Supreme Court sets aside NCDRC order; chides it for acting as experts

Supreme Court sets aside NCDRC order; chides it for acting as experts

Allows insurance claim to the cold storage business operator

The Supreme Court has expressed its discontent with the decision of the National Consumer Disputes Redressal Commission (NCDRC), stating it was surprised that the tribunal could make observations as experts in the disputed matter.

While hearing an appeal, the division bench comprising Justice AS Bopanna and Justice Dipankar Datta noted, “We are aghast to find that the members, who heard the complaint, have made observations as if they were experts sitting in appeal on the reports of the Loss Assessor and the Experts. It seems the NCDRC made observations in the impugned judgment as if its members were experts in the relevant field and clothed with authority to sit in appeal over the same.”

The appellant, SS Cold Storage India, is engaged in the business of operating a cold storage facility. Among other insurance policies, for potato storage, it also obtained Refrigerator Insurance Policy from the respondent, the National Insurance Company Ltd.

In 1997, there was a leakage of ammonia gas in chambers Nos. 1 and 2 of the facility. Accordingly, the appellant informed the respondent and filed a claim with the insurance company regarding 85,956 bags of potatoes.

The surveyor appointed by the respondent informed the appellant that the accident occurred due to decay, wear, and tear. Hence, it was excluded in the Refrigeration Insurance Policy.

Thereafter, the appellant filed a complaint before the NCDRC for seeking adequate compensation. It placed on record the report of three experts. The report stated, “The leakage of ammonia could only be termed as an accidental happening, and that the theory of it being due to normal wear and tear was not correct.”

However, NCDRC stated, “The hairline cracks in the pipes, in all probability, occurred due to wear and tear and gradual deterioration rather than a sudden burst.” The Commission declined relief to the appellant, who then approached the Supreme Court.

Appearing for the appellant, senior advocate Vijay Hansaria contended that only after a thorough inspection of the premises, the Refrigeration Insurance Policy was issued. He averred that the report of the three experts clearly indicated that the cracks were due to an accident, which could not be attributed to normal wear and tear. He argued that NCDRC relied on the report, selectively. The contents of the reports being inseparable, could not have been accepted in part.

On the other hand, appearing for the respondent, Yogesh Malhotra, backed the Commission’s findings. He argued by placing reliance on the surveyor’s report and pleaded that the leakage of ammonia was due to normal wear and tear. Thus, it was excluded under the Refrigerator Insurance Policy.

The Court was faced with the issue of whether NCDRC was justified in rejecting the appellant’s complaint, holding that there was no deficiency of service on the part of the respondent.

The bench observed that the surveyor’s report was not based on any scientific investigation and was not disputed by the respondent. It stated there was no mention of potential wear and tear causes.

The Court held, “It is undisputed that the surveyor did not send the pieces of damaged pipes to an expert or a laboratory to identify the cause of the leak. There was neither any oral nor documentary evidence to support the theory of wear and tear. Also, no reason, far less cogent reason, was furnished by the respondent to arrive at the conclusion that the leakage of ammonia occurred due to simple wear and tear.

The bench added, “More importantly, what is apparent on a perusal of the surveyor’s report is an ipse dixit that ammonia gas leaked because of wear and tear of the pipelines in the chambers, rather than a conclusion drawn on the basis of a process of reasoning having regard to all relevant factors.”

The judges noted that only a few years before the incident, the facility was inspected to renew the policies.

While scrutinizing the experts’ report vis-a-vis the surveyor’s report, Justice Bopanna and Justice Datta observed: “It seems all relevant factors were not considered in the proper perspective by the surveyor, yet the report was relied on by the respondent to defeat the appellant’s claim. The report having recorded the ipse dixit of the surveyor, without any reference to the aforesaid aspects touched upon by the Loss Assessor and the Experts. It is not worthy of acceptance.”

The bench held that the leakage of ammonia gas resulted from an unforeseen accident, which was beyond the appellant’s control. Therefore, repudiation of the insurance claim amounted to a service deficiency on the respondent’s part. It entitled the appellant to the insurance claim.