The main legal point established in the judgment is that insurance policies are to be strictly construed to determine the extent of liability of the insurer. The court found the insurance company deficient in accepting the proposal knowing that the insured shop was at the basement, and therefore, deemed it appropriate that a compensation of Rs.7.5 lakhs on account of deficiency of the insurance company is paid by the insurance company to the complainant/respondent.

ORDER

Prem Narain, Presiding Member

1. This first appeal has been filed by the appellants, Tata AIG General Insurance Company Ltd. and others against the order dated 25.2.2016 passed by the State Consumer Disputes Redressal Commission, Jharkhand, Ranchi (for short, ' State Commission') in C.C. No.23 of 2014.

2. The brief facts of the case are that respondent no.1 had obtained an insurance policy for the period 28.7.2012 to 27.7.2013 in respect of a shop no.2, main Road, Bistupur, Distt. Jamshedpur covering the building and contents therein. For obtaining the said insurance policy the respondent no.1 had submitted a completed and signed proposal form on 28.7.2012. The said proposal form under the column of risk location contained the words "Basements not covered". Accordingly the insurance policy was issued by the appellant with the usual warranty stating as under :

"Warranted no basement exposure or materials or Stock in Open are covered under the policy."

3. It was reported that on 9.12.2012 a fire broke out in the shop due to short circuit. On receiving intimation of the occurrence of fire the appellant deputed a Govt. Licensed surveyor on 10.12.2012 who immediately reached at the site of fire for verification and assessment of loss on the same day. The respondent also had stocks of their Franchiser M/s. Biba Apparels Pvt. Ltd/ The surveyor verified details of loss to stocks, furniture fixtures etc. and submitted his report dated 10.10.2013 assessing the loss at Rs.30,99,095/- after deducting the share Rs.6,33,791/- falling to be borne by another insurer, the United India Insurance Company Ltd., whose policy issued to M/s. Biba Apparels Pvt. Ltd. was current on the date of occurrence and covered the total stocks of franchiser. The surveyor however reported that the shop is at basement of the building. He issued the report subject to the terms, conditions, warranties, policy excess and amount of Policy of the insurance. Since the respondent had not disclosed in the proposal form that the shop was located in the basement and since the proposal submitted by respondent clearly indicated that basement was not covered and the policy was issued with a warranty to that effect, the claim was repudiated by the appellant on 2.12.2013. The respondent then filed a complaint on 16.12.2014 before the State Commission claiming the amount as assessed by the surveyor as also the amount deducted by surveyor being the loss on stocks to be shared by the United India Insurance Company Ltd.

4. The appellant submitted its written statement in April, 2015 submitting that the claim was not admissible in view of the specific warranty in the policy and further because the stocks belonged to M/s. Biba Apparels Pvt. Ltd. who had their own insurance covering their stocks at the affected location. The State Commission however passed an order on 25.2.2016 holding that the loss was covered under the policy issued by the petitioner/OP and directed the petitioner herein to pay Rs.37,32,886/- (which includes also the share of the United India Insurance Company Ltd.) with 12% interest from 16.12.2014 and Rs.2.5 lakhs compensation for harassment and mental agony and Rs.25,000/- as costs.

5. Hence, this appeal.

6. Heard the learned counsel for the appellants as well as respondent no.1. Respondent no.2 was proceeded ex parte vide order dated 22.6.2017.

7. The learned counsel for the appellants stated that the shop insured as per proposal form is Shop No.2, Main Road, Bistupur, Jamshedpur - 831 001. In the proposal form under the heading 'Risk Location', same as above was mentioned by the proposer. Under the column of Risk Location, it is mentioned that the basement is not covered. Insurance is a contract based on mutual trust and therefore, the insurance based on the address given by the proposer in the proposal form was accepted by the insurance company. However, when the surveyor was appointed after the insurance claim was filed, it was found that insured shop is in the