National Consumer Disputes Redressal
M/S. Nirani Sugars Ltd. vs New India Insurance Co. Ltd. on 18 April, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 133 OF 2015 1. M/S. NIRANI SUGARS LTD. Survey No. 166, Jamkhandi Road, Kulali Cross, Mudhol, Bagalkot, Karnataka - 587 313 ...........Complainant(s) Versus 1. NEW INDIA INSURANCE CO. LTD. Divisional Office, Srinath Complex, 2nd Floor, New Cotton Marg, Hubli, Karnataka - 580 029. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. SUBHASH CHANDRA,MEMBER
For the Complainant : Mr. S. K. Pattjoshi, Senior Advocate with
Mr. Karan Khanuja, Advocate For the Opp.Party : Mr. C.K. Gola, Advocate
Dated : 18 April 2023 ORDER
1.The Complainant is a Public Limited Company engaged in the business of manufacturing of sugar at its unit located at Mudhol Taluq, District Balakot, Karnataka. The Complainant had taken Standard Fire and Special Perils Policies covering (i) the stock of baggase/bagas, etc kept in the factory premises (ii) stocks of sugars in godowns/in process/in yards and stocks of spares/packing materials/firewood, etc, and (iii) stocks of molasses kept in the factory/compound. The Policies did not cover spontaneous combustion. The Complainant had taken another Standard Fire and Special Perils Policy No.67070011120100000982 for the period 31.03.2013 to 30.03.2014 covering the stocks of Rs.10 crores due to spontaneous combustion, for which the Complainant paid additional premium. The Opposite Party made additional endorsement in the Policy regarding perils of spontaneous combustion.
2. Case of the Complainant is that on 20.04.2013 at about 11.30 pm it was observed that the molasses stored in the RCC storage tanks suffered spontaneous combustion followed by foaming and frothing and overflowing out of the tanks. The quantity of the affected molasses was 15,332.98 MT. The fire brigade was called and the Police was also informed of the incident. The Opposite Party was intimated of the loss, who deputed Surveyors M/s Integral Assessors, Hyderabad. The Complainant submitted all documents sought by the Surveyor and filed a claim on 28.05.2013 for Rs.919.98 lakhs towards loss of molasses and Rs.93 lakhs for damage of RCC tank. The Surveyor submitted Final Survey Report on 05.12.2013. On the basis of the Survey Report, the Opposite Party, vide letter dated 25.07.2014, repudiated the claim on the ground that (i) the location of the damaged molasses not being covered under the subject Policy and (ii) the spontaneous combustion not having led to ignition/fire does not fasten any liability upon the Insurer.
3. Alleging deficiency in service, the Complainant filed the instant Consumer Complaint seeking direction to the Opposite Party to pay the following:-
"(1) the aggregate principal sum of Rs.9.1998 crores, (2) the interest amounting to a sum of Rs.1,93,19,580/- till the date of the filing of the instant Complaint calculated at the prevailing commercial rate of 12% per annum from the d ate of the raising of the first Claim, namely 28.05.2013 and further interest at the same rate till the date of payment by the Opposite Party, (3) the cost of the instant proceedings and (4) the legal expense in the sum of Rs.22 lac incurred prior to and upon the institution of the instant proceedings.
Any other or further relief deemed fit and proper in the facts and circumstances of the instant case may also be granted in favour of the Complainant Company."
4. The Opposite Party resisted the Complaint by filing written statement on the ground that this Commission did not have jurisdiction to adjudicate as it involved complicated questions of facts and law and was triable by a Civil Court. The Complainant did not implead the Bank in the Complaint though it was a necessary Party. The Complaint was bad for non-joinder of necessary and proper party. It was also submitted that the Complainant was a commercial entity and the Insurance Policy purchased by the Complainant was for commercial purpose. The Complainant was, thus, not a Consumer under Section 2 (1) (d) of the Consumer Protection Act, 1986.
5. On merits, it was stated that the Complainant had taken Standard Fire and Special Perils Policy No.67070011110100001343, which was renewed with the same terms and conditions. After renewal, Policy No.67070011120100000982 was issued to the Complainant. On receiving the intimation of loss, the Opposite Party deputed Mr. B.S. Murthy to conduct the preliminary Survey and M/s Integral Assessors to conduct Final Survey. The Surveyor in its Final Report dated 05.12.2013 opined that the loss did not pertain to the molasses in the tank situated at R.S. No.165:1 and 165:2 located in the sugar factory but in the tank situated at R.S. No.19, which was about one kilometer away from the insured premises. The premises where incident had occurred was not covered under the Policy. Hence, the Opposite Party repudiated the claim. Opposite Party also relied on the judgment of Hon'ble Supreme Court in The Oriental Insurance Co. vs. Sony Cheriyan (1999) 6 SCC 451 and submitted that the Parties were bound by the terms & conditions of the Policy. It was stated that the additional cover was provided for fire damage only due to spontaneous combustion and not otherwise. The term "fire" for insurance purpose means actual ignition of burning under accidental or fortuitous circumstances. Spontaneous combustion is not accidental loss but an inevitable loss under certain circumstances. Further, spontaneous combustion results due to internal heating which takes place in certain substances like hay and coal etc. when stored in bulk. The Opposite Party had not committed any deficiency in service and the Complaint was liable to be dismissed.
6. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Senior Counsel for the Complainant submitted that it was pointed out to the Surveyor, with supporting evidence, that the sugar factory covered the entire complex including RCC Tanks storing the molasses and spontaneous combustion was an add on peril, for which additional premium was paid to the Opposite Party. Despite that the Opposite Party repudiated the claim stating that the location of the sugar factory situated at Sy. No.166 was covered under the Policy but the molasses stored in RCC Tanks situated at Sy. No.19 was not covered under the Policy. In the repudiation letter, the Opposite Party wrongly stated that spontaneous combustion without occurrence of fire was not a covered peril. Learned Counsel further submitted that it is a proposition of law that a Fire Insurance Policy covering spontaneous combustion is an additional peril, covers the loss resulting from the latter without occurrence of fumes and fire. The Opposite Party misinterpreted the term "factory." The factory covers the entire complex comprising sugar manufacturing unit, storage tanks, distillery unit, effluent handling equipments, etc. and the Opposite Party mala fidely observed that the location of the molasses in question was outside the sugar factory. Learned Counsel for the Complainant relied on the judgment of this Commission in New India Assurance Co. Ltd. vs. Taj Sugar Works & Ors. Decided on 13.08.2019 and Murli Agro Products Ltd. vs. Oriental Insurance Co. Ltd., Original Petition No.253 of 1999 decided on 10.12.2014 and submitted that in similar circumstances, this Commission had allowed the claim of the Complainants. Regarding location, learned Senior Counsel for the Complainant relied on the judgment of this Commission in Sona Poultry Farm vs. Canara Bank & Ors., First Appeal No.554 of 2013 decided on 30.01.2019.
7. Learned Counsel for the Opposite Party submitted that the Complainant was a commercial entity and the Policy taken by them was purely for commercial purpose. The Complainant was, therefore, not a Consumer under Section 2 (1) (d) of the Consumer Protection Act, 1986. Further, this Commission had no jurisdiction to adjudicate the Consumer Complaint as the dispute involved complicated questions of fact, which did not fall within the provisions of the Consumer Protection Act, 1986 and the matter was triable by the Civil Court.
The Financier Bank was a necessary Party, which the Complainant had not impleaded in the Complaint. The Complaint was bad for non-joinder of necessary and proper party. On this count also, the Complaint was liable to be dismissed.
8. On merits, Learned Counsel for the Opposite Party submitted that earlier the Complainant took Fire and Special Perils Policy No.670700/11/11110100001343 valid from 31.03.2012 to 30.03.2013 covering the risk of the location at Sugar Factory No.166, Jamkhandi Road, Kulali Cross, Mudhol District Bagalkot, Karnataka. The said Policy was renewed with the same terms & conditions. After renewal, Policy No.67070011120100000982 was issued from 31.03.2013 to 30.03.2014. The Surveyor deputed by the Opposite Party opined that the loss did not take place in the insured tank at R.S. No.165:1 and 165:2 of the sugar factory. The loss occurred in the tank situated at R.S. No.19 which was about one kilometer away from the insured premises. The tank where the loss occurred was, thus, not insured by the Opposite Party. The Opposite Party was not liable to honour the claim and rightly repudiated the claim.
9. Regarding maintainability, the Opposite Party alleged that the Complaint contained complicated facts and it cannot be adjudicated in a summary proceeding under Consumer Protection Act, 1986. Hon'ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd., Appeal (Civil) 7228 of 2001 observed as follows:
"It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved."
10. From the facts and circumstances of the case, it is seen that there are no complicated questions of facts and law involved in this case, which cannot be decided by this Commission. Moreover, as held above by Hon'ble Supreme Court, involvement of some questions of fact and law cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved. This Commission is, thus, competent to adjudicate the instant Consumer Complaints.
11. The Opposite Party also raised the issue of maintainability stating that the Policy was obtained by the Complainant for commercial purpose. The Complainant was, therefore, not a Consumer. This Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint is maintainable.
12. The Opposite Party also resisted the Complaint on the ground of non-joinder of necessary Party stating that the Complainant had not impleaded the financer Bank as a Party. We may mention that the Complainant had not raised any grievance against the financer Bank nor the Opposite Party made any allegation against the financer Bank. We find that the financer Bank is not a necessary Party and the Complaint is maintainable even without impleadment of financer Bank.
13. It was admitted that on the date of incident the Policy was valid. During the course of arguments, Learned Senior Counsel for the Complainant also admitted that there was no fire and the fire brigade was called because there was apprehension that spontaneous combustion and foaming might lead to fire. The dispute is whether the tank in which the loss occurred was insured or not and the cause of loss was covered under the Policy. Learned Counsel for the Opposite Party submitted that spontaneous combustion not having led to ignition/fire does not fasten any liability upon the Insurer. They relied on condition No.6 and quoted the same in the repudiation letter. The Complainant also relied on condition No.6 of the Policy, which reads as follows: -
"In consideration of the payment by the Insured to the company of additional premium of Rs.....the company agrees notwithstanding what is stated in the printed exclusions of this policy to the contrary that the insurance by (item.....of) this policy shall extended to include loss or damage by fire only of or to the property insured caused by its own fermentations, natural heating or spontaneous combustion.
N.B.: The expression 'by fire only' in the endorsement above must not be omitted under any circumstances..."
(emphasis supplied) In condition No.6 above, it is specifically and specially mentioned that the term "by fire only" must not be omitted under any circumstances, meaning thereby that the Insurance Company shall be liable when the loss or damage was caused by fire only. Learned Senior Counsel for the Complainant submitted that the Opposite Party misinterpreted condition No.6 of the Policy and wrongly repudiated the genuine claim of the Complainant.
14. The Court has to simply apply the terms and conditions of the contract and cannot rewrite or create a new contract between the Parties. Hon'ble Supreme Court in Shree Ambica Medical Stores & Ors. Vs. The Surat People's Cooperative Bank Limited & Ors, Civil Appeal No.562 of 2020 decided on 28.01.2020 held as follows:
"20. The Court while interpreting the contract of insurance must interpret the words of the contract by giving effect to the meaning and intent which emerges from the terms of the agreement. In a Constitution Bench decision of this Court in General Assurance Ltd. vs. Chandumull Jain it was observed thus:
11... In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however, reasonable, if the parties have not made it themselves...."
In the aforesaid judgment, Hon'ble Supreme Court held that the Court while interpreting the terms and conditions of the contract, cannot rewrite a contract. We are not inclined to agree with the judgments passed by co-ordinate Bench of this Commission in Murli Agro and Taj Sugar Works (supra), relied upon by Learned Senior Counsel for the Complainant as the Parties are strictly bound by the terms & conditions of the Policy. Condition No.6 of the Policy clearly stipulated that the expression "by fire only" must not be omitted under any circumstances. Hon'ble Supreme Court clearly held that the Courts cannot rewrite a contract. In the instant case, admittedly, there was no fire. The Opposite Party was, therefore, justified in repudiating the claim on the ground that there was no fire.
15. The Opposite Party repudiated the claim also on the ground that the location of the risk was not covered under the Policy. According to the Complainant they provided sufficient evidence to the Surveyor to prove that the sugar factory also included the distillery where the incident took place. On the other hand, the Opposite Party claimed that the loss was caused in the RCC Tank situated at R.S. No.19, which was different from the location mentioned in the Policy. Before submitting the Final Survey Report, the Surveyor sent letter dated 24.09.2013 and email dated 10.11.2013 requesting the Complainant to prove that the location of risk was covered under the Policy, but the Complainant failed to provide any evidence in this regard. The Surveyor, therefore, in the Final Survey Report, observed that the location of risk was not covered under the Policy. We have carefully gone through the Policy document as well as the proposal form. In both the documents, the address of the Insured is shown as "Factory No.166, Jamkhandi Road, Kulali Cross, Mudhol DT Bagai Kot, Katnataka 587313." Against the column of "Risk Location" it is written "As above." Similarly, in column 12 of the proposal forum the location of the insured property is shown as "Sugar factory." There was no mention of distillery anywhere. In the Policy, against the description of assets, it is clearly written as "stock of molasses kept in factory compound." In the Policy also there was no mention of distillery at all. It was admitted by the parties that molasses tanks were situated in the factory compound as well as in the distillery division. It was also admitted that distillery division was situated one kilometer away from the factory premises and that too in a different village. The Surveyor observed as follows:
"Given their physical proximity to the distillery division (R.S. 18), the affected RCC molasses tanks (R.S. No.19) can be deemed as an extension of the distillery and not a part of the far away (1km) sugar factory (at R.S. 152:2B to 168:1F) the assets of which make the insured property.
Since the loss does not pertain to the molasses in the tank situated at R.S. 165:1 and 165:2 in the sugar factory premises, the insured's claim on the damage of molasses in the tanks situated at R.S.19 adjacent to the compost yard of the distillery division have no locus standi under the said insurance policy and thus the insured cannot seek any benefits for the subject loss against the same."
In the Policy document as well as the Survey Report dated 05.12.2013, the address of the insured factory was Factory No.166, Jamkhandi Road, Kulali Cross, Mudhol DT Bagai Kot, Katnataka 587313. The tank wherein the loss due to fire occurred was situated one kilometer far from the insured factory. The Opposite Party repudiated the claim stating that the affected RCC Molasses tanks were situated at R.S. No.19 which was different from the location specified in the Policy. The Surveyor further observed as follows:-
"Moreover it can be seen in the "master Plan for 15000 TDC Sugar, 62, M.W. Co-Gen & 120 KLPD Distillery Division" approved by the President, Gram Panchayat Mudhol, as per Drawing No.NSL/Lay/101/11 (An-8B) that-
The sugar factory is situated in a contiguous area earmarked by various survey numbers ranging serially from 152: 2B to 168:1F with molasses tank at R.S. 165:1 and 165:2.
While the distillery division is situated at R.S. No.18, the adjunct composting yard, the ET Plant and the three affected RCC molasses tanks are situated at R.S. No.19.
Hence, read together:
The location of the affected RCC molasses tanks situated at R.S. No.19 is different from the situation of risk specified in the policy that is No.166, Jamkhandi Road, Kulali Cross, Mudhol-587313."
16. From the above it is clear that Sugar factory was situated in contiguous areas earmarked by Survey Nos. R.S. 165:1 and 165:2 and distillery division was situated at R.S. No.18. The Surveyor observed that the affected RCC molasses tanks situated at R.S. No.19 were different from the situation of risk specified in the Policy that is No.166, Jamkhandi Road, Kulali Cross, Mudhol-587313. The Surveyor reached to the aforesaid conclusion on the basis of the "master Plan for 15000 TDC Sugar, 62, M.W. Co-Gen & 120 KLPD Distillery Division" approved by the President, Gram Panchayat Mudhol. Admittedly, the fire occurred in R.S.No.19.
17. Further, the repudiation letter dated 25.07.2014, reads as follows: -
"(I) Location of the molasses damaged. It is evident from the standard fire and special perils policy no.67070011120100000982 valid from 31/03/2013 to 30/03/2014, which is a location specific Insurance cover, the location of the Sugar factory covered under the said Policy is situated at Sy. No.166, Jamkhandi Road, Kulali Cross, Mudhol, District Bagalkot, Karnataka-587313. It is expressly stated in the Policy that the stocks of molasses kept in Factory compound is covered against insured perils whilst lying at the above Insured's sugar factory.
We note from the master plan for 15,000/- TCD Sugar 62M.W.CO-GEN and 120 KLPD distillery division approved by the President, Gram Panchayat, Mudhol, as per drawing No.NSL/LAY/101/11 that
(a) The sugar factory is situated in a contiguous area earmarked by various survey numbers ranging serially from 152: 2B to 168:1F with molasses tank at R.S. 165:1 and 165:2.
(b) While the distillery division is situated at R.S. No.18, the adjunct composting yard, the ET Plant and the three affected RCC molasses tanks are situated at R.S. No.19.
18. The sugar factory was situated in a contiguous area earmarked by survey Nos.152:2B to 168: 1F with molasses tanks at R.S. 165:1 and 165:2. The distillery division was situated at R.S. No.18 and the three affected RCC molasses tanks were situated at R.S. No.19. Despite letter dated 24.09.2013 followed by email dated 10.11.2013 by the Surveyor, the Complainant failed to place any evidence to establish that RCC Tanks situated at R.S. No.19, where the loss occurred, was covered under the Policy. The Opposite Party was, therefore, justified in repudiating the claim on the ground that the place of incident i.e. Survey No.19 was not covered under the Policy. The judgment relied by learned Senior Counsel for the Complainant in Sona Poultry Farm (supra) is distinguishable on facts as in that case Policy was taken by the Bank on behalf of the Complainant and the Bank officials mentioned wrong address in the proposal form. In the instant case, there is no dispute relating to the address mentioned in the proposal form or the Insurance Policy. Repudiation of insurance claim on the ground that location where loss occurred was not insured, was justified. The Opposite Party cannot be said to be deficient in service.
19. In view of the foregoing discussion, the Consumer Complaint is dismissed. There will be no order as to costs.
...................... C. VISWANATH PRESIDING MEMBER ...................... SUBHASH CHANDRA MEMBER