UNIVERSAL PAPER MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner No.1 is a Limited Company under the provisions of the Companies Act and having a Paper Mill at Jhargram, Midnapore, West Bengal. The petitioner No.1 had insured the respondent No.2 Insurance Company an insurance to the tune of Rs. 5.39 Crores in respect of raw materials, spares stores and finished goods lying at the Paper Mill. The Fire Policy in favour of the petitioner No.1 was issued on 11.11.92 bearing Policy No. 31120/34/o/F/584/98 vide annexure 'A' appended to the writ petition. As per the case made out by the petitioners as averred in the writ petition, a disastrous fire broke out around 10.00 p.m. on 16.2.93 in the Mill premises. Inspite of immediate steps being taken to extinguish the fire, the same could be extinguished only on 22.2.93 after six days of continuous fire-fighting by the Fire Brigade and Fire Brigade report is appended to the writ petition vide annexure 'B'. The entire stock of the raw materials lying at the petitioners' factory had been gutted in the said fire resulting in loss of Rs. 4,90,65,590,00/-. Claim in respect of the said loss was lodged for the said sum on 15.3.93 by Claim No. F/37/93 vide annexure 'F' to the writ petition. Prior to lodging of the aforesaid claim on 17.2.93, the petitioner company intimated in writing the Insurance Company about the accident on account of fire and on receipt of said information the respondent No.2 had appointed two surveyors, Mr. S.K. Das on 17.2.93 itself and M/s. Bhadra & Associates to survey and assess the loss caused by the accident of the fire in respect of raw materials covered by the aforesaid Insurance Policy. The Surveyors thereafter conducted investigation and recommended to the Insurance Company for considering the petitioner company's claim on an interim basis. The said report was submitted on 9.8.93 to the responds with a recommendation of ad-hoc payment of Rs. 1,72,56,555/- rounded off. Thereafter the said Joint Surveyors had finished their final report to the Insurance Company sometime in the month of September, 1994. During the period of interregnum between publication of the interim report and the final report inspite of recommendations being made about the interim payment, nothing was paid to the petitioners. In the meantime, some C.B.I investigation was made about the alleged accident of fire and C.B.I. reported to the Insurance Company that it has closed the secret investigation and they had closed the file. The petitioners are alleged to have made repeated persuasions as per letters annexed as annexure 'G' to the writ petition and the petitioners were informed on 10.1.96 by a letter from the respondent No. 2 conveying an information that Regional Office, Calcutta is advised to process the claim and do the further needful in the matter. The petitioners intimated the concerned respondents by their Lawyer's letter that the writ petition would be moved before Altamas Kabir, J. on 20.2.96 as 'Unlisted Motion'.

(2.) The petitioner No.1 is a sick company and case for its revival is pending with the BIFR. The said BIFR has appointed IDBI as operating Agency for preparing a scheme for the revival of the petitioner company. The IDBI had also requested the respondent No. 2 for early settlement of the petitioners' claim. In the connected writ proceeding the petitioners have prayed for issuance of a Writ of Mandamus commanding the respondents No.2 and 3 to give effect to the Survey Report of the Joint Surveyors made to the respondent No.2 and to release the amount in favour of the petitioners assessed and/or recommended or payable therein and a further Writ of Certiorari has been prayed for with a view for transmission relating to records of the proceedings for the adjudication of the pending controversy. There has been further directions sought for release of the amount under the Insurance Policy to the petitioners in respect of their claim and to release consequential loss and damages for the respondents Nos.2 and 3 suffered by the petitioner company due to payment of loss in time.

(3.) At the instances of the court the interim Survey Report of the Joint Surveyors was placed before this court. As per the said interim report the probable cause of the fire was attributed by the insurer to electrical short-circuit and no evidence was found by the Surveyors of any malicious act. It appears from the report of the Fire Brigade that the same is located it Kharagpur Fire Station and in view of distance involved and paucity of safety measures to tackle the problem of fire in or around area of Jhargram, the same could not be controlled easily, as a result of which lot of time was caused to be wasted as a result of which fire was allowed to spread over. As per column 13.4 in the Interim Report, the stock of raw materials as per books and records just before fire was assessed at Rs.4,98,78,214 It has been further observed in column 13.4 of the said report that in view of explanation offered being assessed with physical verification of inventory conducted by M/s. A.C. Dutta & Company, Cost Accountants on 6.11.92 and on examination of records, stock holdings, the Surveyors accepted the same. As per concluding recommendations of the interim report, there was a direction given by way of recommendation for making an ad-hoc payment of 50% of the total loss which was quantified and the same comes to round about Rs. 1,72,56,550/- sometime on 9.8.93. Since then no effect has been given to the recommendations contained in the interim report given by the Surveyors. It is salient to mention that the efficacy of publication of interim report rotates round recommendations of interim payment on ad hoc basis expeditiously and if the same is not given effect to, the entire exercise may not only become illusory but it may pale into insignificance. Thereafter the final report saw light of the day as submitted by the Joint Surveyors sometime in the month of September, 1994. As per the hint of the arguments of Mr. Pal, appearing on behalf of the contesting respondent namely, the Insurance Company, the said interim report have merged with the final report and Mr. Pal has submitted that in terms of the same in the connected writ petition the petitioners have prayed for giving effect to the said final report. In the said context Mr. Pal has taken pains to place the salient portions of the final survey report and particularly a summary portion of the same. From the resume of the summary as contained in clause 17.00 of the Final Survey Report, it appears that the Surveyors' are convinced about the authenticity of the fire and loss of raw materials and Godown Shed. As per opinion of the Surveyors even in the Final Report there was reiteration of the opinion contained in the Interim Report that the probable cause of fire may be attributed to electrical short-circuit or from thrown away of Bidis and Cigarettes. Even Fire Brigade could not disclose the cause of the accident in terms of precision and the Police Report tends to suggest that the fire in question was accidental in nature. Mr. Pal in no unambiguous terms has assailed the effect of the Joint Surveyors' report and he has also submitted that in view of the observations made in the relevant paragraphs conclusion in column 18.0 of Final Report by the Joint Surveyors though a tentative assessment has been made as to the extent of loss in terms of material index but in view of the other pertinent observations contained therein the same was left open to the discretion of the under-writer. In the wake of the conclusion of the said report Mr. Pal has submitted while appearing on behalf of the Insurance Company that if any effect is to be given to the said report, the same is required to be relegated to the discretion of the under-writer and allowed that no further effect can be given. This court is made to wonder about the efficacy of duplication of reports at interim stage and final stage where no effect of the same can be given and in the background of the same it may be rated as exercise on paper work having no tangible results. The entire claim appears from the submission of Mr. Pal is left in the large. According to Mr. Pal, no effect can be given to the said final report. This court has given its anxious considerations to the submissions of Mr. Pal and if discretion is left to the under-writers then the same could not be allowed to be clouded by certain observation and it becomes irreconcilable in the wake of such observation the recommendations made in terms of remedy figures about the losses to be reimbursed to be insurer. The final report and the conclusion seems to be bristled with the inherent element of intrinsic direction as a result of which it can be deciphered that there is only procedural compliance without any effective or tangible results given to the party. As per submissions of Mr. Pal, if no credence can be given to the Final Report given by the insurer in view of some of the observations made in the concluding portions of the report that the Surveyors have strong observations about genuineness of the purchase and some reservation was expressed about the stock pile of raw materials as alleged in terms of the record and even the same has been dubbed as unjudicious this court is not oblivious about the fact of the submissions of Mr. Pal about the efficacy of the Final Report submitted by Joint Surveyors appointed by the Insurance Company. In the background of the entire gamut of facts emanating from the storehouse of record this court is required to salvage the main crux of the controversy and it is required to deal with specific submissions made by the respective parties with regard to different salient points on law involved in the subject.