Heard learned counsel for the parties.

This appeal has been taken up for disposal at the admission stage itself keeping in view the submissions that have been raised and the contentions that have been taken as grounds in the appeal.

There is no dispute on some minimum facts, namely, that the policy which concerns the present dispute was valid from 09.06.2012 to 08.06.2013 and was a fire policy in respect of a building, the address whereof is disclosed in the policy documents as Vignesvarcresta, 1095, Avinashi Road, P.N. Palayam, Coimbatore, Tamil Nadu 641037.  The location address mentioned in the policy is identical and same.  The coverage nowhere indicates any separate or segregated areas of the said building and therefore the whole building appears to have been insured for a total sum of Rs.5,10,00,000/-.  The building consists of a basement, ground floor, upper floors and an area of terrace.

Admittedly the building was leased out for commercial purposes.  Nonetheless, the risk coverage was for the building and was covered under three policies, namely, a Standard Fire and Special Perils Policy, Public Liability Policy for Lift and a Third Party Insurance for Lift Policy.  The present dispute relates only to the Standard Fire and Special Perils Policy referred to above as the claim made by the appellant was in respect of the loss and damage suffered in a fire that occurred on 25.04.2013.

The intimation of the fire was given to the Insurance Company and a surveyor was appointed who assessed the loss to the tune of Rs.38,42,992/- as against the claim of the complainant/appellant to the tune of Rs.1,77,67,497/-.

The Insurance Company repudiated the claim on the ground that since the complainant/appellant had failed to disclose that part of the building consisting of constructions which were unapproved by the competent authority, the said suppression of fact violated the principle of “uberrima fides” and consequently the claim was repudiated.

Assailing the aforesaid reason recorded by the Insurance Company, the complainant/appellant filed the complaint before the Tamil Nadu State Consumer Disputes Redressal Commission, Chennai (hereinafter referred to as the State Commission) stating that the building was completed long back in the year 2010 and had been existing for more than 12½ years and was also assessed to property tax regularly.  The building was occupied by a large number of business establishments and it is in order to cover the risk of the said building that the complainant/appellant had acquired the three insurance policies referred to above.  The complainant/appellant therefore urged that the Insurance Company had extended the policy knowing the aforesaid status of the building and consequently the reason given now for repudiation is unsustainable and the complaint deserves to be indemnified.

The State Commission while proceeding to assess the evidence came to the conclusion that the complainant/appellant had suppressed the fact that the second and third floors of the building had been constructed without any approval and consequently this amounted to violation and breach of the utmost good faith principle on which insurance policies are founded.  Consequently, it was held that the Insurance Company was justified in repudiating the claim.

The State Commission went further to observe that the leasing out of the property for commercial purposes reflected that insurance was taken not only as a part of risk management but also for profiteering and consequently when the transaction is for a commercial purpose, the complainant/appellant was not a ‘consumer’ within the meaning of the provisions of the Consumer Protection Act, nor were the services availed within the fold of the Consumer Protection Act of which benefit could be taken by the complainant/appellant.

Learned counsel for the complainant/appellant has vehemently urged that the ground taken by the State Commission to treat the activity as a commercial venture is misplaced.  To that extent learned counsel for the complainant/appellant seems to be correct in view of the ratio of the decision in the case of National Insurance Co. Ltd. Vs. Harsolia Motors and Ors., (2023) 8 SCC 362, but the fact remains as to whether the complainant/appellant was at fault by not making the correct disclosure of the status of the building before taking the insurance.

There is no dispute that neither the proposal form nor the policy segregated the building into any portions. Learned counsel for the complainant/appellant has urged that this claim was only in relation to the first floor and consequently if there was any issue with regard to the approval and status of the upper floors, the same would not have any bearing on the claim made by the complainant/appellant.  It is further submitted that the complainant/appellant was claiming loss that was actually suffered on the first floor and in such circumstances applying the principle of segregation the entire claim ought not to have been rejected. 

This argument cannot be sustained for the reason that when the proposal is filled up and an insurance is sought for, then the proposal has to indicate the status of the building which is to be insured.  It is not the case of the complainant/appellant that while moving the proposal, he had indicated any such information with regard to segregated approval of the first floor of the building.  Therefore there is no reason to presume that the insurance was sought only for first floor.  The policy itself indicates the location address of the entire building and therefore this argument of segregation is unsustainable.

Coming to the issue of disclosure in a contract of insurance, the insurer is entitled to investigate and form an opinion about the extent of risk which is going to be covered on the offer and proposal made.  It is quite possible that had the complainant/appellant indicated any such status about the building that it was not approved for the second or the other upper floors, the Insurance Company could have declined to accept the insurance offer.  This being an essential condition while moving a proposal and seeking acceptance was clearly breached by the complainant/appellant.  Consequently, the findings recorded by the State Commission cannot be faulted with on any ground.  There is no infirmity so as to interfere with the impugned order in this appeal.

The appeal is accordingly dismissed.