30-11-2011 to Standard Fire

2. 2011/15080111111100000805 4,00,00,000 and Special 29-01-2012 Perils Policy

Total Sum Assured 6,00,00,000

3. The case of Complainant is that on 27.12.2011, at about 5:00 PM, a fire broke out at M/s Vijaya Chaitanya Enterprises Private Limited near the Kappas heaps and damaged the entire stock. The cause of fire was "sparks emanating from the silencer pipe or lorry exhaust accidentally, the lorry was returning after unloading stocks at that moment of fire". Fire Brigade personnel took 3 hours and 29 minutes to extinguish the fire. The incident was reported to the Police, Insurance Company and the concerned authorities. On 30.12.2011, the Complainant also lodged FIR No.158/2011 at Sattenapalli Police Station. Fire Service Attendant Certificate in FC.No.74/2011-2012, dated 29.02.2012, was issued by the Station Fire House Officer, APDR & Fire Services Department, Sattenapalli stating that the fire was extinguished in 3 hours 29 minutes. On the date of incident, 5776.13 Quintals of Cotton Kappas worth Rs.2,33,24,013/- and 1349.80 Quintals of Cotton Lint (794 Fully Pressed Bales of 170 Kg. each) worth Rs.1,36,64,025/- totalling Rs.3,69,88,038/- were lying in the premises of M/s Vijaya Chaitanya Enterprises Private Limited. The Opposite Party appointed Mr. M. Purnachandra Rao Guntur as Surveyor to estimate the loss. The demolished kappas was removed from the site seeking prior approval of the Opposite Party. The Surveyor advised the Complainant to dry and gin the damaged Kappas and sell the gin cotton and cotton seeds. He also promised the Complainant that they would reimburse the loss, if any, after the sale of ginned cotton and cotton seed.

4. On 14.02.2012, the Complainant submitted the claim for Rs.1,26,00,000/-. Though the Complainant submitted all the documents claimed by the Surveyor, the claim was not settled by the Opposite Parties. The Surveyor assessed the loss at Rs.28,36,124/-. The Surveyor orally insisted the Complainant to accept an amount of Rs.29,00,000/- in full and final settlement of the claim. The Complainant refused to accept this amount. In spite of repeated requests, the Opposite Party did not settle the claim of the Complainant. On 04.02.2013, the Complainant sent a legal notice to the Opposite Party but in vain. Alleging deficiency in service on the part of the Opposite Party, the Complainant filed the present Complaint seeking following relief:-

"1. to pay insurance claim amount of Rs.1,26,00,000/- along with interest @ 18% p.a. from 27-12-2011 till the date of realization;

2. to pay Compensation of Rs.5.00,000/-;

3. to pay costs of Rs.50,000/-; and pass such other order or orders which the Hon'ble Commission deems fit and proper under the circumstances of the case."

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5. The Complaint was resisted by the Opposite Party by filing Written Statement alleging that the fire was caused due to the negligence of the Complainant. The Complainant wanted to get benefit of his own mistake and the Opposite Party was not liable to pay any claim. As per the final report submitted by the Sub-Inspector dated 26.03.2012, there could be two probabilities of the fire accident. The sparks emanated from the silencer pipe of lorry exhaust accidentally or the cigarette butts left by the workers near the cotton heaps that could have caused the fire. The Surveyor also observed that the fire could have occurred due to exhausted red hot carbon spark emanating from the truck. There was no clear evidence to establish the cause of fire. The Surveyor assessed the loss of Rs.28,36,124/-. The liability of the Opposite Party Insurance Company was only to the extent of assessment made by the surveyor. It was also stated that on the basis of reasoning given by the Surveyor, the Opposite Party is not liable to pay the claim made by the Complainant. It was the duty of the Complainant to make the drivers aware about the nature of Cotton Business. The incident could have been avoided if there was awareness among the drivers. The Opposite Party cannot be held liable for the negligence of the Complainant. It was also stated that the Complainant concealed certain documents such as monthly returns from AMC, VAT returns, CST returns, Fire Damage value returns to CTO. Further, the incident was reported to the Police on 30.12.2011, while the fire took place on 27.12.2011. The Opposite Party repudiated the claim, vide letter dated 05.09.2013 on the ground that "the cause of loss as narrated in your claim form as well as claim intimation is not covered under the purview of the policy". Opposite Party, however, stated that the liability of the Insurance Company was only limited to the assessment made by the Surveyor i.e. Rs.28,36,124/-

6. Heard the Learned Counsel for Parties and carefully perused the record. Learned Counsel for the Complainant submitted that the Opposite Party did not supply copy of the repudiation letter to the Complainant. As per the terms and conditions of the Policy, "fire accident" was covered under both the Policies and fire took place during the currency of the Policy. It was, therefore, absolutely false that the damage to the stocks due to fire accident was not covered under the Policy. There was no breach of warranties or violation of any Terms and Conditions of the Policy by the Complainant. The Surveyor erroneously assessed the net loss of Rs.28,36,124/- as against the claim of Rs.1,26,00,000/-. He assessed the loss based on the Volumetric Quantification, i.e. on the basis of height and weight of the burnt heap of ash/burnt kappas. It was also submitted that the Surveyor wrongly assessed the yield of lint at 448768 kgs. whereas the actual quantity of yield of lint was 520374 kgs. The Surveyor assessed 71606 kgs less yield of lint. It was also submitted that the Surveyor had erred in observing that 3,31,800 kgs of good quality cotton lint was retrieved while the actual quantity was 1,15,627 kgs. The Opposite Party wrongly relied on the Survey Report. The actual loss caused to the Complainant was Rs.1,26,00,000/-, which the Opposite Party is liable to pay.

7. Learned Counsel for the Opposite Parties submitted that the claim of the Complainant was repudiated, vide letter dated 05.09.2013, as the cause of claim was not covered under the terms & conditions of the Policy. Since the fire was caused due to negligence of the Complainant, the Opposite Parties were not liable to honour the claim. Final Report submitted by the Police, dated 26.03.2012 indicated that the cause of fire may be the sparks that emanated from the silencer pipe of lorry or the cigarette butts left by the workers. Learned Counsel for the Opposite Parties submitted that the Surveyor had also opined that the fire could

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have occurred due to exhausted red hot carbon spark that emanated from the truck. It was also submitted that the incident took place on 27.12.2011 and the intimation to the Opposite Parties was given on 09.02.2012 after expiry of more than one month, without assigning any reason for delay. The Complaint failed to prove by placing any cogent evidence that the fire was accidental. The Learned Counsel of Opposite Parties relied on the judgment of this Commission in Radhalaxmi Cottage Industries vs. Oriental Insurance Co. Ltd. & Anr. CC No. 329 of 2013 decided on 17.12.2018 whereby this Commission dismissed the Complaint on the ground that the Complainant failed to discharge its initial burden on the basis of evidences produced that the fire was accidental. He further relied on the judgment of Hon'ble Supreme Court in M/s Sonell Clocks and Gifts Ltd. v. The New India Assurance Co. Ltd., Civil Appeal nos. 1217-1218 of 2017, wherein it was held that if the incident of loss is not intimated immediately to the Insurance Company, repudiation of claim is justified. The Opposite Party was, therefore, justified in repudiating the claim, vide letter dated 05.09.2013 on the ground that the "cause of loss and claim intimation is not covered under the purview of the policy".

8. The repudiation letter dated 05.09.2013 reads as follows: -

"With reference to the above, we regret to inform you that the cause of loss as narrated in your claim form as well as claim intimation is not covered under the purview of the policy. We express our inability to settle your claim. Hence we are repudiating your claim."

9. The repudiation letter did not mention the specific condition which was violated by the Complainant. Although, during the course of arguments, the Learned Counsel for the Opposite Parties submitted that Clause 6 of the terms & conditions of the Policy was violated by the Complainant. Clause 6 reads as follows:-

"6. (i) On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company.

a. claim in Writing for that loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items or property damaged or destroyed, and of the amount of the loss and damage thereto respectively, having regard to their value at the time of the loss or damage not including profit of any kind. b. Particulars of all other insurances, if any.

The insured shall also at all times at his own expenses produce, procure and give

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to the company all such further particulars, plans, specifications, books, vouchers, invoices, duplicates, or copies thereof, documents, investigation reports (internal/external), proves and information with respect to the claim and the origin and causes of the loss and the circumstance under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the company, the truth of the claim or any matter connected therewith. No Claim under this policy shall be payable unless the terms of this condition have been complied with.

(ii) In no case whatsoever shall the Company be liable for any loss or damage after the expiry of 12 months from the happening of the loss or damage unless the claim is subject to pending action or arbitration, it being expressly agreed and declared dated if the Company shall disclaim liability for any claim hereunder and such claim shall not within 12 calendar month from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder."

10. In the repudiation letter, the Opposite Parties had not mentioned that the claim was repudiated due to delay in intimation to the Opposite Parties. In the Complaint, the Complainant has not mentioned the date when the intimation was given to the Opposite Parties. Similarly, the Opposite Parties have also not mentioned the date when they were given intimation of the fire incident. The fire occurred on 27.12.2011 and the Surveyor inspected the premises on 29.12.2011 i.e. after two days of the incident. It is, therefore, clear that before 29.12.2011, when the Opposite Parties deputed a Surveyor, there was intimation with the Opposite Parties. There was, thus, no violation of Clause 6 of the terms & conditions of the Policy.

11. The next ground taken by the Opposite Parties is that the Complainant could not establish the cause of fire. The Final Report submitted by the Police dated 26.03.2012 indicated that the cause of fire may be the sparks emanated from the silencer pipe of lorry or the cigarette butts left by the workers. The Surveyor also observed that "from the enquiries and observations made during inspection and the nature of fire damage witnessed, it is opined that the cause of fire appeared to be the exhaust red hot carbon spark emanated from one of the trucks started and left after unloading the cotton Kapas which is only the probable cause which is remote." Opposite Parties have not filed any evidence to establish that the story of incident of fire was false. They have simply stated that the Complainant had not given the specific cause of fire. At the time of incident, the Complainant was not present. From the Final Report submitted by the Police as well as the Survey report, it is established that the fire occurred due to exhaust of red hot carbon spark emanated from the truck. Surveyor had also observed that the "negligent smoking by the labour force also ruled out as no labour is close by the time unloading the cotton kapas." The argument of the Opposite Parties that the Complainant failed to establish the cause of fire is, therefore, rejected.

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12. The Complainant claimed an amount of Rs.1.26 crores. The Surveyor after examining the Insurance Policies, stock statement as well as physical verification assessed the loss of Rs.28,36,124/-. The Complainant alleged that the Surveyor had assessed the loss on the basis of height and weight of the burnt heap of ash/burnt kappas. It was also alleged that the Surveyor had not given any reason for his finding that 3,31,800 kgs. of good quality of cotton lint was retrieved. In this regard, the opinion of the Surveyor relating to the damage is relevant, which reads as follows: -

"SEGREGATION/SALVAGE & EXTENT OF DAMAGE: -

The Insured carried out salvage operation and completed by 20.01.2012 and weighment of salvage completed on 25.03.2012 and the result is as under -

The Surveyor had done weighment of the salvage and on the basis of the weighment it was

observed that the good quantity retrieved was 331800 kgs.

13. The Complainant also alleged that the Surveyor had wrongly arrived at the figure of 33.12% i.e. 448768 kgs lint received as against 33.46% i.e. 520374 kgs. causing difference of 71606 kgs. In this regard, the analysis done by the Surveyor is relevant, which reads as follows:-

"As per the records: -

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Total kapas received upto 27.12.2011 - 6021257 kgs.

Balance as on 27.12.2011 - 520374 kgs.

Cotton kapas ginned - 5500883 kgs.

The yield analysis result is as under

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14. The Surveyor had made the assessment on the basis of record. Surveyor had specifically mentioned that "Cotton lint received after ginning (as per records) 520374 kgs." The allegation of the Complainant that the Surveyor had wrongly arrived at the figure of 520374 kgs. has no force and is rejected.

15. Surveyor Report is an important piece of evidence and it has to be given due weight, though it is not sacrosanct and it can be displaced by leading a cogent evidence. In the present case, the Complainant did not lead any evidence to disprove the report submitted by the Surveyor. In the absence of any evidence to the contrary, the report submitted by the Surveyor is to be accepted.

16. In view of the above the Complaint is partly allowed and the Opposite Parties are directed to pay a sum of Rs.28,36,124/- towards claim of the Complainant alongwith compensation in the form of simple interest @ 9% p.a. with effect from the date of repudiation of the claim till realization, within eight weeks from the date of pronouncement of this order. There shall be no order as to costs. The order be complied within eight weeks.

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C. VISWANATH

PRESIDING MEMBER

......................J

RAM SURAT RAM MAURYA

MEMBER

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