New India Assurance Co. Ltd., Petitioner herein, which was the Opposite Party before the District Consumer Disputes Redressal Forum (for short, the District Forum), has filed the present Revision Petition against   the Order  dated 9.3.2007 passed  in FA No. 730/2004   by State Consumer Disputes Redressal Commission (for short, the State Commission), Andhra Pradesh, whereby the State Commission    dismissed the appeal except it reduced the rate of interest from 12% to 9% on the awarded amount of Rs.33,625.

          Briefly stated the facts are:

          Complainant – Respondent No.1 herein, obtained a fire policy covering his plant and machinery for a sum of Rs.15 lakh for  the period 27.4.2000 to 26.4.2001.  Plant and machinery of the   Respondent No.1 were hypothecated with Bank of India, Balanagar  Branch, R.R. District, Respondent No.2 herein.  Respondent No.1 lodged a claim of damages to plant and machinery  due to floods with the Petitioner  on 23.8.2000.  Petitioner deputed R.L.N. Shastry Surveyor/Loss Assessor to survey and assess the loss.  Surveyor assessed the loss  at Rs.32,355/-.  Since the net assessed loss was within the  excess clause of  policy,   the said assessed loss was found  not payable as per the  said policy condition. Claim lodged by Respondent No.1 was closed and he was informed accordingly.   Respondent No.1 thereafter issued a legal notice dated 16^th August, 2003 to which a reply was sent by the Petitioner on 9.10.2003 denying the allegations made in the said notice.

          Being aggrieved, Respondent No.1 filed the complaint before the District Forum on 29.9.2003 against the Petitioner as well as the Bank of India, alleging deficiency in service.     Respondent No.1   sought a direction that the Petitioner and the Respondent No.2  be directed to  pay a sum of Rs.15 lakhs by way of compensation and Rs.5 lakhs for mental agony with  interest @ 12% on the total sum of Rs.20 lakh from the date of claim till realization.

          Petitioner on being served, filed its written statement contesting the claim on the ground that the complaint was time barred and that the claim had been closed as per the special policy condition and the excess clause which stipulated that the insured was not entitled to any claim for any peril which was less than Rs. 1 lakh.

          During the pendency of the complaint Respondent No.1 withdrew his complaint against the Bank – Respondent No.2

          District Forum by its order dated 30.6.2004 allowed the complaint in part and directed Petitioner to pay a sum of Rs.33,625/- with interest @ 12%  from the date of  filing of the claim i.e. 29.8.2000  till realization.  Rs.5000/- were also awarded as costs.

          Aggrieved by the order passed by the District Forum, Petitioner filed appeal before the State Commission which has been dismissed by the State Commission except that the State Commission has reduced the rate of interest from 12% to 9% on the awarded amount.

          Respondents in spite of service are not present and ordered to be proceeded ex parte.

          Counsel appearing for the Petitioner contends that the order of the Fora below cannot be sustained as they failed to consider the Special Condition and Exclusion Clause of the insurance policy.  That as per the Special Condition and Exclusion Clause the insured was not entitled to any claim for the perils, which was less than Rs. 1 lakh.  Special Condition of the policy reads as under:

“It is understood and agreed that the entire property in one complex/compound/location is extended to cover risk of Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation and the sum insured  for this extension is identical to the sum insured against the risk covered under Fire Policy “C”.  No consequential loss or damage of any kind or description,   nor any loss or damage caused by confiscation or willful destruction by Government or any Municipal or Local Authority is covered under this Policy.

In the event of the Insured making any claim for loss or damage under this policy in respect of the above mentioned perils, he must (if so required by the Company) prove that  the loss or damage was occasioned by the said perils.  It is understood and agreed that in respect of all the above mentioned perils   the Company shall only be liable under this policy for loss or damage if the ascertained loss or damage sustained by the insured in respect of the property hereby insured exceeds:

1) as regards any individual building, including its contents, and any properties (other than stocks in the open) either

a) 2.5% of the total sum insured by all the policies in the name of the insured on such building and contents.

b) Rs.1,00,000/- which ever shall be less”.

          Counsel for the Petitioner has been heard at length. 

As per the Special Condition and Exclusion Clause of the policy, Petitioner was to indemnify for loss or damage in respect of the insured property only if the ascertained loss or damage exceeded 2.5% of the total sum insured by all the policies in the name of the insured on such building and contents or Rs.1 lakh whichever is less.   In the present case, insured had taken insurance policy for a sum of Rs.15 lakh.  2.5% of Rs.15,00,000/- would come to Rs.37,500/-, whereas loss assessed by the surveyor was Rs.32,355/- which was less than 2.5%  of the total sum insured.  Fora  below have not  referred to the Special Condition  and the excess clause in the Policy.   Special Condition and the excess clause stipulated that the insured was not entitled to any claim for any peril which was  less than 2.5% of the sum insured  or less than Rs.1 lakh whichever is less.  In the present case, the loss was less than 2.5%  of the sum insured and therefore excluded from the coverage under the policy.   Supreme Court in   Amravati District Central Cooperative Bank Ltd. vs. United India Fire and General Insurance Company Ltd. – (2010) 5 SCC 294, has held that ‘excess’ clauses are commonly used in insurance contracts.  In insurance parlance, the term ‘excess’ in the excess clause in the policy refers to ‘that part of the amount of loss, under each claim, which is not covered by the policy’ or the ‘amount that the policy-holder has, by agreement, to bear or contribute to each insurance claim’.  In other words it limits the liability of the insurer in regard to each claim, only to the amount of loss, in excess of the sum specified in the excess clause, which the insured has agreed to bear himself.   Point in issue in the present case is squarely covered by the law laid down by the Supreme Court in Amravati District Central Cooperative Bank Ltd. (supra). 

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 extent of liability of the insurer.  The insured cannot claim anything more than what is covered by the insurance policy.   The words of the policy document have to be construed strictly.   Court cannot make out a new contract howsoever reasonable or sound it may look.

District Forum had accepted the report submitted by the surveyor who had assessed the loss at Rs.32,355/-.  Respondent accepted the order the District Forum and did not file the appeal.  Under the circumstances, we have to take the loss at Rs.32,500/-.

For the reasons stated above, this Revision Petition is allowed,  Orders passed by the Fora below are set aside and complaint is ordered to be dismissed.  No costs.