UNITED INDIA INSURANCE CO. LTD. versus M/S KIRAN COMBERS & SPINNERS

Citation: [2006] SUPP. 10 S.C.R. 402 · Decided: 08-12-2006 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Dismissed

Judgment (excerpt)

A 
UNITED INDIA INSURANCE CO. LTD. 
v. 
MIS KIRAN COMBERS & SPINNERS 
DECEMBER 8, 2006 
B 
(G.P. MATHURANDA.K. MATHUR,JJ.] 
Consumer Protection Act, 1986-Compensation claim-Liability· of 
Insurer-Fire policy covering risk of flood in respect of building-Damage to 
the building by floods-Repudiation of claim of insured by insurer on the 
C ground that building collapsed due to structural defect caused by subsidence 
not covered by the policy-Justification of-Held: There was no exclusion 
clause for subsidence in the policy-Subsidence was covered in the policy-
Insurer certified the building to be of first class construction-Cause of damage 
to the building was flood water, thus insurer liable to compensate. 
D 
Respondent company took a fire policy covering risk of flood for its 
building, machinery and stock for a year from the appellant-insurance 
company. Extensive damage was caused to the building of the respondent 
by floods. Respondent raised a claim for the loss sustained. Surveyor 
appointed by appellant assessed the loss as half of what was claimed by 
E the respondent. However, he re:commended that as the building collapsed 
on account of structural defect caused by subsidence. which was not .taken 
F 
·by insured and as such insurer was not responsible. The appellant 
repudiated the claim; Respondent filed a petition claiming damages. 
National Commission decreed the claim of the complainant as assessed by 
the surveyor. Hence the present appeal. 
Dismissing the appeal, the Court 
HELD: 1.1. Subsidence means "the gradual caving in or sinking of an 
area of land". On account of the water flooding into the premises of the 
claimant-respondent's factory from a Mill, the land ca.ved in as a result of 
G which one column of the building collapsed. Clause 8 of the Exclusions in the 
Policy deals with exclusions; if any loss is occasioned on account of these 
events then policy shall not cover such loss. Clause 8(b) only talks of typhoon, 
storm, cyclone, tempest, hurricane, tornado, flood and inundation. Clause 8 
would clearly show that there is no exclusion clause for subsidence. It cannot 
be understood from where the surveyor has brought the expression 
II 
402 
UNITED INDIA INSURANCE CO. LTD. v. KlRAN COMBERS & SPINNERS [A.K. MA THUR, J.J 403 
"subsidence" although clause 8 which specifically talks about exclusions, A 
does not mention anything like subsidence. The policy is covered for flood 
and inundation for which the claimant is covered by paying extra premium, 
therefore, the submission that the policy has not covered subsidence cannot 
be sustained. On the basis of this ground the repudiation of the claim of the 
claimant by the appellant does not appear to be justified. 
B 
(406-B-D; 407-A-C) 
1.2. It cannot be said that the building collapsed on account of poor 
construction of column no. 3 of the building. Normally when the company 
insures any factory, then their Officers and the Engineers used to inspect 
the building to find out whether there is any defect in the construction or C 
the construction is of poor quality. In the instant ease, the company 
certified that it is a first class construction, then for some defect which 
has not been noticed by the company, no benefit could be given to the 
company for such defect. More so, because of defective structure i.e. 
column no. 3, the building has collapsed. So called defect was aggravated 
on account of flooding of the water in the premises of the factory, if the D 
flood water had not entered into the factory, perhaps the construction 
which stood good for 12 years, would have lasted long. The cause of the 
damage to column No. 3 of the building was flood water. Therefore, the 
company cannot escape the liability to compensate the claimant for 
collapse of the building on account of floods. Hence, the view taken by E 
the National Consumer Disputes Redressal Commission is correct and is 
fully justified and there is no ground to interfere with the order. (407-C-H] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9128of2003. 
From the final Judgment and Order dated 18-7-2003 of the National F 
Consumer Disputes Redressal Commission, New Delhi in Original Petittion 
No. 74 of 1994. 
Vishnu Mehra and B.K. Satija for the Appellant. 
S.K. Dholakia and Sumita Hazarika for the Respondent. 
The Judgment of the Court was delivered by 
A.K. MA THUR, J. This appeal is directed against the order passed by 
the National Consumer Disputes Redressal Commission

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