M/s National Insurance Co. Ltd. ..... Appellant
Vs
Mr. Pawan P.Sahani & Ors. ..... Respondents

This Appeal is against the Order of the State Commission, Delhi, wherein the appellant, National Insurance Company, has been directed to pay to Respondents herein an amount of Rs. 5,42,900/- with interest at 18% p.a. from 7th December, 1992 till the date of payment along with the amount of Rs. 15,000/- as compensation within a period of three months. The admitted facts of this case are that Mr.Pavan P.Sahani and others, who are the owners of flat bearing No. A-81, Himalaya House, Kasturba Gandhi Marg, New Delhi, let it out to M/s. N.K.T. (India) on a monthly rent of Rs. 47,412/-. The Respondent had this flat insured with the Appellant, Insurance Company, for a sum of Rs. 19.50 lakhs on the following two counts:

(a) Building including the built-in fixtures etc. for Rs.4,50,000.00

(b) Consequential loss of rent from the 
above for a period of 36 months                      Rs.15,00,000.00

As a consequence of a fire that broke out in the 11th floor of Himalaya House on 30-4-1991, the entire Himalaya House was sealed by an order of the Chief Fire Officer effective from 1-5-1991. The building responed for occupation and use on 15-11-1991 and the Respondents got possession of the flat on 14-1-1992. During the period from 1-5-1991 to 14-1-1992, no rent was received by the Respondents for this flat and, therefore, they claimed a sum of Rs. 4,00,708/- from the appellant, Insurance company, on account of loss of rent which was allowed by the State Commission along with an interest of 18% from 7-12-1992 till the date of payment. The State Commission also allowed rent loss for a period of three months from 14-1-1992, saying that this period is a reasonable one for finding another tenant. The learned Counsel for the Insurance Company has argued that the order of the State Commission is erroneous on the ground that the loss of rent could be claimed only if the concerned flat had been rendered unfit for occupation as a result of fire in the flat itself and not because of sealing of the building by the Chief Fire Officer on account of non-availability of the fire fighting equipment in the Himalaya House. In other words, the contention of the Insurance Company is that as the Insurance Policy did not cover the claim of the Complainant where the building is confiscated, commandeered or requisitioned by any lawfully constituted authority, resulting into loss or damage occasioned by permanent or temporary dispossession, no claim for lost rent could be accepted. The fact of fire in the 11th floor, the sealing of building by the Chief fire Officer as a consequence, the non-occupation of the concerned flat and thus loss of rent are not in dispute. The only point in dispute is whether the sealing of the building was the direct consequence of fire in the 11th floor or it was due to the non-availability of fire fighting equipment in the building. The verdict of the State Commission is that the loss of the rent to the Complainant is a consequence of the fire and, therefore the Respondents are entitled to be compensated for this loss as covered by the policy taken by them from the Appellant Insurance Company.

In this regard, a number of rulings have been cited before us to suggest that the relation of cause and effect should be clearly established and that while doing so "the losses which are the necessary consequence of a fire in the sense that if there had not been any fire they could not have happened" should be taken into account. The argument accepted by the State Commission and advanced before us also by the learned counsel for the Respondents is that the consequences of the fire on the 11th floor were not confirmed to that floor only as the "train of events" showed. The whole building was sealed right from the next day of the fire by the Chief fire Officer resulting in the consequential loss of rent as a final step to the Respondents. In this regard, we find that the following extract from the Judgment of the King's Bench 1909 (1) KB-51, extracted in the Order of the 

State Commission, is quite relevant and pertinent:

"If the final step, in the circumstances so produced is death, it seems to me that the whole previous train of events must be regarded as the proximate cause of death which results".

The learned Counsel for the Respondent also brought to our notice para 603 of Halsbury's Laws of England Volume 25 which reads as follows:

"To constitute a loss within the meaning of a fire policy, it is not necessary to show that the subject matter of the insurance has itself been burned; it is sufficient that the loss has been proximately caused by fire.......For example, losses may be sustained through attempts to check the progress of a fire, property may be destroyed by the water used to extinguish the flames or buildings may be blown up by the fire brigade for the purpose of preventing the fire from spreading. Other losses may be sustained in attempts to save property from fire; the property may be destroyed or damaged in the course of removal. In all these cases, though the property is not burned, its loss is nevertheless proximately caused by fire. Losses by theft during a fire must also be regarded as proximately caused by the fire".

We have carefully gone through the case and heard the learned Counsel for the Appellant - Insurance Company - as well as for the Respondent. After going through the records of the case and the Order of the State Commission, Delhi, along with the various rulings cited before us we are unable to persuade ourselves to accept the line of argument advanced by the Insurance Company to the effect that the loss of rent was not due to fire in the concerned flat itself. Fire in a part of the building may result in the closure of the entire building and, therefore, the loss of rent is a proximate consequence of the fire. In this case another relevant fact is that the building was sealed on 1-5-1991 which is immediately after the fire on 30-4-1991. We, therefore, see no reason to interfere with the Order of the State Commission. This appeal is dismissed with no order as to costs.