JUSTICE V.K.JAIN (ORAL)

          The complainant/respondent in this matter is hotel Shakunt care of Gaurang Gangaprasad Jani. A consumer complaint was instituted by hotel Shakunt through Sh. Gaurang Gangaprasad Jani alleging therein that the complainant is the owner and sole proprietor of hotel Shakunt at H.K. Bhawan, Reid Road, Ahmadabad.  This would mean that the complaint was instituted by Gaurang Gangaprasad Jani claiming to be proprietor of hotel Shakunt.  An insurance policy in the name of hotel Shakunt was issued for the period from 03.03.2007 to 29.093.2008.  The policy  was titled as Machinery Brakedown Policy and had been obtained in respect of a lift installed in the building in which hotel Shakunt was being run.  The hotel building collapsed on 01.02.2008.  A claim under the insurance policy issued by the petitioner company was lodged.  A surveyor was appointed to assess the loss.  The claim, however, was repudiated vide letter dated 19.06.2009 which to the extent it is relevant reads as under:-

This has reference to your above mentioned Fire Claim.

In this regard, we have taken opinion of our Surveyor M/s CP, Mehta. As per his survey report, the building was collapsed because of construction work being processed at that time in the adjoining bldg. which is much deeper than the insured premises. Thus, the foundation work of the Insured premises weakened and collapsed.

Under the circumstances, the claim is not admissible as per policy terms and conditions which please note.

2.      Being aggrieved from the rejection of the claim the respondent approached the concerned District Forum by way of a consumer complaint.  The complaint was resisted by the petitioner company which inter alia stated in its written version that the building was not fit for usage and the complainant having not taken any care or any steps, that resulted in the casualty and, therefore, the insurer was not liable to pay the claim.  It was also the case of the insurer that the foundation of an adjoining building was dug up up to a depth of 20 feet whereas the foundation of the hotel building had been dug up only up to 15 feet and that had resulted in the collapse of the hotel building. 

3.      The District Forum having allowed the consumer complaint the petitioner company approached the concerned State Commission by way of an appeal.  The said appeal also having been dismissed the petitioner is before this Commission. 

4.      It is firstly submitted by the Ld. Counsel for the petitioner that the policy was taken in the name of hotel Shakunt and there was no evidence to prove that Mr. Gaurang Gangaprasad Jani was the proprietor of hotel Shakunt.  He also submitted that the building was owned by Mr. Gangaprasad Jani in whose name the insurance was being taken for many years before the building collapsed.  Mr. Gaurang Gangaprasad Jani claimed to be the proprietor of hotel Shakunt.  This would mean that he claimed to be proprietor of the business which was being run in the name of hotel Shakunt.  No evidence was led by the insurer to rebut the claim of Mr. Gaurang Gangaprasad Jani as regards the ownership of the business of hotel Shakunt.  No other person has come forward claiming to be the owner of the business of hotel Shakunt.  Therefore, I have no hesitation in holding that Mr. Gaurang Gangaprasad Jani was the proprietor of hotel Shakunt.

5.      Coming to the merits of the claim, as noted earlier the policy taken by the complainant was a machinery brakedown policy.  Therefore, the terms and conditions applicable to a standard brakedown insurance policy would apply to the claim.  A reference in this regard can be made to the decision of the Hon’ble Supreme Court in General Assurance Society Ltd.Vs. Chandumull Jain & Anr. (1966), 3 SCR 500 where the respondent had submitted two proposals to the appellant, which were accepted vide two separate letters.  Two interim protection cover notes in respect of the said two proposals were then issued by the insurer.  It was inter-alia stated in the cover notes that the property was insured subject to the terms of the applicant’s proposal and to the usual conditions of the Society’s policies.  The case of the appellant society was that the insurance policy was cancelled by it as per condition No.10 of the said policy.  The suit filed by the insured was dismissed by the trial Court holding that the protection available to the plaintiff was as per the usual terms and subject to the conditions of the policy.  In an appeal, filed by the plaintiff, the Division Bench of the High Court held that as the cover note was only for a month and had ceased to be operative.  Condition No.10 of the insurance policy, which permitted its cancellation, was held not to be applicable.  The Hon’ble Supreme Court felt that the application of Condition No.10 was dependent on how far the terms and conditions could be said to be incorporated in the contract of insurance between the parties.  Dealing with the issue the Hon’ble Supreme Court inter-alia held as under:

          “11.   ……  A cover note is a temporary and limited agreement.  It may be self-contained or it may incorporate by reference the terms and conditions of the future policy.  When the cover note incorporates the policy in this manner, it does not have to recite the term and conditions, but merely to refer to a particular standard policy.  If the proposal is for a standard policy and the cover note refers to it, the assured is taken to have accepted the terms of that policy.  The reference to the policy and its terms and conditions may be expressed in the proposal or the cover note or even in the letter of acceptance including the cover note.  The incorporation of the terms and conditions of the policy may also arise from a combination of references in two or more documents passing between the parties. 

          12.    ……  The policy not only defines the risk and its duration but also lays down the special terms and conditions under which the policy may be enforced on either side.  Even if the letter of acceptance went beyond the cover notes in the mater of duration, the terms and conditions of the proposed policy would govern the case because when a contract of insuring property is complete, it is immaterial whether the policy is actually delivered after the loss and for the same reason the rights of the parties are governed by the policy to be, between acceptance and delivery of the policy.  Even if no terms are specified the terms contained in a policy customarily issued in such cases, would apply.  There is ample authority for the proposition.”

6.      General exception No. 1 of the standard policy reads as under:-

“Loss damage any/or liability caused by or arising from or in consequence directly or indirectly of fire including extinguishment of at fire or clearance of debris and dismantling necessitated thereby smoke, soot aggressive substance. Lighting explosion of any king (other than bursting or disruption of turbines compressors, cylinders of steam engines hydraulic cylinders or fly wheels or other apparatus subject to centrifugal force internal pressure) theft collapse of buildings subsidence, landslide rockslide water which escapes from water containing apparatus, flood, inundation, storm tempest earthquake, volcanic eruption or other Acts of god impact of land borne or water borne or airborne craft or other aerial devices and/or articles crooked there from.”

          It would thus be seen that if the damage to the lift insured by the petitioner company was to happen on account of the collapse of the building, the petitioner would not be liable under the policy issued by it.  The report of the surveyor would show that the building which the lift had been installed for the hotel had collapsed.  Therefore, the loss happened directly due to collapse of the building.  Such a loss would be covered under general exception No.         1 of the policy.  Though the specific clause of the policy has not been quoted in the repudiation letter the pith and substance of the said clause has been quoted and was sufficient to disclose the ground on which the claim was repudiated. 

7.      For the reasons stated hereinabove, I hold that since the loss to the complainant was covered under general exception 1 of the insurance policy the insurer is not liable to reimburse the complainant for the said loss.  The impugned orders, therefore, cannot be sustained and are hereby set aside.  The consumer complaint is, consequently, dismissed with no order as to costs.