Andhra Pradesh

StateCommission

CC/57/07

M/S DATTA SAI INDUSTRIES - Complainant(s)

Versus

UNITED INDIA INSURANCE CO LTD - Opp.Party(s)

M/S J.NARSINGA RAO

14 Dec 2009

ORDER

 
Complaint Case No. CC/57/07
 
1. M/S DATTA SAI INDUSTRIES
UPPAL KAMALAPUR KARIMNAGAR
 
BEFORE: 
 HONABLE MRS. M.SHREESHA PRESIDING MEMBER
 
PRESENT:
 
ORDER

 

 

 

 

 

 

BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION

AT HYDERABAD.

 

C.C. No.  57/2007  

 

Between:

 

M/s. Datta Sai Industries

(Known as  M/s. Sri Datta Sai Industries)

Uppal, Kamalapur Mandal

Karimnagar District.

Rep. by its Managing Partner 

Masadi Linga Rao                                       ***                         Complainant

                                                                    And

 

M/s. United India Insurance Company Ltd.

Rep. by its  Divisional Manager

Ramagundam  Divisional Office

P.B. No. 36, Medipalli Road

NTPC, Jyothinagar,

Karimnagar-505 215.                                  ***                        Opposite Party     

 

 

Counsel for the  Complainant:                   M/s. I. Narasinga Rao

Counsel for the OPs:                                   Mr.  N. V. Jagannath.
                                                                  

CORAM:

 

                          HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT

&

                                          SRI R. L. NARASIMHA RAO , MEMBER

 

 

MONDAY, THIS THE FOURTEENTH DAY OF DECEMBER TWO THOUSAND NINE

 

Oral Order: (Per Hon’ble Justice D. Appa Rao, President)

 

                                                          ***

 

 

1)                 This  is a complaint claiming compensation and expenses for the loss of  stock in trade covered  under  the insurance policy .

 

2)                 The case of the complainant in brief is that it is a partnership firm doing business  in rice mill, purchasing paddy, milling it, polishing the rice and delivering the fine rice to the Food Corporation of  India (FCI) and   exporting remaining rice to various dealers in  Andhra Pradesh and other States.   It  stocks  huge quantities of paddy  and fine rice.   It has insured its building, plant,   machinery  and  other accessories for Rs. 72 lakhs  with  the  opposite  party insurance company valid from 13.12.2005 to 12.12.2006  besides stocks  of paddy, rice, broken rice, gunny bags,  and other packing materials for Rs. 85 lakhs valid for the same period at the instance of  State Bank of India  to whom it hypothecated the above said properties.    While so, there were heavy rains for more than 7 days from  15.9.2006 to 22.9.2006 resulting in floods due to which they were unable to mill the paddy.   It had purchased the paddy  on large scale from farmers in  April, 2006 in Rabi season  and heavily stocked  in  godowns, and also in mill premises by taking all precautionary measures like  covering with  tarpaulin  and other material.   It started milling from  20.10.2006  after removing water from the elevator pond.  When the rice was sent to the FCI, it  rejected the  stock on the ground that it was discoloured and  of poor quality and unfit for human consumption.  On that  it verified  and found that the paddy was drenched in water in spite of covering with tarpaulin.  Immediately it was informed to the insurance company on  23.10.2006.  It had appointed a  surveyor by name Sri  B. Mohan of Karimnagar.  He along with officers of the insurance company inspected the stock and found that 3,500 bags of paddy  were  completely damaged, while 10,850 bags of  paddy were  partially damaged and 150 bags of  rice were  completely soaked in the water.   It had also handed over the relevant registers.   Belatedly on  12.7.2007  the insurance company repudiated the claim stating that the policy did not cover the peril of rains  and that  the policy covers only  fire and allied perils like explosion and flood risks like floods, inundation, storm, cyclone etc.   In fact the paddy was damaged due to rain water,  and  heat developed within the paddy technically termed as ‘spontaneous combustion’.  The repudiation  was totally baseless.  It amounts to deficiency in service.  The surveyor himself assessed the loss  at Rs. 60 lakhs.   Therefore it claimed Rs. 60 lakhs towards damage to the stock in trade and Rs. 1 lakh  towards the expenditure incurred  while segregating the damaged paddy and Rs. 2 lakhs towards mental agony together with interest  @ 24% p.a., and costs.

 

3)                 The insurance company  resisted the case denying each and every allegation made in the complaint.   However, it admitted that  two  policies were issued one covering the risk of  building while the other for stocks of paddy, rice, broken rice etc.   The amount covered under the policy was  Rs. 85 lakhs.  The loss or damage due to rain water was not covered under the terms and conditions of the policy.   It put the complainant to strict proof  that all precautionary measures were taken for covering the stocks with tarpaulin and that the water would not percolate inside causing damage to the stocks of paddy, rice etc.   It also put the complainant to strict proof that  there were continuous rains resulting in damage to the stocks.    In fact the very complainant mentioned that it could know or aware that  the damage was caused to the stocks of paddy, rice etc., when the FCI  rejected the stocks delivered to them.    The claim was made one month  thereafter.    On that it has appointed a surveyor  who in turn submitted his report estimating the loss at Rs. 14,73,373/-  while noting that the terms and conditions of the policy did not cover the loss or damage caused due to rain and spontaneous combustion.  Therefore it  repudiated the claim by letter Dt. 12.7.2007.    The claim was purely speculative and that there was no deficiency  in service on its  part and therefore prayed for dismissal of the complaint with costs.

 

4)                The complainant in proof of its case filed the affidavit evidence of  its Managing Partner  and got Exs. A1 to A11 marked, while the opposite party  filed the affidavit evidence of  RW1  Sri N. Narsaiah, Divisional Manager of the insurance company and  RW2  Sri B. Mohan, Surveyor  and got Ex. B1  survey report marked. 

5)                 The points that arise for consideration are :

i)                   Whether there was any loss or damage caused to the stock in

trade, paddy and rice etc. if so, to what amount?

 

ii)                 Whether the terms and conditions of the policy cover the loss or damage  of  stock in trade,  paddy and rice etc. due to rains and ‘spontaneous combustion’.?

 

iii)              To what relief? 

 

 

6)                It is an undisputed fact that the complainant is a partnership firm

doing business  in rice mill, purchasing paddy, milling it, polishing the rice and delivering the fine rice to the Food Corporation of  India (FCI) and   exporting remaining rice to various dealers in  Andhra Pradesh and other States.   It stocks  huge quantities of paddy and  fine rice.    Though it had taken two polices,  the claim pertains to the policy towards stock in trade viz., paddy, rice, broken rice etc.  for Rs. 85 lakhs valid from 13.12.2005 to 12.12.2006.

 

7)                The complainant alleges that the paddy kept in the mill premises covered  under tarpaulins.  However the paddy was damaged due to heavy rains  from  15.9.2006 to 22.9.2006.  It milled the paddy and sent the rice to  FCI they returned stating that the rice was discoloured and of poor quality and unfit for human consumption.   Immediately  the said fact was informed to the insurance company  on  23.10.2006  on which it appointed Sri   B. Mohan,  a Surveyor. 

 

8)                  The Surveyor in his report Ex. B1 stated that he visited the premises  and found that 5,262 quintals  of  paddy was completely damaged and 4,530 quintals of paddy was partially affected and assessed the net loss at Rs. 14,73,373/-.  He enquired with MRO, Kamalapur, and  took rain fall details and found that from 15.9.2006  to 22.9.2006,   there was rain fall of  395.4 mm  in those eight days.    

 

 

He noted  “When the rain water entered into the paddy bags and the paddy in bulk, the paddy grain got drenched, soaked in rain water and size of the grain  is increased thereby  increasing the volume of the paddy bags.   These paddy bags were stacked one on the other in two to three rows  on four sides  and in the middle the paddy was stored in bulk.   When these bags are soaked in rain water, the volume of the bags increased  and so  was the volume of  the middle heap of bulk paddy.   But there was a limitation to this expansion  of the paddy  in bags to the congestion resulted in friction between the paddy grains and this resulted in enormous  heat developed  from within the bags. 

 

 

So was the case with the paddy in bulk.  This paddy got soaked in  rainwater and volume of this heap  has gone up.  But the heap was surrounded  on all four sides with rows of paddy bags and  increase in volume  of the bulk was contained  resulting in congestion within the paddy.   Again this congestion between the grains  caused friction  among the grains  and this friction caused heat developed  from within  the heap.  The paddy bags  and bulk paddy  was covered by tarpaulins  and were tightly tied up  with nylon ropes.   Due to this reason, there was no ventilation and there was no possibility of dissipation of heat  to other areas.   The  heat generated in the bags and bulk paddy  remained within the paddy thus burning the bulk paddy and paddy bags from within. 

 

As is observed during the survey, the paddy remained beneath the covered tarpaulins, which are tightly tied up with nylon ropes.  For about one week,  there were incessant rains.  There paddy bags and bulk paddy was kept in open on the platforms and there was no electricity power  connected to this paddy.  No fire was observed outside to cause  fire damages to this paddy.   But the paddy was found damaged due to heat and rainwater.  There was no possibility of outside heat reaching the paddy, which is covered by  tarpaulins. 

 

Finally he observed that  all these circumstances suggest that the paddy stacked in bags and stored in bulk was damaged due to heat  originated within the paddy as a result of rainwater.   As already explained above, the heat has originated from within the paddy when soaked in rainwater  and therefore the process can be termed as ‘Spontaneous Combustion’ secondary to rainwater damage. “

 

Though  the surveyor has confirmed the loss due to rain water opined that the policy does not cover the risk and therefore the complainant was not entitled to the claim. 

 

9)                The policy is marked as Ex. A2.  It is a   Standard  Fire and Special Perils Policy (Material Damage).   It covers the risk of  fire, lightning, explosion/implosion, air-craft damage, riot, strike and malicious damage,  storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation, impact damage, subsidence and landslide including rock slide.  Bush fire.  Clause-VI  is applicable to the instant case.  It reads as follows :

         

VI.              Storm, cyclone, typhoon, tempest, hurricane, tarnado, flood and inundation:

 

Loss, destruction or damage directly caused by Storm, cyclone, typhoon, tempest, hurricane, tarnado, flood and inundation excluding those resulting from earthquake, volcanic eruption or other convulsions of nature.  (Whatever earthquake cover is given as an “add on cover”  the words “excluding those resulting from earthquake volcanic eruption  or  other convulsions of nature” shall stand deleted).

 

The complainant did not allege that there was cyclone or flood  and inundation.  Even according to the complainant  the damage was caused due to seepage of rain water.   In that case  the complainant was not entitled to the claim under the said policy.  Apart from it, the complainant also  alleges obviously taking cue from the report of the  Surveyor  wherein it was mentioned that heat was developed within the paddy  which is technically termed as  ‘Spontaneous Combustion’ and therefore the cause of loss is covered by the policy.    It is curious to note that though the stock  was damaged the complainant  had milled a part of paddy  sent it to  FCI and when the stock was rejected on the ground that it  was discoloured  and of poor quality  it claimed the amount with the insurance company.   It was intimated to the insurance company  after 30 days.  In other words for the damage caused to the paddy  between  15.9.2006 and 22.9.2006  intimation was given on  23.10.2006  that too  when  the    F.C.I.   rejected  the  stock  on  the  ground  that  it  was   damaged.                      

 

The surveyor has categorically  noted that the paddy bags were covered by tarpaulins to avoid damage by rain.   According to the insured there were heavy rains from 15.9.2006 to 22.9.2006.  Heavy rains damaged the tarpaulins, and  they   were  cut and  torn  at  places.     To avoid further rain damage, the owners restored the tarpaulins   and covered the stacks of paddy.    He noted that the rainwater entered into the paddy bags  and damaged paddy stored in bulk in the middle of the stack.  Stocks of paddy got drenched in the water.  But these damages were not noticed immediately by the assured.   It was only when the rains completely stopped and some of the paddy was milled, the rice was found decoloured.   This consignment of rice was rejected by the FCI and the insured then removed all the tarpaulins covered over the paddy stacks  and found that the paddy was badly damaged due to rain water.   It is unfortunate that though it took  insurance policy for the  stock,    it did not take policy for the damage  caused by rain.   It cannot be equated to tempest, cyclone, floods and other eventualities.    The complainant ought to have retrieved the  these bags immediately after the rains were abated.  There was negligence on its  part.   At any rate, since the policy does not cover the risk, the complainant was not entitled to any compensation. 

 

 

10)               In the result the complaint is dismissed, however no costs.

 

 

1)       _______________________________

PRESIDENT                 

 

 

 

2)      ________________________________

 MEMBER          

 

 

 

 

         

APPENDIX OF EVIDENCE

 

COMPLAINANT:                                                  OPPOSITE PARTY

         

None                                                                     None.

 

 

Exhibits marked for complainant:

 

Ex. A1;                           Insurance Policies.

Ex. A2;

 

Ex. A3;  12.07.2007;      Repudiation letter issued by OP to complainant.

 

Ex. A4;  06.06.2007       Letter issued by SBH, Huzurabad to OP.

 

Ex. A5;  05.03.2007       Letter issued by SBH, Huzurabad to OP.

 

Ex. A6;  23.01.2007;      Letter issued by SBH, Huzurabad to OP.

 

Ex. A7;  21.11.2006;      Reminder issued by complainant to OP.

 

Ex. A8;  20.09.2006;      News item published in Vaartha

 

Ex. A9;  19.09.2006       News item published in Vaartha

 

Ex. A10; 21.09.2006      News item published in Eenadu

 

Ex. A11; 20.09.2006      News item published in Eenadu.

 

Exhibits marked for  Opposite Party:

 

Ex. B1;  18.08.2007;      Surveyor Report.

 

         

                                                                                      Sd/-

1)       _______________________________

PRESIDENT                 

 

 

                             Sd/-

2)      ________________________________

 MEMBER          

 

Dt.      14.  12.  2009.

*pnr

 

 

 

 

 

 

 

“UP-LOAD  – O.K.”

 

 

 

 
[HONABLE MRS. M.SHREESHA]
PRESIDING MEMBER

Consumer Court Lawyer

Best Law Firm for all your Consumer Court related cases.

Bhanu Pratap

Featured Recomended
Highly recommended!
5.0 (615)

Bhanu Pratap

Featured Recomended
Highly recommended!

Experties

Consumer Court | Cheque Bounce | Civil Cases | Criminal Cases | Matrimonial Disputes

Phone Number

7982270319

Dedicated team of best lawyers for all your legal queries. Our lawyers can help you for you Consumer Court related cases at very affordable fee.