NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
ORIGINAL PETITION NO. 176 OF 1999
1. M/s Gobind Pharm Chem Pvt. Ltd.
Through its Managing Director
Plot No. 70 & 73, Industrial Area Baddi
District Solan, Himachal Pradesh
2. M.L. Garga
S/o Shri R.R. Garga
Managing Director
M/s Gobind Pharm Chem Pvt. Ltd.
H.No. 546, Sector-16, Panchkula
Haryana
3. Akash Jain
S/o Shri Abhey Kumar Jain
Director
M/s Gobind Pharm Chem Pvt. Ltd.
H.No. 158, Sector-18A, Chandigarh
4. Sunil Bansal
S/o Amrit Lal Bansal
Director
M/s Gobind Pharm Chem Pvt. Ltd.
H.No. 352, Gali No. 6, New Town Moga
Punjab … Complainants
Versus
1. National Insurance Co. Ltd.
Through its Chairman-cum-Managing Director
3, Middleton Street
Kolkata-700071
2. Regional Manager
Regional Office-II
National Insurance Co. Ltd.
SCO 337-340, Sector-33B
Chandigarh-160036
3. Divisional Manager
Divisional Office
National Insurance Co. Ltd.
Himland Hotel, Circular Road
Shimla-171002, Himachal Pradesh
4. Branch Manager
Branch Office
National Insurance Co. Ltd.
Near Shitla Mata Mandir
Sector-2, Parwanoo, District Solan
Himachal Pradesh … Opposite Parties
BEFORE :
HON’BLE MR. JUSTICE R.C. JAIN, PRESIDING MEMBER
HON’BLE MR. S.K. NAIK, MEMBER
For the Complainants : Mr. Soumyajit Pani, Advocate
For the Opposite Parties : Mr. Vishnu Mehra, Advocate
Pronounced on : 13th July, 2012
O R D E R
PER S.K. NAIK, MEMBER
1. M/s Gobind Pharm Chem Pvt. Ltd., a company registered under the Companies Act, 1956, alleging deficiency in service on part of the National Insurance Company Limited in treating their claim under Fire ‘C’ Policy after an incident of fire to their factory on the 2nd of June, 1996 arbitrarily and without any justification as a case of ‘no claim’, have filed the present complaint.
2. M/s Gobind Pharm Chem Pvt. Ltd. had set up an industry in the Industrial Area Baddi, District Solan, Himachal Pradesh for the manufacture of INH/Niacinamide-INH drug, which is used for the treatment of tuberculosis. It subsequently diversified into the production of Oxalic Acid, Chloro/NitroChlorobenzenes. Additionally, the unit also undertook job work for processing of Dimethyl Sulphoxide, Aniline and Calcium Tartarate for other drug manufacturers. In order to safeguard its plant, equipment, machinery and the building, it had obtained a Fire Policy ‘C’ from the National Insurance Co. Ltd. for a total sum of Rs.1,05,77,000/- valid for a year w.e.f. 10th of March, 1996 to 9th of March, 1997. Due to working capital crunch, the complainant company could not continue production on its own and had temporarily leased out the manufacturing facilities, including the plant and machinery, to M/s Panacea Biotec Ltd. for a period of six months w.e.f. 1st of April, 1996. The insurance cover, however, continued to remain in favour of the complainant-company. Under the agreement with M/s Panacea Biotec Ltd., the complainant-company was liable to keep the plant and machinery operational at its cost and expense during the period of lease. It so happened unfortunately that while under this arrangement on the 2nd of June, 1996 at about 11.40 pm a major fire/explosion occurred in the factory resulting in the death of 8 workers causing extensive damage to the building, fixtures, plant and machinery of the unit. Apart from the fire brigade being informed immediately, who rushed to the site to douse the fire; an FIR was also lodged with the concerned police station on the same day. The opposite party-Insurance Company was intimated about the mishap in writing on the 15th of June, 1996. The opposite party-Insurance Company initially sought an explanation as to why there was a delay of 12 days in informing them about the incident, which complainant no.2 explained during his personal visit to the opposite party-Insurance Company, where-after the Insurance Company appointed M/s B.K. Sharma & Associates to survey and assess the loss caused to the property of the complainant-company. The said M/s B.K. Sharma & Associates vide their letter dated 14th of August, 1996 asked for certain information from the complainant, which the complainant furnished on the 29th of August, 1996. Thereafter the surveyor along with the representatives of the opposite party-Insurance Company carried out a joint inspection on the 3rd of September, 1996 and submitted a report on the 5th of September, 1996, in which the surveyor was of the view that the complainant-company having leased out the facilities to a third party i.e. M/s Panacea Biotec Ltd., the original circumstance affecting the insured building has changed and, therefore, a legal opinion may be obtained if it amounted to breach of condition no.3 of the policy. On the point of assessment of the loss, the team expressed the opinion that the liability “if admissible, shall be to the tune of Rs. 10.0 lacs”.
3. Considering that the complainant-company had made a claim of Rs.80.86 Lakhs, which quantum the opposite party-Insurance Company considered to be very high; they appointed M/s Mehta and Padamsey Surveyors Pvt. Ltd. as the final surveyors and the complainant was so informed vide their letter dated 21stof November, 1996 with a request to send the claim papers to them directly. Thereafter there is a series of exchange of correspondence between M/s Mehta and Padamsey Surveyors Pvt. Ltd. and the complainant-company as also between the opposite party-Insurance Company and the complainant-company. Alleging that despite repeated opportunities and reminders, the complainant-company failed to submit the requisite information/documents concerning the claim, the opposite party-Insurance Company on the basis of the report of M/s Mehta and Padamsey Surveyors Pvt. Ltd. treated the case of the complainant-company as a case of ‘no claim’ and informed them vide letter dated 15th of May, 1997.
4. Contending that the claim and the documents pertaining thereto, including a copy of the FIR and a report of the fire brigade, had already been furnished to the first surveyor (M/s B.K. Sharma and Associates) and further that even the final surveyor (M/s Mehta and Padamsey Surveyors Pvt. Ltd.) had not only been informed about it accordingly but they were also provided with whatever documents were available with them and despite their claim being genuine, the opposite parties have without any justification arbitrarily closed their case and, therefore, they were constrained to file the present complaint.
5. On notice being served on the opposite parties, they have contested the complaint. In their written version they have denied any negligence/deficiency in service attributable to them and have raised a preliminary objection that the complaint is not maintainable under the provisions of Consumer Protection Act, 1986 in view of the judgment of the Hon’ble Supreme Court in the case of Union Bank of India V. Seppo Rally Oy & Ors. [1999 (8) SCC 357] as there has been no negligence on part of the opposite parties. Negligence, if any, is on part of the complainant, who has failed to submit the required/requested documents/information. Further, the Himachal Pradesh Industrial Development Corporation having filed a recovery suit against the complainant and the opposite parties in the High Court of Himachal Pradesh at Shimla, the proceedings before this Commission were not maintainable. Yet, a third preliminary objection has been raised that the complaint is barred by limitation as the alleged fire incident occurred on 2nd of June, 1996 and the claim was repudiated on 15th of May, 1997 and, therefore, the complaint having been filed after May, 1999, it is well after the period of two years from the date of repudiation.
6. On the merits of the case, the opposite parties have referred to the series of the letters/correspondence, which they and M/s B.K. Sharma and Associates, the first surveyor and M/s Mehta Padamsey Surveyors Pvt. Ltd., the final surveyors, have addressed to the complainant-company for the supply of documents/claim papers, which the complainant has failed to furnish and, therefore, they were constrained to declare it as a case of ‘no claim’. Contending that the entire claim is wrong and misconceived, they have prayed for the dismissal of the complaint with cost.
7. In the rejoinder to the written version, the complainant-company has reiterated its averments and allegations in the complaint and in addition has explained that the opposite parties have asked them to submit different sets of documents on three different occasions with the intention to negate their legitimate claim. Further, it has been averred that even after submitting the documents again and again, the opposite parties were determined not to indemnify their claim on one flimsy ground or the other. This was evident from the fact that despite the complainant-company explaining to the opposite parties and their surveyors that certain documents, such as the final police report was beyond their reach as the fire incident involved the death of 8 workers and the police had to follow their own course of investigation, the opposite parties have been harping upon the submission of such a document. Contending that the complainant-company had furnished most of the documents are not relevant to assess the damage, the opposite parties have willfully created a situation with an intention to deny their justified claim.
8. In support of their respective stands, the parties have filed their evidence in the form of affidavits. While on behalf of complainant-company, Shri M.L.Garga, Managing Director has filed his affidavit, on behalf of the opposite parties Shri A.K. Gupta, Manager of National Insurance Company Ltd. and Shri S.S. Krishna of Mehta and Padamsey Surveyors Pvt. Ltd. have filed their affidavits.
9. We have heard Mr. S. Pani, Advocate, learned counsel appearing for the complainant-company and Shri Vishnu Mehra, Advocate, learned counsel for the opposite parties at length. We have also carefully gone through the entire material placed on record.
10. At the outset, it may be stated that even though some preliminary objections have been raised with regard to the maintainability of the complaint, they have neither been referred to in the written synopsis nor have they been pressed by the learned counsel for the opposite parties at the time of arguments. All the same, their objection with regard to the complaint being barred by limitation does not stand substantiated as the claim of the complainant-company was repudiated on the 15th of May, 1997 and the complaint had been filed on the 14th of May, 1999, a day prior to the expiry of the period of two years limitation. However, the main objection related to the possible breach of condition no. 3 as the insured complainant-company had leased out the manufacturing facilities to M/s Panacea Biotech Ltd. without any information or approval of the opposite party-Insurance Company. The first surveyor M/s B.K. Sharma & Associates had expressed an apprehension in this regard and had advised the opposite party-Insurance Company to obtain a legal opinion in this regard. However, the opposite party-Insurance Company did not obtain any legal opinion. Learned counsel for the complainant-company in this regard has contended that since the property/industrial unit had not been transferred to M/s Panacea Biotech Limited, their right to seek indemnity did not extinguish. In support of thereof, he has relied upon the judgment of the Hon’ble Supreme Court in the case of Vania Silk Mills (P) Ltd. V. Commissioner of Income Tax, Ahmedabad [(1991) 4 SCC 22]. Maybe, in view of this position, the matter has not been pressed by the opposite party-Insurance Company.
11. Coming to the merits, it may be stated that in view of the joint inspection carried out by M/s B.K. Sharma & Associates along with the engineer, Branch Manager and the Development Officer of the opposite party-Insurance Company, in which the liability if admissible under the terms and conditions of the policy was assessed at Rs.10.00 Lakhs, this Commission vide its order dated 7th of May, 2008 had directed the opposite party-Insurance Company to deposit the said sum with this Commission within a period of four weeks. This amount is since lying in deposit. In the same order, this Commission had observed that since M/s Mehta and Padamsey Surveyors Pvt. Ltd. had not assessed the loss as they had not received all the information/documents, the Insurance Company was given the opportunity to appoint further surveyor for finalizing the loss on the basis of the documents for the relevant period. The opposite party-Insurance Company it appears did not appoint any other surveyor but asked M/s Mehta and Padamsey Surveyors Pvt. Ltd. to assess the loss, who in turn by their letter dated 13th of January, 2009 asked the complainant-company to furnish additional information. The complainant-company vide their email dated 24th of April, 2009, however, replied that they do not have other documents in their possession other than those already supplied. This Commission, therefore, vide order dated 19th of May, 2009 directed the opposite party-Insurance Company to get the quantum of loss finalized on the basis of documents which were already supplied by the complainant to the opposite party and their surveyors in the past. Even thereafter, the opposite party-Insurance Company have not been able to get the loss assessed as M/s Mehta and Padamsey Surveyors Pvt. Ltd. expressed their inability to assess the claim in the absence of the documents, which they had earlier called for. In their letter dated 7th of July, 2009 addressed to National Insurance Company Ltd., M/s Mehta and Padamsey Surveyors Pvt. Ltd. have narrated the detailed justification for the information asked for from the complainant-company and how they are relevant for arriving at an appropriate damage/loss caused to the complainant-company on various counts. The gist of the letter is that onus to produce all particulars, plans, specifications, books, vouchers, invoices etc. lies squarely on the complainant-company, which they have failed to supply. It has been stated therein that the surveyor is required to analyze and verify the estimates of loss claimed by the insured and to do so supporting documents, quotations, other evidences and clarifications to substantiate the amounts has to be called for. In the case of the building, plant and machinery etc., the value at risk of the affected property at the time of loss has to be worked out. To ascertain whether there is any under insurance, it has been stated therein that the surveyor has to work out the indemnity in such a manner that the insured does not make a profit out of the loss. We have carefully perused this justification/logic advanced by M/s Mehta and PadamseySurveyors Pvt. Ltd., to which objection has been filed by the complainant-company, explaining as to how the reasons given by the surveyor are illogical and are aimed at frustrating the claim of the complainant-company.
12. We have considered the matter very carefully. From a perusal of the letter of M/s Mehta and Padamsey Surveyors Pvt. Ltd. dated 3rd of December, 1996 addressed to the complainant-company, we find that information/direction to submit documents/papers on as many as 17 items have been asked for. They have asked for two sets of all photographs taken immediately prior to fire. This has been effectively replied by the complainant-company that their engineer/representative Shri Srinivasan had himself taken the photographs at the time of his visit, which should meet the requirement and there is no justification to ask for the photographs from the complainant-company again. On point no. 2, a copy of the FIR already stands submitted. Asking for the final police investigation report, the complainant-company has already explained that it was beyond its reach as the police was still investigating the incident resulting in the death of 8 workers. At point no. 4, the copies of reports of all the fire brigades that attended the fire with their translation have been asked for. Asking for a report from each of the fire brigades/stations, in our view, is unnecessary since the report of the fire brigade within whose territorial jurisdiction the unit fell coordinates all the activities and that report is available on record. A site plan of the factory premises asked for also appears to be not very relevant to the claim as the opposite party-Insurance Company must have visited the site and assessed the quality and standard of construction at the time of providing the insurance cover to the complainant. Under point no. 6, floor-wise dimension layout plan, elevation/end views, sectional views etc. of the building have been asked for, which again do not appear to be relevant after having insured the premises for a certain sum. Similarly, asking for the origin of the fire, its detection, fire-fighting efforts etc. made is not strictly relevant in view of the preliminary report of M/s B.K. Sharma & Associates, the first surveyors. Similarly, asking for the cuttings of newspapers, which published the news of the said fire in the local language duly translated appears irrelevant as the complainants themselves have stated that they came to know about the fire incident from the newspaper, which was extensively reported, on the very next morning and rushed to the site and found that many people had died and the factory had been completely damaged. The rest of the information asked for also, in our view, amounted to making the task of the complainant-company more and more difficult. We are in fact inclined to accept the objection raised by the complainant-company in response to the justification given by M/s Mehta and Padamsey Surveyors Pvt. Ltd. The fact of incident of fire and that as many as 8 workers died as a result of the said fire/explosion is admitted. The opposite party-Insurance Company’s own first surveyor i.e. M/s B.K. Sharma & Associates in their report, after inspection, which was the earliest in point of time, have stated as under :-
“As per the inspection conducted, the damage has occurred mainly to the following items:
1) Plant & Machinery
a) SS Water Jacketed Reaction Vessel : From the nature of debris seen at the site of accident (Photos enclosed), sign of an explosion resulting in blowing off of manhole cover and subsequently falling down of the reactor from the mezanine floor to the Ground floor had occurred. The extent of damage suffered by this reactor shall be known only on testing.
b) Piping, Valves, Insulation & Fittings etc.
c) Condesors, Receivers, Glass items, sintex tank etc.
2) Electricals
Electrical motors, Wiring, Cabling, instrumentations and Electrical fitting etc.
3) Building
Signs of cracking/collapse of walls due to explosion and distortion of roof steel structures in the adjoining stores due to heat was visible.”
13. From a plain reading of this early report, it is quite clear that while the entire plant and machinery had been damaged/destroyed, the building had developed cracks on the verge of collapse due to the explosion and the explosion was of such a severe intensity that it had distorted roof/steel structure in the adjoining store due to heat. The inescapable conclusion, therefore, is that while the entire plant and machinery had been damaged, even the building had suffered extensive damage.
14. It is in the above scenario that we have to consider as to what compensation the complainant-company is entitled to. M/s B.K. Sharma & Associates have quantified the loss to Rs.10,00,000/- without giving any reason whatsoever as to how they have arrived at the said amount. The complainant-company, however, has filed a claim of Rs.80,86,000/-, giving the break up under various heads as under :-
“GOBIND PHARM CHEM PVT. LTD.
Plot Nos. 70 & 73, Industrial Area, Baddi-174101 (H.P.) Phone : 01795 – 4073
Admn Office :1206, Sector 18C, Chandigarh-18 Fax:(0172)541597 Phone:0172–774019
Ref No. …… Dated ………………………………
S. No.
|
Description
|
Qty.
|
Unit Cost
|
Total Cost
|
1
|
s/s 316 Centrifuge 36” x 15” Height
|
1
|
2.87
|
2.87
|
2
|
s/s 316 Centrifuge 26” x 15” Height
|
1
|
1.41
|
1.41
|
3
|
s/s 316 Reaction vessel, dished jacketed, fitted with suitable agitator system along with reduction gear fitted with suitable 316 s/s condenser & receiver
Capacity – 1.0 KL
|
1
|
4.90
|
4.90
|
4
|
s/s 316 Reaction vessel, dished jacketed, fitted with suitable agitation system along with reduction gear
Capacity
1.2 KL
|
2
|
3.10
|
6.20
|
5
|
s/s 316 Reaction vessel dished, fitted with s/s limped coil agitation system along with reduction gear, s/s 316 condenser and receiver
Capacity – 1.0 KL
|
1
|
5.70
|
5.70
|
6
|
s/s 316 Reaction vessel dished jacketed, turbine type agitator system with reduction gear.
Capacity-4500 Lt.
|
2
|
6.20
|
12.40
|
7
|
Absorber 1m dia x 2.5m height, flanged with dished bottom s/s 316
|
2
|
2.30
|
4.60
|
8
|
12 sets of glass flasks with 2 No. of condensers each with other accessories
|
9.60
| ||
9
|
Sintex Tanks
|
0.70
| ||
10
|
Steel structure for housing ofequipments
|
2.00
| ||
11
|
Piping and fittings consisting of flanges, bends, gaskets etc. insulation with aluminum cladding, pumps, valves etc.
|
7.00
| ||
12
|
Electricals consisting of motors, switches, starters, cables, panels etc.
|
4.50
| ||
13
|
Instrumentation consisting of temp. vaccum/pressure gauges
|
1.00
| ||
14
|
CST, Excise, packing, forwarding, loading/unloading, installation/erection etc. at 20%
|
12.58
| ||
15
|
Civil Works (Total Prod. Block)
|
5.40
| ||
Grand Total
|
80.86”
|
15. While it may be true that the complainant-company may have lost all the papers/documents in the devastating fire, their inability to arrange any paper/document/bill/quotation with regard to the equipments/machinery/apparatus from the original suppliers appears rather strange. The very basis on which the amounts indicated above have been worked out, therefore, cannot be taken on its face value but even if we take them as claimed, we find that an amount of Rs.12,58,000/- has been claimed on account of CST, excise, packing, forwarding, loading/unloading etc. This amount cannot be said to be a loss, inasmuch as it has been remitted to the government as statutory levies long back at the time of procurement of the equipments. We also find from the records that the complainant-company had commissioned the unit/factory during June, 1987, as indicated in the joint inspection report (page 98 of the paper-book), and the fire having occurred on 2nd of June, 1996, the equipments/machinery were in use for a good period of time. With a moderate depreciation of even 5-6% per annum, the value of the plant/equipment/machinery would have been reduced by more than half. In that view of the matter, we are of the view that a lump sum compensation of Rs.35,00,000/- with interest @ 9% per annum with effect from the date of repudiation of the claim i.e. 15th of May, 1997 will be the most justified and appropriate compensation.
16. We order accordingly. The opposite party-Insurance Company is directed to pay the awarded amount to the complainant within a period of six weeks and produce the proof thereof before this Commission and get the refund of Rs.10,00,000/- lying in deposit in this Commission along with the accrued interest.
17. The complaint is, accordingly, allowed in the above terms.
Sd/-
( R. C. JAIN, J. )
PRESIDING MEMBER
Sd/-
( S. K. NAIK )
MEMBER
Mukesh
