afore mentioned reasons and keeping in view the principle laid down by the Hon'ble Apex Court in the above mentioned case, we do not see any illegality or infirmity in the Order passed by the State Commission which has only allowed the amount assessed by the Surveyor i.e. Rs.19,48,087/- with a reasonable rate of interest @ 10% p.a. from the date of filling of the report of the first surveyor till the date of realization. We also confirm the moderate compensation amount of Rs.20,000/- and costs of Rs.5,000/- awarded by the State Commission.

However, it is observed that the State Commission has also awarded default interest of 10% as penalty if the amount was not paid within 45 days from the date of passing of the order, which we are of the opinion is excessive and is set aside. It is observed that vide order dated 01.11.2011, 75% of the awarded amount was deposited before this Commission and 50% of the awarded amount was allowed to be withdrawn by the Complainant on furnishing adequate security. It is directed that the balance amount also be paid within four weeks from the date of receipt of this order, failing which, the amount shall attract interest, @ 9% p.a. from the date of filing of the Complaint till the date of realization. The statutory deposit made by the Appellant shall stand transferred to the Consumer Welfares Fund, along with the interest accrued thereon, if any.

In the result, this Appeal is allowed in part modifying the order of the State Commission to the extent indicated above. No order as to costs."

The Order dated 16.12.2016 passed by this Commission attained finality as the Special Leave to Appeal (C) CC No. 9413/2017 filed by the Judgment Debtor was dismissed by the Hon'ble Supreme Court. The Decree Holder/Complainant filed Interlocutory Application No. IA/142/2017 in Execution Application No. EA/02/2011 before the State Commission praying for direction to the Judgment Debtor/Insurance Company to pay a sum of 1,25,631/- to the decree holder/Complainant, deducted by the Judgment Debtor suo-moto towards income tax on the amount of Compensation.

The State Commission vide Order dated 20.12.2017 allowed the Interlocutory Application No. IA/142/2017 in Execution Application No. EA/02/2011 by observing as under:-

"Hence we allow the Application and direct that the Insurance Company which has deposited the TDS did so at his own peril particularly when he was not authorised to deduct the same from the amount of compensation. Hence we allow the Application and direct the JDR to pay the amount to the tune of Rs.1,25,631/- (Rupees One Lakh Twenty Five Thousand Six Hundred Thirty One only) to the decree holder/applicant herein."

Feeling aggrieved by the Order dated 20.12.2017 passed by the State Commission, the Decree Holder has filed the present Appeal Execution before this Commission with following Prayer:-"i) Allow/Grant the appeal and set aside/quashed the impugned order dated 20.12.2017 passed by the Hon'ble State Commission, in interlocutory Application No. IA/142/2017 in Execution Application No. EA/2/2011 and also dismiss the same;

ii) condone the delay of 50 days in filing the appeal;

iii) stay the operation of the impugned order dated 20.12.2017 till the disposal of this appeal; iv) pass any further order/orders which this Hon'ble Commission may deem fit and proper."

I have heard Mr. S.K. Ray, learned Counsel for the Appellant. The Respondent/Decree Holder has filed his written submission. I have perused the averments made in the Appeal Execution and the written submissions filed on behalf of both the Parties.

Mr. S.K. Ray, learned Counsel for the Appellant/Judgment Debtor submitted that the Appellant/Judgment Debtor Insurance Company has deducting 1,25,631/- towards TDS from the interest of 6,28,157/- payable on Compensation of 19,48,087/-, as per provisions of Sections 194A(3)(ix) and 145A(b) of the Income Tax Act, 1961. He further submitted that the Order dated 20.12.2017 passed by the State Commission is illegal and arbitrary and it should be set aside. It was further submitted that they are ready to issue Form 16 A to the Decree Holder/Complainant in order to enable him to reclaim the refund of the TDS amount from the Income Tax Department as has been submitted by the Decree Holder/Complainant during the hearing on 28.08.2018.

Respondent/Decree Holder filed its written submissions in which, without prejudice to his rights and contention, a direction was sought to the Appellant/Judgment Debtor Insurance Company to issue Form 16 A to him being the proof of submission of TDS of 1,25,631/- with the Tax Authority concerned, so as to enable him to reclaim such amount from the Tax Authority.

I have given thoughtful consideration to the various pleas raised by the learned Counsel for the Appellant/Judgment Debtor and the written arguments filed on behalf of the Respondent/Decree Holder.

The Hon'ble Supreme Court vide Order dated 05.06.2020 passed in Civil Appeal No. 2504/2020 entitled "Prateek Infra Projects India Pvt. Ltd. vs. Nidhi Mittal and Anr." has held as under:-

"We, however, vacate the direction of the NCDRC restraining the builder from deducting tax at source, which shall be in accordance with law."

Similar view was taken by the Hon'ble Supreme Court in Order dated 11.01.2021 passed in Civil Appeal No. 62/2021 entitled "M/s. Nexgen Infracon Pvt. Ltd. vs. Manish Kumar Sinha & Anr." and Order dated 01.10.2021 passed in Civil Appeal No. 5109/2021 entitled "M/s. Nexgen Infracon Pvt. Ltd. vs. Sanjay Dhall".

In view of the Orders passed by the Hon'ble Supreme Court in Prateek Infra Projects India Pvt. Ltd. (supra) and M/s. Nexgen Infracon Pvt. Ltd. (supra), the impugned Order dated

20.12.2017 passed by the State Commission directing the Appellant/Judgment Debtor to pay 1,25,631/-, which it had deducted towards 'Tax Deducted at Source' from the interest on compensation, is set aside.

However, the Appellant/Judgment Debtor Insurance Company is directed to issue Form 16 A to the Decree Holder/Complainant in order to enable him to reclaim the refund of the TDS amount from the Income Tax Department.

The Appeal Execution is allowed in above terms.

Pending Application, if any, also stands disposed off.