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CASE NO.: Appeal (civil)  9128 of 2003

PETITIONER: United India Insurance Co. Ltd.         ..      Appellant

RESPONDENT: M/s Kiran Combers & Spinners                    ..       Respondent

DATE OF JUDGMENT: 08/12/2006

BENCH: G.P. MATHUR & A.K. MATHUR

JUDGMENT:   J U D G M E N T

A.K.MATHUR, J.                                  This appeal is directed against the order passed by the National  Consumer Disputes Redressal Commission, New Delhi  in Original  Petition No. 74/1994 on 18.7.2003.  Brief facts giving rise to this appeal are: The  respondent/complainant M/s  Kiran Combers  & Spinners  filed its complaint alleging  deficiency in  service  on the part of  United India Insurance  Company.  The case of the  complainant/respondent was that they got their building and stock  insured  from the  United India Insurance Company (hereinafter to  be referred to as ’the Company’).  The  respondent- complainant   held  a valid  Fire Policy for its stock ( Building Rs. 25 lakhs,  Machinery Rs. 40 lakhs, stocks Rs. 25 lacks and Furniture/Fixtures Rs.  1 lakh) effective from 11.1.1993 to 10.1.1994.   This policy also  endorsed   to cover risk  of flood.  On  account of heavy rains and  floods in the city, insured property was affected by floods on 24th  July, 1993 at about 7.45 P.M.  which caused   damage to building,  machinery and stocks.  This incident was reported to the Company   on  25th July, 1993 and  an FIR was lodged on 27th July, 1993. The  respondent-claimant claimed Rs.20,03,842/- in  July, 1993  from the  Company. Surveyor, namely,  M/s Vij  Engineer’s  Enterprise  appointed by the Company  carried out  its preliminary survey and  submitted a report on 29th July, 1993.  Second Surveyor; M/s Mita  Marine and General Survey Agencies Pvt. Ltd. also visited the  premises and  submitted its detailed report on  14th September,  1993.  M/s Mita Marine assessed the loss of Rs.10,13,571.90.    However, at the same time M/s Mita Marine surveyor recommended  that the insurer carries  no responsibility  in this case as building  collapsed  on account of structural defect caused by subsidence  which was not covered by policy.    A legal notice was issued by the  claimant on 4.12.1993 and  claim was repudiated on 7.1.1994 by the  Company, basing on  the report of the second surveyor i.e.,  M/s Mita  Marine.  Aggrieved against the repudiation of the  claim  of the  respondent-claimant, an Original Petition No. 74/1994  was filed in  the  National Consumer Disputes Redressal Commission,  New Delhi  claiming the damages as aforesaid.         The claim was  contested by the Company; appellant  herein  on the basis of the report given by the Surveyor and their  plea was that the loss and damage caused to building due to  structural  defect in  column No. 1 of building, the subsidence is a  specific extension to the  above  policy which was not insured by the  company.  The relevant extract of Surveyor’s report  reads as under:

"As brought out in the body of the  report,  this loss  and damage has happened due to failure of column

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No. 1 which may have happened due to its own  structural failure or due to its sinking/tilting causing  it to become eccentrically loaded and hence falling  in tension. The insured are covered under the Std.  FP ’C’ with flood endst.   Subsidence is a specific  extension to the above policy, which has not been  taken by the insured.  As such,  we regret to say  that either of the original cause of failure do not  conform to the existing cover.  In view of the  above, we find that  the insurers carry no liability in  the above case.  We understand  that the insured  had been asking the insurers permission for repairs.   We, during our visits had informed the insured that  they would be carrying out the repairs in their  personal capacity and that the insurers were in no  way involved in the same since the liability was not  admitted."

       The report was rebutted by the  respondent-complainant by  filing rejoinder.  The National Commission after hearing the parties  came to the conclusion that the repudiation of the  claim by the  Company is not warranted and they decreed the claim  of the  complainant to the  extend of Rs. 10,13,571.90 as recommended by  the second surveyor.         Aggrieved against the order passed by the NCDRC, New Delhi  on 18th July, 2003, the present appeal has been filed by the  Company.                 Learned counsel for the appellant submitted that it is true that  this is a fire policy  and the appellant  also covered the perils of flood  but the policy did not cover subsidence. Therefore, learned counsel  for the appellant tried to justify that since  the policy had not covered  subsidence  and as pointed out by the surveyor  the respondent is  not entitled to be compensated. Learned counsel for the appellant  also submitted that as pointed out by the surveyor  that the third  column over which the building was constructed was not properly  constructed  and therefore, on account of tilting of that column the  whole building collapsed and as such the company was not entitled  to compensate the claimant- respondent because of the structural  defect. As against this, learned counsel for the respondent submitted  that  the Company has certified the building to be of first class  construction and no defect was pointed out by the company, and it is  on account of  the flood water entering  from the side of  Kohinoor  Woollen Mills, the building collapsed.  It was submitted that in fact   the collapse of the building was on account of entering of flood water  from the side of Kohinoor Woollen Mills and not on account of flood  water coming from the road.  It was also pointed out that there is no  provision for covering subsidence in the policy and therefore, the  National Commission has rightly decreed the claim of the claimant- respondent.

               We have considered the rival submissions of the parties.   It is an admitted position that the claimant was covered from  11.1.1993 to 10.1.1994 and the flood took place on 24.7.1993 and  caused extensive damage to the building. It is submitted that as per  the policy, fire policy is  covered for flood, storm and tempest on  payment of extra 20 per cent  premium i.e. Rs.500/-. Therefore,  there is no dispute that the incident has taken place during the  coverage of the policy and the cause of the damage is flooding of  water into the building. The basic submission which has been  addressed by learned counsel for the appellant was that the company  has not covered subsidence. Subsidence means "  the gradual caving  in or sinking of an area of land". But on account of the water flooding  into the premises  of the claimant-respondent’s factory from Kohinoor  Woollen Mills, the land caved in as a result of which one column of  the building collapsed. The question is whether subsidence was

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covered in  the policy or not. In this connection, a reference may be  made to the terms of the policy. Clause 8 of the policy deals with  exclusions that  if any loss is occasioned on account of these events  then policy shall not cover.   Clause 8 of the Exclusions  in the Policy  reads as under :

               " 8.    Any loss or damage occasioned  by or  through or in consequence directly or indirectly of  any of the following occurrence namely,                 (a) Earthquake, volcanic eruption, or other  convulsion of nature.                 (b) Typhoon, storm, cyclone, tempest,  Hurricane, Tornado, Flood and Inundation.                 ) War, invasion, act of foreign enemy,  hostilities or warlike operations (whether war be  declared or not), Civil War.                 (d) Mutiny, civil commotion assuming  the  proportions of or amounting to a popular rising,  military rising insurrection, rebellion, military or  usurped power.                 (d) Burning, whether accidental or  otherwise, forest bush and jungles and the clearing  of lands by fire.                 In any action, suit or other proceeding  where the Company alleges that the reason of the  provisions of the above Exclusions any loss or  damage is not covered by this Insurance, the burden  of providing that such loss or damage is covered  shall be upon the insured."

A perusal of the aforesaid clause  would clearly show that there  is  no exclusion clause for subsidence. Clause 8(b) only talks of  typhoon, storm, cyclone, tempest, hurricane, tornado, flood and  inundation. None of the events mentioned above includes  subsidence. We fail to understand from where the surveyor has  brought the expression "subsidence" although clause 8 which  specifically talks about exclusions, does not mention anything  like  subsidence.  The policy is covered for flood and inundation for which  the claimant  is covered by paying extra premium, therefore, now to  say that the policy has not covered subsidence, which is not a clause  in the present policy cannot be sustained. Therefore,  on the basis of  this ground, repudiation of the claim  of the claimant by the appellant  does not appear to be justified. Had this been the clause, that if    damage is  caused on account of sinking and caving of the building   i.e. subsidence then perhaps this would have come to the rescue of  the company but since  in the exclusion clause there is no mention of  subsidence, therefore, this ground taken by the appellant-company  and by the surveyor  to  defeat the claim, is absolutely unwarranted.

       Now, coming to the next question of collapse of the building on  account of poor construction of column no.3 of the building, there  also the submission appears to be not justified. In fact, the Company  has certified that this building has a first class  construction. Normally  when the company insures any factory, then their Officers and the  Engineers used to inspect the building  to find out whether there is  any defect in the construction  or the construction is of poor quality.  In the present case, the company certified that it is a first class  construction,  then for some defect which has not been noticed by  the company,  no benefit could be given to the company for such  defect.  More so, in the present case, as  pointed out that because of  defective structure i.e. column No.3, the building has collapsed but  the question is what aggravated or accentuated this,  factory  is in  place for more than 12 years  & it is on account of flood water  entering in factory  that has caused this damage. So called defect  was aggravated on account of flooding of the water in the premises

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of the factory, if  the flood water had not entered into the factory,  perhaps the construction which stood  good for 12 years, would have   lasted long. The  cause  of the damage to the column No.3  of the  building  was flood water. Therefore, the company cannot escape the  liability to compensate the claimant for collapse of the building  on  account of floods.  As a result of  above discussion, we are of opinion  that the view taken by  the National Consumer Disputes Redressal  Commission is correct and is fully justified and there is no ground to  interfere with the order. As such, the appeal is dismissed. There  would be no order as to costs.