HOTEL DREAM LAND vs NEW INDIA ASSURANCE CO.

BY this complaint, the complainants have prayed for a compensation of Rs. 17,92,618/- along with interest @ 19% per annum and costs.

THE brief facts set out in the complaint are that the original complainant, who was the owner of Hotel ''Dream Land'' building situated along the bank of river Manalso near Club House at Manali, got the building of the Hotel insured with the respondents (hereinafter to be referred to as the Assurance Company) for a sum of Rs. 20.00 lakhs for the period from 21.6.1993 to 20.6.1994. During the intervening period i.e. from 9.7.1993 to 12.7.1993, when the insurance policy was in force, admittedly, there was heavy rainfall and from Manali, the river Manalso got swollen to this extent that it entered the Hotel building and washed away a large portion of the foundations of the building. A large cavity was formed in the foundations of the building with the result that huge cracks developed in the building. Some of the rooms got totally damaged and the doors and windows were warped and broken. THE entire building towards the river site tilted and extensive damage was caused. THE claim for an amount of Rs. 17,92,618/- was preferred by the original complainant with the Assurance Company who has since died, but the claim has been arbitrarily repudiated by the Assurance Company. In reply, the Assurance Company has taken the ground that the claim of the complainant is not covered under the Insurance Cover as in terms of Exclusion Clause 10, the claim comes under the exclusion clause. Clause 10 is reproduced below: "Loss or damage due to mere cracking or settlement of the building nor for any loss unless the entire building or a part thereof has collapsed through the shifting or falling away of the soil beneath it".

According to the Assurance Company, the loss or damage to the building of the complainant is the case of mere cracking or settlement of the building and is covered under the exclusion clause. However, the Surveyor was appointed by the Assurance Company. The survey report has been filed by the Assurance Company, but the copy is not available on record. However, Mr. Naresh Gupta, learned Counsel for the Assurance Company has filed another copy of the survey report, let it be placed on record. The Surveyor has assessed the damage at Rs. 29,000/-.

Mr. Gulzar Rathore, learned Counsel for the complainant strongly contends that the ground for repudiation of the claim by the Assurance Company is arbitrary and in fact the case is clearly covered under Clause 7 of the Policy, which is reproduced below: "Storm, cyclon, typhoon, tempest, hurricane, tornado, flood and inundation". According to the Counsel, exclusion Clause 10 does not apply in this case for the reasons that it applies to the loss or damage due to mere cracking or settlement of the building.

THERE is substance in the contention of the. learned Counsel, as the flood water, admittedly, has entered into the building of the Hotel and caused this loss. The case is clearly covered under Clause 7-peril flood. Exclusion Clause 10 will not obviously apply as it refers to mere cracking or settlement of the building. It cannot be denied that the loss to the building has been caused due to flood because of heavy rains and, therefore, there is no difficulty in holding that the case is clearly covered under Clause 7 and exclusion Clause 10 would not apply. The next question that requires consideration is as to what extent the damage/loss has been caused to the complainants.

ATTEMPT has been made by the complainants and some papers have been placed on record showing the estimate of loss prepared by the Junior Engineer, but there is no affidavit in support of such a report, in the absence of which, no reliance can be placed on this document. Mr. Rathore, Counsel for the complainants has placed reliance upon the affidavit filed in support of the complaint. Since he is an interested party, such an affidavit cannot be relied upon. In fact, there is no satisfactory evidence at all to demonstrate that he has suffered the loss of Rs. 17,92,618/-. On the other hand, we have seen the survey report, whereby the Surveyor has assessed the loss at Rs. 29,000/-. In the absence of any reliable evidence of the complainants, there is no alternative left with us except to rely upon the survey report, whereby the loss/damage has been assessed at Rs. 29,000/-. Accordingly, in our opinion, the complainants are entitled to compensation of Rs. 29,000/-. Since the claim has been arbitrarily repudiated by the Assurance Company, the complainants are entitled to interest @ 18% per annum from the date of flood. In the light of what is discussed above, the Assurance Company is directed to pay to the complainants an amount of Rs. 29,000/- along with interest @ 18% per annum from the date of flood i.e. 12.7.1993 till the amount is actually paid to the complainants. The complainants are also entitled to costs of Rs. 1,000/- from the Assurance Company. Complaint allowed with costs.