MANJIBHAI LALJIBHAI PATEL vs United India Insurance Co. Ltd

THE complainant is the owner of the goods transport vehicle who has admittedly insured his vehicle with the opponent. During the insurance period while carrying certain goods which are alleged to be hazardous by the opponent, the transport vehicle caught fire and was badly damaged. THE driver immediately informed the fire brigade authority who arrived at the local spot and extinguished the fire. THE insured made a claim with the opponent but the opponent rejected the claim on the ground that under the Provisions of Explosive Act, 1984 the complainant was required to obtain additional per mit from the concerned R.T.O. to carry/ transport hazardous goods in a public place and since at the time of the accident, the vehicle was carrying Benzen, Form aldihydle and Nitric Acid which are hazardous in nature, it was compulsory and legally necessary for the complainant to obtain special permit to carry above goods. Since no such permission was obtained, same amounted to breach of policy condition of limitation as to use and that breach being material, the claim was repudiated.

THE Insurance Company has filed the written statement where the same defence is taken and alongwith the written statement, the opponent has produced an order by the State Transport Authority, Gujarat State, Ahmedabad made under the Provisions of Section 53(2) and Section 56(2)(vii) of the Motor Vehicles Act, 1939 under which it was resolved that an additional condition as prescribed below to the existing private and public carrier permits under which the vehicles are being used or will be used for transportation of hazardous chemicals in the State of Gujarat or outside the area of Gujarat State in interest of safety of public. THE conditions are with regard to the special labels or notices which are required to be affixed on packages and/or vehicles etc. THE names of the chemicals and correct technical names should be invariably displayed on the packages or vehicle carrying the chemicals. Driver must carry the instructions in writing relating to such danger ous substances etc. But nowhere this order prescribes a special permit for plying the vehicle while carrying the hazardous chemicals. Mr. H.J. Bhatt, the learned Advocate for the opponent could not point out a specific para where such a permission was necessary. To this the learned Advocate for , the complainant draws our attention to a letter written by RTO dated 18.5.91 which was addressed to the United India Insurance Company-the opponent in which it is written that the permits which are issued under the Provisions of Section 79 of the Motor Vehicle, Act, 1988 with all the necessary terms and conditions but there is no mention about separate permit required for transporting the chemicals or dangerous goods. We, therefore, asked Mr. Bhatt to point out a specific requirement of such permit. Mr. Bhatt relies upon the Provisions of Motor Vehicle Act, and submits that letter of the RTO cannot override the Provisions of the Act and Provisions of Act are binding to the complainant. It is not disputed that the complainant was plying the vehicle that required permit. No doubt, mere is no special permit. But as Mr. Bhatt has pointed out requirement of special permit, we shall have to believe that the complainant was having the required permit as stated by the RTO and had only to observe the Provisions contained in the order referred to above. Now, this order does require certain labels affixed and certain details written both on packages and truck. No such plea has been raised by the opposite party that such labels were not affixed on the truck or on the packages. Assuming that it is the duty of the complainant that he has to prove such labels were affixed, since there is no specific evidence on this point, it is very difficult to arrive at a conclusion that no labels were affixed in the packages. Persons who are sending the goods may also be required to affix the labels. In any view of the matter, we are of the opinion that it would not have made any difference if the labels are affixed on the packages. If the fire is the result of the chemicals as submitted by the Insurance Company, affixing of labels etc. does not make any difference. In any view of the matter, assuming for the sake of argument that the labels were not affixed on the packages or truck, the breach of this condition is non-standard breach which does not go to the root of the matter or has no direct relationship with the accident or fire. There is a circular of the Insurance Company itself that even if there is a breach of non-standard condition, the Insurance Company can pay 75% of the damages. The learned Advocate for the complainant, to put an end to this dispute, agrees that if 75% of amount claime with interest and cost is awarded, his client would be satisfied. We are, therefore, of the opinion that in case labels are not fixed, the breach would be the breach of non-standard conditions of the policy. The policy does not mention anywhere that when dangerous goods are carried, certain formalities shall have to be observed. We are, therefore, of the opinion that in absence of specific evidence, if the complainant is awarded 75% of the actual damages suffered, the interest of justice would be served.

In this case the survey report of Udayana Vora has been produced by the Insurance Company and on Page 4 thereof the surveyor has assessed the damages of spare parts requiring replacement at Rs. 2,21,260/-. Deducting 25% as depreciation on spares except glasses he has arrived at Rs. 1,67,015/-. From this amount he has again deducted certain depredation and ultimately fixed the liability of Rs. 1,61,500/- against the I.E.V. of the insured LCV which was Rs. 230,000/-. There is a second type of assessment known as cash loss basis where he has come to the conclusion that on cash loss basis, the amount would be Rs. 1,89,500/- and he has put the salvage cost at Rs. 75,000/- and reduced the amount to Rs. 1,14,500/-. In the third method employed by him he has assessed the value at Rs. 1,95,000/-. However, the Insurance Company has not offered anything and, therefore, we have to find out which is best method.

WE have seen that by three methods, he has assessed the damages Rs. 1,61,500/-. 1,14,500/- and Rs. 1,95,500/- while on cash loss basis, he has arrived at Rs. 89,850/- only whereas the truck has been insured for Rs. 2,30,000/- which badly damaged. Three methods are so contradictory to each other that we are unable to accept the cash loss basis. The reason is that admittedly, the truck was insured for Rs. 230,000/-. The complainant is prepared to return, the salvage because according to him the value of salvage cannot exceed Rs. 25,000/-. If we accept the salvage at Rs. 75,000/- and the truck is taken into total loss, on that basis the complainant will get minimum Rs. 1,55,000/-. Therefore cash loss basis is method is rejected. The minimum value assessed on total loss basis is Rs. 1,90,000/- less Rs. 500/- less Rs. 75,000/- for salvage which comes to Rs. 1,14,500/-. Since the complainant is agreeable to return the salvage, he will be entitled to get Rs. 1,90,000/- less Rs. 500/- on total loss method. It may not be forgotten that the truck was of 1989 model and met with an accident immediately in 1990 and, there cannot be de preciation exceeding 15%. We, therefore, are of the opinion that the total loss basis taken by the surveyor may be taken as a basis or the spare damage assessment value of Rs. 1,61,500/- be taken as the proper value. Obviously, Mr. Bhatt would prefer the lesser value. We are, therefore, of the opinion that the Insurance Company is liable for Rs. 1,61,500/- and salvage should be returned by the complainant. As we have stated, since the complainant is prepared to accept 75% of the value assessed, the total loss would come to Rs. 1,21,000/-. The complainant is also entitled for interest which we award @ 15% only after three months from the date of accident till full payment is made and cost which we quantify at Rs. 500/-. The complainant shall return the salvage to the Insurance Company as soon as he gets the notice and the notice shall be given within 4 weeks. The Insurance Company can delay the payment if the salvage is not received. ORDER The Insurance Company is directed to pay Rs. 1,21,000/- with running interest @ 15% after three months from the date of the accident till the full payment is made and shall pay the cost of Rs. 500/- only. The payment shall be made within 4 weeks from the date of receipt of this order. Complaint allowed.