National Consumer Disputes Redressal
Sanjay Shankarsa Mamarade vs Maharashtra State Financial ... on 7 January, 2002
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NATIONAL
CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
ORIGINAL
PETITION N0. 9 OF 1995
Sanjay Shankarsa Mamarade
Amraoti Badnera Road,
Amravati ( M.S.)
Through:
V.G. Vyas,
Vice President,
Akhil Bharatiya Grahak Panchayat,
Vidarbha Region,
Dhantoli Nagpur. Complainant
Vs.
1. Managing
Director,
Maharashtra State Financial Corporation,
Amrit
Keshav Nayak Marg, Bombay.
2. General
Manager,
Maharashtra State Financial Corporation,
Amrit
Keshav Nayak Marg, Bombay.
3.
Regional Manager,
Maharashtra State Financial
Corporation,
Amravati
(Maharashtra) Opposite parties
BEFORE:
HONBLE MR. JUSTICE D.P. WADHWA,
PRESIDENT
HONBLE MR. JUSTICE J.K. MEHRA,
MEMBER.
MRS.
RAJYALAKSHMI RAO, MEMBER.
MR.
B.K. TAIMNI, MEMBER.
Finances agreed to be provided by Maharashtra State
Financial Corporation for hotel
project - two instalments released - money also spent by complainant - stoppage
of further instalments - action of Maharshtra State Financial Corporation arbitrary and unbusinesslike and actuated by
irrelevant considerations - complainant entitled to appropriate relief.
For the complainants : Mr. Sanjay Mankad, Authorised
Representative
For the opposite Parties : Mr. M.K. Mishra, Advocate
For Mr. Ajit S. Bhasme, Advocate
O R D E R
DATED THE 7th JANUARY, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT) This complaint had been filed on 17.1.1995 by Sanjay Shankarse Mamarade (Mamarade) of Amravati through V.G. Vyas, Vice President, Akhil Bhartiya Grahak Panchayat. A complaint could have been filed either by the consumer or by any voluntary consumer association. This complaint filed by Mamarade through Vice President, Akhil Bharatiya Grahak Panchyat, is misconceived. Akhil Bharatiya Grahak Panchyat cannot take the role of a lawyer, though there is no bar for any voluntary consumer association to itself file a complaint but it need not step in when consumer is an industrialist or a trader and can look after his own interest. Opposite parties are Maharashtra State Financial Corporation (MSFC) and their General Manager and Regional Manager. Grievance of the complainant is that though MSFC sanctioned a loan of Rs.30.00 lakhs for the hotel project of Mamarade, yet only two instalments totalling Rs.3,77,000/- were released. Alleging deficiency in service Mamarade made two alternative prayers :
(i) Compensation of Rs.34,49,030.00 comprising of Rs.21,30,000.00 (the amount of subsidy which was to be given by SICOM State Industrial and Investment Corporation of India), interest on the investment made by Mamarade himself, Rs.1.00 lakh as mental torture, loss of profit and refund of processing fee and other expenses totalling Rs.39,68,930/-; or
(ii) Balance loan of Rs. 26.30 lakhs with interest @ 16% per annum on the entire loan etc. From the prayers, as we have seen above, Mamarade is claiming amount of Rs.21.30 lakhs which he could have got as subsidy from SICOM. But then SICOM is not a party in the proceedings and we have been unable to find as to the circumstances under which such subsidy could have been given, though it is claimed by Mamarade that such subsidy is given on the basis of 30% of project cost which was also taken into account by MSFC while sanctioning the loan of Rs.30.00 lakhs. Mamarade himself was to invest capital of Rs.16.80 lakhs and to arrange and invest unsecured loan of Rs.6.35 lakhs.
Mamarade had a hotel project in sight at Amravati with swimming pool, health centre, etc. The entire project required capital outlay of Rs.74.45 lakhs. Mamarade approached MSFC for grant of loan. He paid necessary processing fees to MSFC for it to examine the project and sanction loan. Mamarade alleged that after examining the pros and cons of the hotel project and also taking into consideration special capital incentive through SICOM, MSFC sanctioned a loan of Rs.30.00 lakhs by their letter dated 2.7.1992 . The entire loan of Rs.30.00 lakhs was towards the fixed assets on 55% margin i.e. for the fixed assets of Rs.100/-, Mamarade would be advanced loan of Rs.45/- only. Complainant alleged that though SICOM is empowered to grant such incentive the quantum of loan is based only on the cost of the approved project by MSFC. Loan was to be disbursed in instalments depending upon the progress of the work in accordance with a set time schedule.
Progress of the construction work done was required to be evaluated by the valuer approved by MSFC. Terms of loan were accepted by Mamarade. It was also alleged that the amount of subsidy by SICOM was nothing but grant-in-aid given by the State Government to encourage commercial and industrial activities in the State.
Then the allegations are that final effective steps for grant of subsidy from SICOM were not taken by MSFC. There was, however, no commitment from SICOM sanctioning the subsidy or even as to the eligibility of Mamarade for the subsidy. Complainant has alleged that due to non-disbursement of loan by MSFC after second instalment, he was disabled to create the entire fixed assets which would have surely entitled the complainant to get the full amount of subsidy i.e. Rs.21.30 lakhs. It, therefore, appears to us for claim of the amount of subsidy from SICOM whatever the fault of MSFC, SICOM should have been made party in these proceedings. SICOM had informed Mamarade by its letter dated 15.12.1994 that as per the provisions of the scheme, complainant had to complete the final effective steps before 30.9.1994 otherwise he might not get any incentive even after he might have submitted his incentives application after completion of initial effective steps. Admittedly, no such steps were taken and there is nothing on the records to show that SICOM sanctioned incentive after the loan was sanctioned by MSFC by their letter dated 2.7.1992. Based on the valuation of the work done by Mamarade two instalments were released by MSFC. A sum of Rs.2,90,000/- was released on 2.9.92 as first instalment and another sum of Rs.87,000/- on 19.1.1993 as the second instalment. Thereafter no instalment was released. Now the game of complaints started against each other. Complainant says that he continued to work for the construction of whole of the building and swimming pool at the project site and by June 1993 he had spent Rs.27,25,510/- but no evaluation was done by MSFC. He wrote letters to MSFC for release of further instalments. He said that he also paid a sum of Rs.10,000/- to MSFC as interest which had fallen due on the first two instalments received by him. It is then contended by the complainant that the Regional Manager of MSFC in July, 1994, after a year of his seeking third instalment of the loan, asked him orally to produce the written evidence indicating that the proposed Amravati Narkhed railway line was not passing through the hotel project site, so that MSFC could consider disbursement of further loan instalment. Mamarade says then he contacted the concerned officers of the District who told him that they had no official information about any such railway line passing through the project site of the hotel. Rather releasing further instalments MSFC cancelled the balance loan by their cryptic letter dated 5.9.94 No reasons were given as to why MSFC took such step. It would appear that earlier to this step of cancellation of loan MSFC did write to the complainant to pay the interest which had fallen due on the amount already advanced to the complainant and it was also pointed out to the complainant that he had not submitted any letter from the Town Planning Authority to the effect that the proposed Amravati Narkhed railway line was not passing through the site of the hotel project and that in spite of the assurance given by the complainant such letter was not given. Mamarade was thus told that in the absence of any such letter it would not be possible for the MSFC to disburse any loan to him. As to what information MSFC itself possessed regarding passing of the railway line nothing was mentioned in their letters to Mamrade. Mamrade protested by letter dated 15.9.1994 to the cancellation of the loan to him by MSFC. He wanted to know the reasons for such cancellation. Mamrade did not hear anything from MSFC. Rather he received a notice from Mrs. Laxmi H. Pangarkar, advocate for MSFC. This notice is dated 18.10.1994. It refers to the sanction of loan of Rs.30.00 lakhs and also the disbursement of Rs.3.77 lakhs to Mamarade. Reference had also been made to the deed of mortgage of immovable property executed by Mamarade and his mother as security for the loan. It was stated that Mamarade defaulted in payment of interest on the amounts given to him which interest amount came to Rs.1,41,904 as on 30.6.1994. This notice also informed Mamarade that the Railway Ministry of the Government had announced a new track of railway line from Narkhed to Amravati and the portion of the land of the hotel project was under proposed railway line. As such it was stated that implementation of the project was allowed to be compelled to be stopped, but you have not given any other alternative proposal of your implementation and hence, all the outstanding amount is recalled. Mamarade therefore, was called upon to return the amount of loan taken by him with interest within 15 days of the receipt of the notice. He was also asked to pay interest @ Rs.306/- per day from 1.7.1994 till realisation.
This notice was replied to by letter dated 1.11.1994 by Mr. Anand Parchure, advocate of Mamarade. Allegations contained in the notice of MSFC were denied. It was pointed out that officers of MSFC were creating unnecessary hurdles which started at the time of releasing second instalment and finding of faults with the project when there was none. Mamarade was intimated by MSFC only on 29.7.94 of the proposed Narkhed Amravati railway line passing though the site of the hotel project and that unless Mamarade produced certificate from the competent authority further loan would not be disbursed. Mamarade in reply to this wrote letter dated 10.8.94 to MSFC to get themselves a certificate from the competent authority at their level since he was unable to produce the same. It was so as it was stated that competent authority expressed its inability to issue any such certificate to a private party. It was pointed out that a certificate from the Commissioner, Amravati Division was submitted by Mamarade that there was no such proposal of Narkhed-Amravati line. In his reply of advocate Parchure on behalf of Mamarade strong protest was made as to the wrong and untenable allegations by MSFC. There is nothing on record to show that railway line passes through the land earmarked for hotel project.
Having thus fed up and totally frustrated, complainant filed this complaint on 17.1.95. During pendency of the complaint MSFC retraced its steps and proposed to renew the loan on certain conditions. This, it would appear, was not agreed to by Mamarade who set down his own conditions. Nothing happened thereafter. Affidavits were filed in support of their respective claims before us and arguments were addressed. The whole case is based on record and case of the parties is fully reflected in the documents brought on record and which we have already detailed above.
We have been unable to find any justifiable ground for MSFC to deny disbursement of loan to Mamarade. Once having sanctioned the loan and then stopping the disbursement after having released part of the loan without any cause, would certainly amount to deficiency in service on the part of the MSFC. We have been referred to a decision of the Supreme Court in the case of U.P. Financial Corporation Vs.M/s. Naini Oxygen & Acetelene Gas Ltd. JT 1994 (7) SC 551, by MSFC to contend that a Corporation established under the State Financial Corporation Act, 1951 is an independent body and has to function in a business like manner. Relevant portion of the judgement we extract:
However, we cannot lose sight of the fact that the Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such, in the discharge of its functions, it is free to act according to its own light. The view it forms and the decisions it takes are on the basis of the information in its possession and the advice it receives and according to its own perspective and calculations. Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however more prudent, commercial or business like it may be, for the decision of the Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable. There could not be any dispute on the principles so laid by the Supreme Court. But then a State Financial Corporation having sanctioned a loan cannot go back on its promises leaving the promisee high and dry which will certainly make the promisee entitled to damages. It was pointed out that during the course of arguments that on 17.2.1995 MSFC approached the Railway Administration to know the factual position of the proposed railway line and in response thereto Railway Administration sent a letter dated 9.3.1995 informing MSFC that proposed railway line was passing through the land bearing survey No.53/2 which was coming under acquisition. That being so it was alleged by MSFC that road to hotel from Badnira road would be completely blocked and there would be no approach road to the hotel site. It was also pointed out that the alternative approach road submitted by Mamrade in these proceedings to the National Commission could also not be used as enquiries from the Town Planning Authority had revealed that that was a private road and would not be available. In spite of that it was contended that MSFC decided to revoke its decision of recalling the loan and agreed to revive the cancelled loan limit by its letter dated 6.4.95 on certain terms. In response to that Mamarade wrote letter dated 19.4.1995 containing terms which, according to MSFC, appeared to be not practicable and helpful to complete the hotel project. Net result was that these talks to revive the hotel project failed.
It would appear that when the loan was cancelled by MSFC it had no evidence of about any railway line passing through the land on which hotel project was being laid. Mamarade is right when he states that he did ask the MSFC to find it for themselves if any railway line was passing through the land from the Town Planning Authority or any other authority as no authority was prepared to give him anything in writing. Knowing the bureaucratic working, to our mind, allegations of Mamarade are correct. So much for the independent working of MSFC, a Corporation constituted under the State Financial Corporation Act, who is given a free hand in its working, underscoring the right of MSFC to take its own decisions in a commercial and business like manner. But then as a State Government Corporation it has to act in a reasonable, bona fide manner and not in arbitrary fashion. Once having agreed to provide finances to Mamarade for his hotel project, it could not leave him midway after he had spent so much amount on the assurances of MSFC that it will abide by its promise till the project was complete. MSFC had withdrawn its helping hand leaving Mamarade bewildered. Mamarade had made serious allegations against the then Regional Manager of MSFC but then he had not impleaded him by name as a party in the proceedings. General Manager and Regional Manager of MSFC are though opposite party No. 2 and 3 but they are in their official capacity. Action of the MSFC in not releasing further instalments was in breach of its promise. Their action was arbitrary and unbusinesslike and actuated by irrelevant considerations. Mamrade is thus entitled to appropriate reliefs against MSFC for huge investments made by him and the stipulation that instalments will be released from the sanctioned loan by MSFC.
Once having held that MSFC was deficient in service, the question now that arises for consideration is to what amount of damages/compensation is Mamarade entitled. In the absence of SICOM being party, it cannot be said that Mamarade is entitled to compensation equal to the amount of subsidy. His claim for proposed profit from hotel project would appear too remote to be taken into account. Similarly his claim for travelling expenses, legal fees, refund of processing fee, etc. also cannot be allowed without proof.
MSFC has claimed interest on the loan amount already advanced @ 20% per annum.
Mamarade also claimed Rs.8,19,000/- as interest @ 20% per annum on the investment of Rs.27.26 lakhs made by him. He has placed on record the valuation report showing his investment amounting to Rs.22.10 lakhs after relese of the second instalment. There is no contrary valuation report filed by the MSFC. Mamrade would certainly be entitled to this amount of interest as his investment remained blocked for the fault of MSFC.
Then Mamarade is also to refund the amount of Rs.3,77,000/- with interest @ 20% per annum. As per the calculation of MSFC in their letter dated 1.11.1993 which interest comes to Rs.58,543/- on the amount of Rs.3,77,000/-. We will debar MSFC claiming any interest after 1.11.1993 because it had defaulted in not releasing the third and other instalments from the loan sanctioned for the project. MSFC has no equity in its favour because of its conduct.
Rs.4,35,543/- [Rs.3,77,000/- + Rs.58,543] is thus to be deducted from the interest amount payable to Mamarade by MSFC.
Considering the passage of time, it is not possible for us to put the clock back and direct MSFC to release further instalments of the loan which was promised as back as in July, 1992. We are also not aware of stage of the project after cancellation of the loan by MSFC. We have seen above that an attempt was made by both the parties to settle their dispute but it failed. We have no resources to tell the parties how their respective finances should be arranged at this stage for the project if not completed so far. Complainant has not told us as to what steps he took or could have taken in remedying the loss that might have occasioned to him on account of breach of the obligation by the MSFC. As noted above it is not possible at this stage to direct the MSFC to perform its obligations and put the hotel project back on the track. The only course, therefore, left with us to award compensation to Mamarade for the default committed by MSFC in failing to discharge its obligations. Mamarade has claimed Rs.1.00 lakh on account of mental torture as he said he had to invest a huge amount of Rs.27.26 lakhs on the project in the hope of getting loan from MSFC and subsidy from SICOM. We are of the view that he is certainly entitled to this amount as compensation for sufferings he had to undergo.
Accordingly complaint is allowed. In our opinion, an award of Rs. 4,84,457 [Rs.8,19,000 - 435,543=3,83,457 + 1,00,000 ] as compensation will meet the ends of justice. This amount shall be payable to Mamarade within a period of two months and in case of default it will carry interest @ 18% per annum from the date of this order till payment. Mamarade shall be entitled to costs which we assess at Rs.10,000/-. J (JUSTICE D.P. WADHWA) PRESIDENT J (J.K. MEHRA) MEMBER .
(RAJYALAKSHMI RAO) MEMBER .
(B.K. TAIMNI) MEMBER NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.1483 OF 2001 (From the order dated 4.7.2001 in Appeal No.535/1997 of the State Commission Delhi) M/s.
Tape Manufacturing Co., NOIDA Petitioner
Vs.
M/s. T.C.C.
Carriers Pvt. Ltd. Respondent
BEFORE:
HONBLE MR. JUSTICE D.P. WADHWA,
PRESIDENT
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER.
Principles of natural justice - non-appearance of the party in spite of repeated notices - yet the State Commission holding violation of rules of natural justice - order of the State Commission set aside
- principles of natural justice do not demand that a person against whom order is proposed to be passed must be physically brought to the Court when he chooses not to appear in spite of notices
- also not the procedural requirement registered notice sent to the addressee must be received back even beyond 30 days of the notice sent by post to him- presumption of service when raised For the petitioner : Mr. Deepak Tyagi, Advocate For the respondent : N E M O O R D E R DATED THE 15th February, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT) Nobody appears for the respondent though notice was sent by registered post on 27.11.2001. We proceed to hear the matter. Complainant is the petitioner before us. Respondent was opposite party before the District Forum.
In normal circumstances we would not have interfered with the impugned order of the State Commission setting aside the order of the District Forum directing ex-parte proceedings against the respondent-opposite party, but considering circumstances of the case we are constrained to exercise our jurisdiction under clause (b) of Section 21 of the Consumer Protection Act. We are firmly of the view that State Commission in the present case has acted in the exercise of its jurisdiction with material irregularity. When the matter came up for admission on September 11, 2001 we passed the following order:
The contention raised is that registered notice was sent on 29.2.1996 for 27.3.96. Since it was not received back, it was the presumption that the Respondent/Opposite Party was in receipt of the notice and he was proceeded exparte. The only contention raised in the application by the Opposite Party was that it did not receive the notice. It is stated that the notice was sent on the correct address of the Respondent, as the Respondent is a private limited company. Apart from saying that the notice was not received, no further evidence was led as to how a registered letter properly addressed was not received. It is stated that the State Commission without appreciation the correct state of affairs set aside the order passed exparte by the District Forum.
Admit. Issue notice to the Respondent returnable on 15.2.2002. There shall be stay of proceedings before the District Forum. Complainant filed a complaint before the District Forum alleging deficiency in service on the part of the respondent-opposite party - a common carrier voilating the instructions for delivery of the consignment entrusted to it. This complaint was filed on 30.5.1995. Notice of filing the complaint was issued by registered post for 28.11.1995. On this date there was no quorum in the District Forum and the matter stood adjourned to 16.5.96. But this date was advanced to 23.2.96 and at the request made by the complainant on 23.2.96 notice was again sent to the respondent for 27.3.96 by registered post. Since the registered post which was addressed to the respondent, a company registered under the Companies Act and having been correctly addressed, was not received back service was taken to be complete. As the respondent did not appear, he was proceeded ex-parte. On 17.9.96 final order, which was ex-parte, was passed in favour of the complainant. Now we come to the second stage. On 30.9.96 certified copy of the order passed on 17.9.96 was sent by registered post to the respondent. There was no response from the respondent. It is stated that on 16.10.96 complainant himself wrote a letter by registered post to the respondent requiring it to make payments in terms of the order dated 17.9.96. This registered letter also the complainant did not receive back.
On 29.11.1996 complainant filed proceedings against respondent for initiating action under Section 27 of the Consumer Protection Act, 1986. Notice of this application was sent by registered post to the respondent on 2.1.1997 for 26.2.1997. As usual it was not received back. Proceedings were thereafter adjourned to 8.4.1997 and a fresh notice in the meanwhile was issued to the respondent as a last opportunity. On this date respondent did appear and was represented by its employee one Manoj Agarwal. He sought an adjournment on the plea that the Advocate Mr. Sandeep Gupta was busy in High Court. Matter stood adjourned to 14.5.1997.
On this date i.e. 14.5.97 nobody appeared for the respondent and bailable warrants were ordered to be issued for 4.8.97. It would appear that bailable warrants could not be issued and on 21.7.97 respondent moved an application for setting aside the ex-parte order dated 17.9.96.
Application was then adjourned to 4.8.97. Complainant was given a copy of the application for setting aside the order dated 17.9.96 and for reply and arguments it was adjourned to 4.9.96. On this date arguments were heard and the order reserved. On 25.9.97 application for setting aside the ex parte order was dismissed.
Respondent-opposite party went in appeal before the State Commission. By order dated 4.7.2001, which is impugned before us appeal was allowed and the ex parte order dated 17.9.96 was set aside. State Commission was of the view that in this case rules of natural justice had been violated and that the respondent-opposite party should have been given an opportunity to represent its case. It recorded principles of natural justice require, that no one should be condemned unheard and therefore we are of the opinion the given facts as detailed above the appellant deserves the opportunity to present its case before the District Forum. It is difficult to appreciate the reasoning of the State commission in the circumstances of the present case. After what has been narrated above about the events that happened before the District Forum it is trite to say that rules of natural justice had been violated.
State Commission has not kept in view the basis as to how a consumer dispute is to be decided expeditiously while observing the principles of natural justice. The principles of natural justice do not demand that a person against whom order is proposed to be passed must be physically brought to the court when he chooses not to appear in spite of notices to him and it is also not the procedural requirement that registered cover sent to the addressee must be received back even beyond 30 days of notice sent by post to him. In these circumstances a presumption can be raised that addressee is served and that on his mere statement that he did not receive the registered cover when the registered cover has been sent on the correct address, cannot displace that presumption. As to how presumption can be displaced will depend upon the facts and circumstances of the case. It could not be said that the respondent-opposite party did not receive the notices sent to it by registered post at its correct registered office address. We do not think it could ever be disputed that principles of natural justice had not been complied in the present case. We, therefore allow this petition and would set aside the order of the State Commission while restoring that of the District forum. Parties shall appear before the District Forum on 8th April, 2002.
J (JUSTICE D.P. WADHWA) PRESIDENT .
(RAJYALAKSHMI RAO) MEMBER (B.K. TAIMNI) MEMBER NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 465 OF 1995 (From the order dated 19.5.1995 in S.C. Case No.16/O/93 of the State Commission West Bengal) Unit Trust of India Appellant Vs. Sri Shankar Das Respondent BEFORE:
HONBLE MR. JUSTICE D.P. WADHWA, PRESIDENT HONBLE MR. JUSTICE J.K. MEHRA, MEMBER.
MRS.
RAJYALAKSHMI RAO, MEMBER.
MR.
B.K. TAIMNI, MEMBER.
Shares - right share - denial to allot right shares to holder of original shares - consumer dispute arise. For the appellant : Mr. S. Ghosh, Advocate For the respondent : N E M O O R D E R DATED THE 13th February, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT) Appellant-Unit Trust of India was the opposite party before the State commission on a complaint filed by the respondent. State Commission by its order dated 19.5.1995 held deficiency in service on the part of the appellant in not allotting 500 right shares to the respondent-complainant whereas it had received the requisite amount within the period as specified by it.
Master shares of the appellant were issued on right basis from 15.3.1989 to 14.4.1989 and the allotment was made on 29.5.1989. Complainant deposited Rs.6,000/- with Bank of India (since discharged from any liability by the State Commission) on 11.4.1989 for transmitting the same to the appellant. Bank had said that the amount was sent to the appellant before 14.4.1989 which fact could not be denied by the appellant.
Since the complainant did not hear anything either from the Bank or the appellant regarding allotment of right master shares it was by letter dated 9.7.1991 that he was informed by the appellant that the complainant was not allotted right shares. Complaining deficiency in service, complainant filed his complaint before the State Commission. He said in the meanwhile master share holders also received allotment of bonus shares @ 50% of the shares held, from the appellant. He therefore said he was deprived of 750 shares the value of which as on 3.4.1992 was Rs.124/-
per share. This complaint was filed on 15.4.1993, thus claiming damages amounting to Rs.93,000/- with interest and a further compensation of Rs.1,10,000/- . The fact that in the Economic Times the value of the master share as on 3.4.1992 was Rs.124/-, had not been denied by the appellant. As noted above, it was the stand of the Bank that the amount of Rs.6,000/- had been paid to the appellant for allotment of 500 right shares to the complainant. This was not done. Deficiency in service, therefore, on the part of the appellant is writ large on the face of it. Taking into account the value of the master share as on 3.4.1992 State Commission awarded him interest @ 18% per annum from May, 1992. But this interest was awarded on the amount of Rs.97,860/-. Rs.1,000/- was also awarded as cost.
Aggrieved by the order of the State Commission, appellant has come before us. It was submitted by Mr. Ghosh, learned counsel for the appellant that since complainant was only prospective allottee of master shares and moreover he wanted to resell the mater shares, he could not be termed as a consumer. His further submission was that the complaint was barred by limitation as the allotment of shares closed on 29.5.1989 to the knowledge of all concerned. We are unable to accept any of these three contentions. It was not the casse of new allotment of shares but that of right shares to which complainant was entitled to on the strength of his holding original shares, he would certainly be a consumer and the dispute raised would be consumer dispute. The objection that the respondent was to resell the shares would appear to be irrelevant as there is nothing on the record to support this contention. Even otherwise it is not the case of the appellant that complainant was indulged in sale and purchase of shares. Complainant came to know about non-allotment of shares to him by letter of the appellant on 9.7.1991 from which date he would have a cause of action to file the complaint. It was within the limitation. We do not find any error in the reasoning of the impugned order of the State Commission for us to take a different view except award of interest @ 18% appears to be on the higher side. We would therefore, modify the order of the State Commission and would direct that the complainant-respondent would be entitled to Rs.93,000/- being the value of 750 shares @ 124/- per share with interest @ 12% per annum from 1.5.1992 till payment. If the appellant has since received the amount as per the award of the State Commission, he shall refund the amount of excess interest received by him. This appeal is disposed of as above. There shall be no order as to costs. J (JUSTICE D.P. WADHWA) PRESIDENT J (J.K. MEHRA) PRESIDENT (RAJYALAKSHMI RAO) MEMBER (B.K. TAIMNI) MEMBER NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 488 OF 1998 (From the order dated 29.1.1998 in Appeal No.243/97 of the State Commission, Punjab) National Insurance Company Ltd.
Petitioner Vs. New Patiala Trading Company Respondent BEFORE:
HONBLE MR. JUSTICE D.P. WADHWA, PRESIDENT HONBLE MR. JUSTICE J.K. MEHRA, MEMBER.
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER Insurance Act, 1938 - Section 64 UM- sub sections (2),(3) and (4) - second surveyor if can be appointed -
Scheme of Section 64UM, particularly of sub-section (3) and (4) would show that insurer cannot appoint second surveyor just as a matter of course. If the report of the surveyor or loss assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second surveyor - prima facie credence to be given to the report of the surveyor or loss assessor. For the petitioner : Mr. Kishore Rawat, Advocate For the respondent : Mr. S.L. Gupta, Advocate for Mr. R.P. Vats, Advocate ORDER Dated the 8th February, 2002 PER JUSTICE D.P. WADHWA, (PRESIDENT).
It is the opposite party which is petitioner before us. Petitioner is aggrieved by the order of the State Commission enhancing the insurance amount payable to the respondent-complainant, on appeal filed by the complainant against the order of the District Forum. In the complaint it is stated that respondent had taken an insurance policy for Rs.1,10,000/- for his shop known as Shop Keepers Policy from the petitioner. Policy covered all the risks of all the articles lying in the shop against flood etc. It is not disputed that there was flood in the city of Patiala during the validity of the policy and the stock of the respondent was damaged. He lodged his claim under the policy with the petitioner on 15.7.1993.
Petitioner appointed Shekhar & Co., Surveyors who made their report on 4.10.1993 assessing the loss to the tune of Rs.86,290.95. In spite of the report of the surveyors, no compensation was paid to the respondent.
Complaining deficiency in service, respondent-complainant approached the District Forum. On being noticed, the petitioner-insurer took up the plea that it had appointed M/s. N. Kumar Chawla & Company as second surveyor who assessed the loss at Rs.46,728/-. Claim of the respondent was settled at Rs.46,600/- which was paid to him in full and final settlement of his claim. It was, therefore stated that there was no deficiency in service on the part of the petitioner. Evidence was led by both the parties before the District Forum which on the material on record concluded that insurance claim had been settled by making payment of Rs.46,600/- but as there was delay in making the payment, an amount of Rs.4600/- was awarded as compensation to the respondent-complainant. Another sum of Rs.128/- was also awarded which was deducted from the amount assessed by the second surveyor. Plea of the respondent that he had accepted the amount of Rs.46,600/- under protest was not accepted by the District Forum. Aggrieved by the order of the district Forum, respondent-complainant went in appeal before the State Commission. It was submitted before the State Commission that there was no justification for the petitioner to appoint the second surveyor and that District Forum was wrong in not accepting the contention of the respondent that he did not accept the amount of Rs.46,600/- voluntarily to settle his claim. State Commission did not find justification on the part of the petitioner in appointing the second surveyor. Reference was made to provisions of Section 64UM of the Insurance Act, 1938.
It was also held on examination of the material on record that the amount of Rs.46,600/- was accepted by the respondent under protest without losing its right to claim full amount of loss sustained by it. State Commission, therefore, allowed the appeal and directed that the respondent-complainant be paid further Rs.46,290.95 the amount of loss as assessed by the first surveyor with interest @ 12% with effect from 4.10.93 till payment. Respondent was also awarded cost of Rs.5,000/-. The amount of Rs.46,600/- which had been paid earlier by the petitioner was allowed to be adjusted. It is now the petitioner-insurer who is aggrieved.
Petitioner is challenging the order of the State Commission both as regards its finding and holding that a second surveyor could not have been appointed. We, however, would not disturb the finding of the State Commission that the amount of Rs.46,600/- was accepted by the respondent under protest. The question that now arises for consideration is if second surveyor could have been appointed under Section 64UM of the Insurance Act, 1938. This Section has been amended by the Act 41 of 1999 where for the words Controller of Insurance the word Authority constituted under the Insurance Regulatory and Development Authority Act, 1999 have been substituted. This Section 64 UM prescribes as to how a surveyor or loss assessor has to be given license to practice. An application for being licensed as surveyor or loss assessor has to be submitted in a prescribed form giving such qualifications as mentioned in Clause (D) of sub-section (1) of Section 64UM. Amount of fee payable is also prescribed and so also the period of validity of the license. There is a provision for duplicate license if original is lost and also provision for renewal of license after the expiry of prescribed period. Every surveyor and loss assessor is to comply with the code of conduct in respect of their duties, responsibilities and other professional requirements as may be specified by regulations made by the Authority. Stringent action is provided against surveyor or loss assessor who is guilty of breach of his duties or willfully making of false statement or acting in a fraudulent manner, entailing cancellation of license given to him. There are ten sub-sections of Section 64UM which it would appear prescribe a complete code as to how a surveyor or loss assessor should conduct. Under sub-section (2) of Section 64UM no claim in respect of a loss equal to or exceeding Rs.20,000/-
in value on any policy of insurance shall be admitted for payment or settled by the insurer unless he has obtained a report on the loss that has occurred from a person who holds a license issued under this section to act as a surveyor or loss assessor. There is a proviso to this sub-section which reads as under:
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor. Then sub-sections (3) and 4 read under:
(3) The Authority may, at any time, in respect of any claim of the nature referred to in sub-section (2), call for an independent report from any other approved surveyor or loss assessor specified by it and such surveyor or loss assessor shall furnish such report to the Authority within such time as may be specified by the Authority or if no time limit has been specified by it within a reasonable time and the cost of, or incidental to such report shall be borne by the insurer.
(1) The Authority may, on receipt of a report referred to in sub-section (3), issue such directions as it may consider necessary with regard to the settlement of the claim including any direction to settle a claim at a figure less than, or more than, that at which it is proposed to settle it or it was settled and the insurer shall be bound to comply with such directions:
Provided that where the Authority issues a direction for settling a claim at a figure lower than that at which it has already been settled, the insurer shall be deemed to comply with such direction if he satisfies the Authority that all reasonable steps, with due regard to the question whether the expenditure involved is not disproportionate to the amount required to be recovered, have been taken with due despatch by him:
Provided further that no direction for the payment of a lesser sum shall be made where the amount of the claim has already been paid and the Authority is of opinion that the recovery of the amount paid in excess would cause undue hardship to the insured:
Provided also that nothing in this section shall relieve the insurer from any liability, civil or criminal to which he would have been subject but for the provisions of this sub-section.
Scheme of Section 64UM, particularly of sub-section (3) and (4), would show that insurer cannot appoint second surveyor just as a matter of course. If the report of the surveyor or loss assessor is not acceptable to the insurer it must specify reasons but it is not free to appoint second surveyor. Appointment by the insurer of a second surveyor itself would be a reflection on the conduct of the first surveyor.
Surveyor or loss assessor is duty bound to give a correct report. If the insurer-Insurance Co.
finds that surveyor or loss assessor has not considered certain relevant points or has considered irrelevant points or for any other account it has reservation about the report, it can certainly require the surveyor or loss assessor to give his views and then come to its own conclusion, but insurer cannot certainly appoint a second surveyor-cum loss assessor to counter or even contradict or rebut the report of the first surveyor..
It is a statute which prescribes licensed surveyor or loss assessor who is to be appointed to assess the loss where it is equal to or more than Rs.20,000/-. Prima facie, therefore, credence will have to be given to the report of such approved surveyor or loss assessor. There is nothing on record in the present case to show that report submitted by first surveyor Shekhar & Co. was in any way faulty. In our view, therefore, State Commission was right in acting upon the report of the first surveyor and allowing the complaint of the respondent-complainant.
We, therefore, do not find any merit in this appeal and we dismiss it with cost which we assess at Rs.2,000/-.
.J. (D.P. WADHWA) PRESIDENT ..J. (J.K. MEHRA) MEMBER ..
( RAJYALAKSHMI RAO) MEMBER ..
( B.K. TAIMNI) MEMBER