Repudiation of claim for stock of Tendu leaves contaminated due to excessive rain and effect of moisture, not proper

National Consumer Disputes Redressal Commission (NCDRC):While observing that damage to the goods caused due to moisture content following heavy rains would be covered under loss due to natural calamity, NCDRC set aside the order of Chattisgarh State Commission, affirming the repudiation of claim by Insurance Company in the matter and directed the Insurance Company to pay claim amount also with costs to the complainant. The facts of the case are that the complainant A.R. Trading Company, whose main occupation was to purchase Tendu leaves from the Government and sell it to Bidi manufacturing Companies, got the bags of Tendu Leaves insured under ‘Standard Fire and Special Perils Policy’ from Oriental Insurance Company Ltd. The bundles of dried Tendu Leaves were kept in bags safely in the godown. In December, 2007, at the time of selling the Tendu leaves, the Complainant observed that the leaves had turned black due to natural calamity, on account of excessive rain fall in that area and hence had become unfit for making Bidis. Therefore, the Complainant submitted claim before the Insurance Company which was repudiated on the ground that leaves were contaminated on account of absorption of moisture from the atmosphere, which is not covered under the Policy. Four separate complaints filed before Chattisgarh State Commission by the complainant in the matter were dismissed on the ground that the Standard Fire and Special Perils Policy covers the risk of fire, lighting, storm, cyclone, tempest, hurricane, tornado, flood and inundation, and as per the General Exclusion Clause No. 4 of the insurance policy, loss, destruction or damage caused to the insured property by pollution or contamination if loss to the insured property is due to natural rains or moisture , then it was not covered. Feeling aggrieved, complainant challenged the orders of Chattisgarh State Commission before NCDRC and filed four appeals. After perusal of material on record and hearing both the parties, NCDRC observed that admittedly, direct and proximate cause in this case for the rotting of Tendu leaves was the rainfall which had occurred during the same period. “In a number of cases under almost identical circumstances where claims had been repudiated under the Fire and Special Perils Policy on the ground that the damage caused to the insured stocks/ premises had been caused because of seepage caused due to heavy rains and not due to inundation, floods etc., we had concluded that the claim was wrongly repudiated since flood/inundation also means outpouring of water. On this analogy loss caused due to moisture content following heavy rains would be covered and the claim should in such circumstances be indemnified,” noted the Commission. While partly allowing all the four appeals, the Commission ordered payment of 50% of the claim amount along with costs of Rs. 10,000 in each case. [A.R. Trading Company v. Oriental Insurance Company Ltd., 2016 SCC OnLine NCDRC 270, decided on June 17, 2016]