UNITED INDIA INSURANCE COMPANY LTD.versusKANTIKA COLOUR LAB & ORS.

                       [2010] 3 S.C.R. 204


A         UNITED INDIA INSURANCE COMPANY LTD.
                                 v.
                 KANTIKA COLOUR LAB & ORS.
               (Civil Appeal No. 6337 of 2001 etc.)
                           MAY 6, 2010
B
               [D.K. JAIN AND T.S. THAKUR, JJ.]

       Insurance - Contract of insurance - For transit of
  imported goods (two machines) - Surveyors' Reports prove
C that on the transit one machine got extensively damaged
  while the other was in working condition - Authorized
  representative of the manufacturer-company stating that the
  damaged machine could not be repaired in India - Insured
  claiming damage of the amount i.e. the actual cost of the
o machines - National Commission held that the Insurance
  company and the carrier were jointly and severally liable -
  On appeal, held: Contracts of insurance are generally in the
  nature of contracts of indemnity - Except the cases of life
  insurance, personal accident, sickness and contingency
E insurance, all other contracts of insurance entitle the insured
  only to the actual loss suffered, not exceeding the amount
  stipulated in the contract - The happening of event against
  which insurance cover taken by itself does not entitle the
  insured to claim - On facts insured not entitled to damage in
F respect of the machine which was not damaged - The
  machine which was damaged requires complete replacement
  - The insured is entitled to the cost of machinf: and custom
  duty component paid on the said machine.

       Respondent No. 1 imported a Printer Process and a
G Film Processor from Japan. The machines, after arrival
  in India, were entrusted to the carrier-respondent for
  onward road transportation. A pre-dispatch survey
  confirmed that the machines were in sound condition.
  Respondent No. 1 had obtained a transit insurance policy
H                          204
        UNITED INDIA INSURANCE COMPANY LTD. v.            205
              KANTIKA COLOUR LAB & ORS.·
    from the appellant-Insurance Company.                        A
         Respondent No. 1 claimed a sum of Rs. 55 lakhs
    alleging that the machines got damaged in the transit. In
    preliminary survey, it was reported that only printing
    machine had suffered damage and there was no                 8
    apparent damage to the Film Processor. The second
    survey report also stated that printing machine had
    suffered damages and not the Film Processor. However,
    it opined that the damage was repairable and assessed
    the repair cost at Rs. 5,76,730/-. Appellant-Insurance       C
    Company on the basis of surveyor's report, offered the
    amount assessed towards repairs which was refused by
    respondent No. 1.

         Respondent No. 1 lodged a complaint before
    National Consumer Disputes Redressal Commission,             D
    against the appellant claiming damage of Rs. 55 lakhs i.e.
    the cost equivalent to the machines. The Commission
    allowed the claim holding that the appellant-Insurance
    company and the respondent-carrier were jointly or
    severally liable to pay Rs. 53 lakhs with interest @ 10%     E
    p.a.

          Appellant filed the appeal challenging the order.
      Respondent No. 1 also filed the appeal challenging the
      order to the extent of the Commission awarding 10%         F
      interest, instead of the rate at which the insured
      borrowed the money from the Bank for purchase of the
    . machines.
1
)                                                           '
        Partly allowing the appeal of the Insurance Company,
    and dismissing the appeal of the insured, the Court      G
         HELD: 1.1. Two aspects stand out from the evidence
    of Senior Sales and Service Engineer of the manufacturer
    of the machines. Firstly, it is clear that the damage has
    been caused only to the printer model and not to the film    H
             /
   206      SUPREME COURT REPORTS               [2010] 6 S.C.R


A processor which was found to be in working coridition
  and about which there was only an apprehension and no
  more that its working may run into difficulty in future.
  There is no real basis for such an apprehension. In any
  case in the absence of proved damage affecting the
B performance of the machine, it is difficult to assume that
  the film processor was also damaged either wholly or in
  part so as to call any repair or replacement of the said
  machine. [Para 18] [214-E-G]

       1.2. Contracts of Insurance are generally in the
C nature of contracts of indemnity. Except in the case of
  contracts of Life Insurance, personal accident and
  sickness or contracts of contingency insurance, all other
  contracts of insurance entitle the assured for the
  reimbursement of actual loss that is proved to have been
D suffered by him. The happening of the event against
  which insurance cover has been taken does not by itself
  entitle the assured to claim the amount stipulated in the
  policy. It is only upon proof of the actual loss, that the
  assured can claim reimbursement of the loss to the
E extent it is established, not exceeding the amount
  stipulated in the contract of Insurance which signifies the
  outer limit of the insurance company's liability. The
  amount mentioned in the policy does not signify that the
  insurance company guarantees payment of the said
F amount regardless of the actual loss suffered by the
  insured. [Para 19] [214-H; 215-A-C]

         Ha/sbury's Laws of England - 4th Edition - referred to.
      1.3. The other aspect that is established is that printer
G model has been extensively damaged and the
  manufacturing company has no arrangement in India for
  carrying out the repairs to the damaged machine. The
  Insurance Company's version that a company in India
  undertakes the repairs does not appear to be acceptable
H specially when the manufacturing company's authorized
       " INDIA INSURANCE COMPANY LTD. v.
   UNITED                                               207
         KANTIKA COLOUR LAB & ORS.
representatives has in no uncertain terms denied the           A
competence of that company to undertake any such
repairs. Such being the position, the National
Commission was justified in holding that the printer
processor being extensively damaged requires complete
replacement. [Para 20] [215-G-H; 216-A·B]                      B
     1.4. The Sale and Service Engineer of the
manufacturer·has referred to the letter addressed by the
manufacturing company to the insured and stated that
the price of a brand new printer processor model QSS-
1923, works out to Singapore $62100. There is no reason        C
why the said amount can not be awarded to the insured
by way of compensation for the damage caused to the
machine. Besides the cost of the machines, the insured
would also be entitled to the customs duty component
paid on the import of the said machine. The total amount       D
payable to the insured by way of compensation for the
damage caused to the machine in question would work
out to rupees equivalent of Singapore $ 62100 at the
exchange rate prevalent as on the date of this judgment
plus a custom duty component of Rs.12, 73,513.36               E
rounded off to Rs.12,74,000/-. The sum total of the two
figures would be payable with interest@ 10% p.a. for the
period mentioned in the National Commission's order.
[Paras 21 and 22) [216-C-G]
    2. Keeping in view the bank rate of interest prevalent     F
during the relevant period there is no reason to award a
higher rate of interest as claimed by the insured. [Para 22]
[216-H; 217-A]               ,
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.            G
6337 of 2001.
    From the Judgment & Order dated 31.05.2001 of the
National Consumer Disputes Redressal Commission, New
Delhi in Original Petition No. 153 of 1999.
                                                               H
    208      SUPREME COURT REPORTS              [2010] 6 S.C.R.


A                               WITH

    C.A. No. 6975 of 2001

       R.P. Bhatt, Vishnu Mehra, B.K. Satija, Kailash Pandey,
  K.V. Sreekumar, Dr. Vipin Gupta (NP), Arun K. Sinha (NP), for
B the appearing parties.

          The Judgment of the Court was delivered by

       T.S. THAKUR, J. 1. These appeals under Section 23 of
C the Consumer Protection Act, 1986 arise out of an order dated
  31st May, 2001 passed by National Consumer Disputes
  Redressal Commission, New Delhi, whereby Original Petition
  No.153of1999 filed by respondent no.1 has been allo~.1ed and
  the appellant-company held liable to pay to the said respondent
D a sum of Rs.53 lakhs with interest @ 10% p.a. jointly and
  severally with the Carrier M/s Super Road Lines towards
  compensation for the damage which machines entrusted to the
  later suffered in the course of transportation from Mumbai to
  Hardwar.

E      2. Respondent No.1-Kantika Colour Lab imported one set
  of Noritsu QSS-1923 printer process and QSF-V50 film
  processor from Japan. The machines arrived at Mumbai on 1st
  November, 1998 and were entrusted to Mis Super Road Lines
  for onward transportation to Hardwar under L/R No.005495
F dated 20th November, 1998. A pre-dispatch survey conducted
  by the Surveyor confirmed that the machines were in sound
  condition at the time of dispatch from Mumbai.

       3. To secure the machines against any possible damage
  respondent No.1-the owner of the machines obtained from the
G appellant Insurance Company a transit insurance policy for a
  sum of Rs.53 lakhs. The policy covered loss against all risks
  including damage/breakage, theft pilferage, road risk and non-
  delivery etc. The insurance was extended to cover SRCC as
  per limits and conditions of the Marine Policy.
H
   UNITED INDIA INSURANCE COMPANY LTD. v.                   209
  KANTIKA COLOUR LAB & ORS. [T.S. THAKUR, J.]
      4. The case of the owner-respondent no.1 is that the         A
machines suffered damage on account of mishandling in the
course of transportation from Mumbai to Hardwar. A damage
certificate issued by respondent no.7 acknowledged that the
damage to the machines had occurred during transportation.
Respondent no.1 accordingly lodged a claim for a sum of            B
Rs.55 lakhs against the appellant company and the Carrier-
respondent no. 7 in this appeal. A preliminary survey of the
damage to the machines was ordered by the appellant
company and conducted by Shri Ajay Kumar Arora, who
submitted a report stating that while Printing Machine QSS         c
1923 had suffered damage, there was no apparent damage
to the Film Processor QSF-V50 which machine outwardly
appeared to be in sound condition.

     5. The appellant-company then appointed Shri Vined
Sharma licensed Surveyor to survey the machine and assess          D
the loss as required under Section 64UM of the Insurance Act
1938. Shri Sharma submitted a report dated 17th April, 1999
after the machines were inspected by Shri Amit Bose, the
Technical Director and Engineer of M/s Satyam Equipment
Services Ltd. In his report Shri Sharma opined tha,t the damage/   E
loss to the machine was repairable and assessed the same
at Rs.5,76,730/-. The report categorically stated that there was
no damage to the Film processor QSF-V50 which was found
to be in working condition. Accepting the said report, the
appellant company offered an amount of Rs.5,76,730/- to            F
respondent no.1 towards compensation which the said
respondent refused to accept. Instead respondent no.1 filed
complaint No.153 of 1999 before the National Consumer
Disputes Redressal Commission, New Delhi, claming an
amount equivalent to the cost of the machines which according      G
to the respondent were a total loss on account of the damage
suffered by them.

    6. The appellant-company contested the claim and took
several objections to the maintainability of the complaint         H
    210      SUPREME COURT REPORTS                [2010] 6 S.C.R.


A including the objection that the complaint raised complicated
  questions of law and fact which could not be tried under
  Consumer Protection Act. It was also alleged that damage
  suffered by the machine was repairable and that the loss was
  limited to Rs.5,76,730/- which the company had offered to
B make good.

        7. In support of its complaint the respondent-company
  examined Shri Pradeep Kumar Sharma, one of its partners.
  The statement of Shri Taposh Dev, Senior Sales and Service
C Engineer was also recorded, on behalf of the manufacturing
  company who too was arrayed as a party respondent.
  Depositions of Shri Vinod Sharma, Surveyor and Shri Amit
  Bose, Technical Director of M/s Satyam Equipment Services
  Pvt. Ltd. examined on behalf of the appellant-company, were
  also recorded.
D
        8. By its order dated 1st May, 2001 the National
  Commission allowed the claim made before it and held the
  appellant-company as also the Carrier to be jointly and severally
  liable to pay a sum of Rs.53 lakhs together with interest @ 10%
E p.a. for the period commencing two months after the second
  Surveyor's report Wc'5 submitted till the actual payment of the
  claim is made. The Commission directed surrender of the
  salvage to the Insurance Company against payment of its claim
  within eight weeks. The complainant was also held entitled to
F costs of Rs.10,000/.

       9. The present appeals call in question the correctness of
  the above order. While Civil Appeal No.6337 of 2001 filed by
  the Insurance Company assails the order passed by the National
  Commission in its entirety, Civil Appeal No.6975 of 2001 filed
G by the owner challenges the said order to the extent it awards
  interest@ 10% p.a. only instead of the rate at which the insured
  claims to have borrowed money from the bank for the purchase
  of the machines in question.

H         10. Appearing for the appellant-Insurance Company Mr.
   UNITED INDIA INSURANCE COMPANY LTD. v.                        211
  KANTIKA COLOUR LAB & ORS. [T.S. THAKUR, J.]
Vishnu Mehra, learned counsel, strenuously argued that the              A
National Commission had committed a palpable error in
awarding Rs.53 lakhs towards compe:isation for the damage
caused to the machine insured with the appellant for its
transportation from Mumbai to Hardwar. He contended that the
order passed by the National Commission proceeded on an                 B
erroneous assumption that the damage suffered by the machine
had rendered the same unusable hence a total loss. The
material available on record argued the learned counsel clearly
established that it was only the printer process QSS-1923 that
was damaged and not the film processor QSF-V50. The latter              C
was in fact found to be in perfect condition and in use at the
time of the survey. It was also argued by Mr. Mehra that the
damage caused to the printer model QSS-1923 was repairable
and that the report of the Surveyor had assessed the cost of
the repair at Rs.5,76,730/- which amount alone was payable
to the insured. It was alternatively submitted that even if this        D
Court were to hold that the entire printer model QSS-1923 was
rendered useless on account of the damage caused to it, the
maximum that could be claimed by the insured was the
replacement cost of the said machine and no more.
                                                                        E
     11. On behalf of respondent-claimant it was contended by
Mr. R.P. Bhatt, learned senior counsel, that while there was no
apparent damage to the film processor QSF-V50, the fact that
the printer model QSS-1923 had suffered damage raised a
reasonable apprehension in the mind of the insured that the             F
impact which the machine had suffered in the course of
transportation may have damaged even the film processor
QSF-V50. It was submitted that merely because the film
processor QSF-V50 was found to be in working condition did
not rule out the possibility of the machine giving trouble in future.   G
     12. As regards the damage to printer model QSS-1923 it
was argued by Mr. Bhatt that the manufacturers had clearly ruled
out any possibility of repairs to the machine in India. It was also
submitted that the expenses on repairs which could be carried
out only in Japan would be far more than the price of a brand           H
    212      SUPREME COURT REPORTS                [2010] 6 S.C.R.


A   new machine making it unwise to insist on repairs. The
    manufacturer had also ruled out the possibility of any such
    repairs being satisfactorily carried out either by Mis Satyam
    Equipment Services Ltd. or by any other agency in India.

       13. The Surveyor report submitted by Shri Vinod Sharma
B certifies damage to the printer model QSS-1923 which
  comprises two distinct sections, namely, (1.A) Paper
  Processor and Dryer Section and (1.B) Printer Section. The
  report records the damage in the following words:

C         "1. PRINTER MODEL QSS-1923

          1.A. PAPER PROCESSOR AND DRYER SECTION

          Chemical tank broken, Roller transportation gone out of
          alignment, replansher system were broken, processor
D         came out of the base completely, all processor racks
          damaged. As such complete Tank Unit & Rack Unit
          requires replacement in addition to Resetting of complete
          Processor.

E         1.B. PRINTER SECTION

          Many parts were found displaced from original setting and
          screws also came out. It requires Resetting of Machine
          along with replacement of Monitor Unit which was found
          damaged. Since the machine i.e. paper processor &
F         printer requires resetting, there will be requirement of
          imported wires & some gears & metal spares."

       14. In so far as film processor QSF-V50, is concerned the
  report specifically states that there is no apparent damage to
G the said machine, no matter the insured apprehends that the
  same may also have been damaged from inside which fact can
  be verified only when the machine is tested. The report further
  states that at the time of the second visit to Hardwar along with
  the engineer of M/s Satyam Equipment Services Ltd. the film
H processor QSF-VSO was found to have been already tested by
   UNITED INDIA INSURANCE COMPANY LTD. v.                      213
  KANTIKA COLOUR LAB & ORS. [T.S. THAKUR, J.]
the supplier's engineer and the tank of the machine was found          A
filled with chemicals. Around 40-50 number of empty Film rolls
were found lying on the spot. The report certifies that the
machine was in working condition. The following passage from
the report is in this regard relevant:
                                                                       B
     "On our second visit on 24.02.99 alongwith Engineers of
     M/s Satyam Equipment Services Ltd. we found that Film
     Processor had already been testified by the Suppliers
     Engineers. The tanks of the machine was found filled with
     Chemicals and around 40-50 No. of empty Film Rolls were           C
     lying there, as the same were informed to be developed
     on the machine. The Insured informed that though this
     machine is working at present but chances are there that
     later on its PC Board may have to be changed. The Insured
     cou'ld not explain the reasons for replacement of PCB, at
     a later stage. Once it is found working in good condition."       D

     15. In his deposition before the National Commission Shri
Vinod Sharma, Surveyor and author of the report reiterated that
the film processor QSF-VSO was not found damaged upon
inspection at site. He refuted the suggestion made to him that         E
the machines were totally damaged.
     16. We may at this stage refer to the deposition of Shri
Taposh Dev, Senior Sales and Service Engineer of respondent
no.2 the manufacturer of the machines in question. In the
                                                                       F
affidavit filed by the said witness it is, inter alia, stated that a
thorough visual inspection of the machines in question was
made by the engineers of respondent no.2 company and a
report based on the said inspection submitted on 21st
December, 1998. The witness on the basis of the said
inspection report stated that Noritsu QSS-1923 printer process         G
was subjected to a strong impact from the sides during transit
from Mumbai to Hardwar resulting in severe damage,
especially to the Paper Processor & Dryer Section thereof. The
mechanical alignment and the optical accessories also had
been badly affected. The witness also stated that it was not           H
    214     SUPREME COURT REPORTS                 [2010] 6 S.C.R.


A economical to undertake such repair work on account of the
  high cost involved in the same especially when the repair may
  not exclude the possibility of any future complications arising
  in the working of the machines. The witness also referred to
  manufacturer's letter dated 7th January, 1999 informing the
B insured about the price of Noritsu QSS-1923 Printer Process
  and QSF-V50 Film Processor after deducting the value of the
  optional accessories. According to the witness the price of
  Printer Process QSS-1923 works out to Singapore$ 62,100.
  The witness asserted that M/s Satyam Equipment Services Ltd.
c were appointed as authorized sales representatives during
  early 1996 but since their services were not found to be
  satisfactory the agreement between the parties was terminated.
  He has further stated that respondent no.2-company had not
  trained any en( ':ieer to repair the Printer Process QSS-1923.
D        17. Not much has been extracted from the witness in cross-
    examination who has stuck to his version that the machine is
    not at all repairable, and that the cost of getting the machine
    repaired in Japan would be much more than the cost of a new
    machine.
E
        18. Two aspects stand out from the above evidence.
  Firstly, it is clear that the damage has been caused only to the
  printer model QSS-1923 and not to the film processor QSF-
  V50 which was found to be in working condition and about
F which there was only an apprehe11sion and no more that its
  working may run into difficulty in future. We, however, see no
  real basis for such an apprehension. In any case in the absence
  of proved damage affecting the performance of the· machine,
  it is difficult to assume that the film processor was also
G damaged either wholly or in part so as to call any repair or
  replacement of the said machine.

       19. Contracts of Insurance are generally in the nature of
  cqntracts of indemnity. Except in the case of contracts of Life
  ln$urance, personal accident and sickness or contracts of
H contingency insurance, all other contracts of insurance entitle
   UNITED INDIA INSURANCE COMPANY LTD. v.                      215
  KANTIKA COLOUR LAB & ORS. [T.S. THAKUR, J.]
the assured for the reimbursement of actual loss that is proved        A
to have been suffered by him. The happening of the event
against which insurance cover has been taken does not by itself
entitle the assured to claim the amount stipulated in the policy.
It is only upon proof of the actual loss, that the assured can claim
reimbursement of the loss to the extent it is established, not         B
exceeding the amount stipulate~ in the contract of Insurance
which signifies the outer limLt of the insurance company's
liability. The amount mentioned in the policy does not signify
that the insurance companY, ·guarantees payment of the said
amount regardless of the ~ctual loss suffered by the insured.          c
The law on the subject in this country is no different from that
prevalent in England; which has been summed up in Halsbury's
Laws of England - 4th Edition in the following words:

             ''The happening of the event does not of itself entitle
     the assured to payment of the sum stipulated in the policy;       D
     the event must, in fact, result in a pecuniary loss to the
     assured, who then becomes entitled to be indemnified
     subject to the limitations of his contract. He cannot recover
     more than the sum insured for that sum is all that he has
     stipulated for by his premiums and it fixes the maximum           E
     liability of the insurers. Even with in that limit, however, he
     cannot recover more than what.he establishes to be the
     actual amount of his loss. The contract being one of
     indemnity only, tie can recover the actual amount of his loss
     and no_more, whatever may have been his estimate of               F
     what his loss would be likely to be, and whatever the
     premiums he may have paid, calculated on the basis of
     that estimate."

     20. The other aspect that is established is that printer          G
model QSS-1923 has been extensively damaged and the
manufacturing company has no arrangement in this countryfor
carrying out the repairs to the damaged machine. The lnsuranee
Company's version that Mis Satyam Equipment Services Ltd.
undertakes the repairs does not appear to us to be acceptable
                                                                       H
    216     SUPREME COURT REPORTS                 [2010] 6 S.C.R.


A specially when the manufacturing company's authorized
  representatives has in no uncertain terms denied the
  competence of the M/s Satyam Equipment Services Ltd. to
  undertake any such repairs. Such being the position, the
  National Commission was, in our opinion, justified in holding
B that the printer processor model QSS-1923 being extensively
  damaged requires complete replacement.

       21. The question, however, is as to what is the cost of such
  replacement. Shri Taposh Dev, has referred to letter dated 7th
  January 1999 addressed by the manufacturing company to the
C insured M/s Kantiak Colour Lab and stated that the price of a
  brand new printer processor model QSS-1923, works out to
  Singapore $62100. We see no reason why the said amount
  can not be awarded to the insured by way of compensation for
  the damage caused to the machine. Besides the cost of the
D machines the insured would also be entitled to the customs duty
  component paid on the import of the said machine. From the
  Surveyor's report submitted by Mr. P.M. Patel and Co. it is
  evident that the invoice value of the goods comprising the
  printer processor and the film processor was Singapore $
E 104000 with an assessable value of Rs.27,36,292/-. A sum of
  Rs.21,32,776/- was on that value paid towards customs duty
  on the import of the said equipment. The duty payable on a
  machine valuing Singapore$ 62100 would, therefore, come to
  Rs.21,32,776X62100/104000=Rs.12,73,513.36.
F
       22. To sum up the total amount payable to the ,,. " . d by
  way of compensation for the damage caused to the machine
  in question would work out to rupees equivalent of Singapore
  $ 62100 at the exchange rate prevalent as on the date of this
  judgment plus a custom duty component of Rs.12, 73,513.36
G rounded off to Rs.12,74,000/-. The sum total of the two figures
  would be payable with interest @ 10% p.a. for the period
  mentioned in the National Commission's order. We make it
  clear that keeping in view the bank rate of interest prevalent
  during the relevant period we see no reason to award a higher
H
   UNJiED INDIA INSURANCE COMPANY LTD. v.                    217
  KANTIKA COLOUR LAB & ORS. [T.S. THAKUR, J.]
 rate of interest as claimed by the insured appellant in Civil       A
 Appeal No.6975 of 2001.

       23. In the result Civil Appeal No.6337 of 2001 succeeds
 i.n part and to the extent that the appellant-company and the
 carrier M/s Super Road Lines shall be liable jointly and            8
 severally to pay the rupee equivalent of Singapore$ 62100 at
 the exchange rate prevalent on the date of this order besides
 a sum of Rs.12, 74,0001- towards customs duty paid by the
 insured on the import of the damaged machine. The amount
 so determined shall earn interest @ 10% p.a. as observed            C
 above.

      24. The amount awarded in favour of the insured-
 respondent no.1 in Civil .•\ppeal No.6337 of 2001 shall be paid
 upon surrender to the appellant Insurance Company of the
 printer process model QSS-1923 comprising the damaged               D
 Printer Process machine (1.A and 1.B) within two months from
 today. Civil Appeal No.6975 of 2001 filed by the insured is,
 however, dismissed.

       25. We make it clear that if the insured has already          E
 ·received directly or through its bank any part of the amount
  awarded by the National Commission it shall refund the excess,
  if any received by it or paid on its behalf to the bank within a
  period of two months failing which the excess amount so
  received but not refunded shall also earn interest in favour of
. the insurance company @ 10% p.a. from the date the period          F
  of two months hereby granted expires ..

     26. Parties are left to bear their own costs.

 K.K.T.                                   Appeals disposed of.       G