SANGRUR SALES CORPORATION versus UNITED INDIA INSURANCE COMPANY LIMITED & ANR.

Citation: [2020] 5 S.C.R. 44 · Decided: 17-01-2020 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 5 S.C.R.
SANGRUR SALES CORPORATION
v.
UNITED INDIA INSURANCE COMPANY LIMITED & ANR.
(Civil Appeal No. 378 of 2020)
JANUARY 17, 2020
[DR. DHANANJAYA Y CHANDRACHUD AND
HRISHIKESH ROY, JJ.]
Consumer Protection – Appellant obtained Insurance Policy
from the first respondent to cover his shop – Shop was insured in
the value of Rs.18 lakhs – Showroom in which the appellant carried
on the business of sanitaryware collapsed as a result of the
excavation work being carried on in an adjacent plot – Claim
repudiated by the insurer – District Forum allowed the claim in
the amount of Rs.18 lakhs with interest @ 9% p.a. from the date
of the institution of the complaint – Upheld by State Consumer
Disputes Redressal Commission (SCDRC) – Reversed by National
Consumer Disputes Redressal Commission (NCDRC) – Held:
Dispute turns on construction of Clause VIII (e) of the policy –
Clause VIII brings within the purview of the insured perils a loss,
destruction  or damage directly caused by subsidence of a part of
the site on which the property stands  or a land slide/rock slide,
but excludes,  what  is stipulated  in sub-clauses (a) to (e) –
Sub-clause (e), which weighed with the NCDRC, relates to the
demolition, construction or structural alterations or repair of any
property or groundworks or excavations – Appellant was not
engaged in any work of demolition, construction or structural
alterations nor was it engaged in any repair of its property –
Excavation which was the cause of the loss, was being carried on
in a neighbouring plot and not by the appellant in his property –
In the absence of specific qualification indicating that the
exclusion will apply to an excavation being carried on by a third
party, the reasonable construction of Sub-clause (e) of Clause VIII
is that it should apply only to a situation where the excavation is
being carried on by the insured himself in his own property –
Significantly, the words “of any property” qualify the words
preceding them namely, “demolition, construction, structural
alterations or repair” and not the words that follow – In the event
   [2020] 5 S.C.R. 44
44
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that the two constructions are possible or in the event of an
ambiguity, the construction which is beneficial to the insured
should be accepted consistent with the purpose for which the policy
was taken, i.e. to cover the risk on the happening of a certain event
– Impugned judgment set aside – Order of the District Forum, as
affirmed by SCDRC is restored.
Allowing the appeal, the Court
HELD: 1.1 Clause VIII brings within the purview of the
insured perils a loss, destruction or damage directly caused by
subsidence of a part of the site on which the property stands or
a land slide/rock slide, but excludes, what is stipulated in Sub-
clauses (a) to (e) thereafter. Clause (e) relates to the demolition,
construction or structural alterations or repair of any property
or groundworks or excavations. [Paras 6, 8] [47-C] [48-C-E]
1.2 The appellant was not engaged in any work of
demolition, construction or structural alterations nor was it
engaged in any repair of its property. The excavation which was
the cause of the loss, was being carried on in a neighbouring
plot and not by the appellant in his own property. In the absence
of a specific qualification indicating that the exclusion will apply
to an excavation being carried on by a third party, the reasonable
construction of Sub-clause (e) of Clause VIII is that it should
apply only to a situation where the excavation is being carried
on by the insured himself in his own property. Significantly, the
words “of any property” qualify the words preceding them
namely, “demolition, construction, structural alterations or
repair” and not the words that follow. In the event that the two
constructions are possible or in the event of an ambiguity, that
construction which is beneficial to the insured should be
accepted consistent with the purpose for which the policy was
taken, namely to cover the risk on the happening of a certain
event. The error of the NCDRC lies in reading the exclusion in
regard to excavations as being applicable in a situation such as
the present where the cause which resulted in the damage was
a work of a third party which was carrying on an excavation in
independent premises. It is not in dispute that no part of the
excavation was attributable to any act or omission on the part
of the appellant. Hence, to read the e

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