National Insurance Company Ltd. and Another Vs. Sambhavi Engineers - Court Judgment

D. Appa Rao, President:

1. This is an appeal preferred by the opposite party Insurance Company against the order of the District Forum directing it to pay Rs. 2,25,000 with interest @ 9% p.a., together with costs of Rs. 2,000.

2. The case of the complainant in brief is that it had taken an insurance policy covering the risk of Hydraulic excavator with the appellant Insurance Company covering the period from 7.7.2006 to 6.7.2007 for Rs. 43,38,650 by paying premium of Rs. 52,465. While so on 27.4.2007 it met with accident damaging cabin, mirror, etc. When the claim was made the officials of the Insurance Company visited the place and estimated at Rs. 2,25,000. Since it did not settle the claim he got issued a registered legal notice followed by complaint claiming Rs. 2,25,000 with interest @ 18% p.a., besides compensation of Rs. 50,000 towards mental agony and costs.

3. The appellant Insurance Company resisted the case. While admitting issuance of policy it alleged that for hydraulic excavator its liability was restricted to terms and conditions of the policy and the premium paid by him. It did not admit that the above said vehicle met with accident by falling and resulting in damage of cabin, mirrors, etc. When he submitted the claim it had conducted spot as well final survey. Though the Surveyor had assessed the loss at Rs. 2,25,000 however he did not agree to pay since the said excavator over turned on spot and the said peril was not covered. As per the commercial endorsement and Indian Motor Tariff No. 47 (IMT-47) a categorical condition was that loss or damage resulting from overturning arising out of the operation was excluded. Only damage arising directly from fire, explosion, self-ignition or lightning or burglary, house breaking or theft are included. Therefore it had repudiated the claim by its letter dated 9.4.2007. There was no negligence on its part, and therefore prayed for dismissal of the complaint with costs.

4. The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A6 marked while the Insurance Company filed the affidavit evidence of its Senior Branch Manager and got Exs. B1 to B6 marked.

5. The District Forum after considering the evidence placed on record opined that excavator was covered by an insurance policy and the same was damaged when it overturned at the work spot vide report of the Surveyor who assessed the loss at Rs. 2,25,000, and therefore directed it to pay the said amount with interest @ 9% together with costs.

6. Aggrieved by the said decision the opposite party preferred the appeal contending that the District Forum did not appreciate either facts or law in correct perspective. It ought to have seen that the peril was excluded, and in the light of the decision of the Honble Supreme Court in Deokar Exports Pvt. Ltd. v. New India Assurance Company Ltd., reported in I (2009) CPJ 6 (SC)=I (2009) ACC 93 (SC)=2009 (1) ALD 15 (SC), that relaxation of terms of the policy cannot be made when the policy was issued excluding such overturn risk. The complainant was not entitled to any amount, and therefore it prayed that the complaint be dismissed.

7. The point that arises for consideration is whether the order of the District Forum is vitiated by misappreciation of fact or law?

8. It is an undisputed fact that excavator belonging to the complainant was insured for Rs. 43,38,550 covering the period from 7.7.2006 to 6.7.2006. It may be stated that the policy that was issued is Misc. and Special type of vehicles policy - B package. The Insurance Company had taken basic premium of Rs. 52,465 and premium covering two employees. Importantly since it is a commercial vehicle it extended for the following perils:

IMT-47 Mobile cranes /drilling rigs/mobile plants/excavators/navies shovels/grabs/rippers.

“It is hereby declared and agreed that notwithstanding anything to the contrary contained in this policy that in respect of vehicles insured the insurer shall be under no liability—

Under Section I of the policy in respect of loss or damage resulting from overturning arising out of the operation as a tool of such vehicle or of plant forming part of such vehicle or attached thereto except for loss or damage arising directly from fire, explosion, self-ignition or lightning or burglary, house-breaking or theft.”

[Emphasis supplied]

Evidently the excavator was damaged while it was operating evidenced from mediators report Ex. B3, and the very narration of the complainant in claim form Ex. B4. The very complainant himself alleges in his complaint that said excavator was damaged due to overturning on spot. It is also not in dispute that the Surveyor who was drafted to conduct spot survey estimated the damage at Rs. 2,25,000, however opined that the complainant was not entitled to the amount in view of the fact that said peril does not cover the terms of the policy. When the complainant did not pay additional premium to cover additional risk and that as per the terms of the above stipulation which we have excerpted the complainant cannot turn round and claim the said amount. The Honble Supreme Court in New India Assurance Company Ltd. v. Sadand Mukh, reported in III (2009) SLT 300=II (2009) ACC 432 (SC)=observed that “The provisions of the Act, therefore, provide for two types of insurance—one statutory in nature and the other contractual in nature. Whereas the Insurance Company is bound to compensate the owner or the driver of the motor vehicle in case any person dies or suffers injury as a result of an accident, in case involving owner of the vehicle or others are proposed to be covered, an additional premium is required to be paid for covering their life and property”. Following the above decision, we may state herein that contract of insurance pertaining to excavator is governed by terms and conditions of the policy. The terms of the policy and also the quantum of the premium payable for insuring the vehicle depends not only upon the carrying capacity of the vehicle but also on the purpose for which the same was being used, and the extent of the risk covered thereby.

9. The Honble Supreme Court in Deokar Exports Pvt. Ltd. v. New India Assurance Company Ltd., reported in I (2009) CPJ 6 (SC)=I (2009) ACC 93 (SC)=2009 (1) ALD 15 (SC), opined that rights and obligations are strictly governed by policy of insurance. No exception or relaxation can be made on ground of equity. The complainant has to blame himself for this when he did not choose to take the policy in respect of loss or damage resulting from overturning arising out of operation, he cannot turn round and claim the amount on the ground that it was damaged. When risk is not covered by the terms of the policy the complainant cannot claim the amount. The District Forum did not consider this aspect at all. Awarding compensation is contrary to the terms of the policy.

10. In the result, the appeal is allowed setting aside the order of the District Forum. Consequently the complaint is dismissed. However, no costs.

Appeal allowed.