JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant obtained two insurance policies form the Oriental Insurance Co. Ltd., in respect of the stock of Cotton Bales. A fire allegedly broke out in the warehouse of the complainant, resulting in substantial loss to the complainant. The incident having been reported to the insurer, a surveyor was appointed by the insurer to assess the loss to the complainant. The surveyor assessed the loss to the complainant at Rs.3,93,92,598/-. The complainant then executed a Discharge Voucher dated 04.9.2015, accepting the aforesaid amount of Rs.3,93,92,598/- in full and final settlement of its claim. The said Discharge Voucher to the extent it is relevant, reads as under:
“In consideration of approval of my / our claim I / we hereby accept from the Oriental Insurance Company Limited the sum of Rs.3,93,92,598/- subject to deduction of reinstatement premium (Rupees three crores ninety three lacs ninety two thousand five hundred ninety eight only) (approved net claim amount) in full and final settlement of my / our claim towards fire to cotton bales at Pipavav port on 07.11.2010.
I / We hereby voluntarily give discharge receipt to the company in full and final settlement of all my / our claims present or future arising directly / indirectly in respect of the said loss / accident. I / We hereby also subrogate all my / our rights and remedies to the company in respect of the above loss / damages. Rs.3,93,92,598/- subject to deduction of reinstatement premium.”
After executing the Discharge Voucher on 4.9.2015, the complainant also submitted an undertaking dated 7.9.2015 to the insurer, confirming that he had no claim pending towards stock of cotton bales destroyed in fire on 7.11.2010. The said undertaking to the extent it is relevant reads as under:
“Re: Marine Policy No.124500/21/2011/331
We hereby confirm that we have no claim pending against the Marine Policy No.124500/21/2011/331 towards stocks of cotton bales lying at Contrans CFS at Pipavav and destroyed by fire on 07.11.2010.
Further, as regards our claim under Fire Policy No.124500/11/2010/1929, Rs.3,93,92,598.00 is acceptable to us in full and final settlement of the claim.”
2. After receiving payment of the above referred amount of Rs.3,93,92,598/- from the insurer on 15.9.2015, the complainant sent a letter dated 30.9.2015 to the insurer, seeking for interest on the delayed period. The said letter to the extent, it is relevant, reads as under:
“We have received the claim amount of Rs.3,93,92,598/- under Fire Policy No.124500/11/2010/1929 dated 15.9.2015.
You are aware that we had refused to sign the DV without payment of interest to us but ultimately we were forced to sign the DV as the insurance company refused to release our claim amount in absence of DV.
You are therefore again requested to process our claim for interest on the delayed period and remit funds to us at the earliest.”
3. Since interest on the said amount of Rs.3,93,92,598/- was not paid, the complainant is before this Commission, seeking an amount of Rs.2,68,84,186/- as interest, alongwith compensation etc.
4. The complaint has been resisted by the insurer primarily on the ground that having voluntarily accepted the payment of Rs.3,93,92,598/- from the insurer, the complainant is precluded from demanding any further amount from the insurer. It is also alleged in the written version that the Discharge Voucher was executed by the complainant without any force, coercion, fraud, undue influence, misrepresentation etc.
5. It is evident from the Discharge Voucher and the undertaking executed by the complainant before receiving the amount of Rs.3,93,92,598/- from the insurer that the said amount was accepted in full and final settlement of the claim towards fire of cotton bales on 7.11.2010. The full and final settlement of the claim would include the claim for interest on account of the alleged delay on the part of the insurer in processing the claim. The case of the complainant as set out in the complaint is that it was coerced and compelled by the insurer to sign certain blank receipts/vouchers/DV, on the pretext that unless the said papers were signed the due amount will not be paid. It is also alleged in para 31 of the complaint that the complainant had no choice but to accept the settlement since it was already in a lot of distress on account of undue delay and was suffering heavy business losses.
6. The issue involved in this complaint came up for the consideration of the Hon’ble Supreme Court in United India Insurance Vs. Ajmer Singh Cotton & General Mills & Ors. (1999) 6 SCC 400 and the following view was taken:
“4………… The mere execution of the 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. 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 the circumstances which can be termed as fraudulent or exercise of undue influence or by misrepresentation or the like. If in a given case the consumer satisfies the authority udner the Act that the discharge voucher was obtained by fraud, misrepresentation, undue influence or the like, coercive bargaining compelled by circumstances, the authority before whom the complainant is made would be justified in granting appropriate relief. However (sic so), where such discharge voucher is proved to have been obtained under any of the suspicious circumstances noted hereinabove, the Tribunal or the commission would be justified in granting the appropriate relief under the circumstances as noticed earlier. The Consumer Disputes Redressal Forums and Commissions constituted under the Act shall also have the power to fasten liability against the insurance companies notwithstanding the issuance of the discharge voucher.”
7. This issue also came up for consideration of the Hon’ble Supreme Court in New India Assurance Co. Ltd. Vs. Genus Power Infrastructure Ltd. (2015) 2 SCC 424, and the following view was taken:
“7. The question that arises is whether the discharge in the present case upon acceptance of compensation and signing of subrogation letter was not voluntary and whether the claimant was subjected to compulsion or coercion and as such could validly invoke the jurisdiction under Section 11 of the Act. The law on the point is clear form following decisions of this Court. In National Insurance Co. Ltd. V. Boghara Polyfab (P) Ltd. in paras 26 and 51 it was stated as under(SCC pp. 284-85 and 294)
26. when we refer to a discharge of contract by an agreement signed by both the parties or by execution of a full and final discharge voucher / receipt b one of the parties, we refer to an agreement or discharge voucher which is validly and voluntarily executed. If the party which has executed the discharge agreement or discharge voucher, alleges that the execution of such discharge agreement or voucher was on account of fraud / coercion / undue influence practised by the other party and is able to establish the same, then obviously the discharge of the contract by such agreement / voucher is rendered void and cannot be acted upon.”
8. …………….. A bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up such a plea must prima facie establish the same by placing material before the Chief Justice / his designate. If the Chief Justice / his designate funds some merit in the allegation of fraud, coercion, duress or undue influence, he may decide the same or leave it to be decided by the Arbitral Tribunal. On the other hand, if such plea is found to be an afterthought, make-believe or lacking in credibility, the matter must be set at the rest then and there.”
9. It is therefore, clear that a bald plea of fraud, coercion, duress or undue influence is not enough and the party who sets up a plea, must prima facie establish the same by placing material before the Chief Justice / his designate.”
10. In our considered view, the plea raised by the respondent is bereft of any details and particulars, and cannot be anything but a bald assertion. Given the fact that there was no protest or demur raised around the time or soon after the letter of subrogation was signed, that the notice dated 31.3.2011 itself was nearly after three weeks and that the financial condition of the respondent was not so precarious that it was left with no alternative but to accept the terms as suggested, we are of the firm view that the discharge in the present case and signing of letter of subrogation were not because of exercise of any undue influence. Such discharge and signing of letter of subrogation was voluntary and free from any coercion or undue influence.”
8. This issue also came to the consideration of this Commission in Anshupati Fibres Pvt. Ltd. Vs. National Insurance Co. Ltd. & Anr. CC/32/2007 decided on 14.1.2015 and the following view was taken:
6. Section 14 of the Contract Act which defines ‘Free Consent’ reads as under:-
“14. ‘Free consent’ defined.—Consent is said to be free when it is not caused by—
(1) coercion, as defined in section 15
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17,
(4) misrepresentation, as defined in section 18,
(5) mistake, subject to the provisions of sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.”
It would thus be seen that a consent is a free consent unless it is obtained by use of coercion, undue influence, fraud or misrepresentation or its given on account of a mistake, subject to the provisions contained in Section 20 to 22 of the said Act. ‘Coercion’ is defined in Section 15, ‘undue influence’ is defined in Section 16, ‘fraud’ is defined in Section 17 and ‘misrepresentation’ is defined in Section 18 of the Act. The aforesaid Sections read as under:-
15. "Coercion" defined.- "Coercion" is the committing, or threating to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
16. "Undue influence" defined.-(1) A contract is said to be induced by "under influence" where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generally of the foregoing principle, a person is deemed to be in a position to dominate the will of another -
(a) where he hold a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall be upon the person in a position to dominate the will of the other.
Nothing in the sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872)
17. "Fraud defined.- "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agents, with intent to deceive another party thereto his agent, or to induce him to enter into the contract;
(1) the suggestion as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
18. "Misrepresentation" defined.-"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is subject of the agreement.”
7. In the case before us, there was no such relationship between the complainant and the opposite parties that the opposite parties can be said to be in a position to dominate the will of the complainant company and use that position to obtain an undue inference over the complainant Company. The Insurance Company does not stand in a fiduciary relationship visa vis the complainant. Clause (b) of Sub Section (2) of Section 16 concerns an individual whose mental capacity is affected by reason of age, illness etc. and is obviously inapplicable. Since the Insurance Company cannot be said to be in a position to dominate the will of the complainant, Sub Section (3) of Section 16 of the Act would also not apply. In any case, the complainant Company has failed to prove that the settlement of the claim for a sum of Rs. 1,39,82,571/- was induced by undue influence. Section 16 of the Contract Act, therefore, is clearly inapplicable. There is no allegation of fraud against the Insurance Company. There is no allegation of concealment of any material fact by the Insurance Company from the complainant with a view to obtain the consent of the complainant Company to the aforesaid settlement. Therefore, Section 17 of the Act is also not applicable. There is no allegation of any misrepresentation within the meaning of Section 18 of the Contract Act and therefore, the aforesaid Section also does not apply.
No case of coercion is made out by the complainant Company, since there is no allegation of committing, or threatening to commit, any act forbidden by the Indian Penal Code or unlawful detaining, or threatening to detain, any property, to the prejudice of the complainant, with intention of causing the complainant to enter into any settlement.”
9. In the present case, the only plea taken in the letter dated 30.9.2015 sent by the complainant to the OP was that they were forced to sign the Discharge Voucher as the insurer refused to release their claim amount in the absence of the discharge voucher. Assuming the said allegation to be correct, the refusal of the insurer to release the claim amount in the absence of a discharge voucher, in my view, does not amount to fraud, misrepresentation, coercion of undue influence as defined in the Indian Contract Act. If the insurer was insisting upon execution of the Discharge Voucher as a pre-condition for release of the assessed amount and the complainant was not willing to do so, nothing prevented it from filing a consumer complaint or a Civil Suit and seeking an interim order, directing the insurer to pay the said amount. Though, it is vaguely alleged in the consumer complaint that the complainant company was already in a lot of distress due to undue delay of five years and was suffering heavy business losses on a daily basis, no such allegation was even made in the letter dated 30.9.2015. Moreover, no documentary evidence such as the Balance Sheet and the Profit and Loss Account of the complainant has been placed by the complainant before this Commission to prove that the complainant company was in a financial distress during the relevant period and was suffering losses in its business on account of the claim amount not being made available to it. Therefore, it would be difficult to accept the plea that the complainant was compelled to execute the discharge voucher on account of any financial distress or hardship.
10. As held by this Commission in Anshupati Fibres Pvt. Ltd. (supra) that once the insured accepts a particular amount in full and final settlement of his claim, he is estopped form claiming any further amount from the insurance company, since the settlement constitutes a binding contract between the parties unless it is shown that it was influenced by use of coercion, undue influence, fraud, mistake or misrepresentation. In the present case, no such influencing factor has been established by the complainant.
11. For the reasons stated hereinabove, the complaint is hereby dismissed, with no order as to costs.
| 