IMPORTANT POINT
Wilful negligence has all elements of gross negligence, but it also requires that defendant knows or should have known about potential injury—It is the highest degree of negligence.

ORDER

AVM J. Rajendra, AVSM, VSM (Retd.), Member—The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 14.02.2013 passed by the State Consumer Disputes Redressal Commission, Maharashtra (hereinafter to be referred as “the State Commission”), in Consumer Complaint No.110 of 2010, wherein the Complaint filed by the Complainant (Appellant herein) was dismissed.

2. For the sake of Convenience, the parties in the present matter being referred to as mentioned in the Complaint before the State Commission. “DCW Ltd.” is the Complainant, which is a manufacturing company involved in the production of caustic soda, synthetic rutile, PVC, etc. in Sahapuram, Tamil Nadu.

“United India Assurance Co. Ltd.” is referred to as the “Opposite Parties” or Insurer in this matter.

3. The main issue in this case is the alleged deficiency in service by the Opposite Parties/Insurer. The Complainant’s insurance claim was repudiated based on the insurer’s contention that the damage to the insured Diesel Generator Sets (for short ‘DG Sets’) resulted from willful negligence on the part of the insured or any person acting on their behalf. The dispute revolves around the application of Clause 2(a) of the insurance policy, which excludes claims arising from ‘willful acts or willful negligence by the insured or any person acting on their behalf’.

4. The Complainant (Appellant herein) purchased an ‘Industrial All Risk Policy’ No. 120200/11/08/06/00000492 from the Opposite Parties (Respondents herein) Company, to insure the Captive Power Plant comprising of Six ‘DG sets’ of 6MW capacity. The Policy was valid from 17.08.2008 to 16.08.2009 with a sum assured for Rs.1,20,00,00,000/-. Out of which plant and machinery comprised of Rs.95,00,00,000/-.

5. During the policy period, DG Set No. 5 encountered an accident on 02.11.2008, wherein the dummy plug near B-5 crank pin became loose, resulting in drop in lube oil pressure. Despite the alarm activation at 3.5 bar lube oil pressure, the ‘DG Set’ No. 5 tripped at 1.40 p.m., leading to damage to the insured ‘DG set’ and other instruments.

6. The Complainant notified the OPs/Insurer about the damage on 04.11.2008. The Complainant hired M/s. Rastek Pvt. Ltd., an expert, to analyze the cause of damage. Their report was submitted with observations. Afterwards, the OPs/ Insurer appointed Shri Anantha Padmanaban, an Authorized Surveyor, to carry out survey of the damage. He observed that the Complainant allowed the ‘DG set’ engine to operate for 10 days with a drop in oil pressure, indicating gross negligence. He noted that the lube oil pressure progressively dropped, starting from 24.10.2008, and went down to 4.45 bar. Thereafter, the Complainant made an insurance claim of Rs. 54,34,858/-. However, the Surveyor assessed the claim at Rs. 35,53,868/-. Based on the Surveyor and Expert’s Report, the insurance claim was repudiated by the OPs/ Insurer, citing Clause 2(a) of the insurance policy, which excludes claims arising from “any willful act or willful negligence on the part of the insured or any person acting on his behalf.”

7. Being aggrieved due to the deficiency in service on the part of the OPs/Insurer, the Complainant filed a Consumer Complaint (No. 110 of 2010) before the State Commission, claiming Rs.54,34,858/- with ancillary claim of interest @18% p.a. and amount of Rs.5,00,000/- as exemplary damages.

8. The OPs/Insurer, in their written version, denied the Complainant’s claim, stating that the insured DG Set was not handled prudently. The Complainant, even after the alarm was activated at a lube oil pressure of 3.5 bar, did not discontinue the engine and allowed it to automatically trip off at a lube oil pressure of 2.8 bar when there was a significant load on the engine. The Respondents contended that the Complainant should have immediately turned off the machine when the alarm was activated at 3.5 bar to minimize