CHATAK COLD STORAGE Vs. NATIONAL INSURANCE COMPANY LTD

JUDGEMENT

(1.) The Complainant M/s. Chatak Cold Storage has a cold storage where potatoes belonging to farmers are stored. The complainant took D.O.S. (Deterioration of Stocks) Insurance Policy from 15.4.1996 to 14.11.1996 with insurance coverage to the extent of Rs. 69,00,000. According to the complainant, due to failure and break down of ceiling fans and other mechanical defects, the stock of potatoes kept in cool chamber No. 4 of the cold storage started deteriorating/rotting which was noticed during inspection on 1.6.1996. About 6,000 bags of potatoes were removed; but due to carbondioxide and other gases generated on account of failure of ceiling fans, the entire stock of potatoes stocked in Chamber No. 4 deteriorated beyond redemption by 18.6.1996. The complainant requested for a survey on 18.6.1996 by writing a letter to the OP. The complainant filed claim for Rs. 27,00,000. It has been submitted by the complainant that the break down of machinery i.e. compressor and ceiling fans was admitted by the OP and claim amounts of Rs. 9,050 and Rs. 9,742respectively were settled by the Insurance Company. The Insurance Company had appointed Surveyor-M/s. Mehta and Padamasee Surveyors Pvt. Ltd. According to the complainant, the OP kept on delaying the payment of compensation as a result of which, legal notice dated 14.6.1998 was given. According to the complainant, the temperature in the cooling Chamber No. 4 had been properly maintained throughout the loading and even after loading was completed. The case of the complainant further is that despite break down of compressor on 14.5.1996, which was repaired on 18.5.1996, the complainant managed to maintain normal temperature till 28.5.1996 when Compressor No. 2 had stopped. During the inspection on 1.6.1996, the temperature was found to be above normal due to major break down of 9" x 9" compressor. Subsequently, there was breakdown of 51 ceiling fans on 3.6.1996 on account of which, the stock of potatoes started deteriorating and in spite of all efforts made to minimize the loss, entire stock of potatoes deteriorated beyond redemption. The complainant claimed to have had a proper licence to run the cold storage vis-a-vis cooling Chamber No. 4.

(2.) The case of the OP is that pre-acceptance inspection was carried out and risk for Chamber Nos. 1, 2 and 3 was recommended to be covered. The pre-inspection report specifically stated that Chamber No. 4 was under trial and, therefore, not recommended for risk insurance and the said Chamber No. 4 could be recommended only after re-inspection was carried out. According to the OP, the complainant informed of the matter only on 18.5.1996 and there was violation of Condition No. 4 attached to the policy, since neither immediate notice was given, nor reasonable precautions were taken to minimize the loss/damage. The OP has pointed out that there had been 2 instances of machinery breakdown. The first instance was break down of 9" x 9" compressor on 14.5.1996, which was repaired and put back in operation on 18.5.1996. However, on analyzing the temperature chart it was observed that temperature in Chamber No. 4 before breakdown was 41 F from 7.5.1996 and had remained 41 F upto 18.5.1996 i.e. restoration of compressor and thereafter continued at 41 F upto 20.5.1996.

(3.) The second instance for machinery breakdown was reported on 3.6.1996 after the process of deterioration had already set in. In the second instance on 3.6.1996, 51 ceiling fans of Chamber No. 4 got burnt and in the temperature chart, the temperature in Chamber No. 4 had been rising since 28.5.1996. On 28.5.1996 itself the temperature had increased from 40 F to 45 F and thereafter, it had reached upto 471/2 and 47 F on 1st and 2nd June, 1996. On 3.6.1996, the temperature came down to 46 F and thereafter had remained around 46 F upto 7.6.1996. Therefore, it indicates that temperature rise was not caused by failure of ceiling fans as rising trend in the temperature started on 28.5.1996 i.e. much before breakdown in ceiling fans. According to the Surveyor, the records did not show immediate impact of machinery breakdown having affected the temperature of the chamber. It has been pointed out that there was no plaster on the outer side of the wall of the Chamber No. 4 which had direct effect on cooling system and non-maintenance of temperature levels. It is further pointed out that the cooling capacity of refrigeration plant was 84,000 qntls. in terms of potato storage which was sufficient only for Chamber Nos. 1, 2 and 3. The total stored quantity of potatoes, along with Chamber No. 4 was 1,16,266.40 qntls which was much beyond the cooling capacity of refrigeration plant.