Delhi District Court
Meenakshi Garden And Gupha Restaurant vs New India Asssurance Co Ltd on 2 February, 2024
CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
IN THE COURT OF VINOD YADAV:
DISTRICT JUDGE (COMMERCIAL COURT)-02:
NORTH-WEST DISTRICT: ROHINI COURTS: NEW DELHI
CNR No.DLNW01-005217-2020
Civil Suit (Comm.) No.122/2020
In the matter of:
Meenakashi Garden and Gupha Restaurant,
Through Dhanpat Kalra, Sole Proprietor,
Mathura Road, Village Seekri, Ballabgarh,
Faridabad, Haryana.
.....Plaintiff
(Through Shri Amit Kumar and Rakesh Rathee, Advocates)
Versus
The New India Assurance Company Limited,
Claim Hub, Delhi Regional Office-1,
3rd Floor, R.G City Centre,
LSC, Block-B, Lawrence Road,
Delhi-110035.
....Defendant
(Through Ms.Sucharita Ghosh, Advocate)
Date of Institution of Suit : 18.08.2020
Date of transfer to this court : 09.08.2023
Date of hearing final arguments : 24.01.2024
Date of judgment : 02.02.2024
DOD: 02.02.2024 || Page 1 of 15
CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
SUIT FOR RECOVERY OF Rs.92,14,560/- (Rupees Ninety Two Lakhs
Fourteen Thousand Five Hundred Sixty Only) Alongwith pendentelite and
future interest @ 9% per annum
02.02.2024
JUDGMENT
1. The facts of the case in brief, as borne out from the record are that in the year 2015, plaintiff had taken policy of fire insurance from the defendant company vide Policy No.31270111150100000093, in respect of tenanted property/restaurant situated at Mahtura Road, Ballabhgarh, Faridabad, Haryana, which was valid for one year w.e.f 28.05.2015 to 27.05.2016. The said policy covered the plaintiff to the extent of Rs.1.15 Crores in respect of its furniture, fittings, fixtures and other contents. It is the case of plaintiff that unfortunately an incident of fire occurred at the above restaurant on the intervening night of 11/12.05.2016. It is stated that at about 5.00 AM on 12.05.2016, the plaintiff was informed by the police about the fire in the restaurant and the fire brigade had been informed and three fire tenders had reached at the spot to douse the fire. On account of fire, the interior of the restaurant had been damaged/destroyed with further damage to the building, furniture and fixtures etc.
2. It is further averred that plaintiff immediately informed the defendant company and lodged its claim under the aforementioned policy of fire insurance. Thereafter, defendant/insurance company nominated M/s Protocol Insurance Surveyors and Loss Assessors (P) Limited to DOD: 02.02.2024 || Page 2 of 15 CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
conduct survey and assessment of the loss. The surveyor visited the site of accident on 12.05.2016 itself and took detailed notes with regard to the damage and destruction caused by the fire. He also took several photographs of the affected premises for the purpose of record and assessment. The surveyor demanded number of documents from the plaintiff and despite receipt of all the documents, no settlement was offered by the defendant for a considerable time. Accordingly, the plaintiff was constrained to issue a legal notice dated 07.06.2017 to the defendant/ insurance company, inter alia calling upon it to settle the claim on urgent basis, however, the defendant vide its letter dated 14.06.2017 rejected the claim of plaintiff. It is alleged that the defendant had rejected the claim of plaintiff on frivolous grounds and the same was utterly malicious. It is stated that the relevant rent agreements were duly provided to the defendant through its surveyor.
3. It is further averred that thereafter the plaintiff moved National Consumers Disputes Redressal Commission (in short "NCDRC"), inter alia seeking settlement of its claim, however, later on it/plaintiff realized that in view of the summary proceedings adopted in NCDRC, it would not be able to demonstrate its evidence by presenting oral deposition and, therefore, withdrew the complaint from NCDRC with liberty/permission to file the same before the Civil Court. Benefit of Section 14 of the Limitation Act, 1963 was also accorded to the plaintiff by NCDRC.
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4. It is further contended that during the course of proceedings before the NCDRC, the plaintiff was provided a copy of surveyor's report by the defendant, on perusal whereof it was revealed that sureveyor had assessed the loss at Rs.61,64,136/- (Rupees Sixty One Lakh Sixty Four Thousand One Hundred Thirty Six Only). It was further revealed that the surveyor had wrongly carried out deduction of Rs.3,41,503/- towards "discount for error and omission" which was without any basis and arbitrary in nature. Accordingly, the plaintiff has filed the instant suit against the defendant, inter alia claiming a decree in the sum of Rs.92,14,560/- (Rupees Ninety Two Lakhs Fourteen Thousand Five Hundred Sixty Only) (which includes principal amount of Rs.61,64,136/- + pre-suit interest @9% per annum amounting to Rs.30,80,424/-) alongwith pendentelite and future interest thereupon.
5. The defendant filed written statement in the matter, inter alia stating therein that the claim of the plaintiff was repudiated on 14.06.2017, on the ground that the plaintiff had not provided the relevant documents with regard to the tenancy of the suit premises and had concealed the factum of tenancy in the "Proposal Form" submitted for obtaining the insurance policy. It was also claimed that the plaintiff had filed the present suit to extort money from the defendant and that on an earlier occasion also, the plaintiff had filed a claim before NCDRDC, which was later on withdrawn with the liberty to file the present suit.
DOD: 02.02.2024 || Page 4 of 15CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
6. On the basis of pleadings of the parties, vide order dated 20.03.2023, following issues were framed in the matter:
(i) Whether the repudiation of claim by the defendant on account of insurable interest was valid? OPD.
(ii) Whether the plaintiff is entitled to recover Rs.61,64,136/- towards principal amount from the defendant? OPP.
(iii) Whether the plaintiff is entitled to pre-suit interest @ 9% per annum on the principal amount, amounting to Rs.30,80,424/- from the defendant? OPP.
(iv) Whether the plaintiff is entitled to pendentelite and future interest from the defendant, if yes, at what rate of interest? OPP.
(v) Relief. 7. (i) In order to discharge the onus of issues, Shri Dhanpat Kalra,
the proprietor of plaintiff examined himself as PW1; whereas, the defendant/insurance company examined Shri Santosh Kumar Hembram, its Deputy Manager as DW1.
Plaintiff's evidence:
(ii) PW1/Shri Dhanpat Kalra in his evidence by way of affidavit Ex.PW1/A has reiterated the averments made in the plaint and proved on record the following documents:DOD: 02.02.2024 || Page 5 of 15
CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
(a) Copy of Insurance Policy bearing No.31270111150100000093 as Ex.PW1/1;
(b) Final Survey Report dated 17.02.2017 as Ex.PW1/2;
(c) Copy of letter dated 25.05.2017, sent by the plaintiff to the defendant as Ex.PW1/3;
(d) Copy of legal notice dated 07.06.2017, sent on behalf of plaintiff to the defendant as Ex.PW1/4;
(e) Copy of rejection letter dated 14.06.2017, sent by defendant to the plaintiff as Ex.PW1/5;
(f) Copy of another legal notice dated 01.07.2017, sent on behalf of plaintiff to the defendant as Ex.PW1/6;
(g) Copy of reply dated 07.07.2017 sent on behalf of defendant to the plaintiff as Ex.PW1/7;
(h) Copy of reply filed by defendant before NCDRC as Ex.PW1/8;
(i) Copy of Affidavit of Admission/Denial of documents filed by plaintiff before NCDRC as Ex.PW1/9;
(j) Copy of Evidence Affidavit filed by plaintiff before NCDRC as Ex.PW1/10;
(k) Copy of order dated 21.05.2019, passed by NCDRC as Ex.PW1/11;
(l) Copy of Rent Agreement dated 01.04.2016 as Ex.PW1/12;DOD: 02.02.2024 || Page 6 of 15
CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
Defendant's evidence:
(ii) DW-1/Shri Santosh Kumar Hembram in his evidence by way of affidavit Ex.DW1/A has reiterated the averments made in the written statement and relied upon Surveyor's Report (already Ex.PW1/2), Insurance Policy (already Ex.PW1/1) and rejection letter dated 14.06.2017 (already Ex.PW1/5).
8. I have heard arguments advanced at bar by Shri Amit Kumar, Advocate, learned counsel for the plaintiff and Ms.Sucharita Ghosh, Advocate, learned counsel for the defendant and perused the entire material on record. My issue wise findings in the matter are as under.
9. Issue No.1:
Whether the repudiation of claim by the defendant on account of insurable interest was valid? OPD. The onus to prove this issue was upon the defendant, as the same was framed on the basis of preliminary objection taken by the defendant in the written statement. In order to prove this issue in its favour, the defendant was required to prove that the claim of the plaintiff was repudiated on well established legal grounds.
10. The defendant has not disputed the insurance policy Ex.PW1/1, Surveyor's Report Ex.PW1/2 and the order dated 21.05.2019, passed by NCDRC, thereby giving liberty to the plaintiff to withdraw the DOD: 02.02.2024 || Page 7 of 15 CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
complaint and to file the present suit on the same cause of action and the benefit of Section 14 of Limitation Act, 1933 being also accorded. The Insurance Regulatory and Development Authority (IRDA) Regulations, 2017 have also not been disputed. It is also an admitted position on record that defendant was required to dispose of the claim of plaintiff within a period of 30 days from the date of receipt of Surveyor's report (Ex.PW1/2).
11. A perusal of the insurance policy/Ex.PW1/1, which is an admitted document reveals that it has got terms and conditions appended thereto, wherein it has been specifically provided:
xxxxx
(i) Cover may be permitted to the tenant as also to the owner-occupant. Further, in respect of the owner-
occupant, the alternative accommodation may be limited to the area presently under his occupation;
(j) For the owner-occupant, since he will not be paying any rent based on the area occupied by him (in comparison) with the actual rent being paid by the tenant in the same building or similar buildings in the same locality, the standard rent based on based on the rateable values fixed by the Municipal/Revenue Authorities for tax purpose may be treated as the original rent for the purpose of this insurance.
(k) It will be compulsory for i. the owner-occupant to insure both the building and contents.
ii. the tenant to insure the contents of the premises for which he is seeking this extension.
Endorsement wording for insurance of rent for alternative accommodation tenant or owner-occupant:
DOD: 02.02.2024 || Page 8 of 15CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
It is hereby declared that in the event of the premises described in the policy and occupied by the insured, hereinafter, referred as, "premises" being destroyed or damaged by any insured peril as to become unfit for occupation and the insured in consequence taking up alternative accommodation the Company shall subject to special conditions set out herein, indemnify the insured against the additional rent (as explained herein) which the insured is called upon to bear for the period beginning from the date of operation of any of the insured perils until the "PREMISES" is tendered fit for occupation, such period not exceeding such reasonable time.
xxxxx
12. A perusal of the surveyor's report Ex.PW1/2, which is again an admitted document clearly contemplates that the matter with regard to the fire incident which took place in the intervening night of 11/12.05.2016 was immediately reported to the defendant, which appointed M/s Protocol Insurance Surveyors and Loss Assessors (P) Limited as the surveyors. The surveyor conducted survey of the premises and collected all the relevant documents from the plaintiff as well as made enquiries from all the concerned persons with regard to the claim. In para 4 of the report, the surveyor categorically stated that the plaintiff had handed over the rent agreement(s) for the period from the year 2014 till 2016. The surveyor duly noted that although the last rent agreement produced before him by the plaintiff was for the period 15.08.2014 to 31.01.2016, but there was a specific term therein that if the landlord-tenant agree, the tenancy will continue further and the rent would be increased @10% per annum for DOD: 02.02.2024 || Page 9 of 15 CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
the next term. The plaintiff had duly produced the Rent Agreement dated 01.04.2016 as Ex.PW1/12, which was to enure for the period from 01.04.2016 till 01.03.2017.
13. In para 4 itself, the surveyor has duly held after enquiry that the insured, i.e the plaintiff had "insurable interest" in the affected building. The existence of an insurable interest is an essential ingredient of any insurance contract. It is also an important and fundamental principle of insurance. What is it that is insured in a fire policy, not the bricks and materials used in building the house, but the interest of the insured in the subject matter of insurance. The legal right to insurer arising out of a financial relationship recognized under the law between the insured and the subject matter of insurance, the essentials of insurable interest are as follows:
(i) There must be some property rights, interest, life or limb or potential liability devolving upon the insured capable of being covered by a policy of insurance;
(ii) Such property, right, life, limb, interest or liability must be the subject matter of insurance;
(iii) The insurer must stand in a relationship with the subject matter of insurance, whereby he benefits from its safety and would be prejudiced by its loss, damage or exchange of liability;
(iv) The relationship between the insured and the subject matter of insurance must be recognized under law.DOD: 02.02.2024 || Page 10 of 15
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14. The surveyor submitted the survey report (Ex.PW1/2) in the matter, bearing in mind the aforesaid ingredients and then came to the conclusion that the plaintiff had "insurable interest" in the affected building. The surveyor also appreciated the fact that the land on which the affected building stood contained contents of "insurable interest" of the plaintiff. In para 8 of the report, a conclusion was arrived at by the surveyor that the captioned incident of fire was duly published in print media and on the basis of material collected by the surveyor, the probable cause of the fire was held to be "short circuit in the electric wiring and the sparks generated therefrom". It was held to be accidental in nature and as such was found to be covered under the policy.
15. Consequently, a claim/compensation which was assessed finally was Rs.61,64,136/- (Rupees Sixty One Lakhs Sixty Four Thousand One Hundred Thirty Six Only) in para 13. Most importantly, in Clause 14, it was held that on the basis of survey so conducted by him, no policy condition or warranty had been breached or violated by the plaintiff.
16. The plaintiff has claimed the aforesaid amount as the suit amount alongwith interest @9% per annum from the date of incident, i.e on 12.05.2016.
17. Now, let us analyse document Ex.PW1/5, i.e the letter of repudiation/rejection impugned in this suit. A careful reading of this document contemplates that the competent authority of the defendant did DOD: 02.02.2024 || Page 11 of 15 CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
not apply mind to the facts and circumstances of the case as well as the surveyor's report Ex.PW1/2 and took decision of repudiation on the basis of congestural assumption that at the time of seeking coverage, although the affected premises was within the possession and occupation of plaintiff, but as a tenant and not as a landlord. No counterable view was taken with regard to the report of surveyor. A factual error was also committed in taking into account rent agreements till the year 2015. This fact is contrary to the report of surveyor as well as the averments made by the plaintiff in the complaint made before NCDRC. The plaintiff has duly proved the rent agreement Ex.PW1/12 for the period from 01.04.2016 till 01.03.2017 which fact again has not been controverted by putting questions to PW-1.
18. Now, let us analyze the evidence recorded in the matter. In para 14, PW-1 had made categorical averments with regard to pleadings in the plaint before NCRDC and various rent agreements. Except for the fact that a question was put to this witness in cross-examination that he had not handed over the copy of the relevant rent agreement, no specific question was put in this regard. The suggestion was denied by PW-1. Except this, no question with regard to validity or otherwise of Ex.PW1/1 was asked from him. This witness in his further cross-examination had categorically stated that he had given all the relevant papers like rent agreement to the surveyor, which fact also finds duly corroborated with the report of surveyor. PW-1 has categorically deposed that he had disclosed in the "proposal form" about the factum of guarantor in the rent DOD: 02.02.2024 || Page 12 of 15 CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
agreement. Similar averments were made by him in the plaint, but the defendant did not produce the "proposal form" on record, to dispute the aforesaid averments. As such, an adverse inference is liable to be drawn against the defendant. A specific question was put to DW-1 whether any letter was written to the plaintiff about producing the relevant rent agreements. This witness categorically accepted that no such letter was ever written to the plaintiff by the defendant. DW-1 also gave evasive reply to the questions that defendant was duty bound under IRDA regulations to settle the claim with the plaintiff within 30 days of the receipt of the report of surveyor. This witness categorically admitted that the surveyor had not pointed out any breach of condition/warranty of the terms and conditions of insurance policy. This witness further could not answer as to by which mode the copy of "proposal form" was sent to the plaintiff.
19. From the material which has come on record, the undisputable conclusion is that the repudiation of the claim of the plaintiff by the defendant through Ex.PW1/5 is not sustainable in the eyes of law. The issue is, therefore, decided against the defendant and in favour of plaintiff.
20. Issues No.(ii), (iii) and (iv):
(ii) Whether the plaintiff is entitled to recover Rs.61,64,136/-
towards principal amount from the defendant? OPP.
(iii) Whether the plaintiff is entitled to pre-suit interest @9% per annum on the principal amount, amounting to Rs.30,80,424/- from the defendant? OPP.
DOD: 02.02.2024 || Page 13 of 15CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
(iv) Whether the plaintiff is entitled to pendentelite and future interest from the defendant, if yes, at what rate of interest? OPP.
The onus to prove all the aforesaid issues was upon the plaintiff. All the aforesaid issues are being taken up together as the same are inter-connected and findings thereupon would be common. Although, the plaintiff could have asked for more compensation over and above the one held by the surveyor in its report Ex.PW1/2, yet the plaintiff has confined the same to the same amount, i.e Rs.61,64,136/- (Rupees Sixty One Lakh Sixty Four Thousand One Hundred Thirty Six Only) alongwith pre-suit interest @9% per annum. The object of settling the claim filed by claimant is to restore him to the position prior to the loss suffered by him for which there was a valid insurance. Therefore, the plaintiff is held entitled to pre-suit interest @ 9% per annum w.e.f 12.05.2016 till the date of filing of the suit, i.e 18.08.2020. The plaintiff is further held entitled to pendentelite and future interest @9% per annum till the date of recovery/realization. All the aforesaid issues are decided accordingly.
21. Relief:
In view of the above discussion, suit of the plaintiff is decreed and a decree in the sum of Rs.61,64,136/- (Rupees Sixty One Lakh Sixty Four Thousand One Hundred Thirty Six Only) alongwith interest @ 9% per annum w.e.f 12.05.2016 till realization thereof is passed in favour of plaintiff and against the defendant.
(ii) Plaintiff is also held entitled to costs and counsel's fee which is quantified as Rs.50,000/.DOD: 02.02.2024 || Page 14 of 15
CS (Comm) No.122/2020:Meenakashi Garden And Gupha Restaurant V/s New India Assurance Co.Ltd.
22. Decree Sheet be drawn accordingly.
23. File be consigned to Record Room after completion of necessary formalities.
Dictated & Announced in the (Vinod Yadav)
open Court on 02.02.2024 District Judge (Commercial Court)-02
North-West/Rohini Courts
DOD: 02.02.2024 || Page 15 of 15