Rajinder Kumar Goyal, Presiding Member
1. The complainant has filed this complaint under Section 17 of the Consumer Protection Act, 1986 (in short “the Act”), against the opposite parties seeking following directions to them:
(a) to direct the opposite parties to pay a sum of Rs. 21,85,817 as the fire insurance claim so claimed by the complainant as per the Claim Form along with interest at the rate of 8.5% on the delayed payment;
(b) to pay Rs. 4,00,000 as compensation for causing mental tension, harassment and mental agony to the complainant.
(c) to pay Rs. 50,000 towards expenses incurred by visiting the office/officers employees of the opposite parties;
(d) to pay Rs. 50,000 as cost of litigation;
(e) to pay punitive cost as assessed by this Commission; and
(f) any other relief which this Commission may deem fit and proper.
Facts of the Complaint
2. Brief facts, as set out in the complaint are that the complainant is running its manufacturing business of high quality cattle and allied feeds and trades in cattle and poultry raw materials. The said business is running in the name and style of Maa Luxmi Devi Agro Private Limited at Patiala. The complainant obtained a Standard Fire and Special Perils Policy bearing No. 30010011170100000196 from opposite party No. 1 effective from 25.5.2017 to 24.5.2018. On 5.1.2018, a fire broke out in the godown of the factory where deoiled rice bran was stored/lying. Intimation was given to opposite party No. 1 on 6.1.2018. As per Chartered Accountant of the company 250 MT of DORB was destroyed whose value was of Rs. 21,85,817 which works out to Rs. 8,743.27 per MT. On 7.1.2018, opposite party No. 2 surveyor visited the premises and received all the relevant documents. Vide letter dated 27.1.2018, opposite party No. 2 informed the complainant that the cause of loss as observed is due to spontaneous combustion, which was replied by the complainant vide letter dated 31.1.2018. As per reply, DORB cannot catch spontaneous combustion as there is no heat generated in the process nor any heat generating process is undertaking where DORB is stored. It is further submitted that the DORB is majorly purchased by the complainant through Shri Ganesh Solvex Private Limited, Khanna wherein the moisture level in the DORB purchased by the complainant is below 10% which is considered to be dry as per the standard practice. The opposite party No. 1 without giving any specific finding straightaway issued the letter dated 9.3.2018 and closed the claim. As per the surveyor’s report, there is no evidence as to how spontaneous combustion had taken place. The claim of the complainant was illegally repudiated. This act and conduct of the opposite parties amounts to deficiency in service and unfair trade practice. Hence, the complainant filed the complaint seeking all the reliefs as prayed for.
Defence of the Opposite Parties
3. Upon notice, opposite parties appeared and filed their written statement taking preliminary objections that the complainant has not filed the complaint through the authorized person as no resolution of the Board of Directors has been annexed. The averments of the complaint have not been sworn by filing of affidavit in support of the averments made in the complaint. The surveyor has assessed the loss for Rs. 14,53,500 which is detailed at page No. 11 of the survey report. The complaint is liable to be dismissed as the complaint falls within the pecuniary jurisdiction of the District Forum. The stock is hypothecated to HDFC Bank Ltd. and the same has not been made a party to the complaint and is defective due to non-joinder of necessary parties. On merits, as per the policy terms and conditions, the loss is covered only if it is attributed to have been caused by one of the insured perils. As the loss of the insured has not been caused by Fire as defined in the Insurance Policy, hence the claim is not payable. The Fire Tariff provides for Add on Covers for which the insured has to opt while getting the insurance policy and paying the necessary premium to that effect. There is no Add on Cover on the policy in question. The Standard Fire and Special Perils Policy was issued as per the Fire Tariff issued by the Tariff Advisory Committee under the provisions of Insurance Act, 1938 and is having statutory value. The property insured is “stocks of cattle feed, Khal, Binola, Bardana and other related items of insured’s trade etc. and it comes under the Category II and no additional premium has been paid by the complainant for getting the coverage to that effect. It is submitted that on receiving the intimation surveyor Sh. Rajiv Arora was deputed. Claim Form was submitted mentioning the cause of loss as “Loss of Stock due to flame fire cause of loss not known to us” by the complainant. It is further submitted that the roof, walls and other part of the buildings were not affected by this fire. The insured earlier said that the fire occurred due to unknown reasons but after we sent an e-mail the Insured said the loss occurred due to bidi etc. When we inspected, we did not find any bidi pieces inside the godown and the insured never told us about this.
The employees told the owner that smoke has started coming from the rack of Rice Bran DOC and they never stated about electric wires getting burnt. This very fact is mentioned in the DDR report of police. Moreover, the insured gave the opposite parties very old bills which were of Feb 2017 and June 2017 and no purchase bills were produced of the last few months as demanded. The complainant is not entitled to the amount as claimed. It is stated that there is no deficiency in service or unfair trade practice on the part of the opposite parties. Rest all the averments as averred by the complainant in his complaint were denied and prayed for dismissal of the complaint with costs.
Evidence of the Parties
4. The complainant, to support of his averments filed his affidavit dated 12.7.2018 along with documents i.e. Insurance Policy dated 25.5.2017 as Ex.C-1, Letter dated 9.3.2018 as Ex.C-2, Communication letter dated 6.1.2018, Certificate dated 15.1.2018, Letters, Communications and documents as Ex.C-5 (colly), Communication dated 27.1.2018 as Ex.C-6, Reply dated 31.1.2018 as Ex.C-7.
5. On the other hand, opposite parties filed the affidavit of Ms. Deep Shikha, Deputy Manager along with documents i.e. copy of the policy dated 25.5.2017 as Ex.OPs1&2/1, copy of Add on Covers as Ex.OPs1&2/2, copy of categories of rates as Ex.OsP1&2/3, copy of classification of material as Ex.OPs1&2/4, copy of wording of endorsement as Ex.OPs1&2/5, copy of letter dated 9.3.2018 as Ex.OPs1&2/6, copy of claim form dated 7.1.2018 as Ex.OPs1&2/7, copy of statement dated 7.1.2018 as Ex.OPs1&2/8, copy of survey report dated 23.2.2018 as Ex.OPs1&2/9.
Contentions of the Parties
6. We have heard the learned Counsel for the parties and have gone through the complaint, written statement and evidence filed by the parties.
7. Learned Counsel for the complainant argued that the complainant insured stocks under Standard and Special Perils Policy No. 30010011170100000196 with the opposite party, which was effective from 25.5.2017 to 24.5.2018. A fire broke out in the godown of the factory where de-oiled rice bran (in short DORB) was stored. Intimation was given to opposite party No. 1 on 6.1.2018. As per record of the company 250 MT of DORB was destroyed whose value is of Rs. 21,85,817. The surveyor was appointed by the opposite party/Insurance Company who inspected the spot. All the relevant documents were handed over as and when demanded. Vide letter dated 27.1.2018, opposite party No. 2 informed the complainant that the cause of loss as observed is spontaneous combustion. The letter was replied vide letter dated 31.1.2018, wherein it was clearly mentioned that DORB cannot catch spontaneous combustion as there is no heat generated in the process nor any heat generating process is undertaking where DORB is stored. The DORB is majorly purchased by the complainant through Shri Ganesh Solvex Private Limited, Khanna wherein the moisture level in the DORB purchased by the complainant is below 10% which is considered to be dry as per the standard practice. Moreover, in the surveyor’s report no evidence has been given as to how the spontaneous combustion had taken place. No specific finding was given by opposite party No. 1 and straightaway issued the letter dated 9.3.2018 and closed the claim. The claim of the complainant was illegally repudiated. Alleging deficiency in service and unfair trade practice, the complainant filed the complaint seeking all the reliefs as prayed.
8. Per contra, learned Counsel for the opposite parties argued that the complaint has not been filed by an authorized person as no resolution to the Board of Directors has been annexed. The surveyor has assessed the loss for Rs. 14,53,500 which is detailed at page No. 11 of the survey report and as per that the complaint is liable to be dismissed for want of pecuniary jurisdiction. The complainant has also not made HDFC Bank Ltd. party to the complaint as the stock is hypothecated with HDFC Bank Ltd. As per the policy terms and conditions, the loss is covered only if it is attributed to have been caused by one of the insured perils. The loss of the insured has not been caused by Fire as defined in the Insurance Policy, therefore, the claim is not payable. The complainant has not opted for Add on Covers and no extra premium was paid to that effect. The Standard Fire and Special Perils Policy was issued as per the Fire Tariff issued by the Tariff Advisory Committee under the provisions of Insurance Act, 1938 and is having statutory value. The property insured is “stocks of cattle feed, Khal, Binola, Bardana and other related items of insured’s trade etc. and it comes under the Category II and no additional premium has been paid by the complainant for getting the coverage to that effect. Moreover, the statement of the owners and employees are different as the employees told the owner that smoke has started coming from the rack of Rice Bran DOC and they never stated about electric wires getting burnt. This very fact is mentioned in the DDR with the police. Further, the bills which were provided are very old i.e. of February 2017 and June, 2017. The complainant is not entitled to the amount as claimed. It is argued that there is no deficiency in service or unfair trade practice on the part of the opposite parties. Finally it is prayed to dismiss the complaint with costs.
Consideration of the Contentions
9. We have give our thoughtful consideration on the contentions raised by learned Counsel for the parties and have carefully gone through the record.
10. First of all, we would like to decide the objection raised by the opposite parties that the surveyor after verifying the records assessed the loss for Rs. 14,53,500. Therefore, the complaint is not in the pecuniary jurisdiction of this Commission. In this regard, it is mentioned that the complainant has prayed to pay a claim of Rs. 21,85,817 along with interest at the rate of 8% on the delayed payment. The complainant has also paid a premium of Rs. 38,000 to obtain the policy in question. Both these amounts when added are above Rs. 20,00,000 and below Rs. 1 crore, therefore, it cannot be said that the pecuniary jurisdiction of the complaint is District Forum. We are fortified with the judgment of the Hon’ble National Commission First Appeal No. 2028 of 2017 titled, M/s. Shree Shyam Poultries v. Chief Regional Manager, United India Insurance Co. Ltd. & Ors., decided on 13.2.2018 wherein it has been observed that in case of Insurance the pecuniary jurisdiction is governed the amount of claim plus the premium paid. In para 3 of the judgment, it has been observed as under:
“3. A Coordinate Bench of this Commission vide their order dated 11.1.2018 in Revision Petition No. 1794 of 2017 titled M/s. Maharani of India v. United India Insurance Co. Ltd., had taken the view that it is not the sum insured which is to be taken to decide the pecuniary jurisdiction but the premium. The premium paid to the insurer which when added to the amount claimed in the Complaint would determine the pecuniary jurisdiction of this Commission. In the instant case, the Appellant’s claim is about Rs. 69,00,000 (Rupees sixty nine lakh only), which will decide the pecuniary jurisdiction. Hence, premium plus claim amount is less than One Crore, which falls within the pecuniary jurisdiction of the State Commission.”
11. Another objection raised by the opposite parties is that the complaint should have been dismissed as it has not been filed through authorized person as no resolution of the Board of Directors has been annexed with the complaint. The complaint has been filed by Sh. Amit Bansal, Director, who is also an authorized person as per the Board Resolution dated 7.7.2018 annexed by the complainant along with the power of attorney. Accordingly, the objection raised by the opposite parties is hereby rejected.
12. Brief facts of the case are that the Complainant-Firm is in the business of manufacturing of Cattle and Allied Feeds and also trades into cattle and poultry raw materials. The firm obtained a Standard Fire and Special Perils Policy bearing No. 30010011170100000196 from opposite party No. 1 for the period 25.5.2017 to 24.5.2018 and paid a premium of Rs. 38,000 vide Ex.C-1. As per the complaint, on 5.1.2018 at around 10:30 p.m. fire broke out in the premises resulting loss of De-oiled Rice Bran (DORB) which was intimated to the opposite party vide Ex.C-3. A DDR was also lodged with the P.S. Shambu where the loss due to slow fire was alleged and stated the cause of fire as unknown. M/s Rajiv Arora, Surveyor and Loss Assessor was appointed as Surveyor who visited the premises on 6.1.2018 and afterwards submitted the Final Survey Report. Vide Ex.OPs-1&2/9, dated 23.2.2018, the surveyor observed the cause of fire as spontaneous combustion on the assumption that the electric wires were seen intact, therefore, the electric short circuit is ruled out and also the product rice bran DOC is prone to spontaneous combustion. Also the roof and other parts of the building were not damaged due to fire. The fire had taken place due to spontaneous combustion caused by bacterial action which created internal heating in the stock of rice bran DOC. On the other hand, surveyor also assessed the loss to the tune of Rs. 14,53,500 after deducting salvage. The opposite party on receipt of surveyor’s report repudiated the claim of the complainant vide Ex.C-2 with the following observations:
“With reference to Fire claim under the above mentioned Policy No. , we are in receipt of survey report. As per surveyor’s remarks ‘Fire is due to Spontaneous Combustion and there is No Add On Cover for the same in this Policy.’ Hence, as per surveyor’s recommendation the claim has been closed as NO CLAIM.”
13. Now the issue is to decide whether the repudiation of claim on account of the reason for fire as spontaneous combustion is in order or not?. Wikipedia defines the spontaneous combustion as under:
“Spontaneous combustion can occur when a substance with a relatively low ignition temperature (hay, straw, peat, etc.) begins to release heat. This may occur in several ways, either by oxidation in the presence of moisture and air, or bacterial fermentation, which generates heat. The heat is unable to escape (hay, straw, peat, etc. are good thermal insulators), and the temperature of the material rises. The temperature of the material rises above its ignition point (even though much of the bacteria are destroyed by ignition temperatures).”
14. From the above definition it is necessary to find factors effecting Spontaneous Combustion:
(i) Atmospheric temperature
(ii) Moisture content in the rice bran DOC
15. The surveyor in his report has not discussed the above factors effecting spontaneous combustion. The surveyor has only stated that rice bran DOC has a tendency of spontaneous combustion and as the possibility of electric short circuit is ruled out, therefore, the only reason is spontaneous combustion.
16. The incident occurred on 5.1.2018 in Rajpura i.e. in Northern Region of India where usually temperature is very low even 4-5OC during January. Therefore, this factor cannot be considered to accelerate the spontaneous combustion in the instant case.
17. The Counsel for the complainant during arguments relied upon the judgment of Hon’ble National Commission in Case First Appeal No. 20 of 2007 titled as New India Assurance Co. Ltd. v. Bharat Oil and Animal Food Industry, I (2013) CPJ 343 (NC)=decided on 31.7.2012, wherein it has been observed under:
“Respondent arranged chemical testing of the damaged material. Chemical Test Report was filed by them. It is clear from the report that the fire due to self heating and spontaneous combustion is possible only if temperature reaches to 210 Celsius to 250 Celsius. Fire took place in the month of December. The factory is situated in Jaipur. A judicial notice can be taken of the fact that in North India the weather in December is very cold and temperature keeps also very low. In such temperature, loss due to self heating may not be possible. Surveyor failed to submit the charing point/degree at which the spontaneous combustion occurs in the different animal food articles which were stored in the godown/factory of the Respondent. On going through the analysis report of the surveyor, it may be seen that the godown of the Respondent was properly ventilated with ceiling height of upto 20 ft. and the stock was placed only upto 10 ft. which further rules out the theory of the spontaneous combustion. From the perusal of the analysis report showing oil contents, flash point, charing point etc. of different food samples supplied by the Respondent which had been stocked by it in its godown, it becomes amply clear that the cause of fire could not be spontaneous combustion as there was no room or occasion for temperature at such high degree in the godown.
Surveyor in his report has heavily relied upon the fact that the electricity cable at a height of about 20 ft. was found to be intact. From the report of the IO, it is evident that fire flames were visible only upto 2 ft. and hence there was absolutely no possibility of the fire damaging the electricity wire at 20 ft. Moreover, that cannot be the basis for jumping to the conclusion that it was a case of spontaneous combustion.
Surveyor in his report, has not said anything about the condition, degree/temperature etc., which could have caused so called spontaneous combustion and had arbitrarily jumped to the conclusion that there was spontaneous combustion.
Onus to show that the fire took place due to spontaneous combustion was on the Appellant which it has failed to prove by leading any evidence showing the condition, degree or temperature which could have led to the spontaneous combustion of the material stored in the factory of the Respondent. Only on the basis of the report submitted by the Surveyor which is self-contradictory it cannot be concluded that the fire h
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ad taken place due to spontaneous combustion.” 18. In view of the above discussions, we are of the opinion the reason of spontaneous combustion to repudiate the claim does not hold good. Further from the report of the Fire Officer, Ex.C-5 and the surveyor report it has been held that there was fire incident and loss of rice bran DOC has occurred. 19. Now the issue is to decide the amount of claim. The complainant has lodged a claim of Rs. 20,00,000 as per the claim Form placed as Ex.OPs-1&2/7 and also gave a detail of loss to the survey for Rs. 22,50,000 for 250 tones rice bran DOC @ Rs. 9,000 per ton. Whereas the surveyor in his report assessed loss for 200 tones rice bran DOC @ Rs. 9,000 per ton, as the rice bran DOC was packed in gunny bags and the weight of the bags was not standard which varied from 40 kg. to 50 kg. Net loss has been worked out Rs. 14,53,500 after deducting 15% salvage and less excess 5% as per policy terms and conditions which is in order. Therefore, we are of the opinion that the loss amounting to Rs. 14,53,500 is admissible to be paid by the opposite party-Insurance Company. 20. Sequel to the above discussions, the complaint is partly allowed against the opposite party No. 1-Insurance Company, whereas the complaint filed against opposite party No. 2 is dismissed. Opposite party No. 1 is directed as under: (i) to pay Rs. 14,53,500 an account of loss/damage to the rice bran DOC along with 8% interest from the date of repudiation of claim i.e. 9.3.2018 till realization; (ii) to pay Rs. 35,000 as compensation for harassment and mental agony as well as litigation expenses. 21. The opposite party No. 1-Insurance Company is directed to comply with the order within a period of 45 days from the date of receipt of the certified copy of the order. 22. Arguments in this case were heard on 31.8.2020 and the order was reserved. The certified copies of the order be communicated to the parties, as per rules. 23. The complaint could not be decided within the statutory period due to heavy pendency of court cases. Complaint partly allowed.