Cement Corporation of India Ltd vs UNITED INDIA INSURANCE COMPANY

BRIEFLY stated the facts are that Cement Corporation of India Ltd. is Government of India undertaking registered under the Companies Act and the dispute relates regarding industrial undertaking of the company which is situated at village Charkhi Dadri in District Bhiwani. The present complaint has been filed through General Manager of the company who is duly authorised to file the complaint.

IT was next averred that stocks of coal in the complainant factory were insured for a sum of Rs. 2 crores against fire policy "c" commencing with effect from 30. 9. 1992 to 29. 9. 1993 vide Annexure P-1 with the United India Insurance Co. respondent. The said policy also covered perils of damage to coal stocks due to "spontaneous combustion". It was next averred that on 2. 2. 1993 at around 8. 00 a. m. , the coal stocks in the gantry in complainant''s factory were destroyed by fire, due to spontaneous combustion. The fire brigade was immediately informed and it took necessary action to extinguish the fire. Respondent was telephonically informed about the fire. Even a letter was written to the respondent intimating them of the fire incident and requested to depute a Surveyor to inspect the spot and assess the loss. Copy of the letter is Annexure P-2. Thereafter, claim form dated 5. 2. 1993 was filled by the complainant with the respondent for the loss of Rs. 37. 93 lacs in respect of the loss in the said fire, whose copy is Annexure P-3.

It was next averred that on 3. 3. 1993 at about 8. 00 a. m. another fire occurred in the coal stock lying in the open yard in its factory due to spontaneous combustion. The fire brigade was informed and it took necessary action to put out the fire. It also informed respondent about the fire and asked it to depute a Surveyor to assess the loss. The copy of the letter is Annexure P-4 dated 3. 3. 93. Measurements of the damage were carried out by the Surveyor on 4. 3. 1993. A claim form dated 12. 3. 1993 was filled by the complainant with the respondent along with measurements of the Surveyor claiming a loss of Rs. 8. 13 lacs due to loss in the said fire dated 3. 3. 1993. A copy of the claim form is Annexure C-5.

IT was next averred that respondent on 31. 3. 1993 issued letter whose copy is Annexure P-6 intimating that the estimated loss with respect to first claim was 221 MT coal and the estimated loss in the second claim was 363. 93 MT coal. Thus, the value of the first claim was Rs. 3,60,806 and that of the second claim was Rs. 5,94,255. It was further averred that respondent vide letter dated 4. 1. 1994 and 14. 1. 1994 respectively rejected the Claims Nos. 1 and 2 on the ground that the policy Annexure P-1 did not cover the peril of spontaneous combustion. Copies of the said letters are Annexures P-7 and P-8. However, complainant had written detail letter dated 20. 1. 1994, whose copy is Annexure P-9 conveying to the respondent that the policy Annexure P-1 covered the peril of spontaneous combustion and as such rejection of the claim was unwarranted. In response to the said letter and after discussion, respondent vide letter dated 27. 7. 1995 accepted the complainant''s case that the peril of spontaneous combustion was fully covered under the policy Annexure P-1 but again rejected both the claims on the ground that the damage ought to have been caused by fire only and since, according to the Surveyor, there was no flames at the time of accident, so, claims were not maintainable. The copy of the letter dated 27. 7. 1995 is Annexure P-10.

ALLEGING deficiency in service, complaint was filed on 27. 3. 1998 and claimed compensation of Rs. 3,60,806 with respect to the first claim and Rs. 5,94,155 with respect to second claim along with interest @ 24% besides compensation and costs of Rs. 10 lacs. Respondent contested the claim and filed written reply. It took certain preliminary objections ; that the complaint was time barred as there was delay of four years in filing the complaint and not of 234 days. It further stated that the claims were rejected vide letters dated 4. 1. 1994 and 14. 1. 1994. It next stated that as per Surveyors'' report there was no visible flames and as such no fire had occurred, so, claims were rightly rejected. It denied that the dense smoke emitted in the fire shrouded and concealed the flames. It further stated that it was a spontaneous combustion which peril was not covered under the terms and conditions of the policy. Therefore, it prayed that the complaint should be dismissed. Parties adduced their evidence by way of affidavits.

WE have heard Counsel for complainant Ms. Abha Rathore, Mr. Pardeep Bedi, advocate along with Mr. Gaurav Bhardwaj, Advocate for respondent and carefully gone through the file.

ANNEXURE P-1 is the insurance policy which has been issued by the New India Assurance Company Ltd. on 29. 9. 1992 and was valid with effect from 30. 9. 1992 to 29. 9. 1993. It was fire policy-C for a sum of Rs. 30 lacs and premium of Rs. 4,360 was paid. It was on stocks of all kinds of jute bags and/or HDPE bags whilst stored and/or lying in the godown situated in the insured factory at Charkhi Dadti, District Bhiwani. However, this policy is not with respect to coal stocks. The non-production of insurance policy has got no adverse effect on the case of complainant because the respondent in para-2 of the written reply on merits has admitted that the insurance policy bearing No. 111202/11/13/1/57/92 was issued by it to the complainant and it was a fire policy-C effective from 30. 9. 1992 to 29. 9. 1993. However, respondents stated that the policy did not cover the peril of damage to the coal stocks due to spontaneous combustion as no extra premium had been paid by the complainant for deletion of exclusion ''c'' i. e. loss due to spontaneous combustion fire policy ''c''. The contention of respondent that the policy did not cover spontaneous combustion as extra premium was not paid cannot be accepted because of admission of respondent that spontaneous combustion was covered under the policy issued to the complainant. Annexure P-10 is the letter dated 27. 7. 95 issued by the Manager of United India Insurance Co. Ltd. to the Accounts Officer of complainant Corporation, Charkhi Dadri in which it had admitted that the policy No. 111202/11/13/1/57/92 for the year 1992-93 should be deemed to include the cover for ''spontaneous combustion'' but again rejected the claims since Surveyors had confirmed that there were no flames at the time of accident and the policy would extend to include loss or damage by fire only and not by spontaneous combustion alone. In view of this admission contained in the letter Annexure P-10, respondent is estopped from asserting that the spontaneous combustion was not included in the policy as premium was not paid. In response to the said letter, complainant had written letter Annexure P-11 dated 29. 5. 1995 stating that the fire brigade was called to extinguish the fire by spraying water and at that time some photographs were taken out and a few of them were sent for perusal of the respondent. The photographs clearly show that there were flames at the time fire in the coal stocks. It was further stated that the Surveyor from Chandigarh reached the site when the fire was totally put off. The photographs were produced at the time arguments which showed that there were flames at the time of fire.

The Haryana State Consumer Commission vide order dated 9. 7. 2001 had condoned the delay of 234 days in filing the complaint for the reasons stated in the application under Section 24a of the Consumer Protection Act.

COUNSEL for respondent contended that there was delay of four years and not of 234 days as claim was rejected vide letters dated 4. 1. 1994 and 14. 1. 1994 Annexures P-7 and P-8 and the present complaint was filed on 27. 9. 1998, so, it was beyond a period of two years and was time barred. In our opinion, contention of learned Counsel is not tenable. Vide letters Annexure P-7 and P-8 respondent had rejected the claim stating that the peril of spontaneous combustion was not covered under the insurance policy granted in favour of the complainant, so, claim was rejected. However, vide letter Annexure P-10 dated 27. 7. 1995 the respondent admitted that the peril of spontaneous combustion was included in the policy. This letter as stated in para-11 of the complaint was received by the complainant on 5. 8. 1995. Thus, there was delay of 234 days which had been condoned. Even otherwise, Annexure P-17 dated 7. 5. 1997 shows that the controversy was still alive because United India Insurance Co. had written to the complainant to correspond with the Regional Manager, Chandigarh to take appropriate action regarding claim of spontaneous combustion. Therefore, there is no manner of doubt that after condonation of delay, the complaint is within time. Vide letter Annexure P-6 of United India Insurance Co. which was written by Sh. R. C. Sharma, A. A. O. , he had assessed the claim of two claims after discussion with the Surveyor at Chandigarh as under: claim No. 1- 221 M. T. Coal claim No. 2- 363 M. T. coal.

ANNEXURE R-2 dated 26. 3. 1993 is the report of Consolidated Surveyors Pvt. Ltd. for the fire which had occurred on 2. 2. 1993. They had assessed net loss of Rs. 3,58,306. 81. Annexure R-1 is report of Surveyor Rakesh K. Khanna dated 30. 3. 1993 regarding fire in coal which had taken place on 3. 3. 1993. He had assessed loss of Rs. 5,98,833. 84. In Annexure R-1 it is mentioned under heading ''cause of loss'' fire in coal lying in open and proximate cause of fire was spontaneous combustion. Vide letter Annexure P-10 the officials of respondent had admitted that the peril of spontaneous combustion was included in the policy which was issued to the complainant. According to Concise Oxford Dictionary Tenth Edition of 1999 edited by Judy Pearsall, the word ''combustion'' means "the process of burning-chemistry rapid chemical combination with oxygen, involving the production of heat and light". Since, according to dictionary meaning of the word combustion heat and light is generated, so, it means that the fire was generated. The report annexure R-1 of Sh. Rakesh K. Khanna shows that primary survey was conducted on 4. 3. 1993 and final survey was conducted on 11th and 12th March,1993. He had stated that even after a gap of 10 days smoke was continuing at 2-3 places in spite of continuous sprinkling of water. He further stated that spontaneous combustion is a slow process of oxidation and it takes time to spread. During the process of oxidation, carbon present in the coal comes in contact with oxygen present in the air and goes to atmosphere in the shape of carbon dioxide i. e. smoke thereby causing loss of coal. It is further mentioned in the heading "identification of cause" that as per primary survey report it was confirmed that cause of fire was due to spontaneous combustion because of inherent properties of coal. Therefore, the Surveyor never doubted that the fire had not taken place due to spontaneous combustion but its main plea was that spontaneous combustion was not covered under the insurance policy. Once it was admitted by the official of respondent vide letter Annexure P-10 that "spontaneous combustion" was included in the peril of policy then claims could not have been rejected on the ground that the fire had not taken place. It is further mentioned in the report that to extinguish the fire complainant used its own water hydrants by making holes and channels and further heavy roller was used to compress the effect and to minimize the cavities/gaps to prevent oxidation. Therefore, complainant had taken every step to extinguish the fire. Since, they had started their own hydrants to extinguish the fire, so, the fire was not visible after some days when Surveyor visited the site. In the Second case surveyor visited the site at Charkhi Dadri on 11. 3. 1994, although fire in the coal lying in open had occurred on 3. 3. 1993. It is further mentioned in the ''particulars of occurrence'' that cause of loss was due to fire due to spontaneous combustion. It is further mentioned that the fire was brought under control by sprinkling water from their own hydrants. He next admitted under the heading "identification of cause" that the fire was due to spontaneous combustion because of inherent properties of coal. Therefore, it was never in dispute that the fire had not taken place but their main plea was that spontaneous combustion was not covered under policy issued to the complainant bearing No. 111202/11/13/1/57/92. Thus, respondent in order to deny the claim took plea that although spontaneous combustion was covered in the peril of policy but since, fire had not taken place, so it is not liable to pay claim. However, Surveyors'' reports Annexures R-1 and R-2 rebutted the stand taken by the respondent and suggested that due to spontaneous combustion fire had taken place.

AT the cost of repetition, we may state that the photographs placed on file also showed that the fire had taken place. These photographs had not been managed afterwards because subsequently when Surveyor visited the spot there might have been no flames because complainant had started operating its own hydrants to put off the fire. The complainant has also placed on file affidavit dated 15. 11. 2007 of Sh. Manoj Kumar, General Manager to state that any of its officials had not made any statement that there were no flames at the time of fire i. e. on 2. 2. 1993 and 3. 3. 1993. Copies of the statements alleged to have been made by the officials of complainant Corporation in this regard have not been placed on file. In the absence of documentary evidence, version of respondent cannot be believed that there were no flames at the time of two incidents of fire.

HENCE, in view of the discussion above, we hold that respondent had without any reason rejected the claims of the complainant. In view of the reports Annexure R-2 of Consolidated Surveyors Pvt. Ltd. dated 26. 3. 1993 with respect to fire dated 2. 2. 1993 and Annexure R-1 of Rakesh K. Khanna dated 30. 3. 1993 with respect to fire of 3. 3. 1993, we accept the complaint with costs of Rs. 10,000 and award compensation of Rs. 3,58,306. 81 say Rs. 3,58,307 in round figure with respect to fire dated 2. 2. 1993 and Rs. 5,98,833. 84 say Rs. 5,98,834 in round figure with respect to fire dated 3. 3. 1993. Since, these amounts were not paid as assessed by the Surveyors and claims were wrongly rejected vide letter Annexures P-7 dated 4. 1. 1994 and P-8 dated 14. 1. 1994, so, respondent is liable to pay interest @ 12% p. a. from the aforesaid dates of rejection till payment. Copies of this order be communicated to the parties, free of charge. Complaint allowed.