PER MR SUBHASH CHANDRA, MEMBER

1.      This complaint under section 21 of the Consumer Protection Act, 1986 (in short, the ‘Act’) has been filed seeking the settlement of claim filed with the opposite party with compensation alleging deficiency in service.

2.     The complainant has stated that he had obtained a certificate of stability for the building of the cold storage from a Chartered Engineer and Architect on 07.12.2009 prior to renewal of the licence of the cold storage for the period 01.01.2010 to 31.12.2010 under the UP Cold Storage Act, 1976 issued by the Licensing Authority (Cold Storage) & District Magistrate, Mahamayanagar (Hathras), UP. He had obtained 6 valid insurance policies including for Standard Fire & Special Perils (SPSP), Deterioration of Stock (Potatoes) and Plant and Machinery and has stated that these covered the building, plant and machinery and stocks. On 18.05.2010 around 9.30 pm the ammonia gas compressor exploded in the cold storage resulting in the death of one employee and the collapse of the building causing extensive damage to the potatoes stored in the cold storage. A claim was lodged with the opposite party for Rs.2,65,44,550/- comprising of Rs.41,73,000/- for plant and machinery, Rs.1,40,14,550/- for building, Rs.72,00,000/- for potato stock, Rs.7,35,000/- for clearing of site and Rs.4,22,000/- for loss in leakage of ammonia gas. However, the claim was repudiated as a “No Claim” by the opposite party on the basis of the Surveyor’s report vide letter dated 17.06.2011. The complainant has alleged deficiency in service and approached this Commission with the following prayer:

a.       Direct the opposite party to pay Rs.2,65,44,550/- as claim under 6 policies covers taken from the opposite party when during their continuation the damage accident has taken place;

b.       Direct the opposite party to pay Rs.10,00,000/- as compensation for the deficiency of service in delay and repudiation of the claim which has caused mental agony, physical harassment and suffering to the complainant resulting in closure of the business of cold storage of the complainant;

c.       Direct the opposite party to pay Rs.5,00,000/- as costs of the litigation;

d.       Pass search any other or further orders as this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case.

3.      Resisting the complaint by way of a written statement, the opposite party denied the averments of the complainant. It was contended that upon receipt of information of the incident of the blast at the cold storage on 18.05.2010, it had deputed a Spot Surveyor, Pradeep Potdar who, after visiting the site, submitted a preliminary report stating that chambers of the cold storage constructed in 1981 and 1988 had been recently modified and that documents requested from complainant on 21.05.2010 had not been supplied. Thereafter, opposite party appointed M/s Protocol Surveyors & Engineers Pvt. Ltd. as the final Surveyor on 19.06.2010. Following correspondence with the complainant seeking information and documents between 29.06.2010 and 30.09.2010 and deputing a structural engineer (Vaibhav Garg) for inspection, the Surveyor submitted a Final Report dated 16.05.2011 concluding that there was no event such as a storm or lightening on 18.05.2010 and that the recently constructed RCC roof in the cold storage had collapsed due to lack of proper jointing of columns. Consequently, there was no liability on the opposite party and, therefore, it was a case of ‘No Claim’. For theoretical purposes, loss was estimated at Rs.43,58,347/-.

4.      The claim of the complainant was accordingly repudiated by the opposite party vide letter date 17.06.2011 on the grounds that (i) the claim against the loss of the building was not admissible as it was not covered under a ‘peril’ defined under the Policy since the collapse of the building was attributable to a structural defect, (ii) the claim for machinery was inadmissible in view of the fact that the damage to the machinery was on account of the collapse of the building which was not a covered ‘peril’ and (iii) the claim for damage to stocks (potatoes) was also inadmissible as it was attributable to the collapse of the building and the stocks were covered only under a Deterioration of Stocks (Potatoes) Policy and collapse of building was an exception as per clause (xi)(d).  The opposite party has  also contended that the report dated 07.12.2009 of M/s Yadav & Associates, Engineers and Architects, Aligarh engaged by the complainant was not valid since the criteria of stability was not stated in the Report.

5.      The opposite party has contended that the pre-insurance inspection report of the cold storage building was not a detailed report from a structural point of view and should, therefore, be disregarded. It has denied that the collapse of the building was on account of the explosion of the ammonia tank. It has also contended that the documents sought by the Surveyors were not made available by the complainant and hence the report was based upon findings on the basis of details made available. Deficiency in service is denied on the ground that the claim was processed as per the terms of the Policy and without delay and the repudiation of the claim is justified.

6.      We have heard the learned counsel for both the parties and carefully considered the material on record, including the rejoinder and written statement.

7.      From the documents on record, it is evident that the complainant’s case is that the blast in the ammonia tank was the cause of the collapse of the cold storage building. It has been argued that the building was structurally sound as per the certificate of stability of the structural engineer dated 07.12.2009. It is also argued that the renewal of the licence by the District Magistrate, Mahamayanagar who is the Licensing Authority under the UP Cold Storage Act, 1976 indicates that the building was structurally safe and, therefore, the report of the Surveyor which is the basis for repudiation of the claim by the opposite party, should not be given credence to. The spread of ammonia in the air for a distance of 10 kms is cited as the reason to prove that the ammonia tank blast was the reason for the building’s collapse. Reliance has been placed upon the report of M/s Yadav & Associates, Aligarh dated 07.12.2009 in support of the claim that building was structurally safe. Other than this, no other evidence has been produced to prove that the explosion of the ammonia tank caused the collapse of the cold storage building.

8.      The opposite party, on the other hand, relies upon the report of the Final Surveyor, M/s Protocol Surveyors & Engineers Pvt. Ltd. and that of the Structural Engineer, Vaibhav Garg, to argue that the building was not structurally safe and therefore collapsed when stocked with potatoes. The report of the Surveyor states that:

        “As reported, the RCC roof was laid only few months back

During our further verifications w.r.t. loss the following sequence of events and circumstantial evidence were noted:

• The collapse of complete RCC roof in one of the chambers occurred on 18.05.2010 at around 09.30 PM.
• The collapse of shed led to consequential damage to stocks and plant and machinery
• During the course of our verifications it was noted that there was no abnormal windstorm or any Thunder, lightning which could have led to collapse
• It could be verified come up since the RCC roofing was done in very recent past and was supported on columns without proper jointings
• It was further noted that the columns which were initially built in 1980s were not designed to take load of RCC roof
• As the chambers were totally filled, the extra load on columns of the RCC roof and loaded chamber was enough to cause the collapse
• The way RCC roof had collapsed as a single slab with separated columns clearly indicated that the columns were not jointed/meshed with the RCC slab
• As the design data was not made available the other aspects could not be verified

From the above, the collapse appeared to have occurred due to RCC roof not being properly supported.

In addition to above, the loss if not caused by the above have also not been caused by any of the insured perils which are listed as per standard fire and special perils policy.

The insured in their Claim Form have also indicated the cause of loss as Sudden Accidental (Cause Not Known).”

The report after noting the perils covered under the ‘Underwriter’s Liability’, states as under:

“We wish to confirm that the collapse of building has not been due to any of the above perils and hence there is NO LIABILITY of the underwriters w.r.t. captioned claim.

Further, as the loss to building and Plant and Machinery are not indemnifiable, the deterioration of stocks also do not find coverage under Deterioration of Stock – Potato Policy. Hence we recommend to close the case as NO CLAIM.”

9.      It is the case of the opposite party that the building collapse is not attributable to the blast of the ammonia tank; rather, it was on account of the structural instability of the building itself. Repudiation of the claim as a case of ‘No Claim’ is justified on the grounds that the cause of the building’s collapse was not a covered peril under the terms of the Policy related to building and machinery and that the stock of potatoes was covered for deterioration and, is therefore, not eligible for a claim under the policy.

10.    Whether the collapse of the cold storage building was due to a trigger or due to a structural defect is the key issue in the matter. The complainant has argued that the blast in the ammonia tank was the cause since ammonia had spread for a large distance. The opposite party, relying on the Surveyor’s report, has concluded that the blast was explosion was not on account of the ammonia tank. It has held that the storage tanks were of 1981 and 1988 vintage and, therefore, the cold storage building was not structurally safe and consequently it collapsed due to structural defects in the construction of the RCC roof which is not a covered peril under the Policy and hence the claim deserves to be repudiated. Both parties have relied upon reports of Structural Engineers. The report of M/s Yadav & Associates specifically mentions that the roof of the building is on AC sheet and not RCC sheet. The relevant portion of the Strength and Stability Certificate issued by them on 07.12.2009 reads as under:

        Constructional Details with Materials:

1. Roof (AC Sheet)
2. 1^st Class brick work in cement mortor with 15”x18” R C C Column

Per Cooling Chamber

1. Chamber I
2. Chamber II as Above
3. Chamber III
4. Chamber IV

(3)     Cold Storage Chambers

Internal measurement in matters storing

Length Breadth high no. of storeys Capacity (m)

1. Chambers to as above 6 stores 2648.67 of sqmt

Wooden

Stacks

          Construction details with material used and ratio FTC in Each chamber construction in detail

1. Roof AC Sheet
2. Walls : 1^st Class brick work in cement mortor with floor: Rice Husk

Insulation :  Thickness in centimeter and material

Racking arrangement

1. Material used for main structure RCC pilers wooden/ steel beams
2. Size of vertical members 2.28 m RCC pillers
3. Size of horizontal members of each storey (NA)
4. Concrete to centre distance of

Vertical members lengthwise 2.28 m inches (NA)

Storage area in each floor 441 (sqmt)

4.       Conclusion – It is certified that I have presently inspected and examined the constructor building and racking arrangements of this cold storey. The cold storage is safe stable and according to cold storage Act 1976.

 11.  The report of Vaibhav Garg appointed by the Surveyor states that:

Structural Defects/ Faults observed:

• As mentioned earlier, a composite structure was in use with MS I beams resting on RCC columns. Some standard practices have to be followed for carrying out composite structure constructions which were ignored and not followed in this case. As compared with standard codes and practices for RCC, structural steel and steel concrete composite structures, the deficiencies/ faults of the fallen structure are enumerated below:

• For fixing MS I beam onto a RCC column, the MS I beam is either bolted or welded to an insert plate fixed in the RCC column. The RCC column thus remains a homogeneous and monolithic structure. This is the standard practice which was not followed for all the columns at every level. Whereas, the connections are monolithic in nature in the adjoining chamber which is in place.

• MS I beams were placed in between the steel reinforcement of columns at the bottom of slab level (approximately) and the concreting done after that. In other words, the homogeneous structure of every column was disturbed at the bottom of slab levels (approximately). The above stated arrangement of providing composite structure joints disturbs the cover between RCC and steel bars provided in the column and ultimately affects the RCC column’s strength and load carrying capacity. As there were five levels, it indicates that every column was weakened at all the five levels.

• At the junctions of columns with beams, the shear forces are much more and additional shear reinforcement has to be provided to cater thee additional shear forces. And, here the junctions were made exceptionally weak with reduced concrete and lesser shear reinforcement. Considering the temperature variation and cold storage chamber building goes through on its external and internal environment, this was a gross defect.

• The 115 mm thick wall was constructed only to share the load of rice husk but its width should have been more/ thicket in order to bear the its own load considering its huge height and length. No tie-beams/ partition columns were provided in between the expanse of this wall, which could have provided some sort of support to the structure.

• A black due to leakage of gases or malfunctioning of a plant is ruled out. There are only the pipelines inside the chamber. The equipment and machinery is outside. Had there been any leakage, there would have been very pungent odour of ammonia inside and it is difficult to ignore such a leakage.

• Thus, it is concluded that the chamber building collapsed as a result structural failure.

12.    In view of the above, it is apparent that the Surveyor appointed by the opposite party has arrived at his conclusion based on his inspection and the documents made available by the complainant. Quite clearly, certain documents pertaining to the design of the roof have not been made available to the Surveyor appointed by the opposite party despite opportunity to the complainant. The opposite party cannot be faulted for the same. While it is open to the complainant to contest the findings of the Surveyor and/or seek appointment of another Surveyor for reasons to be justified, he has not taken recourse to such an option as it is also evident from the record that there has been no demand for another Surveyor to be appointed by the complainant as permitted under section 64 UM of the Insurance Act, 1938 which indicates acceptance of his report. It is not open to the complainant, therefore, to contest the finding of the Surveyor at this stage. As regards the report of M/s Yadav & Associates, Structural Engineer relied upon by the complainant, it is seen that this report is not specific with regard to columns and RCC roof which was constructed recently and cannot therefore, be relied upon as its certificate is for a building with AC sheet roof. The contention of the opposite party based upon a detailed structural report which is not countered by design specifications by the complainant despite opportunity is considered more reliable.

13.    For the foregoing reasons, we do not find merit in the complaint. The same is, therefore, dismissed with no order as to costs.