This Consumer Complaint has been filed under Section 21(a)(ii) of the Consumer Protection Act, 1986 alleging deficiency in service and unfair trade practice on the part of the Opposite Party, and seeking payment of the amount claimed under the Insurance Policy. 

2. The factual background, in brief, is that the Complainant, which is a Governmental Company established under the Companies Act, 1956, had procured a Machinery Insurance Policy for the plant and machinery of Unit No. 1, Jaldhaka Hydel Project (JHP). This Policy, numbered 100700/44/13/5200000007, was effective from the midnight of 24.05.2013 till 23.05.2014, for a total premium of Rs. 3,87,307/- and the sum assured was Rs. 25,91,04,226/-. On 02.10.2013, at 18.05hrs., during the initiation of Unit No. 1 at JHP Stage-1, significant hammering noise and vibration occurred. The machine was subsequently shut down due to high water level in the drainage pit and PRV leakage. An immediate inspection revealed an abnormal downstream pressure gauge reading of 10-12Kg/cm2, which should have been 15-16Kg/cm2, in matching the upstream pressure. The machine was deactivated the same night, and in the morning shift inspection on 03.10.2013, similar anomalies were detected, leading to a declaration of the machine as non-operational after a physical inspection of the spiral case. On 27.11.2013, an Incident Report regarding the event of 02.10.2013 was submitted to the Project Manager, JHP by Mr. P.K. Dutta, AE(O), Mr. R. Basak, AE(E), and Mr. S Roy, AE(M) of the Complainant Company. The Chief Engineer of the Procurement & Contracts Department reported the damages to the Senior Divisional Manager of the Opposite Party on 28.10.2013 and requested the appointment of a Surveyor. Subsequently, a Surveyor was appointed, and a preliminary inspection was conducted on 27.11.2013. A Memorandum of Meeting (MoM) was finalized on 03.06.2014 between the Surveyor/Loss Assessor and the Complainant’s officers. Despite several communications and requests from the Complainant to expedite the claim process, the Opposite Party issued a Repudiation Letter dated 14.03.2018, received by the Complainant’s office on 19.03.2018. Following this, a Legal Notice was sent on 06.06.2019 by the Complainant through its Advocate to demand payment towards the unsettled claim. Getting no positive response to such Legal Notice, the Complainant filed the current complaint. 

3. In the backdrop of the facts narrated  above, the Complainant has prayed as follows  - 

“A. Directing the opposite parties to settle/pay/disburse the amount of Rs. 2,63,19,430/- along with 18% interest from the date of claim submission till the date of filing of the instant claim, totaling Rs. 3,93,76,752/- till date;

B. Directing the opposite parties to pay the interest @ 18% per annum on the claimed amount till the realization of the entire amount as claimed;

C. Cancellation/ Setting aside/ Quashing the alleged repudiation letter dated 14-03-2018 and declare the same as bad in the eye of Law, unfounded, baseless, not according to the IRDA rules and the same is not binding upon the complainant.

D. Directing the opposite parties to pay the compensation of Rs. 10lakhs for causing harassment upon the complainant due to long delay for processing and settlement of the aforesaid claim;

E. Directing the opposite parties to pay a sum of Rs. 5 lakhs for legal expenses and other incidental costs to the complainant…”

 

4. The Complaint has been contested on behalf of the Opposite Party, which in its Written Version has denied the material contentions raised by the Complainant, but has also asserted that the Complainant reported the loss on 28.10.2013 and despite repeated reminders, the Complainant failed to provide the necessary documents and information requested by the Surveyor. The Surveyor's Report dated 23.09.2016 highlighted the Complainant's non-cooperation as a hindrance to a fair assessment of the loss; That Clause 6 of the Policy terms and conditions specifies that the Company is not liable for any loss or damage if no notice, and completed claim form are received within 14 days of the occurrence. Additionally, the Company's liability under the Policy ceases if the damaged item continues to operate without proper repairs. The Complainant submitted the Claim Form and documents after the Survey Report dated 23.09.2016, thereby absolving the Opposite Party of any liability under the Policy; That the Hon’ble Apex Court's decision in "Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd., (2010) 10 SCC 567", has held that Insurance Policy terms must be strictly interpreted without making exceptions on equitable grounds; That the complaint is time-barred. The loss occurred on 02.10.2013, and the complaint was filed with this Commission on 16.03.2020. The Hon’ble Apex Court's decision in "Kandimalla Raghavaiah & Co. National Insurance Co. (2009) 7 SCC 768", has laid down that a complaint should be filed within two years of the cause of action. In the present case, the complaint was filed on 16.03.2020, long after the occurrence of the loss on 02.10.2013, which is clearly beyond the limitation period.

5.   Evidence by way of Affidavit on behalf of Complainant has been filed by Mr. Soumen Das, Resident Director, New Delhi, West Bengal State Electricity Distribution Company Limited; Evidence by way of Affidavit on behalf of the Opposite Parties has been filed by Mr. Vijay Kumar Gupta, Divisional Manager, National Insurance Co. Ltd.

6.    This Commission has heard both the Ld. Counsel for Complainant and the Opposite Party, and perused the material available on record.

7. Ld. Counsel for Complainant has argued that that the claim's limitation period does not apply as the claim was repudiated on 14.03.2018 and received by the Complainant on 19.03.2018. Given that 14.03.2020 was a second Saturday and the next day was a Sunday, the complaint was filed on 16.03.2020. Furthermore, a letter was sent to the Opposite Party on 13.04.2018 protesting the unlawful repudiation, which remains unanswered. Thus, the strict application of limitation laws is unwarranted in this case; That the Complainant falls under the purview of the Consumer Protection Act, being a Power Utility Service of the Government of West Bengal engaged in nation-building; That this Commission possesses the authority to adjudicate on the matter. The Opposite Party's claim that the case is complex and requires extensive scrutiny of evidence is merely a tactic to evade this Commission's jurisdiction. The present case can be decided based on the documents presented before the Commission. These documents clearly show that the claim was unduly delayed and subsequently repudiated without justification. The Final Survey Report was not provided to the Complainant, and there was no indication or intimation explaining why the Surveyor deemed the claim 'closed'; That the Repudiation Letter, while citing Clause 6, fails to specify which part of the Clause was violated. This lack of reasoning makes the letter arbitrary and indicative of a lack of reasonable consideration; That while the assessment of loss by the Surveyor is essential, it is not conclusive. Section 64(UM)(2) of The Insurance Act, 1938 provides that while a report from a licensed Surveyor or loss Assessor is required, the Insurer must independently evaluate the claim. The approved Surveyor’s Report can serve as the foundation for claim settlement but is neither binding on the Insurer nor the Insured.

8. The defence of the Opposite Party in contesting the Complaint is twofold.  Firstly, it claims that the Complaint is manifestly barred by limitation since it was filed almost 6½ years after the mishap giving rise to the Claim occurred on 2.8.2013.  The Second contention of the Opposite Party is that for not having given any intimation about the damage within the prescribed period of 14 days, and thereafter having failed to supply the relevant documents and informations which were required in pursuance of the Joint MoM drawn up on 3.6.2014, inspite of repeated requests and reminders, the Claim of the Complainants had to be closed following the intimation given to it by the Surveyors. As such, conduct of the insured was contrary to its obligation under Clause 6 of the Policy.

9. The first objection regarding the Complaint being barred by limitation is now taken up for consideration.  It has been the submission on behalf of the Opposite Party that as the break-down had occurred on 2.10.2013, so the limitation for filing the Complaint ended two years later on 2.10.2015.  It was however countered on behalf of the Complainant by submitting that after the matter was reported to the Opposite Party, it had initiated the necessary steps for processing the Claim by way of appointment of Surveyors who held a Joint Meeting with the Complainant, the Minutes of which were reduced to writing on 3.6.2014, on account of which the period of limitation automatically got extended. In reply, Ld. Counsel for the Opposite Party submitted that even if the period of limitation is deemed to have been extended on account of his Client’s response to the Complainants intimation and Claim raised, still the fact that after having issued the last reminder dated 15.2.2015 calling upon the Complainants to furnish the requisite documents and information, to which the Complainant did not respond, was a sufficient ground for the Opposite Party to treat the Claim as closed.  In fine, the submission in this regard is that the reminder dated 15.12.2015 sent by the Surveyor to the Complainant, which was delivered in the Complainant’s office two days later, is therefore to be regarded as the break-down point of the interaction between the parties, on account of which the Complaint filed on 16.2.2020 was beyond a period of two years from the said date.  In this regard, reliance has been placed on a decision of the Hon’ble Supreme Court in “Geo Miller and Company Private Limited Vs. Chairman, Raasthan Vidyut Utpadan igam Limited, decided on 03/09/2019, (2020) 14 SCC 643”, in which it had been observed that the cause of action may be determined from the break-down point during the negotiations between the parties.  However, this Commission finds such contention and the ratio of the aforesaid decision of the Hon’ble Supreme Court to be inapplicable in the present case for the simple reason that after having issued the reminder dated 15.12.2015, the Opposite Party had formally repudiated the Insurance Claim only on 14.3.2018.

10. Such explicit repudiation of the Claim on the aforesaid date undoubtedly constitutes a valid cause of action for the Complainant to file its Complaint, which was filed on 16.3.2020.  Incidentally, 14th & 15th March, 2020 were holidays in this Commission being 2nd Saturday and Sunday respectively, after which the Complaint was filed on the very first working day which is therefore within limitation.  Consequently, the objection of the Opposite Party regarding the Claim being barred by limitation is found to be untenable.

11. Now, for considering whether the Opposite Party/ Insurance Company was justified in repudiating the claim on the ground that since the Complainant/Claimant also had failed to inform it about the mishap within fourteen (14) days, and furnish the relevant documents and informations in spite of repeated requests and reminders, such conduct constituted a violation of Clause 6 of the Insurance Policy, which is set out as below –

In the event of any occurrence which might give rise to a claim under this Policy the Insured shall –

a) 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;

b) take all reasonable steps within his power to minimize the extent of the loss or damage; 

c) preserve the damaged or defective parts and make them available for inspection by an official or surveyor of the Company.

d) furnish all such information and documentary evidence as the Company may require.

 

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.

Upon notification of a claim being given to the Company, the insured may proceed with the repair of any minor damage not exceeding Rs.2,500/- provided that the carrying out of such repair is without prejudice to any question of liability of the Company and that any damaged part requiring replacement is kept for inspection by the Company, but in all other cases a representative of the Company shall have the opportunity of inspecting the damage before any alterations repairs or replacement are effected.  Nothing contained herein shall prevent the Insured from taking such steps as are absolutely necessary to maintain the operation of the plant.

The liability of the Company under this Policy in respect of any item of property sustaining damage, for which indemnity is provided, shall cease if the said item is kept in question without being repaired to the satisfaction of the Company.”

12. Regarding the contention that there was violation of the aforesaid Clause 6 of the Policy on the part of the Complainant on account of its failure to intimate in writing and submit the complete Claim Form within 14 days from the date of mishap, it is to be noted, first of all, that a letter of intimation was sent by the Chief Engineer of the Complainant Company to The Sr. Divisional Manager on 28.10.2013, a copy of which is on record as Anneure-A3.  Perusal of the same clearly goes to indicate that even prior to the date of 28.10.2013, the matter had already been brought to the notice of the Insurance Company as there were telephonic discussions between Mr. P.K. Biswas, Manager (M&C), P&CD, Department of the Complainant, and Mr. S.C. Dey of the Insurance Company.  Such intimation in view of this Commission is sufficient to conclude that timely intimation about the mishap was given to the Insurance Company in substantial compliance of the duty of the Insured under Clause 6(a) as reproduced above.  Further, the fact that after such intimation, the Opposite Party had actually acted upon the same by way of convening a Joint Meeting involving the Surveyors appointed by it, and then reducing the Minutes of such Meeting to writing on 3.6.2014 without having already rejected the intimation/Claim at that stage on the ground that it had been raised beyond the stipulated period of 14 days, clearly goes to show complete acquiescence on the part of the Insurance Company in acting upon the Complainant’s request for payment of its Claim.

13. Now, the second objection regarding non-compliance of Clause 6(d) of the Insurance Policy on account of non-furnishing of the requisite informations and documents as required in the Joint MoM dated 3.6.2014 is taken up for consideration.

14. In the light of the aforesaid contentions rival contentions of both sites, we need to consider the following questions for arriving at a balanced conclusion– 

1) Whether the Surveyors from their side were justified in regarding the case as “Closed” on the presumption that the Complainant itself was not interested to pursue the claim? 

2) Whether there were any laches on the part of the Complainant in delivering the required documents and information as sought for?

15. The Surveyors in their letter addressed to the Insurance Company on 23rd September 2016 had mentioned that pursuant to the minutes of the Joint MOM which were reduced to writing on 3rd June 2014, the list of documents/informations required from the Complainant had been recorded therein. But the Complainant failed to supply any document or information for a very long period thereafter, in spite of no less than 4 separate reminders. But when the Complainant still did not respond, the surveyors had no option but to note, "Under the above circumstances, we feel that the insured is not interested to pursue the claim and we have no other option but to treat the matter as closed."

16. The Surveyors have also mentioned about the details of the four reminders issued by them to the Complainant which were in the form of letters dated 5th November 2014, 15th January 2015, 16th September 2015 and 15th December 2015. Copies of all these letters have been placed on record on behalf of the Opposite Party along with its Reply filed in the complaint. The Complainant however claims that none of the aforesaid letters/reminders were received by it, on account of which it could not have responded to any such communication. It has been argued that the burden of proving that such letters had been actually delivered to the Complainant was on the Opposite Party. It was suggested from both sides during the course of hearing that both the contesting parties are huge Public Sector Undertakings, with a tardy  work culture not comparable with that of the private enterprises. Be that as it may, the aforesaid four letters were alleged to have been issued to the Complainant under Registered/Speed Post which the complainant denied. However, from the additional documents placed on record on behalf of the Opposite Party on 5.9.2023, it is seen that the last letter/reminder issued by the Surveyors to the Chief Engineer, Procurement and Contract dated 15th December 2015 was issued by Speed Post. The Postal Initial Receipt showing such issuance is also attached to the letter, and the registered acknowledgement card received back thereafter has also been placed on record. Perusal of the same goes to show that the aforesaid letter had been duly delivered in the office of the Chief Engineer, Procurement and Contract, of the Complainant Company which was received by its concerned staff under his signature and official seal of the office of the Chief Engineer on 17th December 2015. In this view of the matter, we are not in a position to accept that the Complainant never received any intimations or reminders from the Surveyors asking them to supply the requisite documents and informations, as was originally required in the Joint MOM dated 3rd June 2014. 

17. However, a close reading of the aforesaid last reminder/letter of request issued by the Surveyors to the Complainant Company on 15.12.2015 would go to show that it is an exact replica of the earlier four  letters dated 3.7.2014, 5.11.2014, 15.1.2015 and 15.9.2015.  All these five letters are seen to be identical to the point of the last punctuation mark, except for the change in dates of their issuance.  These can therefore be regarded as no more than mere stereotyped reminders to the Complainant Company, and the last letter dated 15.12.2015 does not even contain anything in the nature of a caution or warning to the Complainant that if it now fails to furnish any information or to respond within a specified time, its claim is liable to be closed.  In the totality of these circumstances where the Insurance Company/Surveyors had themselves given  indulgence to the Complainant and not promptly closed the matter on the pretext that there was non-compliance on the part of the Insured/Claimant, and then abruptly closed the claim at a much later stage without even a final caution or warning to the Complainant, we are of the view that such conduct would not justify such abrupt and unilateral closure of the matter after a time span exceeding three years.

18. Conduct of the Insurer/ Opposite party after having received intimation from the Surveyors vide their letter dated 23.9.2016 alongwith the Survey Report in itself questionable.  In the Report, the Surveyors had mentioned inter alia –

“After completion of our Preliminary survey we had issued our letter dated 03/07/2014 (Refer Enclosure) requesting them to furnished the required documents and information towards the captioned loss.  Further we had issued several reminders dated 05/11/2014, 15/01/2015, 16/09/2015 & 15/12/2015.  We regret to inform you that inspite of our several reminders the Insured had not responded nor they have contacted us. 

In this regard please note that copies of all the letters issued to the Insured where marked to you.  We have also tried to contact Mr. P.K. Biswas Manager (M&C ) but we did not get any response from his side.  Under the above circumstances we feel that the Insured is not interested to pursue the claim and we have no other option but to treat the matter as Closed.”

 

19. After having received the aforesaid communication from the Surveyors, the Insurer/ Opposite Party instead of directly repudiating the Claim on account of the alleged non-compliance of Clause 6 of the Insurance Policy however chose to remain quiet in the matter without communicating any further with the Complainant. On the other hand, the Complainant from its side wrote to the Opposite Party again and again for settlement of its pending Claims vide letters dated 26.9.2016, 24.10.2016, 19.5.2017 and 23.5.2017 seeking intervention of the high ranking Managers/Directors of the Insurance Company in respect of several of its claims starting from September, 2011.  Thereafter, on 12.6.2017, the Complainant delivered the requisite documents /informations to the Insurance Company, and also endorsed copies of the same to the Insurers, after which the Insurers approached the Opposite Party seeking further instructions in the light of fact that the documents were received from the Complainant’s side.  They had already submitted their Final Survey Report on 23.9.2016.  But still, no response from the Insurance Company was forthcoming and it again chose to sit quite over the matter without communicating with the Complainant who thereafter again issued a reminder on 31.8.2017, which is on record as Annexure- A9.  Almost 6 ½ months later, the Insurance Company thereafter repudiated the  Claim  on  14.3.2018, by simply mentioning that Clause 6 of the Policy had not been complied with. The Final Report of the Surveyors submitted to the Insurance Company was also not endorsed to the Complainants alongwith repudiation letter.  The Complainants thereafter submitted another representation on 15.4.2018 (Annexure- A11), which also clearly goes to indicate non-receipt of the Surveyor’s report by either the Insurer or the Surveyors themselves, but still no response was forthcoming.  The Complainant thereafter sent an Email to the Insurance Company seeking to know the status of their Claim and also requesting for a copy of the Surveyor’s Report if submitted but again there was no response forthcoming.  Finally, the Complainant issued a Legal Notice to the Insurance Company on 6.6.2019 and only in response to such Notice, copy of the Surveyors’ Report was supplied to the Complainant alongwith a copy of the original repudiation letter.  Such evasive conduct on the part of the Insurance Company in having kept the Complainant in the dark for almost 1½ years after having received the intimation from the Surveyors, before finally repudiating the Claim without even supplying a copy of the said Report to the Complainant, cannot be regarded anything other than a calculated and cunning approach to deny the Complainant’s Claim at the worst, or an instance of the grossest callousness at best.  Had the Claim  been  repudiated  at  a  reasonably prompt stage after due warning/cautioning to the Complainant for their failure or inability to supply the documents and informations required in pursuance of the Joint MoU dated 3.6.2014, the matter could have been viewed in a sympathetic light.  But such, cunning and clandestine conduct adopted by the Insurance Company for such a long time would not warrant any commendation or indulgence.

20. Admittedly, no actual monetary entitlement of the Complainants was finally assessed, because no such Final Survey was actually conducted. The Complainant asserts that they had duly submitted the requisite documents and information which were required following the joint MOM between the Insured and the Surveyors on 3rd June 2014. Its contention in this regard is that being a case of massive breakdown in the Hydel Project, it naturally took time, for the damaged machinery/equipments to be dismantled. Thereafter for having the damaged parts to be procured from the market, it again took time because being a Public Sector/Governmental establishment, it was obligated to go through the long cumbersome procedure of inviting tenders before ultimately acquiring the parts in question. Thereafter, the newly procured parts required further time to be installed and to get the establishment running at its normal capacity, and only after all these exercises were complete, the Complainant was in a position to submit the requisite documents and informations including the total expenditure entailed statement, which was necessary for making the final assessment towards the insurance claim.

21. In such circumstances, we are of the view that the Final Survey must be conducted on the basis of the documents and informations  supplied by the Complainants on 12.6.2017 even at this late stage, which exercise would sub-serve the ends of justice.  We say so because on the last date of hearing (15.4.2024), in answer to our specific queries, Ld. Counsel for the Complainant had submitted at the bar that after having supplied all the requisite documents to the Insurance Company as well as to the Surveyors on 12.6.2017, the damaged articles in question, are still in safe custody of the Complainant, and which had not been physically examined by the Surveyors earlier, could therefore be examined by him at this stage.

22. The Complaint is, therefore, allowed in part with a direction upon the Insurance Company to have a Final Survey to be conducted by the concerned Surveyors on the basis of the documents and informations supplied by the Complainants on 12.6.2017, and after examining the damaged articles and equipments retained by the Complainant, and thereafter to finally decide the Insurance Claim on its own merits after duly considering the Final Report to be submitted by the Surveyors. This exercise shall have to be completed within 90 days from the date of receipt of copies of this Order by the Insurance Company.  Parties to bear their own costs. 

23. Pending application(s), if any, also stand disposed off as having been rendered infructuous.