National Consumer Disputes Redressal
M/S. Silverton Pulp And Papers Private ... vs United India Insurance Co. Ltd. on 18 September, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 182 OF 2019 (Against the Order dated 03/12/2018 in Complaint No. 3/2016 of the State Commission Uttar Pradesh) 1. M/S. SILVERTON PULP AND PAPERS PRIVATE LIMITED THROUGH ITS A.R. OF SH. RAKESH KUMAR GARG, 9 KILOMETER, BHOPA ROAD, MUZAFFAR NAGAR UTTAR PRADESH ...........Appellant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. DIVISIONAL OFFCEI-II, CHURCH ROAD, CIVIL LINES, SAHARANPUR 247001 UTTAR PRADESH ...........Respondent(s)
BEFORE: HON'BLE MR. SUBHASH CHANDRA,PRESIDING MEMBER HON'BLE AVM J. RAJENDRA, AVSM VSM (Retd.),MEMBER FOR THE APPELLANT : MR. RAM N. SHARMA, ADVOCATE FOR THE RESPONDENT : MS. NEERJA SACHDEVA, ADVOCATE Dated : 18 September 2023 ORDER AVM J. RAJENDRA, AVSM, VSM (RETD.), MEMBER
1. The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act") against the Order dated 03.12.2018 passed by the State Consumer Disputes Redressal Commission, Lucknow, U.P. (hereinafter to be referred as "the State Commission"), in Consumer Complaint No. 03 of 2016, wherein the Complaint filed by the Complainant (Appellant herein) was returned.
2. There was 4 days delay in filing the present appeal. For the reasons stated in IA/1942/2019, the delay was condoned.
3. The Appellant/Complainant had previously filed a Consumer Complaint No. 552 of 2015 with this Commission on 30.06.2015. It was sought to be withdrawn due to pecuniary jurisdiction as the claim was less than Rs. 1 Cr. Vide Order dated 04.08.2015 it was allowed with liberty to approach State Commission with a modified prayer. On filing the CC No. 03 of 2016 with modified prayer, the State Commission vide Order dated 03.12.2018 returned the same on pecuniary jurisdiction with direction to approach this Commission. Considering these facts, in the interest of justice, the present appeal is treated as an Original Consumer Complaint.
4. The Complainant, M/s. Silverton Pulp and Papers Pvt. Ltd. is a Company under Companies Act, carrying out the business of manufacturing a wide range of Kraft Board including Kraft Paper, Kraft Board and Packing Paper at 9th Kilometer, Bhopa Road, Muzzafarnagar, UP. The Complainant Company authorized Shri Rakesh Kumar Garg to file the present Complaint. On the other hand, the Opposite Party ('OP' in short) is an insurance company having its Divisional office at Church Road, Civil Lines, Saharanpur -247001, Uttar Pradesh.
5. Brief facts of the case are that the Complainant obtained a Standard Fire and Special Perils Policy No. 0250400/11/11/11/ 00000060 ("Insurance Policy") on 29.06.2011 from the OP. The Insurance Policy covered the Building, Godowns, Machinery, Plant Pulp, Papers, Finished and Semi Finished Raw Materials of the Company for the period of 29.06.2011 to 28.06.2012. The total premium paid was Rs.1,54,696/- and the sum assured was for Rs.27,50,00,000/-. During the validity of the Insurance Policy, a fire incident occurred on 13.12.2011, and the Complainant promptly informed the Fire Station and Police Station. Thereafter, a claim Rs.4,42,64,481/- was filed with the OP on 16.01.2012. The OP appointed M/s SIB Associates as Surveyor and the said Surveyor determined the loss as Rs.2,61,65,126/-.
6. Thereafter, numerous emails were exchanged regarding settlement of the Insurance Claim. On 03.05.2013, the OP sent an e-mail asking for a Consent letter for the settlement of the claim at the rate of 75% and on 22.05.2013, the OP sent a Consent Letter/ Discharge Voucher through an e-mail and offered to pay a sum of Rs.1,96,23,844/-. It was alleged that the Consent Letter for acceptance of Rs.1,96,17,664/- "without prejudice" was sent to the OP as an unqualified acceptance vide e-mail on 23.05.2013. Allegedly, on 26.06.2013, the OP released Rs. 1,96,17,664/- after deducting Rs.6,180/- to the Complainant through NEFT towards reinstatement of the sum insured even though the Statutory Surveyor assessed a loss of Rs. 2,61,65,226/-
7. The Complainant immediately protested the deficient payment of Rs.65,41,282/- vide letter dated 27.06.2013. However, there was no reply. The Complainant then forwarded a Notice to the OP on 03.05.2014 invoking Arbitration under Clause 13 of the Insurance Policy. The OP contested by filing its reply on 19.05.2014, asserting that there is no dispute or difference between the Complainant and the OP regarding the quantum and hence, the Complainant has no right to issue Arbitration Notice or to demand for arbitration or compel the Company to convey consent or concurrence in appointment of an Arbitrator.
8. However subsequently, the Complainant, instead of arbitration, sought relief under the Consumer Protection Act, 1986. The Complainant alleged that the OP failed to pay the balance amount of Rs.65,41,282/- as assessed by the surveyor, and their conduct caused financial loss, mental agony, and harassment. The Respondent/OP could have settled the claim promptly as per the IRDA Act, allowing the Complainant to continue their business without hindrance. The Complainant filed the Complaint seeking the following: -
Award a sum of Rs.65,41,282/- (Rupees Sixty Five Lacs Forty One Thousand Two Hundred and Eighty Two) on account of loss caused to the stocks in favour of the appellant and against the respondent;
Award an interest @ 18% per annum on Rs.65,41,282/- (Rupees Sixty Five Lacs Forty One Thousand Two Hundred and Eighty Two) from 26.06.2013 till the date of filing of this appeal i.e. Rs. 24,72,604/- (Rupees Twenty Four Lacs Seventy Two Thousand Six Hundred and Four) approximately. Further, an interest @ 18% per annum on Rs. 65,41,282/- (Rupees Sixty Five Lacs Forty One Thousand Two Hundred and Eighty Two) from the date of filing of this appeal till the realization of amount in favour of appellant and against the respondent;
Award additional interest @ 2% per annum under Regulation 9(6) of IRDA on Rs.65,41,282/- (Rupees Sixty Five Lacs Forty One Thousand Two Hundred and Eighty Two) from the date of fire i.e. 13.12.2011 till the date of realization of amount in favour of the appellant and against the respondent;
Award a sum of Rs.5,00,000/- (Rupees Five Lacs) on account of compensation for mental agony and harassment in favour of the appellant and against the respondent;
Award cost of Rs.10,00,000/- for the legal proceedings in favour of the appellant and against the respondent;
This Hon'ble Commission may also pass such further order(s) as it may deem fit and proper on the facts and circumstances of the present case.
9. The Respondent/OPs filed written submissions in the matter and submitted that the first complaint before this Hon'ble Tribunal i.e. Consumer Complaint No. 552 of 2015 on 30.06.2015 was directed by this Hon'ble Court to be withdrawn owing to lack of pecuniary jurisdiction. Thereafter, the Appellant filed another complaint before the Hon'ble State Commission, Lucknow vide Complaint No. 03/2016 which was again returned on the ground of pecuniary jurisdiction. It was highlighted that the Complaint filed by the Appellant was barred by limitation as the final payment was made by the Respondent to the Appellant on 27.06.2013 and the Complaint was filed in August 2015, which is much beyond the period of 2 years stipulated under the Act. The Respondent paid the full and final insurance claim amount of Rs. 1,96,17,664/- to the Appellant on 27.06.2013 and Appellant accepted the same without any protest. Further, the Appellant himself had written a letter dated 23.05.2013 agreeing to receive the said amount and has given the unconditional consent for the same. In view of the above, the Appellant cannot raise any further claim from the Respondent. It is a settled principle that a contract comes to an end when the other party pays the receiving party the full and final satisfaction of claim, and the receiving party voluntarily issues a discharge voucher/certificate with respect to the claim. Thereafter, the party issuing the discharge voucher/certificate cannot make any fresh claim or revive any settled claim or can it seek reference to arbitration in respect of any claim. The learned Counsel for the Respondent has substantially relied on the contentions of the written statement filed before the State Commission.
10. In their Rejoinder before the learned State Commission, the Complainant highlighted that several major insurance companies were engaging in similar malpractices of pressuring claimants to sign discharge vouchers or unconditional consent letters before releasing claim amounts. To address such issues, the IRDA issued a Circular No. IRDA/NL/CIR/Misc./173/09/2015 dated 24.09.2015. This circular acknowledged the increasing prevalence of such malpractices by insurance companies and directed them to cease coercing consumers into accepting full and final settlement of claims to prevent potential legal disputes. The Appellant brought out the relevant extract of the above said circular is reproduced herein below: -
"Where the liability and quantum of claim under a policy is established, the insurers shall not withhold claim amounts. However, it should be clearly understood that execution of such vouchers does not foreclose the rights of policy holder to seek higher compensation before any judicial fora or any other fora established by law".
11. The learned Counsel for the Appellant in his arguments reiterated the facts outlined in the original complaint and asserted that the actions of the Respondent constitute a deficiency in service and an unfair trade practice, as outlined by the IRDA Rules and various Orders of this Commission. The loss suffered by the Complainant falls squarely within the terms and conditions of the Insurance Policy and should have been paid as per the assessment of the Surveyor. The Surveyor's assessment did not in fact align with the actual loss incurred by the Complainant. The OPs actions led them to go into financial distress, making it difficult to meet their creditor payment deadlines. As a result, the Complainant is entitled to the balance amount of Rs.65,41,282/- along with interest and compensation, as requested in the prayer.
12. The learned Counsel for the Appellant has placed on reliance on the following judgments:-
(a) Worldfa Exports Pvt. Ltd. versus United India Assurance Co. Ltd., ARB.P. 459/2015, Decided on 11.12.2015 by the High Court of Delhi.
(b) Oriental Insurance Co. Ltd. and Ors. Vs. The Govt Tool Room and Training Centre, MANU/CF/0081/2007, Decided on 17.05.2007 by the NCDRC.
(c) Kamalraj Paliwal Versus National Insurance Co. Ltd., RP/1607/2017, decided on 12.10.2022 by the NCDRC.
(d) Amalendu Sahoo Vs Oriental Insurance Co. Ltd in CA No. 2703 of 2010 arising out of SLP(C) No. 11227/2009 decided on 25.03.2010 by the Hon'ble Supreme Court.
(e) United India Insurance Co. Ltd Vs Antique Art Exports Pvt Ltd. in CA Nos. 3284 of 2019 arising out of SLP(C) No. 23956/ 2017 decided on 28.03.2019 by the Hon'ble Supreme Court.
13. The learned Counsel for the Respondent in her arguments has raised a preliminary objection that the complaint filed is time-barred. She argued that the final payment was issued by the OP to the Complainant on 27.06.2013, and the Complaint was filed in August 2015, exceeding the statutory limitation period of 2 years stipulated under the Act. Further, it is a well-established principle that a contract is deemed concluded when one party provides full and final payment to the other party, and the receiving party voluntarily and unconditionally issues a discharge voucher or certificate acknowledging the settlement of the claim. After this settlement and issue of discharge voucher or certificate, they cannot subsequently bring forward any new claim or resurrect any settled claims. Moreover, the party cannot seek arbitration or any legal action concerning the claim that has already been settled in this manner. In addition, the learned Counsel for the Respondent has also placed reliance upon the following judgments:-
(a) National Insurance Company Limited Vs Boghara Polyfab Private Limited (2009) 1 SCC 267.
(b) ONGC Mangalore Petrochemicals Ltd. Vs. ANS Construction Ltd. (2018) 3 SCC 373.
14. We have examined the pleadings of the parties, associated documents placed on record, the citations referred by both the parties and arguments advanced by both the learned counsels.
15. The fundamental issue for determination is whether the Appellant/ Complainant is legally entitled to be paid Rs.65,41,282 by the Respondent/OP, which is the difference between the amount of loss as evaluated by the Surveyor Report in the fire incident and the amount reimbursed by the Respondent/OP.
16. It is a matter of record that the Complainant had obtained a Standard Fire and Special Perils Policy No. 0250400/11/11/11/ 00000060 on 29.06.2011 from the OP covering the factory assets and stocks from 29.06.2011 to 28.06.2012. The total premium was Rs.1,54,696/- and the sum assured was Rs.27,50,00,000/-. During the validity of the Insurance, a fire accident occurred on 13.12.2011. After all necessary actions, a claim Rs.4,42,64,481/- was filed on 16.01.2012. The OP appointed M/s SIB Associates as Surveyor who determined the loss as Rs. 2,61,65,126/-.
17. The Complainant brought on record a Report filed by Fire Service Dept of Uttar Pradesh Government dated Nil in respect of the fire accident. Para 12 of the Report revealed that the cause of fire was short circuit; source of fire was electric flames, sparking heat and others; and the cause of fire was negligence and carelessness (Annexure A-3). Further, the Complainant had also placed on record a Report in respect of the subject fire accident submitted by the Office of The Deputy Director, Electrical Safety, UP Govt, Meerut Region dated 28.12.2011. The said Report reveals that 'a 33 KV Bhopa Feeder from 132 KV Substation Bhopa Road, Muzaffarnagar is passing from the premises of the Complainant's factory. One phase wire on the Iron Round pole situated in the factory premises, separated from the pin insulator, was hanging with Winding Wire in a manner that there has become a distance of 9 centimeters between the Phase Wire and the channel tied to the Iron Pole. On 13.12.2011 at about 2.50 hours, due to high fog and moisture, current of the Phase Wire with noise/spark on the pole tripped at Earth from the Iron Pole and due to CCTV Cable, which passed from Waste Paper Store to the factory premises, due to the spark came out as a result of burning of insulation from place to place, there occurred fire in the Waste Paper Store and CCTV Control Panel also badly burnt due to high voltage, as well as, waste paper of M/s Silverton Pulp and Papers Pvt Ltd, 9 Kilometer, Bhopa Road, Muzaffar Nagar also burnt. At the time of occurrence, 33 KV Bhopa Feeder tripped at Earth Fault at 2.50 AM which confirms the fire accident. The above mentioned incident of fire has occurred due to momentary electrical flow in the Pole of the Corporation/ tying of the CCTV cable on the pole and flow of High Voltage in the CCTV Cable and due to burning of the Cable/ Insulation from number of places and due to falling the consequent spark on the Waste Paper Store. High Voltage Line was crossing from the midst of the factory premises only with the consent of the factory owner. The factory owner has not taken any electric load from the Corporation for the factory' (Annexure A-9).
18. After the fire accident on 13.12.2011, there were numerous correspondence between the parties regarding the causes for the incident and claim settlement. This included a mail response from the Complainant to the Respondent dated 29.12.2012 inter-alia clarifying that there were no written orders for any departmental inquiry initiated by District Magistrate; the Complainant intimated to Electricity Board regarding the accident; as per the Report of the Director UP State Electrical Safety Division against the government order, they have not taken any liability for the Complainant's loss; and a notice has been sent to the Electricity Dept to compensate for the loss due to fire. The Complainant assured the OP that in the event of any recovery from the Electricity Dept, all recovery rights will be transferred to the OP. The Complainant had also informed the Respondent/OP that over a year had passed from the date of the fire accident. There was, unfortunately, no result even after all queries are replied to. The Complainant further stated that they are under huge pressure from creditors demanding dues for a long time and they are denying continuation of business in future. The Complainant, therefore, requested the Respondent/OP to look into the matter at highest priority and settle the claim without any further delay.
19. On 03.05.2013, the Respondent forwarded an e-mail stating "Please refer our telephonic discussion wherein we requested you to send us your consent to approve the claim as compromised claim @ 75%. Regarding your query regarding logic behind this calculation we may submit that HO is of the view that you have not taken due care in storage of raw material which resulted in fire. Secondly, as reported by UP Electricity Department Meerut, "the loss occurred due to fault of the insured because they have not connected the CCTV with the pole and stocks stored under the electrical pole. Hence, the management of the factory is responsible for the same". So please send us your consent to accept the same to enable us to communicate the same to competent authority".
20. The complainant responded to the above mail of the OP dated 03.05.2013 vide Letter of "consent to accept Rs.1,96,23,844 towards our fire claim" dated 22.05.2013 stating:
"We hereby agree and give our unconditional consent to accept Rs. 1,96,23,844 (Rs. one crore ninety six lacs twenty three thousand eight hundred forty four only) as full and final settlement & payment towards our fire claim number 250400/11/11/11/9000002 dt 13.12.2011. Please remit the same at earliest".
21. Subsequently, based on certain communication, the Appellant again forwarded a "Consent to accept Rs.1,96,23,844 towards our fire claim" vide letter dated 23.05.2013 stating:
"Our revised consent as desired by you, we hereby agree and give our unconditional consent to accept Rs.1,96,23,844 (Rs. One Crore Ninety Six Lacs Twenty Three Thousand Eight Hundred Forty Four Only) as full and final settlement & payment towards our fire claim No. 250400/11/11/11/ 9000002 dt 13.12.2011. We hope that our consent meets your approval to release our payment without any further delay.
22. As a sequel to the above consents to accept payment @ 75% of the amount determined by the Surveyor report, on 26.06.2013, the Respondents made payment of Rs. 1,96,17,664.
23. After the receipt of the said amount, the next day vide letter dated 27.06.2013, the Complainant alleged that the Consent Letter dated 23.05.2012 accepting Rs.1,96,23,844 was clearly marked as 'Without Prejudice'. However, it was not accepted. They had no choice but to sign on dotted lines, as without that the claim was not processed even after 14 months. Thus, they claimed balance Rs.65,41,282 and forwarded a Notice on 03.05.2014 invoking Arbitration under Clause 13 of the Policy. The OP refuted and asserted absence of any dispute between parties as regards the quantum. Hence, the Complainant has no right to issue Arbitration Notice or any further claim in the same matter which is already settled.
24. The above stated facts establish that the Report made by the State Govt into the cause of fire accident held the Appellant culpable for negligence, as the fire accident happened due to certain High Tension cables coming into proximity with CCTV cable, resulting in CCTV Cables causing the sparks over the West Paper Store, resulting in waste paper material catching fire and thus the area got engulfed into fire resulting in the damage in question and the claim. The Surveyor appointed by the Respondent/OPs determined the loss to be Rs. 1,96,23,844. The specific counts of culpability averred against the Appellant by the UP Electricity Board authorities have not been resisted or contested by the Appellant/ Complainant. The Survey report as well as the Reports of the UP State Electricity Board authorities were accessed and deliberated by the Appellant and Respondent/OP and this process seems to have taken about one year with correspondence between the parties.
25. After consideration of these facts and investigation reports of UP Govt Dept, the Respondent proposed to pay compromised claim @ 75% of the amount determined by the Surveyor. These issued and the proposal were communicated wide communication dated 03.05.2013. In the said mail also, the counts of culpability of the Appellant, which contributed to the fire accident was specifically notified. After receiving the said communication and reasons for limiting the claim to 75%, the Appellant did not contest or resist the said imputations of contributory negligence towards the fire accident. On the other hand, after the receipt and acknowledging of the liability towards negligence, the Appellant forwarded two mails specifically consenting for settlement of claim @ 75% of the compensation determined by the Surveyor.
26. Therefore, the Appellant was well notified of the liability towards contributory negligence alleged against by investigating agency of the UP Govt and did not contest or even resist the same. When this was further notified, and a compromise claim was offered, again the Appellant did not even remotely deny, resist or contest, and unconditionally consented to accept the compromise claim. Further, no evidence whatsoever is brought on record by that any communication was forwarded by them to the Respondent asserting that the said compromise or consent for payment of 75% of the compensation determined by the Surveyor was 'Without Prejudice' to its rights or any reservation or protest. Immediately after the payment was received, the Appellant chose to withdraw the consent and demanded payment of the balance stating that the consent was forwarded as there was 14 months delay in payment and was made to sign on dotted lines.
27. It is an established position that the State Govt authorities independently investigated and brought out the culpability and contributory negligence on the part of the Appellant due to which the fire accident had occurred at the Appellant's factory premises. This was the main reason due to which the OP proposed to make a compromise settlement of the claim @ 75% of the amount as determined by the Surveyor. When specifically notified, the Appellant had not refuted, resisted or contested the imputations of culpability and rather unconditionally consented to accept the claim @ 75%. Therefore, the decision to pay such amount cannot be termed as arbitrary or unreasonable. At no stage, the Appellant made any allegations of compulsion, duress, coercion or any such measure by the Respondent/OP to deny the claim, except for the contention of 14 months delay and the payment was made after signing on the dotted lines. At no stage, the Appellant conveyed any reservation or protest, until the payment was made.
28. The learned council for the Appellant brought on record and painstakingly argued that the Consent Letter signed by the Appellant is not valid as they being subjected to financial duress and made to sign on dotted lines. It is a fact that the settlement of claim made on 16.01.2012 took about one year and five months. However, it is an admitted position that there was correspondence between the parties regularly. Further, the case in question involved specific revelations of imputations of culpable negligence against the Appellant by an independent State Govt agency which has not been refuted, resisted, or contested by the Appellant. Specific consideration of the circumstances under which the fire accident occasioned, including imputation of culpable negligence against the Appellant has also been particularly notified by the Respondent and the Appellant once again chose to not to refute, resist or contest the same in any manner and in fact voluntarily and unconditionally accepted the proposed compromise claim settlement with the Respondent/OP. While making assertions of forwarding the consent to accept settlement 'Without Prejudice", the Appellant did not corroborate the contention in any manner. It was alleged that the consent letter had to be issued as the OPs failed to process the claim even after lapse of 14 months.
29. Every case has its own facts and circumstances which need independent consideration and there cannot be a rule of thumb. It was observed by the Hon'ble Supreme Court at Para-18 in UOI & Others Vs. Master Construction Co. 2011(12) SCC 349 that:: "18. In our opinion, there is no rule of the absolute kind. In a case where the claimant contends that a discharge voucher or no claim certificate has been obtained by fraud, coercion, duress or undue influence and the other side contests the correctness thereof, the Chief Justice/his designate must look into this aspect to find out at least, prima facie, whether or not the dispute is bona fide and genuine. Where the dispute raised by the claimant with regard to validity of the discharge voucher or no claim certificate or settlement agreement, prima facie, appears to be lacking in credibility, there may not be a necessity to refer the dispute for arbitration at all."
30. The Appellant led no evidence to corroborate that the letter of consent signed was under certain reservation and without prejudice to its legal rights. There is no evidence that the Appellant was placed under any duress or compulsion to sign the said consent letter. The Appellant was well aware and had specific knowledge of the fact that it was only on account of the imputation of contributory negligence of the Appellant in to the fire accident by the independent UP State Gove Department, the Respondent/OP deliberated and proposed to pay 75% of the claim. However, while being aware as well as specifically notified, the Appellant chose to not even remotely contest the imputations of culpability towards negligence. It was the choice exercised by the Appellant not to refute, resist or contest the counts of culpability towards negligence. At every stage the Appellant/ OP had made its stand clear and communicated. Therefore, the actions taken were based on compromise consent between the parties. The Respondent already paid the full and final insurance claim amount of Rs.1,96,17,664/- to the Appellant on 27.06.2013 The Appellant has not in any manner corroborated that the discharge voucher or the consent letter was obtained under misrepresentation of facts, fraud, undue influence, coercion, duress or he was left with no choice but to sign the same. On the other hand, he was imputed of contributory negligence towards the fire accident by an independent Govt Department, notified by the Respondent, informed of the specific reason due to which the compromise settlement was being offered and was rendered an option to consent for the same. It was the Appellant who voluntarily accepted compromise and consented for settlement. In these circumstances, the facts and circumstances of the cases in the citations relied upon they learned counsel for the Appellant/ Complainant are different and thus the ratio of the referred judgments as well as the Circulars of the IRDA dated 24.09.2015 and 07.10.2016 have limited application to the case in question.
31. In catena of judgments the Hon'ble Supreme Court crystallized the position that once a final settlement has been reached amicably between the parties, then, it is not open to either of the parties to lay any claim/demand against the other party. In Civil Appeal Nos 2491-2492 of 2021 (Union of India and Ors Vs N Murugesan Etc), Hon'ble Supreme Court citing multiple authorities on the subject, held:
"APPROBATE AND REPROBATE:
26. These phrases are borrowed from the Scott's law. They would only mean that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold. The principle behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party. We have already dealt with the provisions of the Contract Act concerning the conduct of a party, and his presumption of knowledge while confirming an offer through his acceptance unconditionally.
27. We would like to quote the following judgments for better appreciation and understanding of the said principle:
Nagubai Ammal v. B. Shama Rao, 1956 SCR 451:
"...XXX...The ground of the decision is that when on the same facts, a person has the right to claim one of two reliefs and with full knowledge he elects to claim one and obtains it, it is not open to him thereafter to go back on his election and claim the alternative relief. The principle was thus stated by Bankes, L.J.:
"Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery. To do so would be to approbate and reprobate the same act".
The observations of Scrutton, LJ on which the appellants rely are as follows:
"A plaintiff is not permitted to 'approbate and reprobate'. The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election-namely, that no party can accept and reject the same instrument: Ker v. Wauchope [(1819) 1 Bli 1, 21]: Douglas-Menzies v. Umphelby [(1908) AC 224, 232]. The doctrine of election is not however confined to instruments. A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. That is to approbate and reprobate the transaction".
It is clear from the above observations that the maxim that a person cannot 'approbate and reprobate' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto. The law is thus stated in Halsbury's Laws of England, Vol. XIII, p. 464, para 512:
"On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here. Thus a party cannot, after taking advantage under an order (e.g. payment of costs), be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it".
State of Punjab v. Dhanjit Singh Sandhu, (2014) 15 SCC 144:
"22. The doctrine of "approbate and reprobate" is only a species of estoppel, it implies only to the conduct of parties. As in the case of estoppel it cannot operate against the provisions of a statute. (Vide CIT v. V. MR. P. Firm Muar [CIT v. V. MR. P. Firm Muar, AIR 1965 SC 1216]).
23. It is settled proposition of law that once an order has been passed, it is complied with, accepted by the other party and derived the benefit out of it, he cannot challenge it on any ground. (Vide Maharashtra SRTC v. Balwant Regular Motor Service [Maharashtra SRTC v. Balwant Regular Motor Service, AIR 1969 SC 329] .) In R.N. Gosain v. Yashpal Dhir [R.N. Gosain v. Yashpal Dhir, (1992) 4 SCC 683] this Court has observed as under: (SCC pp. 687-88, para 10) "10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that 'a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage'."
25. The Supreme Court in Rajasthan State Industrial Development and Investment Corpn. v. Diamond and Gem Development Corpn. Ltd. [Rajasthan State Industrial Development and Investment Corpn. v. Diamond and Gem Development Corpn. Ltd., (2013) 5 SCC 470:(2013)3SCC(Civ) 153], made an observation that a party cannot be permitted to "blow hot and cold", "fast and loose" or "approbate and reprobate". Where one knowingly accepts the benefits of a contract or conveyance or an order, is estopped to deny the validity or binding effect on him of such contract or conveyance or order. This rule is applied to do equity, however, it must not be applied in a manner as to violate the principles of right and good conscience.
26. It is evident that the doctrine of election is based on the rule of estoppel, the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by election is one among the species of estoppel in pais (or equitable estoppel), which is a rule of equity. By this law, a person may be precluded, by way of his actions, or conduct, or silence when he has to speak, from asserting a right which he would have otherwise had."
Rajasthan State Industrial Development & Investment Corpn. v. Diamond & Gem Development Corpn. Ltd., (2013) 5 SCC 470:
"I. Approbate and reprobate
15. A party cannot be permitted to "blow hot-blow cold", "fast and loose" or "approbate and reprobate". Where one knowingly accepts the benefits of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself. This rule is applied to ensure equity, however, it must not be applied in such a manner so as to violate the principles of what is right and of good conscience. [Vide Nagubai Ammal v. B. Shama Rao [AIR 1956 SC 593] , CIT v. V. MR. P. Firm Muar [AIR 1965 SC 1216] , Ramesh Chandra Sankla v. Vikram Cement [(2008) 14 SCC 58 : (2009) 1 SCC (L&S) 706 : AIR 2009 SC 713] , Pradeep Oil Corpn. v. MCD [(2011) 5 SCC 270 : (2011) 2 SCC (Civ) 712 : AIR 2011 SC 1869] , Cauvery Coffee Traders v. Hornor Resources (International) Co. Ltd. [(2011) 10 SCC 420 : (2012) 3 SCC (Civ) 685] and V. Chandrasekaran v. Administrative Officer [(2012) 12 SCC 133 : (2013) 2 SCC (Civ) 136 : JT (2012) 9 SC 260] .]
16. Thus, it is evident that the doctrine of election is based on the rule of estoppel--the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by election is one among the species of estoppel in pais (or equitable estoppel), which is a rule of equity. By this law, a person may be precluded, by way of his actions, or conduct, or silence when it is his duty to speak, from asserting a right which he would have otherwise had."
(Emphasis supplied)
32. In the present case, the facts are known to both the parties. In addition, a notice was also issued and the Appellant consented to the compromise settlement of the claim. The Respondent paid full and final insurance claim amounting to Rs.1,96,17,664/- to the Appellant on 27.06.2013 and the same was accepted. In view of the above, the matter stood settled. The Appellant cannot raise any dispute with respect to the same claim. In view of the aforesaid discussion, the Appeal No. FA/182/2019 is dismissed.
33. All pending Applications, if any, stand disposed of. There shall be no orders as to costs. The statutory amount, if any, deposited by the Appellant be refunded to it.
...................................... SUBHASH CHANDRA PRESIDING MEMBER ................................................................................... AVM J. RAJENDRA, AVSM VSM (Retd.) MEMBER