National Consumer Disputes Redressal
M/S. Balram Bazari Sons Cold Storage ... vs Oriental Insurance Co. Ltd. on 7 December, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 17 OF 2002 1. M/S. BALRAM BAZARI SONS COLD STORAGE PVT. LTD. 1167 NARAICH,
HATHRAS ROAD AGRA - 282 006 ...........Complainant(s) Versus 1. ORIENTAL INSURANCE CO. LTD. HAVING ITS REGISTERED OFFICE AT ORIENTAL HOUSE,
A - 25/27 ASAF ALI ROAD NEW DELHI - 110 002 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE J.M. MALIK, PRESIDING MEMBER HON'BLE DR. S.M. KANTIKAR, MEMBER
For the Complainant : Mr. R. K. Kohli, Advocate with
Ms. Mamata Pal, Advocate For the Opp.Party : Mr. Ajay Singh, Advocate
Dated : 07 Dec 2015 ORDER
JUSTICE J. M. MALIK, PRESIDING MEMBER
1.The main controversy between the parties pivots around the question, "whether the loss caused to the complainant M/s Balram Bazari Sons Cold Storage Pvt. Ltd. was due to explosion or due to unstability of the structure.
2. The complainant Company owns a cold storage situated at 1167, Naraich, Hathras Road, Agra. All the three chambers of the Cold Storage of the Complainant are properly insured (under fire Policy "C", Machinery Insurance Policy and Deterioration of Stocks (Potatoes) in Cold Storage Insurance Policy) from the day of their commencement. Details about the three insurance covers are annexed as Annexure "A". Unfortunately, on 27.03.1999 at about 2-00 P.M. an explosion took place in the plant of the cold storage of the complainant company, causing extensive damage to machinery, plant, building, fixture and fittings and stocks of potatoes. Chamber No. 3 of the cold storage was completely destroyed. Deterioration of stocks (potatoes) in cold storage policy has always been seven months on account of seasonal business of potatoes in the year 1998. The period of such policy was 13th April 1998 to 12th November 1998. The complainant Company gave a cheque dated 26.03.1999 to Sh. Sanjay Aggarwal , the Development Officer of the OP on 26.03.1999 to obtain a "Deterioration of stocks (potatoes) in cold storage" w.e.f. 26.03.1999. 27.03.1999 was Saturday and the office of OP remained closed. The OP did not present the cheque to its Banker on that day. After the incident came to light on 27.03.1999, the OP did not forward the said cheque towards the premium for the Deterioration of Stocks (potatoes) in cold storage to the cashier for preparing receipt and for encashment. The cashier asked for illegal gratification in the sum of Rs.5,00,000/- for assuming risk of stock of potatoes damaged in the accident on 27.03.1999. The complainant Company did not oblige the Divisional Manager and consequently, the OP took the stand that since no premium was paid in advance, it was not on risk for deterioration of stock, and the claims of the complainant under Fire "C" cover note and Machinery Break Down cover note also would be dealt with on merits. The complainant reserved its right to initiate separate action for recovery of its claim under Deterioration of Stocks (Potatoes) in cold storage.
3. Sh. S.M. Dixit, Divisional Manager, Divisional Office II of the Opposite Party visited the site for self-assessment on 27.03.1999 itself. He again visited the spot on the next following day on 29.03.1999 alongwith Mr. D.K. Sharma, Surveyor for spot assessment. On 29.03.1999, one Sh. Gupta, Surveyor from Delhi, visited the spot, for survey and assessment of loss. No information/intimation was given to the complainant. On 02.04.1999, Sh. Dixit advised the complainant Company to carry out the repairs to the plant to save the stock in the other two chambers. At the request of Sh. Ashok Goyal, Director of the complainant Company, Sh. D.K. Sharma again visited the site of accident on 09.04.1999 and inspected Chamber Nos. 1 & 2 of the cold storage.
4. On 20.07.1999, the complainant was informed that the Insurance Company had appointed M/s Associated Surveyors and Consultants Pvt. Ltd. as the Surveyor and their representative would visit the cold storage for final survey. This information was given orally and on the insistence made by the complainant, the OP confirmed in writing the appointment of the said surveyor vide its letter dated 19.07.1999. The said letter was posted on 20.07.1999. Thereafter, the correspondence went on between the parties and the enquiry proceeded. The complainant company also supplied report of expert to the surveyor on 12.10.1999.
5. Vide letter dated 09.10.2001, the Insurance Company repudiated the claim. It gave the following reason:-
"On going through your claim file we have observed that as per Survey Report the loss is due to (a) faulty design (b) faulty construction (c) poor workmanship during the construction and (d) heavily overloaded. None of these is covered by the standard Fire Policy, therefore your claim is not payable."
6. It is alleged that the copy of the surveyor was not furnished to the complainant. The complainant protested the said repudiation. Ultimately, this complaint was filed before this Commission on 15.01.2002 with the following reliefs:-
"(a) Reimbursement by opposite party to the complainant-company of a sum of Rs.35 lakhs, under Fire "C" policy.
(b) Reimbursement by opposite party to the complainant-company of sum of Rs.12,80,000.00 under Machinery break-down policy.
(c ) Award of compensation to the complainant-company by opposite party by way of interest @ 18% per annum on Rs.47,80,000.00 from date of the loss till the date of filing this complaint, amounting to a sum of Rs.24,01,1950.00.
(d) Award of compensation to the complainant-company by opposite party by way of pendent-lite interest on Rs.47,80,000.00 @ 18% per annum from the date of filing of the complaint till the payment of Rs.47,80,000.00.
(e ) Award of compensation to the tune of Rs.2,00,000.00 on account of mental agony, harassment, humiliation and inconvenience caused to the complainant-company due to gross negligence of the opposite party in the discharge of its services.
(f) Award of a sum of Rs.20,000.00, being the cost for filing and pursuing this complaint".
DEFENCE
7. The Opposite Party has contested the present case. The OP admitted that it had issued the Insurance cover for all plants and machinery including insulation, fiberglass, furniture, fixture & fittings, which were installed at above cold storage premises for a sum of Rs.35,00,000.00 and on all plant & machinery including accessories as per list attached D.G. set, motors, compressors etc. installed or arranged in the cold storage premises for a sum of Rs.12,80,000.00.
8. It is stated that on the date of occurrence, the chamber 3 of the cold storage collapsed. It is stated that the surveyors visited the spot several times to survey, verify and assess the damages. A number of letters were sent to the complainant, which have been detailed in the reply and are annexed with the written statement as Annexure -1. The complainant has also provided the report of Dr. A.K. Saluja of Delhi Chapter of Ishrae of India Society of Heating, Refrigerating and Air Conditioning Engineers. Mr. Mahesh Chandra reported to the police that his brother Sh. Suresh Singh passed away due to collapse of the building. The cold storage was over-loaded. All the other allegations have been denied.
SUBMISSIONS AND FINDINGS
9. We have heard the counsel for the parties. Learned counsel for the complainant vehemently argued that the reports of the Surveyors are not reliable, as they are not the experts. They have made the report without any experience. He contends that the report of Dr. A.K. Saluja, Delhi Chapter of Ishrae of India Society of Heating, Refrigerating and Air Conditioning Engineers, who is the Professor and Head, Department of Training & Placement, Delhi College of Engineering, Kashmere Gate, Delhi towers amongst the rest. Its relevant extracts are noted here:-
"In one of the cold storages i.e. No. 3, accident occurred due to which the entire cold storage building smashed. I have gone through the details of the Refrigeration system and checked the liquid lines and bunkers. The accidented lines indicate the failures of the welded joints of the liquid lines (Photographs attached). In the liquid lines of Ammonia Refrigeration System, pressure is high (11.5 kgf/cm2 gauge) and due to failure of welded joints, there had been bursting of the lines, racks, bags, columns and finally the structure collapsed.
Regarding stability of the structure, I had involved my associate Sh. Pramod Adlakha, Chartered Engineer and Practicing Architect, the assessment and observations are as below:
The existing structure has 18" thick external Brick walls. The cold chamber hall of 75' x 105' has been divided into grids of 9'x6'. The RCC columns are placed @ 9'C/C in one direction and 6' in the other direction. The end columns are placed @ 7.6" C/C. The entire hall has been divided into 6 levels. The terrace slab is of R.C.C. with RCC beams of 8"x10" and slab thickness of 4". The external wall has a RCC tie beam concealed in the brick wall with 4-12 main bars. The tie beam is placed @ 8'6" height interval. This beam acts as a band".
The internal columns are of RCC 8"x8" with 4-16 main bars. The columns are tied with beams of 5"x5" in one direction and 4-10 main bars and 3"x6" steel gaider in the other direction. These beams are placed @ 8'6" height interval. The bags are stored in wooden platforms resting on these grid of beams".
"FAILURE OF STRUCTURE Due to explosion of the liquid Ammonia line of Refrigeration System, a portion of the brick wall below the first level of the beam gave way which created a trigger of collapse due to girder resting on brick wall bending downwards and in the next span bending upwards because of continuity effect. With the sagging of end beams, unbalancing of moments occurred at the junctions of columns. The load distribution factor increased at one row of columns leading to excessive loading and thus the failure of the structure.
The foundations have been checked and there is no settlement of foundation.
It is worth mentioning that the adjacent structures, built on the same design and principle are being used for the same purpose and are standing trouble free".
10. Counsel for the complainant submitted that the Surveyors appointed by the OP are not experts and are not the technical persons. Dr. A.K. Saluja also commented on the observations given by the M/s Associated Surveyors & Consultants Private Limited, in their report dated 07.09.2001, which runs as follows:-
"7.2.12 (a) The Condensing bunkers are installed inside the Cold storage and not outside the cold storage.
(b) Ammonia is a high pressure refrigerant and due to the failure of the welded joint the intensity of the explosion was so high to create a hazard to such an extent that a portion of the brick wall below the first level of the beam collapsed and one after, the other the structure and finally the entire building collapsed.
d) (i)The pipe lines were found to be damaged due to external impact of the collapsing structure and bursting was due to the failure of welded joints and not of the pipe lines.
(d)(ii) The accident was never due to bursting of the pipes and hence "HOOP STRESS" and 'LONGITUDINAL STRESS" do not come into the picture. These stresses pertain to circumferential and longitudinal forces and the pipe lines used are of sufficient wall thickness to take care of them.
(d)(iii) As some welded joints failed, the question of operating the safety valve does not arise.
7.2.13 This explosion due to failure of the welded joints had been the only cause of loss.
7.2.14 The idea that the building collapsed due to reasons like Faulty Design, construction, poor workmanship or poor material is baseless in view of my associates Shri Pramod Adlakha; Chartered Engineer and Practising Architect".
11. All these arguments have left no impression upon us. The entire record should be read holistically. By no stretch of imagination, it can be said that the surveyors appointed by the OP are not the experts/technical persons. Sh. Dhanesh Kumar Sharma visited the spot immediately on the next day of the incident and gave the following report. Para No. 7 of the report runs as follows:-
"7. Cause of Damage:
However, the exact cause of damage could not be known and ascertained, but keeping in view the situation and the damages sustained, the loss might have been caused due to structural failure of the chamber on account of overloading and construction fault. The overloading of potato bags can be seen in photographs. There were 7 stags of bags in one row.
There were 3 chambers of 11,783 cu.m. capacity of I & II and 3rd chamber was 11,148.36 cu.m. capacity. The total capacity was 36,714.36 cu.m.
The two chambers 1st and 2nd were built earlier and 3rd chamber was constructed recently, in which the incident happened. On extensive inspection, it was found that there was no cross beam provided in between the chamber walls of 2nd and 3rd, which was clearly visible in the photographs also, so that load sharing can be distributed".
He further observed:-
" xxxxxxxx But at every time he was un-cooperative and did not submit any relevant paper, in spite of repeated requests, so that the exact information can be collected. Finally, he refused for entering into the Cold Storage, by which no possible records and information could be collected".
12. It may be mentioned here that Sh. Dhanesh Kumar Sharma is an Electrical Engineer, Associated Surveyor & Loss Assessor. By no stretch of imagination, it can be held that he is not an expert. The entire case swirls around the question of electricity and construction of building. There cannot be a better expert than Mr. Dhanesh Kumar Sharma. Furthermore, he appears to be a guileless witness.
13. Again, Associated Surveyors and Consultants Pvt. Ltd. are Surveyors, Chartered Accountants, Loss Assessors and Investigators. They visited the premises first time on 29.03.1999 and subsequently. The report of the final surveyor dated 07.09.2001 clearly mentions:-
"7.1.10 In the evening on the same day (27.03.99) one framer namely Sh. Mahesh Chander S/o Sh. Ramcharan Singh R/o Garhi Daher (Police Station Bahan, Distt. Agra) lodged FIR at police station Khandoli (Agra) vide case no. 34/99 Dt. 27.03.99 vide which he complained about the death of his brother Suresh due to burying in debris of collapsed chamber of the cold store of Balram Bazari Sons Cold Storage (P) Ltd. As per him, this happened due to overloading of the storage chamber by storing potatoes beyond its capacity and further due to use of poor quality construction materials in its construction.
7.1.11 Next day an inspection was also carried out by The District Horticulture Officer, Agra, Mr. V.R. Verma and after inspection he also registered a FIR at police station Khandoli (Agra) vide case No. 35/99 vide which The District Horticulture Officer found M/s Balram Bazari Sons Cold Storage (P) Ltd. guilty on several accounts under various clauses of Cold Stores Act '1976".
The complainant could not rebut this piece of evidence. It did not pick up a conflict with all these allegations. It was very easy to produce Sh. Mahesh Chandra or his affidavit to scrub the charge against it. He could have thrown light on the incident whether it occurred due to explosion or due to instability of the building.
14. We are unable to pin any reliance on the report of Dr. A.K. Saluja. He visited the premises on 31.07.1999 after a considerable delay. The spot changes after every moment. Moreover, he mentioned the name of Sh. Pramod Adlakha, Chartered Engineer and Practicing Architect. However, his affidavit did not see the light of the day. Sh. A.K. Saluja has taken photographs of the premises in dispute which make neither head nor tail. Two pipes are lying in the photograph. Does these go to prove the explosion?
15. Again the Surveyor commented in his report in para 7.22, which runs as follows:-
"xxxxxxx As per his report, Dr. Saluja has commented that the damage took place due to explosion of the liquid ammonia line of the refrigeration system. Due to this a portion of the brick wall below the first level beam gave way which created a trigger of collapse due to girder resting on the brick wall bending downwards and in the next span bending upward due to continuity affect with sagging of the end beams, unbalancing of moments occurred at junction of columns. The load distribution factor increased at one row of columns leading to excessive loading and thus the failure of the structure".
The Surveyor further reported:-
"7.2.4 It may be noted here that as per Insured's version the alleged explosion took place in the cooling bunkers of Chamber No. III, whereas Dr. A.K. Saluja has commented that the same took place due to explosion of liquid ammonia line below the first level beam.
7.2.7 As per clause '6' of the Act, the cold store owners are not supposed to store more than 6 bags in a stack (one above the other) however there were found stacks of 7 to 8 bags by the District Horticulture Officer during his inspection immediately after the collapse.
7.2.8 As per news paper reports the accident took place due to overloading of the cold store by storing seven to nine layers of bags. Due to overloading, the south wall collapsed and the ammonia gas pipe line got burst and ammonia gas spread in and all around the cold store area.
7.9.10 During our initial visit we carried out detailed physical verifications & the following were observed:
a) Even after collapse of the structure, 7 or more bags per stack (one above the other) were observed at a no. of places where stackings were still countable.
b) The collapsed debris indicates thorough disintegration of the wall bricks which indicates the possibility of improper material mix or improper/inadequate curing of the building structure during construction.
c) The vertical columns of the collapsed structure were inspected with a view to verify the material & worksmanship quality. It was observed that the reinforcement steel rods of these columns were visible & exposed at a no. of places. As per the civil construction requirements this reinforcement should have been well under the cover of the concrete mix. Also during casting of the columns in stages, care had not been taken for proper bondage between two casting blocks. This type of columns are prone to buckling under load".
7.2.12 Our view in regard to 'Explosion' as cause of the loss vis-à-vis Physical circumstances of the loss is as under:
a) In the subject cold storage, the refrigerant used is Ammonia which runs through cooling and condensing bunkers. The cooling bunkers are installed inside the cooling chambers and the condensing bunkers are installed outside the cold storage chambers.
b) Refrigerant in the condensing & liquid pipe line is at a pressure of 11 kg./cm2 only and in a small bore pipe of refrigeration system even in case of some explosion, it cannot create impact of such a high intensity to cause any collapse of such a heavily loaded structure.
c) Further ammonia in cooling bunkers is at a very low pressure compared to the condensing bunkers. The possibility of leakage/explosion in the cooling bunkers can be ruled out because of very low pressure inside these pipelines.
d) Furthermore the possibility of explosion in the condensing bunkers & Liquid pipelines can be ruled out because of the following:
i) The pipe coils were found to be damaged due to external impact and there was no sign of bursting due to internal pressures.
ii) Normally the bursting of pipes in any pressure lines is due to 'hoop-stress' and not due to longitudinal stress which results into longitudinal or circular failures respectively. The damaged pipes seen during our visits had no longitudinal failures along the seem caused by any such possible hoop stress.
iii) Even in case of some remote chance of abnormal rise in pressure, the safety devices i.e. pressure release valves should have operated.
7.2.13 The explosion as the cause of loss can be ruled out.
7.2.14 Keeping in view of the physical circumstances of the loss and our verifications & observations thereof the subject building collapse was caused due to one or more of the following causes:
i) Faulty design ii) Faulty construction iii) Poor workmanship during construction. iv) and above all such a poorly constructed building was heavily overloaded".
16. Learned counsel for the complainant invited our attention towards the report given by Sh. A.P. Bhatla, Chartered Engineer, Surveyor/Loss Assessor, Registered & Approved Valuer "Machinery & Plant", which shows that he had conducted "Pre-Insurance Inspection" on 27.03.1999, at about 12-00 hours. He found that all the parameters were found safe and in satisfactory condition.
17. It is difficult to fathom how this report goes to support the complainant. This is dated 10.11.2001. This was prepared at the instance of the complainant.
18. In the light of this discussion, it is clear that the complainant wants to make bricks without straw. Explosion is not a small matter. Two or three pipes cannot prove that there was explosion. Explosion has to be distinguished from a child's cracker. Had there been explosion, the complainant should have called the experts at that very moment. It is surprising to note that police was not called. No F.I.R. was lodged. No Panchnama in the presence of the police or any other authority was got prepared. It is not explained how did the explosion take place. No particular article was pointed out. The story propounded by the complainant does not just stack up. The report of Sh. A.P. Bhatla rather goes to support the case of the OP. When all the parameters were found safe and in satisfactory condition, the expectation of explosion could not have possibly arisen. The non-co-operative stance on the part of the complainant at the initial and crucial stage adds tang to the tale. It is difficult to fathom why did the new chamber collapse. Its sanctioned site plan and completion certificate were kept under the hat. The report of Shri A.K. Saluja bristles with other flaws as well. His report is conspicuously silent about the material used and foundations. He did not mention about the cross beam.
19. It must be borne in mind that it is the complainant and nobody else who is to carry the ball in proving that there was explosion. He has not produced even an iota of evidence in this regard. The complaint is without merit and the same is hereby dismissed but there shall be no order as to costs.
......................J J.M. MALIK PRESIDING MEMBER ...................... DR. S.M. KANTIKAR MEMBER