National Consumer Disputes Redressal
M/S. Soham Mannapitlu Power Pvt. Ltd. vs United India Insurance Co. Ltd. & 3 Ors. on 14 October, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 121 OF 2015 1. M/S. SOHAM MANNAPITLU POWER PVT. LTD. Through Its Duly Authorised Person, R/o. 137, H.M.G. Ambassador Building, 7th Floor, Residency Road, Bangalore BANGALORE, KARNATAKA - 560 025 ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & 3 ORS. Through Its Chairman-Cum-Managing Director, Registered & Head Office, 24,Whites Road, CHENNAI - 600 014 2. CHAIRMAN -CUM-MANAGING DIRECTOR, UNITED INDA INSURANCE COMPANY LIMITED, REGISTERED & HEAD OFFICE, 24, WHITES ROAD, CHENNAI - 600 014. 3. DEPUTY GENERAL MANAGER/REGIONAL MANAGER UNITED INDIA INSURANCE COMPNAY LIMITED, REGIONAL OFFICE "KRISHIBHAVAN" 5TH&6TH FLOOR, NRUPATHUNGA ROAD, HUDSON CIRCLE, BENGALURU - 560 001. 4. DIVISIONAL MANAGER, UNITED INDIA INSURANCE COMPANY LIMITED, DIVISION OFFICE - VII, CURENTLY AT "SAIRAM TOWERS" NO. 24, 5TH MAIN, PUTTANNA CHETTY ROAD, CHAMARAJPET BENGALURU - 560 018. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,PRESIDING MEMBER HON'BLE MR. BHARATKUMAR PANDYA,MEMBER
FOR THE COMPLAINANT : MR. CHANDRASHEKHAR CHAKALABBI, MS. AISHWARYA
HIREMATH, MR. VARNIK KUNDALYA, ADVOCATES FOR THE OPP. PARTY : MR. A.K. DE, MS. ANANYA DE, MR. ZAHID ALI,
ADVOCATES
Dated : 14 October 2024 ORDER
PER BHARATKUMAR PANDYA, MEMBER
1. The complainant is filed raising grievance of wrongful rejection of genuine claim lodged for losses and damage suffered by them on account of peril covered under the policy issued by OPs with prayer to direct them to pay the claim as lodged by them. The complainant company is part of Soham group which has been engaged in construction and implementation of hydro power generating projects for over a decade. The complainant company is the owner of a small hydel power generating station in the name and style of "M/s Soham Mannapitlu Power Pvt. Ltd." at Arambody Village, Near Moodabidri, D.K. District, Karnataka. It is engaged in generation of electricity at its hydel power station at Mannapitlu and sells the electricity so generated to the Government of Karnataka under a Power Purchase Agreement with Mangalore Electric Supply Company. The hydel power project purchased by the complainant was about 75% complete on "as is where is" basis along with necessary government approval. Complainant approached OP 4, the division office of OP 1 for the said project to be insured and covered under an insurance policy, who in turn appointed a surveyor and who in turn inspected the project in March, 2008. The surveyor, being satisfied, recommended the OPs to cover the project under CAR (Contractors All Risk Policy)/ EAR (Erection All Risk Policy) until completion of the project; and after completion of project, under IAR (Industrial All Risk) policy. Complainant firstly purchased a Storage-cum-Erection Insurance Policy No. 070500/44/08/04/40000001 dated 01.04.2008 for a sum assured to the tune of Rs.89.36 lakhs (Third party liability with cross liability at Rs.1 crore and Clearance & Debris removal at Rs. 1 crore) and renewed it till 31.08.2009 by paying the premium covering all risks under Storage cum Erection as stated in the policy. Further, on commissioning the 1st 5MW unit of the plant on 07.09.2009, the project was covered under an Industrial All Risk POlicy (IAR policy) (The initial sum insured was Rs. 1,07,39,53,869/- and this sum insured was subsequently enhanced at the time of renewal to Rs. 1,23,50,46,949/-) which was renewed upto 10.11.2011. As mentioned in para 4 of the complaint not categorically denied by the OP and as per page 307 of the complaint, on the request of the complainant made on 11.03.2011, the OP made an endorsement dated 15.03.2011 whereby it was agreed and declared that the exclusions as contained in the exclusion clause in the policy, were also to be covered under the insurance policy since inception of the policy, as per the following endorsement:
"Insurer have issued endorsement on 15.03.2010 with effect from 11.11.2010 " Not wishstanding anything contained herein to the contrary at the request of the Insured vide their letter dt 10.03.2011. It is hereby declared & agreed that the item be excluded property under exclusions of said policy is held covered from the inception of policy i.e., from 11.11.2010
1. Building (Diversion weir, intake, power channel (Box culvert) FOREBAY, Tailrace Channel & Hydro - Mechanical works comprising gates - Trash - Rack & Penstock - Rs.55,03,06,681/-
2. Factory Building: (Office, Control Room, Turbine Floor, Switch Gear Room) - Rs. 2,19,73,344/-
3. Plant & Machinery: (3 x 5 MW Turbo Generator & Switch Yard Equipments & Aliened accessories) Rs.40,29,14,998/-
4. Transmission lines; (110 KV Single / Double Circuit Line) - Rs.9,86,48,816/-
5. Computers furnitures & Fixtures-Rs. 1,10,000/-."
The said hydel power station at Mannapitlu operated during monsoon month from water of the river Gurupur/Pacchamogaru - which is a rain fed river in the Western Ghats. During the months from December to May every year, when there is small quantity of water in this river, the maintenance works are carried out by the complainant every year. Complainant always ensured the completion of maintenance works before the onset of the next monsoon and they also engage professional divers for continuous monitoring and maintenance under water of each and every part of the plant, structure and entire system. On 11.07.2011 maintenance staff and divers checked the plant and did not report any anomalies in the plant and structure. However, at 10.57 am on 11.07.2011 KPTCL grid failed and the hydel power plant which was functioning and generating electricity also got tripped. Due to tripping, there was a sudden upsurge of the water in the Forebay resulting in additional reverse thrust coupled with incoming water. The operating staff at the site acted instantly to control consequential likely damage and closed the service gates of the intake structure to avoid river water into water conducting system. Despite various steps to avoid any incident, inundation and flooding caused substantial material damage to the plant and also consequent loss of profit as the complainant who could not sell the power to the state electricity board as per their Power Purchase Agreement. OPs were immediately informed about the accident and on 14.07.2011. Mr. D. Srinivasan was deputed to inspect the damaged plant and survey the site and assess the loss. As asked by Mr. Srinivasan, the complainant mobilized its resources for reinstating the damaged wall by using concrete in place of originally used UCR (Uncoursed Random) masonry which caused extra cost to the complainant. This reinstatement of Forebay wall in concrete got completed in 57 days as against the UCR work which could have taken 138 days. Surveyor appointed Mr. T.A. Srirama Rao, Consulting Structural Engineer on 16.07.2011 to visit the site and assess the cause of damage. Surveyor vide letter dated 18.07.2011 sought for some information from the complainant which was provided by the complainant on 19.07.2011.
2. After reinstatement of damaged Forebay wall, complainant lodged a claim of Rs.5,37,01,272/- with the OPs on 14.10.2011. However, after lapse of more than four months of reinstatement of the wall and seven months of the occurrence of accidental damage, Professor Dr. J.M. Chandra Kishen of Indian Institute of Science and Mr. T.A. Sri Rama Rao, Structural Engineer appointed by the surveyor, further visited the site for inspection and assessment at the behest of the OPs. Despite various requests in writing and telephonic, the reports of these experts were never shared with the complainant whereas the surveyor is mandated by IRDA to submit his report within a month time and all claims are also to be settled within a specified time period. OPs were intentionally and deliberately delaying the settlement of claim due to which the complainant had to suffer huge losses and such delay was also causing further worsening of financial losses. Complainant wrote a letter on 24.12.2012 requesting OP insurer for payment of 75% of the claim amount so that they can operate their business smoothly and minimize further losses but no response was received from them. Left with no other option, the complainant wrote a letter to Chairman-cum-MD of OP insurer on 22.01.2013 but no response was received even after that. Suddenly thereafter, the complainant received repudiation letter from the OPs on 21.02.2013 rejecting their claim primarily for the reasons that (i) the construction of the UCR masonry was not suited to withstand the forces exerted during flow/holding of water; (ii) There was premature failure of the slip wall due to sliding failure;(iii) Spillway section had not been adequately designed to handle overflow; (iv) the guide walls are not provided with proper foundation resulting in their failure; (v) Coverage for material damage under Section I of the policy is only for accidental physical damage and that too subject to exclusion of faulty or defective design, material and workmanship which are specifically excluded under Exclusion (a) (i) to Section I - Material damage section of the policy; (vi) There was no accident whatsoever as tripping of the grid and stoppage of flow causing stagnation of water were not unusual and had occurred several times earlier. Obviously, the Masonry wall was not designed suitably and it failed on account of sheer inability to hold the water. The repudiation letter dated 21.02.2013 is reproduced as under:
"To
The General Manager
Soham Mannapitlu Power Private Ltd
#37, 7th floor, HMG Ambassador Building, Residency Road,
Bangalore 560 025
Dear Sir,
Re:- Claim under IAR Policy No.071800/11/10/06/0000338 for Damage to Slip Wall on 11/7/2011
We refer to the claim made by you for damage to Slip Wall on 11/7/2011.
As you are aware, immediately upon intimation of the loss, Mr.D.Srinivas, Chartered Engineer was appointed as Surveyor to conduct survey as required by provisions of Insurance Act.
The Surveyor had conducted thorough physical inspection of the damage and had made detailed enquiries besides gathering records.
Besides Survey, technical report was sought from Mr. T.A. Sriram Rao, Structural Engineer in consultation with Dr. J.M. Chandra Kishen of Indian Institute of Science, Bangalore.
The analysis of the cause of damage by the experts clearly revealed that the damage to the Slip Wall due to build up of pressure following stoppage of flow upon tripping of all three turbines due to Grid failure. Water had built up in the Forebay when the Slip Wall had collapsed.
The affected Wall was of 'Uncoursed rubble' (UCR)/stone masonry and only about 3-4 years old when it failed. Subsequently we note that RCC wall has been built in lieu of the UCR wall.
The claim pertains to the damage/reinstatement of the affected wall.
From the Reports of the Surveyor, Dr.Chandra Kishen and Mr. Sriram Rao inter alia, that the
a) there was premature failure of the Slip Wall due to Sliding Failure
b) that its construction of UCR masonry was not suited to withstand the forces exerted during flow/holding of water and had failed
c) that the Spillway section had not been adequately designed to handle overflows.
d) the guide walls are not provided with proper foundation resulting in their failure.
It is pertinent to mention that coverage for Material Damage under Sec.I of the Policy is only for 'accidental' physical damage and that too subject to exclusion of faulty or defective design, material and workmanship which are specifically excluded under Exclusions (a)(i) to Section I- Material Damage section of the Policy.
The failure of the work (in this case the construction) was in the absence of any abnormal or unforeseeable occurrence. There was no accident whatsoever. The tripping of the Grid and the stoppage of flow causing stagnation of water were not unusual and had occurred several times earlier. In the normal course, the specifications of the Wall including nature of construction, foundation etc. ought to have factored such occurrences and the situation of water exerting pressure on the walls. Obviously it was not been designed suitably and failed on account of the sheer inability to hold the water. The masonry wall not only failed prematurely, but against foreseeable circumstances.
As such the loss was not due to any accidental damage and hence is not covered at all.
In any case, being attributable to faulty or defective design, material and workmanship causing it to be unable to withstand the pressure of normal or foreseeable operations, the loss stands specifically excluded.
In such circumstances, we regret our inability to admit your claim which hereby stands repudiated.
We reserve our right to rely upon any other information or ground as may become known or necessary, at a later date.
Please be informed accordingly."
Reiteration of the repudiation by a further letter dated 22.07.2014, after a series of meetings between the Insurer's senior Officers, Surveyor and Technical Experts appointed by the OP, Complainant and their Technical experts, and after considering such respective reports, discussion, and an addendum survey report is reproduced as under:
To
The General Manager
Soham Mannapitlu Power Private Ltd
# 37, 7"' Floor, HMG Ambassador Building,
Residency Road,
Bangalore 560 02.5
22.07.2014
Dear Sir,
Re:- Claim under lAR Policy No.071800/11/10/06/00000338
for Damage to Slip Wall of the Forehav on 11/7/2011
We refer to our letter dt 21.02.2013 wherein we have communicated the repudiation of claim, being, attributable to faulty or defective design, material and workmanship causing It to be unable to withstand the pressure of normal or foreseeable operations.
Consequent to our repudiation of the claim, various discussions/exchange of documents were held from either side.
On 04.07.2014, a joint discussion on the claim was held comprising of your representative, Insurers, Surveyor and Technical Expert from IlSc. Now we are in receipt of the Addendum Survey Report dt 18.07.2014 from the Surveyors who have consciously arrived that the loss falls under excluded causes.
We are enclosing herewith the Addendum Survey Report dt 18.07.2014 for your information. As per the Survey Report , addendum report and Expert opinion of Dr. J. M Chandra Kishen, the claim stands repudiated as communicated earlier.
Thanking You,
Yours faithfully,
A Usha Ramaswamy
Deputy General Manager
Prof. Dr. J.N. Chandra Kishen of Indian Institute of Science, Bangalore appointed by the OP submitted a Technical report in March, 2012, by concluding as under:
"Based on the photographic evidence and stability analysis, it is concluded that the collapse of the Forebay wall had occurred due to sliding mode of failure. The spillway section was not been adequately designed to handle overflow. This has led to its premature failure. Although there had been more than 50 tripping incidents earlier, this would have led to steady degradation of the material and crack formation in the wall. Furthermore, the scouring that had taken place below the foundation bed during the intense monsoon season has resulted in large uplift forces below the spillway section thereby bringing down the resisting forces against shear. This had led to final collapse of the Forebay wall."
The Technical Report dated 08.05.2012 of Structural Consultant Mr. T.A. Srirama Rao also gave findings as below:
"The failure of structure is due to various factors:
Quality of Construction - fair
Technology not updated in time
Rise of water in forebay number of times causing stress to weak structure i.e. slip wall. M/s Soham should have addressed the above impact/stress in time.
The wall has yielded finally on 11.07.2011 after receiving impact 74 times (grid failure) from inception.
Now, M/s Soham has constructed R.C.C. wall with good bonding material and has used latest technology. Anybody will say that this wall would stay for more than 50 years."
3. As per the complainant, the above grounds stated by the OP insurer either in the original repudiation or in the subsequent letter dated 22.07.2014 are totally false, baseless, meritless and founded on wrong facts to avoid their liability. The argument of the insurer that several times in past tripping has occurred is totally ill-founded as at no occasion such tripping resulted into any damage and as such this tripping is not at all a normal situation. Further, the ground of repudiation of faulty or defective design, material and workmanship is not acceptable and valid, as at the time of purchasing the insurance policy, the plant was inspected by the surveyor and he found the plant, its design, its workmanship, etc. worthy for insurance and no defect was pointed out by him. The construction of the fore-bay was in conformity with the guidelines of IBS specifications. Complainant protested and replied vide letter dated 13.03.2013 to the letter of repudiation received from the OP insurer. Various correspondence and meetings with the officers of OP insurer went waste and the claim of the complainant was finally once again rejected by the OPs on 22.07.2014 (reproduced above) in which OPs mentioned the grounds of repudiation as faulty design and workmanship and absence of accident was not taken as a ground in these final repudiation letter as they were convinced that the nature of the accident was fortuitous and not a normal situation.
It is the prime contention of the complainant that another fundamental ground of the Insurer that the failure of the slipway was on account of design defect, faulty workmanship, poor maintenance and scouring at the bottom of spillway, normal wear and tear and such other structural facts, which resulted into damage due to sliding, and therefore such failure of the spillway wall falls under the exclusion clause of the policy, is wholly baseless and is aimed at merely denying the valid claim of the complainant on arbitrary counts. The complainant had contended that the exclusions are endorsed not to apply vide endorsement dated 15.03.2011. The complainants, to counter the adverse findings of the surveyor as communicated by way of repudiation letter as also by providing the copy of the survey report, relied on report of the expert appointed by the complainant themselves namely Bangalore Hydro Engineers and Consultants Pvt. Ltd. (BHEC) which provided necessary counter and established the falsity of the technical reports relied upon by the surveyor and insured. As per the said report, the damaged slip wall, constructed by UCR masonry structure was within the standards prescribed by the Indian standard specifications and that the actual factor of safety against sliding risk is 2.526 in extraordinary conditions and 2.287 in normal conditions, thus repelling the finding of unsafe or defective workmanship, material or structure of the slip wall. The conclusion of the same in para 6 is reproduced as under:
6.0 CONCLUSIONS
i) In our opinion the instability of the wall caused due to this toe erosion possibly is the prime reason for the damages.
ii) After the diagnostic study of design provisions and the photographs taken after the incident, we conclude that the cause of damages to the Forebay wall when plant was in operation and tripped on 11.07.2011 could be attributed to yielding of foundation below toe of the wall and slumping as a result of progressive scouring at the toe area.
Similarly, the complainant submitted that the unit was eligible for subsidy from Ministry of New and Renewable Energy and to verify the eligibility, report from Alternate Hydro Energy Center (AHEC), Roorkee which had categorically certified and positively opined in November, 2010 about the satisfactory health of the project which in turn has also enabled the complainant to receive subsidy amount of Rs.2.5 crores. This fact itself repels the adverse finding on structural strength of the spillway wall. Similarly, the insurer relied on the publication of "Indian Standard-Criteria for Design of Solid Gravity Dams" (1998) published by Bureau of Indian Standards to contend that the publication categorically recognises in Para 5.13 and onwards that the construction material for dams can be both concrete as also masonry. Even no adverse observations were noted by the maintenance department of the complainant during the inspection conducted before the monsoon in 2011. The UCR (Uncoursed Random) masonry is traditionally used for construction of dams and hydro power plants. It is an accepted mode of construction and there is nothing unusual or unexpected or violative of building norms about the construction of forebay. Complainant further referred to the report of IIT, Roorke, dated November, 2010 (page 547) which has been designated by MNRE (Ministry of New and Renewable Energy) wherein their plant was found to be meeting all the requirements for the purpose of availing subsidy from MNRE, Government of India. The relevant portion reads as under:
(g) Conclusions
1. On the basis of the inspection and functional checks/tests carried out on various parts, systems and auxiliaries of the Soham Mannapitlu SHP Station,, it is concluded that they are generally alright. Some suggestions/recommendations have-been given in this report for the benefit of the owner and O & M staff.
2. Most of the major equipments used in the power plant conform to the relevant Indian/ International standards. For each of these equipments, the name plate of the equipment displays a certification mark or it specifies conformity to the relevant standard.
3. As per the generation data supplied by the owner, the actual generation of the power station has equalled or exceeded 80% of projected generation only for 2 months in continuation (i.e., Sept and Oct 2010). Hence the requirement in respect of generation has not been met so far.
4. The weighted efficiency of the generating units, being 85.21 %, is more than the mandatory minimum value of 75%.
Thus the Soham Mannnapitlu SHP Project in Dist. Dakshina Kannada In Karnataka meets all the requirements stipulated for release of subsidy by MNRE, Government of India vide its circular dated July 29, 2003, except the requirement in respect of generation as mentioned in para 3 above.
Being aggrieved by the repudiation by the OP insurer, the present complaint has been filed by the complainant before this Commission on 20.02.2015 praying for following reliefs:
Hold the OPs guilty of deficiency in service to its consumers;
Hold the OPs guilty of unfair trade practice upon its consumer;
Hold that the rejection of genuine claim lodged for losses and damages suffered by complainant with respondent as wrong and direct the respondents to pay the claim amount of Rs.1,59,14,844/-(Rupees One Crore Fifty Nine Lakhs Fourteen Thousand Eight Hundred and Forty Four Only) towards reinstatement of the wall and Loss of profit of Rs.3,77,86,428/- (Rupees Three Crores Seventy Seven Lakhs Eighty Six Thousand Four Hundred and Twenty Eight Only) aggregating to Rs.5,37,01,272/-(Rupees Five Crores Thirty Seven Lakhs One Thousand Two Hundred and Seventy Two Only) to the Complainant as claimed;
Direct the respondents to pay the amount of Rs. 5 Crores as damages and compensation on account of mental pain, agony, sufferings and Rs.25 lakhs as award cost, expenses, travelling expenses, lawyers fee incurred in these proceedings and otherwise Award interest at 18% p.a. from the date of claim till the date of payment.
4. OP insurer filed its written version on 28.10.2015 wherein resisting the complaint, it has been stated by them that complainant themselves admit that grid failure is a normal happening and therefore no insured peril was in operation behind grid failure.
5. Parties led their evidences by way of affidavit and filed their written statements, rejoinder (Part I (Vol. IV) and written synopsis. Affidavit of evidence has been filed by the OP (Part II Vol. IV). Evidence by way of affidavit of M.D. of Bangalore Hydro Engineers & Consultants Pvt. Ltd. (CW 2) has been filed at Part II (Vol. I) and evidence by way of affidavit of complainant (CW 1) has been filed at Part II (Vol. II).
6. The surveyor in his survey report dated 18.09.2012 concluded on the basis of his own experience and the technical reports that many structural defects are responsible for the incident. As per survey report, the Forebay cannot collapse within 3-4 years and there must have existed many structural problems besides defects in construction and design. Further, crack existed and insured might not have addressed the crack specifically during previous monsoon period. The slipwall is an ordinary UCR masonry which developed crack gradually and at one point, when the Forebay was filled with water, the same collapsed. Increase in water level which happened many number of times due to tripping for 74 times resulted into stress on the slip wall on many number of occasions. Force of water along with development of crack and lengthening of cracks over a period time caused the incident to happen. Surveyor has further concluded his findings by referring to the General Exclusion Clause of the policy which reads as under:
"The policy does not cover damage to the property insured caused by Faulty or defective design, materials or workmanship, inherent vice, latent defect, gradual deterioration deformation or distortion or wear and tear."
The surveyor on the basis of findings made the following recommendations:
Recommendation:
The loss is genuine, the slip wall has taken major load - the incident has occurred 74 times i.e. from 13.09.2009 to 11.07.2011 and has yielded due to many defects occurred in the system, but not due to any accidental loss under insurance terminology, which has been explained and analysed by various technocrats and self. The slip wall has to get yielded because the other sides are more stronger as explained above - This is a normal phenomenon and there is no accident unforeseen circumstances for the above loss. Also, on the basis of failure analysis it is evident that the slip wall is defective which would have happened in the normal course. Therefore, the claim under IAR Policy has to be treated as No Liability as per policy terms & conditions.
As the insured Peril (IAR Policy) has not operated for above type of loss, we are not in a position to recommend for payment but to recommend for closure on the above grounds."
7. As per OP insurer the failure of the work of construction was in the absence of any abnormal or unforeseeable occurrence. There was no accident whatsoever. The tripping of the Grid and the stoppage of flow causing stagnation of water were not unusual and had occurred several times earlier. As the wall was not designed as per specifications, it could not hold the water. The masonry wall not only failed prematurely, but also against foreseeable circumstances. As such, the loss was not due to any "accidental damage" and hence the same is not covered under the policy. OP insurer concluded that there is no liability on the insurers as the cause of loss also falls within the excluded clause under the relevant insurance policy issued on the property. OP insurer after considering the Technical reports, the survey report and other material/documents on record, repudiated the claim of the complainant by letter dated 21.02.2013. However, on receiving various representations and report of M/s Bangalore Hydro Engineers and Consultant Pvt. Ltd. (BHEC) countering the rejection of the claim, OP insurer sent that report to Indian Institute of Science, Bangalore for examination and for submitting a further report on the same. Addendum reports were received from Prof. Dr. J.M. Chandra Kishen of Indian Institute of Science, Bangalore and Technical Consultant, and, on the basis of these report and the addendum survey report, OP insurer vide letter dated 22.07.2014 (above) re-communicated to the complainant that the claim stood repudiated as communicated earlier.
8. We have heard the counsel for the parties and perused the documents on record.
It has been contended by the complainant that before purchasing the IAR (Industrial All Risk) policy, they had already purchased Storage cum Erection Policy right from the stage of construction and erection of the plant. OP insurer had the knowledge of the plant, construction and design of the complainant company. The surveyor Mr. Shrinivas appointed to assess the loss after the damage was the same person who had inspected the plant including the construction and the design at the time of issuing the policy. We find no merit in this contention. The pre-policy survey or inspection of the plant by an expert, even if so carried out by the Surveyor, cannot and does not change the character of the policy and terms and conditions stipulating the circumstances in which the liability mentioned therein would or would not arise. It is trite law that the terms and conditions of the of insurance contract are to be read strictly from the policy, and it can never be the case that simply because the insurer prima facie evaluated the risk by inspection/pre-issuance survey for decision on whether to undertake the risk, and if yes, at what premium, every damage, accidental or otherwise, excluded under the policy or otherwise, becomes necessarily reimbursable by the insurer. The onus to prove the event establishing the operation of insured peril is always on the insured. Further, any copy of such report is also not brought on record. Therefore we find no merit in this contention of the complainant.
9. OP insurer repudiated the claim of the complainant based on the report of surveyor, technical expert and addendum reports received from Institute of Science, Bangalore and Technical Consultant and Surveyor. Technical Report dated 18.06.2012 of the IISC, Bangalore gave its concluding remarks as under which may be again reproduced:
"Based on the photographic evidence and stability analysis, it is concluded that the collapse of the Forebay wall had occurred due to sliding mode of failure. The spillway section was not been adequately designed to handle overflows. This had led to its premature failure. Although there had been more than 50 tripping incidents earlier, this would have led to steady degradation of the material and crack formation in the wall. Furthermore, the scouring that had taken place below the foundation bed during the intense monsoon season has resulted in large uplift forces below the spillway section thereby bringing down the resisting forces against shear. This has led to final collapse of the Forebay wall."
10. Surveyor recommended repudiation of the claim of the complainant by giving a Failure Analysis Report whereby it is very clearly mentioned by the surveyor Mr. D. Srinivas that the complainant does not have any evidence or proof as whether, when and what, if at all, any maintenance work of the Forebay has being carried out by the complainant though the complainant has filed evidence and maintained that regular maintenance including just before the happening of the incident were carried out. The slipwall is an ordinary UCR masonry which developed crack gradually and at one point, when the Forebay was filled with water, the same collapsed. Increase in water level happened many number of times earlier resulting in stress on the slipway on many number of occasions. Force of water along with development of crack and lengthening of cracks over a period of time caused the collapse of Forebay wall. As per surveyor, failure could have been avoided if the following steps were ensured by the insured:
Construction at a stretch without delay;
Quality of material & mixing of material uniformly.
Bondage between slip wall & guide wall with uniform design and construction.
Good maintenance of the slip w.r.t. experienced raise of water on many occasions.
Technically the force developed due to increase in water level has not been addressed correctly.
If the slip & the guide wall casted at one time with concrete would have saved the collapse of slip wall.
11. Surveyor in his survey report dated 18.09.2012 has concluded that IAR Policy could have covered the risk subject to the Forebay having no manufacturing or constructional defect. As per "General Exclusion" the policy does not cover damage to the property insured caused by faulty or defective design, materials or workmanship, inherent vice, latent defect, gradual deterioration, deformation or distortion or wear and tear. The Forebay was constructed during 2008-2009. Normally the water tank will have a good safety factor besides a long life. As the cause of loss comes under exclusion, insurer have no liability.
12. Summing up, surveyor's conclusive remarks in his addendum report dated 18.07.2014, after considering the reports of BHEC and the tabular objections to insured's technical experts' and surveyor's findings, on the incident of loss on the basis of various observations/analysis/conclusions made on the incident by parties are summarized as under:
(1) Surveyor does not agree with the insured contention that a mere force due to excess flow of water on the river side spill wall of the forebay, when the generators were shut due to grid failure, could completely damage the spill wall structure.
(2) Hydro civil structures, designed for a very long life span of more than 50 years and for continuous operation, cannot get effected due to such minor incidents and in fact spill way wall shell is designed to take care of the excess water in the event of sudden stoppage of turbines and /or of any exigencies. It is insured's own narration that "tripping of the grid is normal to any power grid and many a times our connected grid has failed, but no such untoward loss like the current loss had happened in the past".
(3) It is a fact that direct effect of force of excess flow of water in the forebay during sudden shutdown will be maximum on the penstock side wall rather than spill side wall of the forebay whereas in present case damage to civil structure/plant and machinery is towards the spill way. This itself shows that the spill wall was inherently and structurally weak. As per surveyor, either it is a coincidence that the spill wall collapsed just at the time the grid failure occurred, or, insured is simply trying to link the collapse of the wall with grid failure to show the cause of collapse to be the grid failure.
(4) Ineffective maintenance can also be the reason behind the incident and the incident could have happened prior to grid failure. Even design and technology used for making spill way is such that it cannot take adequate flow of water.
(5) The various reports have been dealt with as under in the addendum report:
a) Collapse of forebay wall is premature and has occurred as a sliding mode failure due to inadequate factor of safety.
b) The necessary supporting structure like guiding wall, anchorages, supporting structure and the adequate bonding material are lacking.
c) The construction lasted over five years and happened periodically leading to faulty construction practices and lack of bonding between various components. Due to such faulty constructions, cracks developed which were compounded by problems of scouring and river bed erosion. The failure is not due to sudden inflow of water but is due to instability of the wall on account of above listed factors, poor maintenance.
d) The expected water level rise and the possibility of erosion, scour in the foundation, etc. being requisite factors to be accounted for in construction of river side civil work have not been taken into account. The Hydro civil structure in a run off river plant, with high water flow needed such design considerations. If the design has taken into account these factors, the only reason for failure of the hydro civil structure is defective construction practice.
e) Premature failure is a fact. Reasons are many. But definitely the causes for above loss comes under exclusion of IAR policy. In the history of hydel plant operations, this type of failure has not been heard.
f) It is our firm opinion "without prejudice" in this particular incident, the cause of loss for the "collapse" or riverside wall of the Forebay is due to:
1. Faulty or defective design.
2. Faulty or defective construction.
3. Erosion/scouring of materials below the Floor - unprotect neither in design nor in construction, besides low factor of safety for overturning & slop keeping low cohesive factors of slip wall, cracks in the system not attended immediately has resulted in above collapse which is obvious and has occurred during normal operation vis-a-vis not accidental by any external means, besides raise of water level during norms is also common phenomenon.
Important points to be noted in the above connection are:
a. The factor of safety for overturning and slip is low. The cohesive force is bare minimum is also an issue. The river side structure has not been designed for above factors.
b. The construction is also poor because the spill wall of forebay has not been constructed by Insured and no data available. Difference colour in debris indicates cement, mud etc. i.e., non-uniform masonry.
c. CRACKS has not been diagnosed in time i.e., poor maintenance. d. Cracks, scouring, erosion, subsidence is a low process and not sudden accidental in nature. e. The loss due to erosion, scouring, Subsidence causing above failure comes under exclusion under IAR policy.
Therefore, we are stressing from the day one, after our inspection, that the above failure cannot be considered as accidental and beyond the control of Insured. Insured was in possession of the plant from 2007 and they should have addressed the defects during construction/operation and rectify the defects thereafter i.e. by providing required safeguards and good cut off wall of RCC to avoid ill effects of erosion, scoring, subsidence of material below the floor.
Now, the failed structure is reinstated with adoption of required safeguards and RCC protection with cutoff wall which is very good and the safety of factor is more than 2.5. This provision of factor of safety don't get reduced due to the effects of erosion, scouring vis-a-vis loss of contact between dam and foundation (Cohesive force) on the river side.
"7.0 Final inference Under the above circumstances we are of he firm view that the collapse of the spillway of forebay structure is not caused by the reasons as narrated by the insured. In fact, it has failed on its own due to combination of causes such as faulty or defective design or workmen ship, construction, and continued ineffective maintenance over a period of time".
13. After considering the bulky record, at the outset we observe that the insurer has repudiated the claim on the fundamental ground that the insured peril has not operated. As per the coverage clause in the policy, "if after payment of the premium any of the property be accidentally, physically lost or destroyed or damaged, other than by an excluded clause during the period of insurance 11.11.2010 to 10.11.2011 the insurer will pay to the insured, the value of the property at the time of happening of its accidental, physical loss or destruction or damage." We note that the first and the foremost ground of repudiation is that no insured peril has operated at all because there is no evidenced "accident" so as to make the property lost to be designated as "accidentally, physically lost or destroyed". The unnumbered last two paragraphs on the second page in the repudiation letter itself need reproduction:
It is pertinent to mention that coverage for Material Damage under Sec.I of the Policy is only for 'accidental' physical damage and that too subject to exclusion of faulty or defective design, material and workmanship which are specifically excluded under Exclusions (a)(i) to Section I- Material Damage section of the Policy.
The failure of the work (in this case the construction) was in the absence of any abnormal or unforeseeable occurrence. There was no accident whatsoever. The tripping of the Grid and the stoppage of flow causing stagnation of water were not unusual and had occurred several times earlier. In the normal course, the specifications of the Wall including nature of construction, foundation etc. ought to have factored such occurrences and the situation of water exerting pressure on the walls. Obviously it was not been designed suitably and failed on account of the sheer inability to hold the water. The masonry wall not only failed prematurely, but against foreseeable circumstances.
As such the loss was not due to any accidental damage and hence is not covered at all.
14. We agree with the insurer that such absence of any "accident", so as to trigger the insurer's liability at all, is evident from the finding of the surveyor as also the averment of the insured to the effect that the "tripping of the grid" has happened multiple times and therefore, rather than the same being any accident, such tripping is a foreseeable and natural event for any hydro electric project, more so for the insured (having experienced it 74 times in the past, against which obviously the systems are supposed to be and required to be designed in ways that the structure of the forebay does not collapse due to water accumulation and over flow therein. The requisite strengths are to be provided to the structures. Otherwise also, the plant of the complainant has been in operation only for about three years and there is no conceivable, logical and foreseeable reason for collapse of the wall of a forebay which is supposed to be holding, and accordingly so designed, to hold the water quantity as per design, and which has an expected life of nearly 50 years or more. Therefore, the insurer, duly supported by the survey report, is right that tripping in itself cannot be considered to be any accident for a hydro electric project. There is some mention by the insured of heavy rains, flooding and claim being under "flood and inundation" clause of the insurance policy and the evidence of "regular maintenance". However, there is no credible evidence placed by the complainant on record to establish that some unforeseen or infrequent or unnatural event in the form of record breaking rains and floods, or cloud brust, or cyclone, or heavy lightening, or any event like earthquake or land-slide or such other event has caused the damage and loss. That is not even the case of the complainant. Even as per the first intimation of the complainant to the insurer, it was informed that "today at 10.57 am, the grid failed and consequently all the three generating units which were in operation also tripped. This resulted in upsurge in the water level of forebay leading to spill over and washing away the river side wall of the forebay". Thus, after considering that "tripping" (and consequent water accumulation, gush and hydro-dynamic forces), which is certainly not "unforeseeable" having been experienced more than 70 times within 20 months, nor is an "accident" nor is it for the first time and nor such as against which a hydro-structure of the 50 year life should collapse on its own within 3-4 years, we are of the considered opinion that no fault can be found in the surveyor's and insurer's finding that the insured peril has not operated, because there is no "accident" or "unforeseen" or "sudden" event, and therefore, the claim within the policy terms is not makeable or sustainable at all. Further, even the averment of the complainant that heavy rains and floods happened from 27th of June, 2011 onwards is dispelled by the figures of rainfall data during monsoons of 2008 to 2011 as given in the addendum survey report dated 18.07.2014 by the surveyor (page 769). It is seen that the rainfall between 26th June to 11th of July of 2011 has crossed 100 mm. only once, while such rainfall during most of the other days as listed by the surveyor during 2008-2011 are above 100 mm. which unquestionably establish that there is no external reason at all for collapse of the river side wall. In other words, the slip-wall just collapsed on its own, without any "accident", when structurally and by design-parameters for a 50 year expectancy structure, it should not have been even partly damaged, leave aside getting fully collapsed. Tripping of the grid, consequential tripping of the insured's generators is not "accident". Therefore in our opinion, further whether the exclusion clause with regard to "faulty or defective design, material and workmanship causing it to be unable to withstand the pressure or normal or foreseeable operations" as has been made by the surveyor and by the experts engaged by the insurer, duly additionally establishes the cause of collapse which is not accident and if cannot be made by the insured to question the decision of repudiation arrived at by the insurer on the basis that no accident occurred.
15. We note that the complainant's main focus in this complaint is to point out what are the defects or incorrect finding inferences and observations in the reports of the surveyor and in the technical inputs from the experts. After considering issues raised by the complainant and discussed in the joint meeting, the addendum report has been submitted by the surveyor after which the OP reiterated the repudiation vide communication dated 22.07.2014. It is the contention of the complainant that this communication implies that the insurer has given up the ground of non-operation of the insured peril for repudiation and rather has relied on the exclusions of defective design, workmanship, material, etc. and erosion due to normal wear and tear as the ground. We do not agree. The letter dated 22.07.2014 is the communication of the outcome of the discussions and the addendum report prepared by the surveyor after the technical evaluation was attempted to be countered by the complainant. The said letter obviously makes reference only to the strength, structure and defects in the construction of forebay with particular reference to river side wall, as only such portion was attempted to be rebutted by the complainant in their subsequent reference to reports of BHEC and IIT, Roorkee. This in no way can be deemed to be giving up of the fundamental objection already earlier pointed out in original repudiation letter dated 21.02.2013, particularly so when the last line of communication dated 22.07.2014 reads that "as per the survey report, addendum report and expert report of Dr. J.M. Chander Krishan, the claim stands repudiated, as communicated earlier.
16. We have minutely perused the addendum survey report and the respective other technical reports from both the sides, the relevant extracts from which have been summarized or extracted earlier in this order. We note that all the technical issues have finally been crystallized in the addendum survey report dated 18.07.2014. The said report has additionally and in full detail re-brought out the findings of Dr. J.M. Chander Krishan(JMC) who has prepared "failure analysis of forebay wall collapse" after duly considering BHEC's all observations in support of the complainant. The critical findings are that (i) guide walls not having any special function: the insurer's technical expert JMC states that in case of failure of the spill way masonry portion, the guide wall should provide additional resistance and support which has not happened, (ii) failure is not due to sliding but due to under scour and subsidence : it is already mentioned in the main report that intensive scouring is the main reason for failure of the spill way, which is only concurred by BHEC, (iii) both BHEC and JMC agree that failure is due to under scour and subsidence of the wall, (iv) the guide walls were good quality structure : not the construction quality of the guide walls but the design detailing has been found faulty, (v) 3 mtr. head on the down stream portion: the report has made scenario analysis for the down stream side with 0, 1, 2 and 3 mtrs. (vi) cohesive strength of 0 is not acceptable : given the fact that there is excessive scouring with contact loss, the effective contact width gets reduced, (vii) failure is not due to sliding : scouring could be the main reason for failure. However, the sliding could have occurred on account of excessive scouring. It is well known in hydraulic engineering that erosion or scouring of hydraulic structure cause loss of stability. Therefore, the surveyor has incorporated the re-affirmed findings of the technical expert, who has carried out the scientific and technical investigation into "why the slip wall collapsed". Such report would obviously consider and weigh different factors in scientific fashion to arrive at the most likely cause of failure which have to be, when incorporated into a survey report and found to be absolutely objective, accepted unless the material has been placed to establish the arbitrariness and adhocism in such report. As held by the Supreme Court in Khatema Fibers Vs. New India Assurance Co. Ltd, 2021 SCC OnLine SC 818 and Sri Venkateshawara Syndicate Vs. Oriental Insurance Co. Ltd. (2009) 8 SCC 507 SC the surveyor's report cannot be lightly brushed aside and that once when survey report is not based on adhocism or is vitiated by arbitrariness, then the jurisdiction of the consumer forum to go further would stop. There is no credible material with us placed by the complainant to put any real serious challenge to the detailed reports and therefore we have no hesitation in holding that not only the collapse of the hydraulic structure within a period of 3 years of its life itself, in the absence of any other established reasons, establishes that the structure was weak and below standard, the same after investigation has rightly been found to be so. In view thereof, the additional invocation of exclusion clause 1 (page 295) of the policy, cannot also be faulted with. There is absolutely no merit in the contention of the insured that the strength and design excellence of the collapsed wall should be inferred from the fact that the opposite side wall which withstood hydraulic forces far higher than those faced by the collapsed wall, was not affected. This contention itself is wrong because the question is not why three of the four walls have survived. The question is why at all one of the walls' collapsed. Also, the contention in the BHEC report that the construction is not weak because the entire system performed very well for three successive seasons without having any indication of damage or distress has no merits. This contention also needs to be repelled because premature failure of the structure cannot be explained on the ground of survival of the part of the structure merely for three years. Similarly, we find no substance in the contention on behalf of the complainant that the collapse "due to accident of sudden tripping due to unprecedented overflow of water" does not fall within the exclusion clause or that the conclusion of the surveyor regarding cracks having been developed in the structure are baseless. The scouring seen by the technical team/surveyor, as alleged by the complainant, is after the damage, which was caused by a huge 10 mtr. of wall column suddenly gushing out of the forebay wall and hence cannot be made the basis. The evidence only in the nature of photographs have been placed on record to substantiate this contention, which is already countered by the surveyor by way of rainfall data. Otherwise also, such "10 mtrs. water column" as alleged by the complainant would have equally caused damage at places other than the complainant's for which no evidence has also been placed on record.
17. The complainant has contended that the repudiation of the claim has defeated the very purpose of the policy and such actions frustrating the purpose of the policy have been held to be untenable by Supreme Court in United India Insurance Co. Ltd. Vs Levis Strauss (India) Pvt. Ltd (2022) 6 SCC 29. The complainant also relied on Texco Marketing Pvt. Ltd. Vs. Tata AIG General Insurance Co. Ltd. & Ors. (2023) 1 SCC 428 to contend that the exclusion clauses have to be strictly read and that in cases of ambiguity, the principles of blue pencil and contra proferentem have to be applied. However, we find that there is neither any ambiguity nor any loose reading applied to the policy clause including that to the exclusion clause applied by the insurer and therefore the decisions have no applicability. In conclusion, we hold that the complainant has not established any "accident" within insurance terminology to attach liability under the policy on insurer. Additionally, we hold that once there is no accident, the attempt of the insurer and the technical experts was only to additionally find out the "cause of premature failure", and drilling of any holes in such additional exercise by the complainant cannot bring the incident within the "accident", though complainant has also not been successful in drilling any such hole. The addendum survey report dated 18.07.2014 is fair and objective, which has duly and fairly considered all objections raised by the complainant and we agree that the forebay wall has just collapsed on its own, due to structural defects, design faults and strength deficits, and therefore "not an accident". Additionally, we therefore also hold that there is no adhocism or arbitrariness in the surveyor's reports and therefore, as a matter of fact, it has to be held that not only there is no accident, the design and maintenance of the structure itself was faulty and defective which caused the collapse of the forebay wall which also described in detail in survey report and in addendum survey report. Therefore, the claim is rightly repudiated, there is no deficiency in service and therefore there is no merit in the complaint.
ORDER The complaint is dismissed.
..................................................J RAM SURAT RAM MAURYA PRESIDING MEMBER ............................................. BHARATKUMAR PANDYA MEMBER