11/18/21, 6:16 PM UNITED INDIA INSURANCE COMPANY LTD. Vs. T.P.

SHARMA (ADHIKARI)

UNITED INDIA INSURANCE COMPANY LTD. Vs. T.P. SHARMA (ADHIKARI)

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LAWS(SIKCDRC)-2014-4-1
SIKKIM STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Decided on
April 26,2014

UNITED INDIA INSURANCE COMPANY LTD. Appellant

VERSUS
T.P. Sharma (Adhikari) Respondents

JUDGEMENT
S.P. Wangdi, J. (President) -
(1.) IN this Appeal the Appellant, United India Insurance Company
Limited, seeks to assail the judgment dated 6.7.2013 passed by the District Consumer Disputes
Redressal Forum, East and North Sikkim at Gangtok (in short the "District Forum") in Consumer
Case No. 01 of 2011 by which the Respondent, T.P. Sharma (Adhikari) has been awarded
compensation of Rs. 20 lakh for damage caused to his building, being the sum assured against the
policy of insurance which is the subject -matter of the present proceeding.
1(i) The facts and
circumstances leading to the Complaint before the District Forum were that a three storeyed
concrete building owned by the Respondent -Claimant situated at Upper Sichey Busty suffered
severe damages due to rainfall and also on account of seismic movement that had occurred on or
before 4.10.2010, The structure had tilted and was sinking having also developed fissures and
cracks making it hazardous for the Respondent and his family to live in.
(ii) The questioned
building was insured with the Appellant -Insurance Company under UniHome Care Policy No.
031981/46/06/90/00000113 dated 17.7.2006 which was valid up to midnight of 16.7.2020 on
payment of the entire premium. By virtue of the policy with the Appellant -Insurance Company the
Respondent had kept the building indemnified from various disasters/accident/damages, etc.
(iii)
It has been stated on behalf of the Respondent that on 24.10.2010 the Respondent had informed
the Insurance Company verbally of this fact followed by a written application submitted by him to
the Authorities on 25.10.2010 although in the copy of the Complaint filed before us it is indicated
as 25.11.2010. This was admittedly an error and, it was corrected during the course of the hearing
on the consent of the learned Counsel for both the parties. The date is, therefore, taken as
25.10.2010.
(iv) The Respondent thereafter approached the Appellant -Insurance Company to act
in terms of the Insurance policy which, however, was not responded to, compelling him to issue
legal notice followed by reminders to which the Appellant -Insurance Company failed to respond
on unacceptable grounds.
(v) On 12.10.2010 one Mr. D.P. Pradhan, resident of Below Palzor
Stadium Road, Gangtok, filed a Complaint before the Additional District Magistrate -II, Gangtok,
East Sikkim who took cognizance of it and directed registration of a case being Misc. Case No.
68/DM/E against the Respondent -Complainant which in turn led to an inquiry being conducted by
the Gangtok Sadar Police Station, Gangtok. As per the preliminary investigations and the report
submitted by the O/C, Gangtok Sadar Police Station, it was revealed that the houses of the said
D.P. Pradhan and the Respondent herein, T.P. Sharma, were on the verge of collapse and that the

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11/18/21, 6:16 PM UNITED INDIA INSURANCE COMPANY LTD. Vs. T.P. SHARMA (ADHIKARI)

main cause of the damage was an illegal construction of one Mr. Mahendra Gop above the house of
the Respondent. Major cracks in the building were caused by seepage of water as there was no
plum wall to support the house of said Mr. Gop. However, the construction of the Respondent was
found to be legal and authorised having been constructed report, the Additional District Magistrate
issued a conditional order dated 9.11.2010 under Section 133 of the Code of Criminal Procedure,
1973, directing the Respondent to demolish/dismantle the building on or before 9.12.2010 as it
was stated to be in a hazardous and sagging condition,
(vi) As per the direction of the Additional
District Magistrate -II, the Respondent was required to demolish the building by 19.11.2010.
before which he was asked to show cause as to why the demolition should not be carried out.

(2.) THE District Forum, upon considerations of the facts indicated in the Complaint and reply
thereto as well as the evidence on the records, by the impugned judgment, awarded in favour of
the Respondent -Complainant compensation of Rs. 20 lakh being the sum assured under the policy
of insurance, with interest @ 15% per annum from 24.10.2010. He was also awarded a sum of Rs.
25,000 against damages for mental agony and suffering. It was further directed that the payment
be failing which the Appellant would be liable to pay 10% interest on the amount of Rs. 25,000
from the date of filing of the Complaint, i.e., 16.2.2011, until its full and final payment. Before us,
the Appellant -Insurance Company states that the District Forum had failed to consider correctly
the various objections that had been raised against the claim and had rejected those on untenable
grounds. The grounds which were set out primarily are:
(a) The cause of the damage of the house
was due to the illegal construction of one Mr. Mahendra Gop which was situated at a higher level
than of the Respondent;
(b) The liability of the damage would lie thus upon Mr. Gop and not the
Insurance Company;
(c) The Respondent ought to have raised the objection at the time of
construction of the house of Mr. Gop;
(d) The said Mr. Gop was not made a party and, therefore,
the proceedings was illegal for non -joinder of necessary party;
(e) No objection or appeal was
preferred within the time granted in the order of the Additional District Magistrate -II directing
demolition of building;
(f) The District Forum committed an error in arriving at the finding that the
building of the Respondent got damaged due to storm, subsidence and inundation when in fact the
damage was caused by the illegal construction of said Mr. Gop as would be evident from the
record; and
(g) The damage to the insured property caused by the illegal construction or
negligence of some other individual is not covered under the insurance policy.
4(i). During the
course of his arguments, Mr. Thupden G. Bhutia, learned Advocate for the Appellant -Insurance
Company, placed reliance upon Sub -clause (V) of Section I of the policy of insurance to indicate
that the insurance policy does not cover destruction caused to a building as a result of an order of
the Government. It is submitted that the building of the Respondent was dismantled in pursuance
of the order passed by the Additional District Magistrate -II vide order dated 18.2.2011 by which
the Respondent had been given ample opportunity to defend his case before the order was made
absolute. It is emphasised that the damages caused to the insured property was beyond the scope
of the policy there being no ambiguity in the language so far as the insured perils are concerned.
(ii) That the Respondent had also failed to intimate the Insurance Company regarding the
occurrence of the loss depriving the Insurance Company the opportunity to conduct necessary
survey for assessment of the loss. As per the learned Counsel it was essential for the Respondent
to have done this under Sub -clause (IV) of Section I of the policy of insurance.
(iii) The assertion
of the Respondent that he had sent a written intimation dated 25.10.2011 is denied on behalf of
the Appellant as the letter did not bear any signature or receipt by any official/authority of the
Insurance Company. And, also that no acknowledgement nor receipt of the posting of any letter to
the Appellant had been placed.
(iv) As regards the grant of interest against the award, it was
submitted that it ought not to have been allowed as the delay in disposal of the Complaint was not
caused by the Appellant Company but was occasioned (sic.)
5(i). Mr. B. Sharma, learned Senior
Advocate, appearing on behalf of the Respondent, on the other hand, submits that there was no
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error in the impugned judgment of the District Forum for us to interfere. It is submitted that all
the formalities required for making a claim as stipulated in the conditions of the policy had been
complied with. It is stated that the cause of the damage to the building is fully covered by the
policy of insurance as it was on account of the structure tilting and sinking which is a condition
covered under Sub -clause (VI) of Section I of the policy. This tilting and sinking was in turn
caused by the illegal construction of one Mr. Gop whose building is admittedly located on the
higher level than that of the Respondent.
(ii) Mr. B. Sharma submits that due information was
conveyed to the Appellant which stands fully established by the copy of the letter dated
25.10.2010 and the evidence of Respondent himself as P.W.1 which is corroborated in full measure
by Madan Kumar Rai, P.W.2 and Suraj Tamang, P.W.3.
(iii) As per Mr. Sharma, the Appellant
refused to respond to his letter as well as the reminders and legal notice which clearly amounts to
deficiency of service as agreed to be rendered by the Appellant in terms of the policy of insurance.
6. Upon hearing the learned Counsel for the parties and on examination of the pleadings available
on the records and the evidence, we find that the following questions need to be answered for the
purpose of adjudication of the matter. They are - -
(i) What caused the damage to the building of
the Respondent?
(ii) Whether the Appellant was intimated as required under the policy of
insurance?
(iii) Whether the damage was covered under the policy of insurance?
7. The District
Forum upon consideration of the pleadings appears to have framed four issues and they are as
under:
(1) Whether the complainant had given notice of the damage of his insured building to the
O.P. forthwith and delivered notice within 15 days of such further time as granted by the O.P in
terms of Clause 4 to condition applicable to Section 1 of the Insurance Policy?
(2) Whether the
building of the complainant got damaged due to the causes covered by the Insurance Policy?
(3)
Whether there has been any deficiency in service on the part of the OP?
(4) To what relief or
reliefs, if any, is the complainant entitled?
8. Considering the above, we may take up the first
issue that corresponds to the second question framed by us, i.e., whether the Complainant had
given notice of damage.
(i) As per the averments contained in the Complaint, damage to the
building was caused by the rainfall on or before 4.10.2010 and also by the seismic movement
before or after the date leading to one Mr. D. P. Pradhan, a neighbour of the Respondent, making a
Complaint before the Additional District Magistrate -II. This led to a preliminary investigation
conducted by the Sadar Police Station that resulted in a report stating that the main cause of
damage to the building was due to the construction of an illegal house by Mr. Mahendra Gop above
that of the Respondent and that the house of the Complainant was constructed against an
approved blue (sic). The Additional District Magistrate -II on receipt of this report appears to have
directed demolition of the building by his order dated 9.11.2010 granting liberty to the Respondent
to submit show cause as to why the demolition should not be placed.
(ii) On 24.10.2010 the
Respondent had intimated the Insurance Company verbally followed by a written intimation on
25.10.2010 informing of the damages caused to his building with a request to take necessary
steps to compensate him in terms of the policy of insurance. Although in the written objection filed
on behalf of the Appellant this has been denied, the evidence led by the Respondent, in our view,
proves these facts and leaves no room for doubt. The oral evidence of the Respondent himself as
P.W.1, Madan Kumar Rai, P.W.2 and Suraj Tamang, P.W.3 fully establish the assertions and find
their evidence to be firm having withstood the test of their cross -examinations on all material
particulars.
(iii) Under the head "Condition applicable to Section -I" Clause 4 provides that "On the
happening of any loss or damage the insured shall forthwith give notice thereof to the Company
and shall within 15 days after the loss of damage, or such further time as the Company may in
writing allow in that behalf deliver to the Company". The damage having taken place on 4.10.2010
the claim as per this provision ought to have been made on 19.10.2010 but the written intimation
was given only on 25.10.2010 which is 6 days in excess of stipulated 15 days. However, in our
view, such delay would not deprive the Respondent in seeking for the relief as provided under the
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11/18/21, 6:16 PM UNITED INDIA INSURANCE COMPANY LTD. Vs. T.P. SHARMA (ADHIKARI)

policy of insurance. It cannot and ought not to be so straightjacket a provision. We find that under
Clause 8 of the "Common Conditions applicable to all sections" of the policy of insurance, a
claimant is entitled to claim for the damages within 12 calendar months from the date of
disclaimer by the Insurance Company after which only the claim would be deemed to have been
abandoned and not recoverable. Although, this provision pertains to a different situation but,
considering the nature of the policy, certain laxity would also be permissible to a claimant by
condoning the minimal delay of 6 days.
We, therefore, accept the finding of the District Forum that
the Respondent did give the oral and the written intimation on 24.10.2010 and 25.10.2010
respectively.
9(i). On the next question, i.e., what caused the damage? This appears to be the
same as issue No. (ii) framed by the District Forum. The material pleadings in respect of this are
found in paragraphs 5, 6 and 7 of the Complaint which are found to have been dealt with in
paragraph 11 of the written objection filed on behalf of the Appellant. We may reproduce
paragraph 11 of the written objection for convenience:
11. That, in reply to the contents of paras
5, 6 and 7 of the complaint petition that the (sic) it is matter of records and the inquiry report
reveals that the main cause of damage on the house of the complainant was due to the illegal
constructions by one Mr. Mahindra Gop who failed to produce any document with regard to his
constructions of a dwelling house. The major cracks were due to water seepage in the absence of
a plum wall in the construction of the house of Mr. Mahindra Gop. As such it is crystal clear that
the complainant is to claim damage from one Mr. Mahindra Gop and not from this answering
opposite party. It is submitted that Mr. Mahindra being a necessary party in the complaint has not
been made a necessary party as such this complaint petition is liable to be dismissed with cost.....
(ii) From the above, it stands established that the principal ground for repudiating the claim made
on behalf of the Respondent is that Mr. Mahendra Gop, who was responsible for the illegal
construction above the house of the Respondent that caused it to suffer from subsidence and
titling, was not made a party. That he was a necessary party as it was him from whom the
Respondent ought to have sought the remedy and not the Insurance Company.
(iii) Upon
consideration of the evidence and the pleadings as well as the oral submissions of the learned
Counsel, we find that factual aspects of the case do not appear to have been denied by both the
sides except for the ones discussed above. There is no dispute of the fact that the damage to the
building of the Respondent was caused by the illegal construction of said Mr. Mahendra Gop. The
only question, therefore, that calls for determination is as to whether the nature of the damage
was covered by the policy of Insurance.
(iv) We have perused the policy of insurance and we do
not find anything for us to conclude that the nature of the damage is not covered by the policy of
insurance. For this, we may examine relevant provisions of Section I of the UniHome Care Policy
which are reproduced below:
VI. Strom, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood,
Inundation and Earthquake, Fire and Shock.
Loss, Destruction or damage directly caused by
Strom, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood, Inundation, Earthquake, Fire and
Shock.
VIII. Subsidence and Landslide including Rock slide:
Loss, destruction or damage directly
caused by Subsidence or part of the site on which the property stands or Landslide/Rockslide
excluding:
(a) the normal cracking, settlement or bedding down of new structures
(b) the
settlement or movement or 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 of groundworks or excavations,
(v) We find that the District Forum has dealt
with this aspect rather elaborately in its finding at paragraph 16 which we may reproduce for
convenience:
16. On going through the conditions of the UNI HOME CARE policy it is seen that the
said Policy in SECTION - I lays down
The company will indemnify the insured the value of the
Property at the time of the happening of its destruction or the amount of such damage or any
party thereof under and/or sum insured in respect of the loss or damage to the building by.
I........................
II........................
III.......................
IV........................
V........................
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11/18/21, 6:16 PM UNITED INDIA INSURANCE COMPANY LTD. Vs. T.P. SHARMA (ADHIKARI)

VI. Strom, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood, Inundation and Earthquake Fire
and Shock, Loss, destruction or damage directly caused by strom, cyclone, Typhoon, Tempest,
Hurricane, Tornado, Flood, Inundation, Earthquake Fire and Shock.
VII..................................................
VIII. Subsidence and Landslide including Rock slide.
Loss,
destruction or damage directly caused by Subsidence or part of the site on which the property
stands or Landslide/Rock slide excluding:
(a) the normal cracking, settlement or bedding down of
new structures;
(b) the settlement or movement or 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 of groundworks or excavations.
The Oxford
Dictionary defines the word "Subsidence" as "the process by which an area of land sinks to a lower
level than normal or by which a building sinks into the ground."
"Storm" has also been defined by
the Oxford dictionary as "Very bad weather with strong wind and rains,"
"Inundation" according to
the Dictionary ibid is "to cover an area of land with large amount of water."
17. Thus a bare
reading of the Policy clearly discloses that the Insurance Policy covers the damage caused to the
building of the insurer by 'Subsidence', 'Storm' and 'Inundation' without a doubt. Although this
Forum cannot agree with the submissions of the learned Counsel for the complainant that the
Policy covers 'Earthquake', in fact it covers 'Earthquake Fire' and 'Earthquake Shock' which is not
the case in the matter under discussion since there is no complaint of fire or shock by earthquake.
It may be argued that the Insurance Policy Exbt.B relied on by the O.P. does not specify whether
the Policy issued to the complainant was under Fire Policy 'A', 'B' or 'C On this point one may
safely refer and rely on the decision of the Hon'ble Apex Court in : 2009 (9) SCC 70, New India
Assurance Company Ltd. v. M/s. Zuari Industries Ltd. and Others, cited learned Counsel for the
complainant. It is unequivocally been held therein that
31. Moreover in General Assurance Society
Ltd. v. Chanmull Jain and Anr., : AIR 1966 Supreme Court 1644, it was observed by a Constitution
Bench of this Court that in case of ambiguity in a contract of insurance, the ambiguity should be
resolved in favour of the claimant and against the Insurance Company. This decision soundly
quells all voices if raised in protest on this matter.
18. Thus, In view of the above discussions this
Forum has reached the finding that the building of the complainant got damaged due to 'Storm',
'Subsidence' and 'Inundation' which are duly covered by the Insurance Policy.
(v) Since the
findings are quite in detail to which we fully endorse, we need not deal further except to hold that
the findings are correct. The nature of the damage being nature of the risk covered under Clause
(VI) read with Clause (VIII) of Section I.
10. We may add further that had it not for the heavy
rainfall and the tremors and, had the said Mr. Mahendra Gop not started his illegal construction the
insured building would not have tilted and be sinking. It is relevant to note that it was not the case
of the Respondent that he was seeking for the indemnity because of the demolition of the building
in pursuance of the order of the Additional District Magistrate - II but, because of the tilting and
sinking caused by the rainfall and earthquake tremors. In any case, as observed earlier, it stands
established that the Appellant had orally intimated of the happening on 24.10.2010 followed by a
written intimation the very next day, i.e., 25.10.2010.
For all these reasons, we are of the view
that the nature of the damage and its cause are fully covered by the policy of insurance. In United
India Insurance Co. Ltd. v. M/s. Kiran Combers and Spinners, : I (2007) CPJ 1 (SC) : IX (2006)
SLT 367 : AIR 2007 SC 393, a similar facts and circumstances it was held as under:
10................................ So -called defect was aggravated on account of flooding of the water in
the premises of the factory, if the flood water had not entered into the factory, perhaps the
construction which stood good for 12 years, would have lasted long. The cause of the damage to
the column No. 3 of the building was flood water.
11. The question that may arise as regards the
valuation of the building is that there being no survey conducted of the damages caused to the
building the claim would be rendered without any basis. To this, the answer does not appear to be
far to fetch. The Respondent -Claimant has unequivocally stated that he had spent more than Rs.
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25 lakh to construct the building and that the entire building was rendered inhabitable and
dangerous which led to it being demolished. These are undisputed facts. It is thus clear that he
would be entitled to the entire sum assured under the policy of insurance which is Rs. 20 lakh.
12.
Having thus held we may now move over to the issue pertaining to the grant of interest. In our
view, we accept the contention made on behalf of the Appellant -Insurance Company to the
limited extent that the rate of interest granted @ 15% is on the higher side. We are of the view
that it would be fair to reduce it to 10% from the date of the Complaint that was lodged originally
to the Appellant -Insurance Company on 24.10.2010. We also agree that damage on mental agony
and sufferings would not fall within the purview on the policy of insurance and, therefore, stand
rejected.
We find support in our view in United India Insurance Co. Ltd. v. Abdul Rashid Mattoo
and Others,, (2005) 13 SCC 426, the relevant portion of which may be reproduced below:

(3.) MERELY because the Insurance Company resisted the claim made by the respondents and
then defended itself, a finding as to physical harassment and metal torture could not have been
arrived at and recorded by the Commission, All the findings and observations made in that regard
are liable to be set aside as being wholly unsustainable. Similarly, we find that 18% rate of
interest is certainly on the higher side. In our opinion, the rate of interest should not have
exceeded 12% p.a.
13. For the aforesaid reason, the Appeal stands partly allowed. We direct the
Appellant -Insurance Company to pay the compensation as awarded by the District Forum with the
modifications indicated above. Payment of award be made to the Respondent -Claimant within a
period of one month from the date of this judgment.
14. No order as to costs. Let a copy of this
judgment and the Original records of the case be transmitted forthwith to the learned District
Consumer Disputes Redressal Forum, East and North Sikkim at Gangtok for its due compliance.;

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