Order dictated by:

Sh.S.S.Panesar,President.

1. Sh.Raghav Kapoor complainant has filed the present complaint under section 11 & 12 of the Consumer Protection Act on the allegations that complainant is a partnership firm duly registered under partnership Act, 1932. Sh. Raghav Kapoor is one of the partners of the firm namely M/s. United Surgical Industries and therefore is duly competent to sign and verify the pleadings and to institute the present complaint. The complainant obtained Fire Insurance Policy No. 36050211130100000055 in the name of firm from the opposite party for the period from 8.8.2013 to 7.8.2014 vide which the complainant got insured all its business stock against the payment of requisite premium. To the ill luck of the complainant on 25.5.2014 when the factory of the complainant was closed, all of a sudden there was a short circuit due to some technical defect at about 8.00 p.m., as a result of which fire has engulfed the factory premises especially in washing area and in the raw material section and most of the stock in the form of finished goods, semi finished goods, raw material, unfinished goods  whilst lying and/or stored and/or in process of making surgical cotton was destroyed, the detail of which is given hereunder :-

Particulars               Loss claimed                         Loss assessed

                             Qty.            Amt.              Qty.                            Amt.

161 bales Raw 16905 kg         Rs.11,30,945/- 135bales=14175 kg. Rs.9,48,307/-

 Cotton

Less:

Loose Material saved from above 1850 kg.         2000

@ Rs.66.90 per Kg.       Rs.1,23,765/- per Kg.

Burnt damaged material          NIL             12175

(14175-2000) per kg.

                                      10,07,180/-                              Rs.7,90,157/-

                                      Less:

                                      Deduction for excess clause     Rs.  39,508/-

                                      5% of claim amount orRs.10000/-

                                      Whichever is maximum

                                      Net assessed loss                     Rs. 7,50,649/-

The complainant has informed the fire brigade regarding the aforesaid incident and a report in this connection has also been lodged with the Municipal Corporation Fire Services, Amritsar. In the said report the cause of fire is mentioned due to short circuit and has further been mentioned that a loss to the extent of 12 lacs had been occurred in the said incident. DDR dated 26.5.2014 with respect to aforesaid act has also been got lodged with the police authorities. Since the goods were duly insured with the opposite party, therefore, intimation regarding the said incident was also given to the opposite party  and the claim was also lodged alongwith all the relevant documents as demanded by the opposite party . The complainant has also provided the audited sheets for the year ended as 31.3.2012 , 31.3.2013 and trading account as on 25.5.2014 which is as under:-

2.       Upon receipt of intimation from the complainant, opposite party appointed Sh. Baldev Pathnia as surveyor and loss assessor to investigate into the matter and to assess the loss . The said surveyor visited the factory premises on 26.5.2014 and submitted his survey report dated 20.8.2014 in which it has been categorically stated that the insured/complainant has suffered a loss by fire to the tune of Rs. 7,90,157/- approximately which is adjusted to Rs. 7,50,649/- and the complainant gave his verbal consent to the aforesaid figure of loss. But the opposite party vide letter dated 10.4.2015 repudiated the claim of the complainant on flimsy grounds . It has been held in the survey report that cause of fire is an electric short circuit and not self ignition (spontaneous combustion) as mentioned in the repudiation letter. It is worthy to mention over here that no other expert or any electrical engineer has visited the spot at any point of time after the incident at the instance of opposite party. After receiving the report of surveyor ,opposite party dilly dallying the matter of settlement of the claim of the complainant  and thereafter, after a span of more than five months on 16.11.2014 another investigator M/s. Royal Associates visited the factory premises of the complainant and assured that his claim settlement with opposite party is under process  and he visited here just to complete the formalities with regard to the settlement of claim and he has recorded the various statements of the employees of the complainant firm .  However, opposite party vide letter dated 10.4.2015 repudiated the genuine claim of the complainant  on flimsy grounds. The complainant has sought for the following reliefs vide instant complaint:-

1. Opposite party be directed to  pay Rs. 7,50,649/- as mentioned in the report dated 20.8.2014  of the surveyor  alongwith interest @ 18% p.a. from the date of lodging of claim till payment;
2. Compensation to the tune of Rs.2,00,000/- may also be awarded to the complainant alongwith adequate litigation expenses.

Hence, this complaint.

3.       Upon notice , opposite party appeared and contested the complaint by filing written statement taking certain preliminary objections therein inter alia that present complaint is legally not maintainable as the same is an abuse of process of the court ; that complainant is estopped by his own act and conduct from filing the present complaint. The opposite party has repudiated the claim of the complainant vide letter dated 10.4.2015 and vide letter it has been clearly stated that as per the report dated 15.12.2014 submitted by M/s. Royal Associates, Investigating and Detective Agency the proximate cause of  loss as Self Ignition (Spontaneous combustion) which is an exclusion under the fire policy and beyond the scope of terms and conditions  of the fire policy . Earlier the surveyor report was  obtained from Baldev Pathinia but the company was not satisfied with the report as report of surveyor was based merely upon the statement of Satya Charan one of the workers of the complainant Raghav Kapoor and there was no concrete evidence about the alleged incident . That M/s. Royal Associates were appointed to investigate the matter and to verify the genuineness of the bills, account statements, transactions history carried out by the party during the financial year of the loss and its previous financial years and fire brigade report, police report and many other documents placed in the file. That Royal Associates recorded statements of Mr.Satya Charan and others workers. Satya Charan stated in his statement  that he saw smoke coming out from cotton bales. He immediately called other workers. Other workers also confirmed in their statements that fire broke out suddenly  as smoke which was started coming out from bales converted into fire flames due to speedy wind. They have nowhere mentioned in their statements that fire broke out due to short circuit. Further it was revealed from the statement of various workers that there was no light at the place where fire broke out which shows that there was no chance of short circuit. Mr.Satya Charan main eye witness of fire confirmed in his statement at about 8.00 -8.30 pm suddenly smoke started coming out from cotton bales and due to speedy wind it converted into fire flames which shows that cause of fire is self ignition and other workers also confirmed the same. M/s. Royal Associates vide its report dated 15.12.2014  have given the opinion that bales got burnt due to self ignition. They further stated in the report that cause of fire claimed by insured as short circuit seems to be incorrect  and insured has nowhere confirmed in his statement that fire broke out due to short circuit. Even all the works  whose statements were recorded by Royal Associates did not claim in the statement that fire broke out  due to short circuit and all the workers confessed in their statements that fire broke out suddenly and it spread due to speedy wind. Moreover workers also claimed that sale bales were segregated but when the bales were opened these were found burnt from inside which shows that these bales got burnt due to self ignition.  On merits, facts narrated in the complaint have been specifically denied and a prayer for dismissal of complaint was made.

4.       In his bid to prove the case Sh.Sunil Nayyar,Adv.counsel for the complainant tendered into evidence affidavit of the complainant Ex.CW1/A, affidavit of Sh.Satya Charan Ex.CW2/A alongwith documents Ex.C-1 to Ex.C-9 and closed the evidence on behalf of the complainant.

5.       To rebut the aforesaid evidence Sh. Vikas Mahajan,Adv.counsel for the opposite party tendered into evidence affidavit of Sh. S.S.Gill, Sr. Divisional Manager Ex.OP1 alongwith documents Ex.OP2 to Ex.OP14 and closed the evidence on behalf of the opposite party.

6.       We have heard the ld.counsel for the parties and have carefully gone through the record on the file as well as written synopsis of arguments submitted on behalf of both the parties.

7.       On the basis of the evidence on record,ld.cousnel for the opposite party has vehemently contended that on 25.5.2014 due to ill luck of the complainant  the factory of the complainant was engulfed  with fire while the factory premises were closed. In the fire incident, raw material  section  and in the washing area most of the stock in the form of finished goods, semi finished goods, raw material were destroyed. Regarding the aforesaid incident complainant also informed the fire brigade to extinguish the fire and a report in this connection has also been lodge with the Municipal Corporation Fire Service, Amritsar. Opposite party repudiated the claim of the complainant vide letter dated 10.4.2015 and vide said letter, it has been clearly stated that as per report dated 15.12.2014 submitted by M/s. Royal Associates, Investigating and Detective Agency the proximate cause of loss as Self Ignition (Spontaneous Combustion) which is an exclusion under the fire policy and beyond the scope of terms and conditions governing the fire policy. Earlier the survey report was obtained from Baldev Pathania but the company was not satisfied with the report   as report of Baldev Pathania surveyor was based merely upon the statement of Satya Charan one of the workers of the complainant and there was no concrete evidence about the alleged incident . Moreover  the insured was not witness to the alleged incident. Thereafter M/s. Royal Associates were appointed to investigate the matter and to verify the genuineness of the bills, account statements, transactions history carried out by the party during the financial year of the loss and its previous financial years and fire brigade report, police report and many other documents placed on the file and to investigate the cause of loss, gather cogent proofs  to substantiate the genuineness of the loss  and help the opposite party to arrive at a judicious decision and to thoroughly look into the possibility of spontaneous combustion. M/s. Royal Associates recorded statements of Mr. Satya Charan and other workers. Satya Charan stated in his statement that at about 8.00 p.m he saw smoke coming out from cotton bales and he immediately called other works. Satya Charan confirmed in his statement that smoke started coming out suddenly and it converted into fire due to speedy wind.Other workers also confirmed in their statements that fire broke out suddenly as smoke which  started coming out from bales converted into fire flames due to speedy wind. They have nowhere mentioned in their statements that fire broke out due to short circuit. Further  it is revealed from the statement of various workers/employee that there was no light at the place where fire broke out, which shows that there  is no chance of short circuit.Mr.Satya Charan main eye witness of fire confirmed in his statement that at about 8.00 -8.30 p.m. suddenly smoke started coming out from cotton bales and due to speedy wind , it converted in fire flames, which shows that cause of fire is the self ignition  and other workers also confirmed the same. M/s. Royal Associates vide its report  dated 15.12.2014 have given the  opinion that cotton bales were burnt due to self ignition. They further stated in the report  that cause of fire claimed by insured as short circuit seems to be incorrect and insured has nowhere stated in his statement that fire broke out due to short circuit. Even all the workers whose statements were recorded by Royal Associates did not claim in their respective statements that fire broke out due to short circuit and all the workers/employee averred in their respective statements that fire broke out suddenly and it spread due to speedy wind. Moreover, all the workers also stated that there was no light at the place where fire broke out, so there is no question of fire incident due to short circuit. Moreover, workers, also claimed that safe bales were segregated but when the bales were opened those were found burnt from inside, which shows that the bales got burnt due to self ignition. The statements of workers were duly recorded by M/s. Royal Associates. Ld.counsel for the complainant has further contended that permission of IRDA has not been taken for appointing second surveyor. However, the opposite party was fully competent to appoint a second surveyor in case there was some lacuna in the report of the earlier surveyor. In this connection reliance has been placed upon Plastolene Polymer  Pvt.Ltd. Vs. ICICI Lombard General Insurance Consumer Case No. 70/2008 decided on 26.8.2016  and in Madan Mohan Panda  Carrying Vs. National Insurance Company  Consumer Case No. 177/2008 decided on 7.4.2016 by the Hon’ble National Commission wherein it has been held that investigator can be appointed  by the Insurance company to investigate the case after the report of surveyor. In the abovesaid case the Hon’ble National Commission has followed law laid down by the Hon’ble Supreme Court in the case titled as National Insurance Co.Ltd. Vs. Harjeet Rice Mills 2005(6) SCC page 45. In the case in hand complainant is not entitled to get any relief as claimed vide instant complaint on account of the fact and circumstances explained by the counsel for the opposite party and ld.counsel for the opposite party has vehemently contended that  no fault can be found in the appointment of second investigator by the opposite party and  the objection taken by the complainant in that regard is not  legally sustainable and it is contended that complaint is liable to be dismissed and the same may be dismissed accordingly.

8.       But, however, from the appreciation of the facts and circumstances of the case, it becomes evident that complainant has been able to prove his case through evidence on record. The complainant is manufacturer of surgical cotton and has obtained insurance policy from the opposite party for one year w.e.f 8.8.2013 to 7.8.2014 , copy whereof is Ex.C-5 on record. On 25.5.2014 fire incident took place in the factory of the complainant at about 8.00 p.m when due to short circuit surgical wool caught fire and damage was caused  to the complainant. Complainant immediately lodged claim with the opposite party and also lodged complaint with the police vide DDR No. 30 dated 26.5.2014 copy whereof is Ex.C-7 on record. Opposite party appointed M/s. Baldev Pathania and company for assessing loss which assessed the loss to the tune of Rs. 7,50,649/- vide report dated 20.8.2014 Ex.C-1 holding that possibility of spontaneous combustion is ruled out. While visiting site, statement of sh. Satya Charan Ex.C-2 was recorded by surveyor  M/s. Baldev Pathania. Lateron opposite party  on their own appointed  another surveyor namely M/s. Royal Associates , who submitted its report dated 15.12.2014 Ex.C-3/Ex.OP10 after 7 months of the incident and claim of the complainant was rejected  primarily on report Ex.C-3 allegedly on the ground that there was no short circuit and  cotton was  self combustible. M/s. Royal Associates also got recorded statements of complainant and employees. In order to prove its case, complainant examined  himself by filing affidavit Ex.CW1/A alongwith affidavit of Satya Charan Ex.CW1/2. Now the question arises as to whether the opposite party could appoint another surveyor particularly when the earlier surveyor appointed by the opposite party has already submitted his report and assessed the loss to the tune of Rs. 7,50,649/- vide his report , copy whereof is Ex.C-1 on record. The answer to this query has been found recorded in M/s. Sparkling Traders Pvt.Ltd. Vs. M/s. New India Assurance C o.Ltd. 2015(1) CLT 558 (NC), wherein it has been laid down that after getting first surveyor’s report there was no occasion to appoint 2^nd surveyor without any cogent reason. The commission in complaint No. 73 of 2002 M/s. Jagannatha Poultries Vs. New India Assurance Co.Ltd. while placing reliance on judgement of Hon’ble Apex Court reported in AIR 2010 SC 3035-New India Assurance Co.Ltd. Vs. M/s. Protection Manufacturers Pvt.Ltd. observed  as under :-

“The submissions of Mr.Piyush Gupta in regard to section 64UM of the Insurance Act, 1938, are also of substance, as the Appellant-insurance company should have applied to the Regulatory Authority under the Act for a second opinion instead of appointing M/s. J.Basheer & Associates for the said purpose unilaterally. The reports submitted by M/s. J.Basheer & Assocaties are liable to be discarded on such ground as well and rightly held that though it is permissible to appoint 2^nd surveyor to assess the loss but this must be for given reasons and only through the auspices of the Regulatory Authority i.e. IRDA . Admittedly, in the case in hand neither any cogent reason has been given by opposite party No.1 for appointing 2^nd surveyor nor 2^nd surveyor has been  appointed through IRDA nor report of 2^nd surveyor has been placed on record and in such circumstances no reliance can be placed on the report of 2^nd surveyor M/s. J.Basheer & Associates. Report of the 2^nd surveyor was not relied by Hon’ble Apex Court in the judgment of M/s. Protection Manufacturers PVt. Ltd. (Supra). If report of 2^nd surveyor M/s. Protection Manufacturers Pvt.Ltd is discarded then on the basis of report of surveyor M/s. S.S.Kashyap, complainant was entitled to get compensation of Rs. 5,81,900/-.

9.       While rejecting the claim of the complainant on the basis of alleged second report of the second surveyor, reasoning has been given that damage caused to the stock by fire arising from spontaneous combustion does not fall under the definition of fire and therefore the loss fell under the exclusion clause. But, however, the said contention of the opposite party is not  legally tenable  in view of the law laid down in Oriental Insurance C o.Ltd.  Vs. Sukhdev Singh & Anr. III(2010) CPJ 400  (UT) wherin it has been laid down that even otherwise in the abovementioned authorities cited by the complainant, the Hon’ble National Commission while explaining the definitions of “fire” & ‘spontaneous combustion’ held that damage caused to the stock caused by fire arising from spontaneous combustion falls under the definition of ‘fire’ and  it does not fall under the ‘exclusions’. It is further held by their lordships in these authorities that the word ‘fire’ as used in insurance policy, does not have the technical meaning developed from analysis of its nature, but more nearly the popular meaning, being an effect rather than an elementary principle, and is the effect of combustion being equivalent to ignition or burning. The fire develops only at a particular point in a combustion process. The fire or flame is produced only when the point of auto ignition is reached. Therefore,, the term ‘spontaneous combustion’ could not be construed to imply that there was no fire.

10.     Applying the ratio of the judgements ‘supra’ to the facts of the present case, it is found that opposite party reached erroneous decision while rejecting the claim of the complainant by holding that  spontaneous combustion does not fall within the purview of ‘fire’ and the loss fell within the exclusion clause  of the Insurance policy in dispute.

11.     In our considered opinion, complainant is entitled for insurance claim in view of the report of the first surveyor to the tune of Rs. 7,50,649/- alongwith interest @ 9% p.a. from the date of filing of complaint until full and final recovery  & the complaint stands allowed accordingly. The complainant is also entitled to litigation expenses to the tune of Rs. 5000/-. Compliance of this order be made within a period of one month from the date of receipt of copy of this order ; failing which, the complainant shall be at liberty to get the order executed through indulgence of this Forum. Case could not be disposed of within the stipulated period due to heavy pendency of the cases in this Forum. Copies of the order be furnished to the parties free of costs. File is ordered to be consigned to the record room.

Announced in Open Forum

Dated:  5.10.2016.