M/S. Vantage Spinners Pvt Ltd And Two Others. Vs. The Union Of India And 6 Others Case Summary You Can Listen To on Caseon

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M/S. Vantage Spinners Pvt Ltd And Two Others. Vs. The Union Of India And 6 Others

Andhra Pradesh High Court W.P.No.24779 Of 2023

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HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

W.P.No.24779 of 2023

Between:

M/s. VANTAGE SPINNERS PVT LTD

having its Registered Office at R S NO 50 53/2

Hanuman Junction Road, Gollapalli Village

Nuzvid Mandal, Eluru District, Andhra Pradesh

Represented by its Director Smt NandamuriMeena Latha

and two others.

…Petitioners.

AND

The Union of India,

Rep. by its Principal Secretary,

Finance and Commerce,

Sastri Bhavan, New Delhi and 6 others

…Respondents

DATE OF JUDGMENT PRONOUNCED: 13.02.2025

SUBMITTED FOR APP ROVAL:

HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

1. Whether Reporters of Local newspapers Yes/No

may be allowed to see the Judgments?

2. Whether the copies of judgment may be Yes/No

marked to Law Reporters/Journals?

3. Whether Their Ladyship/Lordship wish to Yes/No

see the fair copy of the Judgment?

_____________________________________

JUSTICE VENKATESWARLU NIMMAGADDA

::2::

* HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

+ W.P.No.24779 of 2023

%13.02.2025

# M/S VANTAGE SPINNERS PVT LTD

having its Registered Office at R S NO 50 53/2

Hanuman Junction Road, Gollapalli Village

Nuzvid Mandal, Eluru District, Andhra Pradesh

Represented by its Director Smt NandamuriMeena Latha

and two others.

…Petitioners.

AND

$ The Union of India,

Rep. by its Principal Secretary,

Finance and Commerce,

Sastri Bhavan, New Delhi and 6 others .. Respondents

<GIST:

>HEAD NOTE:

! Counsel for petitioner: Sri Navdeep Singh, learned counsel

representing Sri A.S.K. Bhargav, learned

counsel for the Petitioners.

Counsel for respondents: 1) Sri Y.V. Anil Kumar, for Respondent No.1

2) Sri V. Srinivasa Rao, learned Standing

Counsel for Respondent Nos.4 and 5

? CASES REFERRED:

1. MANU/SC/0121/2023

2. 2024 INSC 164= MANU/SC/0161/2024

3. 2020 INSC 140= MANU/SC/0131/2020

4. 2024 INSC 296 = MANU/SC/0300/2024

5. 2023 INSC 1022 = MANU/SC/1262/2023

6. Appeal Suit No.645 of 2008

7. W.P(C) No.8916 of 2020

8. (2002) 2 SCC 1

9. 2001 (2) SCC 160,

::3::

APHC010479202023

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

(Special Original Jurisdiction)

[3329]

THURSDAY ,THE THIRTEENTH DAY OF FEBRUARY

TWO THOUSAND AND TWENTY FIVE

PRESENT

THE HONOURABLE SRI JUSTICE VENKATESWARLU

NIMMAGADDA

WRIT PETITION NO: 24779/2023

Between:

M/s Vantage Spinners Pvt Ltd and Others ...PETITIONER(S)

AND

The Union Of India and Others ...RESPONDENT(S)

Counsel for the Petitioner(S):

1. AKULA SRI KRISHNA SAI BHARGAV

Counsel for the Respondent(S):

1. SRINIVASA RAO VUTLA

2. Y V ANIL KUMAR (Central Government Counsel)

::4::

THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

WRIT PETITION NO: 24779/2023

This Court made the following:

ORDER:

The instant Writ Petition is filed under Article 226 of the

Constitution of India by the Petitioners for the following relief:

“..to issue a writ or direction more in the nature of or writ of

mandamus

a) By calling for the Investigation Report dated 10.07.2023

submitted by the Respondent No.7 and the Survey Report

dated 17.07.2023 submitted by the Respondent No.6 and

quash the same for being violative of the statutory provisions of

IRDA Act, Rules and Regulations;

b) Consequently, to set-aside the Repudiation Letter vide bearing

No.150098/NMCH/ /2023-24, dated 29.08.2023 issued by the

Respondent No.5;

c) Direct the Respondent No.4 and 5 to release the claim amount

as per the summary in terms of assessment of loss, as

submitted by the Petitioner No.1 along with interest from the

date of claim till realization;

d) Direct the Respondent No.4 and 5 to pay Rs.50,00,000/- as

damages to the Petitioners;

e) And/or to pass..”

2. The Petitioners’ case is that the Petitioner No.1 company was

founded by Petitioner Nos.2 and his wife i.e., Petitioner No.3 and they

established M/s. Vantage Spinners Private Limited at Hanuman

Junction Road, Gollapalli Village, Nuzivid Mandal, Eluru District with

the primary goal of generating employment opportunities for the

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local/rural community. Their commitment has resulted in over 2000

individuals being directly employed by the company, with an additional

6000 to 1000 people indirectly dependent on its operation. The

company’s operations also entail the consumption of 60 acres of

crops daily, demonstrating their significant support to local cotton

farmers.

(a) The Petitioner company purchased the following three

insurance policies from the Respondent Company which covered

building, transformer, electric installation, plant and machinery, stocks,

furniture & fixtures, gross profits etc.,

S.No.

Police

details

Police No. Period Coverage

1. Policy No.1 1507001121P110888335 (SFSP)

22.01.2022

21.01.2023

Plant & Machinery Rs.49,00,00,000.00

Transformer Rs. 30,00,000.00

Building Rs. 5,00,00,000.00

Electric Instl. Rs. 30,00,000.00

Stocks Rs. 5,00,00,000.00

2. Policy No.2 1507001121P108800837 (LOP)

29.11.2021

28.11.2022

Gross Profit Rs.12,00,00,000.00

3. Police No.3 1507001121P106752083(LUS)

13.10.2021

12.10.2022

Plant & Machinery Rs.24,50,00,000.00

Transformer Rs. 30,00,000.00

Building Rs. 5,00,00,000.00

Fittings * Fixtures Rs. 1,20,0,000.00

Stocks Rs. 19,00,00,000.00

(b) While things stood thus, on 04.04.2022 to the unfortunate of

the Petitioner fire occurred accidentally in the factory premises of the

Petitioner company resulting a major portion of the factory premises

causing huge loss to the Petitioner company. The Petitioner company

has two manufacturing units – Spinning and Opened Unit with

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galvalume sheet roofing in the premises. The incident occurred in

storage godown commonly used by both the units. Both units used to

store their stocks within the four walls of the affected common

warehouse/godowns. Since the stocks of OE unit (Unit-II) were also

affected, the policy No. 1507001121P106752083 (LUS) covering its

various assets for a total sum insured of Rs.50 Cores which includes

stocks for a sum insured of Rs.19 Crores was also operative for the

coverage of the subjected claim.

and examined the reports of the fire department officers RFSL,

Vijayawada and CFSL, Hyderabad dated 28.10.2022 and came to

conclusion that the fire was caused accidentally and there was no foul

play on the part of anyone in causing the fire. Respondent No.7

carried out the investigation regarding the cause of fire at the instance

of the Surveyor at the factory premises. They were appointed

contrary to the guidelines of Insurance Regulatory and Development

Authority of India (for short “IRDA”) for Forensic Investigation of the

incident. Respondent No.7 made a report dated 10.07.2023 stating

that arson was the cause of fire and the said report has not been

provided to the Petitioner-company till date by the Respondent

Insurance Company. Respondent Insurance Company after receipt of

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intimation of fire in factory premises appointed Respondent No.6 and

Respondent No.6 visited the factory premises and enquired about the

damages due to fire and submitted report on 17.07.2023 and opined

that arson was the possible cause of fire. Respondent No.5 vide its

letter dated 29.08.2023 intimated the Petitioner company about the

repudiation of the claim.

(d) In spite of repeated reminders to the Respondent Insurance

Company, neither provided report dated 10.07.2023 of Respondent

No.7 nor considered representation of the Petitioner company. The

Petitioner company prepared a summary showing

observations/discrepancies in Surveyor’s report dated 17.07.2023.

Hence, aggrieved by the repudiation letter issued by Respondent

No.5, the Petitioners preferred present Writ Petition.

3. Respondent Nos.3 and 4 filed counter and contending thus:

(a) As per the Final Survey Report under UBLUS Policy, Open

Ended Unit-II was not affected by the incident and production was

ongoing. The Respondent Insurance Company appointed

Surveyor/Loss Assessor and conducted his investigation and

submitted his detailed report dated 17.07.2023, which was furnished

to the Petitioner. Basing on the above Surveyor Report, dt:

17.07.2023, the claim was repudiated.

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(b) As per the Forensic Analysis Report of CSIR -IICT,

Hyderabad, the fire accident occurred due to Hydro Carbons and

Extraneous Accelerants are found in the samples. Therefore, it is not

an accidental fire, and it is a willful act for wrong gain. As per the

Final Survey Report dated 17.07.2023 and the Fire Investigation

Report, dt: 10.07.2023 the Petitioners’ loan account with different

banks were declared as NPA.

Fire Investigation Report dated 10.07.2023, CBI has filed a case

against the Petitioner, Insured and his Directors. The Final Survey

Report dated 17.07.2023 and the Fire Investigation Report dated

10.07.2023, reveal that an Insolvency Petition bearing

No.(IB)55/9/S/AMR/2020 was filed by M/s The Cotton Corporation of

India Limited against the Petitioner, the insured under the provisions

of the Section 9 of the Insolvency & Bankruptcy Code, 2016. The said

Petition was admitted by the NCLT Bench, Amaravati vide its orders

dated 05.04.2022, which is pending under an appeal before the

Hon’ble Appellate Authority (NCLAT), Chennai Bench, vide Company

Appeal (AT)(CH)(INS) NO.129 of 2022. The order dated 05.04.2022

passed by the NCLT is presently stayed as on date by the Hon’ble

Appellate Authority’s Order dated 27.04.2022.

::9::

(d) As per the Survey and Investigation Report, the enquiries

and information gathered, reveal that the Petitioners, the insured has

long outstanding balances i.e., Rs.35 Crores to Electricity Department,

Rs.1.89 Cores under the head of MAT Credit, Rs.2.98 Crores under

Advances against purchases and Rs.3.64 Crores under Interest

Subsidy receivable.

(e) As per the survey report, the raw material godown was

completely damaged and the office building was partially damaged

due to fire. However, details of stock which was damaged was never

provided to the Surveyor as mentioned in the Survey Report. As per

the survey report, the fire has not travelled to the process block (due

to separation wall and firefighting efforts). Furthermore, there was no

evidence of fire, smoke, or soot affecting the spinning process unit.

(f) The Survey Report further observes that even if the stocks in

process were to be affected by fire and resultant heat, these can be

reused by reprocessing and selling them at a discounted rate if there

are any variations in required quality after such reprocessing.

(g) The Petitioner has not provided any plausible explanation of

how exactly the incident occurred. The burden of proof was on the

Petitioner to establish that the incident was a case of accidental fire

through an irrefutable and undeniable evidence Mere Occurrence of

::10::

the incident itself does not mean it is accidental in nature. Hence

there is no direct evidence of the cause of the fire being accidental.

Besides the finding of the Investigator and the Surveyor questioning

the veracity of the cause of fire, it is on record that a letter signed by

many villagers near to Insured’s premises was received by Insurers

on 29.12.2022 alleging that Insured is trying to make fraudulent claim.

(h) Relying upon the facts, events, circumstances, findings of

the survey report together with the fire investigation report,

documentary evidence adduced by Petitioner company as described

above, the Breach of General Condition No.6(1), General Condition

No.7, General Condition No.8 and Stock Warranty Clause shall

severally and jointly operate, override and nullify the coverage under

the Insurance Policy. Therefore, the subject claim filed by the

Petitioner, the insured is inadmissible and untenable. Hence, the Writ

Petition is devoid of merits and same may be dismissed.

4. Petitioners filed reply affidavit denying the allegations made in

the counter affidavit and contending thus:

(a) The counter affidavit does not contain any valid or

substantial grounds for kind consideration of this Hon’ble Court much

less a deliberate articulation of presumptions and surmises for the

sole purpose of denying relief(s) to the Petitioners.

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(b) The averments and contents of the Affidavit filed by the

Respondent company state that the forensic analysis report of CSIR-

IICT, Hyderabad opine that the fire accident has occurred due to

Hydro-Carbons and Extraneous Accelerants found in the samples and

therefore the event was not accidental in nature; that the Final Survey

Repot dt: 17.07.2023 and the Fire Investigation Report dated

10.07.2023 declare that the Petitioners’ loan accounts were found to

be declared as NPA, entailing transfer of loan accounts to Stressed

Asset Management Branch for further entrustment of forensic audit for

period between 01.01.2016 to 31.03.2020; that the forensic audit has

highlighted non-cooperation of borrower, lack of clarification,

fabrication of documents and manipulation of books of accounts,

higher drawing power, breach of trust, diversion of funds, transactions

without receipts and sanctioned terms and differences between sales

and purchases; that the final survey report dated 17.07.2023 and the

fire investigation report dated 10.07.2023 state that CBI has filed case

against the Petitioners, Insured and the Directors thereof under

Section 120B r/w 420, 468, 471 IPC and 13(2) r/w 12(1) of PC Act,

1988 and multiple FIRs have been registered against the Petitioners;

that Insolvency Petition is pending against the Petitioners and as per

Survey and Investigation Report, the Petitioners have outstanding

balances of Rs.35 Crores to the Electricity Department, Rs.1.89

::12::

Crores to head of MAT Credit, Rs.2.98 Crores to Advances against

purchases and Rs.3.64 Crores to Interest Subsidy receivable; that the

Final Survey Report dated 17.07.2023 state that fire/smoke was

noticed in raw material storage godown near spinning unit entailing

complete damage and partial damage to office building, allegedly the

fire has not spread to the process block and there was no conclusive

evidence thereof, that the stocks affected by the fire can be re-used

by reprocessing and selling at a discounted rate, that the report of the

police which is not a technical expert or does not possess scientific or

technical capabilities is replete with infirmities, neither convincing nor

conclusive and does not withstand the test of strict proof with regard

to case of fire; that the cause of loss cannot be assessed in isolation

of the terms and conditions much less must be assessed within

contractual framework of the policy; that the facts, events

circumstances, findings of the survey report together with fire

investigation report, documentary evidence read with policy schedule

terms and conditions conclude that the Petitioners have failed to

provide sufficient documentary proof or explanation of occurrence of

incident in a time-bound manner for accurate assessment and have

breached the terms and conditions of the Insurance Policy and thus,

the claim filed by the Petitioners is inadmissible and untenable due to

ulterior motive and fraudulent and false declarations to defraud the

::13::

Insurer and hence was repudiated; that the Writ Petitioners are guilty

of malpractices and unlawful activities with a motive of wrongful gain

and the villagers have preferred a complaint in lieu of the same stating

that the alleged fire has been created by the Respondent for unlawful

gain and the relief(s) sought for by the Writ Petitioners is not

maintainable under Article 226 of the Constitution of India; that the

Writ Petition consists of disputed questions of facts and the Petitioner

has approached this Hon’ble Court with unclean hands.

and comply with the IRDA regulations. The impugned reports were

not submitted within stipulated time and are stereotypical and suffer

from manipulations and tutoring. Further, the Respondent Company

has misused its superior power and privileged position and has

arbitrarily deprived the Petitioner Company of its Fair and Justified

opportunity of being heard. Thus, the Report arrived at by the

Respondent Company is undeniably preconceived, prejudiced, unfair,

unreasonable and unprofessional. It is denied that the fire was not

accidental as alleged by the Respondent Company. The Police

authorities as well as the fire officials along with State Forensic

Science Laboratory have visited the site and taken samples and have

authoritatively affirmed in their independent reports on 09.05.2022,

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i.e., after 35 days, that the cause of fire of incident dated 04.04.2022

was not willful act on part of the Petitioner Company.

(d) The Surveyor has referred to various irrelevant matters in

his report which has no nexus to the loss occurred to the Petitioner

Company during the operation of Insurance Policy for the sole

purpose of denying their indemnification of said loss. Respondent

Company clearly prove that the loss occurred at site due to accidental

fire entailing the Respondent Company’s liability. Moreover, the

Surveyor has comfortably assessed the loss caused towards plant

and machinery for Rs.11,66,725/- and raw materials purchased along

with large quantity of stocks being damaged. Thus, the irrelevant

reasoning given by the Respondent Company without any iota of

evidence or basis for the purpose of defeating the Insurance Claim of

Petitioner.

(e) The bitter truth of the issue is that the report of

inexperienced and unqualified investigator cannot challenge and / or

replace the findings of the independent Government authorities like

police and FSL authorities. It is very much on record that these

independent authorities have clearly affirmed that the loss is purely

accidental without any iota of foul-play. The fact of the case is the

::15::

report of the Police is based upon the FSL reports, which have clearly

concluded in favour of the Petitioner Company.

(f) The Respondents opinion is bereft of any approvals or

procedure contemplated under IRDA Rules and Regulations and

consideration of Police report which conclusively state that the mishap

was cause due to accidental fire in the premises of Petitioner

Company. Hence, the Writ Petition is liable to be allowed.

5. Learned counsel for the Petitioners further asserts that the

Petitioners’ company has been purchasing insurance policies from the

Respondent Company continuously since 2009. Accordingly, a policy

also purchased for the period from 22.01.2022 to 21.01.2023 for a

total value of Rs.59,60,000/-. Therefore, the Petitioners’ company was

covered under the insurance policy for the said period. The subject

fire accident and loss of property was happened on 03.04.2022 which

is within the valid period of coverage under the insurance policy. The

fire accident was taken place in the premises of the Petitioner’s

company on 03.04.2022 at mid-night. But the complaint was lodged

by the Managing Director on 04.04.2022 at 09:00 PM. The said fire

accident was confirmed by the Inspector of Police vide his terms as it

is a clear case of the accidental fire and hence the Investigating

Officer (IO) is advised to refer the case. More so, the District

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Superintendent of Police, Eluru District admitted and issued a

certificate dated 08.12.2022 by referring based on request of IO and

experts opinion from Centre Forensic Science Laboratory (CFSL),

Ramanthapur, Hyderabad, A.P Forensic Science Laboratories (FSL),

Mangalagiri and from other experts and from legal opinion from the

Deputy Director of prosecution there is nothing to suggest that the fire

which broke out is not an accidental fire. Accordingly, the IO is

permitted to refer the case as action dropped.

6. That the final survey report of the 6

Respondent describing

about the fire accident that the fire was reportedly brought under

control and no personnel were injured in this accident and raw-

material godown was completely damaged and office building is

partially damaged due to fire. It is further observed that the damaged

stock inclusive cotton bales were shifted and dumped at open yard in

the premises rapidly in the presence of Government Fire Department

Police while simultaneously fire fighting operation was on going and

90% of the fire affected warehouse was cleared by insured’s team

using tractors and debris were stored in open yard nearby.

7. It is further observed that the OE Spinning Unit i.e., 2

Unit is

not affected by the incidence and production was on going and finally

the report concluded that basing on preliminary information received

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from insured and pending clarification sought about, they estimated a

loss of Rs.27.50 Crores. Therefore, the survey report of the 6

Respondent clearly and categorically stated that the buildings were

damaged @ Rs.1.40 Crores, P&M @ Rs.1.60 Crores, Furniture and

fixtures @ Rs.0.50 Crores and Stocks @ Rs.24.00 Crores. Therefore

as per the survey report the 6

Respondent concludes about the said

incidence was a fire accident and to the extent of Rs.27.50 Crores and

damage / loss was caused to the Petitioners.

8. He further submits that the appointment of 7

Respondent by

the 5

Respondent as an Investigating Agency for investigation of

incidence and submitting report dated 10.07.2023 and the report of

the 6

Respondent dated 17.07.2023 are being violative of statutory

provisions of IRDA regulations as well rules made thereunder. He

further asserts that issuing impugned letter of repudiation dated

29.08.2023 by the 5

Respondent basing upon the investigation

report of the 7

Respondent and final report of the 6

Respondent is

contrary to the facts as certified by the Superintendent of Police dated

08.12.2022 and investigation report issued by the IO of Nuzivid Circle

dated 12.12.2022.

9. He further contends that the surveyor – 6

Respondent herein

having assessed the loss occurred on various counts as explained

::18::

above and its final report rejected the claim of the Petitioner company

ignoring its own assessment as well as police report is nothing but

contrary to the findings on its own report at preliminary stage. He

further submits that once the appointment of the 7

Respondent as

investigator who submitted his investigation report on 10.07.2023 is

contrary to the IRDA regulations. Therefore, the letter of repudiation

issued basing upon the said report is liable to be quashed.

To substantiate his claim learned counsel for the Petitioners

relied upon the rulings held by Hon’ble Apex Court in following cases:

(1) Karnavati Veneers Pvt Ltd., v. New India Assurance Company

Limited

(2) Thangam and another v. Navamani Ammal

(3) Canara Bank v. M/s United Indua Insurance Co Ltd

(4) Mahakali Sujatha v. Future General India Life Insurance Co., Ltd

(5) New India Assurance Co., Ltd., v. Mudit Roadways

(6) The New India Assurance Co. Ltd. v. Shri Naga Durga Silk

Reeling Industry [Telangana High Court]

(7) Mohit Kumar v. Divya Mahajan [High Court of Delhi]

10. Learned counsel for the Petitioners further submits that the

alternative remedy as contended by the Respondents i.e., the scheme

of Ombudsman which is having only pecuniary jurisdiction of Rs.30

lakhs or so and to approach Civil Court of Law by stating there are

MANU/SC/0121/2023

2024 INSC 164= MANU/SC/0161/2024

2020 INSC 140= MANU/SC/0131/2020

2024 INSC 296 = MANU/SC/0300/2024

2023 INSC 1022 = MANU/SC/1262/2023

Appeal Suit No.645 of 2008

W.P(C) No.8916 of 2020

::19::

disputed facts regarding cause of accident i.e., fire accident and

volume of the loss and regarding value of the loss occurred to the

Petitioner company is not tenable in view of principle laid down by the

Delhi High Court in Mohit Kumar v. Divya Mahajan (Supra 7).

11. He further asserts that the final survey report of the 6

respondent which is consisting of contradictory statements, due to

inexperienced and unqualified investigator who cannot challenge or

dislodge the findings of the independent Government Authorities like

Police and FSL Authorities which are clearly confirmed the loss is

caused purely an accidental without any ioto of doubt. In view of clear

and categorical report of the police authorities and State Forensic

Laboratory after having physical inspection as well as testing of

samples vide its report dated 09.05.2022, contra to that the 6

Respondent deliberately with malafide intention ignored the claim of

the Petitioner and did not act independently and submitted false and

misleading reports to favour the 5

Respondent.

12. On the other hand, learned counsel for Respondents submits

that in view of the forensic analysis report i.e., CSIR-IICT, Hyderabad

the fire accident was occurred due to Hydro Carbons and Extraneous

Accelerants are found in the samples. Therefore, it is not an

accidental fire and it is a willful act for wrongful gain. Therefore, the

::20::

claim of the Petitioner that the subject incidence is a fire accident

cannot be admitted. Apart from that, claiming the fire accident to the

extent of other premises especially the stock warehouse and the value

of the claim of the Petitioner on the guise of the fire accident is also

not an admitted by the Respondents since the core issues are in

dispute and the same cannot be resolved by way of extraordinary

jurisdiction under Article 226 of the Constitution of India. As such the

Writ Petition is not maintainable.

13. He further asserts that in view of final survey report dated

17.07.2023 and pursuant to the report of the 7

Respondent dated

10.07.2023, the subject incidence is not due to accidental fire and

same is due to Hydro Carbons and Extraneous Accelerants and the

Petitioner’s account was classified as “NPA” and CBI has filed a case

against the Petitioners U/s 120-B r/w 420, 468, 471 of IPC and 13(2)

r/w 13(1)(d) of PC Act, 1988 and other offences have been registered

and Insolvency Petition was pending against the Petitioners. Apart

from that, an outstanding of Rs.35 Crores to Electricity Department

and other dues to the statutory authorities and as per the survey

report the raw-material storage godown was completely damaged and

the accident occurred is due to fire smoke and the Petitioners caused

for fabrication of documents and manipulation of books of accounts in

::21::

claiming the compensation. Therefore, the Petitioner approached this

Court with unclean hands. On that sole ground itself the present Writ

Petition is liable to be dismissed.

14. He further contended that the Deputy Chief Inspector of

Factories as well as Deputy Electrical Engineer has specifically stated

that at stock godown there is no power and the alleging fire accidence

was not occurred due to electrical short circuit. But it may possible by

way of short circuit of fork lifter battery or due to pressure between the

cotton. It is a fact that Petitioner’s company parked Fork-Lifter in the

godown.

15. He further submits that in view of breach of general condition

No.8, the claim of the Petitioner cannot be considered under the policy

as the claims arising out of or in any respect of fraudulent or if any

false declaration be made or used in support thereof or if any

fraudulent means or devices are used by the Insured or any one

acting on his behalf to obtain any benefit under the policy and if the

loss or damage be occasioned by the willful act or with the connivance

of the Insured or dishonesty are specifically excluded from the purview

of the Policy.

16. He further submits that the claim of the Petitioner company is

inadmissible, untenable within the scope and purview of the terms and

::22::

conditions of the policy and also in view of the facts and

circumstances and due to findings of the final survey report dated

17.07.2023 and also investigating report dated 10.07.2023 and also

for clear breach of general condition Nos.6(1), 7 and 8. It is further

pleaded that the respondent company received complaints and

malpractices from the workers and villagers about the malpractices,

unlawful activities of the writ petitioner which indicates the petitioner is

trying for unlawful gain from the insurance company. Apart from that

in view of malpractices and unlawful activities and with motive of

wrongful gain the Petitioner is not entitled to invoke extraordinary

jurisdiction before this Hon’ble Court. As such the Writ Petition itself is

not maintainable.

17. He finally argued that in view of disputed questions of facts

arisen out of the affidavit as well as counter affidavit of the

Respondents, the present claim of the Petitioner cannot be decided

mere basing upon the affidavits and counter affidavits without

examining the persons concerned. Therefore, the Writ Petition is

devoid of merits and liable to be dismissed with costs. He relied upon

the rule laid down by Hon’ble Apex Court in Synco Industries v.

::23::

State Bank of Bikaner & Jaipur

and Life Insurance Corporation

Of India v. Smt.Asha Goel

18. Heard Sri Navdeep Singh, learned counsel representing Sri

A.S.K. S. Bhargav, learned counsel for the Petitioners and Sri Y.V.

Anil Kumar, learned Counsel for Respondent No.1 and Sri V.

Srinivasa Rao, learned Standing Counsel for Respondent Nos.4 and 5

and in view of submissions made by both the learned counsel and on

perusal of the material placed on record, to determine the issue this

Court intend to frame the following issues:

(1) In view of contended facts in dispute as claimed by

learned counsel for Respondents in the given facts

and circumstances whether the Writ Petition is

maintainable under Article 226 of the Constitution of

India or not?

(2) Whether the Petitioners herein approached this

Hon’ble Court with unclean hands or not ?

(3) As contended by learned Counsel for Respondents

the Petitioner is entitled to avail alternative remedy

either under the scheme of Ombudsman or by

approaching Court of Law ?

19. Point No.1: On perusal of the entire record filed in support of

the Writ Petitioner as well as counter affidavit after gone through the

pleadings made by learned counsel for the Petitioners as well as

(2002) 2 SCC 1

2001 (2) SCC 160,

::24::

learned Counsel for Respondents, the core issue i.e., the subject

incidence was occurred due to fire as an accident or it is other than

the accidental fire or it is a willful act for wrongful gain. To

substantiate the core issue, learned counsel for the Petitioners relied

upon the certificates issued by the governmental agencies i.e., District

Superintendent of Police and basing upon the IO /SHO(Local) report

dated 12.12.2022 and also in view of the report of APSFL, that the

said incident is an accidental incident caused due to fire as an

accident by which the petitioners suffered loss. Learned counsel for

the Petitioners also relied upon the preliminary findings and

observations of the survey report as is admitted there is a fire accident

and the petitioners and others are tried to rescue the property from

causing damage. Then learned counsel for the Petitioners argued

that the authenticity of the certificates and conclusions arrived by the

Governmental Agencies cannot be disbelieved or replaced in view of

the forensic analysis report of CSIR-IICT, Hyderabad which opined

that the fire accident was occurred due to the Hydro Carbons and

Extraneous Accelerants which were found in the samples and also

because of the investigation report of the 7

Respondent who was

appointed by the 5

Respondent and who submitted report after the

time prescribed under Regulation No.15 of IRDA Act and also basing

::25::

upon the report of the 6

Respondent and his final survey report

which report speaks so many contradictions and contrary statements.

20. Therefore, regarding core issue there may not be any dispute.

Therefore, the contention of the Petitioners that there could not be any

dispute regarding the core issue is not acceptable and untenable for

the reason the forensic analysis report of CSIR-IICT, Hyderabad

which concludes that it is other than fire accident since it is a pioneer

institution in respect of science and research. The observation in its

report that the said fire accident was occurred due to Hydro Carbons

and Extraneous Accelerants cannot be ruled out. The investigation

report as well as survey report of the 6

and 7

Respondents also

indicates the fire and smoke was noticed in the raw-material storage

godown. As such, the issue whether the subject loss or damage to

the Petitioners was caused by way of an incident of fire or by way of

willful act for wrongful gain to be decided only by conducting a

detailed enquiry but cannot be decided on perusal of the affidavit as

well as counter affidavit. The Petitioner to substantiate his contention

relied upon the judgment of Delhi High Court in Mohit Kumar v.

Divya Mahajan (Supra 7) which reads thus:

“25. It is clearly seen that in the instant case, there is no disputed

question of facts. What is to be considered is the import and extent of

the relevant clauses of the insurance policy. The Hon'ble Supreme

Court, time and again, has unequivocally held that the Constitution

::26::

does not place any fetter on exercise of the extraordinary jurisdiction.

Rather, it is left to the discretion of the High Courts. Therefore, it

cannot be laid down as a general proposition of law that in no case

the High Court can entertain a writ petition under Article 226 of the

Constitution to enforce a claim under a life insurance policy. The

determination of the question depends on consideration of several

factors i.e., whether a writ petitioner is merely attempting to enforce

his/her contractual rights or the case raises important questions of

law and constitutional issues, the nature of the dispute raised, the

nature of inquiry necessary for determination of the dispute etc. The

matters are required to be considered in view of the facts involved in

each case.

26. If the court finds that the insurer has illegally repudiated the claim

de hors the specific terms of the policy, the import of the decision in

the case of Asha Goel (supra) would mean that in such cases, the

writ petition would still be maintainable as it has been rightly relied

upon by this court in the case of Pavan Sachdeva (supra).”

(Emphasis Supplied)

21. On perusal of the judgment relied upon by learned counsel for

the Petitioners wherein the dispute therein is regarding relevant

clause of insurance policy to enforce the claim of the Petitioner under

the policy but the issue in the case in hand is squarely different from

the issue involved in the case stated supra. Therefore, the same is

not applicable. On the other hand the ratio rendered by Hon’ble Apex

Court in Life Insurance Corporation Of India v. Smt.Asha Goel

(Supra 9) which reads thus:

“10. Article 226 of the Constitution confers extra-ordinary jurisdiction

on the High Court to issue high prerogative writs for enforcement of

the fundamental rights or for any other purpose. It is wide and

expansive. The Constitution does not place any fetter on exercise of

the extra-ordinary jurisdiction. It is left to the discretion of the High

Court. Therefore it cannot be laid down as a general proposition of

law that in no case the High Court can entertain a writ petition under

Article 226 of the Constitution to enforce a claim under a life

::27::

insurance policy. It is neither possible nor proper to enumerate

exhaustively the circumstances in which such a claim can or cannot

be enforced by filing a writ petition. The determination of the question

depends on consideration of several factors, like, whether a writ

petitioner is merely attempting to enforce his/her contractual rights or

the case raises important questions of law and constitutional issues;

the nature of the dispute raised; the nature of inquiry necessary for

determination of the dispute etc. The matter is to be considered in

the facts and circumstances of each case. While the jurisdiction of

the High Court to entertain a writ petition under Article 226 of the

Constitution cannot be denied altogether, Courts must bear in mind

the self-imposed restriction consistently followed by High Courts all

these years after the constitutional power came into existence in not

entertaining writ petitions filed for enforcement of purely contractual

rights and obligations which involve disputed questions of facts. The

Courts have consistently taken the view that in a case where for

determination of the dispute raised it is necessary to inquire into facts

for determination of which it may become necessary to record oral

evidence a proceeding under Article 226 of the Constitution is not the

appropriate forum. The position is also well settled that if the contract

entered between the parties provide an alternate forum for resolution

of disputes arising from the contract, then the parties should

approach the forum agreed by them and the High Court in writ

jurisdiction should not permit them to by-pass the agreed forum of

dispute resolution. At the cost of repetition it may be stated that in the

above discussions we have only indicated some of the

circumstances in which the High Courts have declined to entertain

petitions filed under Article 226 of the Constitution for enforcement of

contractual rights and obligation; the discussions are not intended to

be exhaustive. This Court from time to time disapproved of a High

Court entertaining a petition under Article 226 of the Constitution in

matters of enforcement of contractual rights and obligation

particularly where the claim by one party is contested by the other

and adjudication of the dispute requires inquiry into facts. We may

notice a few such cases; Mohammed Hanif vs. The State of Assam

(1969) 2 SCC 782; Banchhanidhi Rath vs. The State of Orissa and

ors. (1972) 4 SCC 781; Smt. Rukmanibai Gupta vs. Collector,

Jabalpur and others (1980 (4) SCC 556;Food Corporation of India

and others vs. Jagannath Dutta and others (1993 (Suppl.) (3) SCC

635; and State of H.P. vs. Raja Mahendra Pal and others (1999) 4

SCC 43.

11. The position that emerges from the discussions in the decided

cases is that ordinarily the High Court should not entertain a writ

::28::

petition filed under Article 226 of the Constitution for mere

enforcement of a claim under a contract of insurance. Where an

insurer has repudiated the claim, in case such a writ petition is filed

the High Court has to consider the facts and circumstances of the

case, the nature of the dispute raised and the nature of the inquiry

necessary to be made for determination of the questions raised and

other relevant factors before taking a decision whether it should

entertain the writ petition or reject it as not maintainable. It has also

to be kept in mind that in case an insured or nominee of the

deceased insured is refused relief merely on the ground that the

claim relates to contractual rights and obligations and he/she is

driven to a long drawn litigation in the civil court it will cause serious

prejudice to the claimant/other beneficiaries of the policy. The pros

and cons of the matter in the context of the fact situation of the case

should be carefully weighed and appropriate decision should be

taken. In a case where claim by an insured or a nominee is

repudiated raising a serious dispute and the Court finds the dispute

to be a s bona fide one which requires oral and documentary

evidence for its determination then the appropriate remedy is a civil

suit and not a writ petition under Article 226 of the Constitution.

Similarly, where a plea of fraud is pleaded by the insurer and on

examination is found prima facie to have merit and oral and

documentary evidence may become necessary for determination of

the issue raised then a writ petition is not an appropriate remedy.”

(Emphasis Supplied)

22. On perusal of the rulings relied upon by learned counsel for the

Petitioners and learned counsel for Respondents, it is observed that

the pros and cons as well as fact situation of the case in hand this

Court should be carefully weighed and proper decision should be

taken. In the present case the claim by insured/Petitioners is

repudiated by the Respondents on the ground that it is a willful act for

wrongful gain is a serious dispute one which requires oral and

documentary evidence for its determination, then appropriate remedy

is before court of Law or by way of invoking arbitration proceedings

::29::

with the consent of both the parties and certainly not out of

extraordinary jurisdiction by way of Writ Petition under Article 226 of

the Constitution of India. Similarly, the case in hand the

Respondents also made a plea of fraud on the part of the

Insured/Petitioners to found the prima facie must requires oral and

documentary evidence to determine the issue. Then the Writ Petition

is not appropriate remedy. Therefore, in view of the above

discussion, it is held the Point No.1 is held against the Petitioners

and in favour of the Respondents.

23. Point No.2: As far as 2

issue is concerned, whether the

Petitioners is approached this Hon’ble Court with unclean hands or

not, on perusal of the submissions made by the Petitioners as well as

Respondents the Petitioners herein filed this Writ Petition challenging

the final survey report of the 6

Respondent dated 17.07.2022 and

also final report of 7

Respondent dated 10.07.2023 and also

contending that the reports of the 7

Respondent is contrary to the

Clause-15 of IRDA Regulations, 2007 which stated as under:

(2) The insurer/surveyor shall within 7 days of the claim intimation,

inform the insured / claimant of the essential documents and other

requirements that the claimant should submit in support of the claim.

Where documents are available in public domain or with a public

authority, the surveyor / insurer shall obtain them.

(3) The surveyor shall start the survey immediately unless there is a

contingency that delays immediate survey, in any case within 48

hours of his appointment. Interim report of the physical details of the

::30::

loss shall be recorded and uploaded / forwarded to the insurer within

the shortest time but not later than 15 days from the date of first visit

of the surveyor. A copy of the interim report shall be furnished by the

insurer to the insured / claimant, if he so desires.

(4) Where the insured is unable to furnish all the particulars required

by the surveyor or where the surveyor does not receive the full

cooperation of the insured, the insurer or the surveyor, as the case

may be, shall inform in writing to the insured under information to the

insurer about the consequent delay that may result in the

assessment of the claim. It shall be the duty equally of the insurer

and the surveyor to follow up with the insured for pending information

/ documents guiding the insured with regard to submissions to be

made. The insurer and / or surveyor shall not call for any information

/ document that is not relevant for the claim.

(5) (i) The surveyor shall subject to sub-regulation 4 above, submit

his final report to the insurer within 30 days of his appointment. A

copy of the surveyor’s report shall be furnished by the insurer to the

insured / claimant, if he so desires. Notwithstanding anything

mentioned herein, in case of claims made in respect of commercial

and large risks the surveyor shall submit the final report to the insurer

within 90 days of his appointment. However, such claims shall be

settled by the insurer within 30 days of receipt of final survey report

and / or the last relevant and necessary document as the case may

be.

(ii) Where special circumstances exist in respect of a claim either

due to its special / complicated nature, or due to difficulties

associated with replacement/reinstatement, the surveyor shall, seek

an extension from insurer for submission of his report. In such an

event, the insurer shall give the status to the insured / claimant

fortnightly wherever warranted. The insurer may make provisional /

on account payment based on the admitted claim liability.”

(Emphasis Supplied)

24. On perusal of the Clause-15, the survey should be completed

as per the time line fixed under the Regulation No.15 and should be

settled within 30 days but contrary to that the 7

respondent was

appointed as Investigator after 35 days of the incidence. Therefore,

the final report of the 7

Respondent dated 10.07.2023 is not valid.

As such the consequential letter of repudiation of the 5

Respondent

::31::

is also contrary to the Clause-15. Apart from that the Petitioners

substantiating their claim basing upon the certificates and

conclusions rendered by the Government Agencies i.e., certificate

issued by the Superintendent of Police dated 08.12.2022 and local

Investigating Officer dated 12.12.2022 and also basing upon the

APSFL report which are confirmed the said incident is an accidental

fire. More so, there is no submission on the part of the Respondents

that the certificate issued by the Governmental Agencies either

forged or fabricated. The other contention of the Respondents that

the Petitioner is having alternative remedy under the scheme of

Ombudsman is also not applicable since the jurisdiction of the

Ombudsman is only against the claims which are in lakhs i.e., upto

30 lakhs but the present claim of the Petitioners is more than a Crore.

Therefore, invocation of jurisdiction of this Court under Article 226 of

the Constitution of India cannot be canvassed with unclean hands.

The other contention of the Respondents that alleged fire accident is

a willful act for wrongful gain and Union Bank of India filed a case

against the Petitioners with CBI and CBI also filed a FIR was

registered on 27.12.2022 and other multiple FIRs also registered

against the Petitioners and the final survey report also indicating

about the malpractices, fabrication of documents, manipulation of

books of accounts and false declarations. On the guise of these

::32::

allegations, learned counsel for Respondents contended that the

Petitioner approached this Court with unclean hands is not

reasonable and untenable and liable to be rejected. The said

allegations should be proved at Court of law only. Mere reports by 6

and 7

Respondents cannot be concluded that the Petitioner caused

these offences till final verdict by Court of law and as such it cannot

be said, it approached this Court with unclean hands. The fact

remains the Petitioner is substantiated his claim pursuant to the

certificate submitted by the Governmental Agencies as stated supra,

there is no allegation that the said certificate was either manipulated

or fabricated. In the absence of the same it cannot be said that the

Petitioners approached with unclean hands. Therefore, the issue

decided in favour of the Petitioners.

25. Point No.3: As far as issue No.3 is concerned, there are

disputes regarding the issue whether the Petitioners are entitled for

the claim or not. As contended by learned counsel for Respondents,

in view of Forensic Analysis Report of CSIR-IICT, Hyderabad, which

is a pioneer institution in research, the said incidence is not an

accidental fire it is occurred due to Hydro Carbons and Extraneous

Accelerants which were found in the samples. Therefore, the

determination of the claim by the Petitioners is in dispute. Further,

::33::

there are numerous allegations by the Respondents against the

Petitioners and the said allegations are substantiated by way of

substantive evidence i.e., registration of FIR by CBI at the behest of

Union Bank of India and other multiple FIRs and filing of Insolvency

Petition against the Petitioners before NCLT regarding outstanding

claims nearly more than 30 Crores and due to findings of the final

survey report of the 6

Respondent and investigation report of the 7

Respondent, where they found about the malpractices, fabrication of

documents, manipulation of books of accounts and false

declarations.

26. All these facts and allegations can be determined with the

assistance of oral and documentary evidence only. Certainly it

cannot be by way of simple affidavit and counter affidavits under

extraordinary jurisdiction of this Court, for which learned counsel for

Respondents relied upon the rule laid down by Hon’ble Apex Court in

Synco Industries v. State Bank of Bikaner & Jaipur (Supra 8)

which reads thus:

“Given the nature of the claim in the complaint and the prayer for damages

in the sum of rupees fifteen crores and for an additional sum of rupees

sixty lakhs for covering the cost of travelling and other expenses incurred

by the appellant, it is obvious that very detailed evidence would have to be

led, both to prove the claim and thereafter to prove the damages and

expenses. It is, therefore, in any event, not an appropriate case to be

heard and disposed of in a summary fashion. The National Commission

was right in giving to the appellant liberty to move the civil court. This is an

::34::

appropriate claim for a civil court to decide and, obviously, was not filed

before a civil court to start with because, before the consumer forum, any

figure in the damages can be claimed without having to pay the court fees.

This, in that sense, is an abuse of the process of the consumer forum.”

(Emphasis Supplied)

Learned counsel for Respondents relied upon the ratio

rendered by Hon’ble Apex Court in Life Insurance Corporation Of

India v. Smt.Asha Goel (Supra 9) which reads thus: