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 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.                                                                                                      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 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.                                                                                                      Page 2

Page 3

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 3

Page 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 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 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.                                                                                                      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 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.                                                                                                      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 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.                                                                                                      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 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 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