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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 8884-8900 OF 2010

M/s. Galada Power and        Appellant(s) Telecommunication Ltd.

                Versus

United India Insurance Co. Ltd.       Respondent(s) and Another Etc.

J U D G M E N T

Dipak Misra, J.

The  appellant-complainant  filed  a  batch  of  21

complaints  i.e.  C.D.  Nos.539  to  559  of  2000,  claiming

compensation of Rs.43.59 lacs along with interest @ 18%

p.a. from the respondents, namely, United India Insurance

Company Limited and India Transport Organization, on the

ground  that  there  had  been  shortage/loss  of  'All

Aluminium Alloy Conductor' (for short, 'AAAC') wire, which

was  supplied  by  the  complainant  to  the  Power  Grid

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Corporation  of  India  Limited  (PGCIL).   The  case  of  the

complainant  before  the  Consumer  Disputes  Redressal

Forum,  Ranga  Reddy  District  (for  short,  'the  District

Forum')  was  that  between  1.3.1998  to  13.4.1998,

twenty-one trucks of AAAC wire packed in wooden drums

were  delivered at  stores  of  PGCIL at  Assam.   In  all  the

trucks  shortage  was  noticed  by  PGCIL  on  25th March,

1998.  As there was shortage, which is called transit-loss

for  which  the  appellant  had  taken  a  policy  from  the

insurer, it put forth a claim before the insurer for Rs.35

lacs.   The  said  claim  was  lodged  before  the  insurance

company vide letter dated 3rd April, 1998.

2. On the basis of the communication made by the

appellant,  the  insurer  appointed  a  surveyor  who gave  a

report  on  1st September,  1998,  assessing  the  loss

approximately  at  Rs.2  lacs  in  each  case,  thereby  the

amount  in  toto  assessed  by  the  surveyor  was

approximately  Rs.43  lacs.   Though  the  surveyor  had

assessed the loss and sent it to the insurance company,

the  insurer  vide letter  dated  20th September,  1999,

repudiated the claim by stating thus:-

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“Dear Sirs,

Re: Marine  claim No.050202/21/26/7/18/97/

Policy No.050202/21/26/16/2101/97

On perusal  of  the  records  pertaining  to  the above  claim,  and  subsequent  investigation into the matter, we find that the above claim lodged by you does not fall under the purview of “TRANSIT LOSS”. As such, the claim is not tenable under the terms of the policy.  In view of  this,  we are treating your above claim as “NO CLAIM”.”

[Emphasis added]

3. As  the  claim  was  not  accepted,  the  appellant

knocked at  the doors of  the  District  Forum for  grant of

compensation, but the District Forum declined to accept

the  claim  on  three  counts,  namely,  that  there  was

non-joinder of necessary parties; that the allegation of theft

was not  proved;  and that  in  a summary proceeding  the

factual dispute could not be decided.

4. Dissatisfied by the order passed by the District

Forum, the appellant preferred twenty-one appeals before

the  Andhra  Pradesh  Consumer  Disputes  Redressal

Commission (for short, 'the State Commission').  The State

Commission  after  analysing  the  materials  brought  on

record  opined  that  the  investigator  could  not  be  relied

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upon  as  the  investigation  had  been  completed  after  six

months from the date of occurrence; that the report of the

investigator could not be said to have been based on any

material worthy of verification; that since it was the carrier

who had undertaken to deliver the goods at Assam, it was

they who are responsible to give reasons as to how, when

and  where  the  goods  were  transshipped  and  in  what

condition the goods were delivered; that the length and net

weight of AAAC wire was mentioned on each drum and also

dispatch documents and the respondent No.2, that is, the

carrier  company  had  issued  Exhibit  A-3  (lorry  receipts)

wherein cross reference to the invoice and delivery challan

numbers were given which clearly established the fact that

the complainant had dispatched as per the said Exhibit;

that since the persons present at the site at the relevant

point of time i.e. unloading, were the drivers, there was no

reason to disbelieve their endorsements, specifically when

the  documents,  viz.,  Exhibits  A-25  and  27  confirm  the

shortage on 25.04.1998 in 109 drums; that the finding of

the  District  Forum  that  the  complaint  was  not

maintainable due to non-joinder of necessary party, that is,

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PGCIL, was not correct and the complaint could not have

been  dismissed  on  that  score;  that  the  report  of  the

surveyor,  that  is,  Exhibit  A-12  was  based  on  physical

verification of the consignment of  AAAC wire and hence,

the  repudiation of  claim by the  insurer  was unjustified;

and that there was no inordinate delay in intimating the

claim to the insurance company.  Being of this view, the

State  Commission  allowed  the  appeals  preferred  by  the

appellant and determined the compensation approximately

at Rs.43 lacs in all  the appeals.   Be it  noted,  the State

Commission  while  determining  the  quantum,  made  the

insurer and the carrier jointly and severely liable.

5. The  judgment  and  order  passed  by  the  State

Commission compelled the insurer and the carrier to file

independent  revisions  before  the  National  Consumer

Disputes Redressal Commission, New Delhi (for short, 'the

National  Commission).   The  revisions  preferred  by  the

carrier  stood  dismissed  and  the  same  have  not  been

challenged and, therefore, the view expressed in the case of

the carrier has attained finality.

6. As  far  as  the  insurer  is  concerned,  it  preferred

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twenty-one revisions, out of which four were dismissed by

the National Commission  vide judgment and order dated

6th March, 2009, on the foundation that as they dealt with

the transactions pertaining to “open delivery”.  We are not

concerned  with  those  four  revisions.   As  far  as  the

seventeen revision are concerned, the National Commission

allowed them on  the  ground  that  the  intimation by  the

complainant  to  the  insurer  was  not  made  within  seven

days of arrival of the vehicles at the destination mentioned

in the policy.  The reasoning of the National Commission is

to the following effect:-

“In  this  regard,  the  dates  of  delivery  are important to us.  As per material brought on record, the first intimation of the claim or loss was reported to the petitioner insurer only on 27.3.1998  and  confirmed  by  letter  dated 3.4.98.  There is no dispute that the arrival dates  of  the  different  consignments  in question  start  from  1.3.98  onwards  till 11.4.98.   In  the  above  circumstances  and keeping  in  view  the  terms  of  the  Policy, condition 5 of Inland Transit Clause, we are of the  view  that  there  was  no  Policy  Cover  in existence and the risk stood not covered after delivery of goods to the consignee.  We further note that, even on practical side, not reporting the loss in time deprived the Insurer to have a first a first hand appreciation/assessment of the  extent  of  loss,  more  so  when,  as  per statement  on  record,  against  number  of consignments/delivery  notes  it  is  clearly

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noted 'seal tempered'.

There can be no dispute that Insurance is a contract  of  utmost  good  faith.   Failing  to report  the  loss,  noted  at  the  time  of receipt/delivery  is  a  decisive  and  a determinate  factor  against  the  complainant. We also note with some dismay, and wonder as to why PGCIL was not made a party as it was  at  their  warehouse  in  Assam  that shortage/loss is alleged to have been notice. It is stated by the Ld. Counsel of the Petitioner that  an  effort  was  made  before  the  State Commission  praying  for  making  PGCIL  a party but it was declined.  The whole episode leaves  us  with  a  single  thought  that complainant did not care for the terms of the contract  and  went  on  to  compound  the wrongs.

In retrospect one could only observe that at least  in  cases/consignment  where  material was found tempered, matter should have been reported to the underwriters immediately and delivery  should  not  have  been made by  the complainant to the consignee till the loss had been assessed by the surveyor after perhaps asking for an open-delivery.  This could have been  the  case  of  the  consignee  also  –  not making him a party  should  be held against the complainant.

In the aforementioned circumstances, we are of the view that there was no coverage of risk at  the  time  of  reporting  the  loss  to  the petitioner/insurer,  hence the  complainant  is not  entitled  to  any  relief  in  terms  of condition(s)  of  Policy  as  also  law  and  other material on the subject discussed earlier and also the law laid down by this Commission in the cited judgment (supra).”

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7. Being  of  this  view,  the  National  Commission

allowed  the  revision  petitions  and  set  aside  the  orders

passed by the State Commission.

8. We  have  heard  Mr.  Rana  Mukherjee,  learned

senior counsel for the appellant and Mr. Rakesh Kumar,

learned  counsel  for  the  respondent  No.2.   None  has

appeared on behalf of the respondent No.1, the insurer.

9. It is submitted by Mr. Rana Mukherjee, learned

senior counsel that the National Commission has grossly

erred by opining that the PGCIL is a necessary party.  It is

his  further  submission  that  the  view  expressed  by  the

National  Commission  that  the  claim  stands  defeated

because  of  delayed  intimation  as  postulated  in

clause no. 5, of the policy is not sustainable, inasmuch as

a  survey  was  conducted  and  that  apart  the  letter  of

repudiation does not refer or even remotely touch upon any

of the aspects enumerated in clause 5.  Additionally, it is

urged by Mr. Mukherjee, learned senior counsel that the

National  Commission  has  erroneously  held  that  the

complainant  went  on compounding the  wrongs,  whereas

the material brought on record clearly establish that it was

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quite vigilant and diligent in putting forth his claim and, in

fact, its conduct shows intrinsic faith in the insurer.   

10. Mr. Rakesh Kumar, learned counsel appearing for

the respondent  No.2 made an endeavour to support  the

order  passed  by  the  National  Commission,  but,  as  has

been  stated  earlier,  when the  revisions  preferred  by  the

carrier have already been dismissed and the said orders

have attained finality having not been assailed, we do not

think he can be permitted to argue to sustain the order

passed by the National Commission.  Be that as it may, it

really does not make any difference.  

11. Clause 5 of the Policy that relates to “Duration”,

reads as follows:-

“5. Duration–. This insurance attaches from the  goods  leave  the  warehouse  and/or  the store at the placed name in the policy for the commencement  of  transit  and  continues during  the  ordinary  course  of  transit including customary transhipment if any,

(i) until delivery to the final warehouse at the destination named in the

(ii) in respect of transit by Rail only or Rail and Road, until expiry of 7 days after arrival of the railway wagon at the final destination railway station or

(iii) in respect of transit by Road only until

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expirty of 7 days after arrival of the vehicle at the  destination  town  named  in  the  policy whichever shall first occur.

N.B.1. The  period  of  7  days  referred  to abvoe shall reckoned from the midnight of the day  of  arrival  of  railway  wagon  at  the destination railway station or

2. Transit  by  Rail  only  shall  incidental transit  by  Road  performed  by  Railway Authorities to or from Railway Out-Agency.”

12. The National Commission has relied upon Clause

5 and on that basis has rejected the claim by putting the

blame on the complainant. The letter of repudiation dated

20th September,  1999,  which  we  have  reproduced

hereinbefore, interestingly, does not whisper a single word

with regard to delay or, in fact, does not refer at all to the

duration clause.   What  has  been stated in  the  letter  of

repudiation is  that  the claim lodged by the complainant

does not fall under the purview of transit-loss because of

the  subsequent  investigation  report.  It  is  evincible,  the

insurer had taken cognizance of the communication made

by the appellant and nominated a surveyor to verify the

loss.  Once the said exercise has been undertaken, we are

disposed  to  think  that  the  insurer  could  not  have  been

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allowed to take a stand that the claim is hit by the clause

pertaining to duration.  In the absence of any mention in

the letter of repudiation and also from the conduct of the

insurer in appointing a surveyor, it can safely be concluded

that  the  insurer  had  waived  the  right  which  was  in  its

favour  under  the  duration  clause.   In  this  regard,  Mr.

Mukherjee,  learned  senior  counsel  appearing  for  the

appellant has commended us to a decision of High Court of

Delhi in  Krishna Wanti v. Life Insurance Corporation

of India1,  wherein the High Court has taken note of the

fact  that  if  the  letter  of  repudiation did not  mention an

aspect, the same could not be taken as a stand when the

matter is decided.  We approve the said view.

13. In this context, we may with profit, reproduce a

passage  from Halsbury  Law of  England,  which reads as

follows:-

“In  Halsbury’s  Laws of  England,  Vol.  16(2), 4th Edn., Para 907, it is stated:

“The expression ‘waiver’ may, in law, bear different meanings. The primary meaning has been said to be the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and  avoidance  if  the  right  is  thereafter  as-

12000 (52) DRJ (DB)

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serted, and is either express or implied from conduct. It may arise from a party making an election, for example whether or not to exer- cise a contractual right… Waiver may also be by virtue of equitable or promissory estoppel; unlike  waiver  arising  from  an  election,  no question arises of  any particular knowledge on the part of the person making the repre- sentation, and the estoppel may be suspen- sory only… Where the waiver is not express, it may be implied from conduct which is in- consistent with the continuance of the right, without the need for writing or for considera- tion moving from, or detriment to, the party who benefits by the waiver, but mere acts of indulgence  will  not  amount  to  waiver;  nor may a party benefit from the waiver unless he has altered his position in reliance on it.””

14. In  Manak Lal v.  Dr.  Prem Chand Singhvi2,  it  has

been held:-

“8.  … It is true that waiver cannot always and in every case be inferred merely from the failure  of  the  party  to  take  the  objection. Waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in  question.  As  Sir  John Romilly, M.R.  has  observed  in  Vyvyan v.  Vyvyan3: (Beav p. 75 : ER p. 817)

‘Waiver  or  acquiescence,  like  election,  pre- supposes that the person to be bound is fully cognizant of his rights, and that being so, he neglects to enforce them, or chooses one bene- fit instead of another, either, but not both, of which he might claim’.”

2   AIR 1957 SC 425 3   (1861) 30 Beav 65 : 54 ER 813

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15. Yet  again,  in  Krishna  Bahadur  v.  Purna

Theatre4, it has been ruled that:-

“A  right  can  be  waived  by  the  party  for whose benefit certain requirements or condi- tions had been provided for by a statute sub- ject to the condition that no public interest is involved therein. Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving the right in con- sideration  of  some  compromise  came  into being. Statutory right, however, may also be waived by his conduct.”

16. In  State  of  Punjab  v.  Davinder  Pal  Singh

Bhullar5,  a two-Judge Bench speaking about the waiver

has opined:-

“41. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or  privilege,  which except  for  such  a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. (Vide Dawsons  Bank  Ltd. v.  Nippon  Menkwa Kabushiki  Kaisha6,  Basheshar  Nath v.  CIT7, Mademsetty Satyanarayana v. G. Yelloji Rao8, Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh9,  Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn.10, Sikkim Subba

4   (2004) 8 SCC 229 5   (2011) 14 SCC 770 6   AIR 1935 PC 79 7   AIR 1959 SC 149 8   AIR 1965 SC 1405 9   AIR 1968 SC 933 10   1992 Supp (1) SCC 5

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Associates v.  State  of  Sikkim11 and  Krishna Bahadur v. Purna Theatre.)

42. This Court in Municipal Corpn. of Greater Bombay v.  Dr  Hakimwadi  Tenants’  Assn.12 considered the issue of waiver/acquiescence by  the  non-parties  to  the  proceedings  and held: (SCC p. 65, paras 14-15)

“14. In  order  to  constitute  waiver,  there must be voluntary and intentional relinquish- ment of a right. The essence of a waiver is an estoppel  and  where  there  is  no  estoppel, there is no waiver.  Estoppel and waiver are questions of conduct and must necessarily be determined on the facts of each case. …

15. There is no question of estoppel, waiver or abandonment. There is no specific plea of waiver, acquiescence or estoppel, much less a plea of abandonment of right. That apart, the question of waiver really does not arise in the case. Admittedly, the tenants were not parties to the earlier proceedings. There is, therefore, no  question  of  waiver  of  rights  by  Respon- dents 4-7 nor would this disentitle the ten- ants from maintaining the writ petition.””

17. In the instant case, the insurer was in custody of

the  policy.   It  had  prescribed  the  clause  relating  to

duration.  It was very much aware about the stipulation

made in clause 5(3)  to  5(5),  but despite the stipulations

therein, it appointed a surveyor.  Additionally, as has been

stated earlier,  in  the  letter  of  repudiation,  it  only  stated

that the claim lodged by the insured was not falling under

11   (2001) 5 SCC 629 12   1988 Supp SCC 55

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the purview of transit loss.  Thus, by positive action, the

insurer has waived its right to advance the plea that the

claim  was  not  entertainable  because  conditions

enumerated in duration clause were not satisfied. In our

considered  opinion,  the  National  Commission  could  not

have  placed  reliance  on  the  said  terms  to  come  to  the

conclusion that there was no policy cover in existence and

that the risks stood not covered after delivery of goods to

the consignee.  

18. Coming to the merits of the claim, we find that

the surveyor had given a report that there was a loss.  He

had  also  quantified  it.  The  State  Commission  after

elaborate discussion has held as follows:-

“The surveyor also confirmed in their reports, the  shortage/loss  of  AAAC  due  to  pilferage during transit and estimated the loss as per Ex.A12.  This shortage was also confirmed by Katigorah  police  as  per  Ex.A13  and  as reiterated earlier by the Tage Over Certificate, Ex.A19.   Taking  into  consideration that  the surveyros  appointed  by  the  insurance company  have  completed  their  investigation and submitted their reports and thereafter an investigator  was  appointed  on  16-4-1998 without any valid reasons.  It is held by the National Commission in 1 (2004) CPJ 10 (NC) in  Gammon  India  Ltd.,  v.  New  India Assurance  Co.  Ltd.  that  'Report  of  first surveyor  not  accepted,  second  surveyor

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appointed-Appointment  of  second  surveyor not explained – Deficiency in service proved – Report  of  first  surveyor  upheld'  and  the investigator in the instant case submitted his report  on  28-12-1998  i.e.  almost  8  months after  his  appointment.   Taking  into consideration all  the above submissions,  we are  of  the  considered  opinion  that  the appellant/complainant was able  to  establish that  there  was  shortage/damage  to  the consignment  which  was  given  to  second respondent for transportation.”

19. Though the said aspect has not been gone into by

the  National  Commission,  yet  we  find,  the  findings

recorded by the State Commission are absolutely justified

and tenable in law being based on materials brought on

record in such a situation we do not think it appropriate

that an exercise of remit should be carried out asking the

National Commission to have a further look at it.  In any

case, the exercise of revisional jurisdiction by the National

Commission is a limited one.   We may hasten to add that

to satisfy ourselves, we have perused the surveyor's report

and  scrutinized  the  judgment  and  order  passed  by  the

State  Commission in  this  regard  and we  are  completely

satisfied that the determination made by it  is  absolutely

impeccable.

20. In view of the aforesaid analysis, the appeals are

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allowed.  The judgment and order passed by the National

Commission in the batch of appeals is set aside.  We have

been apprised that 50% of the amount was deposited and

the  appellant  has  withdrawn  the  said  amount.   The

balance  amount  along  with  interest,  as  directed  by  the

State Commission, shall be paid by the insurance company

within four months from today.  There shall be no order as

to costs.

.................................J. (Dipak Misra)

.................................J.  (Rohinton Fali Nariman)

New Delhi; July 28, 2016.