Dr Dhananjaya Y Chandrachud, J
1 Delay condoned.
2 Leave granted.
3 This appeal arises from a judgment and order of the National
Consumer Disputes Redressal Commission1 dated 7 March 2018.
4 The appellant obtained a “Standard Fire and Special Perils Insurance
Policy” from the first respondent to cover his shop situated at Gausala
Road, Sangrur. The shop was insured in the value of Rs 18,00,000 and
SANJAY KUMAR the policy was valid from 21 June 2011 to 20 June 2012. On 29 March
2012, the showroom in which the appellant carried on the business of
1 NCDRC
sanitaryware collapsed as a result of the work of excavation which was
being carried on in an adjacent plot. A First Information Report was lodged
on 30 March 2012 at the Police Station, Sangrur and intimation of the loss
was given to the insurer. A surveyor was appointed. The claim was
repudiated by the insurer on 11 May 2012. This led to the institution of the
consumer complaint before the District Consumer Disputes Redressal
Forum2, Sangrur. The District Forum allowed the claim in the amount of
Rs 18,00,000, together with interest at nine per cent per annum from the
date of the institution of the complaint. The order of the District Forum was
upheld by the State Consumer Disputes Redressal Commission3, Punjab
on 5 May 2016. However, in a revision filed by the insurer, the NCDRC
reversed the order awarding the claim.
5 Notice was issued in the present proceedings on 22 April 2019. The
office report indicates that the insurer has been served. There is no
appearance on its behalf.
6 The dispute between the parties turns on a construction of clause VIII
(e) of the policy of insurance. Before adverting to the exclusions, it is
necessary to extract the relevant part of the insurance policy, which reads
as follows:
“In consideration of the insured named in the Schedule hereto
having paid to the United India Insurance Company Limited
(hereinafter called the Company) the full premium mentioned
in the said schedule, the company agrees, (subject to the
conditions and exclusions contained herein or endorsed or
otherwise expressed hereon) that if after payment of the
premium the Property insured described in the said Schedule
or any part of the such property to be destroyed or damaged
2 District Forum 3 SCDRC
by any of the perils specified hereunder during the period of
insurance named in the said schedule or of any subsequent
period in respect of which the Insured shall have paid and the
Company shall have accepted the premium required for the
renewal of the policy, the Company shall pay to the Insured
the value of the Property at the time of the happening of its
destruction or the amount of such damage or at its option
reinstate or replace such property or any part thereof.”
7 Clause VIII is in the following terms:
“VIII. Subsidence and Landslide including Rock slide: Loss,
destruction or damage directly caused by subsidence of part
of the site on which the property stands or land slide/rock
slide excluding:
a) the normal cracking, settlement or bedding down of
new structures
b) the settlement or movement of made up ground
c) coastal or river erosion
d) defective design or workmanship or use of defective
materials
e) demolition, construction, structural alterations or repair
of any property or groundworks or excavations.”
8 Clause VIII brings within the purview of the insured perils a loss,
destruction or damage directly caused by subsidence of a part of the site
on which the property stands or a land slide/rock slide, but excludes, what
is stipulated in sub-clauses (a) to (e) thereafter. The exclusion in sub-
clause (a) refers to the normal cracking, settlement or bedding down of
new structures. The exclusion in clause (d) refers to defective design or
workmanship or use of defective materials. The crucial exclusion is the
one in sub-clause (e) which has weighed with the NCDRC. Clause (e)
relates to the demolition, construction or structural alterations or repair of
any property or groundworks or excavations.
9 In the present case, the appellant was not engaged in any work of
demolition, construction or structural alterations nor was it engaged in any
repair of its property. The excavation which was the cause of the loss, was
being carried on in a neighbouring plot and not by the appellant in his own
property. In the absence of a specific qualification indicating that the
exclusion will apply to an excavation being carried on by a third party, the
reasonable construction of sub-clause (e) of Clause VIII is that it should
apply only to a situation where the excavation is being carried on by the
insured himself in his own property. Significantly, the words “of any
property” qualify the words preceding them namely, “demolition,
construction, structural alterations or repair” and not the words that follow.
10 It is well-settled that in the event that the two constructions are
possible or in the event of an ambiguity, that construction which is
beneficial to the insured should be accepted consistent with the purpose
for which the policy was taken, namely to cover the risk on the happening
of a certain event. [See in this context, the decision of this Court in United
India Insurance Co Ltd v Pushpalaya Printers4.
11 The NCDRC, in reversing the concurrent views of the District Forum
and the SCDRC, held thus:
“On bare reading of the above, it is clear that as per the
above noted condition, the loss caused to the insured
property due to demolition, construction, structural alterations
or repair of any property or ground works or excavations is
excluded from the risk covered. On perusal of para 3(b) of
the copy of complaint placed on record, it is evident that as
per the stand taken by the complainant on 29.03.2012 the
insured showroom had fallen accidentally as a result of
subsidence and land sliding due to digging work being carried
4 (2004) 3 SCC 694
out by the neighbour in adjacent plot. It is also alleged in the
said paragraph that a daily diary report no.54 dated
30.03.2012 regarding the incident was duly lodged with the
P.S. Sangrur. From the aforesaid admission on the part of the
complainant, it is evident that loss was caused to the insured
because of collapse of the insured building as a result of
excavation work being carried out in the adjacent plot
resulting in subsidence and land sliding. Thus, in my view, in
view of the above noted specific exclusion clause, the
petitioner/ insurance company was justified in repudiating the
insurance claim.”
12 The error of the NCDRC lies in reading the exclusion in regard to
excavations as being applicable in a situation such as the present where
the cause which resulted in the damage was a work of a third party which
was carrying on an excavation in independent premises. It is not in
dispute that no part of the excavation was attributable to any act or
omission on the part of the appellant. Hence, to read the exclusion, as
being attracted in the present case, would not be to a reasonable
construction of the policy of insurance.
13 For the above reasons, we allow the appeal and set aside the
impugned judgment and order of the NCDRC dated 7 March 2018. In
consequence, we restore the order of the District Forum dated 5 May
2016, as affirmed by the SCDRC. In the circumstances, there shall be no
order as to costs.
[Dr Dhananjaya Y Chandrachud]
[Hrishikesh Roy] New Delhi; January 17, 2020
SPECIAL LEAVE PETITION (CIVIL) Diary No(s).47437/2018
(Arising out of impugned final judgment and order dated 07-03-2018 in RP No. 2399/2016 passed by the National Consumer Disputes Redressal Commission, New Delhi)
SANGRUR SALES CORPORATION Petitioner(s)
VERSUS
UNITED INDIA INSURANCE COMPANY LTD. & ANR. Respondent(s)
(WITH IA No. 61971/2019 - CONDONATION OF DELAY IN FILING, IA No. 61972/2019 - CONDONATION OF DELAY IN REFILING / CURING THE DEFECTS)
Date : 17-01-2020 This petition was called on for hearing today.
CORAM :
For Petitioner(s) Mr. Navneet Kumar, Adv.
Mr. Vikas Bhadana, Adv.
Mr. Mohit Singh, Adv.
Mr. Parijat Kishore, AOR
For Respondent(s) Mr. Raunak Jain, Adv.
Mr. A. V. Rangam, AOR
Mr. Buddy A. Ranganadhan, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Delay condoned.
Leave granted.
The appeal is allowed in terms of the signed
reportable judgment.
Pending application, if any, stands disposed of.
(Signed reportable judgment is placed on the file)