Per Shri P.N. Kashalkar, Hon’ble Presiding Judicial Member
1. This is a consumer complaint filed by Prime Health Care Products against IFFCO-TOKIO General Insurance Co. Ltd. According to the complainant, it is a partnership firm having its office at Mumbai and factory at Daman. Complainants are manufacturers of toothpaste, hair care products, body wash, hand wash, creams etc. for Hindustan Unilever Ltd. They are carrying out the manufacturing activities in their premises at Survey No.168, Plot No.198to207, Dabhel, Nani Daman. They had hired a building on rental basis on Plot No.22 for use as godown for storage of packaging materials. The opponent is the Insurance Company carrying out business of general insurance. Opponent issued insurance policy known as “Industry Protector Policy” bearing No.47104803 for the period 14/03/2008 to 13/03/2009. The complainant paid `4,90,833/- for said policy and under the said policy their plant and machinery, building, furniture, fixtures, fittings and stocks were covered to the tune of `31.80 Crores under the head “Fire & Allied Perils”. The stocks and goods were insured for a sum of `10 Crores. The location covered under the policy were Survey No.168, Plot Nos.198to207, Dabhel, Nani Daman, Plot No.22, Dabhel Industrial Co-op. Society Ltd. Dabhel, Nani Daman (Affected Location) and 2/2, 2/3, 1/3/4 constructed at Plot No.2, Diamond Industrial Estate, Dabhel, Daman. The complainant pleaded that they had lodged insurance claim bearing No.47007445 after their goods were heavily damaged on the night intervening 30/06/2008 and 01/07/2008 in their premises at Daman. Because of heavy rains their stocks of raw materials, packaging materials stored on 2nd floor were damaged. There was accumulation of water in their store and it was noticed that water had accumulated on the terrace due to heavy rains and same entered into the storage area. The complainants’ persons at the premises tried to save the stocks from damage. However, much of the material was damaged due to unprecedented heavy rains. The packaging materials, mainly in the form of bottles, cartons, sachets, laminated pouches, etc. and some of the materials packed in corrugated boxes were also affected. The complainants by their letter dated 02/07/2008 lodged their claim and requested the opponent to appoint a Surveyor for assessment of loss. Copy of said letter is annexed and marked as Exhibit-C to the complaint. Preliminary survey was done by the Surveyor Mr.Samir Desai from Vapi. The Surveyor estimated the initial loss at `34,99,615/- and submitted a final claim. Surveyor M/s.Mehta Padamsey Pvt. Ltd. was appointed by the opponent and complainants provided the documents as required by the Surveyor. Surveyor by their letter dated 12/09/2008 asked for certain more documents. They opined that the damage as shown by the complainants was not due to flood as peril covered under the policy. Surveyors were of the view that no insured peril had operated and there was no liability under the policy issued by the opponent. The complainants told the Surveyors that they are not agreeable with their opinion and cause of loss was inundation. The complainants pleaded that so many correspondence was exchanged between them and Surveyor assessed the net loss at `24,15,441/- under the caption remarks in the report. But, they are of the view that the damage was solely due to water seeping through the terrace slabs and unprotected openings on the second floor and such damage could not be construed as the damage by flood as a peril insured under the policy. The complainants pleaded that the goods were damaged because of inundation and they could not maintain the building because it was rented building and the building belonged to the landlord. So, they were not negligent in not taking due care of the premises as was alleged by the opponent and its Surveyors. The complainants pleaded that instead of settling the claim, opponent vide their letter dated 20/01/2009 informed the complainants that loss had taken place due to seepage of rain water and due to improper maintenance of premises and opponent invoked general condition relating to the responsibility of the insured to take reasonable care of the property and to prevent from any damage to it. According to the complainants, opponent wrongly disowned their liability to pay genuine claim of the complainants. According to the complainants stocks were kept on the second floor of the building, the rented premises and they used said premises for more than two years and there had been no loss or damage during said period of two years. They pleaded that the loss was due to heavy rains, not anticipated by the complainants and there was inundation and thus, their loss falls within the ambit of the “Industry Protector Policy” purchased from the opponent and as per Survey Report, their loss was to the extent of `34,99,615/-. They therefore pleaded that opponent unnecessarily repudiated their claim on one or other grounds. They were guilty of negligence to avoid fulfilling its obligation under the policy. They therefore claimed an amount of `34,99,615/- from the opponent with interest @ 18% p.a. They also claimed punitive damages of `2 Lakhs and `1 Lakh as damages for mental agony, suffering besides cost of the proceeding.
2. Opponent filed written version and pleaded that the claim lodged by the complainants is beyond the purview of insurance policy and therefore, it was not payable. Opponent further pleaded that the alleged loss has been admittedly caused by seepage of rain water through terrace slabs into the second floor due to poor waterproofing and also ingress of water from terrace to second floor through grills of the said staircase and not due to any ‘flood’ or ‘inundation’ within the meaning of relevant policy. It pleaded that admittedly the alleged loss had taken place due to improper maintenance of the premises where the goods were stored. This was on account of the failure of the complainants to take due care to prevent alleged loss. They further pleaded that the policy was obtained by the complainants-Company for ‘commercial purpose’ and therefore, the consumer complaint cannot lie. Opponent further pleaded that admittedly, rain water caused the alleged damage and it was not by flood or inundation. Opponent denied that accumulation of water in their stores as alleged. Admittedly, such storage was located on second floor below the open terrace of the building that was ill-maintained and the water had entered through the staircase. Since, storage area was located at second floor, there was no question of any flood or inundation causing the damage. Opponent denied that any water accumulated in the complainants’ premises affected their packaging materials and other items as alleged by the complainants. Mr.Samir Desai had conducted preliminary survey, who submitted his report on 24/07/2008. He noted that drainage system was chocked and there was no water accumulation marks on the wall. The water had seeped through the ceiling and was dripping on packaging items when the Surveyor had visited the premises. The Surveyor also opined and concluded that the cause of loss was on account of seepage of rain water from the ceiling of the storage area. The opponent/Insurance Company pleaded that the Surveyor had requested the complainants to furnish documents and information as per their letter dated 22/07/2008. The final Surveyor M/s.Mehta & Padamsey Pvt. Ltd. clearly observed that there was no door on the staircase opening to terrace and there was no grill on the wall along with staircase which had allowed the water on the staircase. The Surveyor was of the view that no insured peril had operated and therefore, there was no liability under the relevant policy. The Surveyor clearly noted that the alleged loss was caused on account of seepage of water through the terrace slabs and unprotected staircase and without prejudice assessment of loss was made at `24,15,441/-. The opponent/Insurance Company further pleaded that under the policy, insured premises is required to be maintained in good condition which has been grossly neglected by the complainants and complainants were shifting burden on the landlord of the building. The opponent/Insurance Company pleaded that it was the duty of the complainants to take due care of the property in rainy season, especially considering the poor condition of the terrace above the complainants’ storage premises. The complainants should have got repaired said premises on their own and should have adjusted the expenses towards rent payable to the landlord. So, the complainants were negligent in not taking due care of the insured property. Hence, the complainants were not entitled to claim indemnity of the alleged loss. The opponent/Insurance Company further pleaded that the complainants committed breach of policy in not taking due care of the premises wherein the complainants had kept their stocks, packaging materials, etc. and for their negligence, loss had occurred which could not be covered under the policy issued to them by the opponent/Insurance Company. This was clearly told to the complainants by their letter dated 20/01/2009 and by their another letter dated 02/06/2009 by the opponent/Insurance Company. According to the opponent/Insurance Company, claim of the complainants is not payable since the alleged loss was direct result of carelessness on the part of the complainants/Company. Opponent/Insurance Company denied that “tornado” means a “great downpour” or the “flood” means an outpouring of water as alleged. The opponent/Insurance Company denied that the complainants/Company can hold it responsible for the loss when the complainants/Company had stored the goods in unsafe and not properly maintained premises. The opponent denied that it is liable for the alleged deficiency in services and prayed that complaint be dismissed.
3. We heard Mr.A.S. Vidyarthi, Advocate for the complainants and Mr.S.R. Singh, Advocate for the opponent/Insurance Company. Both of them have filed written brief notes of arguments. We perused the same.
4. The following points arise for our consideration and our findings thereon are as under :-
Points Findings
1. Whether complainants prove that its insured Yes
goods were damaged by heavy rains that lashed
out at the Daman damaging substantially the
stocks and packaging materials kept in the
insured premises?
2. Whether repudiation made by the opponent/ No
Insurance Company was proper?
3. What order? Complaint is partly
allowed.
REASONING
5. It is not in dispute that the complainants/Company had taken insurance cover from the opponent for its premises at Daman. It is also not in dispute that said premises was rented premises and in the said premises on second floor, stocks and packaging materials, etc. was kept and stored by the complainants/Company. It is not in dispute that there were heavy rains on 30/06/2008 & 01/07/2008 and due to heavy rains, the packaging material and stocks in trade and some finished products kept in the premises was damaged. At the time of survey, the Surveyor found that there was seepage of water from roof of said premises and the Surveyor was also found that from the staircase and from the windows, the water had entered into the said premises and because of heavy rains, there was considerable damage to the stocks of the complainants/Company. The Surveyor had in his survey report assessed loss to the extent of `24,15,441/-, but the claim was repudiated by the Insurance Company by sending letter dated 26/12/2008. In the said letter the Insurance Company admitted that on 30/06/2008 there was heavy rain in Daman and surrounding areas which continued till 01/07/2008. The water had accumulated in the premises as a result of which stocks of packaging materials and raw materials were damaged. However, the Insurance Company reported that as per the inquiry made by both the Surveyors, it was noticed that there was no accumulation of water in the area surrounding the building or nearby vicinity. In the repudiation letter, the Insurance Company further informed the complainants that the rain water had accumulated on the terrace of the building and the water had seeped through the ceiling due to poor condition of waterproofing over the terrace. The leakage and seepage was visible even during the visit of the Surveyors. The rain water had seeped into the premises through the windows opening from terrace to the staircase as no door was installed. The windows were without glass panes as a result of which the rain water escaped into the premises. Hence, they were repudiating the claim.
6. In this complaint, we are required to decide whether the repudiation was proper? In our view, when the Surveyor assessed the loss of the complainants to the extent of `24,15,441/-, repudiation of the claim of the complainants was simply on the flimsy grounds. The insurance cover was available to the complainants/Company for its premises in question at Daman in respect of peril arising from the flood or inundation. Inundation is an accumulation of water due to heavy rains or inundation can be on account of outpouring of rain on the premises. Inundation is occasioned by heavy rains. Flood is also occasioned by heavy rains, but flood presupposes that there is overflow of water of stream, water canal, river and other water reservoirs because of heavy rains. Heavy down pouring or heavy rains renders water flow into the normal boundary of the river, stream, etc. and therefore, flooding takes place and it ultimately result in water entering into the adjoining areas and causing extensive damage to the properties situated on either side of the river, stream, etc. This is called flooding, but in our view, inundation of the premises can take place due to heavy rains or heavy downpour and it can be because of variety of reasons like seepage of water, percolation of water from gaps or cracks even in the roof or tiles of the premises. Inundation of premises can also take place because of open staircase. But all this happens because of entry of water not on account of flood, but on account of outpouring and heavy rains by seepage, percolation, etc. Every damage caused by the heavy rains either by percolation or seepage of water or by flooding must be held to be within the ambit of the policy issued to cover the peril of flood and inundation. Flood has got typical meaning, but inundation can be in various forms as a result of heavy downpour or lashing of heavy rains to any city or premises.
7. In this case, inundation on the second floor of the premises occurred because of heavy rains on 30/06/2008 and 01/07/2008. Admittedly, considerable damage was caused to the stocks in trade and packaging materials stored in the premises by the complainants/Company, which has been certified by the Surveyors appointed by the Insurance Company. It appears that the Insurance Company repudiated the claim only on the ground that the property was situated on second floor in which the stocks in trade, finished products and packaging materials belonging to the complainants/Company was kept and it was also found that it had been damaged during the seepage of water, since, there was cracks or gaps in the terrace slabs and there was unprotected opening on the second floor. It was contention of the Insurance Company/opponent herein that the inundation of any premises must be accompanied by flood. If there is no flood in the premises or adjoining premises, there cannot be inundation and in such contingencies, loss occasioned to the party would not be falling under the peril of flood and inundation for which the complainants/Company had admittedly taken insurance policy as asserted by Counsel for the opponent Mr.S.R. Singh while arguing before us. He drew our attention to the survey report and empathetically submitted before us that the insurance cover given to the complainants/Company to the premises in question was for flood and inundation. So, there should be flood initially and then only there can be inundation of the premises and relying on the survey report, he submitted before us that there was no flood marks any where on the second floor premises where the stocks of the complainants was kept and therefore, he submitted that damage to the complainants’ property was beyond the ambit of the insurance cover given to the complainants under the head “flood and inundation”.
8. On the other hand, Counsel for the complainants Mr.A.S. Vidyarthi vehemently submitted before us that the policy in question is inclusive of damage caused by the flood or damage caused by inundation i.e. accumulation of water by any other means. He submitted that the building in which the complainants/Company had kept its goods was totally inundated; and Surveyor certified that his Company has suffered loss to the extent of `24,15,441/-, when this is so, hyper technical view should not be taken to deny a rightful claim of the complainants.
9. We are finding that seepage of water, percolation of water through the roof or through the cracks found in the roof of the building must be held to be covering phrase “flood and inundation” which is a peril admittedly covered under the insurance risk undertaken by the opponent/Insurance Company. What is pertinent to note is the fact that this was a rented premises of the complainants and heavy rains are not usual phenomenon so far as Daman is concerned. This was unprecedented rains which lashed out Daman on 30/06/2008 and continued till 01/07/2008. Nobody expected that there would be such a massive rain in Daman on those two days and this massive rain caused considerable damage to the complainants’ property, which was having insurance cover. Inundation of property due to heavy rains must be held to be within the ambit of flood and inundation of the peril covered or secured under the insurance policy purchased by the complainants/Company from the opponent herein. We cannot take a hyper technical view by emphasizing word “flood and inundation”. Said phrase must be given wider meaning so as to encompass into its amplitude, the accumulation of water due to heavy rains because of seepage on account of heavy rains through the ceiling or through the terrace. Many a times, even in normal condition terrace may tend to percolate rain water if there are heavy rains on any particular day or particular period. So, goods are damaged considerably because of seepage of water owing to heavy rains. Said goods must be held to have been damaged due to heavy rains and such accumulation of water in the premises as was found in the complainants’ premises must be held to be covered under the phrase “flood and inundation”.
10. Advocate Mr.Vidyarthi relied upon a judgement of the National Consumer Commission delivered in the case of Bajaj Allianz General Insurance Company Ltd. V/s. Gondamal Hardyal Mal, reported in 2009 CPJ 165 (NC), to buttress his contention that even the rain water entering into the godown through holes would amount to inundating or wetting stocks in the godown and as such it would be covered under the peril styled as “flood and inundation” for which the complainants admittedly had taken cover for its premises at Daman. The National Commission relying on the Oxford Concise Dictionary, interpreted that, “flood would also means an outpouring of water” and gave finding that when the goods are damaged because of outpouring of water coming into the godown through holes, they are liable to be compensated under the insurance cover taken by any person under the head “flood and inundation”.
11. In our case, water had accumulated or outpoured in the premises of the complainants on second floor through cracks found on the terrace slabs. It was on account of heavy rains that lashed out the Daman on 30/06/2008 and 01/07/2008. Rain water entered into the premises with considerable force causing damage to the complainants' goods to the extent of `24,15,441/-. Such outpouring of the rain water would certainly be covered under the phrase “flood and inundation” as has been held by the Hon’ble National Commission in the case mentioned supra. Therefore, in our view, the Insurance Company was guilty of deficiency in service in not honouring the claim of the complainant/Company and in sending repudiation letter dated 26/12/2008. We are finding that said repudiation was improper and that the Insurance Company has taken very hyper technical view to negative the claim rightly lodged by the complainant/Company.
12. The Insurance Company also placed reliance on the policy condition to argue that there was no proper maintenance of the building including terrace, terrace door by the insured and therefore, they were not liable. However, due care of the premises has to be taken not by the insured, but by the landlord of the insured because the insured had taken premises on rent. The insured did not know that there would be heavy rains of unprecedented scale on last day of June and first day of July 2008. So, it was unforeseen and unprecedented circumstances for which the Insurance Company cannot be allowed to take benefit to deny the rightful claim of the complainants/Company. Duty to take care of the premises is of the landlord and not of the complainants/Company who was simply tenant occupying second floor of the building. In the circumstances, we are of the view that the Insurance Company was surely guilty of deficiency in services in repudiating the claim of the complainants/Company on flimsy grounds and there is no merit in the defence raised by the Insurance Company in this complaint. We are finding that the complainants/Company suffered loss to the extent of `24,15,441/- as assessed by the Surveyor. Said loss occasioned to the complainants/Company only on account heavy downpour and because of percolation and seepage of water from the roof. Their goods worth lakhs of rupees got damaged because of inundation of water owing to heavy rains and therefore, the Insurance Company ought to have allowed the claim to the extent Surveyor assessed the loss occasioned to the complainants/Company. In the circumstances, we are finding that the complaint as filed by the complainants/Company is having merit and will have to be allowed to give some reliefs to the complainants/Company in terms of survey report. Hence, we pass the following order :-
-: ORDER :-
1. Complaint is partly allowed.
2. Opponent/Insurance Company is directed to pay a sum of `24,15,441/- to the complainants/Company with interest @ 6% p.a. from the date of repudiation till actual payment.
3. Complainants/Company is entitled to get `20,000/- towards cost of the proceeding.
4. Copies of the order be furnished to the parties.
Pronounced
Dated 16th August 2011.
