1.      The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 18.10.2019 passed by the learned State Consumer Disputes Redressal Commission, Bihar, Patna (hereinafter to be referred to as “the State Commission”), in Consumer Complaint No. 62 of 2015, wherein the Complaint filed by the Complainant (Respondent No.1 herein) was partly allowed.

2.      Brief relevant facts of the case as per the Complainant are that the Complainant M/s Subhash Traders having Regd office at Janakpur Road Sitamarhi is in the business of fertilizer, seeds and pesticide. The firm had cash credit account C/C No.21943665058 at Allahabad Bank Pupri Branch - OP No.8 (Respondent No.2 herein - Bank). The stocks in the shop were insured with Universal Sompo General Insurance Co, Muzaffarpur-OP No. 4, through OP-8 under Standard Fire and Special Perils Policy No. 2114/ 54578095/00/000. The Complainant paid Rs.6066 premium. For another policy No, 2913/54578094/00/000 against burglary the Complainant paid the premium of Rs.9387. Thus, the total premium paid was Rs.15453. But the Bank deducted Rs.17440 and, on objection, Rs.1985 was refunded.

3.      There was continuous rainfall in the area during the period from 15.12.2014 to 06.01.2015 and the stocks kept in the shop were damaged due to heavy moisture/humidity. The Complainant informed the OPs about the damages and requested for policy details. But the branch Manager did not provide the same and did not cooperate. Upon several requests the policy schedule was obtained and they came to know about deduction of excess amount, which was later refunded. After getting the policy, the Complainant registered claim No. CLI 4061196. The Insurer appointed a surveyor, who after due survey, submitted its report to the Insurer. Thereafter the Insurer vide letter dt.18.02.2015 repudiated the claim on grounds that 'no named Peril under the Standard Fire and Special Perils Policy operated as peril."

4. It has been alleged by the Complainant that without proper consideration of the claim, the OPs deliberately rejected their valid claim which is against the terms of the Insurance Policy and also failed to provide good and valuable services. As the surveyor found the stocks in the shop damaged, no question arises to repudiate the insurance claim. Having left with no option, they sent two legal notices dated 30.09.2015 and 27.10.2015, to OPs. In the absence of any action, M/s Subhash Traders filed a Complainant through its proprietor Shri Vikash Kumar against OPs No. 1 to 4 the Universal Sompo General Insurance Co. Ltd and OPs No.5 to 8 Allahabad bank alleging deficiency in service for nonpayment of the insured amount against loss of stocks. The Complainant claimed Rs.35 Lakhs towards loss of stocks with interest @18% p.a. and compensation of Rs.5 lacs on account of mental agony and harassment and Rs.8 lacs for the loss occurred due to non-settlement of claim within time and litigation cost of Rs.25,000. The total claimed amount comes to Rs.48,25,000.

5.      OPs No.1 to 4 in their reply contended that the complaint is not maintainable and the claim was rightly repudiated vide letter dated 18.2.2015. After due consideration of the claim, the surveyor observed that the loss of seeds was due to moisture of rainwater between 15.12.2014 to 06.01.2015. This peril is not covered under the policy. As the loss was due to moisture of rainfall not covered in the policy, their liability is Nil. The supplementary claim under Standard Fire and Special Peril Policy provides coverage of only those perils listed in the policy. It clearly shows that in the perils listed from i to xii in the supplementary petition, the perils such as Heavy rainfall or Moisture are not covered. Therefore, the damages are not due to Perils listed in the policy. Thus, the repudiation of the claim cannot be said to be deficiency in service.

6.      The OPs No.5 to 8 Allahabad Bank in written statement raised preliminary objection stating that the allegations are totally false and misleading, and the complaint is not maintainable either on facts or in law. The Complainant availed loan facility from the Bank and the stocks of the shop was insured with OPs No.1 to 4. The Complainant filed this complaint for payment of the insurance claim and settlement of insurance claim. The Bank has no concern with the insurance liabilities or settlement of claim.

7.      The learned State Commission vide the Impugned Order dated 18.10.2019 passed the following order:

“In facts and circumstance of the present case and in light of above legal position in case of moisture/humidity caused damage to stocks held as direct and proximate cause the ops insurance company (Universal Sompo General Insurance Co. Ltd.) is directed to pay the value of loss assessed in the final survey report dt.15-01-15, for sum of Rs.10,40,000/ with interest 12% p.a. to complainant through financer bank on account of loss of stock, from first date of repudiation claim i.e. 18-02-15 within three months of receipt of present order. Since the complainant is a firm no compensation is awarded on account of mental or physical harassment. The ops Insurance co. are further directed to pay litigation cost of Rs.25,000/ to complainant within aforesaid period. If the awarded amount is not paid within time as mentioned above, entire amount shall carry interest@ 15% p.a. from the date 18-02-15 till final payment to complainant. The ops Bank is exonerated from the liability.”

8.      Being aggrieved the Appellant Insurance Company filed the instant First Appeal No.2281 of 2019 with the following prayers:

           (a) Pass an Order setting aside order dated 18.10.2019 passed in Complaint Case No.CC/62/2015 passed by the Hon’ble State Consumer Disputes Redressal Commission, Bihar, Patna; and

(b) Pass such further and other orders as this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case.”

9.      The Appellant Insurance Company has taken the following grounds in filing the present Appeal:

(a)  The State Commission discredited Survey Report without stating any reason. The Surveyor recorded a categorical finding that the policy does not cover the loss suffered by the Respondent No. 1 and thus the Appellant has no liability.

(b)   The State Commission failed to appreciate that the loss was in fact due to failure of Respondent No.1 to take care of its stocks and protect them moisture. Admittedly, there was no damage due to any storm, but the damage was only due to moisture of the storm. Thus, it is not a covered peril. As such, the Appellant has no liability towards the loss.

(c)  The State Commission erred in following A.R. Trading Company vs Oriental Insurance Co. Ltd, 2016 SCC Online NCDRC 270, which has no bearing on the facts of this case. The present loss was excluded under General Exclusion No. 10, and not on General Exclusion No. 4, which was the issue in the case law relied upon by the State Commission.

(d)  The State Commission failed to appreciate, that the loss in question was within General Exclusion No. 10 of the Policy which states that “10. Loss or damage by spoilage, resulting from retardation or Interruption or cessation of any process or operation caused by operation of any of the penis covered”. A plain reading of this makes it clear that, that ancillary losses, not caused by the peril itself, are not covered. In view of specific exclusion, the loss was not indemnifiable.

(e) Under the terms and conditions, Respondent No. 1 could opt for additional cover, i.e Spoilage Material Damage Cover, to cover the reason for loss of stock. The terms of optional Cover which states that “10. Having paid additional Premium (as Specified in the Schedule) it is hereby agreed and declared that notwithstanding anything contained to the contrary, in the within written Policy, the Insurance under item (as specified in the schedule) shall extend to cover loss or damage by Spoilage resulting from the retardation or interruption or cessation of any process or operation caused by any of the perils covered under this Policy, provided that liability of or destruction of or damage to the property insured described in the schedule to this Policy, or any part of such property is first admitted by the Company.

(f)  Respondent No. 1 was well aware at the time of entering into the present policy that damage, if any, on account of spoilage would not be covered. In fact, Respondent No. 1 had the option to extend insurance cover to include Spoilage Material Damage Cover at that time, but opted not to. Under these facts, the finding of the State Commission, that the loss suffered was included in the policy, is liable to be set aside.

10.    The learned Counsel for Appellant reiterated the grounds advanced in the Appeal. His arguments were centered on the clear language of the Standard Fire and Special Perils Policy. The Complainant's claim for loss of stock due to the moisture and humidity is not covered under the policy. The Complainant failed to provide reasonable evidence that loss of stocks was covered under listed perils of the insurance policy. The case of AR Trading Company is not applicable in this case The case law relied upon by the Complainant is devoid of any merit. The validity State Commission order is questionable and asserted that the facts of the present case are not covered in the insurance policy and thus no claim is payable. He relied upon the judgment of Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd,. (2010) 10 SCC 567, decided on 08.10.2010.

11.    On the other hand, the learned Counsel for the Respondent No.1/Complainant reiterated the issues raised in the Complaint and the affidavit of evidence filed before the State Commission. He argued that the main question at hand is ‘whether the loss of stocks due to moisture and humidity was covered or not under the policy’. He relied upon the judgment of Bajaj Allianz General Insurance Co. Ltd. Vs. Gondamal Hardyal Mal, MANU/CF/0039/2009 and A.R. Trading Vs. Oriental Insurance Company Limited and Ors., MANU/CF/0185/2016. He argued that Hon’ble Supreme Court clarified the principles of interpreting exclusion clauses in insurance contracts and the burden of proof lies on the Insurer to demonstrate that the claim falls under an exclusion clause.

12.    The pleadings and associated documents placed on record are examined and I have rendered thoughtful consideration to the arguments advanced by the learned Counsels of both the parties.

13.    The main issue in question in the case is ‘whether the loss of stock due to moisture and humidity is covered under the Standard Fire and Special Perils Policy in question’? In this regard, the relevant portions of Insurance Policy are as follows:-

Losses Excluded

….

4.        loss or damage directly or indirectly arising from or in consequence of the seepage and or discharge of pollutants or contaminants, which pollutants and contaminants shall include but not be limited to any solid, liquid, gaseous or thermal irritant, contaminant or toxic or hazardous substance or any substance thee presence, existence or release of which endangers or threatens to endanger the health, safety or welfare of persons or the environment.

10.      Spoilage Material Damage Cover

“Having paid additional Premium (as specified in the schedule) it is hereby agreed and declared that notwithstanding anything contained to the contrary, in the within written policy, the insurance under item (as specified in the schedule) of this Policy shall extend to cover loss or damage by Spoilage resulting from the retardation or interruption or cessation of any process or operation caused by any of the perils covered under this Policy, provided that liability for destruction of or damage to the property insured described in the schedule to this Policy or any part of such property, is first admitted by the Company.

14.    In catena of judgements, 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 Civil Appeal No. 4769 of 2022 in the case of National Insurance Co Ltd Vs The Chief Electoral Officer & Ors, the Hon’ble Supreme Court has held as follows:

27. The insurance contracts are in the nature of special class of contracts having distinctive features such as utmost good faith, insurable interest, indemnity subrogation, contribution and proximate cause which are common to all types of insurances. Each class of insurance also has individual features of its own. The law governing insurance contracts is thus to be studied in three parts, namely, (1) general characteristics of insurance contracts, as contracts; (2) special characteristics of insurance contracts, as contracts of insurance, and (3) individual characteristics of each class of insurance.

28.  Now turning to some of the judicial pronouncements, wherein it has been opined that the words used in a contract of insurance must be given paramount importance and it is not open for the Court to add, delete or substitute any words (Suraj Mal Ram Niwas Oil Mills (P) Ltd. vs. United India Insurance Co. Ltd.). Insurance contracts are in the nature where exceptions cannot be made on ground of equity and the Courts ought not to interfere with the terms of an insurance agreement (Export Credit Guarantee Corporation of India Limited vs. Garg Sons International).

29.      This Court in Vikram Greentech India Ltd. v. New India Assurance Co. Ltd. reiterated that 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.

30. In several other judgements, this court has held that the insurance 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.

15.    It is an admitted position that the Complainant suffered loss of stock due to moisture and humidity. There is no stipulated peril listed in the policy providing cover for such damage. The claimant has not even referred to any specific peril listed in the policy, covering the damage due to moisture. Such damage due to weather is reasonably foreseeable by those in business of storing seeds and ought to have taken reasonable steps to protect the stock from such damage, which occasions in a graduated manner.

16.    It is in common knowledge that various types of insurance products are in the market for providing insurance cover on life, health, motor vehicles, personal/professional risks, crops, trees, furniture, goods, stocks, precious metals, cash in safe, goods in transit, luggage/cash in transit, property etc. It is in common knowledge that each of these insurance products have their specific scope of cover, duration, terms and conditions as well as inherent safety/ security precautions the insured is liable to ensure so as to be entitled for the claim under the insurance contract.

17.    Examination of the Standard Fire and Special Perils Policy in question reveals that the loss of stock due to moisture and humidity is not under the named perils of the Insurance Policy. As regards the sacrosanct nature of the terms and conditions of a contract the Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd,. (2010) 10 SCC 567, decided on 08.10.2010 held that:

“26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words.  It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer.  Therefore, the endeavor of the court should always be to interpret the words in which the contract is expressed by the parties.”

18.    The Hon’ble Supreme Court reiterated the mandate of strict interpretation of the Insurance Clauses in the case of Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, decided on 06.02.2020, the relevant portion is reproduced below:

“21. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation becomes a commercially sensible interpretation...”

19.    The terms and conditions of the Insurance Policies require the Insured to take all reasonable steps to safeguard the property under insurance. However, in the present case, the Complainant, who is the owner of the firm ought to have been aware of the heavy rains occurred and its impact of moisture and humidity on the stocks held by the firm. This was foreseeable and the claimant was obliged to take reasonable care of the stocks insured. Thus, there is no deficiency of service on the part of the Appellant Insurance Company.

20.    In view of the foregoing discussions, First Appeal No. 2281 of 2019 is allowed. The order of the learned State Commission dated 18.10.2019 in Complaint No. 62 of 2015 is set aside.

 21.   All pending Applications, if any, stand disposed of accordingly. The Registry is directed to release the Statutory deposit amount, if any due, as per law.