1.      The present Revision Petitions No.2057-2058 of 2016 have been filed under Section 21(1)(b) of the Consumer Protection Act, 1986 (‘the Act’) by the Petitioner against impugned orders dated 21.03.2016 passed by the State Consumer Disputes Redressal Commission, UP, Lucknow (the ‘State Commission’) in FA No. 985/2011 and FA No. 786/2012 respectively wherein the State Commission dismissed the Appeal No.985/2011 and partly allowed the Appeal No.786/2012. In turn, the District Consumer Disputes Redressal Forum, Ferozabad (‘District Forum’) vide order dated 07.04.2011 partly allowed the Complaint.

2.      As per office report, there is 10 days delay in filing the Revision Petition. For reasons stated in IA No. 6359/2016, the same is condoned.

3.      For convenience, the parties involved in this matter are referred to as mentioned in the Complaint before the District Forum. "K.P. Singh & Sons Cold Storage Pvt. Ltd." is recognized as the Complainant. "The National Insurance Co. Ltd,” is denoted as the Opposite Party.

4.      Brief facts of the case, as per the Complainant, are that the Complainant obtained Standard Fire and Special Perils Policy No.461703/11/07/6/310000006 from the Opposite Party (OP) valid from 01.04.2007 to 31.03.2008 for Sum Insured Rs.90,00,000/- for the Building and Rs.31,77,400/- towards the Plant/Machinery and Accessories and paid net premium of Rs.24,335/-. When the potatoes of Chamber No.1 of the cold storage were being taken out, it was found that all the pillars of Chamber No.1 had collapsed due to which the Complainant suffered loss of about Rs.14 Lakh. Intimation was given to the OP. A claim was filed with OP. however, vide letter dated 30.05.2008 the claim was repudiated on the ground that Peril/cause of loss not covered in the policy. The Complainant filed a Complaint before the District Forum.

5.      In reply before the District Forum, the OP contended that the policy issued to the Complainant does not cover the loss due to defective construction. Also the loss was exaggerated to Rs.14 Lakh, while the loss assessed by the Surveyor is only Rs.4,80,658/-. As per the report of the surveyor and the own statement of the Complainant the breaking/collapse of RCC Column of the cold storage between footing beam and floor beam was due to defective construction, not covered under the Insurance Policy. There was no deficiency in service in repudiating the claim and the Complaint be dismissed.

6.      The learned District Forum vide order dated 07.04.2011 partly allowed the complaint with the following directions:

“The complaint of the complainant is partially allowed against the Opp. Party insurance company. The complainant is awarded by way of compensation a sum of Rs.10,00,000/- (Rupees Ten Lacs) from the Opp. Party. The Opp. Party insurance company is directed to pay to the complainant the above said amount within two months from the date of this order. The complainant is also entitled to a sum of Rs.1,500/- towards cost of litigation. If the Opp. Party fails to pay the above insurance amount to the complainant within the stipulated time, then it will pay the above said amount of Rs.10,00,000/- along with interest @ 8% per annum from the date of order till the date of realization.”

(Extracted from translated copy)

7.      Being aggrieved, Appeal No.985 of 2011 was filed by the OP and Complainant filed Appeal No.786/2012. The State Commission, vide order dated 21.03.2016, passed the following order:

“Appeal No.985/2011 is dismissed and by partly allowing Appeal No.786/2012 the insurance company is directed to pay to the complainant a sum of Rs.12,00,000/- along with interest @9% p.a. within two months.  The interest would be calculated from the date of filing of the complaint till realization.

The insurance company is also directed that in case the order is not complied within two months then the interest would be payable @ 10%.

Parties will bear their own costs of the Appeal.”

(Extracted from translated copy)

8.      Hence, the present Revision Petition by the Insurer.

9.      In his arguments, the learned Counsel for Petitioner/OP reiterated the grounds in the reply and asserted that the language of the Standard Fire and Special Perils Policy is clear and needs to be adhered. The Complainant's claim for damage to the building due to movement/disturbance in the earth is not covered under the policy. They failed to usher reasonable evidence that damage of building due to movement/disturbance in the earth is covered under the perils listed. The case law relied upon are inapplicable. The claim is not covered in the insurance policy and thus no claim is payable.

10.    On the other hand, the learned Counsel for the Complainant/ Respondent reiterated the issues raised in the Complaint and the affidavit of evidence filed before State Commission and reply to the Revision Petition. He argued that the main question at hand is ‘whether the damage of building due to movement/disturbance in the earth 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 also argued in favour of the concurrent finding of both the Fora below.  He relied on Mrs. Rubi (Chandra) Dutta Vs. M/s. United India Insurance Co. Ltd., 2011 (3) Scale 654;

11.    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.

12.    The main issue in question is ‘whether the damage to building due to movement/disturbance in the earth is covered under the Policy in question? In this regard, the relevant portions of “WHAT WE COVER” under Section 1 Clause VIII of the Policy are as follows:-

“Subsidence and Landslide including Rock slide Loss, destruction or damage directly caused by Subsidence of part 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 alteration or repair of any property or groundwork or excavations.”

13.    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.

14.    It is an admitted position that the Complainant suffered damage to the insured building due to movement/disturbance in the earth. 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 movement/ disturbance in the earth. Clearly, damages on account of natural conditions such as soil strength, weather conditions etc, if any, ought to have been foreseen and the Complainant has duty to take reasonable steps to secure the structure. Further, the damage occasioned due to reasons such as defective design, poor workmanship, use of defective material etc are not covered under the policy. It is the role and responsibility of the insured to take reasonable steps in this regard to ensure requisite structural integrity. Neither reasonable care that was taken nor efforts that were made to prevent such damage occasioned to a specific portion due to which the pillars of Chamber No.1 of the building had collapsed have been brought on record. If the said damage was due to any natural peril listed in the policy in question, the scope and span of damage would have been different and not limited to a small portion of the building.

15.    It is in common knowledge that various types of insurance products are available in the market for providing insurance cover on life, health, buildings, properties, stocks, motor vehicles, personal/ professional risks, trees, furniture, goods, precious metals etc. 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 contract of insurance.

16.    Examination of the Standard Fire and Special Perils Policy in question reveals that the damage to building due to movement/ disturbance in the earth is not under the named perils of the Policy. 17.      In is an established legal position that the terms of an insurance contract agreed between the parties are to be appreciated and interpreted as stated in the thereat. 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:

“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.”

18.    In Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, decided on 06.02.2020 Hon’ble Supreme Court has held:

“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...”

19.    The insurance policy in question does not stipulate cover for the said peril. The Complainants have not even asserted any specific peril listed in the policy, which covers the damage due to movement/ disturbance in the earth. While the damage occasioned to the building in question, the same is not due to any stated peril in the policy and evidently due to natural conditions, defective structural design, poor workmanship, use of defective material etc, which are not covered under the policy. The terms and conditions of an Insurance Policy requires strict interpretation. The Insured also had duty to take reasonable steps to safeguard the property insured. Thus, the Complainants, who are the owners of the insured premises ought to have been aware of the design, quality, usage and its impact on the pillars of the premises.

20.    The damage to the structure was inspected and assessed by SK Aggarwal & Company Ltd who submitted a report on 03.03.2008. The report reveals that a detailed inspection of the premises was held and the damage occasioned was to limited portion of the structure and it was as a result of structural failure due to RCC failure of the pillar. Such damage is not covered under insurance policy in question. Therefore, the insurer has no liability for such loss. Thus, there is no deficiency in service on the part of the Petitioner Insurer in repudiating the claim.

21.    In view of the foregoing discussions, Revision Petitions No. 2057-2058 of 2016 are allowed. Consequently, the order of the learned State Commission dated 21.03.2016 and the order dated 07.04.2011 of the District Forum are set aside.

22.    There shall be no order as to costs.

23.    All pending Applications, if any, stand disposed of accordingly.