National Consumer Disputes Redressal
Mohak Carpets Pvt. Ltd. vs New India Assurance Company Ltd. on 16 July, 2020
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 556 OF 2020 1. MOHAK CARPETS PVT. LTD. HAVING ITS REGD OFFICE AT 1-B,3RD FLOOR, SRK MALL, 14, KENNEDY AVENUE, THE MALL AMRITSAR, PUNJAB-143001 THROUGH ITS DIRECTOR MS. MEENAKSHI SHARMA ...........Complainant(s) Versus 1. NEW INDIA ASSURANCE COMPANY LTD. HAVING ITS REGD OFFICE AT NEW INDIA ASSURANCE BUILDING 87, M.G.ROAD,FORT, MUMBAI-400001 2. THE NEW INDIA ASSURANCE COMPANY LTD. ALSO AT THROUGH ITS REGIONAL MANAGER/ CLAIMS INCHARGE DELHI, REGIONAL OFFICE-I, LIC-RG CENTRE B-BLOCK, LAWRENCE ROAD NEW DELHI-110035 3. THE NEW INDIA ASSURANCE COMPANY LTD. ALSO AT: THROUGH ITS DIVISIONAL MANAGER R-7A, MAIN GREEN PARK, NEW DELHI-110016 ...........Opp.Party(s) BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Mr. Karan Batura, Advocate For the Opp.Party : Dated : 16 Jul 2020 ORDER JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)
The complainant company is engaged in the business of the manufacturing of carpets. The company obtained a Standard Fire & Special Perils Policy from the opposite party, for the period from 08.10.2014 to 07.10.2015, for a sum assured of Rs.23,75,00,000/-. A fire broke out in the factory of the complainant on 20.2.2015 and the complainants claims to have suffered huge losses, on account of the said fire. A claim of Rs.13,62,74,059/- was submitted by the complainant to the insurer. A surveyor was appointed by the insurer, who assessed the loss at Rs.3,13,76,526/- . The surveyor also reported that the insured had violated condition No.1 and 8 of the insurance policy.
2. The insurer vide its letter dated 20.4.2017 repudiated the claim. The aforesaid letter, to the extent it is relevant, reads as under:
"The surveyor has examined the auditor report in respect of the relevant period. It was noticed by the surveyor that in the auditor reports it has been specifically mentioned that insured has over valued their current assets and there are number of doubtful debits which had arisen due to over billing and invoices. The said report was submitted by him after examining the balance sheet dated 31.3.2014. It was further noticed that you had even not submitted the stock statement after 31.04.2014 to the financier M/s. Central Bank of India. Mr. V.K. Madan, Chief Manager has visited the insured premises and it was noticed that although stock of Rs. 2 crores was lying in the factory but many machines were lying ideal. The surveyor even made detailed analysis of purchase and sales made out by you from 01.4.2014 to 20.2.2015 and lots of variation as noticed. The surveyor has concluded that the figures given by you relating to stock available is based upon wrong consideration and wrong motives. The said assessment was made upon the valid basis as the company was not making much profit accordingly there was no occasion for holding large inventory of stock and raw material. Even as per the reports of the statutory auditors the stocks were overvalued on 31.3.2014 for a sum of Rs.3.32 crore. The report along with all the documents as submitted by the surveyor was examined by the company. The company after minutely examining the entire record has reached the conclusion that the coverage was obtained by misrepresentation. The overvaluation as carried out in respect of stock was apparent. The condition No. 1 of the policy under the heading of General Conditions states :- 'This policy shall be voidable in the event of misrepresentation, mis-description or nondisclosure of any material particular.
Similarly Condition No.8 of the policy states as under:
'If the claim be in any respect fraudulent or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the willful act, or with the connivance of the insured, all benefits under this policy shall be forfeited."
Since the breach which was committed by you was fundamental in nature accordingly no benefits under the policy are payable and the claim stands repudiated."
3. The complainant sent a letter dated 01.5.2018 to the insurer seeking reconsideration of the claim. Vide a detailed letter dated 27.6.2018, the insurer rejected the representation and reiterated the repudiation already made vide its letter dated 20.4.2017. Being aggrieved from the rejection of the claim, the complainant is before this Commission by way of this consumer complaint.
4. In terms of Section 24A of the Consumer Protection Act, a consumer complaint is required to be filed within two years from the date for which the case of action arises. The case of action, in my opinion, arose on 20.4.2017 when the claim was repudiated by the insurer after considering the report of the surveyor on the ground that there was breach of Condition No. 1 and 8 of the Insurance Policy. The representation made by the complainant at a later date or the rejection of the repudiation even if such a rejection is by way of a detailed letter, such as the letter dated 27.6.2018 does not give a fresh cause of action to file a consumer complaint and does not extend the limitation. No additional grounds for repudiation of the claim were given in the letter. The aforesaid letter dated 27.6.2018 is not an acknowledgement of the liability of the insurer and does not constitute acknowledgement within the meaning of Section 18 of the Limitation Act.
5. Though, in terms of the proviso to Section 24A of the Consumer Protection Act, the delay in institution of a consumer complainant can be condoned if sufficient reasons are given, an application seeking such a condonation of delay has not been filed. The period of limitation prescribed under Section 24A of the Consumer Protection Act, being mandatory, this Commission is duty bound to dismiss the consumer complaint. A reference in this regard is made to the decision of the Hon'ble Supreme Court in State Bank of India Vs. B.S. Agricultural Industries (I) II (2009) CPJ 29 (SC)=II (2009) SLT 793, where the Hon'ble Apex Court inter-alia held as under:
"7. Section 24A of the Act, 1986 prescribes limitation period for admission of a complaint by the Consumer Fora thus:
'24A. Limitation period--(1) The District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen.
(2) Notwithstanding anything contained in Sub-section (1), a complaint may be entertained after the period specified in Sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period:
Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay.'
8. It would be seen from the aforesaid provision that it is peremptory in nature and requires Consumer Forum to see before it admits the complaint that it has been filed within two years from the date of accrual of cause of action. The Consumer Forum, however, for the reasons to be recorded in writing may condone the delay in filing the complaint if sufficient cause is shown. The expression, 'shall not admit a complaint' occurring in Section 24A is sort of a legislative command to the Consumer Forum to examine on its own whether the complaint has been filed within limitation period prescribed thereunder. As a matter of law, the Consumer Forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action and if beyond the said period, the sufficient cause has been shown and delay condoned for the reasons recorded in writing. In other words, it is the duty of the Consumer Forum to take notice of Section 24A and give effect to it. If the complaint is barred by time and yet, the Consumer Forum decides the complaint on merits, the Forum would be committing an illegality and, therefore, the aggrieved party would be entitled to have such order set aside."
6. The learned counsel for the complainant has submitted that the consumer complaint could not be filed earlier since proceedings under IBC were initiated against the company and IRP was appointed, who did not file the consumer complaint within two years of the repudiation of the claim. The institution of the proceedings under IBC against a Corporate Debtor does not come in the way of the Corporate Debtor instituting legal proceedings for enforcement of its claim and therefore, it was for the IRP to institute the consumer complaint before the period of limitation expired on 20.4.2019. In fact, even before institution of the proceedings under the IBC, the complainant company had sufficient time available to it to approach this Commission. Even after the IBC proceedings came to an end, no promptness was shown by the company in approaching this Commission, the complaint having been instituted only on 19.6.2020. Be that as it may, I need not delve further into this matter since no application, seeking condonation of delay in institution of the consumer complaint has been annexed to the complaint.
7. For the reasons stated hereinabove, the consumer complaint is hereby dismissed. It is however, made clear that the dismissal of the consumer complaint shall not come in the way of the complainant availing such remedy other than a consumer complaint, as may be upon to it in law.
......................J V.K. JAIN PRESIDING MEMBER