Supreme Court: In an appeal filed by United India Insurance Co. Ltd. (‘Insurance Company’) challenging the decision by the National Consumer Disputes Redressal Commission (‘NCDRC’), which by its impugned order directed Insurance Company to release and pay an insurance claim of Rs. 39,09,92,828/-, the Division Bench of Pamidighantam Sri Narasimha* and Aravind Kumar,JJ. while setting aside the impugned order, opined that the NCDRC fell into a clear error of law and fact in allowing the consumer complaint for multiple reasons.
Background:
The National Highway Authority of India (‘NHAI’) awarded a contract for the design, construction and maintenance of a cable-stayed bridge across the river Chambal on NH-76 at Kota, Rajasthan to a joint venture company comprising of Hyundai Engineering & Construction Co. Ltd. and respondent 2. The value of the project under the contract was Rs. 213,58,76,000/-. The contract provided that the construction work was to be completed within 40 months and the joint venture was thereafter assigned the task of maintaining the said bridge for a period of 6 years, of which, 2 years was the ‘defect-notification period’. The Insurance Company issued a Contractor’s All Risk Insurance Policy covering the interest of NHAI as principal, and Hyundai Engineering Infrastructure Co. Ltd. along with Gammon India as JV Contractor under the policy.
The construction project commenced in 2007. While the construction was in progress, a part of the constructed bridge collapsed in 2009, resulting in the death of 48 workmen. Thereafter, the Ministry of Road Transport and Highways constituted a Committee of Experts, to investigate and report the cause of the collapse. An FIR was also lodged against the respondents for offences under Sections read with Section of the (‘IPC’). After investigation, a final report was filed wherein the officials of the respondent companies were found to be liable for the loss of 48 lives due to several defects at the stage of design, construction and supervision.
Thereafter, NHAI notified the Insurance Company about the incident and requested a surveyor’s deputation to assess the damage caused by the accident and sought indemnification for the loss. Based on the surveyor’s report and also the conclusions of the Expert Committee, the Insurance Company repudiated the insurance claim.
In the meanwhile, respondents completed the work under the contract by 2017. The bridge was inaugurated and put to public use, and it is said to be operating since then. Almost after 2 years of rejection of the claim, respondents filed a Consumer Complaint before the NCDRC alleging deficiency in the Insurance Company service and the unfair trade practice adopted by it. NCDRC passed the impugned order, which resulted in the filing of the present appeal.
Analysis:
The Court reiterated that Insurance is a contract of indemnification, being a contract for a specific purpose, which is to cover defined losses. The Courts have to read the insurance contract strictly. Essentially, the insurer cannot be asked to cover a loss that is not mentioned. Exclusion clauses in insurance contracts are interpreted strictly against the insurer as they have the effect of completely exempting the insurer of its liabilities.
Concerning the Expert Committee report, the Court said that the NCDRC’s opinion about the Expert Committee is not about lack of credibility, or lack of expertise, rather its opinion was only that the Committee was not conclusive in its findings.
Referring to the relevant portions of the Expert Committee’s report, the Court noted that the Committee said that each lateral span of the bridge was supposed to be a monolithic structure. A lateral span is the structure between two support pillars. However, the collapsed lateral span was cast in multiple parts.
The Court accepted the Insurance Company’s submission that there is sufficient evidence to justify repudiation of the claim on the basis of the exclusion clause, and there is no evidence on behalf of the respondents.
The Bench also referred to the surveyor’s report and said that in the present case, the surveyor’s report was the evidence tendered by the insurance company, and it has not been treated as unreliable by the NCDRC.
The Bench opined that the NCDRC fell into a clear error of law and fact in allowing the consumer complaint for multiple reasons. Thus, the Court set aside the impugned order.
[United India Insurance Co. Ltd. v. Hyundai Engineering & Construction Co. Ltd., , decided on 16-05-2024]
*Judgment Authored by: Justice Pamidighantam Sri Narasimha
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