National Consumer Disputes Redressal
United India Insurance Co. Ltd. vs Dalas Biotech Limited on 8 April, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 2096 OF 2013 (Against the Order dated 06/03/2013 in Appeal No. 699/2012 of the State Commission Rajasthan) 1. UNITED INDIA INSURANCE CO. LTD. THROUGH ITS DULY CONSTITUTED ATTORNEY MANAGER, REG OFFICE AT, DELHI REGIONAL OFFICE-I 8TH FLOOR, KANCHENJUNGA BLDG, 18 BARAKHAMBA ROAD, NEW DELHI - 110001 ...........Petitioner(s) Versus 1. DALAS BIOTECH LIMITED THROUGH AUTHORIZED SIGNATORY, SH. PRITAM CHAND PALIWAL ,FINANCE MANAGER, E- 292 PHASE-I RIICO , INDUSTRIAL AREA, BHIWADI, ALWAR RAJASTHAN ...........Respondent(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER For the Petitioner : Mr. Abhishek Kumar Gola, Advocate For the Respondent : Mr. Ajay Kumar Jain, Advocate Dated : 08 Apr 2022 ORDER The present Revision Petition has been filed by the Petitioner/Opposite Party against order dated 06.03.2013 passed by the Rajasthan State Consumer Disputes Redressal Commission, Jaipur (for short "State Commission") in First Appeal No.699 of 2012.
Complainant had taken a Fire and Floater Special Perils Policy No.141701/11/09/13/00000205 for a sum insured of Rs.13 crores from the Opposite Party/Insurance Company, valid for the period 13.01.2010 to 12.01.2011. The Policy covered industrial manufacturing risk for chemical manufacturing (using material with flash point below 32 degree Celsius) and bulk drug manufacturing, stock of raw-materials stored at Insured's bulk drug manufacturing unit situated at E-292 Phase - 1 Bhiwadi and godown at SPA-503, Samtel Zone Bhiwadi Distt. Alwar, Rajasthan. According to the Complainant, on 10.07.2010 when the raw-material was being dispatched from the godown of the company to the manufacturing unit, one Can of Phosphorus Oxy Cloride (POCL3) which was being loaded in the truck fell and the chemical leaked out. Due to contact of the chemical with moisture in the atmosphere, chemical alongwith the insured goods got burnt and damaged. The Opposite Party was immediately informed about this incident and they appointed M/s Protocol Surveyors and Engineers Pvt. Ltd. to assess the loss. The Complainant produced all the necessary documents and filed a claim. The Surveyor estimated the loss at Rs.27,14,357/- and after deducting the salvage value of Rs.10 lakhs, actual loss was arrived at Rs.17,14,357/-. The Opposite Party wrongly repudiated the claim of the Complainant and hence Complaint was filed before the District Forum with the following prayer:-
"Hence submitting this complaint it is requested that the orders to be passed against the Opposite Party insurance company for payment of Rs.17,14,357/- for loss to the insured goods and Rs.2,00,000/- as compensation and Rs.25,000/- for cost of litigation to the complainant. The complainant is entitled to get this amount with interest from the date of survey report."
The Opposite Party resisted the Complaint on the ground that the District Forum had no right to hear the case as the total loss was Rs.35,65,133/-. The Complainant wrote a letter dated 26.10.2010 to the Opposite Party/Insurance Company in which the cause of loss was reported as spontaneous combustion, which was not covered under the Insurance Policy. The Complainant had not taken marine insurance of stock and hence the claim produced by the Complainant was rightly repudiated and there was no deficiency in service on their part. The District Forum after hearing both the Parties and perusing the record, ordered as follows:-
"Hence it is ordered that the opposite party insurance company within one month will pay to complainant the claim amount of Rs.17,14,357/- and for mental agony to the complainant Rs.3000/- will be paid. In this way total amount of Rs.17,17,357/- will be paid. If the said order is not complied within stipulated time period, the insurance company will pay interest on said award amount of Rs.17,17,357/- @ 15% from the date of award till payment."
Aggrieved by the order of the District Forum, the Opposite Party/Insurance Company filed Appeal before the State Commission.
The State Commission after hearing arguments of both Parties and carefully perusing the entire record and material available did not find any illegality or irregularity in the impugned order dated 19.04.2012 passed by the District Forum and dismissed the Appeal. The Insurance Company was further directed to pay additional amount of Rs.10000/- as cost of proceedings in the Appeal. Compliance of the order was to be made within one month. The Appellant was given liberty to withdraw the amount if any deposited by them before the District Forum.
Aggrieved by the order of the State Commission, the Petitioner/Insurance Company filed the present Revision Petition before this Commission under Section 21 of the Consumer Protection Act, 1986.
Learned Counsel for the Petitioner/Opposite Party submitted that the State Commission failed to appreciate that spontaneous combustion was excluded from Standard Fire and Special Perils Insurance Policy. The Respondent/Complainant had not opted for add on coverage with respect to spontaneous combustion. Learned Counsel submitted that the Chief Financial Officer of the Complainant had given a statement that "the fumes were generated due to own fermentation and spontaneous combustion and no fire was generated at the time of loss." It was also submitted that the Policy was not a marine cargo Policy hence the loss occurred during loading was not covered under the Policy. He further submitted that the interest @ 15% awarded by the State Commission was on the higher side. Learned Counsel relied on the judgment of Hon'ble Supreme Court in Oriental Insurance Co. vs. Sony Cheriyan (1999) 6 SCC 451 and submitted that the terms of the Insurance agreement have to be strictly construed to determine the extent of liability of the Insurer and the Insured cannot claim anything more than what is covered by the Insurance Policy.
Learned Counsel for the Respondent/Complainant submitted that there is concurrent finding of both the Fora below that the case of the Complainant was covered under the Policy. Incidentally the chemical can fell down and chemical after coming in contact with the atmosphere caught fire due to which the chemical and the insured goods loaded in the truck got damaged. The loss, thus, cannot be attributed to spontaneous combustion. It was also submitted that the Petitioner did not place on record any evidence to establish that the loss was due to spontaneous combustion. Learned Counsel further submitted that the Petitioner never supplied copy of the terms & conditions of the Insurance Policy, therefore, the same are not applicable in the present case.
Issuance of the Policy by the Insurance Company is admitted. It is also admitted that on the date of incident the Policy was valid. It is also undisputed that the Complainant suffered a loss of Rs.17,14,357/- as assessed by the Surveyor. The dispute between the Parties is whether the loss suffered by the Complainant was covered under the Policy. The liability of the Insurance Company under the Policy is as follows: -
"the company shall pay to the insured the value of property at the time of happening of its destruction or the amount of such damage or at its option reinstate or replace such property or any part thereof.
Fire : EXCLUDING DESTRUCTION OR DAMAGE CAUSED TO THE PROPERTY INSURED BY
a) 1) its own fermentation, natural hearing or spontaneous combustion.
2) Its undergoing any hearing or drying process
b) Burning of property insured by order of any public authority"
From the above, it is clear that the loss sustained due to spontaneous combustion falls under the exclusion clause. Case of the Complainant is that the loss/damage was caused due to sudden fall of a chemical can and not due to spontaneous combustion. In this regard, Surveyor's Report is relevant which reads as follows: -
"The Mishap Date: 10.07.2010 Time: 04:00 P.M. As per the statement of Insured (Annexure-VII), the following is the sequence of events leading to the said damage:
"On 10.07.2010 at about 04:00 P.M., we (at SPA - 503, Samtal Zone, Bhiwadi) were loading the raw material in a truck for GVNE batch no. - 237, 238, 239, 7AVCA 355, 356, 357, 358, Final 339, 340, 341 & Methyl Ester 338, 339, 340, 341 as per material issue notes received from E-292 (their manufacturing unit).
When the loading was complete, it was observed that one Can of Phosphorus Oxychloride (POCL 3) leaked and fume formed (POCL 3 is a solvent and is in liquid form. It is corrosive and hazardous and sensitive material which gets heavily fumed with contact of atmospheric moisture. The fumes of POCL 3 are so irritating that a human being cannot breathe/stand nearby without a cartrage mask. The fumes generate smoke and vapour and no fire is generated).
Due to leakage of POCL 3 all other material loaded in the truck were contaminated and spoiled.
The fumes of POCL 3 cannot be controlled by water but are controlled by throwing dry soil and sand on the chemical. That is why the fire brigade was not called. The fumes spread in the sky and the people residing nearby the premises reported the matter to the police. We brought one trolley of sand to site of loss and the fumes were brought under control by about 08:30 P.M. The fumes were generated due to own fermentation and spontaneous combustion and no fire was generated at the time of loss."
From the above, it is clear that at the time of loss the fumes were generated due to own fermentation and "spontaneous combustion" and no fire was generated. Mr. Vikram Singh, Chief Financial Officer of the Complainant also gave a statement to the Surveyor that the fumes were generated due to own fermentation and spontaneous combustion and no fire was generated at the time of loss. On the basis of the Survey Report, the Opposite Party/Insurance Company repudiated the claim of the Complainant, vide letter dated 13.03.2011, on the ground that the Policy did not cover loss due to Spontaneous Combustion, which was excluded from the Policy. The Complainant had not paid any additional premium to cover the loss of spontaneous combustion. The State Commission dismissed the Appeal of the Opposite Party/Insurance Company on the reasoning that "the dictionary meaning of spontaneous combustion is- "The bursting into flame of a mass of material as a result of chemical reactions within the substance, without the addition of heat from an external source." Thus it is amply clear that the spontaneous combustion is also a form of fire and it is not merely a chemical reaction. Many times, chemical reactions also result in fire and in the present matter, the fire took places as a result of chemical reaction due to fall of POCL 3 on the ground and its being coming in contact with the moisture of atmosphere. This chemical reaction resulted in fire and ultimately the truck in which the chemical was loaded was burnt with the goods. Thus, it appears that the Insurance Company, on a very hyper technical ground and in a very casual manner repudiated the claim of the complainant after taking huge premium from the complainant."
If spontaneous combustion was to be covered under the Policy, 'add on' cover ought to have been taken to cover the same by paying an extra premium. Spontaneous combustion is a form of fire but the same has been specifically excluded from the Policy only to be taken as an 'add on' cover by paying an extra premium. The Complainant having admitted that the fire was caused due to spontaneous combustion and having not taken 'add on' cover of spontaneous combustion, it certainly gets excluded from the Policy and hence howsoever was damage and loss caused, the Complainant/Insured, is not entitled to claim for the same under this Policy and the Insurance Company was well within its right to repudiate the claim arising out of the spontaneous combustion. The cause of fire was not electric short circuit or any other source and according to the Surveyor Report, there was no fire but only fumes due to spontaneous combustion at the time of loss.
All these aspects have been ignored/not dealt with by both the Fora below. The Hon'ble Supreme Court in the matter of Sony Cheriyan (supra) has clearly decided as under:-
"The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risk covered by the insurance policy, the terms of agreements have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy."
In view of the foregoing discussion, we hold that the Petitioner/Insurance Company was justified in repudiating the claim of the Complainant. The orders of both the Fora below are set aside, the Revision Petition is allowed and the Complaint dismissed. No order as to costs.
...................... C. VISWANATH PRESIDING MEMBER ......................J RAM SURAT RAM MAURYA MEMBER