On 9th November 2022, the Supreme Court in a Division Bench comprising of Justice Surya Kant and Justice M.M. Sundresh observed that any non-compliance on the part of the insurance companies would take away their right to plead repudiation of contract by placing reliance upon any of the terms and conditions included thereunder. (M/s Texco Marketing Pvt. Ltd. Vs. TATA AIG General Insurance Company Ltd. & Ors.)
Facts of the Case:
The appellant secured a Standard Fire & Special Perils policy from the respondent on 28.07.2012. It was meant to cover a shop situated in the basement of the building. However, the exclusion clause of the contract specifies that it does not cover the basement. The appellant put up further construction, for which due notice was given and due inspection was also made. The shop met with a fire accident for which the appellant raised a claim. The surveyor of respondent No. 1 also made an inspection, on the basis of which the appellant was instructed to refurnish its shop for the purpose of due evaluation. While arriving at the sum payable, the surveyor did notice the fact that the earlier inspections were made and that the fact that the shop was in a basement was to the knowledge of the insurer. The claim made was repudiated by respondent No. 1, taking umbrage under the exclusion clause. The State Consumer Disputes Redressal Commission rejected the contention of respondent No. 1 on the premise that there was no adequate disclosure, the mandatory provisions have not been followed, as such the insurer was deficient in service and indulged in unfair trade practice. The fact that a similarly placed shop was also covered, was not in dispute. The amount payable is only after due deduction of the goods meant for the third party. This decision was overturned by National Consumer Disputes Redressal Commission. Reliance upon the exclusion clause was placed while setting aside the decision of the State Commission and granting a sum of Rs.7.5 lakhs. Challenging the same, present appeal is filed.
Contentions of the Appellant:
The counsel for the appellant submitted that “the National Commission has not overturned the reasoning of the State Commission both on facts and law. When once there is a finding which is not in dispute, the consequence would follow.”
Contentions of the Respondents:
The counsel for the respondents submitted that “the existence of the exclusion clause is not in dispute. Admittedly, the shop was situated in the basement, as such, the mere fact that the decision of the National Commission was accepted would not disentitle the respondents to contend that the finding that there was knowledge even at the time of the execution of the contract, is not correct. In any case, it cannot be the basis for restoring the decision of the State Commission.”
Observations and Judgment of the Court:
The hon’ble court observed that “the forums have held concurrently that respondent No. 1 was conscious of the fact that the contract was entered into for ensuring a shop situated in the basement. The aforesaid position is not only a factual one but also accepted by the respondents as no challenge has been laid against the impugned order. Similarly, there was no specific denial on the non-compliance of adequate notice. The National Commission has not given any finding on this aspect, though it was dealt with in extenso by the State Commission. On a reading of Section 21(A) of the Consumer Protection Act, 1986, it is clear that it is not akin to Section 96 of the Code of Civil Procedure, 1908. The order has not considered all the relevant materials which were duly taken note of by the State Commission. The terms of the contract are unfair, particularly the exclusion clause, and that respondent No. 1 has indulged in unfair trade practice. In such view of the matter, the decision of the National Commission cannot be sustained as the appellant cannot be non-suited only on the ground of mere deficiency in service without taking note of the fact that it is the duty of the Forum to grant the consequential relief by exercising the power under Section 14(d) and 14(f) of the Consumer Protection Act, 1986 which mandates the payment of adequate compensation by way of an award. The exclusion clause is an unfair term, going against the very object of the contract, making it otherwise un-executable from its inception.”
The appeal was partly allowed. The impugned order passed by the National was set aside except to the extent of declining a sum of Rs.2.5 lakhs towards harassment and mental agony.
Case: M/s Texco Marketing Pvt. Ltd. Vs. TATA AIG General Insurance Company Ltd. & Ors.
Citation: CIVIL APPEAL NO. 8249 OF 2022
Bench: Justice Surya Kant and Justice M.M. Sundresh
Date: November 09, 2022.
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