STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1   The Oriental Insurance Company Limited, Operating Office, SCO No.10-A, 1st Floor, Sector 7-C, Madhya Marg, Chandigarh. 

2.  The Oriental Insurance Company Limited, A-25/27, Asaf Ali Road, New Delhi –110 002

1 & 2 through Deputy Manager-cum-Authorized Signatory, Regional Office, Oriental Insurance Company Limited, SCO No.109-111, Sector 17-A, Chandigarh.

……Appellants.

V E R S U S

M/s Micromation Pvt. Ltd., E/22, Phase 7, Industrial Area, Mohali, through its authorized signatory Joseph K. C. Manager (Admn. A/cs  and Commerce).

....Respondent

Appeal under Section 15 of the Consumer Protection Act, 1986.

BEFORE:    MR. JUSTICE SHAM SUNDER, PRESIDENT.

                   MRS. NEENA SANDHU, MEMBER.

                   SH.JAGROOP SINGH MAHAL, MEMBER

Argued by:  Sh.Aftab Singh, Advocate proxy for Sh.Ashwani                Talwar, Advocate for the appellants.

              Sh.H.S.Parwana, Advocate for the respondent.

PER JUSTICE SHAM SUNDER, PRESIDENT

1.               This appeal is directed against the order dated 23.05.2011, rendered by the District Consumer Disputes Redressal Forum-II, UT, Chandigarh (hereinafter to be called as the District Forum only), vide which it accepted the complaint and directed the OPs(now appellants) as under:-

“i)    pay an amount of Rs.12,66,160/- i.e. (Rs.13,32,800 –        Rs.66,640/- being 5% of claim amount) to the    complainant        along with interest @10% per annum   from 08.12.2008 (i.e. 3 months after the date of       filing the insurance claim i.e.        08.09.2008) till the       date of actual payment;

ii)    pay an amount of Rs.7,000/- to the complainant as   costs of litigation.

This order be complied with by OPs within 30 days from the date of receipt of its certified copy, failing which OPs shall be liable to pay Rs.12,86,160/- along with interest @18% per annum from 08.12.2008 (i.e. 3 months after the date of filing the insurance claim i.e.08.09.2008), till the date of actual payment besides payment of Rs.7,000/- as costs of litigation”.

2.               The facts, in brief, are that the complainant, took a Standard Fire & E.Q. Special Peril Policy (Material damage), from the OPs, which was valid from 03.07.2008 to 02.07.2009, with a view to indemnify the losses, caused to the building, land retaining wall and fixed assets, belonging to him. In the month of July 2008, due to heavy rains, the retaining boundary wall of the building, belonging to the complainant, was badly damaged. The complainant intimated the OPs, about the said damage, vide letter dated 16.7.2008 (Annexure C-3). On receipt of the said letter, the OPs appointed M/s Protech Engineers & Loss Assessors, to assess the loss. The officials of the said Company, visited the site, in order to assess the loss. Thereafter, they sent an email dated 04.08.2008 (Annexure C-4), requiring the complainant, to submit information, as mentioned therein. The complainant, replied the said email and submitted the entire information, sought by the Surveyor, vide letter dated 08.09.2008 (Annexure C-5). The complainant also submitted the claim to the Company, vide letter dated 20.11.2008 (Annexure C-7), through the Surveyor. However, the said claim was repudiated, by the OPs, vide letter dated 24.11.2008 (Annexure C-8), on the ground, that the loss was due to normal cracking, settlement or bedding down of new structures. It was stated that the repudiation of the claim, was illegal. It was further stated that the aforesaid acts of the OPs, amounted to deficiency, in rendering service, and indulgence into unfair trade practice.

3.               When the grievance of the complainant, was not redressed, left with no other alternative, a Complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed against the OPs claiming Rs.13,32,800/-, alongwith interest @18% per annum, from the date of lodging the claim, till the date of actual payment and costs of litigation of Rs.11,000/-.

4.               In the joint reply filed by the OPs, it was admitted, that the complainant, had taken the Standard Fire & E.Q. Special Peril Policy (Material damage). It was also admitted, that the claim was submitted by the complainant, when the retaining wall of the building, was badly damaged. It was denied that the damage to the retaining wall, was due to heavy rains. It was also admitted, that a Surveyor was appointed, who submitted his report dated 30.10.2008 (Annexure R-2). It was also stated that, the OPs, as per the recommendations of the Surveyor, were not liable to pay the claim, as the loss was not caused due to flood, but on account of normal cracking, settlement or bedding down of new structures, which was excluded by the terms and conditions of the policy. It was further stated that the repudiation of the claim, made by the OPs, was, thus, in accordance with the terms and conditions of the policy, and, therefore, it could not be said to be illegal. It was pleaded, that the complaint was barred by limitation. It was also pleaded, that the Consumer Fora at Chandigarh, had no territorial jurisdiction, to entertain the complaint. It was further denied, that there was any deficiency, in rendering service, or indulgence into unfair trade practice, on the part of the OPs.

5.               The Parties led evidence, in support of their case.

6.               After hearing the Counsel for the parties, and on going through the evidence and record, the District Forum, accepted the complaint, in the manner, referred to, in the opening para of the instant order. 

7.               Feeling aggrieved, the instant appeal, has been filed by the appellants/OPs.

8.               We have heard the Counsel for the parties, and, have gone through the evidence and record of the case, carefully. 

9.               The Counsel for the appellants, submitted that the District Forum, did not appreciate, the terms and conditions of the policy, in its proper perspective. It was further submitted that the District Forum, was wrong, in coming to the conclusion, that heavy rainfall and violent out pouring of water fell, within the definition of “flood”, resulting into damage to the retaining wall of the building. He further submitted that infact, damage to the wall was caused, on account of normal cracking, settlement or bedding down of new structures, which fell within the exclusion Clause, contained in the policy.  He further submitted that the damage to the wall, was on account of normal cracking, settlement or bedding down of new structures, and, thus, was not covered by the policy. It was further submitted that the Surveyor, who was deputed by the OPs, assessed the loss, to the extent of  Rs.2,30,641/-, whereas the District Forum, awarded higher amount of Rs.12,66,160/-, without any reliable supporting evidence, having been produced by the complainant. He further submitted that, even the District Forum, awarded penal interest, at a higher rate of 18% p.a. He further submitted that the order of the District Forum, against the appellants/OPs, being illegal, is liable to be set aside.

10.            On the other hand, the Counsel for the respondent/complainant, submitted that the District Forum, was right, in properly interpreting the terms and conditions of the policy, in question, which was obtained by the complainant. He further submitted that the District Forum, was right, in coming to the conclusion, that there was heavy rain fall and violent out-pour of water, which fact was also admitted by the OPs, and which fell within the definition of “flood”, resulting into damage to the retaining wall of the building. He further submitted that the District Forum, was, thus, right in holding that, since, the damage to the wall was caused due to “flood”, the peril, was covered under the policy. He further submitted that the District Forum, was right, in awarding compensation to the sum of Rs.12,66,160/-, which amount was required for reconstruction of the said retaining wall. He further submitted that the order of the District Forum, being legal, and valid, deserves to be upheld.

11.            After giving our thoughtful consideration, to the rival contentions, raised by the Counsel for the parties, the evidence and record, we are of the considered opinion, that the appeal is liable to be partly accepted, for the reasons to be recorded hereinafter. There is no dispute, between the parties, that the policy, in question, for the period referred to above, after paying a premium, was obtained by the complainant. The risks covered, were also mentioned in the policy. According to the complainant, on account of heavy rains, in the month of July, 2008, the loosened earth, underneath the retaining wall was swept away, causing damage to it. The OPs, on the other hand, asserted that the loss to the retaining wall, was due to normal cracking, settlement and bedding down of new structures, which was excluded by the terms and conditions of the policy. With a view to properly appreciate the arguments, addressed by the Counsel for the parties, it would be appropriate, to reproduce the relevant Clauses of the said policy, which read as under:-

“IN CONSIDERATION OF the Insured named in the Schedule hereto having paid to the ….Insurance Company Limited (hereinafter called the Company) the premium mentioned in the said schedule, THE COMPANY AGREES, (Subject to the Conditions and Exclusions contained herein or endorsed or otherwise expressed hereon) that if after payment of the premium the Property insured described in the said Schedule or any part of such Property be directed destroyed or damaged by any of the perils specified hereunder during the period of insurance named in the said schedule or of any subsequent period in respect of which the Insured shall have paid and the Company shall have accepted the premium required for the renewal of the policy, the Company shall pay to the Insured the value of the Property at the time of the happening of its destruction or the amount of such damage or at its option reinstate or replace such property or any part thereof.

                              I.   xxxx

                            II.   xxxx

                          III.   xxxx

                           IV.   xxxx

                            V.   xxxx

                           VI.   Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation.

                         VII.   xxxx

                       VIII.   Subsidence and Landslide including Rock Slide.

Destruction or damage caused by Subsidence of part of the site on which the property stands or Land slide/rock slide excluding:

b.      The normal cracking, settlement or      bedding down of new structures.

c.       The settlement or movement of made   up   ground.

d.      Coastal or river erosion.

e.      Defective design or workmanship or     use of defective materials.

f.       Demolition, construction, structural    alterations or repair of any property or      ground works or excavations.”

12.         In the Shorter Oxford English Dictionary (Volume I), Third Edition, the meaning of word “Flood” is given as under: -

“Flood….1. The flowing in of the tide; as in ebb and f., etc. Also fig. 2. A body of flowing water; a river, stream, usually a large river. Now only poet, OE. 3. Water as opp. To land, often contrasted with field and fire. Also pl. Now poet. or rhet. OE. 4.  An overflowing or irruption of a great body of water over land not usually submerged; an inundation, a deluge OE. 5. A profuse and violent out pouring of water; a swollen stream; a violent downpour of rain. M.E. Also fig. ME. b. transf. of tears, flame, light, lava, a con-course or influx of persons. etc….”

                   The plain reading, of the definition of “Flood” extracted above, clearly goes to show that a profuse and violent out pouring of water or violent down pour of rain also amounts to flood.

13.         The meaning of “Flood”, as contained in the Book “General Insurance” (photocopy whereof was placed on record, by the Counsel for the OPs, before the District Forum), reads as under: -

“Storm” means a violent disturbance of nature, accompanied with thunder or strong wind or heavy rainfalls. ‘Flood’ occurs when any water rises to an abnormal level. The term ‘tempest’ etc. have the same meaning as storm. The ‘inundation’ means the same as flood.”

14.         A bare perusal of the aforesaid Clauses, establishes that the meaning of “Flood”, given in this book is not complete, whereas the meaning of “Flood”, given in the shorter Oxford English Dictionary (Volume I), is quite exhaustive and it includes heavy rainfall also.

15.            Admittedly, a Surveyor was appointed in this case by the OPs. At page 2 of its report, the Surveyor reported as under:-

                     “AS PER OCCURRENCE REPORT

2.1 Due-to-heavy, unprecedented rains, water flow during the 2nd & 3rd week of July 2008 i.e. 12 to 15 July 2008, a portion of land near the right tip gave way and also a portion of retaining wall.

The insured further mentions that while normal rains were unlikely to cause any damage, but persistent rains loosened the bonding of earth and rendered the retaining wall ineffective and cause the earth to slide down resulting in damaging the structure of the building.

2.2 IN OUR VIEWS

The contention of the insured appears to be reasonable and there is every possibility of such an event. Extent & nature of damages noticed by us also support the contention of the insured. We didn’t find anything suspicious or contrary to the statement of the insured.”

16.            Even, the bare perusal of the aforesaid paragraphs, of the report of the Surveyor, clearly goes to establish that the version of the complainant, to the effect, that the retaining wall of the building was damaged, on account of unprecedented rains, was accepted. From the newspapers cuttings produced, on record, which were duly corroborated through the affidavit of Mr.Joseph K.C., Manager Administration, Accounts and Commerce of the complainant, it was proved that retaining (Boundary wall) was damaged due to flood which was caused by continuous heavy rains. It was not a case of damage to the wall, on account of normal cracking, settlement or bedding down of new structures. Normal cracking or bedding down of the structures would have occurred, if the retaining wall had fallen, on its own, without any external factor/force. In the instant case, it was on account of flood, which was caused by heavy down pour i.e. (heavy rains), which took place continuously,  in the month of July, 2008, that the loosened earth by the side of the retaining wall was washed away resulting into damage to the same. The retaining wall of the building, did not crack or bend down, in normal course, under its own weight. The case of the OPs, to the effect that, since the retaining wall was damaged, on account of normal cracking, settlement or bedding down of new structures, which fell within the exclusion Clauses of the policy, does not merit acceptance. Had there been no flood due to heavy rains, resulting into sweeping away the loosened earth by the side of the retaining wall, causing damage to it, the matter would have been different. In those circumstances, it would have been said that, it was only on account of normal cracking, settlement or bedding down of new structures. No doubt, the Surveyor came to conclusion, that the loss was only on account of normal cracking, settlement and bedding down of new structures, but this part of the report of the Surveyor, cannot be accepted to be correct, in view of the facts and circumstances, and, evidence, brought on record and discussed above. The District Forum was, thus, right in holding that the damage to the retaining wall of the building, was on account of “flood”, caused by heavy rains. The District Forum was also right, in holding that the case of the complainant, did not fall within the exclusion Clauses, contained in the policy. The findings of the District Forum, in this regard, being based on the correct appreciation of evidence and law, on the point, do not suffer from any illegality, and are liable to be upheld.

17.            The next question, that arises for consideration, is, as to whether, the District Forum, was right in coming to conclusion that the loss caused to the retaining wall, was to the tune of Rs.12,66,160/-. In this regard, it may be stated here, that such conclusion was arrived at, by the District Forum, without appreciation of evidence on record. The complainant, submitted an estimate for the reconstruction of retaining wall, which is at page 75 of the District Forum file, according to which, the reconstruction would cost Rs.13,32,800/-. It was merely an estimate, without any supporting evidence. The affidavit of the Architect, who prepared this estimate, was not submitted to support the same. No other reliable evidence was produced by the complainant, to prove that, on account of damage to the retaining wall of the building, he suffered loss to the tune of Rs.13,32,800/-. The complainant submitted the balance sheet of the building as on 31.03.2008, which is at page 46/129 of the District Forum file. According to this balance sheet, the amount originally spent for the construction of the boundary wall, was shown as Rs.3,66,744.83. On the other hand, there is a clear-cut report R-2 of the Surveyor appointed by the OPs, which was duly supported by an affidavit of Pukhraj Singh, Surveyor of Protech Engineers and Loss Assessors. The Surveyor of the OPs, took into consideration the expenditure incurred by the complainant on the construction of the retaining wall originally, as per the balance sheet, submitted by it. Ultimately, after deducting the depreciation value and giving due allowance of salvage stones, steel and excess Clause, the Surveyor came to the conclusion that the loss, which was caused to the complainant, on account of damage to the retaining wall of the building, came to be Rs.2,30,641/-. The report of the Surveyor, being based on the data, supplied by the complainant, itself, as also, on other evidence, duly supported by his affidavit, is correct. The District Forum, was required to rely upon the report of the Surveyor, for the purpose of coming to the conclusion, as to the amount, to the extent of which, loss was caused to the complainant, on account of damage to the retaining wall. The District Forum, failed to take into consideration, the report of the Surveyor, which was duly supported by his affidavit, and, thus, fell into a grave error, in awarding compensation in favour of the complainant, to the tune of Rs.12,66,160/-, which was not supported by any reliable evidence and was only an estimate. The District Forum, thus, granted excessive amount of compensation to the complainant. It is held that the complainant is only entitled to compensation, in the  sum of Rs.2,30,641/- and not Rs.12,66,160/-, as awarded by the District Forum. The submission of the Counsel for the appellants, in this regard, being correct, is accepted.

18.            The District Forum, in our considered opinion, was also wrong, in granting penal interest @18% p.a. It could certainly, be said to be on the higher side. In our considered opinion, if penal interest @12%, is granted, that would be just, fair and reasonable. The order of the District Forum, granting penal interest @18% p.a., is modified, and instead, penal interest @12% p.a., is granted.

19.            No other point, was urged, by the Counsel for the parties.

20.            For the reasons recorded above, the appeal, is partly accepted, with no order as to costs, and the impugned order is modified, in the following manner:-

i)        The appellants/OPs, are directed to pay a sum of Rs.2,30,641/- with interest @10% p.a., from 08.12.2008, till the date of actual payment instead of Rs.12,66,160/-, granted by the District Forum

ii)                 The appellants/OPs are directed to pay penal interest @12% p.a., instead of 18% p.a., granted by the District Forum.

iii)              The remaining reliefs granted and directions given by the District Forum shall remain intact.

21.            Certified Copies of this order be sent to the parties, free of charge.

22.            The file be consigned to Record Room, after completion

Pronounced.

3^rd October, 2011

Sd/-

[JUSTICE SHAM SUNDER]

PRESIDENT

Sd/-

[NEENA SANDHU]

MEMBER

Sd/-

[JAGROOP SINGH MAHAL]

 MEMBER

Rg