IMPORTANT POINT
Insurance Company has a right to discard the report of a surveyor and to appoint another surveyor.

ORDER

Order dated 21.12.2009 passed by the State Consumer Disputes Redressal Commission, Andhra Pradesh, (in short ‘the State Commission’) in Consumer Complaint No.45 of 2006 has been challenged in appeal by the appellant M/s. National Insurance Co. Ltd. on the ground that damage caused to the machinery is not due to any peril operating under the insurance policy, rather, it is covered under the exclusion clause given in the policy.

2. Brief facts of the case are that complainant/respondent is a Government of India Enterprise situated at Vishakhapatnam 530 012 (A.P). The appellant/opposite party is a registered insurance company. Complainant is engaged in manufacturing of heavy engineering equipments for oil refineries, steel plants, fertilizers, defence etc. Complainant secured a contract with IOCL and in the pursuance of the contract, it placed a purchase order with M/s. Ingersoll R Ahmedabad, the supplier, for design, manufacture, supply, and supervision for erection, field testing and for commission of two air compressors. Thereafter, complainant took Marine-Cum-Erection Insurance Policy No.550704/04/2000/500058 from the opposite party/appellant for a period from 19.1.2001 to 18.01.2004 Total sum insured was Rs.86,36,50,000/- at a premium of Rs.39,81,945/-. On 23.6.2002, when IOCL, EIL, with the complainant opened one of the compressor for joint inspection, they found accumulation of rain water and patches/pitting in 1st and 3rd stages of the air compressor. Complainant informed the opposite party about the damage on 24.6.2002 and vide letter dated 25.7.2002 lodged a claim with it. Thereafter, complainant lodged a claim of Rs.67,00,330/- towards the damage caused to one of the compressors due to accumulation of rain water in it. Surveyor assessed the loss of Rs.48,26,000/- instead of Rs.67,00,330/-. Allegedly, claim was not settled by the opposite party. Claim was repudiated by the opposite party vide letter dated 13.9.2004. It intimated the complainant that the loss falls under the exclusion Clause of Section 1 of Part 2 i.e. “normal wear and tear gradual deterioration due to atmospheric conditions or otherwise rust scratching of painted or polished surfaces or breakage of glass.” Alleging deficiency in service on the part of the opposite party the complainant filed a consumer complaint before the State Commission. The State Commission vide its order dated 21.12.2009 allowed the complaint and passed the following order:-

“16. In the result the complaint is allowed in part granting Rs.48,26,000/- together with interest @9% p.a. from the date of repudiation viz, 13.9.2004 till the date of realization together with costs of Rs.5,000/-. Time for compliance four weeks.”

3. Aggrieved by the order of the State Commission dated 21.12.2009, the Insurance Company has preferred the appeal before this Commission.

4. Heard the learned counsel for the parties and perused record.

5. Learned counsel for the appellant stated that the compressor which was erected after 13 months of the delivery, due to atmospheric conditions got rusted and this has to be treated as normal wear and tear and therefore, it is covered under the exclusion clause No.(c) of Section I of the policy. In fact, there were many lacunae in the report of the surveyor and therefore, not satisfied with the report of the surveyor, the Insurance Company sought clarification from the surveyor vide their letter dated 24.3.2004 as under:-

“With reference to your above cited survey report, we request you to kindly clarify on the following aspects of ‘admissibility of claim’ to enable us to proceed further.

01. The consignment in packed condition was reportedly stored in the site for nearly 70 days before erection and the commissioning reportedly started after one year of erection i.e. on 23//06/2002 and loss was reportedly discovered on 26th July 2002. In this connection, we advise you to comment on the admissibility of claim under Exclusion (c) to Section I (material damag