[2016) 4 S.C.R. 69

MIS. GALADA POWER AND TELECOMMUNICATION LTD.

UNITED INDIA INSURANCE CO. LTD. AND ANOTHER ETC.

(Civil Appeal Nos. 8884-8900of2010)

JULY28, 2016

[DIPAK MISRA AND R. F. NARIMAN, JJ.)

Consu111er Protection Act, 1986: Insurance - Duration Clause

- Waiver of right under, through positive conduct - Delivery of goods - Claim for shortage/Transit loss - In terms of Cl.5 ('"Duration") such intimation of loss was to be given to insurer within 7 days of arrival of good1 at the destination -Appellant/ co111p/ainant made a claim for transit-loss with insurer beyond period of 7 days

- Insurer appointed surveyor who concluded that there was a loss

- Despite such report, insurer sent repudiation letter refuting appellant's claim stating that claim lodged by appellant did not fall under the purview of transit-loss - Propriety of - Held: C/.5 of the policy related to duration - In absence of any mention of duration clause in repudiation letter and from the conduct of insurer in appointing a surveyor despite such duration clause, the insurer had by positive action waived its right to invoke duration clause - As regards the merit of the claim, the surveyor had given a report that there was a loss - No error found in it - Insurer was thus liable to pay.

Waiver - MeaninK of - Explained.

Allowing the appeals, the Court

HELD: 1.1. CI. 5 of the policy relates to "Duration". Letter of repudiation does not whisper a single word with regard to delay or, in fact, does not refer at all to duration clause of the policy. It states that the claim lodged by the complainant does not fall under

the purview of transit-loss. The insurer had taken cognizance of G communication made by the appellant and nominated a surveyor to verify the loss. Once the said exercise was undertaken, the insurer could not be allowed to take a stand that the claim was hit by the clause pertaining to duration. In absence of any mention

69 H

A in letter of repudiation and also from the conduct of insurer in appointing a surveyor, it could be safely concluded that the insurer had waived the right which was in its favour under the duration clause. [Para 12] (75-G-H; 76-A-BJ

Krishna Wanti v. Life Insuranr° Corporation of India B 2000 (52) DRJ (DB) - app1uved.

Manak Lal v. Dr. Prem Chand Singhvi AIR 1957 SC 425 : 1957 SCR 575 - followed.

Krishna Bahadur v. Purna Theatre (2004) 8 SCC 229 : 2004 (3) Suppl. SCR 833; State of Punjab v. Davinder Pal Singh Bhullar (2011) 14 SCC 770 : 2011 (15) SCR 540 - relied on.

Hals bury s Laws of England Vol.16(2), 4•• Edn. - referred to.

D 1.2. In the instant case, the insurer was in custody of the policy. It had prescribed clause relating to duration. It was very much aware about the stipulations therein, it appointed a surveyor.

Additionally, in repudiation letter, it only stated that claim lodged by the insured was not falling under the purview of transit loss.

Thus, by positive action, the insurer waived its right to advance

E the plea that the claim was not entertainable because conditions -

enumerated in duration clause were not satisfied. The National Commission could Iiot have placed reliance on the said terms to come to the conclusion that there was no policy cover in existence and that the risks stood not covered after delivery of goods to the consignee. [Para 17] (78-E-G] ·

Case Law Reference

2000 (52) DRJ (DB) approved Para 12

1957 SCR 575 followed Para 14 2004 (3) Suppl. SCR 833 relied on Para 15

2011 (15) SCR 540 relied on Para 16

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8884- 8900 of20 I 0.

From the Judgment and Order dated 06.01.2009 of the National H Consumer Disputes Redressal Commission, New Delhi in Revision

M/S. GALADA POWER AND TELECOMMUNICATION LTD. 71

v. UNITED !NOIA INSURANCE CO. LTD.

Petition Nos. 2774-2790 of2006.

Rana Mukhe1jee, Sr. Adv., D. Bharat Kumar, T. Bhaskar Gowtham, Abhij it Sengupta, Ad vs. for the Appellant.

Rakesh Kumar, Arun Kumar, Bipin Kumar, Prabhat Kaushik, Rameshwar Prasad Goyal. M. K. Dua, Advs. for the Respondents.

The Judgment of the Cou11 was delivered by

DIPAK MISRA, J. 1. The appellant-complainant filed a batch of2 l complaints i.e. C.D. Nos.539 to 559 of2000, claiming compensation ofRs.43.59 lacs along with interest@ 18% p.a. from the respondents, namely, United India Insurance Company Limited and India Transport Organization, on the ground that there had been sho11age/loss of' All Aluminium Alloy Conductor' (for short, 'AAAC') wire, which was supplied by the complainant to the Power Grid Corporation of India Limited (PGCIL). The case of the complainant before the Consumer Disputes Redressal Forum, Ranga Reddy District (for short, 'the District Forum') was that between 1.3.1998 to 13.4.1998, twenty-one trucks of AAAC wire packed in wooden drums were delivered at stores of PGCIL at Assam. In all the trucks shortage was noticed by PGCIL on 25'11

March, 1998. As there was shortage, which is called transit-loss for which the appellant had taken a policy from the insurer, it put forth a claim before the insurer for Rs.35 lacs. The said claim was lodged before the insurance compai1y vide letter dated 3rd April, 1998.

2. On the basis of the communication made by the appellant, the insurer appointed a surveyor who gave a repo11 on I" September, 1998, assessing the loss approximately at Rs.2 lacs in each case, thereby the . amount in toto assessed by the surveyor was approximately Rs.43 lacs.

Though the surveyor had assessed the loss and sent it to the insurance company, the insurer vide letter dated 20'11 September, 1999, repudiated the claim by stating thus:-

" Dear Si rs,

.•.

Re: Marine claim No.050202/2112617I18/97 I

Policy No.050202/21/26/16/2101/97

On perusal of the records pe11aining to the above claim, and subsequent investigation into the matter, we find that the above claim lodged by you does not fall under the purview of"TRANSIT

A LOSS". As such, the claim is not tenable under the terms of the policy. In view of this, we are treating your above claim as "NO

CLAIM''."

[Emphasis added]

3. As the claim was not accepted, the appellant knocked at the doors of the District Forum for grant of compensation, but the District Forum declined to accept the claim on three counts, namely, that there was non-joinder of necessary parties; that the al legation of theft was not proved; and that in a summary proceeding the factual dispute could not be decided.

4. Dissatisfied by the order passed by the District Forum, the appellant preferred twenty-one appeals before the Andhra Pradesh Consumer Disputes Redressal Commission (for short, 'the State Commission'). The State Commission after analysing the materials brought on record opined that the investigator could not be relied upon as the investigation had been completed after six months from the date of occurrence; that the report of the investigator could not be said to have been based on any material worthy of verification; that since it was the carrier who had undertaken to deliver the goods at Assam, it was they who are responsible to give reasons as to how, when and where the goods were transshipped and in what condition the goods were delivered; that the length and net weight of AAAC wire was mentioned on each drum and also dispatch documents and the respondent No.2, that is, the carrier company had issued ExhibitA-3 (lorry receipts) wherein cross reference to the invoice and delivery challan numbers were given which clearly established the fact that the complainant had dispatched as per the said Exhibit; that since the persons present at the site at the relevant point of time i.e. unloading, were the drivers, there was no reason to disbelieve their endorsements, specifically when the documents, viz., ExhibitsA-25 and 27 confirm the shortage on 25.04.1998 in 109 drums; that the finding of the District Forum that the complaint was not maintainable due to non-joinder of necessary party, that is, PGCfL, was not correct and the complaint could not have been dismissed on that score; that the repo11 of the surveyor, that is, Exhibit A-12 was based on physical verification of the consignment of AAAC wire and hence, the repudiation of claim by the insurer was unjustified; and that there was no inordinate dlay in intimating the claim to the insurance company. Being of this view, the State Commission allowed the appeals

preferred by the appellant and determined the compensation approximately at Rs.43 lacs in all the appeals. Be it noted, the State Commission while determining the quantum, made the insurer and the carrier jointly and severely liable.

5. The judgment and order passed by the State Commission compelled the insurer and the carrier to file independent revisions before the National Consumer Disputes Redressal Commission, New Delhi (for short, 'the National Commission). The revisions preferred by the carrier • stood dismissed and the same have not been challenged and, therefore, the view expressed in the case of the carrier has attained finality.

6. As far as the insurer is concerned, it preferred twenty-one revisions, out of which four were dismissed by the National Commission vide judgment and order dated 611t March, 2009, on the foundation that as they dealt with the transactions pertaining to "open delivery". We are not concerned with those four revisions. As far as the seventeen revision are concerned, the National Commission allowed them on the ground that the intimation by the complainant to the insurer was not made within seven days of arrival of the vehicles at the destination mentioned in the policy. The reasoning of the National Commission is to the following effect:-

" In this regard, the dates of delivery are important to us. As per material brought on record, the first intimation of the claim or loss was reported to the petitioner insurer only on 27.3.1998 and confirmed by letter dated 3.4.98. There is no dispute that the arrival dates of the different consignments in question start from 1.3.98 onwards till 11.4.98. In the above circumstances and keeping in view the terms of the Policy, condition 5 of Inland Transit Clause, we are of the view that there was no Policy Cover in existence and the risk stood not covered after delivery of goods to the consignee. We further note that, even on practical side, not reporting the loss in time deprived the Insurer to have a first a first hand appreciation/assessment of the extent ofloss, more so when, as per statement on record, against number of consignments/ delivery notes it is c!:::arly noted 'seal tempered'.

There can be no dispute that Insurance is a contract of utmost good faith. Failing to report the loss, noted at the time of receipt/ delivery is a decisive and a determinate factor against the

complainant. We also note with some dismay, and wonder as to why PGCJL was not made a pai1y as it was at their warehouse in Assam that sh011age/loss is alleged to have been notice. It is stated by the Ld. Counsel of the Petitioner that an effort was made before the State Commission praying for making PGCIL a party but it was declined. The whole episode leaves us with a single thought that complainant did not care for the terms of the contract and went on to compound the wrongs.

Jn retrospect one could only observe that at least in cases/ consignment where material was found tempered, matter shou Id have been reported to the underwriters immediately and delivery should not have been made by the complainant to the consignee till the loss had been assessed by the surveyor after perhaps asking for an open-delivery. This could have been the case of the consignee also - not making him a pai1y should be held against the complainant.

Jn the aforementioned circumstances, we are of the view that there was no coverage of risk at the time of reporting the loss to the petitioner/insurer, hence the complainant is not entitled to any relief in terms of condition(s) of Policy as also law and other material on the subject discussed earlier and also the law laid down by this Commission in the cited judgment (supra)."

7. Being ofthis view, the National Commission allowed the revision petitions and set aside the orders passed by the State Commission.

8. We have heard Mr. Rana Mukhe1jee, learned senior counsel for the appellant and Mr. Rakesh Kumar. learned counsel for the respondent No.2. None has appeared on behalf of the respondent No. I, the insurer.

9. lt is submitted by Mr. Rana Mukhe1:jee, learned senior counsel that the National Commission has grossly erred by opining that the PGCIL

is a necessary pa11y. It is his further submission that the view expressed by the National Commission that the claim stands defeated because of delayed intimation as postulated in clause no. 5, of the policy is not sustainable, inasmuch as a survey was conducted and that apart the letter of repudiation does not refer or even remotely touch upon any of the aspects enumerated in clause 5. Additionally, it is urged by Mr.

Mukherjee, learned senior counsel that the National Commission has

MIS. GALADA POWER AND TELECOMMUNICATION LTD.

v. UNITED INDIA INSURANCE CO. LTD. [DIPAK MlSRA, J.]

erroneously held that the complainant went on compounding the wrongs, whereas the material brought on record clearly establish that it was quite vigilant and diligent in putting forth his claim and, in fact, its conduct shows intrinsic faith in the insurer.

I 0. Mr. Rakesh Kumar, learned counsel appearing for the respondent No.2 made an endeavour to support the order passed by the National Commission, but, as has been stated earlier, when the revisions preferred by the carrier have already been dismissed and the said orders have attained finality having not been assailed, we do not think he can be permitted to argue to sustain the order passed by the National Commission.

Be that as it may, it really does not make any difference.

11.-Clause 5 of the Policy that relates to "Duration", reads as follows:-

"5. Duration - This insurance attaches from the goods leave the warehouse and/or the store at the placed name in the policy for the commencement of transit and continues during the ordinary course of transit including customary transhipment if any,

(i) until delivery to the final warehouse at the destination named in the

(ii) in respect of transit by Rail only or Rail and Road, until expiry of7 days after arrival of the railway wagon at the final destination railway station or

(iii) in respect of transit by Road only until expirty of7 days after arrival of the vehicle at the destination town named in the policy whichever shall first occur.

N.B. I. The period of 7 days referred to abvoe shall reckoned from the midnight of the day of arrival of railway wagon at the destination railway station or

2. Transit by Rail only shall incidental transit by Road performed by Railway Authorities to or from Railway Out-Agency."

12. The National Commission has relied upon Clause 5 and on that basis has rejected the claim by putting the blame on the complainant.

The letter of repudiation dated 2Q1h September, 1999, which we have reproduced hereinbefore, interestingly, does not whisper a single word with regard to delay or, in fact, does not refer at all to the duration clause. What has been stated in the letter of repudiation is that the claim lodged by the complainant does not fall under the purview of transit-loss

because of the subsequent investigation report. It is evincible, the insurer had taken cognizance of the communication made by the appellant and nominated a surveyor to verify the loss. Once the said exercise has been undertaken, we are disposed to think that the insurer could not have .been allowed to take a stand that the claim is hit by the clause pertaining to duration. In the absence of any mention in the letter of repudiation and also from the conduct of the insurer in app9inting a surveyor, it can safely be concluded that the insurer had waived the right which was in its favour under the duration clause. In this regard, Mr.

Mukherjee, learned senior counsel appearing for the appellant has commended us to a decision of High Court of Delhi in Krishna Wanti v.

Life Jnsurance Corporation of I11dia1• wherein the High Court has taken note of the fact that ifthe letter of repudiation did not mention an aspect, the sall!e could not be taken as a stand when the matter is decided.

We approve the said view.

13. In this context, we may with profit, reproduce a passage from Halsbury Law of England, which reads as follows:-

"In Halsbury s Lm11s of England, Vol. 16(2), 4th Edn., Para 907,

it is stated:

"The expression 'waiver' may, in law, bear different meanings.

The primary meaning has been said to be the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance ifthe right is thereafter asserted, and is either express or imp! ied from conduct.

It may arise from a party making an election, for example whether or not to exercise a contractual right ... Waiver may also be by virtue of equitable or promissory estoppel; unlike waiver arising from an election, no question arises of any particular knowledge on t'1e part of the person making the representation, and the estoppel niay be suspensory only ... Where the waiver is not express, it may be implied from conduct which is inconsistent with the continuance of the right, without the need for writing or for consideration moving from, or detriment to, the party who benefits by the waiver, but mere acts of indulgence will not amount to waiver; nor may a party benefit from the waiver unless he has altered his position in reliance on it.""

I 2000 (52) DRJ (DB)

14. In Mmiak L{I/ v. Dr. Prem Clt"nd Sin1:ltvf, it has been A held:-

"8 . ... It is true that waiver cannot always and in every case be inferred merely from die failure of the pa1ty to take the objection.

Waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his right to take B the objection in question. As Sir John Rom illy, M.R. has observed in Vyvyan v. f'.'yvyan-': (Beav p. 75 : ER p. 817)

'Waiver or acquiescence, like election, presupposes that the person to be bound is fully cognizant of his rights. and that being so, he neglects to enforce them, or chooses one benefit c instead ofanother, either, but not both, of which he might claim'."

15. Yet again, in Krishn" B{l/uulur v. Purn{I T/te{lfre', it has been ruled that:-

"A right can be waived by the party for whose benefit certain requirements or conditions had been provided for by a statute subject to the condition that no public interest is involved therein. Whenever waiver is pleaded it is for the party pleading the same to show that an agreement waiving the right in consideration of some compromise came into being. Statutory right, however, may also be waived by his conduct."

16. In Sf{lfe o.f Punj{lh v. D{lvinder P{l/Singlt Bltullar5, a two- Judge Bench speaking about the waiver has opined:-

"41. Waiver is an intentional relinquishment of a right. It involves conscious abandonment of an existing legal right, advantage, benefit, claim or privilege, which except for such a waiver, a party could have enjoyed. In fact, it is an agreement not to assert a right. There can be no waiver unless the person who is said to have waived, is fully informed as to his rights and with full knowledge about the same, he intentionally abandons them. (Vide Dawsons Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha 6, Basheshar Nath v. CIT, Mademsetty Satyanarayana v. G

2 AIR I 957 SC 425

3 (1861)30Beav65: 54ER813 • (2004) s sec 229 ' (201n14sec110

'' AIR 1935 PC 79

7 AIR 1959 SC 149

Yelloji Rao", Associated Hotels of India Ltd. v. S.B. Sardar Ranjit Singh", Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn. 10 , Sikkim Subba Associates v. State of Sikkim 11 and Krishna Bahadur v. Purna Theatre.)

42. This Court in Municipal Co17J11. of Greater Bombay v. Dr Hakimwadi Tenants' Assn. 1' considered the issue of waiver/ acquiescence by the non-parties to the proceedings and held: (SCC p. 65, paras 14-15)

"14. In order to constitute waiver, there must be voluntary and intentional relinquishment of a right. The essence of a waiver is an estoppel and where there is no estoppel, there is no waiver.

Estoppel and waiver are questions of conduct and must necessarily be determined on the facts of each case ....

I 5. There is no question of estoppel, waiver or abandonment.

There is no specific plea of waiver, acquiescence or estoppel, much less a plea ofabandonment ofright. That apatt, the question of waiver really does not arise in the case. Admittedly, the tenants were not parties to the earlier proceedings. There is, therefore, no question ofwaiverof rights by Respondents 4-7 nor would this disentitle the tenants from maintaining the writ petition.""

17. In the instant case, the insurer was in custody of the policy. It had prescribed the clause relating to duration. It was very much aware aboutthe stipulation made in clause 5(3) to 5(5), but despite the stipulations therein, it appointed a surveyor. Additionally, as has been stated earlier, in the letter of repudiation, it only stated that the claim lodged by the insured was not falling under the purview of transit loss. Thus, by positive action, the insurer has waived its right to advance the plea that the claim was not entertainable because conditions enumerated in duration clause were not satisfied. In our considered opinion, the National Commission could not have placed reliance on the said terms to come to the conclusion that there was no policy cover in existence and that the risks stood not covered after delivery of goods to the consignee.

18. Coming to the merits of the claim, we find that the surveyor had given a report that there was a loss. He had also quantified it. The

AIR 1965 SC 1405 9 AIR l 968 SC 933

'" J 992 Supp< I) sec 5 " (200·1 J 5 sec 629 " 1988 Supp sec 55

State Commission after elaborate discussion has held as follows:-

"The surveyor also confirmed in their repo11s, the shortage/loss of AAAC due to pilferage during transit and estimated the loss as per Ex.A 12. This shmiage was also confirmed by Katigorah police as per Ex.A 13 and as reiterated earlier by the Tage Over Certificate, Ex.A 19. Taking into consideration thatthe surveyros appointed by the insurance company have completed their investigation and submitted their reports and thereafter an investigator was appointed on I 6-4-1998 without any valid reasons.

It is held by the National Commission in l (2004) CP J l 0 (NC) in Gammon India Ltd., v. New India Assurance Co. Ltd. that 'Repo11 of first surveyor not accepted, second surveyor appointed- Appointment of second surveyor not explained - Deficiency in service proved - Report of first surveyor upheld' and the investigator in the instant case submitted his report on 28-12-1998 i.e. almost 8 months after his appointment. Taking into consideration all the above submissions, we are of the considered opinion that the appellant/complainant was able to establish that there was shortage/damage to the consignment which was given to second respondent for transpo11ation."

1 ~-Though the said aspect has not been gone into by the National Commission, yet we find, the findings recorded by the State Commission are absolutely justified and tenable in law being based on materials brought on record in such a situation we do not think it appropriate that an exercise ofremit should be carried out asking the National Commission to have a further look at it. In any case, the exercise ofrevisionaljurisdiction by the National Commission is a limited one. We may hasten to add that to satisfy ourselves, we have perused the surveyor's report and scrutinized the judgment and order passed by the State Commission in this regard and we are completely satisfied that the determination made by it is absolutely impeccable.

20. In view of the aforesaid analysis, the appeals are al lowed.

The judgment and order passed by the National Commission in the batch of appeals is set aside. We have been apprised that 50% of the amount was deposited and the appellant has withdrawn the said amount. The balance amount along with interest, as directed by the State Commission, shall be paid by the insurance company within four months from today.

There shall be no order as to costs.

Divya Pandey Appeals allowed.