Consumer Protection – Loss of stock of goods insured – Claim for – Appellant-company purchased a standard fire and special perils policy from the respondent-insurer and further paid a additional premium to cover the risk of loss of the stock on account of spontaneous combustion – Thereafter, appellant was declared a sick unit and its factory was closed for some time – After re-opening it was noticed that some amount of stock of coal and lignite was diminished/destroyed on account of spontaneous combustion, causing loss and damage – Appellant demanded claim of Rs.1.4 crores on account of loss suffered by it from the respondent-insurer – Pursuant to the claim, the respondent-insurer appointed a surveyor – The surveyor submitted his report and assessed total loss to the tune of Rs.63,43,679/- – However, respondent-insurer repudiated the claim via letter solely on the ground that since spontaneous combustion did not result into fire and loss was not caused by fire as stipulated by policy conditions, there was no liability under the policy – Appellant filed complaint before the NCDRC – Before NCDRC, respondent-insurer alleged that appellant contravened cl.6(i) of the General Conditions of Policy – The NCDRC rejected the claim of the appellant and held that intimation of claim was sent with considerable delay of over a month thereby violating cl.6(i) of the General Conditions of Policy – On appeal, held: It is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation – If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC – In the instant case, admittedly there was no reference of delay in intimation or lodging of the claim as stipulated in cl.6(i) of the General Conditions of Policy in the repudiation letter – Therefore, order of the NCDRC set aside – The respondent-insurer directed to make payment of Rs.63,43,679/- as assessed by the surveyor.
Allowing the appeal, the Court
HELD : Whether the respondent-insurer had waived the condition relating to delay in intimation and lodging of the claim, by appointing a surveyor.
1. In view of the law laid down by the three Judge Bench in the Sonell Clocks and Gifts Ltd. v. New India Assurance Company Ltd, the argument that by appointing a surveyor the respondentinsurer is estopped from raising the plea of violation of condition prescribing a time limit for intimation/lodging of the claim, has no legs to stand. Thus, issue is answered accordingly. [Para 18][34-E-F]
Sonell Clocks and Gifts Ltd. v. New India Assurance Company Ltd (2018) 9 SCC 784 : [2018] 10 SCR 35 – relied on.
Galada Power and Telecommunication Ltd. v. United India Insurance Company Ltd & Another (2016) 14 SCC 161 – referred to.
Whether in the absence of any mention, of aspect of delay in intimation and violation of conditions of Clause 6(i) of General Conditions of Policy, in the repudiation letter, the same could be taken as defence before the NCDRC.
2. Insofar as this issue is concerned it is undisputed that the letter of repudiation did not even remotely mention anything about violation of duration clause stipulated in Clause (6) (i) of the General Conditions of Policy. The Respondent-insurer repudiated the claim solely on the ground that since spontaneous combustion did not result into fire and loss had not been caused by fire as stipulated by policy conditions, there was no liability under the policy. It was for the first time the respondent-insurer raised the issue of delayed intimation of claim and violation of stipulation of Clause 6(i) of the General Conditions of Policy in its reply filed before NCDRC. [Para 19][34-G-H]
3. Undoubtedly, this Court in Sonell Clocks has distinguished Galada Power on facts and held that the appointment of a surveyor cannot, as a matter of law, be construed as a waiver of the terms and conditions of the insurance policy. However, in Sonell Clocks, the insurer had taken a specific plea in the repudiation letter that the loss was not conveyed within the stipulated period. Hence the singular issue before this Court was only whether the insurer had waived the condition as to delay in intimation by appointing a surveyor. This Court in Sonell Clocks did not have the occasion to consider whether the insurance company could have raised delay as a ground for repudiation for the first time before the consumer forum. [Para 21][35-E-F]
4. Hence, this Court is of the considered opinion that the law as laid down in ‘Galada’ on issue (2) still holds the field. It is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC. [Para 22][35-G-H] Galada Power and Telecommunication Ltd. v. United India Insurance Company Ltd & Another (2016) 14 SCC 161 – relied on.
Sonell Clocks and Gifts Ltd. v. New India Assurance Company Ltd (2018) 9 SCC 784 : [2018] 10 SCR 35 – referred to.
5. Admittedly in the case at hand there was no reference of delay in intimation or lodging of the claim as stipulated in Clause 6(i) of the General Conditions of Policy in the repudiation letter. The NCDRC has failed to take into consideration this aspect of the matter and, therefore, cannot be held to be justified in rejecting the claim of the appellant, on that ground. [Paras 23 and 24]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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