Civil Appeal Nos. 7515 of 2001 and 3393 of 2002. Case: 1. Krishna Food and Baking Industry P. Ltd., 2. New India Assurance Co. Ltd. and Anr. Vs 1. New India Assurance Co. Ltd. and Anr. [Alongwith Civil Appeal Nos. 8495 and 8496 of 2001], 2. Krishna Food and Baking Industry P. Ltd. [Alongwith Civil Appeal Nos. 4024, 8000 and 8002 of 2002]. Supreme Court (India)

Case NumberCivil Appeal Nos. 7515 of 2001 and 3393 of 2002
JudgesC.K. Thakker and D.K. Jain, JJ.
IssueConsumer Protection Act, 1986 - Section 23; Companies Act, 1956; Insurance Act, 1938 - Section 38; Transfer of Property Act, 1882 - Sections 130 and 135; Jammu and Kashmir Migrants (Stay of Proceedings) Act, 1997 - Section 3
Citation2008 (57) BLJR 236, 2008 BusLR 01 (SC), 2008 (12) JT 203, AIR 2009 SCW 82, 2008 (8) Supreme 297, 2008 (13) Scale 747, 2009 (2) RajLW 1252, AIR 2009 SC 1000
Judgement DateNovember 07, 2008
CourtSupreme Court (India)

Judgment:

C.K. Thakker, J.

  1. All these appeals have been filed against a common judgment and order dated June 01, 2001 passed by the National Consumer Disputes Redressal Commission (`National Commission' for short) in Original Petition No. 194 of 1994 and companion matters. These appeals are filed under Section 23 of the Consumer Protection Act, 1986 (hereinafter referred to as `the Act').

  2. To appreciate the controversy raised in the present appeals, few relevant facts may be stated.

  3. M/s Krishna Flour and Oil Mills (`Mill' for short) is a partnership firm while M/s Krishna Food and Baking Industry Pvt. Ltd. (`Company' for short) is a company registered under the Companies Act, 1956 as applicable to the State of Jammu & Kashmir. Both the units were located in Nawab Bazar, Srinagar, in the State of Jammu & Kashmir. Both were sister concerns. Rajendra Kumar Sawhney was Chairman of the Company as also main partner of the Mill. The Company was dealing in manufacturing bread, biscuits, cakes and other bakery items. It is the case of the complainants that during the period of disturbances caused by militancy in early nineties of the last century, Mr. Praneet Sawhney, only son of Rajendra Kumar Sawhney was shot dead by the terrorists on March 27, 1990 in his office. Immediately thereafter, operations of both the units were suspended and the complainants had to migrate to Delhi. It was stated that there was `watch and ward staff' as also some other personnel who looked after the premises and stocks and raw materials lying in the units. It was also stated in the complaints that the complainants were able to transfer records from Srinagar to Delhi.

  4. According to the complainants, they had obtained three separate insurance policies from M/s New India Assurance Co. Ltd. (`Insurance Company' for short), the details of which are as under;

    S No. Policy No. Sum Case No. Items covered

     Assured
     
    1. 112119000249 Rs. 40 194/94 Stock of Wheat, Wheat
     Lakh Products and Packing
     material and Goods of
     like nature of Krishna
     Flour & Oil Mills 
     
    2. 113119000312 Rs. 25 210/94 Stocks of Raw Material
     Lakh like Flour, Maida,
     Ghee, chemicals etc. in
     godowns belonging to
     Krishna Food & Baking
     Industries
     
    3. 113119000313 Rs. 53 209/94 Plant & Machinery
     Lakhs installed in Krishna Food
     & Baking Industries.
     
     (a) Factory Building
     Rs.21 lakhs
     
     (b) Electric fittings
     Rs.4 lakhs
     
     (c) Plant & Machinery
     Rs.28 lakhs

    5. It was the say of the complainants that in the morning of November 12, 1991, certain terrorists attacked the Company as well as the Mill and set them on fire. Substantial damage had been caused to building, plant, machinery and electricity fittings; the raw materials lying in the units were destroyed stocks which were in both the units were also either destroyed or substantially damaged. In view of the insurance coverage, a demand was made by the complainants to the Insurance Company to get the survey done and to pay the amount of loss sustained by the complainants. The Insurance Company, however, did not do anything in the matter for quite long time. The complainants got the survey done through their surveyors and demanded the amount to which they were entitled to. The Insurance Company, however, did not make payment which constrained the complainants to approach National Commission by filing three complaints being Complaint Nos. 194, 209 and 210 of 1994.

  5. The prayer made in the complaints and the demand in respect of policies and sums may be summarized thus;

    S No. Policy No. Sum Complaint Items covered

     Assured No.
     
    1. 112119000249 Rs. 40 194/94 Stock of Wheat, Wheat
     Lacs Products and Packing
     material and Goods of
     like nature of the
     Mills.
     (`Wheat Policy')
     
    2. 113119000312 Rs. 25 210/94 Stocks of Raw Material
     Lakhs like Flour, Maida,
     Ghee, chemicals etc. in
     godown belonging to
     Baking Industry.
     (`Raw Material Policy') 
     
    3. 113119000313 Rs. 53 209/94 Plant & Machinery
     Lakhs installed in Baking
     Industry.
     (`Plant Policy')
     
     (a) Factory Building
     Rs. 21 lakhs
     
     (b) Electric fittings
     Rs. 4 lakhs
     
     (c) Plant & Machinery
     Rs. 28 lakhs

    7. The Insurance Company repudiated the claim of the complainants. At a belated stage, survey had been carried out by the Insurance Company through its Surveyors wherein it was observed that substantial damage had not been caused to building, plant, machinery and electricity fittings and the complainants were not entitled to the amount demanded by them under the said head. The Insurance Company also assessed the damage to the building, plant, machinery and electricity fittings to the extent of Rs. 31,373/- and nothing more.

  6. With regard to raw-materials and stocks, the amount was substantially curtailed by the Insurance Company inter alia on the grounds that the stocks were perishable in nature and had become unfit for human consumption and the same had been badly affected by bacterial growth. It had become worthless at the time of mishap in 1991. It was also contended that in absence of proper `watch and ward staff', there was pilferage of stocks and raw materials by intruders as well as by staff members of the complainants' Company and Mill. It was, therefore, submitted that the complainants were not entitled to the amount claimed in the complaints.

  7. The National Commission went into the merits of the matter and held that the complainants were entitled to certain reliefs. With regard to stocks kept in the godown of the Mill, it observed that it was covered by policy No. 1131190000249. The policy was for an amount of Rs. forty lakhs and premium of Rs. 5,814/- was paid. The claim put forward by the complainants was for Rs. 37,78,618/-. According to the complainants, the stocks which were lying in the units were as under;

    Commodity Quantity Rate Amount (Rs.)

     
    Wheat 2138.48 Qtls. Rs. 400/Qtl. 8,55,392
     
    Maida 4676 Bags (90 Kg.) Rs. 450/bag 21,04,200
     
    Krishna 271 Bags (80 Kg.) Rs. 400/bag 1,08,400
    Bhog Atta
     
    Super 5952 Bags (10 Kg) Rs. 55/bag 3,27,360
    Fine Atta
     
    Bran 2090 Bag (10 Kg) Rs. 100/bag 2,09,000
     
    Bardana (Total value as per 1,74,267
    (Packing Books)
    Material)
     
    Total 37,78,619

    10. The National Commission held that surveyors of the complainants had prepared a report and submitted to the Insurance Company, but the claim was repudiated on the ground that there were no stock worth its while as there was pilferage since the units remained closed for about twenty months. It was also contended by the Insurance Company that the stock was not fit for human consumption. The final survey report at the instance of the Insurance Company recommended to settle the claim of the complainants at Rs. 5,18,619/-. The figure was communicated by the Insurance Company to the complainants.

  8. The National Commission noted that respondent No. 2 Grindlays Bank supported the case of the complainants and prayed that the amount claimed by the complainants be given to them as the complainants executed mortgage documents in the favour of the Bank.

  9. The National Commission considered the evidence of Mr. Ghulam Rasool Wani, the only witness examined on behalf of the complainants who was an illiterate staff member. On behalf of the Insurance Company, two surveyors, Mr. Andrasabi and Mr. A.K. Gupta were examined. The Insurance Company also examined Mr. V.K. Malik and Mr. M.R. Grover. The National Commission considered the relevant documentary and oral evidence and observed that the risk was covered by the terms and conditions of the insurance policy. It also held that the units could not work in view of militancy in the area and the units were required to be closed down. It believed the case of the complainants that there was terrorist attack on both the units on November 12, 1991 and the militants set on fire the units. It further recorded a finding that there was no evidence whatsoever to conclude that there was pilferage either by the intruders or by the staff members of any of the units. It, however, held that...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT