18.05.2015

JAGANNATH BAG, MEMBER

        The present appeal is directed against the order dated 13.03.14, passed by the Ld. District Consumer Disputes Redressal Forum, Kolkata , Unit-II, in CC No. 315 of 212, whereby the complaint was allowed in part on contest against the OPs.

        The Complainant’s case, in brief, was as follows:

        The Complainant obtained from the OPs a policy under the name and style of ‘Medical Establishment - Professional Negligence Errors & Omissions Insurance Policy’ vide policy No. 10170/96/94/873/00001. A complaint case being lodged by one Sri Saroj Kumar Sinha Roy before the State Consumer Disputes Redressal Commission, West Bengal , the Complainant asked the OP/ Insurance Company to appoint Advocates to contest the case, which was not done. An order was passed by the State Commission directing the OP i.e., Calcutta Medical Research Institute, to pay Rs.3,00,000/- to the Complainant vide order dated 05.10.2001. The Complainant suffered financial loss. The order was appealed against before the Hon’ble National Consumer Disputes Redressal Commission under No. 360/2001. Another appeal under No. 362/2001 was also filed against the order of the State Commission by Dr. Subrata Das Gupta before the Hon’ble National Consumer Disputes Redressal Commission. The said two appeals were dismissed by the Hon’ble National Commission directing the Appellant to pay Rs. 2,67,786/- to the Complainant, namely, Swaraj Kumar Sinha Roy. The order was complied with and a cheque vide No. 531159 dated 01.02.2008 was issued after the OP Insurance Company vide their letter dated 19.12.2008 asked the Complainant to satisfy the order of the National Commission and submit the documents for reimbursement. After making such payment the Complainant raised 29. 10. 2010 a claim of Rs. 5,62,617/- against the Medical Policy obtained from the Insurance Company. The Complainant made several correspondences for settlement of the claim. But the claim has not been settled. On 16.06.2011, the OP Insurance Company issued a letter in the name of the Complainant stating , inter alia, that the claim was under process and they would revert on the matter soon. Thereafter , more than one year elapsed but nothing was done by the OP. A legal notice dated 19.09.2012 was sent to the OP Insurance Company, but to no avail. In the said circumstances, the Complainant filed a consumer complaint on the alleged ground of negligence and deficiency in service on the part of the OP Insurance Company praying for direction upon the OP Insurance Company to pay Rs.5,62,611/- as reimbursement of the expenses incurred along with interest @ 12 % p.a thereupon from the date of claim i.e., 20.10.2010, compensation of Rs. 5,000/- and cost of Rs. 1,00,000/-.

        The complaint was contested by the OP Insurance Company, contending, inter alia , that though under clause 4 of the policy , the Insurance Company is required to pay all costs , fees and expenses incurred with their prior consent in the investigation, defence or settlement of any claim, in the instant case they neither took any prior consent from the OP with regard to engagement of Advocate nor took prior consent or approval from the OP for the payment of legal expenses incurred by them. There was no deficiency on their part in so far as the terms and conditions were not adhered to by the Complainant.

      Ld. Forum below after having heard Ld. Lawyers of both parties and upon perusal of materials on record observed that OPs are under obligation to reimburse Rs. 2,67,786/- . It was held by the Ld. Forum below that the Complainant did not take prior consent of the OP Insurance Company in the matter of engagement of lawyer. The legal expenses incurred by the Complainant are beyond the rates as fixed by the Governing Body of the Insurance Company. Accordingly, a sum of Rs.40,000/- was found to be admissible in addition to the sum of Rs. 2,67,786/- . OPs were directed to pay Rs. 3,07,786/- within 2 months from the date of order.

        Being aggrieved by and dissatisfied with the order of the Ld. Forum below, the Complainant- turned -Appellant has come up before this Commission with prayer for direction upon the Respondent Insurance Company to make further payment of Rs. 2,94,825/- and compensation of Rs. 5,00,000/- apart from other relief as may deem fit.

        Ld. Advocate appearing for the Appellant submitted that the Insurance Company is bound to pay the  legal expenses as incurred by the insured in defending their case. The Complainant requested the OP in complaint case No. 453/0/96 to appoint Advocates to protect the interest of the insured Complainant as well as the interest of the Insurance Company, but the OP did not take step . Finding no other alternative, the Complainant appointed Advocate and incurred huge expenditure. The OP Insurance Company is under obligation to reimburse such expenses as per policy terms. Ld. Forum below failed to appreciate the fact in not allowing the total amount of legal expenses . Though direction has been issued by the Ld. Forum below for payment of Rs. 3,07,786/- apart from legal expenses of limited amount of Rs. 40,000/-, such order deserves to be modified / set aside with the direction  upon the Insurance Company to pay the sum of Rs. 5,62,611/- as reimbursable amount , Rs. 5,00,000/- as compensation and Rs. 1,00,000/- as litigation cost.

        Ld. Advocate appearing for the OP/Respondent submitted that there was clear violation of the policy condition in relation to clause 4 of the Policy which stipulates that defence cost as mentioned under the said clause are payable if prior consent of the Insurance Company is obtained. In the present case, the Appellant / Complainant could not produce any evidence before the trial Forum that the consent of the Insurance Company in regard to defending their case before the State Consumer Disputes Redressal Commission was obtained. Ld. Forum’s direction to pay Rs. 40,000/- as per  schedule of fees approved by the Governing Body of the Insurance Company  is also not payable, as no prior consent of the Insurance Company in the matter of appointment of Advocate was obtained . The appeal may be dismissed with costs.

                                Decision with Reasons

        We have gone through the memorandum of appeal together with copy of the impugned order, the petition of complaint , the policy in question and other papers including correspondences between the Appellant/Complainant and the Respondent Insurance Company and the written version submitted by the Insurance Company filed before the Ld. Forum below. 

        The grievance of the Appellant/Complainant is that Ld. Forum below allowed the complaint in part against the claim of Rs. 5,62,611/- ignoring the fact that though the insurer was under the policy obligation to reimburse the total amount of legal expenses, such amount was not allowed and no compensation was paid.

        There is no dispute that the Appellant / Complainant took a policy which, inter alia, assured the reimbursement of legal expenses to be incurred by the insured in case of any claim arising against the errors , omissions etc on the part of the Complainant. There is also no dispute that the Complainant was involved as OP in a complaint case lodged by one Sri Saroj Kumar Sinha Roy and a sum of Rs. 2,62,000/- was spent as legal expenses, apart from payment of compensation  by the order of the Hon’ble State Commission which was confirmed by the Hon’ble National Commission.

        It appears form the contents of the policy conditions that the Appellant / Complainant was required to obtain consent of the OP Insurance Company in the matter of engagement of lawyer in any legal defence. But in the present case , the prior consent of the Insurance Company was not obtained and that being the position , the Insurance Company avoided paying the claimed amount which was beyond the scheduled rates of fees. Ld. Forum below took into consideration all relevant points and decided to allow a sum of Rs. 40,000/- towards reimbursement of legal expenses which is justified as the Insurance Company, in compliance with the instructions of their Governing Body can not go beyond the approved rates. We are inclined to hold that the impugned order has been passed in a reasoned manner and the appeal, in the result, does not succeed . Hence,

                                         ordered

that the appeal be and the same is dismissed on contest but without any costs. The impugned order is confirmed.