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HARYANA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, CHANDIGARH
Hon’ble Mr. Justice S.S. Sandhawalia, President;
Mrs. Basanti Devi & S. Kulwant Singh, Members
DEEPAK INDUSTRIES LIMITED—Complainant
versus
NATIONAL INSURANCE COMPANY LTD. &
ANR.—Opp. Parties
Complaint Case No. 50 of 1993—Decided on 9.5.1994
For the Complainant : Mr. K.K. Aggarwal, Authorised Representative.
For the Opp. Parties :Mr. D.P. Gupta & Mr. S.K. Gularia, Advocates.
The insurer cannot repudiate a claim under a transit insurance policy merely because the premium was not paid before the date of despatch of the goods, unless it can show that the damage occurred at any time prior to the despatch of the machinery or due to any mishandling or negligence on the part of the insured.
Headnote:
INSURANCE - TRANSIT INSURANCE - REPUDIATION OF CLAIM - INSURANCE ACT, 1938, SECTION 64-VB - INTERPRETATION - INSURANCE POLICY - CLAUSE 8.2 - INTERPRETATION - BURDEN OF PROOF - EXCLUSION CLAUSES - INTERPRETATION - REPUDIATION OF CLAIM - JUSTIFICATION.
Fact of the Case:
The complainant, New Allenberry Works, insured a consignment of machinery during transportation from Ernakulam to Faridabad with the opposite party, National Insurance Company Ltd. Upon receipt of the consignment, the complainant discovered damage to the machinery and filed a claim with the insurer. The insurer repudiated the claim on the ground that it had not been established that the damage occurred during transit.
Finding of the Court:
The court held that the insurer was not justified in repudiating the claim. The court interpreted Section 64-VB of the Insurance Act, 1938, and Clause 8.2 of the insurance policy and held that the insurer could not assume risk from a date prior to the payment of premium but it could not be interpreted to mean that the insurance was invalid or illegal. The court also held that the burden of proof was on the insurer to show that the damage occurred at any time prior to the despatch of the machinery or due to any mishandling or negligence on the part of the insured at the time of opening the packages at Faridabad.
Issues: 1. Whether the insurer was justified in repudiating the claim? 2. Interpretation of Section 64-VB of the Insurance Act, 1938. 3. Interpretation of Clause 8.2 of the insurance policy. 4. Burden of proof in insurance claims.
Ratio Decidendi: 1. The court held that the insurer was not justified in repudiating the claim because: - The insurer could not assume risk from a date prior to the payment of premium, but it did not mean that the insurance was invalid or illegal. - The insurer did not provide any evidence to show that the damage occurred at any time prior to the despatch of the machinery or due to any mishandling or negligence on the part of the insured. - The burden of proof was on the insurer to show that the damage was of such a nature that it would not be covered under the terms of the policy. 2. The court interpreted Section 64-VB of the Insurance Act, 1938, and held that it did not entitle the insurer to repudiate the claim altogether. 3. The court interpreted Clause 8.2 of the insurance policy and held that it allowed the insurer to assume risk from an earlier date on the basis of the promise of payment of premium in due course. 4. The court held that the burden of proof was on the insurer to show that the damage was not covered under the terms of the policy.
Final Decision: The court allowed the complaint and directed the insurer to pay the complainant the assessed amount of Rs. 4,55,671/- along with interest at 18% from the date the loss was reported to the insurer till the date of payment within two months.
S. Kulwant Singh, Member—This complaint has been filed against opposite party No. 1 National Insurance Company Ltd.. and opposite party No. 2 Associated Road Carriers Ltd., New Delhi in respect of damage to the consignment which was insured with opposite party No. 1 during transportation by opposite party No. 2 from Ernakulam to the New Allenberry Works, Faridabad on the ground of deficiency in service on account of rejection of the claim filed by the complainant for reimbursement of the damage caused to the consignment which was covered by transit insurance with opposite party No. 1.
2. The facts of the case are not in dispute. Briefly stated the New Allenberry Works, Faridabad placed an order for the supply of an HMT CNC Turning Centre STC 25 machinery which was despatched from Ernakulam on 12th of February, 1990. On receipt of the despatch advice the New Allenberry Works approached the Faridabad Office of the Insurance Company on 14.2.1990 for issue of a policy for covering any loss or damage during transit. The requisite premium was paid and the said policy was issued on 14.2.1990. However the risk coverage has been shown to be from 12.2.1990 during transit from Ernakulam to Faridabad. It is alleged by the complainant that on receipt of the consignment at Faridabad although the packing was out wardlyur damaged, on opening the package it was discovered that the machinery had been damaged during transit. Therefore, immediately information was sent to the Insurance Company as well as to M/s. H.M.T. Ltd. who both deputed their personnel to check the damage. The insurer also appointed a Surveyor to make an assessment of the damage and the said damage was assessed at Rs. 4,55,671/-. Accordingly a claim was filed with the Company but the said insurer repudiated the claim on the ground that it had not been established that any damage was caused to the machinery during transit. The complainant has stated that the claim has been unjusttifiably rejected by the insurer and hence they are liable to pay the assessed amount alongwith interest and compensation for harassment and mental agony to the complainant.
3. Notice was issued to the opposite parties, who denied their liability for any damage. The main stand taken by the opposite party No. 2 was that the consignment was delivered to the complainant in sound condition and utmost care and safety had been exercised during the journey and there was no negligence or carelessness on the part of the carrier in this case. It is significant to observe that this point was not contested by the complainant and no evidence was led to show that any negligence of the carrier had resulted in damage to the machinery. The complainant, therefore, pursued its claim against the insurer only.
4. In support of the complaint the complainant examined Shri Kuldev Raj Kakkar, Asstt. Manager of the complainant and Shri Phool Chand Bhotra, power of attorney holder of the complainant, who in their evidence stated that the machine when inspected at the Ernakulam Workshop of H.M.T. was in proper working condition and had got damaged only during transit, since on opening the boxes at Faridabad extensive damage was found to the machine. Copies of various documents including the insurance cover were also placed on record.
5. The opposite party had examined Shri Dinesh Kumar, Asstt. Administrative Officer, Faridabad, who deposed that on receipt of the claim a Surveyor was appointed and the matter was referred to the Head Office, in whose jurisdiction only the claim could be decided. However, the Head Office rejected the claim and the party was informed accordingly. Since it was considered necessary to examine evidence of the supplier M/s. H.M.T. Ltd. also, Shri K.D. Sharma and Shri G.A. Pillai were also examined at length. Additional evidence on behalf of opposite party No.1 was placed in the shape of affidavit of Shri M.C. Dev, Administrative Officer, Divisional Office, New Delhi, who also stated that since the party
