PACWELL INDUSTRIES vs National Insurance Co. Ltd.

SHORTLY put and shorn of details Commission during the proceedings has impleaded JK Bank, Branch Office Zainakote as complainant No. 2. Objections were sought from the parties. Both parties i.e., complainant No. 1 M/s. Pacwell Industries and National Insurance Co. Ltd. raised no objection for impleading JK Bank as party so Jammu and Kashmir Bank, Branch Office Zainakote is now as complainant No. 2.

THE case of complainant is that he was Managing Partner of M/s. Pacwell Industries (Small Scale Registered Unit) who was carrying the business of manufacturing of corrugated Boxes with the financial aid and assistance of JK Bank, Branch Office Zainakote and State Financial Corporation. Complainant No. 1 insured his movable and immovable property consisting of: (a) Plant and machinery for Rs. 13,00,000.00 under Policy No. 402007/3100556/90 with effect from 10.9.1990 to 9.9.1991. (b) Building for Rs. 10,00,000.00 under Policy No. 402007/3100226/90 with effect from 12.6.1990 to 11.6.1991. (c) Stocks for Rs. 20,00,000.00 under Policy No. 402007/3101072/90 dated 27.12.1990 to 26.12.1991

In the evening of 10.3.1991 fire was noticed in the insured building which completely destroyed the whole building with stocks, plant and machinery. FIR was lodged. O.P. engaged M/s. A.K. Govil and Associates, Delhi based Surveyor to assess the loss. Complainant submitted a claim before the O.P. for Rs. 38,02,112.00. The Surveyor submitted a report and assessed the loss at Rs. 31,56,616.00 vide his report dated 20.7.1992. After the report of the Surveyor it is admitted that Rs. 8,40,620.00 were paid to the complainant through State Financial Corporation on 24.8.193 vide Cheque No. 1157286. Rest of the amount was not paid to the complainant who was avoided and went from pillar to post for the payment. In the meantime the complainant was asked to pay further premium of Rs. 2,043/- vide Annexure N as reinstatement premium and therefore vide letter No. 495 dated 27.8.1998 Annexure-O he was directed to deposit Rs. 8,172.00 again as re-instatement premium which was deposited by the complainant.

COMPLAINANT was informed by the O.P. that balance claim for Rs. 14,31,544.00 was approved. Parties reached to a settlement and vide consent letter dated 23.10.1996 complainant gave a consent to the O.P. for final settlement of Rs. 23,61,963.00 only in full and final settlement of the whole claim. There is no dispute regarding the insurance policies. No controversy is between the parties regarding the loss and damage caused to the unit of complainant. The only dispute which arises is that the stand of O.P. in written version is that the complainant gave consent for Rs. 23,61,963.00 in full and final settlement out of which Rs. 8,40,620.00 were already paid to him through State Financial Corporation, Rs. 14,31,544.00 remained unpaid amount.

THE case of the O.P. in their written version is that virtually O.P. approved only Rs. 14,31,544.00 though according to settlement Rs. 15,21,343.00 was balance amount. Two cheques were issued in the name of JK Bank, Branch Office Zainakote for Rs. 11,05,581.00 under cheque No. 372508 and 2nd cheque in the name of State Financial Corporation, Srinagar for an amount of Rs. 3,20,550/- on the same date i.e., 31.8.1998. O.P. claims that both the cheques were handed over in person to Tariq Ahmed Vaida, Managing Partner through Z.A. Farooqi who was at that time Branch Incharge of the O.P. The stand of complainant is that according to his consent letter Rs. 15,21,343.00 were balanced amount. For this amount no cheques were paid to the complainant. Secondly, the stand of the complainant is that consent was given on the basis that the amount would be paid to him then and there. O.P. did not implement the consent letter so they are bound to pay the amount assessed by the Surveyor which is Rs. 31,56,616.00 Now the question before us is as to whether O.P. is liable to pay the whole amount of Rs. 31,56,616.00 as assessed by the Surveyor to the complainant minus Rs. 8,40,620.00 or the O.P. is bound to pay the consent amount of Rs. 23,61,963.00 minus Rs. 8,40,620.00. The 2nd point to be decided by us is whether there is no deficiency of service on the part of the O.P. because O.P. has paid the balance amount on the basis of consent letter vide two cheques issued for Rs. 11,05,581.00 and Rs. 3,20,550.00. We have to see whether these two cheques have been delivered to the complainant or not.

REGARDING the first point learned Counsel Mr. Reshi has vehemently argued that complainant is not bound by the Consent Letter because the Consent Letter was executed on 23.10.1996 but that was not implemented. O.P. never paid the balance amount. He cannot on the one hand rely on the Consent Letter and on the other hand avoid to make payment. Argument of the learned Counsel for the O.P. is that the complainant has already implemented the Consent Letter by sending the two discharge vouchers so he cannot claim the amount assessed by the Surveyor in his preliminary report.

WE have considered the rival arguments. WE agree with the learned Counsel for O.P. that once the Consent Letter is executed it should be made the basis for compensating through indemnity award, if any. It is so because the complainant cannot give a consent to an amount if the loss is much more than that amount. Complainant has categorically admitted the signatures on the Consent Letter and has admitted that he gave consent for the payment of Rs. 23,61,963.00 if the amount has not been paid to him in time immediately after the execution of consent letter he can well be compensated by allowing him due interest on the awarded amount. Now the question is as to whether two cheques for Rs. 11,05,581.00 and Rs. 3,20,550.00 respectively have been delivered on 31.8.1998 to the complainant. O.P. Counsel Mrs. Shamima Mir is categorical in this behalf that the O.P. delivered the two cheques through Z.A. Farooqi, Branch Incharge to Tariq Ahmed Vaida representative of the complainant. Admittedly no receipts of Tariq Ahmed Vaida regarding the two cheques have been placed on the record. Instead two discharged vouchers which complainant has signed have been placed on record. In these two vouchers dated 31.8.1998 complainant has shown full satisfaction in discharge of all claims upon receiving the amount of Rs. 11,05,581.00 and Rs. 3,20,550.00 The stand of complainant is that these two vouchers which have been got signed by the complainant on blank paper on the assurance that on signing of these discharge vouchers, cheques will be issued to him but were neither issued nor delivered to the complainant. The stand of other side is that O.P. issued the cheques under Nos. 372508 and 372509 for Rs. 11,05,581.00 and Rs. 3,20,550.00 on 31.8.1998 and delivered it to Z.A. Farooqi the then Branch Incharge for handing it over to the complainant.

We have considered the whole record and have given thoughtful consideration to the arguments of the learned Counsel for the parties. Learned Counsel for the complainant has invited our attention to a letter dated 11.11.1998 written by same person namely Z.A. Farooqi, Branch Incharge to the complainant which is reproduced as under: "As already conveyed the Competent authorities have already credited approval for Rs. 14,31,544/-. In this connection you are hereby requested to please submit last vouchers already issued duly discharged under seal and signatures of the financier so as to enable us to issue the cheques.

THIS is clear contradiction of the stand taken by the O.P. in written version that two cheques were delivered to the complainant on 31.8.1998. Letter dated 11.11.1998 is crystal clear to show that till 11.11.1998 two cheques were not delivered to the complainant but Z.A. Farooqi assured to deliver these cheques in future. THIS is substantiated by the statement of Z.A. Farooqi, Branch Manager. In the cross examination the Officer has reiterated that he has given two cheques to the complainant on 31.8.1998 against proper receipt but the receipts have not been filed. He has categorically admitted the letter dated 11.11.1998 in which it has been admitted by him that cheques were to be issued and had not been delivered till that date. He has shown ignorance as to whether the cheques which he claims to have been paid were debited or credited in the account of O.P. He has admitted the signatures on the letter dated 11.11.1998 and has categorically admitted that he has not issued cheques on 31.8.1998 because the last vouchers were not signed by the insured for the financial institutions and at the same time he has again said that he has issued the cheques against last vouchers dated 31.8.1998. The statement is full of contradictions. From this statement it is clear that the letter dated 11.11.1998 is admitted. It is crystal clear that the two cheques have not been delivered at all to the complainant on 31.8.1998. It appears that the cheques have been retained by the officer himself and the stand of the company also is clear on this point that they issued the cheques and handed over to Z.A. Farooqi. Z.A. Farooqi knows better for what reasons he has retained the cheques. Had the cheques virtually been issued those would have been handed over to State Financial Corporation and the Jammu and Kashmir Bank directly as it is established that the first cheque for Rs. 8,40,620.00 was directly issued in the name of State Financial Corporation and was sent to them directly. There was no reason as to hand over the cheques to the complainant personally. Ordinarily cheques should have been sent to JK Bank. Branch Office Zainakot and State Financial Corporation. Secondly, had the cheques been really handed over to the complainant there was no cause for the complainant not to get it credited in the account of financiers. No benefit could have been achieved by the complainant in retaining the cheques. Learned Counsel for O.P. has contended as to why the complainant has not informed the higher authorities for not receiving the cheques. It is so because in his letter dated 11.11.1998, the Incharge Branch Manager has himself accepted that cheques were not handed over till that time but were to be issued in future. It is established that two cheques were not delivered. The stand of the O.P. is that the cheques were signed, issued and handed over to Z.A. Farooqi which clearly reveals that Z.A. Farooqi was bargaining with the complainant and has retained the cheques, and not paid to the complainant nor to the beneficiaries. If by the neglect act of the Officer Company loss is caused to the complainant for that loss it is the employer who is responsible for the acts of his employees. If an employee causes any harassment and is negligent in his act it is the employer who is responsible for his acts vis-a-vis the customer.

ANOTHER plea raised by the Counsel for the complainant is that he gave consent for Rs. 23,61,963.00 but the company had approved only Rs. 22,72,164.00. Complainant is not bound by this approval for lesser amount. We have considered this point. Surveyor has approved the amounts at Rs. 31,56,616.00 but the consent was given by the complainant for Rs. 23,61,963.00 only. On the other hand O.P. has cancelled the consent letter and has not relied on it and O.P. has further deducted from this consented amount also which cannot be allowed. They are bound by the consent amount which is Rs. 23,61,963.00 out of which Rs. 8,40,620.00 has been paid to the complainant through State Financial Corporation remaining Rs. 15,21,343.00 is yet to be paid. This amount of Rs. 15,21,343.00 be paid to the complainant with the same rate of interest of 14% from 1.11.1996 which has been charged by the Bank to the complainant, through the financiers i.e., JK Bank and State Financial Corporation. It is so because the consent letter has been given on 23.10.1996. It is established that the survey report was filed on 20.7.1992 since that period complainant was tossed from one table to another for the payment. Not only this even after giving the consent on 23.10.1996 the payment was not made to him. He had started the unit for which he was very successful but he was ruined by not making the payment in time by the O.P. For mental harassment we direct the O.P. to pay Rs. 50,000.00 as compensation which shall be paid to the complainant directly by the company and this amount shall be recovered from the salary of Z.A. Farooqi who was the then Branch incharge of the O.P. It is so because the functioning of the company had been deteriorated to the extent that cheques though issued by the company were retained by the said officer for bargaining purposes. This is a big concern for the consumers; we hope the Chairman of the company will see that the working of the Insurance Company is improved in future.

BEFORE parting with the judgment we may note here that in pursuance of our directions the O.P. has deposited the amount of admitted liability of Rs. 14,26,131.00 before this Commission in the form of two cheques for the amount of Rs. 11,05,581.00 and Rs. 3,20,550.00 respectively on 16.5.2002 subject to the surrender of two previous cheques allegedly issued in the name of complainant. These cheques for admitted liability were deposited by the O.P. in the name of Commission conditionally and the Commission deposited the amount in the bank and did not hand over to the complainant because point of delivery of previous cheques was in dispute. Now this point has been decided and it is held that previous cheques were not delivered to the complainant so the Commission directed the O.P. to give interest @ 14% on this amount also. The interest which the Commission has gained on this amount shall be returned to the O.P.

A copy of this judgment be sent to the Chairman, National Insurance Company. The whole amount shall be paid to the complainant within a period of six weeks from today. Complaint disposed of.