Date of Filing : 25.01.2021
Date of Disposal: 29.08.2022
DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION
THIRUVALLUR
BEFORE TMT. Dr.S.M. LATHA MAHESWARI, M.A.,M.L, Ph.D (Law) .…. PRESIDENT
THIRU.J.JAYASHANKAR, B.A.,B.L., .....MEMEBR-I
THIRU.P.MURUGAN,B.Com. ....MEMBER-II
CC. No.09/2021
THIS MONDAY, THE 29th DAY OF AUGUST 2022
PIP Polymers Private Limited,
Rep. by its Manager Mr.Pawan Agarwal,
Office at No.41/3, Vellalar Street,
Senthamizh Nagar,
Mugapair East, Chennai -600 037. ……Complainant.
//Vs//
1.The Deputy Manager,
United India Insurance Company Limited,
Silingi Building No.134,
Greams Road, Chennai 600 006.
2.The Regional Manager,
United India Insurance Company Limited,
Silingi Building No.134,
Greams Road, Chennai 600 006. ..........Opposite parties.
Counsel for the complainant : Mr.A.R.Poovannan, Advocate.
Counsel for the opposite party : M/s.R.Elango, Advocate.
This complaint is coming before us on various dates and finally on 24.08.2022 in the presence of Mr.A.R.Poovannan, Advocate counsel for the complainant and M/s R.Elango, Advocate counsel for the opposite parties and upon perusing the documents and evidences of both sides, this Commission delivered the following:
ORDER
PRONOUNCED BY TMT. Dr.S.M. LATHA MAHESWARI, PRESIDENT.
This complaint has been filed by the complainant u/s 35 of the Consumer Protection Act, 2019 alleging deficiency in service on the part of the opposite parties in repudiating the insurance claim along with a prayer to direct the opposite parties to sanction the claim, to pay a sum of Rs.5,00,000/- as compensation for the mental agony, hardship, strain, inconvenience caused by the act of the opposite parties and their deficiency in service and to pay a sum of Rs.5,000/- as cost of the proceedings to the complainant.
Summary of facts culminating into complaint:-
It is the case of the complainant that the complainant was dealing with Hydrogen peroxide for more than three years and that the stocks were insured with the opposite parties vide Policy No.0125001119P105536675 for a period of 06.02.2020 to 05.02.2021 under Standard Fire and Special Perils Policy. On 24.09.2020 all of a sudden fire broke down with explosion in the ware house at about 7pm which was duly informed to the fire and safety department and three fire engines came to the ware house and fire was destroyed. As on 24.09.2020 the total stock in the ware house was 50310 kg of Hydrogen peroxide and its worth is Rs.29,49,009/-. It was submitted that in the accident 1202 jerry cans with Hydrogen peroxide was damaged and the damage was to a tune of Rs.15,00,000/-. The accident was duly informed to the opposite parties and for which one Mrs. Jancy Rani, an IRDA Licensed surveyor was appointed to assess the loss and she submitted her report to the opposite parties after inspection. On 12.11.2020 the opposite parties repudiated the complainant’s claim holding that the stock suffered damage due to spontaneous combustion and self heating without any external source and that standard fire policy is excluded for this damage. It is submitted that an ADD ON policy was also included at the time of entering the insurance. Thus it is submitted by the complainant that the cause of accident was not correctly known and the stock was properly stored with sufficient space, the report by the surveyor is predetermined, ADD On policy was also taken and hence, the repudiation of the claim by the opposite parties was unlawful. Thus aggrieved the complaint was filed by the complainant for the reliefs as mentioned below;
Directing the opposite parties to sanction the claim of the company;
To pay a sum of Rs.5,00,000/- as compensation for the mental agony, hardship, strain, inconvenience caused by the act of the opposite parties and their deficiency in service;
To pay a sum of Rs.5,000/- as cost of the proceedings to the complainant.
Defence of the opposite parties:
The opposite parties 1 &2 jointly filed written version admitting the insurance policy taken by the complainant for the commodity of Hydrogen peroxide and that the policy period was 06.02.2020 to 05.09.2021. It was submitted that there was no proof that 50310 kg Hydrogen peroxide to the tune of Rs.29,49,009/- were stored in the ware house and that in the accident occurred on 24.09.2020, 1202 jerry canes with Hydrogen peroxide was damaged to the value of Rs.15,00,000/-. It is submitted that on the request by the complainant one Mrs. Jansirani was appointed to survey who made the physical inspection on 26.09.2020 and an expert opinion was submitted by her on 05.10.2020 and the final report was submitted on 21.10.2020 related to the fire accident. It is averred that the observations on physical verifications are against the complainant and the available insurance policy is also limited and not to cover the damages as claimed by the complainant and that as the surveyor’s report is based on fact it cannot be simply ignored. The opposite parties cited the reason for fire and damage to the stock of Hydrogen peroxide is due to on its own fermentation, natural heating or spontaneous combustion which is not an insured peril covered under Standard fire and Special Peril Policy. On perusal of the Standard Fire and Special Peril Policy coverage the complainant’s stock of Hydrogen peroxide was not covered with the Add on cover or Spontaneous Combustion. Thus it is submitted that the damage of Hydrogen peroxide is not covered under Standard Fire and Special Peril Policy. Thus the opposite parties submitted that the repudiation of the claim was proper and sought for the dismissal of the complaint.
On the side of complainant proof affidavit was filed and documents Ex.A1 to Ex.A9 were marked. On the side of opposite parties proof affidavit was filed and documents Ex.B1 and Ex.B3 were marked.
Point for consideration:-
1. Whether the repudiation of claim of insurance made by the complainant by the opposite parties is justifiable?
2. If so to what relief the complainant is entitled?
Point:
On the side of complainant the following documents were filed in support of the complaint allegations;
The Insurance policy copy was marked as Ex.A1;
Fire loss report by surveyor dated 26.09.2020 was marked as Ex.A2;
TDS and MSDs dated 30.09.2020 was marked as Ex.A3;
Mail correspondences were marked as Ex.A4 & Ex.A5;
Photograph was marked as Ex.A6;
Repudiation letter dated 12.10.2020 was marked as Ex.A7;
Representation by the complainant to Insurance Ombudsman was marked as Ex.A8;
Reply by UTI dated 18.12.2020 was marked as Ex.A9;
On the side of opposite parties the following documents were filed in support of their defence;
Insurance copy dated 06.02.2020 was marked as Ex.B1;
Email from surveyor dated 05.10.2020 was marked as Ex.B2;
Final survey report dated 21.10.2020 was marked as Ex.B3;
The counsel appearing for the complainant argued that the accident occurred on 24.09.2020 and that the stocks were insured with the opposite parties vide Policy No.0125001119P105536675 for a period between 06.02.2020 to 05.02.2021 under the Standard Fire and Special Perils Policy. Further an Add on policy was taken for a total sum assured of Rs.2,50,00,000.00/- and an additional premium of Rs.10,000/- was paid on the Add on cover to include Earthquake and STFI Cover. It is submitted by the counsel for the complainant that the only question to be decided is whether the spontaneous combustion was covered under Standard Fire and Special Peril Policy. Further he contended that in Saurashtra Chemicals Limited Vs National Insurance Company Limited it has been observed that
“It is settled law that contract of insurance is based upon good faith. It is the duty of the insurers and their agents to disclose all material facts within their knowledge since obligation of good faith applies to them equally with the assure”
Further he also cited the decision rendered by NCDRC in Roshanlal Oil Mills Limited Vs M/s. United India Insurance Company Limited, I (1991) CPJ 293 (NC) in support of his contention that there was insurance cover for damage that occurred due to spontaneous combustion of his stock. He also cited the decision rendered by Supreme Court in Bharat Watch Company Vs National Insurance Company Limited, wherein the Supreme Court has made clear that when the terms of exclusion of a policy are not communicated to the insured, the insurer cannot rely upon the same in order to reject the claim. Thus the counsel for the complainant submitted that the repudiation of the insurance claim is illegal and sought for the complaint to be allowed.
The learned counsel appearing for the opposite parties submitted that even in the complaint it is admitted by the complainant that the cause of accident is not known and when such is the case the repudiation could not be termed as not proper. Further he argued that for the report submitted by the surveyor no objections were filed by the complainant. He also cited the source of fire given in the report as
“There are 1202 Nos of Jerricans were stuffed into the 40 feet closed container without proper ventilation and kept open to sky. This sun light exposure on sealed container during Month of May, June & July 2020 (Peak summer) would have attained the highest level of heat and possibilities of developing pressure in the sealed Jerrican get increased day by day (While stored at Madhavaram).
At the time of incident possibly some of Jerricans would have cracked due to self heating/spontaneous combustion/pressure and leaked & releasing peroxide and reacted with combustible material causing the fire on its own.
Hydrogen peroxide become unstable when heated or contaminated with metals, rust, reducing agent, organic materials etc. In this particular incident the leaked Hydrogen Peroxide evaporated and got contact with the metal (container), organic materials such as rust/dust etc., inside the container storage area, a fire would have resulted on its own spontaneously.”
Thus in support of his arguments he cited the reason for the accident given in the report that the fire was not resulted by fortuitous nature and was resulted on its own self ignition through oxidization. With regard to the liability he submitted that under the policy, fire damage to the stock of Hydrogen peroxide due to it on own fermentation, natural heating or spontaneous combustion were not considered as per insured perils, the Standard Fire and Special Peril Policy and hence he supported the repudiation made by the opposite parties and sought for the dismissal of the complaint.
We perused the pleadings and arguments submitted by both the parties. It is not disputed by both the parties that the insurance policy was taken by the complainant under the Standard Fire and Special Peril Policy and that the period of coverage is from 06.02.2020 to 05.02.2021. It is also not disputed by both parties that on 24.09.2020 fire broke down in the complainant’s premises and that the complainant’s “GOODS” got damaged. The only question for determination before this Commission is whether the insurance claim of the complainant could be granted or not. It is the argument of the opposite parties that the fire accident occurred due to its own fermentation, natural heating or spontaneous combustion which is not an insured peril covered under the Standard Fire and Special Peril Policy and hence the complainant claim is not to be approved. However, it is the arguments of the complainant that the stock of Hydrogen peroxide was properly packed with sufficient spaces for leakage of gas if any and there was no chance for self heating without any external source. But it is admitted by the complainant in his pleadings itself that the cause of accident was not correctly known which was rightly pointed out by the opposite parties. The report of the surveyor was as follows;
“There are 1202 Nos of Jerricans were stuffed into the 40 feet closed container without proper ventilation and kept open to sky. This sun light exposure on sealed container during Month of May, June & July 2020 (Peak summer) would have attained the highest level of heat and possibilities of developing pressure in the sealed Jerrican get increased day by day.
At the time of incident possibly some of Jerricans would have been mishandled by the labours/cracked due to self heating/spontaneous combustion/pressure and leaked & releasing peroxide and reacted with combustible material causing the fire.
Hydrogen peroxide becomes unstable when heated or contaminated with metals, rust, reducing agent, organic materials etc. In this particular incident the leaked Hydrogen Peroxide evaporated and got contact with the metal (container), organic materials such as rust/dust etc., inside the container storage area, a fire would have resulted on its own spontaneously.
Accordingly to the material safety data sheet, Hydrogen Peroxide reacts violently and explosively when contact with organic substances which are a special exposure hazard of hydrogen peroxide.
As per your analysis it is crystal clear that the cause of fire/origin of fire in the Hydrogen peroxide is due to its own fermentation, natural heating or Spontaneous Combustion.”
No objections were made by the complainant for the report of the surveyor. Further it is submitted clearly in the report that the stock of Hydrogen Peroxide was not covered with the Add on cover for Spontaneous Combustion. When we perused the policy documents we could see as per the terms and conditions of the policy the same is not covered under the policy condition as follows;
Fire: Excluding destruction or damage caused to the property insured by
I) its own fermentation, natural heating or spontaneous combustion.
ii) Its undergoing any heating or drying process.
Burning of property insured by order of any Public Authority.
The complainant failed to establish that the spontaneous combustion was included in the Add on cover by proper material evidence. Thus when the cause of fire resulting in the accident is not established by the complainant and when there is no contra evidence produced by the complainant for the report of the surveyor, we are unable to hold that the repudiation of the claim by the opposite parties is unjustifiable. It is also to be noted that the cause of fire in the premises of the complainant could be established by him only by production of evidences that could be produced only before proper Civil Court. Under these circumstances we answer the point accordingly holding that there is no deficiency in service on the part of the opposite parties in repudiating the claim made by the complainant.
In the result the complaint is dismissed. No order as to cost.
Dictated by the President to the steno-typist, transcribed and computerized by him, corrected by the President and pronounced by us in the open Commission on this the 29th day of August 2022.
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MEMBER-II MEMBER -I PRESIDENT
List of document filed by the complainant:-
Ex.A1 15.09.2020 Insurance policy copy. Xerox
Ex.A2 26.09.2020 Fire loss report to surveyor. Xerox
Ex.A3 30.09.2020 TDS and MSDs Xerox
Ex.A4 05.10.2020 Mail Correspondence. Xerox
Ex.A5 12.10.2020 Mail correspondence. Xerox
Ex.A6 .............. Photograph. Xerox
Ex.A7 12.11.2020 Repudication letter. Xerox
Ex.A8 .............. Representation by the complainant to Insurance Ombudsman. Xerox
Ex.A9 18.12.2020 Reply by UTI. Xerox
Document filed by the opposite parties:
Ex.B1 06.02.2020 Insurance policy. Xerox
Ex.B2 05.10.2020 E mail from surveyor. Xerox
Ex.B3 21.10.2020 Final survey report. Xerox
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MEMBER-II MEMBER-I PRESIDENT
