Case BriefsSupreme Court

Supreme Court: In the 2006 Meerut fire case, the bench of Hemant Gupta and V. Ramasubramanian, JJ has held the Organizers responsible for the incident and not the Contractor as the Contractor was only responsible for executing work as assigned to him by the Organizers. It observed,

“The contractor has worked for the Organizers and not for the victims. Hence, the Organizers alone are responsible to protect the life and liberty of the victims.”

The court was dealing with the writ petition preferred by the victims of the fire tragedy which occurred on 10.4.2006, the last day of the India Brand Consumer Show organized at Victoria Park, Meerut, Uttar Pradesh by Mrinal Events and Expositions. The incident claimed the lives of 65 persons and left 161 or more with burn injuries.

The State of Uttar Pradesh had appointed Justice O.P. Garg (Retired) in terms of provisions of the Commission of Inquiry Act, 19521 vide order dated 2.6.2006 but the report submitted by this Commission was not found to be sustainable in Sanjay Gupta v. State of Uttar Pradesh, (2015) 5 SCC 283. The Court then appointed Justice S.B. Sinha (Retired) as a one-man Commission.

Observations

Holding that the report of the one-man Commission does not suffer from any infirmity so as to absolve the Organizers from their responsibility of organizing the exhibition, the Court made the following observations:

  • The victims or their families visited exhibition on the invitation of the Organizers and not that of the Contractor. The Organizers were supposed to make arrangements for putting up the exhibition hall, providing electricity and water and also the food stalls for the facility of the victims/visitors. They cannot now take shelter on the ground that the Contractor who was given work order was an independent contractor and the victims should seek remedy from him.
  • The Court Commissioner found that the contract with the Contractor was neither a turn-key project nor was he appointed as an independent contractor. Therefore, the argument of the Organizers that they are not liable for the acts of omission or commission on the part of the contractor was rejected by the Commission. Even otherwise, the Organizers were vicariously liable for the alleged acts of negligence on the part of the contractor. The Contractor was only responsible for executing work as assigned to him by the Organizers.
  • The ticket proceeds were collected by the Organizers. It is the responsibility of the Organizers, having collected the entry fee, to ensure the safety and well-being of the visitors. The Organizers have failed in that duty causing loss of life of the innocent victims who came to see the exhibition, which was purely a commercial event with an intention to earn profit by the organizers.
  • The argument that the Court Commissioner has not given any conclusive finding on the cause of the fire is not relevant in determining the civil liability. The maxim res ipsa loquitur would be applicable as organizing an exhibition of such substantial magnitude without proper and adequate safety factors which may endanger the life of the visitors, has been rightly found by the Court Commissioner, an act of negligence including negligence of the officers of the State.

Compensation

It is pertinent to note that,

  • The State has paid Rs.2 lakhs each as ex-gratia compensation to the families of the deceased, Rs.1 lakh each for the persons who suffered serious injuries and Rs.50,000/- each for the persons suffering from minor injuries.
  • The Union of India has paid ex-gratia compensation of Rs.1 lakh each for the deceased and Rs.50,000/- each for those with serious injuries. In terms of the order of this Court, the State has paid Rs.5 lakhs each to the deceased, Rs.2 lakhs each to the victims suffering serious injuries and Rs. 75,000/- each to the victims suffering minor injuries, apart from the amount paid by the Union of India.
  • The list of deceased and injured persons has been produced but the amount of compensation payable to each of the victim including the families of the deceased have not been computed and such amount is required to be computed in accordance with the principles of just compensation as in the case of accident under the Motor Vehicle Act, 1988 by the Motor Accidents Claims Tribunal.

The Court, hence, requested the Chief Justice of the Allahabad High Court to entrust the work of determination of compensation to a Judicial Officer in the rank of District Judge/Additional District Judge at Meerut within two weeks of the present order to work exclusively on the question of determination of the compensation on day-to-day basis. Further,

  • The High Court shall provide all necessary infrastructure to enable the Officer to discharge his duties.
  • The nominated Judicial Officer may permit the parties to lead such evidence as may be permissible.
  • The nominated Judicial Officer shall calculate the amount of compensation and forward the report to the Supreme Court for consideration in respect of compensation in accordance with law.
  • The amount paid by the State and a sum of Rs.30 Lakhs deposited by the Organizers has been disbursed to the victims. The said amount, excluding the ex-gratia payments made, be taken into consideration while determination of the amount payable by the Organizers and the State.

It is important to note that as per the report submitted by the Commission, the liability between the Organizers and the State was fixed as 60:40 and no dispute was raised regarding percentage of liability determined by any of the party.

The Court will now take up the matter after 4 months.

[Sanjay Gupta v. State of Uttar Pradesh, 2022 SCC OnLine SC 443, decided on 12.04.2022]


Counsels

For Organizers: Senior Advocate Shanti Bhushan

For Writ Petitioners: Senior Advocate Vikas Pahwa

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Ram Surat Maurya (Presiding Member) addressed a matter wherein the date of issue of the Risk Confirmation Letter was in a serious dispute leading to Insurance Broker’s fraudulent act.

The complainant had a factory, and the OP was engaged in the business of providing insurance services. Further, the complainant obtained standard Fire and Special Peril Policy from the OP, for a period of 10-2-2005 to 9-2-2006 for its buildings, furniture, fixtures, fittings and electrical installation, Plant and Machinery, machinery parts, Dies & moulds and stock for a sum of Rs 23 crores. The said policy was renewed.

In February 2008, the complainant invited offers from Insurances brokers for renewal of the above-said policy. It was stated that the Western Regional Office of the OP accepted the proposal form and issued risk confirmation for fire and allied perils insurance policy and Satyan Insurance Broker sent a Risk Confirmation letter to the complainant on 18-2-2008.

On 17-2-2008, a major fire occurred at the factory premises of the complainant causing extensive loss to the buildings, plant & machineries, furniture and stock etc. The complainant informed the insurer about the said incident and the insured appointed a surveyor and loss adjuster, and further the surveyor declined to proceed in the absence of the insurance policy.

The complainant received a letter (bearing the date 18-02-2008) on 28-02-2008 from the Insurer, stating therein that the consideration received for covering the risk was less than the offer given by them. Hence, they were not in a position to cover the risk as requested.

The Insurer, vide dated 13-03-2008, denied issuance of Risk Confirmation on 14-02-2008.

The complainant then gave a legal notice, to the Insurer for either making payment of Rs 2.70 crores within seven days or to refer the dispute to an Arbitrator. The Insurer, vide reply declined to refer the dispute to an Arbitrator or to pay.

Further, the complainant filed an arbitration application in the Bombay High Court which was ultimately rejected on the ground that in the absence of an arbitration agreement between the parties, the application was not maintainable. Then the present complaint was filed.

What is the serious dispute about?

The dispute between the parties was with regard to the date of issue of Risk Confirmation letter and the letter of the Insurer, declining to issue policy on the ground that the premium was deficient.

Analysis and Discussion

The Commission stated that two circumstances clearly proved the fraudulent act of Satyan Insurance Broker, firstly cheque of Rs 6,825 was bearing a date of 13-02-2008. The complainant issued his cheque of Rs 23,891 on 13-02-2008. Had Satyan Insurance Broker informed the complainant that an insurance premium of Rs 30,176 was payable then the complainant instead of issuing a cheque of Rs 23,891 would have issued the cheque of the full amount. Secondly, it was not a normal conduct that any insurance agent would give a premium of a client from his account.

Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.

In Supreme Court’s decision of Reliance Life Insurance Company v. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 175 and New India Assurance Company Ltd. v. Satpal Singh Muchal, (2009) 12 SCC 673, it was held that a contract insurance is a contract of uberrima fide and non-disclosure of material fact, vitiates the insurance policy.

Therefore, no illegality in not issuing the insurance policy by the Insurer as the Risk Confirmation letter was obtained on concealment of material facts relating to the fire incident.

Coram concluded by stating that,

“If Risk Confirmation letter had been issued on 14.02.2008, the complainant would not have committed two days delay in informing the Insurer in respect of fire incident. Appointment of the surveyor on 20.02.2008 was an innocent mistake, the complainant cannot get any benefit of it.”

In view of the above, no merit was found in the complaint and it was dismissed. [Tainwala Personal Care Products (P) Ltd. v. Royal Sundaram Alliance Insurance Co. Ltd., 2022 SCC OnLine NCDRC 11, decided on 25-1-2022]


Advocates before the Commission:

For the Complainant: Ms. Fareshte Sethna, Mr. Munindra Dvivedi, Ms. Divya Bhalla, Ms. Aathira Pilllai, Advocates

For the OP: Mr. S.M. Tripathi, Advocate and Ms. Deepa Chacko, Advocate

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Rajiv Shakdher and Talwant Singh, JJ., while addressing a matter with regard to the arbitral award, held that,

“Mere erroneous application of the law, or appreciation of evidence, does not call for interference of the award on the ground of patent illegality. The Court cannot set aside the award by reappreciating the evidence, which is taken into consideration, by an Arbitral Tribunal”

Instant appeal was preferred under Section 37 of the Arbitration and Conciliation Act read with Section 13 of the Commercial Courts Act, 2015 against the decision of Single Judge.

Factual Matrix

Respondent was in the business of manufacturing and selling footwear and its components, on 20th March 2008 respondent obtained the Standard Fire and Special Perils Policy from the appellant.

Policy period spanned between 20-03-2008 and 19-03-2009. The total sum assured under the policy initially, was 24,25,00,000/-, which was enhanced to Rs 27,25,00,000/- w.e.f. 30-06-2008.

On 14-12-2008, fire broke out in one of the two units of the respondents which caused damage to the building, plant and machinery, stocks, furniture, fixtures and fittings etc.

Surveyor recommended the release of interim payment in favour of the respondent and accordingly, in March 2009 Rs 2,50,00,000 were paid to the respondent.

Later, in August the respondent scaled down its claim. Surveyor submitted its report to which the respondent consented.

Appellant was somehow not satisfied with the consent letter sent by the respondent and hence asked the respondent to send it again and draft for a fresh consent letter was sent by the appellant via email.

Respondent agreed that, if the balance amount was paid, it would constitute the full and final settlement in respect of its claim lodged with the appellant.

Since the appellant was still not satisfied with the consent letter, he asked the respondent to furnish a new consent letter with the exception that, it contained the averment, to the effect, that, the respondent undertook not to agitate its claim before any court, consumer forum, commission, or any other authority in future. A pre-receipt document was also attached which sought to affirm that respondent’s claim had been settled.

Respondent was unhappy and felt coerced into accepting a lesser amount in respect of the claim lodged by it. After which a notice was issued by the respondent, and this all led to arbitration proceedings.

On being dissatisfied with the award of the arbitral tribunal, the appellant approached the Court and Single Judge repelled the challenge.

Question for Consideration:

Whether the Arbitral Tribunal had committed patent illegality in assessing the loss which the respondent had suffered, qua the stock, which was available, at its factory on the day of the fire?

Analysis, Law and Decision

High Court noted that, because a fire had occurred, and given the fact that stock register and production register was not available (as is perhaps traditionally found with some concerns, if not all), the Arbitral Tribunal took recourse to the manufacturing and trading account, to ascertain the value of the stock that would have been available at the respondent’s factory had the incident of fire not occurred.

Arbitral Tribunal rejected the assessment, made of the loss concerning the closing stock, by the surveyor, for various reasons, including the arbitrary deductions made qua quantities of raw material and finished goods. The Arbitral Tribunal was particularly concerned with the gross profit rate adopted by the surveyor, which, was pegged that 50.81%. The gross profit rate, arrived at by the surveyor, was, undoubtedly, incorrectly calculated, as while calculating the same, depreciation on building, plant and machinery [i.e., Rs. 1,32,80,291/-] was not factored

Arbitral Tribunal picked up correctly from the audited balance sheet of the respondent, which had been submitted to its banker as well.

In Court’s opinion, Arbitral Tribunal was right in concluding that, although the manufacturing and trading account showed that the closing stock as on 14.12.2008, was Rs. 6,25,08,799/-, however, since the respondent while lodging its claim had pegged the value of the closing stock at Rs. 5,98,12,000/-, the value of the closing stock had to be scaled down to that figure i.e. Rs. 5,98,12,000/-. The respondent could not have been compensated, for more than, the claimed amount.

The total loss quantified by the Arbitral Tribunal was pegged at Rs. 4,42,36,337/-

As observed, at the very outset, since the adjusted loss of stock, arrived at by the surveyor, was pegged at Rs. 2,33,59,637/-, the Arbitral Tribunal directed the appellant to pay the balance amount, i.e., Rs. 2,08,76,700/-

High Court did not find anything wrong with the approach adopted by the Arbitral Tribunal.

While there can be no doubt that, weight ought to be given to the surveyor’s report, we are, however, unable to agree that the conclusion reached surveyor, cannot be put to test. As noted by the Arbitral Tribunal, the surveyor had committed, inter alia, serious errors in making arbitrary deductions qua quantities of raw material and finished goods and in ascertaining the rate of gross profit. The rate of gross profit arrived at, was an astronomical figure, of 50.81% only because the surveyor had, somehow, forgotten to factor in depreciation, while calculating the production cost.

Bench also added that the Arbitral Tribunal, in the instant case, has given enough and more reasons, as to why it chose to ignore the methodology adopted by the surveyor in calculating the loss claimed by the respondent on account of damage to its stock.

Therefore, while concluding, the Court expressed that,

“…domestic awards can be challenged on the ground of patent illegality only if it is one, which appears, on the face of the award, and is such, which goes to the root of the matter.”

Lastly, the Court stated that the objections raised by the appellant, to the award, do not meet the bar set, both by the 1996 Act and the law enunciated by the Supreme Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 for bringing it within the ambit of the expression ‘patent illegality’.

In view of the above, the appeal was allowed. [Oriental Insurance Co. Ltd. v. Diamond Product Ltd., 2021 SCC OnLine Del 4319, decided on 9-9-2021]


Advocates before the Court:

Mr. Sanjeev Sindhwani, Senior Advocate with Mr. Abhishek K. Gola, Advocate.

Mr. Vineet Kumar, Advocate.

Hot Off The PressNews

The National Human Rights Commission, India has taken suo motu cognizance of media reports that ten infants were killed in a fire that swept through the Sick Newborn Care Unit (SNCU) at Bhandara District General Hospital in Maharashtra on 09.01.2021. The fire reportedly broke out at around 1.30 am and the hospital administration could rescue only seven out of the seventeen children kept in the ward. A relief of Rs 5 lakhs has been announced by the state government from the Chief Minister’s Fund to each bereaved family and a state wide fire audit has also been announced. A case of accident has been reportedly registered and further investigation is being conducted.

The Commission has issued notices to the Chief Secretary and DGP, Government of Maharashtra calling for a detailed report in the matter within four weeks.

The Director-General of Police is also expected to inform the Commission about the outcome of the investigation being conducted by the police authorities. The report must contain the fire audit reports of various hospitals in the state as well as what measures have been taken or contemplated to be taken by the state against the erring or negligent officers/officials so that they cannot go with impurity.

Issuing the notices, the Commission has observed that the victim babies were in the custody of a state-run hospital where they lost life. Hence, the state cannot escape its responsibility. This is a serious issue of violation of human rights for which the accountability of the negligent officers/officials is required to be fixed, with retrospective effect. The monetary relief alone is not sufficient to compensate. Further, it is imperative to ensure that the support systems in various hospitals in the state must provide adequate care and attention to the patients for protection of their human rights.

According to the media reports, prima facie, the fire perhaps originated from the Air Conditioner and the victim babies died due to suffocation caused by the smoke. Reportedly, a committee headed by the Health Director will probe the incident and submit its report within three days. Electrical Department officials are reportedly investigating into the exact cause of the fire as reported by quoting the Superintendent of Police of Bhandara district.


National Human Rights Commission

[Press Release dt. 11-01-2021]

Hot Off The PressNews

The National Human Rights Commission has taken suo motu cognizance of media reports that 3 minors among 7 persons have died in a candle factory fire in Ghaziabad district of Uttar Pradesh on 05.07.2020. Reportedly, the factory was operating illegally without adequate paperwork, at an under construction house. It is stated that by the time police, fire officials and the local residents rescued the persons trapped in the building, 7 people were charred to death.

The injured have been admitted to the Subharti Medical College at Meerut and the cause of fire is being investigated by the authorities.

The Commission has issued a notice to the Chief Secretary and the Director General of Police, Uttar Pradesh calling for a detailed report in the matter, within four weeks including the action taken against the factory owner and the delinquent officers/ officials, status of the medical treatment being provided to the injured and relief/ rehabilitation provided to the aggrieved, by the State.

It is necessary for the local administration to fix the responsibility of the concerned officer and start departmental/ criminal proceedings against them, immediately to ensure justice to the victims and their families.

Issuing the notice the Commission has observed that it is mentioned in the news report that once a police team had conducted a raid at the alleged illegal factory but no action was taken by them. The factory has been operational for a period of one and a half years hence, it is difficult to believe that the local authorities were not aware of the said illegal unit under their jurisdiction. The incident indicates towards sheer negligent attitude of the civil as well as police authorities due to which several people have lost their lives and many are seriously injured. This is a case of violation of human rights.

According to the media report, the SP, Rural, Ghaziabad has informed that the FIR has been reportedly registered against the factory owner and it is stated that the guilty will be arrested soon. The eyewitnesses have reportedly stated that there were approximately 40 people working in the small building and there was a loud explosion followed by screams when the local people rushed to the spot. It is also stated by the local residents that the police team had once come to raid the particular place but they were perhaps paid off by the factory owner. A police officer posted in Modi Nagar PS has now been placed under suspension as mentioned in the news report. Some workers at the factory reportedly could escape by breaking a wall of the factory, who were working on the other part of the building.


National Human Rights Commission

[Press Release dt. 06-07-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

The National Human Rights Commission, NHRC, India has taken suo motu cognizance of media reports that in Muzaffarpur district of Bihar, a person tried to outrage the modesty of a woman and when he was not successful, he poured kerosene on her and put her on fire.

The victim woman has suffered 85 per cent burn injuries and has been admitted in the SKMCH Hospital where her condition is critical. Reportedly, the victim’s family had approached the police five times for registarion of an FIR but no acrtion was taken but neither an FIR was registered by the police nor any action was taken against the accused.

The Commission has observed that the contents of the news reports, if true, amount to serious violation of human rights of the victim. Accordingly, it has issued notices to the Chief Secretary and the Director General of Police, Bihar calling for a detailed report in the matter within four weeks. The Commission would also like to know about the status of the investigation and treatment of the victim woman, who is reportedly in a state of coma at SKMCH Hospital in Muzaffarpur. The report must include whether any departmental action has been taken against the guilty police officials and whether any relief has been granted to the victim/ family.

According to the media reports, the accused who allegedly assaulted the victim has also sustained burn injuries in his hand. The accused, as mentioned in the news report was harassing the victim for the last three years for which the family of the woman had approached the Ahiyapur police station five times, to get an FIR registered but no FIR was registered by the police. Now, reportedly, the police is making efforts to arrest him.


National Human Rights Commission

[Press Release dt. 09-12-2019]

Hot Off The PressNews

The National Human Rights Commission, NHRC, India has taken suo motu cognizance of media reports that more than 17 students, 15 to 19 years, were killed in the massive fire which broke out in the four-storeyed building housing their coaching centre at Surat in Gujarat on the 24th May, 2019. Many are still in critical condition, undergoing medical treatment in hospitals.

Considering the incident as a grave violation of the human rights of the young students, the Commission has issued a notice to the Chief Secretary, Government of Gujarat calling for a detailed report in the matter including status of the criminal cases registered against the building owner and others found guilty along with action taken against the public servants concerned. He has been asked to include in his the legal status of the building, its construction, fire fighting measures, fire safety clearance and relief granted to the grief-stricken families. The Commission also expects that the best and free of cost treatment is provided by the State to the injured persons. Response from the State government is expected within 4 weeks.

Issuing the notice, the Commission has also observed that it has been constantly insisting the authorities to be more vigilant to avoid such tragic incidents. Going by the media reports, it appears that there was no safe passage for the victims, which could have been used as a fire exit in case of emergency. The mere announcement of compensation to the aggrieved families cannot be a solution to such kind of hazards. Several such incidents have occurred across the country where precious human lives have been lost due to negligence by the authorities and lack of Fire Department’s clearance.

According to the media reports, the fire reportedly started likely due to a short circuit at the staircase near the lower floor and engulfed the entire premises. As there was no way out for the people present on the top floor to come out of the building, they started jumping off the building. Some of them have sustained serious injuries. It is mentioned in the news reports that the horrifying incident was recorded by many passersby, which indicates that nearly a dozen teenagers were trying to escape the thick smoke rising from the building, forcing them to jump off to save their lives.

The fire department officials reached the spot and deployed 19 fire trucks and two hydraulic platforms to douse the fire and evacuate the people trapped in the building. An enquiry into the matter has reportedly been ordered by the state government. Reportedly, Rs 4 lakh to the next of kin of the deceased have been announced by the State government and as a precautionary measure all the Tuition Centres/Coaching centre, etc have been ordered to be closed in the area. The fire hazard checks are also being conducted in various places.


[Dated: 25-05-2019]

National Human Rights Commission