National Consumer Disputes Redressal
Murari Woollen Mills Ltd. vs United India Insurance Co. Ltd. And Ors. on 18 July, 2005
Equivalent citations: III(2005)CPJ118(NC)
ORDER
K.S. Gupta, J. (Presiding Member)
1. This order will govern the disposal of Original Petition Nos. 280 of 1997 and 299 of 1997.
2. O.P. No. 280 of 1997 was filed, inter alia, alleging that complainant is having an industrial unit for manufacture of acrylic/woollen yarn etc. at Plot No. 282, Industrial Area-A, Ludhiana. Stocks and machinery of complainant were hypothecated with Punjab National Bank-opposite party No. 3. During the relevant period, opposite party No. 3 had taken insurance policies as under:
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Policy Period Sum Property
No. Assured covered
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170/92 25.7.1992 to 116,20,000 Stocks and
24.7.1993 machinery
280/92 25.7.1992 to 60,06,000 Stocks
24.7.193
228/92 6.9.1992 to 40,00,000 Stocks
5.9.1993
450/93 8.3.1993 to 7,33,000 Stocks
7.3.1994
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3. Amount of premium paid to United India Insurance Company Ltd., whereof opposite party No. 1 is the Divisional Manager at Ludhiana and opposite party No. 2 Chairman-cum-Managing Director at Chennai, by opposite party No. 3 was debited in the account of complainant. It was alleged that a fire broke out at about 2.00 p.m. on 7.6.1993 near the generator room which housed electric control panel and switches for incoming power. Electric cables supplying power to Govind Industries, tenant passed through the shed wherein stocks of yarn and machinery were kept. Since the telephone in factory was not then working, the fire brigade deptt. was personally contacted by the son of Director R.K. Soni. Several fire tenders reached the site within about 10 minutes and the fire could be brought under control only by 5.20 p.m. Damage caused to stocks, machinery and building was devastating. It was further alleged that on the date of fire 490 kgs. of Viscose tops, 23600 kgs. of Acrylic tops, 36889 kgs. of W.W. yarn, 65436 kgs. of Acrylic yarn and 465 kgs. of Fancy yarn were held by the complainant. In the fire total stocks of viscose tops, acrylic tops, acrylic yarn and fancy yarn was destroyed. Quantity of W.W. yarn destroyed was 229 kgs. Machinery and accessories were also affected resulting into loss of Rs. 25,000/-. It was pleaded that local police was informed of the incident on 7.6.1993 itself. Intimation of fire was also sent on the same date to the opposite party-Insurance Company J.B. Boda Surveyors Pvt. Ltd. was appointed as Surveyor by the Insurance Company. To assess the cause of fire the Surveyor sought the help of G.B. Menon, fire expert. Desraj Gakhar, investigator was later on appointed by the Insurance Company. Complainant suffered loss on stocks of Rs. 1,24,93,359/- and on machinery of Rs. 25,000/-, totalling Rs. 1,25,18,359/-. Claim of the complainant was repudiated by the opposite party Insurance Company by the letter dated 13.5.1997 based on the reports of said G.B. Menon and Desraj Gakhar. It was asserted that claim was repudiated on flimsy ground that fire was set up deliberately for financial gains. It was prayed that opposite party-Insurance Company be directed to pay aforesaid amount of Rs. 1,25,18,359/- towards loss of stocks and machinery with interest and Rs. 5.00 lakhs by way of compensation for harassment, mental torture and financial strain caused to the complainant company.
4. Complaint was contested by opposite party Insurance Company by filing written version. It was alleged fire took place on 7.6.1993 but the complaint was instituted on 30.9.1997 beyond the period of two years from date of fire and, thus, it is barred by limitation. It was not disputed that stocks and machinery were insured under the four policies. It was alleged that on being intimated of the incident J.B. Boda Surveyors Pvt. Ltd. was appointed as Surveyor to assess the loss. Total loss to the stocks less salvage as assessed by the Surveyor was Rs. 51,21,500/- and loss to the machinery was Rs. 11,540/-. It was stated that G.B. Menon, Loss Prevention Association of India and Desraj Gakhar in their reports ruled out the possibility of fire due to electric short circuiting. They opined that fire could be as a result of arson with motive for financial gains. Liability to pay the amounts claimed was emphatically denied.
5. M/s. A.K. Silk and Woollen Mills Ltd. complainant in O.P. No. 299 of 1997 is the sister concern of complainant in O.P. No. 280 of 1997. Stocks and machinery which were destroyed in fire on 7.6.1993 in O.P. No. 299 of 1997 were also kept in the shed wherein the stocks and machinery in O.P. No. 280 of 1997 were kept. Allegations made in O.P. No. 299 of 1997 are similar to those made in O.P. No. 280 of 1997 except that the number of policies, quantity of yarn destroyed and amounts claimed are different. Sum of Rs. 88,13,219/- has been claimed towards loss caused to the stocks and machinery besides Rs. 5.00 lakhs by way of compensation for mental torture etc. Opposite party-Insurance Company contested O.P. No. 299 of 1997 by filing written version on the pleas identical to those raised in the written version filed in O.P. No. 280 of 1997.
6. We heard Mr. M.N. Krishnamani for complainants and Mr. Vishnu Mehra for opposite party-Insurance Company.
7. The plea in regard to complaint being barred by time is stated to be rejected. Cause of action to file complaints within the meaning of Section 24-A of Consumer Protection Act, 1986 (for short the 'Act') had arisen on 13.5.1997 when the claim was repudiated by Insurance Company and not on 7.6.1982 when the fire broke out and, thus, the complaints filed on 30.9.1997 were within limitation.
8. Order dated 30th April, 2002 notices the statement made by Mr. Krishnamani that complainants will abide by the report of Surveyor and accept the amount as assessed by it. Dispute is, thus, not on quantum. Controversy between the parties centres around the question whether fire occurring on 7.6.1993 was accidental or was it due to arson with motive for financial gains. Evidence led by the parties in both the complaints is similar. In the site plan dated 7.10.2003 filed by complainants the shed damaged in fire has been shown in yellow while the portion given on rent to Govind Industries in red colour. As may be seen from this site plan the generator room was located towards south while the meter room wherein electric control panels and switches were installed, towards east on the left corner of the shed damaged in fire. Electric cable is shown to be passing from the meter room to the hall in the tenancy of said Govind Industries through the shed shown in yellow colour. In support of the case that fire took place due to short circuiting in electric cables passing through the damaged shed, the complainants rely on the affidavits of Raj Kumar Soni, Managing Director, Janakraj Sharma and Vijay Kumar Sharma, employees of the company, Baldev Raj Sharma, Station Fire Officer, report of J.B. Boda Surveyors Pvt. Ltd., Surveyor dated 3.5.1994 Ex. C/24, letter from the Surveyor dated 23.12.1996 Exhibit C/30, Fire Brigade Report Exhibit C/10, police investigation report dated 25.6.1993 Exhibit C/11 and certificate from P.S.E.B. dated 30.5.2002 Exhibit C/12. On the other hand, to support the plea of fire having been set up deliberately with motive for financial gains, the Insurance Company relies on the reports of G.B. Menon dated 3.8.1993 Exhibit C/12, Loss Prevention Association Exhibit OW1/4 and Desraj Gakhar dated 12.9.1995 Exhibit O.W. 1/6.
9. In his affidavit said Raj Kumar Soni averred that during the month of January, 1991, opposite party No. 3-Bank had stopped operation of the accounts of complainants and for that reason the working of two units came to a standstill. Thereafter, part of factory building consisting of two sheds and generator/power control room were rented out to Govind Industries Pvt. Ltd. under a lease dated 14.1.1992, Exhibit C/5. Entire stocks of the complainants was shifted to one shed which was destroyed in fire. Power supply to the unit of Govind Industries (P) Ltd. came from the generator/power control room through the cables/wires in conduit passing through the subject shed. On 6.7.1993 at around 2.00 p.m. Vijay Kumar Sharma, Supervisor came rushing and told that subject shed was in fire. Due to fault in Telephone Exchange, the telephone lines in factory premises were not working. His son, Deepak Soni personally rushed in a car to the Fire Station which was at a distance of 1 to 1.5 kms. away from the factory. One Jagmohan Sharma, not known to him, also intimated the Fire Station on phone about the fire. In para 4 of the affidavit aforesaid Janakraj Sharma averred that for power supply from generator room/control power panel room to the portion in possession of Govind Industries Pvt. Ltd., live wires were passing through the subject shed. In paras 6 and 7 of the affidavit Vijay Kumar Sharma stated that live cables were passing through the subject shed to supply power from generator room/control panel room to the portion in the tenancy of Govind Industries Pvt. Ltd. which was operational. Particularly paras 2, 4 and 5 of the said affidavit of Baldev Raj Sharma which are material, are reproduced below:
"2. That the deponent had personally supervised the fire fighting exercise in the incident of fire occurring at Plot No. 282, Industrial Area A, Ludhiana on 7.6.1993. As per practice with the Fire Department, remanants of the burnt building were examined to determine the cause of fire. Electric cables passing through the burnt shed encashed in cable drain alongside the eastern wall of the shed, were found lying in charred condition. These live cables were meant for transmitting power to the adjacent sheds rented out to M/s. Govind Industries Pvt. Ltd. On detailed examination, it was our conclusion that the fire was caused due to short circuit in the above live cables.
4. That with the large experience of deponent having served with the Fire Department for more than 30 years, the deponent is of the firm opinion that the fire was accidental due to short circuiting because during the fire fighters operation, nothing was noticed pointing of finger to arson.
That deponent was first to reach the site of fire and later on other officers from different Fire Sub-Stations and Head Office joined the deponent to control the fire."
10. In the report of Municipal Fire Brigade, Ludhiana, Exhibit C/10, the supposed cause of fire is noted as short circuit and the name of above Baldev Raj Sharma mentioned as one of the persons attending fire.
11. Also taking note of the report Exhibit C/10, the affidavit of Baldev Raj Sharma cannot be disbelieved merely on the ground of his having retired from Municipal Corporation by the time it cannot to be filed.
12. Police investigation report, Exhibit C/11 notices that the fire was due to sudden electric spurt. It may be stated that the letter Exhibit C/12 was sent by the complainants to X.E.N., P.S.E.B., Industrial Area, Ludhiana for issuing certificate if power supply to their unit at 282, Industrial Area, Ludhiana was in running condition on 7.6.1993 before the fire broke out. This letter was returned with the endorsement that power supply from 11 KV West Feeder and 11 KV Oswal Feeder was stopped to the unit at 14.20 hrs. meaning thereby that power supply to the unit was available at the time the fire occurred. Para of the Surveyors' report Exhibit C/24 dealing with cause of fire which is material, runs as under:
"Regarding the case of fire, we enquired from the Director of the Company and other employees of the company. But, they could not throw any light on the exact cause of fire. We checked the complete premises and found that the electrical wirings were passing through this factory to M/s. Govind Industries. We saw the entire wiring in charred condition. Since the factory was not being used and was not being opened frequently, in our opinion, there might have been spark in live wires which might have fallen on the stocks. The stocks being acrylic yarn and tops caught fire and spread all over. Due to combustible nature of goods, the fire spreaded very fast resulting the total destruction of stocks and as well as machines. Therefore, in our opinion, the cause of fire may be electrical short-circuiting."
13. This report is a valuable piece of evidence. In the letter Exhibit C/30 sent by the Surveyor with reference to letter dated 22.10.1996 Exhibit C/22 of the opposite party-Insurance Company, the cause of fire as stated in report, Exhibit C/24 was reiterated.
14. Coming to aforementioned evidence of opposite party-Insurance Company, paras 5.1 and 5.5, of the report Exhibit C/23 of G.B. Menon which are material, read as follows:
"5.1 In such major fires involving total destruction of contents and building elements, usually it will be difficult to establish beyond doubt the cause of fire unless some obvious form of evidence are available. This was one case of that nature where no extraneous evidence was apparent. However, the more likely causes which could have resulted in this major fire are mentioned hereunder with comments.
5.5 The primary requirement for suspecting arson in such cases is the existence of motive/motives. In this major fire incident one of the common motives like financial gains through fraudulent claims apparently exist...."
15. Conclusion as at 5.5 above was reached after observing that it was not a case of electric short-circuiting or careless smoking of the spontaneous combustion. It is pertinent to mention that Shri Menon was not categoric that the incident could not be due to short-circuiting.
16. The report of Desraj Gakhar, investigator, Exhibit O.W. 1/6 is by and large based on the report Exhibit C/23 of Shri Menon. He visited the site for the first time on 18.12.1994 after about one and a half years of the fire. Surveyor had allowed the complainants to remove the debris of burnt materials on their letter dated 12.6.1993 Exhibit C/22. Complainants must have removed the debris within a short period thereafter. By the time visit was made the debris of burnt materials was not available and building reconstructed at the site.
17. In this backdrop, the conclusion reached in the report by Shri Gakhar that fire was self-designed and set up deliberately cannot be accepted.
18. Report of Loss Prevention Association of India, Exhibit O.P.W. 1/4 is based on the site visit made on 22.6.1993 by Vinay Gupta whose affidavit has been filed. This report proceeds on the assumption that no power supply was being provided by the sub-station and damaged Shed did not have power supply at the relevant time. As may be seen from the endorsement by Electricity Department on aforesaid letter Exhibit C/12, the power supply from 11-KV West Feeder and 11-KV Oswal Feeder to this unit was stopped at 2.20 p.m. Again, whether the subject shed had power supply was irrelevant as the complainants allege that contiguous sheds in the tenancy of Govind Industries Pvt. Ltd., an on going unit, had supply of power from the cables/wires passing through the subject shed from the generator room/control power panel room installed towards East of the left corner thereof. By the time of site visit by Vinay Gupta the charred cables had been removed. Report Exhibit O.P.W. 1/4 was, thus, of little help to the opposite party-Insurance Company.
19. In Slattery v. Mance, 1962 (1) All. E.R. 526, it was held that once the insured had shown that the loss was caused by fire, he had made out a prima facie case and the onus shifted on the insurer to show on a balance of probability that the fire caused was connived at by the assured. Aforesaid evidence adduced by the opposite party fall short of proving that fire on 7.6.1993 was set up deliberately with motive for financial gain as alleged by the complainants. From aforementioned evidence of the complainants coupled with the presumption of their having made out prima facie case it is proved that fire was accidental caused by short circuiting in the live cables/ Wires passing through the shed damaged. Repudiation of claim made through the letter dated 13.5.1997 was thus bad and opposite party-Insurance Company being deficient in service, is liable to pay the amounts as recommended by J.B. Boda Surveyors Pvt. Ltd. Since complainants have been deprived of the use of money they are entitled to interest which is quantified at @ 9% p.a. payable after three months of the report Exhibit C/24 dated 5.5.1994. As the stocks and machinery damaged were hypothecated with opposite party No. 3-Bank the awarded amount is to be paid to the Bank.
20. For the foregoing discussion, while partly allowing complaints the opposite party-Insurance Company is directed to pay amounts of Rs. 51,30,540/- in O.P. No. 280 of 1997 and Rs. 28,83,409/- in O.P. No. 299 of 1997 with interest @ 9% p.a. w.e.f. 5.8.1994 till realisation to opposite party No. 3-Bank. It will also pay costs of Rs. 5,000/- to each of the complainants.