Supreme Court of India
SANGRUR SALES CORPORATION versus UNITED INDIA INSURANCE COMPANY LIMITED & ANR. on 17 January 2020
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SUPREME COURT REPORTS
[2020] 5 S.C.R.
ASANGRUR SALES CORPORATION
v.
UNITED INDIA INSURANCE COMPANY LIMITED & ANR.
(Civil Appeal No. 378 of 2020)
BJANUARY 17, 2020
[DR. DHANANJAYA Y CHANDRACHUD ANDHRISHIKESH ROY, JJ.]
Consumer Protection – Appellant obtained Insurance Policyfrom the first respondent to cover his shop – Shop was insured inCthe value of Rs.18 lakhs – Showroom in which the appellant carriedon the business of sanitaryware collapsed as a result of theexcavation work being carried on in an adjacent plot – Claimrepudiated by the insurer – District Forum allowed the claim inthe amount of Rs.18 lakhs with interest @ 9% p.a. from the dateDof the institution of the complaint – Upheld by State ConsumerDisputes Redressal Commission (SCDRC) – Reversed by NationalConsumer Disputes Redressal Commission (NCDRC) – Held:Dispute turns on construction of Clause VIII (e) of the policy –Clause VIII brings within the purview of the insured perils a loss,destruction or damage directly caused by subsidence of a part ofEthe site on which the property stands or a land slide/rock slide,but excludes, what is stipulated in sub-clauses (a) to (e) –Sub-clause (e), which weighed with the NCDRC, relates to thedemolition, construction or structural alterations or repair of anyproperty or groundworks or excavations – Appellant was notFengaged in any work of demolition, construction or structuralalterations nor was it engaged in any repair of its property –Excavation which was the cause of the loss, was being carried onin a neighbouring plot and not by the appellant in his property –In the absence of specific qualification indicating that theexclusion will apply to an excavation being carried on by a thirdGparty, the reasonable construction of Sub-clause (e) of Clause VIIIis that it should apply only to a situation where the excavation isbeing carried on by the insured himself in his own property –Significantly, the words “of any property” qualify the wordspreceding them namely, “demolition, construction, structuralHalterations or repair” and not the words that follow – In the event that the two constructions are possible or in the event of anambiguity, the construction which is beneficial to the insuredshould be accepted consistent with the purpose for which the policywas taken, i.e. to cover the risk on the happening of a certain event– Impugned judgment set aside – Order of the District Forum, asaffirmed by SCDRC is restored.
Allowing the appeal, the Court
HELD: 1.1 Clause VIII brings within the purview of theinsured perils a loss, destruction or damage directly caused bysubsidence of a part of the site on which the property stands ora land slide/rock slide, but excludes, what is stipulated in Sub-clauses (a) to (e) thereafter. Clause (e) relates to the demolition,construction or structural alterations or repair of any propertyor groundworks or excavations. [Paras 6, 8] [47-C] [48-C-E]
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Conclusion
1.2 The appellant was not engaged in any work ofdemolition, construction or structural alterations nor was itengaged in any repair of its property. The excavation which wasthe cause of the loss, was being carried on in a neighbouringplot and not by the appellant in his own property. In the absenceof a specific qualification indicating that the exclusion will applyto an excavation being carried on by a third party, the reasonableconstruction of Sub-clause (e) of Clause VIII is that it shouldapply only to a situation where the excavation is being carriedon by the insured himself in his own property. Significantly, thewords “of any property” qualify the words preceding themnamely, “demolition, construction, structural alterations orrepair” and not the words that follow. In the event that the twoconstructions are possible or in the event of an ambiguity, thatconstruction which is beneficial to the insured should beaccepted consistent with the purpose for which the policy wastaken, namely to cover the risk on the happening of a certainevent. The error of the NCDRC lies in reading the exclusion inregard to excavations as being applicable in a situation such asthe present where the cause which resulted in the damage wasa work of a third party which was carrying on an excavation inindependent premises. It is not in dispute that no part of theexcavation was attributable to any act or omission on the partof the appellant. Hence, to read the exclusion, as being attracted A
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Ain the present case, would not be to a reasonable constructionof the policy of insurance. The impugned judgment and order ofthe NCDRC is set aside. In consequence, the order of theDistrict Forum as affirmed by the SCDRC is restored. [Paras 9,10, 12 and 13] [48-E-H; 49-A; 49-E-G]BUnited India Insurance Co. Ltd. v. Pushpalaya Printers(2004) 3 SCC 694 : [2004] 2 SCR 631 – relied on.
Case Law Reference
[2004] 2 SCR 631relied onPara 10
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 378Cof 2020.
From the Judgment and Order dated 07.03.2018 of the NationalConsumer Disputes Redressal Commission, New Delhi in R. P. No.2399 of 2016.
DNavneet Kumar, Vikas Bhadana, Mohit Singh, Parijat Kishore,Advs. for the Appellant.
Raunak Jain, A. V. Rangam, Buddy A. Ranganadhan, Advs. forthe Respondents.
The Judgment of the Court was delivered byEDR. DHANANJAYA Y CHANDRACHUD, J.
1. Delay condoned.
2. Leave granted.
3. This appeal arises from a judgment and order of the NationalFConsumer Disputes Redressal Commission[1] dated 7 March 2018.
4. The appellant obtained a “Standard Fire and Special PerilsInsurance Policy” from the first respondent to cover his shop situatedat Gausala Road, Sangrur. The shop was insured in the value ofRs 18,00,000 and the policy was valid from 21 June 2011 to 20 JuneG2012. On 29 March 2012, the showroom in which the appellant carriedon the business of sanitaryware collapsed as a result of the work ofexcavation which was being carried on in an adjacent plot. A FirstInformation Report was lodged on 30 March 2012 at the Police Station,Sangrur and intimation of the loss was given to the insurer. A surveyor
was appointed. The claim was repudiated by the insurer on 11 May2012. This led to the institution of the consumer complaint before theDistrict Consumer Disputes Redressal Forum[2], Sangrur. The DistrictForum allowed the claim in the amount of Rs 18,00,000, together withinterest at nine per cent per annum from the date of the institution ofthe complaint. The order of the District Forum was upheld by the StateConsumer Disputes Redressal Commission[3], Punjab on 5 May 2016.However, in a revision filed by the insurer, the NCDRC reversed theorder awarding the claim.
5. Notice was issued in the present proceedings on 22 April 2019.The office report indicates that the insurer has been served. There isno appearance on its behalf.
6. The dispute between the parties turns on a construction ofclause VIII (e) of the policy of insurance. Before adverting to theexclusions, it is necessary to extract the relevant part of the insurancepolicy, which reads as follows:
“In consideration of the insured named in the Schedule heretohaving paid to the United India Insurance Company Limited(hereinafter called the Company) the full premium mentioned inthe said schedule, the company agrees, (subject to the conditionsand exclusions contained herein or endorsed or otherwiseexpressed hereon) that if after payment of the premium theProperty insured described in the said Schedule or any part ofthe such property to be destroyed or damaged by any of the perilsspecified hereunder during the period of insurance named in thesaid schedule or of any subsequent period in respect of whichthe Insured shall have paid and the Company shall have acceptedthe premium required for the renewal of the policy, the Companyshall pay to the Insured the value of the Property at the time ofthe happening of its destruction or the amount of such damageor at its option reinstate or replace such property or any partthereof.”
7. Clause VIII is in the following terms:
“VIII. Subsidence and Landslide including Rock slide: Loss,destruction or damage directly caused by subsidence of part of 2 District Forum 3 SCDRC
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Athe site on which the property stands or land slide/rock slideexcluding:
a) the normal cracking, settlement or bedding down of newstructures
b) the settlement or movement of made up ground B
c) coastal or river erosion
d) defective design or workmanship or use of defectivematerials
e) demolition, construction, structural alterations or repairof any property or groundworks or excavations.”
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8. Clause VIII brings within the purview of the insured perils aloss, destruction or damage directly caused by subsidence of a part ofthe site on which the property stands or a land slide/rock slide, butexcludes, what is stipulated in sub-clauses (a) to (e) thereafter. Theexclusion in sub-clause (a) refers to the normal cracking, settlement orDbedding down of new structures. The exclusion in clause (d) refers todefective design or workmanship or use of defective materials. Thecrucial exclusion is the one in sub-clause (e) which has weighed withthe NCDRC. Clause (e) relates to the demolition, construction orstructural alterations or repair of any property or groundworks orexcavations.E
9. In the present case, the appellant was not engaged in any workof demolition, construction or structural alterations nor was it engagedin any repair of its property. The excavation which was the cause ofthe loss, was being carried on in a neighbouring plot and not by theappellant in his own property. In the absence of a specific qualificationFindicating that the exclusion will apply to an excavation being carriedon by a third party, the reasonable construction of sub-clause (e) ofClause VIII is that it should apply only to a situation where theexcavation is being carried on by the insured himself in his own property.Significantly, the words “of any property” qualify the words precedingGthem namely, “demolition, construction, structural alterations or repair”and not the words that follow.
10. It is well-settled that in the event that the two constructionsare possible or in the event of an ambiguity, that construction which isbeneficial to the insured should be accepted consistent with the purposefor which the policy was taken, namely to cover the risk on the H
happening of a certain event. [See in this context, the decision of thisCourt in United India Insurance Co Ltd v Pushpalaya Printers[4].
11. The NCDRC, in reversing the concurrent views of theDistrict Forum and the SCDRC, held thus:
“On bare reading of the above, it is clear that as per the abovenoted condition, the loss caused to the insured property due todemolition, construction, structural alterations or repair of anyproperty or ground works or excavations is excluded from therisk covered. On perusal of para 3(b) of the copy of complaintplaced on record, it is evident that as per the stand taken by thecomplainant on 29.03.2012 the insured showroom had fallenaccidentally as a result of subsidence and land sliding due todigging work being carried out by the neighbour in adjacent plot.It is also alleged in the said paragraph that a daily diary reportno.54 dated 30.03.2012 regarding the incident was duly lodgedwith the P.S. Sangrur. From the aforesaid admission on the partof the complainant, it is evident that loss was caused to theinsured because of collapse of the insured building as a result ofexcavation work being carried out in the adjacent plot resultingin subsidence and land sliding. Thus, in my view, in view of theabove noted specific exclusion clause, the petitioner/ insurancecompany was justified in repudiating the insurance claim.”
12. The error of the NCDRC lies in reading the exclusion inregard to excavations as being applicable in a situation such as thepresent where the cause which resulted in the damage was a work ofa third party which was carrying on an excavation in independentpremises. It is not in dispute that no part of the excavation wasattributable to any act or omission on the part of the appellant. Hence,to read the exclusion, as being attracted in the present case, would notbe to a reasonable construction of the policy of insurance.
13. For the above reasons, we allow the appeal and set asidethe impugned judgment and order of the NCDRC dated 7 March 2018.In consequence, we restore the order of the District Forum dated 5May 2016, as affirmed by the SCDRC. In the circumstances, thereshall be no order as to costs.
Divya Pandey
Appeal allowed.
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