Page 1 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.

1.The question arising in the first appeal directed against the judgment and order

dated 23

rd

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

C.A. No. 3883 of 2007 etc.

Page 1

Page 2 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 29

th

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 6

th

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 7

th

and 8

th

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 24

th

September, 1992. The requisite

C.A. No. 3883 of 2007 etc.

Page 2

Page 3 survey was carried out and N.T. Kothari & Co. submitted its report on 11

th

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 23

rd

November, 1994 assessing the loss or damage suffered by the

insured at about Rs. 26 lakhs. By an addendum issued on 10

th

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 22

nd

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

C.A. No. 3883 of 2007 etc.

Page 3

Page 4 also claimed by the insured with effect from 6

th

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 7

th

and 8

th

August, 1992 as well as the notice dated 22

nd

April,

1996 were repudiated by National Insurance much later on 22

nd

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:

(i)Complaint was barred by condition No. 6(ii) of the policies;

(ii)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.

(iii)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.

(iv)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 11

th

May, 1995

that is three months after the addendum issued by Seascan Services (WB) Pvt.

C.A. No. 3883 of 2007 etc.

Page 4

Page 5 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

C.A. No. 3883 of 2007 etc.

Page 5

Page 6 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 13

th

August, 1996

while the loss or damage had occured on 6

th

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 7

th

June, 1994 but a complaint was filed with the National

Commission on 5

th

May, 1997. Clearly the complaint was barred by limitation.

1

(2009) 5 SCC 121

C.A. No. 3883 of 2007 etc.

Page 6

Page 7 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 23

rd

March, 1988 and the appellant therein sought a claim from the

insurance company on 6

th

November, 1992 while the complaint was filed with

the National Commission on 24

th

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 6

th

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,

2

(2009) 7 SCC 768

C.A. No. 3883 of 2007 etc.

Page 7

Page 8 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 22

nd

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.

C.A. No. 3883 of 2007 etc.

Page 8

Page 9 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.

C.A. No. 3883 of 2007 etc.

Page 9

Page 10 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 6

th

September, 1993. A claim was lodged by the insured on the next

day. The claim was repudiated by National Insurance on 27

th

December, 1999

while a compliant filed by the insured in the National Commission was pending

since 6

th

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

C.A. No. 3883 of 2007 etc.

Page 10

Page 11 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)

C.A. No. 3883 of 2007 etc.

Page 11

Page 12 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]

C.A. No. 3883 of 2007 etc.

Page 12