SOM PRAKASH SHARMA vs New India Insurance Co. Ltd.

COMPLAINANT Sri Som Prakash Sharma is the sole proprietor of Rainbow Paints & Chemical (Pencil Division) in Industrial Area, Bareilly. The sole opposite party is the New India Assurance Co. Ltd. The complaint was received in the Registry of the Commission on 30th October, 1991. On receipt of notice from the Commission the Insurance Company put in appearance and filed a written statement. Parties filed affidavits in support of their cases alongwith which they also placed on record documentary evidence.

THE case of the complainant is that he is the sole proprietor of the small scale industrial unit which was registered with the Industries Department of the U.P. Government. After obtaining financial assistance from the U.P. State Industrial Development Corporation and the Central Bank of India the factory was set up by the complainant who started production of pencils of various varieties in it in the year 1986. THE complainant obtained an insurance policy form the New India Assurance Co. Ltd. for a sum of Rs. 5,00,700/- which was valid from 20th November, 1989 to 19th November, 1990. THE sum assured included insurance for different amounts of plant & machinery, raw material, chemicals, finished products, electrical fittings, furniture and fixture etc. THE risk against loss caused by fire is covered under this policy. According to the complainant the premises of the factory caught fire on the night between 24th and 25th July, 1990 and inspite of the best efforts of the complainant the fire could not be controlled and everything within it was destroyed in the fire. The complainant says that the loss incurred by him due to the fire was to the tune of Rs. 5,82,248/-. The complainant also says that he gave information about the incident to the Insurance Company without delay and also submited a claim for the aforesaid amount of Rs. 5,82,248/- within time. The Insurance Company, according to the complainant, sent a spot Surveyor by the name of Sri Ajai Kumar Agarwal, who visited the factory and made his investigations and after some time another Surveyor by the name of Sri Rakesh Agarwal was deputed for the same purpose. The complainant says that he had entrusted all the registers and documents relating to the claim to Sri Ajai Kumar Agarwal. Sri Rakesh Kumar Agarwal never contacted the complainant directly nor did he ever meet the complainant. The complainant also says that he subsequently learnt that Sri Rakesh Kumar Agarwal made enquiries from the neighbouring factory owners particularly those who were not on good terms with the complainant. Further, he obtained incorrect statements from the persons who were in the employment of the complainant with a view to decline the claim.

The case of the complainant further is that for a period of about one year from the date of the incident the Insurance Company did not give any information to him about the settlement of the claim. The complainant met the officers of the Insurance Company and complained about their inaction. On this account, says the complainant, the Insurance Company rejected the claim through its letter dated 20th August, 1993 on imaginary and flimsy grounds. The complainant has claimed a sum of Rs. 5,00,700/- which was the sum insured under the Fire Policy with interest @ 18% per annum from the date of the incident till the date of actual payment apart from a sum of Rs. 2,00,000/- by way of compensation for other losses sustained by him like loss of profit, loss of business, harassment and mental agony etc.

THE Insurance Company has, in its reply, pleaded that the claim made by the complainant was not sustainable because it was in respect of a loss which fell under the exclusion clause in the policy. It is also pleaded that factually also the claim was false because the factory, even according to the complainant; was not working for a long time and did not even have a chowkidar for guarding it and that there was no material inside the premises which could have been lost in the fire of which the origin was not known. THE claim that the complainant suffered a loss to the tune of Rs. 5,82,248/- was without any basis and was found to be false by the Surveyor, Sri Rakesh Agarwal, who made detailed inquiry into the matter. THE Company has justified the repudiation of the claim through its letter dated August 20,1991. A copy of the repudiation letter has been filed by Insurance Company alongwith the affidavit dated 9.3.1992 of Sri Indra Raj Lamba, its officer. In this repudiation letter it has been said that the allegation of the complainant about the fire having broken out suddenly due to some reason was incorrect and it had been found that the fire was the result of the complainant''s own machinations to give rise to a false claim. It has also been stated that no probable cause of the breaking out of the fire could be found in the survey and the investigations because no electric connection existed in the factory and there was no occasion for any short circuiting. The fire had not been caused due to biri and cigarette burning because the factory was found to be closed because no chowkidar had been posted and employed by the complainant for looking after the factory and its security.

THE repudiation letter also said that the cause of the fire suggested by the complainant as being due to some chemicals lying in the factory, even if accepted to be correct, brought the claim under the exclusion clause of the fire insurance policy. The repudiation letter proceeded to say that the details of the materials, stocks, chemicals and machines rendered waste in the premises of the factory furnished by the complainant were found to be false and the documents relating to Sales Tax and other financial statement and stock etc. furnished by the complainant were found to be containing bogus and unbelievable figures. So also, the information given by the complainant about the alleged loss suffered by him was found to be false. Even though voluminous evidence has been placed on the record by the parties in respect of their rival versions yet, at the time of the hearing of the case, emphasis was laid by them principally on the question whether the loss sustained by the complainant could be said to have been covered under the provisions of the policy and, if so, the quantum thereof.

MR. Rajesh Chadha made submissions on behalf of the complainant while MR. B.P. Dube, appeared on behalf of the Insurance Company. They were heard at some length.

A copy of the policy of insurance has been filed in the case. It is Annexure No. 5 to the affidavit sworn on 10th June, 1992 by the complainant. The risk covered under this policy includes loss or damage due to fire. In the exclusion clause the second and third items are mentioned thus: 2. Loss or damage to property, occasioned by its own undergoing any heating or drying process. 3. Loss or damage occasioned by or through or in consequence of: (a) The burning of property by any public authority. (b) Sub-terranean fire.

The complainant has filed a copy of the First Information Report lodged by him on 25th July, 1990 as Annexure No. 2 to his affidavit dated 10.6.1992. In it he has informed the police that on the previous night the factory caught fire but it was not known as to when and how it occurred. He has also stated that the factory was lying closed for about a month and may be the fire was caused due to some chemicals.

The Insurance Company has filed with the affidavit of Sri Lamba the copy of the Fire Report relating to the incident of the District Fire Officer, Bareilly as Annexure No. 6. This report mentions that the reason for the fire was unknown and that though the loss due to the fire according to the owner of the factory was estimated at Rs. 3,20,000/- but according to the Station Officer it was estimated to be Rs. 35,000/- out of which the estimated loss for the burnt out roof was about Rs. 15,000/-, the raw-material about Rs. 10,000/- and for finished goods about Rs. 10,000/-. Sri Ajai Kumar Agarwal, who was deputed as the Spot Surveyor submitted a report dated 20.12.1991. A copy of the report is Annexure No. 17 to the affidavit of Sri Lamba. In this report no conclusion has been recorded about he cause of the fire but the loss was assessed at Rs. 48,100/-. Sri Rakesh Agarwal & Associates also submitted a survey report of which a copy has been filed as Annexure No. 18 to the affidavit of Sri Lamba. In this report the Surveyor has concluded that the insured had not suffered any loss due to fire for the fire in the insured premises was of very small nature which extinguished of its own and was caused by the insured himself.

THE pre-ponderance of opinion of people who visited the place of the incident soon after it was that the cause of fire was not known. THE conclusion of Sri Rakesh Agarwal & Associates that the fire was caused by the insured himself does not find support from any cogent material referred to in the report. In fact, a perusal of the entire report shows that the Surveyor has not referred to any material in it on the basis whereof he has concluded that the fire was caused by the insured himself. In this situation we hold that the cause of fire in the present case does not fall under any item of the exclusion clause. THE Insurance Company, cannot, therefore, take resort to the exclusion clause to negative the claim of the complainant. If the incident in which damage was caused by fire to the factory premises and the material in it is not covered by the exclusion clause it is clear that the Insurance Company is under an obligation to make good the loss. In the present, case, as held by us, the exclusion clause in the insurance policy is not attracted. The Insurance Company is, therefore, liable to compensate the complainant for the loss suffered by him.

COMING to the quantum of loss we find that the material placed by the parties alongwith the affidavits filed by them does not lead to any clear estimation of the loss to be done by the Commission. We find that according to the report of the Fire Service Officer the loss sustained by the complainant in the incident was of about Rs. 35,000/-, while according to the report of Sri Ajai Kumar Agarwal it was to the tune of Rs. 48,100/-. In his report Sri Ajai Kumar Agarwal has noticed various circumstances considered by him for arriving at his conclusion including the report of the Fire Service Officer. The factors taken into account by him have not been considered by the Surveyor Sri Rakesh Agarwal & Associates in coming to the conclusion that the complainant had not suffered any loss due to the fire. In this situation we are inclined to accept the estimate made by Sri Ajai Kumar Agarwal and direct the Insurance Company to pay the amount of Rs. 48,100/- estimated by him as the loss suffered by the complainant due to the fire incident subject to legally admissible salvage. The complaint is allowed in the aforesaid terms. The Insurance Company is directed to pay to the complainant a sum of Rs. 48,100/- (subject to salvage) with interest @ 18% per annum from the date of repudiation (20th August, 1991) till the date of actual payment of the amount to the complainant. The complainant will also be entitled to costs of these proceedings which we assess at Rs. 1,000/-. Let copies of this order be made available to the parties or their learned Counsel as per rules. Complaint allowed with costs.