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NATIONAL CONSUMER DISPUTES
REDRESSAL COMMISSION, NEW DELHI
Hon’ble Mr. Justice V. Balakrishna Eradi, President;
Mr. Justice S.S. Chadha, Dr. (Mrs.) R. Thamarajakshi & Mr. S.P. Bagla, Members
THE SR. DIVISIONAL MANAGER,
ORIENTAL INSURANCE CO. LTD. & ANR.—Appellants
versus
GUJARAT LYKA ORGANICS LTD. & ANR.—Respondents
First Appeal Nos. 697 & 698 of 1993—Decided on 18.12.1996
Counsel for the Parties :
For the Appellants :Mr. A.K. Raina, Advocate.
For the Respondents:Mr. S.K. Sharma, Advocate.
Delay in settlement of insurance claims amounts to deficiency in service and the insurance company is liable to pay the claim amount with interest and costs.
Headnote:
CONSUMER PROTECTION ACT - INSURANCE POLICY - DELAY IN SETTLEMENT OF CLAIM - DEFICIENCY IN SERVICE - QUANTUM OF LOSS - BLENDING OF MATERIAL - INSURANCE COMPANY LIABLE TO PAY CLAIM WITH INTEREST AND COSTS.
Fact of the Case:
The complainant, a manufacturer of life-saving antibiotics, obtained an open marine policy and an all-risk insurance policy from the opposite party, an insurance company. Two consignments of raw materials and finished products were damaged during transit due to pilferage and adulteration. The complainant lodged claims with the insurance company, but the company delayed the settlement of the claims for several years. The complainant filed complaints with the State Commission alleging deficiency in service.
Finding of the Court:
The State Commission found that the insurance company was negligent in not settling the complainant's insurance claim in terms of the agreement of policy. The Commission also found that the complainant did suffer the loss of Rs. 7,18,528/- in respect of the consignment of 26 drums and Rs. 4,83,340/- in respect of 11 drums.
Issues: 1. Whether there was deficiency in service on the part of the insurance company? 2. Whether the complainant suffered loss and is entitled for compensation?
Ratio Decidendi: 1. Any inordinate delay in settling insurance claims amounts to deficiency in service. 2. The insurance company was fully aware of the loss caused to the complainant due to adulteration of the raw materials and /or finished Ampicillin Trihydrate and since the risk of pilferage was covered under the insurance policy, there was no difficulty whatsoever for the insurance company to settle the complainant’s insurance claim on the receipt of the Surveyor’s report. 3. The Surveyor appointed by the insurance company had submitted its report assessing the loss suffered by the complainant. 4. The complainant had furnished all the necessary documents to the insurance company. 5. The insurance company failed to settle the claim till the filing of the complaint. 6. The complainant was not able to blend the contaminated material due to its toxicity.
Final Decision: The appeals filed by the insurance company were dismissed. The findings of the State Commission and the quantification of loss were upheld. The insurance company was directed to pay the claim amount with interest and costs.
Mr. Justice S.S. Chadha, Member—First Appeal No. 697/93 is directed against the Order dated 3rd November, 1993 passed by the Maharashtra State Commission at Bombay in Complaint Case No. 250/93 and First Appeal No. 698/93 is directed against the same Order dated 3rd November, 1993 of the Maharashtra State Commission at Bombay in Complaint Case No. 251/93. The State Commission felt that common question of facts and law were involved in the two complaints and hence the two complaints were disposed of by one common order. In Complaint Case No. 250/93, the opposite party viz. Oriental Insurance Company Ltd. was directed to settle the insurance claim and to pay to the complainant Rs. 7,18,528/- together with interest at the rate of 18% per annum calculated from one month after the receipt of the survey report till realisation. In Complaint Case No. 251 /93, the opposite party was directed to settle the insurance claim and to pay to the complainant Rs. 4,83,340/- together with interest at the rate of 18% per annum calculated from one month after the receipt of survey report till realisation. The opposite party was also burdened with costs of Rs. 500/- in each complaint.
2. M/s. Gujarat Lyka Organics Ltd. is the complainant in both the complaints and which is engaged in the manufacture and sale of life saving antibiotics. In Complaint Case No. 250/ 93 the complainant alleged that it had purchased from M/s. Hindustan Antibiotics Ltd. Pimpri a raw material of Penicillin ‘G’ for being used as a critical raw material for production of life saving drugs against the Complainant’s Order No. GLOI/RM/218 dated 22.4.87. M/s. Hindustan Antibiotics Ltd. delivered the consignment from their Bombay godown in 26 fibre drums and its transport was arranged by the complainant to their Ankleshwar factory through M/s. Vijay Transport. The consignment was despatched under invoice-cum-delivery Challan No. AA5/ 0220 dated 16.10.87. The consignment was despatched from Pune on 16.10.87 and later transported from Andheri to Ankleshwar by Truck No. MRL 3260 under Lorry Receipt No.AA14965 dated 21.10.87. The complainant had obtained an open Marine Policy of Rs. 2 crores from Oriental Insurance Company Ltd. The despatch of the aforesaid consignment was reported to the Insurance Company in terms of their Open Marine Policy. The consignment of 26 fibre drums were valued at Rs. 7,18,528/- as per Invoice No. AA5/0720 dated 16.10.87.
3. The facts in Complaint No. 251/93 are these. The complainant M/s. Gujarat Lyka Organics Ltd supplied 11 drums of Ampicillin, Trihydrate (ATH) total quantity being 250 kgs. to M/s. Pace Labs Pvt. Ltd., Bombay. The said consignment was covered under Invoice No. 018/ATH/87/88 dated 1.12.87 and was sent through M/s Ajay Transport Company vide Lorry Receipt No. 170057 dated 1.12.87 fromAnkleshwar to Bombay. This consignment was also reported for insurance under all risk insurance policy which had been obtained by the complainant from the opposite party being Policy No. 12150/000/00000/20/87/00687 with expiry date as 21.5.88. The consignment was received by the consignee on 4.12.87. The said consignment was rejected by M/s. Pace Laboratories as being not in conformity with the specifications and a rejection report was prepared on 10.12.87. The consignment was returned back to the complainant vide Lorry Receipt No. 18874 dated 12.12.87 and was received at Ankleshwar by the complainant on 14.12.87.
4. The complainant alleged in both the complaints that their goods suffered adulteration during the transit as a result of which the complainant suffered total loss of the two consignments. The adulteration of their goods during transit was reported by the complainant to the Gujarat Police. The Gujarat Police at Ankleshwar Police Station registered the offences against the Driver and Cleaner of the Transport Company and both the accused were arrested. The criminal prosecution is pending for decision before the appropriate criminal Court. The compl
