Amarjeet Singh Kawatra, Shimla Vs. M/S. Oriental Insurance Company Limited, Shimla - Court Judgment

Surjit Singh, President (Oral), J. (Retd.).

1. Complainant has filed the present complaint, under Section 12 of the Consumer Protection Act, 1986, seeking issuance of directions to the opposite parties to pay a sum of Rs.4,71,000/- by way of insurance money, Rs.12.00 lacs on account of mental and physical harassment, `5.00 lacs for loss of business and business opportunity and Rs. 12,000/- on account of litigation expenses with interest @ 18% per annum pleading the following cause of action.

2. Complainant purchased a Mahindra Logan car for a sum of Rs.4,94,501/- against Annexure C-1, from opposite party No.2. The manufacturer of the vehicle is opposite party No.3. Soon after its purchase, the car had been insured by the complainant with opposite party No.1 in the sum of Rs.4,71,000/-. Insurance was got done on 29^th February, 2008. Four days later, i.e. on 3^rd March, 2008, when the vehicle was being driven by the complainant in Shimla town, near Ayurvedic Hospital, he noticed in the right mirror that smoke was rising from the rear portion of the car. He stopped the car and looked for the cause of smoke. He saw that the back side of the car was on fire. He went to a nearby building to fetch water. Building was locked. By the time he returned, car was in flames. It was completely destroyed as a result of fire. Incident was reported to the police. Intimation of the accident was given to opposite party No.1, with whom the car was insured. Opposite party No.1, vide letter dated 11.08.2008, copy Annexure R-6, wrote to the complainant that the loss had occurred due to manufacturing defect in the car, which resulted in fire and, therefore, his claim does not lie against it, but lies against the seller and manufacturer of the vehicle.

3. Complainant on receipt of letter, Annexure R-6, aforesaid, filed a complaint, under Section 12 of the Consumer Protection Act, 1986, impleading insurer, i.e. opposite party No.1, the dealer from whom the vehicle was purchased, i.e. opposite party No.2 and the manufacturer of the vehicle, i.e. opposite party No.3.

4. Opposite party No.1 (insurer) in its reply pleaded that the amount of relief claimed had been inflated deliberately to bring the matter within the jurisdiction of this Commission and that the value of the vehicle being only `4,71,000/-, for the purpose of its liability, complaint was required to be filed before the District Forum. On merits, it was stated that the investigation conducted by its surveyor and investigator indicated that the cause of fire was manufacturing defect in the vehicle and, therefore, the liability to compensate the complainant was that of the manufacturer of the vehicle. Further, it was stated that the policy covered the risk of accidental loss or damage and not fire of the vehicle due to some mechanical or electrical defect in it. Also, it was stated that this was a case of mechanical and electrical breakdown. Further, it was stated that the policy provided that in the event of liability arising out of a contract, it shall not be liable to indemnify the insured.

5. Opposite parties No.2 and 3 admit that the vehicle was sold to the complainant, but they deny that there was any mechanical or electrical defect in the vehicle and that the fire took place because of any such defect or manufacturing defect. Objection of jurisdiction on the same lines, as raised by opposite party No.1, was raised by opposite parties No.2 and 3 also.

6. Parties adduced evidence before this Commission. Complaint was disposed of vide order dated 10^th March, 2010. Finding was given that there was no manufacturing defect in the vehicle and that the fire was accidental. With this finding, liability to indemnify the complainant was fastened on the insurer (opposite party No.1), who had already, pursuant to an interim order of this Commission (dated 25.05.2009) paid the entire amount of insurance money. Insurer was ordered to pay `1.00 lac, as compensation and `50,000/- as punitive damages. Also direction was issued to the insurer to pay `5,000/- as litigation expenses.

7. Appeal was filed against order dated 10^th March, 2010 of this Commission, before the Honble National Commission. Honble National Commission has remanded the case to this Commission, vide order dated 30.12.2010, with direction to decide the same afresh, in accordance with the terms appearing in the order. Said terms appear in paras 7 and 8 of the order of the Honble National Commission, which are reproduced below:-

“7.  Having considered the entirety of the facts and circumstances of the case and the gamut of controversy as noticed by the State Commission in the opening part of the impugned order, we are of the view that the complaint has not received the kind of consideration it deserved at the hands of the State Commission. The methodology of deciding the complaint in piecemeal by making the order dated 25.5.2009 at the threshold without full trial of the complaint would show that the State Commission had proceeded to answer the complaint with a certain amount of pre-conviction and prejudged the issue which course is not permissible in law before a quasi-judicial forum like the State Commission. That apart, we are also constrained to note that the state Commission, as per its own observation, had entertained the complaint which it had no pecuniary jurisdiction to try, as the value of the claim/relief had been inflated in order to create jurisdiction of the State Commission.

8. The factum that the car in question was insured against certain risks and it got damaged due to automatic fire within four days of its delivery being not in dispute, the crucial question which was required to be answered before fixing the liability on one party or the other, was whether the car in question caught fire on account of any manufacturing defect or for some other cause and, if so, what that cause was. To decide such a question, opinion of some independent expert having skill and expertise to give opinion in such matters ought to have been obtained than deciding the question by discarding the opinion of the Surveyors/ investigator and going by the testimony of an Executive Manager of opposite party No.3 alone. There exist many automobile experts in the country and to name a few are All India Automotive Research Institute, Pune, etc., whose services can be utilized for the purpose. We are of the view that for fair and effective adjudication of this complaint, the State Commission should obtain opinion of such an independent expert, maybe at the cost of the opposite parties to begin with.”

9. In accordance with the observations made by the Honble National Commission in para-8 of its order, we contacted Automative Research Association of India, Pune. Initially they indicated that they were in a position to give the cause of fire by examining the vehicle and asked for remission of certain amount of money by way of their charges, including travelling expenses. But when a reference was made to them for inspecting the vehicle and a substantial part of the money demanded by them had also been sent by bank draft, they wrote back, vide letter dated 27^th July, 2010, that the matter had been deliberated by the experts available with their Association and that they were of the opinion that on account of long lapse of time (since the occurrence of the incident) it would not be possible to analyze reasons of fire by examining the vehicle. In view of this report received from the aforesaid Association, we are left with no alternative but to proceed to dispose of the complaint on the basis of material/evidence already on record.

10. It is submitted on behalf of the opposite parties that this Commission does not have the jurisdiction to entertain the complaint. We do agree with the submission because basically the complaint is against the Insurance Company, for indemnification of loss and payment of the amount of money for which the vehicle was insured, i.e. Rs.4,71,000/-. No doubt, the complainant asked for Rs.12.00 lacs on account of mental and physical harassment and Rs.5.00 lacs on account of business loss, but this being a consequential loss, is excluded by the policy, and also he cannot seek huge amount of Rs.12.00 lacs on account of alleged mental and physical torture/harassment.

11. However, keeping in view the fact that the Honble National Commission has remanded the matter to this Commission, instead of ordering the return of the complaint for presentation to the appropriate forum, with a direction to decide the question as to the actual cause of fire in which the vehicle was damaged, after obtaining expert opinion, we are of the view that the Honble National Commission intended that the matter should be disposed of on merits by us, ignoring the plea of jurisdiction raised by the opposite parties. Another reason for gathering this impression is that despite a specific prayer having been made before it on behalf of the Insurance Company, the Honble National Commission declined to direct the complainant to refund the amount of `4,68,000/-, which had been paid to him on account of insurance money, pursuant to interim order dated 25.05.2009.

12. Next question pertains to liability for compensating the complainant for the loss of car in fire. Admittedly, the car was insured with the opposite party No.1 for own damage. Insurance policy produced by the opposite party No.1 itself, is Annexure R-1. Section-1 of the policy reads as follows:

“Section 1 – Loss of Or Damage To The Vehicle Insured:

1. The company will indemnify the insured against loss or damage to the vehicle insured hereunder and/or its accessories whilst thereon:

By Fire, Explosion, Self Ignition or lightning;

ii. To x.- xxx -    12. From a bare reading of the above reproduced clause in the policy, it is abundantly clear that the insurer undertook to indemnify the insured in the event of the vehicle getting lost or damaged due to fire, explosion, self ignition or lightning. This clause is not subject to any limitation, leave alone the ones pleaded by the insured. The clause nowhere says that if the fire takes place because of any defect in the vehicle, then the insurer will not be liable to indemnify; rather the use of words “self ignition” indicates that the insurer is under obligation to indemnify the insured, even when the vehicle catches fire without any extraneous cause.

13. Learned counsel representing the insurer says that under clause 2(a) of section-1 of the policy, which is reproduced below, insurer is not liable for consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures or breakages.

14.  Learned counsel says that the fire took place because of mechanical or electrical breakdown. This is not a case of mechanical or electrical breakdown, but a case of fire and in the case of fire, as already noticed by reference to clause (1) (a) of section-I, insurer is liable to indemnify the insured, irrespective of the cause of fire.

15. Another submission, which has been made on behalf of the insurer is that under General Conditions (exception No.2), a claim arising out of any contractual liability is not payable by the insurer. The exception clause reads as follows:

 “The Company shall not be liable under this policy in respect of:

(1) xxxxx

(2)  Any claim arising out of any contractual liability.

(3) To (6)  xxxxxxxx

16. Construction of this clause, in our considered view is that in case the insurer becomes liable to pay any claim to a third party, under a contract with that third party, insurer will not indemnify the insured for such claim. In the present case, insurer is not liable to pay any claim, under any contract with a third party, though, as pleaded by the insurer, he may be having a right to claim damages, including the refund of the price of the vehicle against opposite parties No.2 and 3. This alleged right of the complainant does not affect the liability of opposite party No.1 to indemnify the insured (complainant), in any way.

17. Next submission made on behalf of the insurer is that the opening part of the policy says that the insurance is in respect of the loss or damage arising out of an accident but the present incident was not of accidental fire. Submission has been noticed only to be rejected. Any sudden unexpected incident due to any cause is an accident and thus no accident is without any cause. Therefore, even if, the cause of fire may be some mechanical or electrical defect in the vehicle, as is being canvassed by the opposite party No.1, the fact would remain that this was a fire accident.

18. In view of what we have discussed and concluded hereinabove, opposite party No.1 cannot escape liability irrespective of the fact whether cause of fire was any defect in the vehicle or some other extraneous cause. Now, when the insurer remains liable and the claim of the complainant is basically against the insurer only, though the manufacturer and the seller of the car have also been impleaded as opposite parties, we need not examine the question whether the cause of accident was manufacturing defect in the vehicle, as alleged by opposite party No.1, and denied by opposite parties No.2 and 3. In fact, the complainant had lodged the claim initially against the manufacturer and when it repudiated the same on the ground that liability was that of the manufacturer of the vehicle, complainant filed the complaint against the insurer as also the manufacturer.

19. Above stated position apart, we are of the view that the question raised by the opposite party No.1 that there was a manufacturing defect in the vehicle, is beyond the purview of Consumer Fora. This is a question between opposite party No.1 and opposite parties No.2 and 3. Neither of the two is a ‘consumer nor is either of them a ‘seller of goods (car in this case) vis-a-vis the other. Opposite party No.1 being indemnifier, may after indemnifying the insured, have the right to recover the amount of money by which it indemnifies the insured, by filing a suit, but it cannot seek the remedy by filing a complaint under the provisions of the Consumer Protection Act, 1986 and, therefore, we feel that we do not have the jurisdiction to entertain, dwell upon and adjudicate, this question, which is interse the opposite parties.

20. In view of the above stated position, we allow the complaint and make the interim order dated 25.05.2009 absolute. The order is, however, subject to the return of the salvage of the burnt vehicle. We have been told that the salvage is lying in the stockyard of opposite party No.2 at Kandaghat. We direct the opposite party No.2 to deliver the salvage of the vehicle to the authorized functionary of the Insurance Company as and when he visits their place for the purpose. In addition to the aforesaid order of making the interim order absolute, we direct the opposite party No.1 (Insurance Company) to pay Rs.50,000/- as compensation for unjustified repudiation of claim and Rs.10,000/- as costs, within one month from today, failing which interest @ 9% per annum shall be payable on the sum total of the aforesaid two amount(s), from the date of this order.

21. One copy of this order be sent to each of the parties, free of cost, as per Rules.