Insurance claims cannot be repudiated arbitrarily, especially when surveyor's findings indicate coverage under the policy.

PER HON’BLE MR. SUBHASH CHANDRA

1. This is a complaint under Section 21 (a) (1) of the Consumer Protection Act , 1986 (in short, ‘the Act’) filed by the complainant alleging deficiency in service in repudiation of its insurance claim on the ground of “exclusion” by the opposite party.

2. In brief, the facts of the case are that the complainant (which was previously “M/s Sodhi Brothers LLC”) was allotted 4 MW (2X2 MW) Hydro Electric Project with financing from the State Bank of India through a term loan of Rs.22.60 crores and had entered into a Power Purchase Agreement (PPA) on 11.04.2007 with the Himachal Pradesh State Electricity Board (HPSEB). The project is located across River Bharal in Village Boh, Shahpur, District Kangra, Himachal Pradesh. The project was commissioned on 07.12.2010 and was notified by HPSEB as “commercially operative” w.e.f. the same date. The project was covered for the period from 04.10.2007 to 03.10.2008 and 24.08.2009 to 23.08.2010 under a Standard Fire & Special Peril insurance policy availed from Oriental Insurance Company. For the period from 01.07.2010 to 30.06.2011 it was covered under policy No. 110801/11/10/11/00000169 of the United India Insurance Company in favour of the complainant. The policy was renewed on payment of premium of Rs.4,28,240/- for the period 25.08.2011 to 24.08.2012 for a sum of Rs.31,60,00,000/-. The policy covers two components – Building superstructure for Rs.8,80,00,000/- and Plant and Machinery for Rs.22,80,00,000/-.

3. On account of heavy rainfall in September 2011, on 27.09.2011 there was a landslide during the day on the hill on which the concrete saddle of the penstock had been constructed. Due to damage to the saddle, the penstock pipe broke which resulted in the gushing of water from the penstock at high pressure which damaged the power house and many sensitive equipments due to slush and debris in the power house. The incident was reported to the opposite party on the same day at 3.00 p.m. and followed up by a written communication on 28.09.2011. The respondent appointed one Shri Rajeev Razdan to conduct a preliminary survey who visited the site and submitted a report dated 03.10.2011 stating that due to continuous heavy rains in the area, the penstock pipe slid along with concrete saddle due to pressure of water and this resulted in the power house structure getting damaged by water at high pressure and debris from the hill side. Thereafter the opposite party appointed Consolidated Surveyors Pvt. Ltd. as surveyors who visited the site on 12.10.2011 and submitted report stating that the proximate cause of loss was due to landslide which is covered under the insured perils and recommended that the underwriters may indemnify the loss of the insured. Based upon the subsequent visit of surveyor on 15.12.2012 and inspection of the repairs and re-enforcement undertaken by the insured and the cost of salvage of Rs.3,23,400/-, it was concluded that the estimate submitted by the insured/complainant was exaggerated and recommended payment of Rs.38,46,549.76/-. It is submitted by the complainant that the loss was wrongly assessed by M/s Consolidated Surveyors at Rs.38,46,549.76/- as against the repair cost submitted by the complainant of Rs.1,33,57,421/- since the surveyors did not consider payments in cash even in cases where tax had been deducted at source and proof had been provided. It was averred that cash payments to contractors in civil projects was the norm in remote locations due to non-availability of the banking system in such locations. It is averred that there is no dispute as regards the incident of heavy