Consumer Protection Act, 1986 – Insurance Contract – Exclusion clause – Interpretation – Payment of insurance claim – Contract for design, construction and management of a bridge awarded to the respondent and another company – Issuance of contractor’s all risk insurance policy for the project by the appellant-insurer – However, during the construction, part of the bridge collapsed resulting in fatalities – Investigation report holding the respondents liable due to defects in the design, construction and supervision – Report submitted by Surveyor as also the Committee of Experts – Respondents made a insurance claim, however the appellant repudiated the same – Meanwhile the respondents completed the work under the contract and the bridge was put to public use – Almost after 2 years of the rejection of the claim, the respondents filed a consumer complaint alleging deficiency in the appellant’s service – National Commission allowed the same, directing the appellant to pay the insurance claim – Correctness:
Held: Insurance is a contract of indemnification, being a contract for a specific purpose, which is to cover defined losses – Courts have to read the insurance contract strictly – Essentially, the insurer cannot be asked to cover a loss that is not mentioned – Exclusion clauses in insurance contracts are interpreted strictly and against the insurer as they have the effect of completely exempting the insurer of its liabilities – Appellants-insurer discharged the burden – There was sufficient evidence to justify repudiation of the claim on the basis of the exclusion clause – Reliance on the findings of the Expert Committee justified – It was found from the Expert Committee’s report that combination of factors such as lack of stability and robustness in the structure, shortfall in design, lack of quality workmanship all contributed to the collapse – On the other hand, there was absolutely no evidence on behalf of the respondents – Surveyor was examined and his evidence remained unrebutted – Reports of independent experts relied on by the respondents were not based on site inspection but were theoretical in nature – Furthermore, continuation of work by respondents could be due to various reasons – Even if the NHAI’s decision to continue is taken to be a valid economic decision, that by itself cannot be a reason for not applying the applicable clause of the contract if such applicability is otherwise proved by cogent evidence – Thus, the NCDRC erred in allowing the consumer complaint – Impugned order passed by the NCDRC set aside. [Paras 16, 18, 20.3, 21, 23, 26, 28-30]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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