National Consumer Disputes Redressal
Krishnapatnam Port Company Ltd. vs United India Insurance Company Ltd., on 30 January, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER COMPLAINT NO. 83 OF 2006 JUDGMENT RESERVED ON 23.01.2015 JUDGMENT PRONOUNCED ON 30.01.2015 Krishnapatnam Port Company Ltd., NATCO House, Road No.2, Banjara Hills, Hyderabad 500 033 ... Complainant Versus 1. United India Insurance Company Ltd., Having its Head Office at 24, Whites Road, Chennai 600 014, Through its Chairman & Managing Director 2. United India Insurance Company Limited,] Having its Divisional Office, Division X, Crystal Plaza, 10-5-5/4, 1st and 2nd floor, Masab Tank, Hyderabad 500 028, Through its Divisional Manager . Opposite Parties BEFORE : HONBLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HONBLE DR. B.C. GUPTA, MEMBER For the Complainant Mr. Saurabh Singh, Advocate for Mr. P.B. Suresh, Advocate and Mr. K.P. Toms, Advocate For the Opposite Parties Mr. Kishore Rawat, Advocate Mr. Mayank Sharma, Advocate JUDGMENT
JUSTICE V.K. JAIN, PRESIDING MEMBER The complainant took a Crawl Cat Dredger on hire from the Government of India and obtained a Marine Hull Insurance Policy in respect of the said Dredger, for the period from 10.05.2004 to 09.05.2005. The said Dredger is alleged to have submerged in the Sea at Krishnapatanam Village in Andhra Pradesh on 26.12.2004, due to Tsunami which hit India, taking several lives and destroying properties worth hundreds of Rupees. The insurance company was informed of the loss and was requested to appoint a surveyor to assess the loss. Though a surveyor was appointed, the claim was not paid. The insurance company informed the complainant that since damage to the Dredger was caused solely due to an earthquake in the Indian Ocean Floor, the claim was not admissible under the policy. Being aggrieved from the stand taken by the insurance company, the complainant is before this Commission, seeking a payment of Rs.1,53,50,000/- along with interest @ 18% per annum. The complainant is also seeking compensation amounting to Rs.25.00 lacs, due to the delay in settling the claim.
2. The complaint has been resisted by the insurance company primarily on the ground that the insurance policy excluded the loss due to earthquake and the Dredger in question got submerged only on account of the earthquake which occurred in the Indian Ocean Floor.
3. A perusal of the policy in question would show that it was a Marine Hull Risk Policy as per ITC Port Risks Clause. The ITC Port Risks Clauses, to the extent they are relevant read as under:
4. PERILS 4.1 This insurance covers loss of or damage to the subject matter insured caused by 4.1.1 Perils of the seas, rivers, lakes or other navigable waters 4.1.2 fire, lightning, explosion 4.1.3 violent theft by persons from outside the Vessel 4.1.4 Jettison 4.1.5 Piracy 4.1.6 Breakdown of or accident to nuclear installations or reactors.
4.1.7 Contact with aircraft or similar objects, or object falling therefrom, land conveyance, dock or harbour equipment or installation 4.2 This insurance covers loss of or damage to the subject matter insured caused by 4.2.1 accidents in loading, discharging or shifting cargo or fuel 4.2.2 bursting of boilers, breakage of shafts or any latent defect in the machinery or hull 4.2.3 negligence of Master, Officers, Crow or Pilots 4.2.4 negligence of repairers or charterors provided such repairers or charterors are not an Assured hereunder 4.2.5 barratry of Master, Officers or Crew, Provided such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers, 4.3 Master, Officers, Crew or Pilots not be considered Owners within the meaning of this Clause 4 should they hold shares in the Vessel.
5. EARTHQUAKE AND VOLCANIC ERUTPION EXCLUSION In the case shall this insurance cover loss, damage, liability or expense caused by earthquake or volcanic eruption. This exclusion applies to all claims including claims under Clauses 7, 9, 11 and 13.
It would thus be seen that though the policy taken by the complainant covered loss or damage to the Dredger caused by perils of the seas, no insurance cover was available to the complainant against loss / damage caused by earthquake or volcanic eruption. Consequently, the only question which arises for our consideration in this complaint is as to whether the Dredger got submerged due to earthquake or not?
4. The case of the insurance company is that it was earthquake alone which caused Tsunami in the Indian Ocean and therefore, earthquake was the dominant cause behind the loss of the Dredger. The contention of the complainant on the other hand is that Tsunami and not earthquake was the proximate cause of the Dredger getting submerged in the sea and Tsunami being one of the perils of the sea, the loss is clearly covered under the policy.
5. The report of the surveyor M/s. J.B. Boda Surveyors Private Ltd., to the extent it is relevant for our purpose, reads as under:
CAUSE OF LOSS The incident of Tsunami causing devastation of coastal areas of some parts of Andhra Pradesh, Tamilnadu and Kerala on 26.12.2004 was widely reported. Krishna Patnam Port being on the east coast of India and directly open to the sea was also affected by Tsunami. We could observe tell tale evidence of the same during our visit to the Port. In the light of the above, the cause of the subject casualty can be attributed to Tsunami which struck the location on 26.12.2004.
Note:
The Policy issued is subject to Marine Hull Risk as per ITC Port Risk Clause. This specified Earthquake and volcanic eruption exclusions. The wording of this exclusion states that In no case shall this insurance cover loss / damage liability or expense caused by earthquake or volcanic eruption. This exclusion applies to all claims including claims under Clauses 7, 9, 11 and 13.
It is confirmed that the Tsunami which the subject casually is the direct and uninterrupted effect of an earthquake of magnitude 9.0 on Richter scale occurred on 26.12.2004 at 0626 hrs. IST in Indian Ocean, west of Sumatra Island. In the light of the above, insurers may suitably decide on the admissibility of the claim.
It would thus be seen that according to the surveyor, though the cause of Dredger getting submerged was Tsunami which struck its location on 26.12.2004, the said Tsunami was a direct and uninterrupted effect of an Earthquake which occurred in the Indian Ocean, West of Sumatra Island.
6. The information as regards the cause of Tsunami, as downloaded by the insurance company through Internet reads as under:
The rupture occurred by slip along the 1200-km long fault delineated by aftershocks, making the rupture zone much larger than previously thought from analysis of shorter period waves. This long rupture played a key role in generating the devastating tsunami. In particular, the large tsunami amplitudes in Sri Lanka and India result from rupture on the northern, north-trending, segment because tsunami amplitudes are largest perpendicular to the fault. This effect is shown by comparison of snapshots from two tsunami animations.
2004-Indian Ocean Tsunami The 2004 Indian Ocean earthquake, which had a magnitude of 9.3, triggered a serious of lethal tsunamis on December 26,2004 that killed approximately 300,000 people (including 168,000 in Indonesia alone), making it the deadliest tsunami as well as one of the deadliest natural disasters in recorded history. It also had one of the largest earthquakes. The initial surge was measured at a height of approximately 108 feet, making it one of the largest tsunami storm surges in history. The tsunami killed people over an area ranging from the immediate vicinity of the quake in Indonesia, Thailand and the north western coast of Malasia to thousands of kilometres away in Bangladesh, India, Sri Lanka, the Maldives, and even as far away as Somalia, Kenya and Tanzania in eastern Africa.
The Indian Ocean tsunami generated by the most powerful earthquake in decades on December 26 is believed to have killed more than 150,000 people and made millions homeless, making it perhaps the most destructive tsunami in history.
National Institute of Oceanography, Goa, India 26 December 2004 tsunami On 26th December 2004 the Indian coastline experienced the most devastating tsunami in recorded history.
The tsunami was triggered by an earthquake of magnitude 9.0 on the Richter Scale at 3.4O N, 95.7O E off the coast of Sumatra in the Indonesian Archepelago at 06.29 hrs IST (00.59 hrs. GMT).
What are tsunamis?
Tsunami is a very large ocean wave triggered by underwater earthquake, volcanic activities or landslides. These waves have unusually long-wavelength in excess of 100 kms, generated in the open ocean and transformed into a train of catastrophic oscillations on the sea surface close to coastal zones.
It would thus be seen that the tsunami which struck the Dredger of the complainant was caused directly by earthquake without any interruption from any other source. As against the material produced by the insurance company, no material has been produced by the complaint to show that the aforesaid tsunami was not caused by an earthquake. Therefore, we have no hesitation in holding that it was an earthquake alone which had led to the formation of a tsunami and it was the said tsunami which caused the Dredger of the complainant company to submerge in the sea.
7. The next question which arises for our consideration is as to whether the insurance company would be liable or nor, if the loss to the insured is caused by a tsunami but it is found that the said tsunami was caused directly by an earthquake. In order to arrive at a finding, what we have to identify is the proximate cause of the loss, whether it was one of the perils insured against or it was an excepted cause.
8. Where the peril insured against which the loss is preceded by an excepted cause, the insurer would not be liable if the excepted cause can be regarded as the proximate cause. If the peril insured against is the reasonable and probable consequence directly and naturally results in the ordinary course of events from the excepted cause, the excepted cause is the cause of the loss within the meaning of the policy, since there is no break in the sequence of causes and the relation of cause and effect between the excepted cause and the loss is thereby established. It is not necessary for the excepted cause to remain in operation down to the loss; it is sufficient if it has started the chain of circumstances leading to the loss.
However, if the sequence of causes if broken, the peril insured against being a fresh and independent cause whose connection with the excepted cause is only accidental and not causal, the cause of loss is the peril and not the excepted cause (General Principles of Insurance Law by E.R. Hardy Ivamy).
9. In the case before us, though the loss to the complainant took place on account of tsunami, the tsunami itself caused by an earthquake, which was an excepted cause under the insurance policy. There was no break in the sequence of causes and the tsunami was caused directly by earthquake without being interrupted by a fresh and independent cause. The tsunami in the sea is an obvious, natural and probable result of an earthquake in the sea and therefore, where a tsunami caused by an earthquake results in loss to the insured the cause of the loss would be the earthquake and not the tsunami.
10. In New India Insurance Company Vs. Zuari Industries Ltd. & Ors. IV (2009) CPJ 19, SC, the complainant had taken an insurance policy covering the loss due to fire. A short circuit in the main switch board installed in the sub-station of the factory of the insured resulted in a flash over, producing over currents. The flash over and over-currents generated excessive heat. The paint on the panel board was charred due to excessive heat producing smoke and soot and the partition of the adjoining feeder developed a hole. The smoke/soot along with the ionized air travelled to the generator compartment where also there was short circuiting and the generator power also tripped. As a result the entire electric supply to the plant got stopped and due to stoppage of electric supply, the supply of water /steam to the waste heat boiler by the flue gasses at high temperature continued to be fed into the boiler and damaged the said boiler. The insured lodged a claim for the damage to the boiler and other equipment. The insurance company took the stand that the loss to the boiler and other equipment was not caused by fire but by the stoppage of the electric supply, due to short circuit in the switch board. According to the insurance company, it was thermal shock caused due to stoppage of electricity which had damaged the boiler and equipment and that was the proximate cause for the damage. The contention of the insurance company was that firstly there was no fire and secondly in any case, the fire was not the proximate cause of the damage. Dealing with the question as to what does proximate cause mean, the Honble Supreme Court held that it is not the cause which is nearest in time or place but the active and efficient cause that sets in motion a train or chain of events which brings about the ultimate result without the intervention of any other force working from an independent source. On facts it was held that fire was the efficient and active cause of the damage. Had the fire not occurred damage would also not have occurred and there was no intervening agency which was an independent source of damage. Applying the aforesaid decision to the case before us, it can hardly be disputed that it was the earthquake which was the active and efficient cause, Dredger getting submerged in sea. Had there been no earthquake, no tsunami would have occurred and consequently, there would have been no damage to the Dredger. As noted earlier, there was no independent source of damage in the case before us, tsunami being the direct result of the earthquake.
In Inventa Chemicals Ltd. Vs. United India Insurance II (2004) CPJ 45 (NC), the insured had taken a fire policy from the insurance company in respect of his factory sheds, machinery etc. A fire broke out in the factory of the insured. As a result of the fire, the machine could not be operated and certain material got damaged. The insurance company took the stand that since the reactors were not damaged because of fire but because the electricity supply had to be disconnected in order to ensure that the fire does not spread to other portion, it was not liable to reimburse for the said loss. Rejecting the contention, it was held by this Commission that if electricity supply is disconnected because of fire then fire is the proximate cause for damage or destroying the stock which was in process in the reactors. The aforesaid decision also supports the stand taken by the insurance company.
11. For the reasons stated herein above, we are of the considered view that since the loss to the complainant occurred on account of an earthquake, which was an excepted cause in the policy, the insurance company is not liable to reimburse for the said loss. The complaint is therefore dismissed. No orders as to costs.
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(V.K. JAIN, J.) PRESIDING MEMBER Sd/-
(DR. B.C. GUPTA) MEMBER SB/6