United India Insurance Co. Ltd. And Others v. Roshan Lal Oil Mills Ltd. And Others

Order

Civil Appeal No. 2339 of 1992

1. The respondent M/s Roshan Lal Oil Mills (P) Ltd., together with Punjab Financial Corporation, Punjab State Industrial Development Corporation and State Bank of Patiala, had jointly obtained from the appellant a fire insurance policy in respect of the “stock of mustard seeds and/or toria and/or soyabean and other goods of oilseeds of like nature stored in a silo installed near the oil mill in the factory premises of the respondent situated at Mansa Road, Bhatinda”. The details of goods insured are:

Oilseeds stock (value) Rs 1,00,00,000 Silo (Ist class construction) Rs 10,00,000

It was also mentioned in the insurance policy that the stock of oilseed of the value of Rs 1 crore was pledged with State Bank of Patiala (City Branch), Bhatinda, together with a silo which was pledged/hypothecated with Punjab Financial Corporation and Punjab State Industrial Development Corporation, Chandigarh for Rs 10,00,000.

2. In consideration of additional premium, the appellant subsequently extended the insurance cover to “loss or damage by fire only to the property insured caused by its own fermentation, natural heating or spontaneous combustion”.

3. On 3-8-1990, the respondent reported to the Senior Divisional Manager, United India Insurance Co., Bhatinda, as under:

“Please refer to above policy regarding storage of (i) seeds. It is for your information that about 9860 (I) mustard seed stored in silo has been affected due to self-spontaneous combustion.

You are requested to please register our claim and arrange to depute the surveyor to assess the loss and to avoid any further loss to goods.”

4. Immediately on the receipt of this information, the appellant appointed one Shri D.K Garg of Bhatinda to carry out the preliminary survey who visited the respondent's premises on 4-8-1990 and submitted his report after four months in January 1991. Three days later i.e on 7-8-1990, the appellant appointed M/s Thapar Srinivasan & Kapoor Pvt. Ltd. to survey and assess the loss caused to the respondent. They visited the respondent's premises on 7-8-1990 and again on 16-8-1990. On that date, namely, on 16-8-1990 the appellant also appointed M/s Mehta & Padamsey Surveyor Pvt. Ltd. to survey and assess the loss jointly with M/s Thapar Srinivasan & Kapoor Pvt. Ltd. Thereafter the two surveyors visited the respondent's premises and surveyed the affected area in the presence of Shri D.K Garg, the preliminary surveyor. Joint surveyors submitted their report on 14-6-1991 in which they indicated that though spontaneous combustion had taken place, it had not resulted in “fire”. They reported and enumerated several factors on a consideration of which they came to the conclusion that “fire” had not resulted on account of spontaneous combustion or heating of the stock stored in the silo. The appellant, therefore, repudiated the claim of the respondent on the ground that damage to stock was not covered within the ambit of the insurance policy. The respondent thereafter filed the claim petition before the National Consumer Disputes Redressal Commission (for short “the Commission”) and the Commission by its order dated 26-3-1992 allowed the claim of the respondent for a sum of Rs 61,65,902. The Commission also allowed compensation amounting to Rs 50,000 to the respondent on account of delay which had taken place in the settlement of their claim. The Commission also awarded interest @ 18% per annum on the amount awarded under the insurance policy w.e.f 3-11-1990 (three months after the incident) till the date of the actual payment. It is against this judgment that the present appeal has been filed in this Court.

5. Mr M.L Verma, learned Senior Counsel appearing on behalf of the appellant has contended that risk covered under the policy was for loss or damage by “fire” only to the stock of oilseeds insured with the appellant. The “fire”, it is contended, should have been caused on account of the stock's own spontaneous combustion. He contended that the respondent by their letter dated 3-8-1990 had conveyed to the appellant that the mustard seed stock stored in the silo had been affected due to “self-spontaneous combustion”. This, it is contended, was not covered by the insurance policy as the respondent, on their own showing, had not reported loss or damage caused by “fire” but had reported only “spontaneous combustion” which was not equivalent to “fire”. It is also pointed out that immediately on the receipt of the complaint on 3-8-1990, the appellant had appointed, on 4-8-1990, a preliminary surveyor who along with two other joint surveyors appointed subsequently, surveyed the premises and assessed the loss and on a detailed consideration of the whole matter, including the report which the surveyors had obtained from various laboratories, reported that the stock was not affected by fire. It was on the basis of the survey report that the claim was repudiated by the appellant, but this report was not considered by the Commission which, it is contended, could not be legally ignored as the surveyors were appointed in terms of Section 64-UM(2) of the Insurance Act, 1938. It is also contended that the appellant had acted promptly in the matter and after obtaining a report from the surveyor, repudiated the claim with the result that there was no deficiency in service. It is also contended that the Commission had wrongly awarded interest @ 18% on the claim of the respondent.

6. We have gone through the judgment and order of the Commission and have heard learned counsel for the parties at length.

7. The appellant had appointed joint surveyors in terms of Section 64-UM(2) of the Insurance Act, 1938. Their report has been placed on the record in which a detailed account of the factors on the basis of which the joint surveyors had come to the conclusion that there was no loss or damage caused on account of fire, was given and it was on this basis that the claim was not found entertainable. This is an important document which was placed before the Commission but the Commission, curiously, has not considered the report. Since the claim of the respondent was repudiated by the appellant on the basis of the joint survey report, the Commission was not justified in awarding the insurance amount to the respondent without adverting itself to the contents of the joint survey report specially the factors enumerated therein. In our opinion, non-consideration of this important document has resulted in serious miscarriage of justice and vitiates the judgment passed by the Commission. The case has, therefore, to be sent back to the Commission for a fresh hearing.

8. In view of the above, the appeal is allowed, the judgment passed by the Commission is set aside and the case is remanded to the Commission for a fresh hearing in accordance with law in the light of the observations made above.

9. Since the judgment of the Commission has been set aside, the insurance money paid to the respondent shall be refunded to the appellant within three months from today with interest @ 18% per annum for the whole of the period they have retained the money with them. The appeal is disposed of in the above terms but without any order as to costs. It is hoped that the Commission will dispose of the matter at an early date, say within six months, if possible.

Civil Appeal No. 414 of 1993

10. The main appeal, namely, CA No. 2339 of 1992 has been allowed and the case has been remanded to the National Consumer Disputes Redressal Commission. The question involved in this case is about payment of interest for late deposit of the insurance amount in terms of the judgment dated 26-3-1992. This appeal is also allowed and the judgment and order of the Commission dated 7-12-1992 relating to payment of further interest is set aside with the direction that if in pursuance of the order dated 7-12-1992 any amount by way of further interest had been paid to the respondent, the same shall also be refunded to the appellant within three months from today.

Civil Appeal No. 2458 of 1997

11. We have heard learned counsel for the appellant. The District Forum as also the State Forum have concurrently held that the report submitted by the joint surveyors was suspicious and therefore the contention of the appellant that the fire was caused on account of “spontaneous combustion” of the stock which incidentally was not covered by the policy was not accepted. The Commission has dismissed the revision filed by the appellant. The findings of fact recorded by the authorities below cannot be disturbed in this appeal which is dismissed but without any order as to costs.