Kishore, owner of Jeevan Brothers, a business enterprise, had taken two insurance policies from a general insurance company on his factory located in Goa. One was a fire policy and the other was a consequential loss of p

Kishore, owner of Jeevan Brothers, a business enterprise, had taken two insurance policies from a general insurance company on his factory located in Goa. One was a fire policy and the other was a consequential loss of profit due to fire policy. On 8th January, 2015, early morning around 3.00 A.M., there was a short-circuit in the main switch-board in the sub-station receiving power from the State Electricity Board which resulted in a flashover producing over-currents. The flashover and over-currents generated excessive heat which caused the paint on the panel board to be charred, producing smoke and soot thereby causing a hole to develop in the adjoining feeder. The smoke and soot alongwith the ionized air travelled to the generator compartment where again a short-circuit took place resulting in the tripping of the generator. This resulted in the entire power supply to the plant being stopped and due to this, the supply of water/steam to the waste-heat-boiler by the flue gases at a high temperature continued to be fed into the boiler resulting in damage to it. Kishore had the losses examined which were calculated at: (i) ₹1,35,17,709 for material loss due to damage to the boiler and other connected equipments; and (ii) ₹19,11,10,000 as loss of profits for the period during which the plant had to be shut down due to the accident. He had intimated the insurance company of the accident and loss in due time and subsequently made a claim under the two policies on the insurer. He had sent alongwith the claim, the surveyors' reports. The insurance company rejected the claim holding that the loss did not occur due to fire. Hence, Kishore took the matter to the National Commission under the Consumer Protection Act, 1986. Before the National Commission, the insurance company reiterated its stand that the damage to the boiler and other equipments was not caused by fire but because of stoppage of electricity due to short-circuit in the switch-board, resulting in stoppage of power leading to a thermal shock. It stated that the proximate cause had to be seen for settling a fire claim which in the present case was the thermal shock due to stoppage of power. The National Commission, on examination of the facts, did not agree to the insurer's arguments and decided in favour of Kishore. The insurer not satisfied with the National Commission's decision carried the matter further to a legal forum where again the counsel laid stress on two issues, viz., (a) there was no fire; and (b) in any case, fire was not the proximate cause for the damage. The counsel for the insured relied on the decision of the National Commission and argued that it was necessary to determine first whether there was a fire. Admittedly in this case, there was a short-circuit causing a flashover. A flashover is the near simultaneous ignition of all combustible material in an enclosed area. When certain materials are heated, they undergo thermal decomposition and release flammable gases. Flashover occurs when the majority of surface in a space is heated to the auto-ignition temperature of flammable gases. In the present case, it was noticed that the short-circuit in the main switch board caused a flashover. According to one of the two surveyors, this flashover should be defined as a phenomenon of a developing fire (or radiant heat source), radiant energy at wall and ceiling surfaces within a compartment. In the present case, the paint got burnt due to the flashover and such high energy levels would, undoubtedly, result in a fire causing melting of the panel board. The second surveyor admitted that fire of a short duration could not be called a 'sustained' fire as contemplated by the insurer. In his view, the duration of fire was not at all relevant so long as there was a fire causing damage to the asset. The claim was maintainable even if the fire was for a fraction of a second. The counsel reiterated that the term 'fire' in the fire policy was not qualified by the word 'sustained' and the Appellate Court should bear in mind the basic proposition of law that a court should not add words to the statute or to a document and the policy must be read as it was. The counsel, therefore, stated that the insurance company's argument that there was no 'sustained' fire in this case and hence the claims were not admissible was basically incorrect and wrong. The Court after hearing both the parties agreed to the argument that what was to be decided in this case, whether the loss to the property was caused by 'fire' and not 'sustained' fire. It had been clearly established in the case and also supported by the reports of the two surveyors that there was a flashover in this case resulting in a fire of whatever limited time that had caused the blackening of the switch-board and the consequent loss to the boiler and other equipments. Had the fire not occurred, the damage would not have occurred and that there was no intervening agency that was an independent source of the damage to the plant. The Court also referred to the decision in General Assurance Society Ltd. v. Chandmull Jain and another [AIR 1966 SC 1644] where it was laid down by the Constitution Bench that in case of ambiguity in a contract of insurance, the ambiguity should be resolved in favour of the insured and against the insurance company. The insurer had not questioned the quantification of losses by the surveyors. The Court, therefore, felt that the claims under the two policies were allowable in favour of Kishore and consequently dismissed the insurance company's appeal. On the basis of the above facts and information, answer the following questions: Define 'fire insurance' and explain the risks covered and exclusions under a standard fire and special perils policy.