Dr Dhananjaya Y Chandrachud, J
1 Leave granted.
2 This appeal arises from a judgment dated 12 July 2019 of the National Consumer
Disputes Redressal Commission.1 While exercising its revisional jurisdiction, the
NCDRC, by its judgment, reversed concurrent findings of fact which were
recorded by the District Consumer Disputes Redressal Forum2 and by the State
Consumer Disputes Redressal Commission.3
DigitallySanjay3Kumarsigned by The appellant purchased a JCB Excavator Model 3DX on 25 April 2007. The
1 “NCDRC” 2 “District Forum” 3 “SCDRC”
excavator was insured with the respondent for the period between 5 March 2009
and 4 March 2010 at an Insured Declared Value4 of Rs 13.50 lakhs. On 25 May
2009, the excavator was being used on the Shivpuri-Timli Road near Rishikesh in
the State of Uttarakhand. A portion of the road gave way, as a result of which
the excavator fell into a deep ditch resulting in the death of the operator and
helper and the total loss of the excavator. A First Information Report was filed on
26 May 2009. The FIR states that the accident had occurred due to a sudden
caving of the road. The surveyor appointed by the insurer conducted a spot
survey on 28 May 2009 and reported that the accident had taken place due to
the edge of the road side collapsing due to which the excavator fell into a ditch.
The final survey report was submitted on 18 July 2009. The appellant filed for an
insurance claim but the insurer did not settle it. The respondent repudiated the
claim on 13 April 2010 on the ground that the overturning of the excavator was
not covered in terms of the policy condition Indian Motor Tariff5 47 as the JCB
excavator was being used as a ‘tool of trade’ and no additional premium was
paid. The appellant filed a complaint before the District Forum alleging a
deficiency in service on the part of the insurer and the award of a sum of Rs
13.50 lakhs towards the IDV plus interest at twelve percent, along with
compensation for mental harassment. The District Forum allowed the complaint
on 26 September 2011 by directing the insurer to pay an amount of Rs 13.50
lakhs, together with interest at nine per cent. The judgment of the District Forum
was upheld in appeal by the SCDRC on 1 May 2014. On the issue of IMT 47, The
SCDRC made the following observations:
“9. So far as another plea taken by the insurer
that at the time of the accident, the machine, was
4 “IDV” 5 “IMT”
being used as “Tool of Trade”, for which
additional premium was required to be paid by
the complainant and which was not paid by the
complainant is concerned, we also do not find any
force in the said plea raised by the insurer. The
reason being that as per IMT 47 mentioned in the
insurance policy and which has also been quoted
by the District Forum in the impugned order, the
claim is not payable in the event when the JCB
machine is used as tool of Trade and it overturns
while working as such. In the instant case, the JCB
machine was being used for construction of road
and debris was being removed from the machine.
The JCB machine was being used a whole and not
as “Tool of Trade” and since the machine was
being used a whole, no additional premium was
required to be paid by the complainant.”
The respondent assailed the order of the SCDRC in Revision Petition No 3306 of
2014. The NCDRC, by its judgment dated 12 July 2019, reversed the findings and
the award of compensation by the SCDRC. The NCDRC reversed the decision on
the ground that earth moving equipment, such as a JCB excavator, could be used
either as a tool or as a vehicle, at a given point of time. Since the case of the
respondent was that the excavator was being used for the purpose of road
making when it met with an accident, the NCDRC held that it was being used as
a tool and not as a vehicle. In arriving at its findings, the NCDRC upheld the
submissions of the insurer that the claim could not have been allowed under IMT
47 unless additional premium was paid. The relevant observations of the NCDRC
are extracted below:
“7. A dissection of IMT 47, which applied inter-alia to
excavators and is reproduced in the repudiation
letter would show that unless additional premium
is paid, in case of loss of or damage to the
excavator, the insurer is not liable if the following
conditions are made:
(a) The loss or damage results from overturning of
the vehicle
(b) The excavator is being used as a tool of the
vehicle or of the plant forming part of the vehicle
or attached thereto, unless the loss or damage
arises directly from fire, explosion, self-ignition,
lightning, burglary, house breaking or theft.
8. An excavator machine cannot be used for road
construction unless it is attached to the said
vehicle or is used as a tool of the vehicle. This is
complainant's own case that the excavator was
being used for road making when it met with an
accident. Therefore, it cannot be disputed that
the operation i.e. the construction of the road was
being carried when the excavator vehicle while
being used as a tool, suddenly rolled down on
account of road side edge having got broken.
Earthmoving equipment such as a JCB can be
used either as a tool or as a vehicle at a given
time. It cannot work simultaneously as a tool as
well as a vehicle. Since this is complainant's own
case that the excavator was being used for road
making when it met with an accident, it is evident
that it was being used as a tool and not as a
vehicle at the time it fell 500 ft. down the road.”
4 We have heard Mr Jaideep Singh, counsel appearing on behalf of the appellant
and Mr Abhishek Gola, counsel appearing on behalf of the respondent.
5 The narrow issue which falls for determination in this appeal turns on the
interpretation of the insurance policy. There is no dispute about the fact that the
term of insurance was valid between 5 March 2009 until 4 March 2010. Section I
of the policy, inter alia, provides as follows:
INSURED
1. The Company will indemnify the insured against
loss or damage to the vehicle insured hereunder and/or
its accessories thereon:
i. by fire explosion self-ignition or lightning;
ii. by burglary housebreaking or theft;
iii. by riot and strike;
iv. by earthquake (fire and shock damage);
v. by flood typhoon hurricane storm tempest
inundation cyclone hailstorm frost;
vi. by accidental external means;
vii. by malicious act;
viii. by terrorist activity;
ix. whilst in transit by road rail inland waterway lift
elevator or air;
x. by landslide/rockslide.”
6 However, the insurance policy contains a specific stipulation in regard to the
application of IMT 47 in the following terms:
“IMT 47: Mobile Cranes/ Drilling Rigs/ Mobile Plants/
Excavators/ Navvies / Shovels/ Grabs/ Rippers
It is hereby declared and agreed notwithstanding
anything to the contrary contained in this Policy that in
respect of the vehicle insured the insurer shall be under
no liability:
a) Under Section I of this policy in respect of loss or
damage resulting “from overturning arising out of the
operation as a tool of such vehicle or of plant forming
part of such vehicle or attached thereto except for
loss or damage arising directly from fire, explosion
self-ignition or lightening or burglary housebreaking
or theft.
b) Under Section II except so far as is necessary to meet
the requirements of the Motor Vehicles Act, 1988, in
respect of liability incurred by the insured arising out
of the operation as a tool of such vehicle or of plant
farming part of such vehicle or attached thereto.
N.B.: Omit paragraph (a) for :-
i. Liability only Policies.
ii. Package Policies where an additional premium has
been paid for inclusion of damage by overturning.
NOTE:
Insert make, number or some other means of
identification.
Where a premium reduction is allowed for exclusion of
damage when in use as a tool of trade omit from
paragraph (a) the words “resulting from overturning”
and “except for loss ... or theft”.”
7 Mr Jaideep Singh, counsel appearing on behalf of the appellant, urges that:
i. The NCDRC was not justified in reversing concurrent findings of fact which
were recorded by the District Forum and by the SCDRC to the effect that
the excavator was not being used as a tool of trade, when the accident
occurred; and
ii. In any event, it is apparent from the survey report as well as the findings
of fact which have emerged on the record that the excavator suffered an
accident due to a landslide or the collapsing of the road, to which IMT 47
would not stand attracted.
8 On the other hand, Mr Abhishek Gola, counsel appearing on behalf of the
insurer, submitted that IMT 47 was specifically designed to meet such
contingencies in which event the insurer would not be liable unless an additional
premium was paid. In this context, counsel relied upon the complaint which was
lodged to the police station which specifically adverted to the fact that the soil
under the machine had collapsed resulting in the excavator falling into a deep
ditch. Moreover, the counsel has also adverted to the survey report, according to
which, there was a sudden collapse of the edge of the road side, as a result of
which the machine rolled down about 500 meters.
9 In order to attract the applicability of IMT 47, certain specific conditions have to
be fulfilled. IMT 47 excludes liability:
i. Where the loss or damage has resulted from “overturning arising out of
the operation as a tool of such vehicle or of plant forming part of such
vehicle or attached thereto”;
ii. Unless the loss or damage is directly arising from fire, explosion, self-
ignition, lightning, burglary, house breaking or theft.
10 It is important to note that clause 1 of the insurance policy, which has been
extracted earlier, specifically covers a loss or damage which arises as a
consequence of a landslide. IMT 47 applies to a situation where the loss or
damage has been caused due to ‘overturning’ arising out of the operation as a
tool of such vehicle or of plant forming part of such vehicle or forming a part
thereto. In other words, for the provisions of IMT 47 to be applied, it is essential
to establish that the loss or damage was caused due to overturning and that the
overturning should arise out of the operation as a tool of such vehicle. The
NCDRC was persuaded to adopt the view of the insurer that an excavator could
be used either as a tool of trade or as a vehicle and, in the present case, since it
was being used for the purpose of road construction, it was not being used as a
vehicle. However, the line of reasoning of the NCDRC clearly missed the point
that in the present case the accident was caused as a result of a portion of the
road having given way. The accident was in the nature of a landslide, as a result
of which the vehicle fell into a deep ditch occasioning the death of the operator
and the helper and a total loss of the machine.
11 The situation, in the present case, therefore, did not involve loss or damage due
to the overturning of the vehicle. Consequently, even if, for the sake of
argument, the submission of the insurer that the vehicle was being used as a
tool were to be accepted, it is impossible to subscribe to the findings of fact of
the NCDRC. The damage or loss was not as a result of the overturning of the
vehicle, but was plainly due to the collapsing of the road, which resulted in the
vehicle falling into a deep ditch in a hilly terrain of the State of Uttarakhand.
12 Counsel appearing on behalf of the appellant submitted that NCDRC could not
have reappreciated the facts in its revisional jurisdiction of NCDRC under Section
21(b) of the Consumer Protection Act 1986. In a judgment of a three judge
Bench in Lourdes Society Snehanjali Girls Hostel v H&R Johnson (India)
Ltd,6 this Court held that the NCDRC should not have interfered with the
concurrent findings of fact in the judgments impugned before it, particularly
having regard to the nature of jurisdiction conferred upon it by Section 21 of the
Consumer Protection Act 1986:
“17. The National Commission has to exercise the
jurisdiction vested in it only if the State
Commission or the District Forum has either failed
to exercise their jurisdiction or exercised when
the same was not vested in them or exceeded
their jurisdiction by acting illegally or with
material irregularity. In the instant case, the
National Commission has certainly exceeded its
jurisdiction by setting aside the concurrent finding
of fact recorded in the order passed by the State
Commission which is based upon valid and cogent
reasons. […]”
The limited ambit of the revisional jurisdiction of the NCDRC has been reiterated
in subsequent decisions of this Court, most recently in Sunil Kumar Maity v
State Bank of India.7
6 (2016) 8 SCC 286 7 Civil Appeal 432 of 2022 (Arising out of SLP(C) 21711 of 2019
13 Having regard to the above findings, the judgment of the NCDRC is
unsustainable. We accordingly allow the appeal for the reasons set out above
and set aside the impugned judgment and order of the NCDRC dated 12 July
2019 in Revision Petition No 3306 of 2014. In consequence, the judgment of the
SCDRC in First Appeal No 201 of 2011 dated 1 May 2014, which directed the
insurer to pay a sum of Rs 13.50 lakhs to the appellant, together with interest at
the rate of seven per cent from the date of the filing of the consumer complaint,
shall stand restored.
14 Pending application, if any, stands disposed of.
[Dr Dhananjaya Y Chandrachud]
[A S Bopanna] New Delhi; July 25, 2022 -S-