Oriental Insurance Co.Ltd. vs Baldev Raj Chib
2012 Latest Caselaw 3551 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           RFA No. 539/2004

%                                                              28th May 2012

ORIENTAL INSURANCE CO.LTD.                                       ...... Appellant

                            Through:     Mr. L.K.Tyagi, Adv.


                            VERSUS

BALDEV RAJ CHIB                                                ...... Respondent

                            Through:     Mr. Deo Prakash Sharma and Mr. Dinesh
                                         Kumar, Advocates.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1. This Regular First Appeal filed under Section 96 of the Code of Civil

Procedure, 1908 (CPC) impugns the judgment of the trial Court dated 3.8.2004

decreeing the suit of the respondent/plaintiff for recovery of `5,26,601/- alongwith

interest. The suit has been decreed with respect to the insurance claim made by the

respondent/plaintiff under an insurance policy issued by the appellant/defendant

for a car which was owned by the respondent/plaintiff.

2. The facts of the case are that the respondent/plaintiff purchased a

vehicle being Mahindra Bolero on 9.8.2001 bearing registration no. DL-3CS-8205

and insured the vehicle with the appellant/defendant vide policy

no.Yr/No.2002/2280 and cover note 162161 dated 17.8.2001. The period of

insurance was from 17.8.2001 to 16.8.2002 for a sum of `5,26,601/-. The vehicle

was stolen in the evening of 8.4.2002 and which fact was found out in the morning

of 9.4.2002. The respondent/plaintiff lodged an FIR bearing no. 215/2002 on

9.4.2002 with the police station, Hauz Khas. Since the vehicle remained untraced,

the respondent/plaintiff lodged a claim with the appellant/insurance company for

the recovery of the amount of ` 5,26,601/- being the amount which was stated in

the policy.

3. The respondent/plaintiff, in the plaint, also pleaded a case that though

he had sent his letter dated 31.7.2002 agreeing to receive an amount of `4,65,000/-

in full and final settlement/satisfaction, however, that concession was valid

provided the amount would be released immediately, but since the amount was not

released immediately, the concession in the letter dated 31.7.2002 stood

withdrawn. It was further pleaded that the appellant/defendant wrote its letter

dated 26.7.2002 for furnishing of documents and the respondent/plaintiff is said to

have complied with the request. Since the appellant/defendant failed to pay the

amount of insurance, the respondent/plaintiff filed the subject suit after serving a

demand notice dated 8.10.2002.

4. The appellant/defendant contested the suit and took up several

defences. One plea was of non-joinder of necessary party inasmuch as, the vehicle

was hypothecated to Allahabad Bank which was not made a party. A further

defence was that the claim of the respondent/plaintiff was agreed to be payable for

` 4,65,000/- and vide letter dated 30.10.2002 of the appellant/defendant request

was made for giving of documents for transfer of the registration certificate, but

since this requirement was not complied with, the amount of ` 4,65,000/- could not

be released. It was further pleaded that as per condition no.3 of the insurance

policy, the liability of the appellant/insurance company cannot exceed the insured

value as stated in the policy or the market value whichever is less and since the

market value was less, the respondent/plaintiff was not entitled to more than the

amount of `4,65,000/-, and which was offered to be paid to the respondent/plaintiff

subject to transfer of the registration certificate in the name of the

appellant/defendant.

5. After the pleadings were complete, the trial Court framed the

following issues:-

"i. Whether the suit is not maintainable for the reasons stated in paragraph 1 of the preliminary objections of the written statement?OPD ii. Whether the suit is bad for non joinder of Allahabad Bank as pleaded by the defendant in paragraph 2 of the preliminary objections of the written statement?OPD iii. Whether the suit of the plaintiff is not maintainable for the reasons stated in paragraph 3 of the preliminary objections of the written statement?OPD iv. Whether the plaintiff has no cause of action for filing the suit on the ground pleaded in paragraph 4 of the preliminary objections of the written statement? OPD v. Whether the suit is not maintainable for the reasons stated in paragraph 5 of the preliminary objections of the written statement ? OPD vi. Whether the plaintiff is not entitled to receive a sum exceeding Rs. 4,65,000/-?OPD vii. Relief."

6. The thrust on behalf of the appellant/insurance company was twofold

before this Court. The first was that the liability under the insurance policy cannot

exceed the market value of the vehicle or the insured value whichever is less and

since the market value was lesser at ` 4,65,000/-, it was this value which was liable

to be paid. The second ground on behalf of the appellant/insurance company which

was urged before this Court was that the respondent/plaintiff himself had written a

letter dated 31.7.2002 (Ex.PW1/DA), as per which, the respondent/plaintiff agreed

to `4,65,000/-, and he cannot thereafter back out of the agreement/accord and

satisfaction at ` 4,65,000/- inasmuch as, this amount was not paid to the

respondent/plaintiff only because of failure of the respondent/plaintiff to give the

registration certificate alongwith the transfer documents in favour of the

appellant/defendant.

7. So far as the first argument of the liability only to pay the market

value and not the value as stated in the insurance policy is concerned, reliance is

placed upon Clause-3 of the policy which reads as under:-

"The company may at its own option repair, reinstate or replace the Motor Vehicle or part thereof and/or its accessories or may pay in cash the amount of the loss or damage and the liability of the Company shall not exceed the actual value of the part damaged or lost less depreciation plus the reasonable cost of fitting and shall in no case exceed the insured's estimate of value of the Motor vehicle (including accessories thereon) at the time of the loss or damage whichever is less."

In my opinion, this argument on behalf of the appellant is completely

misconceived because the Clause relied upon deals with the situation where the

vehicle is involved in an accident and thus the damage parts are sought to be

replaced. This Clause does not cover, as per its plain language, theft of the vehicle,

and which is an admitted fact in the present case. I, therefore, reject the argument

that as per the Clause-3 of the policy of insurance, the appellant/defendant could

have paid not the insured value but was entitled to pay only the lesser market

value.

8. It is the second argument which is urged on behalf of the

appellant/defendant, which has merit and is therefore entitled to be accepted. In

order to appreciate the argument let us read Ex.PW1/DA, the letter dated 31.7.2002

admittedly written by the respondent/plaintiff to the appellant/defendant. This

letter was also admitted during admission/denial of documents, and it was

exhibited as Ex.P-2.

"Date: 31.7.2002 THE ORIENTAL INSURANCE COMPANY LTD. 2E/16, JHANDEWALAN EXTN.

NEW DELHI

SUB: VEHICLE NO. DL-3CS-8205 MAKE MAHINDRA BOLERO

Dear Sir, This has reference to the discussion with Mr. Jeevan Aggarwal. I agreed for full & final settlement of our claim against the above subject vehicle for Rs 4,65,000/-(Rupees Four lakh sixty five thousand only)

Thanking You, Yours faithfully,

(Baldev Raj) C-103, DDA Flats, Saket, New Delhi."

9. A reading of the aforesaid letter shows that there is no condition in

this letter, as the counsel for the respondent/plaintiff wanted me to believe, that the

agreement was for receiving of `4,65,000/- in full and final settlement provided the

amount was paid immediately. This letter dated 31.7.2002 only states that there is

an agreement for receiving of amount of ` 4,65,000/- in full and final settlement.

Once in law there is an agreement, there cannot be unilateral

revocation/withdrawal, and therefore, merely because the respondent/plaintiff had

thereafter sent its legal notice dated 8.10.2002, Ex.PW1/7, alleging that the

agreement contained in the letter dated 31.7.2002 (sic. 1.7.2002) will not bind the

respondent/plaintiff, it is however not permissible to add a term to a letter by a

subsequent notice, moreso when the addition which is sought to be made will

vitally change the factual and legal position. I, therefore, reject the argument that

the agreement contained in the letter dated 31.7.2002 would stand withdrawn in

terms of the notice Ex.PW1/7 issued by the respondent/plaintiff to the

appellant/defendant, and, I hold that respondent/plaintiff agreed to receive an

amount of ` 4,65,000/- in full and final satisfaction of his claim under the policy.

The appellant/defendant would have in fact paid this amount as claimed by the

respondent/plaintiff in terms of the letter dated 31.7.2002, however, this amount

could not be paid because of the default of the respondent/plaintiff in failing to

give the registration certificate alongwith the transfer documents to the

appellant/defendant. The appellant/defendant had written two letters dated

30.10.2002 and 28.11.2002, Ex.P-3 and Ex.P-4 respectively, to the

respondent/plaintiff, but admittedly, the registration certificate (with the transfer

documents) was not given. The insurance company on payment of the amount

under the policy with respect to a car, surely is entitled to receive the registration

document of the vehicle duly transferred in its name inasmuch as after paying the

insured amount, the insurance company will become owner of the vehicle, and can

claim the same if at any time it is thereafter recovered. Therefore, the blame must

lie for nonpayment of the amount of ` 4,65,000/- with the respondent/plaintiff. I

may state that the blame must lie with the respondent/plaintiff only partly because

even the appellant/defendant is partly to blame inasmuch as there was no reason

for the delay from 31.7.2002 to 30.10.2002 (Ex.P-3) when the letter was written by

the appellant/defendant to the respondent/plaintiff. I, therefore, hold that the

appellant/defendant was only liable to pay a sum of `4,65,000/- to the

respondent/plaintiff.

10. The only issue which now remains to be examined is what should be

the rate of interest which has to be granted on this amount of ` 4,65,000/-. Learned

counsel for the respondent/plaintiff relies upon Order 41 Rule 33 CPC to urge that

though no cross objections have been filed, interest of justice in the facts of the

present case requires that the low rate of interest at 6% which has been granted

should be enhanced, moreso because the respondent/plaintiff has only partially

received the decretal amount because he was not in a position to furnish security

for release of the balance decretal amount. Learned counsel for respondent/plaintiff

rightly urges that interest only at 6% per annum will not even cover the inflation

cost during this period. Learned counsel for the respondent/plaintiff, and in my

opinion, rightly urges that if the appellant/defendant was really sincere, it would

have at least during the pendency of the suit paid the amount of ` 4,65,000/-,

without prejudice to its rights but even this amount was not paid which was in fact

an admitted amount and a lesser amount for which the appellant/defendant should

have admitted its liability in terms of Order 12 Rule 6 CPC. Considering the facts

of the present case, in my opinion, it would be in accordance with justice and

equity to enhance the rate of interest granted by the trial Court from 6% per annum

simple to 7 ½ per annum simple.

11. In view of the above, the appeal is allowed. The impugned judgment

and decree dated 3.8.2004 is set aside. The respondent/plaintiff will be entitled to

a decree only for a sum of ` 4,65,000/- alongwith interest at 7 ½ % per annum

simple from 1.7.2002 till payment. The respondent /plaintiff will be bound to give

adjustment for the amount which he has already received from the

appellant/defendant after passing of the impugned judgment and decree being the

amount withdrawn by the respondent/plaintiff from this Court, and which amount

was deposited by the appellant/defendant. Parties are left to bear their own costs.

12. In case the amount already deposited in this Court is sufficient to

cover the liability of the appellant/defendant under today's judgment and decree,

then, after paying such amount to the respondent/plaintiff, if there is any balance

available, the same be refunded to the appellant/defendant. In case the amount

deposited in this Court is less than as per today's judgment and decree, the

respondent/plaintiff will be at liberty to execute the judgment and decree for the

balance amount. Decree sheet be prepared. Trial court record be sent back.

May 28, 2012                                       VALMIKI J. MEHTA, J.
ib