NATIONAL INSURANCE CO. LTD. versus HINDUSTAN SAFETY GLASS WORKS LTD.

Citation: [2017] 3 S.C.R. 520 · Decided: 07-04-2017 · Supreme Court of India · Bench: MADAN B. LOKUR · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
[2017] 3 S.C.R. 520 
NATIONAL INSURANCE CO. LTD. 
v. 
HINDUSTAN SAFETY GLASS WORKS LTD. 
' 
. 
. 
(Civil Appeal No. 3883 of 2007) 
APRIL 07, 2017 
(MADAN B. LOKUR AND PRAFULLA C. PANJ, JJ.) 
Consumer Protection Act, i986: 
Damages - Policy taken out by respondent covering damage 
C 
or loss due to flood and inundation - Damqge caused by heavy 
rain - Claim for Rs.52 lakhs -
Two survey reports quantifying loss 
.of Rs.24 lakhs - Nothing paid by appelfrmt-insurer - Complaint 
under CP Act - Repudiation of claim 5 years after the complaint -
Award of Rs.2i lakhs by National Commission -.Challenged by 
·insurer - Held: The appellant-insurer itself took more than two· 
D years in surveying or causing a survey of the loss or damage suffered 
by the insured - Thus, entire delay was attributable to insurer and 
cannot prejudice the claim of the insured, more· particularly when 
the insured had lodged a claim well within time - it is well established 
. that the provision of limitation in the Act cannot be strictly construed 
E to disadvantage a consumer in a case where a supplier of goods or 
services itself is instrumental in causing a delay in the settlement of 
the consumer :S claim - That being so, the National Commission was 
. quite right in rejecting the contention of insurer in this regard - No . 
reason to interfere with t/:le order of National Commission . 
.,, F 
Actionable claim - Claim made by insured - As per policy, 
insurer was not liable for any loss i 2 months after the event that 
caused loss to the insured unless claim ls subject matter of pending 
action or arbitration - Contention of insurer that expression 
'pending action' relate to action instituted in a court of law - Held: 
G Not sustainable - When a claim is made by the insured that itself is 
actionable - There is no question of requiring the insured to 
approa~h a court of law for adjudication of the claim - This would 
amount to encouraging avoidable litigation which certainly cannot. 
be the intention of the insurance policies and is in any case not in 
public interest - insurance. 
H 
520 
NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY 
521 
GLASS WORKS LTD. 
Dismissing the appeals, the Court 
A 
HELD: 1.1. A plain reading of condition no. 6 (ii) of the 
insurance policies showed that the appellant-insurer would not 
be liable for any loss or damage 12 months after the event that 
caused the loss or damage to the insured unless the claim is the 
subject matter of a pending action or arbitration. The contention 
B 
of the appellant-insurer that the expression 'pending action' must 
relate to action instituted in a court of law is not acceptable. 
Moreover, the disclaimer by the appellant-insurer was only in 
May 2001 and the period of 'limitation' under the policies could 
not have started before that time. [Paras 12, 13][525-B, DJ 
c 
1.2. The appellant-insurer itself took more than two years 
in surveying or causing a survey of the loss or damage suffered 
by the insured. Thus, the entire delay is attributable to appellant-
insurer and cannot prejudice the claim of the insured, more 
particularly when the insured had lodged a claim well within time. 
To make matters worse, the insurer actually repudiated the claim D 
of the insured only on 22•d May, 2001 which is well after the 
complaint was filed with the National Commission. [Para 17][526-
D-EJ 
2. In a dispute concerning a consumer, it is necessary for 
· the courts to take a pragmatic view of the rights of the consumer 
principally since it is the consumer who is placed at a disadvantage 
vis-a-vis the supplier of services or goods. It is to overcome this 
disadvantage that a beneficent legislation in the form of the 
Consumer Protection Act, 1986 was enacted by Parliament. The 
provision of limitation in the Act cannot be strictly construed to 
disadvantage a consumer in a case where a supplier of goods or 
services itself is instrumental in causing a delay in the settlement 
of the consumer's claim. That being so, the National Commission 
was quite right in rejecting the contention of National Insurance 
E 
F 
in this regard. The National Commission accepted the second 
survey report as well as the addendum to it and there was no 
G 
reason to disagree with the findings arrived at in the absence of 
any material to discredit the surveyor or the report of the 
surveyor. No case is made out by National Insurance to interfere 
with the order passed by the National Commission. [Par

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