IMPORTANT POINT
Insurer - The insurer has the discretion to accept or reject the report of the surveyor for reasons to be clearly provided.

ORDER

This is a complaint under Section 21 (a) (i) of the Consumer Protection Act, 1986 (in short, ‘the Act’) alleging deficiency in service in the repudiation of the claim filed under a Special Contingency Insurance Policy (SCIP) obtained by the complainant from the opposite party in respect of a mini hydel supply project operated by the complainant.

2. In brief, the facts of the case are that the complainant was operating a mini hydel power project at Kabini Dam Site in Beechanahalli, H.D. Kote Taluk, Mysore District, Karnataka with an installed capacity of 20 MW for which purpose it had entered into a Power Purchase Agreement with the Karnataka Power Transmission Corporation Ltd. on 28.08.2001. The project was based upon supply of water from the Kabini Dam. The complainant was offered a tailor made Special Contingency Insurance Policy covering all risks of failure of hydrology resulting or incurred due to failure of monsoon or deficit rainfall or non-availability of required quantum of water for power generation of Rs.10 crores at a premium of Rs.9,72,000/-. This Policy No. 072200/46/03/00052 dated 23.09.2003 covered a period from 12.09.2003 to 11.09.2004. The policy was renewed for a further period of one year from 13.09.2004 to 11.09.2005 vide Policy No. 072200/46/04/00052 at the same premium of Rs.9,72,000/-.

3. The complainant submits that he provided monthly generation data at periodical intervals to the opposite party. According to the complainant, for the period ending 29.02.2004, the generation was 21.33 million units (approx.) against the projection of 49.43 million units (approx.) leaving a shortfall in generation of 28.10 million units. This shortfall has been stated to be due to lack of water for the hydro based power project and, therefore, as per the Special Contingency Insurance Policy a claim for Rs.3,15,23,083/- was preferred on 05.11.2004. The respondent vide his letter dated 17.02.2005 intimated inability to admit the claim on the ground that rainfall during the policy period throughout India was normal. The complainant has submitted that the non-admission of the claim even without appointing a surveyor and on the basis of the national rainfall average without reference to the local conditions in the catchment area is a premediated and deliberate attempt to repudiate a legitimate claim.

4. The complainant submits that it appointed an independent agency viz. TATA Consulting Engineers (TCE) in May, 2004 to do an assessment of the hydrology of the Kabini Dam. It is submitted that the TCE vide its report dated 11.05.2004 reported that 2003-04 was hydrologically the poorest year when the surplus flow from the Kabini Dam was at the lowest.

5. Following meetings with the opposite party, the complainant was informed that one Mr. D. Shrinivas had been appointed as surveyor to assess the loss incurred. Information sought by the surveyor was provided to him by the complainant and the surveyor submitted a report to the opposite party. The claim of the complainant was repudiated by the opposite party vide letter dated 03.11.2006 on the basis of the surveyor’s report that “liability under the policy does not arise since the government had not declared failure of monsoon in Karnataka especially in the catchment area at Kabini”.

6. Following further meetings and requests with the opposite party including a request to appoint an independent surveyor from outside the State by the complainant, the opposite party appointed one Mr. Supriyo Kar as surveyor. Information desired by this surveyor was also shared with him by the complainant. The report of this surveyor has not been shared with the complainant although the opposite party has informed the complainant that the observations and recommendations of the second surveyor cannot be considered since they are based on a monthly analysis of inflow of water into the dam. The repudiation of the claim was reiterated against which the complaint is before this Commission with the f