Citation Codes

Equivalent Citations

citation codes

Case Number

Consumer Case No. 31 of 2010

Disposition

allowed

Advocates

Nemo, for the Complainant;
Mr. D Varadarajan, Advocate, for the Opp. Party.

Judges

C. Viswanath, Presiding Member

Acts

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Smart Summary

Case Summary: National Consumer Disputes Redressal Commission — Consumer Case No. 31 of 2010

Factual and Procedural Background

The complainant, M/s Global Minetec (a company incorporated under the Companies Act, 1956), purchased and deployed a road scraping and premix laying machine known as a "Surface Miner" and insured it with ICICI Lombard General Insurance Co. Ltd. for a sum insured of Rs. 2,14,20,572/- under Policy No. 3008/51234286/00/000 for the period 09.02.2007 to 08.02.2008, paying a premium of Rs. 95,455/-.

On 06.04.2007 at about 6:45 p.m., a fire broke out in the insured Surface Miner causing substantial damage. The complainant informed the insurer by letter dated 06.04.2007 and reported the incident to the police and the fire department on 07.04.2007. Initial and final survey reports were prepared: a report concluding the engine was Beyond Economical Repair was submitted on 19.06.2007, and a Final Surveyor Report dated 20.11.2007 assessed the loss at Rs. 62,71,700/-.

The insurer repudiated the claim by letter dated 10.09.2008 on the ground that the insured had opted for a discount that limited use to the insured's "own premise" and alleged the vehicle was not being so used. Aggrieved, the complainant filed Consumer Complaint No. 31 of 2010 before the Commission seeking settlement of the claim (inter alia, Rs. 1.61 crores in one prayer), interest, costs and compensation.

The insurer contested the complaint, raising a preliminary objection as to maintainability on the basis that the complainant was a commercial entity and therefore not a "consumer" under the Consumer Protection Act. The insurer also contended the Surface Miner was operated outside the insured's premises in breach of Policy condition IMT.13 (use within own premises), which justified repudiation.

The matter was heard ex parte against the complainant because no one appeared for the complainant on five consecutive dates; the Commission proceeded and ultimately allowed the complaint.

Legal Issues Presented

Whether the Consumer Commission has jurisdiction to entertain a complaint by a corporate/commercial entity against an insurer (i.e., maintainability under the Consumer Protection Act).
Whether the insurer validly repudiated the insurance claim on the basis that the insured vehicle was used outside the 'own premise' as defined in Policy endorsement IMT.13 (and that the insured had taken a discount for limited use).
Whether the insurer's repudiation amounted to deficiency in service and unfair trade practice, entitling the complainant to payment as assessed by the Final Surveyor.

Arguments of the Parties

Complainant's Arguments

The Surface Miner suffered extensive damage by fire on 06.04.2007 and this was promptly reported to the insurer, police and fire department.
Survey reports (including the Final Surveyor Report dated 20.11.2007) assessed the loss at Rs. 62,71,700/- and indicated the engine was Beyond Economical Repair.
The complainant requested processing of the claim (letter dated 09.07.2007) and provided clarifications sought by the insurer; nonetheless, the insurer repudiated the claim on unsubstantiated grounds.
Remedies sought in the complaint included: (a) direction to pay Rs. 1.61 crores towards settlement of the claim; (b) interest at 24% p.a. from 06.04.2007; (c) costs of litigation; and (d) liquidated compensation for mental harassment.

Opposite Party's (Insurer's) Arguments

Preliminary objection as to maintainability: the complainant was a commercial entity and hence not a "consumer" under Section 2(1) of the Consumer Protection Act; the complaint was said to be a misuse of process.
Reliance was placed on the Supreme Court judgment of Economic Transport Organisation vs Charan Spinning Pvt Ltd & Anr. (2010) 4 SCC 114 (the insurer relied upon this authority in support of its position).
On merits, the insurer contended the Surface Miner was being used outside the insured's premises and thus in breach of Policy endorsement IMT.13 ("Use of Vehicle Within Insured's Own Premise"), which excluded liability where the vehicle was used elsewhere than in the insured's premises; the insurer noted the complainant had availed a 33% premium discount for this limitation and therefore repudiation was justified.
The insurer also pointed to the fact that the Surface Miner was, during the policy period, with M/s Sainik Mining & Allied Service Ltd., and argued that this fact defeated the complainant's claim.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Economic Transport Organisation vs Charan Spinning Pvt Ltd & Anr., (2010) 4 SCC 114	The opinion records that the Opposite Party relied upon this Supreme Court judgment; no further detail of the legal principle from this case is stated in the provided text.	The judgment was noted as relied upon by the Opposite Party in support of its maintainability argument; the Commission's final reasoning and holding do not record any application of a specific rule from this precedent in the decision excerpt provided.
Harsolia Motors v. National Insurance Co. Ltd., (2005) CPJ 27 (NC)	This Commission previously held that an insurance policy is for indemnity/reimbursement and insurer services are not hired for a commercial purpose; consequently the services of an insurer do not cease to be consumer services and the Commission has jurisdiction.	The Commission relied on this precedent to hold the present complaint maintainable, concluding that the Commission possessed requisite jurisdiction to entertain the complaint against the insurer.

Court's Reasoning and Analysis

The Commission's analysis proceeded in stages.

Maintainability: The Commission referred to its own prior decision in Harsolia Motors v. National Insurance Co. Ltd. to determine that insurance contracts for indemnity/ reimbursement fall within the Commission's jurisdiction. On this basis the complaint was held maintainable despite the complainant being a commercial entity.
Procedural posture: The record shows the matter proceeded ex parte because the complainant did not appear on five consecutive dates; the Commission nevertheless proceeded to hear and decide the matter on available records and the insurer's submissions.
Interpretation of Policy Endorsement IMT.13 ("Use of Vehicle Within Insured's Own Premise"): The insurer argued repudiation was justified because the insured had opted for a discount limiting use to the insured's own premises. The endorsement defines "use confined to own premise" as "use only on insured premise to which public have no general right of access."
Examination of factual record and external reports: The Commission examined the Police Report (dated 07.04.2007) and the Fire Department Report (dated 14.03.2008), both of which identified the location of the fire as MCI, Lakhanpur Mine, Quarry No.2 Part-II / Lakhanpur (Mine), Jharsuguda, and reported that the fire occurred at the premises of M/s Global Minetec Ltd. The Fire Department report recorded that the cause was an electrical short circuit and that affected machines had costs in excess of crores.
Regulatory context: The Commission noted the Coal Mine Regulations, 1957 (as referenced in an advisory by Mahanadi Coalfield Ltd.) which restrict entry to the mine to employees or authorized persons, supporting the conclusion that the mine premises did not admit the general public and thus fit the policy definition of "own premises."
Link to contractual/work documents: The Commission found that the complainant was a shareholder of M/s Sainik Mining & Allied Service Ltd., and that three directors of the complainant were directors of Sainik, which was the authorised miner at Lakhanpur. The record included a work order dated 13.08.2004 and a letter of intent dated 17.07.2004 between Sainik Mining & Allied Service Ltd. and Mahanadi Coal Field for deployment of the Surface Miner at Lakhanpur OCP, IB Valley Area. The Commission observed that the insurer issued the Miscellaneous Vehicle Package Policy on 20.02.2007 after the commencement of the work order and therefore was aware of the premises and nature of work prior to issuing the policy.
Assessment of evidentiary burden and insurer's failure to rebut: The Commission noted the insurer failed to produce any documentation disputing the location of the Surface Miner or otherwise justifying its contention that the vehicle was not within "own premises." In light of the police and fire reports, the regulatory context, the work order/letter of intent, and the timing of the policy issuance, the Commission concluded the Surface Miner was within the meaning of "own premise" for the policy endorsement.
Conclusion on repudiation: Given the foregoing, and the absence of persuasive rebuttal documentation from the insurer, the Commission held the insurer's repudiation to be unjustified, amounting to deficiency in service and unfair trade practice.

Holding and Implications

Holding: The complaint is allowed.

Direct consequences and orders:

The Opposite Party (ICICI Lombard General Insurance Co. Ltd.) is directed to pay Rs. 62,71,700/- to the complainant, corresponding to the loss assessed by the Final Surveyor in the Survey Report dated 20.11.2007.
Interest is awarded at 6% per annum from the date of filing of the complaint until the date of payment.
There shall be no order as to costs.
The order is to be complied with within six weeks.

Broader implications: The opinion, as provided, does not articulate any broader legal precedent beyond applying the Commission's prior reasoning on jurisdiction (Harsolia Motors) and resolving the facts in this dispute. The decision's immediate effect is the monetary relief ordered; the opinion does not claim to lay down a novel legal principle.

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Global Minetec Through Its Authorized Representative Sh. Ranjeet Singh Gour Complainant(S) v. Icici Lombard General Insurance Co. Ltd. Through Its Registered Office At Icici Bank Towers Opp. Party(S).

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

CONSUMER CASE NO. 31 OF 2010

1. M/S. GLOBAL MINETEC Through its Authorized Representative Sh. Ranjeet Singh Gour, 153, Vasant Enclave, Rao Tula Ram Marg

New Delhi ...........Complainant(s)

Versus

1. ICICI LOMBARD GENERAL INSURANCE CO. LTD.

Through its Registered Office at ICICI Bank Towers, Bandra Kurla Complex

Mumbai - 400 051 ...........Opp.Party(s)

BEFORE:

HON'BLE MR. C. VISWANATH,PRESIDING MEMBER

For the Complainant : NEMO For the Opp.Party : Mr. D Varadarajan, Advocate Dated : 16 Jun 2021

ORDER

The present case is filed under Section 21 of the Consumer Protection Act, 1986. The Complainant is a company duly incorporated under the Companies Act, 1956 and is engaged in the business of mining etc. The Complainant was a shareholder of M/s Sainik Mining & Allied Service Ltd and all the three Directors of the Complainant Company namely Rudra Sen Singhu, Capt. Kuldeep Singh Solanki and Virendra Kumar Sehgal were also the Directors of M/s Sainik Mining & Allied Service Ltd. The Complainant in order to carry out mining operations had purchased road scraping and premix laying equipment known as Surface Miner. The Complainant got the Surface Miner insured with the Opposite Party for a sum of Rs.2,14,20,572/-, vide Policy No.3008/51234286/00/000 for the period 09.02.2007 to 08.02.2008, by paying a premium of Rs.95,455/-. On 06.04.2007 at about 6:45 p.m., during mining fire broke out in the insured Surface Miner which caused huge damage to the Surface Miner. The Complainant, vide letter dated 6.04.2007, informed the Opposite Party about the fire. On 07.04.2007, the incident was also reported to the Police and the Fire Department. 07.04.2007, the Opposite Party appointed Sri. R.N. Tripathy to conduct initial Survey. On 07.06.2007 joint inspection was carried out by Cummins Service Manager and Diamond Engineering Bhubaneshwar who submitted their report dated 19.06.2007 stating that it was not desirable and economical to repair the engine of the Surface Miner as the complete engine was Beyond Economical Repair (BER). On the basis of above report, the Complainant, vide letter dated 09.07.2007 requested the Opposite Party to process the claim as the Complainant was suffering financial loss. On 20.11.2007 Sri Kavish. C. Malhotra, submitted the Final Surveyor Report in which total loss assessed was Rs.62,71,700/-. Though the Complainant gave necessary clarification as sought by the Opposite Party, the Opposite Party, vide letter dated 10.09.2008, repudiated the Claim on flimsy and baseless grounds which reads as "please note,

the said claim has been repudiated in accordance with the terms and conditions of the policy (being No.3008/51234286/00/000) wherein your Company, the Insured, had opted for discount, at the very inception of the policy, on the condition that use of the insured vehicle will be limited to "Own Premise" of the Insured. However, since the said vehicle was not being used as per the said condition of the said policy we are unable to process claim and regret our inability to do so." Aggrieved by the repudiation of the claim, the Complainant filed a Complaint before this Commission with the following prayer :-

"(a) direct the opposite party to pay a sum of Rs.1.61 crores towards settlement of claim;

(b) direct the opposite parties to pay interest @24% per annum w.e.f. 06.04.2007 i.e. the day of the accidental fire on the aforesaid amount, till the date of payment;

(c) award cost of the present litigation to the tune of Rs.3 lacs;

(d) direct the opposite party to pay liquidated compensation for mental harassment and agony to the tine of Rs.15 lac.

(e) Any other or further relief which this Hon'ble Commission may deem fit and proper under the facts and circumstances of the case may kindly be passed."

The Complaint was contested by the Opposite Party by filing Written Statement. Opposite Party took a preliminary objection regarding maintainability of the Consumer Complaint. It was stated that as the Complainant was a 'commercial entity' it was not a "Consumer" under Section 2 (1) of the Consumer Protection Act, 1986. It was further stated that the instant Complaint was gross misuse of process of law and the Complainant was trying to cover the Surface Miner in the Insurance Policy by hook or by crook. Learned Counsel for the Opposite Party relied upon the judgement of Hon'ble Supreme Court in Economic Transport Organisation vs Charan Spinning Pvt Ltd & Anr. (2010) 4 SCC 114.

Heard the Learned Counsel for the Opposite Party and perused the record. Since none appeared on behalf of the Complainant on five consecutive dates, it was proceeded ex-parte, vide order dated 08.02.2021. The Learned Counsel for the Opposite Party submitted that the Surface Miner was being used and operated in violation of the terms and conditions of the Policy, as it was not being operated in the 'insured' premise. It was submitted that since the loss to the Surface Miner was caused elsewhere and not in own premises, Opposite Party was not liable to make the payment, as Complainant had availed 33% discount on the premium for specific use in "own premise" clause. Learned Counsel for the Party relied on relevant terms & conditions of the Policy, which read as follows:

"IMT.13-USE OF VEHICLE WITHIN INSURED'S OWN PREMISE-It is hereby understood and agreed that the insurer shall not be liable in

respect of the vehicle insured while the vehicle is being used elsewhere than in the insured's premise except where the vehicle is specifically required for a mission to fight a fire. For the purpose of this endorsement use confined to own premise shall mean use only on insured premise to which public have no general right of access"

The averments that the Complainant was a shareholder of M/s Sainik mining & allied service ltd., and all the three Directors of the Complainant were also Directors of M/s Sainik mining & allied services Ltd., is totally irrelevant and had no bearing on the issue in this case. Learned Counsel stated that during the course of Insurance cover, the Surface Miner, as per the Complainant's own version was with the said Sainik Mining & Allied Service Ltd., which itself defeated the claim of the Complainant.

Brief facts of the case are that the Complainant got Surface Miner insured with the Opposite Party for a sum of Rs.2,14,20,572/-, vide Policy No.3008/51234286/00/000 for the period 09.02.2007 to 08.02.2008, by paying a premium of Rs.95,455/-. On 06.04.2007 at about 6:45 p.m., during mining fire broke out in the insured Surface Miner which caused huge damage to the Surface Miner. The Complainant, vide letter dated 6.04.2007, informed the Opposite Party about the fire. On 07.04.2007, the incident was also reported to the Police and the Fire Department. On 20.11.2007 Final Surveyor Report was submitted assessing the loss of Rs.62,71,700/-. Though the Complainant gave necessary clarification as sought by the Opposite Party, the Opposite Party, vide letter dated 10.09.2008, repudiated the Insurance Claim. Aggrieved by the repudiation of claim, the Complainant filed Complaint No.31 of 2010 before this Commission.

Regarding maintainability of the Complaint, it has been held by this Commission in Harsolia Motors v. National Insurance Co. Ltd. I, (2005) CPJ 27 (NC) decided on 03.12.2004 that since an Insurance Policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose. This Commission does possess the requisite jurisdiction to entertain a Consumer Complaint wherever a defect or deficiency in the services rendered by an insurer is made out. In view of the above, the Complaint is held maintainable. On merits, the Complainant sought claim from the Opposite Party for the loss incurred due to fire. The Opposite Party repudiated the claim on the ground that Surface Miner was not used in

"own premise" as per the terms & conditions of the Insurance Policy. Regarding the address as mentioned in the Police Report, dated 07.04.2007, location of fire accident was MCI, Lakhanpur Mine, Quarry No.2 Part-II. In the Report of the Fire Department, dated 14.03.2008 same address was mentioned. Report of the Fire Department Report, dated 14.03.2008, reads as follows: -

"Certified that there was a fire incident at Mahanadi Coal Field, at Lakhanpur (Mine), PS, Lakhanpur Dist. Jharsuguda on dated 06.04.2007 at about 18.45 hrs. in the M/s Global Minetec Ltd. The cause of fire was due to electrical short circuit. The fire call was attended by our fire service unit station at 16 Tharmal and extinguished the fire completely. Due to the

fire incident Machine No.1 & T KSM-304 was affected which cost is more than crores."

Indian Motor Tariff 13 of the Insurance Policy defines the use of vehicle within insured's own premises. Relevant portion of IMT-13 reads as follows: -

"…For the purpose of this endorsement use confined to own premise shall mean use only on insured premise to which public have no general right of access". It is also clear from the advisory issued by Mahanadi Coalfield Ltd., dated 13.08.2012 that the said mine where the Surface Miner was deployed was regulated by the Coal Mine Regulations, 1957.

"Duties and responsibility of workmen, Competent person and Officials, Sl. No. 57 (3) "No person who is not an employee of the mine or is not entitled to enter the mine under the Act or under the regulations, or orders made thereunder, or is not so authorised by the manager, shall enter the mine. It shall be the duty of the attendance clerk to see that no such person enters the mine; if any such person forcibly enters the mine, the attendance clerk shall immediately report the matter in writing to the manger."

From the Police Report and Fire Department Report, as also the statute referred to hereinabove, it can be concluded that the said Surface Miner was in the premise where there was no general access to public and qualifies the definition of "own premises" as per the requirement of the Policy.

As per the records the Complainant Company was a shareholder of M/s Sainik Mining & Allied Service Ltd and three Directors of the Complainant's Company were also Directors of M/s Sainik Mining & Allied Service Ltd who were the authorised miners of the Lakhanpur mines and during the Policy period the Surface miner was at the Lakhanpur mine. It is not disputed that the Complainant Company got the work order, vide letter dated 13.08.2004, in view of the letter of intent dated 17.07.2004, between M/s Sainik Mining & Allied Service Ltd. and Mahanadi Coal Field for extraction and transfer of coal strata by deploying Surface Miner at Lakhanpur OCP, IB Valley Area for three years and Miscellaneous Vehicle Package Policy, dated 20.02.2007, was issued by Opposite Party i.e. after the commencement of work order at the Lakhanpur OCP,IB Valley area. It is clear that Opposite Party was well aware with the premises and nature of work before issuing the Insurance Policy. Further, the Opposite Party failed to produce any document disputing the location of the Surface Miner to qualify its ground for repudiating the claim that Surface Miner was not in "own premises". The Opposite Party was therefore not just and fair in repudiating the claim and is held liable for deficiency in service and unfair trade practice.

In the light of the above submissions and record, the Complaint is allowed and the Opposite

Party is directed to pay an amount of Rs.62,71,700/- to the Complainant, as per the loss assessed by the Final Surveyor, vide Survey Report dated 20.11.2007, along with 6% interest from the date of filing of the Complaint till the date of payment. There shall be no order as to the cost. The order be complied in six weeks.

......................

C. VISWANATH

PRESIDING MEMBER

Global Minetec Throu... v. Icici Lombard Genera...