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Judgment
COMPLAINT was filed alleging that the complainant is engaged in the manufacturing of cotton and synthetic yarn on open -end machines and has a unit at 71/3, Mile Stone, G.T. Road, Karnal. Complainant purchased policy No. 353600/11/01/00258 of Rs. 2.75 crores covering the peril of fire to the stock of raw material for the period 19.8.2001 to 18.8.2002 from New India Assurance Co. Limited (hereinafter referred to as the opposite party) whose registered office, Division Office and Regional Office have been impleaded as opposite party Nos. 1, 2 and 3 respectively. Complainant also obtained policy No. 353600/11/01/00260 of Rs. 11.10 crores to cover the peril of fire, etc. to the building, plant and machinery and stock for the period from 19.8.2001 to 18.8.2002. It was alleged that on the intervening night of 13/14th July, 2002, fire broke out in the said unit of the complainant causing severe damage to the raw material, building, plant and machinery and stock. Cause of fire was electric short -circuit/sparking. Police and fire brigade were immediately intimated of the fire. Intimation was sent to the opposite party on 14.7.2002. M/s. T. P. Singh & Co. was appointed as preliminary Surveyor by the opposite party and this Surveyor visited the site of fire on 15.7.2002. R.G. Verma was appointed as Investigator. Keypsens was appointed as final Surveyor to assess the loss. Chandra Prakash was also appointed as second investigator by the opposite party. Though these Surveyors/Investigators submitted the reports to the Insurance Co. but the copies thereof were not made available to the complainant. It was further stated that on 26.10.2002 the complainant submitted claim of Rs. 978.91 lakh under various heads which on 3.2.2003 was revised to Rs. 927.51 lakh. Since the opposite party was deliberately delaying the payment of claim, the complainant filed a writ petition before the Punjab & Haryana High Court. By the order dated 1.4.2003 the High Court directed the opposite party to deal with the claim of the complainant expeditiously and preferably within one month. By the order dated 23.5.2003, the opposite party was granted three months additional time to comply with the order dated 1.4.2003. It was stated that by the letter dated 19.8.2003, the opposite party mala fide repudiated the claim. Attributing gross deficiency in service on the part of Insurance Co., the complainant sought direction to the opposite party to pay Rs. 927.51 lakh and, in alternative, Rs. 5,27,48,094 along with interest @ 18% p.a. and pay amount of Rs. 1.00 crore towards compensation on account of delay in processing the claim.
COMPLAINT was contested by filing written version on the affidavit of Y.S. Udasi, Divisional Manager at Karnal branch. It was alleged that the complainant is not a consumer'' as it availed of the services of Insurance Co. for commercial purpose and civil Court is the appropriate Forum for deciding the disputed questions of facts and complicated issues involved in the case. On merits, issuance of two policies was not denied. It was denied that the fire was caused due to electric short circuit/sparking. Cause and origin of fire was still not known. LPA report did not point out the exact cause of initiation of fire. As per the report of FSL dated 13.8.2002 all electric connections fitted in the complainant''s factory were examined and there was no indication of any electric short circuit. TAC also reported that the exact cause of fire was not known. Keypsens in its preliminary report opined that the cause of fire was not known. In its final report the Keypsens, however, came out with a new theory that fire may have been caused due to spark which was not even the case of the complainant. Manufacturing unit of the complainant was running only one shift. It was further alleged that Keypsens, final Surveyor assessed the loss of stock at Rs. 1,94,59151 out of which amount of Rs. 1,83,96,174 pertained to raw material godown. Maximum utilization of the godown can be 62% to 70% whereas the Surveyor had taken 85% as the utilization capacity of the godown. The dimension of the godown was 146x64x12. Even if the entire godown was full of stock, even then the total assessment of stock should be 37,18,922. It was further stated that alleged purchases in the month of June were doubtful. Purchases from Ashish Wool, Arihant Fibres Panipat, Vardhman Enterprises, Shree Shyam Industries and R.K. Enterprises seem to be doubtful. It was pleaded that the complainant was maintaining two different sets of final accounts for the same period and those were prepared by the same Chartered Accountant. Claim made was repudiated by the letter dated 19.8.2003 after due application of mind by the Insurance Company . Liability to pay the amount claimed was emphatically denied.
COMPLAINAN T filed the affidavit of Rajiv Gupta, one of the Directors while the opposite party - Insurance Co. filed the affidavit of Y.P. Udasi, Divisional Manager by way of evidence. Objection in regard to the complainant not being a consumer'' as the services of Insurance Compay were availed of by it for commercial purpose is stated to be rejected as both the policies were taken and even the incident of fire had occurred much before 15.3.2003 when the definition of consumer'' as given in Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 excluding the services for commercial purpose was amended by the Amendment Act 62 of 2002.
THRUST of argument advanced by Mr. P.P. Malhotra, ASG for the opposite party - Insurance Co. was that the cause and origin of fire as claimed by the complainant is improbable and unreliable. In support of this argument, our attention was drawn to some of the reports placed on the file. It is not in dispute that the opposite party - Insurance Co. appointed M/s. T.P. Singh and Co. as preliminary Surveyor, R.G. Verma and Chandra Prakash as Investigators and Kepysens as the final surveyor. Reports of these surveyors/Investigators are on record. Reports of LPA, FSL and TAC are also placed on the file. Report of Chandra Prakash, Investigator is confined to the verification of purchase and sale transactions for the relevant period. In its preliminary report dated 25.7.2003, M/s. T.P. Singh and Company stated that the exact cause of fire could not be ascertained and same may, therefore, be got investigated by the Insurance Company. In the report dated 14.1.2003 in paras 4.29 and 4.30, said R.G. Verma, Investigator stated : "4.29 We had also referred the matter to Mr. Atul Gupta, Engineer for identifying probable cause of fire.
As per the report dated 26.11.2002 of Mr. Atul Gupta "The cause of fire could be electric short circuit in plant area."
"4.30 We had also referred the matter to M/s. Meritorious Laboratories for identification of traces of petrol/diesel residuals if any found in the debris sample. The result was as follows:
As per para No. 2 of their report it is stated that, "Total hydrocarbons (including petrol and diesel) as CH4 MG/per Kg. By GC/FID method: Not detected." As such it is not case of sabotage."
Para 5 of the said report dealing with the final conclusion which is material, is reproduced below:
"We have not come across any evidence of malicious intentions on the part of the insured. Financial health of the insured was good. The insured could not have benefited due to fire. Almost all the machines of the insured were working. As per evidences available, the fire had travelled from the plant section to the raw material godown through the corridor/passage. It is a case of claim due to accidental fire.
We have presented all the facts to the insurers.
In our considered opinion :
It is a case of spread of fire from plant area to raw material godown.
The cause of fire is "electric short circuit."
The evidences available to us point out the fire to be accidental in nature.
The cause of loss is covered in the policy. The claim falls within the scope of fire and special peril policy."
In his report dated 24.12.2002, Atul Gupta, BE (E and E), concluded that the cause fire could be electric short circuit in the plant area.
PARA 14.2 of the final report dated 17.4.2003 of Keypsens, Surveyor which is material, is extracted below: "In view of the above cited facts/ aspects and circumstances of the loss/fire and based on the physical inspection/verifications made thereof by us during our visits to affected factory site, we are of the considered opinion that in all probability the sparks produced either due to electrical short -circuiting or due to certain loose connections or abnormally high supply voltage in the electrical wiring of lighting load (fixtures/fittings) had set on fire the cotton fluff sticking to the wiring or lying in close vicinity of the point of said electrical fault. Once the cotton fluff had caught fire, the fire had propagated at a rapid pace as aided by the presence of considerable quantity of stocks raw material (cotton/cotton waste/synthetic waste) and stocks in process/WIP. Also direction of flow of strong wind blowing at that point of time coupled with the high temperatures of hot dry summer period, had been quite conducive to rapid spread of fire. We are therefore of the view that the outbreak of fire under reference has been accidental in nature and in all probability the fire had been caused/ occasioned by the heavy electrical sparking resulting either from electrical short -circuiting or certain loose connections or due to abnormally high supply voltage."
IN the final report issued by the Fire Station Officer, Karnal dated 14.7.2002 supposed cause of fire is shown to be by electric short circuit.
PARA 9 of the report of Forensic Science Laboratory, Madhuban, Haryana dated 13.8.2002 notices that : "All the electric connections fitted in this factory were examined. There was no indication of any electric short circuiting. But it could have been possible that due to sparking in any loose connection or due to high voltage in the external electric wires, cotton sticking to these electric wires could have caught fire which further spread in other rooms of the factory due to movement of lighter pieces of burning wool."
TAC report dated 28.7.2002 under the sub -heading cause of fire'' reads, thus:
"The exact cause of fire is not known. In leg -I i.e. the affected raw material godown there is no wiring at all; fire in leg -I is ruled, if at all fire had originated from leg -I.
Electric wiring in leg -II i.e. the working areas, the condition of wiring was bad. Hence, if fire had started from Leg -II, electric short circuit as cause of fire cannot be ruled out."
Lastly, in LPA report on probable cause of fire, it was observed that the exact cause of initiation of fire could not be ascertained during the site visit. Initiation of fire in the manufacturing wing of the building due to electrical reason cannot be ruled out.
OPPOSITE party -Insurance Company does not dispute that the fire did take place in the intervening night of 13/14.7.2002 in the manufacturing unit of the complainant and for covering the peril of fire to the raw material, building, plant and machinery and stocks, aforesaid two policies were purchased by the complainant Company. Insurance Company, however, disputes the origin of fire. In Slattery v. Mance, 1962 (1) All.ER 526, it was held that "once the insured had shown that the loss was caused by fire, he had made out prima facie case and the onus shifted on the insurer to show on a balance of probability that the fire caused was connived at by the assured". Aforesaid reports, by and large, support the complainant that fire was due to electric short circuit/sparking. In the written version, Insurance Co. has not specifically taken the plea that fire was engineered by the complainant nor any evidence has been adduced by the opposite party of the fire having been deliberately set by the complainant. In this backdrop, the opposite party - Insurance Co. cannot legally deny to compensate the complainant for the loss suffered due to fire. Repudiation of claim by the Insurance Co. was totally unjustified.
THIS bring us to the quantum of compensation to be awarded. Keypsens, Surveyor in their final report dated 17.4.2003 in para 20 assessed the loss on depreciated value basis and in para 21 on reinstatement basis thus: "Summary of loss on depreciated value basis Description Insured''s claim (Rs.) Net Assessed Loss (Rs.) Gross Adjusted Loss (Rs.) (a) Building 46,81,000 22,64,463 19,34,740 (b) Plant and Machinery 6,01,79,000 3,13,51,903 3,13,51,903 (c) Stocks 2,63,91,000 1,94,59,151 1,94,59,151 (d) Fire Fighting and other Mis -cellaneous Expenses 15,00,000 12,300 12,300 Total: 9,27,51,000 5,30,87,817 5,27,58,094 Therefore, Total Gross Adjusted Loss on Depreciated Value Basis. : Rs. 5,27,58,094.00 Less : Excess : Rs. 10,000.00 The Net Adjusted Loss on Depreciated Value : Rs. 5,27,48,094.00
The Net Adjusted Loss on Depreciated Value basis comes to Rs. 5,27,48,094 to which the Insured consented in writing and the letter of consent is enclosed herewith.
Summary of Loss on : Reinstatement value basis Description Insured''s claim (Rs.) Net Assessed Loss (Rs.) Gross Adjusted Loss (Rs.) (a) Building 46,81,000 27,93,615 19,76,285 (b) Plant and Machinery 6,01,79,000 6,05,92,804 5,15,34,240 (c) Stocks 2,63,91,000 1,94,59,151 1,94,59,151 (d) Fire Fighting and other Mis - cellaneous Expenses 15,00,000 12,300 (*) 12,300 Total: 9,27,51,000 8,28,57,870 7,29,81,976 Therefore, Total Gross Adjusted Loss on Reinstatement Value Basis. :Rs. 7,29,81,976.00 Less : Excess : Rs. 10,000.00 Net Adjusted Loss on Reinstatement Value Basis : Rs. 7,29,71,976.00
BY the letter dated 14.4.2003, the complainant gave its consent to the payment of Rs. 5,27,58,094 on depreciated value basis. How the amount was arrived at has been discussed at great length under four heads in this report. To be noted that the affidavit of said Y.S. Udasi is silent in regard to the purchases from Ashish Wool and others referred to in para 9 of the written version on merit being doubtful. Complainant is stated to be maintaining two different sets of accounts prepared by the same Chartered Accountant. It was pointed out on behalf of the Insurance Co. that the balance sheet, etc. for the previous year 2001 -02 supplied to the bank by the complainant, did not correspond with the actual balance sheet of the Co. for the same year. On behalf of the complainant, it was submitted that the balance sheet etc. for the said year was filed with the bank for obtaining enhanced loan facility. Be that as it may, the award of compensation based on said final survey report cannot be denied merely on ground of two different balance sheets being prepared by the same Chartered Accountant of the complainant Co.
LN support of the submission of the complainant to be relegated to Civil Court, Mr. Malhotra relied on the decisions in TRAI Foods Ltd. v. National Insurance Co. and Ors., (2004) 13 SCC 656 and Oriental Insurance Co. Ltd. v. Munimahesh Patel, IV (2006) CPJ 1 (SC)=VI (2006) SLT 436=(2006) 7 SCC 655. In view of the said discussion, we do not deem it proper to relegate the complainant to Civil Court in the present case. Complainant was unnecessarily deprived of the use of said money during all these years and is, therefore, entitled to interest.
IN the facts and circumstances of case, we quantify the rate of interest at 10% p.a. which will be payable from after two months of the final survey report dated 17.4.2003.
CONSEQUENT LY , the complaint is allowed with direction to the opposite party - Insurance Company to pay amount of Rs. 5,27,48,094 along with interest @ 10% p.a. from 17.6.2003 to the complainant. Insurance Co. will further pay amount of Rs. 20,000 as cost to the complainant. Complaint allowed.