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CASE NO.: Appeal (civil)  391 of 1999

PETITIONER: United India Insurance Co. Ltd.

RESPONDENT: M/s. Pushpalaya Printers         

DATE OF JUDGMENT: 25/02/2004

BENCH: Shivaraj V. Patil & Dr. AR.Lakshmanan.

JUDGMENT: J U D G M E N T

Shivaraj V. Patil, J.

       The respondent filed a complaint before the  District Consumer Disputes Redressal Forum (District  Forum) under Section 12 of the Consumer Protection Act,  1986 (for brevity ’the Act’) praying for settlement of  an insurance claim at Rs.75,000/- along with interest  at the rate of 18% per annum.  The appellant repudiated  the claim on the ground that damage caused to the  building and printing press of the respondent was not  covered by Clause 5 of the insurance policy.  The  District Forum accepting the contention urged on behalf  of the appellant held that there was no deficiency of  service on the part of the appellant and dismissed the  complaint as not maintainable.  The respondent filed  appeal before the State Consumer Disputes Redressal  Commission (State Commission) against the order of the  District Forum. The State Commission, on interpretation  of the word "impact" contained in Clause 5 of the  insurance policy, allowed the appeal, set aside the  order of the District Forum and granted relief to the  respondent directing the appellant to pay a sum of  Rs.75,000/- with interest at the rate of 12% per annum  with effect from 18.10.1994 till the date of payment.   The appellant, dissatisfied with the order of the State  Commission, filed revision petition before the National  Consumer Disputes Redressal Commission (National  Commission).  The National Commission, while accepting  the interpretation given by the State Commission,  however, reduced the amount of payment to the  respondent from Rs.75,000/- to Rs.56,000/-.  Aggrieved  by said order of the National Commission, this appeal  is brought before this Court by the appellant.         Before us, learned counsel for the parties in  their arguments reiterated their respective  contentions, which were urged before all the forums.   In order to consider the respective contentions urged  on behalf of the parties, it is both necessary and  useful to quote the relevant portions from the  insurance policy: - "IN CONSIDERATION OF THE insured named  in the Schedule hereto having paid to  United India Insurance Company Limited  (hereinafter called THE COMPANY) the  premium mentioned in the said schedule.  

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Till company agrees, (subject to the  condition and exclusion contained herein  or endorsed or otherwise expressed  hereon) that if after payment of premium  the property insured described in the  said schedule or any part of such  property, be destroyed or damaged by the  following: - 1.      ....... 2.      ....... 3.      ....... 4.      ....... 5.      Impact by any rail/road vehicle or  animal."

       In the order of the District Forum it is noticed  that the appellant contested the claim by filing  written objection contending that the damage caused due  to vibration from the operation of bulldozer was not an  incident of impact by any road vehicle, as per Clause 5  of the insurance policy for risk, and so the complaint  was not maintainable.  Para 4 of the order of the  District Forum reads: - "4.     Neither party led any evidence  because it was admitted by the Opposite  Party that in connection with a road  construction with the help of a  bulldozer near the complainant’s  printing press in question there was  damage to that building.  And, both  parties agreed that it all depends upon  the interpretation of the term (5) of  the Insurance Policy."

Thus, from the order of the District Forum it is clear  that the appellant did not dispute as to damage caused  to the building and machinery of the respondent on  account of the bulldozer driven close to the building  on the road for the purpose of road construction and  that both the parties agreed that the sustainability of  the claim depended upon the interpretation of Clause 5  of the insurance policy.  The District Forum took a  narrow view that the word "impact" contained in  clause 5 of the insurance policy covered risk of only  contingent impact of a road vehicle forcibly coming in  contact with another.  It held that the damage caused  to the building and machinery in the instant case was  not due to such forcible contact but it was due to the  consequential effect of vibration on account of  operating of a bulldozer by the side of the  respondent’s printing press building and as such it was  not covered by clause 5 of the insurance policy; thus,  there being no deficiency of service on the part of the  appellant the complaint filed by the respondent was not  maintainable.         According to the State Commission the only point,  which arose for decision in the appeal was whether the  damage caused to the building and the machinery of the  respondent was the resultant of the impact by the  bulldozer.  Considering the meaning of the word  "impact" given in various dictionaries the State  Commission took the view that when the word "impact"  has got meanings more than one and the word "impact"  not only means "coming forcibly in contact with  another", it also means "to drive close", "effective

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action of one thing upon another" and "effect of such  action".  The "impact" covered damage caused to the  building and machinery in view of the admitted fact  that such damage was caused because of close drive by  the bulldozer on the road.  Expressing thus the State  Commission set aside the order of the District Forum  and granted relief to the respondent.         The National Commission concurring with the view  expressed by the State commission interpreting the  expression "impact" observed that the said word has  to be construed liberally and in its wider sense.           The only point that arises for consideration is  whether the word "impact" contained in clause 5 of  the insurance policy covers the damage caused to the  building and machinery due to driving of the bulldozer  on the road close to the building.  It is evident from  the terms of the insurance policy that the property was  insured as against destruction or damage to whole or  part.  The appellant company agreed to pay towards  destruction or damage to the property insured to the  extent of its liability on account of various  happenings.  In the present case both the parties  relied on clause 5 of the insurance policy.  Clause 5  is also subject to exclusions contained in the  insurance policy.  That a damage caused to the building  or machinery on account of driving of vehicle on the  road close to the building is not excluded.  Clause 5  speaks of "impact" by any rail/road vehicle or  animal.  If the appellant company wanted to exclude any  damage or destruction caused on account of driving of  vehicle on the road close to the building, it could  have expressly excluded.  The insured possibly did not  understand and expect that the destruction and damage  to the building and machinery is confined only to the  direct collusion by vehicle moving on the road to the  building or machinery.  In the ordinary course, the  question of a vehicle directly dashing the building or  the machinery inside the building does not arise.   Further, "impact" by road vehicle found in the  company of other words in the same clause 5 normally  indicates that damage caused to the building on account  of vibration by driving of vehicle close to the road is  also included.  In order to interpret this clause, it  is also necessary to gather the intention of the  parties from the words used in the policy. If the word  "impact" is interpreted narrowly the question of  impact by any rail would not arise as the question of a  rail forcibly coming to the contact of a building or  machinery would not arise.  In the absence of specific  exclusion and the word "impact" having more meanings  in the context, it cannot be confined to forcible  contact alone when it includes the meanings "to drive  close", "effective action of one thing upon another"  and "the effect of such action", it is reasonable and  fair to hold in the context that the word "impact"  contained in clause 5 of the insurance policy covers  the case of the respondent to say that damage caused to  the building and machinery on account of the bulldozer  moving closely on the road was on account of its  "impact".  It is also settled position in law that if  there is any ambiguity or a term is capable of two  possible interpretations one beneficial to the insured  should be accepted consistent with the purpose for  which the policy is taken, namely, to cover the risk on  the happening of certain event.         Although there is no

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ambiguity in the expression "impact", even otherwise  applying the rule of contra proferentem, the use of the  word "impact" in clause 5 in the instant policy must  be construed against the appellant.  Where the words of  a document are ambiguous, they shall be construed  against the party who prepared the document.  This rule  applies to contracts of insurance and clause 5 of the  insurance policy even after reading the entire policy  in the present case should be construed against the  insurer.  A Constitution Bench of this Court in General  Assurance Society Ltd. vs. Chandumull Jain & Anr. [1966  (3) SCR 500] has expressed that "in a contract of  insurance, there is requirement of uberrima fides, i.e.  good faith on the part of the assured and the contract  is likely to be construed contra proferentem i.e.  against the company in case of ambiguity or doubt."         In the light of what is stated above, no fault can  be found with the impugned order.  The interpretation  placed by the State Commission as well as by the  National Commission in relation to the expression  "impact" is in order and appropriate.  Hence the  point is answered in the affirmative.         Under the circumstances we find no merit in the  appeal.  Consequently it is dismissed.  No costs.