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2008(1) CPR 288(NC)
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
K. S. Gupta, Presiding Member and Dr. P.D. Shinoy, Member
Kanoria Chemicals and Industries Ltd. —Complainant
versus
National Insurance Company Ltd. —Opp. Party
Original Petition No. 61 of 1998
Decided on 18.9.2007
For the Complainant:Shri S. Raghavan & Hikhilesh R. Advocates.
For the Opp. Party:Shri Vishnu Mehra, Advocate.
IMPORTANT POINT
Onus to prove that the complainant’s case falls under the ‘exclusion’ clause of the Insurance policy is squarely on the Insurance Company.
Headnote:(i) Consumer Protection Act, 1986—Section 14—Insurance claim—Repudiation of claim, deficiency in service—Exclusion clause—Not applicable—Fire ‘C’ policy taken for Plant and Machinery etc. installed in the unit—LOP Policy was further taken from the Insurance Company—Power in the manufacturing unit was synchronized through the two transformers which were in installed the factory and were covered by the material damages policy—One of the transformers became in-operative allegedly due to explosion—Expert report that damage to the transformer was because of bolt falling on the live wiring of ‘R’ Phase which caused the explosion and subsequent damage—However, joint surveyors stated that the evidence clearly established that damage to the transformer was attributable to short circuiting —Issue raised if the damage to the transformer was caused on account of explosive or due to short circuit—Held, it was a case of explosion—Insurance Company cannot deny the claim if not being covered by ‘Exclusion’ clause of the policy.
Held: Onus to prove that Onus to prove that the complainant’s claim falls under the ‘Exclusion’ clause of the policy is squarely on the opposite party-Insurance Co. submission referred to above advanced by Shri Mehra, Adv. about damage to the transformer being caused due to short circuit is repelled thus being without merit. Transformer is a strong, solid enclosed metallic structure harbouring within its coils etc. Bursting, rending or tearing of the transformer cannot alone be a sine qua non for explosion. There was loud noise, splashing of oil through the vent pipe and its cover got thrown due to pressure as stated by Chandra Prakash, the then Foreman(Elec.) of the Co. who was on duty at the relevant time on 6.9.1993. Assuming it not to be a case of explosion, the opposite party-Insurance Co. cannot deny the claim it not being covered by aforementioned ‘Exclusion’ clause of the policy. Repudiation of liability under the policies is deficiency in service on the part of the Insurance Co. (Para 12)
Director of complainant Co., CW2, that the Co. accepts the assessment as made by the surveyors in respect of material damage and loss of profit policy. In the joint survey final report dated 30.7.1997 the surveyors have recommended payment of Rs. 6,82,433 under the Material damage policy. In the final report dated 24.4.1997, the surveyor has recommended payment of Rs. 41,34,055 under the loss of profit policy. Complainant Co. is, thus, entitled to these amounts along with interest which we quantify at 9% p.a. after two months of the two reports dated 30.7.1997 and 24.4.1997. (Para 13)
(ii) Consumer Protection Act, 1986—Section 24A—Limitation for filing complaint—Insurance claim—Incident had taken place on 6.9.1993—Repudiation of claim through letter dated 27.12.1999—Limitation of two years will start running from the date of repudiation of claim—Complaint filed in March, 1998 is within limitation. (Para 5)
Result: Petition allowed accordingly.
K.S. Gupta, Member—Complaint was filed, inter alia, alleging that the complainant is having one of its manufacturing units at Renukoot(UP). This unit produces caustic soda, stable bleaching powder, lindane, etc. Complainant had taken Fire ‘C’ Policy No. 1000200/II/3400008 dated 12.7.1993 for Plant & Machinery etc. installed in the unit for Rs. 55.00 crores. L.O.P. Policy No.10020/II/93/3400009 dated 2.4.1993 for Rs. 17.37 crores was further taken from the opposite party-Insurance Co. Power in the unit was synchronized through the two transformers which were installed inside the factory and were covered by the material damage policy. On 6.9.1993 at about 1.20 p.m. one of the transformers(B.B.C. make) became in-operative due to explosion. Opposite party was intimated of the explosion through the letter dated 7.9.1993. Opposite party appointed A. Patranabis, as preliminary surveyor who visited the unit on 12.9.1993. He inspected the transformer and the explosion site. It was further alleged that S.C. Khurana of M/s. GEC Alsthom, internationally known manufacturer of such equipment reached the site on 9.9.1993 and carried out various tests. His report dated 10.10.1993 was made available to the opposite party. B.A. Subramaniam, Chief General Manager of GEC-Alsthom, an expert agreed by the conclusion drawn by S.C. Khurana that the damage to the transformer was because of bolt falling on the live winding of ‘R’ Phase which caused the explosion and subsequent damage. S. Dareshwar of M/s. Asia Brown Boveri, manufacturer of the transformer also visited the site and carried out various electrical tests. Damaged transformer was later on shifted to the Works of M/s. GEC Alsthom Ltd., Naini for the purpose of carrying out repairs, if possible. In the meantime, Insurance Co. appointed M/s. Mehta & Padamsey Surveyors(P) Ltd. as Joint Surveyor. S. Arunachalam of this Surveyor Company inspected the damaged transformer at Naini on 18.11.1993. A. Patranabis also inspected the damaged transformer at Naini on 18.2.1994. Complainant sent the copy of survey report dated 26.9.1997 of M/s. Associated Surveyors to the opposite party. It was pleaded that opposite party-Insurance Co. have not rejected the complainant’s claim. Damage to the transformer as a result of explosion is covered by the fire ‘C’ policy. Consequent to the explosion, the complainant has suffered loss. Para No.20 of the complaint dealing with the loss allegedly suffered by the complainant is re-produced below:
“20(i) Loss assessed by the surveyors(without prejudice):
(a) For Machinery damages under Fire ‘C’ Policy Rs. 6,82,000
(b) Loss under LOP Policy Rs.41,34,000
(ii) For determining the
consequential loss Rs. 63,92,000
under LOP Policy, the surveyors have not taken into account the cost of transformer incurred to mitigate the loss which should be treated as an additional expenditure necessarily and reasonably incurred for the sole purpose and to diminish the reduction in output which, but for this expenditure, would have taken place during the indemnity period. This has been clarified by the insured vide letter No. KCI /Claim/4230 dated 27.11.1997 to the Insurer(Annexure-12).
Thus, the total claim comes
to Rs.112, 08,000
(iii) Interest @ 18% upto 28.2.1998 on
the above works out at Rs.134,60,000
Total: Rs.246,68,000
2. It was prayed that opposite party be directed to pay amount of Rs. 246,68,000 including interest @ 18% p.a. upto 28.2.1998 as also interest at the said rate from 1.3.1998 till date of payment in addition to cost of Rs. 1,20,000.
3. Opposite party contested the complaint by filing written version. It was alleged that the complaint is barred by limitation as it was filed on 6.3.1998 while the incident had occurred on 6.9.1993, complaint was alleged to be barred by condition No.6(ii) of the Policy. It was not denied that Fire ‘C’ Policy for the period from 1.4.1993 to 31.3.1994 for buildings, plant & machinery for Rs. 55.00 crores was issued by
