Haryana

StateCommission

CC/38/2014

Bhiwani Fibers - Complainant(s)

Versus

National Insurance Company ltd. - Opp.Party(s)

03 Feb 2017

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION, HARYANA, PANCHKULA

                                                 

Complaint No.38 of 2014

Date of Institution: 07.04.2014

                                                          Date of Decision: 03.02.2017

 

M/s Bhiwani fibers Ltd., 5 KM. Stone, Tigrana Mor, Bhiwani, Tehsil and Distt. Bhiwani, through its Managing director Sh. K.K.Mohta

     …..Complainant

                                                Versus

 

National Insurance Company Ltd., Circular road, Ghantaghar, Opposite State Bank of India Bhiwani, Tehsil and Distt. Bhiwani, through its Branch Manager.

         …..Opposite party

 

CORAM:   Mr. R.K.Bishnoi, Judicial Member.
                   Mrs. Urvashi Agnihotri, Member.

 

Present:-    Mr.A.K.Gehlawat, Advocate for the complainant.

                    Mr.G.D.Gupta, Advocate for the opposite party.

 

                                      O R D E R

 

R.K.BISHNOI, JUDICIAL MEMBER:

 

          As per complainant it is engaged in manufacturing process of cotton waste, as mentioned in the complaint.  In the beginning it was manufacturing cotton yarn, but, due to recession it was forced to divert type of production. Building material, goods etc. were insured  vide cover note No.006034 dated  29.09.2010 for Rs. Fifty lacs, valid from 29.09.2010 to 28.09.2011.  On 29.04.2011 at about 4-4:14 A.M. fire broke out in the premises wherein complainant suffered huge loss due to damage of plant, machinery, material and the building premises etc.  Information was given to opposite party (O.P.) and they appointed M/s Royal Associate as investigator. He reported that fire was genuine but cause of fire was unknown.  All the documents were supplied to surveyors as and when demanded. Claim was repudiated on the ground of change of type of production and not giving details of vehicles etc.  OP be directed compensation to the tune of Rs.33,97,921/- alongwith interest @ 18% per annum as detailed below:-

“Sr.No.	Head	Amount	Supported document
1	Finished goods	No Loss (Un-affected by fire mishap)
2	Semi-finished goods (Work in Progress WIP)	12,63,570/-	Audited Balance Sheet
3	Raw Material	17,90,376/-	Audited Balance Sheet
4	Building	03,43,975/-	Report of Mittal surveyors
5	Total amount	33,97,921/-“

 

2.      O.P. filed reply controverting these averments and alleged that complainant did not suffer loss as mentioned in complaint. After receiving information about this incident Mr.Pardeep Gupta was deputed to conduct preliminary survey.  He mentioned in his report that cause of fire was not known and matter be investigated properly. As there was no electricity fittings, short circuit cannot be cause of fire. Lateron IRDA accredited M/s Mittal Surveyor Private Limited was asked to make final assessment. Complainant was requested not to disturb or  remove the stock.  Before final report it was informed that tentative loss could be approximately seven lacs.  When factory was running at full swing it had sale turnover of Rs. Seven crores to Rs.Eight crores and maintaining an average inventories of Rs.Two crores i.e. 25 % of total turnover.  Electric connection of complainant was disconnected in the year 2008. Insured was having stocks of cotton waste in another godown which remained unaffected by fire. The value of stock affected by fire was assessed to tune of Rs.2,88,722/- by surveyor.  The loss of building was worked out to be Rs.3,00,544/-. After applying average clause and excess clause total loss was assessed as Rs.2,37,234/-.  Insured was a spinning mill, but, at the time of incident it was a manufacturing quilt and mattresses, which was never disclosed due to higher rate of premium qua them.  Bank account of complainant also became NPA since 2007.  It was sick unit as  declared by BRIF Board on 29.05.2006. Regarding cause of fire it was told by complainant that the same could be due to flying spark from neighbouring factories or from near by petrol pump, from Generator set, diesel etc.  complainant never submitted statement to the bank. There was no evidence about stock  or  loss as alleged by complainant.  Taking into consideration all the facts and circumstances his claim was repudiated  vide letter dated 25.09.2012 on the following grounds:-

          “i.       You have changed the process

          ii.       Details of vehicles through which raw material was  brought was in the factory was not given to the investigator.

iii.      There was production on a very small scale so there is no justification of new purchases as informed by you.

iv.      Investigator is of the opinion that no work was carried out for last many years.

v.       Exact cause of fire was not intimated.”

Complicated question is involved in this complaint and the matter be adjudicated by the civil court. Objections about maintainability of complaint, concealment of true facts, accruing cause of action etc. are also raised and requested to dismiss the complaint.

3.      Both the parties led evidence.  Arguments heard.  File perused.

5.      Learned counsel for the complainant vehemently argued that claim was repudiated without any reasonable ground vide letter dated 25.09.2012, copy of which is Ex.C-16.  The grounds mentioned therein are not sufficient to reject his claim. As per investigation report fact of fire is not disputed. As per stock statement EX.C-7 and surveyor report Ex.C34 it is clear that stock was lying in the premises as alleged by him and he suffered loss to the tune of Rs.34/- lacs.  Surveyor wrongly assessed loss to the tune of Rs.2,37,234/-, as mentioned in his report Ex.R-2. So it be granted compensation as prayed for.

6.      On the other hand learned counsel for O.P. vehemently argued that his claim was rightly repudiated because he changed process of manufacturing and no work was being done at the time of incident. Cause of fire was also not established.  As per complainant it was a sick unit so there was no question of stock to this extent.  As per report of Surveyor Ex.R-2 and investigator Ex.R-7 his claim was rightly repudiated.

7.      Though it is mentioned in Ex.C-16 that exact cause of fire is not intimated, but, it does not mean that there was no fire.  Investigator as well as surveyor have mentioned in their reports that fire took place.  It is not necessary for insured to know in each and every case that how fire erupted. It is no-where proved that insured/complainant played mischief and caused fire.  If there was no electric connection or generator set was not working it does not mean that fire cannot take place.  Had it been alleged or proved that the complainant himself put the stock on fire then it could have been a different matter.  In this way the complainant is entitled for compensation because of fire as per policy Ex.C-1.

8.      Now the question comes about change of process. As per insurance policy Ex.C-1 cotton, waste cotton, semi furnished goods etc. were also insured. It is not the process but the goods which are insured. For ready reference the articles insured are mentioned below:-

“On building for Rs.10,00,000/- plant & Machinery fire @ 16875/-

          For Rs.15,00,000/- adon stock of Raw Material       8438/-

          Of cotton waste/cotton/semi finished/finished set   869/-

          Products in process and for in the premises            9307/-

          For Rs.25,00,000/-.”

9.      Now the question comes about quantum of compensation. When complainant entered witness box it was admitted by him that it was a sick unit since 2003 and was under BIFR. It’s loan was also declared as NPA since 2008.  It shows that the firm was manufacturing    quilts etc. at a very lower stage.  It is admitted by him that previous insurance was upto Rs.Two crores and lateron it was reduced to Rs.50/- lacs. Complainant was also unable to tell about the turn over of the firm at the time of incident. On the basis of Ex.C-7 it cannot be presumed that goods worth more than Rs.50/- lacs were lying therein. As per Ex.C-7 it cannot be presumed that such huge stock was laying in the godown. Complainant has not produced any bill regarding purchase of raw-material or the sales.  Details  about bringing stock is also not supplied.  So, it cannot be presumed that there was such huge stock in the firm.  Taking into consideration all the facts surveyor assessed loss as detailed below:-

“size of unaffected godown	35 x 45 = 1575 sq. ft.
Qty. of raw material contained	9442 kgs
Value of stocks	96718.00
Area of affected godown	110x60=6600 sq. ft.
Occupancy	75%=4950 sft
Value of stocks in 4950 sq. ft. 96718/1575x4950	3,03,971.00
Less salvage value @ 5%	15,199.00
Loss assessed	2,88,772.00”

After taking into consideration surveyor has assessed the loss as under:-

“Item	Qty	Unit	Rate	Amount
5 Nos. of steel trusses including fabrication & fixations.	8250	Kgs	55.00	4,53,750.00
80 Perlines including fabrication & Fixation	4400	Kg.	55.00	2,42,000.00
Asbestos cement sheets including fixation	250	Nos.	575.00	1,43,750.00
Repair of false roofing on L/S basis				25,000.00
Misc. items like hooks, bolts etc.				15,000.00
Total				8,79,500.00
Less: Depreciation @ 2.5% for 14 yrs @ 35%				03,07,825.00
Balance				5,71,675.00
Less salvage value of steel 12650 Kgs. @ 18/-				2,27,700.00
Net loss assessed				3,43,975.00”

He has given all the details in his report Ex.R-2 and the same cannot be disbelieved because there is no contrary evidence qua this report. Report of surveyor is on the higher pedestal and cannot be brushed aside without any cogent reason as per opinion of Hon’ble National Commission expressed in National Insurance Co. Ltd. Vs. Jyothi tobacco Traders IV (2012) CPJ 103 (NC) and Puranmal Vs. Shri Ram General Insurance Company Ltd. 1 (2016) CPJ 280 (NC)

10.    Resultantly complainant is awarded compensation to the tune of Rs.2,37,234/- alongwith interest @ 09% per annum from the date of filing of complaint. The complainant is also awarded compensation of Rs.15,000/- for mental agony and harassment and Rs.11,000/- as litigation expenses.

 

February 03rd, 2017

Mrs. Urvashi Agnihotri, Member, Addl.Bench

R.K.Bishnoi, Judicial Member Addl.Bench