The main legal point established in the judgment is the interpretation of the Sale of Goods Act, 1930, regarding the transfer of property rights, insurable interest, and the coverage of loss by spontaneous combustion under the insurance policy.

Mr. Justice S.N. Kapoor, Presiding Member—This appeal is directed against the order passed by the Andhra Pradesh State Consumer Disputes Redressal Commission, Hyderabad in C.D. No. 84 of 1994 dated 2.1.2002. The State Commission dismissed the complaint, yet went on consider the loss, and assessed the claim of the complainant/appellant by holding that the complainant/appellant was entitled to claim the loss of 219 M.T. of de-oiled bran at the rate of Rs. 2,000 per M.T. after deducting policy excess at 20%.

2. Dis-satisfied with the order passed by the State Commission, the present appeal has been filed claiming compensation for 685.39 M.T. of de-oiled bran lost in fire at the rate of Rs. 2,028 per M.T. with interest @ 21% and cost of the appeal and the complaint.

3. Facts which have given occasion to filing this appeal are as follows:

The appellant company has been carrying on the business of processing of rice-bran and manufacturing rice-bran oil and de-oiled bran (for short DOB). On 20.8.1991, the complainant/appellant insured several items of raw materials as well as finished stock like rice-bran, DOB, Rice bran oil, gunnies etc., with the respondent for Fire Policy-C, for a total sum of Rs. 2,80,10,000 by paying a sum of Rs. 1,30,407 towards premium. The policy was valid for one year from 9.2.1991. The appellant paid an additional premium of Rs. 14,510 for coverage of stock under ‘Spontaneous Combustion Clause’ which reads as under:

“....notwithstanding what is stated in the printed conditions of the policy to the contrary that the insurance under (the 1, 2, 5 and 6 items of) this policy shall extend to include loss or damage by fire only or to the property insured caused by its own fermentation, natural heating or spontaneous combustion.”

4. On 5.9.1991, the appellant/complainant entered into an agreement to sell the DOB to M/s. Alfred Toepfer (India) Ltd., the broker for M/s. Alfred C. Toepfer International Gmbh in Hamburg for sale of 1,000 M.T. of De-oiled bran @ US $ 52.00 per MT and agreeing to take delivery by 25.11.1991.

5. The fire accident took place on 21.12.1991. The appellant claimed that he suffered a loss of 685.39 M.T. of de-oiled bran and accordingly he preferred a claimed for Rs. 14.80 lakhs. But, the Insurance Company vide their letter dated 12.11.1992 accepted the claim of the complainant only to the extent of Rs. 2,00,087. The complainant being dis-satisfied with the amount offered invoked Clause 13 of the conditions of the policy for seeking arbitration and by letter dated 21.1.1993 nominated Sri Justice Ramanujulu Naidu as arbitrator. Respondent/Insurance company also appointed one Sri Krishna Brahmam, Advocate, Kakinada as Arbitrator. Justice Naidu fell sick and expired in May, 1993. The complainant nominated S.R. Ashok in place of Sri Justice Ramanujulu Naidu and intimated the insurance company as well as Sri Krishna Braham.

6. In the letter dated 4.12.1992, the respondent informed the complainant that out of 685.39 MTs, a deduction of 219 MTs was made for the de-oiled bran lost in the cyclone of May, 1990 and out of the remaining 466.38 MTs, a deduction of 25% was made being the loss occurred prior to the spontaneous combustion and respondent had fixed the value at Rs. 780 per MT being the cost of the manufacture of de-oiled bran arrived at on the basis of the annual report of the company for the year 1990-91.

7. On 17.12.1993, the complainant was informed by the respondents that the appellant has no insurable interest for the claim on the property damaged. Consequently, the complainant filed the complaint preferring the claim as aforesaid.

8. Oriental Insurance company contested the matter by denying that 685.39 MTs of de-oiled bran was lost by claiming that the material had already been sold and as such, the complainant had ceased to have any insurable interest in the property affected in the fire. They offered to settle the claim at Rs. 2,00,087 based on the report of the Surveyor. They made an offer