National Consumer Disputes Redressal
Madhukant K Vira vs Bajaj Allianz General Insurance Co. ... on 7 July, 2025
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL
COMMISSION AT NEW DELHI
RESERVED ON: 23.04.2025
PRONOUNCED ON: 07.07.2025
CONSUMER COMPLAINT NO 1849 OF 2018
Madhukant K Vira
C/o KP Packaging Limited
Plot No.32, Lane No13,
Near Nagpada Junction,
Mumbai 400008 .... Complainant
Versus
1. Bajaj Allianz General Insurance
Company Limited, A company incorporated
under the companies act 1956, Through its
Registered office locates at GE Plaza,
Airport Road, Yerawada, Pune 411006
2. Bajaj Alianz General Insurance
Company Limited, A company incorporated
under the companies Act, 1956 Through its
Policy Servicing office located at Bajaj
Allianz House, 291-Xtrium, 4th Floor, Next
to Holy family hospital Church, Andheri
Kurla Road, Chakala, Andheri East,
Mumbai 400093
3. Bajaj Allianz General Insurance
Company Limited, A Company incorporated
under the Companies Act, 1956 Through its
Claim processing office located at 2nd
Floor, Rustomjee Aspiree Building, CTS
No.628, Eastern Express Highway, Sion (E),
Mumbai 400022 ... Opposite Parties
BEFORE:
HON'BLE MR.JUSTICE SUDIP AHLUWALIA, PRESIDING MEMBER
HON'BLE AVM J. RAJENDRA, AVSM VSM (Retd.), MEMBER
For the Complainant : Mr. Ashutosh Marathe, Advocate with
Mr. Ketan Vira, in person
For the Opposite Parties : Mr. Amit k. Maihan, Advocate (VC)
Ms. Binny Sethi, Advocate
CC/1849/2018 Page 1 of 42
JUDGMENT
AVM J. RAJENDRA, AVSM VSM (Retd.), MEMBER
1. This Consumer Complaint has been filed under Section 21of the Consumer Protection Act, 1986 (for short "the Act") against the Opposite Party seeking to direct the OPs:
(A) That, it be held that the OPs have rendered deficient service to the Complainant within the meaning of the Consumer Protection Act, 1986.;
(B) That, it be held that the OPs adopted Unfair Trade Practice within the meaning of the Consumer Protection Act, 1986; (C) That, the OPs be directed to pay to the Complainant an amount of Rs.10,04,97,831/- towards loss caused to the Complainant due to collapse of insured building due to insured peril;
(D) That the OPs be directed to pay to the Complainant interest @15% on the said amount of Rs. 10,04,97,831/- from 20th August 2016 till the amount is paid by the insurance co.; (E) That, the OPs be directed to pay to the Complainant Rs.10 lakhs towards mental harassment caused by the OPs.; (F) That the OPs be directed to pay to the Complainant cost of Complaint of Rs.7.50 lakhs;
(G) Any other relief be granted to the Complainant which this Commission may deem fit in the interest of justice and fair play;
2. Brief facts of the case, as per the Complainant, are that he is the owner of a residential building named "Vira Sadan" at 41/49, Maulana Azad Road, Near Nagpada Junction, Mumbai 400008. The property is a Ground + 2 Floors structure occupied by tenants at the time of the collapse incident. This building was offered as collateral security to Bank of Maharashtra in connection with credit facilities sought by his son, Mr. Ketan Vira, for his company M/s KP Packaging Ltd, in which the Complainant serves as a Director. As part of the credit facility CC/1849/2018 Page 2 of 42 approval process, Bank of Maharashtra required such immovable properties and fixed assets being mortgaged to be valued by the Bank's approved valuer. Thus, the documents related to the purchase of "Vira Sadan" were submitted to the Bank, and the property was accepted as collateral security for credit facilities to be granted to M/s KP Packaging Ltd. To ensure the enforceability of the security provided, Bank of Maharashtra caused a structural audit of the building through their independent valuer, who furnished a Structural Report dated 02.04.2014, that the property was structurally sound with a remaining useful life of 15 years, barring any natural calamity. Based on this assessment, the Bank accepted the collateral security and released the credit facilities to the company. As per the mandate of the Bank, the Complainant had approached the Opposite Parties (OPs) to insure the building. After conducting their due diligence, including verification of the building's status with Bank of Maharashtra, OPs issued a Standard Fire and Special Perils Policy for a Sum Insured of Rs.9,86,34,000 for period from 28.07.2015 to 27.07.2016. The policy specifically insured the residential building "Vira Sadan" against various perils as stated thereat. The policy schedule explicitly mentioned the interest of "various financial institutes as listed in Annexure II" and specifically identified "Bank of Maharashtra" as the entity that had provided credit against the building's collateral. CC/1849/2018 Page 3 of 42
3. On 25.06.2016, due to heavy rain and inundation of water around in the gully, which caused percolation of water into the building's foundation, a portion of the insured building unexpectedly collapsed and was immediately evacuated by all tenants as a safety precaution. The next day i.e. on 26.06.2016, the remaining building also collapsed. Notably, the collapse occurred without any prior signs of structural distress. The OPs were promptly notified of both collapse events on 25.06.2016, and 27.06.2016, respectively, as the building collapsed in two separate phases. After the incident, the Complainant approached Mumbai Building Repairs & Reconstruction Board (MBR & R Board), a unit of the Maharashtra Housing & Area Development Authority (MHADA), which serves as the Appropriate Authority for conducting inspections and investigations of such properties. The MBR & R Board established under the Maharashtra Housing and Area Development Act, 1976 is operational since 05.12.1977, following a government restructuring three separate boards were created under MHADA's umbrella. The appointed surveyor conducted initial survey of the property and determined that a structural engineer's opinion should be obtained. When informed about the existing structural audit report from Bank of Maharashtra's valuer, in consultation with their surveyor, OPs appointed their own structural engineer, Mr. K.L. Savla, who inspected the collapsed building along the surveyor and Mr Ketan Vira. CC/1849/2018 Page 4 of 42
4. On 07.07.2016, the surveyor issued a letter to the Complainant seeking various documents and information, including the insurance policy copy, claim form, detailed description of the occurrence, detailed loss estimate, probable cause of damage, salvage value assessment, FIR/Panchanama, Fire Brigade report, premises layout, photographs, joint inspection report with the insured's RCC consultant, newspaper clippings, tax receipt copies and reports from relevant departments (BMC/MHADA) about likely causes of building damage. In response, the Complainant submitted a detailed letter dated 28.07.2016, providing comprehensive information and clarifications. These included insurance policy, completed claim form, detailed description of occurrence and loss estimate prepared by M/s Patidar Alliance dated 19.07.2016. Additionally, he provided the letter dated 27.06.2016, from Mumbai Building & Reconstruction Board regarding propping and partial demolition work. As regards the probable cause of damage, while acknowledging that determining the exact reasons was the surveyor's responsibility, the Complainant contended that constant heavy rainfall in the preceding days as a potential contributing factor. He clarified that salvage would be treated according to MHADA Act. He explained that as Mr. Savla was appointed by the insurance company the joint inspection report with RCC consultant should be obtained from the insurer rather than the insured. He contended that CC/1849/2018 Page 5 of 42 the Mumbai Building Repairs and Reconstruction Board, and not the Brihanmumbai Municipal Corporation (BMC), was the appropriate authority to provide inspection and collapse reports for this building, as it was classified as a Cess building under MHADA's jurisdiction. Despite these clear explanations, the surveyor continued to request reports from BMC and structural reports that should have been in the surveyor's possession, which he contended as unfair trade practices. He contended that in the Fire Brigade report it was erroneously stated that the cause was under investigation by the Building Department-E Municipal Ward, which further complicated the jurisdictional confusion. In any case, Fire Brigade is not the appropriate authority to determine jurisdictional matters between the Mumbai Building Repair & Reconstruction Board and the Bombay Municipal Corporation. Following the submission of requested documents and information, the Complainant expected a favorable settlement of the claim. However, OPs repudiated the claim vide letter dated 20.08.2016. This prompted a meeting between the parties and the Complainant protested the unfair practices employed by the surveyor, particularly the demand for reports that were either in the surveyor's possession or should have been obtained by the surveyor as part of his investigative duties. OPs acknowledged the concerns and assured him that such issues would not be raised in future proceedings, and that they would consider the CC/1849/2018 Page 6 of 42 claim based on records and information already provided. However, contrary to OPs assurances, he received another repudiation letter dated 28.09.2016, from OP insurer stating that "none of the perils covered under the policy operated to give rise to the reported collapse of the building". During this period, he received crucial documentation from authorities, including Mumbai Building & Reconstruction Board providing collapse report dated 28.06.2016, which categorically stated that "due to heavy rain, there was inundation of water in house gully causing percolation in foundation of building causing sudden collapse without showing any sign of distress." The Mumbai Building Repairs & Reconstruction Board issued a letter dated 22.07.2016 estimating the salvage value as Rs.1,36,169. The grounds of repudiation directly contradicted the official collapse report from the Mumbai Building & Reconstruction Board, the competent authority for the same. The report clearly established that the loss was due to water inundation, which falls squarely within the scope of policy coverage. Despite this clear position, OPs maintained that the loss was not caused by an insured peril. When he brought this contradiction to the OPs attention vide letter dated 15.12.2016, OPs agreed to reconsider the case and, however, again repudiated the claim vide letter dated 13.04.2017. This final repudiation was despite clear evidence the collapse was due to water inundation damage under the terms of the insurance policy. CC/1849/2018 Page 7 of 42
5. Upon notice, the complaint was resisted by the Opposite Parties (OPs) by filing their Written Statement. The OPs contended that, the complaint faces a fundamental challenge regarding its maintainability under clause 6(ii) of the insurance policy. The Complainant's claim was repudiated vide letter dated 28.09.2016, while the present complaint was filed only in September 2018, creating a significant gap that affects the complaint's tenability. This issue has been previously addressed by the Commission in the case of Wilhelm Textiles India Pvt. Ltd. Vs Oriental Insurance Company, decided on 01.05.2017, in CC No. 163 of 2016, where similar circumstances were considered and appropriate precedent was established. The main contention of OPs is that the present complaint pertains to a loss that falls entirely beyond the scope of the insurance policy, thereby precluding any attribution of deficiency in service to the OPs and thus the complaint is liable to be rejected on this ground alone. The insurance policy in question, being a Standard Fire and Special Perils Policy, operates as a named peril policy, which means that claims under such policies are payable exclusively when the specifically named perils mentioned in the policy document are the operative cause of loss. In the present case, the loss to the building occurred was not due to any named peril covered under the policy, but admittedly due to reasons that fall outside the policy scope. The documents annexed with the complaint CC/1849/2018 Page 8 of 42 itself clearly demonstrate the actual cause of loss to the building, supported by reasoned findings that were reiterated and confirmed by the appointed surveyor. The conclusions regarding the cause of loss have been consistently affirmed by multiple authoritative sources, including the relevant Govt Dept, the professional surveyor and qualified structural experts who conducted independent assessments. Since the reported loss in question falls demonstrably beyond the scope of the policy coverage, no amount was due to be paid and thus the claim was appropriately repudiated vide letter dated 28.09.2016. Given these circumstances, the Complainant has no sustainable cause of action against the OPs, and therefore, the complaint is liable to be dismissed. The complaint has been filed with fundamentally erroneous prayer which itself constitutes sufficient ground for dismissal of the complaint, without any consideration of its merits. Throughout, the Complainant referenced an estimate of reconstruction, yet the total estimated amount of repair in accordance with modern standards represents approximately only ten percent of the amount claimed in the prayer. Most significantly, no reasonable basis whatsoever has been articulated in the entire complaint to justify or support the specific amount prayed for in the relief sought. The complaint is with fictitious prayer amount that lacks any foundation in law or fact, rendering it untenable under established legal principles and meriting outright CC/1849/2018 Page 9 of 42 rejection. The complaint fails to meet this Commission‟s fundamental jurisdictional mandate by any reasonable interpretation or stretch of analysis. While the amount sought by the Complainant corresponds to the Sum Insured, this claim lacks any substantive basis or supporting documentation. More critically, based on the available assessment reports and professional evaluations, any amount that might be theoretically payable would fall substantially below the minimum pecuniary threshold required for this Commission's jurisdiction. Therefore, on this jurisdictional ground alone, the complaint is liable to be returned to the appropriate forum having pecuniary jurisdiction. OPs contended that the importance and reliability of surveyor reports in insurance claim determinations has been consistently upheld and reiterated through a series of authoritative decisions by Hon‟ble Supreme Court as well as by this Commission. The established legal principle maintains that unless cogent and compelling reasons are demonstrated, any deviation from the professional findings contained in a duly conducted survey report is not warranted and should not be entertained. In the present case, the appointed surveyor has evaluated the claim and submitted a comprehensive and detailed report with reasoned findings, supported by cogent evidence and professional analysis. The surveyor, after conducting a thorough and detailed examination of the dilapidated structure and engaging in careful CC/1849/2018 Page 10 of 42 contemplation regarding the actual cause of loss, arrived at the well- reasoned conclusion that the loss in question is not covered under the policy terms and therefore not payable. This conclusion was reached through systematic analysis of all available evidence, structural assessment, and consideration of the policy terms and conditions. Significantly, no document, material evidence or expert testimony has been placed on record or brought before this Commission to demonstrate the actual amount of liability purportedly suffered by the Complainant. No evidence has been presented which would serve to contradict or challenge the professional findings of the surveyor. The absence of such contradictory evidence further reinforces the conclusion that the amount prayed for in the complaint is entirely without factual or legal basis, lacking any supporting evidence or reasonable justification for the substantial sum claimed as relief.
6. The Complainant had filed Rejoinder reiterating the facts of the complaint and filed its evidence including a copy of the of order dated 16.12.2019 (Exhibit A), a copy of the Agreement (Exhibit B), valuation report dated 04.04.2014 & 04.06.2014 (Exhibit C), a copy of the IRDA Circular (Exhibit D), copy of letter dated 21.08.1990 (Exhibit E ), copy of letter dated 7.07.2016 issued by the surveyor (Exhibit F), a copy of letter dated 15.01.2018, 18.02.2018 & 13.08.2018 (Exhibit G), a copy of Chapter VIII of MHADA Act 1976 dealing with the issue(Exhibit H). CC/1849/2018 Page 11 of 42
7. In evidence, OPs submitted a copy of the claim form (Exhibit A), copy of letter dated 16.12.2016 (Exhibit B), copy of letter dated 16.03.2017 (Exhibit C), copy of letter dated 27.07.2016 (Exhibit D), copy of letter dated 28.07.2016 (Exhibit E), copy of letter dated 28.08.2016 (Exhibit F), copy of letter dated 04.04.2017 (Exhibit G), copy of letter dated 13.04.2017 (Exhibit H), copy of letter dated 17.04.2017 (Exhibit I), copy of survey report (Exhibit J), copy of report of structural engineer (Exhibit K), copy of repudiation letter (Exhibit L).
8. The learned counsel for the complainant reiterated the facts stated and the grounds advanced in the complainant and argued that the Complainant had obtained a Standard Fire and Special Perils Policy from the OP to indemnify himself against potential losses to his residential building. This building was later offered as collateral security to Bank of Maharashtra in connection with a loan granted to M/s KP Packaging Limited, a company promoted by the Complainant's son, Ketan Vira, in which the Complainant served as a Director. The learned counsel argued that, prior to the disbursement of the loan, Bank of Maharashtra conducted a structural audit of the building being offered as collateral. The appointed auditor issued a certificate stating that the building had an approximate future life of 15 years from the date of certification. However, within two years of this structural assessment, the building collapsed due to heavy rainfall and CC/1849/2018 Page 12 of 42 consequent inundation of water into the foundation, resulting in a loss that fell within the scope of the insured perils covered under the policy. He asserted that the Complainant immediately notified the insurance company of the loss in accordance with the terms and conditions of the policy. Subsequently, the insurance company appointed a surveyor to assess the claim, who reportedly submitted his findings to the insurer. Despite the Complainant's categorical requests for access to this survey report, the insurance company failed to provide the same, thereby contravening the guidelines issued by the Insurance Regulatory and Development Authority of India (IRDA) which mandate the sharing of such reports with policyholders. The insurance company repudiated the Complainant's claim on the grounds that the loss was not caused by an insured peril. He asserted that the repudiation of the claim by the OPs is illegal and inconsistent with the policy terms, which explicitly provide risk coverage for losses arising from storm, cyclone, typhoon, tempest, hurricane, tornado, flood, and inundation. Given that the building collapsed due to heavy rains and subsequent flooding, the circumstances clearly fall within the ambit of covered perils under the policy. He asserted that the claim is within the scope of the policy and that the Complainant is entitled to be paid Rs.10,04,97,831 along with interest @ 15% per annum from 20.08.2016 till the amount is paid along compensation of Rs.10 lakhs and Rs.7.50 lakhs as costs. CC/1849/2018 Page 13 of 42
9. The learned counsel for Opposite Parties argued that the complaint has been filed in respect of a monetary claim concerning an alleged loss that was rightly repudiated by the Insurance Company as falling beyond the scope of the policy terms of the Insurance Contract. He argued that the complaint is liable to be returned, as by no stretch of interpretation does the complaint meet the threshold required to invoke the jurisdiction of this Commission. The amount sought by the complainant exceeds the Sum Insured under the policy, while nothing has been brought on record to demonstrate or substantiate the actual cost of reconstruction of the building in question. In the absence of any supporting documentation or bills, the prayer for compensation lacks any factual or legal basis. Further, the value of the property itself bears no direct relation to the claimed loss, as the plot and platform where the alleged incident occurred remain unchanged, with only the building structure having sustained damages. Therefore, the entire property value cannot form the basis of any legitimate claim. Based on the assessment report prepared by qualified surveyors, any amount that may be found payable would fall substantially below the minimum pecuniary threshold required for the jurisdiction of this Commission. He asserted that, on this ground alone, the complaint is liable to be returned to be filed before the appropriate forum having jurisdiction to adjudicate such matters. The present complaint is fundamentally CC/1849/2018 Page 14 of 42 untenable as it is barred by Clause 6(ii) of the insurance policy in question. He argued that the complainant's claim was rightly repudiated by the OPs vide letter dated 28.09.2016 and whereas this complaint was filed only in September 2018, beyond the stipulated time limit for filing such complaints. This Commission has already established a clear precedent while dealing with similar provisions in the case of Wilhelm Textiles India Pvt. Ltd. vs. Oriental Insurance Company, decided on 1st May 2017 in Consumer Case No. 163 of 2016, which supports the position taken by the insurance company in the present matter. The policy in question, being a Standard Fire and Special Peril Policy, constitutes a named peril policy, meaning that claims under the policy are payable only when the specifically named perils mentioned in the policy terms operate as the proximate cause of loss. The loss to the building in question did not occur due to any named peril covered under the policy but admittedly resulted from causes falling outside the policy coverage. The documents annexed with the complaint clearly demonstrate the actual cause of loss to the building, as confirmed by reasoned findings made by the appointed surveyor. The findings regarding the cause of loss were independently affirmed by the relevant Government Dept, the surveyor and structural engineering experts. Since the reported loss falls entirely beyond the scope of policy coverage, nothing was found payable under the terms CC/1849/2018 Page 15 of 42 of the insurance contract, and accordingly, the claim was rightfully repudiated through official communication dated 28.06.2016. He asserted that the Complainant failed to establish any valid cause of action against the OP insurer and, therefore, the complaint is liable to be dismissed in its entirety. The present complaint concerns a loss that falls clearly beyond the scope of the policy, and consequently, no deficiency in service can be attributed to OPs, who have acted in accordance with the policy terms and established insurance practices. He reiterated that the importance and reliability of surveyor reports have been consistently upheld and reiterated in a series of cases by the Hon'ble Supreme Court and this Commission in number of cases. Unless cogent and compelling reasons are demonstrated, deviation from the findings contained in a professional survey report is not warranted and would be contrary to established legal precedent. In this case, the qualified and duly appointed surveyor had evaluated the claim in detail and submitted a detailed report containing reasoned findings supported by cogent analysis and professional expertise. After thorough examination of the dilapidated structure and careful consideration of the cause of loss, the surveyor arrived at the well- founded conclusion that the loss is not payable under the terms of the insurance policy. However, in compliance with standard practice and regulatory requirements, the surveyor, after due deliberation and CC/1849/2018 Page 16 of 42 careful scrutiny of all available material, assessed the hypothetical loss at Rs.8,29,250 on a depreciated value basis and Rs. 51,87,000 on a Reinstatement Insured Value (RIV) basis. He argued that without prejudice to the aforementioned submissions and without admitting any liability under the policy terms, any amount that might be considered payable would remain strictly limited to the extent of the assessment made by the qualified surveyor. He asserted that no document or material evidence has been placed on record by the complainant to demonstrate the actual amount of liability suffered or to contradict the professional findings of the surveyor. Therefore, the amount prayed for in the complaint is entirely without factual basis or legal justification. The complainant‟s claim was thoroughly examined and found not payable under the policy terms, leading to its rejection after careful application of mind and adherence to due procedures. The Complainant failed to bring any material on record to establish entitlement to compensation under the policy. Since the reported loss fell outside the policy cover, no deficiency in service can be attributed to the OPs. OPs conducted themselves fairly and in accordance with standard insurance practices throughout the claim process, and therefore, no question of adopting unfair trade practices. The entire complaint was based on unfounded conjectures rather than facts or legal entitlements. He sought complaint to be dismissed with costs. CC/1849/2018 Page 17 of 42
10. We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned counsels for both the parties.
11. It is a matter of record that the Complainant obtained Insurance Policy No.OG-16-1904-4001-00000507 from OPs for the said building in question valid from 28.07.2015 to 27.06.2016. It is uncontested position that the building collapsed on 25.06.2016 and 26.06.2016, which resulted in substantial damage. The complainant immediately reported the incident on 25.06.2016 and 27.06.2016 department, police as well as the OP.
12. The main issues to be determined in the case are, whether this commission has jurisdiction to entertain the complaint? Whether the circumstances under which the building in question had collapsed falls within the scope of the policy in question? If the incident is within the scope of the policy, what is the compensation, if any, liable be paid by the Opposite Parties to the Complainant?
13. As regards jurisdiction of this Commission's, it is the contention of the complainant that the repudiation of the claim by the OPs is illegal and inconsistent with the policy terms, which explicitly provide risk coverage for losses arising from flood and inundation. The building in question collapsed due to heavy rains and subsequent flooding, and CC/1849/2018 Page 18 of 42 the circumstances clearly fall within the ambit of covered perils under the policy. The claim of the Complainant with respect to the incident is for Rs.10,04,97,831 along with interest @ 15% per annum from 20.08.2016 till the amount is paid, along compensation of Rs.10 lakhs and Rs.7.50 lakhs as costs. He, therefore, asserted that as the claim is beyond Rs.1,00,00,000 this Commission has jurisdiction. On the other hand, the OPs asserted that the amount sought as compensation by the complainant exceeds the Sum Insured under the policy. Further, the value of the property itself bears no direct relation to the claimed loss, as the plot and platform where the alleged incident occurred remain unchanged, with only the building structure having sustained damages. After thorough examination of the dilapidated structure and after due deliberation and careful scrutiny of all available material, assessed, the hypothetical loss at Rs.8,29,250 on a depreciated value basis and Rs. 51,87,000 on a Reinstatement Insured Value (RIV) basis. Therefore, the entire property value cannot form the basis of any legitimate claim. Based on the assessment report prepared by the surveyor, any amount that may be found payable would fall substantially below the minimum pecuniary threshold of this Commission and thus the complaint is liable to be returned to be filed before the appropriate forum having jurisdiction. CC/1849/2018 Page 19 of 42
14. It is undisputed that the pecuniary jurisdiction under the Consumer Protection Act, 1986, is governed by the value of the goods/ services and the compensation claimed. This principle has been established by the Larger Bench of this Commission in Ambrish Kumar Shukla and Ors. Vs. Ferrous Infrastructure Pvt. Ltd. (I (2017) CPJ 1 (NC), holds:
"14. Reference order dated 11.08.2016 Issue No. (i) It is evident from a bare perusal of Section 21, 17 and 11 of the Consumer Protection Act that it's the value of the goods or services and the compensation, if any, claimed which determines the pecuniary jurisdiction of the Consumer Forum. The Act does not envisage determination of the pecuniary jurisdiction based upon the cost of removing the deficiencies in the goods purchased or the services to be rendered to the consumer. Therefore, the cost of removing the defects or deficiencies in the goods or the services would have no bearing on the determination of the pecuniary jurisdiction. If the aggregate of the value of the goods purchased or the services hired or availed of by a consumer, when added to the compensation, if any, claimed in the complaint by him, exceeds Rs. 1.00 crore, it is this Commission alone which would have the pecuniary jurisdiction to entertain the complaint. For instance if a person purchases a machine for more than Rs. 1.00 crore, a manufacturing defect is found in the machine and the cost of removing the said defect is Rs. 10.00 lacs, it is the aggregate of the sale consideration paid by the consumer for the machine and compensation, if any, claimed in the complaint which would determine the pecuniary jurisdiction of the Consumer Forum. Similarly, if for instance, a house is sold for more than Rs.1.00 crore, certain defects are found in the house, and the cost of removing those defects is Rs. 5.00 lacs, the complaint would have to be filed before this Commission, the value of the services itself being more than Rs. 1.00 crore."CC/1849/2018 Page 20 of 42
15. Admittedly, the claim of the Complainant beyond in the present case claims over ₹10 Crore, inclusive of interest, compensation etc. Applying the principle from Ambrish Kumar Shukla (Supra), the aggregate claim far exceeds the ₹1 Crore threshold. Consequently, the complaint is within the pecuniary jurisdiction of this Commission.
16. As regards the issue whether the heavy rainfall on 25.06.2016 in the area near the insured building in question and the collapse of a portion of the building and the complete collapse on the next day i.e. on 26.06.2016, covered within the scope of the policy, it is the specific contention of the Complainant that the building in question was duly evaluated for its lifespan by a qualified surveyor of the Bank and it was determined that the building is in good condition with 15 years residual life. Due to heavy rainfall in the area on 25.06.2016 and 26.06.2016, rainwater inundated the surrounding of the building and percolated into foundation and thus the building had collapsed. Notably, the collapse occurred without any prior signs of structural distress. It was due to structural distress, the building collapsed in two separate phases. The Complainant asserted that since the building collapsed due to water inundation in the street and around the building and the rainwater percolating into the foundation adversely impacting its structural integrity resulted in its collapse, the damage occasioned is within the scope of the policy. On the other hand, the OP asserted that the policy CC/1849/2018 Page 21 of 42 in question, being a Standard Fire and Special Peril Policy. The policy constituted a named peril policy, meaning that claims under the policy are payable only when the specifically named perils mentioned in the policy terms operate as the proximate cause of loss. The loss to the building in question did not occur due to any named peril covered under the policy but admittedly resulted from causes falling outside the policy coverage. The documents annexed with the complaint clearly demonstrate the actual cause of loss to the building, as confirmed by reasoned findings made by the appointed surveyor. The findings regarding the cause of loss were independently affirmed by the relevant Government Department, the surveyor and structural engineering experts. Since the reported loss falls entirely beyond the scope of policy coverage, the Complainant is not entitled for any compensation under the insurance contract.
17. It is undisputed that the building collapsed as a sequel to heavy rainfall on 25.06.2016 and 26.06.2016. The Complaint contended that due to heavy rain, the rainwater inundated the area and surroundings of the building, seeped into the foundation and impacted its structural integrity and as a sequel the building collapsed. The OPs contended that damage due to rain is not a listed peril and thus no claim is admissible. As regards the Policy in question, the relevant portions of Insurance Policy covering the risks are as follows:- CC/1849/2018 Page 22 of 42
"VI. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado Flood and Inundation (STFI) Loss, destruction or damage caused by storm, cyclone, typhoon, tempest, hurricane, flood or inundation, volcanic eruption or other convulsions of nature."
18. In catena of judgments, the nature of insurance contracts, scope and restraint to be exercised in interpreting the terms of the contracts are well discussed and crystallized by this Commission and Hon‟ble Supreme Court. In Oriental Insurance Company Limited vs. J.K. Cement Works, 2020 SCC OnLine SC 83, the Hon‟ble Supreme Court has held as follows:
8. Before delving into the particular facts of this case, it may be useful to refer to the dictionary meanings of the terms "flood" and "inundation".
8.1. The word "flood" is defined in Concise Oxford English Dictionary, 8th Edn. (1990) as follows:
"flood.-- ... 1a an overflowing or influx of water beyond its normal confines, esp. over land; an inundation. b the water that overflows.
2a an outpouring of water; a torrent (a flood of rain)."
Particularly in the context of the insurance contracts, Stroud's Judicial Dictionary, 5th Edn. (1986) defines the word "flood", in Young v. Sun Alliance & London Insurance Ltd [Young v. Sun Alliance & London Insurance Ltd., (1977) 1 WLR 104 (CA)], an English case decided by the Court of Appeal, and reads as follows:
"... „Flood‟ in an insurance policy meant a large movement or irruption of water, and did not cover mere seepage from a natural source..."
8.2. The word "inundate" is defined in Concise Oxford English Dictionary, 8th Edn. (1990) as follows:
"inundate.-- ... 1 flood.
2 overwhelm (inundated with enquiries)."
Further, per Black's Law Dictionary, 9th Edn. (1990), the word "inundate" means:
CC/1849/2018 Page 23 of 42
"inundate.-- To overflow or overwhelm; esp., to flood with water."
9. Simply put, a flood may be described as overflow of water over land. Floods can be broadly divided into the following categories: coastal floods, fluvial floods (river floods), and pluvial floods (surface floods).
9.1. The coastal floods occur when water from a sea or an ocean flows into nearby areas. They are caused either by extreme tidal activity (high tides) or by a storm surge -- strong winds from a hurricane or other storms forcing the water onshore -- or by the simultaneous occurrence of both these phenomena.
9.2. The fluvial or river flood occurs when the water level exceeds the capacity of a river, stream, or lake, resulting in the overflow of the surplus water to surrounding banks and neighbouring land. They are usually caused by either excessive rainfall or unusually high melting of snow because of rising temperatures.
9.3. Lastly, the pluvial or surface floods refers to the accumulation of water in an area because of excessive rainfall. These floods occur independently of an overflowing water body. The pluvial floods include the flash floods which take place due to intense, torrential rains over a short period of time. A pluvial flood may also occur if the area is surrounded by hilly regions from where the run-off water comes and accumulates in the low-lying area. In urban localities, because of the concrete streets and dense construction, rainwater is unable to seep into the ground. Steady rainfall over a few days or torrential rains for a short period of time may overwhelm the capacity of the drainage systems in place, leading to accumulation of water on the streets and nearby structures, and resulting in immense economic damage.
10. So far as the term "inundation" is concerned, it can be used to refer to both the act of overflow of water over land that is normally dry and to the state of being inundated. The inundation can also be intentional, which is sometimes carried out for military purposes, as well as for agricultural and river management purposes. In the latter sense i.e. as a state of being, inundation refers to accumulation of water in which objects or land may be submerged. In simpler terms, inundation can be used to refer both the act of overflow of water as well as the result of such overflow.
CC/1849/2018 Page 24 of 42
11. It flows from the above discussion that overflow of water due to a flood may result in the state of inundation. As discussed above, floods are of different types, and may be caused due to several factors complementing each other. Usually, non-coastal floods originate from rainfall, but the magnitude of rainfall sufficient to cause a flood, and the damage that a flood causes, may vary depending on a variety of aspects such as the location of land (low-lying or altitudinous), the water retention capacity of the soil, and the density of population and manmade construction in the area, among other things. In rare cases, a non-coastal flood may also occur without any rainfall. For instance, shortcomings in the construction of a dam may lead to its complete breakdown, resulting in a flood."
19. In Oriental Insurance Co. Ltd. Vs JK Cement Works (Supra), this Commission in Vaibhav Dyestuff Industries and Ors. Vs. New India Insurance Co. Ltd & Ors, FA No.613 and 633 of 2015, decided on 30.01.2024 has held as under:
34. The inundation in the present case has resulted from excessive rainfall and according to the aforesaid orders and judgments, inundation would stand covered under the risk policy, which is also available in the present case. The accumulation of water to the extent of 9" to 1 foot as observed by the surveyor and its retention for about 16 hours in the premises, that to a certain extent is also supported by photographs, renders the claim to be preponderantly probable and therefore acceptable. Consequently, in view of the conclusions drawn hereinabove and the law as discussed, no error is discernable in the conclusions drawn by the State Commission, while allowing the complaint. The loss had occurred due to heavy rainfall and it appears that the surveyor seems to have inappropriately recommended non-payment of damages and his report, which contradicts his own observation is not creditworthy.CC/1849/2018 Page 25 of 42
20. In the case in question, it is an admitted position that the Complainant‟s building collapsed due to waterlogging on account of heavy rainfall and seeping into the foundation of the old building. As per the precedents cited above, the same is termed as inundation and is covered as a risk under the policy.
21. Even if it is considered that there exists some ambiguity in this regard, in approaching such cases entailing absence of clarity with respect to contractual obligations, contentions between the parties and liabilities with respect to insurance contracts, Hon‟ble Supreme Court in Mahakali Sujatha vs. The Branch Manager, Future Generali India Life Insurance Company Ltd. & Anr., Civil Appeal No.3821 of 2024, decided on 10.04.2024 has held "40. Insofar as the Query 6.1 is concerned, it is noted that the same is not clear and it is not known in what context the details of the insured were sought with regard to any existing life insurance policy. On a reading of Query 6.1 holistically, it is also not clear regarding the nature of information that was sought by the respondent insurance company as discussed above. The answer given by the insured to the Query 6.1 was thus in the negative. In this backdrop, can it be said that there was a suppression of material fact by the insured in the proposal form. In this context, it is necessary to place reliance on the contra proferentem rule. This Court in the case of Manmohan Nanda, discussed the rule of contra proferentem as under:
"45. The contra proferentem rule has an ancient genesis. When words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction, applies. This rule is often invoked while interpreting standard form contracts. Such contracts heavily comprise of forms with printed terms which CC/1849/2018 Page 26 of 42 are invariably used for the same kind of contracts. Also, such contracts are harshly worded against individuals and not read and understood most often, resulting in grave legal implications. When such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem rule against the person who has drafted the same.
46. Some of the judgments which have considered the contra proferentem rule are referred to as under:
46.1. In General Assurance Society Ltd. v. Chandumull Jain, AIR 1966 SC 1644, it was held that where there is an ambiguity in the contract of insurance or doubt, it has to be construed contra proferentem against the insurance company. 46.2. In DDA v. Durga Chand Kaushish, AIR 1973 SC 2609, it was observed:
"In construing document one must have regard, not to the presumed intention of the parties, but to the meaning of the words they have used. If two interpretations of the document are possible, the one which would give effect and meaning to all its parts should be adopted and for the purpose, the words creating uncertainty in the document can be ignored."
46.3. Further, in Central Bank of India Ltd. v. Hartford Fire Insurance Co. Ltd., AIR 1965 SC 1288, it was held:
"11. ... what is called the contra proferentem rule should be applied and as the policy was in a standard form contract prepared by the insurer alone, it should be interpreted in a way that would be favourable to the assured."
46.4. In Sahebzada Mohammad Kamgarh Shah v. Jagdish Chandra Deo Dhabal Deb, AIR 1960 SC 953, it was observed that where there is an ambiguity it is the duty of the court to look at all the parts of the document to ascertain what was really intended by the parties. But even here the rule has to be borne in mind that the document being the grantor's document it has to be interpreted strictly against him and in favour of the grantee.
46.5. In United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd., (2016) 3 SCC 49 , this Court quoted Halsbury's Laws of England (5th Edn. Vol. 60, Para 105) on the contra proferentem rule as under:
"37. ... Contra proferentem rule.--Where there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if CC/1849/2018 Page 27 of 42 they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as the language used in answer to questions in the proposal or in a slip, a construction favourable to the insurers will prevail if the insured has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the rule has no application."
46.6. The learned counsel for the appellant have relied upon Sushilaben Indravadan Gandhi v. New India Assurance Co. Ltd., (2021) 7 SCC 151, wherein it was observed that any exemption of liability clause in an insurance contract must be construed, in case of ambiguity, contra proferentem against the insurer. In the said case reliance was placed on Export Credit Guarantee Corpn.(India) Ltd v. Garg Sons International, (2014) 1 SCC 686, wherein this Court held as under :
"39. ... 11. The insured cannot claim anything more than what is covered by the insurance policy. "The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely." The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the Insurance Company must also be read strictly. The contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon."
Having regard to the aforesaid discussion on contra proferentem rule, it is noted that the Queries 6.1 and 6.2 are not clear in themselves as we have discussed the same above. Therefore, the answer given by the deceased cannot be taken in a manner so as to negate the benefit of the policy by repudiation of the same on the demise of the insured.
41. At this stage, we may also dilate on the aspect of burden of proof. Though the proceedings before the Consumer Fora are in the nature of a summary proceeding. Yet the elementary principles of burden of proof and onus of proof would apply. CC/1849/2018 Page 28 of 42 This is relevant for the reason that no corroborative evidence to what has been deposed in the affidavit is let in by the insurance company in order to establish a valid repudiation of the claim in the instant case. Section 101 of the Evidence Act, 1872 states that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. This Section clearly states that the burden of proving a fact rests on the party who substantially asserts the affirmative of the issue and not upon the party who denies it; for a negative is usually incapable of proof. Simply put, it is easier to prove an affirmative than a negative. In other words, the burden of proving a fact always lies upon the person who asserts the same. Until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom burden lies has been able to discharge his burden. Further, things which are admitted need not be proved. Whether the burden of proof has been discharged by a party to the lis or not would depend upon the facts and circumstances of the case. The party on whom the burden lies has to stand on his own and he cannot take advantage of the weakness or omissions of the opposite party. Thus, the burden of proving a claim or defence is on the party who asserts it.
42. Section 102 of the Evidence Act, 1872 provides a test regarding on whom the burden of proof would lie, namely, that the burden lies on the person who would fail if no evidence were given on either side. Whenever the law places a burden of proof upon a party, a presumption operates against it. Hence, burden of proof and presumptions have to be considered together. There are however exceptions to the general rule as to the burden of proof as enunciated in Sections 101 and 102 of the Evidence Act, 1872, i.e. in the context of the burden of adducing evidence:
(i) when a rebuttable presumption of law exists in favour of a party, the onus is on the other side to rebut it; (ii) when any fact is especially within the knowledge of any person, the burden of proving it is on him (Section 106). In some cases, the burden of proof is cast by statute on particular parties (Sections 103& 105).
43. There is an essential distinction between burden of proof and onus of proof; burden of proof lies upon a person who has to prove the fact and which never shifts but onus of proof shifts. Such a shifting of onus is a continuous process in the CC/1849/2018 Page 29 of 42 evaluation of evidence. For instance, in a suit for possession based on the title, once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant, it is for the defendant to discharge his onus and in the absence thereof, the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff's title vide RVE Venkatachala Gounder vs. Arulmigu Viswesaraswami and VP Temple (2003)8SCC 752.
44. In a claim against the insurance company for compensation, where the appellants in the said case had discharged the initial burden regarding destruction, damage of the showroom and the stocks therein by fire and riot in support of the claim under the insurance policy, it was for the insurance company to disprove such claim with evidence, if any, vide Shobika Attire vs. New India Assurance Co. Ltd., (2006) 8 SCC 35.
45. Section 103 of the Evidence Act, 1872 states that the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person. This Section enlarges the scope of the general rule in Section 101 that the burden of proof lies on the person who asserts the affirmative of the issue. Further, Section 104 of the said Act states that the burden of proving any fact necessary to be proved in order to enable any person to give evidence of any other fact is on the person who wishes to give such evidence. The import of this Section is that the person who is legally entitled to give evidence has the burden to render such evidence. In other words, it is incumbent on each party to discharge the burden of proof, which rests upon him. In the context of insurance contracts, the burden is on the insurer to prove the allegation of non-disclosure of a material fact and that the non-disclosure was fraudulent. Thus, the burden of proving the fact, which excludes the liability of the insurer to pay compensation, lies on the insurer alone and no one else.
46. Section 106 of the Evidence Act, 1872 states that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. This Section applies only to parties to the suit or proceeding. It cannot apply when the fact is such as to be capable of being known also by persons other than the parties. (Source: Sarkar, Law of Evidence, 20th Edition, Volume-2, LexisNexis) CC/1849/2018 Page 30 of 42
47. In light of the aforesaid discussion on burden of proof, it has to be analysed if the respondent in the present case has adequately discharged his burden of proof about the fact of suppression of previous life insurance policies of the insured.
48. The respondent insurance company has produced no documentary evidence whatsoever before the District Forum to prove its allegation that the insured had taken multiple insurance policies from different companies and had suppressed the same. The District Forum had therefore concluded that there was no documentary evidence to show that the deceased-life insured had taken various insurance policies except an averment and on that basis the repudiation was held to be wrong. Before the State Commission, the respondent had provided a tabulation of the 15 different policies taken by the insured-deceased, amounting to Rs.71,27,702/-. The same has been extracted above. However, the said tabulation was not supported by any other documentary evidence, like the policy documents of these other policies, or pleadings in courts, or such other corroborative evidence. The respondent sought to mark a bunch of documents before the State Commission, which related to the policy papers of the insured with another insurer, i.e., Kotak Life Insurance. However, the respondent was not granted permission by the State Commission, as the said documents were neither original, nor certified, nor authenticated. Apart from this, there was no effort made by the respondent to bring any authenticated material on record. Thus, in the absence of any evidence to prove that the insured-deceased possessed some insurance policies from other insurance companies, the State Commission upheld the decision of the District Forum in setting aside the repudiation of the claim by the respondent.
49. Before the NCDRC, the respondent again provided the aforesaid tabulation of policies of the insured-deceased. The respondents in their affidavit stated that the insured-deceased had taken multiple insurance policies before taking the policy from them. The NCDRC however accepted the averment of the respondents, without demanding corroborative documentary evidence in support of the said fact. The NCDRC, on the contrary, also held that the fact about multiple policies was not dealt with by the appellant in her complaint or evidence affidavit and this therefore proved that the insured had indeed taken the policies from multiple companies as claimed by the respondents. CC/1849/2018 Page 31 of 42
50. The aforesaid approach adopted by the NCDRC is, in our view, not correct. The cardinal principle of burden of proof in the law of evidence is that "he who asserts must prove", which means that if the respondents herein had asserted that the insured had already taken fifteen more policies, then it was incumbent on them to prove this fact by leading necessary evidence. The onus cannot be shifted on the appellant to deal with issues that have merely been alleged by the respondents, without producing any evidence to support that allegation. The respondents have merely provided a tabulation of information about the other policies held by the insured-deceased. The said tabulation also has missing information with respect to policy numbers and issuing dates and bears different dates of births. Further, this information hasn't been supported with any other documents to prove the averment in accordance with law. No officer of any other insurance company was examined to corroborate the table of policies said to have been taken by the deceased policy holder, father of the appellant herein. Moreover, the table produced is incomplete and contradictory as far as the date of birth of the insured is concerned. Therefore, in our view, the NCDRC could not have relied upon the said tabulation and put the onus on the appellant to deal with that issue in her complaint and thereby considered the said averment as proved or proceeded to prove the stance of the opposite party. A fact has to be duly proved as per the Evidence Act, 1872 and the burden to prove a fact rests upon the person asserting such a fact. Without adequate evidence to prove the fact of previous policies, it was incorrect to expect the appellant to deal with the said fact herself in the complaint or the evidence affidavit, since as per the appellant, there did not exist any previous policy and thus, the onus couldn't have been put on the appellant to prove what was non-existent according to the appellant.
51. The respondents, vide their counter affidavit before this court, have sought to produce some documents to substantiate their claim of other existing insurance policies of the insured/deceased, but the same cannot be permitted to be exhibited at this stage, that too, in an appeal filed by the complainant who is the beneficiary under the policies in question. Any documentary evidence sought to be relied upon by the respondent ought to have been led before the District Forum but the same was not done. It was before the District Forum that the evidence was led and examined and at that stage, the respondent did not take adequate steps to lead any oral or documentary evidence to prove their assertion. Their CC/1849/2018 Page 32 of 42 attempt to annex documents in support of their claim before the State Commission was also declined due to the presentation of unauthenticated documents. Therefore, it can be safely concluded that the respondents have failed to adequately prove the fact that the insured-deceased had fraudulently suppressed the information about the existing policies with other insurance companies while entering into the insurance contracts with the respondents herein in the present case. Therefore, the repudiation of the policy was without any basis or justification.
52. Moreover, we have also held on the facts of this case having regard to the nature of queries in Query Nos.6.1 and 6.2, there was no suppression of any material fact as per our earlier discussion based on the contra proferentem rule.
53. In light of the above discussion, the impugned order dated 22.07.2019 passed by the NCDRC in Revision Petition No.1268 of 2019 is set aside. The respondent company is directed to make the payment of the insurance claim under both the policies to the appellant, amounting to Rs. 7,50,000/- and Rs. 9,60,000/-, with interest at the rate of 7% per annum from the date of filing the complaint, till the actual realisation.
54. The appeal stands allowed in the aforesaid terms."
22. The Hon‟ble Supreme in a recent judgment in the case of Mahaveer Sharma vs. Exide Life Insurance Company Limited & Anr., Civil Appeal No. ---- of 2025 [Arising out of SLP (Civil) No. 2136 OF 2021], decided on 25.02.2025 it has been held that as under:
17. Applying the aforesaid judgments to the facts of the case, it is noted that the insured had made a substantial disclosure inasmuch as he had disclosed that he had obtained another policy from a private insurer-Aviva for an assured sum of Rs. 4 lakhs (which is actually Rs.40 lakh) which was in force. Further the queries under Clauses 52 and 53 were with regard to the policies from other insurers "under consideration" and under clause 54 details of "existing insurance cover" had to be mentioned. Evidently, the details of only one insurance cover was mentioned and not about others which were produced by the insurer before the State Commission as Exhibit A-4 to A-6 therein. Thus, there was only a partial disclosure. It is noted that the other policies Exhibit A-4 to A-6 were of inconsequential sum assured amounting to Rs.2,30,000/- in aggregate whereas the policy disclosed was issued by Aviva was for CC/1849/2018 Page 33 of 42 Rs. 40 lakhs. It is averred in the complaint that the sum assured by Aviva was erroneously mentioned as Rs. 4 Lakhs when it actually was Rs. 40 lakhs whereas in the instant case the sum assured is Rs. 25 lakhs. A copy of the said policy was also submitted to the insurer along with the proposal form.
18. The case at hand involves a slightly different consideration. The father of the appellant had disclosed one other life insurance policy availed by him at the time of filing the proposal form, but failed to disclose other similar policies. While the aforementioned judgement relates to a complete failure to disclose in the peculiar circumstances of two policies being availed of in a short span of time, the present case stands on a different footing of a substantial disclosure which would be sufficient for a prudent insurer to determine the risk assumed. We are of the considered view that such a failure would not influence the decision of a prudent insurer to issue the policy proposed. The policy in question is not a Mediclaim policy; it is a life insurance cover and the death of the deceased has taken place on account of an accident. Accordingly, failure to mention about other policies does not amount to a material fact in relation to the policy availed and consequently, the claim could not have been repudiated by the respondent company.
19. Therefore, we find that in the facts of this case the respondent-
insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs.25 lakh only. Consequently, we find that the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein.
20. In the peculiar facts and circumstances of the present case, the appeal filed by the appellant stands allowed. The order dated 03.03.2016 repudiating the claim of the appellant, the order dated 28.05.2019 passed by the National Commission in First Appeal No. 1963 of 2018 and the order dated 27.09.2018 passed by the State Commission in Complaint Case No. 56 of 2017 are set aside. The respondent insurance company is directed to release all benefits under the policy in question along with an interest of 9% per annum from the date the amount became due till the date of its realization to the appellant."
CC/1849/2018 Page 34 of 42
23. In view of the above, we are of the considered view that the incident wherein the Complainant‟s building collapsed on 25.06.2016 and 26.06.2016 due to waterlogging on account of heavy rainfall and seepage of rainwater into the foundation of the old building can be termed as due to water inundation, which is a covered risk under the policy in question.
24. Now, as regards compensation liable be paid by the OPs to the Complainant as per the terms of the policy, it is a matter of record that the policy provides for reinstatement of the unit against the covered perils. In this regard it is undisputed that the Complainant is the owner of a residential building "Vira Sadan" at 41/49, Maulana Azad Road, Mumbai which is a three floor structure. This building was purchased by him on 24.10.1980. As per the conveyance deed brought on record by the Complainant, Sakinabanoo Yusuf Ali who originally built the said house died on 13.01.1957 and his Legal Heirs sold the house to the Complainant. The date of construction of the building is not on record. It was offered as collateral security to Bank of Maharashtra in connection with credit facilities for his son, Ketan Vira for his company M/s KP Packaging Ltd, in which the Complainant was a Director. As per the Banking procedures, for credit facility approval process, the said Bank required the asset being mortgaged to be valued by the Bank's approved valuer. The Complainant accordingly submitted the CC/1849/2018 Page 35 of 42 related documents of purchase of "Vira Sadan" to the Bank. Towards ensuring the enforceability of collateral security, Bank of Maharashtra caused conduct of a structural audit of the building through its valuer, who furnished a Structural Report dated 02.04.2014, that the property was structurally sound and has a remaining useful life of 15 years, unless any natural calamity occurs. While the valuer considered that the said building was built about 40 years ago, as per the conveyance deed it was at least 57 years old as on 02.04.2014. Based on this assessment, the Bank accepted the collateral security. Thereafter, as per the Bank‟s mandate, the Complainant approached OPs to insure the building. After due diligence, including verification of the building's status with Bank of Maharashtra, OPs issued a Standard Fire and Special Perils Policy for Sum Insured of Rs.9,86,34,000 from 28.07.2015 to 27.07.2016. On 25.06.2016, a portion of the building unexpectedly collapsed due to heavy rainfall and the remaining building also collapsed on 26.06.2016. He notified the collapse to the OPs on 25.06.2016 and 27.06.2016 and the OPs appointed Mr Atul Shah as surveyor, who conducted the survey and filed a report on 15.09.2016, determined the Net Assessed Loss on „Depreciated Value Bases‟ as Rs.8,69,250; and Net Total Loss on „Reinstatement Value Basis as Rs.51,87,000‟. After due scrutiny, the surveyor recommended that the said loss is not within the scope of insurance liability of OPs. CC/1849/2018 Page 36 of 42
25. The OPs repudiated the claim vide letter dated 13.04.2017. The valuation Report of the empanelled valuer of Bank of Maharashtra dated 04.04.2014 reveals that the realisable value of the building in question was determined as Rs.9,86,34,000. In the complaint the Complainant claimed Rs.10,04,97,831, which includes Sum Assured under the policy Rs.9,86,34,000; Architect/ Surveyor and consulting Engineer Fees Rs.15,00,000; Removal of Debris Rs.5,00,000; and excluding Salvage Rs.1,36,169. At the same time, the policy is for Reinstatement and, vide the claim dated 27.07.2016, the Complainant claimed Rs.1,33,76,016 as reconstruction cost of the said building, which includes Rs.1,24,82,339 for reconstruction; and Rs.8,93,677 towards professional charges, architect report etc. Because the policy in question was for reinstatement, the Complainant is entitled for Reinstatement Value of similar building. Therefore, the prayer of the Complainant in the complaint seeking Rs.10,04,97,831 along with 15% interest and other associated claims as compensation and costs of litigation verges to excessive claim as, clearly, the said valuation made by the Bank valuer in the report included the high value building land, which sustained no damage or loss. In addition to the above, the Complainant preferred the claim for Rs.1,33,76,016 as the total reconstruction cost of similar new building.
CC/1849/2018 Page 37 of 42
26. The mandate for due consideration of the Surveyor‟s Report was elucidated in Sri Venkateshwara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507, wherein the Hon‟ble Supreme Court has observed as under:
"22) The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by the insured, a loss adjuster, popularly known as loss surveyor, is deputed who assess the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. There is no disputing the fact that the Surveyor/Surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing Surveyors one after another so as to get a tailor made report to the satisfaction of the concerned officer of the insurance company, if for any reason, the report of the Surveyors is not acceptable, the insurer has to give valid reason for not accepting the report. Scheme of Section 64-UM particularly, of sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a matter of course. If for any valid reason the report of the Surveyor is not acceptable to the insurer may be for the reason if there are inherent defects, if it is found to be arbitrary, excessive, exaggerated etc., it must specify cogent reasons, without which it is not free to appoint second Surveyor or Surveyors till it gets a report which would satisfy its interest.
Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of Surveyor/Surveyors. There is no prohibition in the Insurance Act for appointment of second Surveyor by the Insurance Company, but while doing so, the insurance company has to give satisfactory reasons for not accepting the report of the first Surveyor and the need to appoint second Surveyor."
CC/1849/2018 Page 38 of 42
"23) Section 64 UM(2) of the Insurance Act, 1938, reads that `No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimates to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968 shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report on the loss that has occurred from a person who holds a license issued under this Section to act as a surveyor. In our considered view, the Insurance Act only mandates that while settling a claim, assistance of surveyor should be taken but it does not go further and say that the insurer would be bound whatever the surveyor has assessed or quantified, if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, it can certainly depute another surveyor for the purpose of conducting a fresh survey to estimate the loss suffered by the insured. In the present case, the insurer has stated in the counter affidavit filed before the National Commission and even before us, why the appointment of second Surveyor was necessitated and also has given valid reasons for appointing second Surveyor and also has assigned valid reason for not accepting the report of Joint Surveyor. The correspondence between the insurer and the Surveyors would indicate the particulars differed by the insurer for differing with the assessment of loss made by the Surveyors. The option to accept or not to accept the report is with the insurer.
However, if the rejection of the report is arbitrary and based on no acceptable reasons, the courts or other forums can definitely step in and correct the error committed by the insurer while repudiating the claim of the insured. We hasten to add, if the reports are prepared in good faith, due application of mind and in the absence of any error or ill motive, the insurance company is not expected to reject the report of the Surveyors."
27. The Hon‟ble Supreme Court in Khatema Fibres Ltd. v. New India Assurance Company Ltd., 2021 SCC OnLine SC 818, decided on 28.09.2021 has held that:
"32. It is true that even any inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law or which has been undertaken to be CC/1849/2018 Page 39 of 42 performed pursuant to a contract, will fall within the definition of the expression „deficiency‟. But to come within the said parameter, the appellant should be able to establish (i) either that the Surveyor did not comply with the code of conduct in respect of his duties, responsibilities and other professional requirements as specified by the regulations made under the Act, in terms of Section 64UM(1A) of the Insurance Act, 1938, as it stood then; or (ii) that the insurer acted arbitrarily in rejecting the whole or a part of the Surveyor‟s Report in exercise of the discretion available under the Proviso to section 64UM(2) of the Insurance Act, 1938.
...
37. Two things flow out of the above discussion, They are (i) that the surveyor is governed by a code of conduct, the breach of which may give raise to an allegation of deficiency in service; and
(ii) that the discretion vested in the insurer to reject the report of the surveyor in whole or in part, cannot be exercised arbitrarily or whimsically and that if so done, there could be an allegation of deficiency in service.
38. A Consumer Forum which is primarily concerned with an allegation of deficiency in service cannot subject the surveyor‟s report to forensic examination of its anatomy, just as a civil court could do. Once it is found that there was no inadequacy in the quality, nature and manner of performance of the duties and responsibilities of the surveyor, in a manner prescribed by the Regulations as to their code of conduct and once it is found that the report is not based on adhocism or vitiated by arbitrariness, then the jurisdiction of the Consumer Forum to go further would stop."
28. Towards the costs of reconstruction of the building in question, the Complainant submitted an estimate along with claim dated 28.07.2016 bringing out the details and quantities for Rs.1,24,82,339. In addition, he included the professional fee and architect fee as Rs.8,93,677 and the total as Rs.1,33,76,016.. Mr Atul Shah, the Surveyor appointed by the OPs had conducted a detailed survey and filed a report on 15.09.2016 wherein he had gone into details of the CC/1849/2018 Page 40 of 42 building in question and determined the same to be about 100 years old with bad condition of drainage pipes with Peepal plants and vegetation grown on its walls which played an important role in the deterioration of the building and bad condition of the external plaster. The Surveyor determined the cost of reconstruction of 4000 sq. ft. @ Rs.1500/- per Sq Ft as Rs.60,00,000 and allowed Rs. 60,000 for debris removal. Therefore, the gross loss assessed was Rs. 60,60,000. The Surveyor also deducted salvage value @ 10% of the reconstruction cost as Rs.6,00,000 as well as policy excess @ 5% of the claim amount amounting to Rs. 2,73,000. Thus, after due evaluation, the Surveyor had determined the Net Total Loss on Reinstatement Value Basis as Rs.51,87,000. While the surveyor recommended the said claim as not within the scope of the policy, for the reasons stated above, we are of the considered view that the building collapse was due to inundation of the rainwater and thus the loss sustained by the Complainant is within the scope of the policy in question. At the same time, however, we consider that the said surveyor appropriately determined the Net Total Loss suffered by the Complainant on Reinstatement Value Basis as Rs.51,87,000 and the same deserves to be accepted.
29. In view of the foregoing, the Consumer Complaint No.1849 of 2018 is partly allowed and disposed of as follows:
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ORDER I. The Opposite Party/Insurer is directed to pay the Complainant Rs.51,87,000, along with simple interest @ 7% per annum from the date of repudiation of the claim till the date of final payment, within a period of two months from the date of this order. In the event of delay the rate of simple interest applicable for the entire period shall be @ 10% per annum.
II. The OP/Insurer is also to pay Rs.50,000 to the Complainant as costs of litigation.
30. With these directions, Consumer Complaint No.1849 of 2018 is disposed of.
31. All pending Applications, if any, also stand disposed of accordingly.
............................................. (SUDIP AHLUWALIA, J) PRESIDING MEMBER ......................................................... (AVM J. RAJENDRA AVSM VSM (Retd.)) MEMBER /Megha CC/1849/2018 Page 42 of 42