National Consumer Disputes Redressal
M/S. Detco Textiles Pvt. Ltd. vs M/S. New India Assrance Company Ltd. & ... on 3 March, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 449 OF 2014 1. M/S. DETCO TEXTILES PVT. LTD. Through its Director, Mr. Ramesh Ranka, Office Presently at Unit No. 26, 2nd Floor, Techniplex - 1, Techniplex Complex, On Veer Savarkar Flyover Goregaon-West, Mumbai - 400 062. ...........Complainant(s) Versus 1. M/s. NEW INDIA ASSRANCE COMPANY LTD. & ANR. Through Shri K Sanath Kumar, Director and General Manager, Having its Registered Office at New India Assurance Building, 87 N.G. Road, Fort, Mumbai - 400 001. 2. M/s. Aditi Insurance Surveyors & Loss Assessors Pvt. Ltd. Thr4ough Shri Sanjay Narang, Director and Surveyor and Loss Assessor,
35, Netaji Subhash Marg, Darya Ganj, New Delhi - 110 002. ...........Opp.Party(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. SUBHASH CHANDRA,MEMBER
For the Complainant : Mr. Joy Basu, Senior Advocate with
Mr. PSS Bhargava, having Auth. Letter
Mr. Kanak Bose, Advocate
Mr. Vibhore Yadav, Advocate
Mr. Naman Khatwani, Advocate For the Opp.Party : Mr. Saurav Agarwal, Advocate
Ms. Manvi Adlakha, Advocate
Mr. Shivam Tiwari, Advocate
Dated : 03 Mar 2023 ORDER
1.The Complainant is a Company engaged in the business of processing and dyeing all types of shirting and blended fabrics including 100% Cotton, Polyester/Viscose, Polyester/Cotton/Viscose and Yarn Dyed. Opposite Party No.1 is engaged in the business of providing general insurance services. Opposite Party No.2 is engaged in the business of carrying out insurance surveys.
2. Case of the Complainant is that they purchased Standard Fire and Special Perils Policy No.131000/11/13/01/00000221 dated 08.05.2013 from Opposite Party No.1 by paying a premium of Rs.2,48,934/-. The Policy was valid from 12.05.2013 to 11.05.2014 and covered the risk to stocks at Tarapur Plant due to fire, lightening, explosion/implosion, aircraft damage etc. The Policy was issued with the knowledge of risks involved in the business of the Complainant.
On 25.05.2013, at about 00.15 hrs. fire broke out in the Tarapur Plant, which was used to store the finished stocks. The fire occurred due to short circuit in the tube-light on the first floor of the main building. The fire spread rapidly because of huge stocks kept in the main building and engulfed 320 KVA Generator Set as well as 750 KVA transformer installed just outside the main building. Due to fire accident, various machines, raw materials and finished products, as also the building of the plant were damaged. The Complainant immediately informed the Police, Fire Department as well as the Electrical Inspector about the incident of fire and sought assistance from them to mitigate the damage. The Complainant also informed the incident of fire to Opposite Party No.1, vide email dated 25.05.2013. The Fire Brigade personnel had taken charge of the premises and got the entire premises vacated to extinguish the fire. The Police and Electrical Department Engineers also conducted detailed verification and investigation and prepared panchnama. Police Panchnama Report dated 25.05.2013 and Electrical Inspector's Report dated 27.06.2013 confirmed that the probable cause of fire was electrical short circuit. The Fire Brigade Report dated 30.08.2013 stated that the cause of fire was unknown. Opposite Party No.1 deputed Opposite Party No.2 to conduct Survey and assess the loss. The Surveyor visited the site on 26.05.2013. According to the Complainant, the estimate of loss was Rs.41.95 crores. The Complainant after discussion with Opposite Party No.2 reduced the claim to Rs.35.68 crores, vide letter dated 28.05.2013. The Complainant further reduced the claim to Rs.22.08 crores, vide letter dated 14.01.2014. Ultimately, the Complainant submitted final bill of Rs.21.98 crores with Opposite Party No.2, vide email dated 18.01.2014. The Opposite Parties sought various information/clarifications/documents from the Complainant, which were provided to them. The Opposite Parties, jointly alongwith the Complainant, disposed of the salvage through open tender. The Complainant received letter dated 03.03.2014 from Opposite Party No.1, which included the final Surveyor Report dated 11.02.2014, stating that the Surveyor had assessed the loss at Rs.10,65,12,194/-. The Survey Report was provided to the Complainant without supporting documents, more importantly the Truth Labs Forensic Report, based on which the Opposite Parties recorded their findings/conclusions. The Complainant sent letter dated 14.03.2014 to Opposite Party No.1 stating that several information/documents provided by the Complainant were not considered by the Surveyor while assessing the loss. The Complainant further sent letter dated 24.03.2014 to Opposite Party No.1 pointing out several anomalies in the findings of the Surveyor and requested them to convene a meeting with the Surveyor and the technical team of Opposite Party No.1. No such meeting was convened by Opposite Party No.1. Surveyor, however, vide letter dated 02.04.2014, sought some more information from the Complainant regarding the incident of fire, which was provided by the Complainant, vide letter dated 05.04.2014. Thereafter, the claim remained pending with the Insurance Company. Complainant, vide letter dated 08.05.2014, sought information from Opposite Party No.1 about the status of their insurance claim with a request to release Rs.8 crores as an interim payment. Opposite Party No.1, vide letter dated 16.06.2014, repudiated the claim of the Complainant on the ground that there was possibility of fire accelerants being brought into the premises extrinsically. The Complainant, vide application dated 15.07.2014 under Right to Information Act, sought certain information from Opposite Party No.1 with a request to reconsider their claim. Opposite Party No.1, vide letter dated 07.08.2014, provided incomplete information to the Complainant.
On 14.08.2014, the Complainant filed Complaint Token No.08-14-14791 with the Insurance Regulatory and Development Authority (IRDA). In response to the Complaint, Opposite Party No.1 clarified certain points. IRDA failed to take any action against Opposite Party No.1 for wrongly rejecting the claim of the Complainant. The Complainant appointed an independent IRDA approved Surveyor to reassess the loss. Alleging deficiency on the part of the Opposite Parties, the Complainant filed the present Complaint before this Commission under Section 21 read with Section 12 (1) (a) of the Consumer Protection Act, 1986, praying relief as under: -
"a. Declare and hold the Opposite Parties jointly and severally guilty and liable for deficiency of service and unfair trade practices under the provisions of the Consumer Protection Act, 1986;
b. Direct the Opposite Party No.1 to withdraw/cancel the Rejection Letter dated 16.06.2014 bearing No.MRO IV/CLAIMS HUB/FIRE/2014 by the Opposite Party No.1;
c. Direct the Opposite Party No.1 to pay a sum of Rs.21,98,94,733/- towards the claim made by the Complainant under the Standard Fire and Special Perils Policy dated 08.05.2013 bearing No.131000/11/13/00000221 for a period from 12.05.2013 to 11.05.2014;
d. Direct the Opposite Parties to jointly and severally pay a sum of Rs.5,10,00,000/- towards loss of business/profit on account of the deficient services provided by the Opposite Parties;
e. Direct the Opposite Parties to jointly and severally pay a sum of Rs.3,64,00,000/- towards losses on account of the deficient services provided by the Opposite Parties; and f. Direct the Opposite Parties to jointly and severally pay a sum of Rs.1,63,40,40,000/- towards losses from additional finance cost on account of the deficient services provided by the Opposite Parties; and g. Direct the Opposite Parties to jointly and severally pay a sum of Rs.25,00,000/- towards miscellaneous costs incurred by the Complainant on account of the deficient services provided by the Opposite Parties; and h. Direct the Opposite Parties to jointly and severally pay a sum of Rs.1,00,00,000/- towards mental trauma and harassment on account of the deficient services provided by the Opposite Parties; and i. Direct the Opposite Parties to pay a compound interest at rate of 10% per annum on the amounts directed to be paid in terms of Prayers (c) to (h) above;
j. Direct the Opposite Parties to jointly and severally pay costs of the present Complaint; and k. Pass such other and/or further Orders as may be just and necessary in the facts and circumstances of the case."
3. The Complaint was contested by Opposite Party No.1 by filing Written Statement. Opposite Party No.2 was discharged by this Commission, vide order dated 01.04.2016.
4. Opposite Party No.1 took preliminary objection regarding maintainability of the Complaint stating that the Complainant being a Company was not a "Consumer" under Section 2 (1) (d) of the Consumer Protection Act, 1986. Further, the services of Opposite Party No.1 were availed for commercial purpose. Opposite Party No.1 also took the ground that the dispute involved complex matters which needed extensive evidence (oral and documentary) that can only be dealt by a Civil Court and cannot be decided in a Consumer Forum in summary proceedings.
5. On merits, it was stated that the case of the Complainant was not covered under the Policy, as they failed to provide any proof relating to cause of fire. The Complainant failed to comply this condition. The claim of the Complainant was repudiated on the basis of the Survey Report that fire was due to extraneous ignitable fire accelerants. The CCTV footage also showed that a small ball of fire dropped from above the FG storage area on the ground floor, which cannot be construed to be short circuit in a tube light as alleged by the Complainant. The Survey Report is an important piece of evidence and has to be given due weightage. The Complainant appointed its own Surveyor to get a favourable report. The Complaint had no merit and deserved to be dismissed.
6. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Complainant submitted that the Insurance Policy being a contract of indemnity, the Complainant is a Consumer.
7. On merits, the Learned Counsel for the Complainant submitted that the Survey Report did not mention the entry of any outsider, which ruled out the possibility of fire accelerants being brought from outside. The proximate cause of fire was short circuit in the tube light on the first floor of the factory which is also supported by CCTV footage, Police Report and Electrical Inspector Report. These reports were produced before the Opposite Party but they arbitrarily ignored the same. The Opposite Party repudiated the claim on mere suspicion which is not substantiated by any evidence. The Opposite Party also failed to supply copy of Report of Truth Labs, which was appointed to investigate into the cause of fire, without the consent of the Complainant. The Complainant had produced plethora of evidence and the Opposite Party had not negated any of them and repudiated the claim only on the basis of suspicion that fire accelerant was brought from outside. The Opposite Party had not produced any evidence to prove that the claim of the Complainant was fraudulent and deliberate act of the Complainant. The claims of third parties who had kept their stocks in trust with the Complainant had been honoured by their respective Insurers, including Opposite Party No.1. The Survey Report suffered from various discrepancies. The Surveyor observed that the probable cause of fire was "conspicuous presence of hydrocarbons and use of extraneous ignitable fire accelerants such as kerosene and diesel oil." This finding of the Surveyor was contrary to the fact that kerosene, diesel and other chemicals were commonly used in the Complainant's industry, which was also admitted by the Surveyor in the Final Survey Report. The Complainant appointed an independent Surveyor Mr. Parimal R. Shah, who submitted his report dated 02.05.2015. This report clearly mentions the discrepancies in the Report of the Surveyor appointed by the Opposite Party as well as discrepancies in the report of Truth Labs.
8. Learned Counsel for Opposite Party No.1 submitted that the Complainant was not a "Consumer" under Section 2 (1) (d) of the Consumer Protection Act, 1986 as the services of Opposite Party No.1 were availed for commercial purpose. The Policy covered the business interest of the Complainant. It was also submitted that the proceedings would be appropriately dealt by a Civil Court, as the matter involved complex and technical issues. There was also requirement of examination of detailed evidence and voluminous documents led by the Parties. The issues cannot be decided by the Consumer Forum in summary jurisdiction.
9. On merits, the Learned Counsel for Opposite Party No.1 submitted that the incident of fire was not caused due to short circuit in the tube light as alleged by the Complainant. CCTV footage showed a small ball of fire dropping on the ground floor, which could not be construed to be a spark due to short circuit in the tube light. The time of fire stated by the Complainant was different from the time disclosed in the CCTV footage. It was also submitted that the generator set and the transformer were installed outside the premises of the company. It was not conceivable that the Complainant had kept the hydrocarbons on the higher floors of the building. The repudiation letter sent to the Complainant explained in detail how General Condition 8 of the Policy was attracted and the case of the Complainant was excluded under the Policy. As the company premises were under the ownership and control of the Complainant, it could be concluded that fire accelerants were brought into the premises with the knowledge of the Complainant. The Complainant cannot be given the benefit of their own wrong. Learned Counsel submitted that the Police Panchnama Report cannot be relied as nowhere in the said report the cause of loss had been discussed. Similarly, in the Fire Brigade Report the cause of loss is mentioned as "unknown." It is not true that the Complainant was not supplied copy of Truth Labs Report. Copy of the Truth Labs Report was provided to the Complainant as annexure to the Final Survey Report. Repudiation of the claim by Opposite Party No.1 was justified and the Complaint deserved to be dismissed.
10. So far as maintainability of the Complaint is concerned, this Commission in Harsolia Motors v National Insurance Company Ltd. [I (2005) CPJ 26 (NC)] held that a contract of insurance is a contract of indemnity and, therefore, there is no question of commercial purpose in obtaining insurance coverage. In view of law laid down by Hon'ble Supreme Court, the Complainant is a "Consumer" and the Complaint is maintainable.
11. Regarding the allegation of the Opposite Party that the Complaint contained complicated facts and cannot be adjudicated in a summary proceeding under Consumer Protection Act, 1986. Hon'ble Supreme Court in CCI Chambers Coop. HSG. Society Ltd. v. Development Credit Bank Ltd., Appeal (Civil) 7228 of 2001 observed as follows:
"It cannot be denied that Fora at the national level, the State level and at the district level have been constituted under the Act with the avowed object of providing summary and speedy remedy in conformity with the principles of natural justice, taking care of such grievances as are amenable to the jurisdiction of the Fora established under the Act. These Fora have been established and conferred with the jurisdiction in addition to the conventional Courts. The principal object sought to be achieved by establishing such Fora is to relieve the conventional Courts of their burden which is ever-increasing with the mounting arrears and whereat the disposal is delayed because of the technicalities. Merely because recording of evidence is required, or some questions of fact and law arise which would need to be investigated and determined, cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved."
12. From the facts and circumstances of the case, it is seen that there are no complicated questions of facts and law involved in this case, which cannot be decided by this Commission. Moreover, as held above by Hon'ble Supreme Court, involvement of some questions of fact and law cannot be a ground for shutting the doors of any Forum under the Act to the person aggrieved. This Commission is, thus, competent to adjudicate the instant Consumer Complaints.
13. Brief facts of the case are that the Complainant obtained Fire & Special Perils Policy No.131000/11/13/01/00000221 dated 08.05.2013 for the period 12.05.2013 to 11.05.2014 covering the risk to stock, building and plant & machinery, including the stocks at Complainant's dying and process house plant at E-30, MIDC, Tarapur, District Thane, Maharashtra. The total sum insured was Rs.42.20 crores. Incident of fire occurred on 25.05.2013 at Tarapur plant. The Complainant stated that the fire occurred due to electric short circuit and filed final claim for Rs.21,98,94,733/-. Surveyor M/s Aditi Surveyors & Loss Assessors Pvt. Ltd., were appointed by the Opposite Party, who in turn took the assistance of Forensic Agency, M/s Truth Labs, Hyderabad. The Surveyor relied on the findings of Truth Labs, which are as follows: -
"The result of the analysis of the burnt debris samples collected from the fire affected spots by the expert team of Truth Labs showing presence of C-10 to C-21 range of hydrocarbons and the control fabric samples showing absence of hydrocarbons, when interpreted based upon the conspicuous presence of hydrocarbons in the fire affected samples could have been on account of probable use of extraneous ignitable fire accelerants such as kerosene/diesel oil."
He assessed a total loss of Rs.10,65,12,194/-. Opposite Party No.1 on the basis of the Survey Report concluded that the only real possibility, as identified by Truth Labs, was fire accelerants being externally brought into the premises with the Complainant's knowledge. Opposite Party No.1 accordingly concluded that the insuring clause did not trigger and General Condition No.8 of the Policy was applicable and the claim was declined, vide letter dated 16.06.2014.
The Complainant on the other hand stated that the fire was caused due to electric short circuit and this is supported by the report of the Electrical Inspector dated 28.06.2013 which states that due to the wiring of tube light fixed on the wall of building there was a short circuit, and through the clothes kept under it, fire spread in the entire area. The Complainant also appointed one Mr. Parimal R. Shah, an expert who also concluded that the cause of fire was electric short circuit and assessed the loss at Rs.18,09,61,985/-.
14. The accident of fire and the Policy coverage are not disputed. It is also not disputed that the Complainant had been renewing the Policy with Opposite Party No.1 for almost 5 years. The Complainant submitted that the loss/damage had not been caused due to any deliberate or wilful act on his part. In fact, the Surveyor has also stated absence of entry of any third person in the factory premises which clearly ruled out the possibility of fire accelerants being brought into the premises. The Complainant also stated that the claims of third parties who kept their stocks in trust with the Complainant had been honoured and settled by their respective Insurers. The Surveyor stated that probable cause of the incident was the use of extraneous ignitable fire accelerants such as kerosene and diesel. It is common in the Complainant's factory to use solvents, kerosene, diesel and other chemicals for work process. The Surveyor has simply relied on Truth Labs Report and arrived at his conclusion. Truth Labs Report concluded that there could have been probable use of fire accelerants. This report does not confirm that fire was caused due to arson. The Complainant stated that the petroleum was regularly used in in the process, though in limited quantity, for cleaning the stains of oil and grease on the fabric. Diesel and other fuels were also required for operating the machines including the DG Set and the transformers. The exact cause of trigger of fire could not be arrived at by the Truth Lab or the Surveyor and the Opposite Parties. The Surveyor had completely ruled out any malafide or deliberate conduct on the part of the Complainant. There was also no free entry of any person in the factory premises other than the authorised personnel. There was also no suggestion of any sabotage and no basis for coming to the conclusion that fire was brought in the premises with the Complainant's knowledge. The Policy itself records that HSD and LSD are used by the Complainant as a part of manufacturing and even form part of the items insured. This has also been recorded in the Final Survey Report.
15. We, therefore, do not find any concrete evidence to disbelieve the contention of the Complainant and hold that the probable cause of fire was short circuit. Since various petroleum products/solvents were, in one way or the other, may be small in quantities, used in the process of manufacturing and trade, we rule out the possibility of any mischief on the part of the Complainant of bringing fire accelerant from outside.
16. As regards the quantum of loss, the Surveyor had conducted a detailed Survey on 26.05.2013. He had noted that the Complainant is well established and leading groups in the textile market in Mumbai with an excellence in the processing and trading fabrics. The Company's highly developed infrastructure supports its various divisions and groups in the areas of manufacturing, processing of grey fabrics, warehousing, distribution IT, sourcing, finance and HR-creating efficiencies, economies an d scale & related technical expense leverage. Initially, the Insured had estimated the loss of Rs.42.20 crores. Subsequently, reduced the loss to Rs.35.68 crores and finally submitted claim of Rs.21.98 crores. The Surveyor conducted a very detailed inspection of the premises and assessed the loss after due verification of documents. He assessed the total loss to the building, plant & machinery and furniture etc. at Rs.11,21,18,099/- after making necessary deductions of Rs.5,605,905/- towards excess clause and taking care of the process charges, debris removal, architects fee and goods held in trust arrived at the net adjusted loss of Rs.10,65,12,194/-. For every item, the Surveyor had explained the basis of arriving at the amount. The Complainant on the other hand had not placed any evidence to establish that the assessment made by the Surveyor was incorrect. The Complainant, therefore, cannot be allowed the amount beyond the assessment of the Surveyor. We see no reason not to agree with the assessment made by the Surveyor.
17. In the result, the Complaint is partly allowed. Opposite Party No.1 is directed to pay an amount of Rs.10,65,12,194/- to the Complainant with 9% interest from the date of repudiation of claim till realization. The order be complied within two months.
...................... C. VISWANATH PRESIDING MEMBER ...................... SUBHASH CHANDRA MEMBER