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IFFCO TOKIO General Insurance Co. Ltd. v/s M/s. Prime Health Care Products

    FIRST APPEAL NO.18 OF 2012
    Decided On, 25 April 2012
    At, National Consumer Disputes Redressal Commission NCDRC
    By, MEMBER
    For the Appellant : S.M. Tripathi , Advocate. For the Respondent : ----

Judgment Text

The IFFCO TOKIO General Insurance Co. has filed this appeal against the order of Maharashtra State Consumer Disputes Redressal Commission in Consumer Complaint No.CC/10/3. In the impugned order, the claim of the Complainant (respondent in the present proceedings) was allowed for a sum of Rs.24,15,441/-, which was the amount of net loss, as assessed by the Surveyor appointed by the appellant/Insurance Company.

2. The matter pertained to an insurance claim under an ‘Industry Protective Policy’ taken by the Complainant, who was a manufacturer of hair care products, toothpaste, body wash, hand wash creams etc. for M/s. Hindustan Unilever Ltd. The case of the Complainant as seen from the Consumer Complaint before the State Commission was:-

'In the night intervening 30th June 2008 and 1st July, 2008 there were heavy rains in Daman. In the premises of the Complainant, rain water affected/damaged their stocks of raw materials, packaging materials stored on the second floor i.e at their outside godown as well as factory premises. Prior to the rains all the stock items were in good condition. But due to heavy rains that lasted the entire night (30.6.2008) and the following day (1.7.2008), there was accumulation of water in their store. It was noticed that water had accumulated on the terrace due to unprecedented heavy rain and the same entered into storage area through the staircase. The Complainants’ persons at the premises, immediately started shifting the stocks and tried to save them from damage. However, much of the material was damaged due to unexpected and heavy rains. As per quality parameters the complainants would not be allowed to use such material which had been affected by the water.

Due to the rain water which got accumulated in the Complainants’ premises, packaging materials which were mainly in the form of bottles, cartons, sachets, tubes, sleeves, laminated pouches, labels etc of different sizes and varieties and packaging of some of the materials packed in corrugated boxes were also affected.'

3. Accordingly, on 1.10.2008 the Complainant made a claim for Rs.34.99 lakhs under the policy. While the Surveyor assessed the loss at Rs.24.15 lakhs, the appellant/Insurance Company repudiated the claim by their letter of 26.12.2008 on the ground that the damage had occurred solely due to water seeping through the terrace slab and through unprotected openings on the second floor. According to the OP/insurance coy, such damage would not be construed as damage by flood. This stand was challenged by the Complainant on the basis of condition no.6 in the policy, which permits loss due to flood or inundation, except when it has been caused by an earthquake volcanic eruption or convulsions of nature. According to the Complainant, the loss in his case had directly resulted from inundation on account of rush of rain water into the godown from the terrace through the stair case. Allegedly, the proximate cause of damage to the goods was inundation on the terrace due to heavy rain resulting in seepage, without which the loss could not have occurred.

4. The State Commission has taken into account the fact that there was heavy rain on these two dates, which is admitted by the Insurance Company. The extent of damaged has been assessed by the Surveyor appointed by the Insurance Company at Rs.24.15 lakhs. In this background, considering the objection of the OP/Insurance Company-- that the store was located on the second floor of the building and therefore there is no question of any flood/ inundation causing any damage-- the State Commission has observed that:-

'In our view, when the Surveyor assessed the loss of the complainants to the extent of `24,15,441/-, repudiation of the claim of the complainants was simply on the flimsy grounds. The insurance cover was available to the complainants/Company for its premises in question at Daman in respect of peril arising from the flood or inundation. Inundation is an accumulation of water due to heavy rains or inundation can be on account of outpouring of rain on the premises. Inundation is occasioned by heavy rains. Flood is also occasioned by heavy rains, but flood presupposes that there is overflow of water of stream, water canal, river and other water reservoirs because of heavy rains. Heavy down pouring or heavy rains renders water flow in the normal boundary of the river, stream, etc. and therefore, flooding takes place and it ultimately result in water entering into the adjoining area and causing extensive damage to the properties situated on either side of the river, stream, etc. This is called flooding, but in our view, inundation of the premises can take place due to heavy rains or heavy downpour and it can be because of variety of reasons like seepage of water, percolation of water from gaps or cracks even in the roof or tiles of the premises. Inundation of premises can also take place because of open staircase. But all this happens because of entry of water not on account of flood, but on account of outpouring and heavy rains by seepage, percolation etc. Every damage caused by the heavy rains either by percolation or seepage of water or by flooding must be held to be within the ambit of the policy issued to cover the peril of flood and inundation. Flood has got typical meaning, but inundation can be in various forms as a result of heavy downpour or lashing of heavy rains to any city or premises.'

5. Thus, the view taken by the State Commission is that inundation of the property due to heavy rains must be held to be within the ambit of damage due to flood/inundation, as a peril covered under the policy. The State Commission therefore rejected the ‘hyper-technical’ view of flood/inundation as taken by the Insurance Company for the repudiation of the claim.

6. We have perused the record and heard Shri S.M.Tripathi, learned counsel for the appellant, IFFCO TOKIO General Insurance Co. Ltd. Shri Tripathi drew our attention to the meaning assigned to the word ‘inundation’ in Webster’s New World Thesaures as an abundant, usually overwhelming flow or fall, as of a river or a rain. We find from the definition relied upon by him that along with flood overflow and torrent, it also includes ‘downpour’, a term referred to by the State Commission in the impugned order.

7. We are in full agreement with the State Commission for rejecting the contention of the OP/Insurance Company that there was no question of any damage due to ‘flood/inundation’ as the storage itself was located on the second floor of the building. We may go a step further and add that acceptance of the stand of the Insurance Company would destroy the very justification for provision of the insurance cover, in such a case. No person, in a proper frame of mind, would seek insurance cover, paying heavy premium, for goods stored on the second floor, if he knew that flood water level has to rise high enough to reach the second floor from the ground, for the damage to be compensated under the policy.

8. In the letter of 20.1.2009 address to the Complainant/respondent, the Insurance company had justified repudiation of the claim stating that:-

'The said loss has taken place due to seepage of the rain water due to improper maintenance of the premises. We would like to inform you that as per the general conditions of the captioned policy it is the responsibility of the insured to take reasonable precautions for safety and soundness of the property insured and to prevent any damage to it.'

9. On this point, the State Commission has rightly held that maintenance of the building was an obligation of the owner and the insured was only the lessee of the premises. In any case, the insured cannot be held responsible

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for the damage caused by unprecedented rain. We agree with the State Commission. In fact, the letter of repudiation itself accepts the fact of heavy 'rain fall in Daman and surrounding areas, which continued till 1st July, 2008.' 10. We therefore, do not find any merit in this appeal. We also agree with the State Commission that repudiation of claim on a very flimsy and hyper-technical ground amounts to deficiency in service. The appeal is therefore, dismissed and the order of the Maharashtra State Consumer Disputes Redressal Commission in Consumer Complaint No.CC/10/3 is confirmed. Further, in the facts and circumstances of this case and taking into account the harassment undergone by the Complainant, we deem it just and proper to raise the cost of proceedings awarded in favour of the Complainant to Rs.50,000/- from Rs.20,000/-, awarded by the State Commission.