State Consumer Disputes Redressal Commission
National Insurance Company Limited, vs Gunmala Jain, on 14 March, 2008
14-03-2008 IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 14-03-2008 Appeal No. FA-08/65 (Arising out of Order dated 01-12-2007 passed by the District Forum (Central), Kashmere Gatei, Delhi, in Complaint Case No. 160/2004) 1. National Insurance Company Limited, Through Regional Office-I, Jeevan Bharti Tower-2, Level-4, 124-Connaught Circus, New Delhi 110001. . . . Appellants 2. National Insurance Company Limited, D.O. No. III, Jeevan Vikas, 2nd Floor, 31-31, Asaf Ali Road, New Delhi. Both Appellants to be represented Through Appellant No.1 Versus Ms. Gunmala Jain, S-9, Sunder Block, Shakarpur, Delhi-92. . . . Respondent CORAM: JUSTICE J.D. KAPOOR, PRESIDENT MS. RUMNITA MITTAL, MEMBER
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
Justice J.D. Kapoor (Oral)
1. The respondent insured her vehicle with the appellant-insurance company against the risk of theft and accident. Vide impugned Order dated 1-12-2007 the appellant-insurance company has been found guilty of deficiency in service for repudiating the claim of the respondent arising out of the said policy and directed to pay Rs. 49,821/- towards the expenses incurred for repairing with interest @9% from 6-7-2003 and Rs. 5000/- as compensation and Rs. 2000/- as cost of litigation. Feeling aggrieved the appellant-insurance company has preferred this appeal.
2. The case of the respondent before the District Forum in brief was that she insured her Maruti Zen No. DL 6C H 6324 with the appellant-company, which was valid for the period 27-3-2003 to 26-03-2004. The car met with an accident near Palwal on 03-05-2003 and the right front side of the car was damaged. Since the wheels had got jammed she brought the car to Delhi after hiring the services of a crane. The appellant-company was informed who appointed a Surveyor for inspection where after the respondent got her car repaired from Guru Sewak Automobiles and the spare parts were purchased by the respondent herself from Rajput Auto Agency to the tune of Rs. 36,621/- and spent a total sum of Rs. 47,121/- on the repairs and Rs.2700/- on crane charges and filed a claim with the appellant-company. However, the appellant-company failed to settle the claim. Feeling aggrieved the respondent filed the present complaint before the District. Forum.
3. While justifying the repudiation the claim the appellant-company pleaded that on receiving information about the accident Mr. Mukesh Kumar was appointed as Surveyor who submitted his report on 25-06-2003. the appellant-company wrote a letter to the respondent on the same day informing that necessary details as asked for were not supplied to the Surveyor and that the claim could not be withheld for an indefinite period. The appellant-company again sent a registered letter dated 18-07-2003 asking the respondent to deposit the salvage value of the parts, which were found to have been damaged in the accident dated 3-5-2003. As per the appellant-company the respondent neither replied to the said letter nor deposited the salvage value but straightaway approached the District Forum on 18-07-2003.
4. While rejecting the plea of the appellant-company holding it guilty of deficiency in service, the District Forum issued the following directions:-
i) To pay a sum of Rs.
49,821/- (Rs.36,621/- for purchase of spare parts + Rs. 10,500/- labour charges + Rs. 2,700/- as crane charges) with interest @9% p.a. from 6-7-2003 till realization.
ii) To pay a sum of Rs.
5,000/- as compensation to the complainant.
iii) To pay a sum of Rs. 2,000/- as cost of litigation to the complainant.
5. We have taken a view that non-settlement of a claim of any insured or consumer within a reasonable period one way or the other either by rejecting or allowing is itself a deficiency in service and entitles the consumer to an amount of compensation as to the mental agony, harassment and having been kept in suspended animation for such a long period irrespective of failure or success of his claim. In the instant case, the appellant-company was harping upon the respondent to deposit the salvage value without assessing the loss. The foremost duty of the Surveyor in this case was to assess the value of salvage, damage and estimated cost of repair. But not doing so, the Surveyor failed to perform his function properly.
6. It was on the premise of documentary evidence produced by the respondent that the District Forum has awarded actual expenses incurred by the respondent on the repairs of the vehicle.
7. The contention of the Ld. Counsel for the appellant that the District Forum acted over-board by awarding not only interest but also compensation is completely devoid of merits. Every consumer who has a rightful claim over the money has a right to get interest over that if it is not paid to him within a reasonable period. Interest is granted on the doctrine of equity, good conscience, and justice emanating from the principles enshrined in Sec. 340 CPC, empowering the Civil Courts to award interest, where there is no term in the contract. So far as the word compensation is concerned, it has been provided a very wide connotation and encompasses in its fold each and every element of suffering, i.e. mental harassment, emotional suffering, physical discomfort, loss of business, expenses incurred by the consumer by running from pillar to post to get his grievance redressed from public officers, particularly, the public sector insurance companies. In this regard the observations of the Supreme Court made in the case of Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 are as under:-
The word compensation is of a very wide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done. The Commission or the Forum is entitled to award not only value of goods or services but also to compensate a consumer for injustice suffered by him. The Commission/ Forum must determine that such sufferance is due to malafide or capricious or oppressive act. It can then determine amount for which the authority is liable to compensate the consumer for his sufferance due to misfeasance in public office by the officers. Such compensation is for vindicating the strength of law.
8. For the benefit of the appellant-insurance company and its public officers, we may also bring to their notice the view taken by the Supreme Court that for any malafide or whimsical or capricious conduct of the public officers the District Forum and the Consumer Commissions should direct recovery of compensation amount from the salary of the responsible public officers for indulging in such acts of arbitrariness. These observations have also been made in the case of Balbir Singh (supra) which are noteworthy and are as under:-
This Court then went on to hold as follows:
10. who should pay the amount determined by the Commission for harassment and agony, the statutory authority or should it be realised from those who were responsible for it? Compensation as explained includes both the just equivalent for loss of goods or services and also for sufferance of injustice. For instance in Civil Appeal No.... of 1993 arising out of SLP (Civil) No.659 of 1991 the Commission directed the Bangalore Development Authority to pay Rs.2446.00 to the consumer for the expenses incurred by him in getting the lease-cum-sale agreement registered as it was additional expenditure for alternative site allotted to him. No misfeasance was found. The moment the authority came to know of the mistake committed by it, it took immediate action by allotting alternative site to the respondent.
It was compensation for exact loss suffered by the respondent. It arose in due discharge of duties. For such acts or omissions the loss suffered has to be made good by the authority itself.
But when the sufferance is due to mala fide or oppressive or capricious acts etc. of a public servant, then the nature of liability changes. The Commission under the Act could determine such amount if in its opinion the consumer suffered injury due to what is called misfeasance of the officers by the English Courts. Even in England where award of exemplary or aggravated damages for insult etc. to a person has now been held to be punitive, exception has been carved out if the injury is due to, 'oppressive, arbitrary or unconstitutional action by servants of the Government' (Salmond and Heuston on the Law of Torts).
Misfeasance in public office is explained by Wade in his book on Administrative Law thus:
"Even where there is no ministerial duty as above, and even where no recognised tort such as trespass, nuisance, or negligence is committed, public authorities or officers may be liable in damages for malicious, deliberate or injurious wrong-doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury." (p.777).
The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell & Co. Ltd. v. Broome [1972 AC 1027: (1972) 1 All ER 801] on the principle that, 'an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power.
In Rookes v. Barnard [1964 AC 1129: (1964) 1 All ER 367, 410] it was observed by Lord Devlin, 'the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service'. A public functionary, if he acts maliciously or oppressively and the exercise of powers results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestly and bona fide. But when it arises due to arbitrary or capricious behaviour then it loses its individual character and assumes social significance.
Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to society is far more grievous. Crime and corruption thrive and prosper in the society due to lack of public resistance.
Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it.
Therefore the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook.
Wade in his book - Administrative Law, has observed that it is to the credit of public authorities that there are simply few reported English decisions on this form of malpractice namely, misfeasance in public offices, which includes malicious use of power, deliberate mal-administration and perhaps also other unlawful acts causing injury. One of the reasons for this appears to be development of law which apart, from other factors succeeded in keeping a salutary check on the functioning in the government or semi-government offices by holding the officers personally responsible for their capricious or even ultra vires action resulting in injury or loss to a citizen by awarding damages against them. Various decisions rendered from time to time have been referred to by Wade on Misfeasance by Public Authorities. We shall refer to some of them to demonstrate how necessary it is for our society.
In Ashby v. White (1703) 2 Ld. Raym 938 the House of Lords invoked the principle of ubi jus ibi remedium in favour of an elector who was wrongfully prevented from voting and decreed the claim of damages.
The ratio of this decision has been applied and extended by English Courts in various situations.
In Roncarelli v. Duplessis (1959) 16 DLR 2d 689 the Supreme Court of Canada awarded damages against the Prime Minister of Quebec personally for directing the cancellation of a restaurant-owner's liquor licence solely because the licensee provided bail on many occasions for fellow members of the sect of Jehovah's Witnesses, which was then unpopular with the authorities. It was observed that, 'what could be more malicious than to punish this licensee for having done what he had an absolute right to do in a matter utterly irrelevant to the Alcoholic Liquor Act? Malice in the proper sense is simply acting for a reason and purpose knowingly foreign to the administration, to which was added here the element of intentional punishment by what was virtually vocation outlawry.
In Smith v. East Elloe Rural District Council [1956 AC 736: (1956) 1 All ER 855)] The House of Lords held that an action for damages might proceed against the clerk of a local authority personally on the ground that he had procured the compulsory purchase of the plaintiff's property wrongfully and in bad faith.
In Farrington v. Thompson [1959 UR 286] the Supreme Court of Victoria awarded damages for exercising a power the authorities knew they did not possess. A licensing inspector and a police officer ordered the plaintiff to close his hotel and cease supplying liquor. He obeyed and filed a suit for the resultant loss. The Court observed:
"Now I take it to be perfectly clear, that if a public officer abuses his office, either by an act of omission or commission, and the consequence of that is an injury to an individual, an action may be maintained against such public officer."
In Wood v. Blair [The Times, July 3, 4, 5, 1957 (Hallet J and Court of Appeal] a dairy farmer's manageress contracted typhoid fever and the local authority served notices forbidding him to sell milk, except under certain conditions. These notices were void, and the farmer was awarded damages on the ground that the notices were invalid and that the plaintiff was entitled to damages for misfeasance. This was done even though the finding was that the officers had acted from the best motives.
11. Today the issue thus is not only of award of compensation but who should bear the brunt.
The concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socio-economic outlook. The authority empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good.
In discharging this duty honestly and bana fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable.
But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose? In a modern society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the Court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law.
It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries."
We are in full agreement with what is observed herein. Thus the law is that the Consumer Protection Act has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory and public authorities. Such authorities become liable to compensate for misfeasance in public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen.
9. For the foregoing reasons, we do not find any infirmity in the impugned order and maintain the same.
10. Appeal is disposed of in above terms. Payment shall be made within one month from the date of receipt of a copy of this Order.
11. Copy of Orders, as per statutory requirement, be forwarded to the parties and the concerned District Forum and thereafter the file be consigned to record.
12. FDR/Bank Guarantee, if any, be released under proper receipt.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member HK