National Consumer Disputes Redressal
Naveen Kumar vs United India Insurance Co. Ltd. on 3 July, 2006
Equivalent citations: IV(2006)CPJ241(NC)
ORDER
S.N. Kapoor, J. (Presiding Member)
1. Stocks of the complainant/appellant of all kinds of hosiery goods, machinery and other goods were got insured for a sum of Rs. 20 lakh from United India Insurance Company Ltd., for Rs. 3,00,000 and for a sum of Rs. 8,54,000 from National Insurance Co. Ltd., Insurance Policies were taken by State Bank of Patiala, Milerganj, Ludhiana. Unfortunately on 26.5.1999 fire broke out in the premises of the appellant. Consolidated Surveyors Pvt. Ltd., were appointed as Surveyor by both the companies which assessed damage at Rs. 13,95,827 vide report dated 21.10.1999. Till July 2000 the appellant proprietor of Mahna Hosiery Works did not receive any response from the respondent. He was under severe financial hardship. The workers were threatening to drag the appellant to Labour Court for non-payment of their salaries. The bank which granted loan to the appellant also threatened to pay instalments and interest otherwise his account was to be declared NPA. These circumstances forced him to accept a sum of Rs. 5,45,827 towards the settlement of claims from both the Insurance Companies. On 1.8.2000 the United India Insurance Co. was in dominant position over the appellant and he was forced to accept Rs. 5,45,827 as against Rs. 13,95,827 assessed by Consolidated Surveyors Pvt. Ltd.
2. State Commission on filing complaint No. 98/00 claiming further compensation amounting to Rs. 18,54,173 along with interest @ 24% p.a. dismissed the complaint by the impugned order vide order dated 22.7.2002. Feeling aggrieved by the said order the present appeal has been filed.
3. We have heard the learned Counsel for the parties and gone through the record. From the side of the respondent it is contended that appellant had issued full and final settlement receipts along with an affidavit accepting the amount on 1.8.2000. Cheques were issued immediately thereafter by United India Insurance Co. on 2.8.2000 and by the National Insurance Co. on 28.9.2000. The complaint was filed on 6.12.2000 i.e. after a period of four months from the date of acceptance of the cheques. Both the cheques were encashed without any protest. Full and final settlement receipts, etc. could not be ignored unless there is a strong evidence of undue influence and coercion to do so. However, it is not in dispute that notice was issued after a period of one month disputing the amount of receipts from the Insurance Company.
4. In the light of the submissions made it is required to be seen as to whether there is sufficient reason to infer that appellant had entered into an unconscionable full and final settlement under such circumstances which would indicate coercion and undue inference as has been defined under Section 15 and 16. These Sections read as under:
Section 15 'Coercion' is the committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
Explanation-It is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force in the place where the coercion is employed.
Illustrations A, on board an English ship on the high seas, caused B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code (45 of 1860).
A afterwards sues B for breach of contract at Calcutta. A has employed coercion, although his act is not an offence by the law of England, and although Section 506 of the Indian Penal Code (45 of 1860) was not in force at the time when or place where the act was done.
Section 16 'Undue influence' defined. (1) A contract is said to be induced by 'undue influence' where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another-
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall be upon the person in a position to dominate the will of the other.
Nothing in the sub-section shall affect the provisions of Section 111 of the Indian Evidence Act, 1872 (1 of 1872).
Illustrations
(a) A having advanced money to his son, B, during his minority, upon B's coming of age obtains, by misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the advance. A employs undue influence.
(b) A, a man enfeebled by disease or age, is induced, by B's influence over him as his medical attendant, to agree to pay B an unreasonable sum for his professional services, B employees undue influence.
(c) A, being in debt to B, the moneylender of his village, contracts a fresh loan on terms which appear to be unconscionable. It lies on B to prove that the contract was not induced by undue influence.
(d) A applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. A accepts the loan on these terms. This is a transaction in the ordinary course of business, and the contract is not induced by undue influence.
5. In this matter it is evident that it would be unconscionable for the appellant to accept offer of Rs. 5 lakh from the respondent, instead of Rs. 13,95,827 as per Surveyor's report, in absence of any appropriate reason.
6. There is no doubt that the complainant has executed full and final settlement receipt along with affidavit on 1.8.2000 accepting total amount of Rs. 5,45,000 as against Rs. 13,95,827 The relevant portion of the affidavit reads as under:
That I hereby give my acceptance to total amount of Rs. 5,45,827, Rs. 4,74,632 from United India Insurance Co. Ltd. against Rs. 20 lakh sum insured against stock. Similarly, Rs. 71,195 from National Insurance Company Ltd. Miller Ganj, Ludhiana against Rs. 3 lacs sum insured against stock insurance towards full and final settlement to the fire loss suffered by us against the policy No. 156/98 of United India Insurance Company and 90524 from National Insurance Company, Ludhiana. This consent is being given by me on my own without any force or pressure from any quarter.
7. It is also evident that despite the fact that the report of the Surveyor dated 21.10.1999 was received. The matter was not processed by the Insurance Companies by the reason best known to them. It may be mentioned that the complainant in his affidavit in para 13 stated as under-
Then complainant being in agony and financial crisis trouble and out of job went to the office of the Divisional Manager, Jalandhar, having visited Branch Goraya, and pressed upon the functionaries of the office of the opposite party Nos. 1 to 3 to give reasons for not deciding the matter and settlement of the claim, even after the lapse of 13 months of the claim loss, having completed all the papers upto 30.7.1999.
8. In para 18 it is also mentioned that from the very beginning unlawful demands were made at all the quarters and the complainant being in hot troubled water could not concede to such demands and resultantly the matter was blocked and the case of the complainant was put in cold storage.
9. It is also mentioned in para 18 that the complainant could not meet the demand of the functionaries which was extraneous demand and the complainant's claim was reduced to Rs. 5,45,827. In this regard para 21 of the complaint is relevant-
That the complainant was exploited by the opposite parties and its officers by putting a condition that the complainant will not pursue a matter under law. The complainant was forced to sign an affidavit on 1.8.2000. The signatures were obtained in the office of opposite party at Jalandhar. That since the complainant stood financially broken at that time and on account of huge loss and damages the earning of livelihood had come to standstill. The complainant has a family to support and the complainant under compulsion and exploitation had no option but to put the signatures on affidavit. So that the complainant may have a sigh of relief in those troubled circumstances, because it was not concealed to receive the payment under protest.
10. These allegations were also supported by another affidavit. Thus it is apparent that there was unreasonable delay in settling the claim after receipt of the Surveyor's report.
11. It is also evident from the above mentioned circumstances that the complainant was under financial straits. In such circumstances where the working capital goods assets have been burnt, production obviously be affected. Financial commitment of the bank to pay loan, to pay wages and salaries to the staff would build up financial pressure to accept any sum to get over atleast temporary bottleneck for very survival of the industrial unit.
12. Now, it is required to be seen whether the deductions made by the Insurance Company were justified.
13. It is apparent from the written version filed by the respondents that they relied on the report of Seth Anil Kumar & Associates. Chartered Accountant appointed after the Surveyor's report dated 1.8.2000. We have perused the report and it appears that there was some manipulation in accounts submitted by the complainant/appellant. Since in view of the report of Seth Anil Kumar & Associates dated 1.8.2000 particularly the manipulation in accounts mentioned in the report one may find it difficult to accept the contention of the appellant that the complaint had been coerced to sign the settlement. It may be mentioned that the settlement was reached after the report of Seth Anil Kumar & Associates dated 1.8.2000. Consequently, it will not be appropriate to say that there was any deficiency in service on the part of the Insurance Company.
14. It may be further mentioned that in both policies State Bank of Patiala, Milerganj, Ludhiana was the insured. The insured Bank has not been made a party to the complaint. It may be mentioned that the facts of the case, United India Insurance v. Ajmer Singh Cotton and General Mills and Ors. II ; New India Assurance Co. Ltd. v. Venkata Padmawati R & B Ice Mills , and The Senior Divisional Manager, Oriental Insurance Co. Ltd. and Anr. v. Gujrat Lyca Organics Ltd. and Anr. III (1996) CPJ 175 (NC), were different and these cases were decided on their own facts.
15. It may further be mentioned that in so far as New India Assurance Co. Ltd. v. Sri Venkata Padmavathi R & B Rice Mill (supra), is concerned it was held that the respondent had agreed to accept the amount as full and final settlement of claim and there were no allegation any where before the Commission or before the Supreme Court that the agreement was forced. We might have taken a different view if there had not been the report of Seth Anil Kumar & Associates C.A. appointed later on to investigate the accounts and the report shows manipulation in the accounts and certain other defects in the claim made by the complainant.
16. For the aforesaid reasons, the complainant/appellant is not entitled to get any additional amount under the insurance policy.
17. For the aforesaid reasons, the appeal stands dismissed.