Wednesday, 21 June 2017

When complaint filed before consumer forum will not be barred by limitation?

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.
REPORTABLE
 IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3883 OF 2007
NATIONAL INSURANCE CO. LTD. 
VS.
HINDUSTAN SAFETY GLASS WORKS LTD. 
Dated:April 7, 2017.
Citation: AIR 2017 SC 1900


1. 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
C.A. No. 3883 of 2007 etc.

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
C.A. No. 3883 of 2007 etc.

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
C.A. No. 3883 of 2007 etc.
 Page 3Page 4
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:
(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 11th May, 1995
that is three months after the addendum issued by Seascan Services (WB) Pvt.
C.A. No. 3883 of 2007 etc.
 Page 4Page 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 5Page 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 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.
1
(2009) 5 SCC 121
C.A. No. 3883 of 2007 etc.

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,
2
(2009) 7 SCC 768
C.A. No. 3883 of 2007 etc.

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.
C.A. No. 3883 of 2007 etc.

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.

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
C.A. No. 3883 of 2007 etc.
 Page 10Page 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)

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