JUSTICE V.K.JAIN (ORAL)

          The complainant/respondent in this matter namely hotel Shakunt instituted a consumer complaint through one  Gaurang Gangaprasad Jani who claimed to be its sole proprietor.  A standard Fire & Special Perils Policy had been obtained by the complainant for the period from 30.03.2007 to 29i.03.2008 in respect of the furniture and fixture of the above-referred hotel.  The furniture and fixture of the hotel got damaged on account of the  building having collapsed on 03.02.2008. M/s C.P. Mehta & Co. were appointed to assess the loss and they submitted a report to the insurer.  The claim, however was repudiated vide letter dated 05.05.2009 which to the extent it is relevant reads as under:

This has reference to your above mentioned Fire Claim.

In this regard, we have taken opinion of our Surveyor M/s CP, Mehta. As per his survey report, the building was collapsed because of construction work being processed at that time in the adjoining bldg. which is much deeper than the insured premises. Thus, the foundation work of the Insured premises weakened and collapsed.

Under the circumstances, the claim is not admissible as per policy terms and conditions which please note.

2.      Being aggrieved from the repudiation of the claim the complainant approached the District Forum by way of a complaint.  The complaint was resisted by the insurer primarily on the grounds that the building in which hotel was being run was not fit for usage as per the report of the Municipal Corporation and that the building had collapsed on account of the digging in the adjoining building.  It was also stated in the written version that the hotel building was in the name of Gangaprasad Jani.

3.      The District Forum having allowed the consumer complaint the petitioner approached the concerned State Commission by way of an appeal.  The said appeal having been dismissed vide impugned order dated 27.02.2015 the insurer is before this Commission by way of this revision petition.

4.      It is submitted by the Ld. counsel for the petitioner company that since the policy had been issued in the name of Hotel Shakunt and the building of the said hotel was owned by late Gangaprasad Jani, a consumer complaint by Sh. Gaurang Gangaprasad Jani, who is stated to be son of  Gangaprasad Jani, was not maintainable. I, however, find no merit in this submission.  The Standard Fire & Special Perils Policy had been obtained in respect of the furniture and fixture of the hotel which was being run in the building that had collapsed.  The  business of hotel Shakunt according to the complainant was owned by Sh. Gaurang Gangaprasad Jani through whom the consumer complaint was filed.  In its written version to the consumer complaint the insurer does not claim that the business of hotel Shakunt was owned by someone other than Gaurang Gangaprasad Jani.  No other person has come forward claiming to be the proprietor of the business of hotel Shakunt.  It is not necessary that the ownership of the building as well as of the business being carried therein must necessarily vest in the same person.  Therefore, Mr. Gaurang Gangaprasad Jani could be the proprietor of hotel Shakunt despite his father late Sh.  Gangaprasad Jani being the owner of the building, in which the hotel was being run.  There is no evidence of the insurance policy  in the name of the hotel having been taken by any other person other than Gaurang Gangaprasad Jani.  This is also not the case of the insurer that the proposal form for obtaining the policy in the name of hotel Shakunt was submitted by someone other than Mr. Gaurang Gangaprasad Jani.  Therefore, there is no reason to disbelieve the claim of the complainant to the extent the ownership of the business of hotel Shakunt is concerned.

5.      If the business of hotel Shakunt was owned by Sh. Gaurang Gangaprasad Jani, it is obvious that the furniture and fixture being used in the said hotel were also owned by him.  Therefore, besides being the insured, he had an insurable interest in the articles of furniture which was being used in the hotel which he was running under the name and style of hotel Shakunt. 

6.      Coming to the merits of the claim Sh. Mohan Babu Agarwal, the Ld. counsel for the insurer has drawn my attention to clause VIII of the insurance policy and submitted that the loss being covered under the exclusions contained in the clause the insurer is not liable to reimburse the complainant.  The said clause reads as under:-

VIII  Subsidence and Landslide Including Rock slide

Loss, destruction or damage directly caused by Subsidence of part of the site on which the property stands or Land slide/Rock slide excluding

a.         The normal cracking, settlement or badding down of new structures.

b.         The settlement or movement of made up ground.

c.         Coastal or river erosion.

d.         Defective design or workmanship or use of defective materials.

e.         Demolition, construction, structural alterations or repair of any property or groundworks or excavations.  

          In particular his submission is that the loss or damage was caused by subsidence of a part of site on which the property stood.  The submission of the Ld. counsel for the respondent/complainant, on the other hand,  is that the afore-said clause would apply only where the loss or damage results directly from the subsidence of the site and would not apply in a case where the subsidence happens on account of some event which happened in the adjoining building.  A reference in this regard is made to the decision of the Hon’ble Surpeme court in Civil Appeal No. 378 of 2020, Sangroor Sales Vs. United India Insurance Co. Ltd. & Ors. In the case relied upon by the Ld. counsel for the complainant, the show room in which business was being carried by the complainant collapsed as a result of the excavation work which was carried on in an adjoining plot.  The insurer repudiated the claim relying upon the following clause contained in the insurance policy:-

“VIII. Subsidence and Landslide including Rock slide: Loss, destruction or damage directly caused by subsidence of part of the site on which the property stands or land slide/rock slide excluding:

a) the normal cracking, settlement or bedding down of new structures

b) the settlement or movement of made up ground

c) coastal or river erosion

d) defective design or workmanship or use of defective materials

e) demolition, construction, structural alterations or repair of any property or groundworks or excavations.”

7.      The above-referred clause was interpreted in the following terms:-

“8. Clause VIII brings within the purview of the insured perils a loss, destruction or damage directly caused by subsidence of a part of the site on which the property stands or a land slide/rock slide, but excludes, what is stipulated in sub-clauses (a) to (e) thereafter. The exclusion in subclause (a) refers to the normal cracking, settlement or bedding down of new structures. The exclusion in clause (d) refers to defective design or workmanship or use of defective materials. The crucial exclusion is the one in sub-clause (e) which has weighed with the NCDRC. Clause (e) relates to the demolition, construction or structural alterations or repair of any property or groundworks or excavations.

9. In the present case, the appellant was not engaged in any work of demolition, construction or structural alterations nor was it engaged in any repair of its property. The excavation which was the cause of the loss, was being carried on in a neighbouring plot and not by the appellant in his own property. In the absence of a specific qualification indicating that the exclusion will apply to an excavation being carried on by a third party, the reasonable construction of sub-clause (e) of Clause VIII is that it should apply only to a situation where the excavation is being carried on by the insured himself in his own property. Significantly, the words “of any property” qualify the words preceding them namely, “demolition, construction, structural alterations or repair” and not the words that follow.

12 The error of the NCDRC lies in reading the exclusion in regard to excavations as being applicable in a situation such as the present where the cause which resulted in the damage was a work of a third party which was carrying on an excavation in independent premises.  It is not in

dispute that no part of the excavation was attributable to any act or omission on the part of the appellant.  Hence, to read the exclusion, as being attracted in the present case, would not be to a reasonable construction of the policy of insurance.”

8.      In view of the above-referred binding decision of the Hon’ble Supreme Court the contention advanced by the Ld. counsel for the insurer cannot be accepted. 

9.      For the reasons stated hereinabove, I find no ground to interfere with the view taken by the fora below.  The revision petition being devoid of any merit is hereby dismissed with no order as to costs.