New India Insurance Company Limited vs Rajeshwar Sharma

Dr Dhananjaya Y Chandrachud, J 1 Delay condoned in Civil Appeal @ SLP(C)@CC 5127 of 2017. 2 These appeals arise from a judgment of a Division Bench of the High Court of Jammu and Kashmir dated 28 July 2016. The High Court has affirmed the decision of the Jammu and Kashmir Consumer Disputes Redressal Commission1 by which an insurance claim was allowed in the amount of Rs. 17.28 lacs. New India Assurance Company Limited, the insurer, failed in its challenge to the decision of the State Commission before the High Court. Cross-objections filed before the High Court by the insured for the grant of interest were also rejected. Hence, there are two appeals: one by the insurer and the second by the insured, against the judgment of the High Court. 3 The claim of the insured before the State Commission was that it owns a building known as Patel House which is situated at Akhnoor road, Jammu. The insured claimed that the building was constructed in 1984 with due permission of the municipality. In 1993, additional construction was raised, it is alleged, with the permission of the municipality. According to the insured, on a notice issued under Section 229 of the Jammu and Kashmir Municipal 1 “The State Commission” 3 Corporation Act 2000, he had approached the Jammu and Kashmir Special Tribunal which compounded the infraction in 1996. The Municipal Corporation initiated a demolition drive. Apprehending action against his property, the insured instituted a suit in the Court of the First Civil Subordinate Judge, Municipal Magistrate, Jammu where an ad-interim injunction was granted, restraining the Corporation from proceeding, except in accordance with law. The Municipal Corporation demolished the front portion of the building. The insured was carrying on a business of sanitary ware in the premises. As a result of the demolition, the insured claimed that it suffered damage in the amount of Rs.19.55 lacs.

4 The claim before the State Commission was founded on a policy of insurance which was obtained by the insured. The insurance policy contained the following exclusion:

11) That the Commissioner, Municipality and Executive Officer to show their loyalty towards the Government in violation of Court order and fully well knowing that the complainants are owners of the land demolished the front portion of the building causing total loss of Rs. 19,55,846/- on 18.04.2003. Besides this, due to the damage to the building, the basement has been rendered useless and has to be dismantled which is going to cause a further loss of Rs. 6,15,422/- to the complainants and the complainants reserve their right to claim the said amount as and when the basement is dismantled.” 7 In his counter affidavit filed in these proceedings, the Commissioner of the Jammu Municipal Corporation has stated that in order to remove encroachments/projections over public premises including over footpaths, streets and drains, the Municipal Corporation issued a public notice on 25 January 2003 in the daily editions of ‘Kashmir Times’ and ‘Daily Excelsior’. The notice made an appeal for the removal of projections, platforms and encroachments which were not in conformity with the building line provided by the Jammu Master Plan and Prevention of Ribbon Development Act 1953. After the period stipulated in the public notice ended on 31 January 2013 demarcations were carried out in areas where there were encroachments and the encroachers including the private respondents were directed to remove the encroachment. In the meantime, a suit was filed by the insured, Rajeshwar Sharma, before the First Civil Subordinate Judge, Jammu in which the following ad interim order was passed on 11 March 2003:

The exclusion was clear in exempting the insurer from liability for a loss arising from the destruction of property caused “by order of the government or any lawful authority.” 16 For the above reasons, we are of the view that both the State Commission and the High Court were in error in allowing the claim under the policy of insurance. We would, accordingly, have to allow the appeal filed by the insurer, which we do by setting aside the impugned judgment of the High Court which has affirmed the decision of the State Consumer Disputes Redressal Commission. In consequence, the complaint filed by the insured before the State Commission (CC 2628/2004) shall stand dismissed. 17 Before concluding, we clarify that since these proceedings are confined to the claim of the insured under the insurance policy, nothing contained in this judgment shall affect the merits of the suit which has been instituted by the insured against the Municipal Corporation. The appeal filed by the insurer is 13 allowed. The appeal filed by the insured shall stand dismissed. There shall be no order as to costs.

.....................................................J [Dr Dhananjaya Y Chandrachud] .....................................................J [MR Shah] New Delhi;

December 07, 2018 14