State Consumer Disputes Redressal Commission
National Insurance Company Ltd. vs Kusum Goswami, on 6 January, 2009
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 06-01-2009 Appeal No. FA-08/941 (Arising out of Order dated 19-08-2008 passed by the District Forum ( New Delhi), K.G. Marg, New Delhi, in Complaint Case No. CC-598/06) National Insurance Company Ltd. 808-809 Kailash Building, 26, K.G. Marg, New Delhi 110001. . . . Appellant Versus Kusum Goswami, 5B, Pocket S/G, Dilshad Garden, Delhi 110095. . . . 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. This appeal is directed against the impugned Order dated 19-08-2008 passed by the District Forum directing the appellant Insurance Company to pay the insurance amount of Rs. 50,000/- to the respondent against theft of the vehicle and Rs. 10,000/- towards compensation for mental agony and harassment along with Rs. 5,000/- as cost of litigation. Feeling aggrieved the appellant has preferred this appeal.
2. The facts as alleged by the respondent leading to the impugned Order in brief were that the respondent purchased Car bearing registration No. DL 2CF 9377 from its original owner, which was insured with the appellant company for the period 17-11-2003 to 16-11-2004 against the risk of theft and accidental damage, during the subsistence of the insurance policy. The car was stolen on 22-10-2004 from outside the residence of the respondent and the respondent lodged a report with the police but the car could not be traced. The respondent also informed and preferred a claim with the appellant insurance company, however, the appellant failed to settle the claim. Feeling aggrieved the respondent filed the instant complaint before the District Forum.
3. As against this the version of the appellant insurance company was that the FIR was lodged after 7 days of the theft. Further, the vehicle in question stood in the name of one V.R. Sharma and not the respondent and the claim could not be given to the respondent as said V.R. Sharma never transferred the vehicle in the name of the respondent and there was no privity of contract with the respondent and the appellant insurance company.
4. Through this appeal, the impugned Order has been assailed by the appellant on the premise of the decision of the Supreme Court in Complete Insulations (P) Ltd. v New India Assurance Co. Ltd. AIR 1996 SC 586.
5. We have perused the impugned Order and find that the District Forum has returned the finding of facts that Form No. 29 placed on record by the respondent, which is a notice of ownership of the vehicle, sent to the transport registration authority mentions that on 2-6-2004 the vehicle was transferred in the name of the respondent by its previous owner V.R. Sharma. Form-30 also shows the name of seller as Shri V.R. Sharma and the respondent Kusum Goswami as purchaser on 2-6-2004, which form is also addressed to the Transport Registration Authority, Tilak Marg, New Delhi.
6. We have gone through the Order the Supreme Court relied upon by the appellant insurance company (supra) and find that the Supreme Court has referred to and discussed Chapter-XI of the New Insurance Act, which concerns third party risks only. It was, inter alia, observed that:-
The insurance is compulsory only in respect of third party risks since Sec. 146 prohibits the use of a motor vehicle in a public place unless there is in relation thereto a policy of insurance complying with the requirement of Chapter-XI. Requirements in the Chapter are in relation to third party risks only and hence the fiction of Section 157 of the New Act must be limited thereto.
7. In our view, the District Forum has rightly observed that the insurance goes with the buyer and with the change of title the insured would be the buyer and it was no ground that the theft was reported to the police after seven days because it is human nature to first make efforts to trace the vehicle in the first instance and he lodges a report only when he fails to trace the stolen vehicle.
8. Thus, the subsequent owner of a vehicle does not come within the definition of third party and, therefore, the ratio of the aforesaid decision of the Honble Supreme Court is not applicable in the given facts and circumstances of the case.
9. We have come across large number of cases where the claims of not only the original owners but the subsequent purchasers of the vehicle, during the subsistence of the policy, were rejected. When the original owner of the vehicle approaches the insurance company, it takes the plea while rejecting the claim that he is no more the owner of the vehicle and therefore he cannot reap the benefit of the policy and when the subsequent purchaser files the claim, the insurance company slams the door on his face by telling him that the insurable interests still continue to be in favour of the original owner as these have not been transferred and there is no contract with him as to the insurance policy.
10. In our view, there cannot be a more unscrupulous and unethical approach of the service provider than this in respect of a contract which is of beneficial in nature for the insured person. By taking such an approach the insurance company becomes unjustly rich by denying the claim of both the persons by taking shelter under the grab of concept of third party risk.
11. In our view, the safe course for the insurance companies in such cases would be to obtain either a No Objection Certificate from the original owner or an Indemnity Bond from the subsequent purchaser / owner, but in no way it can reject the claim by usurping the premium on which the insurance cover was issued.
12. It is the universal rule of interpretation of statutes and contracts that wherever a statute or contract is of beneficial nature, as these contracts are, they should receive and be provided beneficial interpretation. If there are more than two or three interpretations possible of a contract or statute, then the interpretation which protects or benefits the consumer has to be accepted and acted upon and no other interpretation.
Otherwise the very purpose of a legislation or contract being provided a status of beneficial nature would be frustrated and defeated. Even if the rule of relaxation is to be applied that should be always done in favour of the consumer and not the other way around. Even the things that come into existence later on and were not contemplated at the time when the statute was made or the contract came into existence, the term should also be extended to those events in order to provide benefit to the consumer.
Hair splitting or hyper-technical course adopted by the service provider with a clear mind set as to how to defeat and frustrate the rightful claim of a person amounts to the grossest kind of deficiency in service and unfair trade practice. Every act and conduct of the service provider or trader has to be tested on the anvil of the definition of deficiency as provided be Sec. 2(1)(g) of the Consumer Protection Act, 1986, as no other law including the Motor Vehicles Act or the Insurance Act have precedence over the provisions of the Consumer Protection Act, 1986, as the remedy available under the Act is in addition to and not in derogation of any other law for the time being in force as postulated by Sec. 3 of the Consumer Protection Act, 1986.
13. It appears that the insurance sector has acquired a dubious distinction and disrepute by indulging in such tactics and adopting arm twisting methods by asking and compelling a person to execute a voucher towards full and final settlement by giving him half of the rightful claim and by taking resort to Chapter-XI of the Insurance Act and provisions of Motor Vehicles Act and switch into third party risk mode.
14. It is the most vexatious approach of the service provider and not at all consumer friendly and does not protect the interests of the consumer; rather it gives fatal blow to the interests and rightful claims of the consumers. Such an approach is arbitrary and oppressive and that is why the Supreme Court has recently called upon all the Consumer Forums and Commissions established under the Consumer Protection Act that if they come to the conclusion that the claim was rejected or action was influenced by capricious, whimsical or arbitrary causes, the compensation should be recovered from the salary of those officers who are responsible for wrongly repudiating the claim. They provide home service to the consumer while obtaining the policy and when the turn of the consumer comes to reap the benefit they slam the door on his face causing bleeding nose.
15. In this regard, the observations of the Supreme Court in Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 and Lucknow Development Authority v. M.K. Gupta, 1994 (1) SCC 243 are pithy and, inter alia, are as under:-
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 malafide 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."
16. Foregoing reasons persuade us to dismiss the appeal being wholly devoid of merits, misconceived and misdirected, with an additional cost of Rs. 25,000/-
17. Appeal is disposed of in aforesaid terms. Payment shall be made within one month from the date of receipt of a copy of this order.
18. Copy of order as per statutory requirement be forwarded to the parties and to the concerned District Forum and thereafter the file be consigned to record.
19. FDR/Bank Guarantee if any be released under proper receipt.
(JUSTICE J.D. KAPOOR) PRESIDENT (RUMNITA MITTAL) MEMBER HK