M/s Sawariya Trading Co vs New India Assurance Co. Ltd

Heard Ms. Malvika Kapila Kalra, Advocate, for the complainant and Mr. Maibam N. Singh, Advocate, for the opposite party.

M/s. Sawariya Trading Company (the Insured) has filed above complaint for directing New India Assurance Company Limited (the Insurer) to pay (i) Rs.64436250/-, with interest @9% per annum from 07.03.2018 till the date of payment, as the insurance claim; (ii) Rs.200000/-, as costs of litigation; and (iii) any other relief which is deemed fit and proper, in the facts and circumstances of the case.

The facts as stated in the complaint and emerged from the documents attached with it, are as follows:-

(a) M/s. Sawariya Trading Company (the Insured) was a proprietorship concern and engaged in the business of stocking, distributing, forwarding and wholesale trading of fast moving consumer goods and associated as a channel partner and wholesale trader of various companies, including Hindustan Unilever Limited, Reckitt Benkiser India Limited, P&amp, G. Premheena Limited and ITC Limited. The Insured took a warehouse located at G.No.232/1-A +232/2, Opp. Divya Marathi Printing Press, near Sai Baba Temple, Paldhi Bypass, Jalgaon through lease agreement dated 01.10.2015, for storing and packaging of various items related to its trade.

(b) New India Assurance Company Limited (the insurer) was a public insurance company and engaged in the business of providing insurance services to the general public. The Insured obtained “Standard Fire and Special Peril Policy” No.16070111170100000077, for the period of 26.04.2017 to 25.04.2018, for a sum of Rs.12/- crores (i.e. Rs.119950000/- on the Stock and Stock in process and Rs.50000/- on Furniture, Fitting and Fitting), stored in the warehouse at G. No.232/1-A + 232/2, Opp. Divya Marathi Printing Press, near Sai Baba Temple, Paldhi Bypass, Jalgaon, from the Insurer.

(c) Enormous fire caught in the above warehouse of the Insured in the night of 29/30.06.2017. Subhash Phulchand Barela, a watchman posted at the garage of Anil Kasat, adjoining to the warehouse of the Insured, first noticed the smoke emanating from the warehouse, around 3:30 hours on 30.06.2017, who informed Anil Kasat on telephone. Anil Kasat immediately reached the spot and informed local police station with request to inform Fire Service Station on telephone. Anil Kasat along with four-five persons, broke open the shutter of the warehouse with the help of JCB and started dousing fire by showering water. In the meantime fire brigade came on the spot and doused the fire. Anil Kasat tried to contact Raman Agrawal son of the proprietor, on his cell phone at 4:14 hours but his cell phone was on silent mode as such he could not pick up the call. In the morning, he found a miscall of Anil Kasat, then he talked with him and came to know about the incident at 6:00 hours. Rajiv Hariom Agrawal informed the incident at Police Outpost, Paldhi, where GD Entry No.5/2017 was made on 30.06.2017 at 17:00 hours. Local police inspected the warehouse and recorded statements of Anil Kasat, Subhash Phulchand Barela, Rajiv Hariom Agrawal and executed a Panchnama on 02.07.2017. The police obtained a report from Shree Sai Electrical, Jalgaon in respect of cause of fire, who gave its report dated 04.07.2017, stating that electric short circuit was the cause of fire. Chief Fire Brigade Officer, Municipal Corporation, Jalgaon, also submitted his report dated 06.07.2017 that the fire was caught due to electric short circuit. Industrial Energy & Labour Department, Government of Maharashtra also conducted an inquiry in respect of cause of fire and submitted report dated 31.08.2017, in which, it was found that no specific reason could be assigned for the cause of fire. The police was satisfied that the fire was caught due to electric short circuit and not due to any foul play and submitted final report, for closer of the case, which was accepted by Sub-Divisional Magistrate on 31.01.2018.

(d) Entire stock of cigarettes, stored in the warehouse was burnt/ charred in this incident, causing huge loss to the Insured. The Insured informed the Branch Office of the Insurer at Jalgon about the incident of fire at its warehouse and loss caused due to it on 30.06.2017. The Insurer appointed J.C. Bhansali & Company, Mumbai, as the surveyor on 30.06.2017 for survey and assessment of loss. The surveyor visited the spot on 01.07.2017, 02.07.2017 and 11.07.2017, inspected the fire-affected stock and verified it from the record. The surveyor, through letter dated 03.07.2017, asked the Insured to submit Claim Form and the papers (total 26 papers) in proof of the incident and loss.

(e) The surveyor asked the Insurer to obtain an investigation report in respect of cause of fire. The Insurer appointed Truth Labs, Delhi on 02.07.2017, for carrying out forensic investigation to determine cause of fire at the warehouse of the Insured. Truth Labs, Delhi constituted a three members expert committee, who inspected the warehouse on 07.07.2017, took photographs of the stock and various portion of the warehouse and prepared inventory. They recorded statement of the witnesses and took 12 samples and conducted forensic examination of it. They took all the papers i.e. Police papers, report of Chief Fire Brigade Officer, report of Shree Sai Electrical, Jalgaon and report of Industrial Energy & Labour Department, Government of Maharashtra. After examining all the papers, statement of witnesses and forensic examination reports of the samples, Truth Labs submitted its Investigation Report dated 20.01.2008, stating that fire was not caused on account of electrical short circuit in the wiring in the warehouse or spontaneous combustion rather it was caused due to deliberate ignition of fire in the stock of cigarettes kept in the south-east corner of the warehouse using readily available flammable and combustible ignition sources, like waste cotton, paper, cardboard scrap.

(f) The Insured submitted Claim Form for Rs.64436250/- and some papers. The surveyor issued reminders for remaining papers, which were supplied time to time. The surveyor submitted Final Survey Report dated 09.02.2018, holding that the claim was exaggerated and based upon fabricated documents. He assessed total loss to Rs.507692/-. Relying upon the Investigation Report of Truth Labs, he recommended that the claim was not admissible. Thereafter, the papers were examined by the competent authority of the Insurer, who by letter dated 07.03.2018, repudiated the claim on the ground that in Investigation Report it was found that the fire was not caused on account of electrical short circuit in the wiring in the warehouse or spontaneous combustion rather it was caused due to deliberate ignition of fire in the stock of cigarettes kept in the south-east corner of the warehouse using readily available flammable and combustible ignition sources, like waste cotton, paper, cardboard scrap. As such loss was not due to insured perils. The surveyor found that the claim declaration was exaggerated and based on fabricated papers. As such, there was violation of clause-8 of the General Conditions.

(g) Then this complaint was filed on 19.12.2018, alleging deficiency in service. The complainant stated that the Investigator has illegally ignored the reports/order of statutory authority i.e. local police and Sub-Divisional Officer, Spot Panchnama, report of Shree Sai Electricals, report of Municipal Corporation, Jalgaon and statement of eye witnesses. There is no evidence that any foul play has been done by the Insured. Findings of the surveyor that the claim was exaggerated and based upon fabricated papers are incorrect.

The Insurer filed its written reply on 04.06.2019, in which, issue of policy in question for the period of 26.04.2017 to 25.04.2017, fire incident and loss in the warehouse of the Insured on 30.06.2017, have not been disputed. The Insurer stated that as soon as the Insured get information of the fire incident on 30.06.2017, J.B. Bhansali & Company, Mumbai was appointed as the surveyor on 30.06.2017. On the request of the surveyor, Truth Labs, Delhi was appointed as the Investigator, for determining cause of fire after forensic examination. The Investigator conducted in depth investigation and submitted its Investigation Report dated 20.01.2018, reporting that the fire was not caused on account of electrical short circuit in the wiring in the warehouse or spontaneous combustion rather it was caused due to deliberate ignition of fire in the stock of cigarettes kept in the south-east corner of the warehouse using readily available flammable and combustible ignition sources, like waste cotton, paper, cardboard scrap. As such loss was not due to insured perils. The surveyor submitted Final Survey Report dated 09.02.2018, assessing net loss to Rs.507692/- as against the claim of Rs.64436250/-. The surveyor found that the claim was exaggerated and based on fabricated papers. The surveyor accepted the report of the Investigator. Thereafter, the papers were examined by the competent authority, who by letter dated 07.03.2018, repudiated the claim on the ground that in the Investigation Report it has been found that the fire was not caused on account of electrical short circuit in the wiring in the warehouse or spontaneous combustion rather it was caused due to deliberate ignition of fire in the stock of cigarettes kept in the south-east corner of the warehouse using readily available flammable and combustible ignition sources, like waste cotton, paper, cardboard scrap. As such loss was not due to insured perils. The surveyor found that the claim declaration was exaggerated and based upon misrepresentation. As such, there was violation of clause-8 of the General Conditions. There was no deficiency in service on the part of the Insurer.

The Insured filed Rejoinder Reply on 09.08.2019, in which, the facts stated in the complaint were reiterated. The Insured filed Affidavit of Evidence of Rajiv Hariom Agrawal and documentary evidence. The Insurer filed Affidavit of Ms. Sweety Saxena, Manager and documentary evidence. Both the parties filed their written synopsis.

The counsel for the complainant submitted that the cause of fire was of electric short circuit. The police has recorded the statement of witnesses and obtained a report from Shree Sai Electrical. The police executed spot Panchnama. Chief Fire Officer whose services were obtained for dousing the fire, submitted report dated 06.07.2017, in which also, cause of fire was found as electric short circuit. From all these materials, the police was fully satisfied that the cause of fire was electric short circuit. The police submitted final report for closure of the criminal case which has been accepted by Sub-Divisional Magistrate by the order dated 31.01.2018. The investigator and surveyor have illegally ignored these reports. It was not proper for the surveyor/ investigator to ignore the reports of statutory authority. The claim of the complainant was fully verified from the record and there was no misrepresentation on its part. Repudiation of the claim is illegal.

We have considered the arguments of the counsel for the parties and examined the record. The Insurer has repudiated the claim invoking Clause 8 of General Conditions of the Insurance Policy on the ground that the Insured has misrepresented the claim. So far as the police report under Section 173 of Code of Criminal Procedure, 1973, is concerned, it is relevant for the purpose of either to proceed with the prosecution or to drop the prosecution, its acceptance or rejection by the concerned Magistrate is also not decisive of civil right of the parties inasmuch the police authorities have no jurisdiction to deal with civil right of the parties particularly in the absence of the contesting party which is here the New India Assurance Company Ltd. Otherwise also the police report is merely based upon visual examination as well as statement of witnesses produced by the Insured. The police did not get forensic examination report in respect of cause of fire, as such, it is not material evidence for the purpose of the Insurer or this complaint.

Shree Sai Electrical in its report dated 04.07.2017 has mentioned that there were all five lights of 100 watt each in the warehouse which were in switched off position. In the light of this observation, the possibility of short circuit, when there was no electricity consumption, is ruled out. The wiring in the warehouse was in the wall at a height of 5-6 from the ground as such cutting of the wire by the rats is also not reliable. The report of Chief Fire Brigade Officer is also based upon visual examination. Electrical Engineer, Industrial Energy and Labour Department, Government of Maharashtra, in this report dated 31.08.2018 has mentioned that no specific reason could be assigned for the cause of fire on 30.06.2017 in the godown. Thus, these reports were not material evidence.

So far as the report of Investigator, Truth Labs, Delhi dated 20.01.2018 is concerned, the Truth Labs has collected 12 samples, i.e.10 samples of the burnt material, one sample of burnt electrical wire and one sample of unburnt electrical wire. In forensic examination reports of the samples of the materials, compounds like i-propyl dodecanoate, i-propyl tetradecanoate, octadecanal, 2 bromo-octatiacontyl pentafluoropropionate, 1,2,3 -propanetriol, diacetate and pyridine, and pyrrolidinyl were found. In forensic examination report of burnt electrical wire, sings of melting, annealing or beading were not found. In forensic examination report of unburnt electrical wire, which was collected from partially melted switch board near shutter No.1, it was found intact and no sing of burning melting, annealing etc. were found. On the basis of this forensic examination report, Truth Labs in his report has recorded the finding that cause of fire was not on account of electric short circuit or on account of spontaneous combustion rather it has been found that cause of fire was deliberate ignition stock of cigarettes kept in south eastern corner. Thus, misrepresentation in respect of cause of fire is fully proved and Insured could not contradict the above forensic expert report.

The surveyor found that there was misrepresentation in respect of stock. The Insured in his statement, as given to the police as well as in the claim form, has mentioned that total 689 cartons of cigarettes were burnt. The Insured in his Claim Form as well as in the documents filed to prove the claim has clearly mentioned that major stocks were of ITC brand. While, verification of the stock at the time of survey, the surveyor found that the cartons were half burnt/charred, but its brand name on the packet were visual and verified. In the verification, the surveyor found that major stock of cigarettes were of ETC brand. When the surveyor asked a clarification in this respect, then, the Insured has stated that the cigarette of ETC brand were of expiry dates, therefore, it were not included in the claim form. This fact was found to be incorrect inasmuch as the manufacturing date in the ETC brand cigarette were mentioned at January, 2017 and expiry date has not expired. The only following packets of ITC brand were found on the spot which value has been assessed to Rs.507692/-:-

Item of ITC cigarettes

Qty.

Remarks

Bristol 10HL

820 Pkts.

Only stock of ITC make found in debris

C Gold Flake Premium 10HL

650 Pkts.

Only stock of ITC make found in debris

Gold Flake Premium 10 HL

800 Pkts.

Only stock of ITC make found in debris

Wills Flake Liberty

162 Pkts.

Stock not shown in stock register & not claimed but found in debris.

The Insured, in his statement given to the police, has stated that the cigarettes were separately stocked in 3-4 layers of carton in the row. The surveyor in his survey report found that only upper layer of cigarettes was superficially burnt. While, all the packets below including their plastic covers were unaffected due to fire. Fire affected cigarettes were found of the brands A-10 or K-10. In the stock register as 30.06.2017, no cigarette of brand A-10 or K-10 was mentioned.  Therefore, the stock register was found not in accordance with actual stock stored in the warehouse. Hence, exaggeration as well as misrepresentation was fully proved. The complainant has not given any explanation of the finding recorded by the surveyor in this respect.  The repudiation letter does not suffer from any illegality.

ORDER

In view of aforementioned discussion, the complaint is dismissed.