Kwality Silk Processors Private Limited vs Oriental Insurance Company Ltd

IN the application filed by the complainant under Section 24A of the Consumer Protection Act, 1986, it is submitted that the cause of action arose on 4.9.2008 when the Surveyor, Mr. Aspi B. Ghadiali had submitted supplementary survey report and as such, the complaint is filed within the period of limitation. Alternatively, it has been submitted that if the repudiation by the OP of claim vide letter dated 22.2.2007 is taken as the cause of action, the complainant had bona fidely acted in the matter as the issue of assessment was still not finally concluded by the Surveyor till the supplementary report dated 4.9.2008 was filed by the Surveyor. He, therefore, contended that the delay of 224 days be condoned in the facts and circumstances of the case.

ON the other hand, Learned Counsel for the OP after placing reliance on the judgments of the Apex Court in State Bank of India v. B.S. Agricultural Industries (I), II (2009) CPJ 29 (SC)=II (2009) SLT 793 and Kandimalla Raghavaiah and Company v. National Insurance Company Ltd. and Anr., III (2009) CPJ 75 (SC), urged before us that the complaint is barred by limitation and no sufficient cause has been shown to condone delay. The Insurance Company had not filed any reply and on 16.2.2010, it was submitted by the Counsel for the Insurance Company that he would argue without even filing the reply.

THE incident giving rise to filing of the claim took place on 22.8.2003. The OP had appointed Surveyor who submitted report on 5.1.2007. The report did not determine the cause of collapse. On 22.1.2007, OP sent letter to the complainant marked (without prejudice) and thereby rejected the claim of the complainant. The complainant obtained opinion dated 8.8.2008 from Textile Technologist, Shri R.S. Gandhi and submitted the same to the OP. The complainant also obtained opinion of Consulting Structural and Chartered Civil Engineer, Shri Zawareh H. Wadia on 22.12.2007. The complainant received undated letter from OP on 18.3.2008 repudiating the claim of the complainant. On 4.9.2008, the Surveyor, Mr. Aspi B. Ghadiali submitted supplementary report dated 4.9.2008, wherein it was concluded that cause of collapse was subsidence. The complaint was filed on 6.10.2009.

AT this stage, we shall refer to the Judgment of the Apex Court in Kandimalla Raghavaiah and Company v. National Insurance Company Ltd. and Anr. (supra), which has been relied by the Counsel for the OP in support of his contention that the claim is time barred.

IN the case before the Apex Court, the consumer had taken fire policy from National Insurance Company. On the intervening night between 22nd and 23rd March, 1988, fire broke out in the godown allegedly due to electric short circuit and the entire stock of tobacco was gutted. The Appellant reported the matter to the Insurance Company as also the Bank. On 24.3.1988 a Surveyor was appointed by Insurance Company who submitted his report on 2.4.1988. On 23.3.1988 itself the Bank had lodged FIR against the Consumer firm and its partners resulting in filing of criminal case No. 72 of 1988 against them under Sections 380, 420, 423, 426, 457 and 484 read with Section 120(B) of the Indian Penal Code, inter alia, alleging that they had intentionally set fire to the tobacco stocks with a view to lay a false claim for loss of the stocks. However, after the trial, accused were acquitted and appeal filed by the Bank against the order of acquittal was dismissed by the High Court on 5.9.1992. In the meantime, on 14.7.1988 Bank had preferred a claim with the Insurance Company for a sum of Rs. 1,32,85,760. However, the Bank did not pursue the claim. On 6.11.1992 the appellant asked for the claim form from the Insurance Company. Having failed to get any response, the consumer firm sent legal notice dated 26.10.1995 to the Insurance Company. On 4.1.1996 the Appellant again asked for claim forms but still there was no response. Ultimately, on 21.3.1996 the Insurance Company replied to the legal notice denying the factum of fire and refused to issue the ''claim form'' on the ground that claim had become time barred. On 21.10.1997 the Appellant filed the complaint before the Commission. Before the Commission the consumer company had submitted that they had asked for claim form from the Insurance Company on 6.11.1992, which was not given although Bank being a co-insured had lodged a claim with the Insurance Company on 14.7.1988 and the Bank was pursuing their claim with Insurance Company on behalf of the consumer company. Therefore, since the denial of the Insurance Company in honouring the claim was received on 21.3.1996, the period of limitation to file complaint would commence from that date. The Commission did not accept the plea of the consumer firm and observed that cause of action accrued on the intervening night between 22nd and 23rd March, 1988 when fire broke out but the complaint was filed only in the year 1997. It was further pointed out that the first action by the consumer firm was in November, 1992, that is to say, after a gap of 41/2 years when Appellant asked for claim form. The Commission held that the complaint was barred by limitation and could not be entertained. According to the Commission cause of action could not be assumed to continue till the denial of the claim.

IN this background, Hon''ble Apex Court after referring to the observations made in State Bank of India v. B.S. Agricultural Industries, (supra), as also the term "cause of action" has observed that the cause of action is generally described as "bundle of facts" which if proved or admitted entitle the plaintiff to the relief prayed for. "Cause of action" is which gives occasion for and forms the foundation of the suit. In the context of limitation with reference to fire insurance policy, undoubtedly, the date of accrual of cause of action has to be the date on which the fire breaks out. The Apex Court held that it is manifest from the letter dated 6.11.1992 of the consumer company that till that date the consumer company had not made any claim whatsoever with the Insurance Company for the loss suffered in the fire on 23.3.1988 and as a matter of fact only on 6.11.1992 they, for the first time, asked for supply of claim forms in order to prefer a claim. It is pertinent to note that in this set of facts that the Apex Court had held that by that time, period of limitation for the purpose of Section 24A of the Act had expired. Even thereafter, the consumer firm kept quite and did not take any action. The Apex Court further held that the filing of the claim by the Bank on 14.7.1988 would not have, in any way, helped the consumer firm. The Apex Court has observed as under: "On their own showing, for the first time, only on 6.11.1992 and then again on 26.10.1995 the appellant had requested the Insurance Company to issue claim form to enable them to prefer a claim which request was declined by the Insurance Company on 21.3.1996. By no stretch of imagination, it can be said that Insurance Company''s reply dated 21.3.1996 to the legal notice dated 4.1.1996, declining to issue the forms for preferring a claim after a lapse of more than four years of the date of fire, resulting in extending the period of limitation for the purpose of Section 24A of the Act. We have no hesitation in holding that the complaint filed on 24th October, 1997 and that too without an application for condonation of delay was manifestly barred by limitation and the Commission was justified in dismissing it on that short ground."

IN the case before the Apex Court, the cause of action admittedly arose on the date on which the fire broke out. Therefore, the consumer firm was required to take necessary steps for filing the claim within the period of limitation under Section 24A of Consumer Protection Act, 1986. The Surveyor was appointed on 24.3.1988 and the report was submitted by him on 2.4.1988. However, the Complainant did not take any step whatsoever till 6.11.1992. For the first time, the consumer firm supplied the claim form to prefer acclaim. By that time, period of limitation for the purpose of Section 24A of the Act had expired.

COMING to the case under consideration, the incident in question took place on 22.8.2003. The OP had appointed Surveyor, Mr. Aspi B. Ghadial who submitted report dated 5.1.2007 and the claim was repudiated by the OP vide letter dated 22.2.2007. When the matter was being examined by the OP and the Surveyor had been appointed, it was but natural that the complainant would wait for the Surveyor''s report and action to be taken therein by the OP. The Insurance Company repudiated the claim vide letter dated 22.2.2007. In these facts, the cause of action would at the maximum continue till 22.2.2007. In the given facts of the case, we find that the case of the complainant is distinguishable on the facts and circumstances and would not be governed by the ruling of the Apex Court in Kandimalla Raghavaiah and Company v. National Insurance Company Ltd. and Anr. (supra).

AFTER the repudiation of the claim, the complainant obtained expert opinion from Textile Technologist, Shri R.S. Gandhi and the report of the Expert Committee dated 8.8.2007 was submitted to the OP. The complainant also obtained report from Consulting Structural and Chartered Civil Engineer, Shri Zawareh H. Wadia on 22.12.2007. The Insurance Company vide undated letter which was received by the complainant on 18.3.2009 repudiated the claim of the complainant. The Surveyor, Mr. Aspi B. Ghadiali on his own submitted supplementary survey report dated 4.9.2008, but the Insurance Company had not called for it. According to the complainant, the OP disassociated itself from the supplementary report of the Surveyor vide letters dated 14.10.2008 and 4.11.2008. The limitation for filing the claim started on 22.2.2007 when the claim had been repudiated by the Insurance Company. The limitation for filing complaint was over 21.2.2009. The complaint was filed on 6.10.2009. The complainant has not been able to show any cause for delay in filing the complaint from 22.2.2009 till the complaint was filed on 6.10.2009. The Apex Court in State Bank of India v. B.S. Agricultural Industries (I) (supra), the Apex Court has laid down in para 8 as under: "8. It would be seen from the aforesaid provision that it is peremtory in nature and requires Consumer Forum to see before it admits the complaint that it has been failed within two years from the date of accrual of cause of action. The Consumer Forum, however, for the reasons to be recorded in writing may condone the delay in filing the complaint if sufficient cause is shown. The expression, ''shall not admit a complaint'' occurring in Section 24A is sort of a legislative command to the Consumer Forum to examine on its own whether the complaint has been filed within limitation period prescribed thereunder. As a matter of law, the Consumer Forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action and if beyond the said period, the sufficient cause has been shown and delay condoned for the reasons recorded in writing. In other words, it is the duty of the Consumer Forum to take notice of Section 24A and give effect to it. If the complaint is barred by time and yet, the Consumer Forum decides the complaint on merits, the Forum would be committing an illegality and, therefore, the aggrieved party would be entitled to have such order set aside."

IN view of the above, we hold that the complaint has been filed beyond period of limitation and no cause whatsoever has been shown for the period 22.2.2009 to 6.10.2009 for delay in filing the complaint. Learned Counsel for the complainant urged before us that sufficient cause must be liberally construed so as to advance substantial justice and in this connection reliance has been placed on the judgments of the Apex Court. The proposition that substantial cause must receive liberal construction is now well settled. However, sufficient cause must be shown for the said purpose. In the case under consideration, no cause whatsoever and not to talk of sufficient cause has been shown by the complainant for not filing the complaint after 22.2.2009 till the complaint was filed on 6.10.2009.

IN view of the above, the application for condonation of delay in filing the complaint is, therefore, rejected. Consequently, the complaint stands rejected with no order as to costs. Complaint rejected.