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2017 DIGILAW 1349 (GUJ)

Mukesh Tobacco v. United India Insurance Co. Ltd.

2017-08-02

N.V.ANJARIA

body2017
JUDGMENT : N.V. ANJARIA, J. 1. Whether there can be a smoke without fire is the poetically put, but the succinctly posed legal question arising in this petition. The petitioner’s claim for loss of goods under the fire insurance policy has been negatived on the logic that though the smokes were evident and admitted, there was no evidence of fire. 2. The respondent-United India Insurance Company Limited refused to sanction the claim of the petitioner towards fire insurance as per decision conveyed in letter dated 25.06.2009 on the ground that the loss of stock of the insured goods tobacco occurred due to the internal heat of spontaneous combustion inside the stock and not by fire. Therefore, the loss would not fall under the purview of the policy. 3. The relevant facts may be noticed. The petitioner is engaged in the business of tobacco and has its factory at Village Samarvada, Taluka Dhanera. As done every time, the factory building, plant & machinery, furniture as well as stock of goods tobacco were insured by the petitioner with the respondent company. The last policy issued by the Insurance company was for the period from 19.07.2006 to midnight of 18.07.2007, for a total sum of Rs. 80 Lacs including a sum of Rs. 70 lakhs, the stock of tobacco was insured. The petitioner had paid additional premium for spontaneous combustion over and above the premium for fire totaling Rs. 37,881/- for covering the above risk. 3.1 At about 7’o clock on 01.08.2006, the security informed the proprietor that the smokes were coming out of the godown of the factory. Many bags of tobacco were gutted in fire. The panchnama was prepared and thereafter, the survey of the factory premises was undertaken by the surveyor. The petitioner put-forth the insurance claim for the loss of tobacco by letter dated 16.10.2006. The respondent company informed that the claim file of the petitioner was closed for the reason that the loss was not identifiable and that any ignition of flame of fire inside the stock of tobacco was not noticed. It was stated that the loss was caused due to internal heat of spontaneous combustion and the claim of the petitioner was treated as no claim. It was stated that the loss was caused due to internal heat of spontaneous combustion and the claim of the petitioner was treated as no claim. 3.2 It appears that the said decision was challenged by the petitioner in Special Civil Application No. 26454 of 2006 which was rejected as per order dated 24.09.2007 on the ground of availability of alternative remedy. The petitioner preferred Letters Patent Appeal No. 2276 of 2007 which was decided by order dated 17.12.2008 observing that if the fire had occurred due to spontaneous combustion and if the claim was covered by the additional policy, appropriate steps should be taken by the Insurance Company. The respondent Insurance Company was directed to make fresh assessment of the claim within two months. 3.3 After long drawn correspondences and notices, the respondent Insurance Company sent communication dated 25.06.2009 which is the impugned decision whereby the claim of the petitioner was rejected as aforesaid. In the affidavit-in-reply, the respondent company referred to survey report of one M/s. A.M. Patel Surveyors dated 05.10.2006 and contended that it was found therein that the loss had occurred because of internal heat of spontaneous combustion and not by fire. 3.4 Now, survey report dated 05.10.2006, inter-alia mentioned that the surveyor did not find any fire damages to any Hassian Bag externally but the stocks of the tobacco were found spoiled inside all the bags due to internal Heat of the spontaneous combustion only. It was stated that no any evidence for the ignition of the flame of Fire was found. It was recorded also that the smokes generated due to internal heat of spontaneous combustion of tobacco stocks were found coming out from the heap of Tobacco Bags and the said Godown was found full of smokes only without any ignition of the flame of fire and was supported by photographs showing only the smokes inside the godown without any flame of Fire. The surveyor contended that that the cause of the damages to the insured’s stocks was only due to the heat of spontaneous combustion without any ignition of Flame of Fire i.e. there was no any Fire and hence there was no any damages due to any Fire took place.” 3.5 The Insurance Company relied on condition No. 6 of Standard Fire and Special Perils Policy which is about spontaneous combustion. It reads as under: “6. It reads as under: “6. Spontaneous combustion “In consideration of the payment of the insured to the Company of the additional premium of Rs. 1750. The Company agrees notwithstanding what is stated in the printed exclusions of this policy to the contrary that the insurance by (item 4...) of this policy shall extend to include loss or damage by fire only of or to the property insured caused by its fermentation, natural heating or spontaneous combustion.” N.B. – the expression ‘by fire only’ in the endorsement above must not be omitted under any circumstances.” 4. Heard learned advocate Mr. Vijay Nangesh for the petitioner and learned advocate Mr. Vibhuti Nanavati for the respondents. 5. In New India Assurance Company Limited vs. Zuari Industries Limited and Others, (2009) 9 SCC 70 , it was a case of fire accident in which the claim for insurance was agitated under the Consumer Protection Act, 1986. There was a flashover due to electrical short-circuit causing damage to boiler and other equipments. The Insurance Company repudiated the claim of the insured on the ground that there was no sustained fire which had caused the said damage. The Supreme Court observed that not only the clause in the policy relating to fire was not qualified by the term “sustained”, but even otherwise the duration of the fire was not relevant. 5.1 It was held that as long as there was a fire which caused the damage, the insured’s claim was maintainable even if the fire is for a fraction of a second, observing: “In our opinion the duration of the fire is not relevant. As long as there is a fire which caused the damage the claim is maintainable, even if the fire is for a fraction of a second. The term Fire in clause (1) of the Fire Policy "C" is not qualified by the word sustained. It is well settled that the Court cannot add words to statute or to a document and must read it as it is. Hence repudiation of the policy on the ground that there was no `sustained fire' in our opinion is not justified. We have perused the fire policy in question which is annexure P1 to this appeal. The word used therein is fire and not sustained fire. Hence the stand of the Insurance Company in this connection is not acceptable.” (Para 9) 6. We have perused the fire policy in question which is annexure P1 to this appeal. The word used therein is fire and not sustained fire. Hence the stand of the Insurance Company in this connection is not acceptable.” (Para 9) 6. In the present case, the aforementioned condition No. 6 about spontaneous combustion to above mentions that the policy shall extend to include loss or damage by fire only or to the property insured caused by its fermentation, natural heating or spontaneous combustion. In the note below, it was mentioned that the expression by fire only in the endorsement must not be omitted under any circumstances. Given this, the clause cannot be read to mean that spontaneous combustion if results into the damages to the insured goods, the claim would not qualify to be granted. 6.1 The policy indicated that the tobacco factory and goods tobacco were insured for fire as well as spontaneous combustion and for that, the premium was differently paid. For spontaneous combustion, a premium of Rs. 1750/- was separately paid. The acceptance of additional premium is also a factor which leaves no room that the Insurance Company accepted to cover the said risk. Otherwise, there was no point or necessity for asking the insured to pay the additional premium on that count. By taking additional premium, the rick was covered for loss caused by spontaneous combustion or natural heat. The necessary implication is that the damage due to pose or poses is given the insurance coverage and the Insurance Company is bound to pay the loss suffered by the insured. 6.2 In McGraw Hill Encyclopedia of Science & Technology, New York, 1982 Vol. 3 in scientific literature “combustion” is defined as under: “The burning of any substance, whether it be gaseous, liquid or solid. In combustion, a fuel is oxidized evolving heat and often light.” The combustion of solids such as coal and wood occurs in stages. First, volatile matter is driven out of the solid by thermal decomposition of the fuel and burns in the air. In combustion, a fuel is oxidized evolving heat and often light.” The combustion of solids such as coal and wood occurs in stages. First, volatile matter is driven out of the solid by thermal decomposition of the fuel and burns in the air. At usual combustion temperature, the burning of the hot, solid residue is controlled by the rate at which oxygen of the air diffuses to its surface.....” 6.3 In Encyclopedia Dictionary of Physics Chief Editor Thewlis, Pergamon Press, Oxford, 1961), the term combustion signifies the process of burning associated generally with fire, flame, the generation of heat, and certain products of reaction. The word “fire” is defined in 20th Century Dictionary as under “the heat and light of burning a mass of burning matter, as of fuel in a grate: flame or incandescence: a conflagration: firing: fuel: a heating apparatus: heat or light due to other causes than burning.” It is clear that the fire need not necessarily be accompanied by flame. Fire is a form of heat energy which causes smouldering, burning, heating, melting and like process. 6.4 It is quite irrational on part of the Insurance Company contrary, to the scope of policy clause so as to put-forth a ground that since the generation of smokes was noticed, the fire had not taken place and no claim would be sustained for damages due to fire. In Zuari Industries Limited (supra), the Supreme Court expressed itself to state that in fire accident, the proximate cause was not the cause which is nearest in time or place. It is the active and efficient cause that sets in motion a chain of events that brings about the ultimate result without the intervention of any other force. 6.5 After discussing the ratio of other decisions including the decision of the English Court in paragraphs 14 to 21, it was stated thus: “In the present case, it is evident from the chain of events that the fire was the efficient and active cause of the damage. Had the fire not occurred, the damage was also would not have occurred and there was no intervening agency which was an independent source of the damage. Hence we cannot agree with the conclusion of the surveyors that the fire was not 23 the cause of the damage to the machinery of the claimant. Had the fire not occurred, the damage was also would not have occurred and there was no intervening agency which was an independent source of the damage. Hence we cannot agree with the conclusion of the surveyors that the fire was not 23 the cause of the damage to the machinery of the claimant. Moreover in General Assurance Society Ltd. vs. Chandmull Jain and Another, AIR 1966 SC 1644 it was observed by a Constitution Bench of this Court that in case of ambiguity in a contract of insurance the ambiguity should be resolved in favour of the claimant and against the insurance company.” (Para 22) 6.6 In the case on hand, breaking out of the smokes from the goods tobacco is an undisputed and admitted factual position. Even if it was generated due to internal heat inside the tobacco stock, it was a fire element. But for the fire element, there would not have been internal heat or generation of smokes as spontaneous generation of heat factuated by fire elements. Therefore, the Insurance Company was wholly unjustified in negativing the claim of the insured petitioner on the ground that the damage was caused not due to fire, but there was an internal heat of spontaneous combustion. The claim did fell within the fire clause of the policy. 6.7 In view of above, the case of the respondent Insurance Company that there was an auto combustion or spontaneous combustion which did not cause fire or loss was not the result of fire, cannot be accepted as valid even either scientifically, as also indeed legally. 7. For the foregoing reasons and discussion, the petition is allowed. The decision of the respondent Insurance Company reflected in communication dated 25.06.2009 refusing the insurance claim of the petitioner by holding that the loss caused to the tobacco goods was not falling within the purview of fire policy in question, is declared unsustainable in law and the same is hereby set aside. The petitioner is entitled to the amount payable under the policy which shall be paid by the respondent Insurance Company on or before 31.10.2017 with further observation that if the amount is not paid on or before the said date, it will carry interest @ 6% from the date of filing of the petition. 8. The petition is accordingly allowed and disposed of. Rule is made absolute in the aforesaid terms. 9. 8. The petition is accordingly allowed and disposed of. Rule is made absolute in the aforesaid terms. 9. Direct service is permitted.