National Consumer Disputes Redressal
M/S Kota Dall Mill, vs United India Insurance Co. Ltd. & 3 Ors., on 5 January, 2016
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 305 OF 2014 1. M/s KOTA DALL MILL, Through its Partner, Shri Ajay Agarwal, Unit I:E-4(II), I.P.I.A., C-Block, Mutimetals Limited Compound, 6-7, Heavy Industrial Area, KOTA - 324003. ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & 3 ORS., Through its Chairman cum Managing Director, Regd. & Head Office: 24, Whites Road, CHENNAI - 600014. 2. Regional Manager, United India Insurance Company Limited, Regional Office: Sahara Chambers, Tonk Road, JAIPUR - 302015. 3. Divisional Manager, United India Insurance Company Limited, Divisional Office: 27, Floor No. 1, Jhalawar Road, KOTA - 324007. 4. Branch Manager, United India Insurance Company Limited, Branch Office II: Above Shimla Studio, Gumanpura, KOTA - 324001. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER
For the Complainant : Mr. Vizzy Agarwal, Advocate For the Opp.Party : Mr. Rajesh K. Gupta, Advocate
Dated : 05 Jan 2016 ORDER
Arguments have been heard for more than two hours.
The complainant took an insurance cover from the opposite party United India Insurance Company Limited to the extent of Rs. 5 crores w.e.f. 04:30 pm on 11.04.2011 in respect of jaggery lying and/stored in Chitresh Cold Storage, Baran Road, Borkhana, Kota. The insurance was valid for a period of six months. The case of the complainant is that loading of jaggery in the cold storage was completed at about 09:30 pm on 11.04.2011 and a fire broke out there at about 11:15 pm. Leakage of Ammonia gas is also alleged to have been noted. The matter was reported to the police as well as to the Fire Department. On intimation being given to the insurance company, one Sh. M.N. Chaturvedi was appointed as the preliminary surveyor on 12.04.2011 itself and after inspection, in the presence of the representative of the complainant, Chitresh Cold Storage Pvt. Ltd. and the insurance company, he drew a panchnama recording the eruption of a fire followed by an explosion. The premises of the cold storage where jaggery had been stored, was also inspected by a joint inspection team comprising (i) Dr. D.K. Choudhary, Deputy Inspector of Factories and Boilers, Kota (ii) Sh. Abdul Saleem, Deputy Director of Factories and Boilers (SMTC), Jaipur, and (iii) Sh. Hari Shanker, Inspector of Factories (Chemicals), Kota. The aforesaid joint inspection team submitted its report dated 25.04.2011 recording a finding that a fire had taken place due to electric short circuit, followed by an explosion and collapse of the chamber in which the jaggery had been stored. The police also submitted a final report dated 21.05.2011 reporting inter-alia about storage of jaggery, eruption of fire leading to explosion and collapse of the building of the cold storage.
2. The complainant lodged a claim of Rs. 1,51,17,919/-. The final surveyor appointed by the insurance company namely M/s. Protocol Surveyors & Engineers Pvt. Ltd., while computing the loss to the complainant at Rs. 1,24,46,540/-, ruled out any fire or explosion in the chamber where the jaggery had been stored. It was reported by the surveyor that the building of the cold storage, which was a weak structure, had collapsed due to overloading. Based upon the report of the final surveyor, the insurance company rejected the claim vide letter dated 27.08.2012 which, to the extent it is relevant, reads as under:
Please note that your file stands closed, on account of Sr. No. 1 and 3 below:-
Inspite of letters/reminders sent to you, you have not complied with the required papers/documents.
As you have withdrawn your claim by giving your consent through your letter dated ................ we are closing your claim file as NO CLAIM.
We are closing your claim file, on account of the following reasons:
The claim occurred is not covered under insured's Paril of Policy, hence your claim is repudiated.
3. Being aggrieved from the rejection of the claim, the complainant is before this Commission by way of this complaint seeking payment of Rs. 1,51,17,919/- alongwith interest and cost of litigation.
4. The complaint has been resisted by the insurance company primarily on the ground that it is barred by limitation and the loss to the complainant had not occurred on account of any fire. In fact the case of the insurance company in the reply is that no fire or explosion at all had taken place in the cold storage and the building had collapsed on account of its being weak having been temporarily repaired in a patch work manner, after a fire in the year 2005 and overloading of the said weak structure included storage of jaggery on the sixth floor of the cold storage.
5. It is not in dispute that the jaggery stored by the complainant in Chitresh Cold Storage was insured by the opposite party w.e.f. 04:30 pm on 11.04.2011. This is not the case of the insurance company that the loss to the complainant had occurred before the insurance policy was taken by it. Thus, the only questions which arise for consideration in this case are as to (i) whether any fire had broken out in the premises of Chitresh Cold Storage in the night of 11.04.2011, (2) whether there was any explosion in the aforesaid cold storage, (3) whether loss to the complainant took place on account of any fire and (4) to what amount, if any, the complainant is entitled from the insurance company.
6. The learned counsel for the complainant has drawn my attention to the FIR No. 243 of 2011 lodged at P.S. Udhyog Nagar, Kota City on 12.04.2011. The FIR was lodged by ASI Kalyan Singh Hada of Police Post Borkheda, P.S. Udhyog Nagar, Kota. In the FIR, he inter-alia stated that at about 11:15 pm, 2-3 persons came to the police post and informed him that gas was leaking near the power house, causing eye burns and suffocation, whereupon he came out of the police post and having himself experienced eye burns due to leakage of gas, he reached the cold storage alongwith Constables named in the FIR. When he reached near the cold storage, he found fire sparks coming from the cold storage. Then the building of the cold storage collapsed all of a sudden with a huge explosion as a result of which the debris fell on some persons who were rushed to the hospital. He further alleged in the FIR that the incident had occurred on account of poor maintenance and leakage of gas due to valves of the plant being weak. He also alleged that probably the building had collapsed on account of explosion caused by eruption of fire, leakage of gas and increase in temperature. He also stated that adequate firefighting equipments had not been kept in the cold storage and the cold storage management also had not made proper arrangement to control the fire. He also stated in the FIR that fire brigade which had reached the spot on being informed, had controlled the fire as well as the leakage of gas.
7. The complainant has also filed an affidavit of ASI Kalyan Singh Hada which to the extent it is relevant, reads as under:
That on arrival at the cold storage, I found that flames of fire were coming out of the cold storage and suddenly thereafter there was a loud explosion, following which a section of the building of the cold storage collapsed. The debris fell upon the hutments around the cold storage.
That immediately I, alongwith above named Constables and other people around, took the people out of the surrounding hutments. Information was given to the police station as well as police control room and fire brigade which arrived at the scene and controlled the gas and fire. The Electricity Department was also informed and the electricity of the area was cut-off. As many of people in the hutments had suffered injuries, they were sent to hospital in ambulance.
8. The English translation of the panchnama prepared by Sh. M.N. Chaturvedi, preliminary surveyor which is stated to have been signed not only by the representative of the cold storage but also by the representative of the insurance company, inter-alia reads as under:
The following signatories i.e. Kota-administration, Managers of the United India Insurance Company, owner and Managers of Chitresh Cold Storage, and Manager of Kota Dall Mill, have taken the following decisions with mutual consent, of which the panchnama has been prepared:-
On 11.04.2011 in the night at about 11:15 pm, due to sudden explosion on account of flames of fire, the building of Chitresh Cold Storage collapsed. Information was given at the fire brigade station and police control room. The fire brigade reached there and controlled the leakage of gas and the fire and the electricity connection was disconnected by informing the electricity department. The said incident of collapse of building took place due to explosion caused on account of fire because of some reason, leading to expansion of gas and increase in temperature. In the premise of the building that collapsed, the raw-sugar of M/s. Kota Dall Mill was stored in its every storey and the said raw-sugar is under the debris of the building and some bags are lying scattered outside.
9. The Fire Accident Certificate dated 11.08.2011, issued by the office of Fire Brigade Station Municipal Corporation, Kota to the extent it is relevant, reads as under:
This is to certify that M/s. Kota Dall Mill, 6-7 Large Industrial Area, Kansuva Road, Kota, Shri Ajay Agarwal S/o Late Sh. Manna Lal Agarwal, Resident of Bunglow No. 3, J.K. Colony, Kota, Police Station Udhyog Vihar, District Kota, caught fire on 11.04.2011 at 11:30 pm in Chamber No. 2 of its Chitresh Cold Storage, Baran Road, Borkheda, Kota, and the fire brigade vehicles No. RJ 20 EA 0066, RJ 20 EA 0031 and RJ 20 G 4189, were sent to extinguish the fire.
The cause of fire is said to be electric short circuit.
The loss on account of fire is said to be as per the survey.
Note: This certificate has been issued on the basis of affidavit and available record in the department.
Special: The fire brigade vehicles were sent at the spot on receipt of information with regard to the incident, and the vehicles shower the water on leakage of the gas. On account of sudden explosion, the building collapsed, which caused damage to the raw-sugar lying therein.
The English translation of the joint inspection report prepared by the officers of the Factories Department, to the extent it is relevant, reads as under:
The members of the joint enquiry committee have found during the enquiry that on 11.04.2011 during storage of raw sugar in chamber no. 2 in the night at about 09:30 pm, there was some electric short circuit and on account of which the bags of raw sugar, which were made of plastic, caught fire and thereafter, the raw sugar caught the fire. Raw sugar is a material based on carbohydrate and on account of its burning, it produced carbon monoxide gas and caused explosion and thereby the chamber no. 2 immediately collapsed. The Ammonia gas pipeline installed in chamber no. 2 also broke down due to the collapse and the Ammonia gas available in that pipeline also spread in the environment and in this way, the incident took place.
10. The surveyor, in his final report, inter-alia stated that no trace of any fire on any contents (jaggery or bag) or portion of the building could be noticed, which ruled out collapse of the building due to fire. In my view, considering the FIR lodged by ASI Kalyan Singh Hada, coupled with his affidavit by way of evidence, the report of Fire Department, the report of the joint inspection team of the Factories Department and the panchnama prepared with the consent and in the presence of the report of the insurance company, it would be very difficult to accept the report of the surveyor to the effect that there was no fire or explosion in the building in which jaggery had been stored. It has to be kept in mind that jaggery is an inflammable material, which on catching fire, will turn into a liquid & later solidify on becoming cool and therefore, the possibility of partially burnt jaggery not being available at the time of inspection by the surveyor cannot be altogether ruled out. On seeing the photographs forming part of the report of the surveyor, it cannot be said that a reasonable certainty that the salvage found by the surveyor at the spot did not include the molten jaggery which on becoming cold, solidifies. It has also to be kept in mind that the entire part of the building which was being used by storing jaggery, had collapsed on account of fire followed by explosion and therefore, there is a reasonable possibility of the tell-tale signs of the fire not being available at the time inspection was carried out by the surveyor. In any case, considering the overwhelming evidence produced by the complainant, originating from authentic sources such as local police, Fire Department, Factories Department and coupled with the panchnama prepared with the consent and in the presence of the report of the insurance company, it will not be safe to accept the report of the surveyor to the extent it ruled out any fire and/or any explosion in the building in which jaggery had been stored.
11. It would be seen from the FIR and the affidavit of ASI Kalyan Singh Hada that the fire had preceded an explosion and it was not the other way round. No cause of explosion has been given by the surveyor who rather took a view that there was no explosion at all in the building. The complainant has placed on record the report from Patel Engineering Associates who are designers and suppliers of cold storage and dairy plant etc. A perusal of the report dated 25.07.2014 would show that they had carried out inspection of Chitresh Cold Storage on the basis of the facts available in the survey report. They noted that the chamber in which jaggery had been stored was closed at about 9:30 pm and it had collapsed between 09:30 pm to 11:20 pm i.e. after about two hours of its closure. The expert examined the case to find out whether the chamber in which jaggery had been stored in HDPE bags of jaggery could collapse. They noted that jaggery is an unrefined sugar, which is a Carbohydrate consisting of Oxygen, Hydrogen and Carbon. Considering the total volume of the cold storage and the weight of the jaggery stored therein, they found that there was 1124 kgs Oxygen present in the chamber which could result in burning 1001 Kgs of sugar without leakage of air inside the chamber. They concluded that the heat generated by burning 1001 Kgs of sugar comes to 4540 degree centigrade and in practice, it would be 3000 degree centigrade since only 66% of the heat generated is converted to air whereas the remaining 34% is transferred to solid parts. The expert took the help of a Structural Engineer to understand as to how much pressure a cold storage can withstand. The expert found that air temperature of 600 degree centigrade in air-tight chamber can generate pressure of 2.14 Kg per sq. centimetre. The matter was referred to the Structural Engineer and Consultant Mr. Ashish Jain of Prime Art Architects (P) Ltd. to examine the effect of the air temperature of 600 degree centigrade that can generate approximately 2.14 Kg per sq. centimetres pressure inside the chamber. The Structural Engineer submitted his report opining that on application of the above temperature and pressure, the building could collapse. The expert thus found that even 20% of the Oxygen present in the atmosphere was sufficient to break the walls of the chamber. They concluded that burning of only 200 Kg of jaggery was sufficient to carry out blast in the chamber and as per the statement of the surveyor, 200 kg of material could easily burn within 1.5 hour period. The conclusion drawn by the expert reads as under:
1.Only 200 kg of jaggery and 20% of the total oxygen in the air-tight chamber is sufficient to increase the air temperature up to 600 degree centigrade and create a pressure up to 2.14 kg/cm2 in the chamber, which can result in collapse of building as per report of Structure Engineer.
2. 200 kg of jaggery can easily burn within 90 minutes as per the client's statement.
3. The structure element inside the chamber will be weak at 600 degree centigrade temperature, causing collapse of the structure as per the Structure Engineer's report.
4. The chamber is said to have been closed at 09:30 pm and the incident is said to have occurred at 11:20 pm. The intervening time of 110 minutes is enough as little as 200 kg of jaggery, leading to rise in air temperature up to 600 degree centigrade and thus creating a pressure up to 2.14 kg/ cm2 in the cold storage chamber, resulting in explosion/blast and consequent collapse of chamber.
The surveyor reported that during salvaging, almost complete stock had been realised. The jaggery, as noted earlier terms into liquid, if heated and later solidifies on becoming cool. Therefore, loss in its weight due to burning may not be substantiated. The learned counsel for the complainant however pointed out from the table given on page no. 24 of the report of the surveyor that the quantity found by him included 1701.20 kg being the weight of the damaged bardana (HDPE Bags) and 96.78 kg being weight of the packing material. If the above referred two figures are excluded from the total quantity of 21403.40 kg, the resultant quantity would be more than 19,000 quintals but less than 20,000 quintals. Therefore, it is evident that there could be burning of jaggery weighing more than 200 kgs.
12. It was vehemently contended by the learned counsel for the insurance company that the chamber in which jaggery had been stored had collapsed not because of any fire or explosion, but because of the structure having been repaired in a patch work manner and more than acceptable load having been stored in the said chamber. He also contended that jaggery should not have been stored in the sixth floor of the cold storage. However, there is absolutely no expert opinion available on record to prove that the structure of the cold storage building, as it stood on 11.04.2011, was weak to the extent that it could not have tolerated storage to the extent of 20725.62 quintals. In fact, no opinion from a Structural Engineer was taken either by the surveyor or by the insurance company. No Structural Engineer has been produced by the insurance company even before this Commission. On the other hand, the certificate dated 17.07.2014 issued by M/s. Prime Art Architects (P) Ltd. and the case study which forms part of the said certificate clearly shows that the structure was safe enough to bear the load of the stock the complainant had actually stored in the cold storage. The report of the Structure Engineer M/s. Prime Art Architects (P) Ltd. is based upon the drawings which were made available to them by the complainant and which were approved by Chief Inspector of Factories and Boilers, Jaipur, Rajasthan on 05.12.2008. The learned counsel for the insurance company submits that the complainant produced, before the Structure Engineer, the drawings which were prepared before a fire had broken out in the year 2005 and therefore, the report being based on pre-2005 drawings cannot be relied upon. I however find no merit in the contention. The drawing clearly shows that it has been approved by the Chief Inspector of Factories and Boilers, Jaipur, Rajasthan on 05.12.2008. Therefore, it cannot possibly be pre-2005 drawing of the structure.
13. The surveyor took some photographs of the adjoining structure of the same building which indicates repair work in the said portion. However, that by itself does not lead to the inference that the portion which collapsed in the incident on 11.04.2011 also had similar repairs undertaken therein. In any case, there is no evidence on record to show that the structure of the cold storage which collapsed on 11.04.2011, was not strong enough to tolerate the weight of the 20725.62 quintals of jaggery. The onus in my view was upon the insurance company to show that the structure was so weak that it could not have tolerated the stock stored therein, but no evidence to substantiate the said plea has been produced by the insurer. Moreover, the report of the surveyor is silent as to on what basis he concluded that the structure which collapsed on 11.04.2011 was so weak that it could not have carried the weight of the stock which the complainant had stored therein. In fact, the insurance company has not taken any opinion from a Structural Engineer even with respect to that part of the building which had not collapsed and in which repair work was found to have been undertaken by the owner of the cold storage.
Therefore, I find no merit in the case of the insurer that the chamber in which stock of jaggery had been stored by the complainant had collapsed due to its inherent weakness and excess stock having been stored and not on account of explosion caused by fire.
14. For the reasons stated hereinabove, I have no hesitation in holding that repudiation of the claim by the insurance company was wholly unjustified and untenable.
15. As regards the period of limitation is concerned, since the claim came to be rejected vide letter dated 27.08.2012 and the complaint was filed on 14.08.2014, it is well within time. The learned counsel for the insurance company submits that the period of limitation should be computed from the date on which the alleged loss took place and in support of his contention, he has placed reliance upon the decision of the Hon'ble Supreme Court in Kandimalla Raghavaiah & Co. Vs. National Insurance Co. & Anr. (2009) 7 SCC 768. A perusal of the above referred decision would show that in that case, there was no repudiation of the claim by the insurer. On the other hand, in the present case, the claim was expressly repudiated by the insurance company vide its letter dated 27.08.2012. Though the period of limitation for the purpose of consumer complaint has to be calculated in terms of Section 24A of the Consumer Protection Act, considering Article 44(b) of the Limitation Act, the cause of action in a case where the claim under the insurance policy is denied by the insurer, would commence from the date of such denial. Since the claim in this case came to be repudiated only on 27.08.2012, the cause of action in terms of Section 24A of the Consumer Protection Act commences only from that date and having been filed within two weeks from the date, the complaint is within the prescribed period of limitation.
16. As regards the quantum of compensation payable to the complainant, though the surveyor assessed the loss to the complainant at Rs. 1,24,46,540/-, two material deficiencies in the report of the surveyor have been pointed out by the learned counsel for the complainant. It has been pointed out that the value of the stored jaggery weighing 20725.62 quintals has been taken by the surveyor at Rs.4,51,89,656/- whereas it should have been Rs. 4,57,92,056/-. On a perusal of the report of the surveyor, I find that he has not rejected the valuation given by the complainant in respect of the jaggery stored in the cold storage. It appears that the surveyor somehow missed out the value of the 251 quintals of jaggery which the complainant had kept in the cold storage from its own stock. The said stock, as per annexure C-3 to the complaint, was transported to the cold storage in vehicle no. RJ-14-GB-4669. The surveyor did not reject the case of the complainant with respect to storage of 251 quintals of jaggery on 06.01.2011 from its own stock. If the value of 251 quintals of jaggery is taken into consideration, the total of the stored jaggery comes to Rs. 4,57,92,056/-.
The surveyor did not give handling charges of Rs. 980271/- to the complainant despite the fact that the said charges were incurred in minimizing the loss by salvaging the jaggery which was still available after the incident of fire, explosion and collapse. It appears that two bids were received by the complainant in respect of the salvage. The first bidder had agreed to bear the handling charges but later on he backed out and did not pay for the salvaging work. The bid then went to the second bidder who did not bear the salvaging charges. Since the second bidder did not bear the handling charges, the surveyor in my opinion, was wrong in not giving the handling charges to the complainant.
17. A perusal of the report of the surveyor indicates that he took value of the entire jaggery which had been stored in the cold storage primarily on the assumption that the entire stored jaggery had been salvaged. In fact, out of the total stored quantity of 20725.62 quintals, only 196.0952 quintals was recovered. Therefore, there was no justification for taking the value of the recovered stock at Rs. 3,28,00,849/-. It should have been taken at Rs. 3,08,26,231/-. After making deduction of Rs. 885910/- on account of realisation from the sale of damaged HDPE bags, the net amount payable to the complainant comes to Rs. 1,51,17,919/-.
18. For the reasons stated hereinabove, I hold that the complainant is entitled to recover Rs. 1,51,17,919/- from the opposite party. The claim was lodged on 18.08.2011 and it came to be rejected by the insurance company on 27.08.2012 i.e. after about one year of the date on which it was lodged. In my view, considering the guidelines issued by IRDA, the complainant is also entitled to interest w.e.f. 18.02.2012 i.e. w.e.f. six months from the date on which the claim was lodged with the insurance company. Considering all the facts and circumstances of the case, I am of the view that the insurance company should pay interest to the complainant @ 9% per annum.
19. For the reasons stated hereinabove, the opposite party is directed to pay Rs. 1,51,17,919/- to the complainant alongwith interest on that amount @ 9% per annum w.e.f. 18.02.2012 till the date on which the said amount is paid. However, in the facts and circumstances of the case, there shall be no order as to the cost of litigation.
......................J V.K. JAIN PRESIDING MEMBER