An ambiguous clause in an insurance contract must be construed contra proferentem against the insurer, and an insurer cannot arbitrarily discard a surveyor's report without cogent evidence, nor can it justify repudiation solely through delayed, post-litigation decisions.

ORDER

Hon’ble Mr. Santanu Saha, Member

I. Genesis of the Case

This Complaint Case arises out of a dispute pertaining to repudiation of an insurance claim under a “Machinery Insurance Policy” obtained by the Complainant, West Bengal State Electricity Distribution Company Ltd. (WBSEDCL) from the Opposite Parties (OPs), National Insurance Company Ltd. (NICL) and Others. The controversy essentially revolves around the interpretation of policy conditions relating to maintenance/overhauling of machinery, the evidentiary value of the surveyor’s report, and the alleged deficiency in service on the part of the insurer in delaying and ultimately repudiating the claim.

II. Facts in Brief

The Complainant obtained a Machinery Insurance Policy on 24.03.2015 for its Purulia Pumped Storage Project (PPSP) from the OP, valid till 23.03.2016, upon payment of a premium of Rs. 3,37,88,714/-.

On 12.04.2015, during the currency of the policy, Unit No. 4 of the PPSP tripped. Intimation was given to the Opposite Party on 20.04.2015. A surveyor was appointed and a joint inspection was conducted on 04.06.2015. The preliminary cause of failure was identified as “stator winding insulation failure,” specifically attributed to failure of Coil No. 46.

The Complainant submitted a claim of Rs. 5,02,43,002/- on 27.06.2016 to the Opposite Party along with requisite documents. Despite repeated communications, the claim remained unsettled.

Afterwards, due to non-settlement of this claim by the Opposite Party, communications were made by the Complainant on 26.9.2016, 24.10.2016, and 11.11.2016. On 13.2.2017 and again on 12.4.2017, Complainant made written requests to the Opposite Party for sharing the final survey report but to no avail.

On 19.5.2017, WBSEDCL wrote to NICL for expeditious settlement of claim followed by further communications on 13.10.2018, 11.12.2018 and 12.4.2019 but got no reply from NICL.

On 22.8.2019, the Complainant filed Consumer Complaint under Consumer Protection Act, 1986 ( CP Act, 1986) before the National Consumer Disputes Redressal Commission (NCDRC) and here the Opposite Party, in its ‘Written Version’ filed before NCDRC, informed that claim of WBSEDCL had actually been repudiated on 16.10.2019.

The Complainant challenged this act of repudiation by sending letter to the Opposite Parties on 11.11.2019 wherein the issue of non-furnishing of the surveyor’s report by the OP was also flagged.

Subsequently, CP Act, 1986 was amended by CP Act, 2019 resulting in change of jurisdiction of different Consumer Commissions at the District, State and National level. With the approval of NCDRC, WBSEDCL withdrew its CC Case from NCDRC and filed the case afresh before West Bengal State Commission on 05.10.2020.

The Surveyor engaged by the Opposite Party, in its Final Survey Report (FSR) submitted on 22.08.2016, assessed the loss to be Rs. 4,98,59,843/- and after adjusting minimum excess of Rs. 6.0 lakh, the assessed net loss stood at Rs. 4,92,59,843.00 only.

III. Arguments

A. Arguments of the Complainant (WBSEDCL)

The Complainant submitted that:

a) The claim was repudiated due to violation of Terms and Conditions (T&C) of the policy which stipulated that the generators are to be overhauled “after 32,000 hours of operation or every four years”. This does not mean overhauling of the generator every four years mandatorily. Absence of the phrase “whichever is earlier” in the T&C clearly indicates that overhauling was contingent upon completion of 32,000 operational hours. Since inception on 12.7.2007 till date of tripping, the generator had operated for only about 18,400 hours, well within permissible limits.

b) The FSR categorically recorded that all preventive maintenance had been carried out as per Original Equipment Manufacturer (OEM) recommendations, thereby negating any negligence on the part of the Applicant.

c) The repudiation letter wa