State Consumer Disputes Redressal Commission
Km Plastics, Managing Director vs United India Insurance Co. Ltd., The ... on 4 September, 2023
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Date of filing : 16.8.2011
IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL
COMMISSION, CHENNAI.
Present: Hon'ble THIRU. JUSTICE R. SUBBIAH : PRESIDENT
C.C. No. 67 of 2011
Monday, the 4th day of September 2023
M/s K.M.Plastics,
Rep. by its Managing Partner,
Meenakshi Sundaram,
No.188, B2A, Coimbatore Main Road,
Pollachi - 642 001. ... Complainant
- Vs -
1. M/s. United India Insurance Co. Ltd.,
Rep. by its General Manager,
No.24, Whites Road,
Royapettah, Chennai- 600 014.
2. M/s. United India Insurance Co. Ltd.,
Rep. by its Branch Manager,
Pollachi Branch,
No.11/2, T.K.Complex,
New Scheme Road,
Pollachi - 642 002. ... Opposite Parties
Counsel for the Complaint : M/s. M.Aravind Subramaniam
Counsel for the Opposite Parties : M/s. M.B.Gopalan Associates
This Complaint came up for final hearing today, on 04.09.2023, and
after hearing the arguments and perusing the materials on record, this
Commission passes the following:-
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ORDER(Open Court)
R.SUBBIAH J., PRESIDENT This Complaint has been filed under Section 17 of the Consumer Protection Act, 1986, as against the Opposite Parties for the following reliefs:-
(a) To direct the opposite parties to pay a sum of Rs.86,72,095/- being the loss sustained by the complainant due to the fire accident that took place on 18.10.2009;
(b) To direct the opposite parties to pay a sum of Rs.10,00,000/-
towards mental agony and compensation;
(c) To direct the opposite parties to pay a sum of Rs.25,000/- being the costs of the complaint.
2. The case of the complainant is that the complainant is a partnership firm incorporated under the Partnership Act and they are carrying on the business of manufacturing of the aluminium caps and other plastic products. The complainant took a Standard Fire and Special Perils Policy bearing Policy No.170303/11/9/11/00000590 with the 2 nd opposite party for the assured sum of Rs.9,46,93,088/- for a period from 26.09.2009 to midnight of 25.09.2010. After the Deepavali holidays the complainant's manufacturing unit reopened on 18.10.2009 and the first shift was started from 22.00 hours. One E.Mohanamurthy, was the shift in charge of the 3 complainant firm switched on the Compressors/Pet Blow/Injection Unit at 22 hours. There was a power cut at about 22.15 hours and immediately the shift in charge on checking the power line meter, came to understand that there was low voltage. When he was returning to his unit around 22.20 hours, he had witnessed a fire on the paper ream godown near the aluminium cap unit. Immediately, he took assistance from the employees of the complainant firm to set off the fire. Since the fire blow spread out in the high speed he was unable to extinguish the fire despite severe efforts. He has informed the same to the supervisor of the complainant firm and in the meantime one of the employees of the complainant firm informed the fire accident to the fire service station at Pollachi. Immediately the fire service personnel came into the spot at about 23 hours and started to extinguish the fire vigorously and the fire was totally extinguished at about 17.30 hours on 19.10.2009 i.e. on the next day. Because of the vigorous spread of the fire the stock of Kraft Paper, entire Aluminium caps Unit, Paper Cartons, Machinery, Building and Electrical Installation were totally destroyed. The employees of the complainant immediately informed the fire accident to the 2nd opposite party and on 19.10.2009 at 8.30 a.m. the officials of the 2 nd opposite party inspected the place. On 19.10.2009 itself the complainant informed the fire accident to the Superintendent of Central Excise Authority who in turn recorded the statement of the General Manager of the complainant firm on 22.10.2010. The complainant lodged a complaint 4 before the Sub-Inspector of Police, Kinathukadavu Police Station on 23.10.2009, who in turn had taken the complaint on file and registered FIR No.500 of 2009 to the effect that the fire accident was due to electrical short circuit and filed a Final Report before the Judicial Magistrate No.I, Pollachi. The Inspector of Factories and the Fire Service authority had also issued a certificate to the effect that the fire accident was due to the electrical short circuit. The complainant submitted a claim petition before the 2 nd opposite party claiming a sum of Rs.88,86,569/- being the loss sustained by the complainant due to the fire accident with all relevant documents to substantiate its claim. The investigation authority who has been appointed by the 2nd opposite party has inspected the complainant factory premises on 05.11.2009 and submitted its report concluding that the fire accident was not accidental in nature and there is no visibility for electrical short circuit. The investigating authority verified the stock details, electrical bills and sales tax returns furnished by the complainant along with the claim petition and it has come to a conclusion that all the above documents are genuine one and the complainant firm have a satisfactory business in the market. The 2nd opposite party appointed a Surveyor and Loss Assessors namely Asawa & Co., to verify the veracity of the claim petition of the complainant. The surveyors submitted their reports to the 2nd opposite party with a conclusion that there were discrepancies in the statement of officials of the complainant's firm and that would establish the facts that there was a delay 5 in intimating the fire accident to the fire station and also to the competent authorities namely Central Excise Department and Inspector of Factories. The Surveyor and Loss Assessors recommended for repudiation of the claim of the complainant on the ground that the complainant has not complied the condition No.6 and 8 of the Insurance Policy and therefore, the complainant is not entitled for any claim as per the claim petition. Based on the said report the 2nd Opposite Party repudiated the claim of the complainant by its order dated 06.07.2011. The final report of Police Authority, Fire Service Department, the certificate issued by the Inspector of Factories and also report of the Truth Lab would prove the facts that the fire accident was due to the Electric Short Circuit. Though the investigation authorities concluded the facts by the documents furnished by the complainant with the claim petition in respect of stock in hand, purchasing of raw materials, stock of raw materials, business statistics of the complainant firm are genuine one and the business of the complainant is satisfactory in the market, the Surveyor and Loss Assessor without any reason rejected the conclusion of the Investigating Authority, but admitted the loss sustained by the complainant to a certain extent is due to the fire accident and the dispute is only on the quantum and as well as the records produced by the complainant to substantiate the claim. The Surveyor is not the competent person to verify the ledgers, invoices, P & L Account and balance sheet of the complainant firm, and only the registered Chartered Accountant is the 6 competent person to give report with regard to the stock in trade and as well as the business statistics of the complainant. The 2 nd opposite party has not chosen to appoint any individual Chartered Accountant to verify the financial position and the other financial aspect of the complainant firm. Therefore, the finding of the surveyor with regard to stock in trade, business statistics of the complainant cannot be taken into account. The complainant had submitted a revised claim petition on 19.01.2011 for a sum of Rs.86,72,095/-. The Surveyor and Loss Assessors came to a conclusion that the loss sustained by the complainant would be treated as a sum of Rs.39,21,581/-. The above conclusion of the surveyor and loss assessors is vague and without any basis. The 2nd opposite party without appreciating the facts and circumstances of the case, documentary evidence produced by the complainant and also the final report of Police authorities, fire service authorities and Inspector of Factories, had rejected the claim of the complainant. Thus, the 2nd opposite party has committed an act of negligence while considering the claim petition of the complainant. Though the complainant has fulfilled all the terms and conditions of the Insurance Policy, the 2nd opposite party by its negligence and deficiency of service rejected the claim of the complainant and as a result of which the complainant sustained a loss of Rs.86,72,095/- which put the complainant into mental agony and irreparable loss which cannot be compensated by 7 money. Hence, alleging negligence and deficiency of service against the opposite parties, the complaint has been filed for the reliefs stated supra.
3. Opposing the case of the complainant the opposite parties have filed a written version by denying the allegations in the complaint, stating that the complainant availed Fire Policy No.170303/11/09/11/00000590 for the period from 26.09.2009 to 25.09.2010 covering building, machinery, electrical installation and stocks of Aluminium Plant and Paper Unit at its factory premises said to be operating as a Packing Unit. The fire accident on 18.10.2009 was intimated to the 2nd opposite party on 19.10.2009 and immediately the opposite party appointed M/s. Asawa & Co. as Surveyors for conduct of statutory survey as required by Section 64-UM of Insurance Act. Alleging that the fire was due to an electrical short circuit, the complainant has claimed a loss of Rs.88,86,567/- initially, towards damage to building, plant and machinery and further claimed for more than Rs.45 lakhs towards major portion of damage to stocks of various items. The Surveyor had conducted an exhaustive survey after making enquiry with the staff and employees of the complainant and scrutiny of documents and verification of the damage they had submitted a detailed survey report dated 11.04.2011. On scrutiny of the report the opposite party found that the claim was found to be not genuine either in respect of cause of fire or the quantum of loss claimed but grossly exaggerated and the records provided were found to be 8 not reconciling with each other and did not reveal the correct picture and the complainant had failed to provide reconciliation whenever sought. Though the Surveyors made a notional assessment of the loss at Rs.39,21,581/- for the record, the report clearly highlighted the fact that the cause of fire was intentional and quantum was grossly exaggerated and that the assessment was subject to admissibility. As per the Condition No.6 (i) of the Policy "On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company." But, in the instant case Condition No.6 has not been complied with. The opposite parties dispute and deny the truth and veracity of the various statements of the complainant's own employees. There was no possibility of any accidental fire to start in the aluminium cap manufacturing unit or to spread in such manner as to cause extensive loss as being claimed. Thus, denying the case projected by the complainant the opposite parties sought for dismissal of the complaint.
4. In order to substantiate the case and claim, along with proof affidavit, 12 documents were filed on the side of the Complainant and they were marked as Exs.A1 to A12. On the side of the opposite parties though proof affidavit has been filed, no document was marked. 9
5. Heard the submission of the counsel for the complainant and the counsel for the opposite parties and also perused the materials placed on record.
6. When the matter was taken up for consideration, learned counsel for the complainant made a detailed submission adverting to the averments made in the complaint. It is the submission of the learned counsel for the complainant that the opposite party has rejected the claim of the complainant on the reasoning that the fire accident was on account of electrical short circuit has not been proved. In this regard the learned counsel for the complainant by relying upon the final report of Police Authority, Fire Service Department, the certificate issued by the Inspector of Factories and also report of the Truth Lab and submitted that the said documents would prove the facts that the fire accident was due to the Electric Short Circuit. The Investigating Authority who has been appointed by the 2nd opposite party after careful consideration and perusal of the documents produced by the complainant in respect of Stock Register, Purchase orders details and other Internal Records has come to a conclusion that the above documents are genuine ones and the complainant have a satisfactory business in the market. Though, the Surveyor and Loss Assessor without any reason rejected the conclusion of the Investigating Authority, it has admitted the loss sustained by the complainant to certain extent due to the fire accident and it has been only disputing the quantum 10 and as well as the records produced by the complainant to substantiate the claim. The reason given by the surveyor for disputing the documents in respect of purchase of aluminium sheets, paper reels are unsustainable and the finding of the Surveyor that the above documents are manipulated and fabricated by the complainant is totally incorrect. But the 2nd opposite party without appreciating the facts and circumstances of the case properly, merely relying upon the Surveyor Report, has rejected the claim made by the complainant, which has to be set aside with consequential direction to the opposite party.
7. Countering the same the learned counsel for the opposite party has submitted that the complainant reported a claim for damage to the property insured in a fire accident and claimed a sum of Rs.88,86,567/- towards building, Plant & Machinery as per the details found in paragraph 11 of the complaint. According to the complainant the damage was caused due to electrical short circuit. In order to substantiate the same the complainant relies upon the FIR given to Kinathukadavu Police vide FIR No.500/2009 on 23.10.2009 and the final report filed observing that the fire was accidentally caused by short circuit. But the opposite party had appointed M/s. Asawa & Co., for survey and the Surveyors had conducted inspection of the premises. Meanwhile, the opposite party had also appointed Mr.M.S.Prasad as Investigator to examine the probable cause of fire origin, besides certain aspects of the claim. It is also seen that M/s. Truth Labs has been 11 conducted a study of the fire debris and reported no presence of hydrocarbon in the debris vide Report dated 21.05.2010 (Ex.A.6), the Investigator has thus concluded that the fire did not originate due to short circuit as claimed by the Complainant vide Investigation report dated 18.06.2010 (Ex.A.7). The Investigator has concluded that there was no trigger of electrical short circuit for the fire from outside. While the Investigator has discussed verification of purchases and the presence of fresh stocks, there is no specific finding of any irregularity. The verification was made with suppliers who found the Invoices to be genuine. The only remark is that it was unusual to keep Rs.15 lakhs worth of aluminium caps in the machinery room. The Investigator further concludes that "it is not to be concluded that the cause of fire was of electrical origin" but admits that he cannot go in-depth of "any criminal nature of concerned, since, such things have to be enquired by concerned police." Ultimately, the Investigator has stated "Awaiting for police outcome though not available till date." Further the learned counsel for the opposite party submitted that Surveyor has considered the aspects of cause of fire and the quantum of loss claimed and concluded at paragraph 13.0 of the Survey Report (Ex.A.8) that there was seat of fire at two different places without any interconnectivity and without valid reason whereas the complainant wrongly stated that there was electrical short circuit. There had been exaggeration in the quantum of loss claimed especially towards stocks and that there was deliberate 12 manipulation of stock register over a period of time, there was inclusion of false purchases, delay in police complaint and other aspects. However, the opposite party strongly urged that there was no accidental fire established and that the complainant's theory of electrical short circuit is found to be false by expert Surveyor and Investigator. Thus, the learned counsel submits that the claim is not maintainable in view of the applicability of Condition Nos. 6 and 8 of the Policy and therefore, the complaint is liable to be dismissed.
8. Keeping in view the submissions made by the learned counsel appearing on either side, I have carefully gone through the entire material available on record. It would be appropriate to look into the Surveyor Report, wherein under caption "cause of fire" the Surveyor and Assessor has come to the conclusion that the fire accident was not accidental in nature and there is no visibility for electrical short circuit. When the Surveyor has investigated and concluded that the cause of fire is not an accident one, the burden lies upon them to prove that the complainant caused fire so as to make a claim under the policy which they miserably failed to do so. At this juncture, it would be appropriate to rely upon the Judgment of the Madras High Court in Sri Balaji Traders vs. United India Insurance Co. Ltd. (2005-I CTC-267), wherein it has been held as follows:-
"a) in a claim for loss due to fire, the Insured/Complainant needs to establish only the occurrence of a fire, since the 13 Policy covers fire itself as the risk. There is no obligation on the part of the Complainant to identify and establish the actual cause of the fire. Even if the Complainant may suggest any cause, by merely disputing or disproving the same the Insurance Company is not entitled to reject the claim as if there was no fire damage.
b) In order to reject the claim there must be clear evidence produced by the Insurance Company to show that the Complainant had caused the fire so as to make a claim under the Policy (arson)."
Keeping in view the above dictum laid down by the High Court, I am of the opinion that when the fire accident was admitted by the opposite party, since they are only disputing the cause of fire, they have to establish the actual cause of fire. Moreover, in the instant case, firstly the Truth Labs Report finds no presence of hydrocarbon. Therefore, the fire cannot be attributed to any inflammable substance so as to even provide any cause for considering complainant's involvement. Even the Investigator has only ruled out short circuit but nowhere given any finding that, the complainant had caused the fire. The Police Report clearly shows the fire was accidental in nature. The Surveyor himself has not provided any evidence or even any reason to link the complainant to the cause of fire. At the same time the occurrence of fire and the ensuing damage to building, plant and machinery and stocks is not disputed. The complainant having established the occurrence of fire and the opposite party having neither identified any cause, 14 nor any involvement of the complainant, the claim cannot be rejected merely on the ground that the fire was not due to electrical short circuit. Therefore, considering all these aspects I am of the opinion that the complainant is entitled for compensation for the loss suffered by him as per the Surveyor Report dated 11.04.2011 (Ex.A.8) in which the loss had been assessed at Rs.39,21,581/-. The relevant para from the Surveyor Report reads as follows:-
12.0 ASSESSED LOSS The assessed loss (net of salvage) has been tabulated in annexure X14. It works out to Rs.39,21,581/-.
Therefore, I am inclined to direct the opposite party to pay to the complainant a sum of Rs.39,21,581/- with interest at the rate of 7.5% per annum from the date of complaint till the date of realization along with Rs.25,000/- towards costs of this litigation. Consequently, the complaint is allowed in part.
9. In the result, allowing the Complaint in part, the opposite party is directed to pay to the complainant a sum of Rs.39,21,581/- with interest at the rate of 7.5% per annum from the date of complaint till the date of realization along with Rs.25,000/- towards costs of this litigation.
R.SUBBIAH PRESIDENT 15 LIST OF DOCUMENTS MARKED ON THE SIDE OF THE COMPLAINANT Sl. No. Date Description of Document Ex.A.1. 19.10.2009 Letter by complainant to Central Excise Department Ex.A.2. 22.10.2009 Statement recorded by the Central Excise Department Ex.A.3. 23.10.2009 Copy of the complaint by the complainant's General Ex.A.4. -- Copy of the FIR (Translated Version) Ex.A.5. -- Claim Petition filed by the complainant to the 2nd opposite party with Annexures.
Ex.A.6. 21.05.2010 Report of Truth Labs Ex.A.7. 18.06.2010 Investigation Reports of loss assessment and investigation services.
Ex.A.8. 11.04.2011 Final Survey Report of M/s. Asawa & Co. With Annexures.
Ex.A.9. 06.07.2011 Order passed by the 2nd Opposite party by repudiate claim of the complainant.
Ex.A.10 24.10.2009 Mobile Forensic Science Laboratory Ex.A.11 25.12.2009 Letter of Inspector of Police to Metropolitan Magistrate of Kinnathukadavu Court -I, Pollachi Ex.A.12 11.11.2009 Report of Inspector of Industries at Pollachi LIST OF DOCUMENTS MARKED ON THE SIDE OF THE OPPOSITE PARTIES Sl. No. Date Description of Documents
--Nil--
R.SUBBIAH PRESIDENT GR/SCDRC/Chennai/Orders/September/2023