R.K. Bawri, Member – Aggrieved by the order dated 29.8.1998 passed by the District Forum, West Garo Hills, Tura (Meghalaya) in Complaint Petition No.8 of 1996, the Appellants, The Oriental Insurance Co. Ltd. have preferred this Appeal The brief facts of the case are that a complaint was filed under section 12 of the Consumer protection Act 1986 by the complainant Mohanlal Agarwalla against the Appellants who were the Opposite Parties before the Forum. The complainant had a premises located at Garobadha which was insured by the Opposite Party / Appellant for the building and the machinery. The loss was informed to the O.P. on the 10^th July, 1995 and a claim of Rs.2,67.563.00 was lodged with the O.P. by the Complainant. The O.P. on their part settled the claim for Rs.21,404.00 in March, 1996. This amount as accepted under protest by the Complainant and subsequently filed the Complaint before the Forum.

 

2. The O.P. raised two preliminary objections before the Forum.

(a) The jurisdiction of the Consumer Forum was questioned as the remedy of arbitration was available and

(b) The locus standii of the attorney-holder who had verified the complaint petition and the maintainability of the complaint were challenged. Both these matters were disposed of vide orders of the Forum dated 20^th December, 1997 in favour of the complainant.

 

Based on the submissions made and the arguments advanced 6 issues were framed for consideration and after hearing the submission made by the learned counsels and perusing the documents on record, the Forum arrived at its findings and conclusions on each issue and disposed of the Complaint Petition vide its order dated 29.8.1998, relevant extracts of which are stated below:

 

3. “Issue No.1 Whether there is any cause of action.

 

It is clear that a claim of Rs.2,67,563.00 was lodged by the claimant for an incident which did occur. The occurrence of the flood and the fact that the claimant sustained damages is not disputed. It is also a fact that after almost one year of lodging the claim, an amount of Rs.21,404.00 was offered to the claimant. The claimant was given no explanation for this amount being paid to him. Subsequently the survey report has been filed in the Forum which also indicates an amount higher than offered. Clearly then, there is a cause of action for the complainant to come to the Forum.

 

Issue No.2. Whether the O.P. has arbitrarily reduced the claim assessed by the Surveyor and if so thus these constitute a deficiency in service.

 

As per the survey report a loss of Rs.77,287.58 (sic-Rs.76787.58) was assessed. Again this is a deduction of Rs.25,000.00 was made by the Surveyor himself on account of “Policy excess”. Simply put, this is supposed to indicate the minimum which the policy will not indemnify. As per clause 1 of the exclusion under the policy document, this minimum loss is limited to Rs.2,500.00. Therefore at best the surveyor can make a reduction of Rs.2,500.00 and not Rs.25,000 for policy excess.

 

There is a further reduction by the O.P. of Rs.30,283.58 from the loss assessed by the surveyor which also is not explained at any stage during the proceedings. Clearly then this deduction is arbitrary and it is an established law that any arbitrary deduction from a claim is a deficiency of service.

 

Issue No.3. Whether there was undue delay in settlement of the claim and whether this constitutes a deficiency of service.

 

The O.P. has not disputed the fact that the claim was lodged by the claimant in July 95 and payment was offered only towards end of May, 1996 i.e. a period of about 10 months. The national consumer Redressal Commission has time and again laid down the yardstick of three months for settlement of an Insurance claim and the actual time of ten months in this case indefinitely a case of delayed settlement and hence deficiency of service.

 

Issue No.4. Whether conditional acceptance/under protest acceptance of claim amount implies no consumer dispute.

 

It has been unambiguously settled by the National Commission that acceptance of an amount under protest does not negate the presence of a consumer dispute and in no way effect the character of the consumer dispute. During the course of arguments this has not been disputed by the learned counsel for the O.P.

 

Issue No.5.Whether complainant has suffered mental harassment and actual loss of business due to deficiency in service.

 

The correspondences on records clearly indicate that the claimant was required to take up the matter of his claim with the O.P. time and again. He was required to visit Tura to meet the concerned officials and pursue his case. He was also required to file a complaint before this Forum. All of which have led a considerable lapse of time and no compensation has been given to him except the amount of Rs.21,404.00. Clearly it is the claimant who has borne the loss sustained by him for a period of more than 3 months.

 

Any delay in settlement must definitely be construed to be mental harassment and to operationalise his business again, he would be required to arrange funds either from his own source or borrowed funds till such time his claim is finally settled to his satisfaction. To the extent, the actual loss of business would be limited to the interest payable on funds required to make the business operational again.

 

Issue No.6. To what relief are the parties entitled.

 

It has already bee determined in the foregoing that the O.P. had erred in making a deduction of Rs.30,283.58 and the Surveyor had erred in making a deduction of Rs.25,000 towards policy excess, when the actual deduction should have been Rs.2500. A deduction of Rs.2500 would lead us to a net liability of Rs.74,287.58 if one were to accept all the other details in the survey report.

 

We now turn to the interest payable to the interest payable on this amount. The claimant had furnished all necessary documents to the O.P. and the surveyor and there is no reason why the O.P. did not settle the claim within three months, i.e. by 10.10.95 which is the guideline repeatedly laid down by the National Commission. Interest at 18 % is therefore payable on the entire amount of Rs.74,287.58 from 10.10.95 till 23.5.96 when the discharge vouchers for Rs.21,404.00 were sent. Further, the balance amount of Rs.52,883.58 and interest at 18% on this Rs.52,883.58 from 23.5.96 till the date of payment shall now be payable.

 

An amount of rs.10,000.00 is awarded towards compensation for mental agony and harassment caused by deficient towards cost of proceedings.”

 

4. It appears that the Appellants have challenged in the Appeal before us almost every finding, conclusion and decision contained in the impugned order dated 29.8.1998 passed by the Forum. We have heard Shri R.Choudhury, learned advocate on behalf of the Appellants as well as Smt. P.D.B. Baruah, learned advocate for the Respondent. We have also examined at depth the relevant records of the Forum and perused the memo of Appeal on the basis of which we proceed to dispose of the Appeal.

 

5. To begin with, learned for the Appellants had a grievance with regard to the non-deduction of the sum of Rs.10000.00 being the ‘policy excess’ from the total assessment made by the Forum.

 

To recapitulate, the total sum insured as per the related Insurance Policy was Rs.4 lacs and premium thereon was paid by the complainant. The Complainant’s claim of loss was Rs.267563.00. The Surveyor assessed the gross loss at rs.76787.58 from which he deducted a sum of Rs.25,000.00 being Policy excess and determined the Net liability of the Insurance Company gave no explanation or reason for determining the amount at Rs.21404.00 against the Surveyor’s net assessment of rs.51787.58 and that the Insurance Company had erred in reducing the amount. The Forum therefore accepted the Surveyor’s gross assessment of Rs.76787.58 but as regards the sum of Rs.25000.00 which was deducted by the Surveyor from the aforesaid gross amount of Rs.76787.58 as “Policy Excess” under the terms of the Policy and not Rs.25000.00 as deducted by the Surveyor. Accordingly the Forum arrived at the final assessed figure of Rs.74827.58 (i.e. Rs.76787.58 minus Rs.2500.00). It is this reduction in the deduction on account of “Policy Excess” from Rs.25000.00 to Rs.2500.00 made by the Forum that is disputed by the Appellants before us.

 

6. The Appellants have for the first time filed before us extracts from the instructions of the Tariff Advisory Committee, Bombay in respect of Special perils including Flood cover. We reproduce below the relevant Special Perils including Flood cover. We reproduce below the relevant special condition which the Appellants rely upon in support of their argument:

 

“It is understood and agreed that in respect of all the above mentioned perils the Company shall only be liable under this policy for loss or damage if the ascertained loss or damage sustained by the insured in respect of the property hereby insured exceeds:

 

 

(a)    2.5% of the total sum insured by all policies in the name of the insured on such building and contents: or

 

(b)   rs.25,000/-

 

 

Which ever shall be less.

 

In no case shall the company be liable in respect of such loss or damage for more than the excess of the amount defined in (a) or (b) whichever shall apply.”

 

Although the Appellants earlier stood by the deduction of rs.25000.00 as made by the Surveyors they now claim before us that in view of the above – mentioned clause as contained in the Tariff, the Forum ought to have been deducted a “Policy excess” of Rs.10000.00, being 2.5% of the total sum insured of Rs.4 lacs, and not only Rs.2500.00 as deducted by the Forum.

 

7. In our considered view this claim of the Appellants cannot be upheld. Apart from the fact that the Tariff Instructions referred to above were never brought to the notice of the Forum by the Appellants and as such the Forum had no occasion to examine them or to come to any finding on their applicability, more importantly, we find that this special condition as contained in the Tariff Instructions has not been incorporated in the related Insurance Policy which is before us. Learned Counsel for the Appellants could not show that such a condition was incorporated in the Policy covering the instant case.

 

In our view, the instructions of the tariff Advisory Committee are instructions for the Insurers and cannot bind the Insured unless they are specifically incorporated in the Insurance Policy as conditions of the Policy issued by the Insurers and such instructions by themselves do not form part of the Contract of Insurance. In this regard we may also advert t the decision of the national Commission in the case of M.K.J. Corporation –vs- United India Insurance Co. Ltd and ors [1986-96 Consumer 3204 (NS)]. As such, reliance by the Insurance Company on the Instructions of the TAC is of no avail.

 

8. What is however relevant, valid and binding upon the Claimant is Exclusion Clause No.1 of the related Insurance Policy which states that “This insurance does not cover the first Rs.2500.00 of each and every loss in respect of which the insured is indemnified by this policy. “In view of this clause contained in the policy it is fair to conclude that only the initial sum of Rs.2500.00 is to be deducted from the total assessed loss before payment is made to the Insured and this sum of Rs.2500.00 represents what is generally known as “Policy Excess.”

 

Now, the Forum made no mistake in deduction of this sum of Rs.2500.00 from the Surveyor’s gross assessment of loss. It recorded its finding and conclusion in the following words:

 

            “As per the survey report a loss of Rs.77,287.58 (sic-Rs.76787.58) was assessed. Against this a deduction of Rs.25,000.00 was made by the Surveyor himself on account of “Policy excess”. Simply put, this is supposed to indicate the minimum loss which the policy will not indemnify. As per clause 1 of the exclusion under the policy document, this minimum loss is limited to Rs.2,500.00. Therefore, at best the surveyor can make a deduction of Rs.2,500.00 and not Rs.25,000 for policy excess.”

 

Thus the decision of the Forum on this issue was perfectly reasonable and in accordance with law and the Appellants have no cause for complaint. We therefore uphold this finding of the Forum and reject this ground of Appeal.

 

9. The next ground of Appeal is regarding the maintainability of the Complaint Petition.

 

The Insurance policy dated 14.3.95 which covers the risk is made out in the name of M/S K.C. rice & Flour Mills as the Insured, which is also confirmed in the Surveyors Report. The Complaint before the Forum is filed in the name of “Mohanlal Aarwalla Prop. M/S/ K.C. Rice & Flour Mills” and is verified by Shri Janhaiyalal Agarwala, son of Shri Mohanlal Agarwala duly authorized Attorney of the complainant. A photo copy of the Power of Attorney dated 17.7.1996 executed by Shri Mohanlal Agarwala in favour of his son Shri Kanhaiyala Agarwala nominating and authorizing him to act for and on his behalf in all Insurance matters connected with the insured property has also been filed along with the Complaint Petition.

 

10. The Appellants maintained before us, as they also did before the Forum, that Shri Kanhaiyalal Agarwala had no locus-standii to institute the complaint as he was not a consumer as per its definition under the C.P. Act and as such the complaint was not maintainable and deserved to be dismissed in limine as the Forum had no jurisdiction to entertain the complaint. This objection on the part of the Appellants had led the Forum to decide the issue of maintainability of the Complaint Petition as a Preliminary issue and having heard both sides the Forum dismissed the objection in the Following words:

 

            “As regard the second point of law raised different state commission have taken different views. While the Madras State Commission (1991 (2) CPR 380) did not accept a husband filing on behalf of his wife, the west Bengal State Commission (1996 (3) CPR 389) has allowed an agent to do so. To our minds, there is needless hair splitting. In a beneficial legislation, the intention is to do away with the technicalities of law. It is logical to assume that if the complainant is ill / invalid, his case and must be allowed to be followed up by any other beneficiary. In the present case the son being a coparcener of the Hindu undivided family, it must be averred that he is a beneficiary and hence is entitled to file a complaint. It also therefore fallows that a beneficiary need not execute a registered power of attorney. Even if a power of attorney is executed, the contention of the complainant that it is not required to be registered has not been rebutted by the O.P. we therefore dismiss both the objections raised by the O.P. and allow the case to proceed ahead. Both parties are represented”        

 

11. The Appellants have however alleged in their Memo of Appeal that the forum gave no decision whatsoever about the maintainability of the complaint petition and that the forum committed a serious irregularity by not deciding this issue. On the face of the orders which are on record, as narrated above, we are indeed bewildered and wonder how the Appellants could make such an allegation which is contrary to facts on record.

 

12.    While we find no infirmity in the reasoning and decision of the Forum in this regard, apart from that, we find that there is no provision in the consumer protection Act which bars a person holding a Power of Attorney from verifying a Complaint Petition filed before the Consumer Forum on behalf of the Complainant. Under Section 2 of the owner of Attorney Act, 1882 a done of power of attorney is entitled to act and sign on behalf of the donor and such act is effectual as if it had been done by the donor of the power himself. Moreover, the status of ‘consumer’ attaches and inheres in M/s K.C. Rice & Flour Mills, the Insured and its proprietor Shri Mohanlal Agarwala. The mere fact that the Complaint is signed by a power-of-attorney holder does not make him the Consumer under the Act and does not render the Petition non-maintainable.

 

13.    here we may quote the provisions of Order 14 and Order 15(1) of the Civil procedure Code, 1908:-

 

“14. Pleading to be signed- Every pleading shall be signed by the party and his pleader (if any): Provided that where a party pleading is, by reason of absence or for other good cause, unable to sign the pleading, it may be signed by any person duly authorized by him to sign the name or to sue or defend on his behalf.

 

15. Verification of pleadings – (1) save as otherwise provided by any law for the time being in force, every pleading shall be verified at the foot by the party or by one of the parties pleading or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case.”

 

Further, Rule 8 of the Meghalaya Protection Rules, 1989 provides that in any proceeding before the District Forum the parties may appear either by themselves or through their authorized agents. Rule 10 of the Rules provides inter alia that a Memorandum of Appeal may be presented to the State Commission by the Appellant in person or by his authorized agent and empowers the appellant or his authorized agent to appear on the date fixed for hearing. Similar provisions are also found in Rules 14 & 15 of the Consumer protection Rules, 1987 framed by the Central Government. And Rule 2(b) thereof defines ‘agent’ as “a person duly authorized by a party to present any Complaint, appeal or reply on its behalf before the National Commission.”

 

14.    When an authorized agent can present a petition /Appeal and also appear on behalf of the Complainant/Appellant before the Consumer Forum and even under the C.P.C. a duly authorized person can sign and verify the pleadings there is no reason why a Power of Attorney Holder cannot verify a Complaint Petition filed before the Forum.

 

Thus, we are of the view that a Power of Attorney holder is not only empowered to verify a complaint petition on behalf of the complainant under the provisions of the Power of Attorney Act but it is also competent to do so under the provisions of the Consumer protection Act. The arguments advanced by the appellants are therefore patently fallacious and are not sustainable in law. As such we reject this ground of Appeal.

 

15.    The Appellants have also assailed the order of the Forum on the ground that, inasmuch as Clause No.11 of the related Insurance Policy provided for arbitration in cases of dispute regarding the quantum to be paid under the Policy, the Complaint petition was not maintainable and the Forum committed a serious irregularity by not deciding this issue although a separate petition was filed by the Appellants in this regard before the Forum on 3.2.1997.

 

We have perused the entire case records of the Forum and we find that this ground of appeal is totally misleading and baseless, to say the least, besides being untenable in law. Records of the Forum reveal that on a point of law raised by the Appellants Insurance Co, the Forum framed the following preliminary issue, besides one other issue regarding maintainability which we have discussed separately, even before entering into the merits of the case, viz: “(i) Jurisdiction of the Consumer Forum to entertain the complaint when the remedy of arbitration was available.”

 

Having heard both the sides and gone through the various judgments cited by them, the Forum concluded in its order dated 20.12.1997 as follows:

 

As regard the first point of law, there is little scope for discussion or doubt. The law in this regard is well laid down by the national Commission {1991 CPJ (D) 203} and in 1991(2) CPR 668. The Arbitration clause does not oust the jurisdiction of the Consumer Forum. We therefore dismiss both the objections raised by the Opposite party and allow the case to proceed ahead.”

 

16.    On the face of this order we are totally at a loss either in understanding or in appreciating the contention of the Appellants that the Forum committed a serious irregularity by not deciding this issue separately in the impugned order nor can we approve of such an argument.

 

Having been decided as a preliminary issue the question of ‘re-deciding’ the issue in its subsequent and final order dated 29.8.1998 could not arise. In any event, even the impugned final order dated 29.8.1998 itself records the factum of disposal of this issue vide orders of the Forum dated 20.12.1997 and the Appellant can thus have no grievances on this count whatsoever.

 

17.    As far as the legality of the decision of the Forum on this issue is concerned, we must straightaway refer to the provisions of Section 3 of the Consumer protection Act which itself clearly states that “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.”

 

As far back as on 18.10.1989, the national Commission had laid down in the case of Commercial Officer, Office of the telecom District Manager, Patna –vs- Bihar State warehousing Corp. {1 (1991) CPJ 42} that the existence of a remedy by way of arbitration does not preclude an aggrieved consumer from seeking Redressal before the forums constituted under the C.P. Act, which is a special statute enacted by Parliament for the specific purpose of providing a speedy, cheap and efficacious remedy to Consumers before the special forums created for that purpose.

 

Furthermore, the Honorable Supreme Court has already laid this matter at rest in its judgment reported in AIR 1997 SC 533 (M/s fair Air Engineers Pvt. Ltd. and Anr –vs- N.K. Modi) where at paras 15 & 16 it held as follows:

 

            “15. It would therefore, be clear that the Legislature intended to provide a remedy in addition to the consentient arbitration which could be enforced under the Arbitration Act or the Civil Action in a suit under the provisions of the Code of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer the automatic right nor create an automatic embargo on the exercise of the power by the judicial authority of the Act. It is a matter of discretion. Considered from this perspective, we hold that though the District Forums, State Commission and national Commissions 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 the act intends to relief the consumers of the cumbersome arbitration proceedings or Civil action unless the forums in their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the act.

 

            “16. Considered from this perspective, we hold that this dispute need not be referred to arbitration under clause (12) of the agreement and the matter could be decided on merits by the State Commission itself.”

 

18.    After the final word in this regard has been spoken by the highest court of our country, nothing more needs to be said as far as the law governing the matter is concerned.

 

We therefore hold that the Arbitration Clause contained in the Insurance Policy is not a bar to the entertainment of a complaint by a Consumer Disputes Redressal Agencies. Consumer under the C.P. Act has two alternative remedies open to him either to seek arbitration, if the terms of the policy so provide, or to seek Redressal of his grievances through the Consumer Disputes Redressal Agencies constituted under the C.P. Act : the notice and discretion is entirely his own.

 

19.    However, on the facts of the present case there is one more aspect that needs to be stated here. The Insurance Company has relied upon the show cause filed by them before the forum to support their arguments before us. Upon perusal of the show cause we are surprised to find that, while on the one hand they state in para 7 that the question to refer the matter to the Arbitrator does not arise at all yet, in succeeding para 8 they state that the Award by the Arbitrator is a condition precedent to any right of action upon the policy which having not obtained the Complaint Petition is in clear violation of the policy and as such is liable to be dismissed. This clearly seems to put the Consumer in a “Heads I win, Tails you lose” situation and is a glaring example of approbation and reprobation.

 

In view of the above discussion, the challenge to the maintainability of the Complaint Petition and to the legality of the impugned order dated 29.8.1998 passed by the forum on the ground of existence of an Arbitration Clause in the Insurance Policy, as raised by the Appellant, is rejected outright.

 

20.    Learned Counsel for the Appellants has vehemently argued that the award of interest at the rate of 18% p.a. in addition to the sum assessed by the Forum as payable by the Appellant to the Complainant under the policy is not impartial and judicious and ought to be at the maximum rate of 10% to 12% as is generally awarded in consumer cases. Learned Counsel for the Respondent on the other hand wants us to uphold the rate of interest at 18%.

 

As this is an often repeated argument we are of the view that the issue relating to the rate if interest payable by an Insurance Company where deficiency in service is established needs to be discussed at length in the light of the various judgments of the Honorable Supreme Court as well as the National Commission so that this may be settled as far as this State Commission is concerned and this will also help us in Adjudicating upon this submission of the Appellants.

 

21.    We find that at least up to 3.1.2001, the rate of interest payable as compensation in cases of deficiency in service in insurance cases was fairly well settled and the Honorable Supreme Court as well as the national Commission had generally upheld the rate of up to 18% p.a. as may be seen from some cases cited below:

 

a)      As far back as on 23.3.1992, in the case of Hindustan Copper Ltd. –vs- new India Assurance Co. Ltd. (1992(2) CPR 4) the National Commission awarded interest the rate of 18%.

 

b)      The National Commission again awarded interest at 18% in II (1993) CPJ 160 (NC) (M/s Ajmer Singh Cotton & General Mills –Vs- The Branch Manager, United India Insurance Co. Ltd).

 

c)      The facts of the case of National Insurance Co. Ltd. –Vs- Jit Ram Shiv Kumar reported in 2001 (1) CPC 2 will show that the award of interest at 18% made by the National Commission on 15.4.1993 was upheld by the Honorable Supreme Court vide its order dated 23.9.1999 and subsequently reaffirmed by the Honorable Supreme Court in Jit Ram Shiv Kumar –Vs- National Insurance Co. Ltd. (AIR 2001 SC 927) on 22.1.2001.

 

d)      In Rajeshwariben Upendra Kumar Shah –vs- The Oriental Insurance Co.Ltd (1998-1996 Consumer 2308 (NS)) decided on 6.6.1996 the National Commission enhanced the rate of interest from 12% which was awarded by the State Commission to 18%, “in accordance with the practice of the National Commission in similar cases.”

 

e)      In the case of United India Insurance Co. Ltd –Vs- fancy Traders (J.T. 2000 (10) SC 337) the Apex Court held that interest at the rate of 18% p.a. as awarded by the State Commission and confirmed by the High Court was justifiable.

 

f)        These cases apart, even for consumer cases relating to deficiency in service in respect of housing flats, the Honorable Supreme Court and national Commission have awarded interest @18%. In Haryana Urban Development Authority –vs- Rajnish chander Sharda decided on 12.1.2000 {2000(1)CPC 259} the Honorable Supreme Court upheld the grant of interest at 18% p.a. by the National Commission.

 

22.    Thereafter, came the judgment of the Honorable Supreme Court in the case of Smt. Kaushnuma begum and Ors –Vs- New Delhi Assurance Co. Ltd and others rendered by the Honorable Supreme Court on 3.1.2001 and reported in AIR 2001 SC 485. In this case which arose under the provisions of the Motor vehicles Act, the Honorable Supreme Court held that:-

 

“Section 171 of the MV Act empowers the Tribunal to direct that ‘in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as may be specified in this behalf. ‘earlier, 12% was found to be the reasonable rate of simple interest. With a change in economy and the Policy of the Reserve bank of India the interest rate has been lowered. That nationalized banks are now granting interest at the rate of 95 on fixed deposits for one year. We, therefore direct that the compensation amount fixed hereinbefore shall bear interest at the rate of 9% per annum from the date of the claim made by the Appellants.”

 

23.    Based upon this judgment a fresh controversy has arisen regarding the rate of interest payable in consumer cases. Persons liable to pay interest, as in the instant case, have started claiming that the lower rate of interest ought to be applied by the Consumer Disputes Redressal Agencies too. However, in our view, this contention is untenable for several reasons. Firstly as mentioned above, the K. Begum case (Supra) was decided under the provisions of the Motor Vehicle Act and not under the Consumer Protection Act and the rationale and purpose behind the award of interest under the two Acts being quite different, the judgment could not have necessary application in Consumer cases. Secondly, as held by the Honorable Supreme Court in K. Begum (Supra) “earlier 12% was found to be a reasonable rate of simple interest” i.e. in Motor Accident cases, in Consumer aces the well-settled rate was 18% as will be evident from the cases referred to by us earlier. This itself clearly shows that the rates of interest under the two laws have no direct bearing upon each other.

 

Further, it will be seen that section 171 of the Motor vehicles act provides that the tribunal may direct that in addition to the amount of compensation to simple interest shall also be paid at such rate and from such date, not earlier than the date of making the claim, as may be specified in this behalf. Thus, whenever the interest is awarded by the Motor Accident Claims tribunal, it is under the specific provisions of section 171 of the Motor Vehicles Act, and such interest is “in addition to the amount of compensation”. There is no similar provision for payment of interest under the Consumer protection Act. It will now be therefore evident that statutory interest as awarded under the M.V. Act and under the C.P. Act are two separate things altogether and is follows as a corollary that the rates of interest under these two Acts are not reliable.

 

24. With regard to services, Section 14(1) of the Consumer protection Act inter-alia provides that if the Forum is satisfied that any of the allegations contained in the complaint about the services are proved it shall issue an order to the Opposite party directing him to do one or more of the following things, namely, (i) under clause (e) of Sec. 14(1), to remove the defects or deficiencies, in the services in the question and (ii) under clause  (d) of sec. 14(1), to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to negligence of the Opposite party.

 

When the Forum awards interest to a party, such interest is in fact by way of compensation to the consumer for any loss or injury suffered by the Consumer due to negligence of the Opposite Party – it is not an award of interest as such. Therefore, under the C.P. Act payment of interest can be said to be the general method and the rate of interest the measure by which the loss and injury is determined and compensation awarded to an entitled consumer by the Consumer Redressal Agencies.

 

We are fortified in this conclusion by the decision of the national Commission in Ghaziabad Development Authority –Vs- dr. N.K. Gupta reported in (2002) 258 ITR 337 wherein at page 345 it was held that :

 

            In the order of the State Commission interest means compensation or damages for delay in construction of the house or handling over possession of the same causing consequential loss to the complainant by way of escalation in the price of the property and also on account of distress, disappointment faced by him. Interest in the order has been used merely as a convenient method to calculate the amount of compensation in order to standardize it. Otherwise, each case of the allottee will have to be dealt with differently. Nomenclature does not decide the issue.

 

26. To us it also appears from the judgment referred to below that the Honorable Supreme Court as well as the national Commission themselves were not guided by K.Begum (Supra) when deciding cases under the C.P. Act. These are some of the cases decided by the Honorable Supreme Court and National Commission involving the rate of interest which were rendered after the judgment in the K. Begum case (supra):

 

a.       In National Insurance Co. Ltd. –Vs- Sky gems (2002(1) CPR 42 (SC)) decided on 9.1.2002 the Honorable Supreme Court upheld the grant of interest by the National Commission at 18% p.a.

 

b.      In Gammon India Ltd. –Vs- New India Assurance Co. Ltd (2002 (3) CPR 141 (NC)) decided on 30.7.2002 the national Commission directed the Insurance Co. to pay interest at 17.5% to the complainant for having been deprived of its claim for all the period.

 

c.       Similarly, in cases regarding housing flats, the national Commission has upheld the award of interest at 18% (See: Ghaziabad development Authority –Vs- Nahar Singh {2002 (1) CPR 171 (NC)} decided on 30.5.2002.

 

27. Thus in view of the latest pronouncement of the honorable Supreme Court and national commission, it appears to us that the judgment in the k. begum case (Supra) has made no change in the position under the Consumer protection Act and that the rate of interest up to 18% p.a. continues to be the norm in cases under the Consumer protection Act where there is proven deficiency in service on the part of Insurance Companies. However it must be borne in mind that this rate of 18% is not sacrosanct and the actual rate at which interest is awarded would depend on the facts and circumstances of each case and would be determined by the Consumer Disputes Redressal Agencies on a rational basis on a consideration of materials produced before them showing the extent of injury suffered and the manner and the extent of the monetary loss caused to the Complainant.

 

28. It must also be pointed out here that the award of compensation by the Consumer Forum need not be restricted only to one mode i.e. by way of interest. Directions may either be issued only for payment of a determined lump-sum compensation or only for interest or partly by way of interest and partly lump-sum. To cite two examples-

 

In the case of Mohd Ishfaq –Vs- dr. martin D’Souza {2002 (2) CPR 151 (NC)} the national Commission while making a direction for payment of a sum of Rs.4lacs awarded interest from the date of filing the complaint and further directed the Respondent to pay rs.2 lacs as compensation for mental agony and harassment along with cost of Rs.5000.00.

 

In the matter of Gora Academy of education & Anr.–Vs- C. Vani & Ors {2002 (1) CPR 93 (NC)} the District Forum had directed the Respondents to pay interest as well as compensation for mental agony and harassment as also costs. This award was upheld by the A.P. State Commission and again by the national Commission.

 

29. Further, although digressing from the issue, it is pertinent to point out here that even if a Consumer Forum were to make an order for payment of

 

(A)   A certain claim amount to a complainant under the Consumer protection act and

(B)   Interest on the claim amount, and further

(C)   Interest on both the above mentioned sums i.e. A+B, after 30 days of the date of order till the date of payment, then such an order will be valid in the eye of law and the order for payment of interest under clause (c) above would not amount to granting interest on interest but would be an interest awarded on delayed payment as was held by the Honorable Supreme Court in M/s Jit Ram Shiv Kumar (Supra).

 

What we have stated in this paragraph has no direct bearing on the case at hand but we mention this position of law to emphasize and focus on the consumer-orientation of the Consumer protection Act as highlighted by the Judgment of the Honorable Supreme court and on its wide ambit towards protection of the interest of consumers and grant of compensation as thought fit in the facts of a particular case.

 

30. In view of the above discussions and upon finding the award of interest at 18% to be fair, just and reasonable in view of the facts and circumstances of the case we reject the contention of the Appellants on this account and uphold the decision of the Forum awarding interest at 18% p.a. to the Respondent.

 

31. Another ground of Appeal taken on behalf of the Appellants is regarding the date from which the interest is payable by them. The Forum has, in the instant case, directed the Insurance Company to pay interest at 18% on the assessed amount from 10.10.95 i.e. 3(three) months after the date of lodging of the claim by the Respondent/Complainant which was on 10.7.1995 while the loss occurred on 7.7.1995. The Appellants contend that the District Forum ought to have granted interest only after 3(three) months from the date of receipt of the surveyors report.

 

Since this issue also frequently crops up in almost all cases where interest is awarded by the Forums for deficiency in insurance service it would be beneficial to delve into the matter at some length and then to decide the matter.

 

32. her a very brief citation of a few cases spread over the last ten years indicating the effective dates from which interest has been awarded by the Honorable Supreme Court and National Commission would be fruitful and would be the beacon by which we would led towards our conclusion.

 

a)      In S. Velliyanagam & co –Vs- New Delhi Assurance Co. Ltd {1992 (1) CPR 808) the National Commission directed payment of interest starting from 3 (three) months after the submission of the reports of the Surveyors.

 

b)      In Hindustan Copper ltd. –Vs- New Delhi Assurance Co. Ltd {1992 (2) CPR 4) the national Commission granted interest from 1 (one) month after the date on which the claim was lodged.

 

c)      In M/s Ajmer Singh Cotton & General Mills –Vs- the Branch Manager, United India insurance Co. Ltd & Ors {II (1993) CPJ 160 (NC)} the National Commission held that interest was to be paid after the expiry of 2 (two) months from the date of the Surveyor’s Report.

 

d)      In the case of Jit Ram Shiv Kumar –Vs- national Insurance Co. Ltd {1 (1994) CPJ 213 (NC)} the National Commission granted interest after the elapse of 6(six) months from the date of lodging of the claim and this was upheld by the Honorable Suprme Court in national Insurance Co. Ltd –Vs- Jit ram Shiv Kumar {2001 (1) CPR 2}.

 

e)      In Rawat Brothers –Vs- M/s Oriental Insurance Co. Ltd –Vs- Sky Gems {2002 (1) CPR 42 (SC) } the Honorable supreme Court itself held that the Consumer therein was entitled to interest from the date on which it preferred the claim petition before the Insurance Company.

 

f)        In the latest case of National Insurance Co. Ltd –Vs- Sky Gems {2002 (1) CPR 42 (SC) } the Honorable Supreme Court itself held that the Consumer therein was entitled to interest from the date on which it preferred the claim petition before the Insurance Company.

 

33. from the above mentioned cases it appears to us that the Honorable Supreme Court and National Commission have not laid down any standard yardstick to be followed by us regarding the date from which interest is to be awarded and that each case is to be decided on its own merit, though it is amply clear from the recent decision of the Honorable Supreme Court in National Insurance Co. Ltd –Vs- Sky Gems (Supra) that Consumer forum are not debarred from awarding interest from the date on which the claim is lodged by a consumer under the C.P. Act.

 

It further needs to be borne in mind, as already held by us in the preceding paragraphs, that an award of interest by the Consumer forum is in fact an award of compensation for the loss and injury suffered by a Consumer and interest is only a method which is generally adopted by the Consumer Forum to determine and award the compensation amount. To us it is therefore self-evident that the Forums have complete discretion, albeit within the bounds of rationality and fairness, to determine the starting point of interest liability in accordance with the ultimate compensation which the Forum determines to be fairly and justly receivable by the aggrieved consumer in the facts and circumstances of a particular case wherever there is any proven deficiency in service. Thus, while the rate of interest would be one measure to determine the ultimate compensation, the effective date from which interest may be directed to be paid would be another.

 

34. we are thus of the view that in cases of proven deficiency in service by Insurance Companies, the Consumer forum are at liberty to award interest from any date starting from the date of lodgment of claim by a consumer before the Insurance company and this starting point is to be determined by the Forum under the facts and circumstances of each case on a rational and fair basis in order to suitably compensate a consumer for any suffering, insult, injury, loss, damage or injustice suffered by him.

 

Coming to the facts of the instant case, by a well reasoned order the Forum granted interest to the Respondent herein commencing from 3 (three) months of lodgment of the claim. In consideration of the facts of the case and the manner of deficiency in service and in view of what we have stated above, we find no infirmity in the decision of the Forum on this count and we uphold the same.

 

35. Learned Counsel for the Appellants has also stressed that the sum of Rs.10000.00 awarded by the Forum to the Respondent as compensation for mental agony and harassment caused by deficient service and the further amount of Rs.5000.00 awarded towards cost of the proceedings were not called for. We are however unable to find any infirmity or excessiveness either in the quantum of compensation for mental agony and harassment caused by the Appellants nor in the quantum of costs of the preceding in view of the facts and circumstances of the case as is evident from the records and we therefore confirm the Forum’s decision in this regard.

 

The grueling journey which the consumer who is already a victim of floods appears to have traveled in this case in order to recover his claim also brings to our mind the following observations of the Honorable Supreme Court in the consumer case reported in AIR 1994 SC 787 [Lucknow Development Authority –Vs- M.K. Gupta] where at page 798 the Apex Court observed:

 

“Therefore the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook.”

 

36. To conclude, in view of all the above discussions, we find that the appeal id devoid of any merit whatsoever and we find no reason to interfere with the impugned order dated 29.8.198 passed by the Forum, Tura and the Appeal is liable to be dismissed. The Appeal is accordingly dismissed.

 

Keeping in view the facts and circumstances of the case we award the sum of Rs.7500/- to the Respondent herein being exemplary costs of this Appeal.

 

37. Before parting with the case we feel compelled to say that in their Memo of Appeal, the Appellants have repeatedly asserted that the impugned order dated 29.8.1998 passed by the Forum has caused financial loss to the Appellants which is a public sector Insurance Company under general Insurance Corp. of India. We have already upheld the order passed by the Forum and thus in our opinion, the order has caused no financial loss to the Appellants, Oriental Insurance Co. Ltd. if any amount is found due under an Insurance Policy the Forum is duty-bound to pass an award for the assessed amount together with reasonable compensation in favour of the Consumer and no such payment can be said to cause financial loss to the Appellants. The Appellants are in fact in the business of Insurance and payment of legitimate claims is as much a part of their business as the collection of premium from the Consumers. The Consumer protection Act makes no distinction between the public sector and the private sector and a public sector Insurance Company is as much amenable to the provisions of the Act as any other company rendering similar service. Consumer Disputes Redressal Agencies are expected to deliver even-handed justice between the parties, whomsoever they may be.

 

At the same time, on perusal of the entire case records and as per the discussions made above we cannot help but form the impression that the Appellants have been over-zealous in resisting the claim of the Complainant consumer by raising pleas whether plausible or implausible, legally tenable or untenable and have somehow wanted to avoid their liability under the policy and to deny the rightful claim of the Complainant/respondent for reasons best known to them. While we appreciate that the Insurance Company has to safeguard public funds and to ensure that no fictitious or inflated claims are paid, yet at the same time, they must bear in mind the following words of the Honorable Supreme Court as pronounced in the case of national insurance Co. Ltd –Vs- Jugal Kishore and ors. [AIR 1988 SC 719 at Para 10]:-

“The obligation on the part of the State or its instrumentalities to act fairly can never be over emphasized.”

 

We sincerely hope and trust that this weighty observation from the highest court of our nation would guide the future conduct of all persons concerned.