M/s SHITAL FIBRES LTD. V. ICICI LOMBARD GENERAL INSURANCE COMPANY
1. M/s SHITAL FIBRES LTD.,
A-17, Focal Point Extention,
JALANDHAR.
Versus
1. ICICI LOMBARD GENERAL INSURANCE COMPANY For the Complainant : For the Complainants : Mr. Sameer Nandwani, Advocate Facts: Complainant M/s Shital Fibres Ltd. obtained 7 insurance policies from Opposite Party Bharti AXA General Insurance Co. Ltd. (now ICICI Lombard General Insurance Co. Ltd.) to cover their building, plant, machinery and stocks. The policies provided coverage against loss due to subsidence and landslide. On 15.04.2012, the insured building collapsed while the factory was operational. Complainant intimated the loss to the insurer. Surveyor M/s Puri Crawford Insurance Surveyors and Loss Assessors assessed the loss to be Rs. 4,19,04,368. They sought documents from complainant and appointed a structural engineer. Surveyor submitted final report on 14.12.2012 attributing the collapse to structural design defects. Complainant contested this and obtained expert reports stating other causes like soil settlement. The insurer repudiated the claim on 04.02.2013 stating it is not admissible under the policy. Complainant sent legal notice but insurer did not change its decision. Hence, complainant approached National Commission. The Commission initially dismissed the complaint in 2013, but the Supreme Court in 2017 set aside the dismissal order and remanded the matter back for fresh consideration. Arguments by Complainant: Insurer wrongly repudiated the claim. Surveyor report is incorrect as no soil testing done. Obtained expert reports showing other causes like soil subsidence. Reports show structural design was not defective. Same loss for stocks was held payable by another insurer. Criminal case acquitted company owner ruling subsidence as cause. Loss is covered under Clause VIII of policy. Not under exclusion clause (e). Insurer deliberately repudiated claim. Arguments by Insurer: Sections: Section 21(a)(1) of Consumer Protection Act 1986 Cases Referred/Cited: Referred Laws: Download Court Copy: https://dreamlaw.in/wp-content/uploads/2024/02/49.pdf Full Text of Judgment: 1. The present Consumer Complaint has been filed under Section 21(a)(1) of the Consumer Protection Act, 1986 (for short “the Act”) by M/s Shital Fibres Ltd. (hereinafter referred to as the ‘Complainant/Insured) against Opposite Party Bharti AXA General Insurance Co. Ltd. Upon Application being IA / 7418 / 2022 filed, vide Order dated 12.08.2022, the name of the Opposite Party, Bharti Axa General Insurance Co. Ltd. has been changed to ICICI Lombard General Insurance Co. Ltd. (hereinafter referred to as Opposite Party/Insurer), alleging that the later was wrong in denying the claim of losses incurred by the Complainant. (Structural safety certificate is attached at end. Annexure-A) Then we asked to check depth of foundation of collapsed building which was around 6 feet below road level.
LIMITED IN PLACE OF M/s BHARTI AXA GENERAL
INSURANCE CO. LTD.,
Case No: CONSUMER CASE NO. 155 OF 2013
Date of Judgement: 09 Jan 2023
Judges:
For the Opp.Party : For the Opposite Party : Mr. Joy Basu, Senior Advocate with Ms. Manvi Adlekha, Mr. Trinath Tadakamalla, Mr. Kanak Bose, and Mr. Naman
Khatwani, Advocates
PFC/10360046/P1/09/D5P116 (from 14.09.2011 to 13.09.2012)
PFC/10587435/P3 (from 29.04.2011 to 28.04.2012)
PFC/10279808/P1 (from 15.05.2011 to 14.05.2012)
PFC/10613562/P1 (from 28.06.2011 to 27.06.2012)
PFC/10652264/P1 (from 30.08.2011 to 29.08.2012)
PFC/10359761/P1 (from 08.09.2011 to 07.08.2012)
5. The Opposite Party Insurance Company repudiated the claim made by the Complainant vide its letter dated 04.02.2013, wherein it was mentioned as below:-
6. It is the case of the Complainant that the Opposite Party / Insurance Company is wrong in denying its claim as the present case falls within the ambit of Clause VIII of the Policy in question which is reproduced as below:
“(viii) Subsidence And Landslide including Rockslide Loss, Destruction or damage caused by Subsidence of part of the site on which the property stands or Landslide / Rockslide 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 ground works or excavations.”
7. The stand of the Complainant was that the building had collapsed due to subsidence and on that basis a claim was made with the Opposite Party Insurance Company. However, the Insurance Company repudiated their legitimate claim on the ground that the claim is not admissible under the captioned policy due to non-operation of any insured peril. Alleging deficiency in service on the part of the Opposite Party Insurance Company, the Complainant has filed the present consumer complaint seeking following reliefs:-
“i) ₹4,19,04,368/- towards losses/damages as assessed by the surveyors of the opposite party.
ii) ₹25,00,000/- towards punitive losses
iii) ₹20,00,000/- towards compensation for loss of business and delay in setting the claim amount of ₹4,19,04,368/-
iv) Interest @ 2% or at the bank rate prevalent as on 15.04.2012 as per regulation 9 of the Insurance Regulatory and Development Authority (Protection of Policy holders Interest) Regulations, 2002 since the amount has not been paid within 30 days from the date of appointment of surveyors.
v) Cost of the complaint be also awarded.
vi) Such other or further relief which this Hon’ble Commission may deem fit and proper may also be passed in favour of the complainant and against the opposite party.
8. Vide Order dated 04.07.2013, the Complaint was dismissed by this Commission by observing as under:-
“The complainant has no bone to pluck with the opposite party. The case is meritless and, therefore, the same is dismissed at the admission stage.”
9. Being aggrieved, the Complainant approached the Hon’ble Supreme Court through Civil Appeal No. 7760 of 2013 against the Order dated 04.07.2013 passed by this Commission. The Hon’ble Supreme Court, vide Order dated 23.02.2017, remanded the matter back to this Commission to be heard on merits. The relevant para of the said order is reproduced as below:-
12. It was further submitted that the Complainant has also obtained stock insurance cover from New India Assurance Company, who appointed Consolidated Surveyors Pvt. Ltd. to assess the loss in the same accident and has opined that the claim is payable as the building has fallen due to subsidence and not due to structural design defect. Mr. Shital Vij, owner of the Complainant Company has been acquitted in a criminal case in which it has been held that the Building fell due to subsidence of soil.
13. Relying upon letter dated 08.08.2011 issued to Punjab Water Supply and Sewage Division regarding a sewer line construction which would possibly cause a flood situation, it was submitted that due to improper installation of sewer line and leakage of sewer, the building has collapsed.
15. Per contra, Mr. Joy Basu, learned Senior Counsel appearing for the Opposite Party Insurance Company vehemently argued that despite giving ample opportunities to the Complainant, it did not provide the reports of the experts for determining the cause of loss. However, during the assessment of loss by the Surveyor, the Complainant vide e-mail dated 06.08.2012 informed that the cause of collapse of the building was due to construction of the neighbouring building, which also belonged to the Complainant. After realising that the cause attributed by it to the collapse of building would exclude a claim under the terms of the Policy, the Complainant changed its stand regarding cause of the loss. The Insurance Company appointed Mr. Surjan Singh Sidhu, an Independent Structural Engineer, who opined that the cause of the loss was due to structural design defects in the Building alongwith vibration of the 24 hrs. running Machine, which led to collapse of the building.
16. The Surveyor vide its Final Survey Report dated 14.12.2012 found that the main cause of the collapse of the Building was a structural design defect and is not covered peril under the Insurance Policy. In view of the findings of the Surveyor and the Structural Engineer the Insurance Company repudiated the claim of the Complainant vide letter dated 14.12.2012, therefore, there is no deficiency in service on its part.
17. In the present case, the OP’s case is that the loss is not covered under the Policy as opposed to the loss being excluded under the Policy. Onus was on the Complainant to prove that the loss was covered under the Policy, which could not be proved.
18. The claim does not fall under clause VIII of the Policy. The Expert reports produced by the Complainant cannot be relied as the same have not been proved through an affidavit of evidence by the respective Expert. The Reports have been reviewed by the Surveyor and detailed objections have been set out in the Surveyor’s Affidavit of Evidence filed on behalf of the OP and none of the objections of the Surveyor have been rebutted by the Complainant.
19. It was submitted that no reliance can be placed on the Report issued by Consolidated Surveyor Pvt. Ltd. appointed by the New India Assurance Company or the decision of the Ld. State Commissions because the Assessment of loss of stock would have separate considerations than that under the Policy issued by the Opposite Party. The Opposite Party was not a party before the State Commission. The report issued by Consolidated Surveyors is flawed as much as it did not appoint its own Structural Engineer to determine the cause of loss. The said Surveyor relied upon two reports issued by Experts appointed by the Complainant even though their reports were issued much after the said Surveyor’s report.
20. The Reliance cannot be placed on letter dated 08.08.2011 issued to Punjab Water Supply and Sewage Division regarding a sewer line construction which would possibly cause a flood situation, because the letter is pre-dated the loss by 8 months. The Complainant has neither filed RTI application nor the covering letter to prove that it has been received through RTI.
21. It was further submitted that for the sake of argument if it is assumed that the alleged repair or excavation of a sewer line could have resulted in subsidence on the plot on which the Building in question was located, the same would fall squarely within exclusion sub-clause(e) of Clause VIII of the Policy. Therefore, the claim was not payable. It was prayed that the Consumer Complaint be dismissed.
22. I have heard Mr. Sameer Nandwani, learned Counsel appearing on behalf of the Complainant, Mr. Joy Basu, learned Senior Counsel appearing on behalf of the Opposite Party Insurance Company, perused the material available on record and have given a thoughtful consideration to the various pleas raised by the Parties.
24. The next contention of the Opposite Party that the present Complaint is not maintainable since the Complainant does not fall within the definition of ‘Consumer’ is rejected in view of the Judgment passed by this Commission in Harsolia Motors v. National Insurance Co. Ltd. I, (2005) CPJ 27 (NC) wherein it has been held that since an insurance policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose. This Commission does possess the requisite jurisdiction to entertain a Consumer Complaint wherever a defect or deficiency in the services rendered by an insurer is made out.
25. The Surveyor appointed Structural Engineer, Er. Surjan Singh Sidhu BE (Civil) to investigate the cause of loss. The conclusion drawn by structural engineer, is reproduced, as follows:
“4. CONCLUSION
26. The Report of Er. Surjan Singh Sidhu is only presumptive. As per report of Er. Surjan Singh Sidhu, the material used in construction of the building meets the standard specifications, but even then the building collapsed. It has been presumed that the beams failed near the joints due to sheer stress and vibrations. It is pertinent to mention here that no machines were installed on first and second floor of the building. Moreover, the insured has submitted a certificate from the competent authority that textile machines installed by the insured has minimum vibrations and such vibrations don’t damage the building. Thus the Reports of Er. Surjan Singh Sidhu does not have much substance to prove that the building collapsed due to material failure. The
Surveyor without taking any measures for soil testing to determine whether the soil was wet or not, concluded that the building collapsed due to defective design.
27. It is not in dispute that upon instruction from the Surveyor appointed by the Opposite Party Insurance Company, the Complainant obtained Expert Opinion to determine the cause of loss. Guru Nanak Dev Engineering College Testing and Consulting Cell, Ludhiana, vide their Report dated 15.03.2013, opined as under:-
“The drawings of Building as mentioned in subject (Refer Structural drawings Sheet No. 1 to 7) submitted by M/s. Sheetal Fabres Ltd. C-81, Focal Point, Jalandhar is checked and found OK, with amendments shown in red ink.”
28. Shri Kunwar Sunil Kumar, Chartered Engineer vide his Expert Report also opined that even if the total vibration of the machine is taken together, it cannot cause the collapse of the building.
29. M/s. ARO Tech Structural Consultants, Jalandhar City, Punjab, opined as under:-
“Generally Reasons for building Failure are:
Structural Instability:
It was requested to client to check its, Str. Drgs, and he approached G.N.E. Ludhiana College for this Part. Their checking shows there was no any Structural defect in drags.
Material Quality:
Existing steel, concrete and Brick samples at Failure site were sent to Bhaskar material testing lab, Jalandhar.
Reports were found to be of good material used.
(Report is attached at end. Annexure-B)
Soil settlement due to excessive load or seepage of water or side deep excavation:
Road joining building and canal is around 17 feet. It reply of our queries Mr.Joginder told that one year back the road b/w building and canal was excavated by Punjab sewerage board to lay a 800mm sewer pipe.
After further investigation we found sewer man hole was at 8 feet distance from building due to which a side soil pressure under columns was developed as 1V:2H criteria for foundation at different levels was not maintained by Punjab sewerage board as per Indian Standard code IS 1904-1986 clause 8.0 (IS code clause attached with) “which satiates that in case of granular or clayey soils, a line drawn between the lower adjacent edges of adjacent footing shall not have a steeper slope than one vertical to two horizontal. At site Vertical distanced B/W foundation of two was 9.0 but horizontal different on h/w two was 8.0 which should be 9*2=18’0”. So a side pressure was developed in soil which was continued even after refilling, because that refilled soil was not compacted properly by Punjab sewerage board.
Other alternative for the deep excavation around an existing building is insertion of sheet piles around it and then excavate the land. This concept was also not followed by Punjab sewerage board.
So collapse of the building may be based on account of the phenomenon of the subsidence of the soil. The phenomenon as described include that a leak from a sewer pipe may saturate soil, making it more vulnerable to subsidence or to landslide. Additionally deeply wet soil is more vulnerable to compaction –by hoover, vehicles or other above ground forces.”
30. From the perusal of the above Expert Reports, it is crystal clear that the cause of collapse of the Building was subsidence of the soil which was due to the leakage from sewer pipe line installed by the Punjab Sewerage Board. Therefore, the claim of the Complainant does fall within Clause VIII of the Policy and it does not fall within the exclusion sub-clause(e) of Clause VIII of the Policy, as alleged by the Opposite Party Insurance Company. Even otherwise, the Opposite Party Insurance Company failed to establish that they have provided the copy of the terms and conditions and the cover note to the Complainant till the date of filing the Complaint, thus, they could not take benefit of the exclusion clause in view of the principle laid down by the Hon’ble
31. For the reasons stated hereinabove, the Consumer Complaint is partly allowed and the Opposite Party Insurance Company is directed to pay a sum of ₹4,19,04,368/- (Rupees Four Crore Nineteen Lakh Four Thousand Three Hundred Sixty Eight only) towards loss as assessed by the Surveyor, alongwith interest @9% p.a. w.e.f. 15.04.2012, i.e., the date of filing of the claim, till the date of payment, within six weeks from today, failing which the rate of interest shall increase to 12% p.a. Keeping in view the peculiar facts and circumstances of the case, the Opposite Party Insurance Company shall also be liable to pay a sum of ₹50,000/- towards cost of litigation to the Complainant. Pending application, if any, also stands disposed off.