1.       The dispute in this petition is regarding a claim raised by the complainant under a Standard Fire and Special Perils Insurance Policy (material damage) acquired by the complainant from the petitioner United India Insurance Company Limited for indemnifying the loss of a double storey constructed house in Rohtak. The sum insured was Rs.25,00,000/- and the policy duration was from 15^th September, 2009 to the midnight of 14^th September, 2010.

2.       Heavy rains occurred between 10^th August to 15^th August, 2010 as a result whereof the soil beneath the building sank on account of water flooding due to the downpour. The subsidence resulted in consequential cracks throughout the building which also leaned in one direction. Not only the insured building but other buildings in the locality suffered the same damage.

3.       The complainant sought indemnification but the insurance company in spite of getting the loss surveyed and report submitted to that effect, repudiated the claim. Even though the copy of the repudiation letter is not on record but from paragraph-3 of the impugned order it appears that the said letter was filed as exhibit R-2.

4.       Aggrieved by the repudiation, the complainant filed CC No.270 on 19^th April, 2015 and after contest the claim was dismissed on 11^th September, 2015 on the ground that the damage caused was not covered for indemnification under the policy as reported by the surveyor.

5.       Aggrieved, the complainant went up in appeal before the State Commission in FA/1095/2015 that has been allowed on 15^th July, 2016. It may be pointed out that the complaint had been filed by Smt. Anaro Devi, who died during the pendency of the complaint itself and was thereafter represented through her legal representatives. The appeal was filed by the legal representatives that was allowed on 15^th July, 2016 against which the insurance company has come up in this revision petition questioning the correctness of the said order on several grounds. The petition was entertained on 13^th December, 2016 and an interim order was passed, subject to deposit 50% of the amount awarded by the fora below.

6.       Learned counsel for the petitioner Mr. Amit Kumar Singh has urged that the incident is not disputed nor is the allegation of loss but in view of exclusion clause applicable to the policy, the cracks appearing in the building did not amount to any

-3-

loss, destruction or damage and therefore no claim was indemnifiable.  Mr. Singh supports the survey report wherein it has been stated that the building suffered only normal cracks and no part of it had either collapsed or was ruined in a manner so as to claim coverage, hence the survey report does not suffer from any infirmity and the insurance company was justified in repudiating the claim. He contends that a mere normal crack does not qualify for any indemnification and consequently the claim was not admissible.

7.       Responding to the submissions, Mr. Shukla for the complainant-respondent urged that findings of fact have been recorded by the State Commission which cannot be interfered with in the exercise of revisional jurisdiction of this Commission. He has relied on the judgments of the Apex Court in Rubi (Chandra) Dutta Vs. United India Insurance Company Ltd. (2011) 11 SCC 269 and the decision the case of Momna Gauri vs. Regional Manager, Scooter India Ltd. & Ors. (2014) 13 SCC 307.

8.       Other orders of this Commission have also been relied on to urge that even the evidence on record including the surveyor’s report runs counter to the argument advanced inasmuch the surveyor’s report in its conclusion is incoherent as against its own observations of the construction being first class. The surveyor records that small to heavy cracks have developed in almost all rooms of the insured house. Mr. Shukla submits that once observations of the surveyor are to that effect, then there was no occasion for him to redefine the subsidence clause to infer that unless there is a total collapse of the building or of the construction in any way, then only a claim would be indemnifiable. It is urged that this conclusion drawn is erroneous and contrary to the terms & conditions of the contract of insurance.

9.       We have heard learned counsel for the parties and we find that the terms of the policy are clear. Policy condition No.VI reads as follows: -

“Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Innundation: Loss, destriction or damage directly caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood or Inundation excluding those resulting from earthquake, volcanic eruption or other, convulsions of nature. (Whenever earthquake cover is given as an “add on cover” the words “excluding those resulting from earthquake volcanic eruption or other convulsions of nature” shall stand deleted.”

This is followed by condition No.VIII, which is extracted herein under: -

“Subsidence and Landside including Rock slide: Loss, destruction or damage directly caused by subsidence of soil of the site on which the property stands or land slide/rock slide excluding:

1. The normal cracking, settlement or bedding down of new structures
2. The settlement or movement of made up ground
3. Coastal or river erosion
4. Defective design or workmanship or use of defective materials
5. Demolition, construction, structural alterations or repair of any property or ground works or excavations.”

10.     The surveyor’s report dated 13.10.2010 is essential for consideration and the same is extracted herein under: -

“Ref. No.UIIC-DO/FST/RKJ/10-11/115                       Date. 13.10.2010

To

          The Divisional Manager

          United India Insurance Co. Ltd.

          Rohtak D.O.

SURVEY AND ASSESSMENT REPORT-DUE TO HEAVY RAIN-WITHOUT PREJUDICE AND PREVILEGED.

Dear Sir,

                   Claim No.     :       

                   Policy No.     :        Standard Fire & Special Perils Policy No.

                                                111200/11/09/00000277.

                   A/C              :        Smt. Anaro Devi W/o Late Sh. Mahabir

                                                Prasad Sharma, 233/9, Kaysthan Mohalla,

                                                Rohtak.

Date of Occurrence    :        Due to heavy rain between 10.08.2010 to 15.08.2010.

                  _______________________________________________________________

          In thankful reference to instructions Dtd. 18.08.2010, to survey and to assess the captioned loss, I have concluded my findings after my visit on 18.08.2010 and now submit this report for your consideration please.

1. COMPLIANCE

Date of Instructions          :        18.08.2010

Survey held on                 :        18.08.2010

2. UNDERWRITERS

United India Insurance Co. Ltd., Rohtak D.O.

Insureds                               :        Smt. Anaro Devi W/o Late Sh. Mahabir

                                                     Prasad Sharma, 233/9, Kaysthan

                                                     Mohalla, Rohtak.

Policy No.                                       :        Standard Fire & Special Perils Policy No.

                                                     111200/11/09/11/00000277

Validity                                 :        15.09.2009 to 14.09.2010

Type of Policy                       :        Standard Fire & Special Perils Policy.

Risk Covered/Coverage          :        Total sum insured available is as

Rs.25,00,000/- as under:

Earthquake risk included.

DATE & TIME OF LOSS:                        Due to heavy rains between 10.08.2010 To 15.08.2010

          _________________________________________________________________

-6-

c) INSUREDS, TRADING ACTIVITY AND PREMISES

The said Residential Building of Smt. Anaro Devi W/O Late Sh. Mahabir Parshad Sharma, 233/9, Kaysthan Mohalla, Rohtak was built new & completed in August 2009. The House is situated on a Plot area of size 142 sq, yds. & had been built on complete area i.e. having covered area also of 142 sq. yds.

The House is built of Ist Class Construction where Walls are set in Cement Sand Mortor having Cement Plaster, where Roofs are of RCC & Floors are of RCC &/or Marble Stone.

d) HISTORY OF FIRE

Date & Time  :           Due to heavy rain between 10.08.2010 to 15.08.2010.

As reported by the Insured's Son Mr. Sharma that it start raining cats & dogs in Rohtak Town since morning of 10.08.2010 & it continued raining every now and then till 15.08.2010, where cracks in the walls of his house developed due to the said heavy rains. On my further enquiry, it was informed that there was no accumulation of water due to Inundation in their Kaysthan Mohalla & also the area was not flooded due to the said heavy rains.

Under the circumstances, undersigned minutely inspected the cause of the said cracks & it was observed that these have developed/occurred, may be due to subsidence as the Front portion of the said house leaning towards its Front Street thus rendering the house slightly leaned/inclined towards at its front portion thus resulting in cracks in the walls of almost all the rooms of the house. Further it was reported that all the houses in their street are slightly subsidizing for unknown reason may be due to subsidence of the earth below in this particular area

          Insurers may please note that while on inspection, it was observed that all the houses in Insureds street are inclining/leaning towards each other & this fact is evident from the photographs arranged by me where it is evident that the top portion of these houses opposite each other in the Insureds street are quite inclined towards each other. Also from the photographs it can be observed that the Insureds house at its first corner had been duly supported by a heavy burnt brick pillar, which the Insured had constructed a month back to support their house from further leaning.

e) CAUSE

The Insured had explained in his intimation Dtd. 16.08.2010 that there is loss in his house due to heavy rains.

Though Rohtak Town had been lashed with heavy rain in the second week of August but Kaysthan Mohalla situated on a very higher site as compared to Rohtak Town, there is at all not any possibility of accumulation of rain water due to inundation & accordingly the cause as stated by the Insured in his intimation is not acceptable. Further after my inspection as explained above, it seems that the cracks in the house have appeared, may be due to subsidence  of  the  earth  below & since the risk of "SUBSIDENCE" only find coverage under the Policy Terms & Conditions when the Building &/or a part of it collapse & thus the risk of "SUBSIDENCE" as explained is also not acceptable under Terms & Conditions of the Policy.

1. NATURE AND EXTENT OF DAMAGES & MY VERIFICATION

During my said visit on 18.08.2010 i.e. about a week later of the said occurrence as stated by the Insured Representative, I observed the following damages to the Residential Building of the Insured, while on inspection:-

• Small to heavy cracks were observed to have developed in almost all the rooms of the said residential house of the Insured.

g) ASSESSMENT OF LOSS

After having visual inspection, undersigned discussed details of the loss with the Insured's Son Mr. Sharma & now report as under:

• Insurers may please note that the Insured in his intimation has stated that the loss in the Building have occurred due to heavy rains, which lashed the Rohtak Town & as stated above under head "Cause" that since Kaysthan Mohalla in Rohtak is situated at a very higher site as compared to Rohtak Town, there is no possibility of accumulation of rain water due to inundation and accordingly the loss is not acceptable.

During my inspection & as per discussions with the Insured's Son Mr. Sharma, it was stated by him that the damages to their residence seems to have occurred as the earth below their house may have subsidized due to recent rains. Also he explained that all the houses in their street are slightly subsidizing/leaning.

Insurers may please note that while on inspection almost all the houses in Insureds street were observed slightly leaning towards the street which in my opinion may be occurring due to subsidence of earth below these houses.

Since the risk of "SUBSIDENCE" under Standard Fire & Special Perils Policy covers the loss to be Building if it &/or part of it collapse & since the Insureds Residential House since had slightly leaned towards its front portion resulting in developing of cracks here and there in the Building, where it is still lying standing intact, accordingly as per terms & conditions of the Policy, the sald risk does not find coverage.

Thus as per explanations, made as above, Insurers are requested to close the file as "NO CLAIM".

This report is issued without prejudice.Sd/

(R.K. Jain)

SURVEYOR & LOSS ASSESOR.”

11.     Coming to the terms & conditions in the policy, clause VI states about the loss, destruction or damage directly caused by flood or inundation. Clause VIII covers loss, destruction or damage directly caused by subsidence of soil of the site on which the property stands excluding normal cracking, settlement or bedding down of new structure. It also excludes loss caused due to defective design or use of defective materials or workmanship. There are other exclusions with which we are not concerned.

12.     The word “loss” means ruin or destruction or the condition of being lost. It is a deprivation of some enjoyment or possession. It entails diminution or disadvantage involved due to deprivation arising out of change of conditions. In the instant case, the observation of the surveyor and the stand of the insurance company is that there was no collapse or destruction or damage to that extent so as to qualify the incident for subsidence claim. It has been urged by the learned counsel for the insurance company that there were normal cracks which has also been mentioned by the surveyor in his report. The cracks were therefore not substantial or of the nature that could qualify as a loss. Mr. Singh urged that the cracks were normal and the surveyor has described it as “here and there with the building leaning towards its front portion.” The building lay intact and it was therefore inferred that in the absence of any collapse the loss was not indemnifiable.

13.     Analysing it stepwise, we find that the construction has been described as a first class construction in clause (c) of the survey report already extracted herein above. The loss is due to heavy rains as indicated in clause (c). Clause (f) of the survey  report  is  more  explicit  with  the observations stating that small to heavy cracks were observed to have developed in almost all rooms of the residential house. The surveyor moves to assess the loss and then its concluding part has recorded that since the subsidence had not resulted in a collapse and since the cracks were here and there, the building remains intact and hence the claim is not indemnifiable. This conclusion has been supported by the insurance company in its affidavit and has been further buttressed during the arguments by the learned counsel for the petitioner Mr. Amit Kumar Singh.

14.     The argument on behalf of the petitioner-Insurance Company is not tenable for the reason that the policy categorically allows the claim of subsidence with an exclusion of damage only due to normal cracking, settlement of soil and bedding down of new structures. In the instant case, cracks have occurred in all the rooms and not only in the same building but other buildings in the row. The sinking of the land appears to be the cause of the cracks which the surveyor himself has described as “small to heavy cracks” as quoted above. In such circumstances, the damage or the loss is not simple or peripheral. It is extensive and appears to be dangerous as the constructions have leaned. Subsidence is clearly covered under the insurance policy  and  so  is  flooding.  There is no evidence led by the insurance company to detract from the findings recorded by the fora below of the heavy rains and the consequential subsidence as observed by the surveyor. The insurance company has declined to grant the reimbursement only on the ground that there was no collapse of the building.

15.     The words “loss”, “damage” or “destruction” nowhere have been coupled with the word “collapse.” A collapse is an incidence or outcome that is also a loss. But all losses and damages need not necessarily be a complete collapse or destruction. The only exclusion in the policy is a normal crack and the other symptoms mentioned therein. Thus, the surveyor has read into the policy a word which otherwise has not been mentioned. The terms of the policy cannot be altered by an interpretation contrary to its intent and purpose unless there is a scope of contra proferentem to be read in favour of the insured. The policy does not reflect complete collapse or destruction and rather indicates that the claim would be excluded only if there are just normal cracks or settlement of the soil. In the instant case, the cracks are not normal cracks or mere cracks in the plaster or otherwise. The surveyor has himself observed by referring to the cracks from “small to heavy” as indicated above. Consequently, the conclusion drawn by the surveyor is contrary to the correct position and therefore it is held that the damage has been suffered and is covered under the policy. The impugned order passed by the State Commission therefore cannot be faulted with. The District Commission had failed to appreciate the facts in correct perspective and had arrived at an incorrect conclusion. The order of the District Commission has not appreciated the law correctly in applying the decisions which have been cited at the bar and have been mentioned in the order of the State Commission. To the contrary, the claim deserves to be allowed that was erroneously rejected by the District Commission.

16.     The State Commission therefore, in our opinion, has rightly reversed the order of the District Commission and has appropriately compensated the complainant with Rs.5,00,000/- as repair for the damaged house.  

17.     The surveyor had not carried out any assessment of loss which is the fault of the surveyor nor had the insurance company contested the same. Nonetheless, the argument of the learned counsel for the petitioner that the award of a lumpsum of Rs.5,00,000/- is not in conformity with law is an incorrect argument, inasmuch as, in our opinion, given the nature of the damage in a house of 142 sq. yards, the compensation awarded seems to be just, adequate and fair. We see no reason much less any other reason to interfere with the impugned order of the State Commission which is upheld. The revision petition has no merit and is accordingly dismissed.