NEW INDIA INSURANCE CO. LTD vs HINDUSTAN PETROLEUM CO. & ORS

Both these revision petitions challenge the order dated 13.9.2007 passed by the A.P. State Consumer Disputes Redressal Commission, Hyderabad by which the State Commission dismissed appeal No.895 of 2004 filed my M/s Hindustan Petroleum Corporation OP No. 2 before the District Forum and also dismissed First Appeal No.564 of 2005 filed by M/s Gowri Shankar Gas Agencies which was OP No.1 before the District Forum against the order dated 6.7.2004 in Consumer Complaint No.264 of 1997. By its order, the District Forum allowed the complaint filed by Shri V. Venkateswara Reddy who is respondent No.1 in this revision petition, in terms of the following reliefs:- "15. Therefore, in the result of the above discussion, the opposite parties 1 & 2 as dealer and the manufacturer of the said gas cylinders are jointly and severally remaining liable to compensate the loss ensured to the complainant on account of the said gas explosion due to improper attendance gas leak complaint by the deputed mechanic of the opposite party No.1.

In the circumstances of the case, the claim of the complainant for incurred expenditure for attending said damage tuning to Rs.3,26,143/- and Rs.50,000/- towards compensation for suffered mental agony at the attitude of the opposite parties in not settling his claim and Rs.500/- towards the costs of the case appears to be justifiable hence, in conclusion of the above discussion, while dismissing the case of the complaint against the opposite party No.3 for the reasons discussed in the supra paras, the complaint is allowed against the opposite parties 1 & 2 directing them jointly and severally to pay to the complainant, the supra stated award amount within a month of the receipt of the order."

Since the District Forum allowed the complaint of respondent No.1 against OP Nos.1 & 2 only and dismissed the same against the OP No.3 Insurance Co., the two OPs, namely, Hindustan Petroleum Corporation and Gowri Shankar Gas Agencies filed the aforesaid appeals challenging the order of the District Forum before the State Commission. The State Commission vide its impugned order dated 13.9.2007 partly allowed the appeals by reducing the amount of damages awarded by the District Forum which had held all the three OPs including OP No.3 Insurance Co. to pay the said amount jointly and severally. The impugned order passed by the State Commission may be reproduced thus:- "In the result the appeals are allowed in part reducing the damages awarded by Dist. Forum from Rs.3,26,143/- to Rs.2,25,000/- and also compensation from Rs.50,000/- to Rs.25,000/-. Opposite parties 1 to 3 are directed to pay the above said amount jointly and severally within a period of six weeks failing which the said amount would attract interest @ 9% p.a. The costs of Rs.500/- awarded by the Dist. Forum is confirmed and the order of the Dist. Forum dismissing the complaint against opposite Party No.3 is set aside."

Aggrieved of the impugned order of the State Commission, both OP No.3 Insurance Co. and OP No.1 Gas Agency have filed aforesaid revision petitions whereas the OP No.2 manufacturing co. has not challenged the modified order of the State Commission. For the ease of reference, we have referred to the parties in these revision petitions by their status before the District Forum.

Briefly stated, the facts which have led to the filing of these revision petitions as set out in the case are that the complainant is a registered consumer bearing No.6022078 of OP No.1 (Gas Agency) which supplies LPG refills manufactured by OP -2 upon the bookings made by the consumers. The complainant used to book the LPG refill with OP-1 as and when the LPG cylinder was exhausted and the servants / representatives of OP No.1 used to connect the new cylinder by

detaching the old one. On 2.8.1996 in the morning, the complainant lodged a complaint with OP.No.1 about the leakage of gas and the OP -1 deputed a mechanic who cut the tube and fixed the same tube in the original position and went away. On 3.8.1996 at about 2.00 a.m. when the complainant and members of his family were asleep, they heard an explosion from the kitchen due to leakage of gas which caused heavy damage to his house developing cracks to the doors, walls, roof of the kitchen, bathroom etc. and the regulator had blown up to the roof breaking kitchen chimney. The accident was reported to the local police station which registered a case bearing No.76/1996. Alleging deficiency in service which caused explosion on the part of the OPs, the complainant filed a consumer complaint before the District Forum praying for direction to the OPs to pay Rs.3,26,143/- towards damages with interest @ 24% p.a. from the date of filing of complaint and Rs.50,000/- towards mental agony and cost of litigation of Rs.500/-.

On notice, the OP-1 which is petitioner in R.P No.4618 of 2009 filed its reply in which it was admitted that the complainant is a consumer of OP No.1 and that he had booked the LPG refill manufactured by OP No.2 on the alleged date. It was also admitted that OP No.3 is the insurer. OP No.1 admitted receipt of the complaint on 2.8.1996 and also its rectification through one of its delivery boys about 10.30 a.m. on 2.8.1996. However, OP No.1 denied the alleged explosion due to leakage of gas since the delivery boy had rectified the problem at 10.30 a.m. According to OP No.1, the members of the complainant''s family used the gas stove for the purpose of cooking and there was no complaint from the complainant after 10.30 a.m. till the time of alleged accident regarding the leakage of gas. Thus denying any deficiency in service on its part, it prayed for dismissal of the complaint. OP No.2, namely, Hindustan Petroleum Corporation who is the manufacturer of the cylinder, did not file any reply. OP No.3 Insurance Co. filed its reply stating that the District Forum has no jurisdiction to entertain the matter which involved complicated questions of fact and law and as such the matter required to be adjudicated by a competent Civil Court. It also submitted that the alleged accident was not due to leakage of gas and that there was no negligence on the part of OPs and hence OP-3 need not indemnify the loss alleged to have been sustained by the complainant. It further said that the complainant has to prove that there was coverage under the policy and that the policy was in force at the time of the alleged accident. Thus it prayed for dismissal of the complaint with cost.

Based on the evidence adduced, i.e., Ex.A1 to A14 and Exs.B1 to B3 and the pleadings put forward by the parties, the District Forum allowed the complaint in terms of the order reproduced above against OP Nos.1 & 2. Complaint against OP No.3 was dismissed. As stated above, OP Nos.1 &2 challenged the order of the District Forum before the State Commission which modified the order of the District Forum in respect of the amount of damages payable but upholding the deficiency in service on the part of the OPs in terms of the directions contained in its impugned order reproduced above.

We have heard Ms. Nanita Sharma, Advocate representing the petitioner Insurance Co. in R.P. No.2338 of 2008 and Shri A.K. Raina, Advocate for respondent No.1/OP-2, namely, Hindustan Petroleum Corporation and Shri Veeranjaneyulu, K.L.N.V., Advocate for respondent No.2/complainant. None has appeared for respondent No.3/OP-1 who is also petitioner in the other R.P. No.4618 of 2009 before us. It has, therefore, been proceeded ex parte.

Learned counsel for the petitioner Insurance Co. in R.P. No.2338 of 2008 has contended that the State Commission has wrongly held the petitioner Insurance Co. liable by erroneously relying upon the decision of the National Commission in the case of K.G. Satyanarayana Vs. Petroleum Corporation Ltd. [206 (6) ALD Cons (1) (NC)] , the facts of which are

distinguishable from the instant case. She further submitted that the State Commission while holding the petitioner Co. liable, overlooked an important fact that there was no insurance cover provided by the petitioner Insurance Co. to the manufacturer Hindustan Petroleum Corporation which is OP No.2 and respondent No.1 in this case and as such question of joint and several liability along with the manufacturer does not arise. The liability of the petitioner Insurance Co. was limited only to the sum insured and in respect of the events/incidents as given in the policy issued to the respondent No.3/OP No.1. Coming to the coverage of the incident in question, it was the contention of the learned counsel that the incident did not take place during installation of the cylinder or transportation of empty cylinder which alone are covered under the policy. In view of this, learned counsel submitted that the well-reasoned order of the District Forum which held the manufacturer Hindustan Petroleum Corporation and the distributor Gas Agency liable to the complainant and exonerated the petitioner Insurance Co. of its liability, did not warrant any interference from the State Commission. In view of this, she pleaded that the revision petition of the Insurance Co. be allowed and the impugned order of the State Commission be set aside by restoring the order of the District Forum.

On the other hand, learned counsel for the complainant submitted that both the fora below have returned their concurrent finding in respect of the alleged incident in which the complainant suffered heavy loss to his property. Supporting the impugned order of the State Commission, learned counsel argued that in terms of the provisions contained in section VII regarding "public liability" of the Insurance Co. under the policy, the Insurance Co. cannot escape liability in respect of the incident upheld by both the fora below. He, therefore, supported the impugned order and pleaded for dismissal of the revision petition filed by the Insurance Co. While none appeared for the Hindustan Petroleum Corporation which was OP No.2 before the District Forum and respondent in these revision petitions, in its written arguments filed on its behalf, it has been submitted that there was no privity of contract between the complainant and the Hindustan Petroleum Corporation Ltd. and at no point of time has the Hindustan Petroleum Corporation Ltd. promised anything to the complainant nor any consideration has passed from the complainant to the Hindustan Petroleum Corporation Ltd. It has further been submitted in the written arguments that the Hindustan Petroleum Corporation Ltd. had entered into a dealership agreement with the dealer Gas Agency and as per clause No.18 of the agreement, it has been provided that the dealer shall act as a principal and not as an agent and shall be responsible in respect of all contracts or agreements entered into by him with the customers for sale of LPG and matters related therewith. In view of this, it has been submitted that the dealer is liable and responsible for its acts of omission or commission, if any, and, therefore, no liability could be fastened on Hindustan Petroleum Corporation Ltd. for the same. In support of its contention, the Corporation has relied on the judgement of the Apex Court in the case of Indian Oil Corporation Vs. Consumer Protection Council, Kerala and Anr. [(II) (1994) CPJ 21 (SC)].

So far as the other revision petition No.4618 of 2009 filed by OP No.1 Gas Agency is concerned, none has appeared on behalf of the petitioner/OP Gas Agency. However, in its revision petition, it has submitted that the findings of the State Commission as well the District Forum are perverse and hence liable to be set aside. It has also been submitted that the State Commission has failed to see that the order passed by the District Forum against the petitioner Gas Agency is based on surmise and conjectures and there is no evidence to hold that the alleged explosion in the house of the complainant took place due to negligence or deficiency in service of the petitioner Gas Agency or the Hindustan Petroleum Corporation. In view of this and other grounds mentioned in the revision petition, the petitioner Gas Agency has pleaded for dismissal of the impugned orders of fora below.

We have considered the rival contentions of the parties carefully. So far as the alleged incident of leakage of gas resulting in the explosion which caused substantial damage to the kitchen and other areas of the house and property of the complainant is concerned, we find that both the fora below have returned their concurrent finding of facts and we have not come across any material irregularity or infirmity which would call for our interference under section 21(b) of the Consumer Protection Act under which the revision petition has been filed. In this context, we reproduce the observations of the District Forum as under:- "9. The Sworn affidavit of C.S. Rajan, a professional Chemical Engineer whose vast experience in his technical field could be felt from the material in the Ex.A.10, says the probable reason for the belated explosion. His affidavit says the movement of the persons during the day time with open windows and the closer of the movements and the windows closing during the night time were the reason for the belated explosion due to any ignitions of the Refrigerator switches etc. The said probability being not dis-credit by the other side with any contra material, it remains not only convincing but also a more probable cause. Hence in the light of the above circumstances what conclusively remains established is that the explosion in the kitchen of the complainant''s house was due to gas leakage from the means that supply gas to the stove."

Further the District Forum observed:- "13. Admittedly while the opposite party No.1 is the dealer of the said gas supplied to the customers domestic use. The opposite party No.2 is the manufacturer of the said gas cylinder which was being distributed to the customers through the opposite party No.1. The complainant alleges the gas explosion in the kitchen of his house on the fateful date occurred at the deficiency of the service of the mechanic send by the opposite party No.1 for attending the complaint of the gas leakage as it was imperfectly attended. Even though the opposite party No.1 denies the truth therein he has not placed any such cogent material such as of the said mechanic or his sworn affidavit to believe that he has attended the said defect perfectly without any error giving raise to any un-happy accidents. As stated above as the material of the complainant''s side explains convincingly the probability for belated gas explosion in dead hours of the night with reference to all the relevant technical date in Ex.A.14 and lower explosive limite and upper explosive limite of L.P. Gas, as the opposite party No.1 who supplied the gas to the complainant''s house for the domestic use and who lends the services for its safe utility cannot escape of its liability to the gas explosion occurred in the house of the complainant which ensured damage and considerable expenditure to the complainant for attending the repairs of the damaged house.

The opposite party No.2 who is the manufacture of the said gas cylinders which the opposite party No.1 furnished to the domestic use of the complainant by remaining exparte to the case proceedings without filing any defence did not deny the contentions of the complainant''s case and its liability to make good of the complainant''s claim for the damage ensured to the house of the complainant on account of the said explosion due to gas leak ensured on account of imperfect attendance of the complaint of the gas leak by the mechanic deputed by the opposite party No.1. In the absence of any specific denial of the contentions of one

side by the other side as it amounts the admission of them, the opposite party No.2 cannot escape liability especially when the said accident established by the affidavit of the neighbours of the complainant and when the decision of the Hon''ble National Consumer Disputes Redressal Commission, New Delhi in M/S Karthik Agencies V/S Smt. K. Raja Kumari and another reported in 1993, Consumer Case Reporter, upholds the order of the State Commission while dismissing the Appeal finding the liability of both the manufacturer and the distributor for supply of the defect cylinder which caused accident. As the alleged occurrence was duly established by the complainant as occurred on account of the leakage of the gas. The decision of the Hon''ble National Consumer Disputes Redressal Commission, New Delhi in Indian Oil Corporation V/S T.C. Rajappa and other reported in 1995 Consumers case reporter page 278, which dismissing the complaint claim in revision for want of proof of occurrence due to gas leak is not remaining applicable as the material of the present case is otherwise."

While upholding the finding of the District Forum, the State Commission has examined this aspect in great detail and has observed thus:- "We have gone through the material on record. It is not dispute that the complainant is a consumer of Opposite Party No. 1 holding valid gas connection. It is also not in dispute that the explosion took place in the house of complainant at 02:00 a.m on 03.08.1996 within a span of 15 hours from the time of complaint/repair attended by delivery boy of opposite party no. 1. It is also not in dispute that extensive damage was caused to the house of the complainant due to explosion. It is the contention of the complainant that explosion took place due to leakage of gas and it had happened within 24 hours after the delivery boy of opposite party no. 1 attended the complaint by cutting one edge of the gas pipe and re-inserted to the stove. The complainant also made a complaint to the police authorities, Atmakoor who registered a case under Crime No. 76/1996 and opposite party no. 1. It is pertinent to note that in Ex. A8 S.I. of Police, Atmakoor, P.S. Kurnool District issued a notice to Sri Indrasenan, Senior Sales Officer, H.P. Corporation, Venkataramana Colony, Kurnool on 11.08.1996 which reads thus:

It is hereby informed that you being the Senior Sales Officer of H.P. Corporation, Kurnool having jurisdiction, Atmakur visited the scene of offence in Cr. No. 76/96 U/s 286 IPC of Atmakur P.S. which is house of Sri V. Venkateswar Reddy, S/o. Subba Reddy of Atmakur along with the Gas dealer Sri P. Gangadhar Reddy disturbed the scene and removed the gas cylinder without informing the investigating agency with an intent to conceal, tamper the available material evidence . Further, you have stated in the press that the gas leak is not responsible for the damage of the house. You should appear before the undersigned to explain the facts and circumstances relating to the above cited case on or before 20.08.1996 without fail with all the material in the case. It is very clear from the above notice that opposite party no. 1 along with Senior Sales Officer of H.P. Corporation; Kurnool destroyed the material evidence so as to escape from the resultant consequences. If really the explosion is not due to gas leakage where is the necessity for opposite party no. 1 and the Senior Sales Officer of HP Corporation to disturb the material evidence available at the scene of accident? It

shows that to cover up their latches they destroyed the material evidence and thrown the blame that the cause of explosion might be due to blasting of explosive material. We observe that as per Ex. A14 Material Safety Data Sheet issued by Bharat Petroleum, it is stated under EMERGENCY AND FIRST AID MEASURES as follows:

Unusual Hazards: Never stand in the axis of bullets.

Heavy leakage of liquid can impair visibility.

LPG fire can cause severe burn injuries.

Leaking gas may travel long distances still it meets an ignition source and flashback or cause vapour cloud explosion.

It is clear from the above that there is a possibility of explosion due to leakage of gas which travels long distances still it meets an ignition source and flashback or cause vapour cloud explosion even according to the Material Safety Data issued by one of the leading Gas giants Bharat Petroleum.

It is pertinent to note that Mr. C.S. Rajan who has been working for the last 46 years in the profession of Chemical Engineering in India and Abroad opined that "An instrument called "Thermostat" controls the fridge temperature by making and breaking contact for running the compressor of the fridge in order to maintain the set temperature of the Refrigerator. The colour of electric flash that occurs during make and break operation would be white. This kind of flash can be seen in household switches also. The temperature of white flash is around 1000 degrees centigrade as an Electrical Engineer would vouchsafe. This is sufficient to ignite and explode an LPG gas mixture.

The explosive limit of petroleum gases, as per hand book of E. Merck Index is 1.5% to 9.5% by volume in atmosphere. 1.5% being the lower explosive limit and 9.5% being the higher explosive unit. The Material Safety Data Sheet (MSDS) issued by Bharat Petroleum confirms the explosive limits of LPG. He further states that in the instance case the electrical flash caused by running of refrigerator located in the kitchen has ignited the LPG gas leaked from the improperly repaired cylinder and has caused severe damage.

The fact remains that the LPG has got the quality of flammability and explosion whether it be 9 Kgs or 14 Kgs quantity. It is also not denied by the Opposite Party No. 1 that the delivery boy of Opposite Party No. 1 repaired the gas stove on a complaint made by the complainant on 02.08.1996 at 10:30 am. It seems that the Opposite Party No. 1 has not deputed the technician who has got skill and experience in attending to the complaints made by the consumers. Opposite Party No. 1 himself admits that delivery boy attended the complaint. The Material Safety Data Sheet (MSDS) provides additional information/references among other things that Laid down safe operating practices should be strictly observed and periodical inspection/testing recommended.

It is nowhere mentioned that the Opposite Parties conducted periodical testing/inspection as per the norms prescribed and that the contention of the Opposite Parties that it is the discretion of the consumer to make use of the rubber tube of his choice is unsustainable. As per the guidelines issued by the Petroleum companies it is the responsibility of the Opposite Parties 1 & 2 to make regular check-ups periodically and see that the Regulator, Cylinder & Gas stove and the tube connected to cylinder are in good condition and do not give scope for leakage of gas. In the instant case within 24 hours of repair work attended by the delivery boy of Opposite Party No. 1 the explosion occurred and the Opposite Party No. 2 remained ex-parte before the District Forum and did not file any material in support of the contention of the Opposite Parties that the cause of explosion is not due to gas leakage. The circumstantial evidence clearly goes to show that the explosion caused due to gas leakage and Ex. A8 clearly states that Opposite Party No. 1 with the help of Senior Sales Officer, H.P. Corporation destroyed the material evidence to shirk from their responsibility. Opposite Parties 1 & 2 also failed to establish that the explosion occurred due to the reasons other than the gas leakage. According to the Survey conducted by Bharat Petroleum Corporation that 50% of cooking gas related accidents occurs because of leakages from tube. In view of the aforementioned reasons, we are inclined to accept that the explosion occurred due to gas leakage and caused extensive damage to the house of the complainant in the light of technical Material Safety Data Sheet issued by Bharat Petroleum which supports the contention of the complainant."

We agree with the view taken by the State Commission while returning its concurrent finding regarding the alleged incident.

As regards the liability of the OPs, both the fora below have concurrently held the OP Gas Agency and the OP manufacturer liable for the incident jointly and severally. Taking into consideration the reasons recorded by them in their respective orders, we are of the considered view that no interference is called for regarding their concurrent finding about joint and several liability of the OP Gas Agency and the OP manufacturer. However, the State Commission vide its impugned order modified the order of the District Forum and fastened the joint and several liability on the OP Insurance Co. as well. We may note that keeping in view the coverage under the policy issued by the OP Insurance Co. and the terms and conditions contained in the policy document subject to which policy in question was issued, the District Forum dismissed the complaint against the OP Insurance Co. In support of its decision, the District Forum has recorded the following reasons in para 12 of its order:- "12. The OP No.1.3 apart from taking several please in excuse of the liabilities of the other opposite parties for compensating the complainant for the loss ensured alleging no deficiency of service on their part simultaneously dis-owns of any of its liability for meeting the claim of the complainant submitting that even if the said accident was held at any deficiency of the services of the other opposite parties. It is not liable for the said claim as the insurer of the opposite parties as its liability is limited as per Sec.VII of the terms of the policy in Ex.B.3(1) to the occurrence caused during the installation of the gas cylinders by the insured or by his authorized agents at the premises of the insured customers or whilst such cylinders are being carried from the insured premises for their installation in insured customers premises of whilst such empty cylinders were in the course of being carried from the insured customers premises to the insured premises and while lying at the insures premises and as the alleged incident ensuing damage to the complainant''s house not happened in any of the above circumstances. The perusal of the provision in Ex.B.3 sounds well in support of the opposite party No.3 stands as the occurrence in the kitchen of the complainant occurred long after the attendance of the complaint of the gas leak and not at the time of installation or the movements of the cylinders as indicated above. Hence there appears every bonafidies in the defence of the opposite party No.3 as to its liability for its insured in compensating the claim of the complainant. Therefore, the opposite party No.3 being at no liability for the complainant''s claim the case of the complainant against the opposite party No.3 dismissed for want of proper cause of action."

Perusal of the impugned order passed by the State Commission indicates that the State Commission has modified the order of the District Forum and fastened the joint and several liability for the alleged incident against the OP Insurance Co. without recording any cogent reasons for such decision. Keeping in view the specific coverage provided under the policy and that too in favour of the OP Gas Agency, the State Commission gravely erred in holding the OP Insurance Co. as jointly and severally liable under the impugned order along with OP Gas Agency and OP manufacturer. Admittedly, the OP Insurance Co. had not issued any cover to the OP manufacturer, i.e., Hindustan Petroleum Corporation. We, therefore, modify the impugned order of the State Commission to this extent by dismissing the complaint against the OP Insurance Co., petitioner herein in revision petition No.2338 of 2008.

Now coming to the third important aspect involved in these revision petitions, namely, the quantum of relief granted by the fora below, we find that the State Commission has reduced the damages awarded by the District Forum from Rs.3,26,143/- to Rs.2,25,000/- and also the compensation from Rs.50,000/- to Rs.25,000/-. No fault could be found with this partial relief granted by the State Commission to the OPs keeping in view the extent of damage to the property of the complainant which has been duly explained by the State Commission in its impugned order. In any case, there is no challenge by the complainant in this regard.

In view of the above discussion, we proceed to pass the following order in respect of these revision petitions:-

Revision Petition No.2338 of 2008 The impugned order of the State Commission holding the petitioner Insurance Co. jointly and severally liable for payment of damages and the compensation is set aside and the impugned order of the State Commission is modified to that extent. Rest of the impugned order of the State Commission is upheld. Thus this revision petition is partly allowed in terms of these directions.

Revision petition No.4618 of 2009 This revision petition is dismissed and subject to the modification directed in our order in revision petition No.2338 of 2008, the impugned order of the State Commission is confirmed.

The parties to these revision petitions shall bear their own costs for this stage of litigation.