JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)

The complainant company obtained an Industrial All Risks Insurance Policy from the OP, inter-alia with respect to material damage to the plant and machinery installed in its factory premises at Porbandar in Gujarat, subject of course to the exclusions contained in the said policy.  The aforesaid policy was valid for the period from 31.03.2013 to 30.03.2014.  On 08.09.2013, the engineers of the complainant, working at the plant, observed an abnormal sound and vibration in the gear box at the pressing side of cement mill no. 5.  The aforesaid mill was shut down and its gear box was opened for inspection.  The inspection revealed that two teeth of the pinion had been damaged.  The gear box components were then sent to the workshop for its replacement/rectification.  The OP was informed and was requested to appoint a surveyor to carry out a survey of the pinion of the gear box. M/s A.M. Patel Insurance Surveyors and Loss Assessors Pvt. Ltd. was then appointed by the OP to assess the loss to the complainant.  The surveyor submitted its report dated 21.11.2013, recommending rejection of the claim.  Based upon the report of the surveyor, the claim was rejected vide letter dated 27.01.2014 which to the extent it is relevant, reads as under:

M/s A.M. Patel Isla Pvt. Ltd., the surveyor was appointed to assess the loss.  As per his report the gear box of the cement mill no. 5 had not damaged due to any accidental breakdown, but it had damaged due to wear and tear which falls under the exclusion claus no. 1)a)i) of the IAR Policy which reads as under :

“The policy does not cover damages to the property insured caused by faulty or defective design materials or workmanship, inherent vice latent defect, gradual deterioration, deformation or distortions or wear and tear.”

In view of the above the company’s liability does not exist hence the competent authority has repudiated the company’s liability from the above said claim, which please note.

2.      Being aggrieved from the rejection of the claim, the complainant is before this Commission seeking recovery of Rs.99,06,040/- alongwith interest quantified at Rs.11,10,125/-. 

3.      The complaint has been resisted by the insurer primarily on the ground on which the claim had been rejected. 

4.      When this complaint came up for hearing on 08.03.2016, the following order was passed by this Commission:

          “We had proposed during the course of hearing that we are inclined to send the aforesaid pinion to IIT, Mumbai or some other appropriate agency for the purpose of opining whether the said shaft and its input teeth were broken due to subsequent gear wheel/first immediate pinion were damaged due to a sudden impact or the said pinion got damaged due to ordinary wear and tear. There is no objection to our adopting the aforesaid course of action. Therefore, with consent of the parties we direct the insurance company to send the aforesaid pinion to the Director, IIT, Powai who is requested to nominate an expert from the said IIT to examine the said pinion and give report as to whether it got damaged due to sudden impact and its input teeth were broken and due to the said damage subsequently the gear wheel/first immediate pinion were damaged and reflected scoring marks on the teeth, as is claimed by the complainant or the said pinion got damaged due to normal wear and tear as is claimed by the insurer.

The aforesaid pinion will be sealed by the surveyor Mr. A.M. Patel, in the plant of the complainant on 14.03.2016 at 10:00 am in the presence of the representative of the complainant. Thereafter, the said pinion shall be taken by a representative of the insurer accompanied by a representative of the complainant to Director, IIT, Powai alongwith a letter of request from the insurer for giving opinion in terms of this order, at an early date. A copy of this order will be annexed to the letter of request to be sent by the insurer to the Director, IIT, Powai. The fee for the aforesaid inspection shall initially be paid by the complainant with IIT, Powai but shall form part of the costs of the complainant. The report shall be sent by the Director, IIT, Powai directly to this Commission, in a sealed cover.”

5.      In compliance of the aforesaid direction of the Commission, the pinion was sent to IIT, Mumbai and was examined by Professor Krishna Jonnalagadda whose report dated 01.07.2016 inter-alia reads as under:

“Summary of investigation: In my opinion, it is not a case of impact damage, external or internal to the gearbox, that lead to the gear teeth breakage on pinion shaft.  Two gear teeth broke with significant similarity on the pinion wheel, which resulted in no corresponding damage to the mating gear wheel tooth.  In an impact, the two mating teeth on both pinion shaft and intermediate gear wheel should be subject to same force (please see section below). Hence, the damage should be similar under impact, given that the tooth material; geometry and dimensions are same for both.  Since the intermediate gear wheel teeth did not show any damage, not even pitting seen due to over loading/wear, the failure of pinion shaft gear teeth could be due to any reason typically associated with wear and tear, inferior material and/or manufacturing, improper alignment of the shafts in the gear box, low endurance limit of the material, improper lubrication, etc.  To find the exact cause for failure from wear and tear further analysis of the microstructure of the material, residual properties, fractography, etc., are required. Given the poor condition of the fracture (broken) surfaces due to improper storage and missing pieces of the gear tooth, it is a complicated task, requiring much more detailed work and hypothesis testing. 

          Pictures from (B) are much more clearer than (A), as they seem to have been taken from cleaned surfaces immediately after the incident.  The pictures in (A) show significant rust information and foreign deposits.  The pictures from (A) are insufficient to arrive at any conclusion, as they are not clear and zoomed out.  Pictures from (B) show gear tooth pitting, which is normally attributed to wear and tear related reasons.  There was some scoring at the ends of some teeth indicated a harsh entry and exit contact between the mating teeth. This can be due to many reasons including, misalignment, improper lubrication, externally induced vibration or overloading, etc.  Pictures numbered 13 and 15 in (B) show features related to severe pitting/spalling on the intermediate gear wheel, which could have been caused by the remaining part of the broken teeth as they now carry a lot more force, therefore increase in the contact stresses.  Spallation of metal from sub-surface crack is often due to high contact stresses.  A point to note here is that these features were not visible on the components shown at IIT Bombay as they may have been erased due to rusting or other deposits.  Pictures number 3 and 5 in the document show the areas on the gear with broken teeth. This picture as will be shown in comparison to the pictures taken at IITB, clearly indicate a fracture process, which is not of short duration related to a single event such as impact.”

6.      A perusal of the claim submitted by the complainant to the OP would show that while replying to the question as to what was the cause of the damage, the answer given by the complainant was “Sudden impact load”. 

7.      Thus, the complainant has taken a specific stand as to the cause of damage to the pinion, the same according to the complainant having resulted on account of sudden impact load.  The aforesaid cause however, has been expressly negatived by Professor Krishna Jonnalagadda of IIT, Mumbai who clearly stated that this was not a case of impact damage.  The expert gave convincing reason in support of the above referred opinion including the definition of ‘impact’.  He clearly opined that since in an impact, the two mating teeth on both pinion shaft and intermediate gear wheel should be subject to same force, the damage should also be similar under impact.  He noticed that the intermediate gear wheel teeth did not show any damage, not even pitting seen due to overloading/wear.  

          The expert, after ruling out impact damage, opined that the failure of the pinion shaft gear teeth could be due to any reason typically associated with wear and tear, inferior material and/or manufacturing, improper alignment of the shafts, low endurance limit of the material, improper lubrication etc.  However, exact cause for failure from wear and tear could not be ascertained since that required further analysis of the micro structure of the material, residual properties, fractography etc. and given the poor condition of the fracture surfaces, due to improper storage and missing pieces of gear tooth, that was found to be a complicated task, requiring much more detailed work and hypothesis testing.  The expert however, noted from the pictures that they showed tooth pitting which is normally attributed to wear and tear related reasons.  It would be pertinent to note here that the pictures on the basis of which the aforesaid observations were recorded by the expert were made available to him by none other than the complainant company. 

8.      In my opinion, since the complainant came out with a specific cause of the damage and the said cause has been rejected by the expert, the reason given by the surveyor appointed by the insurer and then by the insurance company itself for rejection of the claim that is wear and tear, which is found compatible with the report of the expert from IIT, Mumbai needs to be accepted. 

The learned counsel for the complainant has drawn my attention to the report of the experts engaged by the complainant i.e. Mr. V.N. Trivedi and M/s Met-Heat Engineers Pvt. Ltd., and relying upon the aforesaid report, he has submitted that that wear and tear could never have led to the incident in which the pinion got damaged, as wear and tear, by its very nature, is a gradual phenomenon.  Admittedly, the aforesaid reports were made available to the expert from IIT, Mumbai.  Therefore, the above referred reports cannot be preferred over the report of the expert from IIT, Mumbai who was appointed by this Commission with the consent of the parties.  It is also pertinent to note here that before carrying out the inspection, the expert from IIT, Mumbai also had a meeting with the representatives of the parties and as recorded by him, the parties had stuck to the opinions on which they are agitating the matter before this Commission.

9.      For the reasons stated hereinabove, I hold that the complainant has failed to prove that the loss suffered by it was covered under the insurance policy which it had taken from the OP.  The complaint is therefore, dismissed with no order as to costs.