National Consumer Disputes Redressal
Anshupati Fibres Pvt. Ltd. vs National Insurance Co. on 14 January, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER COMPLAINT NO. 32 OF 2007 Anshupati Fibres Pvt. Ltd. Through its Director, E-565-66, Phase-IV, Focal Point, Ludhiana Complainant Versus 1. National Insurance Co. Through its Senior Branch Manager, Dhulkot Road, Ahmadgarh, District Sangrur, Punjab 2. Chairman-cum-Managing Director National Insurance Company 3, Middleton Street, Kolkata Opposite Parties BEFORE: HON'BLE MR. JUSTICE V.K.JAIN, PRESIDING MEMBER For the Complainant : Mr. Jaswant Persoya, Advocate Mr. J. S. Chhabra, Advocate For the Opposite Parties : Mr. Vishnu Mehra, Advocate Ms. Sakshi Gupta, Advocate DATED: 14.01.2015 JUDGMENT
JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL) The complainant company took two fire policies from the opposite party, National Insurance Company Ltd. for the period from 09.09.2003 to 08.09.2004 in respect of its building at E-565-66, Phase-IV, Focal Point, Ludhiana as well as the plant and machinery etc. which it had installed and the stock it had kept in the aforesaid building. A fire broke out in the aforesaid premises of the complainant on 18.04.2004. The case of the complainant is that as a result of the aforesaid fire, it sustained loss amounting to Rs. 3.91 crores. On receipt of intimation of fire, the Insurance Company appointed a surveyor, M/s. V. K. Kharbanda & Associates, who submitted a preliminary submission report recommending the liability of the Insurance Company at Rs. 2.62 crores and also recommending on account payment of Rs. 1.25 crores. However, no payment in term of the aforesaid report was made to the complainant though there were several correspondence exchanged between the parties. Eventually, the complainant Company settled the claim with the Insurance Company and submitted an affidavit of its Director, Mr. Krishan Arora, settling the claim at Rs. 1,39,82,571/-. The aforesaid affidavit to the extent it is relevant reads as under:-
3. That M/s. Anshupati Fibres Pvt. Ltd. had lodged a claim with National Insurance Co. Ltd. due to loss suffered due to fire in factory premises on 17/18.04.2004.
4. That now the deponent has settled the claim with the National Insurance Company Ltd. on behalf of Anshupati Fibres Pvt. Ltd. for a sum of Rs. 1,39,82,571/- and has accepted the same towards full and final settlement of the claim.
5. That the claim has been settled with the free will of the deponent & without any coercion, influence or pressure of any kind from any side.
6. That the deponent on behalf of Anshupati Fibres Pvt. Ltd., undertakes not to claim anything more on account of the present claim in future.
2. Earlier an in account payment of Rs. 75 lakhs was paid by the Insurance Company to the complainant. Pursuant to the aforesaid settlement, a cheque dated 12.04.2006 for Rs. 64,82,571/- was issued to the complainant and was accepted and got encashed by it. After receiving the aforesaid cheque of Rs. 64,82,571/-, the complainant wrote a letter dated 15.04.2006 to the Insurance Company, under the signature of none other than Mr. Krishan Arora. The said letter to the extent relevant reads as under:-
We refer to subject and the cheque no. 712284, dated 12.04.2006, amounting to Rs. 64,82,571/- drawn on Punjab National Bank, Ludhiana given by you to us towards payment of our above referred loss. The net assessed loss as worked out by your survey, for which a consent letter dated 27.10.2004 was given by us, was Rs. 2,15,67,134/- . A sum of Rs. 75 lacs was paid to us as on account payment leaving behind a balance of 1,40,67,134/-.
The cheque for Rs.
64,82,571/- has been received by us under protest as it is much less than what was assessed by the surveyor appointed by you. You have not provided any justification for reducing the claim amount nor have given any details of the same.
You have arbitrarily reduced the amount of claim without providing any reason for the same. You have neither considered it necessary to discuss the same in detail with us nor have taken us into confidence. The assessment of loss was done by a surveyor appointed by you, who is technically qualified and is authorized by IRDA to do so. The ad hoc reduction of claim amount done by you ignoring completely the recommendations of surveyor is not desirable and is against the norms of the professionalism.
We were pressurized by you to execute the discharge vouchers and affidavit and since we were already suffering a heavy financial loss on account of non-payment of our genuine claim, we were left with no other alternative but to comply your pre-conditions for payment of the reduced amount.
Our claim has already been in-ordinately delayed and on account of blockage of funds we have suffered a huge financial loss. You are, therefore requested to release the balance payment of our claim, alongwith interest, as per assessment done by your surveyor within 15 days of the receipt of this letter failing which we will be left with no other option but to take legal resort in the matter.
3. Since, the Insurance Company did not make any further payment, the complainant approached this Commission by way of this complaint seeking the following reliefs:-
a) direct the opposite parties to pay Rs. 75,84,563.00 to the Complainant on account of arbitrary reduction in the claim amount;
b) direct the opposite parties to pay the amount of Rs. 25,07,174.00 on account of interest paid to Financial Institutions/Bank due to non-payment of claim amount by the opposite party;
c) direct the opposite parties to pay a sum of Rs. 12,52,579.00 towards power consumption borne by the complainant due to non settling the claim by the opposite parties;
d) direct the opposite parties to pay Rs. 5 lacs to the Complainant on account of mental agony suffered by the Complainant;
e) direct the opposite parties to pay Rs.
31,000/- to the Complainant on account of legal expenses.
4. The complaint has been resisted by the Insurance Company inter-alia on the ground having settled the matter and accepted the claim of Rs. 1,39,82,571/- in full and final settlement of its claim without any coercion, influence or pressure of any kind, the complainant is precluded from claiming any further amount from the Insurance Company.
5. The learned counsel for the complainant submits that since the complainant Company was in serious financial difficulty on account of loss suffered in the fire, it was left with no option but to accept the offer made by the Insurance Company and such an acceptance cannot be said to be voluntary and without any pressure. According to the learned counsel, the settlement for a sum of Rs. 1,39,82,571/- was not with the free consent of the complainant Company and therefore does not bind the said Company.
6. Section 14 of the Contract Act which defines Free Consent reads as under:-
14. Free consent defined.Consent is said to be free when it is not caused by (1) coercion, as defined in section 15 (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, (4) misrepresentation, as defined in section 18, (5) mistake, subject to the provisions of sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.
It would thus be seen that a consent is a free consent unless it is obtained by use of coercion, undue influence, fraud or misrepresentation or its given on account of a mistake, subject to the provisions contained in Section 20 to 22 of the said Act. Coercion is defined in Section 15, undue influence is defined in Section 16, fraud is defined in Section 17 and misrepresentation is defined in Section 18 of the Act. The aforesaid Sections read as under:-
15. "Coercion" defined.- "Coercion" is the committing, or threating 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.
16.
"Undue influence" defined.-(1) A contract is said to be induced by "under 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 generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another -
(a) where he hold 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)
17. "Fraud defined.- "Fraud"
means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive another party thereto his agent, or to induce him to enter into the contract;
(1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
18.
"Misrepresentation" defined.-"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is subject of the agreement.
7. In the case before us, there was no such relationship between the complainant and the opposite parties that the opposite parties can be said to be in a position to dominate the will of the complainant company and use that position to obtain an undue inference over the complainant Company. The Insurance Company does not stand in a fiduciary relationship visa vis the complainant. Clause (b) of Sub Section (2) of Section 16 concerns an individual whose mental capacity is affected by reason of age, illness etc. and is obviously inapplicable. Since the Insurance Company cannot be said to be in a position to dominate the will of the complainant, Sub Section (3) of Section 16 of the Act would also not apply. In any case, the complainant Company has failed to prove that the settlement of the claim for a sum of Rs. 1,39,82,571/- was induced by undue influence. Section 16 of the Contract Act, therefore, is clearly inapplicable. There is no allegation of fraud against the Insurance Company. There is no allegation of concealment of any material fact by the Insurance Company from the complainant with a view to obtain the consent of the complainant Company to the aforesaid settlement. Therefore, Section 17 of the Act is also not applicable.
There is no allegation of any misrepresentation within the meaning of Section 18 of the Contract Act and therefore, the aforesaid Section also does not apply.
No case of coercion is made out by the complainant Company, since there is no allegation of committing, or threatening to commit, any act forbidden by the Indian Penal Code or unlawful detaining, or threatening to detain, any property, to the prejudice of the complainant, with intention of causing the complainant to enter into any settlement.
8. Mere financial hardship of the complainant, in my view does not constitute coercion as defined in Section 16 of the Indian Contract Act. Nothing prevented the complainant Company from approaching this Commission instead of entering into a settlement with the Insurance Company and in such a complaint the Company could have sought an interim relief based upon the preliminary report of the surveyor. Such a course, however, was not adopted and the complainant Company chose to settle the claim for a substantial amount of Rs. 1,39,82,571/-. It is clearly stated in the affidavit of Mr. Krishan Arora that the claim was settled with his free will and without any coercion, influence or pressure from any side. In view of the said affidavit, the allegations that the settlement was without free consent of the complainant Company cannot be accepted. In any case, no compelling financial hardship has been established by the Complainant Company, by producing its account books, balance sheets, list of Creditors and Debtors, and other relevant documents.
9. In my view, once the insured accepts a particular amount in full and final settlement of his claim, he is estopped from claiming any further amount from the Insurance Company, since the settlement constitutes a binding contract between the parties unless it was shown that it was influenced by use of coercion, undue influence, fraud, mistake or misrepresentation. In the case before this Commission, no such factor could be established by the complainant Company.
10. For the reasons stated hereinabove, the complaint is hereby dismissed. No order as to costs.
V.K.JAIN, J PRESIDING MEMBER PSM/18