These appeals have been filed by the appellant M/s. Shyama Rama Structural & Power Pvt. Ltd. against the order dated 23.12.2014 passed in three separate Complaint Case Nos.12 of 2010, 13 of 2010 & 14 of 2010.  These three complaint cases relate to three different incidents of fire, which resulted in loss of machinery at different occasions.  Three separate insurance claims were filed, which were repudiated leading to filing of these complaints by the complainant.

2.      Brief facts of the case are that the complainant is a manufacturing unit that manufactures the M.S. Ingot in its production furnace division and Re-rolled products in its Re-rolling Mill division. The complainant had purchased 2 “Fire and Special Perils” policy from the OP. First, policy no. 152308/11/2010/138 for all the plant & machinery of Induction Furnace & Crucible division for a sum assured of Rs.1,50,00,000/- and second, policy no. 152308/11/2010/137 for plant & machinery of Rolling Mill division for a sum assured of Rs.45,00,000/- for the period from 21.05.2009 to 20.05.2010. The first accident of fire occurred on 27.9.2009 and second accident of fire took place on 1.10.2009 during the currency of these policies.  As nature of these two accidents is similar, the discussion will concentrate on the accident occurred on 1.10.2009. On 01.10.2009 when the induction furnace crucible no. 1 was running, a fire accident occurred due to an explosion from the charging of M.S. Scrap and sponge iron in the furnace. The complainant intimated regarding the said incident to the Police Station, the OP, and the Andhra Bank on the same day. Subject incidents of FA 35 and FA 36 of 2015 are covered under these policies.  These appeals relate to CC No.12 and CC No.13 of 2010 filed by the complainant before the State Commission.

3.      The complainant had renewed 2 Fire and Special Perils policies from the OP. First, policy no. 191300/11/2011/123 for all the plant & machinery of Induction Furnace & Crucible division for a sum assured of Rs.2,35,00,000/- and second, policy no. 191300/11/2011/122 for plant & machinery of Rolling Mill division for a sum assured of Rs.1,35,00,000/- for the period from 24.05.2010 to 23.05.2011.  There was a fire accident on 4.10.2010 and FA 56 of 2015 deals with this accident.  In this case, CC No.14 of 2010 was filed by the complainant before the State Commission.

4.      These complaints were resisted by the Insurance Company by filing the written statement on the ground that the surveyor had not found that there was any explosion resulting in the fire and no peril under the policy was attracted in the present cases.  Hence, the claims were not payable.  The State Commission vide its order dated 23.12.2014 has allowed claims of Rs.3,92,868/- in CC No.12 of 2010, Rs.2,65,036/- in CC No.13 of 2010 and CC No.14 of 2014 has been dismissed.

5.      Not satisfied with the award of the State Commission, these three appeals have been filed by the appellant/complainant.  Heard AR of the appellant and learned counsel for the respondent Insurance Company and perused the record.  

6.      The AR of the appellant stated that the State Commission has not accepted the peril of explosion on the ground that explosion does not find any mention in the FIR lodged on behalf of the complainant. It was incumbent upon the State Commission to have decided the cause of loss, but the State Commission has not decided the cause of loss.  In the claim form, it was clearly submitted that the fire was caused due to explosion and even in the preliminary survey, the surveyor in his report dated 30.09.2009 has admitted that there was an explosion resulting in the fire.  However, the final surveyor has not agreed with the explosion and it has been concluded by the final surveyor that no peril under the policy was attached and the cases were not covered under the present policy.  AR of the appellant further stated that there was an annual maintenance contract with another company namely Magatherm Electronics Pvt. Ltd. and the service engineer of that company had also inspected the factory during the accident and has analysed the reasons behind the fire and has submitted report dated 07.10.2009, wherein it has been clearly mentioned that:-

“We have given to understand from the meter & operating labors that the incident was occurred due to explosion in the furnace from M.S.Scrap and Sponge iron.  In the centering (first) heat of patching cycle, after charging the scrap with sponge iron, they have switch on the system and after running the furnace of four hour, suddenly they heard blasting sound and noticed hot liquid metal draining from bottom of furnace.  Immediately incoming protection breaker tripped (disconnect) the electrical line.  Even though due to the temperature of hot metal all the listed components were damaged & destroyed in the operating furnace as well as in stand by furnace crucible no.1 because the repairing work is running nearest to crucible no.1. The chemical & Lamination of yoke of crucible no.2 have been burned due to temperature of hot metal. 

The cause of blasting was due to mix up of some airtight metal container with scrap/sponge iron and charged in furnace.  After heated up the container in side air expand, resulting occurred explosion.  In such condition the in built protection systems can’t protect the furnace.  Such incident occurs very often in mini steel industries and so far no such remade takes placed”.

7.      AR argued that surveyor in his report has stated that he has considered the report of the service engineer of Megatherm Electronics Pvt. Ltd..  However, the surveyor was cross examined and it has come out that there was no interaction between the service engineer and the surveyor. The surveyor has not considered the report of the service engineer.  It was stated by the AR that the surveyor has not assessed the loss in his final survey report, though it was his duty to do so. 

8.      It was further stated by the AR of the appellant that the Insurance Company had made up its mind to repudiate the claim right from very beginning and that is why the surveyor in the final report has also not assessed the loss.  When the surveyor report was presented before the State Commission, the surveyor filed affidavits in all the three cases.  In CC No.12 of 2010 & CC No.13 of 2010, the surveyor filed affidavits along with annexure which had the calculation of the assessed loss.  The State Commission has agreed with the report of the surveyor and the assessment of the loss.  The surveyor has given no basis for applying 60% depreciation on machinery particularly the furnace and 50% depreciation on other parts.  The AR stated that in the CC No.12 of 2010 (First Appeal No.35 of 2015), the surveyor in its affidavit dated 11.05.2012 has mentioned 10 machinery items as damaged.  In the annexure, the surveyor has calculated the total value of these items as Rs.16,59,000/-, whereas the fact  is that the value of these items is about Rs.32,00,000/- as given by the Service Engineer of Magatherm Electronics Pvt. Ltd.  Thus, it is not clear as to how the surveyor has arrived on valuation of these 10 items.  Had the surveyor given these details in the final survey report, the appellant could have contested these things.  Though no basis has been given for this assessment by the surveyor, still the State Commission has accepted the assessment given by the surveyor.

9.      In respect of First Appeal No.56 of 2015, the AR stated that the incident was exactly similar to other two accidents that happened on 27.9.2009 (First Appeal No.36 of 2015) and 01.10.2009 (First Appeal No.35 of 2015), but in this case the surveyor has not assessed any loss stating that it was a case of machinery break down and there was no explosion.  The State Commission has also agreed with this assertion of the surveyor without any further examination. Just because the surveyor has not assessed any loss under this item, the State Commission has also thought it convenient to dismiss the complaint otherwise the question of assessment of loss will arise.  The AR argued that there is no basis to differentiate this case from the other two cases where the surveyor has assessed the loss and the State Commission has accepted the report of the surveyor. 

10.  On the other hand, the learned counsel for the opposite party/Insurance Company stated that in no incident, the fire has been seen by anybody and the surveyor has given clear observation that there was no fire in the accident. Nothing has been found as burnt. As no peril in the policy is attracted in the present cases, the complainant has put up a story of explosion. Nobody has been injured in the alleged explosion. All the circumstances indicate that there was no explosion. Moreover, the state Commission has accepted the loss assessed by the surveyor and has allowed the same to the complainant in two items FA 35 of 2015 and FA 36 of 2015. Clearly neither there was any fire nor was there any explosion, still the state Commission has granted the claim to the complainant as assessed by the surveyor in these two cases. Thus, it does not matter whether there was a fire or an explosion, and the complainant would only get the same amount which the State Commission has allowed because the report of the surveyor cannot be rejected without any cogent reasons. The surveyor has assessed the loss quite logically as mentioned in the affidavits filed by the surveyor in these two items. Thus, in a way, the complaints have been allowed in these two cases by the State Commission. The fact is that the complainant is not entitled to even these amounts which have been allowed by the State Commission because the damage to the machinery was due to breakdown of the machinery and not due to any peril mentioned in the current policies. However, the insurance company has not filed appeal against these two orders because the amount involved is not very high.

11.    I have carefully considered the arguments advanced by the AR of the appellant and the learned counsel for the respondent Insurance Company.  So far as the accidents on 27.9.2009 and 01.10.2009 are concerned, the State Commission has accepted the report of the surveyor and the loss assessed by the surveyor.  Thus, the assertion of the AR is not correct that the State Commission has not accepted the explosion as a peril.  In fact, the State Commission has observed the following:-

“33.  In the report submitted before the Police, it is simply mentioned by the complainant that fire incident occurred.  The complainant did not mention in his report that incident occurred due to explosion from charging of M.S.Scrap and sponge iron in furnace and the cause of explosion was due to mix up of some airtight closed/molded type metal container or shock absorber of motor cycle or hollow metal ball etc., with the M.S. Scrap and charged in the furnace during operation.  After heated up the container in side air expand, resulting occurred explosion.  The surveyor specifically denied occurrence of incident of the explosion, but looking to the facts and circumstances of the case, we are of the view that some fire incident took place in the premises of the complainant and complainant suffered loss.”

12.    From the above observation of the State Commission, it is clear that the State Commission has accepted the peril of fire and that is why allowed the compensation in terms of the surveyor’s report. 

13.    So far as the First Appeal No.56 of 2015 is concerned, this accident happened on 04.10.2010 and the State Commission has observed the following:-

“31.  Shri Utkarsh Shingwekar, Surveyor gave his affidavit in which he specifically stated that he was of the opinion that there was a failure in the furnace lining, due to which the molten metal had come into contact with the coils and flown outwards, damaging and melting the coils/yokes. Shri Utkarsh Shingwekar, specifically stated there was a failure in the furnace lining and damages caused due to machine break down.  He further stated that had there been any explosion inside the furnace crucible, the molten metal would have been thrown off heavily with great pressure in various directions damaging many surrounding items. First and foremost there would have been heavy marks on the nearby walls.  The plaster was bound to peel off.

39.        Shri Utkarsh Shingwekar, Surveyor has specifically opined that there was no explosion in the Crucible No.1 and the loss was caused due to machinery breakdown which is not covered under the insurance policy.  On the basis of above facts and circumstances of the case, loss estimate of fire accident dated 04.10.2010 given by Shri Amit Kumar is not reliable and cannot be taken into considered.  On the basis of loss estimate of Shri Amit Kumar, it is not established that the complainant suffered loss to the tune of Rs.51,00422/-.  On the contrary, the surveyor mentioned in his report that there was no explosion in the crucible no.1 and incident was not covered under the Special Fire and Perils Policy therefore, the complainant is not entitled to get any compensation from O.P.”

14.    The learned counsel for the Insurance Company has stated that there was no fire seen by anybody and there was no effort to extinguish the fire.  It was only the machinery break down that is why certain machinery has been damaged.  The complainant is trying to show that the damage has happened due to explosion so that a covered peril may be proved.  The surveyor has given other observations, which clearly reflect that there was no explosion.  The State Commission has accepted these observations.  There is no force in this appeal.  The above observations of the State Commission clearly go on to show that there was no explosion in this accident.  The surveyor has accordingly not assessed any loss for this accident as it was only a machinery break down and the complainant had not taken the machinery break down policy.  The complainant had not been able to counter any of the observations made by the surveyor and the State Commission to prove the complainant’s case.  In the absence of any counter argument, I do not have any hitch in accepting the observations of the State Commission.  Accordingly, I do not find any infirmity in the order of the State Commission in CC No.14 of 2010.

15.    In respect of accident on 27.09.2009 & 01.10.2009, I have examined the report of the surveyor and the assessment made by the surveyor which was filed along with affidavits in these two cases before the State Commission as no assessment of loss was incorporated in the final survey report given by the surveyor.  Surveyor was under obligation as per duties assigned to the surveyor to assess the loss in the final survey.  For the insured, the assessment of the loss by the surveyor is very important. Though surveyor has submitted the affidavits before the State Commission where the assessment of loss has been annexed in the annexure, but this annexure is silent on many points such as:-

(i)  On what basis the prices of the individual damaged machinery have been taken?

(ii)  On what basis the depreciation of 60% on the furnace and 50% on the other items has been applied?  

16.    The complainant has further agitated about the valuation of total machinery for calculating under insurance.  The AR has stated that the total machinery was of Rs.195 lacs, whereas the surveyor has taken at Rs.255 lacs, which is not correct.  The complainant has filed the balance sheet of the year ending March, 2010 to support this assertion.  The fact is that the accidents happened on 27.09.2009 and 01.10.2009, the position of the machinery would have been clear, had the complainant filed the balance sheet of the year ending March, 2009.  Thus, I would not like to enter into the realm of under Insurance and would not like to dispute the report of the surveyor in the absence of relevant balance sheet or other evidence.

17.    From the above examination, one thing is clear that the surveyor has not rightly acted and has not properly performed task given to him.  The surveyor has omitted the assessment of the loss in the final survey report, which is a major lapse.  Though the assessment has been filed in the form of an affidavit before the State Commission, however, there are many questions which seem unanswered as examined above.  In these conditions, I am of the view that there has been deficiency on the part of the surveyor and therefore, on the part of the Insurance Company as well.  As it is not possible to have the survey again, I deem it appropriate to enhance the compensation by Rs.3,00,000/- (rupees three lakhs only) for the accident that happened on 01.10.2009 and for Rs.2,00,000/- in First Appeal No.36 of 2015 for the incident that happened on 27.09.2009, I do not find any merit in First Appeal No.56 of 2015 and the same is dismissed. 

18.    Based on the above discussion, respondent Insurance Company is directed to pay Rs.3,00,000/- (rupees three lakhs only) in First Appeal No.35 of 2015 and Rs.2,00,000/- (rupees two lakhs only) in First Appeal No.36 of 2015 to the appellant over and above the amounts granted by the State Commission. These additional amounts will be paid along with 6% interest per annum from the date of order of the State Commission i.e. from 23.12.2014. This order be complied by the respondent Insurance Company within a period of 45 days from the date of receipt of this order.  First Appeal No.35 of 2015 and First Appeal No.36 of 2015 stand disposed of accordingly.