National Consumer Disputes Redressal
Branch Manager, Oriental Insurance Co. ... vs M/S. Nagarjuna Constructions Company ... on 20 March, 2023
Author: R.K. Agrawal
Bench: R.K. Agrawal
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2307 OF 2016 (Against the Order dated 11/01/2016 in Appeal No. 319/2014 of the State Commission Andhra Pradesh) 1. BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. & ANR. D.NO. 1-234, CANAL ROAD, ANAPARTHY-533342 2. SENIOR DIVISIONAL MANAGER, THROUGH ORIENTAL INSURANCE COMPANY LTD. HEAD OFFICE DEPTT. MOTOR (TP) 88 JANPATH, NEW DELHI-110001 ...........Petitioner(s) Versus 1. M/S. NAGARJUNA CONSTRUCTIONS COMPANY LIMITED REP. BY ITS POWER OF ATTORNEY HOLDER, A. MADHAVA VARMA, R/O. RAJAMUNDRY ...........Respondent(s) REVISION PETITION NO. 2308 OF 2016 (Against the Order dated 11/01/2016 in Appeal No. 347/2014 of the State Commission Andhra Pradesh) 1. BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. & ANR. D.NO. 1-234, CANAL ROAD, ANAPARTHY-533342 2. SENIOR DIVISIONAL MANAGER, THROUGH ORIENTAL INSURANCE COMPANY LTD. HEAD OFFICE DEPTT. MOTOR (TP) 88 JANPATH, NEW DELHI-110001 ...........Petitioner(s) Versus 1. M/S. NAGARJUNA CONSTRUCTIONS COMPANY LIMITED REP. BY ITS POWER OF ATTORNEY HOLDER, A. MADHAVA VARMA, R/O. RAJAMUNDRY ...........Respondent(s) REVISION PETITION NO. 2309 OF 2016 (Against the Order dated 11/01/2016 in Appeal No. 348/2014 of the State Commission Andhra Pradesh) 1. BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. & ANR. D.NO. 1-234, CANAL ROAD, ANAPARTHY-533342 2. SENIOR DIVISIONAL MANAGER, THROUGH ORIENTAL INSURANCE COMPANY LTD. HEAD OFFICE DEPTT. MOTOR (TP) 88 JANPATH, NEW DELHI-110001 ...........Petitioner(s) Versus 1. M/S. NAGARJUNA CONSTRUCTIONS COMPANY LIMITED REP. BY ITS POWER OF ATTORNEY HOLDER, A. MADHAVA VARMA, R/O. RAJAMUNDRY ...........Respondent(s) REVISION PETITION NO. 2310 OF 2016 (Against the Order dated 11/01/2016 in Appeal No. 349/2014 of the State Commission Andhra Pradesh) 1. BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. & ANR. D.NO. 1-234, CANAL ROAD, ANAPARTHY-533342 2. SENIOR DIVISIONAL MANAGER, THROUGH ORIENTAL INSURANCE COMPANY LTD. HEAD OFFICE DEPTT. MOTOR (TP) 88 JANPATH, NEW DELHI-110001 ...........Petitioner(s) Versus 1. M/S. NAGARJUNA CONSTRUCTIONS COMPANY LIMITED REP. BY ITS POWER OF ATTORNEY HOLDER, A. MADHAVA VARMA, R/O. RAJAMUNDRY ...........Respondent(s) REVISION PETITION NO. 2694 OF 2016 (Against the Order dated 11/01/2016 in Appeal No. 350/2014 of the State Commission Andhra Pradesh) 1. BRANCH MANAGER, ORIENTAL INSURANCE CO. LTD. & ANR. D.NO. 1-234, CANAL ROAD, ANAPARTHY-533342 2. SENIOR DIVISIONAL MANAGER, THROUGH ORIENTAL INSURANCE COMPANY LTD., HEAD OFFICE DEPTT. MOTOR(TP) 88, JANPATH, NEW DELHI-110001 ...........Petitioner(s) Versus 1. M/S. NAGARJUNA CONSTEUCTIONS COMPANY LIMITED REP. BY ITS POWER OF ATTORNEY HOLDER, A. MADHAVA VARMA, R/O. RAJAHMUNDRY ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE R.K. AGRAWAL,PRESIDENT HON'BLE DR. S.M. KANTIKAR,MEMBER For the Petitioner : MR. VISHNU MEHRA For the Respondent : MR. C.R. VASANTHA KUMAR Dated : 20 Mar 2023 ORDER
1. The present Revision Petitions have been filed by The Oriental Insurance Company (hereinafter referred to as the Petitioner Insurance Company) under Section 21(b) of the Consumer Protection Act, 1986 (in short 'the Act') against the Orders dated 11.01.2016 in Appeal Nos. 319 and 347 to 350 of 2014 passed by the Andhra Pradesh State Consumer Disputes Redressal Commission (hereinafter referred to as 'the State Commission') whereby the State Commission has dismissed the Appeals by affirming the findings recorded by the District Consumer Disputes Redressal Forum, East Godavari District at Rajahmundry (hereinafter referred to as 'District Forum').
2. It is relevant to mention here that five separate Consumer Complaints involving similar facts and question of law were filed against which similar defence was taken by the Insurance Company in all the cases. Since the facts and questions of law involved in all these Revision Petition are similar except change in Policy numbers, these Revision Petitions are being disposed off through this Common Order. However, for the sake of convenience, RP No. 2307 of 2016 is treated as the lead case and the facts enumerated hereinafter are taken from Consumer Complaint No. CC/56/2008.
3. Briefly stated the facts of the case are that M/s. Nagarjuna Construction Company Limited (herein referred to as the Respondent/Complainant Company), was awarded contract by the Government of Andhra Pradesh for protecting the eroded river margin and construction of groynes at various locations in Andhra Pradhesh. Before commencement of works at Sakhinetipalli for Erection, construction of Groyens at KM 1.250, the Respondent/Complainant Company obtained insurance covers for covering the risk of the construction work from The Oriental Insurance Company Ltd. (hereinafter referred to as the Petitioner/Opposite Party Insurance Company) vide Policy No.432504/404/13/ENGG/CAR/2006/57. The Complainant Company commenced the work as per the schedule of contractors shown in the Insurance policy by covering the work period from 2.5.2005 to 1.10.2006 and the maintenance period from 2.10.2005 to 1.10.2007. The Respondent/Complainant Company's work at Sakhinetipalli village commenced on 2.5.2005 making construction of groyons, dumping scones and other materials and while the work was in progress, there was heavy flow of flood water in the river on 8.8.2005 and 10.3.2005, due to the heavy inflow of flood water, the groyens were damaged and disturbed on account of which the Respondent/Complainant Company sustained heavy loss and the said fact was immediately informed to the Petitioner/Opposite Party Insurance Company on 16.8.2005. On 17.8.2005, the preliminary survey was conducted by Sri K.V.R. Krishna, Surveyor, Kakinada who assessed the damaged portion of Groyens at Sakhinetipalli village and subsequently the Petitioner/Opposite Party Insurance Company appointed Mr. A. Ramalingeswara Rao as Final Surveyor to assess the work loss and estimate the damage done to the work. The Final Surveyor assessed the loss to ₹13,54,563/-. Despite this, the claim of the Respondent/Complainant was repudiated by the Petitioner/Opposite Party Insurance Company. Despite several requests, repeated remainders and service of a legal notice when the Petitioner/Opposite Party Insurance Company did not settle the claim of the Respondent/Complainant Company, alleging deficiency in service and unfair trade practice adopted by the Petitioner/Opposite Party Insurance Company, the Respondent/Complainant Company filed consumer complaints before the District Forum seeking direction to the Petitioner/Opposite Party Insurance Company to pay a sum of ₹20,00,000/- alongwith interest at 24% p.a. from the date of filing of Complaints till the date of realization and award costs of the Complaint.
4. The matter was contested by the Petitioner/Opposite Party Insurance Company before the District Forum. It was contended that the work executed by the Complainant was an unprotected / unsecured work and it was susceptible to damage even for a flood of 1,00,000 cusecs or even less but these facts were not mentioned in the proposal dated 19.07.2005. The Complainant did not comply with the provision of Section 64VB of the Insurance Act, 1938. The Complainant did not submit authenticated documents. It was further submitted that the Complainant appointed N.R. Construction as a sub-contractor and as per their agreement the Complainant transferred the responsibility of obtaining the insurance cover to the said sub-contractor, as such the Complainant did not have any insurable interest in the policy. It was submitted that there was no deficiency in service on their part and prayed that the Complaint be dismissed.
5. After hearing both the Parties and perusal of the material available on record, vide Order dated 01.08.2013, the District Forum allowed the Complaints in following terms:-
"With the discussion held supra and under the facts and circumstances of the case, we are in the considered opinion that the complainant is entitled for the claim as per the policy. However, the claim of the complainant is disproportionate to the loss assessed by the surveyor after considering the available documents supplied by the complainant, we restrict the claim to the extent of loss assessed and recommended by the surveyor to a tune of ₹13,54,563/- only. As the claim was delayed unsettled by the opposite parties, the complainant is also entitled for interest on the above said claim amount.
In the result, the complaint is allowed, directing the opposite parties to pay an amount of ₹13,54,563/- with interest @ 9% p.a. from the date of complaint i.e.25.4.2008 till realization. We further direct the opposite parties to pay ₹5,000/- towards costs of the compliant to the complainant. Time for compliance is two months from the date of receipt of copy of this order."
6. Being aggrieved by the Order dated 01.08.2013 passed by the District Forum, the Petitioner/Opposite Party Insurance Company, filed Appeals before the State Commission.
7. Based on the material adduced and pleadings put forwarded, the State Commission vide Impugned Orders dated 11.01.2016 passed in separate Appeal bearing Nos. FA Nos. 319 and 347 to 350 of 2014, while affirming the findings recorded by the District Forum, dismissed the Appeals preferred by the Petitioner/Opposite Party Insurance Company, by observing as under:
"17) As can be seen from the above, the substantive contention regarding the insurable interest of the complainant is three fold:-
i) that the complainant suppressedthe fact of appointing a sub- contractor, N.R.Constructions;
ii) that the complainant transferred the work under contract in favour of N.R Constructions under letter dt. 3.5.2005 marked as Enclosure-S of Ex. B23 with a condition that the policy should be obtained by the work N.R. Constructions. According to the appellants after the work has been transferred in favour of a third party, the complainant ceased to have any interest in the policy;
iii) by virtue of transfer, N.R. Constructionshas secured interest in the subject matter, thuscameunder theobligation to obtain fresh policy in their favour; and
18. This Commission does not find any merit in the contention Firstly there is no material to show that N.R. Constructions was a sub- contractor of the complainant and the letter dt. 3.5.2005 (Enclosure-S) of Ex. B23 which is relied upon by the Opposite Parties does not prove the said fact. Under the said letter no independent right over the work was created in favour of N.R. Constructions. The letter discloses that construction of work alone was entrusted to it under thesupervision of authorised representatives and directions of the complainant. The control and execution of work and over all maintenancewas retained with the complainant itself. N.R. Constructions was not given independent status even with regard to payments from the Government. The complainant retained the maintenance part of the contract from 2.10.2005 to 1.10.2007. Even if N.R. Constructions was appointed as sub-contractor as rightly pointed out by the Forum it is not uncommon in the field of contracts to appoint sub-contractors to execute the work on behalf of the contractors and mere execution of work by sub- Contractor would not put an end to insurable interest of the contractor. No adverse inference can be drawn that sub-contract was already in existence on the basis that one of the partners of N.R. Constructions A. MadhavaVerma signed Ex. B1 policy as an attorney of the complainant. In any event, the question of sub-contract is not relevant since the claim is based natural calamity but not on account of any defect/default attributable to N.R. Constructions.
19. It is in this context, the question whether the complainant retained its insurable interest in the policy has to be examined. It is well settled that the basis of determination of insurable interest is whether loss of property would cause pecuniary loss to the insured, and whether he would have attained any pecuniary benefit or advantage from preservation of insurance property. If the insured would suffer loss or derives benefit he would be having insurable interest in the subject matter of the insurance contract because the insurance of the subject matter and its ownership may not necessarily go together. There may be insurance to cover the interests of others and the person interested in the insurance may not be the owner of the property. In the instant case, the complainant being responsible for execution and maintenance of work being one of the insured, is entitled to receive the pecuniary benefit under the policy. Hence it is not possible to hold that the complainant lost insurable interest.
20. A decision of the Hon'ble Supreme Court in New India Assurance Co. Ltd. vs. G.N. Sainani, 1997(6) SCC 383, supports the said view in the following terms:-
"14. The question that arises is if the assignee in the facts and circumstances of the present case could be said to be the beneficiary so as to stake his claim under the policy. If we see the definition of "service" as provided under the Act it means and includes the provision of facilities in connection with the insurance as well. The complaint under the Act in the present case has to show that the service hired or availed of or agreed to be hired or availed of by the complainant suffers from deficiency in any respect. The complainant, of course, means a consumer and as we have seen above includes any beneficiary. "Deficiency" has been defined in clause (g) of Section 2(1) of the Act as under:
"2. (1)(g) 'deficiency' means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;"
15. The interest of the insured must exist in the case of marine insurance at the time of loss and the assured must have some relation to or concern in, the subject of the insurance. The service which the insurer offers is with reference to the goods and the insurable interest has to be in respect of the goods. To put it in other words, insurable interest in property would be such interest as shall make the loss of the property to cause pecuniary damage to the assured. To come under the scope of the word "consumer" as defined in the Act it should be possible for the assured to assign his insurable interest in the goods subject-matter of the policy for the assignee as a consumer to enjoy the benefit of the policy with reference to the goods which are insured. What has been assigned in the present case is the amount of loss suffered by the assured on account of short landing of the goods, meaning thereby that right to recover the loss is assigned to the assignee and not that any service is to be rendered under the policy by the insurer with reference to the goods. We are looking at the whole thing from the point of the consumer under the Act with reference to certain relevant provisions of the Marine Insurance Act. Unless the assignee has some insurable interest in the property subject-matter of the insurance uptil the time the policy terminates he cannot be beneficiary of any service required to be rendered by the insurer under the policy. Admittedly it was much after the goods had reached the port of destination and appropriated that the policy was transferred by the insured to the complainant to recover the amount of loss suffered by the assured. Thus, what is assigned is in effect a mere right to sue for the loss on account of short landing of the goods. It is difficult to see as to how it could be said that the respondent, that is the assignee, is the beneficiary of any service under the policy. He may, however, have right to recover the loss from the insurer by filing a suit in a civil court but certainly to seek remedy under the Act he must be a consumer. If the policy had been assigned during the course of its validity and before the goods were appropriated after their arrival at the port of destination, it could perhaps be said that the assignee had beneficial interest therein but not otherwise. By not extending the policy beyond a particular period, that is 60 days, the insurer acted within the terms of the contract of insurance and on that account it could not be said that there was deficiency in service to be provided by the insurer under the policy."
21. Under Clause-15 of the letter Enclosure-S of Ex. B23 all that was stated was that N.R. Constructions should obtain a policy and in such a case it was entitled to claim or receive the claims from the insurance company against damages or loss occurred during the existence of policy on behalf of the complainant directly in its name. It only follows that N.R. Constructions would not be entitled to make any claim under the Policy obtained by the Complainant. If N.R. Constructions did not take the policy, it would be a breach of its obligation agreement between it and the complainant, but the same cannot be aground to repudiate the claim of the complainant as per the Policy given to it.
22. The Counsel would submit that the policy Ex. B3 was issued jointly in favour of the complainant and superintendent Engineer, therefore benefits under the polity at the instance of only one of the insured is not maintainable. There is no substance in the said contention. In the first instance the Superintending Engineer did not set up a rival claim against complainant. Secondly, the insurance policy was obtained for due execution of work and the complainant had issued the same and payments were made by the Superintending Engineer as is evident from Enclosure-Q of Ex. B23.
23. Equally, there is no substance in the contention that the measurement books wore not produced for verification. The record however Reveals that Sri A. Ramalingeshwara Rao, surveyor secured all the original books from the department and assessed the damage only on the basis of official records.
24. Hence, it cannot be said that the appellants suffered any prejudice though the books were not directly produced by the complainant. Except the aforesaid grounds, learned counsel for the appellants has not disputed the quantum of amount awarded in favour of the complainant nor he argued any other point.
25. For the foregoing reasons this Commission finds that the Forum has allowed the complaint on valid grounds and there are no merits in the appeal.
26. Appeal is accordingly dismissed. No costs."
8. Being aggrieved/dissatisfied with the Impugned Orders dated 11.01.2016 passed by the State Commission, the Petitioner/Opposite party Insurance Company has filed the present Revision Petitions before this Commission.
9. Mr. Vishnu Mehra, learned Counsel appearing on behalf of the Petitioner/Opposite Party Insurance Company, submitted that the learned State Commission has acted with material irregularity in not appreciating that insurance being a contract thus, unless specifically agreed in writing, the risk under an insurance Policy commences is covered with effect from the date premium amount is received. It was further urged that the learned State commission had committed a grave error and acted with material irregularity in not appreciating that mere indication of the date of commencement of work in the proposal form does not ipso facto amount to risk incepting from a date prior to the inception of the policy and the observation that cover was granted with the full knowledge that the work had already commenced is irrelevant and does not become the basis of holding the petitioner liable under the policy. It was stated that learned State commission failed to appreciate the fact based on the record, the Respondent / Complainant Company was not entitled to claim any indemnity under the Policy of Insurance in as much as it had no "insurable interest" in the subject matter of Insurance at the time of the occurrence as evident from the Sub- Contract Agreement dated 20.07.2005 between the Respondent and M/s N.R. Constructions including Clause 16 of the said Agreement. It was further stated that Learned State Commission has acted with material irregularity in not appreciating that the Respondent Company did not disclose to the Petitioner about its parting with the insurable interest in the subject matter of insurance to M/s N.R. Constructions. It was prayed that the Impugned Orders passed by the Fora below be set aside.
10. Per contra, Mr. C.R. Vasantha Kumar, learned Counsel appearing on behalf of the Respondents/Complainants supported the Orders passed by the Fora below.
11. We have heard Mr. Vishnu Mehra, learned Counsel appearing on behalf of the Petitioner/Opposite Party Insurance Company, Mr. C. R. Vasantha Kumar for the Respondent/Complainant, perused the Orders passed by the Fora below, the Complaint, the Written Statement and also other documents available on record.
12. From the perusal of the material available on record and having given thoughtful consideration to the pleas raised by the learned Counsel for the Parties, we are of the considered opinion that the submissions made by the learned Counsel for the Petitioner are not acceptable for the simple reason that there is concurrent finding of the fact that there was deficiency in service on the part of the Petitioner Insurance Company in repudiating the genuine claim of the Respondent/Complainant Company.
13. The State Commission vide its well-reasoned Order dated 11.01.2016 has rightly affirmed the findings recorded by the District Forum that there was deficiency in service on the part of the Petitioner Insurance Company in repudiating the genuine claim of the Respondent/Complainant Company. While passing the Impugned Orders dated 11.01.2016, the State Commission had considered all the material evidence on record and we do not find any illegality, material irregularity or jurisdictional error in the Order passed by the State Commission.
14. It is well settled by the Hon'ble Supreme Court in 'Sunil Kumar Maity vs. State Bank of India & Anr.' [Civil Appeal No. 432 / 2022 Order dated 21.01.2022] that the Revisional Jurisdiction of this Commission under section 21(b) of the Consumer Protection Act, 1986 is extremely limited and this Commission cannot set aside the Order passed by the State Commission in Revisional Jurisdiction until and unless there is any illegality, material irregularity or jurisdictional error in the Order passed by the State Commission. For ready reference, relevant paragraph of the Judgment passed by the Hon'ble Supreme Court in 'Sunil Kumar Maity vs. State Bank of India & Anr.' [supra] is reproduced as under:-
"9. It is needless to say that the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity. In the instant case, the National Commission itself had exceeded its revisional jurisdiction by calling for the report from the respondent-bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in-depth appraisal of the case that was required. ....."
15. Recently, the Hon'ble Supreme Court in the case of "Rajiv Shukla vs. Gold Rush Sales and Services Ltd. and Ors. [MANU/SC/1120/2022 : (2022) 9 SCC 31] while affirming its earlier view taken in the case of "Rubi (Chandra) Dutta Vs. United India Insurance Company - (2011) 11 SCC 269" that the National Commission has no right to interfere with the concurrent finding of facts of the Fora below in its Revisional Jurisdiction, has held as under:-
"7.1 At this stage, it is required to be noted that on appreciation of evidence on record the District Forum as well as the State Commission concurrently found that the car delivered was used car. Such findings of facts recorded by the District Forum and the State Commission were not required to be interfered by the National Commission in exercise of the revisional jurisdiction. It is required to be noted that while passing the impugned judgment and order the National Commission was exercising the revisional jurisdiction vested under Section 21 of the Consumer Protection Act, 1986. As per Section 21(b) the National Commission shall have jurisdiction to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity. Thus, the powers of the National Commission are very limited. Only in a case where it is found that the State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise the jurisdiction so vested illegally or with material irregularity, the National Commission would be justified in exercising the revisional jurisdiction. In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record. Therefore, while passing the impugned judgment and order the National Commission has acted beyond the scope and ambit of the revisional jurisdiction conferred under Section 21(b) of the Consumer Protection Act."
16. For the reasons stated hereinabove and the law laid down by the Hon'ble Supreme Court in afore-noted Judgments, we do not find any good ground to interfere with the well-reasoned Orders passed by the State Commission and the Impugned Orders dated 11.01.2016 passed by the State Commission in Appeal bearing Nos. FA / 319 / 2014 and FA / 347 to 350 / 2014, are upheld. Consequently, the present Revision Petitions fail and are hereby dismissed. Keeping in view the facts and circumstances of the case, there shall be no Order as to costs.
......................J R.K. AGRAWAL PRESIDENT ...................... DR. S.M. KANTIKAR MEMBER