National Consumer Disputes Redressal
Cement Corporation Of India vs Icici Lombard General Insurance Co. ... on 16 July, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 210 OF 2009 1. CEMENT CORPORATION OF INDIA Having its Registered Office at Core - 5, Scope Complex, Lodhi Road New Delhi - 110 003 ...........Complainant(s) Versus 1. ICICI LOMBARD GENERAL INSURANCE CO. LTD. Birla Tower, 5th Floor, 25 Barakhamba Road New Delhi - 110 001 ...........Opp.Party(s) BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER
For the Complainant : Mr. Arvind Kumar Gupta, Advocate Mr. Anshul Garg, Advocate and Mr. Abhishek Goyal, Advocate For the Opp.Party : Mr. D. Varadarajan, Advocate Dated : 16 Jul 2015 ORDER JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant which is a Government company invited tender for insurance of its various Units/Dump/Offices etc. The tender submitted by the opposite party having been accepted, the contract was awarded to the said opposite party on 21.7.2006. Under the said contract, the opposite party insured Mandhar Cement Factory of the complainant at Mandhar in Chhattisgarh for the period from 17.10.2006 to 16.10.2007. In an incident of fire and theft which took place on 01.11.2006, the complainant suffered a loss of Rs.2,20,04,190/- for which a claim was lodged with the opposite party. The claim however, was rejected by the insurance company vide its letter dated 04.1.2008, on the ground that the proximate cause of the loss was burglary which was not covered under the policy. Being aggrieved from the rejection of the claim, the complainant is before this Commission, seeking payment of Rs.2,99,39,298.40 from the opposite party, which includes a sum of Rs.79,25,108/- towards interest.
2. The complaint has been resisted by the insurance company primarily on the ground that the theft which took place in the premises of the complainant having preceded fire, the incident of theft and not fire was the proximate cause of the loss caused to the complainant and since it was not one of the perils covered under the policy, the opposite party is not liable to reimburse the complainant. It is pointed out in the reply that the fire took place on account of attempted theft by use of blow lamp/portable gas cutters.
3. The insurance coverage taken by the complainant to the extent it is relevant reads as under:
"2.8 Insurance for stocks of stores and spares including fire, theft/burglary, RSMD and STFI
-do- for silent/closed units 0.10% 5% 0.095%
(b) -do- for operating units *0.19% 5% 0.1805% *Rate after 5% FEA discount on tariff rate of 0.2% 2.9 Fire & Allied Insurance inclusive of RSMD and STFI
a) -do- for silent/closed units 0.10% 5% 0.095%
b) -do- for operating units *0.19% 5% 0.1805% It would thus be seen that though the complainant had taken insurance cover inter-alia against theft/burglary in respect of the stocks, stores and spares, a Standard Fire & Allied Insurance inclusive of RSMD and SDFI but without coverage for theft/burglary was taken by the complainant in respect of silent/ closed units.
4. The circumstances and the cause of the loss sustained by the complainant as identified by the surveyor M/s. Cunningham Lindsey International Pvt. Ltd., reads as under:
"The present Risk at Mandhar is situated about 30 Kms. from Raipur which is closed for a decade now since 1996-97. However, a number of staff and security people are still o the company wage roll of this Silent Risk.
As reported at around 7 a.m. on 1st November, 2007, the incident took place inside the plant premises. In the Transformer Sl. No.24994 which had no electrical input/output power for last several years. The fire Brigade on receipt of the Call of Duty from the Insured's staff reached there and extinguished the fire, which was of a light nature due to the absence of combustibles viz. very little transformer oil was inside.
From local enquiries it was learnt that being a silent Risk there was a past history of theft of transformer oil and copper windings by local petty thieves and miscreants on several occasions, being a desolate place with thick bushy growth all around.
This fire incident was a result of attempted theft by blow lamp/portable gas cutters, who had on the previous night stole oil from another similar Transformer Sl. No.24993, which was not affected by the fire.
Transformer Sl. No. 24994 was reported to have been set on fire while some unknown miscreants/thieves were attempting to take away the copper windings with the help of blow torch or such type of flame cutters.
On inspection of the fire affected Transformer, the following physical observations were noted:
Only minor burnt marks were found inside the tank body and winding Cores The external and internal paint works were not noticeably damaged, as such the fire could be quite minor n nature There was evidence of cutting of copper coils (As evident from the enclosed photographs) There was hardly any oil inside the Tank".
It would thus be seen that the plant where the incident of fire and burglary took place had been closed and it was a silent risk since there was no electric input / output power in the said plant for several years. The report shows that on a previous night the burglars were able to commit theft of oil from the transformer No.24993, using blow lamp/portable gas cutters, though fortunately no fire took place on that date. It further shows that on the date of the incident in question, the transformer No.24993 caught fire when the burglars attempted to take away a copper winding of the said transformer using blow torch or some kind of flame cutter for this purpose. The surveyor found evidence of cutting of copper coils when they carried out the inspection and hardly any oil was left inside the tank of the transformer. In view of the report of the surveyor, it cannot be disputed that the incident of burglary had preceded the incident of fire. A perusal of the fire report submitted for the Fire Department of Municipal Corporation, Raipur would also show that the theft was the cause of the transformer catching fire. In any case, no other cause of fire has been alleged by the complainant. As noted earlier, burglary was not one of the perils got insured by the complainant as far as silent plants such as the Unit at Mandhar were concerned.
5. The next question which arises for consideration in this case is as to whether theft was the proximate cause of the loss to the complainant.
6. A similar issue came up for consideration of this Bench in Consumer Complaint No.83 of 2006 Krishnapatnam Port Company Ltd. Vs. United India Insurance Co. Ltd., and the following view was taken:
"Where the peril insured against which the loss is preceded by an excepted cause, the insurer would not be liable if the excepted cause can be regarded as the proximate cause. If the peril insured against is the reasonable and probable consequence directly and naturally resulting in the ordinary course of events from the excepted cause, the excepted cause is the cause of the loss within the meaning of the policy, since there is no break in the sequence of causes and the relation of cause and effect between the excepted cause and the loss is thereby established. It is not necessary for the excepted cause to remain in operation down to the loss; it is sufficient if it has started the chain of circumstances leading to the loss. However, if the sequence of causes if broken, the peril insured against being a fresh and independent cause whose connection with the excepted cause is only accidental and not causal, the cause of loss is the peril and not the excepted cause (General Principles of Insurance Law by E.R. Hardy Ivamy)."
In that case, though the loss to the complainant had taken place on account of Tsunami the Tsunami itself was caused by an earthquake, which was an excepted cause under the insurance policy. There was no break in the sequence of causes and Tsunami was caused directly by earthquake without being interrupted by a fresh and independent cause. It was therefore held that earthquake and not Tsunami was the proximate cause of the loss to the insured.
7. In New India Insurance Company Vs. Zuari Industries Ltd. & Ors. IV (2009) CPJ 19, SC, the complainant had taken an insurance policy covering the loss due to fire. A short circuit in the main switch board installed in the sub-station of the factory of the insured resulted in a flash over, producing over currents. The flash over and over-currents generated excessive heat. The paint on the panel board was charred due to excessive heat producing smoke and soot and the partition of the adjoining feeder developed a hole. The smoke/soot along with the ionized air travelled to the generator compartment where also there was short circuiting and the generator power also tripped. As a result the entire electric supply to the plant got stopped and due to stoppage of electric supply, the supply of water /steam to the waste heat boiler by the flue gasses at high temperature continued to be fed into the boiler and damaged the said boiler. The insured lodged a claim for the damage to the boiler and other equipment. The insurance company took the stand that the loss to the boiler and other equipment was not caused by fire but by the stoppage of the electric supply, due to short circuit in the switch board. According to the insurance company, it was thermal shock caused due to stoppage of electricity which had damaged the boiler and equipment and that was the proximate cause for the damage. The contention of the insurance company was that firstly there was no fire and secondly in any case, the fire was not the proximate cause of the damage. Dealing with the question as to what does proximate cause mean, the Hon'ble Supreme Court held that it is not the cause which is nearest in time or place but the active and efficient cause that sets in motion a chain or chain of events which brings about the ultimate result without the intervention of any other force working from an independent source. On facts it was held that fire was the efficient and active cause of the damage. Had the fire not occurred damage would also not have occurred and there was no intervening agency which was an independent source of damage.
8. In Inventa Chemicals Ltd. Vs. United India Insurance II (2004) CPJ 45 (NC), the insured had taken a fire policy from the insurance company in respect of his factory sheds, machinery etc. A fire broke out in the factory of the insured. As a result of the fire, the machine could not be operated and certain material got damaged. The insurance company took the stand that since the reactors were not damaged because of fire but because the electricity supply had to be disconnected in order to ensure that the fire does not spread to other portion, it was not liable to reimburse for the said loss. Rejecting the contention, it was held by this Commission that if electricity supply is disconnected because of fire then fire is the proximate cause for damage or destroying the stock which was in process in the reactors. The aforesaid decision also supports the stand taken by the insurance company.
9. In Tootal Broadhurst Lee & Co. Vs. London and Lancashire Fire Insurance Co. (1908) Times 21 May, (PC), an oil stove got overturned due to an earthquake causing the spilled oil to ignite. The burning oil set building to fire which engulfed another property at some distance. The insurer contended that the earthquake was the proximate cause of fire and the same being an excluded peril, refused to pay to the complainant. Holding that there was no break in the chain between the earthquake overturning the stove and destruction of the house of the plaintiff, it was held that the fire remained an "earthquake fire" regardless of time and distance.
10. Learned counsel for the complainant has referred to the decision of the Hon'ble Supreme Court in United India Insurance Co. Ltd. Vs. Pushpalaya Printers, AIR 2004 SC 1700. I however, find no such legal proposition in the above referred decision, which would be of any help to the complainant.
11. Since the proximate cause of the loss to the complainant was burglary and the insurance policy taken by the complainant did not cover the loss on account of burglary, it is not entitled to any reimbursement from the opposite party. The complaint is therefore dismissed without any order as to costs.
......................J V.K. JAIN PRESIDING MEMBER