NEW INDIA ASSURANCE CO LTD Vs. R K SAREEN

JUDGEMENT

(1.) The respondent, Mr. R. K. Sareen, who was complainant before the District Forum, got his 1991 model Ambassador-Nova DL 3c/c-0216 comprehensively insured from the appellant, New India Assurance Co. Ltd. for Rs.2,28,000/- for the period 27.11.1991 to 26.11.1992. The car met with an accident on 4.6.1992. FIR was lodged and the Insurance Company informed. The Insurance Company deputed Mr. S. P. Singh, Surveyor as well as one Technical Officer, Mr. S. L. Mehra. They inspected the vehicle and after discussion it was agreed in principle that the claim be settled on total loss basis for a sum of Rs.1,95,000/-. The opposite party, however, failed to actually settle the claim for the agreed amount and instead appointed Mr. N. L. Ahuja, Investigator. The Company failed to settle the claim for nearly two years and the complainant, accordingly, approached District Forum-II by filings complaint. Offer of settlement which was revived on the same terms as agreed in 1992 was reiterated. The complainant, however, declined to accept the same on the ground that he had lost considerable amount of interest on the agreed sum. On a consideration of the matter the District Forum by order under appeal held that the delay in the settlement of the claim constituted gross deficiency in the part of the opposite party and, accordingly, directed the opposite party to settle the claim by payment of 1.95 lacs alongwith interest @18% p. a. compounded quarterly from 1.9.1992 against the surrender of the salvage of the car besides Rs.5,000/- as costs. Aggrieved by the order, the opposite party has preferred this appeal. The respondent failed to appear when the appeal came up for hearing. We have, accordingly, heard Mr. Vivek Sharma, Advocate for the appellant and have carefully gone through the record.

(2.) At the time of admission of the appeal, Counsel for the appellant agreed to pay to the respondent a sum of Rs.1,95,000/- together with simple interest @ 12% p. a. from the expiry of two months from date of receipt of report of the Surveyor till date of payment. It was clarified by a letter order dated 17.3.1997 that the payment was subject to respondent depositing the salvage of the car with the Insurance Company. On 16.5.1997 Mr. R. K. Aggarwal, authorised agent of the respondent appeared and stated that the respondent had carried out his part of the job and had surrendered the vehicle as well as the papers i. e. R. C. and the requisite form to transfer the vehicle in favour of the Company u/section 50 of the Motor Vehicles Act, 1988. Counsel for the appellant took time and made a statement on 7.7.1997 that the amount of Rs.1,95,000/- together with interest @ 12% had been paid to the respondent. In short, the interim directions given in the context of application for stay moved by the Insurance Company stand complied with i. e. the respondent has deposited the salvage and the Insurance Company has paid the amount agreed between the parties at one stage namely Rs.1,95,000/- together with interest @ 12% p. a. The surviving question is as to the rate of interest and whether the compound interest allowed by the District Forum shall be paid. The contention of Mr. Vivek Sharma, learned Counsel for the appellant is that the interest allowed by the District Forum works out to 27% which is not permissible either under the contract of insurance or the provisions of the Interest Act, 1978. He has also relied on United India Insurance Co. Ltd. V/s. MKJ Corporation, 1996 3 CPJ 8 in which interest allowed was also @ 12% p. a. On a perusal of the record, we find that the complainant was responsible for delay in the settlement of the claim inasmuch as he raised the dispute that he was not bound to return the salvage to the Insurance Company. Now the salvage has been returned the amount agreed has been paid besides interest at the rate of 12%. We have been allowing interest @ 12% in all insurance cases decided after the receipt of the decision of the Supreme Court in the case relied on by Mr. Sharma and it was in view of the same decision that under taking of Mr. Vivek Sharma was accepted in our order dated 3.3.1997. There is however, no reason to interfere in the order of the District Forum granting Rs.5,000/- as costs. The said amount shall be paid by the Insurance Company if they have not already done so. The appeal is partly allowed. Order of the District Forum is modified to the extent that the rate of interest shall be 12% p. a. from two months after the receipt of a copy of the survey report till date of payment. Direction to pay 18% compound interest is set aside. The Insurance Company shall, however, pay Rs.5,000/- on account of costs in terms of the order of the District Forum if the amount has not been paid already. There will be no order as to costs in the appeal, which is disposed of in these terms. Copy of the order be conveyed to both the parties.