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2025 Supreme(Online)(NCDRC) 6315
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
MR. SUBHASH CHANDRA, AVM J. RAJENDRA, AVSM VSM (RETD.), JJ
NEW INDIA ASSURANCE COMPANY LTD. – Appellant
Versus
DAYAL INDUSTRIES PVT. LTD. – Respondent
NC/FA/24/2022
The insurance policy covered losses due to spontaneous combustion, and the entire premises were treated as a single unit for coverage purposes.
Headnote:(A) Consumer Protection Act, 2019 - Section 51 - Insurance claim under Fire and Special Perils Policy - Appellant directed to pay Rs.50,40,096/- with interest and damages - Claim repudiated on grounds of no fire with flame and coverage issues - Court found spontaneous combustion covered under policy, and entire premises treated as one unit. (Paras 1, 10, 11, 12)
(B) Insurance - Coverage interpretation - The principle of contra proferentem applies, favoring the insured when policy terms are ambiguous. (Paras 6, 11)
Facts of the case:
The Appellant issued a Fire and Special Perils Policy for De-Oiled Rice Brawn. A fire occurred on 16.07.2013, leading to a claim that was repudiated based on a surveyor's report stating no fire occurred. The Respondent argued the fire was due to spontaneous combustion, which was covered under the policy.
Findings of Court:
The State Commission found the Appellant liable for the claim, establishing that the fire was due to spontaneous combustion and the entire premises were covered under the policy.
Issues: The main issues were whether the policy covered loss due to spontaneous combustion and if the godown was included in the insured premises.
Ratio Decidendi: The court ruled that the policy covered spontaneous combustion and that the entire premises were treated as one unit, rejecting the Appellant's arguments for repudiation.
Result: Appeal dismissed.
ORDER
PER SUBHASH CHANDRA
1. The Appellant is before us in this First Appeal in challenge to the order dated 10.09.2021 of the State Consumer Disputes Redressal Commission, Uttar Pradesh, Lucknow (for short “State Commission”) in Complaint No.315/2017 under Section 51 of the Consumer Protection Act, 2019 (“Act”) directing Appellant herein to pay the Respondent 50,40,096/- towards the insurance claim under a Fire and Special Perils Policy with interest @ 7% from 16.07.2013 till realization with 50,000/- towards damages and 20,000/- as litigation costs within 60 days or with interest @ 12% p.a.
2. For the reasons stated in the IA for the condonation of delay, the delay of 83 days in the filing of the Appeal was condoned in the interest of justice.
3. We have heard the learned Counsel for the parties and perused the records carefully.
4. The brief conspectus of facts is that the Appellant issued a Fire and Special Perils Policy on 01.05.2013 for the stock of De-Oiled Rice Brawn (DORB) on the premises of the Respondent. A fire was reported to have occurred by the Respondents on 16.07.2013 at 8.30 am. Appellant deputed a surveyor, Yogendra Kumar who, after inspection submitted a report on 23.09.2015 stating that there was no ‘fire’ with a flame and loss was due to smouldering and, therefore, not covered under the Policy. Appellant repudiated the claim on 19.10.2015 based on the report of the surveyor which was challenged on grounds of deficiency in service before the State Commission by the Respondents. Initially the Complaint was dismissed by the State Commission on pecuniary grounds and was remanded back by this Commission in Appeal. It was thereafter allowed by way of the order impugned before us. Essentially, the issue is whether the Policy covers loss due to fire occasioned by ‘spontaneous combustion’ and whether the affected stock is eligible for claim in view of it being located in a godown which was not covered and for which no additional premium was paid.
5. The Appellant’s case is that the State Commission erred in not appreciating that the fire was not accompanied by any flame at any time and that the insured did not summon the fire brigade. The surveyor’s inspection had noted that the debris was only excessively heated and blackened with smell of smoke and signs of ash. Hence it was concluded that there was no fire justifying the claim. It was also contended by the Appellant that the repudiation was based on the basis of the report of a surveyor which cannot be disregarded without cogent and sufficient reasons and that the surveyor’s report has not been challenged.
6. Per contra, the Respondent contended that the fire took place in the DORB godown due to self-combustion and they did not call Fire Service as water would have damaged DORB stocks. According to the Respondent, fire due to self-combustion is without flames and use of water even to douse it can aggravate it. They had lodged report dated 18.07.2013 with the police. It is contended that the rejection of their claim by the Appellant on the ground that the fire affected godown was not covered under the policies in question is illegal, arbitrary and mala fide as the insurance cover sought from time to time under the proposal forms and the policies issued by the Appellant covered the entire Mill (Manufacturing Unit) of the Respondent and that the Appellant could not make any technical/artificial wedge between DORB godowns and Manufacturing area stating that godowns were not included. It is contended that the layout of the Mill prepared by the Surveyor during pre-inspection shows that the entire Mill was One Single Unit, even though there were roads in between the Manufacturing areas and the DORB godowns. Even the Burglary Policies issued by the Appellant for the entire Mill/Mfg. Unit, described it as “Single Location’. It is contended that even if two interpretations were possible, as per the rule of contra proferentem, the one favourable the insured is to be applied as
