B.A. Shaikh, Presiding Member.
1. This is a complaint filed under section 17 of the Consumer Protection Act, 1986.
2. The case of the complainant as set out by it in the aforesaid complaint in brief is as under:
a. The complainant is a company incorporated under the Companies Act, 1956. It has established a sugar manufacturing factory at Vijay Nagar, Gangakhed, of District Parbhani. The valuable by-product in the process of sugar manufacture is molasses and it is required to be stored in tanks which is useful raw material in the distillery (alcohol manufacture). The complainant therefore obtained insurance cover from the opposite party (for short O.P.) Nos. 1,2&3 for storage of the molasses and basically it is a product with potential of being burnt/combustion.
b. The aforesaid policy was obtained for Molasses stored in the factory premises, with total insured amount of Rs.1,00,00,000/- . The total premium for the said insurance policy was Rs.1,12,500/-. Moreover, as the insured material was carrying extra risk, the O.P.s had collected additional premium of Rs. 3000/- for a Earthquake (Fire & Shock) and Rs.10,480/- for Spontaneous Combustion. Thus total premium was worked out at Rs. 1,22,980/-. In view of entitlement of no claim bonus (earlier policies), the net premium was worked out to Rs.53,480/-. The complainant paid premium of Rs.61,194/-. Fire policy of Rs. 1,00,00,000/- was issued by the O.P. No. 3 which was valid for the period from 11/02/2011 to 10/02/2012.
c. On 24/03/2011 the stock of molasses stored in tank No. 1 was damaged due to spontaneous combustion. The officers and workers at the work site had taken immediate steps to avoid the loss. However, the entire stock of molasses stored in tank No. 1 was destroyed/damaged due to spontaneous combustion.
d. The Chief Executive officer of the complainant as per letter dated 25/03/2011 had communicated the details of the said accident to the Head Quarter. All the actions were taken to submit reports to all the concerned authorities. The report of the damage of stock of molasses was also submitted to the O.P. Nos. 2 and 3. The O.P. No. 3 appointed a surveyor to assess the loss and all issues relating to the said loss. The said surveyor had carried out the survey/inspection on 27/03/2011. The said surveyor raised few queries regarding particulars of premium paid by the complainant and additional premium charged by the insurance company. The complainant had given detailed explanation to the surveyor vide letter dated 15/04/2011. The surveyor then submitted report dated 10/06/2011 to the O.P. The surveyor had assessed the loss to the tune of Rs. 79,21,603/- for the stock of molasses in the tank No. 1 which was destroyed/damaged because of sudden/spontaneous combustion. .
e. The complainant had also taken opinion from the expert in the matter from Vasantdada Sugar Institute, Pune as spontaneous combustion of molasses being an unexplained phenomenon. The said institute had furnished its report dated 20/04/2011 which was submitted to the surveyor. The surveyor also stated in his report that that there was no possibility of generation of flames during the process of heat development in molasses and subsequently. During the process of molasses decomposition carbon dioxide (Co2) is emitted and there would be no presence of oxygen. Hence, the loss was due to charring of molasses and not by burning with flames. Finally the surveyor assessed the loss to the extent of Rs. 79,21,603/- as noted above.
f. The complainant issued request letters dated 02/03/2012 & 22/03/2012 to the O.Ps. for settlement of claim. However, the O.P. No. 3 had issued notice dated 16/04/2012 to the complainant seeking explanation as to why the claim should not be repudiated for the reason that the loss was due to spontaneous combustion and there was no loss to the material due to flames. The complainant gave an exhaustive explanation to that show cause notice on 17/05/2012. The O.Ps. were under obligation to adopt reasonable and rational approach as controversy has been settled by the Hon’ble National Commission and Hon’ble Supreme Court. They adopted totally irrational and arbitrary approach and repudiated the claim vide letters dated 23/08/2012. &29/08/2012 respectively by the O.P.No. 2 & 3.
g. Hence, complainant filed present consumer complaint seeking direction to O.P. Nos. 1 to 3 to pay it ( complainant) total claim of Rs.99,72,788/- towards loss sustained by it with interest, compensation and cost , of which head wise details are given in para No. 13 of the complaint.
3. The O.P.Nos. 1 to 3 filed their common reply/ written version and thereby resisted the complaint. Their submission in brief is as under:
a. It is not disputed that bi product namely Molasses is required to be stored in a tank. It is not disputed that the O.Ps. received the intimation from the complainant on 25/03/2011 about event of loss under subject policy and that the O.Ps. appointed surveyor namely Mr. B. Nageshwar Rao, who conducted the survey and submitted report.
b. However, there was previous policy issued by the O.Ps. to the complainant for the period of one year which was in existence till 11/02/2011. The complainant submitted the proposal for further period of one year from 11/02/2011 to 10/02/2012 upon receipt of the said proposal of the complainant , the O.P.No. 3 had duly explained the terms and conditions, exclusion, exceptions and add on cover of Spontaneous Combustion under the standard fire and Special Perils Policy proposed to be renewed by them. The complainant was therefore well aware that there are two categories of the Standard File and Special Perils Policy. One category contemplated the risk of Spontaneous Combustion (With Fire) and second category contemplated the risk of Spontaneous Combustion (Without Fire). The premium for the aforesaid first category was at the rate of 0.187% while the premium for second category was 01.125%. The complainant availed premium for first category of the policy and accordingly paid premium. The complainant did not avail the second category by paying aforesaid premium. Thus Spontaneous Combustion (without fire) was never assumed by the O.Ps. under policy issued to the complainant for the period from 11/02/2011 to 10/02/2012.
c. There is note in the said policy that the expressions “by fire only” in the said endorsement “must not be omitted under any circumstances.” Therefore, loss sustained by the complainant under incident is not covered in the said policy. Moreover, the surveyor also reported about contributory factors leading the loss of stock. Thus contributory factor attributable only to negligence on the part of the complainant in maintaining the ambient temperature of the tank and other related activities. Thus, surveyor also reported that the complainant could not prove the cause of loss with any conclusive evidence. Thus for this reason the complaint deserves to be dismissed.
4. The complainant along with complaint filed copies of following documents.
Policy of stock issued by the O.P.No. 3, Letter submitted by the Chief Executive Officer to the complainant, Letter submitted by the complainant to the surveyor, Survey report dated 10/06/2011, Technical report dated 20/04/2011, furnished by Vasantadada Sugar Institute, Pune, Letters submitted by the complainant to the O.Ps., Notice issued by the O.P.No. 3 to the complainant, Explanation for the same given by the complainant to the O.P. No. 3, Letters issued by the O.P.Nos. 2&3 about repudiation of the claim to the complainant.
5. The complainant also filed his evidence by way of affidavit. He also filed rejoinder to the complaint. His advocate Mr. B.G. Kulkarni has also filed written notes of arguments.
6. On the other hand, the O.P. Nos. 1 to 3 in support of their defence filed copies of the documents namely proposal given by the complainant for policy, premium calculation sheet/quotation for policy, letter issued by the complainant, policy issued by the O.Ps. for the period from 11/02/2011 to 10/02/2012, circular dated 17/03/2010, letter addressed by the surveyor to the complainant, policy issued by the O.Ps. to the complainant for the period from 11/02/2012 to 10/02/2013.
7. The learned advocate of the complainant in his argument reiterated the aforesaid case of the complainant as set out in the complaint and relied on decisions in the following cases and submitted that the observations made in the said cases are squarely applicable to the facts and circumstances of the present case as they are identical to those of the said cases.
i. M/s. Roshan Lal Oil Mills Ltd., Vs. M/s. United India Insurance Co. Ltd. , reported in I(1992) CPJ 293 (NC). The Hon’ble National Commission observed in the said decision as follows,
“ We may further observed that if it was the intention to exclude damage by spontaneous combustion in the pre-ignition stage i.e. combustion without fire as contended by the respondents, this ought to have been stated much more clearly and directly. In any case it has already been observed that the language used in the insurance policy is unqualified and the rejection of the insurance claim by the respondent was not justified in terms of the insurance policy”.
ii. Saraya Sugar Mills Ltd. Vs. United India Insurance Co. Ltd. reported in II (1996) CPJ 6 (NC). It was the case of the complainant that temperature of the molasses tank had risen due to auto combustion by which the molasses stored in tank No. 1 was burnt and solidised. While repudiating the claim the opposite party attributed the damage to spontaneous combustion without fire . From the definition of terms “Combustion’ and Spontaneous Combustion , and 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.
iii. M/s. Murli Agro Products Ltd. Vs. M/s. Oriental Insurance Co. Ltd., in original petition No. 253/1999 decided by the Hon’ble National Commission as per order dated 10/12/2004. It is observed that recovery of additional premium indicates the nature of the contract that subsists between the parties. That contract cannot be of giving insurance coverage only in case of damage by fire. If that contention is accepted, the object and purpose of payment of additional premium is frustrated. Recovery of additional premium indicates acceptance of risk by the insurance company for the perils contemplated.
8. The learned advocate of the complainant thus submitted that as in the instant complaint also additional premium of Rs. 10,480/- was accepted by the O.Ps. from the complainant to recover risk of Spontaneous Combustion and applying the aforesaid decisions to the present case the reliefs sought for in the complaint may be granted.
9. On the other hand, the learned advocate of the O.P. Nos. 1 to 3 filed his written notes of arguments and submitted that the same may be considered as his oral submission. The learned advocate of the O.P. Nos. 1 to 3 reiterated in his written notes of argument the defence taken by the O.P. Nos. 1 to 3 in their reply and also submitted that as the complainant has not paid additional premium at the rate of 1.125% to cover the loss due to Spontaneous Combustion (Without fire) and as loss was caused due to Spontaneous Combustion (Without fire), repudiation of the claim of the complainant is legal and proper. He therefore requested that the complaint may be dismissed. He relied on the decision of the Hon’ble Supreme Court in the case of United India Insurance Co. Ltd. Vs. M/s. Harchand Rai Chandan Lal , decided as per order dated 24/09/2004. In that case it is observed by the Hon’ble Supreme Court that it is stated that the terms of the contract has to be strictly read and natural meaning be given to it and that no outside aid should be sought unless the meaning is ambiguous.
10. We find that admittedly, the surveyor appointed by the O.Ps. assessed the loss at Rs. 79,21,603, after carrying out the survey in detail. The complainant has claimed that much amount towards loss suffered by it in the incident of Spontaneous Combustion. Moreover, admittedly the risk of molasses stored in tank No. 1 of the complainant was covered under the policy. The incident of Spontaneous Combustion took place during the period of policy.
11. The material question involved in the present complaint is as to whether the incident of Spontaneous Combustion took place was covered under the aforesaid policy. The Hon’ble National Commission in the case of Saraya Sugar Mills Ltd. Vs. United India Insurance Co. Ltd. reported in II (1996) CPJ 6 (NC) has very specifically observed that from the definitions of terms combustion and spontaneous combustion, and 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. Therefore we find that as in the instant case also the loss of insured molasses was caused due to Spontaneous Combustion , it was covered under the aforesaid policy.
12. It is also seen that the complainant paid additional premium of Rs. 10,480/- to the O.P. to cover the risk of spontaneous combustion also. It is a simple case of the O.P. that to cover the risk of spontaneous combustion without fire, it was necessary for the complainant to pay premium at the rate of 01.125%. However, the perusal of the policy filed on record shows that for covering risk due to Earthquake (Fire & Shock), premium of Rs. 3,000/- was paid and for covering risk of Spontaneous Combustion premium of Rs. 7,480/- was paid. Thus total premium paid was of Rs. 10,480/- as seen from the said policy produced on record and not disputed. Therefore, we are of the view that when the policy itself shows that the O.P. accepted additional premium of Rs. 7,480/- to cover the risk of Spontaneous Combustion then O.P. cannot turn around and say that the said premium did not cover the risk of Spontaneous Combustion (Without fire). Thus, we hold that the loss caused by the complainant due to Spontaneous Combustion as assessed by the surveyor in the report as above was duly covered under the policy issued by O. Ps.
13. The decision relied on by the learned advocate of the O.Ps. is not applicable to the facts and circumstances of the present case since the contract made in between both the parties under the insurance policy discussed above is very specific to show that the additional premium was paid to cover the risk of Spontaneous Combustion. Moreover, we also hold that the decisions relied by the learned advocate of the complainant are squarely applica
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ble to the facts and circumstances of the present case as they are identical to those of the said cases. Therefore, in the result of the said discussion we hold that the O.Ps. have rendered deficient service to the complainant by repudiating its claim. Hence, we hold that the complainant is entitled to make good of loss as caused to it in the said incident of Spontaneous Combustion. 14. The surveyor as noted above has assessed the loss after conducting due survey, to the extent of Rs. 79,21,603/- and complainant is therefore entitled to get the same from the O.P Nos. 1 to 3. The complainant is also entitled to interest at the rate of 9% p.a. over the said amount from the date of repudiation of the claim vide letter dated 23/08/2012. Moreover, the complainant is also entitled to compensation of Rs. 50,000/- for physical and mental harassment and litigation cost of Rs. 25,000/-. Accordingly, we proceed to pass the following order. ORDER. i. The complaint is partly allowed as under, ii. The O.P.Nos. 1 to 3 jointly and severally shall pay to the complainant Rs. 79,21,603/- with interest at the rate of 9% p.a. from 23/08/2012 till its realization by the said complainant. iii. The O.P.Nos. 1 to 3 jointly and severally shall pay to the complainant compensation of Rs. 50,000/- for physical and mental harassment and litigation cost of Rs. 25,000/-. iv. The O.P.Nos. 1 to 3 jointly and severally shall comply with the aforesaid order within a period of one month from the date of receipt of copy of this order by them. v. Copy of order be furnished to both parties, free of cost.