S.S. Satheesachandran – President
Complaint filed under section 17 of the Consumer Protection Act for short the “Act”.
2. Complainant is a private company engaged in manufacturing of coconut shell based steam activated carbon and its business is fully export oriented. Company had insured its stocks, machineries and buildings with opposite parties 1 to 3 Insurance Company covering risks of fire and peril taking a policy named Standard Fire and Special Perils policy and the period of insurance covered from 13.10.2008 to 12.10.2009. During the coverage period of policy, on 23.05.2009 a fire broke out in the godown of the company where raw materials of coconut shells were stored in sacs. The fire caused huge damage to raw materials and properties of Complainant and the fire and rescue service was summoned to put down the fire. According to the complainant, fire took place on account of electric short circuit and the extent of loss was estimated at Rs.37,55,600/- (Rs.Thirty seven lakhs fifty five thousand six hundred). Cause of fire as stated above was affirmed by police after investigation and also in the report submitted by Kerala Fire Force. Claim for insurance amount was not entertained and considered by the insurance company, upon which complainant engaged an insurance broker to pursue the claim. Insurance company had initially conducted a preliminary survey who after a hasty investigation wrongly concluded that the damage sustained to stock could be attributed to spontaneous combustion. Pursuant to objections raised to that report and prosecution of claim by the insurance broker engaged, insurance company carried out a detailed survey and assessment of loss by a competent surveyor, and after conducting investigation that surveyor filed a report stating that fire had originated from the electrical short circuit and that it was an insured peril. A sum of Rs.21,74,800/- (Rupees Twenty one lakh seventy four thousand eight hundred) was assessed by the surveyor as damages payable for the loss of raw materials in fire. Though the complainant had put forth a claim of Rs.37,55,600/- (Rs. Thirty seven thousand fifty five thousand six hundred) as loss from the damages caused by fire and also entitled to such amount it expressed willingness to limit and settle the claim approved by surveyors of the insurer. However the claim was not settled and thereupon complaint was filed for issue directions to opposite parties to settle the claim for a sum of Rs.21.74,870/-(Rupees Twenty one lakh seventy four thousand eight hundred) as approved by insurance surveyor with 12% interest from the date of lodging of claim with compensation of Rs.5,00,000/- (Rs.five lakhs) for injury and hardship suffered, Rs.2,00,000/- (Rs.Two lakhs) towards damages and expenses incurred in prosecuting the claim and Rs.15,000/- (Rs.fifteen thousand) as cost of the proceedings. Claims as above are raised against opposite parties 1 to 3 insurance company alone in the complaint in which 4th opposite party a bank which had provided financial assistance for operating the business of complainant has been impleaded as a proforma party.
3. Insurance company (Opposite parties 1 to 3) resisted the claim filing a version contending that the loss or damage to stock material of complainant in fire arose from spontaneous combustion, a peril which is specifically excluded in the policy. Immediately on reporting of fire and damages, insurance company deputed a surveyor who after conducting inspection filed a report stating that the fire arose from spontaneous combustion of raw materials, stock of charcoal stored. Claim put up by complainant was therefore repudiated, and, rejection of the claim, a peril excluded by the policy, was not a deficiency in service by insurance company.
4. 4th opposite party-bank against which no relief was claimed did not appear and contest the proceedings.
5. Evidence consisted of testimony of PW.1, Managing Director of complainant-Company and Exts.A1 to A24 for complainant and testimonies of DW.1 and DW.2 and Exts.B1 to B3 for insurance company. We heard the counsel on both sides.
6. The following points emerged for consideration
(1) Whether the fire that broke out in the godown of the complainant - company causing loss and damage to the raw materials stocked arose electric short circuit as claimed by complainant or by spontaneous combustion as contended by the insurance company?
(2) What, if any, is the compensation payable to the complainant in case the cause of fire is found to be from electric circuit as claimed by complainant and rejection of claim by insurance company is found unsustainable?
(3) Other reliefs, if any, and costs to be awarded?
7. Point No.(1):- A fire broke out in the godown of the complainant where raw materials of charcoal were stored on 23.5.2009 and the complainant suffered loss and damages in such fire is not disputed, though there is difference over the quantum of damages suffered. Complainant’s factory engaged in the manufacture of coconut shell based steam activated carbon with the stock of raw materials, machineries, buildings etc was covered by a policy issued by the insurance company under a Standard Fire and Special Peril policy and the fire occurred during the validity period of that policy. Whereas the complainant allege that the fire arose from electric short circuit in the godown where sacs of burned coconut shells were stored the insurance company contend that the fire broke out from spontaneous combustion of such raw materials and it was a peril excluded under the policy cover. So the crucial question involved in the case demanding determination is the cause of fire, whether it arose from electric short circuit or spontaneous combustion from raw materials stored.
8. Complainant relies on Ext.A15 police report in the crime registered over the fire occurrence, Ext.A7 report of electrical inspector and Ext.A16 survey report to substantiate its case that the fire in the godown arose from electric short circuit. Immediately after the fire occurrence recording the statement of Manager of the complainant/Company Ext.A2 crime was registered by police. Pursuant thereto the electrical inspector in the office of the Chief Electrical Inspector, Ernakulam conducted an inspection over the premises where the fire occurred and gave Ext.A7 report stating that electric short circuit caused by burning of aluminium armature cable drawn for wiring the tubelight in the godown where coconut charcoal in sacs were stored might have been the cause for fire occurrence. Basically relying upon and accepting the opinion given thereunder Ext.A7 report of electrical inspector, the police filed a final report in the crime before the court for closing the case. After conducting of a preliminary survey insurance company carried out a detailed further survey through its authorised surveyor and Ext.A16 is the report prepared by that surveyor ascertaining the cause of fire occurrence and also assessing loss and damages sustained. The surveyor who conducted and filed preliminary survey report immediately after the occurrence has opined that the fire occurrence arose from spontaneous combustion from the coconut shell charcoal stored in the godown. Differing from that view the surveyor who filed Ext.A16 report after conducting inspection and detailed survey has opined that none of the contributory factors necessary for spontaneous combustion was present in the premises where the coconut shells charcoal were stored in sacs and the short circuit in the cable leading to the tubelight close to sacs of charcoal might have caused the fire occurrence. Surveyor has assessed the loss and damages from the fire at Rs.21,74,870/- (Rs.Twenty one lakhs seventy four thousand and eight hundred and seventy) though the claim raised by complainant was for Rs.37,55,600/-. Complainant has limited its claim for the sum assessed by the surveyor but seeking in addition compensation and costs as stated in the complaint from insurance company on the basis of the above materials produced to establish its case that the fire in its godown arose from electric short circuit.
9. The insurance company heavily depends upon Ext.B1 preliminary survey report prepared by its surveyor soon after the occurrence, copy of which was produced and exhibited by complainant as Ext.A10, to contend that the fire arose from spontaneous combustion from coconut shell charcoal stored in sacs in the godown of the complainant company and it was a peril not indemnified under Ext.A1 insurance policy obtained by complainant company. The Insurance company also relies upon the first information statement recorded from Manager of complainant company which form part of Ext.A1 FIR in the crime registered over the fire occurrence to buttress its case that fire arose from spontaneous combustion from charcoal kept in the sacs by the complainant company.
10. Cardinal question involved in the case is whether the fire occurred by electric short circuit or from spontaneous combustion from the sacs of charcoal stored in the godown of the complainant company. If the cause of fire was due to spontaneous combustion from the stock stored, it is a peril not covered by the policy taken by complainant company is not disputed. However, learned counsel for complainant company assailing the repudiation of the claim by insurance company on the basis of preliminary report prepared by its surveyor contended that preliminary report has no value when a detailed report was prepared, that too by authorised surveyor of the insurance company at a later stage and a different opinion based on inspection and materials contradicting Ext.A10 report had been given affirming that the fire occurred through electric short circuit as opined by the competent authority electrical inspector after inspection of the premises. Electrical inspector is the most competent authority in a case of this nature to determine the cause of fire occurrence and its authoritative opinion, after inspection of the premises in the absence of convincing materials to hold otherwise has to be accepted and acted upon, according to the learned counsel. The police which investigated the crime registered over the crime, on the basis of the materials gathered, has rightly and correctly accepted the opinion of the electrical inspector and a final report was accordingly filed in the crime before court, is also canvassed by the counsel to urge that the repudiation of the claim by the insurance company based on the opinion of its surveyor who filed Ext.A10 preliminary report is not correct and acceptable. After preliminary report a competent surveyor approved by the insurance company at its instance carried out a detailed survey. The report filed by him with the opinion that the fire arose from electric short circuit is binding on the insurance company and it cannot discard that report and rely upon Ext.A10 report prepared earlier, which was only a preliminary report, is the further submission of the counsel for allowing the claim of the complainant as assessed in Ext.A16 report with compensation and costs.
We do not find much merit in the submissions made that the insurance company is bound by Ext.A16 report prepared by its surveyor and it cannot look into other circumstances including Ext.A10 report to form an objective view over the occurrence of fire, to decide the claim covered by the policy is allowed. No doubt a detailed survey report prepared by the approved surveyor of the insurance company deserves merit and consideration. But it cannot be stated that it is decisive and binding compelling a insurance company to accept that report as final and conclusive. Whatever be the circumstances militating against the acceptance of such report on materials available. First of all it has to be taken note of that Ext.A2 crime was registered recording the statement of the factory manager of the complainant company. His statement forming part of the FIR would show that he reached the factory getting information from shift supervisor that the coconut shell charcoal, approximately of 1000 tones, kept in the godown some how caught fire. He stated that usually coconut shell charcoal stored might produce fumes and heat and also of catching of fire as well, and the fire occurrence in the present case might have taken place accordingly. If that was the version of the factory manager of the complainant over the fire occurrence before police to register the crime what is revealed from A3 report of Station Officer, Fire Service, is more grave. In the fire occurrence report prepared by him he has stated that when electric welding work was done sparks from earth wire might have caused the fire and that about 350 tones of coconut shell charcoal, elevator and rotary sleev were burned in the occurrence. What was the basis or material on which the Station officer formed an inference that occurrence of fire arose from spark of earth wire while welding work was done is not borne out by any of the records produced nor any evidence tendered thereofby both sides. However, it is seen, the fire occurrence report was prepared by the station officer immediately after the occurrence based on inspection and information gathered by him to determine the cause of fire. It has got much probative value and it cannot be brushed aside unless the cause of fire is established otherwise by cogent evidence. Authorised surveyor of the insurance company immediately on getting information of fire and instruction of the company, visited the site and after conducting enquiry and inspection prepared Ext.A10 preliminary survey report. He has opined that there was no external source of ignition, and damage sustained to stock of coconut shell charcoal could be reasonably attributed to spontaneous combustion. The moisture content in the atmosphere due to onset of monsoon was high and that led to exothermic oxidation of coconut shell charcoal which had high volatile matter content and the heat so released if not decapitated, according to him, would lead to temporary increase of heat that can promote self heating process. We find the opinion given by the surveyor in Ext.A10 preliminary report to a large extent is supported by the version given by the factory manager of the complainant on whose statement Ext.A2 crime over the fire occurrence was registered.
While setting forth a case the fire that occurred on account of electric short circuit in the complaint it is stated thus :
“On 21.5.2009 and 22.5.2009 fumes were seen emanating from raw materials stored in the factory premises”
The fire occurred on 23.5.2009 and it caused huge damages to the raw materials and other properties of complainant is its case. From two days preceding the fire occurrence, it is seen, fumes were found emanating from raw materials, coconut shell charcoals, stored in the godown, is a material circumstance that has significant bearing in determining the cause for fire occurrence on 23.5.2009. Complainant has not stated anything nor produced any evidence as to what steps were taken when fumes were found emanating from stock materials atleast from two days previous to fire occurrence. Needless to point out that the fumes from coconut shell charcoal stored would have emanated only on production of heat caused by increase in temperature and, naturally, it might have produced considerable heat as well. Evidently, no step was taken by the complainant or its officials to find out the cause for the fumes coming up from the raw materials stocked nor to take preventive steps to avoid any mishap of fire occurrence.
11. Complainant relying on Ext.A7 report of the Electrical Inspector, Ext.A15 final report filed by police and Ext.A16 survey report seeks compensation from the insurance company for the damage caused in the fire occurrence asserting that the occurrence causing damage to its stock materials and properties arose from electric short circuit. Ext.A7 report is dated 23.06.2009. The references given in their report would show that such report was prepared on the basis of an application submitted by complainant on 26.05.2009 i.e. 3 days after the fire occurrence. The report would show that the next day inspection of the site was conducted by electrical inspector. A portion of the cable wire installed for providing electric connection to the tube fitted in the godown was found melted and that the factory manager stated that the coconut shell sacs had been kept stocked over the cable, which was found melted is the foundation on which the inspector formed an opinion that the fire probably might have been caused due to short circuit from the damaged portion of the cable under the sacs of coconut shells. Report of the electrical inspector and his opinion given as above, it is seen, are accepted by the police for filing Ext.A15 final report in the crime and also the surveyor of the insurance company for his A16 survey report. Even assuming that a portion of the electric cable was found melted in the inspection conducted by electrical inspector that has to be appreciated in the back trop of the admitted case of complainant that fumes were coming from the stock of coconut shell charcoals stored in the godown. Even the report of the electrical inspector would show such sacs were placed over the cable portion which was found melted. The damage to the portion of cable could have arisen from the heat produced by burning of coconut shell charcoals or even in the fire that later took place. Possibility of short circuit arising from 3 code armade cable installed for electric connection to the tubelights fitted in the godown without any external combustion is most unlikely and no inference in the facts and circumstances of the present case is possible solely on the basis of detection of a portion of the cable wire as melted to hold that the fire arose from electric short circuit. In this context it is also to be noted that the inspection by the electrical inspector was at the instance of complainant and not by police or by fire service authorities. Evidently complainant had no case of electric short circuit for fire occurrence before police or fire force. But later he approached the electrical inspectorate for an inspection of the site. The scene mahazar prepared by police immediately after registration of crime would have thrown much light in determining the cause for fire occurrence, but that was not produced. Ext.A7 report of Electrical Inspector solely based on detection of a portion of a cable installed for providing electric connection to the tube lights fitted in the godown was found melted and the statement purported to have been given by factory manager to electrical inspector that sacs of coconut shell charcoals had been stocked over the cable portion found melted cannot given much signifance or value. Ext.A15 police report does not show that the investigating agency ordered for any inspection of the site through electrical inspector. But accepting Ext.A7 report and giving an opinion that the occurrence of fire was from short circuit a closure report was filed in the crime. The said report is found unreliable and unacceptable. Ext.A15 final report filed without looking into other suspicious circumstances for the occurrence cannot have any value. In Ext.A16 survey report the surveyor has also mainly relied upon Ext.A7 report of the electrical inspector without adverting to or examining the other circumstances present in the case including the first information statement given by factory manager of complainant that such fire occurrence from the coconut shells stocked without any external combustion was an usual phenomina. The cause of damage determined by the surveyor who filed Ext.A7 report that there was no external source of ignition and it was a case of spontaneous combustion from coconut shell charcoals stored in the godown had been over ruled and discarded by the surveyor who filed Ext.A16 report expressing the view that only three possibilities could cause spontaneous combustion and in the present case none of the three possibilities was present when the fire commenced. It is seen that this surveyor has expressed such opinion proceeding with a view that the fire commenced in the early hours on 21st May, 2009, but, without expressing what was the basis to hold so when the fire occurrence took place only on 23rd. Evidently, statement of the factory manager that fumes were coming out from the stock of coconut shell charcoal atleast two days prior to fire occurrence, as given expression in his statement forming part of Ext.A2 F.I.R might have impres
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sed upon the surveyor to assume that the fire commenced in the early hours of 21st May, 2009. Though the surveyor has stated of the three possibilities which can cause spontaneous combustion in his report, it is seen, he has not looked into or examined the question whether coconut shell charcoals stocked could give rise to spontaneous combustion. Coconut shell charcoal is one of the most activated carbons with high adsorption capability. Adsorption is highly exothermic. It can adsorp any kind of gases including oxygen, moisture etc. It is well known that coal can ignite spontaneously when exposed to oxygen, which causes it to react and heat up when there is insufficient ventilation for cooling. Carbon based materials like coconut shell charcoal coming into contact with moisture may give rise to oxidation reaction and the possibility of ignition and heat and fire cannot be ruled out. Needless to say charcoal has a strong affinity for moisture, and large quantity of coconut shell charcoal approximately 1000 tones, it is seen, was stored in the godown of complainant. In Ext.A7 report the surveyor has stated if the onset of monsoon at the period of fire occurrence and probably, the presence of moisture had resulted in spontaneous combustion from charcoal. His opinion to a large extent is supported by the statement given by factory manager of complainant company before police. The defence set up by insurance company to repudiate the insurance claim of complainant that the fire occurrence was a peril arising from spontaneous combustion excluded under the policy cover in the facts and circumstances presented in the case deserve to be accepted. Preponderance of probabilities arising from the proved facts and circumstances of the case justify a conclusion that the fire occurrence which was preceded by fumes coming from stock of charcoal stored in godown from two days before was on account of spontaneous combustion and not by electric short circuit as set up by complainant to claim compensation from insurance company. Point is found accordingly. 12. Point Nos. (2) & (3):- In the light of the finding as above, these points do not arise for consideration. Points are found accordingly. In the result, complaint is dismissed directing both sides to suffer their costs.