New India Road Carrier vs NATIONAL INSURANCE COMPANY LTD

BY the impugned order the State Consumer Disputes Redressal Commission, Uttar Pradesh (for short, the State Commission) has partly allowed the complaint No. 146 of 2001 filed by the complainant/appellant and directed the respondents to pay a sum of Rs. 4,50,000 within two months failing which to pay the awarded amount along with interest @ 9% p.a. as against the claimed amount of Rs. 6,25,000 being the value of the vehicle at the time of the theft of the vehicle. Respondents accepted the order of the State Commission and paid the sum of Rs. 4,50,000 within two months of the passing of the order. Complainant/appellant has filed the present appeal seeking enhancement of the value of the insured vehicle, payment of interest and compensation.

APPELLANT had purchased a drive-away chassis of Tata Diesel truck bearing engine No. 697D23GTO 77 8431, Chassis No. 360324 GTO 724808 at a price of Rs. 5,00,730 from M/s. Commercial Automobiles, Jabalpur. Appellant got the body fabricated on the chassis at the cost of Rs. 1,56,3007- on September 25, 1996. The total cost of the vehicle came to Rs. 6,57,030. The above said truck was got registered with RTO, Jabalpur and was assigned registration No. MP-20/G-4238. The appellant got the said truck insured from the respondents for insurance coverage of Rs. 6,25,000 for the period from August 5, 1997 to August 4, 1998 on payment of the premium demanded. During the currency of the policy the truck went missing from March 17, 1999 with its driver and cleaner from Bihar where it had gone for delivery of goods. Immediately on coming to know that the truck in question had gone missing, appellant went to Bihar and reported the incident on March 29, 1998 to the police station at Ahiyapur, Muzaffarpur, Bihar under whose jurisdiction the incident had occurred. After return from Bihar the appellant informed respondent No. 1 on April 1, 1998 about the loss of the vehicle in writing. Respondents appointed a surveyor/investigator who after visiting the residence of the driver and cleaner of the vehicle and after making inquiries from the relatives of the driver and cleaner of the vehicle concluded that the vehicle was intercepted at some point on return journey and looted after liquidating the driver and the cleaner. The said surveyor assessed the price of the vehicle at Rs. 3,50,000 for the purpose of insurance claim which was enhanced to Rs. 4,50,000 in second survey conducted by him. As the respondents did not settle the claim within a reasonable time, appellant filed the complaint in the State Commission on Sept. 18, 2001 seeking payment of the insured sum of the vehicle and various other reliefs arising out of the deficiency in services rendered by the respondents.

RESPONDENTS , on being served, entered appearance and filed written statement taking the stand that the surveyor, initially appointed by the respondent had assessed the value of the missing truck at Rs. 3,50,000. In the second report, the value of the truck was revised to Rs. 4,50,000. That the complainant was asked to submit the driving licence of the driver and final police report duly accepted by the Court. Appellant failed to produce the requisite documents because of which claim was not settled.

AFTER appraising the pleadings and the evidence led by the parties, the State Commission partly allowed the complaint and directed the respondents to pay Rs. 4,50,000 to the appellant within two months failing which interest @ 9% p.a. shall be payable. No relief was granted towards compensation or cost. Respondents accepted the order of the State Commission and paid the sum of. Rs. 4,50,000 within two months of the passing of the order. Complainant has filed the present appeal. Learned Counsel appearing for the appellant contends that the appellant had got his vehicle insured for Rs. 6,25,000 after paying the premium of the insured value of Rs. 6,25,000. That after having charged the premium on the said value, respondents were not justified in taking the value of the vehicle to be less than the insured sum; that the State Commission has also erred in not awarding interest on the awarded amount. As against this, the Counsel for the respondent supported the order of the State Commission and contended that the appellant was entitled to market value of the vehicle as on the date of theft and not on the insured declared value of the vehicle. That the respondents had offered to make the payment of Rs. 4,50,000 to the appellant on March 28, 2000. Since the appellant did not accept the amount, the State Commission has rightly declined to award the interest. Counsel for the parties have been heard at length.

THE State Commission accepted the report of the surveyor awarding the compensation of Rs. 4,50,000 after taking into consideration the depreciated value as has been assessed by the Surveyor. The Hon ''ble Supreme Court of India in Dharamendra Goel v. Oriental Insurance Co. Ltd., III (2008) CPJ 63 (SC), has held that after having accepted the value of the particular insured good and receiving the premium for the same, the Insurance Company cannot disown that very figure and defray inadequate compensation on one pretext or the other when called upon to pay the compensation; that ''take it or leave it '' attitude was clearly unwarranted not only as being bad in law but also ethically indefensible. Relevant observations of the Supreme Court are as under: "It must be borne in mind that Section 146 of the Motor Vehicles Act, 1988 casts an obligation on the owner of a vehicle to take out an insurance policy as provided under Chapter XI of the Act and any vehicle driven without taking such a policy invites a punishment under Section 196 thereof. It is, therefore, obvious that in the light of this stringent provision and being in a dominant position the insurance companies often act in an unreasonable manner and after having accepted the value of a particular insured good disown that very figure on one pretext or the other when they are called upon to pay compensation. This ''take it or leave it '' attitude is clearly unwarranted not only as being bad in law but ethically indefensible. We are also unable to accept the submission that it was for the appellant to produce evidence to prove that the surveyor ''s report was on the lower side in the light of the fact that a price had already been put on the vehicle by the company itself at the time of renewal of the policy. We, accordingly, hold that in these circumstances, the Company was bound by the value put on the vehicle while renewing the policy on 13.2.2002. "

IN the present case, appellant had got his vehicle insured for a sum of Rs. 6,25,000 on August 5, 1997. The vehicle went missing on March 17, 1998 i.e. after a period of seven months of the taking of the policy. After having accepted the value of the vehicle at Rs. 6,25,000 on August 5, 1998 the respondent could not disown this figure and reduce the value of the vehicle to Rs. 4,50,000 when called upon to pay the compensation. As per observations made by the Hon ''ble Supreme Court, this attitude of the respondent was unwarranted being bad in law and ethically indefensible. However, respondent would be entitled to deduct 10% towards depreciation of the vehicle. After deducting 10% towards depreciation the value of the vehicle as on the date of theft would come to Rs. 5,62,500 (Rs. 6,25,000 - Rs. 62,500) which is rounded off to Rs. 5,60,000. The order of the State Commission is modified and the amount of compensation is enhanced to Rs. 5,60,000 instead of Rs. 4,50,000. The State Commission did not award interest on the ground that the appellant had failed to accept the sum of Rs. 4,50,000 offered by the respondent on March 28, 2000. Counsel for the appellant contends that the State Commission, has erred in holding that the respondent had made an offer to pay Rs. 4,50,000 on March 28, 2000. That no such offer was made. We find substance in the submission. The letter dated March 28, 2000 reads as under: "We like to inform you in reference to your letter dated 4.2.2000 that an oversight mistake has been found in the valuation report of the Surveyor and the final valuation has been made at Rs. 4,50,000 for the vehicle at the time of theft. You are, therefore, requested to provide us the under-mentioned documents to enable us to proceed further in the matter: 1. Copy of Driving Licence of the driver. 2. Copy of Police Final Report duly accepted by the Court. "

A perusal of the letter would show that the respondents had not offered to pay Rs. 4,50,000. By this letter, respondent requested the appellant to give the driving licence of the driver and final report of the police duly accepted by the Court to enable it to proceed further. This was not an offer to pay Rs. 4,50,000 and in any case there was no refusal on the part of the appellant to accept the amount. Thus, the State Commission has erred in not awarding the interest on the amount awarded. The appellant was deprived of the use of his money till the passing of the order of the State Commission for which the appellant was entitled to get the interest. The Hon ''ble Supreme Court of India in Alok Shanker Pandey v. Union of India and Ors., II (2007) CPJ 3 (SC)=III (2007) SLT 27=2007 (3) SCC 545, has held that interest is not a penalty or a punishment. Interest is the normal accretion to the capital and the person deprived of the use of his money is entitled to the interest on the principal amount. The relevant observations of the Supreme Court are as under: "It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence, equity demands that A should not only pay back the principal amount but also the interest thereon to B. "

RESPECTFULLY following the view taken by the Supreme Court in Dharamendra Goel ''s case (supra) and Alok Shanker Pandey ''s case (supra), we allow this appeal and direct the respondents to pay the sum of Rs. 5,60,000 to the appellant along with interest @ 9% p.a. from the date of filing of the complaint till realization. Since respondents have already paid the sum of Rs. 4,50,000 to the appellant they are directed to pay interest @ 9% p.a. on the sum of Rs. 4,50,000 from the date of filing of the complaint till the disbursal of the said amount and to pay the balance amount of Rs. 1,10,000 along with interest @ 9% p.a. from the date of filing of complaint till realization within a period of eight weeks from the date of receipt of copy of this order. Appeal is partly allowed and disposed of in above terms with no order as to costs. Appeal partly allowed.