M/S. PANKAJ TRADING COMPANY v. NATIONAL INSURANCE COMPANY LTD.

3. In the Consumer Complaint subject matter of RP No.2772 of 2017, the insurer had made initial payment of Rs.2,76,899/- followed by payment of Rs.2,32,408/- against policy number 3100087/2002. Both the aforesaid payments were made directly to Forest Department. Against policy number 3100178/2002, the insurer made an initial payment of Rs.7,95,801/- followed by payment of Rs.11,47,139/-. The complainant/petitioner executed Discharge Vouchers in favour of the insurer while receiving the second payment in full and final settlement of its claim. It was specifically recorded in the Discharge Vouchers that the payment of Rs.2,32,408/- against policy number 3100087/2002 and payment of Rs.11,47,139/- against policy number 3100178/2002 was received by the insured in full and final settlement of its claim. The amount against policy number 3100178/2002 was paid to the banker of the complainant/petitioner for the benefit of the complainant/petitioner. After receiving the aforesaid payment, the complainant sent a letter dated 22.05.2003 to the insurer acknowledging the payment but claiming that since they had suffered a very heavy loss and did not wish any unpleasantness, they had reluctantly agreed to the assessment made by the surveyor. It would be pertinent to note here that the payment to the complainant/petitioner was made in terms of the assessment made by the surveyor as revised by him by way of an addendum. After receiving the payment as noted hereinabove and sending an identical letter dated 22.05.2003 to the insurer, the complainant approached the concerned District Forum by way of a Consumer Complaint claiming the balance amount which according to it, was payable to it by the insurer.

4. In the Consumer Complaint subject matter of RP No.2773 of 2017, the insurer made initial payment of Rs.1,59,628/- followed by payment of Rs.4,86,184/- against policy number 320902/2002/3100088. Both the aforesaid payments were made directly to Forest Department. Against the second policy, the insurer made an initial payment of Rs.7,33,027/- followed by payment of Rs.11,42,563/-. The complainant/petitioner executed Discharge Vouchers in favour of the insurer while receiving the second payment in full and final settlement of its claim. It was specifically recorded in the Discharge Vouchers that the payment of Rs.4,86,184/- against policy number 320902/2002/3100088 and the payment of Rs.11,42,563/- was received by the insured in full and final settlement of its claim. The amount against the second policy was paid to the banker of the complainant/petitioner for the benefit of the complainant/petitioner.

After receiving the aforesaid payment, the complainant sent a letter dated 22.05.2003 to the insurer acknowledging the payment but claiming that since they had suffered a very heavy loss and did not wish any unpleasantness, they had reluctantly agreed to the assessment made by the surveyor. It would be pertinent to note here that the payment to the complainant/petitioner was made in terms of the assessment made by the surveyor as revised by him by way of an addendum. After receiving the payment as noted hereinabove and sending an identical letter dated 22.05.2003 to the insurer, the complainant approached the concerned District Forum by way of a Consumer Complaint claiming the balance amount which according to it, was payable to it by the insurer.

5. In the Consumer Complaint subject matter of RP No.2774 of 2017, the insurer made initial payment of Rs.4,92,750/- followed by payment of Rs.4,00,336/- against policy number 3100181. Both the aforesaid payments were made directly to Forest Department. Against policy number 3100182, the insurer made an initial payment of Rs.11,46,635/- followed by

3

payment of Rs.19,49,921/-. The complainant/petitioner executed Discharge Vouchers in favour of the insurer while receiving the second payment in full and final settlement of its claim. It was specifically recorded in the Discharge Vouchers that the payment of Rs.4,00,336/- against policy number 3100181 and payment of Rs.19,49,921/- against policy number 3100182 was received by the insured in full and final settlement of its claim. The amount against policy number 3100182 was paid to the banker of the complainant/petitioner for the benefit of the complainant/petitioner.

After receiving the aforesaid payment, the complainant sent an identical letter dated 22.05.2003 to the insurer acknowledging the payment but claiming that since they had suffered a very heavy loss and did not wish any unpleasantness, they had reluctantly agreed to the assessment made by the surveyor. It would be pertinent to note here that the payment to the complainant/petitioner was made in terms of the assessment made by the surveyor as revised by him by way of an addendum. After receiving the payment as noted hereinabove and sending the letter dated 22.05.2003 to the insurer, the complainant approached the concerned District Forum by way of a Consumer Complaint claiming the balance amount which according to it, was payable to it by the insurer.

6. It would thus be seen that the complainant in each matter, had executed two separate Discharge Vouchers, one in respect of the payment made to the Forest Department and the other in respect of the payment made to the banker to the complainant. It would also be seen that identical reason was given by all the four complainants for accepting the payment offered by the insurer, the said reason being that the loss of the complainant was heavy and it wanted to avoid unpleasantness. The learned counsel for the petitioner/complainant submits that the complainants are family members and that is the reason identical reasons were applicable to all of them.

7. Initially, when the Consumer Complaints were dismissed by the State Commission, the complainants had approached this Commission by way of Revision Petitions and this Commission, after setting aside the order passed by the State Commission, directed it to decide the matter afresh in the light of the circulars dated 24.09.2015 and 07.06.2016 issued by

IRDA.

8. The issue involved in this case came up for consideration of this Commission recently in

CC No.285 of 2013 M/s Elastrex Polymers Pvt. Ld. Vs. M/s New India Assurance Co. Ltd., decided on 16.08.2019 and the following view was taken:

(13) The learned counsel for the complainant refers to the Circulars dated 24.09.2015 and 07.06.2016 issued by IRDA which to the extent they are relevant reads as under :

Circular dated 24.09.2015

"The Insurance Companies are using 'discharge voucher' or "settlement intimation voucher" or in some other name, so that the claim is closed and does not remain outstanding in their books. However, of late, the Authority has been received complaints from aggrieved policyholders that the said instrument of discharge voucher is being used by the insurers in the judicial fora with the plea that the full and final discharge given by the policyholders

4

extinguish their rights to contest the claim before the Courts. While the Authority notes that the insurers need to keep their books of accounts in order, it is also necessary to note that insurers shall not use the instrument of discharge voucher as a means of estoppel against the aggrieved policy holders when such policy holder approaches judicial fora. Accordingly insurers are hereby advised as under :

Where the liability and quantum of claim under a policy is established, the insurers shall not withhold claim amounts. However, it should be clearly understood that execution of such vouchers does not foreclose the rights of policy holder to seek higher compensation before any judicial fora or any other fora established by law.

All insurers are directed to comply with the above instructions.

Circular dated 07.06.2016

Wherever there are no disputes by the insured/s claimant/s to the amount offered by the insurer towards settlement of a claim, the present system of obtaining the discharge voucher may be continued.However, the insurers must ensure that the vouchers collected must be dated and complete in all respects while obtaining the signature/s of the insured/s or claimant/s.

1.

If the amount offered is disputed by the insured/s or claimant/s, insurers would take steps to pay the amount assessed without waiting for the voucher discharged by the insured/s or claimant/s.

2.

Under no circumstances the Discharge vouchers shall be collected under duress, by coercion, by force or compulsion.

3.

Insurers are directed to comply with the above with immediate effect.

(14) It is seen that after issuance of the circular dated 24.09.2015 the insurers represented to IRDA that the said circular was not in the line with the IRDA (protection of policyholders interests) Regulation, 2002 and the provisions of Indian Contract Act. On receipt of representation from the insurers IRDA reviewed the matter in the light of the provisions of Contract Act, P.P.I. Regulation and the judgements of the Hon'ble Supreme Court and issued the directions contained in the Circular dated 07.06.2016.

(15) It would be seen that vide subsequent Circular dated 07.06.2016 IRDA will permitting the continuance of the practice of obtaining discharge voucher it, only instructed the insurers not to obtain such vouchers under duress, by coercion, by force or compulsion. None of these circumstances however have been established in this case. Though IRDA Circular enjoins upon the insurer to pay the amount assessed by it without waiting for the discharge voucher in case the offer made by them is disputed by the insured, in the present there is no evidence of any kind of protest by the insured before sending the discharge voucher to the insurer on the very same day on which it received the same alongwith a forwarding letter. Therefore, it cannot be said that there was a non-compliance of the aforesaid circulars though the

5

contention of the learned counsel is that both the circulars came to be issued by years after the payment was accepted in this case.

(17) 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 under 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." 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."

6

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."

9. The question which arises for consideration in these petitions is as to whether the Discharge Vouchers were executed by the complainants under any kind of duress, compulsion or coercion etc. As noted earlier, the only reason given by the complainants/petitioners for accepting the payment offered by the insurer and executing the Discharge Vouchers was that their claim was high and they wanted to avoid unpleasantness with the insurer. The aforesaid grounds, in my opinion, do not constitute any kind of duress, compulsion or coercion etc. The quantum of complaint alone would not lead to inference of any duress, compulsion or coercion etc. unless it is pleaded and proved that on account of its financial compulsions, the complainants had no option but to execute the Discharge Vouchers sought by the insurer, they being unwilling to make any payment without execution of the Discharge Vouchers. This was not the case of the complainants in the letter sent by them to the insurer on 22.05.2003 that they were in some kind of financial distress which had compelled them to accept the amount offered by the insurer. Even otherwise, no evidence such as their Balance Sheets and Profit & Loss Account of the relevant period was produced by the complainants to prove that they were in dire need of the finances at the time Discharge Vouchers were executed by them and therefore, they were left with no option except to sign on the dotted lines.

10. The learned counsel for the complainant refers to the decision of this Commission in RP No.2303/2012 National Insurance Company Ltd. Vs. Giriraj Proteins, dated 03.09.2012 where this Commission inter-alia observed as under:

The learned State Commission did not listen to this eye-wash in view of the authorities of this Commission, reported in New India Assurance Co. Ltd. Vs. Kohinoor Sizing Factory, II (2006) CPJ 237 and Smt. Niharika Maurya Vs. Chief Manager, New India Assurance Co. Ltd. & Ors,

7

pronounced on 21.04.2011, wherein this Commission has held that mere execution of discharge voucher and acceptance of insurance claim would not estop the insured from making further claim from the Insurance Company. 15. In Central Water Transport Corporation Ltd. Vs. Tarun Kanti Sengupta, (1986) 3 SCC 156, the Hon'ble Apex court has held that here a man has no choice or rather no meaningful choice but to give consent to contract or sign on the dotted line in prescribed or other forum or to accept set of rules as part of contract, however, unfair, unreasonable and unconscionable, a clause in that contract may be, the courts will not enforce and will when called upon to so, strike down as unfair and unreasonable clause in a contract entered into between the parties who are not equal in bargaining power 16. In Oriental Insurance Co. Ltd. Vs. Government Tool Room and Training Centre, I (2008) CPJ 267 (NC), this Commission has held that t is wrong practice followed by insurance companies in not paying single pie without having discharge voucher. It is a coercive bargaining as insured has no option but to sign the discharge voucher. Mere execution of discharge voucher and acceptance of insurance claim will not estop the insured from making further claim It is well said that purpose of law is to prevent the strong always having their.

However, in my opinion, considering the authoritative provisions of the Hon'ble Apex Court in

Ajmer Singh Cotton & General Mills (supra) and Genus Power Infrastructure Ltd. (supra), the complainant would be estopped from claiming any further payment from the insurer after executing the Discharge Vouchers accepting the amount offered by the insurer in full and final settlement of the claim unless it is shown that the Discharge Vouchers executed by the complainant were a product of some kind of duress, compulsion or coercion etc. on account of the prevailing financial circumstances of the complainant. Since no such ground has been made out in these matters, there is no escape from the conclusion that the Discharge Vouchers were executed by the complainants of their own free will and without any kind of duress, compulsion or coercion etc. Therefore, having executed the Discharge Vouchers and having accepted the amount offered by the insurer in full and final settlement of their claim, they are estopped from claiming any further amount. This is more so in a case where the payment made by the insurer is based upon the final assessment made by the surveyor which was revised before the payment was accepted.

For the reasons stated hereinabove, the Revision Petitions are dismissed.

......................J

V.K. JAIN

PRESIDING MEMBER

8