NATIONAL INSURANCE CO.LTD. Vs. HINDUSTAN SAFETY GLASS WORKS LTD
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 3883 of 2007, Judgment Date: Apr 07, 2017
When a claim is made
by the insured that itself is actionable. There is no question of requiring
the insured to approach a court of law for adjudication of the claim. This
would amount to the encouraging avoidable litigation which certainly cannot
be the intention of the insurance policies and is in any case not in public
interest.
In our opinion, in a dispute concerning a consumer, it is necessary
for the courts to take a pragmatic view of the rights of the consumer
principally since it is the consumer who is placed at a disadvantage vis-à-
vis the supplier of services or goods. It is to overcome this disadvantage
that a beneficent legislation in the form of the Consumer Protection Act,
1986 was enacted by Parliament. The provision of limitation in the Act
cannot be strictly construed to disadvantage a consumer in a case where a
supplier of goods or services itself is instrumental in causing a delay in
the settlement of the consumer’s claim. That being so, we have no
hesitation in coming to the conclusion that the National Commission was
quite right in rejecting the contention of National Insurance in this
regard.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3883 OF 2007
NATIONAL INSURANCE CO. LTD. ...APPELLANT
VS.
HINDUSTAN SAFETY GLASS WORKS LTD. ..RESPONDENT
WITH
CIVIL APPEAL NO. 1156 OF 2008
NATIONAL INSURANCE CO. LTD. ...APPELLANT
VS.
KANORIA CHEMICALS & INDUSTRIES LTD. ..RESPONDENT
J U D G M EN T
Madan B. Lokur, J.
The question arising in the first appeal directed against the judgment and
order dated 23rd April, 2007 passed by the National Consumer Disputes
Redressal Commission (for short ‘the National Commission’) in Original
Petition No. 161 of 1996 is whether the claim of the respondent for goods
insured, was rightly accepted (though in part) by the National Commission .
Our answer to this question is in the affirmative and we find no reason to
interfere with the decision of the National Commission.
2. The respondent Hindustan Safety Glass Works Ltd. (for short ‘the
insured’) had taken out two policies with the appellant National Insurance
Company, both dated 29th August, 1990 for a period of one year which were
subsequently renewed for another year. The first policy was for an amount
of Rs. 4.9 lakhs to cover the risks on office building, residential
quarters and canteen etc. in Calcutta. The second policy was for an amount
of about Rs. 5.7 crores to cover the risks on building, machinery, finished
and semi finished stocks, store, furniture, wiring and fittings etc. in its
factory/works in Calcutta. The policies included damage or loss due to
flood and inundation.
3. There is no dispute that on 6th August, 1992 there was heavy
incessant rain in Calcutta resulting in heavy accumulation of rain water
inside and around the factory/works of the insured. According to the
insured, there was considerable damage to raw materials, stocks and goods,
furniture etc. As a result of the damage suffered by the insured and in
terms of the two policies taken out with National Insurance, claims were
filed by the insured on 7th and 8th August, 1992 claiming a total amount of
about Rs. 52 lakhs.
4. Pursuant to the claims having been made, National Insurance appointed
N.T. Kothari & Co. as its surveyor on 24th September, 1992. The requisite
survey was carried out and N.T. Kothari & Co. submitted its report on 11th
November, 1993 indicating a loss of about Rs. 24 lakhs having been suffered
by the insured.
5. For reasons that are not very clear, National Insurance did not
accept the report and instead appointed Seascan Services (WB) Pvt. Ltd. as
a surveyor to report on the loss or damage suffered by the insured. The
second surveyor gave its report on 23rd November, 1994 assessing the loss
or damage suffered by the insured at about Rs. 26 lakhs. By an addendum
issued on 10th February, 1995 the damage or loss incurred by the insured
was reduced to about Rs. 24 lakhs.
6. In spite of two survey reports quantifying the loss or damage
suffered at about Rs. 24 lakhs, nothing was paid to the insured by National
Insurance. Consequently, on 22nd April, 1996 the insured sent in notice to
National Insurance to the effect that its claim had not been settled and
that the loss or damage claimed was to the extent of about Rs. 52 lakhs and
that this should be paid.
7. National Insurance did not reply to this notice and consequently, the
insured filed a complaint with the National Commission under the provisions
of the Consumer Protection Act, 1986 (for short ‘the Act’) claiming an
amount of Rs. 52.32 lakhs along with an amount of about Rs.1.81 lakhs
being the expenses incurred for the purpose of loss minimisation. Interest
at 18% per annum was also claimed by the insured with effect from 6th
December, 1992 that is four months after the occurrence of the flood or
inundation.
8. At this stage, it may be noted that the claims made by the insured in
terms of its letters dated 7th and 8th August, 1992 as well as the notice
dated 22nd April, 1996 were repudiated by National Insurance much later on
22nd May, 2001 which is about five years after the complaint was filed with
the National Commission.
9. Be that as it may, in response to the complaint and during the course
of submissions, National Insurance raised four objections. These have been
summarised by the National Commission as follows:
Complaint was barred by condition No. 6(ii) of the policies;
Complaint was barred by limitation as it was filed on 13.08.1996 while the
loss/damage to the insured properties had taken place in August, 1992.
Alleged loss had been caused due to accumulation of dust and moisture on
the stocks lying unattended because of lock out in the factory from
03.05.1991 and not as a result inundation/flood.
None of the two survey reports can form the basis for payment of the amount
claimed.
10. The National Commission rejected all the contentions urged by
National Insurance and by the impugned judgment and order the insured was
awarded an amount of Rs. 21,05,803.89 with interest at 9% per annum from
11th May, 1995 that is three months after the addendum issued by Seascan
Services (WB) Pvt. Ltd. (the second surveyor). Costs of Rs. 20,000/- were
also awarded to the insured. In our opinion there is no error in the
decision appealed against.
11. In so far as the first objection is concerned, namely, reliance on
condition number 6(ii) of the insurance policies it is necessary to first
understand the scope of this condition which reads as follows:
“In no case whatsoever shall the company be liable for any loss or damage
after the expiration of 12 months from the happening of the loss or damage
unless the claim is the subject of pending action or arbitration: it being
expressly agreed and declared that if the company shall disclaim liability
for any claim hereunder and such claim shall not within 12 calendar months
from the date of the disclaimer have been made the subject matter of a suit
in a court of law and the claim shall for all purposes be deemed to have
been abandoned and shall not thereafter be recoverable hereunder.”
12. A plain reading of the aforesaid condition leads to the conclusion
that National Insurance would not be liable for any loss or damage 12
months after the event that caused the loss or damage to the insured unless
the claim is the subject matter of a pending action or arbitration. It was
submitted by learned counsel for National Insurance that the expression
‘pending action’ must relate to action instituted in a court of law.
13. We are not at all impressed by this submission. When a claim is made
by the insured that itself is actionable. There is no question of requiring
the insured to approach a court of law for adjudication of the claim. This
would amount to the encouraging avoidable litigation which certainly cannot
be the intention of the insurance policies and is in any case not in public
interest. Moreover, the disclaimer by National Insurance was only in May
2001 and the period of ‘limitation’ under the policies could not have
started before that time. We leave the matter at that, more particularly
since the learned counsel for National Insurance strictly did not press
this submission.
14. However, learned counsel vehemently argued that in terms of Section
24-A of the Act, the claim made by the insured was barred by limitation
since the complaint was filed with the National Commission on 13th August,
1996 while the loss or damage had occured on 6th August, 1992. Therefore,
the National Commission could not have admitted the complaint since it was
filed beyond the stipulated period of two years from the date on which the
cause of action had arisen.
15. Learned counsel placed reliance on State Bank of India v. B.S.
Agriculture Industries (I)[1] but we do not see the relevance of this
decision. On facts, it was found in this case that the cause of action had
accrued to the appellant therein on 7th June, 1994 but a complaint was
filed with the National Commission on 5th May, 1997. Clearly the complaint
was barred by limitation.
16. Similarly, reliance on Kandimalla Raghavaiah & Co. v. National
Insurance Co.[2] is misplaced. In this case, a fire broke out in the
premises of the insured on 23rd March, 1988 and the appellant therein
sought a claim from the insurance company on 6th November, 1992 while the
complaint was filed with the National Commission on 24th October, 1997.
Under these circumstances, it was held that the complaint was barred by
limitation.
17. Strictly speaking, the event that caused the loss or damage to the
insured occurred on 6th August, 1992 when due to heavy incessant rain in
Calcutta, the raw materials, stocks and goods, furniture etc. of the
insured were damaged. On the very next day, the insured lodged a claim
with National Insurance. In response, National Insurance first appointed
N.T. Kothari & Co. to assess the loss suffered by the insured and a report
was given by this surveyor after more than one year. Thereafter, for
reasons that are not at all clear, National Insurance appointed a second
surveyor which also took about one year to submit its report and eventually
gave an addendum to that report thereby crossing one year in completion of
its report along with the addendum. In other words, National Insurance
itself took more than two years in surveying or causing a survey of the
loss or damage suffered by the insured. Surely, this entire delay is
attributable to National Insurance and cannot prejudice the claim of the
insured, more particularly when the insured had lodged a claim well within
time. To make matters worse, National Insurance actually repudiated the
claim of the insured only on 22nd May, 2001 which is well after the
complaint was filed with the National Commission.
18. In our opinion, in a dispute concerning a consumer, it is necessary
for the courts to take a pragmatic view of the rights of the consumer
principally since it is the consumer who is placed at a disadvantage vis-à-
vis the supplier of services or goods. It is to overcome this disadvantage
that a beneficent legislation in the form of the Consumer Protection Act,
1986 was enacted by Parliament. The provision of limitation in the Act
cannot be strictly construed to disadvantage a consumer in a case where a
supplier of goods or services itself is instrumental in causing a delay in
the settlement of the consumer’s claim. That being so, we have no
hesitation in coming to the conclusion that the National Commission was
quite right in rejecting the contention of National Insurance in this
regard.
19. In so far as the third contention urged by National Insurance is
concerned this is itself contradicted by the reports of the two surveyors
appointed by it. It is possibly to get over this difficulty that National
Insurance advanced the fourth contention namely that none of the two survey
reports could form the basis for payment of the amount claimed.
20. In this context, the contention urged was that the first survey
report given by N.T. Kothari & Co. was not a bona fide report inasmuch as
the Central Glass and Ceramic Research Institute, Calcutta had not
authorised that specific officer to give any report with regard to the
damage or loss suffered by the insured. Without going into this aspect of
the matter since the National Commission itself did not rely upon the first
survey report, we may notice that the second survey report was prepared in
consultation with that very institute namely the Central Glass and Ceramic
Research Institute, Calcutta but on this occasion, another officer had been
consulted. The Insurance Company failed to provide any reason before the
National Commission or even before us to remotely suggest that the second
report was also tainted either because the officer consulted was not
authorised to give a report or for any other justifiable reason. The
National Commission accepted the second survey report which was provided by
Seascan Services (WB) Pvt. Ltd. as well as the addendum to it and we do not
see any reason to disagree with the findings arrived at in the absence of
any material to discredit the surveyor or the report of the surveyor.
21. Accordingly, in our opinion no case is made out by National Insurance
to interfere with the order passed by the National Commission.
CIVIL APPEAL NO. 1156 OF 2008
22. This appeal also concerns the interpretation, in the context of
limitation, of condition number 6(ii) of the insurance policy taken out by
the insured. In this appeal, the insured suffered a loss or damage to its
goods in an incident that occurred on 6th September, 1993. A claim was
lodged by the insured on the next day. The claim was repudiated by National
Insurance on 27th December, 1999 while a compliant filed by the insured in
the National Commission was pending since 6th March, 1998. In view of these
facts and in view of the discussion in the connected appeal, there is no
merit in the objection raised by learned counsel that the complaint was
barred by limitation in view of condition number 6(ii) of the insurance
policy or Section 24-A of the Act. In any event, this contention was not
strictly pressed by learned counsel on the facts of this appeal.
23. On the merits of the case, the only issue is whether the loss or
damage to the insured machine was caused by an explosion or by a short
circuit. According to National Insurance, a short circuit in the machine
disentitled the insured from making a claim. The National Commission held,
on a consideration of the evidence that an explosion had occurred in the
machine and that resulted in a short circuit and consequent loss or damage
to the machine.
24. Having gone through the evidence on record, we find that the view
taken by the National Commission is not only based on the evidence on
record, but is in any event a possible view. In the absence of any material
error in appreciation of the evidence, we do not think it proper to
substitute the view taken by the National Commission with our view.
25. Therefore even in this appeal, National Insurance has not been able
to make out a case for interference with the order passed by the National
Commission.
Result
26. Both the appeals are without any merit and are accordingly dismissed.
................................................J
( MADAN B. LOKUR )
New Delhi; ................................................J
April 7, 2017 (PRAFULLA C. PANT)
ITEM NO.1A COURT NO.5 SECTION XVII
(For Judgment)
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 3883/2007
NATIONAL INSURANCE CO.LTD. Appellant(s)
VERSUS
HINDUSTAN SAFETY GLASS WORKS LTD. Respondent(s)
WITH
C.A. No. 1156/2008
Date : 07/04/2017 These appeals were called on for
pronouncement of judgment today.
For Appellant(s) Mr. Pramod Dayal, AOR
For Respondent(s) Ms. Manjeet Chawla, AOR
Mr. Ramesh Singh, Adv.
Ms. Anne Mathew, Adv.
Mr. Suman Jyoti Khaitan, AOR
Hon'ble Mr. Justice Madan B. Lokur pronounced the reportable judgment
of the Bench comprising His Lordship and Hon'ble Mr. Justice Prafulla C.
Pant.
The appeals are dismissed in terms of the signed reportable judgment.
(Meenakshi Kohli) (Sharda Kapoor)
Court Master (SH) Court Master (NS)
[Signed reportable judgment is placed on the file]
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[1]
[2] (2009) 5 SCC 121
[3]
[4] (2009) 7 SCC 768