The Supreme Court last week dismissed the appeal of Oriental Insurance Company against the order of the National Consumer Commission asking it to pay the full insured amount of Rs 21 lakh for the loss of a vessel owned by Ozma Shipping Company. When the ship sank off Kerala coast and the Ozma sought the insured amount, the insurance company argued before the national commission that though it had accepted the figure of Rs 21 lakh following its surveyor’s report, the ship had depreciated after the policy was taken. The national commission did not accept this plea. The insurance company appealed to the Supreme Court, which dismissed it with cost. The judgement remarked: “The insurance companies in genuine and bonafide claims should not adopt the attitude of avoiding payments on one protest or the other. This attitude puts a serious question mark on their credibility and trustworthiness. This tendency of approaching the Supreme Court in every such case also needs to be curbed.”
‘Liability of the guarantor is equal to that of main borrower’
The Supreme Court has set aside the order of the Calcutta high court and reiterated that the liability of the guarantor to repay a debt is equal to that of the main borrower. In this case, Industrial Investment Bank of India Ltd vs Biswanath Jhunjhunwala, the bank had granted loans to Modern Malleables Ltd on the guarantee of a director. When the firm failed to repay the dues, it invoked the personal guarantee of the director. He challenged it in the high court. It stayed the action against the director. The bank then moved the Supreme Court which emphasised, citing earlier judgements, that the guarantor would be equally liable as that of the company to repay the amounts due.
‘Auction purchaser is consumer’
The Supreme Court has upheld the compensation awarded by the National Consumer Commission to a person who bought a truck in an auction, but was deprived of its use because the documents were delivered to him after six years. In this case, Madan Kumar vs Dist Magistrate, Sultanpur, the highest bid was accepted, but for some unexplained reason he was not given the relevant papers to enable him to use the vehicle. He moved the commission which awarded compensation to him. In the appeal before the Supreme Court, it was argued that the auction purchaser was not a ‘consumer’ as he was running the truck in the course of business. The court rejected this argument and emphasised that since he was running the truck for his own benefit, he was a consumer according to the definition of consumer in the Consumer Protection Act.
‘Insurer can accept or reject report of surveyor’
More From This Section
The Supreme Court has held in the case Sri Venkateswara Syndicate vs Oriental Insurance Company that an insurer has the option to accept or not to accept the report of the surveyor. In this case, Jai Bharat Traders Cotton Ginning Mills was insured, but in an accidental fire much of the stock in its godown were destroyed. It claimed Rs 1.90 crore under the insurance contract. The insurance company appointed a surveyor whose finding was not acceptable to it. Then it appointed a few other firms also to assess the cost. Ultimately it accepted the assessment of a chartered accountant, which was much less. This was challenged in the consumer commission which accepted the insurer’s estimate of Rs 1 crore. On appeal, the Supreme Court stated that under the Insurance Act, the assistance of a surveyor should be taken but the insurer was not bound to accept his opinion. The insurer can depute another surveyor and accept the latter view. The court would interfere only if the rejection of the survey report is arbitrary or malafide.
SC to hear Novartis case today
The Supreme Court will on Monday hear Swiss drug maker Novartis AG's plea against denial of patent for its blood cancer drug Glivec (Imatinib mesylate) in its beta crystal form. The matter will come up for hearing by a Bench headed by Justice Markandaya Katju. The Intellectual Property Appellate Board had in July rejected the company's appeal against a Chennai patent office's decision citing Sections 3(d) and 3(b) of Indian patent law. Section 3(d) of patent law restricts patents for already known drugs unless the new claims are superior in terms of efficacy and Section 3(b) restricts patents for products that are against public interest and do not demonstrate enhanced efficacy over existing products.
Notice to shipowners body on levy of service tax
The Centre has moved the Supreme Court challenging the Bombay High Court ruling that restrained it from levying service tax from Indian National Ship-owners Association for services received abroad between March 2002 and April 2006. The High Court had held that services received by vessels and ships outside India prior to April 18, 2006 from persons who are not residents of India or are outside India cannot be taxed. A bench headed by Justice S H Kapadia has issued notice to the Indian National Shipowners Association, Central Board of excise and Customs and others on the levy of service tax.