COROMANDEL ENGINEERING CO. LTD. vs National Insurance Co. Ltd.

THIS is a complaint under Sec. 17 read with Sec. 12 of the Consumer Protection Act.

THE is a company carrying on business as Engineers and Contractors of buildings and factories. It has insured his machines and equipments with the and taken up policy known as Contractor''s All Risk Policy for a sum of Rs. 4,12,00,000/- in respect of material damage and Rs. 25,00,000/- in respect of Third Party liability. THE ''s company was awarding a contract for the construction of Silos by Indian Cement Limited, Sankhar Nagar Tirunelveli on 7.7.88 while the work was in progress there was damage to the silo due to failure of hydraulic lifting mechanism. THE made a claim with the for a sum of Rs. 10.9 lakhs. THE without even deputing a surveyor rejected the claim on 16.5.89. Subsequently on the complainant''s insistence the deputed Mr. S. Anantha Padmanabhan as Surveyor and even after receiving his report, the rejected the claim on 18.12.90. This amounts to deficiency of service and negligence and hence the claim for compensation in the sum of Rs. 9,90,000/-. The Opposite Party resisted the claim and raised various contentions. It was contended that the complainant is not a consumer. It was also averred that the claim is barred by time, as the Opposite Party repudiated the claim on 16.5.89 and the complaint has been filed only on 11.11.92. On merits the Opposite Party contended that as per the original letter of the complainant, there was an eccentricity of the blending silo while slip form concreting and accordingly eccentricity increased and work was stopped at 14M level. Under the Exclusions forming part of the policy in question, the Opposite Party is not liable for the cost necessary for rectification or correction of any error during construction, unless resulting in physical loss or damage. Reliance was placed under Exclusion Clauses'' e & f of the Policy. It is admitted that a Surveyor was appointed at the request of the complainant and after going through his report, the claim was finally rejected. There was no deficiency of service and negligence and the complaint itself is not maintainable.

Exhs. A1 to A7 and B1 to B3 are marked by consent. Proof affidavits are filed. No oral evidence has been let in.

A preliminary point is raised by the learned Counsel for the Opposite Party that the complainant''s right to claim for compensation is extinguished by virtue of paragraph 4 of condition No. 7 of the General Conditions of Exh. Al policy of insurance which runs as follows: "It is also hereby further expressly agreed and declared that if the Company shall disclaim liability to the insured for any claim hereunder and such claim shall not within 3 calendar months from the date of such disclaimer have been made the subject matter of a suit in a Court of Law, then the claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder."

It is contended by the learned Counsel for the Opposite Party that the claim was rejected finally on 16.5.89 under Exh. A2 letter even before the appointment of a Surveyor. Subsequently a Surveyor was appointed and after perusing his report the claim was against rejected by the Opposite Party on 18.12.90 under Exh. A7. Even if time is reckoned from the time of Exh. A7 i.e. 18.12.90 the claim ought to have been filed on or before 18.3.91, but it has been preferred only on 11.11.92 and hence under paragraph 4 of condition No. 7 quoted above, the claim shall be deemed to have been abandoned and shall not be recoverable. We are afraid this contention has to be upheld. The validity of such a clause in policy of insurance has been the subject matter of a decision by the National Commission in Mis. Paras Textiles v. The New Indian Assurance Company Ltd., I (1993) CPJ 126 (NC)=1993 (1) CPR 713 The National Commission after reviewing the case law on the subject including the judgment of the Supreme Court in Vulcan Insurance Co. Ltd. v. Maharaj Singh & Another (AIR 1976 Supreme Court 287) held that a clause in the policy of insurance that the insurer shall not have the right to sue after 12 months of repudiation of the claim, is not void either under the law of limitation or under the law of contract and hence the complaint filed before the Consumer Disputes Redressal Forum, after that period of 12 months was not maintainable. This decision of the National Commission has been followed by this Commission in M/s. Rayala Corporation P. Ltd. v. M/s. New India Assurance Co. Ltd. (O.P. 431 /92 dt. 30.7.93) and the claim filed more than 12 months after the repudiation was dismissed as not maintainable. It follows that the aforesaid clause in the policy of insurance in this case is valid in law and the complaint filed more than 3 months after the repudiation of the claim is unsustainable.

IT is strenuously argued by the learned Counsel for the complainant that in the aforesaid decisions of the National Commission and this Commission, the period was 12 months while in condition No. 7 of Exh. Al policy, in this case, the period is only 3 months which is arbitrary and unconscionable and cannot be given effected to. When the clause is held valid, it does not matter whether the period fixed thereunder is 12 months or 3 months. IT is needless to go further into this point, in view of the decision of the Supreme Court in Vulcan Insurance Co. Ltd. v. Maharaj Singh & Another (AIR 1976 Supreme Court 287) Clause 13 of the policy of insurance in that case provided that if the claim being made and rejected and an action or suit be not commenced within 3 months after such rejection, the benefits under the policy is forfeited. The Supreme Court upheld the validity of the clause and held that the Respondent No. 1 before them was ill-advised to commence an action under Sec. 20 instead of instituting a suit within 3 months of the date of the repudiation to establish the company''s liability. The complainant filed by the complainant in this case more than 3 months after the repudiation of the claim is therefore not maintainable. The complainant shall be deemed to have abandoned its claim and it is not recoverable thereafter. In the result the complaint is dismissed but without costs. Complaint dismissed.