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ANDHRA PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, HYDERABAD
Honble Mr. Justice A. Venkatarami Reddy, President;
Mrs. J. Anandalakshmi & Mr. K. Ranga Rao, Members
BRANCH MANAGER, NATIONAL INSURANCE COMPANY LIMITED—Appellant
versus
C.H. RATHAIAH & ANR.—Respondents
F.A. No. 552 of 1996—Decided on 10.7.1997
Counsel for the Parties :
For the Appellant :Mr. S. Hnumaiah, Advocate.
For the Respondent No. 1:Mr. V. Gourishanker Rao, Advocate.
For the Respondent No. 2: Government Pleader.
An insurance company is liable to pay compensation for the loss caused due to cyclone during the maintenance period if the insurance policy covers the risk of loss or damage to the works caused by any cause, including cyclone, during the maintenance period.
Headnote:
INSURANCE - CONTRACT - CLAIM - REPUDIATION - DEFICIENCY OF SERVICE - INSURANCE COMPANY LIABLE TO PAY COMPENSATION FOR LOSS CAUSED DUE TO CYCLONE DURING MAINTENANCE PERIOD - NO SPECIFIC EXCLUSION IN INSURANCE POLICY - REPUDIATION OF CLAIM ON GROUND OF 'NO CLAIM' NOT BONA FIDE.
Fact of the Case:
The complainant, a contractor, entered into a contract with the first opposite party, a government entity, for carrying out certain works. The complainant insured the works with the second opposite party, an insurance company, for a period of three months, including a maintenance period. During the maintenance period, a cyclone caused damage to the works. The complainant submitted a claim to the insurance company, but the claim was repudiated on the ground that 'No Claim' was preferred. The complainant filed a complaint with the District Forum, which held that there was deficiency of service on the part of the insurance company and directed it to pay compensation to the complainant.
Finding of the Court:
The court found that the complainant had submitted a claim to the insurance company and that the repudiation of the claim was not bona fide. The court also found that the insurance policy did not specifically exclude the claim for damage arising from the destruction caused by cyclone.
Issues: 1. Whether the insurance company was liable to pay compensation for the loss caused due to cyclone during the maintenance period? 2. Whether the repudiation of the claim by the insurance company was justified?
Ratio Decidendi: 1. The court held that the insurance company was liable to pay compensation for the loss caused due to cyclone during the maintenance period because the insurance policy covered the risk of loss or damage to the works caused by any cause, including cyclone, during the maintenance period. 2. The court held that the repudiation of the claim by the insurance company was not justified because the complainant had submitted a claim and the repudiation was based on the ground that 'No Claim' was preferred, which was not true.
Final Decision: The court allowed the appeal in part and set aside the order of the District Forum insofar as it directed payment of compensation of Rs. 10,000/-. In other respects, the order of the District Forum was confirmed.
Mr. Justice A. Venkatarami Reddy, President—The complainant in O.P. 97/95 District Forum, Guntur was awarded contract by the first opposite party i.e. Superintending Engineer, CERP Circle i.e. Government for carrying out the work of improvements to Bhimunigunta drain from 2.472 Km. to 5.60 km. consisting of excavation of earth from the drain, formation of standard banks on both sides of the drain wherever necessary, construction of model sections and pipe inlets. The complainant insured with the second opposite party i.e. National Insurance Company Limited for a sum of Rs. 10,68,000/- covering the period from 20.5.1992 to 19.8.1992 plus 3 months maintenance period against the loss or damage or destruction by any cause including the loss caused due to rain and cyclone. The complainant paid the requisite premium. According to the complainant he completed the work. But during the maintenance period there was sudden depression causing cyclone resulting in the drain received the flood water between 17.11.1992 and 19.11.1992 causing erosion and silting the bed of the drain. The complainant intimated on 14.12.1992 to the second opposite party i.e. Insurance Company about the damage to the works due to cyclone and for taking necessary steps for payment of compensation. The first opposite party assessed the loss caused due to cyclone at Rs. 2,24,300/-. The complainant submitted claim forms on 28.1.1993 with all relevant documents to the first opposite party who certified the claim forms on 8.2.1993 and sent the same to the second opposite party. When the second opposite party returned the claim forms, the complainant signed the papers and the second opposite party appointed a Surveyor and got the damage assessed. But both the parties did not settle the claim. The complainant, therefore, filed the above complaint alleging that there is deficiency of service on the part of both the opposite parties, and claimed a sum of Rs. 2,24,300/- towards damages for the insured property, Rs. 1,24,860/-towards interest on Rs. 2,24,300/- from 17.11.1992 to 13.3.1995, and at 24% p.a. i.e. Rs. 1,45,000/- towards compensation for mental agony and suffering and Rs. 5,000/- towards expenses.
2. The first opposite party filed its version stated that there is no deficiency of service on the part of the first opposite party towards the complainant as the complainant is not a consumer so far as the first opposite party is concerned and that the complaint is not maintainable and that there was no contract between the complainant and first opposite party to pay the damages to the complainant. In the contract, it was also mentioned that the policy has to be taken by the contractor in the name of first opposite party and that there was no mention that the first opposite party is responsible for payment of any insured amount to the complainant. It was further stated that as per the stipulation under Clause 50(1) of the agreement, the insurance shall cover during the period of maintenance of six months. But the complainant took policy covering the period of only three months of maintenance period. They also denied that the complainant completed the work and the complainant has not been permitted certificate to that effect. Since the insurance was not obtained covering the period of six months maintenance, the claim is invalid and it is the lookout of the complainant to get the payment from the second opposite party as the first opposite party forwarded the claim forms received by it to the second opposite party.
3. The second opposite party i.e. Insurance Company after receiving the notice in the complaint, did not file its version and remained ex-parte.
4. No oral evidence was adduced by both the parties and on behalf of the complainant Exs. A-1 to A-22 were filed and on behalf of opposite parties Exs. B-1 and B-2 were filed.
5. The District Forum held that the complainant did not pay any consideration to the first opposite party who awarded contract to the compla
