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2007 DIGILAW 154 (JK)

Hotel Sara v. Oriental Insurance Co. Ltd.

2007-08-14

AFTAB ALAM, HAKIM IMTIYAZ HUSSAIN

body2007
Per Aftab Alam, ACJ: 1. These two appeals arise from the same award of the J&K Consumer Protection Commission (hereinafter referred to as `the Commission) dated 5 June 2002 made in complaint no.92/1999 filed by Hotel Sara through its proprietor, Ms. Jehan Sara Rashid. 2. The complainant-claimant is in appeal insofar as the Commission did not allow her claim for an amount beyond the sum of Rs. 4,99,500.00 for which a cheque was handed over by the Opposite Party, Insurance Company, to the Financial Corporation (the claimants financier) in course of the proceeding before the Commission. The Insurance Company has filed the appeal against the imposition of interest (@ of 9%) for the delay in making payment of the settlement amount. 3. The complainant-claimant made a complaint before the Commission in regard to non-payment of the assured amount under the insurance policy taken by her from the Insurance Company with respect to her hotel building at Aharabal. The case of the complainant-claimant was that she had a big hotel at Aharabal that consisted of two separate complexes, namely, A & B. It was further her case that complex A was constructed from her own funds and it was commissioned in the year 1987. Later, she wanted to expand the hotel by constructing another building complex for which she approached the State Financial Corporation which sanctioned her loan of Rs. 16.58 lakhs on 23 July 1988. The construction of the building of complex B, with the financial assistance received from the Corporation, was started but soon thereafter the State was affected by insurgency and militancy and in those conditions the construction of complex B remained incomplete. It was further stated by the complainant that she had taken two insurance policies one in respect of complex A exclusively in her own name and the other for complex B jointly with the financier -- for a sum of Rs. 11,60,000.00 for which the amount of annual premium was Rs.2320.00. The premium amounts were duly paid. The complainant further stated that the hotel buildings covered by the insurance policies were in the occupation of security forces. On 30 November, 1996 the security forces vacated the hotel premises and it came under the watch and guard of a chowkidar employed by the complainant. Within a week, however, the militants set the hotel buildings on fire resulting in their complete destruction. On 30 November, 1996 the security forces vacated the hotel premises and it came under the watch and guard of a chowkidar employed by the complainant. Within a week, however, the militants set the hotel buildings on fire resulting in their complete destruction. The complainant lodged an FIR and also submitted its claim under the insurance policies before the Opposite Party the Insurance Company. The Insurance Company first deputed one Irfan Ahmad, surveyor, for preliminary survey. After that, one Omkar Pajnu was appointed surveyor to assess the loss. He assessed the loss at Rs.6,00,000.00, reporting that there was total loss of the building. The complainant requested the Insurance Company it, payment in terms of the report of the surveyor. No payment was, however, made and the Insurance Company appointed another investigator of which no information was given to the complainant. As net claim remained unsettled for a long time, the complainant finally came to the Commission and filed the complaint. The Insurance Company admitted before the Commission that the occurrence of arson had taken place in which the hotel building of the complainant was damaged. It, however, completely denied the claim of the complainant that there were two separate buildings, complexes A and B; according to the Opposite. Party, there was only one building in which the complainant ran her hotel under the name and style of Hotel Sara and the building was constructed by taking loan from the Financial Corporation. The hotel was financed by State Financial Corporation in regard to which the Insurance Company had issued the policy in question. The Insurance Company also admitted the appointment of Irfan Alam as preliminary surveyor and of Omkar Pajnu as the assessor. It was stated that Omkar Pajnu assessed the loss at Rs. 5,92,441.00. It was further stated that later the Insurance Company deputed one G.M. Bhat for re-assessment who assessed the loss at Rs. 5,52,452.00. It was further the case of the Insurance Company that later, on the basis of negotiations, the complainant had agreed to accept the sum of Rs. 4,99,500.00 in full and final settlement of her claim arising from the episode of arson and hence, she was not entitled to pay any amount in excess of that sum. 4. When the matter came up before the Commission, it found that though, according to the Insurance Company, the complainant had agreed to accept Rs. 4,99,500.00 in full and final settlement of her claim arising from the episode of arson and hence, she was not entitled to pay any amount in excess of that sum. 4. When the matter came up before the Commission, it found that though, according to the Insurance Company, the complainant had agreed to accept Rs. 4,99,500.00 in full and final settlement of her claim, as a matter of fact, no payment was made to her till then. Accordingly, by order dated 16 May, 2000, the Commission asked the Insurance Company to pay the aforesaid amount to the complainant. However, before the payment was effected the State Financial Corporation appeared before the Commission and intervened in the matter, claiming the money towards liquidation of its outstanding dues against the complainant. On 29 May, 2001 the Commission directed the Insurance Company to hand over the cheque for the aforesaid amount to the State Financial Corporation even without determining the final rights and liabilities of the parties at that stage. 5. In course of the proceeding, the Insurance Company produced before the Commission the discharge voucher duly executed by the complainant for the sum of Rs. 4,99,500,00 as full and final settlement of her claim. 6. From the award coming under challenge it appears that the Commission accepted the case of the Insurance Company that there was only one building of the hotel that was financed by the State Financial Corporation. It did not accept the complainants case with regard to the hotel consisting of complexes A and 13 and the loan of the Financial Corporation being only with regard to the complex B building. 7. On behalf of the complainant it was contended that the discharge voucher was not binding on her and she was emitted to her claim in excess of Rs. 4,99,500.00 the agreed amount, as claimed by the Insurance Company. In support of the plea it was submitted that the complainant had signed the discharge voucher subject to two conditions: (1) that the payment would be made immediately and (2) the cheque for the amount would be handed over to her personally and not to the State Financial Corporation. It was pointed out that the Insurance Company violated both the conditions subject to which the discharge voucher was executed and, therefore, the complainant was not hound to accept the agreed amount. The Commission turned down both the pleas. It was pointed out that the Insurance Company violated both the conditions subject to which the discharge voucher was executed and, therefore, the complainant was not hound to accept the agreed amount. The Commission turned down both the pleas. As regards handing over of the cheque to the Corporation, the Commission noted the stand taken by the complainants counsel at the time of hearing of the case which is as follows: - "It may not be out of place to mention here that the learned counsel for the complainant has stated at the Bar that he has no objection for giving the amount to SFC and thereby has accepted that the SFC is the financier of the hotel. So the controversy regarding Block A & Block ended." 8. Dealing with the second plea raised on behalf of the appellant, the Commission held as follows: - "After considering the rival arguments we are of the view that complainant is not entitled to any additional amount because she has signed the voucher in full and final settlement for Rs. 4,99,500.00 and has accepted the compromise letter which has been executed for acceptance of the same amount." 9. The Commission referred to a decision of the Supreme Court in United India Insurance Co. Ltd. v. Ajmeer Singh, Cotton and General Mills, 1999 NCJ 453 (SC) and rejected the complainants claim for higher amount of compensation. While disposing of the matter, however, the Commission directed the Insurance Company to pay interest @ 9% on the amount of Rs. 4,99,500.00 from two months after the first survey report submitted by Omkar Pajnu till the cheque was paid to the financer of the complainant, and Rs. 5000.00 as cost of litigation. CIMA No. 64/2003 Hotel Sara v. Oriental Insurance Company 10. Mr. Manzoor Ali, learned counsel appearing on behalf of the appellant (complainant claimant) tried to re-agitate before us that the discharge voucher was not binding upon his client and therefore the Commission was in error in not considering the claim for a higher amount of compensation. In support of the plea that the discharge voucher, though signed by the complainant, was not binding upon her, the learned counsel raised before us a third point that was apparently not submitted before the Commission. In support of the plea that the discharge voucher, though signed by the complainant, was not binding upon her, the learned counsel raised before us a third point that was apparently not submitted before the Commission. It was stated before us that at the time of signing the discharge voucher the complainant was not made aware as to the amount that would be paid by the Insurance Company and she signed the discharge voucher believing in good faith that the Insurance Company would make the payment as per the assessors report fixing the damage at Rs. 6,00,000.00. 11. The submission made on behalf of the appellant cannot be accepted for a moment. A photocopy of the discharge voucher is enclosed as annexure C to the memo of appeal filed by the Insurance Company. The discharge voucher clearly mentions the sum of Rs. 4,99,500.00 by the side of which there is the signature of the appellant and below it, that of her son as the witness. It therefore, cannot be said that the complainant-claimant was not aware of the amount for which she was signing the discharge voucher. 12. Mr. Manzoor Ali also feebly tried to argue that the discharge voucher was not binding on the complainant because of the delay in payment caused by the Insurance Company. That point has already been considered by the Commission and it has rejected it, giving good reasons. I find myself in complete agreement with the view taken by the Commission and find no merit in the point. I therefore, see no substance or merit in the appeal filed by the complainant claimant. CIMA no.59/2002 Oriental Insurance Co. v. Hotel Sara 13. Mr. N.H. Khuroo, learned counsel appearing for the Insurance company submitted that since the disputed claim was fully and finally settled in terms of the agreement: as evidenced by the discharge voucher signed by the complainant claimant, no further liability could be created against the Insurance Company by way of interest and the Commission committed a patent error in giving direction to the Insurance Company for payment of interest. In support of the submission Mr. Khuroo relied upon a Supreme Court decision in Nathani Steels Ltd. v. Associated Constructions, 1995 Supp. (3) SCC 324 and a Division Bench decision of this Court in M/s Mohammad Yaseen Mir & Co. v. National Insurance Company, SLJ 2001 (2) 382. 14. In support of the submission Mr. Khuroo relied upon a Supreme Court decision in Nathani Steels Ltd. v. Associated Constructions, 1995 Supp. (3) SCC 324 and a Division Bench decision of this Court in M/s Mohammad Yaseen Mir & Co. v. National Insurance Company, SLJ 2001 (2) 382. 14. The decision of the Supreme Court is on entirely different set of facts and has no application to the case in hand. 15. The earlier decision of this Court in M/s Mohammad Yaseen Mir and Co. (supra) was indeed rendered on a claim of interest after receipt of payment in terms of the discharge voucher but the crucial difference in that case and the one in hand is that in the reported case the payment in terms of the discharge voucher was made by the Insurance Company without any delay. In the case in hand the Insurance Company did not make any payment even after the discharge voucher was signed by the complainant, thus forcing her to approach the Commission. Even when the matter was before the Commission the Insurance Company handed over the cheque to the State Financial Corporation, on the Commissions direction, on 29 May, 2001. Mr. Khuroo submitted that after the discharge voucher was signed by the complainant, the State Financial Corporation demanded the payment of the amount to it and in those circumstances the Insurance Company was unable to make payment to the claimant. The explanation does not appear to me to be reasonable or justified. The demand by the State Financial Corporation would not justify the Insurance Company to retain the money with itself and not to make payment either to the claimant or to the State Financial Corporation. 16. In the facts and circumstances of the case, I am satisfied that the Insurance Company cannot avoid the liability of interest, taking advantage of the discharge voucher executed by the claimant long time ago. I am therefore, of the view that the Commission was quite right in directing the Insurance Company to pay interest for the delayed payment. I find no merit in the appeal of the Insurance Company either. In the result both the appeals are dismissed. No order as to costs.