State Consumer Disputes Redressal Commission
M/S Shree Balaji Industries, Plot ... vs 1.The Oriental Insurance Company Ltd. ... on 4 October, 2012
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, HARYANA, PANCHKULA Complaint No.52 of 2010 Date of Institution: 13.09.2010 Date of Decision: 04.10.2012 M/s Shree Balaji Industries, Plot No.53, 54, IDC Hisar Road, Rohtak through its General Power of Attorney Ajay Goyal. Complainant Versus 1. The Oriental Insurance Company Ltd. Jawahar Building Model Town, Delhi Road, Rohtak through its Divisional Manager. 2. The Oriental Insurance Company Ltd. LIC Building 2nd Floor, Jagadhri Road, Ambala Cantt through its Regional Manager. 3. The Oriental Insurance Company Ltd. Regd. Office Oriental House, Asif Ali Road, New Delhi. Opposite Parties BEFORE: Honble Mr. Justice R.S. Madan, President. Mr. B.M. Bedi, Judicial Member. For the Parties: Shri Rohit Goswami, Advocate appearing on behalf of Shri Nilesh Bhardwaj, Advocate for Complainant. Ms. Anamika Mehra, Advocate for Opposite Parties. O R D E R
Justice R.S. Madan, President:
The brief facts of the present case as stated by the complainant are that the complainant had started a factory at address plot No.53-54, I.D.C. Hisar Road, Rohtak under the name and style of M/s Shree Balaji Industries. The project of the complainant was regarding refining of black oil and for the above stated purpose on 25.04.2006, the complainant got the fire insurance done from the opposite party No.1 i.e. The Oriental Insurance Company Limited for rupees one crore which included the cover of Rs.40 lacs for plot and machinery which have to be used for refining the waster oil and Rs.60 lacs on the stock of all items including black used oil, light machine oil, vacuum oil, other type of oil, lubricants and old type of raw material used for making finished goods and semi-finished goods of all other similar nature being the property of insured. The fire provisional cover note bearing No.AMB-N0.167249 dated 25.04.2007 w.e.f. 26.04.2006 to 25.04.2007 covering all type of risks as mentioned above was issued by the opposite parties in favour of the complainant.
On 14.07.2006 fire broke out in the factory premises of the complainant, the information of which was given to the opposite parties. Fire Brigade had extinguished the fire. One Surinder Singla of Panipat, surveyor and loss assessor of the opposite parties-Insurance Company had inspected the factory premises and thereafter the investigation of the case was also got done from another surveyor. According to the complainant, the surveyor assessed the financial loss of the complainant to the extent of Rs.35 lacs. The above stated news was published in various newspapers.
As per the report of Chander Parkash-surveyor, at the time of Insurance Policy was purchased by the complainant, the machinery was under various stages or erections while its trial run had yet to be undertaken. The insured had not taken any erection insurance policy earlier. TAC vide letter Fire-40(20) dated 25.01.2006 had clarified that machinery under erection under Section IV (Industrial Unit) of AIFT was to be covered under engineering policy and by giving above said opinion, the surveyor opined that although occurrence is genuine but the said aspect may be considered. Thus, the cause of fire was shown as sudden failure of vacuum pump to maintain vacuum which caused ingress of fresh air (Oxygen) into the pump which when came in contact with super heated oil busted into a flame, causing fire to spread quickly to all machines/containers/vessels holding oil. However, the surveyor assessed the loss to the tune of Rs.22,83,256/-. According to the complainant, as stated in para No.10 of the complaint, under the heading 25 while doing summary of assessment, the assessed loss was shown to Rs.34,74,273/- and under heading 26 i.e. adjusted loss, the total was shown to be Rs.32,39,346/- while making the adjustment loss, the surveyor gave a finding that the case of the complainant may be considered for setting the claim accordingly subject to the policy of the terms and conditions and subject to the submission of copies of original invoice of equipment purchased from M/s Balaji Engg. Works, Jaipur and proof of payment of the bills. Under heading 27 which dealt with claim liability, the surveyor opined that the claim in his opinion is payable. Complainant has further stated that the surveyor opined that there was no breach of warranty of any kind on the part of the complainant even after taking all the precaution which would attract the policy exclusion as such. The opposite parties-Insurance Company thereafter deputed third surveyor namely S.P. Goyal to investigate the report in respect of loss due to fire at the premises. The complainant submitted claimed to the opposite parties but neither the opposite parties settled complainants claim nor repudiated the same and for that reason a legal notice through registered notice was sent on 20.05.2010 to the opposite parties but to no effect. Forced by these circumstances, alleging deficiency in service and unfair trade practice on the part of the opposite parties, the complainant filed complaint before this Commission seeking direction to the opposite parties to pay Rs.35 lacs to the complainant as insurable benefits as per the Insurance Policy issued by the opposite parties.
Upon notice, the opposite parties appeared and contested the complaint by filing written statement wherein they took the plea that the Insurance Company rightly repudiated the claim in March, 2010 due to the reason that the surveyor deputed for the assessment of loss attributed the fire to sudden failure of the vacuum pump, which caused ingress of fresh air (oxygen) into the pump, which when came in contact with surer heated oil burst in flames. Thus, the cause of loss is not covered under the policy. The opposite parties tendered repudiation letter dated March, 2010 as Annexure OP/1. It is further stated that condition -6(b) of standard fire and peril policy was not complied with by the complainant. The complainant had not taken any erection insurance policy earlier. TAC vide letter dated 25.01.2006 had clarified that the machinery under erection under Section IV of Industrial Unit of AIFT, was to be covered under engineering policy. The purchase bills for machines which affected in fire was obtained by insured after fire. Invoice No.15 dated 11.02.2007 and 16 dated 15.2.2007 were issued for Rs.1757600/- and Rs.1613040 respectively by Shree Balaji Engg Works in the name of Shri Balaji Industries Rohtak, Bill No.16 was not signed by Shree Balaji Engineering Works Jaipur. At the time of investigation, the complainant had not given any satisfactory answer to the investigator. The complainant could not provide the banks statements from which it could be clarify that the cheques were being cleared and the complainant also could not provide the investigator. Thus, denying any kind of deficiency in service and unfair trade practice, the opposite parties prayed for dismissal of the complaint.
Both the parties led evidence in support of their respective claims. Complainant tendered in evidence the affidavit of Ajay Goyal and documents Annexure C-1 to Annexure C-8.
Opposite Parties tendered affidavit of Shri Ramavtar, Deputy Manager, Oriental Insurance Company, Chandigarh; affidavit of Shri B.S. Negi, Regional Manager, OIC, Ambala alongwith documents Ex.OP-B to Ex.OP-H/1; affidavit of Shri Surinder Singla, Surveyor and Loss Assessor; Report submitted by Co; Chandra Prakash (Retd.) Surveyor and Loss Assessor Ex.OP-10 and affidavit of Chandra Prakas; Ex.OP-F report submitted by Royal Associates alongwith affidavit and affidavit of Shri S.P. Goyal, Surveyor and Loss Assessor Ex.OP-I. We have heard learned counsel for the parties and also perused the case file as well as the written arguments.
On behalf of the complainant it is contended that as the complainant had obtained the Insurance Policy from the opposite parties whereby all the risks including fire were covered and therefore the complainant is entitled to insurable benefits in view of the policy issued by the opposite parties.
On the other hand learned counsel for the opposite parties has argued that the claim of the complainant was rightly repudiated by the company as per condition 6 Clause b of standard fire and peril policy which was not complied with by the complainant. TAC vide letter Fire-40(20) dated 25.01.2006 had clarified that machinery under erection under Section IV (Industrial Unit) of AIFT was to be covered under engineering policy.
In our view the contention raised on behalf of the opposite parties is supported with the documentary evidence. It has come on the record by way of the report of Royal Associates, Surveyor and Loss Assessor that a factory was being set up by the complainant in partnership with Pardeep Jain, Shree Balaji Industries at Plot No.53-54, Hisar Road, Rohtak. The factory was on 2000 yards area. The building and land of the factory was on rent with them and they had the plan to refine black oil into refine oil. Processing of plant basic oil collection tank mixing Centro cattle heating at 100 degree Celsius (Vacuum 700 degree Celsius) vaporizing condense light clay treatment-filter collection bay. Vacuum collection tank. About 10 workers were working in the factory because the factory was on erection stage. There was no production and for production about 15 more workers were required. On 14.06.2006, 4-6 persons were working at factory for erection work according to their convenience. They were testing the machine. During this process of testing the machine, the Vacuum system failed due to excess heating as a result and machine caught fire. Thus, the sudden failure of vacuum pump to maintain vacuum heat caused ingress of fresh air (oxygen) into the pump when it came into contact with super heated oil and then busted into a flame causing fire which spread quickly to all machines/containers/vessels holding oil. As per the exclusion clause 2 and 6 the complainant is not entitled for the damages due to fire. Clause 2 and 6 are reproduced as under:-
2. Loss or damage to property occasioned by its own undergoing any heating or drying process was not covered by the Insurance Company.
6. Loss or damage to any electrical machine, apparatus, fixture or fitting (including electric fans, electric house-hold or domestic appliances, wireless sets, television sets and radios) or to any portion of the electrical installation arising from or occasioned by over running, excessive pressure, short circuiting, arcing, self-heating or leakage of electricity, from whatever cause (lightning included) provided that this exemption shall apply only to the particular electrical machine, apparatus, fixture, fittings, or portions of the electrical installation so affected and not to other machines, apparatus, fixture, fittings or portions of the electrical installation which may be destroyed or damaged by fire so set up.
In view of the above stated Exclusions, the complainant is not entitled for any damage or loss on account of fire due to heating of the machine which was started for the first time after its installation. In other words, the process of the machine was being tested. This fact finds support from the fact that at the time of fire about 10 workers were working in the factory because the factory was on erection stage and trial. There was no regular production because for regular production about 15 more workers were required for running the factory/machine. Meaning thereby, it was a testing process of the machine but due to overheating of vacuum system, the fire took place in machine which spread in the factory. Thus, in view of the terms and conditions of the Insurance Policy, the opposite parties cannot be held liable to pay any insurable benefits to the complainant because as per settled principle of law, the terms and conditions of the Insurance Policy have to be construed strictly. Reference in this regard may be made to case law cited as UNITED India INSURANCE CO. LTD. versus HARCHAND RAI CHANDAN LAL, (2004) 8 Supreme Court Cases 644, wherein Honble Supreme Court has observed as under:-
Held, the terms of the policy shall govern the contract between the parties and they have to abide by the definition given therein, and all those expressions appearing in the policy have to be construed as it is and something cannot be added, subtracted or substituted Similar view has been taken by the Honble Apex Court in case cited as Suraj Mal Ram Niwas Oil Mills (P) Ltd. Versus United India Insurance Co. Ltd and another, 2011 CTJ 11 (Supreme Court) (CP).
22. Before embarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance have to be strictly construed, and no exception can be made on the ground of equity.
24. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount important, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risk covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the court should always be to interpret the words in which the contract is expressed by the parties.
The facts and circumstances of the instant case are fully attracted to HARCHAND RAI CHANDAN LALs case (Supra) and Suraj Mal Ram Niwas Oil Mills (P) Ltd case (Supra). In this case it has come on the record that TAC vide letter Fire-40(20) dated 25.01.2006 had clarified that machinery under erection under Section IV (Industrial Unit) of AIFT was to be covered under engineering policy which was not taken by the complainant. Thus, in view of the facts and circumstances of the case, the opposite parties-The Oriental Insurance Company Limited cannot be held liable to pay any insurable benefits to the complainant. Hence, this complaint is dismissed with no order as to costs.
Announced: Justice R.S. Madan 04.10.2012 President B.M. Bedi Judicial Member