STATE OF RAJASTHAN vs ORIENTAL INSURANCE CO. LTD.

THE present complaint was filed by the Small Saving Department of State Government of Rajasthan, Ministry of Finance, Jaipur. An agreement was entered into between the Government of Rajasthan, the complainant and M/s. Oriental Insurance Company (in short ''OIC'') on 19.1.1998 for giving Group Public Personal Accident Insurance Benefits to investors under the ''Swarn Jayanti Savings Insurance Scheme'' for a period of 5 years, whereby an investment of Rs. 5000 or multiples thereof would be insured for 10 times the same. This beneficial scheme was made applicable during the period from 19.1.1998 to 28.2.1998. In this regard, the premium for the policy under the Scheme was fixed at the rate of Rs. 6.95. per Rs. 25,000. The period for insurance was from 1.3.1998 to 28.2.2003. As per the agreement, the Insurance Company was to be paid insurance premium of Rs. 75 lakh by the complainant. It was also stipulated in the agreement that on the basis of the insured persons and the insured amount; the aforesaid amount was to be increased or decreased. The opposite party sent its letter dated 31.3.1998 informing the complainant that the earlier paid provisional premium amount of Rs. 75 lakh would be less. Keeping in view that there should be no violation of Section 64VB of the Insurance Act, it was decided that a sum of Rs. 25 lakh would be paid on 31.3.1998. Thereafter, a sum of Rs. 12.50 lakh, the total being Rs. 87.50 lakh, was paid to the opposite party. It was also agreed that 5% of the premium was to be disbursed by the Insurance Company for publicity and communication through small savings directorate and under the advice of the Director, Small Savings. The insurance certificates were to be issued to the investors by 15th March, 1998 and to the agent by 31.3.1998. On 23.4.1998, the Insurance Company informed that they were not receiving the complete list of insurance certificates from the Districts. Accordingly, the directions were issued for complete list. The directions were issued on 18.4.1998 and again on 5.6.1998 by the complainant/department. The department was informed that all the information was furnished. The complainant/department vide letter dated 10.1.1998 asked the Insurance Company to inform the final premium and deposit 5% of the amount for publicity and dissemination. However, the complainant did not give the response. Reminders were also issued on 13.1.1999 and 11.2.1999. Several personal meetings were also held. Ultimately, vide letter dated 4.3.1999 the Insurance Company informed that on the basis of the proposal letters received from the districts, they had prepared a districtwise list. However, that list was not sent to the department. Reminders were sent but they did not ring the bell. Finally, last effort was made on 10.5.2000 asking the Districts to have its record reconciled with the record of Insurance Company for this purpose and the date fixed was 25 -26.5.2000. Another letter was also written on 11.5.2000. The complainant sent letter dated 15.7.2000 but the opposite party did not give the details of final payment of the premium.

IT is transpired that the opposite party was liable to pay back the balance premium in the sum of Rs. 55,02,600. The letter sent by the complainant did not produce the desired result. Consequently, the present complaint was filed with the following prayers on 3.8.2001: (a) Pass an order directing the respondent to pay to the claim petitioner a sum of Rs. 55,02,600 which is the balance advance premium and Rs. 1,62,370 which amount spent on publicity of the aforesaid scheme as per the condition No. 10 of the agreement.

(b) Direct the payment of interest at the rate of 24% on the said amount with effect form 1.4.1998 as the Directorate of Small Savings, Jaipur, was required by the Insurance Company to make excessive and unwarranted, advance payments to the Insurance Company.

(a) Award damages to the petitioner for the loss and injury caused to the State.....

(b) Pass such other and further orders as this Hon''ble Court may deem fit and proper in the facts and circumstances of the case.

The Oriental Insurance Company has contested this case.

THE defendant has listed the following defences in support of its case. It is contended that this complaint is not maintainable, as per Clause 5 of the Agreement under the heading ''Provisions of the Policy''. Clause 5 reads as follows: If any dispute arises regarding payment against the policy the dispute will be settled by arbitrator under Indian Arbitration Act, 1940. It is evidently agreed that if the company does not accept the claim or dispute claims, then such types of disputes will not be sent to arbitrator under the aforesaid provision. It is agreed and it is declared that the decision of the arbitrator will be prior to lodge the legal case in Court or elsewhere for loss or damage.

Further, this complaint does not pertain to a consumer dispute as contemplated under the Consumer Protection Act, 1986. The amount in question is yet to be ascertained. The case is premature. The complainant has not submitted the complete data to insurance policy as provided under the Scheme. It is necessary to examine and re -consider the voluminous data of the districts of the State of Rajasthan to be furnished by the complainant or ascertain total amount of premium. All the allegations have been denied. Both the parties have led the evidence by filing various documents which will be discussed subsequently.

THE key argument urged by the learned Counsel for the opposite party -Insurance Company was that in view of Clause 5 of the Agreement this dispute does not fall with the realm of this Commission. It was argued that Clause 5 clearly, specifically and unequivocally mentions that, "It is agreed and it is declared that the decision of the arbitrator will be prior to lodge the legal case in Court or elsewhere for loss or damage." She submitted that it is, therefore, condition precedent that first of all the complainant or the opposite party, whatsoever the case may be, will invoke the jurisdiction of the arbitrator. Either of them can file this case before the civil Court or Tribunals afterwards. She did not raise any other argument. The argument advanced by the learned Counsel for the opposite party is lame of strength. It is well settled that agreement made by the parties does not put a crimp to the jurisdiction of Court or Tribunal. Section 3 of the Consumer Protection Act, 1986 clearly lays down: 3. Act not in derogation of any other law. The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

IN National Seeds Corporation Limited v. M. Madhusudhan Reddy and Another, II : (2012) SLT 51 : I (2012) CPJ 1 (SC) : (2012) 2 SCC 506, paras 64, 67, 68, 69 and 70 are significant. Out of these, paras 66, 68, 69, 70 are noted as under: 66. The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the grower opts or the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996 Act. Moreover, the plain language of Section 3 of the Consumer Protection Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force.

In Skypak Couriers Limited v. Tata Chemicals Limited, : (2000) 5 SCC 294, this Court observed (SCC p. 296 para 2)

2......Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to a certain deficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal. Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force.

In Trans Mediterranean Airways v. Universal Exports, : (2011) 10 SCC 316, it was observed - -

In our view, the protection provided under the CP Act to consumers is in addition to the remedies available under any other statute. It does not extinguish the remedies under another statute but provides an additional or alternative remedy.

The aforementioned judgments present a clear answer to the appellant''s challenge to the impugned orders on the ground that the growers had not availed the remedy of arbitration.

CONSEQUENTLY , this complaint is maintainable before this Commission. The learned Counsel for the opposite party could find nothing to cavil about. She did not touch the merits of this case. However, we have perused the written synopsis made by learned Counsel for the opposite party. It was contended that as a matter of fact, the opposite party quoted the low premium on the assumption made during the negotiations between the parties that a total insurance cover to be provided by the opposite party would be in the range of Rs. 3000 crores. It is alleged that the complainant could attract investments to the tune of Rs. 133 crores only i.e. not within 50% of the target amount of Rs. 3000 crores. The policy in question was issued for a sum insured of Rs. 1798 crores. It was subsequently increased to Rs. 2697.84 crores then to Rs. 3147.48 crores because of the high expectation of huge investments. The complainant failed to furnish authentic data about the insurance certificates issued by the complainant to the depositors under the different Small Savings Scheme. Mr. S.K. Bakliwal, Chartered Accountant was engaged for this purpose at the instance of the Commission. They were to determine the amount for insurance have been declared by the complainant during the policy period. Negotiations for compromise had taken place but it could not ring the bell.

THESE submissions made by the opposite party itself go to show that they have charged the premium on the higher side. On behalf of the complainant it was contended that it is entitled to residue premium in the sum of Rs. 55,02,600 plus interest @ 24%. However, she contended that in case premium as per the report dated 12.5.2003 is granted to the complainant, it would feel satisfied. The report of Shri S.K. Bakliwal and Company has been placed on record. Its relevant portion runs as follows: (i) The insured could not produce the complete record of Jaipur and Jaipur District therefore, we have prepared the details as enclosed herewith as far as possible from the record produced before us.

(ii) The details of coverage of risk only of those investors who have demanded for getting coverage under the policy and the investors those not approached to insured have not been covered under the policy.

(iii) The coverage of policy taken in accordance to policy terms and conditions.

(iv) Wherever we found errors in the issuance of sum insured either for higher amount or for lower amount we have rectified the same with the consent of insured and have taken effect of the same in the details enclosed herewith and also given the errors wherever found necessary to point out the same, in confirmation of insured.

After above consideration we have determined total amount for which the insured should have declared during the period under the policy in reference is of Rs. 13,32,30,32,100.

THE affidavit of Mr. Rajendra Kumar Modani, Assistant Accounts Officer, Directorate of Small Savings, Government of Rajasthan, Jaipur clearly states that ''As per the premium rate of Rs. 6.95 per Rs. 25,000 the due premium on sum assured Rs. 13,32,30,32,100 amounts to Rs. 37,03,803 only and Rs. 5046.197 is refundable for advanced amount of Rs. 87.50 lacs. We see no reason to discard the report given by an independent Surveyor, namely, Mr. S.K. Bakliwal, Chartered Accountants/Surveyor/Loss Assessor. His report appears to be guileless. None of the parties gave reason to discard the same. It is surprising to note that the opposite party did not make an attempt to return the amount in dispute or part of it. It is withholding the same for about 12 to 15 years despite the efforts made by this Commission time and again to settle the dispute. The law hath not been dead, though it has slept. Again, ''Law is the backbone which keeps man erect''.

UNDER the circumstances, we hereby direct the opposite party to pay a sum of Rs. 50,46,197 from the advance amount of Rs. 87.50 lakh. The opposite party is also liable to pay interest @ 9% p.a. on the amount of Rs. 50,46,197 from the date of its deposit with the opposite party till realisation. We also award litigation charges, harassment and trouble caused to the officers of the complainant in the sum of Rs. 1 lakh which be paid within 90 days from the date of this order. The complaint stands disposed of accordingly.