India Insurance Company Ltd. Vs. Kantika Colour Lab & Ors.  INSC 364
(6 May 2010)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICITION CIVIL APPEAL NO. 6337 OF
2001 United India Insurance Company Ltd. ...Appellant Versus Kantika Colour Lab
. & Ors. ...Respondents (With Civil Appeal No.6975 of 2001)
appeals under Section 23 of the Consumer Protection Act, 1986 arise out of an
order dated 31st May, 2001 passed by National Consumer Disputes Redressal
Commission, New Delhi, whereby Original Petition No.153 of 1999 filed by
respondent no.1 has been allowed and the appellant-company held liable to pay
to the said respondent a sum of Rs.53 lakhs with interest @ 10% p.a. jointly
and 2 severally with the Carrier M/s Super Road Lines towards compensation for
the damage which machines entrusted to the later suffered in the course of
transportation from Mumbai to Hardwar.
Respondent No.1-Kantika Colour Lab imported one set of Noritsu QSS-1923 printer
process and QSF-V50 film processor from Japan. The machines arrived at Mumbai
on 1st November, 1998 and were entrusted to M/s Super Road Lines for onward
transportation to Hardwar under L/R No.005495 dated 20th November, 1998. A
pre-dispatch survey conducted by the Surveyor confirmed that the machines were
in sound condition at the time of dispatch from Mumbai.
secure the machines against any possible damage respondent No.1-the owner of
the machines obtained from the appellant Insurance Company a transit insurance
policy for a sum of Rs.53 lakhs. The policy covered loss against all risks
including damage/breakage, theft pilferage, road risk 3 and non-delivery etc.
The insurance was extended to cover SRCC as per limits and conditions of the
case of the owner-respondent no.1 is that the machines suffered damage on
account of mishandling in the course of transportation from Mumbai to Hardwar.
A damage certificate issued by respondent no.7 acknowledged that the damage to
the machines had occurred during transportation.
no.1 accordingly lodged a claim for a sum of Rs.55 lakhs against the appellant
company and the Carrier- respondent no.7 in this appeal. A preliminary survey
of the damage to the machines was ordered by the appellant company and
conducted by Shri Ajay Kumar Arora, who submitted a report stating that while
Printing Machine QSS 1923 had suffered damage, there was no apparent damage to
the Film Processor QSF-V50 which machine outwardly appeared to be in sound
appellant-company then appointed Shri Vinod Sharma licensed Surveyor to survey
the machine and assess 4 the loss as required under Section 64UM of the
Insurance Act 1938. Shri Sharma submitted a report dated 17th April, 1999 after
the machines were inspected by Shri Amit Bose, the Technical Director and
Engineer of M/s Satyam Equipment Services Ltd. In his report Shri Sharma opined
that the damage/loss to the machine was repairable and assessed the same at
Rs.5,76,730/-. The report categorically stated that there was no damage to the
Film processor QSF-V50 which was found to be in working condition. Accepting
the said report, the appellant company offered an amount of Rs.5,76,730/- to
respondent no.1 towards compensation which the said respondent refused to
accept. Instead respondent no.1 filed complaint No.153 of 1999 before the
National Consumer Disputes Redressal Commission, New Delhi, claming an amount
equivalent to the cost of the machines which according to the respondent were a
total loss on account of the damage suffered by them.
appellant-company contested the claim and took several objections to the
maintainability of the complaint including the objection that the complaint
raised complicated questions of law and fact which could not be tried under
Consumer Protection Act. It was also alleged that damage suffered by the
machine was repairable and that the loss was limited to Rs.5,76,730/- which the
company had offered to make good.
support of its complaint the respondent-company examined Shri Pradeep Kumar
Sharma, one of its partners.
statement of Shri Taposh Dev, Senior Sales and Service Engineer was also
recorded, on behalf of the manufacturing company who too was arrayed as a party
of Shri Vinod Sharma, Surveyor and Shri Amit Bose, Technical Director of M/s
Satyam Equipment Services Pvt. Ltd. examined on behalf of the
appellant-company, were also recorded.
8. By its
order dated 1st May, 2001 the National Commission allowed the claim made before
it and held the appellant-company as also the Carrier to be jointly and
severally liable to pay a sum of Rs.53 lakhs together with interest @ 10% p.a.
for the period commencing two months after the second Surveyor's report was
submitted till the actual payment of the claim is made. The Commission directed
surrender of the salvage to the Insurance Company against payment of its claim
within eight weeks. The complainant was also held entitled to costs of
present appeals call in question the correctness of the above order. While
Civil Appeal No.6337 of 2001 filed by the Insurance Company assails the order
passed by the National Commission in its entirety, Civil Appeal No.6975 of 2001
filed by the owner challenges the said order to the extent it awards interest @
10% p.a. only instead of the rate at which the insured claims to have borrowed
money from the bank for the purchase of the machines in question.
Appearing for the appellant-Insurance Company Mr. Vishnu Mehra, learned
counsel, strenuously argued that the National Commission had committed a
palpable error in awarding Rs.53 lakhs towards compensation for the damage
caused to the machine insured with the appellant for its transportation from
Mumbai to Hardwar. He contended that the order passed by the National
Commission proceeded on an erroneous assumption that the damage suffered by the
machine had rendered the same unusable hence a total loss.
material available on record argued the learned counsel clearly established
that it was only the printer process QSS- 1923 that was damaged and not the
film processor QSF- V50. The latter was in fact found to be in perfect
condition and in use at the time of the survey. It was also argued by Mr. Mehra
that the damage caused to the printer model QSS-1923 was repairable and that
the report of the Surveyor had assessed the cost of the repair at Rs.5,76,730/-
which amount alone was payable to the insured. It was alternatively submitted
that even if this 8 Court were to hold that the entire printer model QSS-1923
was rendered useless on account of the damage caused to it, the maximum that could
be claimed by the insured was the replacement cost of the said machine and no
behalf of respondent-claimant it was contended by Mr. R.P. Bhatt, learned
senior counsel, that while there was no apparent damage to the film processor
QSF-V50, the fact that the printer model QSS-1923 had suffered damage raised a
reasonable apprehension in the mind of the insured that the impact which the
machine had suffered in the course of transportation may have damaged even the
film processor QSF-V50. It was submitted that merely because the film processor
QSF-V50 was found to be in working condition did not rule out the possibility
of the machine giving trouble in future.
regards the damage to printer model QSS-1923 it was argued by Mr. Bhatt that the
manufacturers had clearly ruled out any possibility of repairs to the machine
in India. It 9 was also submitted that the expenses on repairs which could be
carried out only in Japan would be far more than the price of a brand new
machine making it unwise to insist on repairs. The manufacturer had also ruled
out the possibility of any such repairs being satisfactorily carried out either
by M/s Satyam Equipment Services Ltd. or by any other agency in India.
Surveyor report submitted by Shri Vinod Sharma certifies damage to the printer
model QSS-1923 which comprises two distinct sections, namely, (1.A) Paper
Processor and Dryer Section and (1.B) Printer Section. The report records the
damage in the following words:
PRINTER MODEL QSS-1923 1.A. PAPER PROCESSOR AND DRYER SECTION Chemical tank
broken, Roller transportation gone out of alignment, replansher system were
broken, processor came out of the base completely, all processor racks damaged.
As such complete Tank Unit & Rack Unit requires replacement in addition to
Resetting of complete Processor.
PRINTER SECTION Many parts were found displaced from original setting and
screws also came out. It requires Resetting of Machine along with replacement
of Monitor Unit which was found damaged. Since the machine i.e. paper processor
& printer requires resetting, there will be requirement of imported wires
& some gears & metal spares."
14. In so
far as film processor QSF-V50, is concerned the report specifically states that
there is no apparent damage to the said machine, no matter the insured apprehends
that the same may also have been damaged from inside which fact can be verified
only when the machine is tested. The report further states that at the time of
the second visit to Hardwar along with the engineer of M/s Satyam Equipment
Services Ltd. the film processor QSF-V50 was found to have been already tested
by the supplier's engineer and the tank of the machine was found filled with
chemicals. Around 40- 50 number of empty Film rolls were found lying on the
report certifies that the machine was in working 11 condition. The following
passage from the report is in this regard relevant:
our second visit on 24.02.99 alongwith Engineers of M/s Satyam Equipment
that Film Processor had already been testified by the Suppliers Engineers. The
tanks of the machine was found filled with Chemicals and around 40-50 No. of
empty Film Rolls were lying there, as the same were informed to be developed on
the machine. The Insured informed that though this machine is working at present
but chances are there that later on its PC Board may have to be changed. The
Insured could not explain the reasons for replacement of PCB, at a later stage.
is found working in good condition."
his deposition before the National Commission Shri Vinod Sharma, Surveyor and
author of the report reiterated that the film processor QSF-V50 was not found
damaged upon inspection at site. He refuted the suggestion made to him that the
machines were totally damaged.
may at this stage refer to the deposition of Shri Taposh Dev, Senior Sales and
Service Engineer of respondent no.2 the manufacturer of the machines in 12
question. In the affidavit filed by the said witness it is, inter alia, stated
that a thorough visual inspection of the machines in question was made by the
engineers of respondent no.2 company and a report based on the said inspection
submitted on 21st December, 1998. The witness on the basis of the said
inspection report stated that Noritsu QSS-1923 printer process was subjected to
a strong impact from the sides during transit from Mumbai to Hardwar resulting
in severe damage, especially to the Paper Processor & Dryer Section
thereof. The mechanical alignment and the optical accessories also had been
badly affected. The witness also stated that it was not economical to undertake
such repair work on account of the high cost involved in the same especially
when the repair may not exclude the possibility of any future complications
arising in the working of the machines. The witness also referred to
manufacturer's letter dated 7th January, 1999 informing the insured about the
price of Noritsu QSS-1923 Printer Process and QSF-V50 Film Processor after
deducting the value of the 13 optional accessories. According to the witness the
price of Printer Process QSS-1923 works out to Singapore $ 62,100.
witness asserted that M/s Satyam Equipment Services Ltd. were appointed as
authorized sales representatives during early 1996 but since their services
were not found to be satisfactory the agreement between the parties was
terminated. He has further stated that respondent no.2- company had not trained
any engineer to repair the Printer Process QSS-1923.
much has been extracted from the witness in cross-examination who has stuck to
his version that the machine is not at all repairable, and that the cost of
getting the machine repaired in Japan would be much more than the cost of a new
aspects stand out from the above evidence.
it is clear that the damage has been caused only to the printer model QSS-1923
and not to the film processor QSF-V50 which was found to be in working
condition and 14 about which there was only an apprehension and no more that
its working may run into difficulty in future. We, however, see no real basis
for such an apprehension. In any case in the absence of proved damage affecting
the performance of the machine, it is difficult to assume that the film
processor was also damaged either wholly or in part so as to call any repair or
replacement of the said machine.
Contracts of Insurance are generally in the nature of contracts of indemnity.
Except in the case of contracts of Life Insurance, personal accident and
sickness or contracts of contingency insurance, all other contracts of
insurance entitle the assured for the reimbursement of actual loss that is
proved to have been suffered by him. The happening of the event against which
insurance cover has been taken does not by itself entitle the assured to claim
the amount stipulated in the policy. It is only upon proof of the actual loss,
that the assured can claim reimbursement of the loss to the extent it is
established, not exceeding the amount stipulated in the contract of Insurance
which signifies the 15 outer limit of the insurance company's liability. The
amount mentioned in the policy does not signify that the insurance company
guarantees payment of the said amount regardless of the actual loss suffered by
the insured. The law on the subject in this country is no different from that
prevalent in England; which has been summed up in Halsbury's Laws of England -
4th Edition in the following words:
happening of the event does not of itself entitle the assured to payment of the
sum stipulated in the policy; the event must, in fact, result in a pecuniary
loss to the assured, who then becomes entitled to be indemnified subject to the
limitations of his contract. He cannot recover more than the sum insured for
that sum is all that he has stipulated for by his premiums and it fixes the
maximum liability of the insurers. Even with in that limit, however, he cannot
recover more than what he establishes to be the actual amount of his loss. The
contract being one of indemnity only, he can recover the actual amount of his
loss and no more, whatever may have been his estimate of what his loss would be
likely to be, and whatever the premiums he may have paid, calculated on the
basis of that estimate."
other aspect that is established is that printer model QSS-1923 has been extensively
damaged and the 16 manufacturing company has no arrangement in this country for
carrying out the repairs to the damaged machine. The Insurance Company's
version that M/s Satyam Equipment Services Ltd. undertakes the repairs does not
appear to us to be acceptable specially when the manufacturing company's
authorized representatives has in no uncertain terms denied the competence of
the M/s Satyam Equipment Services Ltd. to undertake any such repairs. Such
being the position, the National Commission was, in our opinion, justified in
holding that the printer processor model QSS- 1923 being extensively damaged
requires complete replacement.
question, however, is as to what is the cost of such replacement. Shri Taposh
Dev, has referred to letter dated 7th January 1999 addressed by the
manufacturing company to the insured M/s Kantiak Colour Lab and stated that the
price of a brand new printer processor model QSS-1923, works out to Singapore
$62100. We see no reason why the said amount can not be awarded to the insured
by way of 17 compensation for the damage caused to the machine.
the cost of the machines the insured would also be entitled to the customs duty
component paid on the import of the said machine. From the Surveyor's report
submitted by Mr. P.M. Patel and Co. it is evident that the invoice value of the
goods comprising the printer processor and the film processor was Singapore $
104000 with an assessable value of Rs.27,36,292/-. A sum of Rs.21,32,776/- was
on that value paid towards customs duty on the import of the said equipment.
The duty payable on a machine valuing Singapore $ 62100 would, therefore, come
sum up the total amount payable to the insured by way of compensation for the
damage caused to the machine in question would work out to rupees equivalent of
Singapore $ 62100 at the exchange rate prevalent as on the date of this
judgment plus a custom duty component of Rs.12,73,513.36 rounded off to
Rs.12,74,000/-. The sum total of the two figures would be payable with interest
@ 18 10% p.a. for the period mentioned in the National Commission's order. We
make it clear that keeping in view the bank rate of interest prevalent during
the relevant period we see no reason to award a higher rate of interest as
claimed by the insured appellant in Civil Appeal No.6975 of 2001.
the result Civil Appeal No.6337 of 2001 succeeds in part and to the extent that
the appellant-company and the carrier M/s Super Road Lines shall be liable
jointly and severally to pay the rupee equivalent of Singapore $ 62100 at the
exchange rate prevalent on the date of this order besides a sum of
Rs.12,74,000/- towards customs duty paid by the insured on the import of the
damaged machine. The amount so determined shall earn interest @ 10% p.a. as
amount awarded in favour of the insured- respondent no.1 in Civil Appeal
No.6337 of 2001 shall be paid upon surrender to the appellant Insurance Company
of 19 the printer process model QSS-1923 comprising the damaged Printer Process
machine (1.A and 1.B) within two months from today. Civil Appeal No.6975 of
2001 filed by the insured is, however, dismissed.
make it clear that if the insured has already received directly or through its
bank any part of the amount awarded by the National Commission it shall refund
the excess, if any received by it or paid on its behalf to the bank within a
period of two months failing which the excess amount so received but not
refunded shall also earn interest in favour of the insurance company @ 10% p.a.
from the date the period of two months hereby granted expires.
Parties are left to bear their own costs.
.................................J. (D.K. JAIN)