NATIONAL INSURANCE CO LTD Vs. HARJEET RICE MILLS

JUDGEMENT

(1.) The National Insurance Company, the respondent in a claim before the State Commission under the Jammu & Kashmir Consumer Protection Act, is the appellant before us. M/s Harjeet Rice Mills, the respondent herein, had insured its stocks with the appellant for the period September 1991 to September 1992. The respondent herein approached the State Consumer Commission with a claim that there was an accidental fire in its godown in the night intervening the first and second January 1992; that the goods stocked were lost in the fire; that the surveyor appointed had estimated the loss at Rs. 8,96,500/- on finding that the loss was due to a fire caused by a short circuit; that the appellant had repudiated the claim unjustly; that there was thus deficiency in service and that the respondent was entitled to a sum of Rs. 9 lakhs as the value of the goods lost, to a sum of Rs. 1 lakh as damages for mental agony and for interest at 24% per annum on the entire amount, from the date of the incident of fire. The appellant resisted the claim by contending, inter alia, that the State Commission had no jurisdiction to entertain the claim; that on a further investigation, it was revealed that the fire was not caused by short-circuit; that it was a deliberate act of causing a fire with a view to make a claim on the insurance policy; that the loss was highly exaggerated since the godown concerned did not have the capacity to take in the quantity allegedly stored and lost; that it was a case of an attempted insurance fraud; that the claim was closed as a no claim; that there was no deficiency in service and that the claim was liable to be rejected.

(2.) The State Commission did not consider the objection to its jurisdiction on merits. It held that the Surveyors report relied on by the claimant has to be accepted and an order for payment out of that amount with interest thereon at the rate of 18% per annum from the date of the loss till the date of payment had to be made. It also held that the claim for compensation had to be denied, since, if granted, the amount awarded would have exceeded its jurisdiction. Thus, the appellant was directed to pay a sum of Rs. 8,96,500/- with interest thereon at the rate of 18% per annum from 2.1.1992, till the date of payment. The appellant filed an appeal before the High Court of Jammu & Kashmir. The High Court declined to interfere, essentially stating that the finding of fact arrived at by the State Commission, could not be interfered with in the circumstances of the case. Thus, the appeal was dismissed.

(3.) Learned Senior Counsel for the appellant first submitted that the High Court was in error in not setting aside the decision of the State Commission on the ground that the State Commission lacked pecuniary jurisdiction to entertain the claim. He pointed out that the pecuniary jurisdiction was limited to entertaining claims for Rs. 10 lakhs or less and that in the present case, the claim was for Rs. 10 lakhs plus interest thereon, taking the claim out of the purview of the Commission. Learned counsel for the respondent submitted that the claim was for Rs. 10 lakhs and the claim for interest cannot take the claim beyond the jurisdiction of the State Commission. He also pointed out that the Act has since been amended and now the Commission has been conferred jurisdiction to entertain a claim for a sum above Rs. 10 lakhs. He also submitted that the objection to pecuniary jurisdiction was not taken at the threshold and the High Court was justified in overruling the contention in that regard.