Rejecting the contention of ICICI Lombard Insurance Company in a building collapse case, the National Consumer Dispute Redressal Commission (NCDRC) directed the insurer to pay Rs4.19 crore to Shital Fibres Ltd. The insurer had contented that Shital Fibres does not fall under the definition of the consumer as per the consumer law. However, NCDRC rejected the contention saying, "since an insurance policy is taken for reimbursement or for indemnity of the loss which may be suffered on account of insured perils, the services of the insurer cannot be said to have been hired or availed for a commercial purpose."
In an order passed last week, a bench of justice RK Agarwal says, "it is crystal clear that the cause of the collapse of the building was the subsidence of the soil which was due to the leakage from sewer pipeline installed by the Punjab Sewerage Board. Therefore, the claim of the Complainant does fall within Clause VIII of the Policy, and it does not fall within the exclusion sub-clause(e) of Clause VIII of the Policy, as alleged by the ICICI Lombard. Even otherwise, ICICI Lombard failed to establish that they have provided a copy of the terms and conditions and the cover note to the Complainant till the date of filing the Complaint; thus, they could not take benefit of the exclusion clause in view of the principle laid down by the Supreme Court in the case of Texco Marketing Pvt Ltd vs Tata AIG General Insurance Co Ltd reported in 2022 SCC OnLine SC 1546."
Interestingly, NCDRC, on 4 July 2013, had dismissed a complaint filed by the company against the insurer, stating, "The Complainant has no bone to pluck with the opposite party. The case is meritless and, therefore, the same is dismissed at the admission stage."
Shital Fibres then approached the Supreme Court. In its order on 23 February 2017, the apex court remanded the matter back to the NCDRC for a hearing on merits. "In our considered opinion, the stand adverted to by the appellant and the denial thereof by way of communication by the insurer was required to be looked upon when a claim of the present nature was filed," the apex court says.
Shital Fibres had constructed a building on plot no C- 81, Focal Point at Jalandhar in Punjab and obtained an insurance policy for the building, plant, machinery and stocks. Initially, the building, plant, machinery and stocks were insured with different insurance companies. In 2011, the insurance policies were shifted to Bharati AXA General Insurance Co Ltd (now known as ICICI Lombard General Insurance Co Ltd). There were seven policies issued and termed as 'special peril policies', which included the loss of the building due to subsidence and landslides.
Shital Fibres paid premiums for these policies. While the insurance company issued risk cover letters but neither provided the policy cover note nor the terms and conditions of the policies to the company. Unfortunately, on 15 April 2012, the insured building collapsed while the machines were running and work were going on, as the factory used to run for 24 hours.
The company intimated the loss to ICICI Lombard, which appointed Puri Crawford Insurance Surveyors and Loss Assessors. On 17 April 2012, the surveyor visited the site for the first time and assessed the loss of Rs4.19 crore.
During the hearing, ICICI Lombard's counsel Joy Basu contented that the claim filed by Shital Fibres does not fall under the policy as the survey report found that the reason for the collapse is the structure of the building. He argued further that depending on the survey report, ICICI Lombard could deny the claim as the reason for the building collapse is not listed in clause 6 of the policy.
However, Sameer Nandwani, representing Shital Fibres, countered that the survey report was completely wrong as it did not include soil testing to determine whether the soil was wet. He stated that as per the expert reports submitted by Guru Nanak Dev Engineering College Testing and Consulting Cell, ARO Tech Structural Consultants at Jalandhar City, Kunwar Sunil Kumar, a chartered engineer, the reason for the collapse of the building is subsidence of the soil which was caused due the leakage of a sewer pipe installed by Punjab Sewage Board.
After listening to both sides and perusing experts' reports, NCDRC concluded that the building collapsed due to the subsidence of the soil caused due to leakage of the sewer pipe. It asked ICICI Lombard to pay the insured amount of Rs4.19 crore, along with an interest of 9%, to Shital Fibres within six weeks from the issue of the order.
In 2016, a local court in Jalandhar acquitted industrialist Shital Vij and five others in the 2012 factory building collapse—one of Punjab's biggest industrial disasters—that had claimed the lives of 23 labourers. It was a four-storeyed building of a blanket manufacturing unit of Shital Fibres.
The counsel for Mr Vij argued in the court that the 20-ft-deep ditch dug up by the sewerage department for a storm-water channel in the factory's rear led to the building's collapse. However, the three-member special investigation team report made no mention of any ditch, says a report from Hindustan Times
(Consumer Case No155 of 2013 Date: 9 January 2023)