1. Insurance claim dispute — loss due to spontaneous combustion of oilseeds — dispute over whether such combustion constituted fire under the policy. (Para 1 , 2 , 3 , 4 )
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1999 Supreme(SC) 762
SUPREME COURT OF INDIA
R.P.Sethi : S.Saghir Ahmad
United India Insurance Company Limited
Versus
Roshan Lal Oil Mills Limited
Case No. : 2339 of 1992, 414 of 1993, 2458 of 1997
Date of Decision : 7/27/99
A judgment is vitiated if a consumer commission fails to consider a critical statutory document, such as a joint surveyor's report, which forms the basis of a claim's repudiation. Additionally, concurrent findings of fact by lower forums are generally not disturbed on appeal.
Headnote:(A) Insurance Act, 1938 - Section 64-UM(2) - Insurance claim - Repudiation based on surveyor's report - Non-consideration of joint survey report by the Commission - Miscarriage of justice - Where a claim is repudiated based on a joint survey report appointed under statutory provisions, the Commission is not justified in awarding the insurance amount without adverting to the contents and factors enumerated in said report - Non-consideration of such an important document vitiates the judgment. (Para 7)
(B) Appeal - Scope of interference with findings of fact - Findings of fact recorded by the authorities below cannot be disturbed in appeal. (Para 11)
Facts of the case:
An insurance policy was obtained for oilseeds stock and a silo, with additional cover for loss or damage by fire caused by fermentation, natural heating, or spontaneous combustion. The insured reported loss due to self-spontaneous combustion. Joint surveyors appointed under the Insurance Act reported that although spontaneous combustion occurred, it did not result in "fire", leading the insurer to repudiate the claim. A consumer commission allowed the claim and awarded compensation and interest without considering the joint survey report. In a separate related matter, lower forums found the survey report suspicious and allowed the claim, which was subsequently upheld by the commission.
Findings of Court:
In the first instance, the court found that the Commission's failure to consider the joint survey report, which was the primary basis for the repudiation of the claim, resulted in a serious miscarriage of justice. In the second instance, the court held that the concurrent findings of fact by the District and State Forums regarding the suspicious nature of the survey report could not be disturbed.
Issues: Whether the consumer commission was justified in awarding the insurance claim without considering the joint survey report and whether findings of fact recorded by lower forums can be disturbed in appeal.
Ratio Decidendi: The failure of a quasi-judicial body to consider a critical statutory document, such as a joint surveyor's report, which forms the basis of the insurer's decision to repudiate a claim, vitiates the judgment and necessitates a fresh hearing. Furthermore, appellate courts generally do not disturb concurrent findings of fact recorded by lower authorities.
Result: Civil Appeal No. 2339 of 1992 allowed and remanded for fresh hearing; Civil Appeal No. 414 of 1993 allowed; Civil Appeal No. 2458 of 1997 dismissed.
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Table of Contents
2. Whether spontaneous combustion is equivalent to fire under the insurance policy and whether the Commission erred in ignoring the statutory surveyor's report. (Para 5 )
3. The failure of the Commission to consider the joint survey report, submitted under the Insurance Act, resulted in a miscarriage of justice. (Para 7 )
4. A statutory survey report must be considered by the adjudicating authority when a claim is repudiated based on such report. (Para 7 )
5. Primary appeals allowed and remanded for fresh hearing; separate appeal dismissed regarding concurrent findings of fact. (Para 8 , 9 , 10 , 11 )
6. Does spontaneous combustion automatically constitute fire for insurance purposes?
The court observed that joint surveyors found spontaneous combustion had occurred but had not resulted in fire, indicating that the two are not necessarily equivalent under an insurance policy. (Para 4 , 7 )
7. What is the legal significance of a surveyor's report submitted under Section 64-UM(2) of the Insurance Act, 1938?
Such reports are critical evidence; the failure of a consumer commission to consider a statutory survey report when a claim is repudiated based on that report constitutes a miscarriage of justice. (Para 5 , 7 )
8. Can concurrent findings of fact by lower forums be disturbed in appeal?
Findings of fact recorded concurrently by lower authorities, such as the District and State Forums, cannot be disturbed in appeal. (Para 11 )
(1) CIVIL Appeal No. 2339 of 1992 The respondent M/s Roshan Lal Oil Mills (P) Ltd., together with Punjab Financial Corporation, Punjab State Industrial Development Corporation and State Bank of Patiala, had jointly obtained from the appellant a fire insurance policy in respect of the "stock of mustard seeds and/or toria and/or soyabean and other goods of oilseeds of like nature stored in a silo installed near the oil mill in the factory premises of the respondent situated at Mansa Road, Bhatinda". The details of goods insured are: Oilseeds stock (value) Rs 1,00,00,000 Silo (1st class construction) Rs 10,00,000 It was also mentioned in the insurance policy that the stock of oilseed of the value of Rs 1 crore was pledged with State Bank of Patiala (City Branch), Bhatinda, together with a silo which was pledged/hypothecated with Punjab Financial Corporation and Punjab State Industrial Development Corporation, Chandigarh for Rs 10,00,000.
(2) IN consideration of additional premium, the appellant subsequently extended the insurance cover to "loss or damage by fire only to the property insured caused by its own fermentation, natural heating or spontaneous combustion".
(3) ON 3-8-1990, the respondent reported to the Senior Divisional Manager, United India Insurance Co., Bhatinda, as under:
"Please refer to above policy regarding storage of (i) seeds. It is for your information that about 9860 (I) mustard seed stored in silo has been affected due to self-spontaneous combustion. You are requested to please register our claim and arrange to depute the surveyor to assess the loss and to avoid any further loss to goods."
(4) IMMEDIATELY on the receipt of this information, the appellant appointed one Shri D.K. Garg of Bhatinda to carry out the preliminary survey who visited the respondents premises on 4-8-1990 and submitted his report after four months in January 1991. Three days later i.e. on 7-8-1990, the appellant appointed M/s Thapar Srinivasan & Kapoor Pvt. Ltd. to survey and assess the loss caused to the respondent. They visited the respondents premises on 7-8-1990 and again on 16-8-1990. On that date, namely, on 16-8-1990 the appellant also appointed M/s Mehta & Padamsey Surveyor Pvt. Ltd. to survey and assess the loss jointly with M/s Thapar Srinivasan & Kapoor Pvt. Ltd. Thereafter the two surveyors visited the respondents premises and surveyed the affected area in the presence of Shri D.K. Garg, the preliminary surveyor. Joint surveyors submitted their report on 14-6-1991 in which they indicated that though spontaneous combustion had taken place, it had not resulted in "fire". They reported and enumerated several factors on a consideration of which they came to the conclusion that "fire" had not resulted on account of spontaneous combustion or heating of the stock stored in the silo. The appellant, therefore, repudiated the claim of the respondent on the ground that damage to stock was not covered within the ambit of the insurance policy. The respondent thereafter filed the claim petition before the National Consumer Disputes Redressal Commission (for short "the Commission") and the Commission by its order dated 26-3-1992 allowed the claim of the respondent for a sum of Rs 61,65,902. The Commission also allowed compensation amounting to Rs 50,000 to the respondent on account of delay which had taken place in the settlement of their claim. The Commission also awarded interest @ 18% per annum on the amount awarded under the insurance policy w.e.f. 3-11-1990 (three months after the incident) till the date of the actual payment. It is against this judgment that the present appeal has been filed in this Court.
(5) MR M.L. Verma, learned Senior Counsel appearing on behalf of the appellant has contended that risk covered under the policy was for loss or damage by "fire" only to the stock of oilseeds insured with the appellant The "fire", it is contended, should have been caused on account of the.
