AVM J. RAJENDRA, AVSM, VSM (RETD.), MEMBER

1.      The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (“the Act”) against the Order dated 31.05.2017 passed by the learned State Consumer Disputes Redressal Commission, Uttarakhand (“the State Commission”), in Consumer Complaint No. 10 of 2014, wherein the Complaint filed by the Complainants (Respondents No.1 & herein) was partly allowed.

2.      As per the Report of the Registry, there is 27 days of delay in filing of the Appeal and was condoned vide order dated 20.11.2018. 

3.      For Convenience, the parties in the present Appeal are referred to as mentioned in the Complaint before the learned State Commission. “Food Court The Company Garden Society & Anr.” is referred as the Respondents No.1&2/Complainants and "Universal Sompo General Insurance Co. Ltd.” is referred to as the Appellant/ Opposite Party No.1 or Insurer in this matter and “Allahabad Bank” is referred to as the Respondent No.3/Opposite Party No.2.

4.      Brief relevant facts of the case as per the Complainants are that the Complainant No. 1 is a Society and Complainant No. 2 Secretary of the Complainant No. 1-Society. The Complainant No. 1 constructed a building at Company Garden, Mussoorie at its own cost of over Rs.1,50,00,000/-. Complainant No. 1 had taken a loan from Allahabad Bank, Mussoorie Branch, Dehradun for meeting part of the expenditure incurred in erection of the building. The OP-2/ Allahabad Bank sanctioned the loan vide letter dated 12.02.2010. As per the terms of sanction, it was mandatory that the entire fixed and moveable assets of the society shall be comprehensively insured for full value under a "comprehensive risk insurance policy" through bank's specified person in joint names with the bank at the borrower’s cost. After the completion of the building, the OP-2 itself got the said building insured from the OP-1, who is a business associate of the PO-2. The OP-1 had insured the said premises of the Complainant for Rs.l,48,50,000/-and the premium was realized from the account of Complainant. The Complainant was informed that the policy was in accordance with the terms specified in the sanction letter of the loan. The first policy, namely, Business Shield Policy, was undertaken by OP-1 for the first time from 14.06.2011 to 13.06.2012. Subsequently, the policy was got renewed by OP-2 for and on behalf of the Complainant and the entire premium was debited to the account of the Complainant and the policy was renewed till 13.06.2014. Unfortunately, there was a heavy rainfall in Mussoorie on 18.01.2014 followed by snowstorm, which resulted in heavy snow fall. As a result of this natural calamity (Act of God) the building of the society was damaged and the Complainant suffered a loss of Rs.17,04,000/-. A claim was accordingly preferred. The intimation of loss was immediately given to both OP-1 & 2 over phone. The OP-1 appointed a surveyor who inspected the premises on or around 27.01.2014. While the Complainants were assured that the claim would be paid by the OP-1, however, they were shocked to receive a letter dated 02.04.2014 from OP-1, repudiating the claim on the ground that the Surveyor observed that due to continuous snowfall, snow accumulated on the tin-shade and weight of the accumulated snow exceeded the load bearing capacity and due to this the roof collapsed. As per the Fire And Allied Perils-Buildings & Contents, snowfall is not a named peril/event and hence, the cause of loss is not covered under the Policy. Being aggrieved, the Complainant filed the Consumer Complaint before the State Commission with the following reliefs:

(a) The Opposite Parties be directed to pay jointly and severally, compensation to the tune of Rs.23,04,430/- to the Complainants for the loss suffered by the Complainants.

(b) The Opposite Parties be directed to pay interest calculated @ 18% per annum to the Complainant on the amount awarded by this Hon'ble Commission.

(c) Full Cost of the proceedings may kindly be granted in favour of the complaints and against the Opposite Parties.

(d) Any other relief to which the Complainants are found to be entitled under the facts and circumstances be awarded in favour of the Complainants.”

5.      In their reply, OP-1/Universal Sompo General Insurance Co. contended that there no deficiency or negligence in service or any unfair trade practice involved. OP-1 had issued a 'Standard Fire &. Special Perils' Policy No. 2960/51501740/02/000 from 14.06.2013 to 13.06.2014. The policy terms and conditions were duly sent to the insured. The present policy was a renewal of the past two policies, indicating that the Complainant was satisfied with the coverage and the exclusions of the policy. The description of property and sum insured are as under:-

6.      The Building head is further classified in different sections with the respective sum insured:-

7.      The present 'Standard Fire & Special Perils' Policy is a named peril policy, meaning that only the losses arising out of the perils named in the present policy shall be covered and losses occurring out of those perils which are not named in the present policy shall be excluded. On 18.01.2014, there was snow fall in Mussoorie from 6 AM to 3.30 PM. Snow kept on accumulating on the tin shade roof of the Complainant’s premises and it went up to 3 meter height. The weight of the accumulated snow exceeded the tin shade load bearing capacity and it collapsed on first floor along with false ceiling below tin shade around 03:30 PM, for which the complainant filed the present claim. The claim was declined based on the terms of the insurance policy. The Complainant was duly informed that as per the policy, Snowfall is not a named peril / event and, hence the cause of loss was not covered under the purview of the present policy. Therefore, the claim was repudiated in accordance with the terms and conditions of the policy. It is gross negligence on the part of the Complainant as they should have got the roof cleaned/ cleared and not allowed the snow to accumulate, especially when he was aware during the said period the area is prone to snowfall and that the roof is merely a tin shade and will not be able to withstand the weight. Therefore, OP-1 has correctly and on justifiable grounds declined the claim, which is in accordance with laws that govern them. The event of snow fall that took place in Mussoorie was not "snowstorm" as alleged by the Complainant. During that time of the year, it was normal to experience snowfall to the extent experienced on 18.01.2014. The valuation / assessment of loss of Rs.17,04,000/- is baseless, inflated and misconceived. The repudiation vide letter dated 02.04.2014 by OP-1 was on the basis of terms and conditions of the policy. OP-1 had appointed an IRDA recognized Surveyor and Loss Assessor to carry out a detailed survey into the loss, they carefully examined the circumstances of the loss, the documents submitted relating to the claim and the survey report. Clearly, due to continuous snowfall, snow accumulated on the tin shade and the weight of the snow so accumulated exceeded the load bearing capacity and the roof collapsed. As per the policy, snowfall is not a named peril/event and, hence, the cause of loss was not covered under the purview of the present policy. Therefore, the claim was repudiated in accordance with the terms and conditions of the insurance policy. If at all there is any loss, the same was due to their own negligence and inactions. The complaint is liable to be dismissed.

8.      In their reply, OP-2/Allahabad Bank has stated that the Complainant Society constructed a building at in own cost and had taken loan from OP-2. As per the policy, it was mandatory to insure the assets of the Complainant society under comprehensive risk, but it is not mandatory that the insurance should be done through the company, which is being only referred by OP-2. The Complainant was free to get the insurance done through any insurer of choice. To safeguard the interest of OP-2 the policy is hypothecated with OP-2, so that in case of any calamity or loss the bank can recover its loan amount. The Complainant society on its own choice got their assets insured from OP-1. It is admitted that on 18.01.2014 heavy rainfall followed by snowfall took place in Mussoorie and caused partial damage to the said building. The OP-2 has not given any services to the Complainant and the Complainant is not a consumer of OP-2. The Complainant society borrowed loan for commercial purpose from OP-2. They informed the Complainant in its sanction letter dated 12.02.2010 that hypothecation of assets is to be created out of bank finance of all structure and assets at conservatory-cum-temperate green house and kitchen and restaurant in favour of OP-2 and the Complainant was free to choose insurer of choice. After acceptance of the conditions in the sanction letter, the Complainant got the insurance from OP-1.

9.      The learned State Commission vide the Impugned Order dated 31.05.2017 passed the following order:

“Accordingly, consumer complaint is partly allowed against the Opposite party No. 1-Insurance Company. Insurance Company is directed to pay to the complainant a sum of Rs. 11,84,192/- against the amount insured alongwith interest @ 6% per annum from the date of filing the consumer complaint till the date of payment within 30 days from the date of order. The opposite party No. 2-Allahabad Bank is discharged.”

10.    In the Appeal the Appellant Insurance Company has mainly raised the following grounds:

(a)  The cause of loss to the building of the insured was snowfall. When the insured intimated the loss telephonically, the cause of loss was stated as snowfall. Thereafter, when Claim Form was filled the cause was again stated to be snowfall. Nowhere was any mention of storm or snowstorm as cause of loss was stated. The State Commission failed to note the admission of the insured in their own Claim that the cause of loss was snowfall and not storm or snowstorm.

(b) They appointed an independent and IRDA certified Surveyor to assess the loss. The insured reported the cause of loss to the Surveyor also as snowfall. The cause of loss was investigated and concluded to be only snowfall and not storm or snowstorm. The State Commission, instead of relying on the report of the independent Surveyor wrongly went on to interpret the words in favour and for the benefit of the insured/Respondent No.1.

(c)  Only when the claim was repudiated on the ground that snowfall is not a named peril in the Policy, the scope of the event was changed from snowfall to storm to circumvent the terms and conditions of the Policy as storm is a named peril and snowfall is not. This is an afterthought and deserves rejection.

(d) The claim of the insured was recommended for repudiation by the Surveyor and repudiated by the Appellant in accordance with the terms and conditions of the Policy.

(e) The State Commission accepted the insured version claiming storm as 'a violent disturbance of the atmosphere with strong winds and usually rain, thunder, lightning or snow' even when there was no violent disturbance in the atmosphere. The loss was caused because the snow kept on accumulating on the roof shed and due to its weight, the roof collapsed. In a geographical location like that of Mussoorie, snowfall is normal. There were no reports of unprecedented snowfall in the region at that time. There was no storm that occurred in a flash. In fact, snow kept gradually accumulating on the roof shed and when the weight exceeded the capacity of the shed, it collapsed. The view that snowfall is a species of storm is incorrect. Moreover, the Complainant never adduced any evidence to prove any storm or storm like situation that caused the loss.

(f) As per Policy, the insured was obligated to take reasonable care of the Insured premises. But they failed to do so. In area where snowfall is certain, proper steps ought to have been taken for snow to drain out and not keep accumulating on the roof shed and collapse.

(g) The insured cannot claim anything outside the purview of the Policy as was wrongly done in this case. The Hon’ble Supreme Court in Oriental Insurance Co. Ltd. v. Sony Cheriyan, (1999) 6 SCO 451 followed in the matters of National Insurance Co. Ltd v. Swaran Singh & Others, AIR 2004 SC 1531 and United India Insurance Co. Ltd. v. Harchand Rai Chandan La! (2004) 4 CompLJ 443 (SC), Kalyan Singh Chauhan v. National insurance Co. Ltd. through Divisional Manager - III (2014) CPJ 16 (NC), Life insurance Corporation Ltd. v. Kamlesh through Jal Bhagwan-I (2014) CPJ 287 (NC), New India Assurance Company Ltd. v. BIrbal Singh Jhakhar - I (2014) CPJ 597 /a- (NC), National Insurance Company Ltd. v. Abdul Razak-I (2016)CPJ 649(NC), wherein It was held that:

"The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein."

The Hon'ble Supreme Court in Oriental Insurance Co. Ltd. v. Samayanallur Primary Agricultural Coop. Bank, AIR 2000 SC 10, followed in the matters of Polymat India P. Ltd. and Anr. V. National Insurance Co. Ltd. and Ors. AIR 2005 SC 286; United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644 and Hasmukhrai Chandrakant v. The Oriental Fire and General Insurance Co. Ltd. I (2006) ACC 169. held that:

"The insurance policy was to be construed haying reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it."

(h)  The claim for Rs. 11,84,192/- did not fall under the Policy and so the Insured was not liable to be compensated. Even for the sake of argument, though not admitted, if it is considered that the loss fell under the purview of the Policy, the State Commission ought to have accepted the calculation of loss by the independent and IRDA certified Surveyor. On its own, it has gone on to calculate the amount, which is almost double than the same assessed by the Surveyor, without any justification.

11.    In his arguments, the learned Counsel for Appellant reiterated the grounds advanced in the reply and Appeal and asserted that the clear language of the Standard Fire and Special Perils Policy needs to be adhered. The Complainant's claim for damaged to the building due to snowfall is not covered under the policy. They failed to usher reasonable evidence that damage of building due to snowfall was covered under listed perils of the insurance policy. The cases law relied upon by them are devoid of any merit. The claim is not covered in the insurance policy and thus no claim is payable. He relied upon the following judgments in support of his arguments:

a. Oriental Insurance Co. Ltd. Vs. Sony Cheriyan (1999) 6SCC 451.

b. United India Insurance Co. Ltd. V. Harchand Rai Chandan Lal (2004) 8 SCC 644.

c. Vikram Greentech (I) Ltd. & Anr. V. New India Assurance Co. Ltd. (2009) 5 SCC 599.

d. Sri Venkateswara Syndicate V. Oriental Insurance Co. Ltd. & Anr. (2010) 10 SCC 567.

e. Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd. & Anr. (2010) 10 SCC 567.

f. Oriental Insurance Co. Ltd. V. Ishwar Singh 2015 SCC Online NCDRC 1707.

g. Oriental Insurance Co. Ltd. V. Pawan Enterprises 2015 SCC Online NCDRC 3263.

h. IC Sharma V. Oriental Insurance Co Ltd (2018) 2 SCC 76.

12.    On the other hand, the learned Counsel for the Respondents No.1 &2/Complainants reiterated the issues raised in the Complaint and the affidavit of evidence filed before the State Commission. He argued that the main question at hand is ‘whether the damage of building due to snowfall was covered under the policy’. He argued that Hon’ble Supreme Court clarified the principles of interpreting exclusion clauses in insurance contracts and the burden of proof lies on the Insurer to demonstrate that the claim falls under an exclusion clause. He relied upon the following judgments:-

a. United India Insurance Co. Ltd. V. Pushpalaya Printers, MANU/SC/0164/2004 Para 6.

b. Sri Senthil Andavar Industries V. Tamil Nadu Industrial Investment and Anr., MANU/CF/0465/2006, Para 20.

c. Sharp Ferro Alloys Ltd. v. United India Insurance Co. Ltd., 2023 SCC OnLine NCDRC 240, Para 16,17,19,20&21.

d. Flowtex Products V. United India Insurance Company Limited, 2023 SCC OnLine NCDRC 119, Para 15.

e. SS Cold Storage India Pvt. Ltd. V. National Insurance Company Ltd, 2023 SCC OnLine SC 944, Para 15,31,33,34.

f. United India Insurance V. Virender, 2011 SCC Online NCDRC 231, Para 4 & 5.

g. New India Assurance V. Punjab State, 2015 SCC OnLine NCDRC 1089, Para 5 & 6.

h. M/s. Shivram Chandra Jagarnath Cold Storage V. National Insurance Company & Ors. v. National Insurance Company & Ors., 2015 SCC OnLine NCDRC 27.

i. The Branch Manager, Iffco Tokio General Insurance Co. Ltd. v. Sri Purnachandra Rao, FA No.A/483/2008, Paras 11.         

13.    We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels of both the parties.

14.    The main issue in question in the case is ‘whether the damage of building due to snowfall is covered under the Business Shield Policy in question’? In this regard, the relevant portions of “WHAT WE COVER” under Section 1 of Insurance Policy are as follows:-

“Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation.”

15.    In catena of judgements, the nature of insurance contracts, scope, and restraint to be exercised in interpreting the terms of the contracts are well discussed and crystallized by this Commission and Hon’ble Supreme Court. In Civil Appeal No. 4769 of 2022 in of National Insurance Co Ltd Vs The Chief Electoral Officer & Ors, the Hon’ble Supreme Court has held as follows:

27. The insurance contracts are in the nature of special class of contracts having distinctive features such as utmost good faith, insurable interest, indemnity subrogation, contribution and proximate cause which are common to all types of insurances. Each class of insurance also has individual features of its own. The law governing insurance contracts is thus to be studied in three parts, namely, (1) general characteristics of insurance contracts, as contracts; (2) special characteristics of insurance contracts, as contracts of insurance, and (3) individual characteristics of each class of insurance.

28.  Now turning to some of the judicial pronouncements, wherein it has been opined that the words used in a contract of insurance must be given paramount importance and it is not open for the Court to add, delete or substitute any words (Suraj Mal Ram Niwas Oil Mills (P) Ltd. vs. United India Insurance Co. Ltd.). Insurance contracts are in the nature where exceptions cannot be made on ground of equity and the Courts ought not to interfere with the terms of an insurance agreement (Export Credit Guarantee Corporation of India Limited vs. Garg Sons International).

29.      This Court in Vikram Greentech India Ltd. v. New India Assurance Co. Ltd. reiterated that the insured cannot claim anything more than what is covered by the insurance policy. The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely. The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly.

30. In several other judgements, this court has held that the insurance contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon.

16.    It is an admitted position that the Complainant suffered damage of building due to snowfall. There is no stipulated peril listed in the policy providing cover for such damage. The Complainants have not even referred to any specific peril listed in the policy, covering the damage due to snowfall. Such damage due to weather is reasonably foreseeable by those in the insured premises in the hill station and ought to have taken reasonable steps to protect the insured premises. Further, the damage occasioned in a graduated manner over a period of time on 18.01.2014 and it was reasonably feasible to prevent the snow accumulation with some efforts. Neither the reasonable care that was taken or efforts that were made to prevent such graduated accumulation of snow and damage to the tin shed, which could be normally foreseen, were brought on record.  

17.    It is in common knowledge that various types of insurance products are in the market for providing insurance cover on life, health, buildings, properties, motor vehicles, personal/professional risks, trees, furniture, goods, stocks, precious metals etc. It is in common knowledge that each of these insurance products have their specific scope of cover, duration, terms and conditions as well as inherent safety/ security precautions the insured is liable to ensure so as to be entitled for the claim within the scope of the insurance contract.

18.    Examination of the Business Shield Policy in question reveals that the damage to building due to snowfall is not under the named perils of the Policy. As regards the sacrosanct nature of the terms and conditions of a contract the Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd,. (2010) 10 SCC 567, decided on 08.10.2010 held that:

“26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavor of the court should always be to interpret the words in which the contract is expressed by the parties.”

19.    The Hon’ble Supreme Court reiterated the mandate of strict interpretation of the Insurance Clauses in the case of Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, decided on 06.02.2020, the relevant portion is reproduced below:

“21. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation becomes a commercially sensible interpretation...”

20.    The terms and conditions of the Insurance Policies require the Insured to take all reasonable steps to safeguard the property under insurance. However, in the present case, the Complainants, who are the owner of the insured premises ought to have been aware of the regular feature of snowfall in the area and its impact on the tin roof of the premises. This was foreseeable and they were obliged to take reasonable care of the insured premises. Thus, there is no deficiency of service on the part of the Appellant Insurer.

21.    In view of the foregoing discussions, First Appeal No. 1591 of 2017 is allowed. The order of the learned State Commission dated 31.05.2017 in Complaint No.10 of 2014 is set aside.

22.    All pending Applications, if any, stand disposed of accordingly. 23. The Registry is directed to release the Statutory Deposit amount, if any due, in favour of the Appellant as per law.