1. THE complainant M/s. Saraya Sugar Mills Ltd. is a medium scale undertaking running a Sugar Mill at Sardamagar in the District of Gorakhpur, Uttar Pradesh. The complainant had taken a fire insurance policy from the opposite party -United India Insurance Co. Ltd. viz. Fire Policy C which covers various risks e.g. fire, lightening, explosion/imposition, riots, strikes etc. The opposite party issued the policy bearing No. 01/1/0/ 662/90 dated 19.2.90 covering the risk for the period 20.2.90 to 19.2.91 for a sum of Rs. 15.00 lakhs. The premium paid on the policy was broken up as follows :
(a) Fire premium @ 1.40 per 1000 and
(b) Spontaneous combustion @ 0.25 per 1000.
The complainant paid the total amount of Rs. 2,351 /as premium in respect of both i.e. for the fire as well as spontaneous combustion in lieu of which the opposite party covered the insurance risk under the policy namely, building, machinery and accessories, and stocks in process, stocks in godown, furniture and stocks of molasses in steel tanks and in the pit, for a total amount of Rs. 15.00 lakhs. There was a fire in the premises of the complainants factory on 11th February, 1991 due to spontaneous combustion as a result of which the entire stock of molasses in Tank No. 1 i.e. 46,089. if Quintals was burnt and solidised. An F.I.R. was lodged on the same day. The complainant filed the claim with the Insurance Co. on 21st February, 1991 for a sum of Rs. 12,13,402.49. The Insurance Company appointed M/s. K.D. Kohli and Co. as Surveyors who asked for some details. The complainant vide letter dated 4th March, 1991 sent the same to the Surveyors which included the balance sheets for the years 1988 -89 and 1989 -90 and also a brief description of the spontaneous combustion of molasses in tank No. 1. The Insurance Co. vide letter dated 31st July, 1992 rejected the claim of the complainant on the ground that there was no fire due to spontaneous combustion and hence in terms, conditions and exclusions of the aforesaid policy of insurance, the loss is not covered. The complainant wrote to the Senior Divisional Manager of the opposite party -Insurance Co. on 18th August, 1992 stating that in similar circumstances in respect of an earlier policy the claim was allowed and despite necessary papers having been furnished to the Surveyors the Insurance Co. has arbitrarily rejected the claim. No reply of that letter was received by the complainant. The complainant sent various reminders to the Insurance Co. to expedite the claim. On 18th March 1993the complaint received a letter ances Department of the Insurance Co. that the Chairman -cum -Managing Director to whom the representation had been addressed, had taken up the matter and issued directions to the concerned officers. On 11th March, 1993 the complainant received a letter from the Deputy Manager of the Insurance Co. reiterating their earlier stand that since the insurance policy did not mention fire due to spontaneous combustion the claim could not be entertained.2. THE complainants case is that the clause mentioned by the Insurance Co. in their letter dated 11th March, 1993, does not exist in the policy and as such on factual ground the repudiation of the claim is entirely vitiated. In the complaint the complainant has also referred to the definition of combustion and spontaneous combustion and of fire which will be referred to in the latter part of the order. The grievance of the complainant is that by charging additional premium for spontaneous combustion, fire by spontaneous combustion had been covered. Hence according to the complainant the service provided by the Insurance Company is deficient. The complainant claims Rs. 12,13,402.42 being the amount of claim on burnt/destroyed molasses as per the policy. The complainant also claimed Rs. 5.00 lakhs as compensation due to withholding of the amount which could have been utilised for purchase of more sugar cane for the crushing sea sons of 1991 -92. The complainant also claimed interest at the rate of 18% on the amount of Rs. 12,13,402.42 from the date of filing the claim with the Insurance Company.
The opposite party contested the claim of the complainant. According to the opposite party, on receipt of intimation of the loss, M/s. K.D. report was submitted on 31st August, 1991. The Surveyors came to the conclusion that the damage to the molasses was caused due to auto heating and that there was no fire due to spontaneous combustion. The concluding portion of the report of the said Surveyors reads as follows :
''From the foregoing description of mishap and other related details, it is clear that though the molasses in Pit No. 1 got damaged and charred by auto heating, no fire due to spontaneous combustion took place. As a matter of fact, the process of overheating developed built up, over a period of days and amelioratory measures were taken to prevent chemical deterioration. Under the terms and conditions of policy of insurance and the meaning of the term fire and spontaneous combustion, the subject claim cannot be covered and hence no liability is made out''.
Another Surveyor Shri Naushad Ali Subzposh was also appointed and his report was received on 14th January, 1992. After considering the report of both the Surveyors and keeping in view the fact that the molasses was damaged due to auto heating and that there was no fire due to spontaneous combustion the opposite party repudiated its liability vide letter dated 31st July, 1992. The complainant wrote a letter dated 18th August, 1992 requesting the Insurance Company to reconsider the matter. The matter was reviewed and after due application of mind the claim was again repudiated vide letter dated 18th December, 1992. The complainant sent a letter dated 25th February, 1993 to the Chairman/Managing Director of the opposite party .to review the claim. Vide letter dated 11th March, 1993 the claim of the Complainant was again repudiated as the same was not admissible as per the terms and conditions of the policy. As the policy extended to the loss or damage by fire only and in the present case the alleged loss and damaged caused to the molasses was not due to fire and no fire due to spontaneous combustion took place and thus the loss was not caused under the terms and conditions of the policy. The endorsement to the policy reads as follows :''In consideration of the payment by the insured to the Company of additional premium of Rs. ¦ ¦.. the Company agrees notwithstanding what is stated in the printed exclusions of the policy to the contrary that the insurance by (items of ) this policy shall extend to include loss or damage by FIRE only of or to the property insured caused by its own fermentation, natural heating or spontaneous combustion''.
3. HENCE the case of the opposite party is that there was no deficiency of any kind whatsoever in the service provided by it. It was also pleaded that the repudiation was not arbitrary as it was with due application of mind and in good faith.
4. WE have heard the parties and gone through the records. The relevant facts are not in dispute. The molasses of the complainant in Tank No. 1 were burnt and solidised due to auto heating and spontaneous combustion. The Insurance Companys case is that as there was no fire due to spontaneous combustion therefore the loss was not covered under the policy. Thus the fate of the case entirely hangs upon the definition of ''combustion, ''spontaneous combustion and ''fire''. The definition of combustion and spontaneous combustion was considered by this Commission in M/s. Roshanlal Oil Mills Ltd. v. M/s. United India Insurance Co. Ltd., I (1992) CPJ 293 (NC). It was observed :
''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. 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.... (Mc -Graw Hill Encyclopaedia of Science and Technology, New York, Vol. 3 1982). Another test defines combustion as under : The term combustion signifies the process of burning associated generally with fire, flame, the generation of heat, and certain products of reaction. (Encyclopaedia Dictionary of Physics Chief Editor Thewlis, Pergamon Press, Oxford, 1961).''
As noticed above, the case of the Insurance Company is that auto combustion/spontaneous combustion did not cause fire. Therefore, the loss is not covered under the policy. Fire had been defined in Chambers 20th Century Dictionary as follows :''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 : ''
In the Concise Oxford Dictionary the meaning of fire has been given as follows :''Active principle operative in combustion, in which substances join chemically with oxygen in air and usu. give out bright light and heat; flame, incandescence;''
From the above definition of fire given in the two dictionaries it is clear that fire need not necessarily be accompanied by flame. Fire is a form of heat energy which cause smouldering, burning, heating, melting and perhaps some few more words.The complainant wrote a letter dated 6th February, 1991 to the opposite party stating :
''We would like to inform you that molasses of season 1990 -91 stored in covered Pucca tank No. 1 is overflowing due to high temperature and excess foaming inspite of taking best precautions''.
A telegram was sent by tine complainant to Excise Commissioner and Controller of Molasses, U.P. and Collector, Central Excise, Allahabad and its copy was also sent to the opposite party. The telegram reads as follows :''Temperature of Molasses tank Number one Reached eighty -five degree centigrade despite all efforts of cooling and controlling it () Auto combustion appears to have started''
This telegram was followed by the complainant by means of letter dated February 12/ 15,1991 addressed to the Excise Commissioner & Controller of Molasses, U.P., Allahabad and its copy was sent to opposite party. Thus the case of the complainant is that temperature of the molasses tank had risen due to auto combustion by which the molasses stored in tank No. 1 was burnt and solidised. While repudiating the claim the opposite party attributed the damage to spontaneous combustion without fire. From the definitions of terms combustion and spontaneous combustion, and the dictionary meaning of Fire'', it would only be natural to presume that the damage to the stock of molasses has been caused by fire arising from spontaneous combustion.5. THE complainant has paid additional premium at the rate of 0.25 per thousand for spontaneous combustion over and above the basic rate. If the basic rate for the damage by fire simpliciter covered the risk there was no precise purpose of charging additional premium for spontaneous combustion. As remarked in Roshan Lais case (supra) by this Commission if the contention of the Insurance Company is to be accepted it would mean that the risk spontaneous combustion is merely tautological inasmuch as it already falls under Fire for which basic premium has been prescribed. We have not been able to understand why the additional premium for spontaneous combustion was charged if the loss was payable only if it leads to fire.
6. IN the light of the above discussion we are of the opinion that the repudiation of the complainants claim by the opposite party cannot be sustained.
The next question which arises is as to what amount is the complainant entitled. In the letter dated February 18, 1991 written by the complainant to the Assistant Divisional Manager of the opposite party, the details of the loss of molasses in Tank No. 1 have been given as follows :
Tank No. : One Quantity : 46,089.17 qtls. Value : Rs. 4,42,456.03 Excise duty @ 12.60 p. quintal : Rs. 5,80,723.54 Administrative charges @2.50p/qtl : Rs. 1,15,222.92 Total : Rs. 11,38,402.49
Of course while submitting the claim form on 21st February, 1991 the complainant has added Rs. 75,000/ - to the above total amount as salvage expenses for digging/excavating the solid molasses. We are of the opinion that the complainant is only entitled to Rs. 11,38,402.49 which is the actual loss which has occurred due to burnt/ destroyed molasses.7. AFTER taking into consideration that the four months are sufficient from the date of submission of the claim, the Insurance Co. should have settled the claim, we direct the opposite party to pay Rs.
8. ,38,402.49 WITH interest at the rateof 15%perannumfrom21stJune, 1991 to the date of actual payment. 11. The complainant has also claimed damages amounting to Rs. 5.00 lakhs but we think that the interest awarded to the complainant on the amount of loss will sufficiently compensate the complainants damages for loss in business etc. We further order that the opposite party will pay Rs. 5,000/ - as costs to the complainant.
