OM PRAKASH VS. RELIANCE GENERAL INSURANCE AND ORS. AIR 2017 SC 4836

MATERIAL FACTS

The Appellant Insured Truck was stolen. The Appellant submitted the insurance claim to the Respondent Company and the fact of the fraud was verified by an investigator authorized by the company. Subsequently, the Corporate Claims Manager granted the Appellant’s amount for the aforementioned claim.
The Appellant subsequently made a range of appeals and queries to the Respondent-company requesting, inter alia, timely approval and disposition of its insurance claim, and the Respondent-company rejected the Appellant’s insurance claim, making reference to the violation of the Imminent Knowledge Condition relating to the loss/theft of the vehicle.
The appellant subsequently sent a complaint to the District Forum, the State Commission, and the National Commission. The National Commission had rejected this petition. In the present appeal, the Appellant challenged the lawfulness and validity of the aforementioned decree.

ISSUES

Whether the National Commission correctly dismissed the revision petition on the basis that, after a delay of 8 days from the incidence of theft, the Appellant filed his claim?

RULE OF LAW

Section 379 of the Indian Penal Code
Section 12 of the Consumer Protection Act, 1986

ANALYSIS

It is a universal understanding that an individual who has lost his vehicle will not go to the insurance company immediately to demand compensation. He will initially make attempts to track the vehicle. Such a claim cannot be dismissed on the basis of delay unless the justification for the delay in submitting a claim is sufficiently and satisfactorily clarified.
It is also important to acknowledge here that dismissing legitimate statements that have previously been checked and established by the investigator to be right would not be fair and rational. The delay state shall not be a refuge for the repudiation of insurance claims which have already been exhibited to be valid and true. The purpose of the Consumer Protection Act is to deliver stronger protection for consumers’ interests. It is a favorable statute worthy of egalitarian development. Although contemplating the contentions made under the Act, this meritorious purpose should not be ignored. In the case at hand, the Appellant offered coherent explanations for the 8-day delay in notifying the Respondent of the occurrence.

The Investigator had evaluated that the loss was credible and the Corporate Claims Manager authorized the compensation for the claim, which was fair and reasonable. Without taking into consideration the reason for the delay, the National Commission was not rational in dismissing the Appellant’s argument. The appeal was therefore approved and the appellant was qualified to claim compensation. Directions are given by the National Commission, the State Commission, and the District Forum were set aside.

CONCLUSION

It is completely true that the owner must instantly notify the insurer after the theft of the vehicle. This situation should not, nevertheless, preclude the settlement of legitimate cases, especially when the gap or the delay in intimating or presenting documents is due to inevitable conditions. The insurer’s determination to deny the claim has to be centered on legitimate and valid reasons. The procedural denial of claims on a solely technical basis would contribute to the deterioration of faith of insured people in the insurance sector. Such a claim cannot be dismissed on a technical basis if the explanation for the delay in making a claim is sufficiently stated.
The Respondents were therefore ordered to pay the sum with interest to the Appellant from the filing date of the petition until the payment date.

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BANK OF INDIA V. BRINDAVAN AGRO INDUSTRIES PVT. LTD. MANU/SC/0238/2020

MATERIAL FACTS

An account with the Appellant Bank was operated by M/S Brindavan Agro Industries Pvt Ltd. (respondent). The bank debited the relevant transaction costs, namely the TEV study and the service tax fees, to the consumer’s account. The penultimate request for approval was sent to the Head Office which had the appropriate authority to grant the approval for such loans of substantial value.

The consumer raised objections; however, to the deduction of transaction fees because the bank was only entitled to do so once the loan had been approved. Due to the purported delay of the bank in permitting access to credit as well as the fact that the consumer had obtained financial assistance from other banks, the consumer demanded a refund of the specified amount on the basis of losses incurred.

Again, through e-mails, he recapitulated his demand application. The access to credit was, nonetheless, granted within three months of the final revised application. When the bank’s officers confronted the customer with the demanded letter of sanction for the credit facilities, the consumer manifested the letters of sanction granted by the other banks. The consumer lodged an application that authorized the State Commission in ordering the Bank to pay the balance of the transaction costs besides the interest. However, the appeal against such an order was dismissed before the National Commission.

ISSUE

Whether the Respondent was entitled to transaction costs debited by Bank?

RULE OF LAW

Section 17 of the Consumer Protection Act, 1986

ANALYSIS

The court, therefore, observed that the decisions of the State Consumer Disputes Redressal Commission (SCDRC) and National Consumer Disputes Redressal Commission (NCDRC) endured from patent illegitimacy and that their directions were subsequently set aside. The Bank decided, however, to reimburse some amount, from the transaction costs by intimating the customer through an email but in its e-mail, the customer had not approved such an offer.
Accordingly, the Consumer was qualified to a reimbursement of the amount conveyed to the Consumer by the Bank’s decision instead of an exemption of TEV charges in its totality. The demand was to award half of all the fees, thus the total sum of the fees to be taken into account and not the fees under a specific heading. In addition, the bank was ordered to provide a refund within two months of the date of the order.

CONCLUSION

The Bank’s facilities were used for cash credit services, which in turn entitled the respondent to hold a position of ‘consumer’ under the Act.
The consumer was evidently an old and a regular customer of the appellant bank, who requested more than Rs. 40 crores of credit facilities and it was shocking that he was oblivious of the Bank’s operation, policies and procedures because for many years he had been affiliated with the bank. It was not acceptable to acknowledge unfamiliarity with the Bank’s process and its Circular. The customer was conscious of the transaction costs and demanded that the transaction costs be waived; thus, the transaction costs were debited by the bank in accordance with the authorization granted by the consumer.

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Kandhari Beverages (Pvt.) Ltd. vs Darshan Kumar

Facts:

The appellant was accused of trading three crates of cold drinks that were found contaminated, with the presence of flies within the bottles after being served to the guests. Respondent no.1 had purchased these bottles from Respondent no. 2, who in turn bought it from the appellant. Reportedly, neither the respondent nor any of his guests had consumed the beverage. The respondents filed a case in the dispute redressal forum seeking for refund of costs and compensation.

Issues:

• Whether respondent no. 1 is entitled to compensation?

Legal Provisions:

• The Consumer Protection Act, 1986

Appellant’s Contention:

The appellant did not deny the fact that the bottles had been manufactured by him. It was submitted that the drinks were processed as per international standards taking every detail into account which means that there couldn’t have been any scope of mistake. The appellant had raised an objection that respondent no. 1 cannot put himself under the purview of ‘consumer’ as he did not buy the crates from them directly instead were bought from respondent no. 2, therefore he is not liable to pay any compensation or costs. It was further submitted that the respondent did not mention any bill proving the date of purchase. There was no intake of the beverage by the guests; hence any liability on account of consumption does not arise. Therefore, it is prayed to set aside the appeal.

Respondents’ Contention:

The respondent submitted that after the opening of the bottle, many flies were present within the contents and it did seem like adulteration. If consumed, it could have proven fatal for the health of his guests; accordingly, he had arranged another crate of bottles. There was adulteration and hence it is prayed for a reward of compensation.

Observations of the forum:

The learned District forum observed that the version presented by the appellant that the bottles have been allegedly adulterated is falsified. After examining the contents of the bottle, it is proven that there was nothing intentional or any wrong done by the respondents deliberately. The prime responsibility lies on the part of the manufacturer to ensure and carry out safety standards to prevent any calamity. After perusing the receipt of notice sent to respondent no. 2 and the appellant again falsifies the contention of the appellant that there is no proof of date of sale or purchase. Furthermore, taking into consideration the judgment passed by the High Court of Karnataka in Hindustan Coca Cola Beverages Pvt. Ltd. & Anr. Vs. Ravishankar, it was observed that it is not necessary for the ‘consumer’ to ingest the adulterated liquid to claim the compensation.

Judgment:

The District Forum awarded damages of Rs.10,000/- and a cost of Rs.1,000/- to respondent no. 1. The appeal of the appellant was also dismissed with costs of Rs. 3000/-.

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Wg. Cdr. Arifur Rahman Khan and Aleya Sultana v. DLF Southern Homes Pvt. Ltd.

Facts:

Nine flat-buyers had initially filed a complaint before the National Consumer Dispute Redressal Commission (NCDRC), they had booked residential flats in a project called Westland Heights at New Town, DLF in Bengaluru, this project was being developed in an area measuring 27.5 acres which was a part of a larger 80-acre township. A brochure advertising the nature of the project and amenities to be provided to the buyers, pursuant to which the complainants had booked flats and entered into an agreement with the developer – clause 11(a) of the Apartment Buyers Agreement (ABA) stipulated the completion of the project within 36 months from the date of execution of agreement except for force majeure conditions. The flat-buyers were informed on 12 January 2011 that possession of apartments was expected to be completed by mid-2012, the dates were further extended up to 2015 when they were informed of another delay by a notification dated 4^th May 2015 that they hadn’t received the Occupation Certificate (OC), thus the obligation of handing over possession within 36 months was not fulfilled.

The nine flat-buyers filed a consumer complaint of breach of contractual obligation under terms of ABA, so a complaint was filed under section-12 (1)(c) of the Consumer Protection Act (CPA), 1986. The NCDRC divided the 339 flat-buyers complainants into 6 groups- based on whether or not they had taken possession, executed deeds of conveyance, settled disputes or sold flats before or during pendency of the complaints or their application for impleadment, since 337 out of 339 flat-buyers had taken possession, their complaints were dismissed and the NCDRC dealt with the remaining two complainants accepted compensation but did not take possession and their appeals were dismissed, the NCDRC accepted the submission of DLF Southern Homes Pvt. Ltd. And Anabel Builders and Developers Pvt. Ltd. (the respondents) that there was no deficiency on their part in complying with the contractual obligations and that despite delay in handing over possession of the flats the complainants were not entitled to compensation in excess of what was set-out in the ABA which is Rs. 5 per sq. ft per month, it observed that the flat-buyers had failed to prove that the said compensation was unreasonable, the commission relied on the cases of DLF Homes Panchkula Pvt. Ltd. V. D. S. Dhanda and Ghaziabad Development Authority v. Balbir Singh for their decision. 

Issues:

1. Whether the flat-buyers are constrained by the stipulation in ABA of providing compensation at the rate of Rs. 5 per sq. ft per month.
2. Whether the flat-buyers who seek to take a claim against the developer for delayed possession can as a consequence of doing so be compelled to suspend their right to obtain a conveyance deed. 

Legal Provisions:

Consumer Protection Act, section 12 (1)(c)

Appellant’s Contention:

The counsel for the appellants contended that there was a delay ranging from two to four years in handing over possession and flat-buyers should not be constrained by one-sided and unreasonable agreements. The execution of conveyances or settlement deeds do not prevent flat-buyers from claiming compensation, also the emails of the developers to the flat-buyers clearly indicate that the flat-buyers under protest were not permitted to execute conveyance deeds. The amenities contracted by the developers were alleged to have not been provided by them. They also contended that the flat-buyers were not liable to secure the developers for the demand of interest and penalty imposed by the tax-authority for failure of the developer to deposit tax on time, it was clarified during oral arguments that only interest was recovered from flat-buyers. 

Respondents Contention:

The respondents contended that the complainants have given no evidence to establish coercion or duress inflicted by developers while executing conveyance or settlements. They stated that possession was handed over between four to six years ago and the developer had transferred his right, title and interest to the Residents Welfare Association, the flat-buyers have benefited by the increase in value of the property. They also mentioned that the allotments were made escalation free and the burden of increased costs was borne by the developer. As per clause 15 of ABA, the flat-buyers were compensated at a rate of Rs. 5 per sq, ft per month which amounts to Rs. 7500 per month for a 1500 sq. ft flat, no proof of actual loss suffered was provided by the complainants. Regarding facilities and amenities, they stated that a club house containing a swimming pool, gymnasium, tennis court, badminton court and squash court has been constructed and its OC was received on 13 May 2019.

It was also mentioned that the flat-buyers as per terms of the ABA were aware that they have no rights over the amenities outside the 27.5-acre residential complex and forming a part of the wider complex of 80 acres. As per clauses 1.3, 1.10, 2 and 3 the allottees were required to bear tax-liabilities including towards work contracts tax, clause 23(b) entitled the developer to raise demand on proportionate basis for electricity charges from flat-buyers; and as agreed in the ABA, the price of the apartment included in the price break-up parking charges separately for exclusive use of earmarked parking spaces, there was no prohibition regarding the same in the Karnataka Apartment Ownership Act.

Observation of the Court:

The case was heard by the Supreme Court Bench of Dr. D Y Chandrachud and K.M. Joseph, JJ. The court observing the findings of the NCRDC stated that there is no dispute that the completion of the project was delayed, the existence and extent of delay constitutes an admitted factual position. The court recorded that the ABA is one-sided, in it a delay of payment by a flat-buyer attracts interest rate of 18% per annum beyond 90 days whereas the developer delays in handing over possession the flat-buyer is restricted to receiving interest at only Rs. 5 per sq. ft per month. They stated that the terms of the agreement drafted by the developer does not maintain a level platform between the developer and purchaser. The court stated that where a delay of such nature takes place on part of the developer as in the present case.

Ranging from two to four years it qualifies as deficiency under sec-12(1)(g) of the CPA, 1986 and the consumer forum has jurisdiction to award reasonable compensation to alleviate the harassment and agony suffered by the flat-buyers and the same cannot be prevented by a term of agreement, the court relied on the decisions in the cases of Lucknow Development Authority v. M. K. Gupta (1994) and R V Prassannakumaar v. Mantri Castles (2019). The court held that in the present case there are clear and valid reasons for not holding down the flat-buyers to receive a compensation at the rate of Rs. 5 per sq. ft/p.a. in terms of clause 14 of the ABA, the delay on part of the developer caused agony and hardships beyond financial matters. The court held the developer’s submission accepted by the NCDRC that the flat-buyers forsake their remedy before the consumer forum by seeking a deed of conveyance to be incorrect.

The observed that since the developer was awaiting permission from the Bangalore Development Authority to handover possession and management of the constructed clubhouse to the RWA so there was no breach by the developer of the obligation to provide a constructed facility of a club for the RWA. Regarding the representation made by the developer to the buyers of the amenities like school, hospital, restaurant, supermarket, etc in the 80 acre township of New Town which was not provided, the court held that the developer breached a clear representation which was made to the buyers and he would be liable for it. On the contention regarding taxes paid by flat-buyers the court observed the terms of the ABA and the developer’s submission and held that there was no deficiency of service regarding demand of interest payable on the tax which was required to be deposited with the revenue.

The court observed no infirmity in the findings of NCDRC which upheld the collection of charged towards electricity based on the terms of ABA, the charges recovered were not contrary to what was specified in the contract between the parties. The court also stated that the ABA contained a break-up of total price of the apartment, the parking charges for exclusive use of earmarked parking spaces was separately included in it, so the charges recorded were in terms of the agreement. The court observed that the dismissal of the complaint by the NCDRC was erroneous, the reasoning of the NCRDC suffered from patent error of law. The flat-buyers were held to be entitled to compensation for the delayed handing over of possession of the apartment and for the failure of the developer to fulfil representations made to the flat-buyers in regard to provision of amenities. 

Judgement:

The court set aside the impugned judgement and order of the NCDRC dated 2^nd July 2019, the appeal was partially allowed. The court gave following directions to the developer regarding the amount of compensation to be paid to the appellants except for the 11 appellants who entered into specific settlements with the developer and three appellants who sold their right, title and interest under the ABA; the compensation amount was to be paid in addition to the amount paid by the developer at the rate of Rs. 5 per sq. ft/p.a., the same was to be paid within one-month from the date of judgement failing which it would attract an interest rate of 9% p.a. until the payment. 

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