For the Appellant Ms Suman Bagga, Advocate For the Respondent Ms K Radha Rao, Advocate ORDER PER SUBHASH CHANDRA 1. This appeal under Section 15 of the Consumer Protection Act, 1986 (in short, the ‘Act’) challenges the order dated 28.06.2013 of the Andhra Pradesh State Disputes Redressal Commission, Hyderabad (in short, the ‘State Commission’) in Complaint Case No. 48 of 2012 partly allowing the complaint. 2. The delay of 35 days in the filing of this complaint is condoned for the reasons stated in the application for the condonation of delay in the interest of justice. 3. Briefly put, the relevant facts of the case are that the complainant (hereinafter called the respondent) had insured a Hitachi Hydraulic Excavator with the opposite party (hereinafter called the appellant) under a Contractors Plant and Machinery Policy (in short, the ‘Policy’) for the period 26.06.2010 to 25.06.2011. On 31.10.2010 around 3 am the excavator fell into a sump filled with mud and rainwater while working. Consequently, the engine and other parts were damaged and a claim for loss of Rs 48,89,193/- was lodged by the respondent on 09.11.2010 with the appellant. On 10.11.2010 the appellant appointed M/s Intec Insurance Surveyors & Assessors to assess the loss who, after thorough investigation based on documentary evidence submitted by the respondent in July 2011, submitted a final report on 25.09.2011. As per this report the loss was concluded to be on account of negligence of the Excavator Operator who was an employee of the respondent. The report mentioned that there was no damage to the cabin and external parts except the mud/slush marks over the travel motor assembly and track motor assembly areas. Even after dismantling of the engine no physical damage was found to the travel motor, main pump, fan pump and swing motors. All damages noticed were internal damages due to the mud water entering the excavator engine. The surveyor ascribed this damage to the operator not stopping the engine when he noticed the excavator sinking as there would have been no possibility of the mud water entering the engine had it been in a stopped condition. In view of Exclusion Clause ‘O’ which stated that the insurer shall not be liable under the policy for “Loss or damage directly or indirectly caused by or arising out or aggravated by the willful act or willful negligence of the insured or his representative.” Loss assessed was for Rs 23,26,060/- after deducting Rs 1,53,040/- for policy excess (@ 1%), Rs 70,000/- for salvage, Rs 12,43,559/- for depreciation and 0.8755 for under insurance factor. Based on this report, the claim was repudiated on 29.09.2011 as per Exception (b) of the Policy. 3. Respondent issued a Legal Notice on 22.12.2011 asserting that the excavator had not been operated while submerged and that there was no willful negligence on part of the respondent or his representative and seeking settlement of claim of Rs 48,89,193/-. The allegations were denied vide reply dated 16.04.2012 reiterating that the operator did not exercise proper care and caution to stop the engine immediately and attempted to take the excavator out keeping the engine running which resulted in the machine sinking deeper and causing extensive damage. The respondent thereafter approached the State Commission and filed a complaint seeking damages of Rs 48,89,193/- with interest @ 18% from 31.10.2010 till realization and compensation of Rs 2,00,000/- and Rs.25,000/- costs. The complaint was disposed of on contest allowing the complaint in part by the impugned order which is before us. 4. We have heard the learned counsel for the parties and perused the records. 5. It is the appellant’s case that the claim fell under Exception (b) of the Policy which reads as under: (b) Loss or damage due to electrical or mechanical breakdown, failure, breakage or derangement, freezing of coolant or other fluid, defective lubrication or leak of oil or coolant, but if as a consequence of such breakdown or derangement an accident occurs causing external damage, such consequential damage will be indemnifiable. It is contended that the State Commission erred in not appreciating the Surveyor’s report and wrongly holding that repudiation of the claim did not amount to deficiency in service. It is argued that the State Commission’s rejection of the appellant’s contention that the operator should have stopped the engine immediately was erroneous as also the conclusion that the operator had tried his best to get the excavator out of the sump and the engine stopped on its own. It also erred in holding that the excavator fell into the sump on its own and not because of mechanical breakdown. The reduction of the depreciation value from 30 to 10% on the ground that the excavator had been purchased only 4 months prior is also contested as also the reduction of amount of under insurance. It is averred that the State Commission failed to appreciate that the terms and conditions of the Policy provided for the sum insured to be equal to the cost of replacement of the insured property by new property of the same kind and capacity, including cost, freight, duty etc. and accordingly the Surveyor had assessed the excavator’s value at Rs 1,74,80,000/- and therefore applied under insurance. 6. Learned counsel for the appellant argued that there was no deficiency in service as the repudiation was based on the Surveyor’s report and was based on the Exclusion Clause of the Policy. It was further argued that the damage was only to the engine and not to the external body and was therefore due to the operator continuing to operate the engine when submerged in the muddy water which was violative of Exception O. It was stated that the respondent did not disclose that the information furnished by M/s Telco Construction Equipment Co. Ltd. had stated that mud water entered through the muffler and entered the engine through the exhaust valve and mixed with engine oil which led to seizure of the engine. It was also submitted that the Policy was one of reinstatement and was equal to cost of replacement including dues, freight, duties and erection cost and therefore the Surveyor had rightly applied underinsurance which had been disallowed by the State Commission. Reliance has been placed by the appellant on the judgment of the Hon’ble Supreme Court in Sikka Papers Ltd. Vs National Insurance Co. Ltd., AIR 2009 SC 2834 to contend that the surveyor’s report cannot be said to have wrongly rejected the claim for parts which had suffered due to wear and tear on account of constant use and although replaced could not form part of the claim for reimbursement under the policy. It was therefore prayed that the appeal be allowed. 7. Per contra, it was argued by the counsel for the respondent that the impugned order was in order and that the State Commission had rightly adjudicated the complaint and that even though the awarded amount was less than the amount claimed, the respondent had not challenged the order in order to close the issue. It was contended that the repudiation was arbitrary and unjust since there had been no willful negligence as per the evidence of the excavator operator and that the State Commission had concluded on the basis of the statement of the operator and findings of the surveyor that the operator had tried his best to the excavator out of the sump but the engine had stopped itself. It was also argued that the service engineer had noted the damage to the same parts as had been pointed out in the surveyor’s report. The State Commission had, according to the respondent, rightly concluded that the damage was not due to mechanical breakdown. Therefore, the claim was admissible since the Exclusion Clause O and (b) did not apply. The excavator, according to the respondent had accidentally fallen into the sump and the loss was therefore liable to be indemnified under the Policy under the reinstatement clause. It was argued that the underinsurance applied by the insurer was incorrect as the total value of the excavator was Rs.1,74,80,000/- whereas the damage was estimated at Rs 1,53,04,000/-. Reliance was placed by the respondent on the judgment of the Hon’ble Supreme Court in M/s Shobika Attire Vs. New India Assurance Co. Ltd., 2006 (8) SCC 35 that the complainants had discharged the initial burden regarding destruction and damage by fire and riot in support of the claim and it was for the insurance company to disprove the claim with evidence, if any. 8. It is manifest that the appellant relied upon the Surveyor’s report to come to the finding that the damage to the excavator was due to the negligence of the operator in continuing to keep the engine of machine switched on. Its conclusions are based upon Exclusion No. O and (b) of the Policy. The letter of repudiation dated 29.09.2011 reads as under: Surveyors, based on the documents and their survey, concluded that the claim is not falling under the purview of the policy and hence the same was informed to your goodselves in person by one of the surveyor’s associate. ‘’’’’’’ As informed during the discussion that the cause of loss for the reported loss does not fall under the purview of the policy. Also, it was informed during the discussion that the final survey report is yet to be released by the surveyor. Ot was agreed in the meeting to relook into the claim once again. As discussed in the meeting the claim was relooked into once again and regret to inform you that the cause of loss based on the statement of the Operator, Mr Gopal Reddy, Telcon Service Report, Claim Form and Survey, is not falling under the purview of the policy as per the Exception (b) of the policy which is reproduced for your ready reference: (b) Loss or damage due to electrical or mechanical breakdown, failure, breakage or derangement, freezing of coolant or other fluid, defective lubrication or leak of oil or coolant, but if as a consequence of such breakdown or derangement an accident occurs causing external damage, such consequential damage will be indemnifiable. [Emphasis supplied] 9. It is apposite at this stage to recall that the finding of the State Commission in the impugned order reads as follows: 11. … We observe from the material on record that there is no documentary evidence to establish that the damage was due to mechanical or electrical breakdown, failure or derangement or defective lubrication etc. It is the case of the opposite parties that the operator should have immediately stopped the engine and only because of his negligence the entire engine got damaged. We observe from the statement and also the findings of the surveyor that the operator only tried his best to get the excavator out of the sump and that the engine had stopped by itself. …… 13. (The statement of Sri Gopal Reddy, operator of the excavator) only establishes that the excavator did fall into the sump which is about 5 metres depth and due to recent rains, the mud and silt accumulated in the sump. This fact has not been disputed by the opposite parties. The fact remains that the excavator fell into the sump and that there was mud and silt accumulated in the sump because of rains. The statement of the operator only establishes that he tried his level best to get the excavator out of the sump as he tried by swinging the excavator to pull up with the bucket support but by then the engine had stopped. This statement in no way evidences that there was negligence or willful operation by the excavator operator. It only manifests that the operator had tried his level best to pull out the excavator from out of the sump. In his findings the surveyor has stated that the excavator was found with mud and slush at the travel motor assembly and track motor assembly areas. It is also not in dispute that the engine was stopped and was removed which the surveyor had inspected. ……… 15. In the instant case the excavator accidentally fell into the sump and has nothing to do with mechanical breakdown as we could see that the mechanical breakdown excludes wear and tear and also any defect in the equipment which in the instant case the damage resulted only because of the accidental fall into the sump. The excavator was working without any problem prior to this fall which occurred in the 3rd shift due to operations in open cast mines. Therefore, we are of the considered view that the damage caused to the excavator is not due to mechanical breakdown and the repudiation by the opposite parties under the Exception (b) of the policy is not justified, and amounts to deficiency in service. [Emphasis supplied] 10. From the foregoing, it is evident that the cause of the damage to the excavator covered by the Policy was a fortuitous event of an accident due to its operations in the open cast mine. The incident occurred while working in the third shift which evidences that there was no mechanical breakdown or any breakdown due to electrical or other issues with lubrication or seizing. Since the excavator slipped into the sump of mud and rainwater accidentally, the action taken by the operator to extricate it cannot be considered to be “willful” in the manner in which it is contemplated under Exception O. There was no deliberate or wanton entry into the sump by the operator constituting any act of willfulness to attract the provisions of this Exception. Rather, his actions were to intended to minimize the damage by attempting to move the excavator out of the sump which did not succeed. It would be a travesty to conclude that the operator drove the excavator into the sump deliberately and willfully. As regards the Exception (b) relating to admissibility of claim only if there is external damage accompanying mechanical breakdown, in light of the fact that there was no breakdown, mechanical or any other, prior to the excavator slipping into the sump, it would be fallacious to reject a claim on this ground. While an insurance policy as a contract of insurance must be read in the language agreed upon between the parties as held by the Hon’ble Supreme Court in Suraj Mal Ram Niwas Vs United India Insurance Co. 2010 SCC Online SC 1148, it is also moot whether it can be read down to the detriment of the insured in a manner that is contrary to the facts on record. As regards the admissibility of various elements of the claim, the State Commission has fairly considered all aspects of the claim such as the cost of restoration, depreciation @ 10% instead of 30% in view of the fact that the machine was only four months old, etc. 11. In view of the discussion above, we are of the considered opinion that the appeal lacks merits and is liable to fail. The State Commission has logically and extensively examined the contentions and arrived at a considered decision. We do not find any reason that warrants our interference. The appeal is therefore dismissed and the order of the State Commission affirmed. 12. Pending applications stand disposed of with this order. | 
