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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
Dr. Inder Jit Singh, Presiding Member
Puri Oil Mills Ltd. – Appellant
versus
Royal Sundaram Alliance
Insurance Co. Ltd. and Anr. – Respondents
First Appeal No.786 of 2017
(Against the Order dated 23/02/2017 in Complaint No. 79/2014 of the State Commission Haryana)
Decided on 7.7.2023
Consumer Protection Act, 1986 – Section 19 [Consumer Protection Act, 2019 – Section 51] – Appeal - Services – Insurance – Repudiation of Claim – Breakdown of Machinery – Attracted under breakdown Policy – Exclusion clause not applicable - On facts, it was not a case of planned repair, or normal wear and tear as the project had been commissioned only two months back, there could not be any situation of repair and maintenance, it was not a case of gradually developing flaw, the manufacturer’s report records the cause for misalignment hub assembly of turbine, the Appellant’s decision to continue to run the project to minimize the generation losses was based on manufacturer’s advice – Thus, the break-down of the machinery is covered under the Machinery Break Down Policy and exclusions/exceptions are not attracted - State Commission erred in concluding that when there is no defect in any part, it cannot be opined that OPs are liable to pay any compensations, and that complainant has not suffered loss on account of failure of machinery - The claim of the appellant has been in respect of misalignment in the bearings in the hub assembly resulting in dismantling, repairing, and reassembling of the turbine and consequent loss for the period during which the said turbine remained inoperative – Therefore, action of Respondent Insurance Company herein in repudiating the claim under Machinery Break Down Policy is not justified – On facts, Appeal is allowed, impugned order set aside. [Paras 6 to 15].
Result: Appeal allowed.
ORDER
The present First Appeal (FA) has been filed by the Appellant against Respondents as detailed above, under section 19 of Consumer Protection Act 1986, against the order dated 23.02.2017 of the State Consumer Disputes Redressal Commission Haryana, Panchkula, (hereinafter referred to as the ‘State Commission’), in Consumer Complaint (CC) no 79 of 2014 inter alia praying for:—
(i) To set aside the impugned order dated 23.02.2017 passed by the state commission.
(ii) To direct the respondents to indemnify the loss of Rs.36,20,000/- along with interest @ 18% p.a. from the date of loss till actual realization.
(iii) To direct respondents to pay a sum of Rs. 1,00,000/- to the complainant for inconvenience, harassment, discomfort, disappointment, mental agony, and deficiency of service.
(iv) To impose Punitive Damages upon the respondents to the tune of Rs.1,00,000/-
(v) To award costs in favor of appellant and against the respondents.
2. While the Appellant was the Complainant, the Respondents were OPs in the said CC 79 of 2014 before the State Commission. Notice was issued to the Respondents on 11.08.2017. Parties filed Written Arguments/Synopsis on 15.05.2018 (Respondents/OPs), 07.05.2018 & 23.02.2023 (Appellant/ Complainant) respectively.
3. Brief facts of the case, as emerged from the FA, Order of the State Commission and other case records are that:—
(i) The complainant undertook the installation of a Hydro Power Project located on the Yamuna Augmentation Canal in Tusang village, Tehsil Indri, District Karnal, Haryana. The project involved the utilization of vertical Kaplan turbines manufactured by M/s B Fouress (P) Ltd (BFPL). Following the completion of construction and operational preparations, the project was successfully commissioned on 17.06.2011.
(ii) In order to safeguard against potential machinery breakdowns and associated financial losses, the complainant procured a Machinery Breakdown Insurance Policy from OP No.1, Royal Sundaram Alliance Company Limited. The policy provided coverage with a sum assured amount of Rs 6.1 crore and remained in force from 28.06.2011, to 27.06.2012. Although a cover note was issued at the time of policy issuance, the finalization of terms and conditions was postponed until 24.11.2011, subsequent to policy inception.
(iii) As a problem was identified in the turbine in August 2011, the complainant engaged in discussions with BFPL, the manufacturer of the turbine. On 22.08.2011, it was collectively decided to dismantle the hub in order to rectify the issue. During a meeting held on 24.08.2011, it was discovered that the turbine body was jammed, prompting BFPL to recommend the dismantling of the hub assembly.
(iv) Despite the machinery breakdown occurring on 12.09.2011, the complainant made the decision to continue operating the turbine until that date to mitigate losses. It was explicitly communicated to BFPL that the unit was commissioned in June 2011 and began experiencing problems within a few months. Consequently, engineers inspected the problem and advised the dismantling of the turbine.
(v) As per the request, the water level in the canal was lowered, which resulted in unit No. 2 also tripping. Subsequently, the generator and gear box were dismantled and sent for repairs. The breakdown of the units led to a loss of Rs. 32.90 lacs, and an additional amount of Rs. 3,30,900/- was paid for labor charges associated with the dismantling process. R.L. Aggarwal was appointed as the surveyor by the OPs, and a report was submitted on 28.08.2012. However, OP No.1 repudiated the complainant’s claim in a letter dated 04.10.2012.
4. Vide Order dated 23.02.2017, the State Commission has dismissed the complaint filed, holding inter alia that the complainant has failed to prove that they suffered loss on account of failure of machinery and OPs are liable to pay the same.
5. Appellant(s) have challenged the Order dated 23.02.2017 of the State Commission mainly/inter alia on followi
SupremeToday
Exclusions/exceptions - The break-down of the machinery is covered under the Machinery Break Down Policy and exclusions/exceptions are not attracted.
Insurers are not liable for losses arising from the insured's failure to follow operational guidelines; the burden of proof lies on the complainant to establish policy coverage.
Insurance Policy – Machinery Breakdown Insurance Policy – Repudiation of Insurance policy – No clarity as to under which policy claim has been repudiated – Deficiency in service.
(1) Wear and Tear – The manner in which it has been believed to be an exercise for wear and tear merely placing reliance on the date of purchase, therefore, is not based on sound reasoning as it excl....
The date of discovering damage is not equivalent to the date of loss under insurance claims; the insured must prove that the incident causing loss occurred within the policy period for indemnificatio....
(1) Fresh Survey – if for any reason, the insurer is of the view that certain material facts ought to have been taken into consideration while framing a report by the surveyor and if it is not done, ....
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