IMPORTANT POINTS
(1) Breach – The breach in the Dam was caused due to heavy rains and that was clearly covered under the Insurance claim. The deficiency in service by erroneously repudiating the claim is established.
(2) Exclusionary Clause – This was not a loss or damage suffered and therefore the Exclusionary Clause to that extent under Section 1 would be attracted. Consequently, accepting the said finding of the Surveyor, the claim on that count cannot be indemnified.

ORDER

This complaint has been filed by a Private Limited Company through its Director that undertakes contracts for construction of public works, including roads, dams etc. The present complaint is filed with regard to the non-settlement of an insurance claim that had been registered with the insurance company, claiming a loss while carrying out the work of construction of a water storage tank under the lift irrigation scheme at Village Muchonipally in Gattu Mandal, Mehbubnagar, Andhra Pradesh. The project was sanctioned and contract awarded and in order to cover the risk the complainant took a Contractors All Risk Insurance Policy from the opposite party that was valid for the period between 18.07.2008 to 17.07.2009 that was continued from 18.07.2009 to 17.01.2010.

2. The complainant commenced work on this project of the lift irrigation scheme titled as “Jawahar”. According to the complainant heavy rains on an unprecedented scale were witnessed at the site, causing a breach in a part of the bund of the said project between 30.09.2009 and 03.10.2009. This breach occurred on account of this heavy rainfall. The water to be accommodated had to pass through a feeder canal to be constructed by another agency. Since the feeder canal had not been completed the water could not flow through the same and for that reason the portion of the bund which is a gorge was not raised to its final height leaving sufficient gap for the rain water to drain off to avoid any breach in the bund.

3. According to the complainant the said portion consisting of the gorge of the bund was kept open till November, 2008 by which time the rainy season was over and there was no threat of rain water. The gorge therefore could be safely enclosed and the work was undertaken by the complainant to ensure that the work is completed by February-March, 2009.

4. Unfortunately, in Feb., 2009, the local farmers commenced their agitation against the non-payment of their alleged dues of compensation towards the land acquired by the Government and during the protest that followed, the construction work was obstructed. It is in this background that the work could not be concluded as the rainfall in October, 2009 was unprecedented recording 261.1 mm against the average rainfall of 87.13 mm. The rainfall was three times in its intensity as against the previous records, which caused the damage.

5. The said torrential rains caused the breach and on 03.10.2009, the complainant dispatched this information with promptness to the opposite party insurance company informing it about the damage. Another letter was dispatched on 05.10.2009 requesting the opposite party to appoint a surveyor.

6. Mr. C.S. Balasubramanian was appointed as a surveyor by the Regional Office of the opposite party insurance company, who visited the site and submitted an interim survey report on 17.11.2009. The report describes that on the date of the loss there was not much activity at the breach site as there was a farmers’ protest. The occurrence described heavy rains that had caused the reported breach of the earthen bund of gorge portion of the reservoir. There were other reported damages as well. The breach noticed was from chainage 2.70 kms to 2.80 kms. It was a complete breach and huge cracks had developed on the top of the earthen bund for about 10 M on either side of the project. The corresponding damages were also of the same lengths. Other breaches and rain cuts were also noticed and it was opined that the flooding did take place but how it caused the breach, is not known. It has again been stated therein that the State Irrigation Department was aware of the damage but it did not resolve the issue of protesting farmers as a result the project activities had come to a standstill.

7. However, while verifying the records, the following facts have been stated at Item No. ‘H’:—

“H.1 The insured were maintaining Measurement Books where the works carried out at the project site were recorded on periodical