NCDRC's pretense of expertise overturned, insurance claim denial reversed: Supreme Court

NCDRC's pretense of expertise overturned, insurance claim denial reversed: Supreme Court

During the appellate proceedings challenging the verdict of the National Consumer Disputes Redressal Commission (NCDRC), a notable incident unfolded within the hallowed halls of the Supreme Court. Presided over by Justices A.S. Bopanna and Dipankar Datta, a Division Bench was taken aback by the NCDRC's ruling. The Bench noted with incredulity that the tribunal members, in the present case, assumed an almost Olympian stance, opining as if possessing the arcane expertise of the very matter in dispute. 

The Court's consternation was palpable as it remarked, "We stand stunned to ascertain that the said members, who were seized of the complaint, ventured into the realm of observations akin to erudite savants deliberating upon the findings of the Loss Assessor and the Doyens of Expertise... It appears manifest that the NCDRC, in the impugned pronouncement, donned the robes of expertise and audaciously assumed the mantle of the appellate authority."

The case involves S.S. Cold Storage India Pvt. Ltd., operating a cold storage facility, which held a Refrigerator Insurance Policy from National Insurance Company Ltd. In 1997, ammonia gas leakage damaged stored potatoes. The appellant reported and claimed damages, but the Respondent's appointed Surveyor attributed it to wear and tear, not covered by the policy. The appellant, disputing this, submitted expert reports indicating accidental leakage. The National Consumer Disputes Redressal Commission (NCDRC) rejected the claim, attributing the issue to gradual deterioration. The appellant now appeals this decision.

In the initial statements, Senior Advocate Vijay Hansaria, representing the Appellant, emphasized that the Refrigeration Insurance Policy had been issued following a thorough premises inspection. Hansaria highlighted three expert reports attributing the cracks to an accident, challenging the NCDRC's selective reliance on these reports. On the opposing side, Yogesh Malhotra, appearing for the Respondent, supported the NCDRC's findings, citing the Surveyor's report. Malhotra argued that the ammonia leakage resulted from normal wear and tear, falling under the policy's exclusion clause.

The central dispute faced by the Court was whether the NCDRC's rejection of the Appellant's complaint, asserting no service deficiency on the part of the Respondent, was valid.

The Court noted that the Surveyor’s Report's absence of scientific investigation remained unchallenged by the Respondent. The Court emphasized that the Surveyor's report didn't even mention potential wear and tear causes. In the Court's view:

"The Surveyor neglected to send damaged pipe pieces to an expert or laboratory for cause identification. No oral or documentary evidence backed the wear and tear theory. Moreover, the Respondent failed to provide any cogent reasoning for concluding that the ammonia leakage resulted from simple wear and tear. The Surveyor’s Report appeared to assert, rather than deduce through a reasoned process considering all factors."

Notably, the Court highlighted that the facility had been inspected for policy renewal just a few years before the incident. Upon comparing expert and Surveyor reports, the Court commented:

"The Surveyor’s Report, though incomplete in assessing relevant factors, was relied upon by the Respondent to reject the Appellant's claim. Since the report only cited the Surveyor's assertion and omitted aspects addressed by the Loss Assessor and Experts, the Court found it unsuitable for acceptance."

Based on these observations, the Court concluded that the ammonia gas leak was an unforeseen accident beyond the Appellant’s control. Consequently, the rejection of the insurance claim by the Respondent amounted to a deficiency of service. In the end, the Court ruled in favor of the Appellant's entitlement to the insurance claim.

Case Title: S.S. Cold Storage India Pvt. Ltd. v. National Insurance Company Limited, Civil Appeal No. 2042/2012.

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