State Consumer Disputes Redressal Commission
Md. Nausad Ali vs The Branch Manager, United India ... on 20 January, 2012
J U D G M E N T
IN THE COURT OF STATE CONSUMER DISPUTES REDRESSAL COMMISSION: ASSAM CONSUMER APPEAL NO. 70 OF 2005 Md. Nausad Ali S/o Late Abdul Jabbar R/o Vill- Kopati Mouza- Pub Sialmari, P.S. Dalgaon P.O. Kopati, Dist- Darrang, Assam . Appellant Versus
1. The Branch Manager United India Insurance Co. Ltd.
Mangaldai Branch, L.N.B.Road Mangaldai.
2. Divisional Manger, United India Insurance Co. Ltd Tezpur-
784001, Dist- Sonitpur, Assam
3. Regional Manager United India Insurance Co. Ltd G.S.Road, Guwahati . Respondents For the appellant : Mr. D.Mazumdar, Advocate Mr. S.Saikia, Advocate Mr. R.Sarma, Advocate For the respondents :
Mr. R.Goswami, Advocate Mr. I. Barooah, Advocate Date of Hearing :
3-01-2012 Date of Judgment :
B E F O R E THE HONBLE PRESIDENT MR. JSUTICE A. POTSANGBAM.
THE HONBLE MEMBER MRS. B. LASKAR.
THE HONBL MEMBER MR. M.K.BAROOAH.-2-
J U D G M E N T BY JUSTICE A. POTSANGBAM Head Mr. D. Mazumdar, learned counsel appearing for the appellant and Mr. R.Goswami, learned counsel appearing on behalf of the respondents.
2. Being aggrieved, this appeal is filed by the appellant against the impugned judgment and order dated 21-5-05 passed by the District Forum, Darrang, in C.P.A. Case No. 4(DM-2)/2004 wherein the appellant was directed to approach Civil Court for appointment of an arbitrator and get his claim settled through an arbitral proceedings.
3. Facts, bereft of details, which are necessary for disposal of this appeal may be noticed as hereunder.
4. The appellant is the owner of a truck bearing registration No. AS-13/5447 which was insured with the respondent/opposite party under policy number 130703/31/021/11/00500/2001 for the period from 28-7-2001 to 27-7-2002.
During the coverage of insurance period, the aforesaid truck met with an accident at Gelabeel on 12-7-2007 at 52 NH under Orang Police outpost and thereafter, on lodging an Ejahar by the driver of the truck, G.D.E. No. 218 was registered on 12-7-2007 in the police records of the outpost. Other facts, which are associated with the case, are not elaborately stated herein as they are not considered necessary for disposal of this appeal. However, it is noticed from the records available before the Commission that while the said damaged vehicle was in the garage of Assam Body Builders, Kharupetia, an expected expenditure of Rs. 2,26,000/- excluding the parts was submitted to the respondent. It is also noticed that after submission of report by the first surveyor, a second surveyor was appointed by the respondents for inspection/assessment of the damaged vehicle. It appears that the second surveyor had assessed the damage to an amount of Rs. 56,001.04 but the respondenst offered only a sum of Rs. 49,943.00 by way of compensation against the damage caused to the vehicle, which was refused to be received by the appellant. Subsequently, the appellant -3- submitted a claim for a sum of Rs. 1,50,529.44 to the respondent for settlement under the policy of insurance against the damage and repairing charges of the vehicle. The break up of the aforesaid claimed amount is indicated below:
a. Crane fare :- Rs.
3,500.00 b. Body repairing charge by Assam Body Builders, Kharupetia :- Rs.95,000.00 c. Engine repairing charge by Sri Sri Biswakarma Engineering Works :- Rs. 12,500.00 d. Purchase of parts from Saraf Motors Company, Guwahati :-
Rs. 39,529.44 e. Interest on the aboe amount @ 12% p.a. from 12-7-02 till realization Rs.
______________________ Total Rs.1,50,529.44
5.
As the aforesaid claimed amount was not being settled by the respondents, the appellant approached the District Forum in C.P.A. Case No. 1(DM-1)/2003 and the District Forum at Mangaldai was pleased to drop the proceedings of the aforesaid case with direction to the parties to settle the mater as per terms and conditions of the relevant insurance policy. The District Forum further observed that if the matter could not be settled, as directed, the aggrieved party could approach the District Forum again.
6. On having failed to settle the claim of the appellant despite direction of the District Forum as discussed above, the appellant again approached the District Forum in C.P.A. 4(DM-2)/2004 which was disposed of by the learned District Forum on 21-5-05 by directing the appellant to approach the Civil Court for appointment of an arbitrator for settlement of the matter through an arbitral proceeding. It appears that the aforesaid order was passed by the District Forum by invoking the terms and conditions as stipulated in para 7 of the policy. Hence, this appeal against the aforesaid order dated 21-5-05.
7. After admission of the appeal on 20-9-05, the appeal could not be taken up for hearing and disposal for a long period , due to non appointment of President for nearly six years and adjournments sought by the parties -4- from time to time. Both parties have filed their respective written arguments and respondents have also filed a copy of the insurance policy.
8. In the appeal, a specific plea is taken by the appellant that the District Forum erred in law in relegating the matter to an arbitral proceedings without complying with the mandatory provision of Section 8 of the Arbitration and conciliation Act, 1996 (hereafter referred to as the Act of 1996). It is further contended that the existence of arbitration clause in the policy or in an agreement does not take away the power and jurisdiction of Consumer Fora to adjudicate and resolve a consumer dispute in view of Section 3 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act of 1986). It will be relevant to quote section 3 of the Consumer Protection Act, 1986, for better appreciation while deciding this appeal.
Section 3 : The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.
9. In the written argument submitted by the respondent, it is contended that the arbitration clause, being a part of the insurance policy, can be invoked any time when a dispute relating to quantum arises and there is no illegality in invoking the arbitration clause even after filing of written statement and accordingly it is prayed that the appeal be dismissed for want of merit.
10. From the above narration of facts and upon consideration of the pleas of the contesting parties, the following issues emerge for determination of the Commission.
(i) What is the scope of Section 3 of the Consumer Protection Act, 1986 ?
(ii).Whether a Consumer Forum can entertain and adjudicate claim of a consumer despite the existence of an arbitration clause in a policy/agreement entered into between the parties, on the ground of deficiency, negligence or breach of terms and conditions incorporated in the policy/agreement ?-5-
iii. Whether it is mandatory for a party in an agreement to comply with the provisions of section 8 of the Arbitration and Conciliation Act, 1996 as a condition precedent before invoking an arbitration clause.
iv. Any other question/issue ancillary to and consequential to the above issue.
For convenience and easy reference, Section 8 of the Arbitration and Conciliation Act, 1996, is hereby reproduced.
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the disputes, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and arbitral award made.
11. Mr. D.Mazumdar, the learned counsel appearing for the appellant, has argued that the scheme and object of the Consumer Protection Act, 1986 is to promote the welfare of the society by enabling the consumers to participate directly in the market economy and it attempts to remove the helplessness of a consumer which he faces against powerful business, described as a network of rackets or a society in which producers have secured power to rob the rest or as the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration leaving the common man helpless, bewildered and shocked. The above observation has been made by the Apex Court in a case reported in (1994) 1 SCC page 243, (Lucknow Development Authority Vs M.K.Gupta).
12. The Apex Court in AIR 1997 Supreme Court Page 533 (M/s Fair Air Engineers Pvt. Ltd. and another Vs N.K.Modi), after discussion and examination of the the scope/provision of section 3 of the Act, affirmatively -6- held that the Parliament was aware of the provisions of the Arbitration Act, Contract Act and the consequential remedy available under Section 9 the C.P.C. when the Consumer law was enacted. Nonetheless, the Act provides the additional remedy and the Consumer Fora created under the Act of 1986 are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitral proceedings pursuant to a contract entered into between the parties. The relevant portion of para 15 of the aforesaid judgment is hereby reproduced.
Para 15. Thereby, as seen, Section 34 of the Act does not confer an automatic right nor create an automatic embargo on the exercise of the power by the judicial authority under the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forums, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the appropriate forums, on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the forum for adjudication of the disputes would be otherwise those given in the Act.
13. Existence of Arbitration clause in a contract/agreement/policy will not take away the right of a consumer to approach a Consumer Forum to adjudicate upon a claim and correspondingly, a Consumer Forum does not loose its jurisdiction and competency to adjudicate of a claim submitted by a consumer on the ground of deficiency, disservice, negligence and breach of terms of conditions of agreement/ policy. The above proposition of law finds support in a judgment of the Andhra Pradesh High Court reported in A.I.R. 2008 A.P..166. In view of what has been discussed here-in-above, the issue no. 1 is answered in the manner indicated above.
14. With regard to issue no. (ii), it may be stated that Section 8(1) of the Arbitration and Conciliation Act, 1996 puts an embargo on a party to invoke -7- the arbitration clause in an agreement, if such prayer is not made prior to and at the time of submitting its first statement on the substance of the dispute and secondly, section 8(2) puts another embargo from entertaining an application under section 8(1), unless the application invoking the arbitration clause is accompanied by the original arbitration agreement or a duly certified copy thereof. Admittedly, in the instant case, the application under section 8 invoking the arbitration clause, was filed by the respondents before the District Forum after submission of written statement which was to be considered as the first statement on the substance of the dispute as contemplated in Section 8(1) of the Arbitration and Conciliation Act, 1996. It is not the case of the respondents that prior to filing of the written statement, a prayer was already made under section 8(1) invoking the arbitration clause and that the application before and after filing of the written statement was accompanied by the original policy/agreement or certified copy of the same and as such, the mandatory requirement of section 8 was not complied with while invoking the arbitration clause.
15. The above proposition of law has been settled by Competent Court of law and re-affirmed by the Apex Court in para 29 of the judgment reported in (2010) SCC72 (N.Radhakrishan Vs ) This issue is also answered as above.
16. It appears that this aspect was completely ignored by the District Forum while passing the impugned judgment which is discussed in the forgoing para 14. The aforesaid legal proposition relating to section 3 of the Consumer Protection Act, 1986 and requirement of complying with the mandatory provision of section 8 of the Arbitration and Conciliation Act, 1996, are not controverted by the learned counsel appearing for the respondent.
17. Mr. R.Goswami, the learned counsel appearing for the respondents, in his usual frankness, has submitted that it will be difficult for him to argue against the settled position of law, as discussed above, and as such, the learned counsel submits that appropriate order may be passed by the Commission, taking into the consideration the objections raised by him.
18. Having settled the legal issues, as discussed above, the Commission is confronted with another fact that the appellant had been denied of any -8- kind of relief for nearly eight years and as such, we deem it appropriate that, interest of justice would be served better, if some kind of interim relief is given to the appellant. It is not in dispute that damaged vehicle was assessed by the second surveyor at Rs. 56,001.04 and offer from the insurance company was for Rs. 49,943/- and as such, we round up the figure to Rs. 50,000/- (Rupees fifty thousand). This rounded figure of Rs. 50,000/- is to be deposited by the insurance company before the District Form within two months from today and the District Forum, on receipt of the same, shall release the said amount of Rs. 50,000/- to the appellant/complainant on being indentified by a counsel known to the District Forum.
19. Upon consideration of the mater in its entirety and in the backdrop of the discussion made as here-in-above, the impugned judgment dated 21-5-05 passed by the District Forum, Darrang in CPA Case No. 4(DM-2)/2004 is hereby set-aside and the case is remanded back to the District Forum, Darrang, along with a copy of this order, for deciding the case of the appellant/complainant afresh on merit and in accordance with law.
20. The appeal is allowed to the extent indicated above. No order as to cost. Parties are directed to appear before the District Forum on 29-3-2012.
Registry is directed to send one copy of this order to all the District Fora, Assam.
MEMBER MEMBER PRESIDENT