M/S. MELCON vs NEW INDIA ASSURANCE CO. LTD.

This revision petition has been filed by M/s. Melcon against the order dated 12.04.2012 of the State Consumer Disputes Redressal Commission, Rajasthan, (in short ''the State Commission), wherein the order dated 3.5.2010 of the District Forum, Alwar, Rajasthan, (in short ''the District Forum'') allowing the complaint has been set aside.

Brief facts of the case are that the petitioner had taken a Standard ''Fire and Special Perils Policy'' No.330600/11/07/11/00000028 valid for 22.4.2007 to 21.4.2008. The policy covered Building, plant and machinery and stock of all types MFC of distributors Elec Transformers etc. On 2.3.2008 while repairing a transformer, fire broke out as a result of which remaking of copper coils 800 kg, burnt oil 500 liter, set of gaskets 2 set were got burnt in fire. The petitioner filed a claim before the respondent Insurance Company, which was repudiated by their letter dated 31.3.2008 and explanatory repudiation was also sent on 7.4.2008. The petitioner filed a consumer complaint before the District Forum, which vide its order dated 3.5.2010 allowed the complaint as under:- "Therefore, we did not agree with the proposed judgment cited by the Insurance Company and in the interest of justice we think it proper to grant the claim as recommended by the surveyor and therefore in our humble view the complaint of the complainant deserved to be accepted as follows:

It is therefore ordered that the opposite party i.e. Insurance Company will pay Rs.1,04,500/- in accordance with the report of the surveyor. Apart from that Rs.3,000/- for mental agony will be paid separately. If the order is not carried out within the prescribed period of one month then interest @12% will be paid w.e.f. 26.5.2008."

Aggrieved by the above order of the District Forum, the respondent Insurance Company preferred an appeal before the State Commission, which was allowed vide its order dated 12.4.2012 setting aside the order of the District Forum as well as the complaint.

Hence, the present revision petition.

We heard the learned counsel for both the parties and perused the documents carefully.

Learned counsel for the petitioner argued that the petitioner never received the full policy containing terms and conditions of the policy. Only a cover note dated 13.4.2007 was given to the petitioner. Therefore, the terms and conditions or the General Exclusion Clauses were not communicated to the petitioner before the date of incident and the petitioner did not have any knowledge of the same. The cover note mentions under description of risk as factory building, plant and machinery and stock of all types MFC of distributors elec. transformers etc. Learned counsel for the petitioner also cited the judgment in case of Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd., (2000) 2 SCC 734 wherein it has been held that:- "Insurance- Duty of parties to disclose the facts in their knowledge- Exclusion clause neither disclosed by insurer nor made part of the insurance contract- Effect- The insured was manufacturing high tension insulators for transmission lines- "All-risk insurance policy" for installation of 25 M3 kiln with furniture, covering risk against loss during storage-cum-erection including trial and testing- Kiln erected and loaded with insulators for trial and testing- A few days (4 days in this case) later when opened, complete structure of kiln furniture with insulators found to have collapsed on kiln car damaging various items of kiln car- As the insurer failed to indemnify the loss as assessed by surveyors, the insured filing a complaint before the State Commission- Insurer''s plea that the damaged property was not covered by the insurance policy rejected and the insurer directed to indemnify the loss by paying the amount determined by surveyors- In appeal before National Commission, the insurer pleading that the insured had violated the terms and conditions of the policy by using used kiln furniture while the insured denying the communication of any such exclusion clause to him by the insurer- On facts, the allegation of the insured found to be correct- In such circumstances, held, National Commission erred in reversing the State Commission''s order on the ground that the insured himself ought to have called for the terms and conditions from the insurer- Duty of the parties to disclose the facts known to them, explained- In absence of communication of the exclusion clause to the insured, held, the insurer could not claim the benefit of that clause- Further held, the insurer could not raise a new plea before the National Commission- Hence, National Commission erred in accepting the new ground and allowing the insurer''s appeal- Consumer Protection Act, 1986, S. 14- Practice and Procedure- Pleadings- New plea- Not allowed in appeal before National Commission."

Learned counsel opined that in this judgment it has been held that the Insurance Company cannot repudiate the claim on the basis of violation of terms and conditions of the policy if the terms and conditions were not supplied to the insured before the incident. Learned counsel also narrates that the arguing counsel before the State Commission has accepted the fact that the transformer which had come for repair was not covered under the policy. This was an inadvertent mistake on the part of the arguing counsel before the State Commission. The petitioner had received only the cover note, which states ''stocks of all types'' and therefore, whatever was present in the insured premises, would be treated as covered under the policy. No distinction was made in the policy about the stock available and the stock coming for repairs.

Learned counsel for the petitioner also argued that the loss has occurred due to fire, which is an admissible peril under the policy. The argument of the respondent that there was no fire and the surveyor has mentioned in his report that it was due to short circuiting during testing of the transformer wherein it was only the oil that burnt and the outer body of the transformer was not burnt, is not tenable. As the terms and conditions were not supplied by the Insurance Company, this should be treated as fire whether it was caused by short circuiting or by any other reason.

Learned counsel for the respondent stated that the transformer in question had come for repairs and was not part of stock insured. The cover note supplied to the petitioner itself mentions that terms and conditions are attached. Even if it is assumed that terms and conditions were not supplied to the insured, all stocks mentioned in the cover note has a clear meaning that stocks owned by the insured and cannot cover any other stocks of somebody else, which will be coming into the insured premises. Learned counsel also stated that the loss has been caused due to internal fire inside the transformer due to short circuiting during testing of this transformer that came for repairs. As per General Exclusion Clause No.7, the electrical equipment, which is damaged by short circuiting, is not covered under the policy. Repudiation of the claim has been made on these counts only. The State Commission has rightly appreciated this clause and accordingly the claim of the petitioner has been rejected.

We have carefully considered the arguments advanced by both the parties and have gone through the records. The main question relates to application of General Exclusion Clause 7, which reads as under:- "7. Loss, destruction or damage to any electrical machine, apparatus, fix of fitting arising from or occasioned by over-running, excessive press short circuiting, arcing, self heating or leakage of electricity from what cause (lightning included) provided that this exclusion shall apply only to the particular electrical machine, apparatus, fixture or fitting so affected and not to other machines, apparatus, fixtures or fittings which may be destroyed or damaged by fire so set up."

The surveyor in his report has mentioned as follows:- " Occurrence As revealed to us, by Sh. R.K.Jain, Prop. Of M/s Melcon & Sh. Jagmohan Singh, factory manager that one transformer 2500KVA having Sl. No.284404 was received by

them for repairing on dt. 23.2.2008 & taken into their stock vide D3 no.45 dt. 25.2.2008. The transformer was under repair & they put copper coils after insulating everything & put in the transformer box with transformer oil. The repairing of transformer was on final stage & they were carrying the testing of transformer on dt. 2.3.2008 at about 10.30 P.M. & all of sudden some short circuiting fault occurred & transformer coils caught fire. They lodged the FIR with the Police Station, M.I.A., Alwar & also informed the Fire Brigade. The statement in writing with regard of occurrence & copy of FIR as submitted is enclosed herewith for you ref.

They had mentioned in the FIR that they informed the Fire Brigade but they controlled the fire prior to Fire Brigade by their own sources.

SURVEY, OBSERVATIONS AND OUR OPINION

During survey on dt. 3.3.2008, I critically inspected the reported damaged/burnt transformer in the light of occurrence/cause & nature of accident as explained by the insured rep. During survey following damages were observed:-

Sl. No.& Particular of effected Transformer-

2500KVA, 33000/415V,50Hz,

Type of cooling- Onan,

Oil- 1765.0kg, Total Mass- 8,380.0kg.

Volume of Oil-2300.01trs,

Yr of Mfg.-2005, Sl. No.284404.

It was observed that HT & LT coils of the transformer got burnt due to fire caused by short circuiting. The transformer container found intact, as there was no mark of flame over it. The inner surface of container has a big black mark of flash at one place & rest of portion seems intact. The coils were badly burnt due to short- circuiting."

From the above survey report, it is clear that coils of transformer were burnt due to short circuiting during testing of the transformer and as per General Exclusion Clause No.7 of the policy, claim relating to transformer is not admissible.

We have to see whether it would have made material difference in the incident if the petitioner had known the terms and conditions of the policy beforehand. The facts in the case of Modern Insulators Ltd. (supra), judgment cited by the learned counsel for the petitioner are different than in the present case. In Modern Insulators Ltd. (supra) used tiles were used, which was barred by way of exclusion. In the present case, even if the petitioner had known the terms and conditions of the policy, it would not have made any difference in the accident because it happened suddenly due to short circuiting, which was not something that was done knowingly as the case with the Modern Insulators Ltd. (supra). In all probability, the petitioner would not have refused or returned the policy after knowing the terms and conditions of the policy. Hence, we conclude that in the present case, prior information of terms and conditions of the policy

would not have made any difference in the occurrence of the incident and in the operation of the exclusion clause thereon.

Based on the above discussions, we conclude that the findings of the State Commission are based on correct appreciation of facts and evidence as well as right interpretation of the terms and conditions of the policy. We find no illegality, material irregularity or jurisdictional error in the order dated 12.4.2012 of the State Commission. Accordingly, the revision petition being devoid of any merits is hereby dismissed.

No order as to costs.