Case Title: S.S. Cold Storage India Pvt. Ltd. v. National Insurance Company Limited, Civil Appeal No. 2042/2012
Summary
The Supreme Court expressed dissatisfaction with a National Consumer Disputes Redressal Commission (NCDRC) decision in a case involving S.S. Refrigerated Storage India Pvt. Ltd., a company operating a refrigerated storage facility. The company obtained a Refrigerator Insurance Policy from National Insurance Company Ltd. for potato storage, and in 1997, an ammonia gas release occurred in Chambers 1 and 2 of the facility. The Appellant filed a complaint with the NCDRC to obtain compensation, but the NCDRC determined that the hairline cracks in the pipelines were likely due to gradual deterioration and wear and tear, rather than a sudden burst.
The parties’ arguments included Senior Advocate Vijay Hansaria, who argued that the Refrigeration Insurance Policy was issued only after a comprehensive inspection of the premises, and Yogesh Malhotra, who endorsed the NCDRC’s conclusions. The Court found that the Respondent did not exhibit any deficiency of service, as the Surveyor’s report was not founded on any scientific investigation and did not address potential wear and tear causes. The Court concluded that the ammonia gas discharge was the consequence of an unforeseen accident and was beyond the Appellant’s control, and the Respondent’s repudiation of the insurance claim was a service deficiency.
About the case
In response to an appeal that challenged a National Consumer Disputes Redressal Commission (NCDRC) decision, the Supreme Court expressed its dissatisfaction with the NCDRC’s decision. The matter was heard by a Division Bench that included justices Dipankar Datta and A.S. Bopanna. In the present instance, the Bench was taken aback by the observations made by the tribunal members, who were experts in the disputed matter. The Court stated, “We are appalled to discover 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 appears to us that the NCDRC made observations in the impugned judgment as if its members were experts in the pertinent field and had the authority to sit in appeal over the same.
The Appellant (S.S. Refrigerated Storage India Pvt. Ltd.) is a company that operates a refrigerated storage facility. The Appellant obtained a Refrigerator Insurance Policy from the Respondent (National Insurance Company Ltd.) for potato storage, in addition to other insurance policies.
Chambers 1 and 2 of the aforementioned facility experienced an ammonia gas release in 1997. Consequently, the Appellant notified the Respondent and subsequently submitted a claim to the Respondent for 85,956 sacks of potatoes. As per the Refrigeration Insurance Policy, the Appellant was informed by the Surveyor, who was appointed by the Respondent, that the incident was the result of decay, wear, and tear. Consequently, the same was excluded.
The Appellant filed a complaint with the NCDRC in order to obtain sufficient compensation in the aforementioned context. The report of three experts was recorded by the Appellant in that matter. The reports concluded that “the ammonia leakage could only be described as an accidental occurrence, and that the theory that it was the result of normal wear and tear was incorrect.” Nevertheless, NCDRC determined that the hairline cracks in the pipelines were likely the result of gradual deterioration and wear and tear, rather than a sudden burst, and declined to provide the Appellant with any relief. Accordingly, the appellant initiated this appeal. Senior Advocate Vijay Hansaria, who represented the Appellant, first argued that the Refrigeration Insurance Policy was issued only after a comprehensive inspection of the premises. Furthermore, Hansaria asserted that the fractures were the result of an accident, as evidenced by the reports of three experts, and cannot be attributed to normal wear and tear. He continued to contend that the NCDRC has selectively relied on the aforementioned reports; however, the contents of the reports were inseparable, and as a result, they could not have been accepted in part and rejected in part. Conversely, Yogesh Malhotra, who represented the Respondent, endorsed the NCDRC’s conclusions and contended that they should not be altered. He argued that the ammonia discharge was a result of normal wear and tear and, as a result, was not covered by the Refrigerator Insurance Policy, despite relying on the Surveyor’s report.
The Court was confronted with the contentious issue of whether the NCDRC was justified in dismissing the Appellant’s complaint, asserting that the Respondent did not exhibit any deficiency of service. The Respondent has not refuted the Court’s observation that the Surveyor’s Report was not founded on any scientific investigation. The Court also noted that the Surveyor’s report does not address potential wear and tear causes. The Court maintained a record:
“It is undeniable that the Surveyor failed to submit the damaged pipes to a laboratory or an expert in order to determine the source of the leak. The theory of wear and tear was not substantiated by any oral or documentary evidence. Additionally, the Respondent did not provide any rationale, much less a cogent one, for his conclusion that the ammonia leak was the result of basic wear and tear. More importantly, the Surveyor’s Report appears to be an ipse dixit that ammonia gas escaped due to the pipelines’ wear and tear in the Chambers, rather than a conclusion that was reached through a process of reasoning that considered all pertinent factors.
The Court also observed that the facility was inspected to renew policies only a few years prior to the incident. Moving forward, the Court conducted a thorough examination of the experts’ report in comparison to the Surveyor’s report and noted the following:
“It appears that the Surveyor failed to take all pertinent factors into account in the appropriate manner; however, the Respondent relied on the Surveyor’s Report to undermine the Appellant’s claim.” The report is not worthy of adoption in our opinion, as it only records the ipse dixit of the Surveyor and does not address the aforementioned aspects that the Loss Assessor and the Experts have addressed.
The Court concluded that the ammonia gas discharge was the consequence of an unforeseen accident and was beyond the Appellant’s control, as indicated by the aforementioned observations. Consequently, the Respondent’s repudiation of the insurance claim was a service deficiency. Ultimately, the Appellant was granted the aforementioned insurance claim by the Court.
