(B.V. Nagarathna and R. Mahadevan, JJ.)
Civil Appeal No(s). 255 of 2016
Gujarat Guardian Limited ___________________________ Appellant;
v.
New India Assurance Co. Ltd. ______________________ Respondent.
With
Civil Appeal No(s). 5292 of 2017
New India Assurance Co. Ltd. _______________________ Appellant;
v.
Gujarat Guardian Limited __________________________ Respondent.
Civil Appeal No(s). 255 of 2016 and Civil Appeal No(s). 5292 of 2017, decided on November 27, 2025
The Judgment of the Court was delivered by
B.V. Nagarathna, J.
CIVIL APPEAL NO(S). 255 OF 2016:
Shri Santosh Krishnan, learned counsel for the appellant submitted that this appeal has been rendered infructuous in view of the final order passed by the National Consumer Disputes Redressal Commission (for short, “NCDRC”) in favour of the appellant herein.
2. Recording the said submission, the Civil Appeal is disposed as having been rendered infructuous.
Pending application(s) shall stand disposed of.
CIVIL APPEAL NO(S). 5292 OF 2017:
3. We have heard learned counsel for the appellant-New India Assurance Company Limited (appellant-Insurer) and learned counsel for the respondent-complainant at length.
4. Briefly stated, the facts of the case are that the respondent-complainant is a company engaged in the production of ‘float glass’ at a plant located in Gujarat. The respondent-complainant took an Industrial All Risks Insurance Policy (for short, “policy”) from the appellant-Insurer for the period 01.04.2005 to 31.03.2006. On 07.06.2005, while one of the water coolers at the plaint was being replaced, there was a leak of molten glass and hot lava at a temperature of 1100°C was spewed, resulting in an emergency shut-down of the plant.
5. The respondent-complainant lodged a claim under the Policy under two heads – material damage as well as loss of profits due to a business interruption. The appellant subsequently appointed M/s. Rakesh Narula & Co., Insurance Surveyors Pvt. Ltd. to conduct the survey. Consequently, the surveyor submitted two reports dated 30.09.2005, quantifying the losses due to material damage and loss of profits as Rs. 4,50,000/-and Rs. 1,10,55,245/- respectively.
6. Despite these reports, the appellant engaged another surveyor – M/s. P.C. Gandhi & Associates – which submitted a report on 25.07.2006, opining that the failure in this case was caused by ‘wear and tear’, which is an exclusion under the policy. Therefore, while material damage would be covered under the policy, the ‘loss of profits’ would not be covered.
7. On the basis of this subsequent report, the appellant informed the respondent-complainant that their claim only under ‘material damage’ had been approved for Rs. 4,49,231/-. Aggrieved, the respondent filed Consumer Complaint No. 75 of 2008 before the NCDRC. In response, the appellant raised a preliminary objection that the respondent was not a ‘consumer’ under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 (for short, “the Act”), since the same excludes a person availing services for any commercial purpose. Therefore, a claim under the heading of ‘loss of profits’ demonstrates a commercial purpose, and is consequently excluded. Further, the appellant contended that the leak of molten glass was due to the refractory having been in use for 12.5 years, and having become considerably weaker in the process due to wear and tear.
8. By impugned final judgment and order dated 01.06.2016, the NCDRC allowed the complaint, and directed the appellant to pay a sum of Rs. 1,14,95,245/- along with interest at the rate of 9% per annum with effect from 01.01.2006 until the date of payment. The NCDRC, inter alia, observed that the appellant was not justified in acting on the report of the second surveyor, by discarding the report of the first surveyor who was assisted by a Glass Technologist. Hence, the present appeal by the insurer.
9. As this is an appeal preferred against the order of the NCDRC in Consumer Complaint No. 75 of 2008, we find that the NCDRC was justified in overruling the preliminary objection taken by the Insurance Company to the effect that the respondent-complainant was not a Consumer within the meaning of Section 2(1)(d)(ii) of the Act.
10. Secondly, during the course of submissions, our attention has been drawn to Section II of the Industrial All Risks Insurance Policy issued by the appellant-Insurer in favour of the respondent, and particularly to the column dealing with the ‘Basis of Insurance’. On a reading of the same, we find that the basis of the claim in the instant case was the reduction in output as a consequence of damage caused to the plant. As a result, there was a shutdown of the plant for a period of fifteen days resulting, inter alia, in loss of profits in respect of which the claim was made. We also note that the appellant-Insurer had appointed M/s. Rakesh Narula and Co., Insurance Surveyor Pvt. Ltd. to conduct a survey of the accident which occurred in the plant and the resultant loss of profits. The surveyor, in its reports dated 30.09.2005 has noted the net adjusted loss of profits due to business interruption as Rs. 1,10,55,245 on the basis of the loss assessment which is extracted as under:
“LOSS ASSESSMENT:
Thus based on our observation and verification carried out and based on the information and explanations furnished by the Insured, we have made the assessment of loss as under:
| A. | Loss of Production in MT | 1524 MT |
| B. | Contribution per MT | Rs. 9811.55 |
| C. | Loss of Contribution (BxC) | Rs. 14,952,802 |
| D. | Increased Cost for minimization of Loss | Rs. 1,102,443 |
| E. | Gross Loss | Rs. 16,055,245 |
| F. | Less: Underinsurance | NIL |
| G. | Net Assessed Loss | Rs. 16,055,245 |
| H. | Less: Excess – Maximum | Rs. 5,000,000 |
| I. | Net Adjusted Loss | Rs. 11,055,245” |
11. Instead of accepting this surveyor’s report and making the payment in terms of the policy, the appellant-Insurer sought to seek a favourable opinion and appointed M/s. P.C. Gandhi & Associates, Surveyors and Loss Assessors to consider the surveyors reports submitted by M/s. Rakesh Narula and Co., Insurance Surveyor Pvt. Ltd. in order to overrule it. The whole object of seeking such a report was to ensure that no payment was made under the Insurance Policy and such a report was submitted by M/s. P.C. Gandhi & Associates. Consequently, by letter to the respondent dated 15.09.2006, the appellant-Insurer stated that the claim had been approved for Rs. 4,49,231/- with regard to loss/damage due to molten glass, and that the claim with regard to business interruption was not admissible.
12. Hence, this constrained the respondent complainant to approach the NCDRC, where a frivolous objection was raised by the appellant-Insurer to the effect that the respondent-complainant was not a consumer within the meaning of Section 2(1)(d)(ii) of the Act. We find that firstly, the preliminary objection raised was wholly frivolous and contrary to the provisions of Section 2(1)(d)(ii) of the Act. Secondly, there was a deficiency in service on the part of the appellant-Insurer inasmuch as having already sought the report of the first surveyor i.e., M/s. Rakesh Narula and Co., Insurance Surveyors Pvt. Ltd., another surveyor was appointed to comment on the first report only for the purpose of denying the claim. Obviously, when the second surveyor stated that no claim was payable under the Section II (Business Interruption), a letter was sent to the complainant on 15.09.2006. This constrained the respondent-complainant to approach the NCDRC.
13. We find that the NCDRC has rightly held that the respondent-complainant is a ‘consumer’ within the meaning of Section 2(1)(d) of the Act and secondly, taking note of the loss assessment made by M/s. Rakesh Narula and Co., Insurance Surveyors Pvt. Ltd., has rightly awarded the compensation to the respondent herein in the following terms:
“11. The complainant is therefore, disposed of with the following directions:
(i) Subject to the orders, if any of the Hon’ble Supreme Court in the appeals pending before it, the opposite party shall pay a sum of Rs. 1,14,95,245/- to the complainant as the principal amount of compensation.
(ii) The opposite party shall also pay compensation in the form of interest to the complainant on the aforesaid amount of Rs. 1,14,95,245/- @ 9% per annum with effect from 01.01.2006 till the date of payment.”
14. Learned counsel for the appellant-Insurer sought to persuade us to grant interest from 02.06.2008, i.e., the date on which the complaint was filed before the NCDRC and not from 01.01.2006. Secondly, learned counsel sought to persuade us that interest at the rate of 9% per annum is on the higher side.
15. We have perused the manner in which the preliminary objection was raised by the appellant herein and the manner in which the claim was considered by the appellant-Insurer.
16. We do not think that this is a case for showing any of the indulgences that the appellant-insurer has sought. Therefore, we find no reason to accept the submissions made by learned counsel for the appellant.
17. Hence, the appeal is dismissed.
18. It is noted that 50% of the decretal amount was deposited by the appellant before the NCDRC, which has already been withdrawn pursuant to the order of this Court. Hence, the balance decretal amount shall be paid within a period of four weeks from today without driving the respondent to file an execution petition.
However, we refrain from imposing costs on the appellant.
SUPREME COURT OF INDIA
RECORD OF PROCEEDINGS
Civil Appeal No(s). 255/2016
M/s. Gujarat Guardian Limited.….Appellant(s)
Versus
The New India Assurance Co. Ltd.….Respondent(s)
With
C.A. No. 5292/2017 (XVII-A)
UPON hearing the counsel the Court made the following
ORDER
C.A. No. 255 of 2016 is disposed of and C.A. No. 5292 of 2017 is dismissed in terms of the common signed nonreportable judgment, which is placed on file.
Pending application(s), if any, shall stand disposed of.
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