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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7315 OF 2016

MAHAVIR ROAD AND INFRASTRUCTURE PVT LTD.   APPELLANT(s)

                         VERSUS

IFFCO TOKIO GENERAL INSURANCE CO LTD RESPONDENT(s)

J U D G M E N T

DR DHANANJAYA Y CHANDRACHUD, J  

Delay condoned.

Admit.

This appeal arises from a judgment and order dated 23

February 2016 of the National Consumer Disputes Redressal

Commission1.   The  NCDRC  rejected  the  complaint  of  the

appellant  alleging  a  deficiency  of  service  in  the

rejection of a claim under an insurance policy.

The  appellant  was  undertaking  the  resurfacing,

metalling  and  asphalting  of  roads  in  Nashik.   An

insurance  policy  was  obtained  by  the  appellant.   The

insurance cover encompassed ‘material damage’.  Section 1

of the insurance policy was in the following terms:

“SECTION-1 MATERIAL DAMAGE

The  Company  hereby  agrees  with  the  insured (subject  to  the  exclusions  and  conditions contained herein or endorsed hereon) that if, at any time during the period of insurance stated in the said Schedule, or during any further period of extension thereof the property (except packing

1 “NCDRC”

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materials  of  any  kind)  or  any  part  thereof described in the said Schedule be lost, damaged or  destroyed  by  any  cause,  other  than  those specifically  excluded  hereunder,  in  a  manner necessitating replacement or repair the Company will pay or make good all such loss or damage upto an amount not exceeding in respect of each of the items specified in the Schedule the sum set  opposite  thereto  and  not  exceeding  in  the whole the total sum insured hereby. The Company will also reimburse the insured for the  cost  of  clearance  and  removal  of  debris following  upon  any  event  giving  rise  to  an admissible  claim  under  this  Policy  but  not exceeding in all the sum (if any) set opposite thereto in the Schedule.”

However,  the  exclusions  to  Section  1,  inter  alia,

were to the following effect:

“EXCLUSIONS TO SECTION – 1

The Company shall not, however, be liable for:

*** c) normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use or obsolescence  or  otherwise,  rust  scratching  of painted  or  polished  surfaces  or  breakage  of glass;”

There were specific conditions applicable to Section

1.  Among the ‘major perils/Act of God perils’ described

in Memo 8 was “Flood/Inundation”.

The appellant submitted a claim on the ground that

between 25 June 2007 and 5 July 2007, it had suffered a

loss and damage to the roads which had been worked upon

due to “abnormal rainfall and water logging”.  By its

letter dated 14 September 2007, the appellant stated that

due  to  heavy  rains  on  29  June  2007,  the  roads  were

inundated and the top layer had been washed out.  

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By a communication dated 28 March 2008, the insurer

rejected the claim,  inter alia, on the ground that the

damage  had  been  caused  by  defective  workmanship  and

materials  and  due  to  the  failure  to  provide  an

alternative  route  for  traffic.   Subsequently,  after

further  correspondence,  the  insurer  informed  the

appellant on  13 May 2008 that the loss or damage to the

roads had been caused due to (i) monsoon rains; and (ii)

damage/peeling off of the top surface of the asphalt due

to  the  plying  of  vehicular  traffic  on  wet  roads,

resulting  in  wear  and  tear.   The  exclusion  in  the

insurance policy of damage due to normal wear and tear or

due to gradual deterioration as a result of atmospheric

conditions was relied upon.   

The report of the Surveyor, B.P. Shah & Associates,

dated 21 March 2008, was in the following terms, insofar

as is material:

“PROBABLE CAUSE:

According to the insured loss was caused due to heavy abnormal rains etc.  Copy of their letter dated  28th July  2007  is  enclosed  herewith (Encl.4).

What was observed was surface damages & neither any rain cuts nor erosion of base soil of the roads  by  flowing  floodwater  were  seen.   Top surface of the asphalt had peeled off/got damaged due to movement of traffic over a period of time on wet roads and normal wear & tear which also crerated few pot holes.  Policy excludes normal wear  &  tear,  gradual  deterioration  due  to atmospheric conditions (Exclusion C under Section 1)  &  also  damage  due  to  movement  of  traffic, which is by no means fortuitous.”

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The NCDRC rejected the consumer complaint on several

grounds. It held that:

(i) The appellant had initially stated in its claim

form that the loss had occurred between 25 June 2007 and

5 July 2007.  In its letter dated 14 September 2007, the

appellant  claimed  that  due  to  heavy  rains  on  29  June

2007, the roads were inundated and the top layers were

washed out.  The report of the Surveyor indicated that

the  stand  taken  before  it  was  that  the  damage  had

occurred on 2/3 July 2007.  Thus, the appellant had not

been consistent in the date of the allaged damage;

(ii) In  breach  of  the  obligation  contained  in  the

insurance policy which required that the damage should be

immediately notified, intimation was furnished only on 9

July 2007 and there was no explanation for the delay in

reporting the damage to the insurer;

(iii) According to the Surveyor, there was no evidence

of any damage on account of flood water and only surface

damage  was  found.   The  data  of  the  Meteorological

Department indicated minimal rains on the alleged dates

of damage;

(iv) No expert had been examined by the appellant in

support of its claim that rainfall, to the extent that

had occurred, would have resulted in severe damage to the

road.

Mr.  Anirudha  Joshi,  learned  counsel  appearing  on

behalf  of  the  appellant,  submits  that  the  insurance

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policy  covered  damage  due  to  ‘any  cause  whatsoever’.

Hence, it was urged that whether or not the damage had

been caused by excessive rainfall was really not material

at all since the appellant was entitled to be indemnified

for the damage which was sustained to the roads.  In this

regard,  Section  1  of  the  insurance  policy  was  relied

upon, which has been extracted earlier.   

On the alleged failure of the appellant to intimate

the insurer of the cause of the loss or damage, learned

counsel submitted that Clause 5 of the General Conditions

stipulated that the insurer shall not be liable, in any

case, when no notice has been received within fourteen

days of the occurrence.  In the present case, it was

submitted that the notice on 9 July 2007 was within a

period of fourteen days.  On these grounds, it has been

submitted that the reasons which have weighed with the

NCDRC in dismissing the complaint are unsustainable.   

On the other hand, it was urged on behalf of the

insurer by Mr. Abhishek Mishra, learned counsel  that the

specific ground on which the claim was filed under the

terms of the insurance policy was that there was abnormal

rainfall  and  water  logging.   This  was  evidently  in

pursuance of the provisions of the insurance policy under

which flood/inundation constituted the major perils which

were within the purview of the insurance cover.  Learned

counsel has adverted to the claim form, the letter dated

14  September  2007  and  the  Surveyor’s  report  dated  21

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March 2008.  The basis of the claim was found to be

false.

While analyzing the rival submissions, it must, at

the outset, be noted that the basis of the claim which

was  submitted  by  the  appellant  was  that  there  was

abnormal rainfall and water logging between 25 June 2007

and 5 July 2007.  Subsequently, in its letter dated 14

September 2007, the appellant claimed that it was due to

heavy rains on 29 June 2007 that the roads were inundated

and the top layer had been washed out.

While  dealing  with  this  submission,  the  NCDRC  has

made the following findings:

“As per the data quoted from the Meteorological Department,  the  rainfall  was  15.2  mm  on 25.6.2007,  9.2  mm  on  26.6.2007,  0  mm  on 27.6.2007, 5mm on 28.06.2007, 0 mm on 29.6.2007, 0 mm on 30.6.2007, 10.6 mm on 01.7.2007, 49.2 mm on 02.7.2007 and 116.6 mm on 30.7.2007.”

Upon analysing the data which was placed before it,

the NCDRC observed:

“In fact, there was no rain at all on 29.6.2007 or even on 30.6.2007.  In fact, the rainfall from 25.6.2007 to 01.7.2007 was nil or nominal.  The rainfall on 02.7.2007 was 49.2 mm, whereas the rainfall on 03.7.2007 was 111.6 mm.”

But, it has been urged on behalf of the appellant

that, whether or not, there was abnormal rain and water

logging is irrelevant because the appellant was entitled

to claim in terms of Section 1 of the insurance policy

where damage had been caused by any cause other than what

was specifically excluded.  In this background, it is

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necessary to note that among the exclusions provided in

the insurance policy was normal wear and tear and gradual

deterioration due to atmospheric conditions.  The case of

the appellant was that it was due to excess rainfall that

the roads were damaged.  By necessary implication, the

submission was that this would not constitute normal wear

and  tear  in  terms  of  the  exclusions  contained  in  the

policy.

We have adverted to the report of the Surveyor, which

found that there was only surface damage and no evidence

of  the  road  having  been  washed  out  as  a  result  of

excessive monsoon rain or inundation.   

That apart, as we have noted from the findings of the

NCDRC, the dates on which the alleged damage is stated to

have occurred had not witnessed excessive rainfall and

the rain was within normal parameters.  The failure of

the  appellant  to  examine  any  expert  in  regard  to  the

cause of the damage is a significant omission which has

been correctly relied upon by the NCDRC.  The insurance

policy specifically excluded normal wear and tear.  In

order to establish that this was not a case involving

normal wear and tear, the appellant sought to rely upon

what it described as abnormal rainfall and water logging.

The evidence on the record did not sustain the basis of

such a claim.

In this view of the matter and for the reasons we

have indicated, we are unable to come to the conclusion

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that  the  order  pased  by  the  NCDRC  suffered  from  any

error.   We  accordingly  do  not  find  any  reason  to

entertain the appeal.  The appeal is dismissed.

Pending application, if any, stands disposed of.

.............................J.  (DR DHANANJAYA Y CHANDRACHUD)

.............................J.  (HEMANT GUPTA)

NEW DELHI MARCH 26, 2019

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ITEM NO.38               COURT NO.8               SECTION XVII

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal  No(s).7315/2016

MAHAVIR ROAD AND INFRASTRUCTURE PVT LTD.           Appellant(s)

                               VERSUS

IFFCO TOKIO GENERAL INSURANCE CO LTD               Respondent(s)

(WITH APPLN.(S) FOR CONDONATION OF DELAY IN FILING APPEAL)   Date : 25-03-2019 This appeal was called on for hearing today.

CORAM :           HON'BLE DR. JUSTICE D.Y. CHANDRACHUD          HON'BLE MR. JUSTICE HEMANT GUPTA

For Appellant(s) Mr. Anirudha Joshi, Adv. Mr. Abhishek Singh, Adv. Mr. Onkar Singh, Adv. Mr. Saurabh Mishra, AOR

                   For Respondent(s) Mr. Abhishek Mishra, Adv.

Mr. Rajat Khattry, Adv.                   Mr. Vivek Kishore, AOR                      

UPON hearing the counsel the Court made the following                               O R D E R

Delay condoned.

Admit.

The  appeal  is  dismissed  in  terms  of  the  signed

reportable judgment.

Pending application, if any, stands disposed of.

 (SANJAY KUMAR-I)                (SAROJ KUMARI GAUR)      AR-CUM-PS                           COURT MASTER

(Signed reportable judgment is placed on the file)