This first appeal has been filed by the appellants, Tata AIG General Insurance Company Ltd. and others  against the order dated  25.2.2016  passed by the State Consumer Disputes Redressal Commission, Jharkhand, Ranchi (for short, ‘ State Commission’)  in  C.C. No.23 of 2014.

2.       The brief facts of the case are that respondent no.1 had obtained an insurance policy for the period 28.7.2012 to 27.7.2013 in respect of a shop no.2, main Road, Bistupur, Distt. Jamshedpur covering the building and contents therein.  For obtaining the said insurance policy the respondent no.1 had submitted a completed and signed proposal form on 28.7.2012. The said proposal form under the column of risk location contained the words “Basements not covered”. Accordingly the insurance policy was issued by the appellant with the usual warranty stating as under :

”Warranted no basement exposure or materials or Stock in Open are covered under the policy.”

3.       It was reported that on 9.12.2012 a fire  broke out in the shop due to short circuit.  On receiving intimation of the occurrence  of fire the appellant deputed a Govt. Licensed surveyor on 10.12.2012 who immediately reached at the site of fire for verification and assessment  of loss on the same day.  The respondent also had stocks of their Franchiser M/s. Biba Apparels Pvt. Ltd/ The surveyor verified details of loss to stocks, furniture fixtures etc. and submitted his report dated 10.10.2013 assessing the loss at Rs.30,99,095/- after deducting the share Rs.6,33,791/- falling to be borne by another insurer, the United India Insurance Company Ltd., whose policy issued to M/s. Biba Apparels Pvt. Ltd.  was current on the date of occurrence and covered the total stocks of franchiser.  The surveyor however reported that the shop is at basement of the building. He issued the report subject to the terms, conditions, warranties, policy excess and amount of Policy of the insurance.  Since the respondent had not disclosed in the proposal form that the shop was located in the basement and since the proposal submitted by respondent clearly indicated that basement was not covered and the policy was issued with a warranty to that effect, the claim was repudiated by the appellant on 2.12.2013.  The respondent then filed a complaint on 16.12.2014 before the State Commission claiming the amount as assessed by the surveyor as also the amount deducted by surveyor being the loss on stocks to be shared by the United India Insurance Company Ltd. 

4.       The appellant submitted its written statement in April, 2015 submitting that the claim was not admissible in view of the specific warranty in the policy and further because the stocks belonged to M/s. Biba Apparels Pvt. Ltd. who had their own insurance covering their stocks at the affected location.  The State Commission however passed an order on 25.2.2016 holding that the loss was covered under the policy issued by the petitioner/OP and directed the petitioner herein to pay Rs.37,32,886/- (which includes also the share of the United India Insurance Company Ltd.) with 12% interest from 16.12.2014 and Rs.2.5 lakhs compensation for harassment and mental agony and Rs.25,000/- as costs.

5.       Hence, this appeal.

6.       Heard the learned counsel for the appellants as well as respondent no.1.  Respondent no.2 was proceeded ex parte vide order dated 22.6.2017.

7.       The learned counsel for the appellants stated that the shop insured as per proposal form is Shop No.2, Main Road, Bistupur, Jamshedpur – 831 001. In the proposal form under the heading ‘Risk Location’,  same as above was mentioned by the proposer. Under the column of Risk Location, it is mentioned that  the basement is not covered.  Insurance is a contract based on mutual trust and therefore, the insurance based on the address given by the proposer in the proposal form was accepted by the insurance company.  However, when the surveyor was appointed after the insurance claim was filed, it was found that insured shop is in the basement and it cannot be covered under the insurance. Hence, the claim was repudiated.

8.       The learned counsel further pointed out that in the policy which was issued on 31.7.2012, it is clearly stated under the Coverage Section A (Fire Building and /or Contents), that “Warranted no basement exposure or materials or Stock in Open are Covered under the Policy.”

9.       Though the surveyor has assessed the loss at Rs.30,99,095/-, the learned counsel pointed out that the surveyor has stated that the insurance has also been taken by the franchiser for all the locations in India and this shop is one of the locations and therefore no double benefit can be given to the complainant. The surveyor has clearly stated that the stock was in the basement and basement is not covered under the policy. Based on the surveyor’s report the insurance claim was repudiated on 2.12.2013.  The learned counsel argued that the State Commission has allowed payment of Rs.37,32,886/- but the order of the State Commission suffers from various infirmities. First of all, it has been presumed by the State Commission that no claim has been preferred or would be preferred by the franchiser company Biba Apparels. Secondly, the State Commission has wrongly assumed that the reinstatement clause was invoked by the insurance company, whereas the fact is that it was only advice by the surveyor and the insurance company had no knowledge of the same.  The complainant should have verified from the insurance company whether the insurance company was also in agreement with the surveyor for invoking the re-instatement clause. The language of the re-instatement clause clearly shows that it shall the insurance company which shall invoke the clause and not the surveyor. The learned counsel further states that at no point of time the complainant was unwilling to get the property re-instated. It simply means that complainant re-instated the property but without any direction from the insurance company and therefore, now he cannot take advantage of the re-instatement clause and insist on approving the claim. The State Commission has further observed that a team of officers had visited the insured shop which is against the facts. The OP in their evidence stated that the shop was not inspected by the officers of the insurance company.  Whatever has been mentioned in the surveyor’s report by the surveyor that only means that agent had visited the premises but the agent is not an officer of the insurance company.

10.     The learned counsel for the appellant further stated that the terms of the contract have to be construed in the manner they are written in the policy and Courts cannot interpret those terms differently even on the basis of natural justice or equity. To support his arguments, the learned counsel relied upon the judgment  of the Hon’ble Supreme Court in  Oriental Insurance Company Ltd. vs. Sony Cheriyan, II (1999) CPJ 13 (SC) wherein the Apex Court held as under:

“15.  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. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein.”

11.     On the basis of above judgment,  it was argued by learned counsel that it is clearly mentioned in the policy that basement is not covered and therefore, this condition is binding on both the parties and complainant cannot pursue his claim on any pretext.  It was further  argued by the learned counsel that the State Commission has erroneously allowed compensation of Rs.2.5 lakhs whereas  the complainant/respondent is a Private Limited company and therefore,  no compensation can be awarded to such complainant as held by the Hon’ble Supreme Court in  the case of Sikka paper Ltd. Vs. National Insurance Com-any Ltd. and others, III (2009) CPJ 90 (SC) , wherein the Hon’ble Supreme Court has observed the following:

(iii)  Compensation – Mental harassment – Complainant being company, claim for mental harassment, legally not permissible – Only natural person can claim damages for mental harassment , not  corporate entity.”

12.     It was also argued by learned counsel for the appellant that the complainant has taken the plea that the premises were inspected by the agent of the insurance company as well as by some officers from the insurance company. The insurance company has clarified that no officer of the insurance company visited the site, however, it was visited by the agent, and therefore,  it is not a binding on the insurance company as the agent at that time was working as agent of the insured rather than of the insurer as held by the Hon’ble Supreme Court in Mrs. Maniluxmi Patel and another vs. Hindustan Co-operative Insurance Society Ltd. and another, AIR 1962 CALCUTTA 625  (V 49 C 13) wherein it has been observed:

     “The Court of Appeal …… affirmed the decision of Rowlat, J. Scrutton, L.J. said, that on the findings of the arbitrator the agent must have written down wrong answers, unintentionally because (a) he misunderstood what was said or (b) forgot or (c)  misunderstood the questions; or else intentionally. On any of these suppositions he was acting as agent of the proposer and not of the company.”

13.     If the proposal form was filled by the agent then also he was acting  as agent of the insured and not of the insurer. Hence, any mistake in the proposal form cannot be forgiven on the ground that the proposal form was filled by the agent.

14.     On the other hand,  the learned counsel for the respondent no.1/complainant  stated that the office of the insurance company is across the road and everybody in the office of the insurance company knew that the insured shop was in the basement. The learned counsel further stated that the same insurance company has allowed endorsement of non-applicability of the same exclusion clause regarding basement without charging any extra premium after the incident of fire  in the complainants shop on the similar policy relating to another garment shop namely “JMA Stores” which is also located in the basement. This means that for the same amount of premium one shop can get the insurance cover without exclusion of basement  but the other shop cannot get the same.  Equity demands that if the other shop has been insured with the endorsement regarding non-applicability of basement clause, then the complainant also deserves to be indemnified  by the insurance company and the technical objection regarding basement has really no meaning. Moreover, insurance company knew about basement as reported by the surveyor in his recommendation as follows:

     “The insurer is also advised to keep in mind the conditions of the policy for coverage section A (Fire) in which it is clearly mentioned that “Warranted no basement exposure”. The shop is at basement of the building and was insured by the insurer knowing the fact.”

15.     The learned counsel for the respondent  further stated  that as per the advice of the surveyor, the respondent reinstated his shop, particularly furniture, fixture and fittings as they were covered under the re-instatement clause of the policy. This is borne out by the following observation of the surveyor in his report submitted to the insurance company :

         “We requested the insured to produce the books of account of their shop for the current year as well as earlier years. Reportedly they were maintaining books of account in Computer system. Since Computer of the shop was burnt due to fire in  the shop, they were unable to produce the books of account for our verification.

          Insured was requested to re-furnish the shop on the same pattern and design as was before the incident of fire. He was also requested to submit the detailed bills and details of furniture, fixture & fittings of the shop with a blue print of lay-out. Since reinstatement value clause is applicable for furniture, fixture and fittings, he was requested to submit the bills and payment evidence in detail for reinstatement of the same.”

16.     As re-instatement has been allowed, the complainant has incurred huge expenditure on the same. After allowing the re-instatement,  the insurance company cannot drag its feet backward and deny the claim.

17.     The learned counsel for the respondent further stated that the surveyor has recommended a loss of Rs.30,99,095/- and the State Commission has allowed the same alongwith share of the insurance of the franchiser that was deducted by the surveyor and therefore, the total amount of Rs.37,32,886/- has been allowed by the State Commission. The learned counsel further argued that report of the surveyor is very important document on the basis of which the claim is to be settled. The surveyor’s report cannot be brushed aside without any cogent reason and this is to be taken into consideration for deciding the claim.

18.     I have considered the arguments advanced by the learned counsel for the parties and have examined the record.

19.     It is an admitted fact that the insured shop has been at the basement and still the shop has been insured by the insurance company. The insurance company has taken the plea that they were not aware whether the shop was at the basement because the address of the insured shop does not specify so. Even if one leaves the facts stated by the learned counsel for the complainant

that the office of the insurance company was across the road and nearby shop of “JMA Stores”  which was also insured but the policy has been endorsed  for non-applicability of exclusion clause regarding basement, the surveyor  has fairly stated in his final recommendation that the insurer may take a view  as the basement is not covered but the shop was insured by the insurer knowing the fact. In a way the surveyor has categorically stated that the shop has been insured knowingly by the insurance company (at least by their local officers).  It has also been alleged that the shop was inspected by the agent and some officials of the insurance company. However, insurance company has denied that the officers of the company ever visited the shop and the same may have been visited by the agent. It is true that the proposal form for insurance has been filled up. The same may have been given either by the insurance company or by the agent of the insurance company. Here agent had acted on behalf of the insurance company for selling the policy. It is clear that the agent was knowing that the shop was at the basement. It is not clear why the agent got filled up the proposal form from the complainant, if proposal  form was not applicable for the basement shop of the complainant . Moreover, the form does not ask any question whether the shop is at the basement or at which floor?  If basements are not covered then either there should have been some other policy which was covering the basement shop or it should have been written on the top of the form that this form is not applicable for basement. Under the Risk Coverage Section A (Fire Building and/or Contents) it is stated “Warranted that no basement exposure or materials or stock in open are covered under the policy”. This gives an indication as if the material kept in the basement or the material in the open are not covered and the other parts of the shop may be covered. In the present case,  the whole shop is located in the basement and therefore,  the insurance company or the agent should have given other form to the complainant to take the appropriate policy. Before accepting the proposal form,  the insurance company must have inquired or verified the address of the shop to be insured. In verification the fact that the shop being in the basement must have come to the notice of the insurer. It is true that  the insurance is a subject matter of utmost trust and all the parties should disclose all the information that they have. The complainant has given the complete address of the shop and the insurer has accepted the same for insurance.  It is also pertinent to note that the surveyor cannot take the risk of spoiling the relationship with the insurance company by writing a false fact that goes against the insurance company.  Hence, the mentioning of the fact that  the insurance company or its officers knew about the fact of the insured’s shop being at the basement cannot be ignored.  Thus, I reach to the conclusion that even though this form was not applicable for the basement shop, however, the insurance company got the insurance proposal approved knowingly that this shop was in the basement.  The insured was not at fault since the insured had given the address of the shop as was required.  There was no column to specifically answer whether the shop was at the basement or at which floor. In these circumstances, I find that the policy was wrongly issued by the insurance company and I find deficiency of  service on the part of the insurance company in this regard.

20.     So far as the re-instatement of the shop by the complainant is concerned, even if the same was agreed and asked by the surveyor, the liability of the insurance company cannot be invoked if there is no  approval for the same from the insurance company.  The complainant has not been able to show any letter of approval from the insurance company for invoking the re-instatement clause for furniture, fixture and fittings. Therefore, the State Commission has wrongly allowed the claim on the basis of re-instatement of the shop for furniture, fixture and fittings even if the claim was at all admissible.

21.     The wider question is whether the claim is payable under the policy. Clearly as the policy and the facts stand today, it is admitted that the insured shop is at the basement and as per the policy basement is excluded for the building as well as contents in case of fire. However the complainant got his building as well as stocks covered under the policy where fire was covered. No objection was raised by any party during the currency of the policy before the accident that the policy does not cover the basement. Hence, the complainant was mentally assured that his shop was covered. Had the insurance company indicated that because the shop was at basement, it was not covered, the complainant may have taken some other policy. However, the complainant has lost that opportunity and he has suffered loss.

22.     From the above examination, I reach to the conclusion that the incident cannot be covered in the policy. It is clearly stated in the policy that basement exposure is not covered and admittedly the shop is at the basement, therefore, the building and stock being at the basement are not covered. 

23.     On the other hand, the above examination has shown that insurance company  has definitely been deficient in accepting the proposal knowing that the insured shop was at the basement. Here the complainant is not at fault as he has filled the right address of the shop in the proposal form.  On the basis of the deficiency on the part of the insurance company for issuing a wrong policy and not offering the appropriate policy, I deem it appropriate that interest of justice would be served if a compensation of Rs.7.5 lakhs  on account of deficiency of the insurance company is paid by the insurance company  to the complainant/respondent.  As the report of the surveyor is on the basis of re-instatement and the re-instatement was not authorized by the insurance company, therefore the loss assessed by the surveyor cannot be accepted. Moreover, the complainant has also not been vigilant to have seen his policy carefully and therefore, a reasonable compensation can only be awarded to the complainant and he cannot be compensated for his total loss.   In taking this decision,  I am guided by the decision by the Hon’ble Supreme Court in Citibank N.A. vs. Geekay Agropack Private Limited (2008) 15 SCC, wherein it has been laid down that in case of loss of a cheque at the hand of a bank, only a compensation could be provided for the deficiency of the bank, but the total amount of cheque cannot be granted.

24.     Based on the above discussion, the appeal filed by the insurance company is partly allowed and the order dated 25.2.2016 passed by the State Commission is modified to the extent that insurance company shall be liable to pay only Rs.7.5 lakhs (Rupees seven lakhs and fifty thousand only)  alongwith interest @ 8% p.a. from 16.12.2014 till actual payment instead of Rs.37,32,886/- alongwith 12% p.a. interest as ordered by the State Commission. The order of State Commission awarding Rs.2.5 lakhs for mental agony is set aside. The order relating to cost of Rs.25,000/- is maintained. This order be complied by the insurance company within a period of 45 days from the date of this order, failing which the awarded amount shall carry an additional interest of 5% p.a. from the date of this order till actual payment. No order as to costs for this appeal.