SANGRUR SALES CORPORATIONversusUNITED INDIA INSURANCE COMPANY LIMITED & ANR.

44                      [2020]
             SUPREME COURT     5 S.C.R. 44
                            REPORTS                     [2020] 5 S.C.R.


A                  SANGRUR SALES CORPORATION
                                     v.
      UNITED INDIA INSURANCE COMPANY LIMITED & ANR.
                       (Civil Appeal No. 378 of 2020)
B                           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
C
     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
D    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
E
     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
F    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
G
     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
H    alterations or repair” and not the words that follow – In the event
                                      44
SANGRUR SALES CORPORATION v. UNITED INDIA INSURANCE                     45
                    CO. LTD.

that the two constructions are possible or in the event of an           A
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.
                                                                        B
      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-       C
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           D
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         E
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        F
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        G
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 exclusion, as being attracted      H
46               SUPREME COURT REPORTS                     [2020] 5 S.C.R.


A    in the present case, would not be to a reasonable construction
     of the policy of insurance. The impugned judgment and order of
     the NCDRC is set aside. In consequence, the order of the
     District Forum as affirmed by the SCDRC is restored. [Paras 9,
     10, 12 and 13] [48-E-H; 49-A; 49-E-G]
B           United India Insurance Co. Ltd. v. Pushpalaya Printers
            (2004) 3 SCC 694 : [2004] 2 SCR 631 – relied on.
                            Case Law Reference
     [2004] 2 SCR 631                   relied on             Para 10
           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 378
C
     of 2020.
           From the Judgment and Order dated 07.03.2018 of the National
     Consumer Disputes Redressal Commission, New Delhi in R. P. No.
     2399 of 2016.
D          Navneet Kumar, Vikas Bhadana, Mohit Singh, Parijat Kishore,
     Advs. for the Appellant.
           Raunak Jain, A. V. Rangam, Buddy A. Ranganadhan, Advs. for
     the Respondents.
            The Judgment of the Court was delivered by
E
            DR. DHANANJAYA Y CHANDRACHUD, J.
            1. Delay condoned.
            2. Leave granted.
          3. This appeal arises from a judgment and order of the National
F    Consumer Disputes Redressal Commission1 dated 7 March 2018.
           4. The appellant obtained a “Standard Fire and Special Perils
     Insurance Policy” from the first respondent to cover his shop situated
     at Gausala Road, Sangrur. The shop was insured in the value of
     Rs 18,00,000 and the policy was valid from 21 June 2011 to 20 June
G    2012. On 29 March 2012, the showroom in which the appellant carried
     on the business of sanitaryware collapsed as a result of the work of
     excavation which was being carried on in an adjacent plot. A First
     Information Report was lodged on 30 March 2012 at the Police Station,
     Sangrur and intimation of the loss was given to the insurer. A surveyor

H    1
         NCDRC
    SANGRUR SALES CORPORATION v. UNITED INDIA INSURANCE                      47
        CO. LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]

was appointed. The claim was repudiated by the insurer on 11 May             A
2012. This led to the institution of the consumer complaint before the
District Consumer Disputes Redressal Forum2, Sangrur. The District
Forum allowed the claim in the amount of Rs 18,00,000, together with
interest at nine per cent per annum from the date of the institution of
the complaint. The order of the District Forum was upheld by the State
Consumer Disputes Redressal Commission3, Punjab on 5 May 2016.               B
However, in a revision filed by the insurer, the NCDRC reversed the
order awarding the claim.
      5. Notice was issued in the present proceedings on 22 April 2019.
The office report indicates that the insurer has been served. There is
no appearance on its behalf.                                                 C
       6. The dispute between the parties turns on a construction of
clause VIII (e) of the policy of insurance. Before adverting to the
exclusions, it is necessary to extract the relevant part of the insurance
policy, which reads as follows:
                                                                             D
         “In consideration of the insured named in the Schedule hereto
         having paid to the United India Insurance Company Limited
         (hereinafter called the Company) the full premium mentioned in
         the said schedule, the company agrees, (subject to the conditions
         and exclusions contained herein or endorsed or otherwise
         expressed hereon) that if after payment of the premium the          E
         Property insured described in the said Schedule or any part of
         the such property to be destroyed or damaged by any of the perils
         specified hereunder during the period of insurance named in the
         said schedule or of any subsequent period in respect of which
         the Insured shall have paid and the Company shall have accepted
                                                                             F
         the premium required for the renewal of the policy, the Company
         shall pay to the Insured the value of the Property at the time of
         the happening of its destruction or the amount of such damage
         or at its option reinstate or replace such property or any part
         thereof.”
                                                                             G
         7. Clause VIII is in the following terms:
         “VIII. Subsidence and Landslide including Rock slide: Loss,
         destruction or damage directly caused by subsidence of part of
2
    District Forum
3
    SCDRC                                                                    H
48            SUPREME COURT REPORTS                          [2020] 5 S.C.R.


A          the site on which the property stands or land slide/rock slide
           excluding:
                 a) the normal cracking, settlement or bedding down of new
                    structures
                 b) the settlement or movement of made up ground
B
                 c) coastal or river erosion
                 d) defective design or workmanship or use of defective
                    materials
                 e) demolition, construction, structural alterations or repair
                    of any property or groundworks or excavations.”
C
            8. 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. The
     exclusion in sub-clause (a) refers to the normal cracking, settlement or
D    bedding down of new structures. The exclusion in clause (d) refers to
     defective design or workmanship or use of defective materials. The
     crucial exclusion is the one in sub-clause (e) which has weighed with
     the NCDRC. Clause (e) relates to the demolition, construction or
     structural alterations or repair of any property or groundworks or
E    excavations.
            9. In the present case, 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
F    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
G    them namely, “demolition, construction, structural alterations or repair”
     and not the words that follow.
           10. It is well-settled that 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
H
    SANGRUR SALES CORPORATION v. UNITED INDIA INSURANCE                        49
        CO. LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]

happening of a certain event. [See in this context, the decision of this       A
Court in United India Insurance Co Ltd v Pushpalaya Printers4.
       11. The NCDRC, in reversing the concurrent views of the
District Forum and the SCDRC, held thus:
         “On bare reading of the above, it is clear that as per the above
         noted condition, the loss caused to the insured property due to       B
         demolition, construction, structural alterations or repair of any
         property or ground works or excavations is excluded from the
         risk covered. On perusal of para 3(b) of the copy of complaint
         placed on record, it is evident that as per the stand taken by the
         complainant on 29.03.2012 the insured showroom had fallen
                                                                               C
         accidentally as a result of subsidence and land sliding due to
         digging work being carried out by the neighbour in adjacent plot.
         It is also alleged in the said paragraph that a daily diary report
         no.54 dated 30.03.2012 regarding the incident was duly lodged
         with the P.S. Sangrur. From the aforesaid admission on the part
         of the complainant, it is evident that loss was caused to the         D
         insured because of collapse of the insured building as a result of
         excavation work being carried out in the adjacent plot resulting
         in subsidence and land sliding. Thus, in my view, in view of the
         above noted specific exclusion clause, the petitioner/ insurance
         company was justified in repudiating the insurance claim.”
                                                                               E
       12. 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,       F
to read the exclusion, as being attracted in the present case, would not
be to a reasonable construction of the policy of insurance.
       13. For the above reasons, we allow the appeal and set aside
the impugned judgment and order of the NCDRC dated 7 March 2018.
In consequence, we restore the order of the District Forum dated 5             G
May 2016, as affirmed by the SCDRC. In the circumstances, there
shall be no order as to costs.

Divya Pandey                                                 Appeal allowed.

4
    (2004) 3 SCC 694                                                           H