RAKESH UTPAL vs Oriental Insurance Co.Ltd.

THE complainant constructed House No. F-19/ 58 in Sector, 8, Rohini in the year 1992. THE complainant had been obtaining insurance policy from the opposite party from year to year covering risk against fire and damage due to earthquake, flood and inundation etc. THE last renewed policy for Rs. 35 lakhs was in force for the period 12.4.1994 to 11.4.1995. From 24.7.1994 to 31.7.1994, there was heavy down-pour. On 28.7.1994, there was an earthquake in Delhi region. THE case of the complainant was that as a result of heavy rains the flood water entered the building and inundated the basement of the building and as a result of rain and earthquake the building developed cracks and suffered substantial damage. THE Insurance Company was informed, Mr. A.K. Dhingra of M/s. Select Surveyors, inspected the building on 4.8.1994 and found water still standing in the basement floor. He also noticed damage to the building including cracks at various places. He took photographs and submitted his report dated 24.9.1994 to the Insurance Company. THE complainant supplied necessary information and documents to the Surveyor as desired by him (the Surveyor) and applied to the Meteorology Department regarding the relevant data in connection with the earthquake. THE Surveyor again inspected the premises on 7.9.1994 and informed the complainant that the claim was not payable being not covered by the policy. THE complainant represented explaining the facts but the Surveyor struck to his view. According to the complainant, the loss was estimated at Rs. 3,70,000/- which for want of timely repairs increased to Rs. 4,85,000/-. Legal notice dated 31.10.1997 was served to which reply dated 7.11.1994 was received. In these circumstances, the complainant filed the present complaint on 23.11.1994 claiming Rs. 5,06,000/- on account of compensation as per details mentioned in para 18 of the complaint.

IN the written statement filed by the opposite party it was admitted that during the year 1992-93, the complainant had obtained insurance policy for the house for Rs. 25 lacs which was increased to Rs. 35 lacs for the year 1993-94 and the same was renewed for the year 1994-95. The admitted case on both sides is that prior to the present claim the complainant had not made any claim under any of the earlier insurance policies. The main stand of the INsurance Company is that according to the Surveyor appointed by it, the loss appeared to have occurred on account of seepage from the basement floor and not on account of either flood or earthquake. Agreeing with the view of the Surveyor, the INsurance Company repudiated the claim and before the repudiation could be conveyed, the complainant had filed the present complaint. The complainant filed his detailed affidavit by way of evidence alongwith newspaper report of Punjab Kesri dated 29.7.1994 regarding the earthquake resulting in damage to old buildings. The opposite parties filed affidavit of Mr. R.B. Shami, Manager in the Regional Office of he Insurance Company, New Delhi alongwith the copies of the correspondence, report dated 24.9.1994 alongwith photographs of, Mr. A.K. Dhingra prepared for the Surveyors appointed by the Insurance Company, the correspondence exchanged between the complainant and Surveyor and that with the Company the data provided by the Meteorology Department and the detailed report dated 31.3.1995 made available by the Director General of Meteorology Department.

We have heard learned Counsel for the parties and have carefully gone through the records. As noted in the report of the Surveyor, the insured building was constructed in the year 1992. It was a first class construction. The policy was renewed for the year 1994-95 in April, 1994 and the damage occurred within about three months in July, 1994. It is safe to proceed on the footing that the building was intact in April, 1994 when the policy was renewed. Even otherwise, it is nobody''s case that the complainant was trying to get indemnified on account of damage existing prior to taking the policy in April, 1994. Mr. Dhingra had given three main reasons in para 7 of his report for coming to the conclusion that the damage appeared to be on account of seepage from the basement floor and not on account of the flooding of the basement on account of heavy and continuous rain fall during the period 28.7.1994 to 31.7.1994. Mr. Rathi pressed only one of these three grounds which reads as under: "Water is seeping into the basement through its floor/walls. This cannot be termed as an occurrence of flood/ inundation in terms of policy and an accidental happening."

IT is not disputed that water was still standing in the basement floor when Mr. Dhingra visited the spot on 4.8.1994. According to the complainant, however, the water was several feet deep, according to Mr. Dhingra it was only 4 inches deep. IT is well-known that there has been normal monsoon during the last several years. If the flooding of water was on account of seepage from he floor, such flooding should have occured during the period 1992-1994. No claim was filed by the complainant as no such flooding had taken place earlier. IT cannot be a mere co-incidence that there were heavy rains for 4 days accompanied by an earthquake which, according to the newspapers, resulted in damage to several houses, that such flooding should occur. Appearance of water on account of seepage from the walls from floor of a basement is not an extraordinary phenomenon and can happen where necessary precautions have not been taken at the time of construction. What is extraordinary is the occurrence of alleged seepage when there were heavy rains accompanied by an earthquake. Moreover, the existence of cracks, as distinguished from flooding of the basement cannot be explained by the phenomena of seepage from the floor of the basement. The contention of Mr. Rathi is that the photographs show that only the lower portion of the walls of the basement were found wet to the exclusion of the upper portions of the walls which indicated that the flooding was on account of seepage from the floor. We are unable to accept this contention. The flooding occurred on account of rains which took place towards the end of July and when the Surveyor inspected the flooding he found the water still standing there and he asked the complainant to get the basement dewatered. He re-inspected the basement 7.9.1994 before finalising his report. The report of the Meteorology Department shows that earthquake measuring 4.0 on the Richter scale hit Delhi region on 28.7.1994 at 7.53 p.m. 1ST. Though in the same report, the earthquake has been described as "slight", we have not been referred to any authority to show that an earthquake of the intensity of 4 on Richter scale cannot cause cracks in the building, even though newly constructed. The co-incidence of rain earthquake and occurrence of damage leads to the irresistible conclusion that it was on account of the said factors that damage to the building occurred. We further find that the Insurance Company has failed to apply its independent mind and has merely accepted the report of the Surveyor in this behalf. We further find that the report of the Surveyor is not supported by good reasons. We, therefore, find the present case to be one of the deficiency in service as the Insurance Company failed to settle the claim and ultimately rejected the claim on grounds which do not stand scrutiny. The next important question is as to the amount of compensation. The complainant set out details of the amount claimed by it. The complainant also submitted estimate dated 1.9.1994 prepared by Monica Estate Pvt. Ltd. and 15.11.1994 estimating the cost of rectification work to be Rs. 3,70,000/- and Rs. 4,85,000/- on the respective dates. As against the above material, the Surveyors appointed by the Insurance Company failed to estimate the loss in terms of money. On a perusal of the estimate submitted by the complainant, we find that the same is not detailed one and has not been prepared by a Civil Engineer or qualified architect. On the contrary, the said estimate has been prepared by Monica Estates Pvt. Ltd., Real Estate Agents and Property In vestments Consultants. In the absence of details it is not possible to place reliance on these estimates. As against the above, the Surveyor appointed by the Insurance Company failed to assess the loss. In the absence of reliable material, we would not like to hazard fixing an amount of guestimate. We allow the complaint only to the extent that we hold that the Insurance Company was deficient in service and is liable to indemnify the complainant. We direct the Insurance Company to have the damage assessed within four weeks of the receipt of a copy of this order. It will be open to the complainant to place such material as may be in his possession before the Surveyor. On the assessment of the damage, the Insurance Company shall pay the same to the complainant along with 12% interest thereon from 1.10.1994 till date of payment allowing two months time from the date of occurrence of loss which might have been justifiably taken by the Insurance Company. In case, the complainant disputes the extent of loss assessed by the Surveyor, it will be open to the complainant to raise a dispute before the Arbitrator in terms of the arbitration clause provided in the policy. The Insurance Company shall also pay Rs. 2,500/- as costs to the complainant. The complaint is disposed of in these terms. A copy of the order be conveyed to the parties. Complaint disposed of.