From insurance claim to contract arbitration, here are the key court orders

A weekly selection of key court orders

Flood includes rainfall for insurance claim

Damage to property because of heavy rainfall is included in the definition of ‘flood’ and ‘inundation’ in the general insurance policy, the Supreme Court has ruled, rejecting the argument of Oriental Insurance that it was outside the scope of the policy. Loss because of heavy or extraordinary rain is not insured, the company argued. The case arose when heavy rainfall led to the flooding of coal stock held by J K Cement Works in Nimbahera. The claim was rejected on the tricky argument over the meaning of flood and inundation. The insurer lost all the way, from district consumer forum to the National Consumer Commission. Rejecting the arguments of the insurer, the court pointed out that there was no doubt that heavy rainfall had occurred in the area, causing flood-­like conditions that resulted in the coal kept on the premises being washed off. Moreover, the surveyor’s report also stated there was an accumulation of water because of the heavy rainfall and that had resulted in the coal being washed off.  The court directed Oriental to pay Rs 58.89 lakh as damages, with 9 per cent interest.

  

Delay in reporting theft to insurer condoned

Settling differences between two judges on the question of consequences of delay in informing theft of a vehicle to the insurance company, the Supreme Court has ruled that such delay by itself would not be a ground to reject the claim. In this case, Gurshinder Singh vs Shriram General Insurance, the person whose tractor was stolen had lodged a complaint with police but the vehicle could not be traced. He filed a claim before the insurer but it was rejected on the ground of delay of 52 days. The consumer forum and the National Commission rejected the claim on the same ground. But the Supreme Court reversed their rulings and stated that “when an insured has lodged the FIR immediately after the theft and when the police after investigation have lodged a final report that the vehicle was not traced and when the surveyors/investigators appointed by the company have found the claim of the theft to be genuine, mere delay in intimating the insurance company cannot be a ground to deny the claim of the insured.”

Petro firms lose plea to buy leased land

The Supreme Court has dismissed the appeals of three government-owned petroleum companies which wanted the court to direct their landlords to sell the leasehold land to them. The companies had constructed petrol pumps and given them to their dealers long ago, even before nationalisation, under dealership agreements. The companies were not in actual possession of the land given to their dealers. There was no time limit mentioned in the lease deed. The companies now wanted the court to fix the price for the land and sell the plots to them. The three companies, Bharat Petroleum Corporation, Indian Oil Corporation, and Hindustan Petroleum Corporation invoked the Madras City Tenants’ Protection Act to claim the right. The Madras High Court had earlier dismissed their plea as the companies were not in actual possession of the land, yet given the plots to their dealers. The Supreme Court upheld that view.

Gift vouchers come with strings

Gifts offered by corporates come with strings, it was evident in the judgment of the Supreme Court in Today Merchandise vs Anil Kumar. The company advertised holiday vouchers on its website which would enable buyers to get gifts like laptops, cell phones and LED TV sets. But there was a condition: The gift would be contingent on the number of referrals the buyer makes. This buyer bought three vouchers and claimed gifts on them. The company rejected the claim as he did not refer it to anyone. The buyer moved the consu­mer forum and succeeded in convincing it that he suffered mental torture because of his disappointment.  The com­pany’s appeal against the order of compensation failed in the appellate forum. But on the last appeal, the company succ­eeded in overturning all the orders against it. The Supreme Court stated that the buyer was not entitled to the gifts by merely buying vouchers, without fulfilling other conditions.

Govt loses CWG contract arbitration

The Delhi High Court has dismissed for the second time the appeal of the ministry of youth affairs challenging an arbitral award against it in its dispute with a consortium, Gl Litmus Events. The disputes go back to the contracts in the Commonwealth Games held in New Delhi around 10 years ago. The consortium had complained about non-payment of dues and the matter was decided against the government. It challenged parts of it last September and lost in most of them. Now it again lost on other parts when the high court rejected its arguments. The government had argued that under the contract, it was absolved from paying compensation and interest. The court repelled the contention and stated that the tribunal had found that the company “was illegally deprived of the amounts rightfully payable to it on an appreciation of the evidence placed on record". The court also pointed out that its role in appeals against awards was limited. A court reviewing an arbitral award under the Arbitration Act does not sit in appeal over the award, it quoted the Supreme Court. If the view taken by the arbitrator is possible, no interference is called for.

Direct sellers on e-platform sue each other

A division Bench of the Delhi High Court has lifted the injunction passed against one set of direct sellers against another, all top companies. Earlier, a single judge Bench had imposed the restriction on one group, which claimed to be direct selling entities in terms of the Model Framework for Guidelines on Direct Selling on e-commerce platforms. Three appeals were by Amazon Seller Services against Amway India, Oriflame India, and Modicare. Two of the appeals were by Cloudtail India against Amway and Oriflame, respectively. The sixth appeal was Snapdeal's against Amway. An illustration of the cause of the internecine legal battle was that Amways’  products were being sold on various online portals or mobile apps and wholesale and retail shops illegally at unwarranted discou­nts, resulting in a decline in the sales of the Amway's direct sellers. The further allegation was that such unauthorised sellers were removing the unique code imprinted on Amway products to avoid the distributor channel from being tracked. The single judge found that there was a breach of contract. The division Bench asserted that there was no prima facie case against the opposite parties.