LexSIKKA PAPERS LTD. versus NATIONAL INSURANCE CO. LTD. & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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[2009] 9 S.C.R. 1088
SIKKA PAPERS LTD.
v.
NATIONAL INSURANCE CO. LTD. & ORS.
(Civil Appeal No. 6527 of 2002)
MAY 29, 2009
[D.K. JAIN AND R.M. LODHA, JJ.]
Consumer Protection Act, 1986
c
Compensation -
Machinery Insurance Policy -
Reimbursement on breaking down of. machinery -
On
surveyor's report some parts advised to be replaced - Many ,
other parts also got replaced - Held: The parts which had
suffered due to wear and tear, although replaced, could not
D form part of claim for reimbursement under the terms of policy
- In case of under - insurance, the insurer is entitled to pay
. only in such proportion as the sum insured bears to the
amount insured -
The pro-rata formula and the amount
deducted from the sum payable on account of under-
insurance ·cannot be faulted - National Commission did not
E commit any error in accepting surveyor's report - Insurance
- Under - insurance.
Consumer Protection
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Claim by company towards mental harassment - Held:
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Not legally permissible - It is only natural person who can
claim for mental harassment and not a corporate entity.
The appellant-company purchased a Diesel
Generating Set for 45,25,000/- and got it insured for Rs.
35,00,000/-. The said generating set broke down within
the period of insurance. The surveyor appointed by the
insurer inspected the machine and identified the
damages. He suggested the damaged parts to be
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SIKKA PAPERS LTD. v. NATIONAL INSURANCE co.1089
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replaced. The complainant sent the machine for repairs
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to authorized repairers and got many other parts also
replaced. According to the complainant it paid Rs.
25,00,000/- to the repairers and handed over the bills to
the insurer. Since the insurer agreed to pay Rs.8,07,110/
- only, the complainant approached the National
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Commission claimjng Rs. 25,00,000/- towards cost of
repairs and Rs.10,00,000/- for mental harassment. The
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stand of the insurer was that as per the surveyor's report
on assessment of damages, only those items that were
affected in accident were to be replaced, but the insured
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got other parts also replaced which did not suffer any
damage as a result of accident and as such, the insurer
was not liable for replacement of such parts. The National
Commission directed the insurer to pay to the
complainant an amount of Rs. 10,47,491/- with 12% D
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interest.
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In the appeal filed by the insured, the questions for
consideration before the Court were: (1) Whether the
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insurers were justified in accepting the report dated May
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15, 2000 submitted by the surveyor who had assessed
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the loss of Rs. 14,45,000/- after deducting about
Rs.10,55,000/- from Rs.25,00,000/- i.e. actual amount paid
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by the complainant for repairing the diesel generating set
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(ii) whether the insurer was justified in deducting the
amount of Rs.3,71,509.50 (25.71%) as under-insurance
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from the loss assessed at Rs.14,45,000/- by the surveyor
in its report dated May 15,2000.
Dismissing the appeal, the Court
HELD: 1.1. In view of the General Exceptions G
incorporated in the Machinery Insurance Policy, ·the
provision of 'sum insured', viz. the cost of replacement·
of insured property by new property of the same kind
and same capacity, is subject to the exception that repair
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1090
SUPREME COURT REPORTS [2009] 9 S.C.R.
l ...
A or replacement shall not extend to the machinery or parts
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which have undergone normal wear and tear due to its
use and exposure; the insurer is required to reimburse
the insured to the extent of monies spent on repairs or
replacement of the machinery to the kind of position that
B it was before the incident of damage. [Para 11] [1099-C-
F]
New India Assurance Company Limited vs. Pradeep
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Kumar 2009 (6) SCALE 253 and Vikram Greentech (/) Ltd.
c & Anr. vs. New India Assurance Co. Ltd. JT 2009(5) SC 579,
referred to.
1.2. The parts which had suffered due to wear and
tear on account of constant use, although replaced,
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could not form part of claim for reimbursement under the
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D terms of policy and, therefore, surveyor in its report dated
May 15, 2000 cannot be said to have wrongly rejected
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such claim. The complainant has failed to show any
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reason to reject surveyor's report. [Para 15] [1103-D-E]
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Dictionary of insurance (llnd Edition by C. Bennett,
referred to.
2. As per invoice the diesel generating set was
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