RESERVED
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
UTTAR PRADESH LUCKNOW
COMPLAINT CASE NO. 06 OF 2005
1. U.P. State Sugar Corporation Limited, unit- Bulandsahar, Panni Nagar District Bulandsahar , U.P through its General Manager
2. M/s Wave Industries Private Limited, a company incorporated under the Companies Act 1956 having its registered office at 33, Community Centre, New Friends Colony, New Delhi, 110065 through its Managing Director
Complainants
Versus
1. M/s United India Insurance Company Limited, Court Road, Civil Lines, District Bulandsahar, U.P. through its Branch Manager
2. Regional Manager, M/s United India Insurance Company Limited, Delhi Regional Office-II, 5th Floor, Kailash Building, 26, K.G. Marg, New Delhi
3. Chairman cum Managing Director, M/s United India Insurance Company Limited, Head Office at 24, White Road, Chennai 600014
Opposite parties
BEFORE
HON’BLE MR. JUSTICE VIRENDRA SINGH, PRESIDENT
HON’BLE JUGUL KISHORE, MEMBER
HON’BLE RAJ KAMAL GUPTA, MEMBER
For the Complainants : Sri R.K. Shukla, Advocate
For the Opposite parties : Sri Alok Kumar Singh, Advocate
DATED:
JUDGMENT
MR.JUSTICE VIRENDRA SINGH, PRESIDENT
The instant complaint has been filed by the complainants against the repudiation of their claim by the opposite parties claiming following reliefs :-
- to pass order directing the opposite parties to pay the claim amount of Rs. 55,36,806/- to the complainant forthwith.
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- to award interest @ 18% to the claim amount from the date of occurrence of loses to molasses in open pit i.e. 02.07.2003 till its actual payment to the complainant.
- to allow the complaint with cost.
- to award appropriate compensation towards the loss of business due to non payment of claim amount to the complainant.
- to pass such other orders allowing any other relief or reliefs to the complainant as this Hon’ble court may deems fit and proper in the circumstances of the case.
The case of the complainants as per their complaint is that the complainant got insurance of its molasses under ‘Standard Fire and Special Peril Policy’ with the opposite party no.1 namely United India Insurance Company Limited, Bulandsahar. Premium alongwith 8% S.T. was paid to Opposite party no.1 and a cover note no. 650597 dated 08.04.2003 was issued by one Sri Yogesh Kumar Sharma, Development Officer of opposite party no.1 towards the property insured i. e. ‘on stock of molasses in tank located in mill premises at Panninagar, Bulandsahar and the sum insured under the said policy was Rs.1,50,00,000/- (one crore fifty lacs) and the period of insurance was from 08.04.2003 to 07.04.2004.
It is pertinent to mention that representative of the opposite party no.1 was asked to cover the risk of spontaneous combustion to the molasses under the aforesaid policy from the date of inception i.e. 08.04.2003 and later on request was made in writing vide letter dated 05.05.2003 whereupon the complainant was told that the endorsement for the risk cover of spontaneous combustion in molasses would have been made after consultation of their Divisional/Regional Office. Vide letter dated 26.05.2003 the opposite party no.1 was requested to cover spontaneous combustion and also add one kuchcha pit in which molasses were stored. On the request made by the complainant aforesaid the opposite party no.1 issued Mid Term Cover for Spontaneous Combustion on the original policy including the molasses kept in open kuchcha pit. Subsequently vide letter dated 26.06.2003 sent to the said insurance company request was made for enhancement of the sum insured i.e. 1.50 crores for a further amount of Rs.1.15 crores in view of the increase in the stock
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value. On the aforesaid request of the complainant the sum insured was enhanced from 1.50 crores to Rs.2.65 crores w.e.f. 26.06.2003.
Despite all the precautions being taken up by the complainant to save the molasses from overheating, the damages to the molasses of open pit was caused due to sudden occurrence of the spontaneous combustion to the material therein on 02.07.2003. The opposite party no.1 was immediately communicated vide letter dated 02.07.2003 regarding occurrence of spontaneous combustion in the molasses stored in open kuchcha pit as well as the losses caused to the complainant due to damage of molasses of 27823.15 quintals to the tune of about Rs.55 lacs and requested to make good the losses. The opposite parties deputed one M/s KD Kohli & Company Private Limited as surveyor to assess the losses, whose representative visited the 04.07.2003. Despite all informations as required by the surveyor were made available to him the opposite parties were not finalizing the claim of the complainant as such the Sri V.K. Kapoor, Chief Accountant and Sri R.K. Nigam, Accountant of complainant sugar mill met Sri R.C. Kapoor Manager at Delhi Regional Office of opposite party no.1 and discussed about the matter with him where it transpired that as per report submitted by the surveyor the quantity of molasses in open kuchcha pit was destroyed by spontaneous combustion but no fire of any type resulted there from which was necessary for allowing the claim. Sri R.C. Kapoor agreed to arrange a meeting with surveyor and also advised to technically prove that the fire had been there at the time of spontaneous combustion. However, instead of giving opportunity to the complainant to establish his claim as assured by the Delhi Regional Office of the Insurance Company, the Branch Manager of the United India Insurance Company at Bulandsahar vide letter dated 21.10.2003 intimated about the repudiation of the claim of the complainant stating therein that occurrence of fire is mandatory for establishing liability under the policy. The cause of action has arisen to the complainant, for the purpose of availing remedies provided in the courts of law, after receiving the reply dated 18.08.2004 in response to the legal notice dated 07.07.2004 denying the liability of insurance company to make good the losses and reiterating the reasons as given in the letter dated 21.10.2003 for repudiation of the claim.
Complainant no.2 M/s Wave Industries Private Ltd has also filed affidavit
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stating that during the pendency of the present complaint case the U.P. State Sugar Corporation having its head office at Lucknow, a holding company of U.P. State Sugar Corporation Ltd Unit Bulandsahar the complainant no.1 to the complaint case have executed a slump sale agreement dated 07.10.2010 for sale of assets of its unit at Bulandsahar in favour of M/s Wave Industries Private Limited and pursuant whereof entire management and control of assets as well as possession of said sugar mill unit of Corporation has been transferred to the purchaser namely M/s Wave Industries Private Limited
The opposite party no.1 United India Insurance Company has filed written statement denying the allegations levelled against them by the complainant. It is stated that the alleged damage to the molasses stored in the open pit was caused due to own carelessness of the claimant in not taking necessary and sufficient steps for controlling the temperature; in not preparing the pit as per standard specification and in not taking proper steps for early lifting of the molasses from the kuchcha pit by the purchasers. The claim of the claimant was rightly rejected. There is no deficiency in service on our part. Further no unfair trade practice was adopted by the opposite parties. The claimant is not entitled to any compensation or to any other relief.
The complainants have filed the following evidence/documents in support of their case:
- Annexure-1 True copy of cover note dated 8.04.2003 as well as policy.
- Annexure-2 True copy of policy bearing endorsement of spontaneous combustion.
- Annexure-3 True copies of letters requesting to make endorsement for risk cover of spontaneous combustion.
- Annexure-4 True copy of policy bearing endorsement and receipt.
- Annexure-5 True copy of letter dt. 02.07.2003 intimating O.P. no.1 regarding incidence of spontaneous combustion.
- Annexure-6 True copy of letter dt 04.07.2003 from surveyor to complainant for furnishing the information mentioned therein.
- Annexure-7 True copy of letter dt 25/26.07.2003bearing informations as required by the surveyor.
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- Annexure-8 True copy of duly filled claim form dt 25.7.2003 for an amount of Rs.55,36,806/-
- Annexure-9 True copy of letters dt 01.10.2003 & 20.10.2003 sent to RM Delhi Regional office, for fixing the meeting with surveyor.
- Annexure-10 True copy of letter dt 21.10.2003repudiating the claim of the complainant.
- Annexure-11 True copy of document bearing details of temperature records for the molasses stored in 3 steel tanks and one kuchcha pit.
- Annexure-12 True copy of letters dt 02.06.2003& 03.06.2003 regarding installation of addl. Recirculation pump at the open kuchcha pit.
- Annexure-13 True copy of letter dt 10/11.11.2003 addressed to RM Delhi Regional office for reconsideration of the matter.
- Annexure-14 True copy of letter dt 03.02.2004 from Delhi Regional office of Insurance Company.
- Annexure-15 True copy of letters dt 17.02.2004 and 18.03.2004 to Insurance Company Bulandsahar for supply of surveyor report.
- Annexure-16 True copy of letter dt 05.05.2004 from the office of IRDA of India Hyderabad received by the complainant in response to his request for supply of surveyor report by the insurance company.
- Annexure-17 True copy of representation dt 20.05.2005 sent to Chairman cum MD United India Insurance Company Ltd Channi for reconsideration of claim.
- Annexure-18 True copy of legal notice dt 07.07.2004 sent to OP no.1 through Ms. KC Sharma, Advocate
- Annexure-19 True copy of reply dated 18.08.2004 to the legal notice sent by Sri Vishnu Mehra Advocate
The complainant has filed an affidavit of Sri Varij Kumar, Liaison Officer U.P. Sugar Corporation Bulandsahar in evidence stating that the present affidavit is being submitted in evidence for supporting the averments /allegations made in the paras concerned of the memo of complaint alongwith the annexures attached thereto.
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The complainant has also filed written arguments reiterating the facts mentioned in the complaint case and placed reliance on the following case laws :-
- “II (1996) CPJ 6 NC Saraya Sugar Mills Limited versus United India Insurance Company Limited.”
- “II (2002) CPJ 42 (NC) New India Assurance Company Limited versus Taj Sugar Works and another”
- “I (2005) CPJ1 (NC) Murli Agro Products Ltd versus Oriental Insurance Company Limited”
- “I (2000) CPJ 448 (UP SCDRC) M/s Taj Sugar Works versus Punjab National Bank and another”
- I (1999) CPJ 410 (AP SCDRC) Shirdi Traders versus BM , Oriental Insurance Company Limited and another.
The opposite party no.1 has filed in evidence an affidavit of Sri Neeraj Kumar Srivastava, Manager of the Regional Office of the Insurance Company, reiterating the contents of written statement.
The opposite party United India Insurance Company has also submitted written arguments reiterating the contents made in written statement and denying the allegations made in the complaint. In support of their case the opposite parties have placed reliance on the following cases:
- “M/s Murli Agro Products Limited versus M/s Oriental Insurance Company Limited order dated 10.12.2004 passed in Original Petition no. 253 of 1999 by NCDRC.”
- “The New India Assurance Company Limited versus M/s Novelty Palace, Order dated 04.12.2008 passed in Revision Petition no. 2311 of 2004 by NCDRC.”
We have heard Sri R.K. Shukla, learned counsel for the complainants and Sri Alok Kumar Singh, learned counsel for the opposite parties and perused the entire record.
There is no dispute on this fact that on the request made by the complainant the opposite party had issued Mid Term Cover for Spontaneous Combustion on the
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original policy including the molasses kept in open kuchcha pit. The only dispute is raised by the opposite party that the damage to the molasses stored on open pit was caused due to own carelessness of the claimant in not taking necessary and sufficient steps for controlling the temperature and not preparing the pit as per standard specification and in not taking proper steps for early lifting of the molasses from the kuchcha pit by the purchasers. The policy issued by the opposite party to the complainant has been endorsed w.e.f. 09.06.2003 as follows:-
“Endorsement wording:
In consideration of the payment by the insured to the company of additional premium of Rs.3848/- including service tax 8%, the company agrees notwithstanding what is stated in the printed exclusion of this policy to the contrary that the insurance by Fire of this policy shall extend to include loss or damage by Fire only; of or to the property insured caused by its own Fermentation, Natural Heating or Spontaneous Combustion.
The policy shall be effected from 09.06.2003 after fifteen days of receipt of the premium. At the request of insured letter dated 26.05.2003 the policy is being endorsed for one Kuchcha Pit in which the molasses is being kept. All other terms and conditions of the policy shall remain unlatered.”
The aforesaid endorsement itself discloses that the molasses is covered by the insurer even if damaged by its own Fermentation , Natural Heating or Spontaneous Combustion. Therefore, there remains no dispute that fire is must. Had there been the factum of fire must for the coverage of molasses by the policy the endorsement wording would not have been in the shape of stating that the insurance of this policy shall extend to include loss or damage by fire only of or to the property insured caused by its own Fermentation, Natural Heating or Spontaneous Combustion. This much wording shows that not only the fire is covered but the damage by its fermentation, natural hearing or spontaneous combustion is also covered.
Though the law laid down by the Hon’ble N.C.D.R.C. in Original Petition no.253 of 1999 Murli Agro Products Limited versus M/s Oriental Insurance Company Limited discloses that if the contract is vague, benefit should be given to the insured and the exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy that is to identify the damage caused due to fire and it is highly time for the insurance company to have terms clearly defined in
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the insurance policy with a reasonable clarity and not to continue with the old forms which terms are vague and vide this interpretation of the Hon’ble N.C.D.R.C. the complainant before us does also deserve the interpretation in favour of the complainant for the policy issued in favour of the complainant by the opposite party but in this case wherein the endorsement wording is clear thereby extending the benefit beyond fire only to the extent of damage caused by its own fermentation , natural heating or spontaneous combustion, we are of this view that only fire is not necessary wherein the damage caused is found due to spontaneous combustion.
So far as the question of carelessness of the complainant pertaining to not taking necessary and sufficient steps for controlling the temperature and for early lifting of the molasses is concerned, there is no mention in the policy that what type of care had to be taken by the complainant to avoid the damage and not only this, what was the carelessness of the complainant in respect to the damage to the molasses has not been disclosed. Therefore, mere assertion that due to carelessness of the complainant the damage was occurred is not sufficient. Though in the written statement of the insurer it is stated that the claimant had got the temperature chart prepared but had not taken necessary and sufficient steps for maintaining the temperature of the molasses stored in kuchcha pit, we are unable to understand that what type of steps had to be taken by the complainant in this regard. It is admitted in the written statement by the insurer that the claimant had made allegation about admixing anti foaming agent but had not given particulars as to when and in what quantity the admixing of anti foaming agents was done and the temperature mentions about the ad-mixing of certain chemical on 26.06.2003 and 29.06.2003 when the temperature had already risen to 65 and 70 C respectively but whether the mixing of anti foaming agent was not necessary or was it not mixed proportionately or whether there was any other steps to be taken by the complainant, no where stated by the opposite party.
Though the insurer has pleaded that the storing of molasses in the kuchcha pit is only a temporary measure and when ambient temperature is rising , there is every risk of damage to the molasses stored in kuchcha pit and therefore, it is
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necessary to take effective steps for early lifting of the molasses from the kuchcha pit by the purchasers and the steps taken by the claimant in this direction were too
late and therefore, the molasses remain in kuchcha pit in summer season for too long a period to remain undamaged but there is no mention and even there is no evidence that it was incumbent or it was a pre condition for the insurance that the molasses shall be lifted earlier and shall not be kept for not a long time in kuchcha pit. Since the molasses was endorsed insured by the insurer in a kuchcha pit, the insurer cannot repudiate the claim of the claimant on such flimsy grounds.
Hence we are of this view that the insurer has wrongly repudiated the claim of the complainant on the basis of illegal, frivolous and misconceived grounds which are not tenable in the eyes of law. Since the insurer has issued ‘Mid Term Cover’ for the losses caused to the molasses due to natural heating or spontaneous combustion and the phenomenon of ‘spontaneous combustion’ covers under the term ‘Fire’ and all reasonable care and precautions were taken by the complainant and none of the specific carelessness of the complainant is evidenced by the insurer for keeping preserved molasses and the damage is cause by spontaneous combustion, we are of this view that the complaint deserves to be allowed for the claim of the complainant which has been even observed and found by the surveyor of the insurer to the tune of Rs.35,21,064/- against which there is no evidence on record of the insurer that the damage of the molasses upto that extent was not occurred due to spontaneous combustion.
Since the insurer has wrongly repudiated the claim of the complainant, the complainant is entitled for interest @ 09% p.a. from the date of filing of this complaint till the payment is made by the insurer to the complainant. A sum of Rs.15,000/- is further to be allowed to the complainant as litigation expenses in this case.
ORDER
The complaint is allowed. The insurer is directed to pay a sum of Rs.35,21,064/- to the complainant with interest @ 09% p.a. from the date of filing
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of this complaint till the payment is made, alongwith Rs.15,000/- towards litigation expenses.
The insurer is further directed to pay the entire amount to the complainant within two months, failing which the complainant shall be entitled to get the interest @ 18% PA from the date of this order.
(JUSTICE VIRENDRA SINGH)
PRESIDENT
(JUGUL KISHORE)
MEMBER
(RAJ KAMAL GUPTA)
MEMBER
Asif
Steno-Court no.1
