UNITED INDIA INSURANCE CO. LTD.versusM/S KIRAN COMBERS & SPINNERS

A                       UNITED INDIA INSURANCE CO. LTD.
                                            v.
                         MIS KIRAN COMBERS & SPINNERS

                                  DECEMBER 8, 2006

B                      (G.P. MATHURANDA.K. MATHUR,JJ.]


           Consumer Protection Act, 1986-Compensation claim-Liability· of
     Insurer-Fire policy covering risk offlood in respect of building-Damage to
     the building by floods-Repudiation of claim of insured by insurer on the
C    ground that building collapsed due to structural defect caused by subsidence
     not covered by the policy-Justification of-Held: There was no exclusion
     clause for subsidence in the policy-Subsidence was covered in the policy-
     Insurer certified the building to be offirst class construction-Cause ofdamage
     to the building was flood water, thus insurer liable to compensate.
D        Respondent company took a fire policy covering risk of flood for its
   building, machinery and stock for a year from the appellant-insurance
   company. Extensive damage was caused to the building of the respondent
   by floods. Respondent raised a claim for the loss sustained. Surveyor
   appointed by appellant assessed the loss as half of what was claimed by
E the respondent. However, he re:commended that as the building collapsed
   on account of structural defect caused by subsidence. which was not .taken
  ·by insured and as such insurer was not responsible. The appellant
   repudiated the claim; Respondent filed a petition claiming damages.
   National Commission decreed the claim of the complainant as assessed by
   the surveyor. Hence the present appeal.
F
           Dismissing the appeal, the Court
           HELD: 1.1. Subsidence means "the gradual caving in or sinking of an
     area of land". On account of the water flooding into the premises of the
     claimant-respondent's factory from a Mill, the land ca.ved in as a result of
G    which one column of the building collapsed. Clause 8 of the Exclusions in the
     Policy deals with exclusions; if any loss is occasioned on account of these
     events then policy shall not cover such loss. Clause 8(b) only talks of typhoon,
     storm, cyclone, tempest, hurricane, tornado, flood and inundation. Clause 8
     would clearly show that there is no exclusion clause for subsidence. It cannot
     be understood from where the surveyor has brought the expression
II                                        402
UNITED INDIA INSURANCE CO. LTD. v. KlRAN COMBERS & SPINNERS [A.K. MATHUR, J.J 403

"subsidence" although clause 8 which specifically talks about exclusions,           A
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, the submission that the policy has not covered subsidence cannot
be sustained. On the basis of this ground the repudiation of the claim of the
claimant by the appellant does not appear to be justified.                          B
                                                          (406-B-D; 407-A-C)

       1.2. It cannot be said that the building collapsed on account of poor
construction of column no. 3 of the building. 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         C
the construction is of poor quality. In the instant ease, 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, because of defective structure i.e.
column no. 3, the building has collapsed. So called defect was aggravated
on account of flooding of the water in the premises of the factory, if the          D
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 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. Hence, the view taken by             E
the National Consumer Disputes Redressal Commission is correct and is
fully justified and there is no ground to interfere with the order. (407-C-H]

     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9128of2003.

     From the final Judgment and Order dated 18-7-2003 of the National              F
Consumer Disputes Redressal Commission, New Delhi in Original Petittion
No. 74 of 1994.

     Vishnu Mehra and B.K. Satija for the Appellant.

     S.K. Dholakia and Sumita Hazarika for the Respondent.
                                                                                    G
     The Judgment of the Court was delivered by

       A.K. MA THUR, 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.
                                                                                    H
    404                    SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R.

A         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
B   (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 lackhs and Furniture/Fixtures Rs. I lakh) effective from
     l l.l .1993 to IO. l.l 994. This policy also endorsed to cover risk of flood. On
    account of heavy rains and flo()ds in the city, insured property was affected
C   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
D   Surveyor; Mis Mita Marine and General Survey Agencies Pvt. Ltd. also
    visited the premises and submitted its detailed report on 14th September, 1993.
    Mis Mita Marine assessed the loss of Rs. I 0, 13,571.90. However, at the same
    time Mis Mita Marine surveyor recommended that the insurer carries no
    responsibility in this case as building collapsed on account of stmctural
E   defect caused by subsidence which was not covered by policy. A legal
    notice was issued by the claimant on 4.12.1993 and cla'im was repudiated on
    7. l.l 994 by the Company, basing on the report of the second surveyor i.e.,
    Mis 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
F   as aforesaid.

          The claim wa5 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. I of building,
    the subsidence is a specific extension to the above policy which was not
G   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 No. 1 which may have happened
            due to its own structural failure or due to its sinking/tilting causing
H
    UNITED INDIA INSURANCE CO.LTD. v. KIRAN COMBERS & SPINNERS (A.K. MATHUR, J.J 405

            it to become eccentrically loaded and hence falling in tension. The         A
            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      B
            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
                                                                                        c
    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.
                                                                                        D
          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       E
    to justify that since the policy had notcovered 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           F
    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       G
    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.
                                                                                        H
    406                     SUPREME COURT REPORTS [2006] SUPP. IO S.C.R.

A          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,
B   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
C   Kohinoor Woollen Mills, the land caved in as a result of which one column
    of the building collapsed. The question is whether subsidence was 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 :
D
               " 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.
E
               (b) Typhoon, storm, cyclone, tempest, Hurricane, Tornado, Flood
            and Inundation.

               (c) War, invasion, act of foreign enemy, hostilities or warlike
            operations (whether war be declared or not), Civil War.·
F               (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.
G
               ·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."

H         A perusal of the aforesaid clause would clearly show that there is no
UNITED INDIA INSURANCE CO. LTD. v. KIRAN COMBERS & SPINNERS [A.K. MATHUR, J.] 40 7

exclusion clause for subsidence. Clause S(b) only talks of typhoon, storm,           A
cyclone, tempest, hurricane, tornado, flood and inunda~ion. 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          B
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          C
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       D
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         E
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            F
defect was aggravated on account of flooding of the water in the premises 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        G
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.

N.J.                                                        Appeal dismissed.
                                                                                     H