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Judgment
THE complainant is a Public Limited Company having its Factory in Industrial Area, Ghaziabad and is engaged in the manufacture of M.S. ingots and steel casting from iron scrap and sponge iron. THE complainant took a fire insurance policy from Oriental Insurance Company Limited, hereinafter referred to as opposite party No. 1, for Rs. 65.00 lacs for the period 7.4.1995 to 6.4.1996, covering stock of raw material scrap/sponge iron. THE policy was extended to cover risk of spontaneous combustion. On 29.8.1995 a serious fire occurred in the stocks of sponge iron. THE Insurance Company was informed. THEy appointed M/s. Laxmi Surveyor and Engineer of Delhi for surveying an assessment of the loss. Subsequently M/s. R.L. Aggarwal and Sons were also appointed as joint Surveyors. THE incident was also reported to the police on 30.8.1995. THE representative of the Surveyors reached the site on the date of the fire incident when the fire was still on. THE nature of sponge iron was stated to be such that use of water or any other fire extinguishing media only aggravated the fire and the only way to put down the fire was to let the sponge iron cool down by spreading the same in the open area. It was for this reason that Fire Brigade was not called. However, immediate steps were taken to spread out the stock in open. In the fire 181.1 MTs sponge iron was damaged/ destroyed. Further case of the complainant is that on the insistence of the Surveyor, the complainant persuaded M/s. Kansal & Co., Dealers and Commission Agents in all kinds of iron and steel scrap to purchase 97.815 MTs of the burnt sponge iron at the average rate of Rs. 2,079.73 as per Bill Nos. 132 to 136 of dated 5.9.1995. For the remaining damaged stock, no customer could be found. In fact, even M/s. Kansal and Co. returned the stock purchased by them on the ground that on getting the sample tested from Mr. A.K. Sinha, Metallurgical Consultant, they came to know that the said stock was unusable and had hardly any market value. THE complainant claimed indemnification of Rs. 12,15,728.82 on account of cost of 176.065 MT of sponge iron @ Rs. 6,905/- PMT, Rs. 33,320/- as expenses incurred for saving the remaining stocks from the fire, Rs. 2,50,000 /- as storage charges @ Rs. 2,500/- per month from November, 1995 to August, 1996 besides interest @ 18%. THE total claim made was thus of Rs. 14,92,373.32.
IN the written version filed by the opposite party, it was pleaded that the insurer failed to take all necessary steps to reduce the loss. Actually fire brigade should have been called and they could find a way to control the fire and minimise the loss. With regard to the sale of a part of the damaged stock to Kansal & Co., it was stated that the sale was completed when in pursuance to the sale the goods were physically delivered to the purchaser and the sale could not be cancelled merely on the ground that the stock purchased was not found to be upto expectations of the buyer. After deducting the amount which the insured was entitled to claim from Kansal & Co., the INsurance Company, by its letter dated 22.4.1997, offered to settle the claim on payment of Rs. 9,62,091 /- in full and final settlement. This has not been accepted by the complainant. The opposite party has placed on record a copy of the final survey report prepared by the two Surveyors appointed in this case. We have carefully gone through the joint report of the Surveyors. They recommended to the Company indemnification of the cost of 176.065 MTs of burnt sponge iron @ Rs. 6,905/- per MT amounting to Rs. 12,15,728.82. They also recommended expenses incurred in removing the sound stock of 222.150 MTs @ Rs. 150/- PMT amounting to Rs. 33,322.50. From the total of Rs. 12,49,051.32, they deducted a price of 176.65 MTs as salvage at the rate at which the complainant had at one stage sold part of the damaged stock to M/s. Kansal and Company, namely @ Rs. 2,079.75 per MT amounting to Rs. 3,66,167.66. After deducting the deductable excess of Rs. 2,500/- they recommended for settlement at Rs. 8,80,384/-. In the course of survey, the Surveyors also got tested samples from uneffected stock of sponge iron as well as the damaged sponge iron from M/s. Rathi Ispat Limited and enclosed with their report, the test report dated 27.12.1995. They also extensively quote the opinion of both Mr. A.K. Sinha, Metullergist as well as the test report forwarded by M/s. Rathi Ispat Ltd. A comparative table of the various components as a result of analysis in the report of Rathi Ispat Ltd. seems to support the conclusion reached by Mr. A.K. Sinha. The categorical case of the complainant is that they had not received the payment when Kansal & Company cancelled the deal. In our view, the correct legal position is that the insured must take all possible care of the salvage until it is taken over by the Insurance Company as a trustee. At the same time, the Insurance Company cannot foist salvage on the insured. It is their headache to find a customer and dispose of it as it thinks fit. The Insurance Company is, therefore, not justified in making a deduction on a account of part of stock having, at one stage, been sold to Kansal & Co. Nor is there any justification to put valuation of the remaining unsold stock at the rate at which Kansa & Co. agreed to pay, at one stage.
For these reasons, we allow the complaint and direct the opposite party to pay Rs. 12,49,051.32 together with the interest @ 12% per annum from 10.7.1996 i.e. after two months of the report of the joint Surveyors till date of payment, in terms of the law laid down by the Supreme Court in United India Assurance Company Ltd. v. M.K.J. Corporation, III (1996) CPJ 8 (SC). The payment in terms of this order shall be made within four weeks of the receipt of a copy of this order failing which it will be open to the complainant to invoke jurisdiction of this Commission under Section 27. Complaint allowed. ______________