Mahavir Road And Infrastructure Pvt Ltd. vs Iffco Tokio General Insurance Co Ltd

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7315 OF 2016

MAHAVIR ROAD AND INFRASTRUCTURE PVT LTD. APPELLANT(s)

VERSUS

IFFCO TOKIO GENERAL INSURANCE CO LTD RESPONDENT(s)

J U D G M E N T

DR DHANANJAYA Y CHANDRACHUD, J

Delay condoned.

Admit.

This appeal arises from a judgment and order dated 23

February 2016 of the National Consumer Disputes Redressal

Commission1. The NCDRC rejected the complaint of the

appellant alleging a deficiency of service in the

rejection of a claim under an insurance policy.

The appellant was undertaking the resurfacing,

metalling and asphalting of roads in Nashik. An

insurance policy was obtained by the appellant. The

insurance cover encompassed ‘material damage’. Section 1

of the insurance policy was in the following terms:

“SECTION-1 MATERIAL DAMAGE

The Company hereby agrees with the insured Signature Not Verified (subject to the exclusions and conditions Digitally signed by SANJAY KUMAR Date: 2019.03.28 contained herein or endorsed hereon) that if, at 15:42:56 IST Reason: any time during the period of insurance stated in the said Schedule, or during any further period of extension thereof the property (except packing

1 “NCDRC” 2

materials of any kind) or any part thereof described in the said Schedule be lost, damaged or destroyed by any cause, other than those specifically excluded hereunder, in a manner necessitating replacement or repair the Company will pay or make good all such loss or damage upto an amount not exceeding in respect of each of the items specified in the Schedule the sum set opposite thereto and not exceeding in the whole the total sum insured hereby.

The Company will also reimburse the insured for the cost of clearance and removal of debris following upon any event giving rise to an admissible claim under this Policy but not exceeding in all the sum (if any) set opposite thereto in the Schedule.”

However, the exclusions to Section 1, inter alia,

were to the following effect:

“EXCLUSIONS TO SECTION – 1

The Company shall not, however, be liable for:

***

c) normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use or obsolescence or otherwise, rust scratching of painted or polished surfaces or breakage of glass;”

There were specific conditions applicable to Section

1. Among the ‘major perils/Act of God perils’ described

in Memo 8 was “Flood/Inundation”.

The appellant submitted a claim on the ground that

between 25 June 2007 and 5 July 2007, it had suffered a

loss and damage to the roads which had been worked upon

due to “abnormal rainfall and water logging”. By its

letter dated 14 September 2007, the appellant stated that

due to heavy rains on 29 June 2007, the roads were

inundated and the top layer had been washed out. 3

By a communication dated 28 March 2008, the insurer

rejected the claim, inter alia, on the ground that the

damage had been caused by defective workmanship and

materials and due to the failure to provide an

alternative route for traffic. Subsequently, after

further correspondence, the insurer informed the

appellant on 13 May 2008 that the loss or damage to the

roads had been caused due to (i) monsoon rains; and (ii)

damage/peeling off of the top surface of the asphalt due

to the plying of vehicular traffic on wet roads,

resulting in wear and tear. The exclusion in the

insurance policy of damage due to normal wear and tear or

due to gradual deterioration as a result of atmospheric

conditions was relied upon.

The report of the Surveyor, B.P. Shah & Associates,

dated 21 March 2008, was in the following terms, insofar

as is material:

“PROBABLE CAUSE:

According to the insured loss was caused due to heavy abnormal rains etc. Copy of their letter dated 28th July 2007 is enclosed herewith (Encl.4).

What was observed was surface damages & neither any rain cuts nor erosion of base soil of the roads by flowing floodwater were seen. Top surface of the asphalt had peeled off/got damaged due to movement of traffic over a period of time on wet roads and normal wear & tear which also crerated few pot holes. Policy excludes normal wear & tear, gradual deterioration due to atmospheric conditions (Exclusion C under Section

1) & also damage due to movement of traffic, which is by no means fortuitous.” 4

The NCDRC rejected the consumer complaint on several

grounds. It held that:

(i) The appellant had initially stated in its claim

form that the loss had occurred between 25 June 2007 and

5 July 2007. In its letter dated 14 September 2007, the

appellant claimed that due to heavy rains on 29 June

2007, the roads were inundated and the top layers were

washed out. The report of the Surveyor indicated that

the stand taken before it was that the damage had

occurred on 2/3 July 2007. Thus, the appellant had not

been consistent in the date of the allaged damage;

(ii) In breach of the obligation contained in the

insurance policy which required that the damage should be

immediately notified, intimation was furnished only on 9

July 2007 and there was no explanation for the delay in

reporting the damage to the insurer;

(iii) According to the Surveyor, there was no evidence

of any damage on account of flood water and only surface

damage was found. The data of the Meteorological

Department indicated minimal rains on the alleged dates

of damage;

(iv) No expert had been examined by the appellant in

support of its claim that rainfall, to the extent that

had occurred, would have resulted in severe damage to the

road.

Mr. Anirudha Joshi, learned counsel appearing on

behalf of the appellant, submits that the insurance 5

policy covered damage due to ‘any cause whatsoever’.

Hence, it was urged that whether or not the damage had

been caused by excessive rainfall was really not material

at all since the appellant was entitled to be indemnified

for the damage which was sustained to the roads. In this

regard, Section 1 of the insurance policy was relied

upon, which has been extracted earlier.

On the alleged failure of the appellant to intimate

the insurer of the cause of the loss or damage, learned

counsel submitted that Clause 5 of the General Conditions

stipulated that the insurer shall not be liable, in any

case, when no notice has been received within fourteen

days of the occurrence. In the present case, it was

submitted that the notice on 9 July 2007 was within a

period of fourteen days. On these grounds, it has been

submitted that the reasons which have weighed with the

NCDRC in dismissing the complaint are unsustainable.

On the other hand, it was urged on behalf of the

insurer by Mr. Abhishek Mishra, learned counsel that the

specific ground on which the claim was filed under the

terms of the insurance policy was that there was abnormal

rainfall and water logging. This was evidently in

pursuance of the provisions of the insurance policy under

which flood/inundation constituted the major perils which

were within the purview of the insurance cover. Learned

counsel has adverted to the claim form, the letter dated

14 September 2007 and the Surveyor’s report dated 21 6

March 2008. The basis of the claim was found to be

false.

While analyzing the rival submissions, it must, at

the outset, be noted that the basis of the claim which

was submitted by the appellant was that there was

abnormal rainfall and water logging between 25 June 2007

and 5 July 2007. Subsequently, in its letter dated 14

September 2007, the appellant claimed that it was due to

heavy rains on 29 June 2007 that the roads were inundated

and the top layer had been washed out.

While dealing with this submission, the NCDRC has

made the following findings:

“As per the data quoted from the Meteorological Department, the rainfall was 15.2 mm on 25.6.2007, 9.2 mm on 26.6.2007, 0 mm on 27.6.2007, 5mm on 28.06.2007, 0 mm on 29.6.2007, 0 mm on 30.6.2007, 10.6 mm on 01.7.2007, 49.2 mm on 02.7.2007 and 116.6 mm on 30.7.2007.”

Upon analysing the data which was placed before it,

the NCDRC observed:

“In fact, there was no rain at all on 29.6.2007 or even on 30.6.2007. In fact, the rainfall from 25.6.2007 to 01.7.2007 was nil or nominal. The rainfall on 02.7.2007 was 49.2 mm, whereas the rainfall on 03.7.2007 was 111.6 mm.”

But, it has been urged on behalf of the appellant

that, whether or not, there was abnormal rain and water

logging is irrelevant because the appellant was entitled

to claim in terms of Section 1 of the insurance policy

where damage had been caused by any cause other than what

was specifically excluded. In this background, it is 7

necessary to note that among the exclusions provided in

the insurance policy was normal wear and tear and gradual

deterioration due to atmospheric conditions. The case of

the appellant was that it was due to excess rainfall that

the roads were damaged. By necessary implication, the

submission was that this would not constitute normal wear

and tear in terms of the exclusions contained in the

policy.

We have adverted to the report of the Surveyor, which

found that there was only surface damage and no evidence

of the road having been washed out as a result of

excessive monsoon rain or inundation.

That apart, as we have noted from the findings of the

NCDRC, the dates on which the alleged damage is stated to

have occurred had not witnessed excessive rainfall and

the rain was within normal parameters. The failure of

the appellant to examine any expert in regard to the

cause of the damage is a significant omission which has

been correctly relied upon by the NCDRC. The insurance

policy specifically excluded normal wear and tear. In

order to establish that this was not a case involving

normal wear and tear, the appellant sought to rely upon

what it described as abnormal rainfall and water logging.

The evidence on the record did not sustain the basis of

such a claim.

In this view of the matter and for the reasons we

have indicated, we are unable to come to the conclusion 8

that the order pased by the NCDRC suffered from any

error. We accordingly do not find any reason to

entertain the appeal. The appeal is dismissed.

Pending application, if any, stands disposed of.

.............................J. (DR DHANANJAYA Y CHANDRACHUD)

.............................J. (HEMANT GUPTA)

NEW DELHI MARCH 26, 2019 9

ITEM NO.38 COURT NO.8 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s).7315/2016

MAHAVIR ROAD AND INFRASTRUCTURE PVT LTD. Appellant(s)

VERSUS

IFFCO TOKIO GENERAL INSURANCE CO LTD Respondent(s)

(WITH APPLN.(S) FOR CONDONATION OF DELAY IN FILING APPEAL)

Date : 25-03-2019 This appeal was called on for hearing today.

CORAM :

HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE HEMANT GUPTA

For Appellant(s) Mr. Anirudha Joshi, Adv.

Mr. Abhishek Singh, Adv.

Mr. Onkar Singh, Adv.

Mr. Saurabh Mishra, AOR

For Respondent(s) Mr. Abhishek Mishra, Adv.

Mr. Rajat Khattry, Adv.

Mr. Vivek Kishore, AOR

UPON hearing the counsel the Court made the following O R D E R

Delay condoned.

Admit.

The appeal is dismissed in terms of the signed

reportable judgment.

Pending application, if any, stands disposed of.

(SANJAY KUMAR-I) (SAROJ KUMARI GAUR) AR-CUM-PS COURT MASTER

(Signed reportable judgment is placed on the file)