A. P. Sahi, President
1. 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 repudiation letter also mentioned 11 discrepancies as pointed out by the surveyor in the final survey report.
14. The complainant alleges that the copy of the final survey report was never given to the complainant and as such the repudiation is based on material for which no opportunity was available to the complainant to respond to.
15. It is however stated that none of the 11 discrepancies in any way establish the reasons for denial of the claim. Hence the action of the Insurance Company clearly amounts to an unfair trade practice and deficiency in service. Learned counsel submits that the information was given timely, promptly and with supporting material but the surveyor ignored the same and on a totally mis-appreciation of the material came to a wrong conclusion which has been again reaffirmed in the repudiation letter.
16. It is submitted that the reference to the expenditure incurred for preventive maintenance which has been described in the surveyor’s report as having been caused due to wear and tear is an incorrect conclusion. Hence the claim deserves to be allowed.
17. The Insurance Company has come up with a plea that there was neither any unforeseen damage nor accident and that the complainant had incurred normal wear and tear expenditure for preventive maintenance of the turbine which stands excluded under the terms of the policy. The discrepancies were carefully noted by the surveyor including the status and dates of billing of the items. The claim was rightly repudiated and in the absence of any proof of any accidental damage, the loss suffered by the complainant is not reimbursable. The Insurance Company was therefore not obliged to indemnify the complainant for the loss complained. Hence the claim deserves to be repudiated.
18. Having considered the submissions raised it would be apt to extract the terms of the policy incorporating the material damage section along with the exclusionary clause presently involved. The same is extracted herein under:-
“INDUSTRIAL ALL RISKS INSURANCE POLICY
Section I – Material Damage
In consideration of the insured paying to the Company, the premium shown in the schedule, the Company agrees (subject to the terms, conditions and exclusions contained herein or endorsed or otherwise expressed hereon which shall so far as the nature of them respectively will permit be deemed to be conditions precedent to the right of the Insured to recover hereunder) that if after payment of the premium any of the property insured be accidentally physically lost destroyed or damaged other than by an excluded cause during the period of insurance or any subsequent period in respect of which the insured shall have paid the Insurer shall have accepted the premium required for the renewal of this policy, the Insurer will pay to the Insured the value of the property at the time of the happening of its accidental physical loss of destruction or damage (being hereinafter termed Damage) or at its option reinstate or replace such property or any part thereof
Provided that the liability of the Insurer in respect of any one loss or in the aggregate in any one period of insurance shall in no case exceed
i. As regards buildings, plants and machinery, furniture, fixture, fittings etc. the cost of replacement or reinstatement on the date of replacement or reinstatement subject to the maximum liability being restricted to the sum insured in respect of that category of the item under the policy.
ii. As regards stocks the market value of the same not exceeding the sum insured in respect of that category of item under the policy.
EXCLUSIONS
EXCLUDED CAUSES
This policy does not cover damage to the property insured caused by:
i) faulty or defective design materials or workmanship inherent vice latent defect gradual deterioration deformation or distortion or wear and tear.”
19. It is undisputed that the said policy was in operation for period of claim as it was effective from 01.04.2008 to 31.03.2009. A perusal of the said terms and conditions demonstrate that the policy does not cover the damage to the property insured caused by wear and tear.
20. From the documents on record it is evident that the Insurance Company was informed by the complainant requesting for appointment of a surveyor on 24.10.2008. A spot survey, also described as a preliminary survey was conducted by Mr. Subhash Chawla. The report was submitted on 31.10.2008, which is extracted herein under:-
“Job Ref. No. 3150 Dated : 31.10.2008
MACHINERY BREAKDOWN CLAIM PRELIMINARY
INSPECTION REPORT
WITHOUT PREJUDICE
Insurer:
United India Insurance co Limited
Do I
MM Malviya Road, Amritsar.
Insured:
M/s Khanna Papers Mills Limited
Fatehgarh Road, Bye pass
Amritsar.
Insurance policy particulars:
Industrial All risk policy covernote number 260404, effective from 1.4.08 to 31.3.09: total sum insured Rs. 6.10 crores;
Scope of insurance:
Building Rs 40 Crores against the risk of Fire and Earthquake
Plant and Machinery Rs 460/crores against Fire and Earthquake:
Machinery breakdown to the extent of Rs 415 Crores.
Subject matter affected:
Power Industrial Turbine Make ALSTOM as a comprehensive unit with tail pinion and gear box installed at the premises of the insured.
For the purpose of power generation.
Gear box Make Walchand Industries Limited; type GN 705; HP 11060 KW:
Serial number 123/002/2141 ; YOM 2001.
Date of loss:
22.10.08
Date of inspections:
24.10.08 around 7 p.m.
Cause of loss:
As reported by the insureds representative at the site of inspection, that they are not aware of the exact cause of loss; however the schedule servicing of the system was done during 2006.
Inspection of loss:
Pursuant to the instructions from the DO I of the underwriters, the undersigned did visited the insureds premises and found that the Turbine along with the pinion and gear box had already been dismantled and the required parts except the rotor had already sent for repair; The rotor’s first and large impellor fins had got several cuts and its groove sealing wires had also sustained cuts and pressed.
The technical staff of the insured reported that the bearing system of the gear box had gone undersized to the extent of giving play to the shaft so it was sent to Delhi for repair and sizing.
The photographs of the damaged rotor along with the dismantled pinion shaft and gear box were arranged and are being enclosed.
In my opinion, the loss could have resulted due to minor play in the forefront side of the rotors fitment.
The insured’s rep. were advised to get the estimate arranged at the earliest.
The servicing staff of the Manufacturer’s had already been arrived and was working overnight to put the machine to work.
Issued without prejudice.
Encl:
Photographs
P F bill. (SUBHASH CHAWLA) “
21. This survey indicates that the cause of loss was not exactly known but at the same time the pinion and the gear box of the turbine had been dismantled and the required parts had been sent for repair. It is also evident that the visible damage was reported and the bearing system of the gear box had been sent for repairs as it was reported to have gone undersized resulting in play of the shaft. The photographs of the damaged rotor along with dismantled parts were also enclosed along with the said report. The spot surveyor, however, opined that the loss could have resulted due to some minor play in the forefront side of the rotors fitment.
22. The turbine appears to have stopped for repairs of the shaft and bearings of the gear box and was restarted and again stopped.
23. The surveyor issued a letter to the complainant stating that they had surveyed the equipment on 30.10.2018, whereupon certain documents had been demanded and were awaited receipt from the complainant. The letter dated 15.11.2008 is extracted herein under:-
“Dated :15/11/2008
M/s Khanna Paper Mills Ltd.,
Fatehgarh Churain Road,
Amritsar.
Dear Sir,
Re: Turbine Loss dated 22/10/2008.
As regards above said loss, which was surveyed by us on 30/10/2008, we had requested you to please submit the following documents, which are still awaited.
1. Estimate of loss.
2. Quotation/bills of repairs.
3. Claim form duly filled & signed.
4. Statement regarding cause of loss.
5. Technical report of repairers.
6. Copies of log book.
7. Copy of insurance policy.
8. Present valuation of complete plant & machinery.
You are requested to please do the needful immediately on receipt of this letter to enable us to submit our report to the underwriters.
Thanking you,
Yours faithfully.
For V.K. MEHTA ASSOCIATES”
24. The turbine was stopped and again restarted on 16.11.2008 when it was again finally stopped on 28.01.2009 for replacement of the parts. The gear box was dismantled and was inspected by the surveyor. M/s. Siemens Company OEM had sent its engineers and a technical report was submitted on 10.03.2009, which is to the following effect:-
“To,
Mr. V.R. Sinha DGM (Utility)
Khanna Paper Mills Ltd
Amritsar
Subject: Technical report of 10.5 MW STG breakdown.
Dear sir,
10.5 MG STG was tripped on 05/10/2008 due to excessive vibration. Main cause of excessive vibration was removal of starter diaphragm’s bolts during full load operation. These bolts damaged the turbine rotor blade, turbine labyrinth sealing as it was passing through the steam path inside the turbine. Turbine rotor was unbalanced due to removal of material from the turbine blades these caused the excessive vibration and then failure of turbine bearings, high speed coupling, gearbox pinion shaft, GB bearings and main oil pump of GB.
With Regards
For Siemens Ltd”
25. A perusal of the said report will indicate that the main cause was a vibration resulting in tripping due to dislodging of the starter diaphragm bolts during full load operations. The bolts had damaged the turbine rotor and its labyrinth sealing that resulted in an imbalance and further failure of the equipment.
26. The Insurance Company raised a query on 19.03.2009, which is extracted herein under:-
“To: M/S KHANNA PAPER MILLS LTD
FATEHGARH ROAD, AMRITSAR
Dist. : AMRITSAR, Punjab, Pin : 143001
Dear Sir(s)/Madam,
Re: Claim No. : 200200/11/08/06/90000018 Srl. No.: 1
Policy No. : 200200/11/08/06/00000002
Insured : M/S KHANNA PAPER MILLS LTD
Date of Loss: 24/10/2008
We refer to your above mentioned claim and would request you to let us have the following documents at an early date :
1. ESTIMATE OF LOSS
2. QUOTATION/BILLS OF REPAIRS
3. CLAIM FORM DULY FILLED & SIGNED
4. STATEMENT REGARDING CAUSE OF LOSS
5. TECHNICAL REPORT OF REPAIRERS
6. COPIES OF LOG BOOK
7. COPY OF INVENTORY BOOK AND STOCK REGISTER
Thanking you,
Yours faithfully,
Authorised Signatory”
The said request was for documents which were almost similar to the letter of the surveyor dated 15.11.2008.
27. The complainant responded to the same vide letter dated 21.04.2009 with all the details as would be evident from the same is extracted herein below:-
“Ref: - KPM/ClaimBill/09 Dated 21.04.09
V.K. Mehta Associates
Surveyors & Loss Assessors
94 Lawrence Road
Amritsar.
Phone : 6537969, 2223992
Mobile : 9814056969, 9216656969
Re: - Submission of Documents relating to Turbine Loss under IAR Policy.
Please find attached following documents in order for the Turbine Loss.
1. Copy of policy along with its Schedule & details covering various plants & Machineries.
2. Claim Bill.
3. Claim form Duly filled.
4. Copy of incident report from Plant.
5. Copy of Invoice: 027 of Rector India Pvt Ltd for Complete High Speed Coupling.
6. Siemens Invoice No. 2008-09/031 dtd 17/11/08 service engineers for replacement of Turbine Rotor Steam Sealing Fins.
7. Siemens Invoice No. 2008-09/005 dtd 14/10/08 & 2008-09/016 dtd 22/10/08 for Repairing of 10.5 MW Turbine.
8. Siemens Invoice No. 9688000014 dtd 24/10/08 service engineers for supervisory services.
9. Siemens Invoice No. 9867500035 dtd 24/05/07.
10. Siemens Invoice No. 9867500066 dtd 10/07/07.
11. Siemens Invoice No. 9867500087 dtd 24/08/07.
12. Siemens Invoice No. 2008-09/028 dtd 20/11/08 charges during repairing of 10.5 MW STG Turbine.
13. Siemens Invoice No. 9867500034 dtd 24/05/07 for Journal & Thrust Bearing.
14. Walchandnagar Inds Ltd Invoice No. 08300098 dtd 05/08/08 for the supply of Pinion shafts & Bearing.
15. Walchandnagar Inds Ltd Invoice No. 88801 dtd 31/10/08 for Inspection and Repairing of GN 70’S Gearbox.
16. Walchandnagar Inds Ltd Invoice No. 1185 for supply of Pump Bush Bearing While metalled.
17. Bill of Arudra Engineers Pvt Ltd for Cleaning of Condenser tubes.
18. Bill of Ashok Manufacturing Co. Pvt. Ltd for Balancing of Pinion Shaft.
19. Bill of Ashok Manufacturing Co. Pvt. Ltd for Balancing of Turbine Rotor.
20.Bill of Aswartha Condition Monitoring Engineers for vibration analysis and diagnostic of 10.5MW.
21. Bill of Kalsi Mechanical Works for One No of Turbine Shaft Coupling Dismantling and Installation with supply of shaft holding arrangements.
22. Walchandnagar Inds Ltd Invoice No. GER/PRF/88814 dtd 23/02/09 for the supply of Main Oil Pump.
23. Walchandnagar Inds Ltd Invoice No. 1488 for the supply of Gear Machine Parts, Spare Bearings, RTDS for gear box.
24. Siemens Invoice No. 9868500305 for purchase of 10.5MW Turbine Trip Device.
25. Walchandnagar Inds Ltd Invoice No. GER/SR/KPML/88801/02 for service charges for replacement of bearings of gear box.
26. Seimens Lts Invoice No. 2008-09/093 for deputation of Siemens Engineer for Allignment checking.
27. Bill of M/s Guru Nanak Dev Engineering & Fabrication Works dtd 15/02/09.
28. Bill of M/s Guru Nanak Dev Engineering & Fabrication Works dtd 20/02/09.
29. Bill of M/s Guru Nanak Dev Engineering & Fabrication Works dtd 28/02/09.
30. Bill of M/s Guru Nanak Dev Engineering & Fabrication Works dtd 07/03/09.
31. Copy of Log Book.
32. Material issue slips.
Please issue survey report to Insurance Company & instruct them to issue the cheque as per claim bill.
Please acknowledge receipt & confirm.
Thanking you and with best Regards,
Yours faithfully,
for Khanna Papers Mills Ltd.,
Authorised Signatory”
28. The surveyor, however, renewed its demand for some more material vide their letter dated 30.11.2009, which is extracted herein under:
“Dated 30/11/2009
M/s Khanna Paper Mills Ltd.,
Fatehgarh Churian Road,
Amritsar.
Dear Sir,
Re: Turbine Loss dated 05/10/2008
As regards above said loss, which was surveyed by us on 30/10/2008 & made subsequent visits and the discussions held with you recently, the following documents are still awaited.
1. Statement regarding history & occurrence of loss.
2. Technical Report of Siemens.
3. Photographs arranged by you.
You are therefore once again requested to please do the needful immediately on receipt of this letter to enable us to submit our report to the underwriters.
Thanking you,
Yours faithfully,
FOR V.K. MEHTA ASSOCIATES”
This was followed by a reminder to the same effect dated 03.02.2010.
29. A Technical report was submitted by the Siemens engineers on 27.03.2010 giving the details of the operations undertaken for restoring the functioning of the turbine after carrying out the repairs due to the damage that had occurred as indicated therein. The said technical report is extracted herein under:-
“Technical report of 10.5 mw Turbine failure 27.03.2010
10.5 MW steam TG was running at full load till 9.10 pm on 5th October, 2008. There was a very High vibration in Turbine, Gear Box & Generator. Turbine tripped on very high vibration. There was an abnormal sound from Turbine & Gear Box. Turbine, Gear Box & Generator were opened for checking of abnormalities. After open inspection of Turbine, it was found that Turbine Rotor Blades were in damaged condition due to removal of stator diaphrams bolts during running condition of turbine.
Due to damage of Turbine Blades complete Rot-dynamics of system was disturbed that caused the unbalancing of Turbine Rotor, Gear Box Pinion, Gear Box Gear & Generator Rotor. This unbalancing of system damaged the Turbine Bearings, Gear Box Bearing. There was a scoring marks on Gear Box Pinion shaft. Main oil pump was also damaged due to excessive vibration & very less clearance in white mental Bearings.
Turbine bearings & Gear Box bearings are made of white metal material which is very sensitive for any abnormalities. Normal bearing clearances are 0.20mm to 0.35mm.
Turbine was started on 30.10.2008 at 5.00 am after completion of jobs. Turbine load was not increasing more than 70MW due to high temp of Gear Box working side thrust bearing temptation (up to 98’C).
Turbine was stopped on 12.11.2008 for correction of pinion shaft bearings of Gear Box. Turbine again started on 13.11.2008 & load of turbine was maximum reached to 9.8 MW but thrust bearing temp. was still on higher side of 100’C.
Turbine was again stopped on 15.11.2008 for Gear Box thrust bearing high temp corrections after that Turbine stated on 16.11.2008 but thrust bearing temperature was still 100’C at 9.8MW.
Turbine again stopped on 28.01.2009 at 9.00 hrs for replacement of Gear box pinion bearings with new bearings to solve the issue. Turbine again started & slowly turbine load was reached to full load of 10.5 MW on 22.02.2009.
Regards”
30. On 03.04.2010, the complainant submitted the said technical report and the list of spares and services that were undertaken. The surveyor on 26.05.2010 after having received the documents pointed out certain discrepancies which in their opinion needed clarification. It is with this letter that the surveyor made queries pointing out the discrepancies on the part of the complainant. The letter is extracted herein under:-
“Dated 26/05/2010
M/s Khanna Paper Mills Ltd.,
Fatehgarh Churain Road,
Amritsar.
Dear Sir,
Re: Turbine Loss dated 05/10/2008
Policy No. 200200/11/08/06/0000002.
================================
We have recently received certain documents & photographs arranged by you in connection with above said claim. We have observed some discrepancies & you are requested to please clarify the same at your earliest to enable us to submit our report to the underwriters:-
1. The date of loss is reported to be 05/10/2008 but the intimation for survey was given on 24/10/2008 i.e. after a gap of 19 days. Please clarify why survey was not arranged immediately & no chance was given for inspection of the turbine in damaged condition.
2. The turbine was opened and repaired number of times. Please clarify why it was opened again & again.
3. You have submitted bills of year 2005, 07, 08 & 2009. Some bills are prior to the date of loss. Some orders were placed before the reported loss. Please explain.
4. The Preliminarily Survey was done on 24/10/2008 by Sh. Subash Chawla when damaged rotor had already been sent for repairs. He has mentioned the date of loss to be 22/10/2008 and stated that your technical staff had reported excessive play in gear box shaft to be the cause of loss. Please clarify the exact date & cause of loss.
Thanking You,
Yours faithfully
For V.K. MEHTA ASSOCIATES”
31. The aforesaid query was responded by the complainant on 20.08.2010, which is extracted herein under:-
“KPM/INS/2010-11 20 Aug 2010
V K Mehta Associates
94, Lawrence Road,
Amritsar
PH: 2220339
Kind Attn : Mr. V K Mehta
Sub : Turbine Loss dtd 5/10/2008
Dear Sir,
With ref to your letter dtd 26 May 2010, we wish to state the following:
As already informed you that there was very high vibration in turbine gear box and generator, turbine tripped on very high vibration on 05/10/08 at 9.10 pm. Siemens engineer visited our factory and inspected the rotor from 16/10/08 to 21/10/08 where they tried to rectify the fault. At this stage damage was not known and the insurance company was not informed. Accordingly Rotor was sent for repair prior to informing the insurance company. But after the inspection of engineer it was detected that loss was very heavy and beyond the excess then the insurance company was informed on 24th oct 2008.
We have arranged all the photographs of damages and same was given to you clearly showing the damages. The Turbine in damaged condition was also inspected by Spot Surveyor.
Regarding opening and repairing number of times we have already clarify by way of technical report that optimum load was not achieved in spite of our best efforts and so the turbine was opened number of times from 05/10/08 to 22/02/09 when ultimately turbine was running satisfactorily..
Regarding submitting the bills for the year 2007, 2008 and 2009 we clarify that certain critical parts are kept at our store as insurance spares which was used during the repair. So the bills prior to loss are also submitted to you.
Hope this clarifies all your points. So you are requested to submit the report immediately which is already over delayed.
Please arrange to settle the claim at the earliest.
Thanks & Regards
For Khanna Paper Mills Ltd
Authorized Signatory”
32. The surveyor thereafter submitted its final report on 20.10.2010, which is extracted herein under:-
“Dated 20/10/2010
FINAL REPORT
For the Consideration of Insurer
Concerned & their Legal Advisors only.
=================================
The Senior Divisional Manager,
United India Insurance Co. Ltd.,
D.O. 1 M.M.M Road, Amritsar.
Dear Sir,
Re: Turbine Loss dated 05/10/2008
Under Policy No. 200200/11/08/06/00000002
A/c M/s Khanna Paper Mills (P) Ltd., Amritsar.
=================================
Pursuant to instructions received from your office, we visited the premises of insured on 30/10/2008 & made subsequent visits to survey and assess the loss. We had requested the insured to submit required information / documents and reminded vide our registered letters dated 15/11/2008, 30/11/2009 & 03/02/2010. We had requested the insured to submit technical report of M/s Siemens, photographs arranged & statement regarding history & occurrence of loss. The insured has recently complied with the requirements, hence delay in submitting the report. After careful inspection, details discussions with the insured and verification of records, the report is submitted as under:-
INSURERS: United India Insurance Co. Ltd.,
D.O.1, M.M.M. Road, Amritsar.
INSURED: M/s Khanna Paper Mills (P) Ltd.,
Fatehgarh Churian Road, Amritsar.
POLICY PROFILE: Policy No. 200200/11/08/06/00000002
Period of Insurance: 01/04/2008 to 31/03/2009
Total Sum Insured Rs. 610 Crore.
Type of Policy: INDUSTRIAL ALL RISK POLICY
DETAILS OF COVERAGE
a. Fire & Allied Risks
Building Rs. 40 Crores
Entire Plant & Machinery Rs. 460 Crores
Stocks of All Kinds Rs. 110 Crores
b. Machinery Breakdown Risks Rs. 415 Crores
The Policy is subject to
a. Agreed Bank Clause.
b. Designation of Property Clauses.
c. Local Authorities Clauses.
d. Removal of Debris Clauses (Upto 1% of Claim Amount)
e. Architects/Suveyors/Cons. Engineer Fees (Upto 3% of Claim Amount)
f. Reinstatement Value Clauses.
SPECIAL CONDITION: Subject to excess clause of Rs. 5 Lacs for each & every claim.
DATE & TIME OF LOSS: 05/10/2008 at 9.10 PM.
DATE OF SURVEY: 30/10/2008 & Sub. Visits.
PERSON CONTACTED: Sh. V.K. Sinha, Sh. Gagandeep Singh, Sh. Parminder Singh.
CAUSE OF BREAKDOWN: The turbine tripped due to high vibration.
PARTICULARS OF LOSS: Turbine rotor blades got damaged, fins worn out.
Pinion & Bearings were damaged.
High speed coupling.
Turbine blades repaired.
Mail oil pump
Gear box bearings etc. (As Per Claim Form)
OCCURRENCE OF LOSS: As stated by Sh. V.K. Sinha, the occurrence of loss is as under:-
“10.5 MW STG was running at full load till 9.10 PM on 05/10/2008. There was a very high vibration in turbine, gear box & generator. Turbine tripped on very high vibration. There was a abnormal sound from turbine & gear box. Turbine, Gear Box & generator were dismantled for checking of abnormalities. After open inspection of turbine, it was found that turbine rotor blades were in damaged condition. Turbine blades were damaged due to removal of stator diaphrams bolts during running condition of turbine. Due to damage of turbine blades complete roto-dynamics of system was disturbed that caused the unbalancing of turbine rotor, gear box pinion, gear box gear & generator box. This unbalancing of system damaged the turbine & gear box bearings & there was a scoring mark on gear box pinion shaft. Main oil pump (MOP) was damaged.
10.5 MW Turbine was started after the correction of all problems. Now, it is running at full load of 10.5 MW.
INSPECTION: During course of our survey and inspection it was observed by us that the turbine was already repaired. It was stated by the insured that on 05/10/2008 the turbine had tripped due to high vibration & on dismantling turbine rotor blades were found damaged. The turbine blades were damaged due to breakage of stator diaphragm bolts during removing of turbine. Due to damage of turbine blades complete rotor dynamics of system was disturbed causing unbalancing of turbine rotor. Though damage of turbine rotor is considered possible due to stated cause, but damage to gear box & generator etc. are not considered possible in the said mishap. However the insured has not given a chance to inspect the damaged items before sending them for repairs and no damaged parts were shown to us.
The loss was preliminary surveyed by Sh. Subhash Chawla who has submitted his report dated 31/10/2008 which is enclosed. In the said report the date of loss is mentioned to be 24/10/2008 at 7 PM which differs the stated due to loss as per the claim form. Moreover the gear box was dismantled on 29/01/2009 & inspected by us when the insured reported damage to pinion bearings etc. Therefore different losses were observed to have resulted one after the other. Moreover the turbine was dismantled on different occasions. The cause of loss to gear box pinion, bearings, thrust bearings, condenser tubes & oil pump etc are considered to be due to normal wear & tear only & are not found accidental in nature.
VALUE AT RISK: We had requested the insured to give the details of machinery along with their present replacement value. However the insured has shown their inability to do so stating that quotations for the present replacement values of all the machinery are not feasible. Therefore we have worked out the present replacement value of entire plant & machinery using RBI index for inflation and taking capitalized cost of machinery from the balance sheets of the insured upto 31/03/2008. The interest & other preoperative expenses have been deducted as certified by their C.A.’s and the net replacement cost is worked out at Rs. 475.788 Crores. The insured is covered to the extent of Rs. 460 Crores plus 15% escalations i.e. total Rs. 529 Crores which is adequate.
ASSESSMENT OF LOSS: The insured submitted detail of loss for Rs. 10994378/-. The bills submitted pertain to different losses and are dated differently. Some repairs are carried out due to normal wear & tear and some repairs are carried out on account of preventive maintenance. Therefore after careful inspection, detailed discussions with the insured & verification of documents, the net loss is assessed as under which is, however not considered payable under terms & condition of the policy of insurance due to number of discrepancies observed by us as mentioned after the assessment made below:-
|
S. No. |
DESCRIPTION |
AMOUNT ESTIMATED |
AMOUNT ASSESSED |
REMARKS |
|
1. |
Complete High Speed Coupling |
3,15,000.00 |
Not Allowed |
Due to wear & tear |
|
Sales Tax |
12,600.00 |
Not Allowed |
Due to wear & tear |
|
|
Total |
327600.00 |
NIL |
||
|
2. |
Siemens Invoice No.2008-09/031 dated 17/11/2008 for visit of Mr. Rangahadham & Mr. CH V Krishna from 16/10/2008 to 21/10/2008 Service Engineers for replacement of Turbine Rotor Steam Sealing fins. |
2,70,482.00 |
2,70,482.00 |
|
|
3. |
Siemens Invoice No. 2008-09/005 dated 14/10/2008 & 2008-09/016 dated 22/10/2008 for repairing of 10.5 MW Turbine. |
24,80,000.00 |
24,80,000.00 |
|
|
4. |
Siemens Invoice No. 9688000014 dated 24/10/2008 Service Engineers for Supervisory Services |
63,827.00 |
63,827.00 |
|
|
5. |
Siemens Invoice No. 9867500035 dated 14/05/2007 spares for 10.5 MW Steam Turbine Part No.1CYJ428046, Part No. 1CYJ428014, Part No.1CYJ428059 |
53,280.00 |
Not allowed |
Due to wear & tear |
|
6. |
Siemens Invoice No. 9867500066 dated 10/07/2007 spares for 10.5 MW Steam Turbine Part No. 1CYJ226034, Part No. 1CYJ226035. |
2,89,687.00 |
Not Allowed |
Due to wear & tear |
|
7. |
Siemens Invoice No. 9867500087 dated 24/08/2007 spares for 10.5 MW Steam Turbine Part No. 1CYJ226036, Part No. 1CYJ226037. |
2,89,687.00 |
Not Allowed |
Due to wear & tear |
|
8. |
Siemens Invoice No. 2008-09/028 dated 20/11/2008 Idle Charges during repairing of 10.5 MW STG |
9,50,000.00 |
Not Allowed |
Due to wear & tear |
|
9. |
Siemens Invoice No. 9867500034 dated 24/05/2007. Journal & Thrust Bearing 1CYJ412031. |
3,84,705.00 |
Not Allowed |
Due to wear & tear |
|
10. a) |
Walchandnagar Inds Ltd., Invoice No. 08300098 dated 05/08/08 for the supply of pinion shafts & bearing. |
14,10,000.00 |
Not Allowed |
Due to wear & tear |
|
b) |
Sales Tax 2% |
32,266.00 |
Not Allowed |
Due to wear & tear |
|
Total |
14,42,266.00 |
NIL |
||
|
11. |
Walchandnagar Inds Ltd., Invoice No. 88801 dated 31/10/2008 for Inspection & repairing of GN 70’s gearbox |
1,99,077.00 |
Not Allowed |
Due to wear & tear |
|
12. a) |
Walchandnagar Inds Ltd., Invoice No. 1185 for supply of pump bush bearing white metalled. |
1,30,000.00 |
Not Allowed |
Due to wear & tear |
|
b) |
CST 2% |
2975.00 |
Not Allowed |
Due to wear & tear |
|
Total |
132975.00 |
Nil |
||
|
13. |
Bill of Arudra Engineers Private Limited Invoice No. SR-242 dated 22/10/2008 for cleaning of condenser tubes |
1,05,000.00 |
Not Allowed |
Preventive maintenance |
|
14. |
Bill of Ashok Manufacturing Co. Pvt. Ltd., Invoice No. 68/J/216 dated 24/10/2008 for Balancing of Pinion Shaft. |
9650.00 |
Not Allowed |
Preventive Maintenance |
|
15. |
Bill of Ashok Manufacturing Co. Pvt. Ltd., Invoice No. 68/J/215 dated 23/10/2008 for Balancing of Turbine Rotor. |
53,000.00 |
25,000.00 |
|
|
16. |
Bill of Aswartha Condition Monitoring for Manufacturing Co. Pvt. Ltd., Invoice No. 68/J/216 dated 24/10/2008 for Balancing of Pinion Shaft. |
1,17,858.00 |
Not Allowed |
Preventive Maintenance |
|
17. a) |
Bill of Kalsi Mechanical Works Invoice No.248 dated 23/10/2008 for One No of Turbine Shaft Coupling Dismantling and Installation with supply of shaft holding arrangement. |
45,000.00 |
15,000.00 |
|
|
b) |
VAT 4% |
1800.00 |
600.00 |
|
|
Total |
46800.00 |
15,600.00 |
||
|
18. a) |
Walchandnagar Inds Ltd., Invoice No. 88814 dated 23/02/2009 for Main Oil Pump 10.5 MW Turbine |
3,77,960.00 |
Not Allowed |
Due to wear & tear |
|
b) |
CST 2% |
8338.00 |
Not Allowed |
Due to wear & tear |
|
Total |
3,86,298.00 |
Nil |
||
|
19. a) |
Walchandnagar Inds. Ltd., Invoice No. 1488 for gear parts, Spare bearing RTGS for gear box. |
10,77,040.00 |
Not Allowed |
Due to wear & tear |
|
b) |
Freight |
23564.00 |
Not Allowed |
Due to wear & tear |
|
Total |
11,00,604.00 |
NIL |
||
|
20. a) |
Siemens Invoice No. 9868500305 dated 17/03/2009 for purchase of 10.5 MW Turbine Trip Device. |
2,83,500.00 |
Not Allowed |
Preventive Maintenance |
|
b) |
CST 2% |
6,137.00 |
Not Allowed |
Preventive Maintenance |
|
21. a) |
Wlchandnagar Inds. Ltd., Invoice No. 88801/02 dated 14/02/2009 for replacement bearings of 70’s gear box |
1,65,000.00 |
Not Allowed |
Due to wear & tear |
|
b) |
Travelling Charges (WNR-Amritsar-Pune) |
12,897.00 |
Not Allowed |
Due to wear & tear |
|
Total |
1,77,897.00 |
Nil |
||
|
22. |
Siemens Invoice No. 2008-09/093 dated 26/02/2009 for visit of Mr. Rakam Laxmaiah from 07/02/2009 to 10/02/2009 & Mr. Saurabh Sharma from 27/01/2009 to 10/02/2009 for alignment checking & overtime charges |
5,09,048.00 |
Not Allowed |
Preventive Maintenance |
|
23. |
Bill of Guru Nanak Dev Engineering & Fabrication Works Invoice No. 891 dated 15/02/2009 |
3,50,000.00 |
Not Allowed |
Preventive Maintenance |
|
24. |
Bill of Guru Nanak Dev Engineering & Fabrication Works Invoice No. 827 dated 20/02/2009 |
3,50,000.00 |
Not Allowed |
Preventive Maintenance |
|
25. |
Bill of Guru Nanak Dev Engineering & Fabrication Works Invoice No. 842 dated 28/02/2009 |
3,10,000.00 |
Not Allowed |
Preventive Maintenance |
|
26. |
Bill of Guru Nanak Dev Engineering & Fabrication Works Invoice No. 812 dated 07/03/2009 |
3,05,000.00 |
Not Allowed |
Preventive Maintenance |
|
Grand Total |
1,09,94,378.00 |
2854909.00 |
||
|
Salvage Value |
54,909.00 |
|||
|
Gross Loss Assessed |
28,00,000.00 |
|||
|
Less Excess Clause of 2 reported losses |
10,00,000.00 |
|||
|
Net Loss Assesses |
18,00,000.00 |
DISCREPANCIES: We have observed number of discrepancies which are highlighted as under:-
1. As per the claim form, the loss resulted on 05/10/2008 but was intimated on 24/10/2008 only when it was surveyed by Sh. Subhash Chawla. There is abnormal delay in arranging survey. “The rotor was sent for repair prior to informing the insurance company” as confirmed by the insured vide their letter dated 20/08/2010. Therefore it is apparent that the insured has not given a chance to inspect the damaged items immediately after the loss.
2. In the cause of loss the insured has stated that there was abnormal sound from turbine & gear box & the turbine gear box & generator were dismantled for checking. However these items were dismantled on different dates & the turbine was run in between. Moreover there is very heavy sound when the turbine is running and it is difficult to substantiate any abnormal sound.
3. In the log book dated 05.10.2008 of the concern it is mentioned that “T.G. Shut for maintenance work” but there is no mention of any abnormal sound.
4. Preliminary Surveyor Mr. Subhash Chawla has mentioned in his report dated 31.10.2008 that the representative of insured were not aware of the exact cause of loss & that the schedule servicing of the turbine was done during 2006. Therefore it appears that the routine servicing was due & the T.G. was shut for maintenance work only.
He has further mentioned that the technical staff of the insured reported that the bearing system of the gear box had gone undersized to the extent of giving play to the shaft so it was sent to Delhi for repair and sizing which is due to wear & tear only.
5. It is mentioned in the insured letter dated 20/.08/2010 that there was very high vibration in turbine gear box and generator & turbine tripped on very high vibration on 05/10/2008 at 9.10 PM. Siemens engineer visited the factory & inspected the rotor from 16/10/2008 to 21/10/2008 & rotor was sent for repairs prior to informing the insurance company. The insured has failed to give a satisfactory reply, why the survey was not arranged immediately after the loss.
6. At the time of final survey on 30/10/2008, the turbine was found running. However the insured informed on 29/01/2009 that the gear box has been dismantled & was inspected by us. Some parts like pinion shaft & bearing etc. were found damaged & replaced due to wear & tear only and had no relevance with stated cause of loss.
7. The idle & thrust bearings were purchased on 24/05/2007. Therefore the problem was detected in 2007. Moreover damage to these parts is due to wear & tear only.
8. The pinion shaft & bearings were purchased on 05.08.2008 much before the alleged date of loss. Therefore damage to these parts had resulted much earlier. Moreover these parts are replaced due to wear & tear only.
9. The technical report of M/s Siemens submitted by the insured appears fake as it does not beer any dispatch No. & designation & address of the signatory and is not in the records of M/s Siemens as confirmed by them on telephone.
10. The insured has replied out letter dated 26/05/2010 on 20/08/2010. The insured has intentionally submitted required information/ documents in peace meals and has unnecessarily delayed the submission of all information/ documents in peace meals and has lodged a false claim to cover up losses due to wear & tear only.
11. The T.G. was running at low efficiency due to wear & tear of certain parts and no unforeseen losses were observed. It was run n between the dismantling as well, as apparent in the log book also.
Recommendations:
The discrepancies noted above show that number of items were replaced due to war & tear or preventive maintenance only. Moreover the insured had not given a chance to inspect the turbine before starting dismantling and repairs and has submitted the required information/ documents in piecemeals and after prolonged delay & lodged false claim to cover up the losses due to wear & tear and preventive maintenance.
In view of the above it is recommended that the claim may be ‘Repudiated’.”
33. While submitting its report the surveyor had doubted the claim of the complainant on almost 11 grounds which are extracted hereinabove and which have been referred to in the repudiation letter dated 01.12.2010, which is extracted herein under:-
“Date : 01/12/2010
To
M/S KHANNA PAPER MILLS LTD
FATEHGARH ROAD, AMRITSAR
Dist. : AMRITSAR, Punjab
Dear Sir,
Re : Your claim No. 200200/11/08/06/90000018 Srl. No. : 1 on policy
No. 200200/11/08/06/00000002
Please note that your file stands closed, on account of Sr. No. 1 and 3 below:-
1. Inspite of letters/reminders sent to you, you have not complied with the required papers/documents
2. As you have withdrawn your claim by giving your consent through your letter dated__________ we are closing your claim-file as NO CLAIM/Repudiated
3. We are closing your claim-file, on account of the following reason :-
AS PER SURVEY REPORT LOSS TO THE TURBINE OCCURRED DUE TO SOME PREVENTIVE MAINTENANCE AND THERE ARE 11 DISCREPANCIES AS POINTED BY THE SURVEYOR IN SURVEY REPORT
We absolve ourselves from any further liabilities, arising out of this claim: which please note.
Thanking you,
Yours faithfully
(GOBIND AGGARWAL)
Sr./Divisional Manager / Sr./Branch Manager.”
34. It is therefore clear from the aforesaid narration of facts that the complainant had been insisting on acceptance of the claim on the ground that the damage caused to the turbine commenced with the vibration caused after the dislodging of the rotor bolts and that ultimately, according to the complainant, damaged pinion bearings and other parts of the gear box.
35. While giving its explanation the complainant had also informed the surveyor about the doubts expressed in the letter dated 26.05.2010 regarding billing of the spare parts. It had been categorically stated in the reply dated 20.08.2010 that some spare parts were kept in the store and which are maintained in order to replace them whenever needed. Thus, the purchase bills and vouchers of some of the spare parts were prior to the date of accident was explained as having secured spare parts that were kept in store for meeting any emergency in future. It was therefore the case of the complainant that the spare parts which have been purchased earlier were utilized only after the incident and therefore its prior purchase was not for simple wear and tear but also to meet unforeseen circumstances.
36. The surveyor has also disbelieved the report of the OEM engineers dated on the ground that it has been simply written by hand and it does not bear the seal of the company to which the engineers belong. He has also stated in his report that he had telephonically confirmed the same.
37. Having considered the documents on record, the submissions raised on the evidence pointed out as well as the decisions relied on by the parties on either side, the first issue which needs to be factually resolved is about the information tendered to the Insurance Company by the Complainant and the finding of the surveyor as approved by the repudiation letter whereby the claim has been denied on the ground that no immediate information was given and it was only after 19 days that the Insurance Company was informed about the incident. Undisputedly, according to the Claimant, the equipment suffered a huge vibration on 05.10.2008. There are two explanations given by the Complainant as to why the Insurance Company was intimated on 24.10.2008. In this regard, the submission of the Complainant is that there had to be some preliminary assessment to be made before the intimation was to be forwarded in as much as the policy contains an Excess Clause of a minimum of Rs.5,00,000/- on each and every claim of breakdown. Accordingly, if the breakdown or the loss suffered was less than Rs.5 lacs, the claim could not have been lodged unless it exceeded the Excess Clause. The Excess Clause as contained in the policy is extracted herein under:
“Excess Clause: Minimum Rs.5,00,000/- on each and every claim of breakdown, other as per policy terms Condition.”
38. The second explanation given is that the said assessment could only be made after consulting technicians, for which, steps were taken as there was an urgency of repair. The manufacturing process could have come to a standstill and instead of minimizing the loss, the same would have increased. Thus, between 16.10.2008 and 21.10.2008, the fault was sought to be detected and immediate repairs had to be undertaken as indicated above. It is correct that the Insured has to inform the Insurer about any such mishap promptly. The giving of notice is contained in Clause-5 of the General Terms and Conditions of policy where the information has to be given within 15 days after the loss or damage. A further period of the proceedings for settlement through arbitration within 12 months is also provided therein. Clause-5 as would be relevant to the present controversy is extracted herein under:
“5. (i) On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf deliver to the Company
a) A claim in writing for the loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items or property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage no including profit of any kind.
b) Particulars of all other insurances, if any.”
A perusal thereof would indicate that the information has to be given forthwith and within 15 days in writing taking the claim. 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 labeled 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.
39. Then comes the assessment of the evidence and the facts relating to the cause of the incident and the loss as claimed by the Complainant. This commences with the notification of the loss in the form submitted by the Complainant which is at Page-28 of the Complaint. Against Column No.4, the recital is that a high vibration in the turbine occurred. The gearbox and the generator as well as the turbine tripped on this high vibration and on inspection the rotor blades were found to be in damaged condition. The pinion shaft and bearings were damaged on account of high speed. The coupling and the turbine parts and the gear box bearings etc. were also affected. Some repairs were also undertaken and an estimated cost of repairs of Rs.1,10,00,000/- was reflected in the said form. The report which was sent by M/s. Siemens Company on its pad which is dated 10.03.2009 as well as the technical report dated 27.03.2010 that has been extracted herein above categorically indicates that the main cause of such excessive vibration was the dislodging of the diaphragm bolts during full load operation. The technical reports were before the surveyor as is admitted in the final survey report dated 20.10.2010. The dislodged bolts damaged the turbine rotor blade, the turbine laybrinth sealing which got disbalanced and that effected in failure of the bearings, the high speed coupling, the gear box pinion shaft and bearings and the main oil pump of the gear box. The said report which was sent subsequently as compared to the spot survey dated 31.10.2008 confirms the damage to the rotor fins which was accompanied by photographs indicating the damage caused to the other parts of the TG set as well.
40. The final survey report dated 20.10.2010 by M/s. V.K. Mehta Associates while recoding the observations on inspection states that though damage to the turbine rotor is considered possible due to the stated cause, but the damage to gear box and generator are not considered possible due to the said mishap. It was also observed that different losses were observed to have resulted one after the other and the turbine was dismantled on different occasions. Thus, it was concluded that the loss to the gear box, pinion, bearings and crust bearings as well as the oil pumps etc. were due to normal wear and tear only and were not because of the accident. This observation appears to overlook the response given by the insured on 20.08.2010 to all such queries raised in the letter dated 26.05.2010.
41. The information which was given and the technical reports which have been submitted was about the dislodging of the diaphragm bolts that caused a complete unbalance of the entire system including the turbine and the generator. Reliance was placed by the surveyor on the information received from the technical staff that the bearing system of the gear box had gone undersized having a play affecting the shaft and therefore, it was sent to Delhi for repair and sizing. This statement has been construed by the surveyors as if the repairs were undertaken as a routine course of wear and tear because the system had gone undersized. The Complainant had tendered the technical reports of the dismantling of the bolts and the unbalancing of the system which suffered vibrations and a large noise was reported. This technical inspection coupled with the fact of the dislodging of the diaphragm bolts have nowhere been discussed by the surveyor at all. Instead what has been concluded is that the turbine rotor could have been damaged but damage to the generator and gear box are not possible. This conclusion is contrary to the report of the engineers and after having opined that the damage to the turbine rotor was possible. The said inference drawn by the surveyor, therefore, is based on no assessment having been made of the entire rotor dynamics getting disturbed including the gear box and the generator connected with the turbine.
42. The nature of the vibration and its impact has been assessed by the engineers, but the surveyor at Item No.9 of his report states that the technical report from M/s. Siemens Company appears to be fake as it does not bear any dispatch number, designation and address and the same was confirmed on telephone being not available in the records of M/s. Siemens Company. As noted above, the report dated 10.03.2009 from the engineers of M/s. Siemens Company is on the pad of the Company addresses to Mr. V.K. Sinha, the DGM of the Complainant Mill, it also refers to the official address, work’s address of the factory at Vadodara alongwith phone number, fax number etc. There is nothing on record to indicate in the queries made by the surveyor from the Complainant about the said technical report being either fake or otherwise. The query dated 26.05.2010 made by the surveyor is on record which nowhere indicates any clarifications sought from the Complainant about the veracity of the said certificate. The recital contained in the survey report about verifying it on phone by the surveyor nowhere recites as to on which date and from whom any such confirmation was sought. The certificate has been issued on behalf of M/s. Siemens Company by the Power Generation Division and is an official communication. The said communication was again affirmed by the technical report that was tendered by Mr. V.K. Sinha on 27.03.2010. The surveyor seems to have mixed up these two documents on record in as much as it is the subsequent technical report dated 27.03.2010 tendered by Mr. V.K. Sinha that was handwritten. The report from M/s. Siemens Company dated 10.03.2009 is a typed letter and therefore, the surveyor seems to have got confused and incorrectly rejected the same by stating that it is handwritten. Thus, the appreciation of the technical report by the surveyor and its acceptance verbatim by the Insurance Company in its repudiation reflects complete non-application of mind and the rejection is based on no critical appreciation or otherwise of the contents of the said technical report which establishes that due to the dislodging of the diaphragm bolts the entire system got unbalanced resulting in a huge vibration causing a consequential damage to all the components of the TG set that were sent for repairs.
43. The repudiation is mainly on the ground that there was wear and tear in the bearings and other parts and therefore, there was no accident, rather this entire exercise by the Company was for preventive maintenance in order to rectify the usual wear and tear. According to them, the servicing after a long time was undertaken and therefore, the damage to the rotor blades could not have resulted in the damage to the other parts which otherwise had occurred on account of wear and tear. All this seems to be more speculations than objectively and preponderantly possible. The discussion and observations in the preceding paras hereinabove on the evidence adduced including the two technical reports as well as the damage caused establish the loss suffered due to the unforeseen circumstance of the bolts giving way leading to the unbalancing of the turbine.
44. 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.
45. The other evidence which has been taken into account by the surveyor and believed by the Insurance Company is that the machine had to be stopped time and again and the purchase invoices of some of the spare parts were prior to the date of the incident, hence, the spare parts were not purchased for the accident. The impression drawn is that these bills were in respect of spare parts purchased more than an year ago or at least before the date of the incident that may have been for replacement on account of wear and tear. The claim, therefore, has been repudiated by inferring that if the spare parts had been purchased earlier they were nowhere related to the accident as reported and were made available at the time of the maintenance care being taken on the happening of the incident.
46. From a perusal of the purchase invoices tendered by the Complainant, it is correct that an approximate number of six of the bills as have been highlighted herein above appear to be in relation to the spare parts which seem to have been purchased prior to the date of the incident. Nonetheless the explanation given by the Complainant in their reply dated 20.08.2010 and pleadings and evidence is that the said purchases were made and kept in store in advance for meeting any such exigencies. The exigencies also could be of wear and tear as alleged by the Insurance Company. But the other side of the coin is that if the spare parts have been stored in advance, which was also the response of the Complainant, then they can be utilized even on the occurring of an accident or a loss as presently involved. If the spare parts have been purchased earlier and were stationed in the store of the Company that too even in the year 2005 and 2007/2008, and even if the orders were placed before the reported loss, the same cannot be construed to mean that such advance purchases were only meant for wear and tear and not for any such exigencies of accident. The machine is a turbine for the purpose of power generation which is a continuous operational mechanism. It is not unusual that some spare parts are kept for such emergency repairs which aspect does not appear to have been examined either by the surveyor or even by the Insurance Company while considering the reply and the explanation afforded by the Complainant. The explanation afforded by the Complainant is not an impossibility to the extent that no spare parts are retained by factories and it is only after the accident happens that orders are placed. It is no doubt true that major replacements may occur only after such incidents but the purchase of such spare parts and lying in the store for months or even for more than an year cannot necessarily lead to the conclusion that they were kept only for wear and tear and not in order to meet the exigency of any accident. The conclusion, therefore, drawn by the surveyor and accepted as one of the reasons in the repudiation letter as a discrepancy is, therefore, discarding a preponderant possible and probable happening as improbable. As noted above, 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.
47. Learned Counsel for the Complainant has rightly relied on the judgment of the Apex Court in the case of Sikka Papers Ltd. Vs. National Insurance Company 2009 Vol.7 SCC Page-777 to urge that in the said case, the observations made by the Apex Court in the case of New India Assurance Company Ltd. Vs. Pradeep Kumar were reiterated and held that even though the assessment of loss by an approved surveyor is a pre-requisite for a settlement of any such claim by the Insurer but the surveyor’s report is not the last and final word. It has been held that the said report is not so sacrosanct that it cannot be departed from as it is not conclusive by itself. The surveyor’s report may be the basis or foundation for settling a claim but it is neither binding on the Insurer or the Insured. The ratio of the above judgment, therefore, does indicate that the surveyor’s report can be assessed more so when the repudiation letter in the present case dated 01.12.2010 directly refers to the eleven discrepancies pointed out by the surveyor. The Apex Court in a recent decision Khatema Fibres Ltd. Vs. New India Insurance Company Ltd. & Anr. 2021 SCC Online SC 818 has held that due weight has to be given to the report of the surveyor and it need not be subjected to any forensic examination unless it can be shown that the conclusion drawn by the Insurance Company on the basis of such a survey report is either whimsical or arbitrary. As noted above the discarding of the engineer’s report from M/s. Siemens Company by giving it a description it which does not possess is clearly casual. The inference drawn on belated information as alleged by the Insurance Company, that had also been explained by the Complainant, and applying the clause of prompt information to repudiate the policy is arbitrary. The drawing of the inference of availability of spare parts in advance in the store of the factory and holding that such predated purchases create a doubt on the nature of its usage only for preventive maintenance and wear and tear is a selective logic without assessing the need of such factories of keeping spare parts in advance for exigencies of accidents as well.
48. The surveyor by his inference has shifted the cause of damage to wear and tear. The incident according to the surveyor himself as noted above did cause damage to the rotor blades. He stops short and then proceeds to treat the other damages as for preventive maintenance and wear and tear. It is on record that the machine had to be dismantled on at least three occasions and was witnessed by the final surveyor as well. The photographs had also been tendered and the nature of the repairs carried out indicated that it was all done and the damage was so severe that it undertook, at least three operations between October, 2008 and February, 2009 to finally make the turbine run. All this loss is covered as the duration of the policy was valid from 01.04.2008 to 31.03.2009. To infer that this was an exercise only for preventive maintenance and replacement due to wear and tear, seems to be stretched so as to invoke the Exclusion Clause. The Exclusion Clause is contained in the material damage section of the policy which has been extracted herein above. It indicates that a latent defect, gradual deterioration or deformation or distortion or wear and tear would stand excluded. The machine may have had some deterioration but the incident happened only after the huge vibration caused the damage as indicated. The cause of the incident commenced with the dislodging of the bolts and not due to wear and tear.
49. The contention is that the turbine was got dismantled and that the surveyor had no immediate excess for inspection. As indicated above, the equipment had been dismantled on several occasions between October, 2008 and February, 2009 which reassembling was witnessed by the surveyor as is evident from the final surveyor’s report. The photographs were there and as such it cannot be said that the Complainant wanted to shield any information or inspection by the Insurance Company so as to camouflage their claim under the garb of an accident. The Insurance Company while invoking the Exclusion Clause didn’t obtain any expert opinion and as noted above no material was brought forth to demonstrate that the technical opinion given by M/s. Siemens Company was incorrect. To the contrary, the surveyor went to the extent of calling it fake which as discussed above was clearly against the weight of evidence on record and with no material produced by the Insurance Company to contradict the veracity of the technical reports. The insurers could have obtained it in writing from M/s. Siemens Company but information without any details is said to have been exchanged on a telephone the details whereof are nowhere disclosed. This, therefore, was a clear attempt to simply dislodge the technical report by an oral averment and without putting the Complainant to any notice about the same.
50. 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.
51. Consequently, the Complaint deserves to be allowed. Accordingly, the claim of Rs.1,91,30,330/- as depicted in the claim deserves to be accepted as it is backed by related documents and bills pertaining to the expenses incurred for the loss suffered. The net loss assessed by the surveyor by disallowing heads on wear and tear and preventive maintenance for the reasons given herein above cannot be accepted. It is not the case of the Insurance Company that the bills and invoices are fake. Thus, on a comparative indication of the loss assessed by the surveyor is not in conformity with the actual loss suffered. The claim is, therefore, allowed with 9% interest from the date of the loss till the date of payment. The same shall be payable to the Complainant within three months. In the event of delay, the rate of interest shall stand enhanced to 12% p.a.
