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Smart Summary

Concise Analytical Summary of the Opinion — F.A. No.63/2019

Factual and Procedural Background

This appeal was filed by Opposite Party No.1 (Manager, Future Generali India Insurance Co. Ltd.) challenging the order dated 22.12.2018 passed by the District Consumer Disputes Redressal Forum, Solan. The District Forum had partly allowed the complainant's complaint under section 12 of the Consumer Protection Act, 1986 and directed Opposite Party No.1 to pay Rs.5,02,807/- with interest at 9% per annum from the date of filing of the complaint until payment, together with Rs.50,000/- for mental harassment and Rs.5,000/- as litigation charges.

Brief factual background as stated in the opinion: the complainant applied to Opposite Party No.2 for a house loan of Rs.10,00,000/-, which was sanctioned. Opposite Party No.2 got the complainant's house insured with Opposite Party No.1 for Rs.10,00,000/- for the period 17.06.2016 to 16.06.2026. The complainant alleged he had spent Rs.15 lakhs on construction. On 25.12.2016 the house was totally damaged due to heavy rainfall. The complainant notified the opposite parties and local revenue agency. A surveyor appointed by Opposite Party No.1 inspected on 16.01.2017 and asked for a civil engineer's assessment; the civil engineer assessed loss at Rs.6,74,102.43. Opposite Party No.1 allegedly offered Rs.3,51,000/- on 23.03.2017 and did not pay; the complainant served a legal notice dated 29.12.2017 and ultimately filed the consumer complaint when the insurer did not comply.

Procedurally, evidence (oral and documentary) was led before the District Forum; the District Forum partly allowed the complaint; Opposite Party No.1 appealed to the State Commission (F.A. No.63/2019). The State Commission heard counsel for both sides (Opposite Party No.2 did not appear at final hearing) and dismissed the appeal, upholding the District Forum's order. The file records transmission of certified copies and disposal directions dated 03.05.2021.

Legal Issues Presented

  1. Whether loss to the complainant's house caused by heavy rainfall is covered by the Standard Fire and Special Perils insurance policy issued to the property.
  2. Whether damage to a house that was under construction at the time of loss is excluded from coverage, given the policy and the timing of commencement of insurance.
  3. Whether delay in intimation of the loss to the insurer (if any) justified repudiation of the claim.
  4. Whether the insurer's contention of defective design, workmanship or use of defective material as the cause of loss (and the absence of the surveyor's affidavit) undermines the complainant's claim.
  5. Whether the insurer's contention of under-insurance (and consequent proportional reduction) should be applied to reduce the claim amount payable to the complainant.

Arguments of the Parties

Appellant / Opposite Party No.1 (Manager, Future Generali India Insurance Co. Ltd.)

  • The policy in question was a Standard Fire and Special Perils Policy covering only specified special perils; heavy rainfall is not a specified peril and therefore the insurer is not liable to indemnify for damage caused by heavy rainfall.
  • The house that was damaged was under construction at the relevant time; coverage for an under-construction structure was not available so insurer has no liability.
  • The claim was repudiated because intimation of the loss was delayed (allegedly occurrence on 25.12.2016 but intimation received on 13.01.2017), and the delay was not explained by the complainant.
  • The surveyor/investigator's inspection revealed defective design/workmanship or inadequate retention wall construction as causes of loss; therefore loss is not indemnifiable under the policy.
  • If liability is found, the insurer contends only the surveyor-assessed amount of Rs.3,51,000/- is payable and that deductions for under-insurance should apply because the surveyor valued the house at Rs.14,32,500/- while sum insured was Rs.10,00,000/- (under-valued by 30.19%).

Complainant

  • The complainant relied upon a decision of the National Consumer Disputes Redressal Commission in United India Insurance Co. Ltd. v. Imperial Gift House (CLT 2007(1) 351) to submit that loss caused by heavy rainfall is covered and the District Forum correctly followed that decision to hold the loss was covered under the policy.
  • The complainant asserted that he had spent Rs.15 lakhs on construction and presented a civil engineer's assessment of loss at Rs.6,74,102.43.
  • The complainant relied on evidence that the insurance cover commenced immediately after loan sanction and before construction began, and that the insurer was aware of that arrangement, arguing the insurer cannot now object to coverage for an under-construction house.
  • With respect to delay in intimation, the complainant relied on principle (as argued by counsel) that delay should not be a ground for repudiation where the claim has been verified and found genuine.
  • Complainant contended that under-insurance plea was not available to Opposite Party No.1 because the house was insured by Opposite Party No.2 as part of a loan-security arrangement and the insurer never required the complainant to declare the value.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
United India Insurance Company Ltd. v. Imperial Gift House, CLT 2007(1) 351 The National Commission's holding that loss due to heavy rainfall comes within the ambit of the meaning of 'flood' and that insurer was liable to indemnify for collapse due to heavy rainfall. The State Commission followed this decision and held that, since it was admitted the house was damaged due to heavy rainfall, the District Forum did not err in holding the loss was covered under the policy.
Om Prakesh v. Reliance Insurance Company, Civil Appeal No.15611 of 2017 (decided 04.10.2017) Principle that it is not fair and reasonable to reject genuine claims which have been verified and found to be correct merely on the ground of delay in intimation; delay should not be a shelter to repudiate otherwise genuine claims. The Court invoked this Supreme Court principle to reject the insurer's contention that delay in intimation justified repudiation, noting the insurer's witness was vague and no intimation document was produced.

Court's Reasoning and Analysis

The State Commission proceeded in a stepwise analysis based exclusively on the materials and submissions before it:

  1. Coverage for heavy rainfall: The Commission noted that the parties admitted the house was damaged by heavy rainfall on 25.12.2016. It accepted the complainant's reliance on United India Insurance v. Imperial Gift House that heavy rainfall can fall within the ambit of flood and accordingly be covered. On that basis, the Commission found no error in the District Forum's conclusion that the loss was covered under the policy.
  2. Under-construction status: The Commission observed that the loan was sanctioned and insurance cover commenced immediately after sanction and before construction began; Opposite Party No.1 was aware of that arrangement. Given those facts, the insurer was precluded from raising an objection that an under-construction house was not covered.
  3. Allegation of defective design/material: The insurer relied on the surveyor/investigator's observations that defective workmanship/design or inadequate retention wall caused the damage. The Commission found this contention unsupported because Opposite Party No.1 did not file the affidavit of the surveyor/investigator to prove those findings. Further, such a ground was not specifically relied on in the insurer's repudiation letter.
  4. Delay in intimation: The insurer claimed intimation was received late (stated in its reply as 13.01.2017). The Commission examined the insurer's affidavit evidence and found the Legal Manager's testimony vague; the insurer had not produced the document evidencing the intimation. The Commission further relied on the Supreme Court's principle in Om Prakesh that delay should not be used as a shelter to repudiate genuine claims already verified, and therefore it could not hold there was unjustified delay warranting repudiation.
  5. Under-insurance and quantum: The insurer contended the surveyor valued the house at Rs.14,32,500/- and hence the Rs.10,00,000/- insurance amounted to under-insurance requiring proportional deduction. The Commission observed that Opposite Party No.1 had denied the complainant's claim of spending Rs.15 lakhs and had not filed the surveyor's affidavit explaining the valuation. The Commission also emphasized that the complainant did not himself effect the insurance; Opposite Party No.2 insured the property as part of the loan-security arrangement and the insurer had never asked the complainant to declare the value. On these bases, the Commission rejected the insurer's plea of under-insurance and the reductions applied by the surveyor.
  6. Conclusion from analysis: After addressing each contention, the Commission concluded that the District Forum's factual and legal appraisal did not suffer from legal infirmity and that the appeal lacked merit.

Holding and Implications

Core Ruling: The appeal filed by Opposite Party No.1 (Manager, Future Generali India Insurance Co. Ltd.) is dismissed and the impugned order dated 22.12.2018 of the District Consumer Disputes Redressal Forum, Solan is upheld.

Implications and direct consequences:

  • The District Forum's directions (as affirmed) remain in force: Opposite Party No.1 must make payment of Rs.5,02,807/- with interest at 9% per annum from the date of filing of the complaint until payment, and pay Rs.50,000/- for mental harassment and Rs.5,000/- as litigation charges (as awarded by the District Forum).
  • The parties have been directed to bear their own costs by the State Commission.
  • The State Commission ordered transmission of certified copies free of costs as per rules and directed sending a certified copy to the District Forum for information; the file of the State Commission is to be consigned to the record room after due completion.
  • No new binding legal precedent was created by this order; the decision affirms the District Forum's factual findings and applies existing authorities (as set out in the table above).

Disposition recorded in the opinion: F.A. No.63/2019 is disposed of. Pending applications, if any, are also disposed of. (Order dated 03.05.2021.)

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    Manager Future Generali India Insurance Co. Ltd. v. Sh. Balak Ram. & Anr.

    1. This appeal has been preferred against order dated 22.12.2018 passed by District Consumer Disputes Redressal Forum, Solan, whereby complaint filed by the complainant

    1 Whether reporters of the local papers may be allowed to see the order? Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 under section 12 of the Consumer Protection Act,1986 (hereinafter called as the Act) was partly allowed and the Opposite Party No.1 was directed to make payment of Rs.5,02,807/- along with interest @ of 9% per annum from the date of filing of complaint till payment. The Opposite Party No.1 was further directed to pay a sum of Rs.50,000/- towards mental harassment etc. and Rs.5000/- as litigation charges.

    2. It would be apposite to mention here that the parties will be referred, as have been arrayed before the District Forum.

    3. Brief facts, as averred in the complaint, are that the complainant had applied to the Opposite Party No.2 for grant of house loan to the tune of Rs.10,00,000/- which was sanctioned by the latter. In order to secure this loan, the opposite Party No.2 also got the house of the complainant insured with the opposite Party No.1 for a sum of Rs.10,00,000/- for the period from 17.06.2016 to 16.06.2026. The complainant spent a sum of Rs.15 lacs on the construction of this house. On 25.12.2016, the house of the complainant was totally damaged due to heavy rain fall. Intimation about this loss was given by the complainant to the opposite parties as well as to the local revenue agency. The opposite party No.1 had appointed surveyor who visited the spot on 16.01.2017 for verification of loss. The surveyor asked Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 the complainant to get the loss assessed from civil engineer. Accordingly, the complainant got the loss assessed from civil engineer Sh.Ravinder Mishra, who assessed the loss at Rs.6,74,102.43. After completion of all codal formalities, the complainant lodged his claim with the opposite Party No.1.On 23.03.2017, the Opposite Party No.1 offered him a sum of Rs.3,51,000/- by ignoring the loss assessed by the civil engineer. Even, this amount was not paid by the Opposite Party No.1. Upon this, the complainant served legal notice dated 29.12.2017 upon the Opposite Party No.1, but the latter failed to comply with this notice. Hence, this complaint.

    4. The Opposite Parties have resisted and contested the claim of the complainant. The Opposite Party No.1 in its reply has taken various preliminary objections against the maintainability of this complaint. On merits, it is not disputed that the house of the complainant was insured with it for a sum of Rs.10,00,000/-. It is also not disputed that the said house was damaged. However, it is denied that the complainant had spent a sum of Rs.15 lacs on the construction of this house. According to the Opposite party No.1, the policy issued to the complainant was Standard Fire and Special Perils Policy which covered special perils. The house of the complainant was damaged due to heavy rain fall which is not a specified peril under the policy. Therefore, the Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 Opposite Party No.1 is not liable to indemnify the complainant. It is further pleaded that the loss was occurred on 25.12.2017, but the intimation of the incident was given on 13.01.2017 and no explanation was given for the delay caused in giving intimation. The surveyor on physical verification has also found that the building was under construction. Therefore, there was breach of the terms and conditions of the policy. As per the investigation conducted by the surveyor/investigator, the retention wall was not adequately built which caused damage to the residential house due to heavy rain /continuous seepage of water. The defective design or workmanship or use of defective material was also the cause of damage. Loss was assessed to the tune of Rs.3,51,000/- by the surveyor subject to terms and conditions of the insurance policy. Since the policy does not cover the cause of loss, therefore, the claim of the complainant was repudiated vide letter dated 30.12.2017. Hence, there was no deficiency of service on the part of the answering opposite party and as such this complaint is liable to be dismissed.

    5. The Opposite Party No.2 in its separate reply has admitted that house loan was sanctioned in favour of the complainant and the answering opposite party got the house of the complainant insured in order to secure the loan. The loan account of the complainant has become NPA. In case Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 compensation is awarded to the complainant the same be ordered to be paid to the Opposite Party No.2. There is no deficiency of service on the part of the answering opposite party.

    6. No rejoinder was filed by the complainant.

    7. The parties led oral as well as documentary evidence in support of their respective cases.

    8. The learned District Forum below after hearing the parties and going through the records partly allowed the complaint as aforesaid.

    9. Feeling aggrieved by the impugned order dated 22.12.2018 passed by the learned District Forum, the Opposite Party No.1 has filed the instant appeal on the ground that the learned District Forum while passing the impugned order has failed to appreciate the pleas set up and evidence led on behalf of the opposite party No.1 in true prospective and as such the same is not sustainable and deserves to be set aside.

    10. We have heard Sh.Amit, Advocate, vice counsel for the Appellant/Opposite Party No.1 and also carefully gone through the written submissions filed by Sh.O.C.Sharma, Advocate, counsel for the complainant. At the time of hearing final arguments, none appeared for the Opposite Party No.2. Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019

    11. The learned vice counsel for the appellant/opposite party No.1 has vehemently argued that the learned District Forum below fell in grave error in appreciating the terms and conditions of the policy and held that loss caused due to heavy rain fall was covered under the policy. According to him, in this case the complainant was issued Fire and Special Perils Policy which covered only special perils. The house of the complainant was damaged due to heavy rain fall which is not a specified peril under the policy, hence the opposite party No.1 is not liable to indemnify the complainant for the loss suffered by him.

    12. Per contra, the learned counsel for the complainant in his written submissions has relied upon the decision of the Honble National Commission in United India Insurance company Ltd.vs Imperial Gift House, CLT 2007(1) 351 and submitted that the loss caused by heavy rain fall was covered under the policy and the learned District Forum has rightly followed this decision and held that the loss of the complainant was covered under the policy.

    13. In United India Insurance company Ltd.vs Imperial Gift House (supra), the Honble National Commission has upheld the order of the State Commission vide which the Insurance company was held liable to indemnify the insured for the loss suffered by collapse of roof Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 due to heavy rain fall on the ground that heavy rain fall comes within the ambit of the meaning of flood. In the instant case, it is admitted case of the parties that the house of the complainant was damaged due to heavy rain fall on 25.12.2017. Therefore, the learned District Forum below has not committed any error by following this decision to hold that the loss suffered by the complainant was covered under the policy.

    14. The next contention of the learned vice counsel for the appellant/opposite party No.1 is that the residential house of the complainant was insured but the house which was damaged was under construction. Therefore,the opposite party has no liability to indemnify the complainant for the loss cause to his under constriction house.

    15. The complainant had taken loan from the opposite party No.2 for construction of house. The opposite party No.2 at the time of sanctioning the loan got the proposed house of the complainant insured to the extent of loan amount of Rs.10,00,000/- for the entire loan period from 17.06.2016 to 16.06.2026. Thus, the insurance cover has commenced immediately after the loan was sanctioned and before start of the construction of the house of the complainant. The opposite party No.1 was fully aware about this fact. In view of this, the opposite party No.1 is precluded from raising Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 objection that under the policy under construction house was not covered.

    16. The next contention of the learned vice counsel for the appellant is that loss suffered by the complainant was on account of defective design or material used by him for construction of his house. This contention is based upon the observations made by the surveyor/investigator in his report after physical inspection of the spot. But the opposite party No.1 has not filed the affidavit of the surveyor/investigator to prove that on physical verification he has found that the loss suffered by the complainant was on account of defective design or material used by him for construction of his house. Moreover, this is not the ground taken by the opposite party in the letter of repudiation of the claim made by the complainant.

    17. The next contention of the learned vice counsel for the appellant is that in this case there is considerable delay in giving intimation of the loss by the complainant to the opposite party No.1 which has not been properly explained by the complainant. In its reply the opposite party no.1 has pleaded that the intimation about this occurrence was received by it on 13.01.2017, but in his affidavit Sh.Vidula Kaushik, Legal Manager of the opposite party No.1 has only stated that the intimation was received after considerable delay. He remained silent about the date of receiving the Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 intimation. Thus, the testimony of Sh.Vudula Kaushik in this behalf is general and vague. The opposite party No.1 has also not placed on record any document containing the intimation which was sent to it by the complainant. In view of this, it cannot be held that there was considerable delay in giving intimation of this incident by the complainant to the opposite party. Even otherwise, in view of the judgment of the Honble Supreme Court in the case of Om Prakesh vs Reliance Insurance Company, Civil Appeal No.15611 of 2017 decided on 04.10.2017 it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator. The condition regarding the delay shall not be a shelter to repudiate the insurance claims which have been otherwise proved to be genuine.

    18. The last contention of the learned vice counsel for the opposite Party No.1/appellant is that in case it is held that the opposite party no.1 is liable to indemnify the complainant for the loss suffered by him, in that case, the opposite party No.1 is only liable to pay a sum of Rs.3,51,000/- to him as assessed by the surveyor. The learned District forum below has wrongly rejected the deductions made by the surveyor on account of under insurance. The value of the house was assessed by the surveyor at Rs.14.32,500/-, whereas the insurance of the Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 house was to the tune of Rs.10,00,000/- which was under valued to the extent of 30.19%.

    19. The opposite party No.1 in its reply has specifically denied that the complainant had spent a sum of Rs.15 Lacs on construction of his house. The opposite party No.1 has also not filed the affidavit of the surveyor to testify as to how he has assessed the value of the house at Rs.14,32,500/-. Therefore, it cannot be held that the house of the complainant was under insured. Even otherwise, the complainant did not at his own insured the house in question, but the same was insured by the opposite party No.2 to the extent of the loan amount in order to secure its loan in pursuance of special arrangement with the opposite party No.1. The opposite party No.1 had never asked the complainant to declare the value of his house. In view of this, the opposite party No.1 cannot raise the plea of under insurance.

    20. As a sequel to our above discussion, we hold that the impugned order dated 22.12.2018 passed by the learned District Forum, Solan, does not suffer from any legal infirmity and as such the instant appeal filed by the appellant/opposite party No.1 is devoid of any merit and is accordingly dismissed. The parties are, however, left to bear their own costs.

    21. Certified copy of order be transmitted to parties free of costs strictly as per rules. Certified copy of order be Manager, Future Generali India Ins.Co. Ltd. Vs.Balak Ram & Anr. F.A. No.63/2019 sent to learned District Forum for information forthwith. File of State Commission be consigned to record room after due completion. F.A.No.63/2019 is disposed of. Pending application(s) if any also disposed of. Sunita Sharma Presiding Member R.K.Verma Judicial Member 03.05.2021 Manoj

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    Manager Future Generali India Insurance Co. Ltd. v. Sh. Balak Ram. & Anr.
    (May 3, 2021)