TaxTMI 
TaxTMI 
2025 (10) TMI 1334
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..... 248 of 2012 filed by M/s Orion Conmerx Pvt. Ltd. (hereinafter referred to as 'Insured') was partly allowed and it was held by the National Commission that the Surveyor 'had not proved that the fire was not accidental' and that the documents provided by the Insured, namely, reports of the Bank Auditor, Architect and Chartered Accountant were adequate to assess the loss caused. Further, the National Commission held that the assessment of the loss at Rs.61,39,539/- by the Surveyor was rightly done taking into account the material lost in the fire and the documentary evidence (after the exclusion of furniture, fittings and fixtures, as they were not insured) and the said amount was directed to be paid with simple interest @ 9% per annum, with effect from the date of repudiation of the claim till realization, by the National Insurance Co. Ltd. (hereinafter referred to as 'Insurance Company') to the Insured within eight weeks. ARGUMENTS ON BEHALF OF THE INSURANCE COMPANY 2. At the outset, Ms. Shantha Devi Raman, learned counsel for the Insurance Company submitted that the Insurance Company had given cogent reasons for repudiation of the claim raised by the Insured, inasmuch as, t....
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....d not led evidence of any forensic expert or independent witness disproving the report of final Surveyor. 6. Consequently, according to her, as the final Surveyor had not concluded that the fire was accidental, the Insured was not entitled to any compensation under the fire policies. 7. She also emphasised that the preliminary Surveyor and the final Surveyor in their reports dated 07th October 2010 and 30th March 2011 had stated that there is no coverage available for 'FFF' (i.e. furniture, fixtures and fittings) under any of the fire policies. 8. She further stated that the Insured in its complaint had not specifically pleaded as to what was the basis for claiming an amount of Rs.3,30,93,678/- (amount as per prayer in complaint) or to substantiate the quantity/unit of stocks lost or its unit value and therefore, there was no calculation available on record to contradict the calculation made by the final Surveyor. She pointed out that the Insured had sought the claim amount (while raising the claim with Insurance Company) of Rs. 3,51,52,412/- under the following six heads:- CLAIM PARTICULARS CLAIM AMOUNTS Stocks Rs. 2,65,75,647/- Furniture and Fittings Rs....
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....om the total stock value and the reason of the exclusion was that 'these are sample pieces and not for sale and hence cannot be included.' She, however, stated that while filing its claim, the Insured had included the cost of sample pieces. 12. She contended that the Insured relied on the generalised findings of M/s AURA pertaining to furniture, fittings, building, plant and machinery, showroom and electrical fittings, without any evidence to substantiate their findings and M/s Tarun Gandhi for stocks, without substantiating the basis or proof of their analyses and hence, both were unreliable and could not be a piece of evidence to contradict the detailed report of the final Surveyor. She stated that the Insured had attached a table of cancellation of orders and divided the claim of Rs. 2,65,75,647/- into Rs. 1,72,88,452/- as against cancelled orders Rs. 50,02,698/- as against accessories and Rs. 42,84,497/- as against samples. She contended that this table had been created by the Insured with the assumption that all its products were finished products, however, it cannot be accepted when it is not supported with evidence. She emphasised that cancellation of orders does not prov....
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....um to go further would stop." B. Industrial Promotion and Investment Corporation of Orissa Limited Vs. New India Assurance Company Limited and Another, (2016) 15 SCC 315, wherein it has been held as under:- "12. This Court in General Assurance Society Ltd. v. Chandmull Jain, (1966) 3 SCR 500 : AIR 1966 SC 1644] held that there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the insured and the contract is likely to be construed contra proferentes i.e. against the company in case of ambiguity or doubt. It was further held in the said judgment that the duty of the Court is to interpret the words in which the contract is expressed by the parties and it is not for the Court to make a new contract, however reasonable." C. United India Insurance Company Limited Vs. Hyundai Engineering and Construction Company Limited and Others, (2024) 6 SCC 310, wherein it has been held as under:- "34. At the outset, the experts concerned were never examined before NCDRC. Further, these reports were not based on siteinspection. They are all theore....
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....counted for Rs. 14.65 crores, work in progress for Rs. 6.35 crores and finished goods for Rs. 6.35 crores approximately. He clarified that samples have no marketable value for bank and hence were excluded by the bank from total stock in its valuation report. 20. He emphasised that due to fire, considerable damage had taken place to the building structure, plant and machinery, furniture and fixture, electrical fittings, stock of raw material, semi-finished and finished goods and showroom. 21. He stated that except for the claim of stocks (i.e. insofar as other five heads of claims were concerned), the difference in the amount claimed and agreed to by the Surveyor was essentially on account of furniture, fittings and fixtures not being considered on the basis that none of the fire policies covered the said category. He pointed out that Rs. 54,31,076/- was towards furniture, fixtures and fittings. He contended that the Surveyor's view on furniture and fittings was a clear error, inasmuch as, the Policy No. 360901/11/103400000092 under the head "Description of Risk" clearly provided for "FFF" which means furniture, fittings and fixtures. 22. He contended that the Insured is en....
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.... He stated that apart from the aforesaid preliminary evidence, the affidavit of Mr. Tarun Gandhi, Partner of M/s Tarun Gandhi & Co. enclosing a detailed report dated 05th January 2012 was also relied upon. The said report, according to him, was admissible in terms of Section 65(g) of the India Evidence Act, 1872. 27. He further stated that the loss of Rs. 2,45,16,913/- against loss of stock had been duly proved/established by the Insured. He pointed out that the value of stock had been independently proved by placing on record costs of various items (finished WIP, raw material) which were lying on the first floor and the ground floor that got damaged because of fire as well as use of water to douse the fire and the quantity of such items in the said two places. 28. Mr. Ramesh Singh contended that the amount of Rs. 29,93,850/- assessed by the final Surveyor towards the net loss of stock was clearly wrong as it considered only the value of identifiable/recognizable goods i.e. the goods which were damaged because of water and completely left out the unidentifiable/unrecognizable goods i.e. the goods which were damaged on account of fire. He emphasised that photographs showing th....
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....wise, is within the contract. 34. The object of the contract is to protect the Insured against loss occasioned by fire. The fire must be accidental. The dictionary meaning of the expression 'accidental' is a 'happening occurring unexpectedly or by chance'. Consequently, damage from a deliberately set fire will not be covered. To carry out the investigation, therefore, beyond the cause of the loss and to cast upon the Insured the burden of establishing that the cause of the fire itself was covered by his contract, would largely defeat this object. 35. The cause of fire, however, becomes material where the circumstances of the case are open to suspicion, and seem to indicate that it would be contrary to the principle of good faith (doctrine of uberrima fides) inherent in the contract to permit the Insured to recover. Accordingly, the cause of fire becomes material in cases where the fire is occasioned not by negligence but by the wilful act of Insured himself or of someone acting with his privity or consent. In such a case, his conduct, coupled with the making of a claim, is a fraud upon the insurers and he cannot enforce his claim against them. (See: The Law Relating to Fire I....
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....t cause of fire is proved. 40. In the present case, actual fire damage is proved by police investigation report based on complaint dated 25th September 2010, preliminary Surveyor's report, photographs of fire, fire claim form and reports of M/s AURA, Architects & Designers and Tarun Gandhi & Co., Chartered Accountants. 41. The final Surveyor's conclusion that the fire is not accidental is not correct, as there is no reasoning in the final Surveyor's report as to why the fire is not accidental. This Court is of the view that the final Surveyor's report has only found that electric short circuit is not the sole source and that there were three independent sources/seats/pools of fire. But the said finding cannot lead to the conclusion that the fire in question is not accidental. This is more so, when the final Surveyor in its report has neither concluded that the incident of fire falls within the exception/exclusion clause of the fire policies nor fraud, negligence or intentional damage by the Insured. In fact, the final Surveyor's report is not conclusive with regard to the cause of fire and there is no finding leave alone any conclusion in the final Surveyor's report that the ....
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....rned counsel for the Insurance company did not defend the impugned order on the said ground. 47. It is also settled law that coverage provisions should be interpreted broadly and in case of ambiguity, it is to be resolved in favour of the Insured. This Court in Canara Bank vs. United India Insurance Company Limited and Others, (2020) 3 SCC 455 has held as under:- "22. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation ....
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....e and value. d. Date-wise production movement. e. Copies of orders placed by various customers on Insured which were cancelled due to fire. 53. This Court randomly tested the veracity of five figures given in the said list of cancelled orders against the backup/primary evidence/documents. No discrepancy was found, except in one instance, namely, Serial No. 32, wherein the quantity ordered figure is shown to be less than quantity cancelled. This was found on account of the fact that the production of said product was more than what was ordered. This figure is corroborated by contemporaneous documents like production movement records and stock details at three locations. 54. This Court agrees with the contention of the Insured that the purpose of valuation done by the bank is different, inasmuch as, for the Insured the samples are of value, but not to the bank. Destruction of samples on account of fire caused loss to the Insured, who had to arrange for replacement of the samples. 55. The Insured has also produced production logs, which showcase daily production of items, including finished goods and the goods at the advance stage of production. The Insured ....