Full Judgment Text
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CASE NO.:
Appeal (civil) 9128 of 2003
PETITIONER:
United India Insurance Co. Ltd. .. Appellant
RESPONDENT:
M/s Kiran Combers & Spinners .. Respondent
DATE OF JUDGMENT: 08/12/2006
BENCH:
G.P. MATHUR & A.K. MATHUR
JUDGMENT:
J U D G M E N T
A.K.MATHUR, J.
This appeal is directed against the order passed by the National
Consumer Disputes Redressal Commission, New Delhi in Original
Petition No. 74/1994 on 18.7.2003.
Brief facts giving rise to this appeal are:
The respondent/complainant M/s Kiran Combers & Spinners
filed its complaint alleging deficiency in service on the part of
United India Insurance Company. The case of the
complainant/respondent was that they got their building and stock
insured from the United India Insurance Company (hereinafter to
be referred to as ’the Company’). The respondent- complainant
held a valid Fire Policy for its stock ( Building Rs. 25 lakhs,
Machinery Rs. 40 lakhs, stocks Rs. 25 lacks and Furniture/Fixtures Rs.
1 lakh) effective from 11.1.1993 to 10.1.1994. This policy also
endorsed to cover risk of flood. On account of heavy rains and
floods in the city, insured property was affected by floods on 24th
July, 1993 at about 7.45 P.M. which caused damage to building,
machinery and stocks. This incident was reported to the Company
on 25th July, 1993 and an FIR was lodged on 27th July, 1993. The
respondent-claimant claimed Rs.20,03,842/- in July, 1993 from the
Company. Surveyor, namely, M/s Vij Engineer’s Enterprise
appointed by the Company carried out its preliminary survey and
submitted a report on 29th July, 1993. Second Surveyor; M/s Mita
Marine and General Survey Agencies Pvt. Ltd. also visited the
premises and submitted its detailed report on 14th September,
1993. M/s Mita Marine assessed the loss of Rs.10,13,571.90.
However, at the same time M/s Mita Marine surveyor recommended
that the insurer carries no responsibility in this case as building
collapsed on account of structural defect caused by subsidence
which was not covered by policy. A legal notice was issued by the
claimant on 4.12.1993 and claim was repudiated on 7.1.1994 by the
Company, basing on the report of the second surveyor i.e., M/s Mita
Marine. Aggrieved against the repudiation of the claim of the
respondent-claimant, an Original Petition No. 74/1994 was filed in
the National Consumer Disputes Redressal Commission, New Delhi
claiming the damages as aforesaid.
The claim was contested by the Company; appellant
herein on the basis of the report given by the Surveyor and their
plea was that the loss and damage caused to building due to
structural defect in column No. 1 of building, the subsidence is a
specific extension to the above policy which was not insured by the
company. The relevant extract of Surveyor’s report reads as under:
"As brought out in the body of the report, this loss
and damage has happened due to failure of column
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No. 1 which may have happened due to its own
structural failure or due to its sinking/tilting causing
it to become eccentrically loaded and hence falling
in tension. The insured are covered under the Std.
FP ’C’ with flood endst. Subsidence is a specific
extension to the above policy, which has not been
taken by the insured. As such, we regret to say
that either of the original cause of failure do not
conform to the existing cover. In view of the
above, we find that the insurers carry no liability in
the above case. We understand that the insured
had been asking the insurers permission for repairs.
We, during our visits had informed the insured that
they would be carrying out the repairs in their
personal capacity and that the insurers were in no
way involved in the same since the liability was not
admitted."
The report was rebutted by the respondent-complainant by
filing rejoinder. The National Commission after hearing the parties
came to the conclusion that the repudiation of the claim by the
Company is not warranted and they decreed the claim of the
complainant to the extend of Rs. 10,13,571.90 as recommended by
the second surveyor.
Aggrieved against the order passed by the NCDRC, New Delhi
on 18th July, 2003, the present appeal has been filed by the
Company.
Learned counsel for the appellant submitted that it is true that
this is a fire policy and the appellant also covered the perils of flood
but the policy did not cover subsidence. Therefore, learned counsel
for the appellant tried to justify that since the policy had not covered
subsidence and as pointed out by the surveyor the respondent is
not entitled to be compensated. Learned counsel for the appellant
also submitted that as pointed out by the surveyor that the third
column over which the building was constructed was not properly
constructed and therefore, on account of tilting of that column the
whole building collapsed and as such the company was not entitled
to compensate the claimant- respondent because of the structural
defect. As against this, learned counsel for the respondent submitted
that the Company has certified the building to be of first class
construction and no defect was pointed out by the company, and it is
on account of the flood water entering from the side of Kohinoor
Woollen Mills, the building collapsed. It was submitted that in fact
the collapse of the building was on account of entering of flood water
from the side of Kohinoor Woollen Mills and not on account of flood
water coming from the road. It was also pointed out that there is no
provision for covering subsidence in the policy and therefore, the
National Commission has rightly decreed the claim of the claimant-
respondent.
We have considered the rival submissions of the parties.
It is an admitted position that the claimant was covered from
11.1.1993 to 10.1.1994 and the flood took place on 24.7.1993 and
caused extensive damage to the building. It is submitted that as per
the policy, fire policy is covered for flood, storm and tempest on
payment of extra 20 per cent premium i.e. Rs.500/-. Therefore,
there is no dispute that the incident has taken place during the
coverage of the policy and the cause of the damage is flooding of
water into the building. The basic submission which has been
addressed by learned counsel for the appellant was that the company
has not covered subsidence. Subsidence means " the gradual caving
in or sinking of an area of land". But on account of the water flooding
into the premises of the claimant-respondent’s factory from Kohinoor
Woollen Mills, the land caved in as a result of which one column of
the building collapsed. The question is whether subsidence was
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covered in the policy or not. In this connection, a reference may be
made to the terms of the policy. Clause 8 of the policy deals with
exclusions that if any loss is occasioned on account of these events
then policy shall not cover. Clause 8 of the Exclusions in the Policy
reads as under :
" 8. Any loss or damage occasioned by or
through or in consequence directly or indirectly of
any of the following occurrence namely,
(a) Earthquake, volcanic eruption, or other
convulsion of nature.
(b) Typhoon, storm, cyclone, tempest,
Hurricane, Tornado, Flood and Inundation.
) War, invasion, act of foreign enemy,
hostilities or warlike operations (whether war be
declared or not), Civil War.
(d) Mutiny, civil commotion assuming the
proportions of or amounting to a popular rising,
military rising insurrection, rebellion, military or
usurped power.
(d) Burning, whether accidental or
otherwise, forest bush and jungles and the clearing
of lands by fire.
In any action, suit or other proceeding
where the Company alleges that the reason of the
provisions of the above Exclusions any loss or
damage is not covered by this Insurance, the burden
of providing that such loss or damage is covered
shall be upon the insured."
A perusal of the aforesaid clause would clearly show that there
is no exclusion clause for subsidence. Clause 8(b) only talks of
typhoon, storm, cyclone, tempest, hurricane, tornado, flood and
inundation. None of the events mentioned above includes
subsidence. We fail to understand from where the surveyor has
brought the expression "subsidence" although clause 8 which
specifically talks about exclusions, does not mention anything like
subsidence. The policy is covered for flood and inundation for which
the claimant is covered by paying extra premium, therefore, now to
say that the policy has not covered subsidence, which is not a clause
in the present policy cannot be sustained. Therefore, on the basis of
this ground, repudiation of the claim of the claimant by the appellant
does not appear to be justified. Had this been the clause, that if
damage is caused on account of sinking and caving of the building
i.e. subsidence then perhaps this would have come to the rescue of
the company but since in the exclusion clause there is no mention of
subsidence, therefore, this ground taken by the appellant-company
and by the surveyor to defeat the claim, is absolutely unwarranted.
Now, coming to the next question of collapse of the building on
account of poor construction of column no.3 of the building, there
also the submission appears to be not justified. In fact, the Company
has certified that this building has a first class construction. Normally
when the company insures any factory, then their Officers and the
Engineers used to inspect the building to find out whether there is
any defect in the construction or the construction is of poor quality.
In the present case, the company certified that it is a first class
construction, then for some defect which has not been noticed by
the company, no benefit could be given to the company for such
defect. More so, in the present case, as pointed out that because of
defective structure i.e. column No.3, the building has collapsed but
the question is what aggravated or accentuated this, factory is in
place for more than 12 years & it is on account of flood water
entering in factory that has caused this damage. So called defect
was aggravated on account of flooding of the water in the premises
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of the factory, if the flood water had not entered into the factory,
perhaps the construction which stood good for 12 years, would have
lasted long. The cause of the damage to the column No.3 of the
building was flood water. Therefore, the company cannot escape the
liability to compensate the claimant for collapse of the building on
account of floods. As a result of above discussion, we are of opinion
that the view taken by the National Consumer Disputes Redressal
Commission is correct and is fully justified and there is no ground to
interfere with the order. As such, the appeal is dismissed. There
would be no order as to costs.