Orissa High Court
M/S. Falcon Marine Exports Ltd. & Anr vs Chairman-Cum-Managing Director on 9 March, 2023
Author: Biswanath Rath
Bench: Biswanath Rath
A.F.R.
ORISSA HIGH COURT : C U T T A C K
W.P.(C) No.12457 of 2005
An application under Article 226 of
the Constitution of India, 1950
M/s. Falcon Marine Exports Ltd. & Anr. : Petitioner(s)
-Versus-
Chairman-cum-Managing Director, : Opposite Party(s)
New India Assurance Co. Ltd., & Ors.
For Petitioner : M/s. S.Pr. Sarangi,
B.C. Mohanty,
P.P. Mohanty,
D.K. Das, P.K. Dash
For Opposite Party Nos.1 to 3 : M/s. S. Roy, R. Pati,
S.K. Mohanty
Mr. N.N. Mishra
JUDGMENT
CORAM :
JUSTICE BISWANATH RATH Date of hearing & judgment : 09.03.2023
1. Heard the submissions of learned counsel for respective parties.
2. This Writ Petition involves the following prayer:-
"In view of the facts and circumstances stated herein above, the Hon'ble Court may be pleased to issue a 'Rule-Nisi call upon the Opposite Parties to show cause so as to why they shall not be directed to forthwith settle the claim of the Petitioner No.1 Company to the tune of Rs.58,30,863/- along with interest at the rate of 24 percent from forty-five days of filing the claim, on its entire claim till payment of the Claim by the New India Assurance Company Ltd., Opposite Party No. 1, Page 1 of 15 // 2 // 2, 3, 4 and if the Opposite Parties fail to show cause or show insufficient cause make the said Rule absolute.
AND Issue such other writ/ writs, order/orders, relief/reliefs which the Petitioner No.1 Company is entitled to."
3. Principal challenge of the Petitioner in this writ petition is made to the impugned order at Annexure-11 more particularly at page 42 of the brief. Through the impugned order at Annexure-11 the Insurance Company declines to make over the loss of damage caused to the Petitioner for the Super cyclone taken place on 29.10.1999, however, dependent on the Insurance Policy No.1155020002507.
4. Factual background involved herein is; Petitioner No.1 being a Public Limited Company namely M/s. Falcon Marine Exports Ltd. is incorporated under the Companies Act, 1956. This establishment is located at A/22, Cuttack Road, "FALCON HOUSE", First Floor, Bhubaneswar, Dist.-Khurda. Petitioner-Company deals with business of processing and exports of marine products like shrimps, pomfrets, seer fish etc. Petitioner No.1-Company is also registered with MPEDA along with a processing plant at Mancheswar Industrial Estate, Bhubaneswar come to be established in 1992. Pleadings further disclose that Petitioner's turn over at the relevant point of time was Rupees One hundred seventy crores of rupees. Petitioner No.1-Company's factory was equipped with supply of electricity by the CESCO and was also armed at the relevant point of time with one generator of 125 KVA capacity also involving two cold stores. Petitioner No.1-Company was procuring raw materials of various kinds of marine products from the following sources:-
(i) Own Culture/Prawn culture farmers.
(ii) Procurement agents of various centres.
(iii) Direct purchase from fisherman at various centre.
(iv) Direct purchases from fisherman/agents at factories.
Page 2 of 15// 3 //
5. Variety of marine products used in the factory are disclosed in paragraph no.'c' of the brief. Name of the products are described in page 7 of the brief. On 17.09.1999 Petitioner No.1-Company insured its stock of prawn and fish stored in the processing Plant situated at Macheswar Industrial Estate, Bhubenswar with the New India Assurance Company Ltd. for a sum of rupees six crores vide Policy No.1155020002507. Petitioner invested a sum of Rs.1,64,588/- by way of premium vide receipt No.446435 and 446802 dated 17.09.1999. Paragraph no.(f) at page 8 of the brief discloses the validity of the Policy for one year with the starting date from 18.09.1999 and ending on 17.09.2000. While the matter stood thus, it is pleaded that on 27.10.1999 a depression was formed over the Bay Bengal in the Odisha coast near Paradeep. It gradually intensified into a "Super Cyclone" with maximum wind speed up to 226K.M. per hour thereby causing unprecedented destruction and devastation in some of major districts in the State including the city of Bhubaneswar. Plant of the Petitioners' establishment along with materials available at that point of time in the plant premises situated in the city of Bhubaneswar were all severely damaged due to such super cyclone for speed of wind more than 240K.M. per hour. As a consequence of such devastating super cyclone apart from causing extensive and unprecedented damage to the processing plant of the Petitioners, there was also severe damage to the power supply to the Petitioners Company. The diesel gen-set available to support the premises on failure of electricity had also got submerged under the water thereby rendering it defunct causing thereby severe damage to the stocks. It is claimed, for the chaos created due to super cyclone, there was no possibility of entering into such premises, which remained beyond human effort for almost seventeen days. Such damage clearly affected the functioning of the plant thereby causing severe damage to the stocks in the plant involved.
Page 3 of 15// 4 //
6. It is, in the above factual background of the matter, Petitioners claimed for policy coverage through Annexure-2. Thereafter a claim through Annexure-3 was submitted on 4.11.1999. In the meantime vide Annexure-4 the Central Institute of Freshwater Aquaculture a competent authority on inspection of the factory involved submitted report indicating the unfitness of different type of materials in a tabular format as appearing at page 29 of the brief. In the meantime vide Annexure-5 the Insurance Agent one A.N. Poddar wrote to the Joint Secretary (Insurance), Ministry of Finance, Government of India informing the destructions taken place on the issue involved thereby giving therein a detail of the exercise undertaken and the findings therein. In the meantime the Managing Director of the Company vide Annexure-6 submitted the form under the heading "FIRE CLAIM FORM" but thereby informing the Insurance Company to the vast extent of damage, the reason of damage, the date of incident taken place as well as monetary loss on account of such incident, which all are available at running page 34 & 35 of the brief. In the meantime Petitioners' Plant also obtained the report of the registered Surveyors & Loss Assessors. Application was made to the Assessors appearing at Annexure-7 along with supported material at Annexures-9 & 10 of the brief. In the meantime the Insurance Company vide impugned order dated 23.07.2002 at Annexure-11 communicated the Petitioners negativing the claim of the Petitioners impugned herein.
7. It is on the basis of the above materials, taking this Court to the clause clearly borne through the Insurance Policy at Annexure-2 even though nomenclated as Fire Policy 'C' in the first tabular format under paragraph no.5 Mr. Sarangi, learned counsel for Petitioners attempted to satisfy that the Insurance Policy of Rupees Six crores at Annexure-2 also covers the loss on account of flood and cyclone. Taking this Court to the Page 4 of 15 // 5 // revelations through the Surveyors, Loss Assessors and Valuers' report and the clause 30, 40, 50, 60 & 80 and also the assessment of damage as well and further taking this Court to the loss assessed under clause 10 & 10.1 so also the conclusion vide clause 11.3, Mr. Sarangi, learned counsel for Petitioner submitted that even assuming that there is high claim by the Petitioners in the claim format, however, keeping in view the opinion of the Assessor/valuer, the Petitioners are at least entitled to a sum of Rs.41,37,251/-.
8. Answering respondent through learned counsel for Opposite Party- Insurance Company, on the other hand, taking this Court to the nature of the policy being FIRE POLICY 'C' even though did not dispute the policy involving covering damage on account of flood and cyclone, however submitted that the entire claim of the Petitioners as well as the observation of the assessor involving the stock materials got damaged due to shortage of power supply. Thus learned counsel in opposition attempted to contend that there is no direct nexus of damage of the materials involved on account of flood or cyclone as claimed. There is, however, no denial to the observation of the Assessor / Surveyors find place at Annexure-8. Taking this Court to the paragraph nos.5 & 6 of the counter affidavit, it is submitted that there is also raising of objections to the entitlement of the Petitioners. There is, however, no denial to either the observation of the Central Institute of Freshwater Aquaculture, a Govt. agency vide Annexure-4 or there is any challenge at any point of time to the observation of its Surveyor clearly observing the reason of damage being Super cyclone already havoc in the large part of the State in 1999.
9. Considering the rival contentions of the parties, this Court finds, undisputedly Petitioner's Company had insurance policy though Page 5 of 15 // 6 // nomenclated as Fired Policy 'C', however, column no.5 of the said policy in the first table provided therein did contain under special perils covering damages on account of flood, cyclone. Sum insured in the policy remaining to rupees six cores policy period covers the period from 18.09.1999 to 17.09.2000. The super cyclone took place on 29.10.1999, which definitely comes under the period covered by the Insurance Policy. There has been clear disclosure through the claim of the Petitioner that there was damage due to the power supply either by the State supply agency or through the own arrangement, which all got severely damaged on account of super cyclone, 1999 also resulting creation of heavy stock of water. Further looking to the report vide Annexure-4 this Court finds, this communication was made on 18.11.1999 with the followings:-
"xx xx xx CENTRAL INSTITUTE OF FRESHWATER AQUACULTURE No. FME/MNS/12 Ref: HACCP Follow-UP Programme Sub: Examination of frozen stored prawn products at Falcon Marine Export Processing Unit, Mancheswar.
In response to the requisition dated 13.11.99 from Falcon Marine Exports Limited, Bhubaneswar, regarding Hazard Analysis and Critical Control Point programmes. Samples were collected from Mancheswar Processing Unit on 13.11.99 and detailed bacteriological and physic-chemical analysis was conducted for the random samples stored in their freezing units as per details given below.
All the varieties have completely decomposed. The meat should be immediately condemned through incineration as it is not suitable for human consumption and risk of public health hazards.
Through disinfection of the freezing chambers are recommended before the start of routine operations.
xx xx xx"
10. There is also definite material through Annexure-6 at running page 34 & 35 of the brief giving clear disclosure to the extent of damaged Page 6 of 15 // 7 // material, reason of damage for super cyclone taken place in the locality on 29.10.1999. Since both the parties refer to the Surveyors, Loss Assessors and Valuers' report, this Court on perusal of the Surveyors, Loss Assessors and Valuers' report dated 29.04.2001 finds, through clause 2.0, 3.0, 4.0, 5.0, 6.0, 7.0, 8.0, 9.0, 10.0 upto 11.3 the Assessor has given the following information :-
"2.0 THE POLICY:
The relevant particulars of the policy under which the claim arises are as follows:
a. INSURED M/s. Falcon Marine Exports Ltd.
(Hyp with SBI, Commercial Br.
BBSR)
b. POLICY NO. 11550 2000 2507
c. POLICY NO. 18-9-99 TO 17-9-2000
d. LOCATED AT Mancheswar Industrial Estate
Bhubaneswar
e. PROPERTY INSURED Prawn & fish in godown
f. SUM INSURED Rs.6,00,00,000
g. PERIL COVERED Fire & Allied perils extended to cover
loss by flood, cyclone
3.0 INSURED:
3.1 M/s. Falcon Marine Exports Ltd. Is one of a leading sea food
export company in Orissa. They have own processing plants at Mancheswar in Bhubaneswar and Paradeep. The company procures prawns from various coastal collection centres such as Paradeep, Puri, Balasore, Kalupada, etc. and from its aqua center prawn farms. The raw prawns are transported to the plants in insulated vans. The materials are processed (cleaned, peeled, graded and packed in ice slabs). The packed prawns meant for exports are stored in cold storage chamber. Temperature inside the cold storage is maintained at -18 degree C. When ever shipments are made, the finished goods are sent to Calcutta or Vizag in refrigerated vans.
3.2 At its Mancheswar plant, the company has two cold storage chamber installed inside the factory building. Cold storage 1 is of 80 MT capacity & cold storage 2 is of 70 MT capacity. The processed materials are packed in Frozen slabs weighing 1.8 kg (Black Tiger) and 2 kg for others. The plant has a sanctioned load of 215 KVA power supply from Orissa State electricity Board (GRIDCO) The Insured has also installed one DG set of 125 KVA. The DG set is installed in a room between the processing hall & ice plant. The DG set is one foot above the outside plinth level. The room has brick walls and asbestos sheet roof on metal frame work. It is operated by a supervisor. 3.3 The Insured was maintaining purchases & stock records at their main office at Bhubaneswar. Daily production records and Page 7 of 15 // 8 // dispatch details are maintained at plant & main office. The exports for the year March, 1999 was Rs.115 Crores.
4.0 INCIDENCE:
4.1 On 29-10-99 the Eastern Coastal Districts of Orissa was affected by a severe cyclone causing unbelievable destruction to life & property. Widely termed as a 'Super Cyclone' had a wind speed of 250 Kmph was also accompanied by heavy rains. The city of Bhubaneswar experienced cyclone from mid night of 28-10-99 onwards. Many trees, electric poles and kutcha houses got uprooted/blown off. At around 1.40 A.M. of 29-10-99, the power supply went off in entire Bhubaneswar. 4.2 The supervisor (of the Insured company) started the DG set.
Due to increase in the velocity of wind/rain the operator Mr. Ashok Mohanty came to office room, where Factory manager & 3 more staff had already assembled for protection. Due to continuous disturbance of weather they were unable to come to factory area. On 29-11-99 at around 9 P.M. the factory manager & other staff came around the factory area and noticed that the DG set had stopped working. Efforts were made to restart the DG set. But no one was available to set right the generator. There was no power & water and the place was totally cut off from the rest of the place. The Chairman & factory manager came to know that due to devastating effect of the cyclone in Orissa the power supply from electricity board was not expected for another 10 days. The transmission lines had snapped at many places. 4.3 On 31-10-99 the Insured managed to get a Generator engineer. On testing the machine he found that storm water has entered into the alternator of the generator. In the meantime the temperature inside the cold storage plant started increasing and it was decided to shift the materials to Vizag. The Insured deployed there own/ other refrigerated vans and started shifting the cartons of finished prawn to rented cold storage plant at Vizag from 1-11-99 onwards. 4.4 The DG set was repaired and started functioining from 4-11- 99 onwards. The temperature in the cold storage plant reached the required -18 degree C on 7-11-99. The power supply from electricity board was restored on 13-11-99.
4.5 Due to lack of power supply and breakdown of DG set, the temperature inside the cold storage plant increased from 29-11-99 onwards and caused deterioration to stock of prawns. Out of total quantity of frozen prawns of 144.808 MTs on 28-10-99, the stock segregated as spoiled is 15MTs. The balance materials of 129.808 MT have either been shifted to Vizag cold storage or have been salvaged as good at Mancheswar itself.
4.6 The Insured intimated the loss to D.O.2, Bhubaneswar on 4- 11-99. The Surveyor Mr. S.S. Patri and the Divisional Manager Mr. Trivedi visited the Insured's plant on 5-11-99. The DG set was already repaired. Mr. S.S. Patri visited the plant again and inventorised the spoiled stock. The Surveyor Mr.S.S. Patri submitted the preliminary survey report on 17-12-99.
5.0 CAUSE OF DAMAGE Page 8 of 15 // 9 // 5.1. The cyclone of 29-10-99 caused the failure of power supply from GRIDCO and breakdown of DG set which led to rise in temperature of cold storage. Due to rise in temperature of the cold storage, the finished marine products stored inside the cold storage plant has deteriorated.
5.2 In our opinion the direct cause of loss is deterioration of stock due to change of temperature in the cold storage plant.
6.0 EXTENT OF DAMAGE 6.1 The stock of finished marine products packed in cardboard boxes and stored inside the cold storage has got damaged. Due to the temperature of the cold storage increasing beyond the permissible range of - 18 degree C, the materials have deteriorated. It has decomposed & many have blackened. It was giving very foul smell and is not suitable for human consumption.
6.2 The total stock in the Insureds plant on 29-10-99 was 144.808 MT. Out of this 15.001 MT got damaged. It was later destroyed by burning. The balance materials were salvaged by removing it to rental cold storage at Vizag.
6.3 The Insured has claimed Rs.58,30,863 for the damaged prawns. This include Rs.2,80,000 being cost of transporting the material to Vizag and Rs.5,69,166 being rental charges of the hired cold storage at Vizag for salvaging the balance materials.
7.0 OUR OBSERVATIONS 7.1 We visited the Insured's factory first on 13-1-2000 and inspected the premises. We had detailed discussion with the surveyor Mr.S.S.Patri and a joint visit was made to the Insured's plant to inspect the spoiled materials. The factory manager showed us the nature of deterioration in sample packets removed from the cartons. They were kept separately inside the cold storage No.1 and the quantity was ascertained from the number of packets & stacking, behind the surveyor Mr.S.S.Patri confirmed that the damaged stock has been inventorised by him at the time of survey.
7.2 The sample of the deteriorated stock was collected by Central Insurance of Fresh water Aquaculture (CIFA), Bhubaneswar for analysis as required under Hazard Analysis and Critical Control Point Programme. CIFA in their report dated 18-11-99 has confirmed that detailed bacteriological and physiochemical analysis it is confirmed that the varieties have completely decomposed.
7.3 We are informed that when the temperature of cold storage began to rise, the Insured decided to remove the finished goods to a hired cold storage at Vizag. All the cartons were individually inspected and sent to M/s. Snowman Frozen Food Ltd. Vizag Totally 113.104 MT was shifted and saved.
7.4 The DG set room was in between the processing hall & ice plant. The roof of DG set room was found intact and no damage was noticed. We are informed that storm water entered through the window and damaged the DG set. Considering the high velocity of the wind/rainfall Page 9 of 15 // 10 // on 29-10-99 and the extent of damage caused by the fury it is possible that storm water must have affected the DG set. The log book of DG set indicate that there was enough fuel and it was functioning normally. Earlier the DG set was used when ever the power went off. Accordingly to the level of fuel remaining in DG set it is estimated that it must have stopped working at around 11.30 A.M. on 29-10-99. 7.5 As per the Temperature log book of Cold storage unit it is noted that the temperature started rising on 29-10-99 and it reached +1 degree C on 3-11-99. After the DG set was repaired and resumed working on 4- 11-99 the temperature became normal to -18 degree C on 7-11-99. From 1-11-99 the Insured has shifted sound stock to hired cold storage at Vizag after checking/testing the stock. Due to increase in temperature stock of prawns started deteriorating. When the temperature rises the bacterial & enzymes gets activated leading to spoilage of materials. Samples were drawn and tested.
8.0 INSURANCE LIABILITY 8.1 The policy issued is a simple storage policy covering prawn & fish inside the godown. It is a fire C policy extended to cover Flood & cyclone. Accordingly to the normal flood extension endorsement loss of or damage to property insured directly caused by storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation are covered. Under the heading "Special Condition" it is stated. No consequential loss or damage of any kind or description is covered under the policy'. 8.2 In this particular case there was cyclone on 29-10-99. The cyclone caused heavy toll of loss of life and other destruction. The communication & power supply were completely broken. The stock were kept inside cold storage plant. In addition to direct power supply the Insured had DG set to maintain the temperature inside the cold storage plant. Due to cyclone the power supply got cut off. Storm water entered the DG set and it stopped working. For nearly five days the DG set could not be repaired. Therefore the temperature inside the cold storage increased and the stock of prawn got deteriorated. The Insured then arranged to segregate the prawns and shift them to other cold storage at Vizag. Despite this, large quantity of stock got damaged. This was due to rise in temperature inside the cold storage. Storm or flood water did not in any way enter the cold storage unit. The damage was mainly due to increase in temperature caused by failure in power supply. There was no direct impact on the stock by any of the insured peril.
8.3 As stated above the policy was Fire C extended to cover Flood & allied risk. To give rise to a claim under this policy the loss should be caused by direct affect of the insured peril. In this case stock was not affected directly by storm or flood. Nature of stock was such that it has to be kept at a certain temperature. The failure of power supply and DG set caused the temperature to increase. Therefore the loss is attributed directly to rise in temperature caused by failure of power supply. 8.4 The exclusion in the endorsement clearly states that consequential loss is not covered. The above loss is apparently of a consequential nature.
Page 10 of 15// 11 // 8.5 Had the Insured taken cover against deterioration of stock due to power failure following damage to premises of public power station and terminal ends of electric service feeders (vide part-III-Tariff 2 section 10- Special Perils- sub section 2) then there is a possibility of such a loss coming under purview of policy. Insured has taken simple storage policy. For instance if instead of prawns there were goods like grains, cotton, etc inside the godown there would have been no damage due to failure of power supply. Storm/flood has not directly affected the stock. 8.6 There is no mention of cold storage (including damage to property caused by change of temperature resulting from operation of insured peril) in the policy.
8.7 We therefore feel the loss was not caused by direct influence of insured peril.
9.0 ASSESSMENT:
9.1 We have verified the daily stock register, purchase register & other relevant records at the main office and the Insureds Mancheswar plant. The documents relating to removal of material to hired cold storage at Vizag for salvaging the stock was also verified. 9.2 The Insured has destroyed the damaged materials between 20-2-2000 and 24-2-2000 in the presence of General Manager Production, General Manager Finance and Quality Control Incharge.
The Surveyor Mr.S.S. Patri was also present at the time of destruction. Mr.S.S. Patri has confined vide his letter dated 20-3-2001 that the damaged stock was destroyed in his presence. Photographs of the destruction is sent with this report.
9.3 As per the stock register & other records verified by us the position of total stock on 29-10-99, salvaged stock and damaged stock is as follows:
Variety Total Stock Salvaged Damaged
Kgs Stock-Kgs Stock-Kgs
HL White 47,712 40,150 7,062
HL Black Tiger 53,406 49,926 6,480
Brown 8,546 7,874 672
Pink 6,442 3,300 3,142
PUD 29,202 28,556 646
144,808 129,806 15,002
9.4 The production, Despatch and Closing stock in the past three
months are as follows:
MONTH PRODUCED DESPATCHED CLOSING
STOCK
AUG-99 78130.600 76380.000 119139.100
SEPT-99 101954.100 90868.000 130225.100
OCT-99 135242.900 120660.000 144808.000
9.5 The production and level inventory depends on the season
and quantum of catch at the centers. Monthly stock statement has been submitted to bank.
Page 11 of 15// 12 // 9.6 VALUATION:
9.6.1 The stock is valued at cost of raw materials consumed for finished stock processed per kg and other direct expenses per kg of stock processed. The Insureds claim is at sales price. According to the Insured the cost of production is Rs.293 per kg. This include direct & indirect expenses and also interest on working capital. For calculation of cost of production we have included cost of raw materials and direct expenses incurred at factory. Indirect administration cost and cost of financing is not taken into account.
9.6.2 From production records it was found that the yield at Mancheswar plant is around 84.34 % from 1-4-99 to 30-9-99. The over all yield of the company which include Paradeep and Mancheswar plants is less. It is 70.63 %. As separate production records are available we have taken the average yield of Mancheswar plant.
Raw materials consumed 620277 Kg Finished stock processed 523190 Kg Yield 84.34% 9.6.3 For the purpose of valuation we have considered the cost of
production from 1-4-99 to 30-9-99. The average yield is 84.34 % upto 30-9-99, whereas the yield for October, 99 is 76.55% only. As the average gets affected the yield of October, 99 is ignored.
9.6.4 The value of raw material consumed for producing 523190 kg is Rs. 112974462 i.e. Rs.215.93 per kg.
9.6.5 The following are the direct expenses incurred from 1-4-99 to 30-9-99 at Mancheswar plant for processing 523190 kg of finished materials upto 30-9-99.
EXPENSES AMOUNT-RS
Feeds, seeds & culture 22849530
Processing charges 2554020
Packing materials 2374117
Electricity charges 1731397
Procurement expenses 109110
Freight & cartage 564822
Repair & maintainence 939037
Consumable 190583
Total 31312616
Average rate of direct expenses per kg Rs.59.85
9.6.5 The cost of production is as follows:
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Cost of raw material consumed per kg Rs.215.93
Direct expenses per kg Rs. 59.85
Cost per kg Rs.275.78
10.0 LOSS ASSESSED
10.1 Value at Risk
Total Stock at Mancheswar plant on 29.10.99 144808 Kg
Cost of 144808 kg @ Rs.275.78 per kg = Rs.3,99,35.150
Sum Insured of Rs.6,00,00,000 was found to be adequate. 10.1 Loss Assessed:
Cost of 15002 Kg of stock spoiled In cold storage @ Rs.275.78 per kg Rs.41,37,251 Less: Excess applicable for loss by cyclone Rs. 1,00,000 Net Loss Assessed Rs.40,37,251 11.0 CONCLUSION 11.1 M/s. Falcon Marine Exports have claimed for loss due to damage to stock of prawns meant for exports. Due to severe cyclone in Orissa on 29-10-99, the power supply was cut off and the DG set also stopped functioning resulting in rise of temperature in cold storage. The prawns stored in the cold storage got spoiled due to increase in temperature.
11.2 In our opinion the loss is not due to direct cause of insured period i.e. cyclone/ flood. The proximate cause of loss is change in temperature of the refrigeration plant leading to deterioration of goods.
So the loss is not due to insured peril.
11.3 The cost of damaged stock is Rs.41,37,251 ISSUED WITHOUT PREJUDICE."
11. Looking to all the above, this Court finds, there is no hesitation in observing the loss faced by the Petitioners-factory not only on account of devastating super cyclone in the State more particularly in the district of Cuttack, Khurda and Puri, but the Petitioners' factory is also situated in Bhubaneswar comes within the district of Khurda. There has been Page 13 of 15 // 14 // definite loss to the extent indicated by the Surveyors, Loss Assessors and Valuers. Further the Insurance Company since relying on such Surveyors' report, there cannot be denial to the assessment made by the Surveyor as the cost of loss was an outcome of super cyclone taken place in 1999. The plea of the Insurance Company that loss occurred on account of running of such factory without power supply, this Court in the entire reading of the claim application and looking to the report at Annexure-4 finds, there has been close mind reading of the Insurance Company on the entire issue involved. It is not understood, how the Insurance Company finds the claim is an outcome of running of the factory premises without power supply. When failure of supply at relevant point of time was definitely an outcome of severe damage due to super cyclone hitting the large part of State with wind speed from 220 kms. per an hour to 275 kms. per hour and undisputedly damage caused is an incident involving super cyclone, this Court is unable to appreciate the understanding of the Insurance Company in even not understanding the impact of the factory, loss occurred on variety grounds and the majority of the grounds on the super cyclone effect. This Court here takes into account the prospect of coverage of loss through the Insurance Policy at Annexure-2 and finds, the Insurance Company has undertaken to cover the damages relating to cyclone. In the circumstance, conditions in the agreement could not have been violated by the Insurance Company being party to such clear understanding and the Surveyor appointed here undisputedly is an enlisted Surveyor of the Insurance Company involved and further report of Surveyor is also never challenged and or disputed.
12. In the circumstance, this Court while declaring the impugned order at Annexure-11 a mechanical one and being passed in arbitrary exercise of power and clearly contrary to the policy condition in Annexure-2, in setting aside the Annexure-11 this Court allows the claim of the Page 14 of 15 // 15 // Petitioners to the extent at least in the line of opinion of the Surveyors, Loss Assessors and Valuers as find place at clause 10.1 read together with clause 11.3 therein. In the process while allowing this writ petition to the extent the loss assessed by the Surveyors, Loss Assessors and Valuers at Rs.41,37,251/-, also for finding the Petitioners entitled to such damage at least since the date of submission of the report of the Surveyors, Loss Assessors and Valuers and value on 29.04.2001, also assessed the entitlement of the Petitioners to interest at the rate of 8% per annum all through. For the Insurance Company having a definite role to mitigate the demand of the policy holder and failing to keep its promise and having adopted an unfair practice by forcing the policy holder to approach the High Court under the writ jurisdiction and following of such pursuit for nearly 20 years, this Court also quantifies the litigation expenses to a sum of Rs.50,000/- to be paid to the Petitioners.
13. All the amounts assessed hereinabove shall be calculated and released in favour of the Petitioner No.1 as undertaken within a period of one & half months from the date of communication of a certified copy of this judgment. Failure of which Petitioners shall be entitled to interest @12% per annum all through taking into account the loss involved herein is a business loss.
14. Writ Petition succeeds. There is, however, order as to costs as hereinabove.
...............................
(Biswanath Rath) Judge Orissa High Court, Cuttack.
The 9th day of March, 2023// Ayaskanta Jena, Senior Stenographer Page 15 of 15