ORDER BY HON’BLE PRESIDENT- MR. P.K. PADHI:
JUDGMENT
Complainant has filed this consumer complaint U/s.35 of C.P. Act, 2019 seeking following reliefs;
“Direct the opposite parties No.1 & 2 to settle the claim amount of Rs.24,16,076.98 paisa and pay Rs.10,00,000/- (ten lakhs) towards mental agony, harassment and litigation expenses”.
The brief fact of the case is that, the complainant purchased one Crawler Excavator Volvo Ex 210D, Machine, SL. No.VCEC210DP00252198 and insured the machine under opposite parties No.1 & 2 by paying Rs.25,535/- vide policy No.32161831 on 10.02.2022 and the policy was effective from 09.02.2022 to 08.02.2023. The excavator of the complainant was engaged at sand quarry for excavating of sand at Ambagaon Masinta sand bed River Brahmani under the district Debagarh and during operating on accidental machine came to contact with water for which the machine breakdown for which complainant immediately contacted to the opposite party No.2 accordingly opposite party No.2 deputed one surveyor for verification of the facts and collection of required documents, after verification the surveyor submitted report to the opposite party No.2 on 26.3.2022. After inspection report and advice of the surveyor and opposite party No.2 the machine handed over to the authorized dealer opposite party No.3 to repair the same accordingly the opposite party No.3 prepared workshop inspection report on 21.4.2022. During repair period the complainant approach the opposite party No.2 to give some advance amount but he assured the complaint to repair the same and after completion of the work he will pay the entire bills amount. After completion of the work the complainant submitted the bills of Rs.24,16,076.98 paisa before the opposite party No.2 on 04.11.2022 but he did not accept the bills and rejected the claim application with some grounds which is not maintainable in the eye of law and out of terms and conditions.
Opposite parties No.1 & 2 appeared and filed their written version stating as under;
The complainant insured Crawler Excavator SRNo.VC EC 210 DP 00252198 vehicle with opposite parties No.1 & 2 and opposite parties issued one contract plant and machinery policy No.32161831 covering risk of the vehicle from 09.02.2022 to 08.02.2023 on the basis of terms and condition of the policy. After receipt of the claim intimation opposite parties appointed one surveyor and he submitted important observations are the excavator was employed on the sandy river bank of the Brhamani river. At the time of swinging of the boom machine slipped in to the water of the river. There was current in the river water and slope in the river bed. So, the machine got pulled inside river and was around 15/20 feet away from the sandy river bank when it was retrieved by crane. Surveyor visited the spot on 07.3.2022 when the insured’s excavator was inside the river and not lifted out and conducted survey on the spot. It was found during survey that, the machine was being lifted with the help of a crane. As evident from the photographs shared by insured and visual observation, engine and hydraulic pump compartment was completely submersed and cabin was partially submerged. It was found that the insured’s machine was used in sandy river bank of the Brahmani river due to which reason the machine slipped in to the water of the river and consequently the machine got pulled inside river. Thus the machine was used in wet work which was used against the warranty of the equipment’s policy terms and conditions. A warranty imposes certain obligations on the insured, and it is amply clear that a warranty needs to be complied as specified in policy term and condition. If it’s non-compliance materially affects the cause of loss then there is a breach of warranty and the insurer is discharged from liability from the date of such breach. So opposite parties shown their inability to pay the claim vide letter dtd.14.9.2022 rightly as per policy term and conditions.
We have gone through the consumer complaint, written version, written note of argument of both sides, citations and annexure.
The accident took place during currency of policy is not in dispute and the husband of complainant expired after the claim was rejected as complainant failed to repay the loan has not been disputed by opposite parties.
Now the question before us as to whether keeping such clause excluding to work in certain places is permissible and is it not unfair trade practice and whether the opposite parties have properly explained regarding the exclusion clause to the policy holder and properly communicated regarding the exclusion clause and what is the law of the land in this respect and what is the purpose.
The aim of insurance is to reduce financial uncertainty and make accidental loss manageable. It does this substituting payment of a small known fee on insurance premium to a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss.
Complainant has filed and relied on the decision of Hon’ble Supreme Court on the case of M/s. Texco Marketing Pvt. Ltd. vrs. Tata AIG General Insurance Company Ltd. (2002 Live Law (SC) 937 in C.A. No.8249/2022) wherein Hon’ble Supreme Court has held as under;
“Consumer Protection Act, 2019 - Consumer Commission has power to issue directions for consequential relief if the terms of the contract are found to be unfair.
The principles governing disclosure, good faith and notice are founded on the common law principle of fairness. These principles are meant to be applied with more rigour in standard form contracts such as insurance contracts. Such an application is warranted much more when we deal with an exclusion clause. A very high standard of good faith, disclosure and due compliance of notice is required on the part of the insurer, keeping in view the unique nature of an insurance contract.
An act of good faith on the part of the insurer starts from the time of its intention to execute the contract. A disclosure should be a norm and what constitutes a material fact requires a liberal interpretation. It is only when an insurer is not intending to act on an exclusion clause, the aforesaid principles may not require a strict compliance. The three elements which we have discussed are interconnected and overlapping. It is the foremost duty of the insurer to give effect to a due disclosure and notice in its true letter and spirit. When a exclusion clause is introduced making the contract unenforceable on the date on which it is executed, much to the knowledge of the insurer, non-disclosure and a failure to furnish a copy of the said contract by following the procedure required by statute, would make the said clause redundant and non-existent.
None of you nowadays will remember the trouble we had – when I was called to the Bar- with exemption clauses. They were printed in small print on the back of tickets and order forms and invoices. They were contained in catalogues or timetables. They were held to be binding on any person who took them without objection. No one ever did object. He never read them or knew what was in them. No matter how unreasonable they were, he was bound. All this was done in the name of “freedom of contract.” But the freedom was all on the side of the big concern which had the use of the printing press. No freedom for the little man who took the ticket or order form or invoice. The big concern said, “Take it or leave it.” The little man had no option but to take it. The big concern could and did exempt itself from liability in its own interest without regard to the little man. It got away with it time after time. When the courts said to the big concern, “You most put it in clear words,” the big concern had no hesitation in doing so. It knew well that the little man would never read the exemption clauses or understand them. It was a bleak winter for our law of contract….”
On a discussion of the aforesaid principle, we would conclude that there is an onerous respo0nsibility on the part of the insurer while dealing with an exclusion clause. We may only add that the insurer is statutorily mandated as per Clause 3(ii) of the Insurance Regulatory and Development Authority (Protection of Policy Holder’s Interests, Regulation 2002) Act dated 16.10.2002 (hereinafter referred to as IRDA Regulation, 2002) to the effect that the insurer and his agent are duty bound to provide all material information in respect of a policy to the insured to enable him to decide on the best cover that would be in his interest. Further, sub-clause (iv) of Clause 3 mandates that if proposal form is not filled by the insured, a certificate has to be incorporated a t the end of the said form that all the contents of the form and documents have been fully explained to the insured and made him to understand. Similarly, Clause 4 enjoins a duty upon the insurer to furnish a copy of the proposal form within thirty days of the acceptance, free of charge. Any non-compliance, obviously would lead to the irresistible conclusion that the offending.
The complainant has also relied on the judgment of Hon’ble Apex Court in the case of Golak Chand (D) THR LRs vrs. Axis Bank & others SLP No.14140/2020 which in our considered opinion not much relevant as in that case the Insured Company dealt after the death of insured person in a different manner after learning the death of insured but in the present case the opposite parties only rely on the exclusion clause of the policy as such the decision of Hon’ble Supreme Court is not of much relevant to the present case.
The complainant has also relied on the decision of NCDRC in the case of IFFCO TOKIO General Insurance Co. Ltd. vrs. Asman Ghad, Hyderabad, A.P. wherein Hon’ble NCDRC in para 8 of judgment has held as under;
“It is an admitted fact that the machine had fallen down due to loose earthen soil and was damaged. The spot surveyor, in his report, had categorically stated that due to loose soil the vehicle lost control and fell down from upside place causing damage to the insured machine. He never mentioned that the peril was not covered. Even the second surveyor Sh. D.R. Krishna Murthy also used the same very words that the damage was caused due to the machine having turned and rest on its side due to loose earthen soil. The complainant has also filed his affidavit by way of evidence and Mr. K. Suresh Kumar Reddy, partner deposed in his affidavit that the Volvo Hydraulic Excavator machine was going towards ramp for excavating further work, the undernearth earthen soil with boulders got loosened and due to that position the Volvo Hydraulic Excavator machine slipped down despite best efforts made by the operator to stop the machine from slipping and it slipped by 7 to 8 feet back and rested on the left side of the machine. In the meanwhile some loose boulders and big stones also slipped and fell on the machine causing damage to cabin, radiator, cooler, bucket cylinder and engine oil leakage. A perusal of the material on record does not show any documentary evidence to establish that the damage was caused because of over-turning. Material on record establishes t ha t the damage was purely accidental and happened on account of loose soil because of which the machine had slipped down. The surveyor had reported that there was damage on account of loose soil but stated that over-turning is not covered. Merely because the machine slipped down and ail on the left had side, the Insurance Company cannot bring it within the ambit of overturning to repudiate the claim. The complainant in order to prove the loss also file the rep air bills for 29,31,626.25/- from M/s Vijay Engineering Equipment India P. Ltd.
In the result this Appeal is dismissed accordingly with no order as to costs. Statutory deposit shall be refunded to the Insurance Company. Needless to add, the amount deposited by the Insurance Company in compliance of the order dated 22.04.2010 together with the interest accrued shall stand released to the complainant only to extent of decretal amount. The balance, if any, shall be released to the Appellant Insurance Company.”
The opposite party has also filed one decision of Hon’ble Apex Court in the case of Export Credit Guarantee Corpn of India Ltd. vrs. M/s Garg Sons International in civil Appeal No.1557/2004 along with good number of other cases wherein Hon’ble Apex Court has held as under;
“Export Credit Guarantee Corp. of India Ltd. Vrs. M/s Garg Sons International in Civil Appeal No.1557/2004”.
The opposite parties have also relied several other cases which are quoted below;
“(M/s. Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd. (2010) 10 SCC 567), (Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR 1999 SC 3252; Polymat India P. Ltd. v. National Insurance Co. Ltd., AIR 2005 SC 286; M/s. Sumitomo Heavy Industries Ltd. v. Oil & Natural Gas Company, AIR 2010 SC 3400 & Rashtriya Ispat Nigam Ltd. v. M/s. Dewan Chand Ram Saran AIR 2012 SC 2829)” and thus prayed to dismiss the consumer complaint.
Now the issue to be decided whether putting such clause in small letter without express by intimating and rejecting the claim after asking the complainant to repair the machine is coming within the purview of unfair trade practice and deficiency in service.
As per the consent of opposite parties the complainant has repaired the Excavator machine by spending huge amount and bill of Rs.24,16,076.98 paisa was submitted before opposite party No.2 on 04.11.2022, which was not accepted but prior to that after the accident the opposite parties vide letter dtd.26.3.2022 (Annexure-2) have directed as under;
“SUB- Claim Number 32027566, under Policy Number 32161831, Date of Loss- 05/03/2022, Insured- Rajashree Behera.
Dear Sir
This is in reference to the claim reported under the captioned policy vide mail dated 07/03/2022 wherein, Er. Rabi Narayan Tripathy was deputed for verification of the facts and collection of required documents.
We have received the survey report and on examination of the same along with other claim documents and declarations, following are the observation for the submitted claim.
- The excavator was employed on the sandy river bank of the Brahmani river. At the time of swinging of the boom the machine slipped in to the water of the river. There was current in the river water and slope in the river bed. So, the machine got pulled inside river and was a round 15/20 feet away from the sandy river bank when it was retrieved by crane. Surveyor visited at the spot 07.03.2022 where the insured’s excavator was inside river and not lifted out and conducted survey on the spot.
- It was found during survey that, the machine was being lifted with the help of a crane. As evident from the photographs shared by insured and visual observation, engine and hydraulic pump compartment was completely submersed and cabin was partially submerged. Period of submergence was more than 24 Hrs.
We wish to highlight the warranties under the policy held by you which reads as under:
- Warranted the equipment’s should not be used in Wet Works, Bridges/Tunnel/Underground work/Hilly Areas/Coal Mines or Coal Mining Activities/Offshore activities/ Oil Rigs/Hydro power & River Basin projects (Underground or Open).
Please not that these warrantees under the policy is a precedent to the admission of any liability by the insurer and since the claim falls under warrantee as explained above, the insurer may repudiate their liability.
In light of the facts stated above, we regret to inform you that your claim is not tenable and doesn’t fall under the purview of the policy.
We however regret having lost an opportunity to serve you.
Thanking You
Yours sincerely,
For IFFCO- TOKIO General Insurance CO. Ltd.”
Putting some clause unilaterally to the disadvantage of insured is like taking the soul from body as the Excavator machine is supposed to be deployed in river basin, mines and putting the clause not to work in such place in our considered opinion amounts to unfair trade practice and it is an offending clause written in small letters to befool the insured and to cheat who pays premium to insure her machine from any untoward incident as such the clause put by opposites parties void abinitio and cannot be sustained and non receipt of bills and settle the claim amounts to deficiency in service and unfair trade practice moreover the excavator in fact being used to take away earth/sand from the bank of the river has got overturned. This fact does not show that it was used in wet work or any other work under the warranty. So the repudiation on vague ground is deficiency in service on the part of opposite parties for which we have to decide what amount the complainant is entitled.
It is not disputed that the husband of complainant has expired in the meantime may be out of shock due to delay/non settlement/apprehending repudiation of claim and complainant is a widow lady and she has to run the machine and maintain her livelyhood. Keeping the aforesaid fact, point of law and issue, deficiency in service, unfair trade practice of opposite parties we held that there is deficiency of service and unfair trade practice on the part of opposite parties. The surveyor has already calculated the loss of Rs.29,48,570.44 paisa. It is settled in law that the surveyor report can be the basis for settlement of claim in the present case surveyor has made some deduction without any basis. Therefore the actual loss has been assessed as Rs.29,48,570.44 paisa. However the complainant produced Annexure 4 series with regard to the purchase of parts and the payments made. However complainant has filed the bills etc. towards purchasing and repairing of the excavator and thereby claim Rs.24,16,076.98 paisa.
Therefore we hereby direct the opposite parties to settle the claim by paying Rs.24,16,076.98 paisa (Rupees twenty four lakhs sixteen thousand seventy six and ninety eight paisa) rounded to Rs.24,16,077/- with 12% interest from the date of accident to till date of payment and we award compensation of Rs.10,00,000/- (ten lakhs) towards mental agony and deficiency in service and Rs.25,000/- towards litigation expenses. The aforesaid decrital amount to be paid by opposite parties within 30 days of passing of the order failing which opposite parties shall pay Rs.2,000/- per day. The opposite parties No.1 & 2 are jointly and severally liable to pay the aforesaid decrital amount. With the aforesaid observation and direction consumer complaint is disposed of.
Pronounced in the open Commission on this 24th August,2023.
