National Consumer Disputes Redressal
M/S Hindustan Aeronautics Limited, vs M/S New India Assurance Company Limited ... on 9 December, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 289 OF 2014 1. M/s HINDUSTAN AERONAUTICS LIMITED, Through its General Manager, Avionics Division, Korwa, AMETHI - 227412. ...........Complainant(s) Versus 1. M/s NEW INDIA ASSURANCE COMPANY LIMITED & ANR., Through its Chairman & Managing Director, Regd. Office: New India Assurance Building, 87, Mahatma Gandhi Road, Fort, MUMBAI. 2. M/s New India Assurance Company Ltd., Through its Branch Manager, Nandan Building, Road No. 3, Industrial Area, Jagdishpur, AMETHI. ...........Opp.Party(s) BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Ms. Kiran Suri, Sr. Advocate Ms. T.S. Shanthi, Advocate Ms. Vincy George, Advocate For the Opp.Party : Mr. J.P.N. Shahi, Advocate Mr. Bhartendu B., Advocate Dated : 09 Dec 2019 ORDER JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant is a Public Sector Undertaking, under the Ministry of Defence, Government of India. The complainant obtained an Import / Export Transmit Marine Cargo Open Policy, from the opposite party New India Assurance Company Limited, for the period from 01.11.2006 to 31.10.2007. The said policy was issued in continuation of an earlier policy issued by the same company. The limit per transit in the said policy was recorded as Rs.10.00 crores, for import / export consignments. The complainant dispatched a consignment, consisting of 23 packages to HAL Nasik, vide Dispatch Advice dated 16.6.2007. The value of the said consignment was declared at Rs.25.00 crores. The insurer was requested vide letter of even date to insure the consignment and adjust the premium from the advance premium, which the complainant had paid to the insurer. One of the above referred 23 consignments got damaged during transit. An intimation of the damage was given to the insurer, who was requested to depute a surveyor for survey of the consignment. The surveyor advised the complainant on 07.7.2007 to quickly dismantle the unit and forward details, along with the cost of repair. The complainant estimated its loss at Rs.3,69,09,171/-. The cost of repair of the unit was initially quoted by the Russian Supplier at US$ 826500, which they later reduced to US$ 678156. With the permission of the surveyor, the said unit was sent to Russia for repairs. Eventually, the Russian supplier revised the repair cost to US$576432.60. The damaged unit was accordingly repaired by the Russian supplier. A final survey was thereafter done by the surveyor appointed by the insurer but the claim was approved by the insurer only for Rs.14,18,240.00 as against the assessed amount of Rs.2,71,97,322.06. This is also the case of the complainant that since the insurer took more than three years to give its clearance to the inspection of the repaired unit, the said unit could not be fitted in the Fighter Aircraft Su-30 MKI and the said Aircraft could not be delivered as per the schedule of delivery, for which the OP is liable to pay liquidated damages, besides it having lost realization of the sale value of the Aircraft. The complainant allegedly suffered the interest loss of Rs.100 crores on account of the said delay in realization of the price of the aircraft. The complainant is therefore before this Commission seeking payment of Rs.2,71,97,322.06 from the OP along with compensation of Rs.100 crores due to loss of interest, besides compensation on account of harassment and special damages.
2. The complaint has been opposed by the insurer which has admitted the policy taken by the complainant as well as the damage of the Unit during its transit. The appointment of the surveyor and the assessment made by him has also not been disputed. It is however, alleged that the bolts were not tightened and the spring was broken which had damaged the equipment. According to the insurer the damage had happened due to negligence in packing and the complainant having not adhered to the prescribed instructions for the packing. It is stated that the complainant had breached the terms and conditions of the policy by loading the consignment, without prior intimation to the insurer and prior inspection by it. It is also stated that on applying underinsurance clause, the amount payable to the complainant comes to Rs.14,18,240/-, which the insurer had offered to the complainant. This is also the case of the insurer that though the consignment value was Rs.18.15 crores, the bottom limit in the policy was only Rs.1.00 crore and therefore, underinsurance works out to be 94.49%.
3. The insurer intimated the complainant vide its letter dated 04.2.2013, that the claim had been approved for Rs.14,18,240/-. The complainant thereupon, sent an email to the insurer seeking reasons for disallowing the claim to the extent of Rs.2,57,79,082.06. The insurer responded to the email of the complainant, vide its letter dated 28.2.2013, which to the extent it is relevant reads as under:
"In this regard we would like to inform you on going through the Survey Report and various papers provided by you in support of your claim our Competent Authority has approved your claim for Rs.14,18,240/-. Details of the calculation are as under:
Loss claimed 2,70,83,240/-
Less Improvement / upgradation @ 5% on Rs.2,68,43,575/-
Rs.13,42,179/-
Rs.2,57,41,061/-
On applying under insurance clause 2,57,41, 061x1,00,00,000 (single carrying limit 18,15,00,000/- = Rs.14,18,240/-
Admittedly, the surveyor had assessed the loss to the complainant at Rs.2,57,41,060.78 after making a deduction of Rs.13,42,179/- on account of improvement / upgradation of the equipment. He felt that the aforesaid amount of Rs.2,57,41,060.78 was a reasonable assessment of the loss suffered by the complainant. The insurer did not reject or reduce the claim on the ground of the alleged defective packing nor was the claim rejected or reduced for want of notice or inspection before dispatch of the goods. The claim was reduced solely on the plea of underinsurance, the value of the consignment being Rs.18,15,00,000/- and the per consignment limit being Rs.1.00 crore. In view of the decision of the Hon'ble Supreme Court in Galada Power and Telecommunication Ltd. Vs. United India Insurance Co. Ltd. & Anr. (2016) 14 SCC 161, the insurer cannot be allowed to contest the consumer complaint on any ground other than the ground on which the claim was reduced / repudiated. The Hon'ble Supreme Court specifically approved the decision of the Hon'ble High Court of Delhi in Krishana Wanti Vs. LIC (2000) 52 DRJ 123, holding therein that if the letter of repudiation did not mention an aspect the same could not be taken as a stand when the matter is decided. Therefore, the only question, which arises for consideration in this complaint, is as to whether the complainant had underinsured the consignment or not.
4. Vide letter dated 29.8.2005, the complainant had invited quotations for Marine Insurance Policies from severs insurers, including the OP namely, The New India Assurance Company Ltd. In the said letter, the approx. yearly value of incoming material was given at Rs.50.00 crores, while the approx. yearly out going material was given at Rs.120.00 crores. It was further stated in the said letter that the volume of business could vary based upon the actual dispatch per year and the rates were to be quoted for policy period of two years, which could be extended further based on mutual agreements. The OP while submitting its quotation, in terms of the letter dated 29.8.2005, expressly stated that they were ready for agreement on the rates quoted by it for two years though the policy would be issued only for one year and renewed thereafter as per IRDA guidelines. All the other conditions stated in the letter dated 29.8.2005 were accepted by the insurer. Earlier, the complainant in response to a letter received from the OP had informed it that the carrying limit per consignment would be taken as Rs.10.00 crores for drafting the policy but in case any consignment was valued more than the above limit, the rate of premium would be the same as per the contract though they were to be informed separately. While accepting the quotation submitted by the OP vide its letter dated 28.9.2005, the complainant had specifically informed the OP that the premium rate during the policy period of two years would be firm and fixed. It is therefore evident that though for the purpose of issuance of insurance policy the limit per transit and per location was agreed at Rs.10.00 crores, the insurer was required to insure even a consignment of higher value though it was entitled to charge premium payable on such higher value from the complainant. A provisional premium was to be paid to the insurer based upon volume of transaction in the previous year which was liable to be adjusted on the basis of biweekly or monthly declaration.
5. The complainant dispatched the consignment in question vide dispatch advice dated 16.6.2007. The surveyor noted in final survey report dated 7.4.2011 that although the insured initially got covere of Rs.10.00 crores in the special open policy, it continued to enhance the same from time to time as and when the dispatch equalled the SI and paying the premium from time to time as was agreed with the insurer and therefore, it was being presumed that the SI was declared when the dispatch of the consignment of declared value of Rs.25.00 crores took place. It was also noted that though policy endorsement required the insured to intimate the insurer in advance before dispatching the consignment of higher value that had never been the practice. The surveyor noticed that there had been similar default of atleast 39 times earlier, where the value of the consignment was more than the specified limit of Rs.1.00 crores recorded in the policy for each consignment.
6. It is not in dispute that the advance premium had been paid by the complainant to the insurer. Considering the past practice, evidenced by as many as 39 instances noted by the surveyor it can be safely said that the policy taken by the complainant was operated in a flexible manner, instead of restricting the same to the value recorded for the purpose of issuance of the policy. The correspondence exchanged between the parties before issuance of the policy, coupled with the instances found by the surveyor would show that the intention of the parties was to insure each and every consignment, irrespective of its value and on payment of the premium payable on such value by the insured. Therefore, it would be difficult to uphold the reduction from the assessment made by the surveyor, on the ground that the limit per consignment was recorded as Rs.1.00 crores in the insurance policy. Moreover, it is not understood why the value per consignment was recorded at Rs.1.00 crores when the insured value per transit was recorded at Rs.10.00 crores in the same policy document. The learned counsel for the complainant has drawn my attention to the decision of the Hon'ble Supreme Court in Radha Sundar Dutta Vs. Mohd. Jahadur Rahim & Ors. AIR 1959 SC 24 (V 46 C 5), where the Hon'ble Apex Court approved the following statement of law which the Privy Council has earlier approved in Forbs Vs. Git (AIR) 1921 PC 209:
"If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected repugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later."
Be that as it may, what is material for the purpose of this consumer complaint is that irrespective of the value of the consignment it was duly insured under the policy issued by the OP.
7. For the reasons stated hereinabove I hold that the OP was not justified in reducing the assessed amount form Rs.2,57,41,060.78 to Rs.14,18,240.00. The complainant therefore is entitled to recover the assessed amount of Rs.2,57,41,060.78 from the OP along with appropriate interest on that amount.
8. Though, the complainant has also claimed Rs.100 crores towards loss of interest on account of its having not been able to deliver the Aircraft worth Rs.300 crores and thereby having been deprived of the said amount for more than three years on account of delay in inspection of the equipment by the insurer, no arguments on the said claim were advanced. In any case, the aforesaid claim being remote cannot be awarded in the present consumer complaint.
9. For the reasons stated hereinabove, the complaint is disposed of with the following directions:
(i) The OP shall pay a sum of Rs. 2,57,41,060.78 to the complainant; (ii) In terms of Clause 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interest) Regulations, 2002, the insurer is expected to settle the claim within a maximum period of six months, failing which interest is payable to the claimant. The OP shall therefore pay compensation in the form of simple interest @ 9% per annum to the complainant with effect from six months from the date of the lodgement of the claim till the date of payment. (iii) The payment in terms of this order shall be made within three months from today. (iv) No order as to costs. ......................J V.K. JAIN PRESIDING MEMBER