Hotels Above Shops, One Fire NOC: Allocating Liability in India's Mixed-Use Commercial Buildings

On 19 August 2026 a fire in a central Kolkata building housing several hotels killed at least nine people and injured six. Euronews and ABC News reported that the blaze erupted around 1:45 am, that five fire engines were deployed, and that firefighters struggled to reach people trapped on upper floors through thick smoke. The building sat close to the West Bengal Fire Department headquarters. Response distance was not the binding constraint. The building itself was: a smoke-logged stair at two in the morning leaves guests on upper floors with nowhere to go.

Three weeks later, on 6 September 2026, The News Mill reported a fire at a chemical factory in the Chitpur area of Kolkata, with no casualties and the cause under investigation. That was the second significant commercial fire in the city inside three weeks. The two sit at opposite ends of the liability spectrum. The chemical plant is a single occupier on a single site with a statutory liability regime attached to it. The hotel building is several businesses stacked in one envelope, sharing one stair, one riser, one water tank and one fire licence, with no single party in control of the whole.

That second shape is common in Indian city centres. Ground-floor shops, a restaurant or two, small hotels on the middle floors, storage and staff accommodation at the top, often inside heritage or converted residential stock where rooms were added within an existing envelope rather than designed as a hotel. The question after a loss of this kind is rarely whether cover existed somewhere in the building. It is whose cover responds, in what order, and for what share.

India has no codified occupiers' liability statute. Liability to a visitor is worked out in tort, on the ordinary duty of care owed by the party in control of the premises, and in parallel through the Consumer Protection Act, 2019, under which a paying guest is a consumer and unsafe premises are a deficiency in service. Both routes turn on the same factual question: who controlled the part of the building where the harm originated, and who controlled the part where it caused death or injury.

In a mixed-use block those are usually different people.

• The owner or landlord controls the structure, the common staircase and lobby, the lift, the electrical riser and main panel, the water tank and pumps, the DG set and its fuel, and the terrace.
• Each occupier controls its own demised area, including its internal partitioning, wiring beyond the meter, kitchen and LPG bank, guest rooms and stock.
• A facility management or maintenance contractor controls the actual condition of the shared systems, does the hot work, and holds the keys to the pump room.
• A fit-out contractor may have been the last party to touch the wiring or the false ceiling in the unit where the fire started.

Each of them generally assumes another party's policy responds. The claimants make no such assumption. A dependant suing after a fatal fire names the hotel that sold the room, the owner of the building, and anyone else identifiable, and leaves the court to allocate. Contribution between defendants is settled long after the first defence costs have been spent, which is why the public liability wording's treatment of defence costs matters as much as the indemnity limit.

A fire no-objection certificate is issued by the state fire service against submitted drawings and an inspection carried out on a given day, under state fire services legislation and the municipal building bye-laws, with the technical content drawn from Part 4 (Fire and Life Safety) of the National Building Code of India, 2016. It records that the layout and the installed systems were found acceptable at that inspection. It is a building permission with a renewal cycle, and often the only fire-safety document an owner produces.

It does not certify any of the following on the night of a fire:

1. That the second staircase still exists and has not been enclosed to add rooms or storage.
2. That fire doors are shut and unpropped, and that the stair is not being used as a store.
3. That the hydrant pump starts, that the terrace tank holds its reserve, and that the sprinkler valves are open.
4. That travel distance from the furthest room to a protected stair still matches the approved drawing after internal partitioning.
5. That the exit discharge at ground level is not blocked by the shops that took the frontage.

The Code treats a building containing more than one occupancy group as a mixed occupancy, and requires the more restrictive provisions to be applied unless the occupancies are separated from each other by fire-resisting construction. That single requirement is where a large share of converted stock fails in practice. A shop and a hotel floor separated by an ordinary slab with an unsealed cable riser through it is one fire compartment for practical purposes, whatever the approved drawings show. Smoke moves through the riser and the stair, and the loss becomes a whole-building loss.

For an underwriter this has a direct consequence. Where separation is unverified, the probable maximum loss for the building is close to the total sum insured across every occupier in it, and the liability exposure of each occupier includes people who never entered its premises.

A mixed-use building of this kind normally has three separate insurance conversations running in parallel, none of them aware of the others: the structure, the income it produces, and the people it can injure.

Property and income

Property cover for small and mid-sized risks is generally written on the IRDAI standard products. Bharat Sookshma Udyam Suraksha applies where the total value at risk across all insurable assets at one location is up to INR 5 crore, and Bharat Laghu Udyam Suraksha applies above that and up to INR 50 crore, with the Standard Fire and Special Perils wording used above the threshold. The building is usually the owner's insurance and the contents, stock and tenant improvements are each occupier's own. Two failures repeat. The owner insures the structure at written-down book value rather than reinstatement value, so the average clause cuts the claim in proportion to the under-insurance. And tenant improvements, which in a converted hotel can exceed the value of the shell finishes, are insured by nobody because each side assumes the other has them.

The owner's income exposure is rent receivable, which needs to be insured as such and not assumed to follow the material damage cover. The occupiers need business interruption on their own gross profit or room revenue, with an indemnity period long enough to cover reinstatement of a heritage or municipally constrained building, which is slower than a greenfield rebuild. The occupiers who did not burn need a denial of access or prevention of access extension, because a fire two floors below closes their business through a civil authority order without touching their property.

Injury and liability

Guest and public injury sits in a public liability or commercial general liability policy, rated on the occupancy and on turnover or guest nights, with an any-one-accident and any-one-year limit. Staff injury sits outside it, under the Employee's Compensation Act, 1923, and the associated policy.

Once several insureds share one building, three wording points decide how much of the loss actually stays where the parties intended.

Cross-liability. Where the owner and the occupiers are named on one liability policy, a cross-liability clause makes the policy operate as though a separate policy had been issued to each insured, subject to the overall limit. Without it, an occupier's claim against the owner is a claim by one insured against another and can fall foul of the insured-versus-insured position. With it, the aggregate limit is still shared, so a single event that injures guests of two hotels can exhaust the limit for everyone on the schedule.

Subrogation. After paying the material damage claim, the property insurer has subrogation rights against the party whose negligence caused the fire, which in a mixed-use block is often a co-occupier or the maintenance contractor. A waiver of subrogation between the parties named in the lease keeps that recovery from destroying the commercial relationship, and it has to be agreed with the insurer rather than asserted in the lease alone.

Contractual allocation. Leases in this segment usually carry an indemnity clause pointing in one direction and an insurance clause pointing in another. Liability policies commonly exclude liability assumed under contract except to the extent it would have attached anyway, so an owner who has extracted a broad indemnity from a small hotel operator may have extracted an uninsured promise. The practical test is whether the indemnifying party's policy has been endorsed to accept that specific contractual liability, and whether it has the limit to honour it.

The document that resolves all three is a written insurance schedule annexed to the lease: who insures the structure, who insures improvements, who carries what public liability limit, who is named as additional insured, whose policy is primary, and who supplies a certificate of insurance at each renewal. Owners who collect that certificate from every occupier and contractor before entry, and again at renewal, learn that a tenant has let cover lapse before a claim does.

Fire rating in India has been de-tariffed for two decades, so a mixed-use commercial building is priced on what the risk survey finds rather than on an occupancy code. The questions that move the rate and the terms are consistent.

• Occupancy mix and separation. Which groups occupy which floors, and are they separated by fire-resisting construction with sealed penetrations, or only by a slab with an open riser.
• Escape provision. Number of stairs, whether they are enclosed and pressurised, travel distances after actual partitioning, and whether the exit discharge is clear at street level.
• Night occupancy. Sleeping occupancy above a mercantile or restaurant floor is the single worst combination in this class, because the ignition source is downstairs and the vulnerable population is upstairs and asleep.
• Reach. The floor of the highest sleeping occupancy against the aerial appliance height the local fire service can actually deploy in that street. The Kolkata fire is the illustration: appliances arrived quickly and still could not reach the trapped occupants.
• Ignition sources. Commercial kitchens and LPG banks, DG sets and diesel storage, electrical loading on a riser sized for a residential building, and unsupervised hot work during fit-outs.
• Housekeeping and maintenance evidence. Pump test logs, fire door inspections, extinguisher refill dates, an electrical thermography report, and a hot work permit system the facility contractor can produce.

Liability underwriting adds guest counts, food and beverage operations and whether the operator is also the owner. Our underwriting note on Indian hotels covers how the same building is rated on the property and casualty sides, and the wider hospitality liability profile covers the exposures that follow the guest rather than the structure.

A converted heritage or residential building with a current fire NOC, one stair, sleeping occupancy on the fourth floor and a restaurant at ground level is a severity risk. Price, sub-limit and survey it as one.

The allocation exercise is straightforward once someone owns it. In most buildings of this type nobody does, because the owner sees a rent roll and each occupier sees only its own floor. A broker acting for the owner, or for the largest occupier, can run it in a few weeks.

1. Map control. Walk the building and write down, area by area, who physically controls it: structure, stair, lift, riser, pump room, terrace, each demise. This map, not the lease, decides where the duty of care sits.
2. Test the escape route at night. Check the stair, the fire doors, the exit discharge and the pump at the hour the building is most occupied and least staffed, and record it. A fire NOC on the wall is not evidence of any of this.
3. Reconcile the sums insured. Structure on reinstatement basis, improvements allocated to a named party, stock and contents by occupier, rent receivable for the owner, and no gap between the three schedules.
4. Put the liability limits on one page. Every occupier's any-one-accident limit alongside the owner's, so the shortfall against a multi-fatality scenario is visible before it is tested. A limit set against a slip-and-fall claim will not survive nine deaths.
5. Fix the wordings. Cross-liability on any shared liability programme, agreed waiver of subrogation between owner and occupiers, contractual liability endorsed where the lease demands an indemnity, denial of access on every occupier's business interruption cover.
6. Make certificates a condition of entry. No fit-out contractor, maintenance contractor or new tenant starts work without a current certificate of insurance naming the owner, and the file is refreshed at each renewal.

Nine deaths in a building where the fire service arrived within minutes is a design and control failure, not an insurance failure. Insurance decides who carries the cost afterwards, and in a mixed-use building that answer should be written down before the fire rather than argued out between three insurers and a set of dependants two years later. Sarvada's liability insurance and property insurance practices structure these programmes so that each party's cover matches the part of the building it actually controls.