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2001 DIGILAW 70 (UTT)

National Insurance Co. Ltd. v. Ram Swaroop Gupta

2001-05-11

D.D.BAHUGUNA, K.C.BHARGAVA

body2001
JUDGMENT K. C. Bhargava This is an appeal against the judgment and order dated 19.5.2000 passed by District Consumer Forum II, Lucknow in complaint case No. 731/1999. 2. The facts of the case stated in brief are that the complainant took a loan of Rs.-16,0001- on 26.8.1996 from. opposite party No. 2 Oriental Bank of Commerce. He purchased a she buffalo on the same date and got it insured from National Insurance Company Limited, opposite party No. 1 on 12.12.1997. On 27.8.1996 the condition of the she buffalo W,-,s examined by the Veterinary doctor and found it to be free from any disease and in good condition. The she buffalo suddenly fell ill in April 1998 and inspite of best possible treatment, she died on 24.6.1998. The complainant on the same day informed the insurance company and made a claim. 3. The opposite party No.2 bank was also informed on 3.5.1999. The complainant has been paid only a sum of Rs. 8,0001- as cost of the she buffalo instead of Rs. 16,000/-. The complainant has prayed for recovery of balance amount alongwith 24% per annum interest from the insurance company from 3.5.1999. 4. The opposite party No. 2 has alleged in the written version that a sum of Rs. 16,000/- was given on loan for purchase of the she buffalo which was purchased. Opposite party No. J insurance company in its written statement alleged that the complainant did not get his she buffalo treated properly and she fell ill. The cost of the she buffalo falls after the capacity to give milk is reduced. It is further alleged that the complainant has not furnished particuilars of treatment which was given to the she buffalo. The amount due has been paid and there is no deficiency in service. 5. The learned District Forum, after considering the case of the parties and penning the evidence on record, came I to-the conclusion that the deficiency service was on behalf of the insurance company and hence it directed for payment of Rs. 8,000/- alongwith interest at the rate of 18% per annum payable from 24.6.1998 to 3.5.1999. A cost of Rs. 3,000/- was also allowed. It was I further directed that if the payment is not made within three months, then the interest shall run at the rate of 24% per annum. 6. 8,000/- alongwith interest at the rate of 18% per annum payable from 24.6.1998 to 3.5.1999. A cost of Rs. 3,000/- was also allowed. It was I further directed that if the payment is not made within three months, then the interest shall run at the rate of 24% per annum. 6. Aggrieved against the order of the learned District Forum the insurance company has come in appeal and has challenged the correctness of the order passed by the District Forum. 7. Learned Counsel for the appellant has argued that the she buffalo died on account of septicaemia. According to the learned counsel the she buffalo was not treated at all by the complainant in order to obtain the insurance amount from the insurance company in the event of death of the she-buffalo. A perusal of file will go to show that the she buffalo died on 24.6.1998 for which information was sent to the insurance company by the complainant. The insurance company appointed a surveyor whose report is dated 29.9.1998. The sum insured was Rs. 16,000/- and the she buffalo had died during the continuance of the policy. The surveyor has mentioned that he has taken statement of Sri Ram Swaroop Gupta, the complainant, who has stated that after two births the she buffalo became ill. She was got treated by Dr V. K. Srivastava, Veterinary Surgeon but she died in the night of 23/ 24 June 1998. The post-mortem examination was also done. The surveyor has also tried to meet Dr. V. K. Srivastava, but he could meet him with great difficulty. The doctor told him that the complainant's she buffalo had developed prolapsed recta which was not treated. Hence it died on account of prolapsed septicaemia. It has further been mentioned that when prolapsed recta is not treated, then it developed illtu septicaemia and the death took place. It has further been mentioned that the complainant intentionally did not get the treatment done. According to him, the doctor refused to give anything in writing. Hence we find that the report of the surveyor is not supported by any report of the doctor or his statement. 8. A claim form was given by the insurance company to the complainant which was got duly filled and was submitted to the insurance company. According to him, the doctor refused to give anything in writing. Hence we find that the report of the surveyor is not supported by any report of the doctor or his statement. 8. A claim form was given by the insurance company to the complainant which was got duly filled and was submitted to the insurance company. It has been mentioned in it that the animal was seen about 2 months back and the notice, was sent to Veterinary doctor just after the disease took place. It has further been mentioned that on several times the doctor attended the she buffalo. It has further been mentioned that the death of the she-buffalo was due to septicaemia on account of proposed recta. It has also been mentioned that the she buffalo was in a milking condition. It has also been mentioned that the she buffalo was treated by the local veterinary staff: Thus this document clearly goes to show that the complainant had contacted the veterinary hospital on the onset of the disease about two months before the death and several visits were made to the veterinary doctor for treatment of the she buffalo. There is one valuation certificate which has been completed by the veterinary doctor. This also says that the cause of the death of the she buffalo is septicaemia due to proposed recta and yield of the milk was 10 lit, a day and two months before the death she delivered a baby. At the time of death, the yield of milk was 2 to 3 lit. per day. About her health, it is written that she was very well built during early call wing and pregnancy but during illness she has gone weak. This clearly goes to show that the she buffalo was in a very sound condition before she fell ill. The yield of milk was also 10 lit. a day. When she buffalo fell ill, it is natural that she will be weak and will give less quantity of milk. Thus we find from this document that the condition of the she buffalo was very good but on account of development of disease she became weak and ultimately died. There is one more document on record dated 8.12.1998 which was written by Dr. V. K. Srivastava, to the bank. It was mentioned that the she buffalo of the complainant was given medical treatment. There is one more document on record dated 8.12.1998 which was written by Dr. V. K. Srivastava, to the bank. It was mentioned that the she buffalo of the complainant was given medical treatment. This medical treatment was given on 20.4.1998, 27.4.1998, 15.5.1998, 28.5.1998 and 16.5.1998. This shows that the she buffalo was treated by the veterinary doctor from time to time and the case of the insurance company that no treatment was given to the she buffalo is proved false from the document on record. Now we come to the market value of the she buffalo. As had been seen in the earlier part of the judgment the she buffalo was insured with the insurance company on 12.12.1997 and she died on 24.6.1998 after about 7 months. At the time of insurance the value of the she buffalo was taken at Rs. 16,000/- for the purpose of insurance. Thus we find that at the time of insurance the cost of the she buffalo was Rs. 16,000/-. The cost will not decrease on account of the illness of the she buffalo. It is natural that when an animal falls ill, then it is bound to become weak. If it does not respond to the treatment, then it dies, but it does not mean that the cost of the she buffalo was less than Rs. 16,000/-. We have to see the cost of the she buffalo who was in a good condition on the date of death. Therefore, we find that the cost of the she buffalo was Rs. 16,000/- when she died. 9. Thus we find that the she buffalo was in sound physical condition before her death and the findings of the learned District Forum are perfectly correct and cannot be interfered with. 10. Now the question of rate of interest arises. Learned Counsel for the insurance company has argued that the interest should be fixed at the rate of 12% per annum. In support of his argument he has placed reliance on the case of United Insurance Company Limited v. M.K.J. Corporation 1996-1999 Consumer, 4781 (N.C.), in which it was held that the rate of interest in the case of insurance company should be 12% per annum. In support of his argument he has placed reliance on the case of United Insurance Company Limited v. M.K.J. Corporation 1996-1999 Consumer, 4781 (N.C.), in which it was held that the rate of interest in the case of insurance company should be 12% per annum. However, the learned Counsel for the, complainant has argued that the interest should be awarded at the rate of 18% per annum in view of the decision of the Hon'ble Supreme Court in the case of United India Insurance Company Limited v. Fancy Traders JT 2000(10) S. C. 337. The Hon'ble Supreme Court in this case held that the interest at the rate of 18% per annum is justifiable. The .order of the Hon'ble Supreme Court in very short and is being reproduced below: ORDER 1. Leave is granted. 2. Heard Learned Counsel for the parties. 3. The net loss caused to the respondent due to fire was assessed at Rs. 4,72,146/- but the applicant paid only' a sum of Rs. 2,75,146/- to the bank of the respondent. The balal1£@ amount• together with interest at the rate of 18% was ordered to be-paid to the respondent by the State 'Commission. 4. Having regard to the facts and circumstances of the case, the High Court also did not interfere with the rate of interest awarded by the State Commission. We find no justification for our interference in the matter under Article 136 of the Constitution. 5. The appeal is accordingly dismissed. There shall be no order as to the costs." 11. In a recent case, National Insurance Company v. Jeet Ram Sheo Kumar 2001 CTJ 1 (S.C.), the Hon'ble Apex Court had also considered the quantum of interest which should be awarded in the case of insurance company. In that case before the Apex Court, it was held that the repudiation of the claim by the insurance company was wholly malafide. It was held that all the risks were covered by the insurance policy. The ship which was carrying the goods was lost on the high seas. Before the Hon'ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. It was held that all the risks were covered by the insurance policy. The ship which was carrying the goods was lost on the high seas. Before the Hon'ble Supreme Court it was contended that the Commission was not justified in awarding interest at the rate of 18% per annum to the respondent. The Hon'ble Supreme Court repelled the contention of the insurance company about the rate of interest in the following words : "So far as the question of quantum of interest is concerned, we see no infirmity in the order passed by the Commission except that the order of the Commission requires a little alteration so that the date 6.12.1987 is altered to 12.8.1987 in consonance with the judgment of the Commission itself." 12. The learned Counsel for the insurance company has placed reliance on the case of Smt. Kaushnuma Begum & Ors. v. The New India Assurance Company Limited & Ors. JT 2001 (1) S. C. 375. According to learned Counsel in this case the interest at the rate of 9% per annum has been directed to be paid. We have gone through this case. It has been held that how we have to fix up the rate of interest. Section 171 of the Motor Vehicle Act empowers the Tribunal to direct that' in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as may be specified in this behalf. Earlier, 12% was found to be the reasonable rate of simple interest. With a change in economy and the policy of the Reserve Bank of India, the interest rate has been lowered. The Nationalised banks are now granting interest at the rate of 9% on fixed deposits for one year. We, therefore, direct that the compensation amount fixed here if1 before shall bear interest at the rate of 9% per annum from the date of the claim made by the appellants. The amount of Rs. 50,000/ - paid by the insurance company under Section 140 shall be deducted from the principal amount as on the date of its payment and interest would be recalculated on the balance amount of the principal sum from such date." 13. Thus we find that the Hon'ble Court has considered the provisions of Section 171 of the Motor Vehicles Act. 50,000/ - paid by the insurance company under Section 140 shall be deducted from the principal amount as on the date of its payment and interest would be recalculated on the balance amount of the principal sum from such date." 13. Thus we find that the Hon'ble Court has considered the provisions of Section 171 of the Motor Vehicles Act. The provisions of the Consumer Protection Act were not considered in that case and the interest at the rate of 9% per annum was allowed which is being granted now on fixed deposits by the Nationalised banks. Learned Counsel for the complainant has argued that the Hon'ble Supreme Court has in all previous cases under Consumer Protection Act has confirmed the rate of interest at 18% per annum because this also represents the amount of damages which has to be given. According to learned Counsel the damages are granted in the form of interest and damages consist of many components. Learned Counsel for the complainant has a point in this argument. Under the Consumer Protection Act no rate of interest has been provided. The Hon'ble Supreme Court has granted interest under the provisions of Section 34 of the Civil Procedure Code. The Hon'ble Supreme Court in the case of Sovintorg (India) Limited v. State Bank of India (1999) 6 SCC 406 : 1999 (II) CCC 34 (S.C.) has held that the interest can be awarded as compensation or damages because it is based on equity, justice and good conscious. Reliance has been placed by the learned Counsel for the complainant on the case of Jeet Ram Sheo Kumar v. National Insurance Company 2001 (1) Supreme 333. In that case the interest was awarded by the National Commission at 18% per annum on the principal amount. Thereafter an appeal was brought to the Supreme Court against the judgment of the National Commission. The Apex Court directed for deposit of principal amount alongwith 12% per annum interest. Thereafter; the Hon'ble Supreme Court passed the final order confirming the award of principal amount and interest as reported in 2001 CTJ 1 (Supra). It was held in 2001 (1) Supreme 333 (Supra) that liability to pay interest at 18% does not cease merely because principal amount alongwith 12% interest was deposited pursuant to interim order. The respondent was therefore held liable to pay interest at the rate of 18% per annum. It was held in 2001 (1) Supreme 333 (Supra) that liability to pay interest at 18% does not cease merely because principal amount alongwith 12% interest was deposited pursuant to interim order. The respondent was therefore held liable to pay interest at the rate of 18% per annum. Thus the Apex Court has held that 18% interest is to be paid in cases under Consumer Protection Act. That was a case against the insurance company which went to the Hon'ble Supreme Court against the judgment of the National Commission. Thus we find that in cases arising under the Consumer Protection Act, the Hon'ble Supreme Court has consistently taken a view that interest at the rate of 18% per annum has to be paid on the compensation amount. This rate of interest has been allowed by the Hon'ble Supreme Court keeping in view the facts that the claims which are pending before the insurance companies are not decided by the insurance companies within a reasonable time and the claims are repudiated in flimsy grounds. The complainant is harassed by the insurance company and he has to suffer mental torture and has to run to the office of the insurance company and has to wait for getting the insured amount after entering into litigation. All these factors are considered while granting compensation in the form of interest in such cases. 14. Thus in view of the majority of decisions of the Hon'ble Supreme Court, it is now clear that the interest at the rate of 18% per annum is to be paid by the insurance company when it is found that the deficiency is on behalf of the insurance company. 15. On the basis of above discussions, the appeal is liable to be dismissed. ORDER 16. The appeal is dismissed and the judgment and order of the learned District Forum are confirmed. The appellant shall also pay a sum of Rs. 2000/ - to the complainant as cost of appeal. Compliance of the order be made within a period of two months from the date of this order. Let copy as per rules be made available to the parties.