IMPORTANT POINT
The court emphasized the need for proper justification and adherence to regulations in repudiating an insurance claim, and highlighted the importance of considering expert reports and providing reasoned decisions.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The petitioner no.1, the West Bengal Power Development Corporation Limited, is a Public Sector Undertaking of the Government of West Bengal. One of its main thermal power plants is situated at Bakreswar in Birbhum, West Bengal which was covered by a comprehensive Mega/Industrial All Risk Insurance Policy from the respondent, the New India Assurance Company Limited for a total sum insured of Rs. 73,56,36,46,295/-. In August, 2017, sudden vibration was observed in the machinery. The supplier of the plant and machineries, Bharat Heavy Electricals Limited (BHEL) was contacted for advice and the operational parameters were transmitted to BHEL. As per the advice of BHEL, the unit was shut down in August, 2018 to facilitate inspection. The Turbo Generator Set was dismantled and inspected when the Generator Rotor was found damaged, the findings of the inspection and recommendations regarding which were drawn in a Minutes of meeting between BHEL and petitioner no.1 on August 19, 2018 which has been annexed to the present writ petition. Ultimately, the petitioner no. 1 lodged an insurance claim with the respondent-insurance company in September 9, 2018 referring to such minutes for damage to the tune of Rs. 32,70,96,000/- by a letter dated September 19, 2018.

2. The respondent appointed a surveyor, Shri Ashok Chopra of Ashok Chopra and Company, Surveyors and Loss Adjusters, who submitted his initial report opining that the loss was not admissible under the terms and conditions of the Policy. However, the gross assessed loss was quantified by him at Rs. 32,53,26,000/-.

3. The petitioners objected in writing, upon which there was correspondence between the parties. Two sets of “Root Cause Analysis” (RCA) Reports were obtained which indicated that the damage to the alternator rotor was sudden and accidental. As such, the petitioner no. 1 requested the respondent to revisit the stand by its Letter dated June 24, 2019.

4. By an e-mail dated August 29, 2019, the respondent informed the petitioner no. 1 that its Competent Authority had agreed to review and reopen the claim and appointed an independent agency, TCR Advanced Engineering, Vadodara, to investigate the cause of loss. The said independent agency issued its RCA Report on October 25, 2019, concluding that the incident was sudden and accidental. In terms thereof, the respondent asked its Surveyor, Shri Ashok Chopra to review/reassess the loss in reference to the RCA Report, upon which the Surveyor submitted an Addendum Report recommending an amount of Rs. 23,32,00,202/- to be admissible. The admissibility of the claim was not disputed by the Surveyor but the quantum was.

5. To resolve the issue, a meeting was held at the Head Office of the respondent on September 14, 2021 upon which the General Managers of the respondent and the Surveyor, according to the petitioners, agreed with the representation and accordingly on September 15, 2021 the surveyor issued an Addendum Survey Report removing under-insurance applied in his earlier report and recommended a claim settlement of Rs. 30.50 Cr. (net).

6. The respondent by an e-mail dated September 20, 2021 admitted that loss payable is Rs. 30,50,15,562/- in terms of the second Addendum Report of the Surveyor. However, the said amount was not paid. Upon further communication from the end of the petitioner, by a cryptic e-mail dated January 24, 2022, it was intimated from the end of the respondent to the petitioners that despite their best effort, the Competent Authority had decided to maintain the earlier decision for repudiation of the claim.

7. Challenging the said repudiation, the present writ petition has been preferred.

8. Learned counsel for the petitioners argues that the repudiation is arbitrary. After the first Surveyor Report was reopened and an expert appointed, the same Surveyor rectified his report and gave a fresh report. It was settled between the parties that there was loss, on the basis of the se