National Consumer Disputes Redressal
New India Assurance Co. Ltd vs Bharat Oil & Animal Food Industry on 31 July, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO.20 of 2007 (From the Order dated 21.09.2006 in Complaint Case No.83/1993 of the State Consumer Disputes Redressal Commission, Rajasthan) New India Assurance Co. Ltd. Regional Office No.1, Level-V, Tower-II, Jeevan Bharti, 124, Connaught Circus, New Delhi-110001 .. Appellant Vs. Bharat Oil & Animal Food Industry F-791, Road No. 14, V.K.I.A, Jaipur ..Respondent BEFORE: - HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER For the Appellant : Mr. Sanjiv Sharma, Advocate For the Respondent : Mr. Manjeet Singh Bhamra and Ms. Nidhi Gupta, Advocates PRONOUNCED ON: 31.07.2012 O R D E R
ASHOK BHAN, J., PRESIDENT Appellant Insurance Company which was the Opposite Party before the State Commission has filed this Appeal against the order ..2..
and judgment dated Sept.21, 2006 passed by the State Consumer Disputes Redressal Commission, Rajasthan (in short, the State Commission) in Complaint Case No. 83/1993 whereby the State Commission upholding its earlier order dated Oct.9, 1995 allowed the complaint and directed the Appellant to pay a sum of Rs.3,75,102/- to the complainant along with interest @ 15% p.a. w.e.f. 1.5.92 till payment.
FACTS:-
Complainant/Respondent which was dealing in manufacturing of cattle feed, purchased three fire policies bearing Nos. 1133020-000116 for Rs.6,00,000/-; 113302-0000097 for Rs.5,00,000/- and cover note no.163513 for Rs.5,00,000/- from the Appellant Insurance Company for stock of raw material, goods, bardana, manufacturing of all types of pashu ahar and similar type of goods stored lying in the factory-cum-godown of the Respondent. On Dec.27, 1991 at about 8.00 A.M., a fire took place in the godown of the factory of the Complainant as a result of which the goods kept in the godown were burnt and damaged. On receiving the intimation, Appellant Insurance Company appointed Shri Rajeev Kumar Agarwal, Surveyor to assess the loss. The Surveyor submitted his report assessing the loss at ..3..
Rs.3,75,102/-
with a finding that the cause of fire was due to spontaneous combustion i.e. natural hearing. On the basis of the Surveyors report, the Appellant Insurance Company repudiated the claim lodged by the Respondent on the ground that the spontaneous combustion was not covered under the policies as per exclusion cause c of clause 6. Complainant, being aggrieved, filed the complaint before the State Commission.
Appellant, on being served, entered appearance and filed its written statement resisting the complaint mainly on the ground that the fire took place in the factory/godown of the Complainant due to spontaneous combustion i.e. natural heating and for that as per exclusion clause of clause 6 loss or damage to the property occasioned by its own fermentation, natural heating or spontaneous combustion or by its undergoing any heating or drying process could not be covered.
State Commission, after considering the facts, pleadings and evidence led by the parties, allowed the complaint and directed the Appellant Insurance Company to pay a sum of Rs.3,75,102/- to the Complainant as assessed by the Surveyor along with interest @ 15% from Feb.15, 1992 till payment.
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Appellant, being aggrieved, filed First Appeal No. 582/95 before this Commission.
After hearing the Ld. Counsel for the parties, this Commission vide order dated Sept.23, 2005 remanded the matter to the State Commission for decision afresh by observing as under:-
In this matter, the dispute relates to whether the fire, which took place in this matter, was as a result of spontaneous combustion or otherwise had not been decided on the basis of specific evidence led by the parties. In absence of specific evidence, question whether the fire was caused by ordinary fire or it was caused by spontaneous combustion not covered under the policy, cannot be decided. As such, it is required to be decided by allowing the parties to lead appropriate evidence and to examine the experts in case of necessity.
The Ld. State Commission, it appears, had decided the matter mainly on the ground that the OP/Appellant had not pleaded Exclusion Clause of spontaneous combustion as its defence to escape from the liability and still further it was also earlier observed that it was not already stated fire and alleged insurance policy were not produced.
Pursuant to the order dated Sept.23, 2005 passed by this Commission, appellant filed the policies in question and affidavit of expert, Shri B. Tayal, who had also given the survey report, before the State Commission. Respondent relied on the affidavit already filed ..5..
on record before the passing of the order by the State Commission. State Commission after referring to the meaning assigned to the word fire in the Strouds judicial dictionary in Vth Edition concluded as under:
This definition is very exhaustive in the manner that the word fire would include the state of combustion in which inflammable material burns, producing heat, flames and often smoke. Therefore, the word or term spontaneous combustion in the survey report dated Jan.29, 1992 cannot be construed to imply that there was no fire.
For the reasons it is held that the insurance company would not be entitled to take the benefit of the exclusion clause.
and allowed the complaint in the same terms and conditions on which it was allowed earlier.
Learned counsel appearing for the Appellant contends that the State Commission has passed the impugned order contrary to the directions given by this Commission. This Commission in its order of remand while holding that in the absence of specific evidence the question whether fire was caused due to some external reasons or by spontaneous combustion not covered under the policy, could not ..6..
be decided on the evidence present on record, remanded the matter back to the State Commission with a direction to decide the question afresh after allowing the parties to lead appropriate evidence and examining the experts in case of necessity. That the State Commission misconstrued the issue involved in the matter in holding that the term spontaneous combustion in the survey report dated Jan.29, 1992 cannot be construed to imply that there was no fire and the insurance company would not be entitled to take the benefit of the exclusion clause. That it was never the case of the Appellant that there was no fire. That the State Commission mis-understood the case presented by the Appellant. The case of the Appellant through-out was that there was a fire but the cause of fire was spontaneous combustion, i.e. natural heating. The contention of the Appellant was that the loss was caused by spontaneous combustion and, hence, such a damage or loss was excluded under the policy.
As against this, counsel for the respondent submits that the order passed by the State Commission is in consonance with the facts of the case as well as settled principles of law and as such no interference is called for. That the appellant rests its contentions upon ..7..
the self-contradictory, unsubstantiated, incomplete & factually incorrect inspection report dated Jan.29, 1992 in an attempt to invoke exclusion clause on account of spontaneous combustion. That the surveyor had deliberately failed to submit the charing point at which the spontaneous combustion occurs. That it was not a case of spontaneous combustion. The spontaneous combustion takes place if the temperature reaches 210 Celsius to 250 Celsius which was not the case. That the incident happened in the month of December early in the morning and at that time the temperature could not reach 210C to 250C ruling out the possibility of spontaneous combustion. That there is no intrinsic evidence to show that the fire took place because of spontaneous combustion.
Counsel for the parties have been heard at length.
We find substance in the submission made by the Learned Counsel for the Appellant to the effect that the State Commission has passed the order contrary to the direction issued by this Commission. The issue was as to what was the cause of fire and not that there was no fire. It is not disputed before us that there was fire but what was the cause of the fire was to be determined which the State Commission has failed to do. The State Commission by referring to ..8..
the meaning of the word fire as given in Strouds dictionary, concluded that the loss was caused due to fire and the insurance company would not be entitled to take the benefit of exclusion clause. As mentioned above, it was never the case of the Appellant that there was no fire. It was the case of the Appellant that the fire was caused due to spontaneous combustion and not that there was no fire.
After reaching this conclusion, option before us is either to remand the case to the State Commission for afresh decision or decide ourselves as to what was the cause of fire. Since this dispute is going on between the parties for the last 20 years as the fire had taken place in the year 1992 and the relevant evidence is already on record, we deem it appropriate to dispose of the appeal on merits ourselves.
The question, which falls for determination before us, is (a) whether the fire was occasioned by spontaneous combustion? (b) if the answer to the above question is in affirmative, whether the damage or loss occasioned by spontaneous combustion was excluded in the policy?
Copy of the policy has been put on record. Sub clause (c) of the exclusions clause of the policy reads as under:
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Loss or damage to the property occasioned by its own fermentation, natural heating or spontaneous combustion or by its undergoing any heating or drying process.
From the reading of this clause it is evident that loss or damage to the property occasioned by its own fermentation, natural heating or spontaneous combustion is excluded from the purview of the policy. Counsel for the Respondent very fairly conceded before us that the Respondent had not paid the additional premium to cover the loss or damage to the property due to spontaneous combustion, i.e. natural heating.
According to the Oxford Dictionary spontaneous combustion means:-
Spontaneous Combustion:- the ignition of organic matter without apparent cause, especially through heat generated internally by rapid oxidation.
Wikipedia defines the spontaneous combustion as under:-
Spontaneous combustion is a type of combustion which occurs by self heating (increase in temperature due to exothermic internal reactions), followed by thermal runaway (self heating which rapidly accelerates to high temperatures) and finally, ignition.
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Cause and ignition
1.
A substance with a relatively low ignition temperature (hay, straw, peat, etc.) begins to release heat. This may occur in several ways, usually oxidation by a little moisture and air, bacterial fermentation generates heat.
2. The heat is unable to escape (hay, straw, peat, etc. are good thermal insulators), and the temperature of the material rises.
3. The temperature of the material rises above its ignition point (even though much of the bacteria are destroyed by ignition temperatures).
4. Combustion begins if sufficient oxidizer, such as oxygen, & fuel are present to maintain the reaction into thermal run-away.
Affected materials Haystacks and compost piles may self-ignite because of heat produced by bacterial fermentation.
Linseed oil in a partially confined space (such as a pile of oil-soaked rags left out in an uncovered container) can oxidize leading to a buildup of heat and thus ignition.
Coal can spontaneously ignite when exposed to oxygen which causes it to react and heat up when there is insufficient ventilation for cooling.
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Pyrite oxidation is often the cause of coal spontaneous ignition in old Mine tailings.
Pistachio nuts are highly flammable when stored in large quantities, and are prone to self-heating and spontaneous combustion.
Large cow manure piles can spontaneously combust during conditions of extreme heat.
Cotton/Linen. when these materials come into contact with polyunsaturated vegetable oils(linseed, massage oils) bacteria slowly decompose the materials, producing heat. If these materials are stored in a way so the heat cannot escape, the heat build up increases the rate of decomposition and thus the rate of heat build up increases. Once ignition temperature is reached, combustion occurs with oxidizers present (oxygen).
In addition large areas of woodland, shrubland and grasslands during periods of dry hot weather are known to be capable of spontaneously combusting - though the mechanisms causing this are poorly understood. This has been proven to occur via the lifecycle of a variety of plants which require the area to be burned prior to germination.
People have also been reported as spontaneously combusting. This phenomenon is not considered true spontaneous combustion, as it is largely attributed to the wick effect, whereby an external source of fire ignites nearby flammable materials and human fat or to other sources.
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Learned counsel appearing for the appellant heavily relied upon the report of Shri B. Tayal, Chemical Engineer-cum-Licensed surveyor wherein he has concluded that the fire was generated among the stacks of oil cakes by way of spontaneous combustion. We have gone through the report as well as affidavit filed by B. Tayal. Shri B. Tayal, during the course of inspection, found that the bags of oil cakes had been stacked in the godown of the insured premises in the front as well as on both sides of the rear wall. The height of the stack was around 10 ft.. However, the height of the stack before the fire started was taken to be 15 ft.. That the affected godown had concentration of fire near the rear wall and in the middle portion of the hall. That the walls and the roof had no signs of fire. The walls and the roof were not found to be black either. The electric cables present in the room at a height of about 20 ft. were also found to be intact. He concluded that though the stock in the vicinity had been affected, the flames had not affected the upper parts of the walls, roof and the electrical cables. That on removal of the upper bags of oil cakes an attempt was made by the insured to remove the bags from the site of fire so as to protect the unburnt bags but the labour soon gave up owing to the heat present in the lower layers of the stacked bags and ..13..
the emission of pungent fumes therefrom. That on Jan.2, 1992, the stock from the place where there was concentration of burnt stock had been removed and the floor was found to have burn marks. Even on that day, when the upper layer of bags of oil cakes from the side stack was removed, the lower layers were found to be hot with layers at the bottom still smouldering. From the above noted observation the surveyor concluded as under:-
That it was evident from the afore-narrated physical observation of the site that the reported fire had emanated from the lower layer of the stacks of oil-cake bags and had traveled upwards. The central area near the rear wall, where there was no passage way, was worst affected by such fire. There was, thus, every indication that the fire that had affected the insured-stock was a result of internal heating or spontaneous combustion i.e. natural heating.
That there are certain items like coal, vegetable oils hay, quicklime, celluloid, vegetable fibers, fishmeal and oil bearing products like copra, groundnuts, vegetable cakes, etc., which exhibit the tendency of spontaneous combustion.
Fire broke out in the factory-godown on 27.12.91 at about 8.00 A.M. Soon after noticing the fire, Respondent informed the Police and the Fire Brigade. Fire Brigade and Police personnel with the help of inhabitants and employees controlled the fire. Respondent ..14..
immediately thereafter on the same day informed the officials of the Insurance Company about the fire whereupon the Insurance Company deputed Surveyor, Shri Rajeev K. Aggarwal for assessment of loss. Surveyor of the Insurance Company inspected the damaged material in the factory godown and instructed the Respondent to dispose of the damaged material.
Prior to the incident of fire, raw material, bardana and finished goods etc. kept in the factory premises were to the tune of Rs.14,91,339.79. Out of said stock, raw material was of Rs.11,67,172.69, bardana was of Rs.1,25,158/- and finished goods were of Rs.1,99,009.10. After incident of fire, raw material amounting to Rs.7,61,637.11 remained safe, bardana amounting to Rs.1,25,277.60 remained safe and finished goods worth Rs.1,99,040/- remained safe. According to the Respondent, material worth Rs.4,05,515.28 was damaged and gutted in the fire. The Stock Statement showing position prior to fire and after the fire was prepared and submitted by the Respondent to the Insurance Company.
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Description of the goods lost, number of bags, their weight, rate and value furnished by the Respondent is as under:-
S.No. Description Bags Weight Rate Value _______________________________________________________
1. D-oil rice on 2258 130964 151 1,97,755.64
2. Sun Flower D.O.C 804 47436 251 1,19,064.36
3. Tilli Papdi Khal 216 15876 378 60,011.28
4. Kapasia Khal 142 7171 400 28,684.00 Total 4,05,515.28 _______________________________________________________ Police Officer after carrying out investigation, in his report concluded that I reached to M/s. Bharat Oil and Animal Food Industry, Road No. 14, where the stock of animal food kept in godown was burning. Flames upto 2-2 ft. height could be seen. Fire brigade also reached for help. For extinguishing fire the fire brigade and police arranged water from the boring and fire could be controlled. Due to fire and due to use of the water for extinguishing the fire the bags of animal food damaged.
From the above report it is clear that there was fire and vigorous efforts were made to extinguish the same. Due to fire and use of water, stocks of material lying in the godown suffered heavy losses.
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Respondent arranged chemical testing of the damaged material. Chemical Test Report was filed by them. It is clear from the report that the fire due to self heating and spontaneous combustion is possible only if temperature reaches to 210 Celsius to 250 Celsius. Fire took place in the month of December. The factory is situated in Jaipur. A judicial notice can be taken of the fact that in North India the weather in December is very cold and temperature keeps also very low. In such temperature, loss due to self heating may not be possible. Surveyor failed to submit the charing point/degree at which the spontaneous combustion occurs in the different animal food articles which were stored in the godown/factory of the Respondent. On going through the analysis report of the surveyor, it may be seen that the godown of the Respondent was properly ventilated with ceiling height of upto 20 ft. and the stock was placed only upto 10 ft. which further rules out the theory of the spontaneous combustion. From the perusal of the analysis report showing oil contents, flash point, charing point etc. of different food samples supplied by the Respondent which had been stocked by it in its godown, it becomes amply clear that the cause of fire could not be spontaneous ..17..
combustion as there was no room or occasion for temperature at such high degree in the godown.
Surveyor in his report has heavily relied upon the fact that the electricity cable at a height of about 20 ft. was found to be intact. From the report of the IO, it is evident that fire flames were visible only upto 2 ft. and hence there was absolutely no possibility of the fire damaging the electricity wire at 20 ft.. Moreover, that cannot be the basis for jumping to the conclusion that it was a case of spontaneous combustion. Surveyor in his report, has not said anything about the condition, degree/temperature etc. which could have caused so called spontaneous combustion and had arbitrarily jumped to the conclusion that there was spontaneous combustion.
Onus to show that the fire took place due to spontaneous combustion was on the Appellant which it has failed to prove by leading any evidence showing the condition, degree or temperature which could have led to the spontaneous combustion of the material stored in the factory of the Respondent. Only on the basis of the report submitted by the Surveyor which is self-contradictory it cannot be concluded that the fire had taken place due to spontaneous combustion.
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For the reasons stated above, we do not find any merit in this appeal and dismiss the same with costs which are assessed at Rs.10,000/-.
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(ASHOK BHAN J.) PRESIDENT . . . . . . . . . . . . . . . .
(VINEETA RAI) MEMBER Yd