INSURENCE POLICY FIRE

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

REVISION PETITION NO. 3587 OF 2012

(From the order dated 14.06.2012 in First Appeal No. 269/2011

of Karnataka State Consumer Disputes Redressal Commission)

 

New India Assurance Co.

Level-5, Tower-II,

Jeevan Bharati Building

Connaught Circus,

New Delhi – 110001

Represented by its Manager                     …  Petitioner

Versus

M/s. Penta Care Ayurpharma,

71/21/1, 3rd Main, Gandhi Gram,

Maruthi Extension, S.R. Puram,

Bangalore – 560021

Represented by its Partner

Dr. Niranjana Murthy                              …. Respondent(s)

 BEFORE

HON’BLE MR. JUSTICE K.S. CHAUDHARI,

PRESIDING MEMBER

HON’BLE DR. B.C. GUPTA, MEMBER

 APPEARED AT THE TIME OF ARGUMENTS

 

For the Petitioner(s)

 

Mr. R.S. Rana, Advocate

For the Respondent(s)

 

NEMO

PRONOUNCED ON : 30th MAY  2013

O R D E R

PER DR. B.C. GUPTA, MEMBER

        This revision petition has been filed under section 21(b) of the Consumer Protection Act, 1986 against the impugned order dated 14.06.2012 passed by the Karnataka State Consumer Disputes Redressal Commission (for short ‘the State Commission’) in FA No. 269/2011, ‘New India Assurance Co. versus M/s. Penta Care Ayurpharma’, vide which, while dismissing the appeal of the petitioner/OP, the order dated 22.12.2010 passed by the District Forum, Bangalore in consumer complaint no. 896/2010, allowing the said complaint, was upheld.

2.     Brief facts of the case are that the respondent/complainant, M/s. Penta Care Ayurpharma, who is carrying on the activity of manufacturing ayurvedic medicines, had obtained an insurance policy from the petitioner/OP, known as the ‘Fire and Special Peril Policy’, which was in force from 5.6.2007 to 4.6.2008. The sum assured under the said Policy was Rs.17 lakh.  It has been stated that on 26.4.2008, there was a fire on the premises of the complainant and bulk of furnished products and extracts stored in the store room were completely burnt, resulting in loss to the tune of Rs.2,55,335/-, as stated by the complainant.  The complainant informed the petitioner/OP about the incident who, in turn, appointed a surveyor for the assessment of damage to the goods.  The case of the petitioner/OP is that two out of three pulverising machines being used at the premises, were out of order and hence, one single machine was used continuously for a long time which resulted in excessive heat being generated during the process.  The heat was trapped inside the bags placed in the store room and this resulted in slow burning of the stocks in question, resulting in loss.  The petitioner/OP maintained that the cause of the loss is a peril which is excluded under the terms and conditions of the insurance policy in question, and hence they were not liable to pay the claim.  The complainant/respondent filed a complaint no. 896/2010 before the District Forum, which allowed the same and directed the petitioner/OP to pay a sum of Rs.2,55,335/- to the complainant with interest @12% p.a. from the date of repudiation, i.e., 25.09.2008 until actual payment.  The petitioner/OP was also asked to pay a sum of Rs.5,000/- to the complainant as cost of the proceedings.  An appeal filed before the State Commission against this order was dismissed by the State Commission vide impugned order and the order of the District Forum was confirmed.  It is against this order that the present revision petition has been filed.

3.     After hearing the learned counsel for the petitioner on 28.09.2012, it was decided to send notice to the respondent and the date of hearing was fixed as 18.03.2013.  In response to the notice, complainant/respondent sent a written reply which is on record.  The respondent requested that the said petition be dismissed.  However, he did not appear personally to plead his case.

4.     While arguing the case, the learned counsel for the petitioner/OP has drawn our attention to a copy of the ‘Standard Fire and Special Peril Policy (material damage)’, in which it has been stated as follows:-

“Fire

Excluding destruction or damage caused to the property insured by

 (a)    (i)        its own fermentation, natural heating or spontaneous combustion.

 (ii)         its undergoing any heating or drying process.

(b)               burning of property insured by order of any Public Authority.”

 5.     Learned counsel further invited our attention to the surveyor’s report dated 4.09.2008 in which it has been stated as follows:-

We convert the fully dried herbs in to micro-fine form for different formulations.  On 26.04.2008, since two of the three pulvarisers were on repairs, single machine was used continuously used to meet our month end supply targets and to prepare new of medicines wanted to be launched in the first week of May.  For the first time more than 150 kg. of fine powder was made in the evening and in order to protect the same from rodents, all bags were kept inside the store and closed.  Due to overuse of single machine, the excess heat generated during pulverisation was trapped inside the bags and slowly ignited. As the rooms were closed as usual and the air entry was largely restricted, the fine powers are burnt slowly, engulfing the entire stock in the room, emitting large amount of smoke and heat.

 6.     The learned counsel argued that during the process of pulverisation, excess heat had been generated due to over-use of the single machine as the other two machines were out of order.  This heat was trapped inside the bags and had led to slow ignition and burning of material placed inside the store room.  It was clear from the wording of the policy as stated above that this case was covered under the exclusion clause, and hence the petitioner was not liable to pay the claim.  Learned counsel for the petitioner also stated that the petitioner had obtained an expert opinion from M/s. Basker Associates, insurance surveyor and loss assessor who stated in their report dated 18.09.2008 that the standard policy excludes fires such as spontaneous combustion, heating due to its own fermentation etc. from its scope.  The fire in ayurvedic pharma material undergoing spontaneous combustion is possible and is excluded under the scope of the policy.

7.     On the other hand, the respondent in its written version has stated that the District Forum had rightly dismissed the unscientific and far-fetched argument by petitioner that natural products undergoing biodegradation, leading to exothermic microbial reaction, resulting in special kind of heat generation is capable of burning material into ashes with heat and smoke without flame.  Even if the goods were burnt due to excessive heat generated during pulverisation, it should be held as accident loss by fire.  The respondent has argued that once the policy was issued after collecting huge amounts of premium for special peril policy, it was the bound duty of the petitioner to indemnify the loss caused to the complainant/respondent.  The respondent pleaded that the said petition should be dismissed.

 8.     We have given thoughtful consideration to the arguments advanced by the parties and examined the entire material on record.  The facts of the case make it quite clear and it has not been denied by the OP that loss has been caused to the complainant due to the burning of the Ayurveda pharma material placed inside the store.  The main issue to be decided in the case is whether such loss is covered, for making payment of insurance claim, under the terms and conditions of the policy in question.

 9.     The District Forum observed in their order that the Insurance Policy in question, was issued for the purpose of indemnifying the insured in case of fire and special peril.  Hence, when the goods of the complainant were burnt due to excess heat generated during pulverisation, it can be held as an accidental loss by fire.  Hence, prima facie, such loss is covered under the policy which is issued for covering fire risk.  It is further observed by the District Forum that the conditions of the policy were not enclosed with the policy and till that day, the opposite party had not furnished the conditions which were attached to the policy.  The District Forum held that for non-production of such document containing exclusion clause, they reached the conclusion that the opposite party had failed to substantiate its contention that the fire accident was excluded under the terms of the policy.  The State Commission also observed that it was a special type of policy, covering the pulverisation plant and stored materials for preparation of ayurvedic medicines and since the policy was subsisting on the date of the incident, the OP was liable to make good the loos sustained by the complainant.  We do not find any reason to disagree with the findings of the State Commission and the District Forum because it is an established fact that loss has been caused to the complainant due to the burning of stocks in the godown. It is clearly a case of accidental fire.  Fire was not caused under any heating or drying process as at the time of Fire, pulverisation was not under operation. Record also does not reveal that fire was on account of own fermentation or natural heating or spontaneous combustion and in such circumstances exclusion clause is not applicable.

10.   In the light of these observations, we do not find any irregularity, illegality or jurisdictional error in the orders passed by the State Commission and the District Forum.  The revision petition is, therefore, ordered to be dismissed and the orders passed by the State Commission and the District Forum upheld with no order as to cosT…………

(K.S. CHAUDHARI J.

 

..……………………………

(DR. B.C. GUPTA)

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