Royal Sundaram Alliance Insurance Co. Ltd vs S.K. Samanta & Co. Pvt. Ltd

R.K. Agrawal, J., President Member

This Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986, has been filed by Royal Sundaram Alliance Insurance Co. Ltd., the sole Opposite Party in the Complaint (hereinafter referred to as the Insurance Company), against the Order dated 05.09.2013, passed by the West Bengal State Consumer Disputes Redressal Commission at Kolkata (hereinafter referred to as the State Commission) in SC Case No. FA/220/12.  By the Impugned Order, the State Commission has partly allowed the Appeal, preferred by the Insurance Company, and directed it to pay a sum of Rs.5,15,052/- instead of Rs.6,22,557/-, by modifying the Order dated 23.02.2011, passed by the District Consumer Disputes Redressal Commission, North 24 Parganas at Barasat (hereinafter referred to as the District Commission) in CC Case No. 43/2011.  By the said Order, the District Commission had partly allowed the Complaint, filed by the Complainant, Respondent herein, and directed the Insurance Company to pay to the Complainant a sum of Rs.6,22,557/- within one month, failing which it would carry interest @ 10% p.a. till its realization, as also further sum of Rs.5000/- towards litigation cost.

Briefly stated, the facts, leading to the filing of the present Revision Petition, are that the Complainant purchased two new Hydraulic Mobile Cranes of 12 Ton capacity, each at a sale consideration of Rs.9,75,052/-, vide Invoice No. Kol/9260 dated 30.03.2010 and Invoice No. Kol/9261 dated 30.03.2010 from Escorts Construction Equipment Ltd., Kolkata for using the same in its Project at Bhilai.  The Cranes were handed over to the road carriers, namely, M/s Super Cargo Carrier, Kolkata and M/s Kotak Transport Company, Kolkata for transportation from Kolkata to Bhilai through two trucks under Consignment Nos. 001013 dated 08.04.2010 and 380 dated 14.04.2010.  According to the Complainant, all the documents were produced before the Insurance Company before granting transit insurance policy in respect of both the Cranes, covering the transit risk without raising any objection.  While the truck carrying the Crane under Consignment No. 001013 dated 08.04.2010 safely reached at the destination, the truck carrying the other Crane under Consignment No. 380 dated 14.04.2010 due to brake failure met with an accident, causing serious injury to the Driver of the truck, who later succumbed to the injury at the hospital, and the Crane was also seriously damaged.  The Complainant reported about the accident to the Insurance Company, which deputed one Mr. S.R. Sarkar to carry out spot survey.  The spot survey was carried out and the Complainant was asked to shift the damaged Crane to the nearest authorized dealer of Escort Construction Equipment Ltd. for final survey.  Then, the Insurance Company deputed Mr. M.A. Rawani, Surveyor, Raipur, to conduct the final survey and assess the loss.  After examining the damaged Crane, the Surveyor suggested that the damage was so serious that the repairing cost would fetch nearly the value of the new crane and declared it a case of total loss.

According to the Complainant, when he preferred a claim in the matter, the Insurance Company agreed to settle the claim on net of salvage/total loss basis and given a proposal to the Complainant, wherein the salvage buyer was to make direct payment of Rs.4,50,000/- to the Complainant through demand draft and the said payment was to be adjusted from the claim amount to be paid by the Insurance Company.  The Complainant agreed to the proposal and handed over the damaged Crane to the nominated buyer Mr. Shobha Ram Viswakarma after receiving the aforesaid sum of Rs.4,50,000/- as salvage value as assessed by the Surveyor and requested the Insurance Company to settle the claim as per the advice of the Surveyor Mr. Rawani.  The Complainant also requested the Insurance Company for reimbursing the amount of Rs.16,150/-, paid by it to M/s Rajat Enterprises as rent for keeping the damaged Crane in their godown and also for its loading/unloading, in addition to the balance claim amount of Rs.6,22,557/-.  However, the Insurance Company repudiated the claim on the ground that the Crane in question was protruding outside the lorry, which was in violation of the Warranty.  As per the Warranty, the diamensional cargo was to be carried in low bed multi axle trailers, which was not complied with.  Alleging that there was no valid reason in repudiating the claim, the afore-noted Complaint came to be filed before the District Commission, praying for a direction to the Insurance Company to pay a total sum of Rs.8,30,472/-, including the claim amount of Rs.6,22,557/-.

Upon notice by the District Commission, the Insurance Company resisted the Complaint by filing its Written Version.  While contending that the District Commission had no territorial jurisdiction to entertain the Complaint on the ground that the accident occurred in Orrisa and no cause of action arose at Barasat, it was stated on its behalf that the Complainant was issued a Marine Cargo Specific Policy in respect of transit coverage of the Crane in question.  The coverage was subjected to specific terms and conditions as stipulated in the policy.  The survey report revealed that due to snatching of the rope, the front arm of the Crane in question disbalanced and, when the vehicle driver checked the speed, the vehicle skidded along with the consignment to a slope and capsized at its left and toppled, resulting in the damage to the Crane in question.  The consignment i.e. Crane was partly outside the lorry and it was also not covered with any tarpaulin though, as per the Warranty, closed vehicle/wagon duly covered with tarpaulins was to be used.  Specific warranties stipulated in the policy were required to be complied by the Complainant and upon compliance of those specific warranties the Complainant’s claim would have been admissible under the policy as policy was issued subject to those specific warranties, failing which the Insurance Company would have been absolved from the liability.  The Complainant expressly breached the warranties under the policy as he failed to carry the over diamensional cargo in low bed multi axle trailers and did not ensure that consignment was transported in a closed vehicle duly covered by tarpaulin.  The correspondence between the Surveyor and the Complainant could not be said silent acknowledgment on the part of the Insurance Company and the statements of the Surveyor could not bind the Surveyor.  As there was breach of the warranties under the policy, the claim of the Complainant was not payable.

After hearing learned Counsel for both the Parties and on consideration of the evidence adduced and the documents filed by them in support of their respective cases, the District Commission partly allowed the Complaint by observing and directing thus:

“Now the question is whether there was any breach of contract of the warranty or the repudiation of the claim was at all justified?

It is uncontroversial that the Insurance Company granted transit Insurance Coverage for both cranes from 08.04.2010 till the delivery of the second crane.  The first crane reached safely at its destination but the second crane met an accident enroot.  It is also not in dispute that Mr. S.R. Sarker has been appointed from Eastern Regional Office at Sale Lake to make spot survey of the accident and the final spot survey was made by Mr. M.A. Rawani.  Both the surveyors submitted their report.  The complainant has very much bank on the letter of Mr. Rawani dated 23.06.2010 addressed the complainant that the insurer agreed to settle the claim on net of Salvage/Total loss basis and the salvage buyer shall make direct payment of Rs.4,50,000/- and the said amount shall be adjusted from the claim amount to be paid by the Insurance Company.  The complainant has laid very much tests on the said letter and on relying upon the said letter, the complainant received Rs.4,50,000/- and requested the Insurance Company to pay the balance insurance amount to the tune of Rs.6,22,537/- plus other expenses including the cost of hiring charges.  According to the complainant the Insurer cannot resile from their own commitment to settle the claim on net of salvage/total loss basis.

On analyzing the evidence and the materials on record we find that the case put forward by the complainant is acceptable.  It is quite clear that the vehicles skidded along with the consignment to a slope of the road side and capsized at its left causing damage to the consignment and the truck.

The survey was made after the accident.  Then how the surveyor can say the subject crane was protruding outside the lorry.  It is equally true that the crane cannot be carried in a closed vehicle as per one of the clause of the warranty.  Finally the Insurance Company made a faint attempt that over diamensional cargo to be carried in low bed multi axle trailer.  It is noteworthy that the complainant did not choose the carrier.  The manufacturer in fact, handed over the cranes for carrying it by a truck and they know better by which vehicle this crane can be carried from Kolkata to Bhilai.  The subject matter of the policy was all transit risk to goods carried by lorry, tanker or rail.  The policy is clearly, therefore, a policy to cover loss to the goods in transit while being carried from one place to another by lorry.  So we do not find any breach of warranty.  More so when the insurance agreed to settle the claim on net of salvage/total loss basis and that to after parley’s with the surveyor and the complainant and subsequently the insurer cannot retreat from the commitment made by them on the ground alleged to have been set up with regard to breach of contract of the warranty mainly on two points that warranted over diamensional cargo to be carried in low bed multi axle trailer and closed vehicle duly covered by tarpaulin.

These two clauses are not attracted.  Thus it cannot be said that there was any breach of warranty.  This Forum has jurisdiction to try this case because the vital correspondence and the appointment of surveyor has been made from their Eastern Regional Office at Sale Lake.

What has been discussed in the foregoing line, we are of the view that the complainant is entitled to the balance claim of Rs.6,22,557/- as total loss.  The repudiation of claim is totally unjustified.

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The O.P. Insurance Company is directed to pay a sum of Rs.6,22,557/- to the complainant within one month from the date of communication of this order, failing which it would carry at interest @ 10% P.A. till its realization.

The O.P. Insurance Company is further directed to pay a sum of Rs.5,000/- towards the litigation cost. …”

Aggrieved with the Order passed by the District Commission, the Insurance Company carried the matter further in Appeal before the State Commission and the State Commission on reexamination of the matter, partly allowed the Appeal and in modification of the Order passed by the District Commission directed the Insurance Company to pay to the Complainant a sum of Rs.5,15,052/- instead of Rs.6,22,557/-, observing thus:

“It is very much on record that the insurance company was posted with the fact that the crane was being carried by a truck instead of by a Low Bed Multi Axle Trailer.  There was no objection whatsoever from the insurance company and no word of caution against the warranty conditions.  Failure on the part of the insurance company to desist the Complainant/Respondent from sending the insured crane through a truck otherwise than in a closed vehicle with tarpaulin cover exposes the hollowness of the conditions themselves  which the Ld. Forum below rightly hinted at, holding that a ‘crane can not be carried in a closed vehicle’.  Further the final surveyor categorically mentioned in his report (Page 3, Paragraph 7) that ‘On verification of registration certificate of the vehicle carrying the consignment, it was found to be in transit worthy condition as far as carrying capacity is concerned’.  The said final surveyor, however, after examination of all relevant facts and circumstances concluded that a sum of Rs.5,15,052/- only was assessed after recovery of salvage value.

We find it prudent to hold that the assessment made by the surveyor on total loss (net of salvage) basis is justified in so far as the nature of the accident and the terms and conditions of the policy are concerned and in that view of the fact the impugned order needs to be modified. …”

Still aggrieved with the Order passed by the State Commission, the Insurance Company is before us in the present Revision Petition.

Learned Counsel for the Insurance Company stated the State Commission failed to consider that as per the terms and conditions of the concerned policy of insurance the Crane could have been carried only in a low bed multi axle trailer but in the present case it was being taken in a truck, which could not have been considered as a low bed multi axle trailer, and further there was no tarpaulin over the consignment, which was also a violation of the terms and conditions of the policy.  The State Commission erred in concluding that though the Insurance Company knew that the consignment was being carried by a truck and not by a low bed multi axle trailer but it did not raise any objection and did not give any word of caution to the Complainant in order to desist it from sending the consignment through a truck otherwise than in a closed vehicle.  It was duty of the Complainant to abide by the terms and conditions of the transit insurance policy and, therefore, the question of issuing any word of caution did not arise.  Both the Fora below misread and misunderstood the terms and conditions of the policy while holding that the vehicle whereby the consignment in question was being carried was found to be transit worthy as far as carrying capacity was concerned.  From the photographs being taken by the licensed independent Surveyor, who was appointed to assess the loss after the alleged occurrence of accident, it was clear that the subject Crane was being protruding outside the truck, which was a violation of the terms and conditions of the policy.  Both the Fora below wrongly took the view that the Insurance Company agreed to settle the claim, inasmuch as the Insurance Company had given the consent for settlement only in respect of net loss on salvage basis, which does not mean that the Insurance Company had agreed to satisfy the entire claim of the Complainant.  Further, any letter in this behalf given by the Surveyor in his personal capacity does not make the Insurance Company liable.  There was a specific Excess Clause in the concerned policy of insurance, under which the Insurance Company is not required to pay first ten thousand rupees of any claim but both the Fora below have not considered the said Clause and, therefore, the Order passed by the State Commission is liable to be set aside.

On the other hand, learned Counsel for the Complainant, while reiterating that there was no violation of the terms and conditions of the concerned insurance policy and the Insurance Company had wrongly repudiated the claim, stated that both the Fora below on appreciation of the evidence adduced and documents placed on record by the Parties have rightly directed the Insurance Company to pay the claim amount and, therefore, the Revision Petition preferred by the Insurance Company is liable to be dismissed.

We have heard learned Counsel for the Parties and have perused the Orders passed by the State Commission and the District Commission, grounds taken in the Memo of Revision Petition and the documents filed along with it.

The contention of the Insurance Company that there was violation of the terms and conditions of the insurance policy on the part of the Complainant does not seem to be correct.  For the reasons recorded in the Order passed by the District Commission, which has been affirmed by the State Commission, we are unable to agree with the said contention.  Both the Fora below have given ample reasons why it cannot be said there was any violation of the terms and conditions of the insurance policy in carrying the insured Crane by a truck instead of a low bed multi axle trailer or a closed wagon/vehicle or a wagon/vehicle covered with tarpaulin and that the Crane was protruding outside the truck/lorry.  To reiterate, in the present case, the Manufacturer, in view of its vast experience and looking to the nature of the item to be transported, had decided to use a truck for the said purpose and the Final Surveyor had found the truck to be transit worthy as far as carrying capacity was concerned.  In such a situation, if for any untoward reason, an accident is occurred, the Insurance Company would be liable for indemnification of the loss suffered by the Insured.

As stated in the Order passed by the State Commission, before issuance of the transit insurance policy in question, the Complainant had submitted all the necessary documents with the Insurance Company, including the aforesaid consignment notes, stating that the transportation of the Cranes would be done through two trucks.  It appears that the Insurance Company did not consider all the documents furnished by the Complainant and issued the insurance policy in a routine manner without raising any objection to the Cranes being transported through trucks though (i) the vehicles (trucks) sought to be used for transportation of the Cranes; and (ii) the Warranty stipulated in the insurance policy as regards transportation of over diamensional cargo by low bed multi axle trailers or closed vehicles/wagons and vehicles/wagons covered with tarpaulins, were at contrast to each other.  In such a situation, the submission of the Insurance Company that it was not required to put a word of caution to the Complainant is misconceived.  In view of the facts and circumstances of the Case, the State Commission has rightly observed that though the Insurance Company was posted with the fact that the Cranes would be transported through two trucks but it did not put a word of caution to the Complainant that it would result in violation of the terms and conditions of the insurance policy.

Coming to the submission of the Insurance Company that it had given the consent for settlement only in respect of net loss on salvage basis and the same does not mean that it had agreed to satisfy the entire claim of the Complainant, we find that the Surveyors are appointed by the Insurance Companies and they work strictly as per the directions given and the mandate assigned to them by the Insurance Companies.  While doing so, they are required to inspect the spot; verify the records, including the relevant goods and documents etc.; assess the loss suffered by the Insured in accordance with the terms and conditions of the insurance policy concerned; and thereafter furnish their report to the Insurance Companies accordingly.  In the present Case, Mr. M.A. Rawani had been appointed by the Insurance Company as the Surveyor to assess the loss.  After carrying out the inspection and assessing the loss, he had submitted his report dated 08.08.2010, treating the case as a claim on total loss (net of salvage) basis.  Before that vide his letter dated 23.06.2010, the said Surveyor had intimated the Complainant that the Insurer had agreed to settle the claim on net of salvage/total loss basis, under which the salvage buyer would make direct payment of Rs.4,50,000/- to you through DD and had given certain instructions.  Accordingly, as stated in the survey report dated 08.08.2010, quotations for disposal of the salvage (Crane) were called for and the same was handed over to one Mr. Shobha Ram Vishwakarma after receiving salvage value of Rs.4,50,000/-.  We are of the considered opinion that the said action by the Surveyor could not have been taken without obtaining necessary instructions from the Insurance Company.  It is true that a Surveyor is required to apply its own independent mind for assessing the loss suffered by an Insured but in all probabilities it cannot be accepted that the Surveyor would take the said action without obtaining instructions in this behalf from the Insurance Company concerned.  If in the discharge of its duty, the Surveyor has addressed the letter dated 23.06.2010 to the Insured (the Complainant) in connection with the settlement of the claim on total loss basis and disposal of the salvage, it cannot be said that the Insurance Company will not be liable to settle the entire claim.  In the present case, it seems that as an afterthought the Insurance Company had declined to honour the claim made by the Insured (the Complainant).

Finally, coming to the submission of the Insurance Company that the Fora below have not considered that there was an Excess Clause in the insurance policy, under which it is not required to be pay first ten thousand rupees of any claim, we do not find that any such submission was made by the Insurance Company before the Fora below and perhaps because of this reason the said Clause has not been taken into consideration by both the Fora below, resulting in the award made in favour of the Complainant, without deducting the amount of Rs.10,000/- in terms of the said Clause.  Even then, since the said Clause is an integral part of the insurance policy, the amount of Rs.10,000/- is required to be deducted from the amount awarded in favour of the Complainant.  Accordingly, the Insurance Company is at liberty to deduct the said amount from the amount payable to the Complainant.

In view of the aforesaid discussion, the Revision Petition is partly allowed.  The Insurance Company is directed to pay to the Complainant the amount awarded by the State Commission, after deducting a sum of Rs.10,000/- towards Excess Clause, as stated in the Insurance Policy.  Rest of the directions given by the District Commission and affirmed by the State Commission shall remain unchanged.  There shall be no order as to costs.