1. Insurance claim for flood damage rejected due to delayed intimation — Dispute over whether appointment of a surveyor constitutes waiver of policy notice conditions. (Para 1 , 2 )
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2018 Supreme(SC) 830
SUPREME COURT OF INDIA
Dipak Misra, CJI., A.M. Khanwilkar, D.Y. Chandrachud, JJ.
M/s. Sonell Clocks and Gifts Ltd. – Appellant(s)
Versus
The New India Assurance Co. Ltd. – Respondent(s)
CIVIL APPEAL NOS.1217-1218 OF 2017
Decided On : 21-08-2018
IMPORTANT POINTS
There must be a specific plea of waiver.
Appointment of a surveyor is not per se waiver of condition of immediate reporting by insured of the damage.
A party is not expected to state the provisions of law in its pleading.
The party breaching the conditions must face the consequences.
Headnote:(a) Words and phrases – Waiver – Intentional relinquishment of a right – There must be a specific plea of waiver, much less of abandonment of a right by the opposite party – Instantly repudiation of appellant’s claim – Difficulty in estimating damages and breach of clause 6 of the policy – Appointment of a surveyor not per se waiver – Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Regulations, 2000 – A party is not expected to state the provisions of law in its pleading. (Para 12, 17, 21, 24, 15, 26)
MANU/SC/1343/2010; (2011) 14 SCC 770 – Relied upon
First Appeal No.321 of 2005 – Cited with approval
(2016) 14 SCC 161 – Distinguished
(b) Insurance policy – Breach of – The party breaching the conditions must face the consequences. (Para 27)
(2017) 9 SCC 724 – Distinguished
Facts of the case:
The appellant filed a complaint before the National Consumer Disputes Redressal Commission, New Delhi asserting that it had taken an Insurance Policy from the respondent for a period of one year from 19th July, 2004 to 18th July, 2005, in respect of its building, plant and machinery for a sum assured of Rs.2,87,00,000/- on reinstatement value basis. Due to torrential rains and floods in the entire area, the machinery as well as raw material lying therein were damaged. This event occurred on 4th August, 2004. Intimation of the loss was given to the respondent after a gap of 3 months 25 days, on 30th November, 2004. The respondent conveyed rejection of the claim to the appellant on the ground that neither the intimation of the loss had been given to it immediately nor were the requisite particulars of the loss conveyed within stipulated period. Thus, there was breach of terms and conditions of Clause 6 of the general conditions of the policy.
The appellant approached the Commission for a declaration that the respondent was guilty of deficiency in service as well as unfair trade practices. Additionally, to direct the respondent to sanction the genuine claim of the appellant and reimburse the loss caused to it due to the floods to the tune of Rs.2,66,05,000/- with interest at the rate of 21% per annum from the date of incident till realization of the same. The appellant also prayed for compensation amount of Rs.5,00,000/- towards mental agony and cost and further an amount of Rs.1,00,000/- towards incidental expenses.
The complaint filed by the appellant came to be dismissed by the Commission.
The appellant filed a review petition before the Commission upon liberty granted by Supreme Court which has been dismissed.
Finding of the Court:
Conclusion of the Commission upheld.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Appellant contends appointment of surveyor implies waiver of notice delay; Respondent asserts no intentional relinquishment of rights and explicit repudiation based on policy terms. (Para 3 , 8 , 13 , 14 )
3. Waiver requires conscious abandonment of known rights — Appointment of surveyor is mandatory under 2000 Regulations and does not per se estop insurer from raising delay pleas. (Para 12 , 16 , 18 , 19 , 21 , 23 , 24 , 25 )
4. Appointment of a surveyor does not constitute waiver of notice conditions if the insurer explicitly repudiates the claim based on such breach in the repudiation letter. (Para 21 , 24 )
5. Appeals dismissed — Conclusion upheld that insurer did not waive the condition relating to delay in intimation. (Para 28 , 29 )
6. What constitutes a legal waiver of a right?
Waiver is an intentional and conscious relinquishment or abandonment of an existing legal right, advantage, benefit, claim, or privilege, performed by a person who is fully informed of their rights. (Para 12 )
7. Does the appointment of a surveyor by an insurer automatically waive the right to reject a claim for delayed intimation?
No. The appointment of a surveyor per se does not estop an insurer from raising a plea of violation of notice conditions; waiver must be gathered from the totality of the obtaining circumstances. (Para 21 )
8. How do the Insurance Surveyors and Loss Assessors Regulations, 2000 affect the interpretation of waiver?
Under these regulations, it is mandatory to appoint a surveyor upon receipt of intimation about the loss, meaning such appointment is a statutory obligation rather than an intentional waiver of policy conditions. (Para 23 , 24 )
9. Is the requirement to provide immediate notice of loss a technicality that can be overlooked for genuine claims?
No. The fulfillment of the stipulation to provide forthwith intimation of loss is a sine qua non for maintaining a valid claim under the policy, not a mere technical matter. (Para 20 , 27 )
JUDGMENT
A.M. Khanwilkar, J.
1. The appellant filed a complaint before the National Consumer Disputes Redressal Commission, New Delhi being Consumer Complaint No.20 of 2006, asserting that it had taken an Insurance Policy from the respondent (Insurance Company) for a period of one year from 19th July, 2004 to 18th July, 2005, in respect of its building, plant and machinery at plot No.70/3, B.K. Textile Compound, Dan Udyog Sangh Ltd., Piparia, Silvassa, Dadra Nagar, Haveli, for a sum assured of Rs.2,87,00,000/- (Two Crore Eighty Seven Lakh Only) on reinstatement value basis. Due to torrential rains and floods in the entire area, the water gushed into the factory premises causing damage to the machinery as well as raw material lying therein. This event occurred on 4th August, 2004. Intimation of the loss was given to the respondent after a gap of 3 months 25 days, on 30th November, 2004. Thereafter, the respondent appointed a surveyor to assess the loss caused due to the flooding of the factory premises. The surveyor after causing inspection submitted its report to the respondent inter alia stating that the claim was not payable on account of the failure of the complainant to comply with the mandate of Clause 6 of the general conditions of the policy. Acting upon the said report, the respondent vide letter dated 18th February, 2005 conveyed rejection of the claim to the appellant on the ground that neither the intimation of the loss had been given to it immediately nor were the requisite particulars of the loss conveyed within stipulated period. Thus, there was breach of terms and conditions of Clause 6 of the general conditions of the policy.
2. As a sequel, the appellant approached the Commission for a declaration that the respondent was guilty of deficiency in service as well as unfair trade practices. Additionally, to direct the respondent to sanction the genuine claim of the appellant and reimburse the loss caused to it due to the floods to the tune of Rs.2,66,05,000/-(Two Crore Sixty Six Lakh Five Thousand Only) with interest at the rate of 21% per annum from the date of incident till realization of the same. The appellant also prayed for compensation amount of Rs.5,00,000/- (Five Lakh Only) towards mental agony and cost and further an amount of Rs.1,00,000/- (One Lakh Only) towards incidental expenses.
3. The complaint was opposed by the respondent on the ground that there was gross violation of the terms and conditions of the policy as no intimation muchless immediate information about the loss was given to the Insurance Company nor was a claim lodged with the requisite particulars within the time stipulated in the policy.
4. This objection commended to the Commission as a result of which, the complaint filed by the appellant came to be dismissed by the judgment and order dated 10th December, 2015 on the following terms:
“5. It would thus be seen that as per the terms and conditions of the policy taken by it, there were three obligations on the complainant/insured. The first obligation was to give notice of the loss to the insurer, immediately on the said loss taking place. The second obligation on the complainant was to submit a claim for the loss or damage, giving all necessary particulars of the loss, within a period of 15 days or such other time as the insurer might allow. The third obligation on the insured was to intimate the insurer, within six months of the date of the loss, that it intended to replace or reinstate the property which had been destroyed or damaged.
6. It is not in dispute that the alleged loss despite having occurred on 04.08.2004 was reported to the Insurance Company only on 30.11.2004. Thus neither immediate intimation of the loss was given to the Insurance Company nor was a claim lodged with the requisite particulars within the time stipulated in the policy. The complainant Company, therefore, contravened clause 6 of the insurance policy taken by it on account of the above referred two defaults
