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2013 DIGILAW 209 (JK)

National Insurance Co. Ltd. v. Kamal Masala Co.

2013-04-15

DHIRAJ SINGH THAKUR, M.M.Kumar

body2013
D.S. Thakur, J. 1. The present appeal has been preferred by the appellant-Insurance Company against order dt. 25th of Feb'11, passed by the J&K State Consumer Disputes Redressal Commission, Jammu (for short Consumer Commission), whereby an amount of Rs. 3,57,475/-, along with interest @8% per annum including litigation expenses to the tune of Rs.4000/- has been allowed in favour of the complainant. 2. The facts in brief be noticed as under:- 3. The complainant is a firm carrying on the business of spices and Hawan Samagree by manufacturing them in the business premises. The complainant got the building of the firm insured for a sum of Rs. 2.60 lacs and the stocks for a sum of Rs. 7 lac, with the appellant-Insurance Company. The policy of insurance was valid from 17th of Sept'04 to 16th of Sept'05. According to the complainant, a fire broke out at the insured premises on account of short circuit causing loss and damage to the building and the stocks. An FIR was registered with the police station Gangyal in that regard. 3.1 According to the averments made in the complaint, an intimation regarding the fire incident was given to one Mr. Bhagat, the Divisional Manger Office-II of the Appellant-Company, who deputed a Surveyor namely Mr. Rohit Sharma, to assess the loss suffered by the complainant-firm. 3.2 It was alleged in the complaint that despite the needful having been done by the complainant, the appellant had failed to settle the claim. 3.3 Objections were filed by the appellant to the complaint before the Consumer Commission wherein, the factum of the complainant being insured with the Company, was not denied. 3.4 The claim was, however, resisted on the ground that intimation regarding the incident should have either been given to the UCO Bank, Gandhi Nagar, Jammu, in as much as, the proposal form had been submitted by the said bank or to the Policy issuing office directly, with regard to the registration of the claim in respect of the alleged loss. It was averred in the objections that intimation regarding claim was received by the Insurance Company from the Divisional Office-II at Canal Road, Jammu. It was also averred that Mr. It was averred in the objections that intimation regarding claim was received by the Insurance Company from the Divisional Office-II at Canal Road, Jammu. It was also averred that Mr. Rohit Sharma, had never been assigned any survey work from the office of the appellant and that the Surveyor could not have been appointed by any other branch except the branch issuing the policy, which in this case was Divisional Office-I. 3.5 After going through the evidence led in support of the claim and the objections, the Consumer Commission allowed the complaint and awarded the compensation as stated above. 4. Learned counsel appearing for the appellant reiterated the stand as was taken before the Consumer Commission as regards improper intimation of the alleged fire incident and the unauthorized appointment of Mr. Rohit Sharma, as Surveyor to assess the loss by Divisional Manager Office-II. 5. Heard counsel for the parties. 6. Counsel for the appellant has drawn our attention to the General Conditions of the Shopkeepers' Insurance Policy, which is applicable to the facts of the present case. Clause I of the said General Conditions reads as under:- "Notice: Every notice and communication to the Company required by this Policy shall be in writing to the Office of the Company through which this insurance is effected." 7. Emphasizing on the above condition, counsel for the appellant urged that intimation to Divisional Office-II of the Company, would be no intimation and consequently, would not create any liability on the appellant. 8. Generally, insurance contracts containing a number of terms and conditions, depending upon their effect may be classified as follows:- i/ Conditions which, if not fulfilled, entitle the insurer to repudiate the liability. ii/ Stipulations, the breach of which give the insured the right to claim damages only. It is generally the essential conditions of a contract which, if not fulfilled, entitle the insurer to repudiate liability. Essential conditions: 9. The difference between an essential condition and a non-essential condition is that in the former case, the innocent party on becoming aware of the breach can consider himself discharged and sue for damages for loss of contract or keep the contract and recover damages for the particular breach. 10. In the later case i.e non-essential condition, only the later course is available and not damages for loss of contract. The Test: 11. 10. In the later case i.e non-essential condition, only the later course is available and not damages for loss of contract. The Test: 11. The test of an essential condition of contract is whether the promise is of such importance to the promisee that he could not have entered into a contract unless assured of a strict and substantial performance of the promise. See Bettini v. Gye (1876)1 QBD 183, (1874-80) AII ER 242. 12. Generally the terms of the insurance contract provide for the method and manner in which the insured is to intimate the factum of loss or prescribe the procedure for a claim. Whether such clauses are essential conditions or not and whether the insurer is given the liberty to repudiate or consider himself discharged of its obligation or the conditions are only incidental or collateral with no scope to the insurer to escape liability under the contract, can be assessed only upon a wholesome construction of such provisions and the intention of the parties to the contract. 13. From a reading of the policy of insurance, however, it transpires that the condition regarding intimation to the branch issuing the policy was not at all a condition precedent or an essential condition of a contract, breach of which could enable the Insurance Company to escape liability. The general condition aforestated, did not go to the root of the contract so that failure to perform it would render the performance of the rest of the contract by the appellant-insurance company different in substance from what the appellant had stipulated for. 14. In Lickiss v. Milestone Motor Policies At Lloyds, (1966) 2 All E.R. 972, a condition in a policy of motor insurance required the insured that in the event of an accident, the insured would give immediate notice to the insurers of the occurrence regarding the accident and to forward immediately any letter or notice of intended prosecution relating to the accident. This was a condition precedent to the liability of the insurers. An accident having occurred, the police sent a notice of an intended prosecution to the insured and also to the insurers. The insurers repudiated their responsibility on the failure of the insured to give notice as above. This was a condition precedent to the liability of the insurers. An accident having occurred, the police sent a notice of an intended prosecution to the insured and also to the insurers. The insurers repudiated their responsibility on the failure of the insured to give notice as above. Nevertheless, the insurer was held liable on the ground that the insurer had received all the information and that it was unnecessary for the insured to give that information and that it could not rely on that condition. 15. It is an admitted fact that the building premises and the stocks were insured with the appellant-Company under the Policy of Insurance, which was valid on the date of incident. The factum of intimation to Divisional Office-II of the Company is admitted by the appellant. The insistence on the part of the appellant that intimation ought to have been given only to the Branch issuing policy of the Company or to the UCO Bank who had submitted the proposal form for insurance, is a plea which is devoid of any merit and, thus, cannot be accepted in view of the finding that the condition regarding intimation was a general condition and not an essential condition. What was important was receipt of intimation by the company's branch office which in this case is admitted although indirectly through its Divisional Office-II situate in the same city. 16. Even otherwise, the requirement of notice as prescribed in the General conditions of the Contract of Insurance must be deemed to have been waived, the moment, the Divisional Office-II through its Divisional Manager-Sh Bhagat, received the intimation from the complainant with regard to the loss and deputed the Surveyor namely Shri Rohit Sharma, to assess the loss. Even otherwise, the Divisional Office-II, having further communicated to Divisional Office-I, regarding the incident and the loss suffered by the complainant, which is admitted by the appellant-Company in its objections before the Consumer Commission, the requirement of Notice clause of General Conditions of the Policy, would be deemed to have been satisfied. In this regard, reference is made to Section 39 of the Jammu and Kashmir Contract Act, Svt. 1977 (1920 AD), which is reproduced here-in-below:- "39. In this regard, reference is made to Section 39 of the Jammu and Kashmir Contract Act, Svt. 1977 (1920 AD), which is reproduced here-in-below:- "39. Effect of refusal of party to perform promise wholly: When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified by words or conduct, his acquiescence in its continuance." 17. Testing the facts of the present case on the touchstone of the substantive provision of Section 39, noticed above, it is clear that once the Company accepted the intimation through its Divisional Office-II and passed on the said information regarding the incident to Divisional Office-I, and as indicated above, appointed a Surveyor, the Insurance Company must be deemed to have acquiesced by its conduct and, therefore, cannot insist on the requirement of performance of procedure prescribed in the General conditions regarding the method and manner of service of notice. 18. The second issue is with regard to the appointment of Sh. Rohit Sharma, as Surveyor and the report prepared by him as regards the loss suffered by the complainant. 19. The counsel for the appellant urged that it is only the Branch that issues the policy of insurance that is entitled to appoint the Surveyor or investigate the claim made by an insured with regard to the loss suffered by him. 20. The issue regarding appointment of a Surveyor is an internal matter of the appellant-Company. Mr. Rohit Sharma, appears to have been appointed as Surveyor by Sh Bhagat, Divisional Manager in Divisional Office-II, to visit the spot and prepare the report. It is not the case of the appellant that the said Surveyor was not appointed through Divisional Office-II. If that were the case, it would have been very easy for the Insurance Company to cite Mr. Bhagat, as a witness to support the claim of the appellant that the report prepared by the said Surveyor was unauthorized. All that is stated by the appellant before us is that right to appoint a Surveyor was vested only with the Divisional Office-I and not the Divisional Office-II. Bhagat, as a witness to support the claim of the appellant that the report prepared by the said Surveyor was unauthorized. All that is stated by the appellant before us is that right to appoint a Surveyor was vested only with the Divisional Office-I and not the Divisional Office-II. This, in our view, would not make any difference at all till such time, it is admitted that the appointment of the Surveyor was by the Insurance Company irrespective of the fact whether the same was appointed through Divisional Office-I or Divisional Office-II. If that be so, the report prepared by the Surveyor cannot be disbelieved. 21. Even otherwise, the survey report prepared by the loss assessor is quite comprehensive and detailed and we see no reason to disbelieve it. 22. Counsel for the appellant in the alternative and without prejudice to the objections aforementioned, placed reliance upon a certificate issued by the Fire Services Department wherein the loss has been quantified only at Rs.10,000/-. 23. The certificate issued by the Fire Services Department ought to have been placed before the Consumer Commission and proved in accordance with the Law. 24. We feel that, even otherwise, in the light of detailed report prepared by the Surveyor, the certificate issued by the Fire Services Department can be said to be nothing but tentative. The assertion of the counsel for the appellant that the loss could not be more than the one as reflected in the certificate issued by the department concerned, therefore, cannot be accepted. 25. The Consumer Commission, in our opinion, has committed no illegality in allowing the complaint and awarding the compensation in the manner indicated above. 26. The present appeal is, thus, without any merit and is, accordingly, dismissed along with connected CMA.