AI Structured Summary
Not yet generated for this judgment
Judgment
C. Viswanath, Presiding Member
The present Complaint is filed under Section 21(a)(1) of the Consumer Protection Act, 1986.
Complainant is a Public Limited Company engaged in the business of manufacturing of liquor. The Complainant had a glass plant at Sahibabad Industrial Area, Ghaziabad. The Complainant also launched Binnie’s potato chips and PET containers. In order to cover the risk to building, plant & machinery, furniture- fixture, electric installation and office equipments, the Complainant purchased Standard Fire & Special Perils Policy No.351600/11/10/3400000125 with add on earthquake and terrorism cover, alongwith reinstatement value for a sum of Rs.3,91,52,98,214/- from the Opposite Parties. The Complainant also took Fire Declaration Policy No.351600/11/10/3400000117, covering the risk for insured stock and stock in process with add on earthquake and terrorism cover for a sum of Rs.77,96,00,000/-, out of which Rs.4,00,00,000/- was for stock of molasses stored in the tanks. Both Policies were valid from 03.08.2010 to 02.08.2011.
Case of the Complainant is that on 12.03.2011, at about 12.15 noon, suddenly a loud sound was heard followed by flowing of molasses stored in over ground MS tank. The driver and helpers who had brought molasses for unloading also sustained injuries and were admitted in the nearby hospital and one of the workers died. The explosion and force of molasses was so devastating that the tanker also turned turtle. The Complainant immediately intimated the incident to the Police and the Opposite Parties. The Complainant lodged claim for loss of building, plant & machinery, electrical equipments and molasses, including molasses recovery expenses, apart from damage of civil works/buildings. The Opposite Parties deputed M/s Select Surveyors Pvt. Ltd. to carry out the preliminary survey and M/s Adarsh Associates for assessment of loss. The Complainant completed all necessary formalities and also submitted documents sought by the Surveyors. M/s Select Surveyors Pvt. Ltd. submitted Preliminary Survey Report dated 01.04.2011. M/s Adarsh Associates, Surveyors and Loss Assessors submitted Final Survey Report on 01.05.2012 assessing the loss at Rs.1,30,41,699/- against the claim of Rs.4,05,15,464/-. Despite repeated requests, the Opposite Parties did not settle the claim of the Complainant. On 14.11.2011, the Complainant moved an application under RTI to know the status of the claim. The Opposite Parties, vide letter dated 27.02.2014, repudiated the claim on the ground that the molasses tank burst due to weakening of MS Plates/weld joints due to heavy/deep pitting from inside, mainly at the bottom of the tank and the tank was unable to hold the pressure of molasses stored. Alleging deficiency on part of the Opposite Parties, the Complainant filed the instant Consumer Complaint with the following prayer: -
“i) Hold that the complainant is entitled for an amount as claimed in claim bill and direct the respondents to disburse amount of Rs.4,05,15,464/- towards the loss along with interest @ 12% p.a. from the date of loss till the date of actual disbursement.
ii) Grant exemplary damages of Rs.50,00,000/- on account of deficient services and unfair trade practices;
iii) Grant litigation expenses to the extent of Rs.3,30,000/-.
iv Pass any other orders or directions as deemed appropriate in the facts and circumstances of the case.”
The Opposite Parties contested the Complaint on the ground that the claim of the Complainant was repudiated on the basis of recommendations of the Surveyor and technical investigations. On receiving intimation of loss, the Opposite Parties deputed Preliminary Surveyor, who observed that MS Tank suffered self-damage due to ageing and/or failure of some MS Plates. The Tank was filled beyond its capacity. The Final Surveyor, M/s Adarsh Associates deputed technical expert M/s Satyakiran Engineers Pvt. Ltd., who observed that improper repair maintenance and thickness of MS plates was responsible for excessive hoop stress, which led to collapse of the tank. Apart from the report of the Surveyor, the matter was also referred to an independent technical expert. Based on the inspection of the site, observations of the preliminary surveyor, technical expert and the Final Survey Report the Opposite Parties repudiated the claim.
Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Complainant submitted that the Opposite Parties engaged M/s Satyakiran Engineers Pvt. Ltd. to carry out necessary testing and cause analysis for failure of the tank in question. M/s Satyakiran Engineers appointed a Government owned National Testing Laboratory to test the samples from the burst tank. The Complainant also engaged National Metallurgical Laboratory, Jamshedpur, a Government owned laboratory to find out the cause of loss. Both the Government owned laboratories confirmed that the material of the MS Tank met with the required standards. Despite that, the Opposite Parties repudiated the claim, without application of mind and in total disregard of the terms & conditions of the Policy. The Opposite Parties tried to shift the onus of proving the cause of loss upon the Complainant. The Opposite Party failed to produce any evidence to prove that the MS Tank burst due to weakening of MS Plates/weld joints.
It was submitted that the Policy covered the following perils and not the causes of peril: -
“1. Fire
Lighting
Explosion/Implosion
Aircraft Damage
Riot Strike Malicious & Terrorism Damage
Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood & Inundation
Impact Damage
Subsistence & Landslide including rock slide
Bursting and/or overflowing of water tanks, Apparatus and pipes
Missile Testing Operations
Leakage from Automatic Sprinkler installations
Bush Fire”
All causes, unless specifically excluded in the terms & conditions of the Policy, were covered. The reasons given by the Surveyor that the loss was due to wear and tear of the MS tank was not excluded in the Policy. Learned Counsel relied on the definition of “explosion/implosion” given in the text book of Insurance Institute of India and submitted that the Opposite Party misinterpreted that the incident was not covered in the insured peril. It was further submitted that the assessment made by the Surveyor was not correct based on the documents submitted by the Complainant.
Learned Counsel for the Opposite Parties submitted that the Opposite Parties repudiated the claim of the Complainant on the basis of the Survey Report. On physical verification, the Surveyor did not notice any signs of fire and/or associated explosion having taken place inside the Malt House. M/s Satyakiran Engineers Pvt. Ltd. after detailed inspection of the site and discussion with the representative of the Complainant, submitted their report dated 31.08.2011 observing that the improper repair maintenance with low and random thickness of the MS steel plates used for construction of the wall of the tank shell, was responsible for excessive hoop stress generation. It was also observed that the shell plates had weakened due to creep and stress corrosion cracking evident from visual, FMPI and Ultrasonic test. The Complainant, without informing the Opposite Parties or the Surveyor, engaged M/s CSIR-National Metallurgical Laboratory, Jamshedpur to ascertain the cause of failure of MS tank but, vide report dated 17.06.2011, had not given specific cause of loss and stated that the cause of loss may be dust explosion. The aforesaid report was discussed at length with all concerned, including the Complainant. The Surveyor in the Final Survey Report dated 01.05.2012 observed that the MS Tank had not burst due to any peril covered under the Policy and the same was result of gradual wear and tear/erosion of metal leading to reduction of thickness of MS plates used in fabrication of the falls of the Tank. Learned Counsel for the Opposite Parties further submitted that in view of the divergent views, it was suggested to the Complainant that the matter could be referred to IIT Delhi. The Complainant initially showed willingness for the same but there was no clear consent from their side. The Complainant, vide email dated 25.07.2013, reiterated their demand for payment of the claim. The Opposite Parties rightly repudiated the claim and there was no deficiency in service on their part and the Complaint deserved to be dismissed.
It is an admitted fact that the Complainant had taken Standard Fire and Special Perils Policy No. 351600/11/10/3400000125 for the period 03.08.2010 to 02.08.2011 for a sum of Rs.391,52,98,214/- covering building, plant & machinery, FFF and office equipments of various divisions of Insured’s plant at Hamira and also Fire Declaration Policy No. 351600/11/10/3400000117 covering the same period for Rs.77,96,00,000/- on stock and stock in process pertaining to Insured’s trade. On 12.03.2011 at about 12.15 hrs while the plant was operating, a sudden loud sound was heard followed by flowing of molasses stored in over ground MS tank. The driver and labour who brought the molasses for unloading also sustained injuries and were admitted in the nearby hospital. One of the workers also died. The explosion was so grave that the tanker turtled. The Complainant immediately informed the Police and the Opposite Parties and filed a claim for the loss incurred. The Opposite Parties deputed M/s Select Surveyors Pvt. Ltd. to carry out preliminary Survey who confirmed large quantity of the molasses that had come out of the burst open/collapsed Milled Steel Tank and spread all around. There was no occurrence of any fire.
The Preliminary Surveyor observed that the Mild Steel Tank being used for storage of molasses had suffered self-damage due to ageing and/or failure of some Milled Steel Plates used in the course of repair/maintenance, due to inferior/substandard quality, as quality cannot always be checked/ascertained when steel plates are purchased. He assessed the gross value of loss under different heads at approximately Rs.5 crores.
The Surveyor in his assessment report observed that the said tank was repaired by the Insured in 2009, by replacing the MS plates mainly of the top segment, as their thickness had considerably reduced. The conical roof of the tank was also repaired by welding additional sheets as their thickness had considerably reduced and the same had severely corroded and become fragile. Reportedly, the said tank was repaired 3 times in past, by replacing the MS steel plates of walls where thickness had considerably reduced and welding additional plates at the conical roof. The molasses spread in the entire area towards the rear boundary wall, part of which also collapsed due to the force of the molasses flow. A large fluid mass of the fast moving molasses hit the wall of the malt house and damaged the same as well as the plant & machinery installed therein. The Surveyor held that MS tank had suffered self-damage due to ageing and/or failure of some MS plates used in the course of repair/maintenance, which may have been due to inferior/substandard quality. SF & SP Policy opted by the Insured did not cover the risk of self-damage/self-collapse or breakdown of any equipment and thus the above loss was not indemnifiable.
It is seen that the Policy covered the following perils: -
“1. Fire
Lighting
Explosion/Implosion
Aircraft Damage
Riot Strike Malicious & Terrorism Damage
Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood & Inundation
Impact Damage
Subsistence & Landslide including rock slide
Bursting and/or overflowing of water tanks, Apparatus and pipes
Missile Testing Operations
Leakage from Automatic Sprinkler installations
Bush Fire”
Peril No.3 clearly talks of explosion/implosion. It is seen that the Policy covered Insurance Perils. Loss due to wear and tear of MS Tank does not find place under any exclusion clause. The Surveyor observed that the Tank was repaired by the Insured in May, 2009 by replacing the MS Plates mainly on the top segment. The conical roof of the tank was also repaired by welding additional sheets as their thickness had considerably reduced. The said tank was repaired 3 times in the past by replacing MS steel plates of walls, where thickness had considerably reduced and welding additional plates at the conical roof. M/s Satyakiran Engineers Pvt. Ltd., the Preliminary Surveyor appointed by the Insurance Company, had in turn appointed Government owned National Test House to test the samples from the burst tank. The National Test House confirmed that the MS Tank met the required standards. The Complainant also engaged the services of the CSIR-National Metallurgical Laboratory, which also found that the materials of MS Tank met with the standards. The Final Surveyor also noted that the National Metallurgical Laboratory, Jamshedpur in their study held as follows:-
“i. The chemical composition of the investigated plate conformed to mild steel specifications.
ii. No significant variation in plate thickness was observed.
iii. No corrosion/surface defects/flaws were observed.
iv. No micro-structural defects/in-homogeneities were observed.”
As seen above, the Surveyors themselves admitted that regular maintenance was carried out to the MS Tanks as also both the Government agencies held that the tank met with the required standards and that the probable cause of bursting of the over ground MS Tank was due to external impact overload, may be due to dust explosion induced pressure wave//wall collapse in the barley section. The Surveyor also noted that the tests confirmed that MS plate used was of good quality and their properties did not deteriorate.
It is not understood as to how despite the favourable reports of both the Government agencies, the Surveyor came to hold that the Tank suffered self-damage due to ageing and due to inferior sub-standard quality of material used. The Insurance Policy covered the perils and the happening of the event and not the cause of peril. Implosion/explosion is covered under the Policy and the Opposite Parties, having denied the legitimate claim, had not stated any exclusion clause of the Policy on which the claim was repudiated. The fact of loss is not denied. The loss suffered by the Complainant was not self-inflicted. It is, therefore, held that the claim had been wrongly repudiated by the Opposite Parties.
The Complainant filed claim for a gross loss of Rs.4,05,15,464/- and after deducting the salvage value of Rs.23,75,000/-, net loss of Rs.3,81,40,464/-. The Surveyor inspected the site and held discussion with the representatives of the Insured at the site, and after detailed analysis arrived at the assessment of loss. Based on the supporting documents and proof of expenses incurred and considering the unit rates for various works items as per the prevailing market rate on the date of loss, duly deducting the debris and dismantling charges and depreciation and salvage, the Surveyor assessed the loss. After assessment of the loss in respect of the building, plant & machinery including electrical installation and stock and making necessary deductions towards Policy excess, the Surveyor recommended a net adjusted loss of Rs.1,30,41,699/-.
I see no reason not to agree with the assessment made by the Surveyor and direct the Opposite Parties to pay the Complainant Rs.1,30,41,699/-, as assessed by the Surveyor, with interest @ 9% per annum from the date of repudiation till payment is made. The order be complied within two months.