SC: Menstrual Health is a Fundamental Right under Article 21; Orders Free Sanitary Pads in Schools  ||  Supreme Court: Industrial Court is the Proper Forum to Decide Issues Relating to Contract Labour  ||  Supreme Court: Only Civil Court of Original Jurisdiction Can Extend Arbitral Tribunal’s Mandate  ||  SC: Demolition of Private Property Must Rest on Clear Statutory Grounds and Due Consideration  ||  SC: After Complaint Was Withdrawn, BCI Disciplinary Committee Could Not Penalise Advocate  ||  MP HC: Decree Holder Cannot Defeat Compromise or Initiate Execution by Refusing Debtor’s Cheque  ||  MP HC: Spouse’s Income Cannot Be Clubbed With Public Servant’s for Disproportionate Assets Case  ||  Ker HC: Bar Association is Not Employer & Cannot Form Internal Complaints Committee under POSH Act  ||  SC: Ex-Contract Workers Must Be Preferred When Employers Replace Contract Labour With Regular Staff  ||  SC: Waqf Tribunals Cannot Hear Claims over Properties Not Listed or Registered under Waqf Act    

Texco Marketing Pvt. Ltd. Vs. Tata Aig Generla Insurance Company Ltd. & Ors. - (Supreme Court) (09 Nov 2022)

When term of a contract is unfair, particularly by adopting an unfair trade practice, the aggrieved party has to be extended the resultant relief

MANU/SC/1466/2022

Consumer

The Appellant secured a Standard Fire and Special Perils policy from the Respondent. The Policy was meant to cover a shop situated in the basement of the building. However, the exclusion clause of the contract specifies that it does not cover the basement. The shop met with a fire accident for which the Appellant raised a claim. The claim made was repudiated by respondent No. 1, taking umbrage under the exclusion clause.

The State Consumer Disputes Redressal Commission rejected the contention of Respondent No. 1 on the premise that there was no adequate disclosure, the mandatory provisions have not been followed, as such the insurer was deficient in service and indulged in unfair trade practice. The fact that a similarly placed shop was also covered, was not in dispute. The amount payable is only after due deduction of the goods meant for the third party. The aforesaid decision was overturned by the National Consumer Disputes Redressal Commission, despite a finding to the effect that Respondent No. 1 was not in compliance of the mandate of the law and inspection was indeed done prior to the execution of the contract, and even thereafter. Having found a deficiency in service, it placed reliance upon the exclusion clause in setting aside the decision of the State Commission while granting a sum of Rs.7.5 lakhs.

Once, the State Commission or the National Commission, as the case may be, comes to the conclusion that the term of a contract is unfair, particularly by adopting an unfair trade practice, the aggrieved party has to be extended the resultant relief. Once it is proved that there is a deficiency in service and that Respondent No. 1 knowingly entered into a contract, notwithstanding the exclusion clause, the consequence would flow out of it. Even as per the common law principle of acquiescence and estoppel, Respondent No. 1 cannot be allowed to take advantage of its own wrong, if any. It is a conscious waiver of the exclusion clause by Respondent No. 1.

The findings of the State Commission are indeed approved by the National Commission. These findings are sufficient enough to come to the conclusion that the terms of the contract are unfair, particularly the exclusion clause, and that Respondent No. 1 has indulged in unfair trade practice. In such view of the matter, the decision of the National Commission cannot be sustained as the appellant cannot be non-suited only on the ground of mere deficiency in service without taking note of the fact that it is the duty of the Forum to grant the consequential relief by exercising the power under Section 14(d) and 14(f) of the Consumer Protection Act, 1986 which mandates the payment of adequate compensation by way of an award. The said provision makes it consequential in granting adequate compensation once it finds deficiency, the existence of unfair terms in the contract and unfair trade practice on the part of the other party. A party is entitled for the relief which the law provides.

Non-compliance of Clauses (3) and (4) of the IRDA Regulation, 2002 preceded by unilateral inclusion, and thereafter followed by the execution of the contract, receiving benefits, and repudiation after knowing that it was entered into for a basement, would certainly be an act of unfair trade practice. This view is fortified by the finding that the exclusion clause is an unfair term, going against the very object of the contract, making it otherwise un-executable from its inception. The order impugned passed by the National Commission stands set aside except to the extent of declining a sum of Rs.2.5 lakhs towards harassment and mental agony. Appeal allowed in part.

Tags : DEFICIENCY   SERVICE   EXCLUSION CLAUSE  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved