REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 13401 OF 2015

M/S BASPA ORGANICS LIMITED     ...APPELLANT  

VERSUS

UNITED INDIA INSURANCE COMPANY LTD.   …RESPONDENT

J U D G M E N T

MOHAN M. SHANTANAGOUDAR, J.

The present appeal arises out of the judgment dated

21.07.2015  passed  by  the  National  Consumer  Disputes

Redressal  Commission,  New  Delhi  (“National  Commission”)

dismissing the consumer complaint (Original Petition No. 48 of

2004) filed by the Appellant herein.

2. The facts giving rise to this appeal are as follows:

2.1 One M/s Shrirang Agro Chemical Pvt. Ltd., having its

factory premises in Tarapur, Thane District, was engaged in the

business  of  manufacturing  a  chemical  called  Cyper  Methnic

Acid  Chloride  (“CMAC”),  an  intermediate  product  used  in

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growing cash crops. The said factory premises had become a

sick  unit,  and  was  auctioned  off by  the  Maharashtra  State

Financial  Corporation  (“MSFC”).  The  bidding  took  place  on

14.03.2001, and on 15.03.2001, the Appellant was declared the

highest bidder, having quoted a price of Rs. 4 crores.

2.2 The  Appellant  commenced  production  of  CMAC  in

November  2001.  The  previous  company  (Shrirang  Agro

Chemical Pvt. Ltd.) had taken an insurance coverage from the

Respondent, and the Appellant continued this coverage. To this

end,  after  inspecting  the  plant  and  machinery,  a  Fire  and

Special  Perils  Policy  was  issued  by  the  Respondent  from

12.11.2001 to 11.12.2001 insuring the subject premises for a

total Insured Declared Value of Rs.12.5 crores. The said policy

was  continued  for  the  period  between  12.12.2001  and

11.01.2002 as well.  

2.3 On  03.01.2002,  a  fire  broke  out  at  the  factory

premises, based on which the Appellant filed a claim with the

Respondent. On 30.01.2004, based on reports from the three

surveyors,  the  Respondent  repudiated  the  claim  of  the

Appellant on two grounds. It was held, firstly, that the Appellant

had purchased the factory premises for only Rs. 4 crores, but

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had overvalued it and taken a policy for an excessive value of

Rs. 12.5 crores, and  secondly, that the Appellant suppressed

the material fact of not being duly licensed for the storage and

use of Hexane at the factory. Aggrieved by such repudiation,

the Appellant filed a consumer complaint before the National

Commission.

3. The National  Commission dismissed the Appellant’s

complaint,  holding that the repudiation was justified on both

the above counts, i.e.,  that the Appellant had overstated the

value  of  the  factory  while  taking  insurance,  and  that  the

Appellant was operating without obtaining the requisite licence

for the storage of Hexane. It is against this dismissal that the

Appellant has approached this Court by way of an appeal under

Section 23 of the Consumer Protection Act, 1986.

4. Learned Senior Counsel  appearing on behalf  of the

Appellant, Shri S.S. Naphade, argued against the appointment

of  the  third  surveyor,  S.B.  Nalluri  &  Associates  (“third

surveyor”).  He   contended  that  once  the  second  surveyor,

Mehta and Padamsey Surveyors Pvt. Ltd. (“second surveyor”),

had clearly assessed the loss and submitted a detailed report

wherein  it  had  ruled  out  any  mala  fides  on  part  of  the

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Appellant, there was no occasion to appoint the third surveyor.

Learned Senior  Counsel  also  relied  on  the  notification  dated

21.11.2001 issued by the Ministry of Petroleum and Natural Gas

in exercise of its powers under the Essential Commodities Act,

1955  (“the  Essential  Commodities  Act”),  to  argue  that  the

Appellant was exempt from obtaining a licence for storage of

Hexane, since according to him, the Appellant had stored less

than 20 kilolitres  of  Hexane.  It  was  submitted  that  the  said

notification clearly stipulated that there was no requirement of

a licence for storing up to 20 kilolitres of Hexane.  

5. On the other hand, learned Senior Counsel appearing

on behalf of the Respondent, Shri P.P. Malhotra, contended that

repudiation  of  the  claim  was  justified,  inasmuch  as  the

Appellant had not disclosed that it was not in possession of the

requisite licence for storing Hexane. It was contended that the

Appellant was required to obtain a licence as per either Article

3 or Article 7 of the First Schedule to the Petroleum Rules, 1976

(“1976 Rules”).  

5.1 It  was further  argued that  even assuming that  the

aforementioned  notification  dated  21.11.2001  exempted  the

Respondent from obtaining a licence for storing Hexane up to

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20 kilolitres,  the second surveyor’s report,  against which the

Appellant had not raised any objection, was categorical in its

finding  that  the  factory  premises  held  over  90  kilolitres  of

Hexane, out of which 79.152 kilolitres of Hexane had suffered

damage. Thus, no reliance could be placed on the exemption

under this notification in the instant facts and circumstances.

5.2 Learned Counsel also argued in favour of the finding

of the National Commission with respect to overvaluation of the

subject factory by the Appellant while taking insurance.

6. At the outset, we must observe that we are at a loss

to  understand  why  the  insurance  policy  was  taken  by  the

Appellant for only one month and extended thereafter, again,

for only one more month. It is also quite perplexing as to why

the Respondent agreed to issue a policy for such a short period

of  time,  and  no  plausible  reasons  are  forthcoming  from the

records to explain the peculiar nature of this transaction.

7. Be  that  as  it  may,  upon  perusing  the  material  on

record and after hearing the learned counsel, we find that two

issues  arise  in  the  instant  case,  to  determine  whether

repudiation of the claim was justified for breach of policy terms:

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(i)  whether the Appellant was not duly licensed to store

Hexane,  and therefore  had suppressed a  material  fact,  thus

breaching Clause 1 of the policy, and  

(ii) whether the Appellant overvalued the subject factory

while taking insurance, amounting to fraud under Clause 8 of

the policy.

8. In this regard, we find it  relevant to reproduce the

said clauses of the insurance policy:

“1. This policy shall be voidable in the event of mis- representation,  mis-description  or  non-disclosure  of any material particular.

  x x x  8. If the claim be in any respect 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 or if the loss or damage be occasioned by the willful act, or with the connivance of the insured, all benefits under this policy shall be forfeited.”

9. With  respect  to  the  question  of  licensing,  the

Respondent’s case is that the Appellant had not disclosed that

it had stored Hexane without having obtained a licence for the

same, as required under the 1976 Rules. In this respect, the

Respondent has relied on Articles 3 and 7 of the First Schedule

to  the  1976  Rules.  Articles  3  and  7  specifically  refer  to

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petroleum Class A, which is defined as follows under Section

2(b) of the Petroleum Act, 1934 (“the Petroleum Act”):

“(b) “petroleum Class A” means petroleum having a flash-point below twenty-three degree centigrade”.

10. To  show  that  Hexane  falls  within  Class  A,  learned

Counsel  for  the  Respondent  has  drawn  our  attention  to

literature  from the National  Fire  Protection  Association  (“the

NFPA”),  an  international  non-profit  organisation  working

towards  eliminating death, injury, property and economic loss

due to fire. As per the records of physical properties of selected

chemicals prepared by the NFPA, the flash point of n-Hexane is

-23°C.1 Admittedly, the substance being stored by the Appellant

was n-Hexane, or normal Hexane. Indeed, as per nomenclature

adopted  by  the  International  Union  of  Pure  and  Applied

Chemistry, the substance carrying the molecular formula C6H14

is known as “Hexane” or “n-Hexane”.2  This is also supported

by  Bretherick’s  Handbook  of  Reactive  Chemical  Hazards,

referred  to  by  the  Respondent,  which  notes  that  Hexane,

1  NFPA  497,  Recommended  Practice  for  the  Classification  of Flammable  Liquids,  Gases,  or  Vapors  and  of  Hazardous  (Classified) Locations  for  Electrical  Installations  in  Chemical  Process  Areas (2017 edition). 2  National Center for Biotechnology Information, PubChem  Compound Database, available at  https://pubchem.ncbi.nlm.nih.gov/compound/Hexane.

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having the formula C6H14, has a flash point of -23°C.3 Since the

flash point of the substance is well below 23°C, it can safely be

said that it falls under the category of petroleum Class A.

11. Against this backdrop, we find it useful to refer to the

relevant Articles of the First Schedule to the 1976 Rules, which

were the rules in force as on the date of the incident:

FIRST SCHEDULE

Article Form of licence

Purpose for which granted

Authority empower ed  to grant licence

Fee

1 2 3 4 5

3 X To import and store petroleu m  Class A  in quantity not exceedin g  300 litres.

District Authority

Rs.  20  for  every calendar  year  or part thereof.

xx xx xx xx xx

6 XIII To import and store petroleu m  in  an installati on.

Chief Controller or  a Controller of Explosives

3  BRETHERICK’S HANDBOOK OF REACTIVE CHEMICAL HAZARDS,  Vol.  I,  2032 (PG Urben ed., 7th edition, 2006).

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authorised in  this behalf  by the  Chief Controller.

7 XIV To import and store otherwis e than in bulk  (a) petroleu m  Class A  in quantitie s exceedin g  300 litres,  (b) petroleu m  Class B  in quantitie s exceedin g  25,000 litres  (c) petroleu m  Class C  in quantitie s exceedin g  45,000 litres  or (d) partly one class and partly two class of petroleu

Petroleum Class B –  When  stored  in bulk  or  with  any other  class  of petroleum  or when  stored  in quantities exceeding  25,000 litres.  The  same fee  as  laid  down for  petroleum Class A.

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m.

12. Before  looking  into  whether  the  Appellant  was

required to obtain a licence under the provisions reproduced

above,  it  is  relevant  to  note  that  the  Appellant  has  not

challenged the second surveyor’s report, or its finding that the

factory premises contained over 90 kilolitres of Hexane, out of

which  79.152  kilolitres  were  damaged.  On  the  contrary,  the

Appellant seeks to rely on the report heavily.  

13. The  Respondent  has  contended  that  the  Appellant

was required to obtain a valid licence under the Petroleum Act

and the 1976 Rules. In this regard, it is pertinent to note that

Section 8 of the Petroleum Act makes it clear that storage of

small  quantities  of  petroleum Class  A  does  not  require  any

licence. It reads:

“8. No licence needed for import, transport or storage of small quantities of petroleum Class A.—(1)  Notwithstanding  anything  contained  in  this Chapter, a person need not obtain a licence for the import, transport or storage of petroleum Class A not intended  for  sale  if  the  total  quantity  in  his possession does not exceed thirty litres. (2)  Petroleum Class  A  possessed without  a  licence under this section shall be kept in securely stoppered receptacles of glass, stoneware or metal which shall not, in the case of receptacles of glass or stoneware, exceed  one  litre  in  capacity  or,  in  the  case  of

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receptacles  of  metal  exceed  twenty-five  litres  in capacity.”

13.1 Therefore,  it  is  evident  that  for  the  storage  of

petroleum Class A less than 30 litres in quantity, no licence is

required under the Petroleum Act or rules thereunder. As per

Article 3, a licence issued by the District Authority is required

for importing and storing petroleum Class A in a quantity not

exceeding 300 litres. Thus, the Respondent may be justified in

arguing that for storage of petroleum Class A ranging from 30

litres to 300 litres in quantity, a licence under Article 3 may be

required.  However,  in  the  instant  case,  it  is  clear  that  the

Appellant had stored much more than 300 litres of Hexane, and

therefore, a licence under Article 3 would not be sufficient.

14. The Respondent also drew our attention to Article 7

of the 1976 Rules to further its argument on the requirement of

the  licence.  Article  7  deals  with  storage  of  certain  forms  of

petroleum otherwise than in bulk. The expression “petroleum in

bulk” is defined in clause (xv) of Rule 2 of the 1976 Rules as

follows:

“(xv)  “petroleum  in  bulk”  means  petroleum contained in  a  tank irrespective  of  the  quantity  of petroleum contained therein” (emphasis supplied)

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14.1  In turn, the term “tank” is defined in clause (xxii) of

Rule 2 in the following manner:

“(xxii)  “tank” means  a  receptacle  for  petroleum exceeding 1000 litres in capacity”

15. From the definitions reproduced above,  it  becomes

evident  that  irrespective of  the quantity  of  petroleum,  when

petroleum is stored in a tank, it is referred to as “petroleum in

bulk” under the 1976 Rules. As mentioned earlier, Article 7, on

which the Respondent seeks to place reliance, deals with the

grant of a licence for storage of petroleum  otherwise than in

bulk, i.e. otherwise than in a tank. In other words, for petroleum

Class  A  exceeding  300  litres,  a  licence  under  Article  7  is

required when it is  not being stored in receptacles exceeding

1000 litres in capacity.

16. In this regard, we may also refer to Condition 2 of

Form XIV of the Second Schedule to the 1976 Rules. Form XIV

corresponds to the licence granted under Article 7 of the First

Schedule, and Condition 2 of the said Form reads as follows:

“2. The petroleum shall be stored only in the storage shed which  shall  be  constructed  of  suitable  non- combustible  materials,  provided  that  when  no petroleum  Class  A  is  stored,  the  beams,  rafters, columns, windows and doors may be of wood.”

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(emphasis supplied)

16.1 In turn,  the term “store shed” is  defined in clause

(xxi) of Rule 2 as follows:

“(xxi)  “store  shed”  means  a  building  used  for  the storage of petroleum otherwise than in bulk, whether forming part of an installation or not,  but does not include a building used for the stores of petroleum exempt from licence under Sections 7,8 or 9 of the Act”

16.2 A  store  shed,  therefore,  is  a  building  where

petroleum is stored otherwise than in bulk, i.e., otherwise than

in  receptacles  with  a  capacity  of  over  1000  litres.  Most

significantly, clause (xxi) of Rule 2 states that a store shed may

be a part of an “installation”. At this juncture, it is relevant to

note that this term is also defined under the 1976 Rules,  in

clause (xiv) of Rule 2:  

“(xiv) “installation” means any premises wherein any place has been specially prepared for the storage of petroleum in bulk, but does not include a well-head tank or service station”

17. Upon  reading  the  definitions  of  “store  shed”  and

“installation”  together,  it  becomes  clear  that  “installation”

carries a much broader meaning. In order for any premises to

be an “installation” under the 1976 Rules, it must necessarily

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contain a place specially prepared to store petroleum in bulk. In

other  words,  such  a  place  must  have  the  capacity  to  hold

receptacles with a capacity of 1000 litres or more (which would

be nothing but a “tank” as defined under the 1976 Rules). At

the same time, an installation may also have the capacity to

store  petroleum  otherwise  than  in  bulk.  An  installation,

therefore, may consist of both tanks and storage sheds, or it

may consist only of tanks.  

18. In the instant case, the second surveyor had clearly

stated that the Hexane had leaked from the tanks in which it

was stored. However, it is not clear from the material on record

whether  or  not  the  term  “tank”  was  assigned  the  same

meaning as under the 1976 Rules. If the tanks referred to by

the  second  surveyor  were  receptacles  that  could  not  store

more  than  1000  litres  of  petroleum,  then  they  would  not

constitute “tanks” under the 1976 Rules,  and the petroleum

stored in such tanks would fall under the category of petroleum

stored “otherwise than in bulk”. In such a case, a licence would

be required under Article 7.

19. At  this  stage,  we  may  fruitfully  refer  to  the

application preferred by the Appellant to obtain a licence under

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Article 6 of the First Schedule to the 1976 Rules, which pertains

to the import and storage of petroleum in an installation, vide

letter  dated  22.10.2001.  In  its  response  to  the  above

application,  the  Controller  of  Explosives,  Nagpur  noted  vide

letter  dated  05.11.2001,  that  the  drawings  of  the  site  and

layout of the proposed installation had been approved, subject

to the condition that the pump/motor to be incorporated were

flame proof, in accordance with IS:2148. Further, the Appellant

was asked to submit certain documents that were necessary in

connection with the grant of the licence applied for, such as an

application  under  Form VIII  (which  is  an  application  for  the

grant, amendment, renewal, or transfer of a licence to import

and store  petroleum),  a  Safety  and Test  Certificate  required

under  Rule  130  and  126  of  the  1976  Rules  issued  by  a

competent  person,  a  No-Objection  Certificate  from the  Local

District  Authority  along  with  the  site  plan  duly  endorsed  by

such  authority,  and  so  on.  Additionally,  the  Appellant  was

directed to comply with the provisions of the Solvent, Raffinate

and Slop (Acquisition, Sale, Storage and Prevention of Use in

Automobiles) Order, 2000 (“the 2000 Order”).

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20. The above communication clearly indicates that even

the  Controller  of  Explosives  was  of  the  opinion  that  the

premises where the Appellant was storing Hexane amounted to

an “installation”. As we have discussed supra, for a premises to

be  considered  as  an  installation,  it  must  contain  a  place

prepared to hold “tanks” as defined under the 1976 Rules. This

strongly suggests that the “tanks” referred to by the second

surveyor  were  indeed “tanks”  as  envisaged under  the  1976

Rules.  In  our  considered view,  this  shows that  the Appellant

may well have been required to obtain a licence under Article 6

itself.

21. It is not the case of the Appellant that it provided the

documents  stipulated  by  the  Controller  of  Explosives.  No

further  communication  between  the  Appellant  and  the  said

authority has been placed on record either. There is nothing on

record to show that a licence under Article 6 was granted to the

Appellant.  

22. In light of the above discussion, we are of the view

that the Appellant was required to obtain a licence under the

1976 Rules for the storage of Hexane, be it under Article 6 or 7,

and has failed to show that it possessed any such licence.

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23. Having examined the scheme of the 1976 Rules with

respect  to  licensing  requirements,  we  may  now  turn  to  the

Appellant’s  contention  that  it  was  exempt  from  obtaining  a

licence under the said rules, by virtue of the notification dated

21.11.2001 issued  by  the  Ministry  of  Petroleum and Natural

Gas,  amending  the  2000  Order.  The  relevant  clause  of  the

amended order that is being relied upon by the Appellant is as

follows:

“3.  Restriction  on  sale  and  use  of  solvents, raffinates, slops and other product:-

(1) No  person  shall  either  acquire,  store  or  sell solvents included in the Schedule, without a licence issued  by  the  State  Government  or  the  District Magistrate  or  any  other  Officer  authorised  by  the Central or the State Government; Provided that no such licence shall  be required for consumption of 50 KLs per month or less and storage of 20 KLs or less of solvents listed in the Schedule combined.”

24. Evidently,  there is  an exemption carved out  in  the

proviso dispensing with the need for a licence in the cases laid

down  thereunder.  Significantly,  Hexane  is  mentioned  in  the

Schedule referred to in the above clause, making it clear that

the substance is governed by the same. The Appellant seeks to

argue that pursuant to the above proviso, it was not required to

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obtain  a  licence  under  the  1976  Rules  for  the  storage  of

Hexane  on  its  premises.  In  order  to  determine  whether  the

reference to  a  “licence”  in  the  said  clause includes licences

under  the  Petroleum  Act,  it  is  essential  to  examine  the

background and scheme of the 2000 Order.

25. A  glance  at  the  notification  dated  21.11.2001,

amending  the  2000  Order,  as  well  as  the  said  order  itself,

reveals that both were issued in exercise of the powers of the

Central  Government  under  Section  3(1)  of  the  Essential

Commodities Act. This statute, as is evident from its Statement

of Objects and Reasons, was enacted to provide for the control

of  the  production,  supply  and  distribution  of  and  trade  and

commerce in certain commodities, in the interest of the general

public. Further, Section 3 empowers the Central Government to

pass orders providing for  the regulation or prohibition of the

production, supply and distribution of any essential commodity,

and  trade  and  commerce  therein,  under  certain  conditions.

Section 3(1), in particular, reads as follows:

“3.  Powers  to  control  production,  supply, distribution,  etc.,  of  essential  commodities.― (1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for

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securing their  equitable distribution and availability at  fair  prices,  or  for  securing  any  essential commodity for the defence of India or the efficient conduct  of  military  operations,  it  may,  by  order, provide for regulating or prohibiting the production, supply  and  distribution  thereof  and  trade  and commerce therein.”

26. Clearly, orders under Section 3(1) may pertain to the

following objectives:

(i)  maintaining  or  increasing  supplies  of  any  essential

commodity;

(ii)  securing the equitable distribution and availability at

fair prices of such commodity; or,

(iii) securing any essential commodity for the defence of

India or the efficient conduct of military operations.

27. Furthermore,  Section  3(2)  contemplates  particular

aspects with respect to which orders may be passed in exercise

of the power under Section 3(1). In this regard, it is relevant to

refer to clause (d) of Section 3(2):

“(2) Without prejudice to the generality of the powers conferred  by  sub-section  (1),  an  order  made thereunder may provide―  

    x x x

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(d)  for  regulating by licences,  permits or  otherwise the  storage,  transport,  distribution,  disposal, acquisition,  use  or  consumption  of,  any  essential commodity”.

28. Thus, it is clear that the Central Government has the

power to pass orders under the Essential Commodities Act to

provide  for  licensing  regimes  governing  the  storage  of  an

essential commodity, in pursuance of the three objectives set

out in Section 3(1). The 2000 Order, in our considered view, is

one such order, providing for a licensing regime regulating the

acquisition, sale, storage and prevention of use in automobiles

of solvents, raffinates and slops, particularly for the purposes of

the  Essential  Commodities  Act.  There  is  nothing  in  the  said

order to suggest that it intends to replace or modify any other

existing licensing regime under any other law in force, including

the Petroleum Act and the rules formulated thereunder.  

29. In  fact,  we  find  that  the  notifications  issued  in

pursuance of the 2000 Order set to rest any residual doubt in

this regard. For instance, a perusal of G.R.S. 578(E), an order

dated  30.06.2000  issued  by  the  Central  Government  under

Clause 3 of  the 2000 Order,  clearly  reveals  that  the licence

being referred to under the order is the Solvent, Raffinate and

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Slop  Licence.  The  said  notification  reiterates  that  the  said

licence  is  to  be  issued  by  the  State  Government,  District

Magistrate,  or  the  officer  authorised  by the Central  or  State

Government,  as  also  mentioned  in  Clause  3(1)  of  the  2000

Order.  

30. There cannot be any dispute that the licence issued

under the Essential Commodities Act and control orders are for

a different purpose altogether compared to the Petroleum Act.

Thus, it is clear that the licensing regime envisaged in clause 3

of the 2000 Order,  and the exemption granted thereto, is in

addition to the licensing requirements under the Petroleum Act.

The direction of the Controller of Explosives vide letter dated

05.11.2001 to comply with the requirements under the 2000

Order is an additional requirement to be complied with in order

to obtain a licence under the Petroleum Act. It cannot be said

that  an  exemption  from obtaining  a  licence under  the  2000

Order would amount to an exemption to obtain a licence under

the Petroleum Act.  Hence, even assuming that the Appellant

was exempt from obtaining a licence under the 2000 Order by

virtue of the said exemption, the Appellant was still required to

obtain a licence in accordance with the 1976 Rules. We hasten

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to add here that, as already mentioned supra, the quantity of

Hexane stored by the Appellant was more than 20 kilolitres.

Hence, the Appellant was required to obtain a licence under the

2000 Order as well.

31. From the above discussion, it is evident that the 1976

Rules  prescribed  that  a  licence  had  to  be  obtained  for  the

purposes  of  storing  Hexane  of  the  quantity  involved  in  the

instant case, and the Appellant has failed to comply with this

requirement.  In the absence of such a licence, the Appellant

could not have lawfully stored Hexane. Therefore, we are of the

view that the non-disclosure of the non-possession of a licence

was  of  a  material  nature,  and  constituted  a  violation  of

Condition 1 of the insurance policy. As a result, we are inclined

to  affirm  the  finding  of  the  National  Commission  that  the

Respondent  was  justified  in  repudiating  the  claim  of  the

Appellant on this ground.

32. The second issue, regarding the overvaluation of the

subject  factory,  was  not  seriously  argued  by  either  party.

Moreover,  it  is a question of fact,  which this Court generally

does not probe deeply. Thus, we shall refrain from examining

the merits thereof. The same is also unnecessary in light of our

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above  finding  that  the  repudiation  of  the  instant  claim  was

justified on the ground pertaining to the Appellant  lacking a

licence for storing Hexane under the Petroleum Act and 1976

Rules.  

33. Before we part with this matter, we may note that

some  objection  was  raised  by  the  Appellant  against  the

appointment of the third surveyor by the Respondent. Suffice it

to state that the appointment of the third surveyor was for the

limited  purpose  of  examining  whether  the  Appellant  was  in

possession of the requisite licences for the storage of Hexane.

Moreover, neither did the findings of the third surveyor disturb

the findings of the second surveyor, nor were they material to

the conclusion against the Appellant arrived at by the National

Commission.  The  second  surveyor  had  given  a  categorical

finding that about 90 kilolitres of Hexane were stored in the

factory premises, and this finding has not been challenged by

the Appellant. At the same time, while the findings of the third

surveyor supplement the reasoning of the National Commission

vis-à-vis the absence of a licence under the Petroleum Act and

1976 Rules, they are not crucial to this conclusion, inasmuch as

the Appellant itself never contended that it was in possession of

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the requisite licences for the storage of Hexane. As a result, we

find that irrespective of whether or not the appointment of the

third surveyor was proper, the findings of the said surveyor do

not materially affect the outcome of the instant case.  

34. In light of the above discussion, we find no reason to

interfere with the conclusion in the impugned judgement of the

National  Commission  that  the  repudiation  of  the  claim  was

justified for breach of Clauses 1 and 8 of the insurance policy.

35. The instant  appeal  is  therefore dismissed.  Ordered

accordingly.

…..…………................................J. (MOHAN M. SHANTANAGOUDAR)

.……………………………...............J.       (R. SUBHASH REDDY)

New Delhi; February 14, 2020

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