SANJIV KHANDELWAL vs ORIENTAL INSURANCE Company

IN this complaint the grievance has been made that the insurance claim on account of the damages suffered due to fire amounting to Rs. 3,21,670 has not been paid to the complainant by the opposite party.

THE short facts are that Jagat Alloys is a proprietary concern of a young '' manufacturer. He was having a small industrial unit at Thane. THE unit was insured (for stocks, machinery, equipments etc.) with the Oriental Insurance Company the opposite party. On 12.10.1989, fire occurred in the factory damaging the stock of raw material. THE claim was lodged with the opposite party. THE Surveyor was appointed and after the survey was ride, the survey report was submitted to the Insurance Company enumerating the valuation of the loss caused due to fire. But the opposite party rejected the claim of the complainant. Another contention of the complainant is that there was delay of nine months in deciding the claim and rejecting it without assigning any convincing and valid reasons. THErefore, the complainant in this complaint is claiming the compensation of Rs. 4,94,339 as detailed in the complaint. It is useful to catalogue the chronological events which are as under : THE Insurance Policy was issued on 27.9.89 for Rs. 10,50,000/- covering the period from 26.9.89 to 25.9.90. Fire took place on 12.10.89. Surveyor (M/s. Hashman Services) visited the factory on 14.10.89 Details were called by surveyor on 17.10.89 from complainant. Details were submitted by the complainant on 1.11.89. Surveyor disputed the claim of Rs. 3,21,670 on 1.1.90. On 24.1.90 meeting was held in the office of Sr. Divisional Manager. On 24.1.90. a letter from complainant to expedite the settlement was sent. On 25.3.90 M/s. Chempro Inspections Pvt. Ltd. were appointed as experts. On 17.4.90 meeting was arranged with the Regional Manager. On 30.4.90 Surveyor obtained letter from complainant for claim of Rs. 1,93,341 vide letter dt. 30.7.90. THE claim was rejected on 30.7.90. THE complaint was filed on 14.9.90 before this Commission. In response to the notice u/Sec. 13(2) of the Consumer Protection Act, 1986 (for short ''Act''), the opposite party submitted its written statement justifying the rejection of complainant''s claim for compensation. THE complainant amended the original complaint in terms of claim and gave further details. Both the parties filed their respective affidavits and documents in support of their claims. We have also heard Shri Mogare, Advocate for the complainant and Shri Mokashi, Advocate for the Oriental Insurance Company. 2. THEre are certain admitted facts in this case. THE fact that the complainant was insured under fire policy ''C bearing No. 12310/10/90/01271 issued on 27.9.89 covering the risk to the extent of Rs. 10,50,000/- for a period between 26.9.89 to 25.9.90 is admitted. THE fire policy covers the property viz. the machinery, accessories, equipments, stock of raw material, semi and finished products consisting of Silico-manganese, ferromanganese, limes, furniture and fixtures etc. It is also an admitted fact that the initial survey of the alleged instance of fire dated 12.10.89 was conducted by Hashman Services. It is also a fact that the experts opinion of Chempro Inspections was obtained by insurer at their instance. THE main point of dispute between the parties is that according to the complainant, he has been put to a loss of Rs. 4,94,339/- on account of the fire that took place in his factory premises on 27.9.89. THE break-up of loss on each head is described in detail in the complaint. According to the opposite party, the Oriental Insurance Company Ltd., there was no fire and consequently loss if any, cannot be granted. It has been further contended by the Oriental Insurance Company that in order to cover the claim under the Insurance Policy, actual ignition is necessary to cause the fire. It is submitted that the complainant has failed to prove that there was actual ignition and therefore, the cause of loss does not fall within the meaning of the term "fire." THE reliance was placed by the opposite party on page 255 of the book on the law relating to Fire Insurance by Wellford and Otter Barry. In support of his contention, the report of the Surveyor was also relied on for his observation that there was a possibility of chemical reaction taking place. We are unable to agree with the contentions raised by the opposite parties. In our view, there is convincing material on record to show that there was a fire and the loss caused to the complainant was due to fire. According to us, there is following documentary evidence which is material for the just decision of the main issue whether the loss caused to the complainant was due to fire within the meaning of the Fire Insurance Policy. 1. Survey Report by Hashman Services dated 29.5.90 : The said report states that on instructions from Oriental Insurance Co., the loss was assessed due to fire on 12.10.89. In that report, the cause is stated to be due to some form of chemical reaction. However, the final assessment of the loss was arrived around Rs. 1,50,000/- to Rs. 1,70,000/-. In Clause (4) of the notes, it is stated that experts opinion was to be sought. It is stated in comments that there was no fire within the meaning of the fire policy. It is also stated that the material stored at the factory site could melt at a high temperature of around 1500 to 2000. The insurance company, therefore, sought the advice of the expert viz. the Chempro Inspections. 2. Chempro Inspections Report dated 215.1990 : In its report, the Chempro Inspections stated in page 4, "there is sufficient proof to confirm accidental incidence of fire and fire loss. They have assessed the loss on page 5 of the report at Rs. 2,03,091/-. The Chempro Experts stated in the said report that the silico manganese can ignite only over 1500. 3. There is Fire Brigade Report dated 26.10.1989 from Municipal Corporation, Thane. : It is stated that there was a fire on 12.10.1989 in the Company M/s. Jagat Alloys and the Thane Municipal Corporation Fire Brigade services were requisitioned. It is also stated that there was extensive damage due to fire resulting the loss of Rs. 4,00,000/- approximately.

Affidavit of the complainant : In the affidavit, the complainant has stated that the loss caused to him is due to fire.

THANE Police Station : There is a certificate from the THANE Police Station dated 24.12.90 stating that the first information report about the fire was received in the Police Station on the evening of 12.10.89 and the entry has been taken at Sr. No. 28 at 4.00 p.m. in the station diary vide Entry No. 28. From the material mentioned above, it is clear that there was fire in the factory premises of the complainant. These documents indicate that the fire had taken place in complainants factory. 4. The opposite party, the Oriental Insurance Company repudiated the claim of the complainant vide their communication dated 30.7.90 quoting the Surveyor''s Report that there was no fire within the meaning of the fire policy. That takes us to examine the contents of the fire policy. The fire policy in question is at Annexure I. The said policy indemnifies the loss of the complainant in the case of fire which is at Sr. No. 1 of the policy. The Oxford Reference Dictionary states the meaning of ''fire'' as under : - "The state or process of combustion causing heat and light, the active principle operative in this flame or incandescence." There is no definition of fire indicated in the policy. We have, therefore, to rely on the expert opinion sought by the Oriental Insurance Company from Chempro Inspections experts. The Chempro Inspections have clearly indicated that there was sufficient proof to confirm an accidental incidence of fire and fire loss. The report is dated 21.5.1990. In view of the expert opinion, that there was fire, there is no reason for the opposite party to repudiate the claim of the complainant. There is another communication which is placed on record from Chempro Inspections dated 12.5.1990 addressed to the complainant in which it is stated that during various discussions, the loss was assessed at Rs. 1,93,341 for being recommended for payment In addition to this recommendation, the Hashman Services also recommended in its survey report loss of the complainant at Rs. 140,000/-to Rs. 1,70,000/-. These instances clearly show that the complainant''s loss was assessed on account of the fire in his factory. We have also found that even though the complainant had made a claim of more than Rs. 4,00,000/- for the loss due to fire, he agreed before the Hashman services at the time of assessment to accept the payment of Rs. 1,93,341/- in full settlement of his claim. In our view, therefore, at least the compensation of Rs. 1,93,341 should have been paid to the complainant for his loss due to fire. We fail to understand when there is clear fire policy indemnifying the loss of the complainant, in case of fire, and when the instance of fire was stated by Chempro experts in their report, we do not understand as to why there should be hesitation on the part of the Insurance Company to deny the claim of a young entrepreneur. From the facts and circumstances of this case, we are clearly of the view that this is a case where there is not only delay but there appears to be adamant attitude of the part of the Insurance Company to deny the legitimate claim of the complainant on flimsy ground. We, therefore, find that delay is not finalizing the claim and finally rejecting it for no valid reason amounts to deficiency in the service of the Insurance Company. We further find that there is positive negligence on the part of the Insurance Company to ignore the positive opinion of the Chempro Inspections and the various documents placed by complain it on record. Since we find that there is evidence on record to show the negligence on the part of the opposite party, the complainant is entitled to claim the compensation for his losses. The complainant has claimed the losses of more than Rs. 4,00,000/-in his claim. There is no difficulty for us to accept the agreed loss arrived at in the Chempro experts letter dated 29.5.90 at Rs. 1,93,341/-. The complainant agreed to accept the aforesaid payment towards the losses suffered by him due to fire to his factory in question. In our view, it would meet the ends of justice if we quantify the loss of complainant at Rs. 1,93,341/- which he had accepted. We hold that the complainant has proved his allegations in this complaint and thus, he is entitled for compensation. We, therefore, pass the following order : - ORDER We direct the opposite party, the Oriental Insurance Company Ltd., through its THANE Division Office of finalize the claim of the complainant at Rs. 1,93,341/- within a period of two months from the date of this order and pay the compensation to the complainant failing which the aforesaid amount shall carry interest at the rate of Rs. 18% p.a. from two months onward from the date of this order till full payment is made to the complainant. Complaint allowed.