Facts of the case

National Insurance Company Ltd. v. Hindustan Safety Glassworks Ltd. & Anr.(1) is a case that is mostly about consumer rights and power. Every person is a consumer in some capacity, and hence the relevance of an act dealing with the subject is immense. The Consumer Protection Act, 1986 addresses particular concerns in this area, including consumer protection, consumer rights, and penalties for violations of the aforementioned issues. Applying for a policy with an Insurance Company also falls inside the broad consumer umbrella, as seen by the aforementioned scenario. The respondent Hindustan Safety Glass Works Ltd. had taken up two policies with the appellant National Insurance Company, both dated 29th August 1990 for one year and then renewed for another year.

• The first policy was for Rs. 4.9 lakhs and covered risks relating to office buildings, residential quarters, and canteens in Calcutta.

• The second policy was for approximately Rs. 5.7 crores and covered risks relating to building, machinery, finished and semi-finished stocks, store, furniture, wiring and fittings, and other property in the company’s factory/works in Calcutta. The insurance covered damage or loss resulting from flooding or inundation.

On 6 August 1992, strong persistent rain fell in Calcutta, leading in a significant buildup of rain water within and around the insured’s factory/works. According to the insured, significant damage occurred to raw materials, inventories and commodities, and furnishings. As a consequence of the insured’s loss and in accordance with the terms of the two policies taken out with National Insurance, the insured submitted claims on 7th and 8th August, 1992, seeking a total of about Rs. 52 lakhs.

• On 24th September 1992, National Insurance appointed N.T. Kothari & Co. as its surveyor.

• National Insurance did not accept the report but instead engaged Seascan Services (WB) Pvt. Ltd. as a surveyor to reflect on the loss or damage caused by the insured; they also assessed the loss incurred by appellants at 24 lakhs. Despite two survey reports valuing the loss or damage at about Rs. 24 lakhs, National Insurance made no payment to the insured (defendants).

On 22nd April 1996, the insured notified National Insurance that its claim was not settled and that the amount requested for loss or damage was about Rs. 52 lakhs, which should be paid. National Insurance did not respond to this notification, and as a result, the insured filed complaints with the National Commission under the terms of the Consumer Protection Act, 1986 (the Act), demanding Rs. 52.32 lakhs in addition to about Rs.1.81 lakhs in loss minimization expenditures.

Questions Involved

1. Whether Hindustan Safety Glass Works’ claims were correct?
2. One of the fundamental issues in the case was that the complainant was banned from proceeding before the national commission due to the fact that the complaint was made on 13.08.1996, although the loss happened in August, 1922.

Rules governing this case

1. Section 6 of the National Insurance policy says, “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 of pending 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 court of law and the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”
2. Section 24A of the Consumer Protection Act 1986 discusses the statute of limitations for filing a complaint in a consumer forum. According to the section, the forums (District Forum, State Commission, or National Commission, as applicable) will not examine a complaint filed more than two years after the occurrence of the conflict. It was remarked in Anshul Aggarwal v. New Okhla Industrial Development National Law Portal(2) that it is critical to bear in mind the statute of limitations set by the act. In R.B Ramalingam v. Bhavaneshwari(3), the court remarked that it is the court’s responsibility to ensure that the postponement of the petition being filed is adequately justified; this is a fundamental principle that must be respected.

Judgement given in this case

1. After evaluating all the relevant situation and contentions, the National Commission issued an order of payment to the National Insurance Company. It was ordered to pay Rs. 21,05,803.89 in addition to interest at the rate of 9% per annum beginning 11 May 1995. Because the insurance company made reasonable efforts in estimating the amount to be claimed and employed a surveyor in 1994, and the surveyor’s second report was submitted in 1995, and the addendum was passed in 1995, interest was calculated from 1995. Along with this, a sum of Rs. 20,000 was also awarded.

• The strong persistent rain in Calcutta on August 06, 1992, caused loss or damage to the insured’s raw materials, stocks and commodities, furniture, etc., according to the Hon’ble Supreme Court of India. The insured made a claim with National Insurance the very following day. NT Kothari & Co was hired to examine the insured’s loss and report after more than a year. Then, for unknown reasons, National Insurance recruited a second surveyor who took over a year to complete his report, which included an addendum. The Hon’ble Court noted that National Insurance took over two years to survey or cause a survey of the insured’s loss or damage, and so the whole delay is to be attributed to National Insurance, which cannot prejudice the insured’s claim, particularly when the insured filed the claim well within time. Worse, National Insurance denied the insured’s claim only on May 22, 2001, long after the National Commission received the complaint.

The Hon’ble Court held that in a consumer dispute, courts must take a pragmatic approach to the customer’s rights, primarily because the consumer is at a disadvantage against the supplier of services or goods. The goal of a beneficial law like the Consumer Protection Act is to offset this disadvantage. The Act’s restriction clause cannot be rigorously understood to disfavour a customer where the provider of goods or services causes the delay in settlement of the consumer’s claim. Observing that this was the fundamental premise, the Court concluded that the National Commission had been correct in dismissing National Insurance’s claim.

On the other hand, the Central Glass and Ceramic Research Institute, Calcutta, had not allowed that specific officer to provide any report on the damage or loss experienced by the insured. Another officer was contacted in the second survey report, the Hon’ble Court noted. A second report was likewise contaminated, but for other reasons, such as the officer contacted not being allowed to make a report or for any reason.

The Hon’ble Supreme Court of India decided that both appeals were without merit and were thus rejected.

Analysis

The case to be examined is solely based on consumer rights and powers. In the business world, the customer remains a secret ladder for many corporate and entrepreneurial triumphs. Every person is a businessman, and every businessman is a consumer (every maker is a user). A person who violates a right indirectly loses that right since every citizen is a customer in some fashion.

The Consumer Protection Act, 1986 is the first step in the Indian society that defines the rights of the consumer, the penalties for breaking such rights, the authority to deal with such situations, etc. The Act bases consumer rights on the International Organization of Consumers’ core consumer rights. 

In the matter of National Insurance Company Ltd v. Hindustan Safety Glass Works Ltd. and Anr. consumerism’s positives and negatives, including increased expectations and globalisation difficulties, have recently affected everyone. In this situation, the Indian government enacted the Consumer Protection Act, 1986, to safeguard customers from unethical sellers. The Consumer Protection Act, adopted by the Indian Parliament in 1986, provides for the formation of consumer councils and other agencies to adjudicate consumer complaints and related problems. Like civil cases, the Consumer Protection Act of 1986 was created to make consumer complaints easier and faster to resolve. The Act created the notion of “consumer” and granted specific extra rights to those who fall under the Consumer Protection Act, 1986.

The ‘limitation period’ is a major issue in every judgement. The limitation time for bringing grievances under the Consumer Protection Act, 1986 is defined in Section 24A. According to the definition, a complaint can be made with a district, state, or national commission within 2 years following the cause of action. However, sub-clause (2) of the same article specifies that a complaint lodged after the statutory period would be considered provided the complainant provides adequate grounds to the Forums, State and National Commissions. The rule also requires the Forum, State Commission, and National Commission to document the reasons for the delay and to continue with the complaint.

Conclusion

From the decision, it is clear that the courts are in favour of the Consumer Protection Act providing maximum protection for customers. At the same time, it punishes the customer if he says something that isn’t true or makes a complaint about the person who made it. As a citizen, you are entitled to the same protections as a manufacturer. The law looks at the fact that everyone who buys something is a manufacturer and everyone who sells something is a customer. Because of the above decision, the court found that the insured made a policy for the materials that could be used in any situation. The policy did not specify any particular disaster that would cause damage to goods and other materials that would allow the insured to get the insurance money.

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References

1 – (2017) 5 SCC 776.

2 – (2011) 14 SCC 578

3 – 2009 (2) Scale 108

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