1.       The present case is filed under Section 21(a) (1) of the Consumer Protection Act, 1986.

2.       Case of the Complainant is that they obtained a Standard Fire and Special Perils Insurance Policy No.080500/11/08/110000049 from the Opposite Party by paying a premium of Rs.7,58,430/-. The Policy was valid from 16.05.2008 to 15.05.2009 and covered the risk to the plant & machinery for Rs.117 crores and factory building and office building for Rs.8 crores. The Insured property was also hypothecated with various Banks named in the Policy.

3.       On 08.12.2008, at about 1 pm, during the trial of 10 MW turbine, suddenly lubrication oil pipe burst resulting in fire due to which the turbine was burnt. The Fire Brigade was called which controlled the fire after great effort. On 08.12.2008, the matter was also reported to the Police. The Opposite Party Insurance Company was informed of the incident, vide letter No.F/DGMF/5748 dated 08.12.2008, requesting them to depute a Surveyor at the earliest to assess the damage. The Opposite Party deputed M/s Mack Surveyor Pvt. Ltd. as Surveyor to assess the loss. The Surveyor visited the factory on 15.12.2008 and made enquiry and took photographs. On 16.12.2008, the Surveyor sent a letter to the Complainant to submit several documents. The Complainant complied with all the requirements of the Surveyor by furnishing the documents and information, vide letter dated 26.12.2008. According to the Complainant, the replacement cost of the turbine was around Rs.4 crores, but the Complainant submitted a rough estimate of Rs.1,22,00,000/- and claim form was accordingly filed by the Complainant with the Surveyor. On, 14.02.2009, the Complainant sent a letter to the Surveyor stating that as per the report of repairers the turbine was not in a repairable condition. In reply to the letter dated 14.02.2009, the Surveyor sent a letter dated 16.03.2009 to the Complainant that they did not agree with the Complainant.

4.       On 13.04.2009, the Complainant appointed a Committee consisting of four Senior Engineers from operation, maintenance and technical specialist to look into the details of cause of damage to the turbine and informed the Surveyor, vide letter dated 25.05.2009. The said Committee submitted its report dated 01.06.2009 and a copy of the same was sent to the Surveyors on 06.06.2009. On 30.06.2009, the Complainant made detailed calculation of the loss and submitted the revised claim for Rs.2,01,70,501/-. The Surveyors recommend about Rs.40 lakhs towards the net amount of loss and asked the Complainant to consent to an amount of around Rs.40 lakhs so that immediate settlement of the claim could be made. The Surveyors did not disclose the basis of arriving at the amount of around Rs.40 lakhs.

5.       On 13.09.2010, the Complainant sent a representation to the Insurance Regulatory and Development Authority, Hyderabad seeking their intervention in the matter. On 10.10.2010, the Complainant sent a letter to the Opposite Party seeking a copy of Surveyor Report, which was not provided to the Complainant. On 06.12.2010, the Complainant sent a legal notice to the Opposite Party, which was not replied by the Opposite Party. On 21.2.2011, the Opposite Party repudiated the claim. Alleging deficiency in service on the part of the Opposite Party, the Complainant filed the instant Consumer Complaint with following prayer:-

“1. A Sum of Rs.2,01,70,501/- being the value of the Turbine destroyed by the fire.

2. Interest @18% per annum on the said amount of Rs.2,01,70,501/- from 1.3.2009 up to the date of filing the complaint and thereafter up to the date of realization.

3. A sum of Rs.1,00,000/- towards harassment caused to the Complainant in entering into avoidable correspondence and consequent expenses.

4. A sum of Rs.1,00,000/- towards costs of this litigation.

5. Any other or further relief as this Hon'ble Commission finds fit and proper in the circumstances of the case.” 

6.       The Complaint was resisted by the Opposite Party by filing Written Statement. The Opposite Party took preliminary objection as to the maintainability of the Complaint on the ground that Complaint involved complicated questions of law which cannot be adjudicated by this Commission in summary proceedings under the Consumer Protection Act, 1986.

7.       On merit, it was stated that on receiving intimation of the incident the Opposite Party appointed M/s Mack Surveyors Pvt. Ltd. as Surveyor for assessment of loss. The Surveyor, vide report dated 23.01.2010, assessed loss at Rs.37,77,706/- and observed that the loss could be attributed to the fire caused due to leakage of oil from lubrication pipe of the turbine, due to electric spark. On detailed analysis of the Survey Report and the addendum thereof dated 06.01.2011, the Opposite Party observed that the claim of the Complainant was not covered under the Policy. The claim was, therefore, repudiated, vide letter dated 21.02.2011. It was stated that there was no evidence to prove that the damage to the turbine was caused due to fire. The turbine was damaged by over speeding of rotor due to mechanical fault, which was not covered under the Policy. The flash fire was said to have lasted less than two minutes. It was not possible for such a short duration fire to melt the shaft made of gun metal as well as the trip wear indicator made of aluminium.

8.       Heard the Learned Counsels for the Parties and carefully perused the record. Learned Counsel for the Complainant submitted that on 08.12.2008 at about 1 pm when the turbine was in running condition, suddenly lubricant oil pipe burst and the turbine was burnt. It was submitted that there is a technical inspection report of M/s Turbofix Engineers & Consultants dated 27.12.2008 to the effect that the turbine was damaged due to fire. There was total loss to the turbine and the replacement cost was Rs.4 crores. Learned Counsel also submitted that the Complainant appointed a Committee consisting of Four Senior Engineers from operation, maintenance and technical specialist, who submitted their report dated 25.05.2009 giving the details of cause of damage. He also submitted that due to the incident of damage of turbine, the Complainant went into financial crunch and the Surveyor tried to take benefit of the financial condition of the Complainant. The Surveyor asked the Complainant to settle the claim at Rs.40 lakhs so that immediate settlement of claim could be made. As the Complainant had suffered harassment, they gave their consent to the offer of the Surveyor with the hope that the claim would be paid without delay. It was also submitted that loss/damage to the turbine due to leakage of lubrication pipe and thereby causing fire was very well covered under the Policy. Learned Counsel further submitted that the Surveyor had arbitrarily deducted depreciation @ 75% of turbine, while the yearly depreciation should not be more than 5%.

9.       Learned Counsel for the Opposite Party submitted that there was no evidence that the damage to the turbine was caused by fire. Loss to the turbine was caused by over speeding of rotor of the turbine due to mechanical fault, which was not covered under the Insurance Policy. It was submitted that the flash fire lasted for less than two minutes and it was not possible that such a short duration fire could melt the shaft which was made of gun metal or the trip wear indicator made of aluminium.  Learned Counsel also submitted that as per the Survey Report, due to sudden bursting of lubrication oil pipe, pressure of oil inside the turbine became low due to which the internal rotating parts could not be adequately lubricated resulting in overheating and breakdown of turbine, which cannot be said to be direct damage to the turbine due to fire and there was consequential damage to the turbine. As per exclusion clause 9, consequential loss was not payable. The Opposite Party repudiated the claim on the basis of the Survey Report. It was submitted that there is no deficiency in service on the part of the Opposite Party and the Complaint is liable to be dismissed.

10.     It is admitted that the Complainant obtained Standard Fire and Special Perils Insurance Policy No.080500/11/08/110000049 from the Opposite Party by paying a premium of Rs.7,58,430/-. It is also admitted that the Policy was valid from 16.05.2008 to 15.05.2009 and covered the risk to the plant & machinery for Rs.117 crores and factory building and office building for Rs.8 crores. On 08.12.2008, at about 1 pm, during the trial of 10 MW turbine, suddenly lubrication oil pipe burst resulting in fire due to which the turbine was burnt. The loss/damage caused to the turbine by fire is disputed by the Opposite Party. The claim of the Complainant is covered under the Insurance Policy is also disputed by the Opposite Party.

11.     Regarding the preliminary issue of maintainability of the Complaint, we find that there is no complicated question of law involved in this case and the issue involved can very well be adjudicated by this Commission. The Complaint is, therefore, held to be maintainable.

12.     On merit, the Opposite Party alleged that the loss to the turbine was not caused by fire but was due to some mechanical fault, which was not covered under the Insurance Policy. The Surveyor in their report dated 23.01.2010 observed as follows: -

“(e)   considering the opinion of the expert we confirm that the loss is due to in Insured peril & covered under the policy.”

13.     Surveyor also observed/insisted in “bold letters” that “it can therefore be concluded that most probable cause of mechanical failure was the fire due to bursting of Lubricating Oil Pipe.” In the affidavit evidence, the Opposite Party filed the expert report of Precision Engineers regarding fire loss to the turbine, which reads as follows: -

“The fire could have caused unequal expansion of the spindle and the bushing of control valves, which could have got stuck and allowed the stem to reach the turbine cylinder. In such case any command from the governor was of no consequence and this could have led to over speeding of the turbine, bearing failure and in turn jamming of the rotor.

It can therefore be concluded that most probable cause for the accident was fire due to bursting of Lubricating Oil Pipe.”

14.     From the above, it is seen that M/s Mack Surveyors and Precision Engineers have given the same finding regarding loss to the turbine and both of them were deputed by the Opposite Party. Further the Committee appointed by the Complainant, vide report dated 01.06.2009 observed as follows: -

“The leaking turbine oil vapour present immediately caught fire from the above spark. Flash point of the turbine oil (Grade 26 and N 48) is 190-210 degree centigrade. Spark temperature is approx. 600 degree centigrade.

The huge quantity of spilled turbine oil lying on surface of turbine oil also caught fire and the flame flashed suddenly. Immediately the complete turbine was under flame for some time.

Such sudden flame and flash further the complete turbine was engulfed within flames for a while. This further damaged the signal cables and signal/communication to close the speed governor malfunctioned and did not work at all.”

15.     From the aforesaid three reports, it is clear that the cause of accident was fire due to bursting of lubricating oil pipe and not due to mechanical fault as alleged by the Opposite Party.

16.     It is relevant to note that after the submission of Final Survey Report, the Opposite Party held a meeting with the Surveyor after more than eight months on 04.10.2010. Thereafter, the Surveyor submitted an addendum dated 06.01.2011 wherein it was observed that the “loss will be well with the excess of the policy & the file may be closed as “NO CLAIM.” If there was any ambiguity in the Final Survey Report, the Opposite Party would have immediately discussed the same with the Surveyor. The Opposite Party took more than eight months to hold a meeting with the Surveyor. Further, the addendum ousting the claim of the Complainant is impermissible unless there is a satisfactory reason for rejecting the conclusion of the Final Surveyor Report. In the present case, no reason has been adduced by the Opposite Party. The addendum sought by the Opposite Party from the Surveyor seems to be an afterthought.

17.     The Opposite Party alleged that there was no direct damage to the turbine due to fire. The Surveyor observed that “most probable cause of mechanical failure was the fire due to bursting of Lubricating Oil Pipe.” The Committee appointed by the Complainant observed that “huge quantity of spilled turbine oil lying on surface of turbine oil also caught fire and the flame flashed suddenly. Immediately the complete turbine was under flame for some time.” From the Final Survey Report and the report of the Committee appointed by the Complainant it is clear that the damage to the turbine was caused due to fire. The allegation of the Opposite Party that there was no direct damage to the turbine due to fire is, therefore, rejected.

18.     The only issue relates to the quantum of loss suffered by the Complainant. It is alleged by the Complainant that the Surveyor had made depreciation at 75% without assigning any reason. The turbine was functioning efficiently and the yearly depreciation should not be more than 5% per year. As per Survey Report dated 23.01.2010, the turbine purchased by the Complainant in 2005 was a second hand machine. The turbine was originally purchased by M/s British Sugar PLC, IPSWITCH, UK from AEG Kanis, Germany in 1989. If 5% per year depreciation is calculated from 1989 till 2008 (as the incident of fire occurred on 08.12.2008), the total depreciation for 17 years comes to 85%. However, the Surveyor made depreciation of 75%. The depreciation at 75% made by the Surveyor is accepted

19.     Complainant also alleged that the Surveyor had arbitrarily taken the amount of salvage at Rs.62,77,544/-. The salvage could be sold only for Rs.28.50 lakhs. The Complainant had calculated the salvage value of Stator and Rotor at Rs.3,39,696/- and Rs.9,51,600/- respectively. According to the Surveyor the Rotator/Stator/Control Panels were not damaged and calculated the value of the same at Rs.37,74,375/-. Surveyor further stated that the control of governor was recently purchased, which was not damaged. He calculated the same at Rs.16,93,169/-. The Surveyor had given reason for calculation of salvage, which, in our opinion, is justified. The Surveyor had assessed the net loss at Rs.37,77,706/-. Complainant failed to establish that there is any arbitrariness in the assessment made by the Surveyor.  

20.     In the view of above discussion, we partly allow the Complaint and direct the Opposite Party to make payment of Rs.37,77,706/- alongwith 9% interest to the Complainant from the date of repudiation of the claim till the date of realization. Opposite Party shall also pay an amount of Rs.50,000/- as cost of litigation. The order be complied within eight weeks.