- 12 Dec, 2023
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M/S. PADMA PLOYCHEM PVT. LTD. v. NEW INDIA ASSURANCE COMPANY LIMITED
1. M/S. PADMA PLOYCHEM PVT. LTD.
THROUGH ITS DIRECTOR MR. RAKESH KUMAR,HAVING ITS OFFICE AT 528/1, KARKARI ROAD,VISHWAS NAGAR
DELHI-110032
………..Petitioner(s)
Versus
1. NEW INDIA ASSURANCE COMPANY LIMITED
THROUGH ITS MANAGER, DRO-II, 10TH FOOR, CORE I,SCOPE MINAR, LAXMI NAGAR DIRECTOR CENTER
DELHI-110092
……….Respondent(s)
Case No: REVISION PETITION NO. 2014 OF 2019
Date of Judgement: 06 December 2023
Judges:
DR. INDER JIT SINGH
PRESIDING MEMBER
FOR THE PETITIONER : MS. SRISHTI SINGLA, PROXY COUNSEL (WITH AUTHORIZATION)
FOR THE RESPONDENT : MR. J PN SHAHI, MS. AASTHA KAUSHAL, ADVOCATES
Facts
Complainant company had a money insurance policy with OP insurer. On 11/02/2015, complainant was carrying Rs. 9,65,000 cash and documents in a bag in their car. At a petrol pump, during tire repair, complainant discovered the bag missing from rear seat. CCTV showed two people stealing the bag on a motorcycle. Complainant filed police FIR and informed insurer through letter on 12/02/2015. Submitted insurance claim form, co-operated with insurer’s surveyor investigation. Insurer repudiated the claim on 30/09/2015 citing surveyor’s report.
Court’s Elaborate Opinions
Scope in revision petition is limited under Sec 21(b) of Consumer Protection Act. Powers can be exercised only if there’s prima facie jurisdictional error in impugned order. No jurisdiction to interfere with concurrent findings of fact by lower forums. Found no illegality, irregularity or jurisdictional error in State Commission order.
Arguments by Petitioner/Complainant
Vehicle wasn’t unattended as director was present, overseeing tire repair. Doesn’t meet criteria of ‘unattended vehicle’ under Exclusion Clause 6. Burden of proof is on insurer to prove conditions of exclusion clause were met. No evidence to conclusively state vehicle was unattended during theft. Thus exclusion clause 6 not applicable, repudiation of claim unjustified. Cites relevant precedent of NCDRC judgment in a similar controversy.
Arguments by Respondent/Insurer
Lower forums already assessed evidence, not to be re-appreciated. Exclusion Clause 6 and 11 rightly invoked for repudiating claim. Clause 6 – lacked proper care in carrying cash, left unattended in unlocked car. Gross negligence by complainant director. Failed to submit required purchase documents for the cash. No evidence proving deficiency of insurer. Breach of policy terms, hence insurer not liable.
Referred Laws and Sections
Section 21(b) of Consumer Protection Act. Exclusion Clause 6 and 11 of Insurance Policy. Reliance on precedents like Rubi Chandra Dutta v. United India Insurance.
Download Court Copy: https://dreamlaw.in/wp-content/uploads/2023/12/task-1.pdf
Full Text of Judgment:
1. The present Revision Petition (RP) has been filed by the Petitioner against Respondentas detailed above, under section 21(b) of Consumer Protection Act 1986, against the orderdated 20.08.2019 of the State Consumer Disputes Redressal Commission, Delhi (hereinafterreferred to as the ‘State Commission’), in First Appeal (FA) No.465/2018 in which orderdated 17.09.2018, District Consumer Disputes Redressal Forum, East (hereinafter referred toas District Forum) in Consumer Complaint (CC) no. 47/2016 was challenged, inter aliapraying to allow the present revision petition and set aside the order passed by the State Commission.
2. While the Revision Petitioner (hereinafter also referred to as complainant) wasAppellant and the Respondent (hereinafter also referred to as OP) was Respondent in the saidFA/465/2018 before the State Commission, the Revision Petitioner was complainant andRespondent was OP before the District Forum in the CC no. 47/2016.
3. Notice was issued to the Respondent. Parties filed Written Arguments/Synopsis on01.05.2023 (Petitioner/Complainant) and 01.05.2023 (Respondent/OP) respectively.
4. Brief facts of the case, as emerged from the RP, Order of the State Commission, Orderof the District Commission and other case records are that:-
The complainant company held a money insurance policy with the OP, covering theperiod from 13.06.2014 to 12.06.2015 for Rs. 10 lakhs. On 11.02.2015, around 6 P.M.,while returning from the office to their residence by car, the complainant had Rs.9,65,000/- and some office documents in a bag. At a Petrol Pump in CBD Ground,East Delhi, during a tire pressure check after refueling, the complainant discovered apuncture in the rear wheel. While repairing the tire, the complainant found their bagmissing from the car’s rear seat. CCTV footage revealed an individual taking the bagand fleeing on a motorcycle with another person. The complainant filed an FIR underSection 379 IPC at PS Anand Vihar, Delhi, and promptly informed the OP of the theftthrough a letter dated 12.02.2015. A Money Insurance Claim Form was dulysubmitted. Despite a thorough police investigation leading to an untraced report fromthe court on 06.07.2015, the OP appointed surveyor Naresh Jain. The complainantcooperated with the surveyor, providing responses to all inquiries, including thoserelated to CCTV footage and certified statements from M/s Padmini Chemicals andM/s S.N. Impex. However, the OP, through a letter dated 30.09.2015, repudiated theclaim on purportedly false and frivolous grounds outlined by the surveyor,significantly delayed by 230 days.
5. Vide Order dated 17.09.2018, in the CC no. 47/2016 the District Forum has dismissedthe complaint. Aggrieved by the said Order dated 17.09.2018 of District Forum, Petitionerappealed in State Commission and the State Commission vide order dated 20.08.2019 in FANo.465/2018 has dismissed the appeal and the dismissed the complaint.
6. Petitioner has challenged the said Order dated 20.08.2019 of the State Commissionmainly on following grounds:
i. That the Insurance Company must not unreasonably reject a claim due to a minorbreach of policy terms. When there’s a breach, the claim should be settled on a non-standard basis, not wholly rejected. However, this approach wasn’t acknowledged bythe State Commission. Additionally, the exclusion clause cited in the insurance policy(Exclusion Clause 6) wasn’t applicable in the circumstances of this case. Despite this,the State Commission unjustly dismissed the complainant’s claim entirely. As per theestablished law, when there’s a breach of policy terms or warranties, the claim should be settled based on non-standard considerations. The appointed surveyor misinterpretedthe case and the State Commission failed to consider the complainant’s statement andthe FIR, making adverse inferences that led to the denial of the claim.
ii. The dismissal of the claim on the grounds of the vehicle being unattended andunlocked, as well as the alleged inability to explain cash withdrawals, is contradicted bythe observations made by the surveyor. The surveyor conducted a thorough examinationand cross-verified the cash book entries with the bank statements, establishing thelegitimacy of the cash withdrawals. Furthermore, the surveyor verified the ledgeraccounts of specific entities, finding that the statements were consistent with the insuredaccounts. These observations challenge the basis for rejecting the claim and suggest thatthe actions and explanations provided by the insured were valid and supported byevidence.
iii. The State Commission didn’t consider the contradiction between the Surveyor’s findingsand the reasons given in the Repudiation Letter. The Surveyor clearly stated that thevehicle wasn’t unattended, contrary to the reasons cited by the OP for rejecting theclaim. The reasons cited by the OP regarding the complainant’s inability to clarify cashwithdrawals don’t align with the surveyor’s findings that the cash transactions werelegitimate. The State Commission overlooked essential contentions raised by thecomplainant, such as the purpose of the cash withdrawal and the necessity formaintaining cash balances in business operations. The Surveyor’s role was to assess theloss for the OP to quantify. However, the Surveyor, without substantiated grounds,claimed the loss couldn’t be established, despite acknowledging the alignment of the complainant’s account statements.
iv. The State Commission wrongly dismissed the complainant’s appeal without rectifyingthe non-consideration by the OP of crucial facts. The complainant was not providedwith a copy of the terms and conditions before the District Forum’s reliance on them,leading to an unfair dismissal. The reliance on Exclusion Clauses 6 & 11 by the StateCommission was misplaced and inconsistent with previous legal precedents. The OP’srepudiation of the claim was unjustified, constituting a deficiency in service andcausing both financial losses and mental distress to the complainant. The OP’s conductwarrants exemplary damages beyond the actual losses suffered by the complainant.
v. The complainant contends that the State Commission failed to acknowledge criticalpoints, such as the contradiction between the repudiation letter and the Surveyor’sreport, the purpose of cash withdrawals, and the necessity for maintaining cash balancesin business. Additionally, there’s a dispute regarding the non-disclosure of terms and conditions to the complainant and the incorrect application of exclusion clauses, resulting in an unjustified claim repudiation.
7. Heard learned counsels of both sides. Contentions/pleas of the parties, on variousissues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing,are summed up below.
i. The counsel for Petitioner/complainant argued that the central issue at hand in thisRevision Petition is whether the loss incurred by the Complainant falls within thepurview of Exclusion No.6 of the Insurance Policy. The State Commission determinedthat the insurer was not liable for the stolen money due to the exclusion clause relatedto theft from an unattended vehicle. However, the State Commission’s conclusion thatthe vehicle was unattended is erroneous. The cash was indeed in an unattendedbriefcase, yet the Director of the Complainant Company was present nearby, overseeing the repair of his car’s tire. This does not meet the criterion of the vehicle being unattended as specified in Exclusion Clause 6 of the Insurance Policy. The counselemphasizes the importance of witnesses’ statements present at the scene, particularlythose recorded in the Surveyor Report. The Surveyor, in that report, made a crucialobservation: “However, from police FIR and insured statement, it could be observedthat the vehicle was not unattended.”
ii. The counsel further argued that the burden of proof lies with the Insurer to establish thatthe conditions of the Exclusion Clause were met—specifically, to prove that the vehiclewas unattended at the time of the theft. Yet, there is no substantial evidence to supportthis claim. As per the Surveyor’s Report and other relevant statements, it cannot beconclusively stated that the vehicle was unattended during the theft. Consequently,Exclusion 6 of the Insurance Policy was not applicable in this case, rendering therepudiation of the claim unjustified. The counsel cites a precedent involving a similarcontroversy, referencing the judgment in’New India Assurance Co. Ltd. v. M/sPradeep Kumar Trilokchand, Revision Petition No. 699 of 2019.’ In that case, theNational Commission ruled in favor of the Consumer/Policy Holder against the Insurance Company, applying a similar legal principle.
iii. The counsel for Respondent/OP argued that the lower forums have already madefindings on the matter, and the National Commission isn’t supposed to reassess orreappreciate the evidence in revisional jurisdictions. The complainant’s company had amoney insurance policy, and an incident occurred where a bag containing cash andoffice documents was stolen from the complainant’s car. The complainant reported theincident to the police and the OP, filing a claim for the stolen amount. The counselcontends that the exclusion clauses 6 and 11 of the policy were invoked for repudiating the claim. Exclusion Clause 6 relates to the proper care and attention needed forcarrying a substantial amount of cash, emphasizing that the cash was left unattended onthe back seat of the car with the doors open. The OP alleges gross negligence on thepart of the director of the complainant company, contributing to the repudiation of the claim.
iv. The learned counsel argues that the complainant company does not qualify as aconsumer within the meaning of the Consumer Protection Act. The complainant failedto submit required documents related to the purchase of the property; list of office documents which were present in the same bag and the reason for carrying huge cashwithout proper care. This failure was rightly held by the District Forum. The counsel asserts that there is no concurrent evidence on record proving the deficiency of the OP, as per the findings of the District Forum. The counsel for respondent/OP concludes thatthere was a gross breach of terms and conditions of the policy, making the insurancecompany not liable to indemnify the petitioner.
8. We have carefully gone through the orders of the State Commission, District Forum,Surveyor’s report, repudiation letter, other relevant records and rival contentions of theparties. In this case there are concurrent findings of both the fora below against thePetitioner/complainant herein. State Commission has given a well –reasoned order after dulyconsidering the contentions of both side and relying on various judgements of the Hon’bleSupreme Court and NCDRC. Extract of relevant paras of orders of the State Commission isreproduced below:-
“9. Short question for adjudication in this appeal is whether there exists anyinfirmity in the impugned order dismissing the complaint as no deficiency wasfound in the subject as against the insurer, warranting interference by thisCommission. The District Forum has passed orders relying on Exclusion Clause 6Clause 11 of the policy. Those exclusion clauses are as under:
Exclusion Clause -6-
‘Money carried under contract of affreightment and theft of money fromunattended vehicle’
Exclusion Clause-11-
‘Loss or damage due to or contributed to by the insured having caused or sufferedanything to be done whereby the risks hereby insured against were unnecessarily increased.’
10. Exclusion Clause 6 envisages that cash- huge cash- is supposed to be kept dulyattended by somebody. In the subject matter the cash was being carried withoutobserving proper care inasmuch as the cash was lying on the back seat of the carand the door were kept opened. This is clear case where exclusion clause 6 ismanifestly applicable.
11. Point that remains unanswered is whether the due and necessary precaution ascontemplated under the aforesaid clause 6 was observed. The answer to this wouldbe, as analysed by the District Forum, in negative.
12. It is a trite law that the insurer is liable to indemnify the loss only in the eventthe insured has been found to be acting in conformity with the terms of the policy.Terms of policy are like any other contract enforceable keeping in the view theterms thereof.
xxxx
18. Coming back to the facts of the case it is undisputed fact that the cash waslying on the back seat of the car and the door of the vehicle were opened. This is aclear case of negligence on the part of the appellant. The Hon’ble NCDRC in thematter of G.B.S. Chauhan vs. United India Insurance Co. Ltd., as reported in IV[2017] CPJ 385 (NC) is pleased to hold that if the cash is taken away from theunattended car the insurer is not liable to indemnify the loss, the act beingcontrary to the terms of the policy.
19. Having regard to the legal position explained 1 am of the considered view thatthere exists no infirmity in the orders passed by the District Forum assailed beforethis Commission and accordingly upholding the said order, the appeal is dismissedleaving the parties to bear the cost. Ordered accordingly.”
9. District Forum has also given a well-reasoned order, extract of relevant observations ofDistrict Forum are reproduced below:-
“To analyse the exclusion clause 6, we have seen that complainant was carryinghuge case without proper care in his car and the cash was lying at the back seatand car doors were open. We have also seen the policy issued by OP (EX CW1/3)as Anne. C3 which specify that cash has to be kept during and after business hoursand limit was sum insured Rs. 10 lacs.
xxxx
Here cash was kept in a bag which was lying on the rear seat of the car and doorswere unlocked.
Here money was carried by the complainant from office to residence withoutproper care and custody.
xxxx
Here money collected by the complainant had exceeded 48 hours and as per hisown statement before FIR and surveyor does not correspond with the policy terms.We have also seen the Anne.CW1/5 page 20 where complainant had submittedstatement of account up to date 09.02.2015 which showed Rs 10,72,223.56/- andon 11.02.2015 incident of theft occurred in the evening, but there was no statementof account for 10.02.2015 and also no explanation for taking Rs 9,65,000/- andleaving Rs 1,07,223/ in the office.
xxxx
Complainant being in PVC trading business and dealing in huge cash transaction,should had been more vigilant for carrying huge cash, but after seeing the factsand evidences of the case there is no concrete evidence on record to provedeficiency of OP or has taken due care for the cash. It is clear that OP workdepend upon policy terms and condition and final report from their appointed surveyor. Here these points were found to be as per policy norms. So, neitherdeficiency of OP seen in their working nor any element of unfair trade practicewas proved by the complainant.”
10. Extract of relevant para/conclusion of Surveyor’s report is reproduced below:-
“7. Loss is though justified from cash balance as per cash book, but due to insuredinability to provide appropriate clarification for withdrawing the cash from bankson various dates despite having adequate cash balance in cash book to meet day today expenses creates doubts about the actual cash balance with the insured as onloss date. In such circumstances, I am of the opinion that the loss could not beestablished and so, the case may be closed as No Claim.”
11. As was held by Hon’ble Supreme Court in
Rubi Chandra Dutta Vs. United IndiaInsurance Co. Ltd.
[(2011) 11 SCC 269], the scope in a Revision Petition is limited. Suchpowers can be exercised only if there is some prima facie jurisdictional error appearing in theimpugned order. In
Sunil Kumar Maity Vs. State Bank of India & Ors.
[AIR (2022) SC577] held that “
the revisional jurisdiction of the National Commission under Section 21(b) ofthe said Act is extremely limited. It should be exercised only in case as contemplated withinthe parameters specified in the said provision, namely when it appears to the NationalCommission that the State Commission had exercised a jurisdiction not vested in it by law, orhad failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdictionillegally or with material irregularity.
”12. The Hon’ble Supreme Court in Rajiv Shukla vs Gold Rush Sales And Services Ltd.
Civil Appeal No. 5928 of 2022, decided on 8 September, 2022, held that:-
“13. As per Section 21(b) the National Commission shall have jurisdiction to callfor the records and pass appropriate orders in any consumer dispute which ispending before or has been decided by any State Commission where it appears tothe National Commission that such State Commission has exercised its jurisdictionnot vested in it by law, or has failed to exercise a jurisdiction so vested, or hasacted 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 isfound that the State Commission has exercised its jurisdiction not vested in it bylaw, or has failed to exercise the jurisdiction so vested illegally or with materialirregularity, the National Commission would be justified in exercising therevisional jurisdiction. 14. In exercising of revisional jurisdiction the NationalCommission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation ofevidence on record. Therefore, while passing the impugned judgment and order theNational Commission has acted beyond the scope and ambit of the revisionaljurisdiction conferred under Section 21(b) of the Consumer Protection Act.’
13. After careful consideration of all the facts and circumstances of the case, we tend to agreewith the findings of District Forum & State Commission. We find no illegality or materialirregularity or jurisdictional error in the orders of the State Commission, hence the same isupheld. Accordingly RP is dismissed.
14. The pending IAs in the case, if any, also stand disposed off.