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  • MR. YOGESH MALHOTRA
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  • MR. YOGESH MALHOTRA
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Smart Summary

National Consumer Disputes Redressal Commission — First Appeal No. 613 of 2013 (10 March 2022)

Factual and Procedural Background

This appeal was filed by M/s S. R. Pharmaceuticals against the State Consumer Disputes Redressal Commission, Haryana's order dated 17.07.2013 which dismissed the complainant's consumer complaint (No. 01/2013).

Facts as stated in the opinion: The appellant had obtained a Standard Fire & Special Perils Policy (No. FMD0006080000100) for the period 26.04.2010 to 25.04.2011 for a sum insured of Rs. 1,25,00,000/-. During the policy period the firm changed its address and the insurer made an endorsement reflecting that change. On the intervening night of 24/25.06.2010 the roof of the godown allegedly collapsed due to a thunderstorm and heavy rain, which allowed rainwater to enter and damage medicines stored there.

The appellant lodged a claim for Rs. 60,06,974.13. The insurer deputed M/s Protocol Surveyors & Engineers Pvt. Ltd., who assessed loss at Rs. 50,17,580.53 and reported that wind speeds in Karnal were 8.0 km/h (24.06.2010) and 8.9 km/h (25.06.2010), which could not be termed a storm; accordingly the insurer repudiated the claim by letter dated 10.09.2011. The complainant then filed a consumer complaint seeking payment of loss, interest, exemplary damages and litigation costs. The State Commission dismissed the complaint, expressing that the cause of the roof collapse could not be established as storm and suggesting the possibility of a fraudulent claim. The appellant appealed to the National Commission. The appeal was filed with a delay of one day, which the National Commission condoned in the interest of justice.

Legal Issues Presented

  1. Whether the consumer complaint was maintainable — specifically, whether the complainant (a pharmaceutical business) qualifies as a "consumer" under the Consumer Protection Act, 1986 for the purpose of an insurance contract.
  2. Whether the loss to the insured stock was caused by a peril covered under the Standard Fire & Special Perils Policy (i.e., whether the roof collapse and consequent damage were caused by a storm/thunderstorm and heavy rain).
  3. Whether the State Commission erred in relying on the local weather report (Central Soil Salinity Research Institute, Karnal) and the insurer's surveyor report rather than on the meteorological report produced by the complainant (Met Department, Safdarjung, New Delhi).

Arguments of the Parties

Appellant's Arguments

  • The appellant produced a weather report from the Meteorological Department (Safdarjung, New Delhi) to establish that the loss was caused by a storm.
  • The State Commission erred in accepting the weather report of the Central Soil Salinity Research Institute, Karnal, over the appellant's evidence.
  • The surveyor's conclusion that the loss was not due to storm/heavy rain was incorrect.
  • The appellant relied on precedents decided by this Commission — United India Insurance Co. Ltd. vs. Imperial Gift House & Anr. and Bajaj Allianz General Insurance Co. Ltd. vs. Gondamal Hardyal Mal — as supportive authority.

Respondent's Arguments

  • The matter involved complicated questions of fact and law requiring voluminous evidence and was not appropriate for summary disposal by a consumer forum.
  • The complainant, being engaged in commercial activities (pharmaceutical business), was not a "consumer" under Section 2(1)(d) of the Consumer Protection Act, 1986.
  • The insurer's surveyor reported no damage to other buildings in the area; the appellant's meteorological report pertained to Safdarjung, New Delhi (about 200 km from Karnal) and was therefore not the best evidence. The Central Soil Salinity Research Institute, Karnal report showed wind speeds of 8.0 km/h and 8.9 km/h on the relevant dates, which could not be termed a storm, justifying repudiation.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] Holds that a contract of insurance is a contract of indemnity and that obtaining insurance coverage does not amount to acquiring it for a commercial purpose that would exclude "consumer" status. The Commission relied on this authority to conclude the complainant is a "consumer" and that the State Commission had jurisdiction to entertain the complaint (i.e., complaint was maintainable).
United India Insurance Co. Ltd. vs. Imperial Gift House & Anr. [I (2007) CPJ 6 (NC)] In that case the issue involved interpretation of the terms "flood" and "tornado". The Court held this precedent was not applicable to the present facts because the current dispute involved a specific weather report from a local institute (Karnal) rather than issues of term interpretation addressed in Imperial Gift House.
Bajaj Allianz General Insurance Co. Ltd. vs. Gondamal Hardyal Mal [IV (2009) 165 (NC)] Involves interpretation of the term "flood". The Court stated this precedent was not applicable because the present case does not raise an interpretive question about "flood" and instead turned on a local weather report and survey evidence.
M/s S.R. Pharmaceuticals vs. HDFC ERGO General Insurance Co. Ltd. & Anr. (linked in the opinion) Described in the opinion as a matter before the Hon'ble Supreme Court concerning interpretation of the terms "flood" and "inundate". The Court stated this authority was not applicable to the instant facts because it concerned interpretation of terms ("flood"/"inundate") not in issue here, whereas here there was a specific local weather report.

Court's Reasoning and Analysis

The court proceeded in two principal stages: (A) preliminary/maintainability and (B) merits.

A. Maintainability

The National Commission rejected the respondent's contention that the complaint raised complicated facts that made the forum's summary jurisdiction inappropriate. It found no complicated factual matrix preventing adjudication. Relying on Harsolia Motors (I (2005) CPJ 26 (NC)), the Commission observed that an insurance contract is one of indemnity and that procuring insurance does not make the insured ineligible to be a "consumer." Consequently, the Commission held the State Commission had jurisdiction and the complaint was maintainable.

B. Merits — Cause of Loss and Evidence

It was admitted that the policy was valid on the date of incident and that the surveyor assessed loss at Rs. 50,17,580.53. The crucial factual dispute concerned causation: whether the godown roof collapse and consequent stock damage were caused by a storm/thunderstorm and thus covered under the policy.

The court evaluated the evidentiary value of competing weather reports:

  • The complainant's weather report came from the Meteorological Department for Safdarjung, New Delhi, but that location is approximately 200 km from Karnal; the court treated that as not the best evidence for weather conditions at Karnal.
  • The respondent produced a weather report from the Central Soil Salinity Research Institute (CSRI), Karnal, showing wind speeds of 8.0 km/h (24.06.2010) and 8.90 km/h (25.06.2010), which the surveyor and building surveyors opined could not be termed a storm and thus could not have caused the collapse.
  • The surveyor's report, quoted by the court, recorded that the area witnessed rain in the night in question, that the insured's godown collapsed due to unknown reasons, and that the stock got damaged; it also recorded the view of surveyors that the loss was not caused by any peril insured under the policy because the wind speeds recorded were insufficient to be termed a storm.

The court gave weight to the CSRI Karnal report, noting CSRI is a reputed Central Government research institute and that there was no evidence placed on record by the complainant to challenge the accuracy of that report. The Commission therefore found no reason to disbelieve the CSRI data or the surveyor's conclusion. The court also explained why the precedents relied on by the appellant were inapposite: those cases dealt with interpretation of terms like "flood," "tornado," or "inundate," whereas the present case turned on a specific local weather report showing wind speeds that could not be characterized as a storm.

Holding and Implications

APPEAL DISMISSED

Holding (core ruling): The National Commission held that the respondent insurer was justified in repudiating the claim and that the State Commission correctly dismissed the consumer complaint. The appeal was dismissed with no order as to costs.

Implications and consequences:

  • The direct effect is that the State Commission's order dismissing the complainant's claim is upheld and the insurer's repudiation stands.
  • The Court treated the complainant as a "consumer" for maintainability purposes (relying on Harsolia Motors), but on the facts the insurer's decision to repudiate was justified by the local weather report and survey evidence.
  • The opinion indicates that the earlier authorities cited by the appellant were not treated as establishing entitlement because they involved different factual or interpretive issues; the decision did not purport to lay down any new precedent beyond the application of existing principles to the facts before it.

This summary is based exclusively on the content of the provided opinion and contains no information beyond what is stated in that opinion.

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    M/S. S. R. PHARMACEUTICALS v. HDFC ERGO GENERAL INSURANCE CO. LTD. & ANR.

    NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

    NEW DELHI

    FIRST APPEAL NO. 613 OF 2013

    (Against the Order dated 17/07/2013 in Complaint No. 01/2013 of the State Commission Haryana)

    1. M/S. S. R. PHARMACEUTICALS Through its Partner Shri Jatinder Kumar, 172-B, Sector-3, HSIDC Industrial Area,

    Karnal,

    Haryana. ...........Appellant(s)

    Versus

    1. HDFC ERGO GENERAL INSURANCE CO. LTD. & ANR. Through its Regional Claims Manager, C-302, 3rd Floor, Ansal Plaza,HUDCO Place, Andrews Ganj,

    New Delhi-110 049.

    2. HDFC ERGO, General Insurance Co. Ltd, 6th Floor, Leela Business Park, Andheri- Kurla Road, Andheri

    (E),

    Mumbai-400 059 Maharastra. ...........Respondent(s)

    BEFORE:

    HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER For the Appellant : Mr. Bhaskar Tiwari, Advocate Mr. Ramakant Shukla, Advocate

    For the Respondent : Mr. Yogesh Malhotra, Advocate Mr. Sushant Kishore, Advocate

    Dated : 10 Mar 2022

    ORDER

    1. The present Appeal is filed against the order dated 17.07.2013 passed by State Consumer Disputes Redressal Commission Haryana (in short 'State Commission') in Consumer Complaint No.01/2013 whereby the Consumer Complaint filed by the Complainant/Appellant was dismissed.

    2. The Appeal has been filed with a delay of 1 day. The Appellant has not filed an application for condonation of delay. However, in the interest of justice, delay is condoned.

    3. Case of the Complainant/Appellant is that they obtained Standard Fire & Special Perils Policy No.FMD0006080000100 from the Opposite Party/Respondent Insurance Company, valid from 26.04.2010 to 25.04.2011, for sum insured Rs.1,25,00,000/-. The Complainant firm was situated at 106, Vikas Nagar, Gali No.2, Phoosgarh Road, near Sector-6, Karnal. During the validity of the Policy, the firm shifted to the new address at 172-B, Sector-3, HSIDC, Industrial Area, Karnal. The Opposite Party was duly informed by the Complainant about the

    1

    change of address. The Insurance Company made an endorsement on the Policy to that effect. In the intervening night of 24/25.06.2010, the roof of the godown collapsed due to thunder storm and heavy rain and rain water entered into the godown causing damage to the medicines stocked in the godown. The Complainant informed the Opposite Party about the incident and lodged a claim of Rs.60,06,974.13. The Opposite Party deputed M/s Protocol Surveyors & Engineers Pvt. Ltd. for Survey and assessment of loss, who assessed the loss at Rs.50,17,580.53. The Surveyor observed that on the intervening night of 24/25.06.2010 wind speed was 8 km per hour in Karnal, which could not be termed as storm and could not lead to collapse of the roof of the building. The loss suffered by the Complainant was not covered under the Policy. On the basis of the Survey Report, the Opposite Party repudiated the claim of the Complainant, vide letter dated 10.09.2011. Alleging deficiency in service on the part of the Opposite Party, the Complainant filed a Consumer Complaint before the State Commission with the following prayer: -

    "i) Direct the respondents No.1 and 2 to disburse the amount of Rs.56,93,886.78 towards the loss alongwith interest @ 12% p.a. from the d ate of loss till the date of actual disbursement.

    ii) Grant exemplary damages of Rs.1,00,000/- on account of deficient services and unfair trade practices.

    iii) Grant litigation expenses to the extent of Rs.88,000/-.

    iv) Pass any other orders/directions deemed appropriate in the facts and circumstances of the case."

    4. The Complaint was resisted by the Opposite Party by filing the written statement primarily on the ground that the issue involved complicated questions of facts and law, which required voluminous evidence. It was also stated that as the Complainant is doing the business of pharmaceuticals it was not a "Consumer" under the Consumer Protection Act, 1986.

    5. On merit, it was stated that after verifying the documents supplied by the Complainant, the Surveyor assessed the loss at Rs.50,17,580/-. The claim of the Complainant, however, was not covered under the Policy. It was also stated that as per report of the Central Soil Salinity Research Institute, Karnal, wind speed was 8 km per hour on 24.06.2010 and 8.9 km per hour on 25.06.2010, which could not be termed as storm.

    6. After hearing the Learned Counsel for the Parties and perusing the record, the State Commission, vide impugned order dated 17.07.2013, dismissed the Complaint with the following observation: -

    "In view of the above, the complainant has miserably failed to establish on the record that the roof of godown had fallen due to storm or heavy rain but the cause of damage/fall could not be ascertained. Without any cogent and convincing evidence available on record about the damage of the roof of the

    2

    godown due to storm, we feel it a case of fraud and dishonest intention of the complainant to get false claim on flimsy grounds. The story of the complainant seems to be a cooked up and therefore we do not find it a fit case to grant any insurable benefit to the complainant.

    For the reasons recorded above, this complaint is dismissed."

    7. Aggrieved by the order dated 17.07.2013, the Appellant/Complainant has filed the instant Appeal with the following prayer: -

    "A. In the interest of justice the Appeal be accepted and the order dated 17th July, 2013 whereby the State Consumer Disputes Redressal Commission dismissed the Complaint of the Appellant be set aside. B. The complaint filed by the Appellant be allowed in terms of the relief claimed in the complaint.

    C. Any other or such further relief, which this Hon'ble Forum may deem fit and proper in the facts and circumstances of the case may be passed in favour of the Appellant and against the Respondent.

    8. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Appellant/Complainant submitted that the Appellant produced the report of Metrological Department, Delhi to prove that the loss sustained by the Complainant was due to storm. The State Commission erred in relying upon the report of Salinity Research Institute, Karnal. The Surveyor had wrongly given the cause of damage that it was not due to storm or heavy rain. The State Commission failed to appreciate the fact that on the date of incident there was heavy rain and storm and the rainwater inundated the stock lying in the insured premises. Learned Counsel relied on the judgment of this Commission United India Insurance Co. Ltd. vs. Imperial Gift House & Anr. I (2007) CPJ 6 (NC) and Bajaj Allianz General Insurance Co. Ltd. vs. Gondamal Hardyal Mal [IV (2009) 165 (NC).

    9. Learned Counsel for the Respondent/Opposite Party submitted that the case involved complicated questions of facts and law, which required voluminous evidence and could not be decided in summary jurisdiction by the Consumer Forum. Learned Counsel also submitted that as the Complainant was involved in commercial activities, it was not a "Consumer" under Section 2 (1) (d) of the Consumer Protection Act, 1986.

    10. On merits, Learned Counsel for the Opposite Party submitted that the Surveyor recorded that there was no damage to any other building in the entire area due to the alleged storm. The Complainant submitted report of the Metrological Department of Safdarjung Area, New Delhi which is 200 km. away from the place of incident. The Opposite Party, however, submitted the report from the Central Soil Salinity Research Institute, Karnal, which stated that the wind speed on 24.06.2010 and 25.06.2010 was 8.0 km per hour and 8.90 km respectively, which could not be termed as storm.

    3

    11. Regarding preliminary issue of maintainability of the Complaint, we find that no complicated facts are involved as alleged by the Opposite Party. The State Commission was very well within its jurisdiction to decide the Consumer Complaint. Opposite Party alleged that as the Complainant was involved in commercial activities, it was not a "Consumer. This Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint before the State Commission was maintainable.

    12. It is admitted that the Complainant obtained Standard Fire & Special Perils Policy No.FMD0006080000100 from the Opposite Party/Respondent Insurance Company, valid from 26.04.2010 to 25.04.2011, for sum insured Rs.1,25,00,000/-. It is also admitted that on the date of incident the Policy was valid. The Surveyor assessed the loss at Rs.50,17,580.53. According to the Complainant the roof of godown collapsed due to thunderstorm and heavy rain and rain water entered into the godown causing damage to the medicines stocked in the godown. The case of the Opposite Party is that on intervening night of 24/25.06.2010 wind speed was 8 km per hour in Karnal, which could not be termed as storm. The best evidence to prove that the loss was caused due to the thunderstorm and heavy rain was the weather report from the concerned Department. Though the Complainant submitted the weather report from the Metrological Department but the said report pertained to Safdarjung Area, New Delhi which is 200 kms far from the place of incident. The State Commission, therefore, discarded the said report. The Opposite Party submitted the weather report from Central Soil Salinity Research Institute, Karnal, which stated that the wind speed on 24.06.2010 and 25.06.2010 was 8.0 km per hour and 8.90 km respectively. On the basis of the said weather report, the Surveyor observed as follows:-

    "i) The area of Karnal witnessed Rain in the night of 24/25.06.2010.

    ii) The insured's godown collapsed due to unknown reasons and rain water fell into the godown.

    iii) The stock of medicine got wet/damaged in the captioned mishap. ……

    The matter was discussed with the Insurance Surveyors of the building, who was also of the opinion that the loss has not been occasioned by any peril under the fire policy. Further a wind speed of 8km/hrs that was there in Karnal on that day on 24 & 25.06.2010 cannot be termed as STORM and in no way it can cause collapse of building."

    Relying on the weather report of Central Soil Salinity Research Institute, Karnal and the Survey Report, the Opposite Party repudiated the claim of the Complainant. Central Soil Salinity Research Institute is a reputed Research Institute established by the Central Government. There is no reason to disbelieve the statistics maintained by them. The

    4

    Complainant failed to place any evidence on record to prove that the weather report of Central Soil Salinity Research Institute, Karnal submitted by the Opposite Party was not correct. State Commission rightly relied on the report submitted by the Opposite Party. The judgments

    United India Insurance Co. Ltd. vs. Imperial Gift House & Anr. I (2007) CPJ 6 (NC, Bajaj Allianz General Insurance Co. Ltd. vs. Gondamal Hardyal Mal [IV (2009) 165 (NC) and M/s S.R. Pharmaceuticals vs. HDFC ERGO General Insurance Co. Ltd. & Anr. relied by the Learned Counsel for the Complainant/Appellant are not applicable in the facts of the case since there is a clear report of Central Soil Salinity Research Institute, Karnal stating that wind speed on 24.06.2010 and 25.06.2010 was 8.0 km per hour and 8.90 km respectively. In Imperial Gift House case (supra) the issue before this Commission related to the interpretation of the terms

    "flood" and "tornado" whereas in the instant case there is a specific weather report from the Central Soil Salinity Research Institute to the effect that on 24.06.2010 and 25.06.2010 was 8.0 km per hour and 8.90 km respectively. There is no question of interpretation of this report especially when the Complainant had not produced to the contrary. In Gondamal Hardyal Mal (supra) also the issue related to the interpretation of the term "flood." This case is also not applicable as in the instant case there is no dispute relating to the interpretation of the term

    "flood." In M/s S.R. Pharmaceuticals (supra) also the issue before Hon'ble Supreme Court was regarding the interpretation of the terms "flood" and "inundate", which is not in the case on hand. This case is, therefore, not applicable to the facts of the case.

    13. For the foregoing discussion, we find that the Opposite Party was justified in repudiating the claim of the Complainant. The State Commission rightly dismissed the Complaint. Complainant/Appellant failed to point out any infirmity or irregularity in the impugned order. The Appeal is, therefore, dismissed with no order as to cost.

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

    C. VISWANATH

    PRESIDING MEMBER

    ......................J

    RAM SURAT RAM MAURYA

    MEMBER

    5

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    Comments

    M/S. S. R. PHARMACEUTICALS v. HDFC ERGO GENERAL INSURANCE CO. LTD. & ANR.
    (Mar 10, 2022)