Murli Cold Storage Pvt Ltd vs New India Assu Co Ltd

WE had heard this case in part on 31 July, 1997 and on the request made by the learned Counsel for the Insurance Company we heard it further today. Sri Vivek Nigam has appeared on behalf of the complainant while Sri Anand Mohan has appeared on behalf of the United India Insurance Company Ltd. which is the sole opposite party.

THE complainant, a Private Ltd. Company carries on the business of extracting oil from Neem Seeds. For the purpose it purchases oil seeds and gets its stock insured. In the present case the insurance policy was taken from the opposite party. A copy of the policy has been filed as Annexure -C with the complaint. It shows that stock of raw material of seeds used for oil extraction in the plant and stored at godown or in the open, were insured. Amongst the risks covered by the policy, which was a ''Fire Policy'' was loss or damage occasioned by its own furmentation, natural heating or spontaneous combustion. Additional premium for covering this risk was charged by the Insurance Company from the complainant for the relevant period to which the policy related. On 26 November, 1991 it was discovered by the complainant that stocks of oil seed got damaged on account of spontaneous combustion. It was also found that De -oiled Neem Cakes were also damaged for the same reason. The complainant reported the loss to the Appropriate Authorities and submitted a claim in the prescribed form to the Company with details mentioned therein. It appended a claim bill in which it put forward a claim for reimbursement, to the tune of Rs. 11,66,217.50 (Eleven lac sixty six thousand two hundred seventeen rupees and paise fifty only).

THE Insurance Company appointed a Surveyor who made several visits to the site and attempted to collect the relevant material from the complainant in order to prepare his report. He ultimately submitted a report of which a copy has been filed as Annexure C -A -1 alongwith the counter affidavit filed on behalf of the Insurance Company. It has been mentioned in this report at several places that inspite of repeated requests some information which was required by the Surveyor was not furnished by the complainant. The report also says that since the loss had been caused by ''spontaneous combustion'' the risk was not covered under the insurance policy As such also the Surveyor could not make his own assessment about the loss. On receipt of this report the Insurance Company repudiated the claim through its letter dated 23 November, 1993 (Annexure C -A -5 to the counter affidavit). In its material part the letter reads : "We have received information from you regarding fire in the factory premises, we deputed the Surveyor who thoroughly investigated the matter and after investigation it was found that the damage to the stock of Neem Seed and Neem De -oil Cakes have been caused due to thermal decomposition/spontaneous heating and not due to actual ignition/fire originated therefrom. Since the claim does not fall within the purview of the policy, hence your claim is not tenable, hence the Company repudiate your claim."

AFTER it, the complainant approached the Commission through the present complaint for relief. What was basically emphasised on the part of the complainant was that the Insurance Company was not justified in repudiating the claim on the non -existent ground that the risk was not covered under the insurance policy and that by doing so it had committed deficiency in service towards the complainant.

MR . Anand Madan has urged on behalf of the Insurance Company that it was incumbent upon the official concerned to have specifically mentioned the fact that loss due to fire alone was the risk covered under the policy in the case of spontaneous combustion as was laid down by the Tariff Advisory Committee in its report where it dealt with combustion. The mere fact that it was not so mentioned would not alter the position to the prejudice of the Company and that the condition aforesaid should be read in the policy concerned. We find ourselves unable to accept this submission. The failure of the Company to mention that in cases of a claim relating to spontaneous combustion liability was being undertaken in case the loss was caused ''by fire only'' may visit the official concerned with some penalty, if the Insurance Company so desires, but it cannot deprive the policy -holder of the benefit occuring to him from the words used in the policy itself. In the present case we have found that risk occuring on account of spontaneous combustion was specifically undertaken by acceptance of additional premium by the Insurance Company and it cannot be permitted now to avoid it on the fanciful ground that the risk covered was only in respect of loss caused ''by fire only''.

IT is clear, in the aforesaid circumstances, that the Insurance Company was deficient in its service towards the complainant by repudiating the claim on a non -existent ground that the risk of damage by spontaneous combustion to the insured articles was not covored under the policy. For this deficiency in service the Insurance Company is bound to compensate the complainant. We have found on a perusal of the claim form (Annexure 10 to the complaint) that while giving the claim bill two heads of claim have been put forward by the complainant. The first claim is about the loss to the stock of Neem Seeds available on the date of the incident, namely 26 November, 1991. The loss under this head has, however, been computed on the basis of the quantity of oil which could have been extracted from the stock of Neem Seed which were lost due to spontaneous combustion and not on the basis of quantity of Neem Seeds which were actually damaged or lost due to it. This basis is not correct in law. What was insured was the stock of Neem Seed and not the by -product which could have been obtained from it. Loss, therefore, has to be confined to the quantity of the Neem Seeds lost or damaged due to spontaneous combustion. 10. The second item relates to loss of Neem De -oil Cake which was lost in the incident. 11. While in the claim bill the two items of claim have been valued together at Rs. 11,66,217.50 we find it stated in the report submitted by the Surveyor to the Insurance Company (Annexure C -A -1) that during inquiry by the Surveyor it was given out on behalf of the complainant Company that what was lost as stock of Neem Seed lying loose in open valued at Rs. 3,03,600/ - and Neem De -oil Cake kept in bags in the shed and also lying in open totalling to a sum of Rs. 1,46,347/ -. Together the loss amounted to a sum of Rs. 4,49,947/ -. Even though, according to the Surveyor, the claim to this extent also could not be verified by him as necessary information was not given by the complainant yet we are inclined to accept the loss at the figure of Rs. 4,49,947/ - because it has been pointed out on behalf of the complainant -Company by his learned Counsel that the needed information had been forwarded by the complainant to the Insurance Company alongwith the letter dated 8 April, 1992 a copy of which has been filed as Annexure -F to the complaint together with the annexures mentioned in it. We are of opinion that since the complainant had itself disclosed the loss at the aforesaid figure to the Surveyor it would be just and proper to confine the claim to this amount for purpose of relief to be granted to the complainant. 12. We also find that upon an erroneous opinion about its liability under the insurance policy and by repudiating the claim on a non - existent ground the Insurance Company has deprived the complainant of the aforesaid amount for sufficient period of time. It is, therefore, liable to pay interest on this amount to the complainant at 18% per annum, which is the normal bank rate, from the date of repudiation till the date of actual payment. 13. The fact that the complainant was kept waiting for a long time for settlement of its just claim and had to approach the Insurance Company about it time and again leads to the inescapble conclusion that it must have suffered harassment in the process. We are inclined to assume it : -i favour of the complainant and hold the Insurance Company liable to pay compensation under this head as well to the complainant. Taking the circumstances in their totality we assess this amount at Rs.

,000/ -. 14. IN the result, the complaint succeeds in me aforesaid terms. The amount payable by the INsurance Company to the complainant in pursuance of this order shall be paid by the Company within three months from today failing which the entire amount due shall carry further interest at 18% per annum from the due date of payment till the date of actual payment. However, we leave parties to bear their own costs in the case. 15. Let copies of this order be made available to the learned Counsel for the parties as per rules. Complaint allowed.