[Mumbai Floods 2005] NCDRC dismisses Leela Hotel insurance claim of Rs 6 Crores

National Consumer Disputes Redressal Commission: In a complaint under Section 21(a)(i) of Consumer Protection Act, 1986 filed by Hotel Leelaventure (‘Leela Hotel’) seeking compensation for loss suffered during 26 July 2005 Mumbai floods on account of repudiation of claim under two insurance policies issued by New India Assurance (‘insurance company’), Subhash Chandra, Presiding Officer dismissed the said claim since Leela Hotel could not prove inclusion of Leela Galleria in the insured premises as per said policies.

Mumbai’s Leela Hotel claimed compensation of Rs. 5,98,42,267 along with punitive damages and costs from New India Assurance for the losses and damages suffered to the properties of Leela Hotel which were insured under two insurance policies for its buildings and items due to unprecedented flash floods due to excessive rains and high tides in Mumbai Sea on 26-07-2005 which resulted in inundation/flooding of water into the premises of the Hotel by 2.5 feet, with basement almost completely submerged and caused loss of buildings, plant & machinery and accessories, fixtures, fittings, furniture, etc.

The said incident was intimated to insurance company on the same day followed by another letter on 11-08-2005 estimating a loss of Rs 4 Crores. The Final Survey Report indicated that the location and description of risk when read together covered only the damaged stock located within insured premises, and the stock located at any other places like Leela Galleria and its basements were not covered for being outside the scope of ‘insured premises’. Meanwhile, a ‘ridiculously low compensation, fixed arbitrarily, unreasonably, unfairly and unjustly at Rs. 37.57 lakhs’ was given on 26-12-2006 which was rejected by Leela Hotel.

It was averred that Leela Hotel paid a premium of around Rs 22 lakhs and suffered a loss of about Rs.6 crores, while the insurer offered a petty compensation of Rs 37.57 lakhs without assigning any reason, in violation of principles of natural justice. Leela Hotel alleged a deficiency in service and came up with a consumer complaint in the instant matter. It was contended that the insurance policies were taken only for indemnification of any loss that may be suffered by them and not for the purpose of generating any profits.

The Commission pointed out that the insurer was required to issue an endorsement to cover Leela Galleria, which was not issued, and while Leela Hotel sought amendment through an endorsement, it could not produce any documents including the policy issued. Nor was any other document brought on record to suggest that the items covered in the Galleria were covered under the existing two policies. It further pressed on the fact that assets/stocks/FFF of Galleria being insured under another specific policy of Oriental Insurance Co. Ltd. indicated that the said area and its contents were not covered under the existing two policies obtained for the purpose of fire, earthquake.

The Commission therefore refused to accept the contention of Leela Hotel that premises of Galleria was covered under the two policies. It further explained that “An insurance policy is a contract of insurance which has to be read as it is without any additions or other interpretations.”

It also targeted the assessment report by surveyor appointed by Leela Hotel, and perused Section 64-UM(3) of Insurance Act, 1938 which deals with power of surveyor appointed by the insurer to appoint an expert for assisting in finalization of assessment of loss in an insurance claim. The Commission observed that “The report of the surveyor can be contested by the insured for valid reasons. The insurer is required to consider the report of the surveyor appointed by it although he is not bound to accept the report in entirety.”

The Commission noted that the initial assessment was Rs. 6,91,93,420 which included loss incurred on Leela Galleria premises, which was no covered in the final report. Thus, the Commission upheld the assessment of the final surveyor and disallowed/dismissed the complaint by Leela Hotel.

[Hotel Leelaventure Ltd. v. New India Assurance Co. Ltd., 2023 SCC OnLine NCDRC 239, Order dated 7-07-2023]

Advocates who appeared in this case :

For Complainant: Advocate Abhimanyu Mahajan, Advocate Anubha Goel, Advocate Mayank Joshi, Advocate Shambhavi Kala;

For Opposite Party: Advocate Vishnu Mehra, Advocate Kunaal Malhotra.