2006 (12) TMI 227 - SC - Indian Laws

Deficiency in services - collapse of the building on account of poor construction of column No. 3 of the building - Held that - Appeal dismissed. The cause of the damage to the 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. Thus the view taken by the National Consumer Disputes Redressal Commission is correct and is fully justified and there is no ground to interfere with the order.

Summary

Issues involved:
Claim of deficiency in service by the insurance company regarding coverage of flood damage and building collapse due to subsidence and poor construction.

Analysis:
1. Flood Damage Coverage:
The complainant, a business entity, held a valid Fire Policy with the insurance company covering risks of flood. The insured property suffered damage due to floods, leading to a claim of over Rs. 20 lakhs. The company repudiated the claim based on surveyor reports, citing subsidence as not covered under the policy. However, the National Commission decreed the claim to the extent recommended by the second surveyor, amounting to Rs. 10,13,571.90. The Supreme Court analyzed the policy terms and exclusions, noting that the policy covered flood and inundation but did not exclude subsidence. The Court found the company's repudiation unjustified as subsidence was not explicitly excluded in the policy.

2. Building Collapse Due to Poor Construction:
The insurance company contended that the building collapse was due to a structural defect in column No. 3, not covered under the policy. The company certified the building as having first-class construction, and the collapse was attributed to floodwater entering from a neighboring property. The Court observed that the floodwater aggravated the alleged defect, causing the collapse. The Court emphasized that the company's certification of the building's quality and the impact of floodwater on the collapse were crucial factors. Ultimately, the Court upheld the National Commission's decision, dismissing the company's appeal and affirming the liability to compensate the claimant for the building collapse due to floods.

In conclusion, the Supreme Court upheld the National Commission's decision, emphasizing that the insurance policy covered flood damage without excluding subsidence. The Court also highlighted the impact of floodwater on the building collapse, rejecting the company's arguments regarding poor construction as a justification for repudiating the claim. The judgment serves as a reminder of the importance of thorough policy analysis and factual considerations in insurance claim disputes.