NATIONAL INSURANCE CO. LTD. vs PRAFULCHANDRA JAYANTILAL SHAH

By this Revision Petition, National Insurance Company Ltd., the sole Opposite Party in the Complaint, calls in question the correctness and legality of the order dated 17.01.2012, passed by the Gujarat State Consumer Disputes Redressal Commission, Ahmedabad (for short "the State Commission") in Appeal No. 286 of 2010. By the impugned order, the State Commission has affirmed the order dated 01.08.2009 passed by the District Consumer Disputes Redressal Forum, Himmatnagar, District Sabarkantha (for short "the District Forum") in Complaint No. 92 of 2008. By the said order, the District Forum, while accepting the Complaint filed by the Respondent herein, alleging deficiency in service on the part of the Insurance Company in repudiating his claim for indemnification of the loss suffered by him on account of fire in the godown on 11.11.2006, had directed the Insurance Company to pay to the Complainant an amount of Rs.16,12,488/- as compensation alongwith interest @ 6% per annum from 17.06.2008, i.e. the date of filing of the complaint, till realization, with a stipulation that if the said amount is not paid within two months from the date of order, the same would carry interest @ 9% per annum.

Briefly put, the material facts, giving rise to the filing of the Complaint are that the Complainant had obtained from the Insurance Company a Standard Fire and Special Perils Policy (Material Damage) in respect of the stock of fire crackers stored in two godowns at Survey No. 28, Dhandha Savgadh. The policy was valid for the period from 13.08.2006 to 12.08.2007. Unfortunately, on 11.11.2006, the Complainant claim to have learnt at his residence that a fire had broken out in his godowns. On the Insurance Company being informed immediately, a Surveyor was appointed by it to assess the loss on account of the said fire. It appears that since an FIR about the incident had been registered with the police, the samples collected from the site were sent for the opinion to the Forensic Science Laboratory at Gandhi Nagar. On analysis of the samples, in the said report, the Laboratory opined as follows:

" Opinion:

Potassium Chlorate found in the result of analysis is very sensitive for heat, pressure and flame.

Potassium Nitrite, Sulphur and Carbon found in the result of analysis are the substance of gun powder. "

The Surveyor called for certain details from the Complainant vide several letters and, ultimately, relying on the Site Inspection, Police Report, Police Panchnama, Fire Brigade Report and Forensic Laboratory Report, the Surveyor gave a proximate cause of loss as follows:

" 9. PROXIMATE CAUSE OF LOSS: Based on our discussions with the insured, our inspection of the site of loss, Police Report, Police Panchnama, Fire Brigade Report, Forensic Laboratory Report, calculation given by the insured and ingredients of the fire crackers being most hazardous & prone to spontaneous combustion & therefore, spontaneous combustion had caused fire & burnt the crackers stock of the insured in the manner stated above."

Relying on the said reports, vide a letter dated 23.11.2007, the Insurance Company rejected the claim as "No Claim" on the ground that Spontaneous combustion has caused fire, burning the stock in the premises and, therefore, the claim was excluded in terms of Clause 1(a) of the terms and conditions of the policy, which reads as follows:

" 1. Fire

Excluding destruction or damage caused to the property insured by

i) its own fermentation, natural heating or spontaneous combustion.

ii) its undergoing any heating or drying process.

burning of property insured by order of any Public Authority. "

Being aggrieved by the decision of the Insurance Company, the Complainant filed the Complaint before the District Forum. Taking into consideration the evidence adduced by both the parties in support of their respective stands, as noted above, the District Forum allowed the Complaint with the aforestated direction.

Not being satisfied with the aforesaid direction, the Insurance Company carried the matter further in Appeal to the State Commission but without any success. Hence, this Revision Petition.

Having heard learned counsel for the Insurance Company and perused the documents on record, including the Surveyor''s Report and the report of the Forensic Science Laboratory, we are of the opinion that there is no substance in the Revision Petition, in so far as the concurrent finding recorded by both the Fora below to the effect that repudiation of Complainant''s claim by the Insurance Company was unjustified, is concerned.

Mr. Bakshi, learned counsel appearing for the Insurance Company, has strenuously urged that from the report of the Forensic Science Laboratory, it is clear that since the chemicals, which were found in the fire crackers, were very sensitive to heat, pressure and flame and in the absence of any evidence on record to indicate any other cause of fire, it can be safely inferred that the cause of fire was the spontaneous combustion because of the internal heat because of presence of chemicals in the fire crackers.

Having perused the said report, we are unable to persuade ourselves to agree with the learned counsel. It is evident from the said report of the Laboratory that it is only with regard to the chemical composition of the crackers and the properties of Potassium Chlorate, Potassium Nitrite, Sulphur and Carbon, which are all substances of the gun powder. It is true that all these chemical substances are highly inflammable and may explode because of heat or pressure but the question for consideration before us is as to whether the Insurance Company had been able to prove by cogent evidence that the cause of fire was on account of internal heat, pressure or flame erupting from the fire crackers, stored in the godown, themselves. We are in complete agreement with the Fora below that no material in that behalf was brought on record by the Insurance Company. It needs little emphasis that having repudiated the claim in terms of afore-extracted clause 1(a)(i), onus was on the Insurance Company to prove that spontaneous combustion was on account of fermentation or natural heating. In that view of the matter, we do not find any ground to interfere with the concurrent finding by the Fora below to the effect that the Insurance Company had failed to produce any evidence to show that the fire in the godowns was due to internal heating. Accordingly, we affirm the said finding.

The next question surviving for consideration is as to whether the Fora below were justified in awarding interest on the aforenoted amount. Having perused the documents on record, we find that in order to assess the loss the Surveyor had to write several letters to the Complainant, asking for information on certain points and complete information was furnished by the Complainant only when the Insurance Company, vide its letter dated 05.05.2007, threatened him that in case the requisite documents, as demanded by the Surveyor, were not furnished, his case will be closed. Evidently, there was delay on the part of the Complainant in furnishing the requisite information. Having regard to the said conduct of the Complainant, which resulted in delay in submission of report by the Surveyor, we are of the opinion, that the award of interest on the amount of compensation, as awarded by the lower Fora, is not justified.

Consequently, while maintaining the amount of compensation, awarded by the Fora below, we set aside the direction with regard to the payment of the interest on the said amount by the Insurance Company to the Complainant. The amount due to the Complainant in terms of this order shall be paid within four weeks from the date of receipt of a copy of this order, failing which the said amount shall carry interest @ 9% per annum from the date of this order till actual realization.

It appears from the order dated 01.08.2012 that while issuing notice to the Complainant, the Insurance Company was directed to deposit 50% of the awarded amount in the concerned District Forum, as a pre-condition for stay of the impugned order. It is stated that the said order was duly complied with. If that be so, the amount deposited, alongwith accrued interest, if any, shall be released to the Complainant forthwith. While remitting the balance amount due to the Complainant, in terms of this order, the principal amount deposited by the Insurance Company in terms of the said order, shall be accounted for.

The Revision Petition stands disposed of in the above terms with no order as to costs.