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CASE NO.: Appeal (civil)  619 of 2005

PETITIONER: National Insurance Company Ltd.                  

RESPONDENT: Nipha Exports Pvt. Ltd.                                          

DATE OF JUDGMENT: 29/09/2006

BENCH: H.K. SEMA & P.K.BALASUBRAMANYAN

JUDGMENT: J U D G M E N T (with I.A. No. 2)

H.K.SEMA,J.

               The challenge in this appeal is to the order dated 8th  September, 2004 passed by the National Consumer Disputes  Redressal Commission (hereinafter the Commission) in  Original Petition No. 42 of 1996.  By the aforesaid order, the  Commission directed the appellant, National Insurance  Company Ltd., to pay interest @ 6% on Rs.70,38,038/- from  10th December 1990 till 8th June, 1994 within a period of eight  weeks by way of damages.                   A limited notice was issued by this Court on  13.01.2005 on payment of interest @ 6% as damages by  reason of delay in payment.                  The sole question to be determined in this appeal is,  as to whether there was any delay in making the payment of  Rs.70,38,038/- and if so, the insurance company, the  appellant is liable to pay interest @ 6% for delay in payment as  ordered by the Commission.                  Few background facts may be noted:                 In 1990, five transit insurance were obtained by the  respondent herein for covering their consignment to Sudan for  their principals i.e. M/s Sudan Gezire Rehabilitation Project,  Khartoum, Sudan.  The policies were issued subject to the  terms and conditions.  It was discovered that on arrival of the  consignment there was some damage on account of rust.  The  investigations were carried out in respect of the transit of the  consignment at the destination port to find out as to at which  stage the damage to the consignment could have had  occurred.    A dispute was also raised between the parties as  to who would be entitled to receive the claim amount as the  shipment was on C.I.F. basis.   Ultimately, the matter was  resolved and the legalized documents of consignments were  furnished to the appellant on 21.5.1993.  Thereafter, various  correspondences between the parties to accept the offer of the  claim amount as offered by M/s American President Lines.  It  is alleged that till the letter dated 25.6.1993 written by the  appellant there was no acceptance of the offer by the  complainant-respondent herein and the matter was withheld  at the instance of the complainant.  There was also a dispute  between the parties because in the policy, the machinery items  were subject to institute replacement clause, which provided  for the indemnity to be made only when the loss or damage  suffered by the goods to the extent of actual cost of repairs,  replacement and conditions effected and incurred.  The

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complainant was also claiming that they had incurred out of  pocket expenses and, therefore, the appellant was asking them  to provide and furnish the necessary bills in support of total  expenses incurred by them, which they failed to do and  therefore, the matter was again referred to M/s Webster & Co.  for making the investigation into the possible cost involved  from M/s Nipha and their local suppliers, respondent herein.                   Ultimately, M/s Webster by its letter dated 8.4.1994  settled the claim on the basis of consignment as done by the  Surveyors.                 In the facts and circumstances, as recited above, it  cannot be said that prior to the letter dated 8.4.1994 the claim  had been finally settled and the payment was withheld by the  appellant.  After the settlement of the amount US $279158.40  equivalent to Rs.70,38,038/- was paid to the respondent on  8.6.1994.  The respondent received the aforesaid amount and  gave a clean discharge to the appellant without any  qualification, signifying receipt of the amount in full and final  settlement of the claim.                       Mr.Mahendra Anand, learned senior counsel,  appearing on behalf of the respondent, referred to a letter  dated 17.3.1991 and submitted that by the aforesaid letter  right, title and interest was vested with M/s Nipha Exports  Private Ltd. by Sudan Gezire Rehabilitation Project.  In the  letter aforesaid, it is stated that they have no objection to  settle the claim in favour of M/s Nipha Exports Private Ltd.,  and advised to address the correspondence direct to them in  future.  It is his contention that there is no explanation  whatsoever by the appellant for withholding the payment from  17.3.1991 to 8.4.1994, the date on which the matter was  settled.  In view of the circumstances, as recited above, we are  unable to accept this contention.  From the letter dated  17.3.1991, it is clear that it was not the settlement of the  claim but it was a no objection certificate that the claim may  be settled in favour of the respondent and advise that all  future correspondence be addressed to them directly.   Therefore, it cannot be said that the final settlement was  arrived at by the aforesaid letter.                  The next question to be considered is as to whether  after giving a clean discharge certificate by accepting the  amount signing the voucher, the complainant-respondent can  raise the complaint?                 As already noticed, the payment was made to the  respondent on 8.6.1994 and the respondent gave a clean  discharge to the appellant without any qualification, signifying  receipt of the amount in full and final settlement of the claim.   Thereafter, after a lapse of two months the respondent  addressed a letter dated 6.8.1994 to the appellant which is  extracted:                 "Re:Marine Loss NO.101500/43/90-91/86-90                                                                          Ex.M.V. Eagle Nov/Fresia.

               Dear Sir,  

Thank you for your letter dated the 9th June,  1994 enclosing a Cheque for Rs.70,38,038/- in  discharge of your liability under the policies,  which, however, did not include interest."       

               In the letter, thus read there is no complaint that  the discharge voucher or receipt had been obtained from the  complainant respondent herein fraudulently or by exercise of  undue influence or by misrepresentation or the like or coercive

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bargaining.  In the case of United India Insurance   Vs.   Ajmer Singh Cotton & General Mills, (1999) 6 SCC 400, it  was pointed out by this Court that mere execution of  discharge voucher would not always deprive the consumer  from preferring claim with respect to the deficiency in service  or consequential benefits arising out of the amount paid in  default of the service rendered.  It was further pointed out that  despite execution of the discharge voucher, the consumer may  be in a position to satisfy the Tribunal or the Commission  under the Act that such discharge voucher or receipt had been  obtained from him under  circumstances which can be termed  as fraudulent or exercise of undue influence or by  misrepresentation or the like, and if such a case is proved, the  authority before whom the complaint is made would be  justified in granting appropriate relief.                   This Court in  Polymat India P.Ltd.    vs.  National  Insurance Co.Ltd., 2004(10) Scale 99  also considered the  facts of a similar case as in the case in hand.    In that case  the reason for delay had been explained. The fire took place on  13th January, 1993 in which the insured goods were reportedly  gutted by fire.  The insurance company appointed the  Surveyor and Surveyor sent his report dated 5th November,  1993 which was received by the appellant on 9th November,  1993.  As there were some discrepancies in the survey report,  the insurance company vides letter dated 14th December, 1993  sought for clarification from the Surveyor, which was replied  to on 22.4.1994 by the Surveyor.  The insurance company  after that took the decision and informed the claimant by a  letter dated 1.7.1994 for approval of the claim under both the  policies.  It is, in these circumstances, this Court held that  there was no delay in payment and the levy of interest @ 18%  by the Commission was set aside by this Court.                    In the present case, the claim of the complainant  was finally settled by a letter dated 8.4.1994 and the payment  was made on 8.6.1994, which was accepted by the respondent  without any qualifications.  It cannot, therefore, be said that  the payment was made belatedly.  The important date to be  decided in such circumstances is the date on which the  quantum of compensation and to whom it should be paid is  finally decided and not from the dates on which the  correspondences ensued between the parties.                   In the facts and circumstances, aforestated, we are  of the view, that the claim was finally settled by a letter dated  8.4.1994 and the payment was made on 8.6.1994, and  therefore, there was no delay in making the payment which  would warrant the award of interest on delayed payment.  The  view taken by the Commission was, therefore, erroneous.  The  Order dated 8th September, 2004 of the Commission is set  aside.  The appeal is allowed. No costs.