This Consumer Complainant has been filed by the complainant M/s. Patel Engineering Ltd. against the opposite parties Bajaj Allianz General Insurance Co. Ltd. & anr. 2. Brief facts of the case are that the complainant company is engaged in carrying out construction works under contract awarded by various Govt. and public Sector undertaking. The National Hydro Power Corporation Ltd. (NHPC Ltd.) awarded the work of Teesta Low Dam Hydroelectric Project Stage III Civil Works (Lot-1) vide agreement to the complainant. Complainant obtained a “Contractor’s All Risk” Insurance Policy from the opposite parties, Policy No.OG-05-1901-0404-00000031, total sum insured Rs.2,38,51,00,000/- and Rs.10,00,00,000/- against 3rd party liability. On 25.07.2005, due to huge landslide there was heavy damage at the work site of the powerhouse. The factum of damage was duly intimated by the complainant to the opposite parties vide their letters dated 26.07.2005 and 02.08.2005. Again on 11/12.08.2005 and 18.09.2005 due to landslide at other sites there was further damage to the executed work of the complainant. On intimation, opposite parties deputed M/s. Inder Chadha & Associates as surveyor and loss assessor. On 20.01.2006, complainant vide letter sent the revised claims for the incident of loss (given below) and requested the surveyor for recommendation of payment of 80% of the claim and balance to be paid on submission of survey report- Table A S.no. | Date of Loss | Amount Claimed | 1. | 25.07.2005 | Rs.1,88,52,432/- | 2. | 11/12.08.2005 | Rs.23,03,249/- | 3. | 18.09.2005 | Rs.10,96,978/- | 4. | 17.01.2006 | Rs.92,58,170/- |
3. On 25.08.2007, surveyor vide letter advised the opposite parties that claim was not tenable as the losses were due to defect in design and the rock being softer, which was duly replied by the complainant. 4. On 22.09.2008 and 23.09.2008, opposite parties vide letters repudiated the claims of the complainant on the basis of survey report that there were continuing landslides because of nature of works and landslides were caused due to inadequate slope protection measures for the project and the soil conditions. 5. On 17.09.2010, the complaint was filed with following prayers:- “(i) hold that the respondent are guilty of deficiency of service and unfair trade practice and have thereby violated the relevant provisions of the Consumer Protection act, 1986; (ii) award a sum of Rs.3,15,10,829/- (Rupees Three Crore Fifteen Lakh Ten Thousand Eight Hundred Twenty Nine only) and US$2755 in favour of the complainant payable by the respondent towards the loss suffered by the complainant arising from the incident of landslide losses dated 25.07.2005, 11.08.2005, 18.09.2005 and 17.01.2006. (iii) award a sum of Rs.50 lakh in favour of the complainant towards compensation for business loss, mental stress, agony and harassment suffered by the complainant. (iv) award interest @18% p.a. being pre-suit, pendentelite and future interest on the reliefs claimed in (i) to (iii) above till the date of actual payment. (v) award costs of Rs.2 lac to the complainant which is likely to be incurred in conducting the present proceedings (vi) pass such other or further order (s) this Hon’ble Commission deems fit and proper in the facts and circumstances of the case.” 6. The complaint has been resisted by the opposite parties by filing the written reply. Both sides filed their affidavit evidence, which have been taken on record. 7. Heard the learned counsel for both the parties and perused the record. Learned counsel for the complainant stated that at four occasions the damage and loss occurred due to landslide which is a covered peril under the policy. 8. On intimation of loss, the Insurance Company appointed a surveyor who submitted his report after more than 3 years and no assessment of loss has been done by the surveyor. The Insurance Company repudiated the claims on similar grounds as mentioned in one of the repudiation letter dated 22.09.2009 which reads as under:- “There were continuing landslides because of nature of works. Slides were caused due to inadequate slope protection measures of the project and the soil conditions.” 9. Learned counsel for the complainant emphasises that the reasons given in the repudiation letter do not correspond to any exclusion clause or any condition in the policy, which could disentitle the claims of the complainant. In the policy, there are no qualifications attached with the provision of admissibility of claims due to landslides. In fact, the provision reads as under:- “The major peril/Acts of God claims shall mean claims arising out of a. Earthquake –Fire & Shock b. Landslide/Rockslide/Subsidence c. Flood/Inundation d. Storm/Tempest/Hurricane/Typhoon/Cyclone/Lightning or other atmospheric disturbances. e. Collapse f. Water damage for ‘wet’ risks i.e. contract involving works in rivers, canals, lakes or sea.” 10. From this provision, it is clear that landslide caused by any reason is covered under the policy. The complainant has been taking all precautions to safeguard the structures and works being completed on the ground. However, the natural phenomenon of landslide could not have been prevented by the complainant. The insurer and the insured i.e. both parties are bound by the terms and conditions of the policy and none of the reasons given in the repudiation letter are mentioned as exclusion in the policy, therefore, if the policy conditions are not violated or no exclusion clause is attracted, the claim cannot be refused by the Insurance Company. 11. It was stated by the learned counsel for the complainant that the surveyor has given totally unjustified reasons for cause of loss. The surveyor has opined as follows:- “Causes of Loss In the claim form, the insured has given the cause of the loss as landslide. Our opinions on the above losses are detailed hereunder: The landslide losses under the policy are part of the AOG perils and not insulated. That means that there has to be some sort of a external AOG peril which causes these slides. The Insured’s contention that the same are caused by excessive rainfall are not correct as the slides were happening continuously. What is pertinent to note is that there is a hill slope both above the highway and below the highway. Land slides are occurring (for whatever reasons) in the lower section only-that is from highway to the river bed area. There are no slides in the slopes above the highway. Without going into various technical reasons in simple terms, the slides appear to have been triggered off man made reasons, which is cutting the natural slopes. Once a slope is cut, its equilibrium is disturbed and it will ‘run’ or move towards a natural gradient that will release the locked in stresses. Rainfall records as examined do not show any excessive rainfall. Just the normal rainfall that is expected in the monsoons in this part of the region. The losses were caused due to man made conditions, that is cutting of slopes and not due to any AOG perils.” 12. Learned counsel contended that the surveyor has not considered landslides as acts of God, rather the surveyor has stated that the landslides have been caused by manmade conditions like cutting of slopes when a construction work has been taken up in the area. However, the complainant has been taking all the precautions to safeguard the structures. Moreover, the policy does not distinguish whether the landslides are caused due to an act of God or due to some other reasons. Losses as a result of landslides are covered under the policy without any exception or any conditions attached. 13. The learned counsel for the opposite party/Insurance Company stated that the delay in submission of the report by the surveyor has occurred due to non-supply of the documents by the complainant. Learned counsel emphasised that there was faulty designs of the structures under the project, which led to the landslides. In the letter dated 25.08.2007, the surveyor has informed the complainant of the reasons for non-indemnification of the claim. The extract of that letter is reproduced below:- “We acknowledge receipt of your letter 100/213/4/19-21-26-34/4420 dated July 24th, 2007 wherein under para 4 you have stated that NHPC has not given you any design data. As discussion with your goodselves and as per the drawings and photographs shown, these slides are occurring over the entire hill section. The hill side slopes are cut/excavated, treated and then lined with RCC after rock anchors etc. are drilled as per the drawings and specifications of m/s NHPC. These slope treatments are part of the permanent work to be done as per contract. It has been confirmed that after every occurrence, a team from NHPC visits the site and suggests remedial measures which include; Increasing diameter and length of anchor bolts, sal balli piling in some zones, Drilling holes and grouting with cement, admixture in some select zones near the highway. We have found that the magnitude of the slides increased as the slope cutting progressed downwards towards the river bed, probably indicating instability in the hill as lower sections were excavated. As per various site visits and observations made and the drawings examined it appears that the inadequate Slope is the main factor. The area between the river and the highway being fixed, the slopes being maintained are less than 1:2. Also, in some areas it was observed that Rock condition being highly fragmented and soft- different from the hard rock as originally envisaged as per the geological bore hold data. As of end April 2007, for the first loss of 25-07-2005, it was found that restoration work of major part was done, when there was another slide. For the other losses as of now, no restoration work has been done except for some removal of debris from critical areas. Under the circumstances, we are advising the Underwriters that no indemnity arises under the policy as the losses are due to a defect in design and the rock being softer that envisaged in areas and the losses are increasing as the slope cutting reaches the lower sections, which causes an imbalance in the overburden and slopes. Hence these are inevitable losses. We are releasing our report shortly to the Underwriters.” 14. From the above, it is clear that the landslides were not natural and they were caused due to faulty design of structures being adopted by the insured. 15. It was further argued by the learned counsel for the opposite parties that loss due to such acts of the insured, which actually led to landslides cannot be covered under the General Exclusions (C), which reads as under:- “C. Willful act or willful negligence of the Insured or of his responsible representative.” 16. Learned counsel further stated that it is the claim of the complainant that the landslides have occurred due to heavy rainfall in the region. However, the same is not supported by the rainfall data, which shows that there was no excessive rainfall in the region when landslides occurred. 17. On the aforesaid grounds, learned counsel for the Insurance Company asserted that the insurance claims submitted by the complainant cannot be accepted. 18. Learned counsel for the opposite parties further informed that an independent report submitted by Geological Survey of India has observed that the landslides may have been caused due to faulty design of the structures and by not taking the precautionary steps to prevent such landslides. Similarly for similar claims submitted to National Insurance Company Limited by the same complainant, the National Institute of Technology Silchar has submitted its technical report confirming the same facts as brought out by the report of the Geological Survey of India. These are two independent bodies, which have given reports confirming contentions of the surveyor and the Insurance Company. 19. I have carefully considered the arguments advanced by the learned counsel for both the parties and have examined the material on record. The admitted facts are that the claims in respect of loss due to landslides were submitted for four such occasions as given in Table A. It is also a fact that the surveyor has considered these landslides to have been caused by work related disturbances particularly slope cutting etc. without taking any precaution such as making of retaining walls etc.. The Insurance Company has also alleged that the claims are not payable under loss or damage due to faulty designs of structures. 20. In the present case, the main question to be considered is whether the loss due to landslides is indemnifiable or not under the policy. It is seen from the policy that no qualifications are attached with the clause which allows coverage of loss due to landslide, except for the loss due to faulty design. Other reasons given by the surveyor for not accepting the claims of loss due to landslides on these four occasions are not reflected in the policy either as exclusion or as violation of any conditions. Both parties agreed that there is no clause in the policy which requires the insured to take due care and precautions for safeguarding the structures. In such situation, distinguishing the landslides on these four occasions on the basis of reasons advanced by the surveyor from the normal landslides is not justified. 21. On the other hand, it is also true that once the complainant has taken up work in an area where landslides may occur, the complainant is supposed to take all precautions to safeguard the structures and particularly after one such landslide. In fact after the first landslide, the complainant should have found out the reasons for such landslide and should have taken steps to protect the structures and to minimise the loss against the landslides in future. Obviously, taking insurance policy does not mean that the complainant may go on having losses due to same factor just because losses are covered under the policy even if there is no clause in the policy relating to “taking reasonable care and precautions”. In the present case, the surveyor has clearly observed that the landslides may have been caused by faulty designs of the structures being constructed and that too without any protective structures. The observations of the surveyor have also been reaffirmed by two independent technical reports of Geological Survey of India and the National Institute of Technology Silchar. Both these reports were solicited by the Insurance Companies and in these reports only possibility has been expressed that the landslides may have occurred due to design faults in the structures. Earthquakes, landslides and rockslides etc. are the natural phenomenon which depend on many causal factors. However, it is also correct that protective measures might have been taken by the complainant to safeguard the structures and to minimise the loss. It has also been informed by both the learned counsel that the project work has been completed. So the fault in design of structure is not confirmed. 22. From the above discussion, I reach to the conclusion that the landslide is a covered peril under the policy. The first loss due to landslide may be considered for indemnification as the complainant may have been caught unaware or may not have been fully prepared to deal with the situation. However, further losses due to landslides cannot be considered for indemnification because, by that time, the complainant should have learnt the lesson and should have taken proactive steps for establishing protective measures for safeguarding proposed structures under the project. From the details given in table A, it is seen that the first incident occurred on 25.07.2005 for which a claim of Rs.1,88,52,432/- was submitted by the complainant. The claim has not been analysed by the surveyor and the surveyor has not assessed the loss due to this landslide independently. It was the duty of the surveyor to assess the loss. The Insurance Company also did not insist upon the surveyor to get the loss assessed. This Commission also did not have the benefit of perusing the full insurance claim filed by the complainant for the incident of landslide that happened on 25.07.2005 as the same has not been filed by the complainant before this Commission. In these circumstances, the only option is left to direct opposite party Insurance Company to examine the claim of the complainant for the landslide that occurred on 25.07.2005 and to settle the claim on the basis of assessment of loss by a licenced surveyor. 23. On the basis of above discussion, the consumer complaint No.175 of 2010 is partly allowed and the opposite party Insurance Company is directed to consider the insurance claim submitted by the complainant for the incident of landslide that happened on 25.07.2005 by examining the claim either by appointing a licensed surveyor or by examining themselves and to settle the claim within a period of 100 days from the date of receipt/service of this order. |