Monday, April 10, 2017



                         IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 3883 OF 2007





                        CIVIL APPEAL NO. 1156 OF 2008




                               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
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

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

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

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.


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


26.   Both the appeals are without any merit and are accordingly  dismissed.

                                              ( MADAN B. LOKUR )

New Delhi;

April 7, 2017

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)


HINDUSTAN SAFETY GLASS WORKS LTD.                Respondent(s)
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.
      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]

      [2] (2009) 5 SCC 121

      [4] (2009) 7 SCC 768

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