SHARDA ASSOCIATESversusUNITED INDIA INSURANCE COMPANY LTD

548                      [2022]REPORTS
               SUPREME COURT    7 S.C.R. 548               [2022] 7 S.C.R.


A                           SHARDA ASSOCIATES
                                        v.
               UNITED INDIA INSURANCE COMPANY LTD.
                         (Civil Appeal No. 4910 of 2022)
B                                JULY 25, 2022
              [DR. DHANANJAYA Y CHANDRACHUD AND
                        A. S. BOPANNA, JJ.]
             Consumer Protection – Insurance claim – Deficiency in service
C     – Insurance Policy – Interpretation of – Appellant insured JCB
      Excavator with respondent for Insured Declared Value of Rs 13.50
      lakhs – While the excavator was being used for road making, a
      portion of the road gave way due to which the excavator fell into a
      deep ditch resulting in death of two people and total loss of the
      excavator – Appellant filed for insurance claim – Respondent
D     repudiated the claim on ground that overturning of the excavator
      was not covered in terms of the policy condition Indian Motor Tariff
      47 (IMT 47) as the JCB excavator was being used as tool of trade
      and no additional premium was paid – Appellant filed complaint
      before District Consumer Forum alleging deficiency in service –
      District Forum directed the insurer to pay an amount of Rs 13.50
E
      lakhs together with interest @ 9% – Judgment of District Forum
      upheld in appeal by State Consumer Forum (SCDRC) – Respondent
      filed revision petition – National Consumer Forum (NCDRC)
      reversed the decision of SCDRC on the ground that earth moving
      equipment such as a JCB excavator could be used either as a tool
F     or as a vehicle and in the present case since it was being used for
      road making, it was being used as a tool and not as a vehicle –
      NCDRC held that the insurance claim could not have been allowed
      under IMT 47 unless additional premium was paid – On appeal,
      held : Clause 1 of the insurance policy covers loss or damage which
      arises as a consequence of a landslide – IMT 47 applies to a situation
G
      when the loss or damage was caused due to ‘overturning’ and the
      ‘overturning’ should arise out of the operation as a tool of such
      vehicle – The accident herein however was caused as a result of a
      portion of the road having given way and was in the nature of a
      landslide – The damage or loss was not a result of the overturning
H
                                       548
      SHARDA ASSOCIATES v. UNITED INDIA INSURANCE                          549
                    COMPANY LTD.

of the vehicle, but was plainly due to collapsing of the road which        A
resulted in the vehicle falling into a deep ditch – NCDRC erred in
reversing the concurrent findings of fact recorded by District
Consumer Forum and SCDRC – Judgment of SCDRC accordingly
restored.
       Consumer Protection Act, 1986 – s.21(b) – Revisional                B
jurisdiction of National Consumer Forum (NCDRC) – Limited ambit
of.
        Lourdes Society Snehanjali Girls Hostel v. H&R
        Johnson (India) Ltd. (2016) 8 SCC 286; Sunil Kumar
        Maity v. State Bank of India 2022 (2) SCALE 88 –                   C
        relied on.
                        Case Law Reference
(2016) 8 SCC 286                 relied on                Para 12
2022 (2) SCALE 88                relied on                Para 12          D
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4910
of 2022.
      From the Judgment and Order dated 12.07.2019 of the National
Consumer Dispute Redressal Commission, New Delhi in Revision Petition
                                                                           E
No. 3306 of 2014.
      Jaideep Singh, Gp. Capt. Karan Singh Bhati, Advs. for the
Appellant.
      Abhishek Gola, Akshat Agarwal, Viresh B. Saharya, Advs. for
the Respondent.                                                            F
        The Judgment of the Court was delivered by
        DR DHANANJAYA Y CHANDRACHUD, J.
        1. Leave granted.
                                                                           G
       2. This appeal arises from a judgment dated 12 July 2019 of the
National Consumer Disputes Redressal Commission. 1 While exercising
its revisional jurisdiction, the NCDRC, by its judgment, reversed
concurrent findings of fact which were recorded by the District Consumer

1
    “NCDRC”                                                                H
550              SUPREME COURT REPORTS                          [2022] 7 S.C.R.


A     Disputes Redressal Forum2 and by the State Consumer Disputes
      Redressal Commission.3
             3. The appellant purchased a JCB Excavator Model 3DX on 25
      April 2007. The excavator was insured with the respondent for the period
      between 5 March 2009 and 4 March 2010 at an Insured Declared Value 4
B     of Rs 13.50 lakhs. On 25 May 2009, the excavator was being used on
      the Shivpuri-Timli Road near Rishikesh in the State of Uttarakhand. A
      portion of the road gave way, as a result of which the excavator fell into
      a deep ditch resulting in the death of the operator and helper and the
      total loss of the excavator. A First Information Report was filed on 26
      May 2009. The FIR states that the accident had occurred due to a sudden
C
      caving of the road. The surveyor appointed by the insurer conducted a
      spot survey on 28 May 2009 and reported that the accident had taken
      place due to the edge of the road side collapsing due to which the
      excavator fell into a ditch. The final survey report was submitted on 18
      July 2009. The appellant filed for an insurance claim but the insurer did
D     not settle it. The respondent repudiated the claim on 13 April 2010 on the
      ground that the overturning of the excavator was not covered in terms
      of the policy condition Indian Motor Tariff5 47 as the JCB excavator
      was being used as a ‘tool of trade’ and no additional premium was paid.
      The appellant filed a complaint before the District Forum alleging a
      deficiency in service on the part of the insurer and the award of a sum
E
      of Rs 13.50 lakhs towards the IDV plus interest at twelve percent, along
      with compensation for mental harassment. The District Forum allowed
      the complaint on 26 September 2011 by directing the insurer to pay an
      amount of Rs 13.50 lakhs, together with interest at nine per cent. The
      judgment of the District Forum was upheld in appeal by the SCDRC on
F     1 May 2014. On the issue of IMT 47, The SCDRC made the following
      observations:
               “9. So far as another plea taken by the insurer that at the time of
             the accident, the machine, was being used as “Tool of Trade”, for
             which additional premium was required to be paid by the
G            complainant and which was not paid by the complainant is
             concerned, we also do not find any force in the said plea raised by
             the insurer. The reason being that as per IMT 47 mentioned in the
      2
        “District Forum”
      3
        “SCDRC”
      4
        “IDV”
H     5
        “IMT”
   SHARDA ASSOCIATES v. UNITED INDIA INSURANCE                                 551
 COMPANY LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

      insurance policy and which has also been quoted by the District          A
      Forum in the impugned order, the claim is not payable in the event
      when the JCB machine is used as tool of Trade and it overturns
      while working as such. In the instant case, the JCB machine was
      being used for construction of road and debris was being removed
      from the machine. The JCB machine was being used a whole
                                                                               B
      and not as “Tool of Trade” and since the machine was being used
      a whole, no additional premium was required to be paid by the
      complainant.”
       The respondent assailed the order of the SCDRC in Revision
Petition No 3306 of 2014. The NCDRC, by its judgment dated 12 July
2019, reversed the findings and the award of compensation by the               C
SCDRC. The NCDRC reversed the decision on the ground that earth
moving equipment, such as a JCB excavator, could be used either as a
tool or as a vehicle, at a given point of time. Since the case of the
respondent was that the excavator was being used for the purpose of
road making when it met with an accident, the NCDRC held that it was           D
being used as a tool and not as a vehicle. In arriving at its findings, the
NCDRC upheld the submissions of the insurer that the claim could not
have been allowed under IMT 47 unless additional premium was paid.
The relevant observations of the NCDRC are extracted below:
      “7.    A dissection of IMT 47, which applied inter-alia to               E
             excavators and is reproduced in the repudiation letter would
             show that unless additional premium is paid, in case of loss
             of or damage to the excavator, the insurer is not liable if the
             following conditions are made:
      (a)    The loss or damage results from overturning of the vehicle        F
      (b)    The excavator is being used as a tool of the vehicle or of
             the plant forming part of the vehicle or attached thereto,
             unless the loss or damage arises directly from fire, explosion,
             self-ignition, lightning, burglary, house breaking or theft.
      8.     An excavator machine cannot be used for road construction         G
             unless it is attached to the said vehicle or is used as a tool
             of the vehicle. This is complainant’s own case that the
             excavator was being used for road making when it met
             with an accident. Therefore, it cannot be disputed that the
             operation i.e. the construction of the road was being carried
                                                                               H
552              SUPREME COURT REPORTS                           [2022] 7 S.C.R.


A                  when the excavator vehicle while being used as a tool,
                   suddenly rolled down on account of road side edge having
                   got broken. Earthmoving equipment such as a JCB can be
                   used either as a tool or as a vehicle at a given time. It
                   cannot work simultaneously as a tool as well as a vehicle.
                   Since this is complainant’s own case that the excavator
B
                   was being used for road making when it met with an
                   accident, it is evident that it was being used as a tool and
                   not as a vehicle at the time it fell 500 ft. down the road.”
             4. We have heard Mr Jaideep Singh, counsel appearing on behalf
      of the appellant and Mr Abhishek Gola, counsel appearing on behalf of
C     the respondent.
             5. The narrow issue which falls for determination in this appeal
      turns on the interpretation of the insurance policy. There is no dispute
      about the fact that the term of insurance was valid between 5 March
      2009 until 4 March 2010. Section I of the policy, inter alia, provides as
D     follows:
            “SECTION - I: LOSS OF OR DAMAGE TO THE VEHICLE
            INSURED
            1. The Company will indemnify the insured against loss or damage
E           to the vehicle insured hereunder and/or its accessories thereon:
            i.   by fire explosion self-ignition or lightning;
            ii. by burglary housebreaking or theft;
            iii. by riot and strike;
F           iv. by earthquake (fire and shock damage);
            v. by flood typhoon hurricane storm tempest inundation
               cyclone hailstorm frost;
            vi. by accidental external means;

G           vii. by malicious act;
            viii. by terrorist activity;
            ix. whilst in transit by road rail inland waterway lift elevator or
                air;
            x. by landslide/rockslide.”
H
   SHARDA ASSOCIATES v. UNITED INDIA INSURANCE                                 553
 COMPANY LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

      6. However, the insurance policy contains a specific stipulation in      A
regard to the application of IMT 47 in the following terms:
      “IMT 47: Mobile Cranes/ Drilling Rigs/ Mobile Plants/ Excavators/
      Navvies / Shovels/ Grabs/ Rippers
      It is hereby declared and agreed notwithstanding anything to the
      contrary contained in this Policy that in respect of the vehicle         B
      insured the insurer shall be under no liability:
      a) Under Section I of this policy in respect of loss or damage
         resulting “from overturning arising out of the operation as a
         tool of such vehicle or of plant forming part of such vehicle or
         attached thereto except for loss or damage arising directly from      C
         fire, explosion self-ignition or lightening or burglary
         housebreaking or theft.
      b) Under Section II except so far as is necessary to meet the
         requirements of the Motor Vehicles Act, 1988, in respect of
         liability incurred by the insured arising out of the operation as a   D
         tool of such vehicle or of plant farming part of such vehicle or
         attached thereto.
      N.B.: Omit paragraph (a) for :-
      i. Liability only Policies.
                                                                               E
      ii. Package Policies where an additional premium has been paid
          for inclusion of damage by overturning.
      NOTE:
      Insert make, number or some other means of identification.
                                                                               F
      Where a premium reduction is allowed for exclusion of damage
      when in use as a tool of trade omit from paragraph (a) the words
      “resulting from overturning” and “except for loss ... or theft”.”
       7. Mr Jaideep Singh, counsel appearing on behalf of the appellant,
urges that:                                                                    G
      i. The NCDRC was not justified in reversing concurrent findings
         of fact which were recorded by the District Forum and by the
         SCDRC to the effect that the excavator was not being used
         as a tool of trade, when the accident occurred; and
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554             SUPREME COURT REPORTS                            [2022] 7 S.C.R.


A           ii. In any event, it is apparent from the survey report as well as
                the findings of fact which have emerged on the record that the
                excavator suffered an accident due to a landslide or the
                collapsing of the road, to which IMT 47 would not stand
                attracted.
B            8. On the other hand, Mr Abhishek Gola, counsel appearing on
      behalf of the insurer, submitted that IMT 47 was specifically designed to
      meet such contingencies in which event the insurer would not be liable
      unless an additional premium was paid. In this context, counsel relied
      upon the complaint which was lodged to the police station which
      specifically adverted to the fact that the soil under the machine had
C     collapsed resulting in the excavator falling into a deep ditch. Moreover,
      the counsel has also adverted to the survey report, according to which,
      there was a sudden collapse of the edge of the road side, as a result of
      which the machine rolled down about 500 meters.
            9. In order to attract the applicability of IMT 47, certain specific
D     conditions have to be fulfilled. IMT 47 excludes liability:
            i. Where the loss or damage has resulted from “overturning
               arising out of the operation as a tool of such vehicle or of plant
               forming part of such vehicle or attached thereto”;

E           ii. Unless the loss or damage is directly arising from fire, explosion,
                self-ignition, lightning, burglary, house breaking or theft.
             10. It is important to note that clause 1 of the insurance policy,
      which has been extracted earlier, specifically covers a loss or damage
      which arises as a consequence of a landslide. IMT 47 applies to a situation
F     where the loss or damage has been caused due to ‘overturning’ arising
      out of the operation as a tool of such vehicle or of plant forming part of
      such vehicle or forming a part thereto. In other words, for the provisions
      of IMT 47 to be applied, it is essential to establish that the loss or damage
      was caused due to overturning and that the overturning should arise out
      of the operation as a tool of such vehicle. The NCDRC was persuaded
G     to adopt the view of the insurer that an excavator could be used either
      as a tool of trade or as a vehicle and, in the present case, since it was
      being used for the purpose of road construction, it was not being used as
      a vehicle. However, the line of reasoning of the NCDRC clearly missed
      the point that in the present case the accident was caused as a result of
      a portion of the road having given way. The accident was in the nature
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      SHARDA ASSOCIATES v. UNITED INDIA INSURANCE                                    555
    COMPANY LTD. [DR DHANANJAYA Y CHANDRACHUD, J.]

of a landslide, as a result of which the vehicle fell into a deep ditch              A
occasioning the death of the operator and the helper and a total loss of
the machine.
         11. The situation, in the present case, therefore, did not involve
loss or damage due to the overturning of the vehicle. Consequently, even
if, for the sake of argument, the submission of the insurer that the vehicle         B
was being used as a tool were to be accepted, it is impossible to subscribe
to the findings of fact of the NCDRC. The damage or loss was not as a
result of the overturning of the vehicle, but was plainly due to the collapsing
of the road, which resulted in the vehicle falling into a deep ditch in a
hilly terrain of the State of Uttarakhand.
                                                                                     C
       12. Counsel appearing on behalf of the appellant submitted that
NCDRC could not have reappreciated the facts in its revisional jurisdiction
of NCDRC under Section 21(b) of the Consumer Protection Act 1986.
In a judgment of a three judge Bench in Lourdes Society Snehanjali
Girls Hostel v H&R Johnson (India) Ltd,6 this Court held that the
NCDRC should not have interfered with the concurrent findings of fact                D
in the judgments impugned before it, particularly having regard to the
nature of jurisdiction conferred upon it by Section 21 of the Consumer
Protection Act 1986:
          “17. The National Commission has to exercise the jurisdiction
          vested in it only if the State Commission or the District Forum has        E
          either failed to exercise their jurisdiction or exercised when the
          same was not vested in them or exceeded their jurisdiction by
          acting illegally or with material irregularity. In the instant case, the
          National Commission has certainly exceeded its jurisdiction by
          setting aside the concurrent finding of fact recorded in the order         F
          passed by the State Commission which is based upon valid and
          cogent reasons. […]”
      The limited ambit of the revisional jurisdiction of the NCDRC has
been reiterated in subsequent decisions of this Court, most recently in
Sunil Kumar Maity v State Bank of India.7                                            G
      13. Having regard to the above findings, the judgment of the
NCDRC is unsustainable. We accordingly allow the appeal for the reasons
set out above and set aside the impugned judgment and order of the
6
    (2016) 8 SCC 286
7
    Civil Appeal 432 of 2022 (Arising out of SLP(C) 21711 of 2019                    H
556             SUPREME COURT REPORTS                         [2022] 7 S.C.R.


A     NCDRC dated 12 July 2019 in Revision Petition No 3306 of 2014. In
      consequence, the judgment of the SCDRC in First Appeal No 201 of
      2011 dated 1 May 2014, which directed the insurer to pay a sum of
      Rs 13.50 lakhs to the appellant, together with interest at the rate of
      seven per cent from the date of the filing of the consumer complaint,
      shall stand restored.
B
             14. Pending application, if any, stands disposed of.

      Bibhuti Bhushan Bose                                          Appeal allowed.
      (Assisted by: Neha Sharma, LCRA)

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