TAJ SUGAR WORKS vs Punjab National Bank

THIS complaint has been filed for recovery of Rs. 11,26,000/- alongwith 18% per annum interest and a sum of Rs. 1,00,000/- as compensation.

THE facts of the case stated in brief are that the complainant runs a sugar factory in village Shahbazpur, Post Kotwali Dehat, Distt. Bijnore under the name of M/s. Taj Sugar Factory. Complainant got the insurance of his factory premises done for a sum of Rs. 20,00,000/-. THE policy commences from 18.1.1995 for a period of one year ending on 17.1.1996. THE insurance risk was also covered under the insurance policy for which a sum of Rs. 6,783/- was paid as premium. In the factory the stock of sugar cane, ''rab'', ''sheera'' etc. were kept and they were all insured. It is further alleged at about 2 a.m. on 22nd of April, 1995 one Mukesh, labourer had informed the complainant that in two tanks of rab smoke is coming out. When the complainant reached the place of incidence, he found that the rab was burning as smoke and bubbles were coming out. Complainant, therefore, tried to extinguish the fire but it could not be done. The rab which were kept in the tank was of 3000 quintals which were burnt. An FIR was lodged and information was sent to the Fire Department. Letters were also written to the Insurance Company and the claim was also lodged. The complainant had suffered a loss of Rs. 11,26,000/- on account of the fire. On 19.6.1995 complainant received a letter from the Surveyor informing him that rab is inflammable material and hence no claim can be given for the same. When the claim was not allowed, the complaint was filed.

In the written statement the opposite party No. 2, Insurance Company, has admitted the insurance of the premises and the period of the risk cover. It has alleged that fire policy ''C'' was taken and the coverage of risk was not taken by the complainant for losses to the stock due to spontaneous combustion nor any premium was paid for this purpose. It is admitted that the complainant had informed about the fire at 2 p.m. on the alleged date. After getting information of the incidence, the Insurance Company entrusted the matter to plot Surveyor. On the basis of preliminary inspection attributed to the cause of loss on account of spontaneous combustion. It is further alleged that this conclusion was reached on the basis of smoke and bubbles coming out of the rab. He has also recorded the statement of two witnesses who have stated that no fire was detected.

THE final survey was entrusted to Sri Vijay Prakash Maheshwari, who referred the matter to the Hindustan Tasting and Research Laboratory (India), Sahibabad, Ghaziabad whose report dated 28.4.1995 shows that the ''rab'' was burnt due to spontaneous combustion. It is further alleged that the Surveyor by his report dated 3.9.1995 assessed the net loss of Rs. 5,63,718.73 which according to him was not payable as the fire broke out due to spontaneous combustion which is not covered under the policy. The complainant had filed an affidavit in support of his allegations contained in the complaint alongwith complaint itself. Opposite party has filed evidence in support of his contention at a later stage.

WE have heard learned Counsel for the opposite party and have perused the records. However, the complainant remained absent on the date of hearing. The only question which arises in this case is whether the complainant is entitled to claim damages for the loss suffered by him on account of damage caused to his 3000 quintals of ''rab'' which was stored in the tank. According to the parties the damage was done due to spontaneous combustion of the ''rab''. We have to examine the position as to whether the spontaneous combustion is covered under the definition of ''fire'' or not. If the spontaneous combustion is covered under the term ''fire'' then there was no point in paying additional premium for the spontaneous combustion as argued by the learned Counsel for the opposite party, Insurance Company. If it was not covered under the word "fire" then the extra premium is to be paid in getting the goods insured for spontaneous combustion. On this point there is an authoritative view of the National Commission in the case of Saraya Sugar Mills Limited v. United India Insurance Company Limited, II (1996) CPJ 6 (NC). In that case the damage was caused on account of spontaneous combustion of molasses. After considering the definition of fire in the dictionaries and other facts on record, the National Commission was of the opinion that the spontaneous combustion is covered under the word ''fire''. In that case also the Insurance Company had taken a plea that as the insurance policy did not mention ''fire'' due to spontaneous combustion, the claim could not be entertained. It was the Surveyor, in that case, who had reported that the molasses were damaged due to auto heating and that there was no fire due to spontaneous combustion. Opposite party repudiated the liability. In view of these contentions of the Insurance Company the National Commission, after discussing the various aspects of the matter, held as under : "From the definitions of terms "combustion" and spontaneous combustion, and the dictionary meaning of "fire" it would only be natural to presume that the damage to the stock of molasses has been caused by fire arising from spontaneous combustion."

In the next para the National Commission has held as under : "If the basic rate for the damage by fire simplicitor covered the risk there was no precise purpose of charging additional premium for spontaneous combustion. As remarked in Roshan Lal''s case by this Commission if the contention of the Insurance Company is to be accepted it would mean that the risk ''spontaneous combustion'' is merely autological inasmuch as it already falls under the ''fire'' of which basic premium has been prescribed. We have not been able to understand why the additional premium for ''spontaneous combustion'' was charged if the loss was payable only if it leads to fire."

AFTER holding as above, the National Commission held that in the light of above discussions, we are of the opinion that the repudiation of the complainant''s claim by opposite party cannot be sustained. The same view was taken by the National Commission in an earlier case of M/s. Roshan Lal Oil Mills Limited v. United India Insurance Company Ltd., I (1992) CPJ 293 (NC). Thus on the basis of these decisions and on the facts on record, we find that spontaneous combustion is covered under the definition of word "fire" and the policy taken by the complainant of the stock was of fire. Therefore, the damage to the ''rab'' by spontaneous combustion is covered by the definition of "fire" and no additional premium was required to be paid for spontaneous combustion as argued by learned Counsel for the Insurance Company. Therefore, we have no hesitation in rejecting the contention of the Insurance Company and held that the damage to the ''rab'' of the complainant was caused due to fire, which includes spontaneous combustion also.

THE next question which arises for consideration is as to what amount should be awarded to the complainant as damages for the loss. As mentioned in the earlier part of the judgment, the complainant has claimed a sum of Rs. 11,26,000/- as damages and Rs. 1,00,000/- as compensation. The report of the second Surveyor has been filed by the Insurance Company who has assessed the damages for the losses caused by spontaneous combustion. The Surveyor has taken two ponds of rab burnt which comes to 6240 sq. ft. It amounted to 2,80,800 kgs. The cost of the rab comes to Rs. 9,40,680/-. After substracting loss of salvage value of Rs. 47,034/-, the cost comes to Rs. 8,93,646/-. According to the Surveyor average clause is applicable in this case. According to learned Counsel this average clause has been applied on the sum and that the stock insured was of lesser value than the stock found at the time of fire. Sum insured was for Rs. 20,00,000/- while the stock was found to be Rs. 31,45,429.20. Thus the amount which comes to be paid comes to Rs. 5,68,218.73. After deducting a sum of Rs. 2,500/- as excess clause, the net amount payable comes to Rs. 5,66,718.73, but the Surveyor has reported that this amount is not payable as it was destroyed on account of spontaneous combustion which is not covered under this policy. The claim was repudiated by the Insurance Company.

We have already held that spontaneous combustion is also covered under ''fire'' in the policy. Thus the Insurance Company is liable to pay this amount on account of spontaneous combustion. As the claim was repudiated the Insurance Company is also liable to pay 18% per annum interest from three months after the submission of the claim till the date of payment, i.e. from 1.8.1995. The claim petition is liable to be partly allowed. Order The claim petition is partly decreed for a sum of Rs. 5,65,718.73 against the Insurance Company alongwith interest at the rate of 18% per annum to be paid with effect from 1.8.1995 till the date of payment. Rest of the claim is dismissed. Let the compliance of this order be made within two months from the date of this order. Let copy of this order be made available to the parties as per rules. Complaint partly allowed.