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Judgment
COMPLAINT was filed, inter alia, alleging that the complainant Company was incorporated with the following objects as given in its Memorandum and Articles of Association: "To purchase, manufacture, produce boil, refine, prepare, process (including solvent extraction), import, export, sell and generally to deal in whatever may be thought fit in all kinds of edible and non-edible oils including all minor oils like rice bran oil, mahuwa oil, watermelon seed oil, tree oil, sal seed oil and mango kernel oil, vegetable ghee, and kinds of oil seeds including all kinds of those seeds which produce minor oils like watermelon seed, cotton seed, sal seed, and rice bran."
COMPANY has the factory at A-2, UPSIDC Industrial Area, Kosi Kotwas Site-II, Near Kosi Kalan, Distt. Mathura (UP). On being approached by the representative of the opposite party-Insurance Company, the complainant purchased fire policy ''C'' bearing No. 1131140103660 for a sum of Rs. 4.50 crores. During the currency of the policy on 29.3.1998, it was learnt by the officers of the complainant- Co. that some person(s) had played mischief and opened all the four valves of the four main oil storage tanks and the main valve connecting all the four tanks/valves and the oil stored in all the tanks was being drained out into the nallah at a distance of 25-50 yards away from the factory of the complainant. There was more than 400 MTs of oil in the four storage tanks. Mischief was reported to P.S. Kosi-Kalan, Distt. Mathura and FIR No. 35/98 was recorded on 29.3.1998. Loss was reported to the opposite party-Insurance Co. through a letter on 30.3.1998. On 31.3.1998 Pradeep Madan, Branch Manager, Shri Bedi, Divisional Manager and K.P. Sen of M/s. Keypsens- Surveyor visited the factory of the complainant. Pradeep Madan informed that M/s. Keypsens having office at Flat No. 211, Pocket-V, Mayur Vihar, Phase-1, New Delhi, had been appointed as Surveyor to assess the loss. It was further alleged that the complainant supplied all the information and records demanded by the Surveyor from time to time. On or around 12.7.1999, the banker of complainant forwarded to the complainant a letter dated 11.6.1999 received from Regional Office of the Insurance Co. indicating vaguely that the file had been received from the Divisional Office and the claim of the complainant falls outside the scope of the policy. Insurance Company till date had not released Rs. 1.36 crores being the amount of loss suffered. Attributing deficiency in service, direction is sought to be made to the Insurance Company to pay a total amount of Rs. 2,37,51,638 as detailed below in Sub-para (i) of the grounds of claim and Rs. 55,000 towards litigation expenses- "Details: S. No. Particulars Amount (Rs.) 1. Claim on the basis of Ground (a) 5,00,000.00 2. Claim on the basis of Ground (b) 5,00,000,00 3. Claim on the basis of Ground (c) 5,00,000.00 4. Claim on the basis of Ground (d) 5,00,000.00 5. Claim on the basis of Ground (e) 5,00,000,00 6. Claim on the basis of Ground (f) 5,00,000.00 7. Claim on the basis of Ground (g) 5,00,000.00 8. Claim on the basis of Ground (h) 5,00,000.00 9. Claim on the basis of Ground (i) 5,00,000.00 10. Actual claim of the loss suffered by the claimant on 29.3.1998. 1,36,00,000.00 11. Interest accrued @ 24% p.a. 56,51,638.34 Grand Total: 2,37,51,638.34
COMPLAINT was contested by filing written version by the opposite party-Insurance Company. Issuance of fire policy ''C'' in question to the complainant was not denied. It was alleged that by the letter dated 30.3.1998 the complainant had intimated the Insurance Company that some unidentified miscreants had opened the main valves of four oil storage tanks and oil had gone down the drain resulting in huge loss to them. On receipt of this intimation, K.P. Sen, Surveyor was deputed to assess the loss. He visited the site along with the officers of the Insurance Company on 31.3.1998. On examination of the relevant documents, it was noticed that there was no sign of any external physical damage either to the tanks or the outlet valves of the tanks or the main valve and all were apparently in undamaged condition. It was stated that there was labour unrest at the complainant''s factory since its commissioning. Though the complainant was aware of the individuals behind the problem but while lodging FIR the complainant did not disclose this fact and the name of any suspected person to the police. During investigation the police did not find any clue and closed the case. It was also stated that though the complainant was facing labour unrest since the commissioning of plant, neither the security was strengthened nor any other step was taken by placing proper fencing and raising the boundary wall in the rear section of the factory from where any person could easily enter into the factory premises. It was not established that the alleged loss to the stocks of oil in tanks was due to the malicious act as alleged. It was pleaded that the complainant delayed the supplying of the documents, information and clarification to the Surveyor as a result whereof the report of Surveyor was delayed. On receipt of Surveyor''s report and thoroughly examining the other relevant documents and the terms and conditions of the policy in question, it was found that the loss did not fall within the scope of the relevant clause of the policy. Replying Insurance Co., therefore, by the letter dated 27.4.2000 intimated the complainant through banker who was following the claim that loss did not fall within the scope of policy. Liability to pay the claimed amount was, therefore, repudiated. Complainant was aware of the repudiation of the claim. Liability to pay the amount claimed was denied.
LETTER dated 27.4.2000 through which the claim made was repudiated by the opposite party-Insurance Company runs as follows: "M/s. Bank of India. 37, Shaheed Bhagat Singh Marg, New Delhi-110001. Reg.: Claim No. 11/311401/98/001 Policy No. 11/311401/98/03660 Date of loss 29.3.1998 Dear Sir, We refer to your claim in respect of the above. We have carefully examined the information provided by you and the inspection report of the Surveyors and find that: 1. There was no visible physical damage by external violent means to the property insured. 2. No such damage was found to have been directly caused by any malicious act. Even the fact of malice has not been established from evidence on record. 3. The loss is found to be caused by omission and commission of some person/s. In view of this, we regret that the loss does not fall within the scope of the policy and the liability in respect thereof is hereby repudiated. Thanking you, Yours faithfully, (Branch Manager)"
SINCE controversy between the parties mainly centers around the interpretation and applicability of RSMD clause of the policy taken by the complainant, the same being, omitting immaterial portion, is reproduced below: "This policy is extended to cover Riot, Strike and Malicious and Terrorist Damage as under- 1. Loss of or visible physical damage by external violent means to the property insured directly caused by: (i) The act of any person taking part together with others in any disturbance of the public peace (whether in connection with a strike or lock-out or not) not being an occurrence mentioned in Exclusion h(iii) and (iv) special conditions hereof. (ii) The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimizing the consequences of any such disturbance. (iii) The willful act of any striker or locked out worker done in furtherance of strike or in resistance to a lockout resulting in visible physical damage by external violent means. (iv) The action of any lawfully constituted authority in preventing or attempting to prevent any such act or in minimizing the consequences of any such act. (v) Any malicious act but excluding any commission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) provided that the company shall not be liable for any loss or damage arising out of or in the course of burglary, house-breaking, theft or larceny or any attempt by any person taking part therein,"
SUBMISSION advanced by Mr. P.K. Seth for the Insurance Company was that above Clause 1 is in two parts and even for the loss under the former part, it has to be proved that loss was by external violent means to the property insured caused by any malicious act. According to him, loss/damage in present case was not directly caused due to the malicious act as alleged. To be only noted that by aforesaid letter dated 27.4.2000, the claim had been repudiated under the latter portion of said Clause I of RSMD clause of the policy. On the other hand, it was urged by Mr. Rajesh Mahana for the complainant that the claim of the complainant is fully covered under the former part of said Clause 1 read with Sub-clause (v). Strong reliance was placed on the decision in Indu Nissan Oxo Chemical Industries Ltd. v. Oriental Insurance Co. Ltd., IV (2009) CPJ 68 (NC). It was pointed out that appeal filed by the Insurance Company against the said decision was dismissed by the Supreme Court. In Indu Nissan Oxo Chemical Industries case (supra), the complainant was insured under a fire policy ''C'' covering the building, plant, machinery/accessories, furniture and fixtures, fittings, stock and stock in process in the plant for the period from 9.11.1994 to 8.11.1995; on a thorough physical checking of the plant carried out by the plant In-Charge and the Technical Service Engineer on 17.1.1995, it was noticed that the air-lock removal vent valve in the discharge pipeline of pump P-501A was partially open allowing the flow of distilled alcohol into the drain funnel under the vent line and due to partial opening of air-lock removal vent valve and consequent drainage of the material into the soil, the complainant had suffered a loss of distilled Iso-decanol of a total quantity estimated at 245MT valued at Rs. 98 lakh from 21.12.1994 to 17.1.1995; on claim for this amount being repudiated, a complaint was filed which was contested by the opposite party-Insurance Company alleging that the claim made was not covered by RSMD clause of the insurance policy. While repelling this defence taken by the Insurance Company, it was held after referring to said RSMD clause in para No. 6 of the decision (at page No. 71 of the report)- "Reading of the clause would show that it covers loss of the property insured or visible physical damage to the property by external violent means directly caused by any of the events enumerated in five sub-caluses. We are unable to accept the submission advanced by Mr. Shankara, Advocate that the word ''or'' between the words ''loss of'' and ''visible physical damage'' occurring in above Clause I is conjunctive/additive and not disjunctive and this clause would be inapplicable till the loss is shown to have been caused by visible physical damage by external violent means to the property. Clause I is in two parts. Loss to the insured property by any malicious act will be covered by the former part of Clause I read with Sub-clause 5 above. In Black''s Dictionary, ''malicious act'' is defined as an intentional or wrongful act performed against another without any legal justification or excuse..."
WE are in total agreement with the interpretation given above to the former part of Clause I. Thus, the submission referred to above advanced on behalf of Insurance Company that even the loss to the property under the former part of the said clause has to be proved as having been caused by external violent means to the property insured is repelled being without any merit.
THIS brings us to the issue if loss/damage to the insured property on 29.3.98 was directly caused due to the malicious act within the meaning of above Sub-clause (v) of Clause I. Complainant alleges that all the outlet valves of four oil storage tanks and main valve was found open and second end of the flexible pipe used for filling the oil tankers connected to the outlet of main valve was placed inside the drain and the oil of the tanks was drained in nearly nallah. Insurance Company has filed along with the written version, a copy of the final Surveyor report dated 11.2.99 of Kaypsens, Surveyor. A portion under the sub heading ''Cause of the Damage'' thereof being material is reproduced as under: "The insured had instituted an internal inquiry under Mr. Dinesh Sharma-one of the plant officials. In his report, Mr. Dinesh Sharma has observed that since under normal conditions only the main valve and valve of one tank are opened to take out oil, the simultaneous opening of all the four valves of the four tanks and the main valve gives rise to the suspicion that this had been the malicious act of some unsocial elements. Further, it has been stated that the labour problem in the plant, the termination of services of some of the workers and the noticing of two unknown persons on the night of 24.3.1998 by the security guard - Mr. Desh Raj during the patrolling in the rear portion of the factory (near Solvent Extraction Plant), were also important links of the incident under reference. A copy of the said report of Mr. Dinesh Sharma along with the attached statements of the plant and security staff, is enclosed herewith..."
IT was pointed out by Mr. Seth, Advocate that in the FIR the complainant had not disclosed the name of any suspected person nor the police during investigation was able to find out any clue and the police case was thus closed. It was submitted that the concerned workers/operators may have inadvertently opened the outlet valves instead of closing it at the close of the plant office on 28.3.98 and leakage of oil could not be attributed as being directly caused by malicious act. Complainant alleges that mischief of opening the valves was committed by the person(s) not known to it. Therefore, in our view, on grounds of non-disclosure of the name of the suspected persons committing the mischief in FIR or the police having closed the case, it cannot be inferred that it is not a case of mischief. Further, in his report, Dinesh Sharma who had conducted internal inquiry into the cause of loss has noticed that under normal conditions only the main valve and valve of one tank are opened to take out oil and simultaneous opening of the outlet valves of all the four tanks and the main valve was sufficient to conclude that it was a case of mischief. In Black''s Dictionary, ''malicious act'' is defined as intentional or wrongful act performed against another without any legal justification or excuse. Simultaneous opening of the outlet valves of the four tanks and the main valve was not authorized by the complainant company. Loss to the insured property was, therefore, directly caused due to malicious act. It is difficult to accept the contention referred to above on behalf of the Insurance Co. that the opening of the valves was due to omission/negligence of the concerned workers/operators of the company.
IN aforesaid final report, the Surveyor assessed the net loss at Rs. 52,10,323. During the course of arguments on behalf of the complainant only the award of that assessed amount was pressed though in the complaint amount of more than Rs. 2 crore had been claimed. Obviously, Insurance Company was deficient in service in not offering the said amount by way of settlement of claim to the complainant. Since complainant has been deprived of the use of the said money all the years, it is entitled to interest which we quantify at 9% per annum from after two months of the survey report dated 11.2.1999.
RESULTANTLY, the complaint is partly allowed with direction to the opposite party - Insurance Company to pay amount of Rs. 52,10,323 along with interest thereon @ 9% per annum from 11.4.1999. Complainant is entitled to cost of Rs. 15,000 . Awarded amount will be paid within six weeks from today on furnishing by the complainant of ''No Objection'' from the Bank of India by whom the policy in question was purchased, to the opposite party. Complaint partly allowed.