National Consumer Disputes Redressal
M/S. Garg Acrylics Ltd. vs United India Insurance Co. Ltd. on 3 March, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 224 OF 2015 1. M/S. GARG ACRYLICS LTD. ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. (THROUGH THE DEVISIONAL MANAGER)
DIVISIONAL OFFICE-III, GULMOR HOTEL BUILDING, FIROZPUR ROAD, LUDHIANA.,UNJAB. 2. M/s. Pioneer Urban Land & Infrastructe Ltd., Through its Managing Driector, Registered office A-22, 3rd Floor, Green Park, Aurobindo Marg, New Delhi - 110 016. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. SUBHASH CHANDRA,MEMBER
For the Complainant : Mr. Rohit Suri, Advocate
Ms. Geetika Kapur, Advocate For the Opp.Party : Mr. Ravi Bakshi, Advocate
Dated : 03 Mar 2023 ORDER
1.The present Complaint is filed under Section 21(a)(1) of the Consumer Protection Act, 1986.
2. The Complainant M/s Garg Acrylics Ltd. is a Public Limited Company, Registered Office at 209, M.G. House, Community Centre, Wazirpur Industrial Area, Delhi-52 having units at three places, including at Village Jiwan Singh Wala, Talwandi Saboo Road, Bathinda. The Complainant is engaged in the business of manufacture of Yarns and Garments. The unit at Village Jiwan Singh Wala, Talwandi Sabo Road, Bathinda, comprised of a production block and 4 godowns constructed in the rear. It was insured by the Opposite Party Insurance Company, vide Standard Fire & Special Perils Policy No.200900/11/12/11/00000388, from 03.07.2012 to 02.07.2013.
3. The case of the Complainant is that on 13.03.2013 at about 10:55 am, fire broke out in Godown No.2. Fire could be controlled by 7:35 p.m. on 15.03.2013. The Opposite Party/Insurance Company was informed of the fire incident, vide letter dated 13.03.2012. Police and Fire Departments were also informed immediately. The whole godown was completely gutted in the fire. The Complainant submitted claim form on 19.04.2013 for Rs.1391.27 lakhs and the cause of fire was stated to be "Possibility of accidental falling of cigarette/beddi abrasion and flash from steel trolley used for withdrawing cotton's bales".
4. The Opposite Party deputed M/s Cunningham Lindsey International Pvt. Ltd. as the Surveyor, who visited the site on 14.03.2013 and 15.03.2013. The Complainant stated that it supplied complete data with regard to the incident of fire as well as statement of eye witnesses, storage/stacking plan, system of stock accounting details, details of stocks etc. as sought by the Surveyor, vide letters dated 18.04.2013 and 07.05.2013. The Surveyor, vide letter dated 29.05.2013, was explained the abnormal increase in purchase trends, as well as, the waste generation at 21.88%. Further, raw cotton being seasonal in nature was procured during October to March every year and was stored to meet the production needs during the non-procurement season. The Surveyor, vide Final Survey Report dated 02.09.2013, assessed the loss at Rs.8,08,17,703/-. The Surveyor, however, observed that the fire was caused on account of extraneous ignitable fire such as Kerosene as indicated by the hydrocarbons detected in the burnt salvage collected.
5. Not satisfied with the Final Survey Report dated 02.09.2013, the Complainant sought expert opinion from M/s Premier Forensic Science Institute, New Delhi, who gave opinion on 28.09.2013. The report was sent to the Insurance Company, vide letter dated 07.10.2013, explaining the cause of fire as well as the reason for the abnormal purchase of stocks which was primarily seasonal in nature. After numerous exchange of correspondence between the Parties, the Opposite Party, vide e-mail dated 28.11.2014, repudiated the claim. Aggrieved by the repudiation of the claim, the Complainant filed the instant Consumer Complaint with the following prayer:-
"a. directions be issued to the OP for payment of the insurance claim of Rs.1391 lacs along with interest from the date of loss till payment @ 18% p.a., b. direct for the payment of the amount of Rs.8,08,51,702.86 as interim claim as assessed by the Surveyor.
c. direct the payment of damages to the extent of Rs.10,00,000/, on account of harassment, grave mental and physical tension and loss of time and money, d. the cost of litigation to the extent of Rs.2,00,000/- be awarded in favour of the complainant.
e. Any other relief which the Hon'ble Commission may deem fit in the facts and circumstances of the case."
6. The Opposite Party resisted the Complaint by filing reply stating that the Complaint does not disclose any cause of action against the Opposite Party. It was stated that on receipt of intimation of fire, the Opposite Party immediately deputed a Surveyor for assessment of loss. The Opposite Party, after thorough examination of the Final Survey Report, repudiated the claim on the ground that fire was caused on account of extraneous ignitable factor such as Kerosene, as indicated by the hydrocarbons detected in the burnt salvage collected. It was stated that the expert report submitted by the Complainant was unreliable.
7. The Complainant filed rejoinder to the reply filed by the Opposite Party stating that mere color of the smoke was no basis to conclude the presence of Hydrocarbon and repudiation of such a huge claim. It was stated that the Complainant deputed M/s Premier Forensic Science Institute to ascertain the cause of fire, who observed that the fire was totally accidental in nature and the loss was purely fortuitous and uncertain. The Opposite Party, thus, illegally repudiated the claim.
8. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Complainant submitted that repudiation of the claim on the ground that the fire was caused on account of extraneous ignitable source as kerosene was not justified. M/s Premier Forensic Science Institute, New Delhi 28.09.2013, vide report dated 28.09.2013, observed that burning of many substances like plastic, paint, polymer etc. may change the colour of smoke. It was also observed that the analysis did not indicate presence of kerosene at all. The Committee further observed that no person was seen coming out of the godown either in the CCTV footage or by any eye witness. It was not possible for any person to have disappeared in micro-second or seconds after setting the fire. Learned Counsel further submitted that the report submitted by M/s Truth Labs cannot be relied upon as the samples were taken 11 days after the incident of fire. The report itself indicated the extent of damage caused to the structure. The moisture in the cotton mills caused annealing of fire within the bales with generation of heat around each bale resulting in creation of an atmosphere surcharged with dry humid and hot condition within the godown. The report of M/s Truth Lab itself dispelled the factum of external accelerators and gave an indication as to the hot and humid temperature being an additional cause for fire. It was also evident that the experts could not reach every nook and corner to identify possible reason of fire as they found extensive damage. There was neither any independent finding nor observation of the Surveyor. The Report of the Surveyor is inconclusive and inconsequential as it does not specify the persons/experts, who visited the spot and collected the information. It was submitted that at high temperature, cotton being highly combustible in nature, is susceptible to catch fire very quickly on account of any catalyst or even on account of excessive heat so generated. Surveyor took over 20 days to carry out a preliminary assessment of the site and as such the salvage had been lying in the open to the vagaries of nature. The presence of external hydrocarbons due to fire tenders used for controlling fire as well as machine evacuation of the salvage cannot be ruled out. There is no conclusive finding by the Surveyor regarding cause of fire and as such the Surveyor had worked at the behest of the Opposite Party to avoid the liability. The roof as well as the rear wall had collapsed, there was surely presence of external factor at the time of collection of samples as the roof of the godown in question was painted and paint contains hydrocarbon. Bales of cotton, each weighing about 165 kgs were tied with synthetic as well as metallic strips. The synthetic material used for tying the bales are also made of hydrocarbon. They being highly combustible would emit smoke on burning. Also, samples taken from different parts of the godown were neither collected/sealed in the presence of any official of the Complainant Company nor were signatures affixed on samples. Further, the samples did not represent homogeneous collection of the huge quantity of material. It was submitted that the burden was on the Opposite Party Insurance Company to establish that the fire was caused by the Complainant intentionally, which they failed to do.
9. Learned Counsel for the Opposite Party submitted that the Complainant had made several claims in the past due to incidents of fire. Two claims were filed in 2006 for Rs.367 lakhs each. One claim was filed in 2009 for Rs.529 lakhs. M/s Truth Lab concluded that the fire was on account of extraneous ignitable fire accelerants such as kerosene as indicated by the hydrocarbons detected in the burnt debris collected. There was an abnormal increase of 478% in the purchase trend just before the incident of fire. The sudden high procurement of cotton, despite low order in hand, was unjustified. Four samples were collected from the godown of the Complainant for the purpose of quality assessment. As per quality analysis report of North Indian Textile Research Association (NITRA), two samples were found to be of inferior quality when compared to normal parameters. After thorough examination of various facts and circumstances as well as the Survey Report, the Opposite Party came to the conclusion that the claim was not payable. The expert opinion obtained by the Complainant from M/s Premier Forensic Science Institute was unreliable and was a tailored report to suit the claim of the Complainant. The Opposite Party followed the settled principles and procedure to assess the admissibility of the claim and was well within its right to consult experts before taking final decision in a claim involving huge amount and rightly repudiated the claim.
10. Facts of the case are that the Complainant purchased a 'Standard Fire and Special Perils Policy' from the Opposite Party valid from 03.07.2012 to 02.07.2013 for sum insured Rs.74,11,42,000/-. On 13.03.2013, at about 10:55 am the workers present at the site noticed fire in godown No.2. Entire godown was engulfed in the fire. The Opposite Party deputed M/s Cunningham Lindsay International Pvt. Ltd. as Surveyor, who assessed the loss at Rs.8,08,51,703/-, vide Final Survey Report on 02.09.2013. The Surveyor, however, observed that the amount was not payable as the cause of loss was not accidental. On the basis of the Survey Report, the Opposite Party repudiated the claim of the Complainant, vide letter dated 28.11.2014.
11. There is no dispute as to the occurrence of fire. It is also admitted that on the date of incident of fire, the Policy was valid. The Opposite Party repudiated the claim on the ground that fire occurred on account of extraneous ignitable fire accelerants such as kerosene, since there was presence of carbon atoms in the samples collected. On the other hand, M/s Premier Forensic Science Institute, deputed by the Complainant observed that the cause of fire was accidental. The Surveyor noted that as per record, there was no receipt of cotton bales on 13.03.2013 in the fire affected godown. The Surveyor appointed M/s Truth Labs, who vide report dated 13.06.2013 observed as follows: -
"1. When the godown was opened in the morning at 10:15 a.m. and inspected by Mr. Surjit Singh and Mr. H.S. Gill as a matter of routine, nothing untoward was reported by them. That shows no one could have entered before them and there were no indication of fire.
2. Suddenly smoke was detected at 10:52 A.M. from the hot air ventilators located at the ceiling level of godown no. 2 from the rear side as captured by camera no. 8.
3. For generation of smoke and emanation of smoke through the hot air ventilator, first of all an ignition of fire should have taken place followed by its initiation, burning of the raw materials, propagation of fire into flame which in turn could have generated smoke.
4. In a stimulated experiment conducted to determine the approximate time taken for such process to occur, smoke raising to a level of about 20 ft. from the ground level, after filling within the confined space, the minimum time required would not be less than 25 to 30 minutes.
5. That means fire could have been initiated at around 10:25 a.m. so as to convert into the stage of flames and smoke as noticed from the ventilator.
6. The detection of hydrocarbons in the burnt debris collected from three widely separated locations on the rear side of the godown where maximum effects of fire were noticed indicate that such a fire could have been initiated simultaneously from different locations suggesting multiple origins of fire.
7. The above fact is corroborated by CCTV camera no. 8 which recorded emanation of smoke initially from the comer ventilator of godown no. 2 near column no. 1 and later in between columns 2 and 3, 3 and 4 and 4 and 5.
8. The above facts further confirm the hypothesis that the actual initiation of fire was around 10:25 a.m. and passage of 25 minutes before its escalation to the ceiling level after it got filled around the hall and when once it reached the roof level it started leaking through the air passage ventilators.
9. Any initiation of fire on account of a spark possibly generated due to friction between two metallic straps would not lead to a major fire of this dimension in such a short period of 25 minutes as it has to first of all sustain, catch up, spread and then turn into a volatile burning media which all takes quite a long time. Hence, the possibility of fire emanating from the frictional sparks of metallic straps in a given time is ruled out.
10. In the event of fire to be possibly initiated by tossing of a lighted bidi or a cigarette butt by someone in the cotton bales, the process of propagation of heat and burn effects from the bidi or cigarette to the tightly packed cotton bales and conversion of such fire into red hot flame and spreading to the interiors of the bales so as to generate smoke, would take a substantial time as there was no free circulation of oxygen in the confined space. Hence, the possibility of initiation of fire due to a burning bidi or cigarette is ruled out from the standpoint that within 25 minutes the smoke would not have emanated, if it were initiated by bidi or cigarette butt.
11. There was no power supply into the godown to think of a possible electrical short circuit or other electrical related causes for initiation of fire.
12. There was no other chemical substances stored or chemical process activities undertaken in the godown which could have led to a chemical related fire or spontaneous combustion.
13. In the light of above exclusions and based on the detection of presence of ignitable fire accelerants such as kerosene in the burnt debris collected from the zone of origin of fire at all the three locations on the rear side of the godown from where smoke almost simultaneously erupted and emanated and was first noticed by the workers, it is concluded that fire was originated through human intervention.
14. Someone who could have stealthily brought ignitable fire accelerants soon after the routine morning inspection or the godown by the management at 10:15 a.m., should have poured the fire accelerant such as kerosene along the rear side of the godown and ignited the fire and quickly retreated from the godown by around 10:25 a.m.
15. In the remaining 25 minutes time, fire could have propagated within the cotton bales from multiple origins and after it started burning at the surface layers white smoke could have generated simultaneously and got filled all around the godown covering upto ceiling level and when the fire could not quickly propagate to the interiors of the bales due to smoldering effects, black smoke could have generated due to incomplete combustion which was observed by the workers and also recorded by the CCTV camera no. 8 subsequently.
CONCLUSION Based on the thorough and in-depth inspection of the incident of fire occurred in the raw material godown no.2 of M/s Grg Acrylic Ltd. located in Village Jiwan Singh Wala on Talwandi Sabo Road, Bhatinda, Punjab on 13th March, 2013 at about 10:55 a.m., followed by a series of forensic investigations, analysis of physical evidence, it is concluded that the incident of fire was, Not an account of someone tossing lighted cigarette or bidi in the godown Not on account of frictional sparks generated between two metallic straps used for baling the cotton bundles Not on account of electrical failure or chemical related incidents, and Was on account of extraneous ignitable fire accelerants such as kerosene as indicated by the hydrocarbons detected in the burnt debris collected."
12. From the above, it is clear that M/s Truth Lab had not given the exact cause of fire. Regarding cause of fire, in para-14 of the report, M/s Truth Lab had given the finding on conjecture and surmises to the effect that "someone who could have stealthily brought ignitable fire accelerants soon after the routine morning inspection or the godown by the management at 10:15 a.m., should have poured the fire accelerant such as kerosene along the rear side of the godown and ignited the fire and quickly retreated from the godown by around 10:25 a.m." Further, there is no evidence by way of CCTV footage that someone entered in the affected godown. Regarding the cause of fire, the Surveyor accepted the report of M/s Truth Lab in toto and had not given any independent finding. On the basis of the Survey Report, the Opposite Party repudiated the claim. In the repudiation letter, the Opposite Party also stated that the fire was caused intentionally. The Opposite Party had not produced any evidence whatsoever to establish that the fire was caused intentionally by the Complainant. Burden of proof was on the Opposite Party to establish the allegation of causing intentional fire, which they failed to do. On the other hand, Premier Forensic Science Institute deputed by the Complainant observed that the fire was accidental in nature. The findings of Premier Forensic Science Institute read as follows: -
"The smoke emanated (meaning originally started) from Godown No.2 from the top corner of the roof ceiling level at 10:52:08 AM indicated a single source of fire. Single source of fire is an indication of an accidental fire.
i. No one was seen coming out of the Godown either on the CCTV footage around that time or through any eye witness.
ii. No dead body was found in the Godown hence it is a clear case of an accidental fire.
iii. No person can make it possible that he disappears in microseconds or seconds after setting it on fire as he has to travel some distance from the starting point of fire up (corner of the Godown in this case) to the exit point on his own feet. No one has been noticed coming out of the Godown and no one can disappear also hence no person is involved.
Thus it is correctly concluded that-
a) The fire is accidental in nature.
b) No human being was set the building on fire as none was seen entering the Godown with any corner around that time.
c) No petroleum produce like kerosene is used for starting fire or any other inflammable material.
d) No container having kerosene was recovered from the Godown.
e) Nobody was seen coming out of the Godown around that time.
III. GC-MS Analysis:
Finding carbon atoms of different masses is a normal phenomenon. These carbon atoms can be generally constituents of several substances like:
a) Paints : Many items were painted everywhere in the Godown b) Plastic : Plastic strips were used in bales of cotton in Godown and plastic contains organic pllymers (Annexure-C). c) Polymers : They are hydrocarbons d) Alcohols, Thinners and some medicines.
Many other things when burnt will also turn into carbon, say wood and others (Annexure D). Carbon atoms can come from kerosene also provided presence of kerosene is established. On the contrary its absence has been established by the emanating smoke which was of white colour at the start of burning. Later on burning of various other substances may change colour of smoke which is expected."
The Opposite Party could not prove the exact cause of fire and that it was caused intentionally. The Opposite Party ruled out the theory of accidental fire but failed to produce any evidence to establish that the fire was caused by the Complainant themselves. Moreover, in the Survey Report it is nowhere mentioned that the fire was caused by the Complainants intentionally. As seen from the report of Premier Forensic Science Institute, no one was seen coming out of the Godown either on the CCTV footage around that time or through any eye witness. It was also observed that no person can disappear in microseconds or seconds after setting it on fire as he has to travel some distance from the starting point of fire up (corner of the Godown in this case) to the exit point on his own feet. No one has been noticed coming out of the Godown and no one can disappear so quickly. Regarding presence of carbon atoms, Premier Forensic Science Institute observed that presence of carbon atoms of different masses was a normal phenomenon. These carbon atoms can be generally constituents of several substances like paints, plastics, polymers, alcohol, thinners, several medicines, wood etc. In absence of any evidence to prove that the fire was set by the Complainant intentionally and keeping in view the report of Premier Forensic Science Institute, the argument of the Opposite Party that the fire was set by the Complainant intentionally is rejected and it is held that the fire was accidental in nature.
13. The Surveyor as well as the Opposite Party also raised dispute regarding purchase made by the Complainant. It was alleged that the Complainant made abnormal purchases. In this regard, the Complainant drew our attention to their letter dated 7th October, 2013 sent to the Opposite Party wherein they had clarified the purchases made by them. The same reads as follows: -
"ABNORMAL PURCHASE
i) The surveyor has indicated that we have made abnormal purchases, incidentally they are not familiar with the practices of this trade. This is normal in every spinning mill that the inventory is increased when the prices are lower and this continues for 6 months.
ii) The surveyors have tried to confuse the issue by showing the Trend/increase purchase pattern during January to March without corroborating the fact that this is a new plant and would require an inventory build up for an installed capacity of 60930 spindles. The surveyors have also mentioned in their report the increase in our installed capacity over a period of 9 moths.
iii) ... iv) This being a new plant we had extra capacity for storage and were accumulating stocks for the subsequent months. Moreover as explained above we had also increased our capacity over the last few months. We were also expecting an increase in prices in the coming months, which is also evident from our purchases made in the months post the loss."
From the above, it is clear that the Complainant has tried to explain that the inventory increase when prices are lower. In this regard, the Surveyor had given the price of cotton during April to September, 2012 as follows: -
Month Cotton Price/kg Apr-12 111.00 May-12 98.00 June-12 94.64 July-12 95.56 Aug-12 103.17 Sep-12 106.95 Average cotton price for April, 2012 to September, 2012 is Rs.101.5 per kg."
Similarly, the Surveyor had also given the cotton price during October, 2012 to March, 2013 as follows: -
Month Cotton Price/kg Oct-12 93.38 Nov-12 95.25 Dec-12 95.34 Jan-13 98.16 Feb-13 100.04 Mar-13 105.63 Mar-13 111.00 Average purchase price of cotton for the period Oct 12 - Mar 13 is Rs.99.83 per kg."
On the basis of the above, the Surveyor observed that there was not much difference in prices during seasonal and non-seasonal period and cotton was available in all months. Regarding capacity of utilization, the Surveyor observed as follows:-
"...the available capacity at Bathinda is not utilized to the extent of Ludhiana unit. While the capacity utilization of Ludhiana units range from 90% - 100%, this is much less in Bathinda unit. Therefore, question of increased consumption during with addition of capacity as contended by insured is not established."
The version of the Complainant that abnormal purchases were made expecting increase in price was rightly rejected by the Surveyor. The Surveyor also observed that the Complainant failed to establish the increased consumption of cotton.
The Surveyor assessed the loss to the stock at Rs.8,05,30,917.27 and loss to the building at Rs.45,76,138.38. The Surveyor, thus, assessed the net loss at Rs.8,08,51,702.86. The Surveyor had given detailed reasons and calculations for arriving at the aforesaid figure. The Complainant alleged that they suffered a loss of Rs.1,391/- lakhs. The Complainant failed to show that the assessment made by the Surveyor was not correct.
14. In view of the above, the Complaint is partly allowed. Opposite Party is directed to pay an amount of Rs.8,08,51,702.86 as assessed by the Surveyor with interest @ 9% p.a. from the date of filing the Complaint till date of actual payment. The order be complied in 8 weeks. There will be no order as to costs.
...................... C. VISWANATH PRESIDING MEMBER ...................... SUBHASH CHANDRA MEMBER