Calcutta High Court
Irc Natural Resources Pvt Ltd vs The New India Assurance Company Ltd on 21 May, 2026
Author: Sugato Majumdar
Bench: Sugato Majumdar
2026:CHC-OS:252
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Sugato Majumdar
CS-COM/194/2024
[OLD NO CS/82/2020]
IRC NATURAL RESOURCES PVT LTD
VS
THE NEW INDIA ASSURANCE COMPANY LTD
For the Plaintiff : Mr. Jishnu Saha, Sr. Adv.
Ms. Sananda Ganguly, Adv.
Mr. Rohit Banerjee, Adv.
Mr. Ishaan Saha, Adv.
Ms. Sananda Ganguli, Adv.
For the Defendant : Mr. Soumendra Nath Ganguly, Adv.
Mr. Jit Ray, Adv.
Hearing concluded on : 30/04/2026
Judgment on : 21/05/2025
Sugato Majumdar, J.:
This is a suit for money decree, interest and other reliefs. The Plaintiff is a private limited company registered under the Companies' Act 1956, having its registered office at Sunyat Sen Street, Kolkata - 700072 within the jurisdiction of this Court. The Defendant is a public limited company having its office at 4, Mangoe Lane, Kolkata - 700001 within jurisdiction of this Court.
Page |2 2026:CHC-OS:252 The Plaint case, in nutshell, may be summarized as follow:
a) The Plaintiff is engaged in the business of cargo handling. In the year 2016, the Plaintiff participated in a tender for handling cargo at Berth No. 13 (now Berth No. 14) of the Haldia Dock Complex of Kolkata Port Trust. The Plaintiff was required to deploy two Mobile Harbour Cranes (in short "MHC"). The Plaintiff's bid was accepted as a result of which the Plaintiff was to deploy to MHCs of 100 tons capacity each. The Plaintiff purchased two 100 tons capacity MHC from Terex Gottwald which is a company of Germany. Import value of each crane was Rs.20,58,66,920/-. Since the values of the two cranes were above rupees forty crores, the Plaintiff had to look for institutional finance for purchasing and importing the cranes. The Plaintiff obtained a loan of Rs.37.03 crores from IndusInd Bank. One of the conditions of the loan was to insure the MHCs to their full value. The Plaintiff, therefore, got the MHCs insured by the Defendant. The MHCs were installed and commissioned on 05/11/2016. The MHCs were insured with effect from 04/10/2016. The insurance was for one year period but was renewed from time to time. The policy of insurance covered all the perils. The policy of insurance was "Contractor's Plant and Machinery Insurance Policy". Detailed terms and conditions were embodied and contained in the said policy document including exceptions.
b) On 27/04/2019, at about 08:50 a.m. while the renewed policy was in force, one of the MHC bearing Serial No. 241760 was damaged by accidental fire from external source resulting in death of the crane operator. The fire was noticed at the bottom side of the damaged MHC under its hydraulic system and around its tyres. Although immediate attempt was made to control fire by the Plaintiff's personnel present at the site, they could not stop the fire Page |3 2026:CHC-OS:252 which spreaded rapidly from the bottom of the hydraulic system and around the tyres to the hydraulic system of the crane. Thereafter, the fire engulfed the chassis, machine house and the gear room, as well as the superstructure of the MHC. Fire Brigade was immediately informed of and they came to extinguish the fire. After hours of struggle, fire was extinguished at about 12:40 p.m.; in the meantime, fire had substantially ravaged and destroyed chassis, tyres, hydraulic system, gear room, machine house as well as the superstructure of the MHC, rendering the same useless. The Fire Brigade personnel prepared a report and handed over the same to the Plaintiff, but could not identify the cause of fire.
c) The Plaintiff informed of the incident of fire to the Defendant as well as to the Haldia Dock Complex, Kolkata Port Trust. On 27/04/2019, the Defendant appointed one surveyor to make a preliminary survey of the loss.
d) Kolkata Port Trust made a full enquiry and intimated the Plaintiff that it was destroyed by accidental fire. In terms of communication made on 05/07/2019. Kolkata Port Trust expressed that the later decided to consider the above incident of fire under "force majeure" clause.
e) On the basis of enquires and investigations made by the Plaintiff, it was felt that probable cause of fire was strong gusts of wind blowing coal dust/granules, ignited due to spontaneous combustion into the lower frame, chassis and hydraulic system of the damaged MHC. Heaps of coal are regularly unloaded at Berth 13 of the Haldia Dock Complex. MHCs deployed by the Plaintiff, were and are still used for loading, unloading and handling of coal. Berth 13 is in close proximity of the damaged MHC. Coal dusts might have been ignited due to spontaneous combustion as a result of Page |4 2026:CHC-OS:252 prolonged exposure to atmosphere. This was a regular phenomenon. There was strong gusts of wind in the morning of 27/04/2019 which possibly carried burning coal dusts to the damaged MHC causing ignition.
f) There are two separate fuel inlets in each MHCs for filling high speed diesel, required to run those MHCs. Both fuel inlets led to the same fuel storage tank at the base section of the crane. Fuel capacity is 7000 litters. There are two fuel inlets in the MHCs. One inlet is located towards the bottom of the fuel storage tank at the base section of the crane. The other is located at the top of the same. Even the inlet located at the base section of the crane ultimately directs fuel to the storage tank at the top. Filling of diesel in the MHCs through the upper inlet at the top of the fuel storage tank in the base section of the crane is, as such, much faster and is a preferred mode. As most MHCs deployed at Haldia Dock Complex are of Liebherr make, which only have filling inlets at the top of their fuel storage tanks, it is standard practice of almost all the crane operators who have deployed MHCs to fill high speed diesel in their crane through the top inlet of the fuel storage tanks of the cranes. While placing the purchase order to the manufacturer of the MHC, the Plaintiff clearly indicated that filling of fuel to run the same would be done as per prevailing local practice which is to fill high speed diesel in the cranes from the top inlet of the fuel storage tank. This practice was never objected to.
g) The Plaintiff used to procure and still procure high speed diesel from the dealer of Hindustan Petroleum for running those MHCs. As a matter of standard practice, upon receiving requisition for supplying high speed diesel for the MHCs at Haldia Dock Complex, all the dealers of high speed diesel bring their tankers and park the same at a distance of 10 miters from Page |5 2026:CHC-OS:252 the concerned MHC. Thereafter, with aid of pump, pumps in high speed diesel through the upper inlet of the fuel storage tank of the MHC. Upon completion of the filling activity, the dealer moves into tanker away from that MHC. This was and still is the practice followed by the dealers supplying high speed diesel to the MHCs. Filling of high speed diesel is done by the dealer with help of a pump and hosepipe. Pump and the hosepipes are supplied by the dealers with help of which supply and filling of high speed diesel is done. The hosepipes, commonly called "suction hose" and "delivery hose", connects the pump to the fuel storage tank of the MHC. Although the hosepipes and the pump belong to the dealer, they are stored at the Plaintiff's facility or operational convenience. Upon being required to supply high speed diesel to any of the Plaintiff's crane, the dealer approaches the MHC with tanker, which apart from its driver also usually carries two crew members. It is dealers' personnel who connects the hosepipes. For this purpose, the tanker's crew members use to take assistance of the Plaintiff's persons at the site.
h) In the morning of 27/04/2019, the dealer first started filling the MHC identified by the serial no. 241763 and after completing the refueling of the said MHC approached the MHC, parked the tanker at a distance of 10 mtrs away. Thereafter, the dealer filled 4000 ltrs high speed diesel. Refueling started at 08:15 a.m. and ended at 08:40 a.m. after which the pump was stopped; the suction and the delivery hoses were disconnected, the residual fuel was drained in a bucket kept for this purpose. The tanker thereafter moved away to a farther corner of the berth. The residual fuel was taken to the Plaintiff's store. Very small quantity of fuel spilled onto the ground which was immediately covered with sand. After removal of the bucket Page |6 2026:CHC-OS:252 containing residual fuel, fire was noticed first. The process of refueling was complete before outbreak of the fire, as is evident from the investigation conducted by the port authorities.
i) On being apprised of the incident of fire, the Defendant appointed a preliminary Surveyor to visit the site and prepared a report dated 28/04/2019. According to the Plaintiff, the preliminary survey report failed to disclose and ascertain the actual cause of fire. Subsequently another Surveyor was appointed on 03/05/2019. The final Surveyor furnished two survey reports on 02/11/2019 and 11/12/2019. According to the Plaintiff this Surveyor acted irregularly in complete violation of the mandatory provisions of the applicable Regulations although the Plaintiff co-operated with him and furnished all the necessary documents. It is further pleaded that the Defendant appointed one M/s Screen Facts Services Pvt. Ltd. being forensic investigator to investigate into the cause and origin of fire, root cause of the loss and circumstances as well as nature of damage. The said M/s Screen Facts Services Pvt. Ltd. visited the berth on 23/07/2019 when the Plaintiff rendered all co-operations. On the basis of the report of the Surveyors as well as that of M/s Screen Facts Services Pvt. Ltd. the claim of the Plaintiff was repudiated. On 02/12/2019, the Surveyor sent an e-mail to the Plaintiff stating that the Plaintiff had appointed a dealer of the petroleum company for refueling the crane; therefore, it is responsibility of the Plaintiff to arrange for suitable pump and accessories for refueling the crane. The Report of M/s Screen Facts Services Pvt. Ltd. expressed opinion that due to closing of the inlet valve of the crane tank, with pump running, temperature of high speed diesel in the impeller pump increased and ignited high speed diesel. Heated/ignited high speed diesel developed enormous Page |7 2026:CHC-OS:252 pressure resulting in explosion of casing of the pump. Hence burning ejected high speed diesel with great force on reaching the bottom part of the crane resulting in fire on tyres. According to the report of M/s Screen Facts Services Pvt. Ltd., this was the root cause of fire. The Report of M/s Screen Shots attributed negligence to the Plaintiff as the root cause of fire. On the basis of the recommendation of the Surveyor, the claim of the Plaintiff was repudiated.
j) The Plaintiff refuted the findings of the Surveyor as well as that of M/s Screen Facts Services Pvt. Ltd. on the ground that opinion was based on conjectures and surmises; the finding is fundamentally erroneous as it had no material basis. It is averred that there was no valve in the upper inlet at the top of the fuel storage tank at the base section of the crane; therefore, there could not be any question of such inlet valve being closed, either manually or automatically. There is no mention in the Defendant's letter dated 24/01/2020 as to what safety precaution or S.O.P was required to be followed. It is further stated that the pump was not a part of insured machinery. There was no stipulation either in the policy of insurance or in the Operating Manual of the MHC with regard to the nature of the pump to be employed for filling high speed diesel into the crane. It is further stated that the pump was not the property of the Plaintiff, but was provided by the dealer to use to refill fuel. There were no specific safety norms.
The Defendant contested the suit by filing written statement. Sum and substance of the written statement may be summarized as follow:
i) According to the Defendant, this Court has no jurisdiction to entertain the suit; the suit is barred by the principles of estoppel, waiver and Page |8 2026:CHC-OS:252 acquiescence; the suit is also barred by non-joinder of necessary party being the fuel surveyor who surveyed the claim and also the financing bank.
ii) On getting intimation of fire, the Defendant appointed a Surveyor. During the course of survey, the Plaintiff submitted claim wherein it was stated that the loss had been caused by accidental fire. The Surveyor, in his letter dated 12/07/2019, stated that the cause of fire was yet to be ascertained.
Therefore, the Defendant appointed a competent forensic expert to ascertain the cause of fire. M/s Screen Facts Services Pvt. Ltd. was appointed accordingly. The said M/s Screen Services Pvt. Ltd. submitted their respective report dated 09/08/2019 wherein it was observed that the fire was not on account of spontaneous combustion, electrical related causes or arson but due to closing of the inlet valve to the crane tank, the temperature of high speed diesel in the impeller of the pump increased, igniting high speed diesel resulting in explosion of casing of the pump due to increase in pressure. Burning high speed diesel was ejected with great force which reaching on the bottom part of the MHC resulted in fire ono the tyre. The root cause of the fire incident was due to using of the pump not adhering to safety norms and due to negligence on the part of the concerned in running the pump after closing the valve. Copy of the report dated 09/08/2019 was submitted to the Defendant by M/s Screen Facts Services Pvt. Ltd.
iii) The Surveyor appointed by the Defendant submitted his interim report dated 02/11/2019 wherein his specific comment regarding admissibility of loss and the Defendant's liability as insurer to deal with the loss was absent. On queries made by the Defendant, the Surveyor submitted his Page |9 2026:CHC-OS:252 final report dated 11/12/2019. The surveyor confirmed recommendation for repudiation of the claim based on the Exception Clause 'O' of the policy. Accordingly, the Defendant repudiated the claim of the Plaintiff, in terms of the letter dated 24/01/2020, considering the line of observation made by M/s Screen Facts Pvt. Ltd. forensic expert, regarding cause of loss and recommendation of the report of the final surveyor dated 11/12/2019.
iv) It was stated that report and opinion expressed by the Kolkata Port Trust Authority that the plea that the fire took place for force majeure is the personal opinion of the authority to which the Defendant did not agree. It was stated that the fact of presence of resident engineer of the manufacturer of MHC during the entire period of functioning is personal knowledge of the Plaintiff. It was pleaded that standard operating procedure was not maintained while fueling the tank of the MHC and the root cause of fire incident was use of pump not adhering to safety norms and also due to negligence on the part of the Plaintiff in running the pump after closing of the valve.
v) It was further contended in the written statement that the alleged probability, canvassed by the Plaintiff, of strong gusts of wind blowing coal dust/granules ignited due to spontaneous combustion into the lower frame, chassis and hydraulic system of the damaged MHC has been sufficiently countermanded by the forensic report submitted by M/s Facts Screen Services Pvt. Ltd. It was stated by the Defendant that there existed considerable distance between the heap of coal and MHC. The heap of coal in the vicinity of the MHC, did not catch fire in spite of heavy flames generated during burning of the MHC which further indicates that the heap of coal was at a considerable distance from the MHC. Fire present in P a g e | 10 2026:CHC-OS:252 the coal dust/particles, generated as a result of spontaneous combustion and must have travelled a certain distance due to heavy winds prevailing on that day. However, fire present in the coal particles must have been extinguished by gusty winds themselves on falling on any solid objects such as tyre as the burning coal particles are too then to cause any fire damage. Further coal does not produce flame when burnt because it does not vaporize like kerosene. On burning, coal produces carbon-di-oxide, heat and light. Fire holding capacity of coal dust is very low. Hence, according to the Defendant, the hypothesis of the Plaintiff is devoid of any scientific basis.
vi) Referring to the forensic report submitted by M/s Screen Facts Services Pvt. Ltd. it is stated in the written statement that the pump used or refueling the MHC on the date of loss had been examined and it was found that the casing of the hydraulic pump exploded, making an irregular hole of about 10 cms in diameter along with the propagated crack on the top body of the pump. The hose that discharged diesel on 27/04/2019 into the tank of the MHC was also found to be extremely burnt. The pump used for fueling the tank of the MHC was a centrifugal pump, which is called in local market as "petrol start kerosene run water pump" and is meant for pumping water. As the name suggest, the pump starts with petrol and runs with kerosene. The said pump has become obsolete now and only petrol operated water pumps are available in the market. The type of centrifugal pumps which had been used by the Plaintiff, certainly should not be used for inflammable low boiling point liquids like high speed diesel, wherein vapour expansion is faster leading to severe explosion. In the instant case, it was not water but inflammable volatile high speed P a g e | 11 2026:CHC-OS:252 diesel that was being pumped into the MHC. After the crane tank was filled, the inlet valve to the crane must have been still in operating condition and resultantly the pump was trying to pump high speed diesel. The temperature of high speed diesel in the impeller increased due to churning of high speed diesel on the impeller blades igniting the high speed diesel. Being highly volatile, heated vapour of the high speed diesel must have developed enormous pressure resulting in explosion and causing the casing of the pump give way to a gaping hole. It was because of the huge pressure developed inside the pump housing, the burning high speed diesel must have been ejected out with great force spreading the fire all along the bottom part of the MHC, as was observed by Sri Souvik Gharami, Safety and Electrical Engineer of the Plaintiff. Due to high wind prevailing on the day, coaking coal particles, which was being unloaded from a ship, must have been deposited and settled on tyres on the body of the MHC and acted as fire accelerants spreading flames rapidly.
vii) It was further stated that Mr. Souvik Gharami, Safety & Electrical Engineer made statement that one BC type foam fire extinguisher was there near the pump motor while explaining the stop-by-stop procedure of refueling. Mr. Gharami, in order to prevent fire, used BC type foam extinguisher. Thus, Mr. Gharami did not follow standard operating procedures. Mr. Gharami also stated, in course of enquiry by the Defendant, that he did not know whether the helpers were skilled or unskilled. He informed that the pump motor belonged to the supplier of oil and complies with safety requirements. Mr. Gharami could not state whether the hoses complied with safety norms or not. It was stated in the written statement that refueling of the MHC was done in a casual manner without following the P a g e | 12 2026:CHC-OS:252 standard operating procedure and safety norms. It was further contended that adoption of procedure of refueling tanks of the MHC in an irregular manner is an aberration of the standard procedure offending safety precautions. It was further stated that the report of the Kolkata Port Trust Authority does not ipso facto signify that the standard operating procedure had been followed.
viii) It was stated that submission of survey report depends on special character of any claim and as such, albeit a directory regulation, issued by I.R.D.A. such directions are not mandatory. Cause of fire was unidentified after submission of the report of the forensic experts. It is denied that there was any violation of the directions or I.R.D.A. regulations or the Insurance Act 1938 by the Defendant.
ix) It was contended that centrifugal pumps are risk prone. More so, using an obsolete type of pump for pumping high speed diesel was highly risky. Modern operations involve pumps with flow meters or pressure switches or some other means of detection that the pump is running but not delivering.
x) It was further stated that refueling activity was still not closed when the fire was noticed. On the fateful day, at about 07:45 a.m., the said Mr. Souvik Gharami and helper along with the truck containing high speed diesel, went to the MHC and began refueling as per scheduled program. After refueling, the technicians and the helpers went to store-room to deposit tools and tackles required for the purpose of refueling. After depositing some tools and tackles in the store-room, they proceeded towards the MHC to gather up the rest of the tools, and tackles still needed P a g e | 13 2026:CHC-OS:252 to be taken to store-room. This was when they suddenly noticed the fire. Statements of Mr. Gharami, recorded by the Defendant were to the effect that accessories used for refueling should be moved to the store. Then the crane would be started as per technical person's command and the final measurement and diesel percentage would be taken. But fire was noticed during this process.
xi) The Defendant denied all other allegations contained in the plaint. It is specifically denied that, in the given facts and circumstances of the case, the Defendant is liable to pay any sum of money, as claimed. The suit should be dismissed, according to the Defendant.
On the basis of the rival pleadings, the following issues were framed:
1. Whether the instant suit is maintainable in law and in facts?
2. Whether the survey report issued by the surveyor is correct and has been made in consideration of the terms and conditions as set out in the relevant Contractors Plant and Machinery Policy (CPM Policy)?
3. Whether the repudiation of claim by the defendant is correct within the purview and scope of the CPM policy?
4. Whether the claimant in the instant suit pro0ceeding is entitled to the claim of Rs.28,80,51,635/- along with the interest @18% on the said amount per annum in excess of the amount as claimed, is correct?
5. Whether the plaintiff is entitled to its claim on account of fire destruction?
P a g e | 14 2026:CHC-OS:252
6. Whether the plaintiff is entitled to get any relief or reliefs? Both the parties adduced oral as well as documentary evidences. Plaintiff's argument:
Mr. Chowdhury, the Learned Senior Counsel appearing for the Plaintiff argued that the insurance policy in question was of a kind of reinstatement or repair indemnity policy. Following the fire incidence, Surveyor was appointed to opine on whether repair of the concerned MHC was possible. Consequently it was decided to assess the loss, consequent to the fire incident as constructive total loss of the equipment.
There was no allegation of arson. There was no mention of arson either in the report of the Spot Surveyor or in the report of the Final Surveyor or in the Final Survey Report made by M/s Screen Facts. The Final Survey Report prepared by M/s Screen Facts attributed fire to closing of the inlet valve to the crane tank. The temperature of high speed diesel in the pump increased causing ignition of high speed diesel resulting in explosion of the casing of the pump due to increased pressure. Burning high speed diesel was ejected with great force which, on reaching the bottom part of the MHC, caused fire on tyres. The Report of M/s Screen Facts attributed the cause of fire to the using of pump not adhering to safety norms and due negligence on the part of the operator in running the pump in spite of closing of the valve. It was argued by Mr. Chowdhury that it was not alleged by the Surveyor or by M/s Screen Facts that there was any willful act or willful negligence on the part of the Plaintiff. Referring to Clause 5 (a) and Clause (o) of the policy, Mr. Chowdhury submitted that the policy contemplated disclaimer of liability by the Defendant in case of "willful act or willful negligence of the insured or his representative". In this case there was no allegation of willful act or negligence, flouting statutory norms or P a g e | 15 2026:CHC-OS:252 failure to take any reasonable step. Referring to Rakapalli Raja Rama Gopala Rao Vs. Naragani Govinda Sehararao & Anr. [(1989) 4 SCC 255] and State of Orissa & Ors. Vs. Md. Illiyas [(2006) SCC 275], Mr. Chowdhury submitted that the expression willful excludes casual, accidental, bona fide or unintentional acts or genuine inability. Willful acts do not encompass accidental or involuntary or negligent acts. It means and connotes acts done with bad purpose. Referring to National Insurance Company Ltd. Vs. Ishar Das Madan [(2007) 4 SCC 105] the Leaned Counsel submitted that where there is an express clause excluding applicability of the insurance cover, it would be for the insurer to show that the claim falls within purview of it. It was further submitted by Mr. Chowdhury that nothing is there in evidence or allegation that the Plaintiff failed to follow any of the manufactures instruction in operation of the mobile harbor crane. According to Mr. Chowdhury, repudiation of the claim of the Plaintiff is unjustified and the Plaintiff should be allowed compensation as prayed for.
Next Mr. Chowdhury argued that M/s Screen Facts only once visited the spot after lapse of three months and prepared the final report. M/s Screen Facts did not have any experience in forensic investigation of fire accidents. During visit, the said M/s Screen Facts did not record testimony of any person present. Although it was stated in the report submitted by M/s Screen Facts that certain doubts had arisen with regard to the versions provided by the persons at site, there was clearly no attempt to obtain clarifications of such doubts by them. According to Mr. Chowdhury, the report submitted by M/s Screen Facts is defective but blindly followed by the Defendant.
Next Mr. Chowdhury argued that M/s Screen Facts attributed the cause of fire to use of defective or unfit pump while injecting high speed diesel. The manufacturer of the crane did not specify any particular type of pump to use for P a g e | 16 2026:CHC-OS:252 refueling. There was no statutory guideline or any manual provided for use of any particular type of pump. The pump was provided by the supplier of the oil. If any negligence was there in choice or use of pump that must be attributable to the supplier of oil, not to the Plaintiff. Therefore, there was no negligence on the part of the Plaintiff which stands on the way to payment of compensation.
Next Mr. Chowdhury argued that expert opinion must always be received with great caution and it is not safe to come to a conclusion solely based on the expert opinion without any substantial corroboration. Mr. Chowdhury referred to Magan Behari Lal Vs. State of Punjab [(1977) 2 SCC 210].
Next it was argued by Mr. Chowdhury that although the Plaintiff had clearly stated in the plaint that the MHC was not fitted with any inlet valve and that the refueling exercise had been complete before the fire took place. The tanker had moved away by that time and there was no specific denial of the same by the Defendant in the written statement. Referring to Badat & Co. Vs. Bombay East India Trading Company [AIR 1964 SC 538] Mr. Chowdhury submitted that if denial of a fact is not specific but evasive, the said fact shall be taken to be admitted. In such event the admission itself being proof, no other proof is needed. Mr. Chowdhury also referred to the answer of DW-2 (Q.34) in cross examination that his understanding was that the fuel tanker moved away after refueling.
Referring to Cement Corporation of India Vs. ICICI Lombard General Insurance Pvt. Ltd. [2025 SCC OnLine SC 2821] Mr. Chowdhury relied on the observation of the Supreme Court of India that if there was fire and the fire was not caused by any willful act of the insured then any loss attributable to fire would be covered under the policy. In case of damage, in such circumstance, the P a g e | 17 2026:CHC-OS:252 reason behind such fire would be irrelevant. British & Foreign Marine Insurance Company Ltd. Vs. Gaunt [(1921) 2 A.C. 41] was also relied upon.
Per contra the principle limb of argument of Mr. Ganguly, Learned Counsel for the Defendant was that the Plaintiff has failed to establish the case of accidental loss. It was argued that the Plaintiff was not sure about the cause of fire as there could be various possible causes, and the exact cause of fire could never be ascertained. It was pleaded in the plaint that probable cause of fire was strong gusts of wind. But no evidence or enquiry had been made by the Plaintiff.
Secondly, it was argued that the best evidence on behalf of the Plaintiff had not been produced. PW-1 was not eye-witness and was not present at the time of the accident. Those who were present and eye-witnessed the incident could have furnished the first-hand experience and evidence. Various officers of the Plaintiff company who were present at that time did not come forward to give their ocular testimony. Therefore, according to the Learned Counsel, evidence of PW-1 should be discarded and should not be relied upon.
Thirdly, it was argued that no expert witness with regard to the accidental nature of fire was produced by the Plaintiff to prove and substantiate its case. Even a purported report of Perfect Forensic Scientific Society was relied upon by the Plaintiff and submitted to the Surveyor, bearing date 17/06/1019 was not produced as evidence. No witness on behalf of that body came forward to depose on behalf of the Plaintiff. On the other hand, the expert report produced by M/s Screen Shot was proved by the forensic expert on behalf of that company who was examined as DW-3. It was proved that the cause of fire was attributable to the defective use of pump. It was further submitted that according to the deposition of DW-3 recommendation of the Oil Industry Safety Directorate was on public domain. Deposition of DW-3 was P a g e | 18 2026:CHC-OS:252 not shaken in course of cross-examination. It was further submitted that the Plaintiff did not follow the standard operating procedure because of gross negligence which was the result of explosion. In nutshell, the Learned Counsel supported the report of M/s Screen Shot and relied upon the explosion theory advanced by the said M/s Screen Shot. Thus, according to Mr. Ganguly the Learned Counsel, the Plaintiff has failed to prove its case and the suit is liable to be dismissed.
Then Mr. Ganguly argued that without prejudice to the rights and contentions of the Defendant in respect of repudiation of claim and without admitting but assuming that the Plaintiff claim would succeed, the Plaintiff is not entitled to the amount claimed. It was submitted that the assessment made by the DW-2 has not been contradicted or impeached in cross-examination. The surveyor also deposed that sum insured under the policy, as on the date of loss was Rs.21,77,24,040/- whereas the new replacement cost was Rs.25,74,00,000/-. The evidence of DW-2, the surveyor enjoys statutory recognition and evidentiary primary, and that should be accepted, argued by the Learned Counsel for the Defendant.
In support of his argument that in absence of cogent rebuttal, Court should accept the Surveyor's assessment, the Learned Counsel relied upon National Insurance Company Ltd. Vs. Vedic Resorts & Hotels Pvt. Ltd. [(2023) 12 SCC 823] and National Insurance Company Ltd. Vs. Hareshwar Enterprises Pvt. Ltd. & Ors. [(2021) 17 SCC 682]. In support of his contention on under insurance, the Learned Counsel relied upon Sikka Papers Ltd. Vs. National Insurance Company Ltd. & Ors. [(2009) 7 SCC 777].
P a g e | 19 2026:CHC-OS:252 ISSUE WISE DISCUSSIONS:
Issue No.1, 2,3 & 4:
It is not in dispute that the mobile harbour crane was damaged beyond repair by the fire. It is the plaint case that fire was accidental. Probable cause of fire was strong gusts of wind blowing coal dust/granules, ignited due to spontaneous combustion, into the lower frame, chasis and hydraulic system. Cause of damage was, therefore, force majure according to the plaint case.
No eye witness was examined on behalf of the Plaintiff to share his personal knowledge of the accident. The Learned Counsel for the Defendant, therefore, insisted that the statement of P.W.1 should be discarded as hearsay evidence. It should be kept in mind that the plaint did not speak out any specific cause of fire but only articulated a probable cause of fire, which may be true or may not be true. M/s Screen Shot attributed the cause of fire to improper use of pump or rather wrong and negligent use of the pump for refueling. The report of M/s Screen Shot was prepared after several months of the incident. But the team of M/s Screen Shot visited the spot and enquired into the matter from people who were present at the time of the incident. The report of M/s Screen Shot was adduced in evidence and proved by DW-
3.
If the report of M/s Screen Shot is to be relied upon, the question comes up whether the staff of the Plaintiff company were negligent as a result of which the fire broke out.
In affidavit of evidence, DW-2 stated that the pump used was petrol start kerosene run water pump, which had been obsolete in market. These types of pumps were meant for pumping water only and certainly should not be used for pumping P a g e | 20 2026:CHC-OS:252 inflammable low boiling point liquids like high speed diesel. In the report submitted by him it was stated that after the crane tank was filled, the inlet valve to the crane tank must have been closed to avoid reverse flow but the motor must have been still in operating condition, the pump trying to pump high speed diesel. The temperature of high speed diesel in the impeller increased due to churning of high speed diesel on the impeller blade igniting high speed diesel. Being highly volatile, the heated high speed diesel vapour must have developed enormous pressure resulting in the explosion and causing the casing of the pump give way to a gaping hole. Because of huge pressure developed inside the pump housing, the burning high speed diesel must have been ejected out with great force speeding the fire all along the bottom part of the mobile harbour crane. Thus, the tyres of the crane caught fire which subsequently spreaded to the hydraulic oil which further escalated the flame. DW-2 in course of cross examination was asked whether the pump was owned by the petroleum company or of the Plaintiff. He could not state properly who owned the pump but expressed opinion that whoever was the owner of the pump, he had supplied an improper pump making it an act of negligence as per reports of M/s Screen Shots (Q.132). He further stated, in answer to question no.177 that the diesel supply set up was directly obtained from the dealer of Hindustan Petroleum by the insured themselves. Hence, it was responsibility of the insured to properly check the safety norms as regard using of the pump for supply of diesel to the mobile harbour crane. Use of wrong type of pump clearly shows negligence on the part of the insured. In answer to Q.167, DW-2 stated that according to forensic expert, the pump in question was used for pumping water.
DW-3, a witness on behalf of M/s Screen Shots, in the course of cross- examination, stated (Q.170) that he was not aware of whether the pump in question P a g e | 21 2026:CHC-OS:252 belonged to the Plaintiff or to the dealer of high speed diesel. His evidence is in consonance with the evidence of DW-2, therefore, need not be reiterated.
Probable reason of fire, as appears from the plaint case, was strong gusts of wind blowing coal dust/granules, ignited due to spontaneous combustion, into the lower frame, chassis and hydraulic system. PW-1 could not speak out the exact reason but expressed a probable cause. No eye witness on behalf of the Plaintiff had been examined. On the contrary, the Defendant caused spot enquiry, interrogated concerned personnel of the Plaintiff and submitted report. M/s Screen Shot found out a definite cause of fire. Instead of surmise a concrete reason should be acceptable, therefore. Reports of the Surveyor as well as of M/s Screen Shot are, therefore, more reliable and acceptable.
Certain facts are discernable from the evidence adduced. Firstly, there was no allegation of arson on the part of the Plaintiff with intention to lodge a false insurance claim. Secondly, cause of fire was use of a pump not fit for refueling high speed diesel. Thirdly, it is not in evidence that the Plaintiff failed to maintain the MHC properly. Fourthly, the concerned pump did not belong to the Plaintiff and it was supplied by the dealer of the high speed diesel. Therefore, it is not the Plaintiff who negligently or deliberately used a wrong pump.
Exclusion Clause (o) of the policy of insurance states as follow:
"THE COMPANY SHALL NOT BE LIABLE UNDER THIS POLICY IN RESPECT OF -
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(o) loss or damage directly or indirectly caused by, or arising out of or aggravated by the willful act or willful negligence of the insured or his representatives."
In General Assurance Society Ltd. Vs. Chandmull Jain & Anr. [(1966) 36 Comp. Las. 468] Constitutional Bench of the Supreme Court of India held that in interpreting documents relating to contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract however reasonable, if the parties have not made it themselves. The policy of insurance, in the instant case, is a standard policy. The term "willful act" and "willful negligence" must have been used to refer specific circumstance distinguished from mere negligent act. Use of the word "Willful" must be given meaning in the perspective. The words "willful act" and "willful negligence"
precisely define the ambit of the disclaimer clause which need not be jeopardized by the Courts using its own meaning.
In Texco Marketing (P) Ltd. v. TATA AIG General Insurance Co. Ltd., (2023) 1 SCC 428, it was observed by the Supreme Court of India in respect of exclusionary clause:
"13. An exclusion clause has to be understood on the touchstone of the doctrine of reading down in the light of the underlining object and intendment of the contract. It can never be understood to mean to be in conflict with the main purpose for which the contract is entered. A party, who relies upon it, shall not be the one who committed an act of fraud, coercion or misrepresentation, particularly when the contract along with the exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract. The main contract once signed would eclipse the offending exclusion clause when it would otherwise be impossible to execute it. A clause or a term is a limb, which has got no existence outside, as such, it exists and vanishes along with the contract, having no independent life of its own. It has got no ability to destroy its own creator i.e. the main contract. When it is destructive to the P a g e | 23 2026:CHC-OS:252 main contract, right at its inception, it has to be severed, being a conscious exclusion, though brought either inadvertently or consciously by the party who introduced it. The doctrine of waiver, acquiescence, approbate and reprobate, and estoppel would certainly come into operation as considered by this Court in Union of India v. N. Murugesan [Union of India v. N. Murugesan, (2022) 2 SCC 25 : (2022) 1 SCC (Civ) 711 : (2022) 1 SCC (L&S) 328] ."
In Cement Corporation of India Vs ICICI Lombard General Insurance Company Limited (2025 SCC OnLine SC 2821) the Supreme Court of India held, referring to Texco Marketing's case (Above), that in case of insurance contracts, the exclusion clause must be construed strictly and wherever there is any ambiguity between two or more clauses in the contract, it must be interpreted in favour of the insured. In New India Assurance Company Limited v. Mudit Roadways, (2024) 3 SCC 193 the Supreme Court of India held that the precise cause of fire is immaterial provided the insured is not the instigator of the fire. This judgment underscores the importance of insurers' duty to act in good faith and honour its commitment to the insured. In Orion Conmerx Pvt. Ltd vs National Insurance Company Ltd. (2025 SCC OnLine SC 2309) it was observed by the Supreme Court of India:
"33. It is settled law that the contract of fire insurance is a contract to indemnify the Insured against loss by fire. The expression 'fire' signifies the cause of the loss and in order to determine whether in a particular case the loss is caused by fire, the following rules generally apply:--
a) There must be an actual fire; hence mere heating or fermentation will not be sufficient to render the insurers liable for loss occasioned thereby.
b) There must be something on fire which ought not to have been on fire.
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c) There must be something in the nature of an accident, but a fire occasioned by the willful act of a third person without the consent of the Insured, is to be regarded as accidental for the purpose of this rule.
If these requisites are satisfied, any loss attributable to the fire, whether by actual burning or otherwise, is within the contract.
34. The object of the contract is to protect the Insured against loss occasioned by fire. The fire must be accidental. The dictionary meaning of the expression 'accidental' is a 'happening occurring unexpectedly or by chance'. Consequently, damage from a deliberately set fire will not be covered. To carry out the investigation, therefore, beyond the cause of the loss and to cast upon the Insured the burden of establishing that the cause of the fire itself was covered by his contract, would largely defeat this object.
35. The cause of fire, however, becomes material where the circumstances of the case are open to suspicion, and seem to indicate that it would be contrary to the principle of good faith (doctrine of uberrima fides) inherent in the contract to permit the Insured to recover. Accordingly, the cause of fire becomes material in cases where the fire is occasioned not by negligence but by the willful act of Insured himself or of someone acting with his privity or consent. In such a case, his conduct, coupled with the making of a claim, is a fraud upon the insurers and he cannot enforce his claim against them. (See: The Law Relating to Fire Insurance by A.W. Baker Welford and W.W. Otter-Barry Fourth Edition).
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37. Consequently, this Court is of the opinion that once it is established that the loss is due to fire and there is no allegation/finding of fraud or that the Insured is the instigator of the fire, the cause of fire is immaterial and it will P a g e | 25 2026:CHC-OS:252 have to be assumed and presumed that the fire is accidental and falls within the ambit and scope of fire policy."
The decisions, aforementioned, must be kept in mind before coming to a conclusion.
The established fact is that the Plaintiff did not instigate causing of fire or did not commit any deliberate act of incendiary. Even if the best case of the Defendant be accepted, that does not establish any willful act or willful negligence on the part of the Plaintiff. Therefore, this Court comes to the conclusion that neither there was any willful act nor any willful negligence on the part of the Plaintiff and the Defendant wrongly repudiated the claim of the Plaintiff and are liable to pay insurance claim.
These issues are decided in favour of the Plaintiff.
Issue No.4:
Once it is decided that the Plaintiff is entitled to insurance claim, quantum of the same is to be considered.
The Plaintiff assessed the total loss and payable amount at Rs.28,80,51,635/- with interest at a rate of 18% per annum. On the other hand, according to the Defendant, even if any sum is payable, that must be according to the Surveyor's Report.
Section 64 UM (4) of the Insurance Act, 1938 provides:
"(4) No claim in respect of a loss which has occurred in India and requiring to be paid or settled in India equal to or exceeding an amount specified in the regulations by the Authority in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the P a g e | 26 2026:CHC-OS:252 commencement of the Insurance Laws (Amendment) Act, 2015, shall, unless otherwise directed by the Authority, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred, from a person who holds a licence issued under this section to act as a surveyor or loss assessor (hereafter referred to as "approved surveyor or loss assessor"):
Provided that nothing in this sub-section shall be deemed to take away or abridge the right of the insurer to pay or settle any claim at any amount different from the amount assessed by the approved surveyor or loss assessor."
The Surveyor's Report should be accepted and relied upon for payment of insurance claim. The Surveyor assessed loss and net payable amount as follow:
Constructive total loss : Rs.11,95,70,780/-
Deduction towards dismantling : Rs.5,00,000/-
the mobile harbour crane
Further deduction of policy excess : Rs.1,00,000/-
Total : Rs. 11,89,70,780/-
As calculated above, in terms of the Surveyors' Report, a sum of Rs.11,89,70,780/- shall be payable to the Plaintiff. This amount shall carry interest at a rate of 9% per annum from the date of repudiation namely 24th January, 2020 till repayment. The amount shall paid within 60 days from the date of decree, in case of default of which the Plaintiff shall be at liberty to draw up execution proceeding.
P a g e | 27 2026:CHC-OS:252 Issue No.4 is decided accordingly.
In nutshell, the suit is allowed.
The Plaintiff do get a decree of Rs. Rs.11,89,70,780/- with interest at a rate of 9% per annum on and from 24th January, 2020 till repayment.
The instant suit is disposed of along with all pending applications. Decree may be drawn up.
(Sugato Majumdar, J.)