National Consumer Disputes Redressal
M/S. Srk Constructions & Projects ... vs United India Insurance Company Ltd on 22 January, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 1050 OF 2015 1. M/S. SRK CONSTRUCTIONS & PROJECTS PRIVATE LTD. FLAT NO. 501, LUMBINI ENCLAVE, PUNJAGUTTA, HYDERABAD ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE COMPANY LTD D.O-1,12,11/3, NEAR ANDHRA BANK, RAJA RANGAYAPPA RAO STREET,
VIJAYAWAD ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN,PRESIDING MEMBER
For the Complainant : Mr. S.T. Venkatachala, Advocate For the Opp.Party : Mr. Ravi Bakshi, Advocate
Mr. Shashank Kumar, Advocate
Dated : 22 Jan 2019 ORDER JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)
The complainant was awarded a contract by the PWD of Arunachal Pradesh for double-laning of Papu-Yupia-Hoj-Potin Road from Km 0.00 to 53.00. The complainant had obtained insurance policy bearing no. 150700/44/10/03/600000026 for the period from 20.08.2010 to 19.02.2013. The site of the work is alleged to have been severally damaged on account of a landslide due to heavy rains. A claim for Rs.9,31,93,700/- was submitted by the complainant to the OP for rectification of damages by excavating the debris, including loading, transportation and unloading the same in disposal area with a load upto 3.00 km and making the road to lines and grades. M/s Protocol Surveyors & Engineers Pvt. Ltd. were appointed as the surveyors to examine the claim. Vide their final report dated 02.12.2013, the surveyor recommended the claim to the extent of Rs.17,87,163/-. The claim however, was repudiated by the insurer vide letter dated 07.10.2014 which to the extent it is relevant, reads as under:
As per Claim Form we note that the claim is towards excavation of debris, loading and transportation and unloading the same. The claim is found to be made entirely for cost of removal of debris that had fallen on the road under construction due to landslide following the heavy rain. There is no damage to the road that is claim.
The Contractors All Risks Policy essentially covers the construction comprising double laning of Papu-Yupia-Hoj-Potin Road in Arunachal Pradesh with ancillary extensions.
It is clear that there was no claim made for material damage viz. damage to any portion of the construction and the loss claimed was entirely for "debris removal".
Debris removal is covered under Material Damage Section of the car policy as under:-
The company hereby agrees with the insured (subject to the exclusions and conditions contained herein or endorsed hereon) that if, at any time during the period of insurance stated in the said Schedule or during any further period of extension thereof the properly ..... described in the said Schedule be lost, damaged or destroyed by any cause, other than those specifically excluded hereunder, in a manner necessitating replacement or repair the company will pay or make good all such loss or damage upto an amount not exceeding in respect of each of the items specified in the schedule the sum set opposite thereto and not exceeding in the whole the total sum insured hereby.
The company will also reimburse the insured the cost of clearance and removal of debris following upon any event giving rise to an admissible claim under this policy but not exceeding in all the sum (if any) set opposite thereto in the schedule.
From the above coverage clause it would appear clear that:
Debris removal is essentially an extension of Material Damage cover
The Material Damage cover is against loss or damage to 'property'
In the event of an admissible claim under the policy, the company will also reimburse the cost of debris removal.
Thus, debris removal is an additional cover to Material Damage in view of the words "also reimburse", conditional upon "an admissible claim under the policy."
When debris removal is thus an additional cover and is subject to an admissible claim, there must be such claim for material damage to property insured under the policy namely the road under construction, apart from the debris removal itself.
In the absence of any Material Damage claim, the expenses for debris removal alone will not be admissible.
We may also mention that in the context of coverage of the property viz., construction, debris refers to that of the construct that might have collapsed, whereas the claim relates to debris that has fallen from outside which is not the intention of cover as expressed by the plain language of the policy. Be that as it may, the fact remains that the question of considering debris removal costs does not arise in the absence of any material damage claim.
2. Being aggrieved from the repudiation of the claim, the complainant is before this Commission seeking payment of Rs.9,31,93,700/- alongwith interest etc.
3. The final report of the surveyor, to the extent it is relevant, reads as under:
Based on our survey and verifications carried out, it was noted that various landslides occurred on several occasions in these hills, where this under-construction project road lies.
These landslides resulted in:
a) Accumulation of large quantities of debris on the road, blocking the further progress of work and causing hindrance to vehicular traffic movement on the existing road.
Cause of Loss
Xxxx
The road is being made by excavating & cutting the natural hills slopes.Due to huge area of cross section on account of large height and width of excavated portion, large faces of hills get exposed.These excavated large faces of hills get deprived of its natural slope and vegetation.
During the rainy season, the hills, owing to their geological composition of soil/soft rock, allow seepage of water.Due to seepage of water, earth get saturated very heavy, thus starts sliding towards the toe/bottom of hill due to gravity.As a result, the mass of soil collapses, causing so called "landslides".These landslides happen frequently in the area, particularly during the monsoon months.
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The landslide debris fallen from naturally formed hills (which are not insured) from the External Debris.
The policy of insurance has a set sum insured for Debri Removal.The policy wordings for removal of Debris from Landslides are quoted as below:
Quote
Removal of Debris from Landslides:
It is agreed and understood that otherwise subject to the terms, exclusions, provisions and conditions contained in the policy or endorsed thereon, the insurer shall not indemnify the insured in respect of:
Expenses incurred for the removal of debris from landslides in excess of the costs of excavating the original materials from the area affected by such landslides.
Expenses incurred for the repair of eroded slopes or other graded areas if the insured has failed to take the measures required or to take them in time.
Unquote
Therefore, based upon above, there is a liability on the Underwriters w.r.t. the captioned loss.
7) Nature & Extent of Damage
The landslides caused the following damage:
During landslides, the soil, muck vegetation etc. from the hill fell over the road.As a result, the roads got blocked by these landslides debris.
The project road is an existing road, whose widening is being carried out; the road is also being used for vehicular movement by local inhabitants.The landslide debris had to be removed in order to maintain the record for the movement of traffic.
a) Debris removal
All such debris which came down from the hills fall in this category. Those chainages of project road where the hill-slopes had been subjected to excavation were within the profile of excavated portion as per the profile x-section drawings.
The insured had claimed for removal of Debris and related this item to "Rate of excavation of hills".Whereas, the excavation of hills profile is an activity in which the surface of hill is cut and dressed in the desired slope.The surplus is disposed off to designated dumping area.
10) Quantification & Assessment
The quantification of damage was done on the basis of physical inspection for the claimed items. The quantification & assessment of loss is based upon the following:
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Based upon the measurement taken, comparison was carried out with the excavated profile as existing on the site.During the verifications, we have conducted detailed measurements and have compared with the pre-loss hill profiles provided by the insured.
The lesser of the two, i.e. the actual quantities found during our survey and the quantity of originally excavated material has been recommended for assessment.The calculation for the same are available with us & can be provided in the form of Excel Sheet, if desired, as these would be difficult to print on a single page layout.
Based upon above, our Assessment of Loss is attached Annexure B and summary of the claim is as under:-
S. No.
Description
Unit
Claimed
Recomm.
Quantity
Rate
Amount
Quantity
Rate
Amount
1.
Rectification of the damages by excavation of earth, loading, unloading and transportation and disposal in disposal area
Cum
506488
184
93193700
99611.00
41
4108953.75
Assessed Loss Rs.
93193700
4108953.75
Therefore
Assessed Loss = Rs. 4108954/-
As the losses would have also been caused due to normal rainfall; we recommended a deduction @ 20% over the Assessed Loss for normal rainfall losses.
Therefore,
Assessed Loss
=
Rs.4108954/-
Less @ 20% = Rs. 821791/-
Net Assessed Loss = Rs.3287163/-
Please refer to Annexure (Rainfall data), where it can be seen that prior to 26/27/28 June, 2012; there are 02 other incidences of heavy rainfall on 24.05.2012 and 02/03.06.2012. Since, it is not possible to segregate incident specific damages, we recommended that 03 excess @ Rs.5,00,000/- per event (Total Rs. 15 Lacs) may be deducted.
Therefore, Net Assessed Loss = Rs.3287163/-
Less @ 20% = Rs. 1500000/-
Net Payable Amount = Rs.1787163/-
The above amount of Rs.1787163/- (Rupees Seventeen Lacs Eighty Seven Thousand One Hundred Sixty Three Only) is the net liability of the underwrites, if accepted as per terms and conditions of insurance policy.
4. Mr. Neeraj Saini who inspected the site of the damage alongwith his colleagues in M/s Protocol Surveyors & Engineers Pvt. Ltd. is present in Court. He states that the re-imbursement recommended by them pertains to the damage which was caused due to the debris falling from that portion of the hill where the work was being actually carried out by the complainant. He further states that they have not recommended any re-imbursement for the damage on account of debris falling from other portions of the hill where no work was being executed by the complainant. In view of the aforesaid statement coupled with the report of the surveyor, I am unable to accept the contention of the learned counsel for the insurer that the debris had fallen from those portions of the hill where no work was being executed.
5. The learned counsel for the insurer submits that there was no damage to the work which the complainant was executing with PWD of Arunachal Pradesh and therefore, the claim only for removal of the debris is not admissible under the insurance policy. Mr. Neeraj Saini however, clearly states that there was damage also to the work being executed by the insurer in the hills and the cost of excavation includes the cost of restoring the work to the same position which existed before the landslide happened and that is why they have recommended re-imbursement inter-alia for the excavation work.
6. For the reasons stated hereinabove, I hold that repudiation of the claim in its entirety was not justified. Though the claim lodged by the complainant was to the extent of Rs.9,31,93,700/-, the report of the surveyor clearly shows that the damage attributable directly to the debris falling from those portions of the hill where the work was being executed by the complainant, could be rectified for the amount recommended by them. Therefore, the claim is admissible only to the extent of Rs.17,87,163/- recommended by the surveyor.
7. The complaint is therefore, disposed of with the following directions:
(i) The OP shall pay a sum of Rs.17,87,163/- to the complainant alongwith interest on that amount @ 9% per annum w.e.f. 6 months from the date of submission of the claim till the date of payment.
(ii) The payment in terms of this order shall be made within three months from today.
(iii) There shall be no order as to costs. ......................J V.K. JAIN PRESIDING MEMBER