India: Limitation Vis-A-Vis Consumer Protection Act – An Analysis Of The Judgement Of The Hon'ble Supreme Court Of India In The Matter Of National Insurance Co. Ltd. Vs. Hindustan Safety Glass Works Ltd. And Ors.

The pros and cons of consumerism including rising demands and issues of globalization have been affecting everyone in recent times. In such a scenario, the Indian Government, taking in to account the needs of the people, passed the Consumer Protection Act, 1986, to protect the consumers from unscrupulous suppliers. The Consumer Protection Act, 1986, an Act of the Parliament of India, enacted in 1986, to protect the interests of consumers in India, makes provision for the establishment of consumer councils and other authorities for the settlement of consumer disputes and for matters connected therewith also. Unlike civil suits which are expensive and time consuming, the Consumer Protection Act, 1986, was enacted to provide a simpler and quicker access for redressal of consumer grievances. The Act, for the first time, introduced the concept of 'consumer' and conferred various express additional rights on the person who comes under the purview of 'consumer' as per the Consumer Protection Act, 1986.

One of the main and vital challenges in every adjudication is the period of 'limitation'. It is pertinent to state that Section 24A of the Consumer Protection Act, 1986, defines the limitation period for filing the complaints under the Consumer Protection Act, 1986. As per the definition, the complaint can be filed with District Forum, State or National Commission within 2 years from the date of cause of action having been arisen. However, sub-clause (2) of the said provision states that a complaint filed beyond the prescribed period would be entertained if the complainant satisfies the Forums, State and National Commissions with sufficient reason that prevented him from filing within the prescribed period. A provision is also given mandating the Forum, State Commission, and National commission to record the reasons for condoning the delay and proceed to entertain such delayed complaint.

For the sake of reference, the operative part of Section 24A is reproduced herein below:

Section 24A in the Consumer Protection Act, 1986

[24A. Limitation period.—

(1) The District Forum, the State Commission or the National Commission shall not admit a complaint unless it is filed within two years from the date on which the cause of action has arisen.

(2) Notwithstanding anything contained in subsection (1), a complaint may be entertained after the period specified in sub-section (1), if the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that he had sufficient cause for not filing the complaint within such period; Provided that no such complaint shall be entertained unless the National Commission, the State Commission or the District Forum, as the case may be, records its reasons for condoning such delay.

Hence, in view of the aforesaid, the time period for filing a complaint for a consumer from the date of violation of a right is 2 years. The law in this regard is laid down in Sec24-A of the Consumer Protection Act, 1986. However, the Hon'ble Supreme Court of India, in a landmark judgement, on 07.04.2017 in the matter of National Insurance Company Ltd. vs. Hindustan Safety Glass Works Ltd. (MANU/SC/0390/2017), has held that where a supplier is responsible for causing a delay in the settlement of the consumer's claim, the consumer shall be entitled under law to file a complaint in the Consumer Court even after the expiry of the period of two years.

Brief Facts of the Case & Analysis of the Judgment Passed by the Hon'ble Supreme Court of India Hindustan Safety Glass Works Ltd. (i.e. insured) i.e. Respondent, had taken out two policies with the appellant National Insurance Company, both dated August 29, 1990, for a period of one year which were subsequently renewed for another year. The first policy was for an amount of Rs. 4.9 lakhs to cover the risks on office building, residential quarters and canteen etc. in Calcutta. The second policy was for an amount of about Rs. 5.7 crores to cover the risks on building, machinery, finished and semi-finished stocks, store, furniture, wiring and fittings etc. in its factory/works in Calcutta, wherein both the policies included damage or loss due to flood and inundation.

On August 06, 1992, there was heavy incessant rain in Calcutta resulting in heavy accumulation of rain water inside and around the factory/works of the insured, which the respondent claimed had caused considerable damage to raw materials, stocks and goods, furniture etc. As a result of the damage suffered by the insured and in terms of the two policies taken out with National Insurance, claims were filed by the insured on August 07 and 08, 1992, claiming a total amount of about Rs. 52 lakhs.

Pursuant to claims, National Insurance carried out two surveys wherein the reports were submitted on November 11, 1993, and the second report was given on November 23, 1994, assessing the loss/damage suffered by the insured.

In spite of the two survey reports quantifying the loss or damage suffered at about Rs. 24 lakhs, nothing was paid to the insured by National Insurance. Pursuant to the same, notices were served upon the insurer. However, to the utter shock and disappointment, there was no response from the National Insurance. Hence, in view of such circumstances, insured filed a complaint with the National Commission under the provisions of the Consumer Protection Act, 1986 (for short 'the Act') claiming an amount of Rs. 52.32 lakhs, along with an amount of about Rs.1.81 lakhs being the expenses incurred for the purpose of loss minimization, further interest at 18% per annum was also claimed by the insured with effect from December 06, 1992 i.e. four months after the occurrence of the flood or inundation.

There were various objections raised by the National Commission as follows, wherein one of the major objection, which is subject matter of the present article, is regarding the complaint being barred by condition No. 6(ii) of the policies i.e Complaint was barred by limitation as it was filed on August 13, 1996, while the loss/damage to the insured properties had taken place in August, 1992.

Reliance on condition number 6(ii) of the insurance policies it is necessary to first understand the scope of this condition which reads as follows:

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.

A reading of the aforesaid condition leads to the conclusion that National Insurance would not be liable for any loss or damage 12 months after the event that caused the loss or damage to the insured unless the claim is the subject matter of a pending action or arbitration. It was submitted by the learned Counsel for National Insurance that the expression 'pending action' must relate to action instituted in a court of law.

However, the Hon'ble Court held that when a claim is made by the insured, that itself is actionable, there is no question of requiring the insured to approach a court of law for adjudication of the claim and that this would amount to encouraging avoidable litigation, which certainly cannot be the intention of the insurance policies and which in no case in public interest.

However, the learned Counsel vehemently argued that in terms of Section 24A of the Act, the claim made by the insured was barred by limitation, since the complaint was filed with the National Commission on August 13, 1996, while the loss or damage had occurred on August 06, 1992. Therefore, the National Commission could not have admitted the complaint since it was filed beyond the stipulated period of two years from the date on which the cause of action had arisen.

The National Commission rejected all the contentions urged by National Insurance and by the impugned judgment and order, the insured was awarded an amount of Rs. 21,05,803.89 with interest at 9% per annum from May 11, 1995, i.e three months after the addendum issued by Seascan Services (WB) Pvt. Ltd. (the second surveyor), furthermore even costs of Rs. 20,000/- were also awarded to the insured.

Aggrieved by the impugned order, National insurance preferred appeals to the Hon'ble Supreme Court of India.

JUDGMENT

The Hon'ble Supreme Court of India held that the event that caused the loss or damage to the insured occurred on August 06, 1992, was the heavy incessant rain in Calcutta in which the raw materials, stocks and goods, furniture etc. of the insured were damaged. It was observed that on the very next day, the insured lodged a claim with National Insurance. In response, National Insurance first appointed N.T. Kothari & Co. to assess the loss suffered by the insured and a report was given by this surveyor after more than one year. Thereafter, for reasons that are not at all clear, National Insurance appointed a second surveyor which also took about one year to submit its report, and eventually gave an addendum to that report thereby, crossing one year in completion of its report along with the addendum. It was observed and noted by the Hon'ble Court that National Insurance itself took more than two years in surveying or causing a survey of the loss or damage suffered by the insured and hence, the entire delay is attributable to National Insurance which cannot prejudice the claim of the insured, especially when the insured had lodged a claim well within time. Furthermore, to make matters worse, National Insurance actually repudiated the claim of the insured only on May 22, 2001, which was well after the complaint was filed with the National Commission.

The Hon'ble Court was of the view that in a dispute concerning a consumer, it is necessary for the courts to take a pragmatic view of the rights of the consumer principally since it is the consumer who is placed at a disadvantage vis-a-vis the supplier of services or goods. It was further held that the very purpose of a beneficent legislation, in the form of the Consumer Protection Act, is to overcome this disadvantage. The provision of limitation in the Act cannot be strictly construed to disadvantage a consumer in a case where a supplier of goods or services itself is instrumental in causing a delay in the settlement of the consumer's claim. The Court observed that this being the underlying principle, it had no hesitation in concluding that the National Commission was quite right in rejecting the contention of National Insurance in this regard.

Further, it was held that the contention urged was that the first survey report given by N.T. Kothari & Co. was not a bona fide report as the Central Glass and Ceramic Research Institute, Calcutta had not authorized that specific officer to give any report with regard to the damage or loss suffered by the insured. Further, the Hon'ble Court noticed that the second survey report was prepared in consultation with the Central Glass and Ceramic Research Institute, Calcutta, wherein another officer had been consulted. However, it was clearly held that the Insurance Company failed to provide any reason to remotely suggest that the second report was also tainted either because the officer consulted was not authorized to give a report or for any other justifiable reason.

The National Commission accepted the second survey report which was provided by Seascan Services (WB) Pvt. Ltd. as well as the addendum to it and the apex court did not see any reason to disagree with the findings arrived at in the absence of any material to discredit the surveyor or the report of the surveyor.

That the Hon'ble Court in the second appeal being Civil Appeal No. 1156 of 2008, further observed and held that the aforesaid appeal even concerns the interpretation, in the context of limitation, of condition number 6(ii) of the insurance policy taken out by the insured. That in view of the same, it was further observed by the Hon'ble Court that, the insured suffered a loss or damage to its goods in an incident that occurred on September 06, 1993. A claim was lodged by the insured on the next day. The claim was repudiated by National Insurance on December 27, 1999 while a complaint filed by the insured in the National Commission was pending since March 06, 1998. In view of these facts and in view of the discussion in the connected appeal it was held that there is no merit in the objection raised by learned Counsel that the complaint was barred by limitation in view of condition number 6(ii) of the insurance policy or Section 24-A of the Act. In any event, this contention was not strictly pressed by learned Counsel on the facts of this appeal.

Thus, the Hon'ble Supreme Court of India was of the view that National Insurance had not been able to make out a case for interference with the order passed by the National Commission and held that both appeals were without any merit and were accordingly dismissed.

CONCLUSION

The result of this decision, now, is that in all other complaints, the limitation period under section 24A cannot be strictly construed to disadvantage a consumer. It is pertinent to state that with the economic progress and developments in the trade and commerce, a wide variety of consumer goods and services have started appearing and the very purpose of the Consumer Forums/Commissions is to observe the principle of natural justice for redressing the grievance of the consumers. Hence, as per the aforesaid judgement of the Hon'ble Supreme Court of India, in matters concerning consumer dispute, it is important to take a pragmatic view of the rights of the consumer principally, since it is the consumer who is placed at a disadvantage vis- a vis the supplier of good or services who is a step forward in the legal system of our country and thereby, making it imperative to protect the interest of the consumers who also play a major role in the economics and market dynamics of our country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions