Murali Purushothaman JUDGMENT
Murali Purushothaman, J.
1. Being aggrieved by Ext. P7 award passed by the Insurance Ombudsman, Kochi declining to grant interest on the award amount from the date of filing the petition, the petitioner has preferred this writ petition. According to the petitioner, he was the proprietor M/s. C.A.K. Traders, North Kalamassery which was carrying on business in PVC pipes, paints and electrical goods. The stock in trade in the shop was hypothecated to South Indian Bank, Kalamassery Branch and was insured with New India Assurance Co. Ltd., the first respondent, through the second respondent Branch Office vide Ext. P1 policy for an amount of Rs. 9 lakhs. On the night of 19.5.1997, a fire broke out in the shop room of the petitioner and the entire goods in the shop were destroyed. A final report was submitted by the police on 10.8.1997 reporting that the fire was due to electrical short circuit. The Fire Force assessed the damage to the stock as Rs. 9.25 lakhs. On 25.5.1997, the petitioner preferred a claim for Rs. 11 lakhs with the insurer. The surveyor appointed by the insurer estimated the loss at Rs. 9,36,781.90. When there was delay on the part of the insurer to settle the claim, the petitioner caused to issue a lawyer's notice to which the insurer replied that the claim is not settled as there is an order of stay from this Court in O.P. No. 17708 of 1997 filed by one M.M. Aboobacker. The said original petition was disposed of by judgment dated 15.6.1998 directing the Central Bureau of Investigation (CBI) to conduct an enquiry into the incident of fire that occurred in the shop of the petitioner on 19.5.1997. To avoid any possible loss to the petitioner herein, this Court also ordered that the amount payable to him shall be transferred to a fixed deposit so as to earn interest thereof. It was also ordered that the amount shall be disbursed to the petitioner herein only on the basis of the outcome of the CBI enquiry. The CBI submitted final report on 29.1.2000 wherein it was stated that the accident occurred due to electrical short circuit and the Chief Judicial Magistrate Court, Ernakulam accepted the final report and closed the case. The insurer sent a voucher for Rs. 56,768/- to the South Indian Bank to which the goods were hypothecated and refused to make any payment to the petitioner towards his claim of Rs. 11 lakhs. Accordingly, the petitioner preferred a complaint before the Insurance Ombudsman on 4.7.2003. The Insurance Ombudsman passed an award on 3.8.2004 dismissing the complaint. This Court, by Ext. P6 judgment, set aside the award since the award was passed without hearing the petitioner and remitted the matter to the Ombudsman for fresh consideration, in accordance with law.
2. Pursuant to Ext. P6 judgment, the Ombudsman passed Ext. P7 award dated 10.2.2012 directing the respondent-insurance company to pay an amount of Rs. 9 lakhs after deducting the amount of Rs. 56,768/- settled with the bank with 9% interest per annum from 28.9.2011, the date of Ext. P6 judgment of this Court till 10.2.2012, the date of Ext. P7 award with cost of Rs. 5,000/- and in default, the amount of Rs. 8,43,232 (900000-56768) shall carry further interest @ 9% per annum from the date of Ext. P7 award till payment is made. The Ombudsman further directed that, in order to implement the award, the petitioner shall furnish to the insurer a letter of acceptance of the award in full and final settlement of the claim as prescribed in Rule 16(5) of the Insurance Ombudsman The Redressal of Public Grievances Rules, 1998 ('RPG Rules', for short) within a period of one month from the date of receipt of the award, and the insurer shall comply with the award within 15 days of receipt of the acceptance letter and intimate compliance to the Ombudsman.
3. Thereupon, within two weeks of receipt of Ext. P7 award, the petitioner sent letter of acceptance to the insurer on 12.3.2012 with copy to the Ombudsman. A reminder was sent on 8.5.2012 demanding compliance of the award. Since the insurer did not comply with the award within 15 days of receipt of the acceptance letter from the petitioner, he sent Ext. P8 letter dated 16.6.2012 informing the first respondent that he will be constrained to withdraw the acceptance letter, in case the award is not complied with, within 15 days therefrom. Since there was no reply, the petitioner, by Ext. P9 dated 1.9.2012, informed the first respondent that he is withdrawing the acceptance letter. In the said circumstances, the petitioner has preferred this writ petition for direction to respondents 1 and 2 to comply with Ext. P7 award and also challenging Ext. P7 to the extent it limits payment of interest on the award amount from 28.9.2011, the date of Ext. P6 judgment.
4. Heard Sri A.A. Mohammed Nazir, the counsel for the petitioner and Sri George Cherian, the senior counsel for respondents 1 and 2 instructed by Smt. K.S. Santhi.
5. According to Sri Nazir, the Ombudsman ought to have ordered interest on the award amount from 25.5.1997, the date of preferring the claim petition. The date of Ext. P6 judgment of this Court has no nexus whatsoever for fixing the date of payment of interest on the award amount. It is also contended that the petitioner had submitted the letter of acceptance within the time directed by the Ombudsman and as stipulated by RPG Rules. Therefore, respondents 1 and 2 have to disburse the award amount to the petitioner. The pendency of O.P. No. 17708/1997 before this Court cannot be a reason for denying interest on the award amount. It is further contended that even after the final report by the CBI, respondents 1 and 2 did not settle the claim and the petitioner is entitled for interest for wrongfully withholding payment, from the date of claim.
6. Sri George Cherian contends that, since the petitioner has submitted letter of acceptance as per the order of the Ombudsman and in terms of the RPG Rules, the same amounts to acceptance of the award in full and final settlement of the claim. Since the award includes interest, after accepting the award, he cannot challenge it on the ground that interest is not paid from the date of claim petition. It is also contended that since the petitioner has withdrawn the letter of acceptance, he can get the award executed only in accordance with law. It is also contended by the senior counsel that grant of interest is a matter left with the discretion of the Court or Tribunal as per section 3 of the Interest Act and section 34 of the Code of Civil Procedure and the Ombudsman has, in its discretion, granted interest from the date of Ext. P6 judgment of this Court and the same cannot be found fault with.
7. In compliance with Ext. P7 award, the petitioner submitted letter of acceptance within the time stipulated therein. As per the award and the RPG Rules, the insurer shall comply with the award within 15 days of the receipt of acceptance letter and shall intimate the compliance to the Ombudsman. Rules 16 and 17 of the RPG Rules are extracted hereunder:-
"16. Award:- (1) Where the complaint is not settled by agreement under rule 15, the Ombudsman shall pass an award which he thinks fair in the facts and circumstances of a claim.
(2) An award shall be in writing and shall state the amount awarded to the complainant: Provided that Ombudsman shall not award any compensation in excess of which is necessary to cover the loss suffered by the complainant as a direct consequence of the insured peril, or for an amount not exceeding rupees twenty lakhs (including ex-gratia and other expenses), whichever is lower.
(3) The Ombudsman shall pass an award within a period of three months from the receipt of the complaint
(4) A copy of the award shall be sent to the complainant and the insurer named in the complaint.
(5) The complainant shall furnish to the insurer within a period of one month from the date of receipt of the award, a letter of acceptance that the award is in full and final settlement of his claim.
(6) The insurer shall comply with the award within 15 days of the receipt of the acceptance letter under sub-rule (5) and it shall intimate the compliance to the Ombudsman.
17. Consequences of non-acceptance of award.--If the complainant does not intimate the acceptance under sub-rule (5) of rule 16, the award may not be implemented by the insurance company."
(emphasis supplied)
There is no justification whatsoever on the part of the insurer in not complying with the award within 15 days of receipt of the acceptance letter. The acceptance letter was withdrawn by the petitioner only on 1.9.2012, six months after sending the acceptance letter, that too, after Exts. P8 and P9 letters calling upon the insurer to comply with Ext. P7 award. The insurer cannot, now, take a stand that they need not comply with Ext. P7 award since the letter of acceptance has been subsequently withdrawn by the petitioner.
8. With regard to the claim of the petitioner for interest from the date of the claim petition, it is to be noted that the petitioner has accepted Ext. P7 award by the letter of acceptance. As per 16(5) of the RPG Rules, the complainant shall furnish to the insurer within a period of one month from the date of receipt of the award, a letter of acceptance that the award is in full and final settlement of his claim. The award includes interest and when a letter of acceptance is given in full and final settlement of the claim, the petitioner cannot challenge the award to the extent it denied interest from the date of filing the claim petition. It is trite that, grant of interest, even in the absence of specific provision for granting interest, is a matter left with the discretion of the Courts or Tribunals. This Court cannot, therefore, interfere with the discretion exercised by the Ombudsman in the award of interest and the date on which it is made payable.
9. The insurer cannot contend that since the letter of acceptance has been subsequently withdrawn, they shall not comply with the award. It is to be noted that while defending the challenge with regard to the date from which the interest is to be paid on the award amount, it was contended that, by the letter of acceptance, the petitioner has accepted the award in full and final settlement of his claim and therefore, cannot challenge the award to the extent it limits payment of interest on the award amount from 28.9.2011. The parties cannot approbate and reprobate at the same time and when the insurer has taken the stand that the petitioner has accepted the award in full and final settlement, they cannot contend that they will not comply with the award as the letter of acceptance was withdrawn.
Accordingly, the writ petition is allowed in part with direction to respondents 1 and 2 to comply with Ext. P7 award within a period of two months from the date of receipt of copy of this judgment. There will be no order as to costs.
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