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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
A.P. Sahi, President
Khanna Paper Mills Ltd. – Complainant
versus
United India Insurance Co. Ltd. – Opp. Party
Consumer Case No.9 of 2012
Decided on 14.11.2023
Consumer Protection Act, 1986 – Section 21(a)(i) – [Consumer Protection Act, 2019 – Section 58(1)(a)(i)] – Services – Insurance – Repudiation of Claim – Breakdown of Turbine – Proper maintenance by complainant – Proof of – No comments by Surveyor to disprove the same – It is evident that the information was tendered on 24.10.2008 after taking the photographs and also collecting the information with regard to the status of the machinery and carrying out emergency operations and repairs in order to avoid any loss to the Company. Thus, the information tendered within 19 days keeping in view the assessment of the loss as per the Excess Clause appears to be justified as there was nothing pointed out so as to hide or camouflage the happening in any way. The passage of time, therefore, in the above circumstances cannot be said to have travelled a far distance from the proximity as envisaged under the terms of the policy – The intimation either not being given immediately or within 15 days had been explained in the reply dated 20.08.2010 which has not been labelled as untrue but has been rather treated to be a violation strictly construing the period of 15 days available under the general conditions and also casting a doubt on the information not being tendered forthwith – This in the opinion of this Commission does not render the happening or the incident to be invalid or outside the coverage of the policy. The loss was suffered due to the said incident as complained of by the Claimant. There is neither any inordinate or deliberate delay so as to warrant the invoking of the Clause referred to above. The period taken to intimate in respect of the nature of the incident cannot be said to be prolonged or procrastinated so as to cast a doubt on the Complainant regarding tendering of such information – Thus, the disruption occurred because of the dislodging of the diaphragm bolts. It is not the case of the Insurance Company that the bolts had worn out due to wear and tear. There was also no evidence that the alleged wear and tear caused the bolts to give way. There is also not technical evidence that there was no proper maintenance of the TG set or that care to maintain the equipment was lacking. The surveyor also has not commented on any lack of maintenance care on the part of the claimant – Thus, there can be a logical assumption of preponderance of probability of the spare parts having been purchased earlier for such a contingency which was tendered as an explanation by the Complainant. 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 excludes a greater possibility which is preponderant – Thus, on all counts, the theory of wear and tear repeatedly mentioned by the surveyor which has been accepted in the repudiation letter is beyond acceptance and deserves rejection for all the reasons stated herein above – Therefore, complaint is allowed, claim directed to be admitted. [Paras 39 to 51].
Result: Complaint allowed.
ORDER
A.P. Sahi, President—This complaint is by a Paper Mill about an insurance claim that has been repudiated by the opposite party, United India Insurance Company Limited on 01.12.2010. The present complaint was filed praying for damages suffered by the complainant due to breakdown of an Industrial Steam Turbine installed by the complainant for power generation.
2. The complainant mill is a manufacturing unit that had undertaken an Industrial All Risk Policy for a coverage of Rs.610 crores with an excess clause that the claims would be admissible if they are above Rs.5,00,000/-. The coverage was in respect of machinery, equipment, building etc. and the present claim relates to the damage to an Alstom make Steam Turbine and various other parts which got damaged according to the complainant in unforeseen circumstances.
3. It is stated that the turbine was working at full capacity when at about 9 p.m. on 05.10.2008 there was a violent vibration and the turbine tripped. The rotor bolts of the turbine were damaged. The manufacturer M/s. Siemens Company were informed of the aforesaid breakdown intimating that it appears that the diaphragm bolts got dislodged when the turbine was in an operational stage as a result whereof in the turbine blades got damaged. However, the internal damage could not be exactly assessed as it was not known as to what had happened inside the turbine.
4. Engineers from the manufacturer came and examined the turbine. The investigation continued between 16.10.2008 to 21.10.2008 and on 24.10.2008 a tentative assessment of the manufacturer was received, whereafter the complainant requested the Insurance Company to send its surveyor. One Mr. Subhash Chawla was appointed as the preliminary surveyor who investigated and assessed the loss. The turbine was restarted on 30.10.2008 on which date the final surveyor M/s. V.K. Mehta and Company visited the factory. On 31.10.2008, the spot surveyor Mr. Subhash Chawla submitted his report.
5. The turbine was again stopped for repairs as some sound was observed on 12.11.2008 and it was restarted the next day. The functioning again stopped on account of the gear box thrust, bearing and pinion shaft bearings emitting some sounds.
6. The surveyor sent a letter on 15.11.2008 seeking documents from the complainant.
7. The turbine was again restarted on 16.11.2008 and then was again stopped on 28.01.2009 and it was inspected by Mr. Subhash Chawla, the first surveyor.
8. The turbine was restarted on 22.02.2009 and on 10.03.2009, M/s. Siemens Company the OEM submitted a technical report.
9. On 19.03.2009, the complainant again received a letter from the Insurance Company to which a reply was given by the complainant on 21.04.2009.
10. After a fairly long time a query was again raised by the surveyor on 30.11.2009 and a reminder was sent on 30.01.2010. A reminder was again sent on 03.04.2010 followed by another letter on 26.05.2010.
11. A reply was submitted by the complainant on 20.08.2010, whereafter the final surveyor M/s. V. K. Mehta and Company submitted its report on 20.10.2010.
12. The claim of the complainant was repudiated by the opposite party on 01.12.2010. A request for review was made by the complainant that was not responded to whereafter the present complaint was filed.
13. Learned counsel for the complainant urged that it was the dislodging of the bolts when the turbine was in operation on 05.10.2008 that offset the functioning of the turbine and since sometime was consumed in trying to find out the faults with the help of the engineers, the Insurance Company was accordingly informed in October, 2008 itself of the damaged caused with all supporting documents. However, subsequently the surveyor demanded documents which were sent but relying on the surveyor’s report the claim was erroneously repudiated on the ground that the claim was made in respect of expenses incurred due to some preventive maintenance and not due to any unforeseen circumstance or accident. The re
(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 court affirmed that damage to the turbine was predominantly due to mechanical breakdown and not covered under the fire insurance policy, emphasizing the importance of evidence in establishing pro....
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....
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.
The court emphasized the need for proper justification and adherence to regulations in repudiating an insurance claim, and highlighted the importance of considering expert reports and providing reaso....
Exclusions/exceptions - The break-down of the machinery is covered under the Machinery Break Down Policy and exclusions/exceptions are not attracted.
Surveyor's report, while important, is not conclusive; claim exclusion must be proven by the insurer, particularly where there are indications of bias.
Insurance claims must be assessed justly, with surveyor reports not being conclusive and subject to scrutiny.
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