GROVER VINEYARDS LIMITED vs NEW INDIA ASSURANCE COMPANY LIMITED

THE complainant is a Company engaged in the manufacture of wines having its factory in Doddaballapur Taluk. THE said factory was insured with the opposite party (for short, "O.P."). THE complainant has obtained two policies insuring the assets and also covering risk of fire, lightening and explosion/implosion. THE assured sum under the said policies is Rs. 15,00,000 and Rs. 3,45,00,000, respectively. THE case of the complainant is that on 2.12.1999 at 10.30 p.m. there was leakage of wine in the winery to the extent of 15,000 litres due to the pressure built up inside the tank consequent on fermentation. THE loss was estimated at Rs. 14,60,00. THE fact of explosion/implosion was intimated to the O.P. THE O.P. after coming to know of the explosion/implosion appointed a Surveyor to assess the loss. THE Surveyor assessed the loss at Rs. 14,61,694 and submitted a report to that effect on 24.1.2000. Pursuant to the said report, the O.P. did not take any action to pay compensation to the complainant towards the loss suffered by it. After a lapse of about 8 months, the O.P. appointed another Surveyor to assess the loss. THE second Surveyor assessed the loss at Rs. 12,58,988 but he recommended to the O.P. to repudiate the claim of the complainant on the ground that the said loss was due to the "material failure" and the same was not covered under the policy. On the basis of the second Surveyor''s report, the O.P. repudiated the claim of the complainant by its letter dated 15.3.2001. A copy of the said letter is produced as Exhibit ''R-3''. This repudiation of the claim has made the complainant to file this complaint.

ON service of notice issued by this Commission, the O.P. has filed its version justifying its action in repudiating the claim of the complainant. According to the O.P., as there is a mechanical failure, any loss suffered due to mechanical failure comes under the exclusions clause in the policy and, therefore, it is not liable to pay any compensation to the complainant. On the basis of the rival contentions, the point that arises for consideration is: Whether the complainant is entitled for compensation as claimed in the complaint?

The reason given for repudiation of the claim in Exhibit ''R-3'' reads thus: "The loss of stocks is clear case of mechanical failure of storage tank which is not covered under our fire policy ''C'' terms and conditions."

Clause 3 of fire policy ''C'' reads as follows: "3(a) Explosion/implosion but excluding loss of or damage to boilers (other than domestic boilers, economizers or other vessels, machinery or apparatus in which steam is generated or their contents resulting from their own explosion/implosion. (b) Caused by centrifugal forces."

From this clause it is seen that any loss caused due to explosion/implosion is covered under the policy. Clause (c) of the Exclusions Clause reads thus: "(c) Loss or damage to property occasioned by its own fermentation, natural heating or spontaneous combustion or by its undergoing any heating or drying process." From a reading of this clause it is seen that any loss or damage to property occasioned by its fermentation, natural heating or spontaneous combustion or by its undergoing any heating or drying process is excluded. The reason given for repudiation of the claim is that the loss or damage has caused due to the mechanical failure. In the instant case, there is no such mechanical failure in the wine tank fixed for fermentation. Clause 3 of fire policy ''C'' referred to above states that any loss or damage caused due to explosion/implosion is covered under the policy. From the facts and the material placed before us we find that leakage of wine from the tank in all probability was due to the pressure built up inside the tank. Due to the pressure, two bolts which were fixed to the tank flew off and this led to leakage of wine. Therefore, the loss or damage that has been suffered by the complainant is due to the explosion/implosion, i.e., due to bursting of the tank.

THE dictionary meaning of the word "implode" is ''burst for cause to burst inwards''. THE word "implosion" is a noun. (Concise Oxford Dictionary). In the instant case, due to the pressure built up inside the tank, the bolts that were fixed to prevent leakage flew off, which means there was a burst. Therefore, the loss suffered by the complainant is due to the explosion/implosion and the same is covered under the policy.

THE first Surveyor has estimated the loss at Rs. 14,61,694 in the month of January, 2000 and he has also recommended for payment of compensation treating that the risk is covered under the policy. After the first Surveyor submitted the said report, it is not known what made the O.P. to appoint another Surveyor in the month of August, 2000. THE second Surveyor has also estimated the loss at Rs. 12,58,988. THE reason given in the second Surveyor''s report is that the risk is not covered under the policy as the loss or damage caused was due to material failure. In the instant case, there is no such material or mechanical failure since the leakage of wine was due to the pressure built up inside the tank. The O.P. has produced the technical opinion given by the Indian Institute of Science. The relevant portion of the said opinion reads thus: "At the location of bolt failure (viz., the bottom most part of the 4,000 mm tall tank), the pressure due to the head of the liquid column would have been the maximum. In addition, there would have been some additional internal pressure generated within the stored wine. These two pressures together had resulted in shearing of the welded bolt."

From the said technical report it is seen that the pressure built up inside the tank resulted in shearing of the welded bolt. Therefore, it is clear that the loss is because of explosion/implosion inside the tank. Further, the second Surveyor gave his report after about 9 months from the date of the first Surveyor''s report. Having regard to the lapse of time it is not known whether the second Surveyor could give a correct picture because in all probability by the time the second Surveyor inspected the spot the evidence available would have been destroyed. In this regard, it is useful to refer to the report of the Central Food Technological Research Institute, Mysore, as per their letter dated 23.2.2001 addressed to the O.P. The said document has been produced by the O.P. before this Commission. The contents of the said letter read thus: "We have examined your request, and in this connection we may inform that due to the fact that the incident occurred a year back and that the tanks and the actual damaged portions are not now available for examination, technically it is not possible for the CFTRI to express its opinion in this matter."

A reading of the said letter discloses that the opinion expressed by the second Surveyor that the damage or loss was due to material or mechanical failure is based on no evidence and, therefore, the same cannot be relied upon.

THEREFORE, we are of the view that the complaint deserves to be allowed.

IN the result, we pass the following order: (1) The complaint is allowed. (2) The O.P. is directed to pay Rs. 14,60,000 either to the complainant or to the Bank/financier as per the terms of the policy with interest at 6% per annum from the date of the complaint till realisation; (3) The O.P. is also directed to pay Rs. 2,000 to the complainant towards the cost of these proceedings.

Complaint allowed with costs.