NATIONAL INSURANCE CO. LTD.versusHINDUSTAN SAFETY GLASS WORKS LTD.

                               [2017] 3 S.C.R. 520


  A                    NATIONAL INSURANCE CO. LTD.
                                         v.
                 HINDUSTAN
                   '
                           SAFETY GLASS
                                    . . WORKS LTD.
                         (Civil Appeal No. 3883 of 2007)
  B                              APRIL 07, 2017
           (MADAN B. LOKUR AND PRAFULLA C. PANJ, JJ.)
             Consumer Protection Act, i986:
              Damages - Policy taken out by respondent covering damage
  C or loss due to flood and inundation - Damqge caused by heavy
       rain - Claim for Rs.52 lakhs - Two survey reports quantifying loss
       .of Rs.24 lakhs - Nothing paid by appelfrmt-insurer - Complaint
       under CP Act - Repudiation of claim 5 years after the complaint -
       Award of Rs.2i lakhs by National Commission -.Challenged by
      ·insurer - Held: The appellant-insurer itself took more than two·
  D
       years in surveying or causing a survey of the loss or damage suffered
       by the insured - Thus, entire delay was attributable to insurer and
       cannot prejudice the claim of the insured, more· particularly when
       the insured had lodged a claim well within time - it is well established
     . that the provision of limitation in the Act cannot be strictly construed
  E 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, the National Commission was
    . quite right in rejecting the contention of insurer in this regard - No .
       reason to interfere with t/:le order of National Commission .
.,, F     Actionable claim - Claim made by insured - As per policy,
    insurer was not liable for any loss i 2 months after the event that
    caused loss to the insured unless claim ls subject matter of pending
    action or arbitration - Contention of insurer that expression
    'pending action' relate to action instituted in a court of law - Held:
  G Not sustainable - When a claim is made by the insured that itself is
    actionable - There is no question of requiring the insured to
    approa~h a court of law for adjudication of the claim - This would
    amount to encouraging avoidable litigation which certainly cannot.
    be the intention of the insurance policies and is in any case not in
    public interest - insurance.
  H
                                        520
   NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY                    521
                 GLASS WORKS LTD.

       Dismissing the appeals, the Court                              A
        HELD: 1.1. A plain reading of condition no. 6 (ii) of the
 insurance policies showed that the appellant-insurer 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. The contention    B
 of the appellant-insurer that the expression 'pending action' must
 relate to action instituted in a court of law is not acceptable.
 Moreover, the disclaimer by the appellant-insurer was only in
 May 2001 and the period of 'limitation' under the policies could
 not have started before that time. [Paras 12, 13][525-B, DJ
                                                                      c
       1.2. The appellant-insurer itself took more than two years
 in surveying or causing a survey of the loss or damage suffered
 by the insured. Thus, the entire delay is attributable to appellant-
 insurer and cannot prejudice the claim of the insured, more
 particularly when the insured had lodged a claim well within time.
 To make matters worse, the insurer actually repudiated the claim D
 of the insured only on 22•d May, 2001 which is well after the
 complaint was filed with the National Commission. [Para 17][526-
 D-EJ
         2. In a dispute concerning a consumer, it is necessary for
· the courts to take a pragmatic view of the rights of the consumer E
  principally since it is the consumer who is placed at a disadvantage
  vis-a-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 F
  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, the National Commission
  was quite right in rejecting the contention of National Insurance
  in this regard. The National Commission accepted the second
  survey report as well as the addendum to it and there was no G
  reason to disagree with the findings arrived at in the absence of
  any material to discredit the surveyor or the report of the
  surveyor. No case is made out by National Insurance to interfere
  with the order passed by the National Commission. [Paras 18, 20
  and 21)(526-F-G; 527-C-D, E]
                                                                      H
522           SUPREME COURT REPORTS                         [2017] 3 S.C.R.


A          State Bank of India v. B.~. Agriculture Industries (I)
           [2009] 4 SCR 762; Kandimalla Raghavaiah & Co. v.
           National Insurance Co. [2009] 10 SCR 870 -
           distinguished.
                             Case Law Reference
 B           [2009] 4 SCR 762         distinguished            Para 15
             (2009) 10 SCR 870        distinguished            Para 16
           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3883
      of2007.
 C           From the Judgment and Order dated 23.04.2007 of the National
      Consumer Disputes Redressal Commission, New Delhi in Original
      PetitionNo.161 of1996
                                      WITH
            C. A. No. 1156 of2008.
 D
            Vishnu Mehra, Pramod Dayal, Advs., for the Appellant.
            Jayant Bhushan, Sr. Adv., S.M. Suri, Ms. Manjeet Chawla, Ramesh
      Singh Suman Jyoti Khaitan, Ms. Anne Mathew, Vikas Kumar, Advs. for
      the Respondent.
 E          The Judgment of the Court was delivered by
           MADAN B. LOKUR, J. I. The question arising in the first
   appeal directed against the judgment and order dated 23ni April, 2007
   passed by the National Consumer Disputes Redressal Commission (for
   short 'the National Commission') in Original Petition No. 161 ofl 996 is
 F 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
-G 'the insured') had taken out two policies with the appellant National
   Insurance Company, both dated 29'h 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
 H policy was for an amount of about Rs. 5.7 crores to cover the risks on
  NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY                             523
       GLASS WORKS LTD. [MADAN B. LOKUR, J.]

building, machinery, finished and semi finished stocks, store, furniture,     A
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'" 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          B
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'" and 8'" August, 1992 claiming a total
amount of about Rs. 52 lakhs.
                                                                              c
       4. Pursuant to the claims having been made; National Insurance
appointed N.T. Kothari & Co. as its surveyor on 24'" September, 1992.
The requisite survey was carried out and N.T. Kothari & Co. submitted
its report on I !'"November, 1993 indicating a loss ofabout Rs. 24 lakhs
having been suffered by the insured.
                                                                            D
       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 10'" Februaryy1995 the damage or loss incurred by .E
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"d April, 1996 the insured sent in notice
to National Insurance to the effect that its claim had not been settled       F
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 C(),nsumer Protection Act, 1986 (for short 'the Act')       G
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 iniindation.
                                                                              H


                        ,
524              SUPREME COURT REPORTS                           [2017] 3 S.C.R.


A             8. At this stage, it may be noted that the claims made by the
       insured in terms of its letters dated 7'h and 8'h 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.
 B            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
 c                 while the loss/damage to the insured properties had taken place
                   inAugust, 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/
 D                 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
 E 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.
 F
              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
 G            of the loss or damage unless the claim is the subject ofp~nding
              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
 H
    NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY                         525
         GLASS WORKS LTD. [MADAN B. LOKUR, J.]

        court of law and the claim shall for all purposes be deemed to      A
        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 B
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 c
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 inte11::st. Moreover, the disclaimer by National Insurance
was only in May 2001 and the period of 'limitation' under the policies D
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 E
limitation since the complaint was filed with the National Commission on
131h August, 1996 while the loss or damage had occured on 61h August,
1992. Therefore, the National Commission could not have admitted the
complaint since it was filed beyond the stipulated period of two years       0,



from the date on which the cause of action had arisen.                   F
      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 G
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
1
    (2009) s sec 121
2
    (2009) 1 sec 768                                                        H
526           SUPREME COURT REPORTS                          [2017) 3 S.C.R.


A the premises of the insured on 23n1 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 241h October,
  1997. Under these circumstances, it was held that the complaint was
  barred by limitation.
 B         17. Strictly speaking, the event that caused the loss or damage to
   the insured occurred on 61h 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
 C 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
 D 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 22"d May, 2001 which
 E 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-a-vis the supplier of services or goods. It is to overcome
  F 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 gooas or services itself is
    instrumental in causing a delay in the settlement of the consumer's claim.
. G That being so, we have no hesitation in coming to the conclusion that the
    National Commission was quite right in rejecting the contention ofNationa[
    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
  H appointed by it. It ~s possibly to get over this difficulty that National
  NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY                        527
       GLASS WORKS LTD. [MADAN B. LOKUR, J.]

Insurance advanced the fourth contention namely that none of the two      A
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 B
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
at1d Ceramic Research Institute, Calcutta but on this occasion, another
officer had been consulted. The Insurance Company failed to provide C
any reason before the National Commission or even before us to remotely
suggest that the second report was also tainted either becau3e the officer
consulted was not authorised to give a report or for any other justifiable
re:,son. The Nation:il Commission accepted the second survey report
which was provided by Seascan Services (WB) Pvt. Ltd. as well as the D
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.. E
      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 61h September, 1993. A claim was F
lodged by the insured on the next day. The claim was repudiated by
National Insurance on 27'h 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 G
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 H
528             SUPREME COURT REPORTS                        [2017] 3 S.C.R.


A 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.
 B
             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.
 c
            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
 D          26. Both the appeals are without any merit and are accordingly
      dismissed.


      Devika Gujral                                             Appeals dismissed.