CONSUMER DISPUTES REDRESSAL FORUM II
Udyog Sadan, C-22 & 23, Qutub Institutional Area
(Behind Qutub Hotel), New Delhi-110016.
Case No. 861/2009
M/s Forech India Ltd.
S-23, Green Park Extension,
New Delhi 110016. Complainant
Vs
The New India Assurance Co. Ltd.
Through its Divisional Manager
R-7A Green Park
New Delhi 110016.
Also At
87, Mahatma Gandhi Road,
Fort, Mumbai – 40023 -Opposite Party
Date of Institution 07.11.2008 Date of Order 25.08.2015
Coram:
N.K. Goel, President
Naina Bakshi, Member
O R D E R
The complainant company through its General Manager and one of the Principal Officers duly authorised by the resolution of the Board of Directors dated 10.11.2000, namely, Sh. Krishan Aggarwal, filed the complaint before the State Consumer Dispute Redressal Commission, Delhi.
The case of the complainant is that the complainant had got the Machinery Breakdown Insurance Policy from the OP on 10.8.1998 vide policy No. 311500/44/98/38024 which was renewed on 06.08.2000 for the period 10.8.1999 to the midnight of 09.08.2000; that the Roto Cure Machine 1.47 2.2 meter, Make Hermann Berstorf Germany was insured which covered different parts amounting to Rs. 55,00,000/- and the component Steel Band of the Roto Cure Machine was specifically insured for Rs. 16,00,000/-. On 24.10.1999 the Steel Band of the Roto Cure Machine broke and the OP was informed who appointed a surveyor on 25.10.1999. Thereafter the complainant company purchased a new steel band from M/s Hermann Berstorff Machinenbau Gmbh vide invoice no. 99/09344/VL dated 27.10.1999 and got it cleared from the customs on 02.11.1999 and the total cost of replacement of the said broken steel band came to Rs. 15,67,428/-. The surveyor of the OP visited the complainant company on 23.11.1999 and found that the Roto Cure Machine was running satisfactorily. Accordingly, a claim of Rs. 15,67,428/- was raised upon the OP by the complainant company which after several correspondences was declined by the OP citing the reason that the steel band fell under the special exclusion clause No. 2 under the Machinery Insurance Policy Clause. No term of exclusion or any special exclusion clause was ever provided by the OP to the complainant at the time of initial insurance or the renewal thereof. Moreover, if the said part was to fall under any exclusion clause, it does not stand to logic as to how the OP would have insured the said part for an amount of Rs. 16 lacs. OP was served with a legal notice dated 22.12.2007.
It is stated as follows:-
20. That the Complainant Company is entitled for their claim to the tune of Rs. 15,67,428/- (Rupees Fifteen Lakhs, Sixty Seven thousand Four hundred Twenty Eight only), interest thereon from 15.4.2000 to 31.01.2008 at the rate of 18% p.a. to the tune of Rs. 21,99,895/- (Rupees Twenty One Lakhs, Ninety Nine thousand, Eight hundred, Ninety Five only), Rs. 5,500/- (Rupees Five Lakhs only) as the cost of legal notice and Rs. 5,00,000/ (Rupees Five Lakhs only) as compensation for mental agony and harassment, totalling Rs. 42,72,823/ (Rupees Forty Two Lakhs, Seventy Two thousand, Eight hundred, Twenty Three only).
Therefore, the complainant filed the present complaint with the following prayers:
(1) Be allow an amount of Rs. 42,72,823/- (Rupees Forty Two Lakhs, Seventy Two Thousand, Eight hundred, Twenty Three only) and the interest pendentelite thereon may be declared payable to the complainant company by the OP and the OP may be directed to pay the said amount to the complainant company within 30 days of the order of this Hon’ble Commission.
(2) Cost of the complaint may be awarded in favour of the complainant company.
The complaint was registered as CCNo. 08/29. The State Commission passed an order on 12.3.2008. The relevant part of the order is reproduced as under:
5. Since the complainant is not in possession of the exclusion clause, the grievance of the complainant can be remedied at this stage by directing the OP to give reply to the legal notice issued by the complainant, within 15 days from the date of receipt of this order, pointing out the exclusion clause which complainant has not produced before us. If the complainant still has any grievance, he can make an application before us for revival of the complaint within one month from the date of receipt of communication from the OP.
Thereafter the complaint was got revived. on 8.8.2008, the State Commission observed that even if the allegations made in the complaint are assumed to be correct and proved the amount of compensation cannot exceed Rs. 20 lacs for the purpose of pecuniary jurisdiction. Hence, the State Commission transferred the case to this Forum.
In the written statement the OP has inter-alia pleaded that the complainant is not a consumer as defined under the Consumer Protection Act as the services availed by the complainant were for commercial purposes. Reliance has been placed on exclusion clause No. 2 of the policy of insurance which reads as under
Loss of or damage to belts, ropes, chains, rubber tyres, dies moulds, blades, cutters, knives or exchangeable tools, engraved or impression cylinders or rolls objects made of glass, porcelain, ceramics, all operating media (e.g. lubricating oil, fuel, catalyst, refrigerant, dowtherm) felts, endless conveyor belts wires, sieves, fabrics, heat resisting and anticorrosive lining and parts of similar nature, packing material parts not make if metal (except insulating material) and non-metallic lining or coating of metals parts.
It is pleaded that in view of the exclusion clause, the entire claim of the complainant was repudiated by the OP vide their letter dated 21.02.2006 after full application of its mind. However, the fact that steel band of Roto Cure Machine was specifically got insured by the complainant for Rs. 16 Lacs has not been denied in the written statement. It is prayed that the complaint be dismissed.
Complainant has filed a rejoinder to the written statement.
Affidavit of Sh. Krishan Aggarwal has been filed in evidence on behalf of the complainant company. On the other hand, affidavit of Sh. Suriender Batoha, Senior Divisional Manager of the OP has been filed in evidence.
Written arguments have been filed on behalf of the parties.
We have heard the counsel for the parties and have also carefully gone through the record.
The main contention raised on behalf of the OP is that the transaction in question being of commercial nature, this Forum has no jurisdiction to entertain the complaint. It is also contended that the complaint involves complicated questions of facts and law which require detailed evidence, examination and cross-examination of expert witnesses and records and the same cannot be decided in the summary proceedings before this Forum. It is further contended that the repudiation of the claim of the complainant under exclusion clause 2 of the Policy in question was perfectly justified. On the other hand, Ld. Counsel for the complainant has relied on the decision reported as Harsolia Motors Vs National Insurance Co. Ltd., Manu/CF/0083/2004 I(2005)CPJ27(NC) and Indraprastha Gas Ltd. Vs. New India Assurance Co. Ltd. & Ors, Manu/CF/0952/2014 I(2015)CPJ279(NC) and has contended that from the facts and circumstances of the present case, it transpires that the transaction in question was not of commercial nature and, hence, this Forum has jurisdiction to entertain the complaint. It is contended that the repudiation of the claim in question of the complainant by taking shelter of exclusion clause 2 of the policy in question was not at all justified especially when the steel band was specifically insured for Rs. 16,00,000/ and the Surveyor of the OP after visiting the factory of the complainant on 23.11.1999 had found that the Roto Cure Machine was running satisfactorily with the replaced steel band thereby admitting the fact that the complainant had suffered a loss of Rs. 15,67,428/ due to the damage of steel band.
In the present case, the claim pertains to the period prior to the year 2002. The words but does not include a person who avails of such services for any commercial purpose in section 2(1)(d)(ii) of the Consumer Protection Act were added by Act of 62 of 2002, Section 2 w.e.f. 15.3.2003. Therefore, in our considered opinion, the present case is covered by the law laid down by the Supreme Court in civil appeal No. 1879/2003 titled as Karnataka Power Transmission Corpn. & Anr. Vs Ashok Iron Works Pvt. Ltd. decided on 9.2.2009 wherein it has been clearly laid down that the transactions taken place before the said amendment under section 2(1)(d)(ii) of the Consumer Protection Act will not be hit by the said amendment and the transactions shall come within the purview of the term consumer.
Moreover, in Harsolia Motors’ case (Supra), it has been held as under:
12. Findings:
At the outset, it is to be stated that an insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him. Under Sec. 3 of the Insurance Act, 1938, no person is permitted to carry on business of insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.
13. Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coverage is taken for commercial activity carried out by the insured.
14. In Halabury’s Law of England, vol. 25, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of the contract of insurance belong to general category of contracts of indemnity. In the sense that insurers liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
15. In this view of the matter, taking of the insurance policy is for protection of the interest of the assured in the articles or goods and not for making any profit or trading for carrying on commercial purpose.
It has been further held as follows
23. Further, from the aforesaid discussion, it is apparent that even taking wide meaning of the words for any commercial purpose it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or services hired in an activity which is not directly intended to generate profit, it would not be commercial purpose.
24. In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit.
Therefore, in view of the above discussion, we hold that the complainant is a consumer for the purposes of seeking an amount of Rs. 15,67,428/- towards the cost of the Steel Band of the Roto Cure Machine incurred by him in getting the same replaced. Undisputably, the Steel Band of Roto Cure Machine had been insured by the OP for an amount of Rs. 16,00,000/-. The complainant incurred an amount of Rs. 15,67,428/- towards getting the said Steel Band replaced with a new one when the old one had gone out of order. The OP repudiated the claim by getting recourse to exclusion clause 2 of the policy in question. According to the OP witness’s affidavit, the copy of the survey report of the Surveyor is Annexure R2 in which the surveyor opined that belts and conveyors were excluded from the purview of the policy. It were not the belts and conveyors of the Roto Cure Machine which had gone out of order. It was the Steel Band itself which had gone out of order. Therefore, the repudiation of the claim of Rs. 15,67,428/- by the OP was not justified. By doing so, the OP committed grave deficiency in service.
In view of the above discussion, we allow the complaint and direct the OP to pay to the complainant an amount of Rs. 15,67,428/- towards the claim amount, Rs. 1 Lac as compensation for mental agony and harassment and Rs. 5,500/- towards legal cost within 30 days from the date of receipt of copy of this order failing which the OP shall become liable to pay Rs. 15,67,428/- along with interest 7% p.a. w.e.f. 07.11.2008 on which date the complaint was received by this Forum from the State Commission till the date of realisation.
Let a copy of this order be sent to the parties as per regulation 21 of the Consumer Protection Regulations. Thereafter file be consigned to record room.
Announced on 25.08.15.
(NAINA BAKSHI) (N.K. GOEL)
MEMBER PRESIDENT
Case No. 861/2009
25.08.2015
Present – None
Vide our separate order of even date pronounced, the complaint is allowed and the OP is directed to pay to the complainant an amount of Rs. 15,67,428/- towards the claim amount, Rs. 1 Lac as compensation for mental agony and harassment and Rs. 5,500/- towards legal cost within 30 days from the date of receipt of copy of this order failing which the OP shall become liable to pay Rs. 15,67,428/- along with interest 7% p.a. w.e.f. 07.11.2008 on which date the complaint was received by this Forum from the State Commission till the date of realisation. Let the file be consigned to record room
(NAINA BAKSHI) (N. K. GOEL) MEMBER PRESIDENT
