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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Ajit Bharihoke, Presiding Member and Anup K Thakur, Member
Indian Farmers Fertilezer Co-Op. Ltd. —Complainant
versus
New India Assurance Co. Ltd. —Opp. Party
Consumer Case No.103 of 2005
Decided on 21.11.2017
Counsel for the Parties:
For the Complainant:Mr. Pradeep Dewan, Sr. Advocate Assisted by Mr. Mohtish Kr. Singh, Advocate
For the Opp. Party:Mr. S.M. Tripathi, Advocate
IMPORTANT POINT
Violation of express condition of insurance contract may vitiate insurance cover.
Headnote:Consumer Protection Act, 1986—Section 21—Insurance—Machinery Breakdown Policy—Damage to Synthesis Gas Compressor Turbine (TK-1431) covered under policy—Delay in settlement of insurance claim—Subject Synthesis Gas Compressor Turbine was commissioned in year 1988 and complainant had been getting it insured year by year—It is not the case of complainant that he got Synthesis Gas Compressor Turbine overhauled or inspected in opened up state from maker’s representative or a competent agency as provided in policy condition—Complainant has not even adduced any evidence to show that it furnished to opposite party copy of report issued by maker’s representative or competent agency which may indicate that requisite inspection and overhauling of insured plant was conducted within stipulated period—Complainant has violated express condition of insurance contract, as such, insurance company was justified in disowning liability for loss or damage caused and repudiating insurance claim—Complaint dismissed.
Held: Undisputedly, the subject Synthesis Gas Compressor Turbine was commissioned in the year 1988 and the complainant had been getting it insured year by year. It is not the case of the complainant that he got the Synthesis Gas Compressor Turbine overhauled or inspected in opened up state from the maker’s representative or a competent agency as provided in the above noted condition. The complainant has not even adduced any evidence to show that it furnished to the opposite party copy of report issued by maker’s representative or competent agency, which may indicate that requisite inspection and overhauling of the insured plant was conducted within the stipulated period. Therefore, it is clear that complainant has violated the above noted express condition of the insurance contract, as such, insurance company was justified in disowning the liability for loss or damage caused and repudiating the insurance claim.
Learned counsel for the complainant has referred to judgment of Supreme Court in Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan and Others AIR 1987 SC 1184 and submitted that in the aforesaid judgment, Hon’ble Supreme Court stressing that the insurer should follow “main purpose rule”, held that exclusion clause has to be ‘read down’ in order that it is not at war with the ‘main purpose’ of the insurance contract.
The above submission of learned counsel for the complainant is misconceived. On careful perusal of the above referred judgment of the Supreme Court, it is clear that in the aforesaid matter, the issue before the Supreme Court related to the liability of insurer towards the third party victim, who was not a party to the insurance contract but only a beneficiary under the contract. In the instant case, the insurance company has offered to insure the subject plant with a specific rider casting duty upon the insured to keep the plant and its units in perfect condition by getting it inspected or overhauled by the maker’s representative or any authorised agency so as to avoid any unnecessary breakdown in the machinery resulting in the damage. The above condition is meant to safeguard the interest of the insurer. Therefore, ‘main purpose rule’ has no applicability in the instant case.
In view of the discussion above, it is established that complainant has violated the above noted condition which was meant to protect the interest of the insurance company. Therefore, in view of the expressed provision in the above condition, the insurance company was justified in repudiating the claim and it cannot be said to be deficient in service. (Paras 14 and 17)
Result: Complaint dismissed.
Ajit Bharihoke, Presiding Member—The complainant is engaged in the production and marketing of fertilizers. One of its plants is situated at Aonla, District Bareily, U.P. and is manufacturing Ammonia and Urea. The production in the Aonla plant commenced in the year 1988. The complainant since commissioning of Aonla plant in the year 1988 had been taking insurance cover for the said plant on year to year basis since 1988. Lastly, the aforesaid fertilizer plant was insured by the opposite party insurance company for the period 02.10.2000 to 01.10.2001.
2. That on 15.01.2011 Synthesis Gas Compressor Turbine (TK-1431) covered under the above noted machinery breakdown policy was damaged. An intimation to this effect was communicated to the concerned divisional office of the opposite party vide letter dated 17.01.2001.
3. That the opposite party on receipt of intimation of loss deputed one Arvind Kumar to conduct survey. Thereafter, final survey was done by M/s Kaypsens Surveyors and Loss Assessors.
4. According to the complainant, it suffered damage amounting to Rs.1,34,65,235/- towards the cost of repairs / reinstatement of the damaged rotor of effected steam turbine (details are given in para 9 of the complaint). It is further the case of the complainant that it fully cooperated with the surveyors M/s Kaypsens and provided all the required information and documents from time to time. Despite that opposite party delayed the settlement of insurance claim. The opposite party, however, vide letter dated 04.11.2003 repudiated the insurance claim of the complainant on the ground that claim is beyond the scope of the policy because of breach of policy condition i.e. inspection and overhaul of the machine within stipulated period / stipulated hours of operation.
5. Complainant made various representations to the opposite party to re-examine entire matter in the light of the clarification given to the contents of survey report but the opposite party neither replied to the representation nor took any action thereon. The complainant, however received a letter dated 29.03.2005 from the Assistant General Manager, Regional Office, Kanpur of the opposite party that the opposite party was re-opening the claim which was repudiated and the claim was under process. The opposite party, however, failed to intimate the complainant about the follow up of the above noted letter dated 29.03.2005 or the decision taken on the repair of the claim. The complainant feeling aggrieved raised the consumer dispute by filing consumer complaint seeking direction to the opposite party to pay to the complainant sum of Rs.1,34,65,235/- towards the payment of insurance claim with 18% interest thereon from the date of loss besides Rs.1,00,000/- towards the cost of litigation and damages.
6. The opposite party resisted the complaint. In the written statement, opposite party took the preliminary objection that complaint is not maintainable as the complainant is not a consumer as defined under section 2 (1) (d) of the Act because it availed of services of the opposite party for commercial purpose. The opposite party also pleaded that complaint is barred by limitation. On merits, the opposite party admitted having issued machinery breakdown insurance policy in respect of subject fertilizer plant on payment of premium. It is also admitted that the steam turbine and synthesis gas compressor and auxiliaries which are subject matter of the dispute were part of the insured plant. It is denied that complainant suffered damage amounting to Rs.1,34,65,235/. The opposite party justified the repudiation of the insurance claim on the ground of non compliance of the specific condition in the policy. Relevant condition is reproduced as under:—
“Inspection of Turbines and Turbo Generators-Amended Provisions”
“All mechanical and Electrical parts of any steam turbine, gas turbine, water turbine or generator shall be inspected and overhauled thoroughly under the supervision of mak
