NATIONAL INSURANCE CO. LTD. versus HINDUSTAN SAFETY GLASS WORKS LTD.
[2017] 3 S.C.R. 520, Supreme Court of India, 2017
Outcome: Dismissed (Dismissed)
Segment: Ratio
A 
B 
[2017] 3 S.C.R. 520 
NATIONAL INSURANCE CO. LTD. 
v. 
HINDUSTAN SAFETY GLASS WORKS LTD. 
' 
. 
. 
(Civil Appeal No. 3883 of 2007) 
APRIL 07, 2017 
(MADAN B. LOKUR AND PRAFULLA C. PANJ, JJ.) 
Consumer Protection Act, i986: 
Damages - Policy taken out by respondent covering damage 
C 
or loss due to flood and inundation - Damqge caused by heavy 
rain - Claim for Rs.52 lakhs -
Two survey reports quantifying loss 
.of Rs.24 lakhs - Nothing paid by appelfrmt-insurer - Complaint 
under CP Act - Repudiation of claim 5 years after the complaint -
Award of Rs.2i lakhs by National Commission -.Challenged by 
·insurer - Held: The appellant-insurer itself took more than two· 
D years in surveying or causing a survey of the loss or damage suffered 
by the insured - Thus, entire delay was attributable to insurer and 
cannot prejudice the claim of the insured, more· particularly when 
the insured had lodged a claim well within time - it is well established 
. that the provision of limitation in the Act cannot be strictly construed 
E to disadvantage a consumer in a case where a supplier of goods or 
services itself is instrumental in causing a delay in the settlement of 
the consumer :S claim - That being so, the National Commission was 
. quite right in rejecting the contention of insurer in this regard - No . 
reason to interfere with t/:le order of National Commission . 
.,, F 
Actionable claim - Claim made by insured - As per policy, 
insurer was not liable for any loss i 2
months after the event that 
caused loss to the insured unless claim ls subject matter of pending 
action or arbitration - Contention of insurer that expression 
'pending action' relate to action instituted in a court of law - Held: 
G Not sustainable - When a claim is made by the insured that itself is 
actionable - There is no question of requiring the insured to 
approa~h a court of law for adjudication of the claim - This would 
amount to encouraging avoidable litigation which certainly cannot. 
be the intention of the insurance policies and is in any case not in 
public interest - insurance. 
H 
520
NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY 
521 
GLASS WORKS LTD. 
Dismissing the appeals, the Court 
A 
HELD: 1.1. A plain reading of condition no. 6 (ii) of the 
insurance policies showed that the appellant-insurer would not 
be liable for any loss or damage 12 months after the event that 
caused the loss or damage to the insured unless the claim is the 
subject matter of a pending action or arbitration. The contention 
B 
of the appellant-insurer that the expression 'pending action' must 
relate to action instituted in a court of law is not acceptable. 
Moreover, the disclaimer by the appellant-insurer was only in 
May 2001 and the period of 'limitation' under the policies could 
not have started before that time. [Paras 12, 13][525-B, DJ 
c 
1.2. The appellant-insurer itself took more than two years 
in surveying or causing a survey of the loss or damage suffered 
by the insured. Thus, the entire delay is attributable to appellant-
insurer and cannot prejudice the claim of the insured, more 
particularly when the insured had lodged a claim well within time. 
To make matters worse, the insurer actually repudiated the claim D 
of the insured only on 22•d May, 2001 which is well after the 
complaint was filed with the National Commission. [Para 17][526-
D-EJ 
2. In a dispute concerning a consumer, it is necessary for 
· the courts to take a pragmatic view of the rights of the consumer 
principally since it is the consumer who is placed at a disadvantage 
vis-a-vis the
supplier of services or goods. It is to overcome this 
disadvantage that a beneficent legislation in the form of the 
Consumer Protection Act, 1986 was enacted by Parliament. The 
provision of limitation in the Act cannot be strictly construed to 
disadvantage a consumer in a case where a supplier of goods or 
services itself is instrumental in causing a delay in the settlement 
of the consumer's claim. That being so, the National Commission 
was quite right in rejecting the contention of National Insurance 
E 
F 
in this regard. The National Commission accepted the second 
survey report as well as the addendum to it and there was no 
G 
reason to disagree with the findings arrived at in the absence of 
any material to discredit the surveyor or the report of the 
surveyor. No case is made out by National Insurance to interfere 
with the order passed by the National Commission. [Paras 18, 20 
and 21)(526-F-G; 527-C-D, E] 
H
522 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A 
State Bank of India v. B.~. Agriculture Industries (I) 
[2009] 4 SCR 762; Kandimalla Raghavaiah & Co. v. 
National Insurance Co. [2009] 10 SCR 870 -
distinguished. 
B 
Case Law Reference 
[2009] 4 SCR 762 
distinguished 
(2009) 10 SCR 870 
distinguished 
Para 15 
Para 16 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3883 
of2007. 
C 
From the Judgment and Order dated 23.04.2007 of the National 
D 
E 
Consumer Disputes Redressal Commission, New Delhi in Original 
PetitionNo.161 of1996 
WITH 
C. A. No. 1156 of2008. 
Vishnu Mehra, Pramod Dayal, Advs., for the Appellant. 
Jayant Bhushan, Sr. Adv., S.M. Suri, Ms. Manjeet Chawla, Ramesh 
Singh Suman Jyoti Khaitan, Ms. Anne Mathew, Vikas Kumar, Advs. for 
the Respondent. 
The Judgment of the Court was delivered by 
MADAN B. LOKUR, J. I. The question arising in the first 
appeal directed against the judgment and order dated 23ni April, 2007 
passed by the National Consumer Disputes Redressal Commission (for 
short 'the National Commission') in Original Petition No. 161 ofl 996 is 
F whether the claim of the respondent for goods insured, was rightly 
accepted (though in part) by the National Commission . Our answer to 
this question is in the affirmative and we find no reason to interfere with 
the decision of the National Commission. 
· 2. The respondent Hindustan Safety Glass Works Ltd. (for short 
-G 'the insured') had taken out two policies with the appellant National 
Insurance
Company, both dated 29'h August, 1990 for a period of one 
year which were subsequently renewed for another year. The first 
policy was for an amount of Rs. 4.9 lakhs to cover the risks on office 
building, residential quarters and canteen etc. in Calcutta. The second 
H policy was for an amount of about Rs. 5.7 crores to cover the risks on
NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY 
523 
GLASS WORKS LTD. [MADAN B. LOKUR, J.] 
building, machinery, finished and semi finished stocks, store, furniture, 
A 
wiring and fittings etc. in its factory/works in Calcutta. The policies 
included damage or loss due to flood and inundation. 
3. There is no dispute that on 6'" August, 1992 there was heavy 
incessant rain in Calcutta resulting in heavy accumulation of rain water 
inside and around the factory/works of the insured. According to the 
B 
insured, there was considerable damage to raw materials, stocks and 
goods, furniture etc. As a result of the damage suffered by the insured 
and in terms of the two policies taken out with National Insurance, claims 
were filed by the insured on 7'" and 8'" August, 1992 claiming a total 
amount of about Rs. 52 lakhs. 
4. Pursuant to the claims having been made; National Insurance 
appointed N.T. Kothari & Co. as its surveyor on 24'" September, 1992. 
The requisite survey was carried out and N .T. Kothari & Co. submitted 
its report on I !'"November, 1993 indicating a loss ofabout Rs. 24 lakhs 
having been suffered by the insured. 
5. For reasons that are not very clear, National Insurance did not 
accept the report and instead appointed Seascan Services (WB) Pvt. 
Ltd. as a surveyor to report on the loss or damage suffered by the insured. 
The second surveyor gave its report on 23rd November, 1994 assessing 
c 
D 
the loss or damage suffered by the insured at about Rs. 26
lakhs. By an 
addendum issued on 10'" Februaryy1995 the damage or loss incurred by .E 
the insured was reduced to about Rs. 24 lakhs. 
6. In spite of two survey reports quantifying the loss or damage 
suffered at about Rs. 24 lakhs, nothing was paid to the insured by National 
Insurance. Consequently, on 22"d April, 1996 the insured sent in notice 
to National Insurance to the effect that its claim had not been settled 
F 
and that the loss or damage claimed was to the extent of about Rs. 52 
lakhs and that this should be paid. · 
7. National Insurance did not reply to this notice and consequently, 
the insured filed a complaint with the National Commission under the 
provisions of the C(),nsumer Protection Act, 1986 (for short 'the Act') G 
claiming an amount of Rs. 52.32 lakhs along with an amount of about 
Rs.1.81 lakhs being the expenses incurred for the. purpose of loss 
minimisation. Interest at 18% per annum was also claimed by the insured 
with effect from 6th December, 1992 that is four months after the 
occurrence of the flood or iniindation. 
H 
,
524 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A 
8. At this stage, it may be noted that the claims made by the 
insured in terms of its letters dated 7'h and 8'h August, 1992 as well as 
the notice dated 22nd April, 1996 were repudiated by National Insurance 
much later on 22nd May, 2001 which is about five years after the complaint 
was filed with the National Commission. 
B 
9. Be that as it may, in response to the complaint and during the 
c 
D 
course of submissions, National Insurance raised four objections. These 
. have been summarised by the National Commission as follows: 
(i) Complaint was barred by condition No. 6(ii) of the policies; 
(ii) Complaint was barred by limitation as it was filed on 13 .08.1996 
while the loss/damage to the insured properties had taken place 
inAugust, 1992. 
(iii) Alleged loss had been caused due to accumulation of dust and 
moisture on the stocks lying unattended because of lock out in 
the factory from 03.05.1991 and not as a result inundation/ 
flood. 
(iv) None of the two survey reports can form the basis for payment 
of the amount claimed. 
10. The National Commission rejected all the contentions urged 
E by National Insurance and by the impugned judgment and order the 
insured was awarded an amount of Rs. 21,05,803.89 with interest at 9% 
per annum from 11th May, 1995 that is three months after the addendum 
issued by Seascan Services (WB) Pvt. Ltd .. (the second surveyor). Costs 
of Rs. 20,000/-were also awarded to the insured.
In our opinion there is 
no error in the decision appealed against. 
F 
G 
H 
11. In so far as the first objection is concerned, namely, reliance 
on condition number 6(ii) of the insurance policies it is necessary to first 
understand the scope of this condition which reads as follows: . 
"In no case whatsoever shall the company be liable for any loss 
or damage after the expiration of 12 months from the happening 
of the loss or damage unless the claim is the subject ofp~nding 
action or arbitration: it being expressly agreed and declared that if 
the company shall disclaim liability for any claim hereunder and 
such claim shall not within 12 calendar months from the date of 
the disclaimer have been made the subject matter of a suit in a
NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY 
525 
GLASS WORKS LTD. [MADAN B. LOKUR, J.] 
court of law and the claim shall for all purposes be deemed to 
A 
have been abandoned and shall not thereafter be recoverable 
hereunder." 
12. A plain reading of the aforesaid condition leads to the conclusion 
that National Insurance would not be liable for any loss or damage 12 
months after the event that caused the loss or damage to the insured B 
unless the claim is the subject matter of a pending action or arbitration. 
It was submitted by learned counsel for National Insurance that the 
expression 'pending action' must relate to action instituted in a court of 
law. 
13. We are not at all impressed by this submission. When a claim c 
is made by the insured that itself is actionable. There is no question of 
requiring the insured to approach a court of law for adjudication of the 
claim. This would amount to the encouraging avoidable litigation which 
certainly cannot be the intention of the insurance policies and is in any 
case not in public inte11::st. Moreover, the disclaimer by National Insurance 
was only in May 2001 and the period of 'limitation' under the policies D 
could not have started before that time. We leave the matter at that, 
more particularly since the learned counsel for National Insurance strictly 
did not press this submission. 
14. However, learned counsel vehemently argued that in terms of 
Section 24-A of the Act, the claim made by the insured was
barred by 
E 
limitation since the complaint was filed with the National Commission on 
131h August, 1996 while the loss or damage had occured on 61h August, 
1992. Therefore, the National Commission could not have admitted the 
complaint since it was filed beyond the stipulated period of two years 
0, 
from the date on which the cause of action had arisen. 
F 
15. Learned counsel placed reliance on State Bank of India v. 
B.S. Agriculture Industries (I) 1 but we do not see the relevance of this 
decision. On facts, it was found in this case-that the cause of action had 
accrued to the appellant therein on 7th June, 1994 but a complaint was 
filed with the National Commission on 5th May, 1997. Clearly the complaint G 
was barred by limitation. 
16. Similarly, reliance on Kandimalla Raghavaiah & Co. v. 
National Insurance Co.2 is misplaced. In this·case, a fire broke out in 
1 (2009) s sec 121 
2 (2009) 1 sec 768 
H
526 
SUPREME COURT REPORTS 
[2017) 3 S.C.R. 
A the premises of the insured on 23n1 March, 1988 and the appellant therein 
sought a claim from the insurance company on 6th November, 1992 while 
the complaint was filed with the National Commission on 241h October, 
1997. Under these circumstances, it was held that the complaint was 
barred by limitation. 
B 
17. Strictly speaking, the event that caused the loss or damage to 
the insured occurred on 61h August, 1992 when due to heavy incessant 
rain in Calcutta, the raw materials, stocks and goods, furniture etc. of 
the insured were damaged. On the very next day, the insured lodged a 
claim with National Insurance. In response, National Insurance first 
appointed N.T. Kothari & Co. to assess the loss suffered by the insured 
C and a report was given by this surveyor after more than one year. 
Thereafter, for reasons that are not at all clear, National Insurance 
appointed a second surveyor which also took about one year to submit 
its report and eventually gave an addendum to that report thereby crossing 
one year in completion of its report along with the addendum. In other 
D words, National Insurance itself took more than two years in surveying 
or causing a survey of the loss or damage suffered by the insured. Surely, 
this entire delay is attributable to National Insurance and cannot prejudice 
the claim of the insured, more particularly when the insured had lodged 
a claim well within time. To make matters worse,
National Insurance 
actually repudiated the claim of the insured only on 22"d May, 2001 which 
E is well after the complaint was filed with the National Commission. 
18. In our opinion, in a dispute concerning a consumer, it is 
necessary for the courts to take a pragmatic view of the rights of the 
consumer principally since it is the consumer who is placed at a 
disadvantage vis-a-vis the supplier of services or goods. It is to overcome 
F this disadvantage that a beneficent legislation in the form of the Consumer 
Protection Act, 1986 was enacted by Parliament. The provision of 
limitation in the Act cannot be strictly construed to disadvantage a 
consumer in a case where a supplier of gooas or services itself is 
instrumental in causing a delay in the settlement of the consumer's claim . 
. G That being so, we have no hesitation in coming to the conclusion that the 
National Commission was quite right in rejecting the contention ofNationa[ 
Insurance in this regard. 
19 .. In so far as the third contention urged by National Insurance 
is concerned this is itself contradicted by the reports of the two surveyors 
H appointed by it. It ~s possibly to get over this difficulty that National
NATIONAL INSURANCE CO. LTD. v. HINDUSTAN SAFETY 
527 
GLASS WORKS LTD. [MADAN B. LOKUR, J.] 
Insurance advanced the fourth contention namely that none of the two 
A 
survey reports could form the basis for payment of the amount claimed. 
20. In this context, the contention urged was that the first survey 
report given by N. T. Kothari & Co. was not a bona fide report inasmuch 
as the Central Glass and Ceramic Research Institute, Calcutta had not 
authorised that specific officer to give any report with regard to the 
B 
damage or loss suffered by the insured. Without going into this aspect of 
the matter since the National Commission itself did not rely upon the 
first survey report, we may notice that the second survey report was 
prepared in consultation with that very institute namely the Central Glass 
at1d Ceramic Research Institute, Calcutta but on this occasion, another 
officer had been consulted. The Insurance Company failed to provide 
C 
any reason before the National Commission or even before us to remotely 
suggest that the second report was also tainted either becau3e the officer 
consulted was not authorised to give a report or for any other justifiable 
re:,son. The Nation:il Commission accepted the second survey report 
which was provided by Seascan Services (WB) Pvt. Ltd. as well as the 
D 
addendum to it and we do not see any reason to disagree with the findings 
arrived at in the absence of any material to discredit the surveyor or the 
report of the
surveyor. 
21. Accordingly, in our opinion no case is made out by National 
Insurance to interfere with the order passed by the National Commission.. E 
CIVIL APPEAL NO. 1156 OF 2008 
22. This appeal also concerns the interpretation, in the context of 
limitation, of condition number 6(ii) of the insurance policy taken out by 
the insured. In this appeal, the insured suffered a loss or damage to its 
goods in an incident that occurred on 61h September, 1993. A claim was 
F 
lodged by the insured on the next day. The claim was repudiated by 
National Insurance on 27'h December, 1999 while a compliant filed by 
the insured in the National Commission was pending since 6th March, 
1998. In view of these facts and in view of the discussion in the connected 
appeal, there is no merit in the objection raised by learned counsel that 
G 
the complaint was barred by limitation in view of condition number 6(ii) 
of the insurance policy or Section 24-A of the Act. In any event, this 
contention was not strictly pressed by learned counsel on the facts of 
this appeal. 
23. On the merits of the case, the only issue is whether the loss or H
528 
SUPREME COURT REPORTS 
[2017] 3 S.C.R. 
A damage to the insured machine was caused by an explosion or by a 
short circuit. According to National Insurance, a short circuit in the 
machine disentitled the insured from making a claim. The National 
Commission held, on a consideration of the evidence that an explosion 
had occurred in the machine and that resulted in a short circuit and 
B 
c 
consequent loss or damage to the machine. 
24. Having gone through the evidence on record, we find that the 
view taken by the National Commission is not only based on the evidence 
on record, but is in any event a possible view. In the absence of any 
material error in appreciation of the evidence, we do not think it proper 
to substitute the view taken by the National Commission with our view. 
25. Therefore even in this appeal, National Insurance has not 
been able to make out a case for interference with the order passed by 
the National Commission. 
Result 
D 
26. Both the appeals are without any merit and are accordingly 
dismissed. 
Devika Gujral 
Appeals dismissed.