APPEARED AT THE TIME OF ARGUMENTS

O R D E R

PER MR. C. VISWANATH, MEMBER

          A biomass based power generating Plant of 8 MW was set up by the Complainant at RIICO Industrial Area, Keshwana, Kotputli, Rajasthan.

2.       According to the Complainant, the Power Plant was commissioned in Sept. 2006.  The boiler was blazed up as per schedule and the turbine was synchronized to the grid on 28.08.2007. After about 15 hours of successful running, the Travelling Grate started giving trouble, broke down and the boiler stopped at 9:50 a.m. on 29.08.2007.

3.       Learned Counsel for the Complainant stated that the Opposite Party was informed about the breakdown of the machinery, vide letter dated 30.08.2007. Thereafter, the Complainant initiated necessary steps to restore the functioning of the boiler as provided in the “sequence of technical events of break down in Travelling Grate from 17.08.2007 to 24.10.2007”. After the visit of Mr. H.S. Cheema, Managing Director, Cheema Boilers Limited (boiler manufactures) it was concluded that the Travelling Grate was misaligned because of thermal expansion of the boiler during running. Despite the Complainant intimating this incident to the Opposite Party vide letter dated 30.08.2007 and requesting them to depute the Loss Assessor and Surveyor to assess the losses, the Opposite Party failed to take any step. Though the loss incurred was known to the Opposite Party right from the very beginning, still the Complainant sent a written reminder on 01.10.2007.  There was no pre-exiting condition which was unknown to the OP at the time of grant of the Policies. The Complainant also informed that the Plant was shut down on 17.08.2007 and restarted on 17.11.2007.

4.       There has, thus, been a deficiency in service by the Opposite Party and the OP is liable to pay the claim of the Complainant.  Complainant prayed to direct the OP to indemnify the loss and pay Rs.8,56,560/- to the Complainant, along with interest thereon @15% per annum from 30.09.2007 till actual realization of payment on account of damage due to break down in Travelling Grate on 28.08.2007 under MBD Policy; indemnify the loss and pay to the Complainant Rs.1,85,60,000/- for loss of working days as the break down occurred on 29.08.2007, after giving due credit for time excess period of 7 days along with interest thereon @15% p.a. from 17.12.2007 till the date of actual realization of payment on account of loss of working days under MLOP Policy; and pay Rs.10,00,000/- towards the Compensation for mental agony, discomfort and sufferings etc. due to deficiency and negligence in services by the Opposite Party.

5.       The Complaint was contested by the Opposite Party and reply filed.  The OP contended that the Insurance Policy was obtained by suppression of material facts and is therefore void and no claim can be set up under the said policy.  It was categorically stated that there is no deficiency in service and the Complaint is not maintainable under the provisions of the Consumer Protection Act, 1986. 

6.       According to the Opposite Party, the Plant was insured under Erection All Risks (EAR) Policy upto 16.8.06.  On 11.08.06, the Complainant requested for extension of EAR Policy upto 16.10.06 and also sought to know the premium for Fire & Machinery Breakdown Policies.  Fire, Fire Loss of Profits and Boiler Insurances were effected by the Complainant from 17.10.06, but coverage for Machinery Breakdown (MB) and Machinery Loss of Profits (MLOP) were deferred by the Complainant as they could not provide the details of equipment and machinery.  Thereafter there were a series of correspondence with the Complainant on the equipment to be covered and quotations on insurance premium, but with little response.  On 23.08.2007, the Complainant showed urgent interest in the Machinery Breakdown and Machinery Loss of Profit Insurance.  He took the Machinery Breakdown Insurance with effect from 9am of 27.08.2007 to midnight of 26.08.2008 for a sum of Rs.9,65,72,076/- and Machinery Loss of Profit Insurance from midnight of 28.08.2007 to midnight of 27.08.2008 for a sum of Rs.9,28,00,000/-. 

7.       Immediately thereafter on 29.08.2007, the Travelling Grate broke down and the boiler stopped.      The Plant was shut down after abnormal noise was heard from the Travelling Grate of the Boiler.  The Service Engineer M/s Cheema Boilers Ltd. observed that the abnormal noise came from the Travelling Grate due to the Grate touching the casing.  The only reason for damage was the misalignment of Travelling Grate due to thermal expansion of boiler.  The Service Engineer only readjusted the gap between the casing and the Travelling Grate.  The same was tried in cold conditions and was found to be in order.  However, when the Boiler was fired, the Travelling Grate again jammed as the gap was not sufficient to take care of thermal expansion of boiler casing.  The problem continued as the cause was not cured.  As on the date of the start of the Policy, the Travelling Grate was not in good condition and hence it broke. 

8.       This was not a new problem, but result of a pre-existing problem in Travelling Grate which was concealed from the Insurance Company.  Anticipating trouble, the Complainant showed undue haste in taking the Insurance Policies, which otherwise he was dilly dallying for a long time.

9.       When the Surveyor visited the Plant on 24.01.2007, the Travelling Grate was totally dismantled and he was denied opportunity of inspecting the damaged part prior to dismantling.  As per Policy condition, the insured should not have proceeded with dismantling/repairing of the damaged item before inspection of the Surveyor, unless it was needed to minimise the loss. 

10.     The Complainant also wrongly attributed, the shut-down of the plant for 10 – 12 days, to the poor quality of fuel due to increase in moisture content because of rains, while the actual cause was due to the Travelling Grate touching the casing and its eventual breakdown. 

11.     Realising that the log records of the Plant operation prior to breakdown may come for examination, the Complainant managed to get a Police Complaint filed on 14.10.07 stating that the records were stolen. The Police, however, not finding any cognisable offence, did not register a regular FIR.  On the other hand, the Complainant informed the Surveyors that the log book was in their Head Office.  It is clear that the intimation to Police on 14.10.07 about the loss of log book was clearly back dated information. The Surveyor, however, chanced upon a log sheet dated 2.8.07 during their visit to the control room of the Plant on 24.10.07. This shows that the log book was not lost but was kept concealed from the Opposite Party.

12.     The Insured claimed a loss of Rs.8,56,560/- towards repair cost of Boiler.  The Surveyor opined that there is no liability of insurance on account of the following:

(a)     At the time of the start of the policy, the TG was not in a healthy condition.

(b)     The insured was aware that the problem in TG was not fully resolved, since only cold runs had been carried out.

13.     The Complainants themselves were not ready with the repair bills etc. up to 15.11.07, which were required to be provided with the claim form. Even so the claim form was completed only on 31.12.07.  The Complainants have never submitted any claim with evidence in respect of alleged loss of profits.  The Complainant is not entitled to Rs.8,56,560/- towards repairs and replacements to the Travelling Grate. The Complainant is not entitled to claim Rs.1,85,60,000/- towards the alleged loss of working days, since firstly the claim under the Machinery Breakdown policy is not admissible and secondly, there is no evidence on record to establish the loss claimed.  The claim under MLOP Policy will be issued once the liability under MBD Policy has been established.

14.     Heard the Learned Counsels for the Complainants and the Opposite Party.  They reiterated their respective contentions as stated above.  We have also carefully gone through the evidence placed on record.

15.     The break-down of Travelling Grate occurred on 29.08.2007 and the Complaint was made vide letter dated 1.10.87, which was received by the OP on 04.10.2007, more than a month after the breakdown of the machinery.  Despite repeated enquiries, the Complainant could not produce evidence to show that the intimation of breakdown of Travelling Grate was sent on 30.08.2007 and received by the Opposite Party. The Opposite Party also stated that by this letter they received a cheque no. 269719 dated 18.08.2007 for Rs.1,59,177/- as instalment premium for M/s. Kalptaru Energy Venders (a group company of Complainant).  The Complainant has always been corresponding with the Opposite Party by email, but could not provide any satisfactory reply as to why the Insurance Company was not informed about the breakdown of the machinery forthwith by telephone, telegram or email. 

16.     This is a breach of condition 8 of the Machinery Breakdown Insurance Policy, which states that in the event of any occurrence which might give rise to a claim under the Policy, the Insured shall immediately notify the Company by telephone or telegram as well as in writing, giving an indication as to the nature and extent of loss or damage.  The Company shall not be liable for any loss or damage of which no notice and completed claim form have been received by the Company within fourteen days of its occurrence. 

17.     Soon after taking the Machinery Breakdown and Machinery Loss of Profits Policies, the Travelling Grate of the Boiler broke down.  Travelling Grate was giving trouble prior to the Complainant taking insurance.  Repairs were carried out but it continued to give trouble.  Cold test was conducted, but when the boiler was fired, due to thermal expansion the Travelling Grate broke down.  In the email dated 27.08.2007, Complainant informed that Travelling Grate was opened for checking of noise and routine maintenance and after completing minor jobs was almost under completion.  He also informed that the Plant was under shut down for about last 10 – 12 days and hopefully would be operational by the next day.  The shut down was mainly because of the extremely poor quality of fuel as moisture has gone up substantially because of rains, whereas the Surveyor observed that “the heaps of the mustard crop residue develop an impervious layer which does not permit rain water to enter inside the heap and damage the fuel stock.  Thus, the contention of the insured that on 17.08.2007, the Plant was stopped on account of poor quality and high moisture content in the fuel is not correct.  The Plant in our opinion was stopped after abnormal noise was heard from the Travelling Grate of the Boiler.”

18.     By the time the Surveyor went, they had also dismantled the Travelling Grate and declared the log sheets stolen.  All these were attempts to delete evidence to show that the Travelling Grate was giving trouble before taking insurance.   The Travelling Grate was already under frequent breakdowns and there was definitely a pre-existing problem known to Complainant which was concealed.

19.     This falls within the General Exception 8 of the Machinery Breakdown Insurance Policy and is not admissible.  It reads as “Loss, damage and/or liability due to faults or defects existing at the time of commencement of this insurance and known to the insured or his responsible representative but not disclosed to the company.”

20.     For accepting the claim under Machinery Loss of Profit Insurance Policy; there has to be in force an insurance covering the machinery described in the Schedule from any accidental cause indemnifiable under the standard Machinery Insurance Policy and or Boiler & Pressure Plant Insurance Policy and in respect of which liability shall have been admitted or would have been admitted but for the operation of any Excess thereunder.

21.       In view of the above, we are convinced that the claim of the Complainant was rightly repudiated by the Opposite Party due to breach of Policy conditions.  We find no deficiency in service on the part of the OP Insurance Company.  Accordingly, the complaint stands dismissed.  There shall be no order as to costs.