National Consumer Disputes Redressal
M/S. Gujarat Industries Power Co. Ltd. vs Cholamandalam Ms General Insurance Co. ... on 20 February, 2026
I1'
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
JUDGMENT RESERVED ON: 20.01.2026
JUDGMENT PRONOUNCED ON: 20.02.2026
CONSUMER COMPLAINT NO. 84 OF 2011
M/s Gujarat Industries Power Company Ltd., P.O. Petrochemicals, Distt. Vadodara,
Gujarat Though its Company Secretary and DGM Legal
Complainant
Versus
The Cholamandalam MS General Insurance Co. Ltd., having its Regd. And Head Office
at: "Dare House", II Floor, No. 2 NSC Bose Road, Chennai -600001.
And a Regional Office at: Ahmedabad Regional Office, Option Z, 2nd Floor, Near Hotel
Bawarchi, Opp. Hotel Next, Off CG Road, Ahmedabad - 380009.
Opposite Party
BEFORE:
HON'BLE MR. JUSTICE A.P SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
For the Complainant Ms. Surekha Raman, Mr. Yashwant Sanjen Bam,
Advocates
For the Opposite Party Mr. S.M. Tri path i, Advocate
ORDER
PER HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
1. Heard Ms. Surekha Raman, Advocate for the Complainant and Mr. S.M. Tripathi, Advocate, for OP insurance company.
2. Complainant - M/s Gujarat Industries Power Company Ltd., a Public Ltd. company is engaged in the business of Electrical Power Generation in the State of Gujarat. Complainant commissioned its first power project, a 145 MW gas based Combined Cycle Power Plant (CCPP) as Captive Power Plant (CPP) in February, 1992 at Vadodara. OP insurance company issued an Industrial All Risks Insurance Policy to the Complainants for the period from 01.04.2009 to 31.03.2010 for total sum assured of Rs.701.91 crores. Linder the said policy the OP insurer is liable to pay to the complainant, inter alia, claims relating to Material damage and Business Interruption.
Page 1 of 493. Brief facts of the case and the contentions raised by Advocate Ms. Sulekha Raman on behalf of the complainant, are discussed in the order dated 17.09.2025 passed by this Commission, which is reproduced below:
"1. The complainant is a State Corporation engaged in Power Generation in the State of Gujarat. The complaint has been filed alleging deficiency in service against the Opposite Party Insurance Company that has declined to indemnify the claim set up by the complainant in respect of the damage to the tooth of the Gear Shaft of the Load Gear Box of a 32 megawatt box Turbine GT#1 installed at Power Station No. 1 at Vadodara in Gujarat. The rejection was communicated through a registered letter dispatched by the Surveyor dated 27.04.2010 that was reaffirmed by the Insurance Company through its communication dated 04.08.2010. The fractured tooth of the load speed shaft of the turbine has been depicted in a photograph filed by the Insurance Company along with its reply and is extracted hereinunder:Page 2 of 49
2. Learned counsel for the complainant Ms. Surekha Raman advanced her submissions today and we have heard her in order to proceed with the matter with the consent of Mr. S. M. Tripathi, learned counsel for the Insurance Company, who has appeared online and prayed that he may be granted an adjournment of three weeks to enable him to overcome his personal indisposition and then assist the Bench accordingly.
3. While advancing her submissions, learned counsel for the complainant urged that the complainant Corporation has installed a couple of turbines and the present dispute relates to the Gear Box of the Gas Turbine which stood insured under an Industrial All Risks Insurance Policy for a sum of Rs. 701,91,00,000/-. The claim made under the said policy is for the damage aforesaid as well as the loss due to business interruption. A copy of the policy, the duration whereof was from 01.04.2009 to 31.03.2010 has been filed on record.
4. Prior to this policy, the Insurance coverage is stated to have been with the New India Assurance Co. Ltd.
5. According to the complainant, the Gas Turbine remains almost in continuous operation, and as an internal practice of maintenance and upkeep, the turbine is generally serviced after 48000 fired hours. According to the learned counsel, the turbine had experienced a couple of sudden load throwoffs during the duration of the policy, but since there was no deficit in the operations of the turbine or the production, the same was being operated as according to the learned counsel, turbines cannot be shut down on some mathematical precision and are put off as and when the complainant gets the opportunity or as per need keeping in view the requirement of supply and distribution of the electricity in the State. The submission is that for the purpose of maintenance, shut downs are carried out as per the exigency and need of power supply in the State.
Learned counsel further submits that the aforesaid time table of 48000 fired hours is only for the Gas Turbine and there is no such compulsion or requirement as per the instruction manual for maintaining any time table of maintenance for the Load Gear Box in which the damage has occurred. The same is maintained as and when needed, but is taken care of simultaneously when the Gas Turbine is put off for maintenance.
6. According to the learned counsel, with the window of shut down available to the power plant, the Gas Turbine was shut down on 24.07.2009 and the Original Equipment Manufacturer namely M/s. BHEL Gas Turbine arrived for taking care of the maintenance when the Load Gear Box was also opened for overhauling and maintenance. During this exercise, a piece of the broken tooth of the Low Speed Gear of the Load Gear Box of Gas Turbine was found in the oil sump of the Gear Box. On a further cleansing process, it was found to be a part of the broken tooth of the Gear that was intimated through a prompt claim of the damage and loss suffered to the Insurance Company on 01.08.2009.
7. The Insurance Company appointed Mr. Sirish Desai, a Chartered Engineer and Surveyor, who conducted his preliminary survey after visiting the site on 02.08.2009 in the presence of his team of surveyors as well as the officials of the complainant Company and tendered his Preliminary Survey Report dated 03.08.2009 which is extracted hereinunder:
Page 3 of 49An-n R-l SIRISH DESAI B.E,, da 4 AC, DJ0^,, C. &g., FJ.E. (IKOtAL F-MJ, S L A (IndiaK, FXMINDM,) CHART6REd ENGINEER . INSURANCE SURVEYORS / GOVT. APPROVE0 VALUER Insurance Surveyor Government Fellow ol Indian Institute 'A" Category DylRDA App^ivcd Valuer ol Insurance Sunoyors Fire, Engg, & Marine Cargo Reg. No, 54 ol CAI. and -css Assess>tts Mo. P;o f-1116' License No. SLA-4MS val of tags. F/WJ MlS&ol 2M7. otisrr B3sg,!th:"'a Near Polo Cfub. Vadedara 390 001. PnoftC ; (ozes) 2429MI6. 24283C7, 2410352 2433635, Rcsi<tencc>(02(»5} 2433691, Cell Nos.: 98251 45348,98250 45208. Emaift sirishdesai^sify.com son 41O,'PSR/2OO9-2O10 3'* August. 2009 PRELIMINARY SURVEY REPORT L To.
The Cholamandalain MS General Insurance Co. Ltd Ahmedabad Regional Office, W SLA '4626 )o OpiionZ, 2nd Floor, J>l EXR DATE r Near Hotel Bawarchi, i \ *«ar4/2oii / I ft* Opp Hotel Next, OH C G Road.
Ahmedabad -- 380 009.
sub:
Station No. 1 under the Machinery Breakdown Section. Date of Loss : Noticed during Shut Down on 25-7-2009.
Insured : WWs. Gujarat Industries Power Corporation Ltd., Vadodwa, Gujarat.
instructions I Late Evening ol Is1 August, 2009
1 1.0
■- received from Cholamandalam,
ft
Ahmedabad Office at Ahmedabad.
DATE OF VISIT 1 Sunday Morning on 2,w August, 2009.
2.0
j2.1 Persons Present 1) Mr. 8, G. Gajjar. Manager Mechanical.
2) Mr. A. N. Shah, General Manager, Finance.
3) Mr. Nirav H. Shah, AsstL Manager. (Meeh.)
4) Mr. Sirish Desai. Surveyor.
5) Mr. Vicky Desai, Surveyor.
Page 4 of 49
•$ IRISH DESAI
toOrWecf-UWSKJ 2.
3,0. DATE/TIME OFiLOSS ; ®J
Noticed during Shut Down: on 25-7-2009.
4.0' POLICY DETAiLS :
insurers
The Cholamandalam MS
General Insurance Co. Ltd.,
Ahmedabad Regional Office,
OptionZ, 2W Floor.
Near Hotel Bawarchi,
Opp Hotel Next.
Off C G Road,
Ahmedabad -380 009.
Insured M/s. Gujarat Industries Power
Corporation Ltd.,
P. O. Petrochemicals.
Dist. Vadodara.
Gujarat
Policy No. Derails Awaited.
Type of Policy Industrfel All Risk Policy.
Policy Period 01-04-2009 to 31-03-2010.
Location of Risk M/s. Gujarat Industries Power
Corporation Ltd.,
P. O. Petrochemicals,
Disl. Vadodara,
Gujarat
Situation of Loss Gear Box of 32 MW Gas Turbine of Station No.
1 of GIPCL, Vadodara.
Excess Material Damage MB Claims 5% of
lhe Claim Amount or subject to
minimum Rs. 5.Q0 Lakhs and
maximum Rs. 50.00 Lakhs.
Policy subject to Reihstajemem Value Clause.
Agreed Bank Clause.
fro INTRODUCTION :
!(5-i Insured Gujarat Industries Power Corporation ltd.. Vadodara, Gujarat set up
Ek two Gas Based Power Stations No. 1 having 32 MW x 3 Nos. Gas Turbines and
HRSGof49MW.X1.
Page 5 of 49
5,2
Th ♦' M
go j
6.0 DETAILS OF INCIDENCE :
6.1 I!^5-aS|T'^,ine N°' 1 Was for Mai°r Inspection at 48,000 Hours and
V wa® ctecidecJ for the sequential shutdown from 25'-'' July, 2009 by SHEL and other Overhauling Agencies. j 6.2. On dismantling the Load Gear Box, it was observed that One Tooth out of total 70 Nos. of the Gear Speed Shaft connected to the Generator had 200 mm out of total 345 mm. Tooth Length was found fractured and broken from the base.
i 6.3 Some of the other Teeth of the Gear Speed Shaft connected to the Generator also received indentation marks on the diametrically opposite side but these marks appear to be due to entangling of the broken tooth pieces.
6.4 Even the Main Bearings Shells of Gear Shaft along with the Gear Shaft of the Load Gear Box had fine annular scoring rings which required permissible tolerance in the inner diameter.
6.5 The broken tooth of the Gear Shaft was to be retrieved from the Lubr.cating Oil Sump of the Load Gear Box of the 32 MW Gas Turbine No. 1 of the Power Station No. 1.
6.6 The matter was reported to the BHEL Engineers regarding the breakage of the Gear Tooth and other damages suffered by the Load Gear Box of the 32 MW Gas Turbine No. 1.
6.7 During our visit to the Power Station, the damages Gear Shaft and the Main Bearings of Load Gear Box was available for Inspection in dismanited condition.
DETAILS OF LOAD GEAR BOXj !
1. Make : Render Graffenstaden. West Germany, r' < 2. Serial No. : 3752.
3. Model (Size) :TRL61.
: 4,500/5.100 KW.
4- Power
fe*
W-s
Speed : 5,122/3.000 RPM.
Service Factor : 1.1
7. Speed Ratio :1.71
8. : 11.000 Kgs.
Weight
Page 6 of 49
IS H DESA I
5f
6.8 During our visit, vre were infer
Mcator, of
6.9
'> " GaS S"te LC,S''
Operating Parameters and Safety
6.9 Vl't>rat*on A*arn1 Limit was 12.5 mm / sec. while the vibration readings was at
10 to 11 mm / sec. which was within the Permissible Limits.
6.10 The Lubricating Oil Pressure in: the Load Gear Box was also at 1.75 Kgs. / cm2 as per the manufacturers operating Oil Pressures Levels and the c rcutating lubricating oil flow was also more than the design oil quantity of 750 Litres per Minute.
7.0 PHOTOGRAPHS :
7.1 We had taken a set of Photographs of the damaged to Gear Speed Shaft of the Load Gear of the Gas Turbine No. 1 to indicate the nature and extent of damages suffered by the Gear Speed Shaft.
8.0 CAUSE OF DAMAGE :
8.1 The cause of damages is not known at this stage.
8.2 In our opinion, sudden and accidental jerk received by the Gear Speed Shaft of the Load Gear Box resulted in the fracture and shearing of the Gear Tooth and the fractured pieces could have entangled with the other teeth in rotation caused indentation marks on the surface of the teeth.
8.3 The matter is under discussion with the Insured and when Histo^ of the Gas Turbine is available, more detains would be available.
8.4 Once the broken tooth of the Gear Speed Shaft was retrieved from the Lubricating Oil Sump of the Load Gear Box of the 32 MW Gas Turbine No. 1 of the Power Station No. 1 it could be sent for Metallurgical Laboratory Test to check the metal grain structure to establish the cause of damage.. Ibj The details of Gas Path Inspection and Major Inspection Details would throw Uh' more light on the failure of the Tooth of the Gear Speed Shaft of the Load Gear ElBOoxof the Gas Turblne No. 1.
||BThis could be termed as accidental damages and payable under the Industrial All 'Risk Insurance Policy., Page 7 of 49 SlRlSH DESAI 10 ESTIMATE OF LOSS :
9.1 BHEL foMnsp^ctions amH las the matter ws to be leferrerl io 9.2 The Gear Speed Shalt is comprising ol Integral One Piece and the Advice and Suggestions of.the Manufacturers Flenders West Germany would be raqipred to proceed further in the matter 9.3 Therefore, as a provisional estimate, loss can bo considered at Rs. 30.00 Lakhs after the adjustment of the IAR Policy Excess of Rs. 5.00 Lakhs subject to revision when more details arc available from the Insured.
This is the Preliminary Survey Report issued without prejudice Io your rights as Insurers.
Prepared by :
SIRISH DESAI Practicing Chartered Engineer.
"A" Category Surveyor and Loss Adjuster ' by IRDA for Fire, Engineering and Marine Cargo SLA: 4626 Issued since 12-44931 and Valid till 12 4-2011- Fellow of Indian Institute of Insurance Surveyors and Loss Assessors.
Government Approved Vaher,
. Under the Wealth Tax Act, 1957
r . No. Cat. VII-54/1996.
8. Learned counsel has invited the attention of the Bench to clause 6.2 to indicate the nature of the loss, and then invited the attention of the Bench to clause 8 thereof to indicate that the cause of damage was not known at that stage, but opined that the sudden and accidental jerk received by the speed gear shaft of the Load Gear Box had resulted in the fracture and shearing of the gear tooth evidenced by the fractured pieces. The said recital also indicates that the broken tooth was retrieved from the lubricating oil sump and a suggestion was also made to send the same to a Metallurgical laboratory for test. It was also observed that details of further inspection would throw more light on the same, but the incident could be termed as an accidental damage that may be covered for indemnification under the policy.
9. Learned counsel has urged that this preliminary survey report does not indicate any fatigue failure so as to construe the damage due to wear and tear.Page 8 of 49
10. Learned counsel then urged that the Original Equipment Manufacturer M/s. BHEL reviewed the said damage as they had overhauled it on 25.07.2009 and they dispatched their opinion on 03.08.2009 that was communicated on 24.08.2009. The copy of the said communication has been filed along with the rejoinder, which is extracted hereinunder:
r ■
r>o, Ventateswara (GE Infra.
Non-Og)
From:
: Sent
I To:
Satject
Sgssa-'
TTMaSTW.htm, wjn>
To: Saxena, Bh^^Wm.Energy, NooGb
T°,he',Mbtah<*,the6*arb0* Wehov.rwlewe-.ttuiMmecndth.f.lfcwinsoreour room breakage rtfkcw ductile fcikre due to o sudden high bending loodsi We would like to get confImeticn It the inodune has faced ay problem of high foods in the recent past. Such duncges on gear teeth worranl repskeinent of the Internals, We do not recommend the use of the some for operation.
The fifirtex model TRL61V It on obsolete model (630 mm center distance) ond avdlobility of Fdrgirgs etc is dodbtfd. The replacement model for the came Is the 660 mm center distance machine with 4 bearings and a solid pinion,':
However we of the larger end model would require compotdbUitY evaluation Involving all the concerned Englneenng groups. Far this we suggest a meeting In Hyderabad after your return, THE 5U66ESTE6 MODEL CAM BE ^FINALISED TECHNICAUy ACCEPTANCE BY AU. ENSG GROW'S ^Mecmtime Mr Anji Reddy may be advised to oarry out all tha nortnal routine checks on the Gw box fhety grinding gthe sharp edges of ths broken tooth. DP and MPI of all ths Ger teeth shall be carried out to check the health jv ef babnee teeth on pinion and gear, Blue contact, backlash, dimensonaf check for ovality of easing bares to bo ^carruied out. Spirit level, spring bock chock of the LGB fmndatlon also to be done. No of shims benwth «ch load > rpdfrit to be minimised.
f■ BHEL does not recommend use of the sAject gearbox and win not stand guarantee to the performance of the machine. This may please be noted.
& ansa of any questions please do not hesitate to contact us.
Regards
bi..-' -- 7
•karoo krishna
K t
11. It is submitted that the Original Equipment Manufacturer has opined that the breakage of the tooth reflects "ductile failure" due to "a sudden high bending load". It also states that the same would require confirmation if the machine had faced any problem of high load in the recent past.
12. Learned counsel therefore submits that the cause of the damage as reflected in the report of the preliminary surveyor stood corroborated with the report of the Original Page 9 of 49 Equipment Manufacturer referring to sudden high bending loads that has been described by the preliminary surveyor as sudden accidental jerks causing the fracture and shearing of the gear tooth.
13. Learned counsel reiterated that the Original Equipment Manufacturer has nowhere indicated any wear and tear in the said gear.
14. She has then urged that the repudiation is mainly founded on the strength of the final survey report dated 09.06.2010 by the Surveyor which has proceeded to consider the Failure Analysis Test conducted by the Electricity Research Development Agency (ERDA). The said failure analysis report was obtained at the instance of the Insurance Company itself which is dated 29.10.2009. Learned counsel has specifically invited to the Overall Remark in the said report. The remark on the Chemical Composition Analysis is extracted hereinunder:
ELECTAICAl RESEARCH AMO OSVELCPMEihT ASSOTIAT Or- , C:-.t 3".
Report No: MMET/FI/192 Overall remark on Chemical Composition Analysis The chemical composition of the core of Gear tooth material indicates that the • material used is a low-carbon, low-alloy steel. Tins material composition ts commonly adopted for gear applications. The chemical composition analysis of the surface indicates that carburizing surface treatment has been carried-out to enhance the bending fatigue and contact fatigue life of the gear. (Carbon percentage ■ of the surface region >s on higher side as compare to the core region.) Ko abnormality fs observed in the material.
15. It is urged that the said remark categorically states that no abnormality was observed in the material. She has then pointed out to the Overall Remark for Metallography which is extracted hereinunder:Page 10 of 49
^cLECTRiCAL RESEARCH ANO DEVELOPMENT XSSCC A7.DN Report No: MMET/FI/I92 Mn^nalyns ofgurM ofCowSpe^g^ro/Les/ garfto^of gr # 1 Overall RenQrk for Metollography The micrographs show that -
1. Microstructure at core region consists of tempered martensitic matrix and alloy carbides. No abnormality is observed.
2. Microstructure at surface region consists of high-carbon tempered martensitic matrix and higher fraction of alloy carbides, indicating effect of surface hardening treatment carried-out. No abnormality is observed.'
16. This again does not observe any abnormality. She has then invited the attention of the Bench on the overall remark of the hardness measurement which is extracted hereinunder:
' etECTSlCAfc P = S=4^CM A.'.O CE . .
Report No: MMET/F1/192
ofQearTootfi of Low Spted Qesr of Load Ijear^Soj^of CfT # 1 Overall Remark Hardness Measurement:
1. The hardness observed in the core region indicates that appropriate hardening & tempering treatment have been carrted out. The hardness is matching with the micro-structural phases observed for the given composition.
2. The hardness observed at & near surface indicates the effect of surface hardening carried-out for enhancing bending and contact fatigue resistance of the gear.
■ -
NoabnofT^yJ^^ht <!
Page 11 of 4!9
17. This once again categorically records that no abnormality is observed. It is submitted that with all the aforesaid scientific analysis once again confirmed the safety factor against contact fatigue failure that has been recorded as follows:Report No: MMET/FI/m 40
Taifun nafysif of^cafToot/i ofLaw Spud Cear of Load I 4.6.2.4 Contact fatigue life . rr' -- (£*£11 n r -1 IcTPcC1 1 * • G=1 • c^o.s (t76xS12)-70 oc.= 0.8 =1679 MPa 1679 contact fatigue ' ^safety ~ 555 =2.97 For a gear with a tooth having 70% breakage, the modified safety factor is contact fatigue 1679 "Safety " 565 x 1.82 f.
=1.63 Thus, reasonably sufficient safety factor exists agosnst contact tongue failure provided stress concentration sites are not present cn rhe broken tooth end tne gear box is not subjected to load and speed transients os well as other resonant conditions.
Page 12 of 4918. She has then invited the attention of the Bench to the Conclusions at the end of the report in clause 5 which is extracted hereinunder:
Repoct No: MME17 H/192 'FailuneJlnafysis ofQtar'Toolfi of £otu Speed' of i'.mitl (J<ar<lio>(of <fT it 1 5.0 CONCLUSIONS I. Chemistry ond microstructure anolysis of core of the failed gear tooth indicates the presence of c homogeneous tempered martensitic microstructure with on average Siardness of 313 HV suggesting optimal core toughness. The observed heat treatment state is consistent with the analyzed chemistry.
2. Similarly, analysis of the surface region of the tooth indicates the presence of carburized layer of about l.Srrim depth. The hardness of rhe surface region is found to be 546 HB (55 Rc) corresponding to an equivalent tensile strength (of surface region) of 1.820 MPo.
3. Visual examination /stereo fractography of the fracture surface show the fracture to have initiated ot the tooth root region. Further, fracture surface is clearly seen to exhibit two distinct topographies namely a cyclic crack propagation zone containing the crack initiation site and a plastically i . perturbed, final-unstable-fracture zone. The cyclic fracture zone contains characteristic parallel running striations. A number of concurrent cyclic crack propagation zones are seen. The fracture surfaces arg, approximately, oriented normal to the direction of the bending moment generoted tensile and compression stresses in the gear tooth.
A gear design with respect to bending cychc-
fotigue life and pitting-contact-fatigue life clearly confinTThat hi^h facers of safety-havelfa^ogoEte^i^e origmal gearbor^sign to ensure infinite life with respect to bending <S contact fatigue, 5 11 <3 also shown that adequate factors of safely continue to exist for the partially broken tooth, with respect to bending and contact fatigue lives.
^provided stress concentration ^^ot^cisTon the broken tooth and Customer; Gujarat Imtustries Power . . vij--h ..
Page 13 of 49 -- f _ *
- •-t M .u::-.--''* * ■ - -
RcpOH MMET/l'l/192
Tailunjlnafysisof&ar Tootfi ofLawSpieS Q^r^ofqT* I
the geor box >s not subjected to fosd cnrf speed rronsients along wuh other resonant condition.
6. The Mure of tooth by the mechanism of bending cyclic stresses' appears to be associated with nucleanon of a crack at the root of the gear tooth. It is conjectured tha- the sudden nucleation of the crack----- -
has occurred due to presence of supra-normal bending st ress * qenerdtzd'tstrtorsional resonant modes in the gear box excited by load transients due to mismatch between instantaneousjnpu^and outjMjt^--• Ipads, _
7. The gearbox has seen a total of 1,45.87! hours of operation. At the rated rotation speed of 3000 RPMi. this translates into 2.63 e*10 cycles of operation. Even through, the gear box is designed for ;
infinite fatigue life, the machine has been subjected to transient mismatches between instantaneous input end output load demands due to external grid disturbances. The above factors would have imafiSgd severe transient loading on the gear teeth along with excitation of torsional modes resulting in cyclic load conditions to prevail at the gear tooth roots.
Investigators:
(U.K. Puntambekar) Sr. Manager & Head Metallurgy Section - MTO ii?
(Dr. G.S. Grewal) ,
Dy. Director & Head <,2|
(Materials Technology Division)
-'■My Ife'1
Cusiomer: Gujarat Industries Power twn$$^tinitetl, Barada.Page 14 of 49
19. It is submitted that on an overall reading of the said failure analysis report, it is abundantly clear that the Gear Box was designed to ensure infinite life with respect to bending and contact fatigue. It is therefore submitted that there was no question of any wear and tear being the cause of the damage in the Gear Box. The component seemed to be of an imported manufacture namely Flender- Graffen Staden, Germany.
20. The Surveyor proceeded to submit his final survey report on 09.06.2010, which is extracted hereinunder:
S1RISH DESAI OJR.& A.C,aBA.C. tng. FJtE. (JHOl*). F JulJL SIA (IndllJ. F LV.ptOUM CHARTERED ENGINEER I INSURANCE SURVEYORS I GOVT. APPROVED VALUER CMrtatd tmurmcft Surveyor Fellow of Indian bnsSllu'lc •A* Category by tROA Approved Valuer of InftUTance Surveyors Enalnerr end Lo»> Assessors No. sto-F-nw Ftre^ Eftgg.S Marino Cargo UeenteNOb SLA -4W6 Reg. to. 54 of CAT.
VH of 1995. FfWf 01M96f of TOOT.
eMWT ■r. *iit3oel«tv. eaes'XP*"9 R<Mdr H»»r Polo CW&, V»dCKI»r» 1W001. Phons: (O2BS) 24Z9S0S, 242F1OT. 241S3S2 : JoMS) 2433S35, RssMsnessfOMS) 243369T, Can Nos.: 9S261 49340.9SZS0 45308, Email: [email protected] SD/1410/FSR/2010-2011 91f' June. 2010.
FINAL SURVEY REPORT To.
The Choiamandalam MS General Insurance Co. Ltd.. <Uc.Ko.
Ahmedabad Regional Office. SLA/4S2B
OptionZ, a"*1 Floor. oi
[on CKROATE
Near Hotel Bawarchi, laMfSoti
Opp Hotel Next,
Off CG Road,
Ahmedabad -- 380 009.
SUb: Final Survey Report in respect of the MB Claim No. 09-10/WA001/51 for Damages to Tooth of the Gear Shaft of the Load Gear Box of 32 MW'Gas Turbine GT# 1 of the Power Station No. 1 under Machinery Breakdown Section of the Industrial All Risk Policy No. PSP - 00059346-000-00. Date of Loss :
Noticed only during Shut Down on 2S-7-2009.
•- I insured : M/s. Gujarat Industries Power Corporation Ltd., Vadodara. Gujarat.
■i 1.0 INSTRUCTIONS :
received from Cholamandatam, Ahmedabad Office at Ahmedabad.
iy. , Sunday-Morning^xv 2^- AuguotF-20e9
2) Chennai Office on 12th August, 2009
fei ■ 3) 5th September, 2009 with Mr. Jog.
pi lOP February, 2010.
. April. 2010
Page 15 of 49
I1 t > J
SIRISH DESAI
2.1 Persons Present 1) Mr. B. G. Gajjar, Manager Mechanical.
2) Mr. A. N. Shah, General Manager, Finance.
3) Mr. Nirav H. Shah, Asstt. Manager, (Meeh.)
4) Mr. Sirish Desai. Surveyor.
5) Mr. Vicky Desai, Surveyor.
! 2.2 We had submitted our Preliminary Survey Report No. SD/1410/PSR/2009-2010 dated 3rd August, 2009 and the Status Report submitted after our several Plant visits.
3.0 DATE I TIME OF LOSS r Noticed only during the Shut Down for Major Overhauling on 25-7-2009.
( £0 POLICY DETAILS.: .
Insurers The Chotamandalam MS
General Insurance Co. Ltd.,
Ahmedabad Regional Office,
OptionZ, 2^ Floor,.
Near Hotel Bawarchi,
Opp Hotel Next,
Off CG Road,
Ahmedabad * 380 009.
Insured : M/s. Gujarat Industries Power
Corporation Ltd.,
P. O. Petrochemicals.
. ......------------
Gujarat
Policy No. Details Awaited.
Type, of Polkfe^ Inrluntriftl All Rhk
Policy Period 01-04-2009 to 31-03-2010.
Location of Risk M&. Gujarat Industries Power
iCorporaBon Ltd.,
P'O.Petrochemicals,
_________
Page 16 of 49
s|RrSHOESAl
Situation of Loss Gear Box of 32 MW Gas Turbine of Station No.
1 of GIPCL. Vadodara.
Excess Material Damage MB Claims 5% of
the Claim Amount or subject, to
minimum Rs. 5.00 Lakhs and
maximum Rs. 50,00 Lakhs.
Policy subject to. Reinstatement Value Clause.
Agreed Bank Clause.
5.0 INTRODUCTION : '
5.1. GIPCL was incorporated In 1985 as Public Limited company under the auspices of Government of Gujarat The company is engaged in business'e.
Electrical Power Generation. The total present capacity of Vadodara and Mangrol plants is 560 MW.
5.2 The company has a vision to transform itself into a national level power sector enterprise. The company is having its registered office at P.O. Petrochemical, Vadodara, Gujarat J 5.3 It commissioned its first power project, a 145 MW gas based Combined Cycle Power Plant in.Febfuary, 1992 at Vadodara. Power from this plant is distributed to its promoters in proportion to their original equity holding.
5.4 The company expanded its capacity and commissioned 165 MW Naphtha & Gas based Combined Cycle Power Plant at Vadodara in November, 1997 as Independent Power Producer(IPP) with Power Purchase Agreement (PPAj with GUVNL.
' 5.5 It commleatonod 260 MW Lignite based Power Plant at Nani Naroli, District €trraHtH^ovemberr^999^"todependent 'PmtrerProduceT(IPP)rwft}rPw^w' Purchase Agreement (PPA) with GUVNL. It also has Rs own Captive Lignite Mines at Vastan for Surat Lignite Power Plant, 5.8 2 x 125 MW SLPP Phase II Expansion Project with Expansion of Lignite Mines fe
-in aavaflceg^fiMflB^riftipfemo^tiOT? F6rffiiTaiso; captwe- Lignite~Mine~r developed at Mangrol (adjacent to Vastan) and the mining lease for the same is avatebfe. The project Is expected to bo commissioned in the current financial year.
5.7 Government of Gujarat has consented to allot 500 MW Expansion Phase-3 also to Gujarat Industries Power Compahy Limled and the Site Selection, Environmental Clearance, and Engineering Activities by consultants for the same are in progress. .
_______
Page 17 of 49
sjRIsM DESAI
! Promoters of GIPCL •
5.8
I
Gujarat Urja Vikas Nigam Ltd. (Erstwhile Gujarat Electricity Board) i Gujarat State Fertilizers & Chemicals Ltd., Vadodara Gujarat Alkalles & Chemicals Ltd., Vadodara.
Retrofits Co-operative Ltd., Vadodara.
5.9 Insured Gujarat Industries Power Corporation Ltd,, Vadodara, Gujarat set up • two Gas Based Power Stations No. 1 having,32 MW x 3 Nos. Gas Turbines and HRSGof49MW.X1.
5.10 The Station No. 2 having 110 MWGas Turbine and HRSG of 52 MW xl at GIDC Notified Area of Vadod are Petrochemicals Estate near the Vadcd Vadodara ara City Vadodara City.
6.0 DETAO OF INCIDENCE :
6.1 The Gas Turbine No.. 1 was in for Major InspecUon at 48,000 Hours and accordingly it was decided for the sequential shutdown from 25"1 July, 2009 by BHEL and other Overhauling Agencies.
6.2. On dismantling the load Gear Box, it was observed that One Tooth out of total 70 Nos. of the Gear Speed Shaft connected to the Generator had 200 mm out of total 345 mm. Tooth Length was found fractured and broken from the base.
6.3 Some of the other Tedth of toe Gear Speed Shaft connected to the Generator also received indentation marks on toe diametrically opposite side but these marks appear to be due to entangling of the broken tooth pieces.
6.4 Even the Main Bearings Shells of Gear Shaft along with the Gear Shaft of the Load Gear Box had fine annular scoring rings which required permissible tolerance In toe inner diameter.
6.5 The broken tooth of toe Gear Shaft was to be retrieved from the Lubricating Oil Sump of toe Load Gear Box of the 32 MW Gas Turbine No. 1 of the Power Station No. 1.
6.6 The matter was reported to the BHEL Engineers regarding the breakage of the , Gear Tooth and other damages suffered! by toe Load Gear Box of the 32 MW Gas Turbine No. 1.
During our visit to the Power Statipn^heAamages Gear Shaft and toe Main 6.7 Bearings of Load Gear Box wrasj^ilab^foiInspection in dismantled condition.
___________ :
Page 18 of 49 r Ccnsnuej-z 5,
OESAI
OPTAILS OFJLOAD GEAR BOX :
: Flender Graffensteden, West Germany
1.
2. Serial No. : 3752.
3. Model (Size) :TRL 61.
4. Power : 4.500 / 5,100 KW.
5. Speed : 5.122 / 3.000 RPM.
6. Service Factor : 1.1
7. -Speed Ratio .: 1.71
8. Weight : '11,000 Kgs.
6.8 During our visit, we were informed that there was no indication of any abnormality observed in the running of the Gas Turbine No. 1.
6.9 The meshing Gear Speed Shaft connected to the Gas Turbine side of the Load Gear Box was undamaged and healthy.
Operating Parameters and Safety 6.10 The vibration Alarm Limit was 12.5 mm / sec. while the vibration readings was at i 10 to 11 mm / sec. which was within the Permissible Limits.
. . " * I
6.11 The Lubricating Oil Pressure in the Load Gear Box was also at 1.75 Kgs. / cm2 i
as per the manufacturers operating Oil Pressures Levels and the circulating lubricating oil flow was also more than the design oil quantity of 750 Litres per Minute.
7,0 PHOTOGRAPHS ;
7.1 We had taken a set of Photographs of the damaged to Gear Speed Shaft of the
Load Gear of the Gas Turbine No. 1 to indicate the nature and extent of damages suffered by the Gear Speed Shaft and the same are now enclosed for your ready reference and records.
8.0 CAUSE OF DAMAGE ; ' 8.1 The cause of damages was not Iknown^ In our opinion, sudden and accMeng|fereoeiyed fey the Gear Speed Shaft of 8.2 the Load Gear Box resulted in the;fracturfand>hearing of the Gear Tooth and the fractured pieces could have entangled^ the other teeth in rotatm caused indentation marks on the surface < Page 19 of 49
----- ----- ------............................. . . ...........
3.3 9,0 INSURED'S ESTIMATE OF LOSS; 9-1 Cl'im ,o,,he ,M*1*GMr B" fc'
9,2 We were also informed that the New Gear Box had been imported and replaced the damaged Gear Box on 23rt March, 2010.
f' k 10.0 ASSESSMENT OF LOSS •
10.1 We submit our observations for the MB Claim as under.- 10.2 Vibration Charts Insured had submitted two sheets of Vibration Charts from which it is observed - that there was a vibration spike between 08th March, 2009 and 15th March, 2009 during the Policy Period of New India Assurance Co. Ltd, But had refrained from oommenting on this spike between OS''' March, 2009 and 15th March, 2009 Therefore, the vibration spikes mentioned above have to play a vital role in'the date of damages and the admissibility of the. MB Claim.
We had not received thespedfrc reply and views on this aspect immediately.
10.3 Test Analysis Report of ERDA Hie ERDA Test Analysis Conclusions has specificaily not thrown any light en the date of damages i.e. t0Gth±ieakaae4if-.iha-Gea^Shaft-basetheTrMiL! "w^ess*****^ i rt__ _a. _i 4 -|L a ■ " Analysis pf the metal of die fractured gear tooth.
10.4 Major hlspectfons Insured har| Rnhmittad Jhaf-MajojfJrupactioii-ftH-FratTHr H Gas Jl ilrhinft a< stipulated by OEM we every 48,000 fired hours between February, 2003 ( 93,113 Fired Hours) io 21? July, 2009 (1,45,871 Fired Hours).
Therefore, between |he Two Major Inspections of the Gas Turbine GT 1 the machine has run 52,758 Fired Hours as against stipulated 48,000 Fired Hours.
* ' It may be noted that as against the stipulated Major Inspection at 48,000 Hours, the machine has additionally run by 4,758 Hours over and above the stipulated 48,000 Hours.
Page 20 of 49D E S AI Sai&wSN: 7.
Mathematically, 4,75B.Hours translates to 198.25 Hours based on 24 hours per day and to 6.S08 Months based on 30 days per month.
Therefore, had the Major inspection taken at 48,000 Hours, the loss would have fallen some time about 6.6 Months back namely some time in January I February, 2009 during the period of Insurers M/s. New India Assurance Co. Ltd.. IPCL Brandi Office, Vadodara and not the Date of Loss : Noticed only during Shut Down on 25-7-2009:
The delay in stopping the Machine at stipulated 48,000 Hours has resulted in the claim being lodged on M/s. Cholamandalam MS General Insurance Co. Ltd.
■ In our opinion, had the Major Inspection been carried out at say 48,000 Fired Hours before 31" March, 2009, damages of tooth breakage would have been noticed during the Policy Period of New India Assurance Co. Ltd.. We therefore reiterate that the Loss should have been informed to New India Assurance Co. Ltd. and involving them in the Process of MB Claim as they have been underwriting the Risk of GIPCLfor a very long time in the past.10.S Date of Damage: 1
Insured had rightly observed that the exact time of failure cannot be established and the date of observation of the damages to the low speed shaft is considered as the date off damage. And therefore, considered under the IAR Policy of the Insurers Cholamandalam MS General Insurance Co. Ltd. with whom they had • taken the Policy from 1* April, 2009.
The ERDA Test Analysis Conclusions has speciffcally not thrown any light on the probable date of damages i.e. date of tooth breakage of the Gear Shaft.
It was imperative that the Date of Damage be first established by the Insured without fail for the claim to be tenable under any Policy but this could not be established..
10.6 Vibration '• • Further, It may be noted.that there Was absolutely no vibration in the Load Gear £ Box in sp'tte of a broken ftaoe of tooth and the machine was running trouble free i-Qj-tho-moshed^ontacto-bf-Inpul-qiw Gutput Gfearronans. "Probably, fiaerthe Load Gear Box not dismantled, the machine would have continued to run in trouble free manner with tpe meshed Gear Shafts without any hindrance to the running of the GT 1 and Power Generation.
^i = . SX'mS'Sts1"» >- " 28 Mw •** reasons. '
- ■ ______________________________ 2:^_______________________________ Page 21 of 49 st r I S H DESAI Hi 6, reasons for 'hese ohsewations which hither to before was also not replied by them. ■ 10.7 Admissibility The admissibility of the MB Claim tor the tooth breakage and the damages would depend on your establishing the Date of Loss which cannot be the pinned down to the date on which the damages were noticed at the time of opening the Gear Box during Major Overhauling.
We had drawn their attention that it is imperative that the Date of Damage be first established vrithout fail for the claim to be tenable under the Policy.
110 FINAL CONCLUSION :
'11.1 We had written to the Insured our Final Registered Letter No. SD/1410/FSR/2009«2010 dated 27w April. 2010 which conveyed that the claim was not tenable and admissible as the date of loss could not be established and the text of the Final Letter sent was as under-
Quote 11.2 It has been pointed out in the ERDA Report that the above factor would have ■ imposed severe transient loading on the gear teeth along vrith excitation of torsional modes resulting in cyclic load conditions to prevail at the gear teeth roots;. • 1 11.3 Out of the fotal of 14fi fl71hoursJaneraticrt.as4)n-the-dat<>of-w>Mr-nmtwnff-fh>»---
damage, by chance, 1/11,113 hours of operations amounting to 97% is ptjor to the commencement of the IAR Policy issued by ChOlamandalam MS General • Insurance Co. Ltd.,.
11 a Wn nfrto.from-thoir letter dntrd ?,<1,ri Rh.'gQlO tliut-tftcy tiiid imt trit any • I abnormality in the operation of the gear box. Yet you did notice the tooth breakage only on 25/7/09 and it was also at the time of overhauling only. Therefore it is evident that the breakage has happened during any time of the operations prior to* the commencement of the current IAR Policy as it does not get dearly established to have occurred during the period of the current policy.
» • 11.5 We also note from the observation of BGGTS that the machine was running with the broken tooth before shutdown and that you were permitted to take the gear box into operation on this consideration.
Page 22 of 49 S|RI3H DESAI .
M raj
\ \**'**'J /
Feb™^e20lr'S SST
11 6' SnS'etv 5n the ,asl mcetin9 heW 5" y°ur °'{'ce
docu,me^ submitted by you up till now did not .
Even ERDA rpnnrt Uie '°SS du,®9 the subject policy period.
S r by'y0U <J0es n05 p,0VKle the exact date of loss.
'"s "be "ns",',e<, m <ia,e ms
117 !«tto flrte»ra,e thal ss a stjrvey°rs. we would be fair and assess the
StlrJ! tr^n4s.par®nt manner within the scope of the policy which has an obligation on the Insured to establish the loss to fall within the terms and conditions of the policy.
11.8 In order to prove your said statement, we had requested you to provide us with h SU tLotfler disturbances in past 5 years which till date has not been shared wrtn us These details would help the Insurers to clearly study the pattern of outages of the Gas Turbine GT#1 but on the contrary it has been slated as matter, is being stretched by demanding more and more information, which is remote in nature and has no relevance to the claim."
11.9 We reiterate that captioned policy has been availed by you with effect from 01.04.2009 to 31.03.2010. Subject loss was noticed on 25.07,2009 when the said Gear Box was opened for major overhaul as per normal work procedures. If the losis is due to external grid disturbance on 21/06/09 the gear box should have been put to physical check immediately and not on 25/07/09 when the overhauling was taken up. Earlier such major overhaul was carried out in the year 2003.
11.10 No abnormality was noticed in functioning df the said gearbox at any time from .2003 till it was again opened on 25.07.2009. You also have admitted thal said gearbox is working in fine condition even after completion of overhaul exercise • and restarting the gearbox with the shaft having one tooth fractured and boken, 11.11 We also note-from the technical reports of ERDA that the failure of the tooth is due to fatigue caused by the continued gradual cyclic loading.
11.12 Please appreciate that it is obligatory on the part of the'Insured to substantiate his claim under terms of the policy terms. Already almost 8 months have passed and till date you are inable to justify your claim under coverage of the policy.
-=^1J-3Jn.viow.of.tht3,--we-regret oui iiiubillty to proce^, Lite W a* ilTvyT not admissible and tenable under the Policy Conditions.
Unquote l?-0 WARRANTIES • 1^1 Hie MB Claim could not be admitted and the claim was not payable under the ' Policy Conditions.
Page 23 of 49SIRISH DESAI io.
13.0 NET LOSS:
Assessed Amount of Claim Nil.
Net Payable Loss NIL
14.0 ENCLOSURES :
14.11 One Set of Photographs.
14.2 Estimated Amount of Claim as submitted by the Insured.
14.3 Vibration Charts showing the Spikes in the GT # 1 Operation. 14.4 History Sheets of the GT#1.
14.5 Proof of Registered Letters and Acknowledgement Slips signed by Insured.
14.6 Log Sheets of Operation for GT#1 of the days of spikes in operation.
This is the Rna! Survey Report issued without prejudice to your rights as Insurers.
PrepareOby: A J SI RISK DESAI Practicing Chartered Engineer, "A" Category Surveyor and Loss Adjuster by IRDA for Fire, Engineering and Marine Cargo SLA: 4626 Issued since.'12>4«1981 and Valid till 12^4-2011 -- ------
l-6llow ot Indian Institute of Insurance Surveyors and Loss Assessors. .
Government Approved Valuer, ' Under the Wealth Tax'Act, ^.957 -
_ ___________ Mr. IVO, L - - - -
" - : <
21. With the aforesaid material on record, the communication was received of the claim not being indemnifiable broadly on the ground that the date of damage not being Page 24 of 49 confirmed, the same cannot be coincided with the date of the damage having been noticed. The second ground is that the damage was caused due to wear and tear which is not covered under the policy. The communication through the Surveyor indicating that the claim was not admissible dated 27.04.2010 is extracted hereinunder:
S1RISH DESAI
ae. OR*. AX,MA.C.EnS. fAv.csm*,
CHARrEflEO ENGINEER f INSURANCE SURVEYORS t GOVT. APPROVSO VALUER EMilnttr Ftftowof Intditn Institute HO- F*11K1 AppwavuMf & kfttunnce-Surveyor* LST50 UCKom rid. sia -- {(JI R^ V) 0|no -saoicat.
5^95 I Wt Ali&tOft Nd.
r/wfooiMoranr.
SD/1410/FSRQ009-2010 27^ April. 2010. .
REGISTERED LETTER WITH A/D
To.
MZs. Gujarat Industries Power V&f Js.
Corporation Ltd., a;( stAMsao jo
P. O. Petrochemicals, al EXRDATC ijf
t \ iar«.<awir / Z
Dist Vadodara 391346,
Gujarat
Dear Sirs.
Kind Attn.: Mr. K. S. Munshi. Dy. Genoral Manager. Technical Services.
Sub: MB Claim No. 09-10/WAO01/51 for Damages to Tooth of the Gear Shaft of the Load Gear Bore of 32 MW Gas Turbine GT # 1 of the Power Station No. 1 under Macnrrtery Breakdown Section of the Industrial Alt Risk Policy No. PSP - 00059346-000-00. Date of Loss ; Noticed only during Shut Down on 25-7-2009.
Insured : M/s. Gujarat industries Power Corporation Ltd,, Vadodara, Gujarat . also shared with the Insurers Cholamandalam MS General insurance Co. Ltd..
In this connection we visited your office for further discussion on is!h April 2010 for the collection of the details of the sudden outages of GT #1 in support of the MB Claim.
fhfonned by you. it was a Corporate Decision that no further details even thouoh avariabfe would not be submitted fn support of the MB Claim to the Insurers MS General Insurance Co. Ltd.. j uu * v-1 - ; ■ We were also informed that ^ ^Now Gear Box had been imported and replaced damaged Gear Box oh 23rd March; - 2010. \ M the • . • . • x'.'.-'c -f',,, ; ***>*' ^.exchange of■various andoeve^l correspondence, we have to submit our aS. ^^atl0ns ln TP** of MB C>a'n» for the Gear Box vide your tetter dated 14th ' .Apnlr 2010 as under for your information.-
Page 25 of 49s I RIs H DESAI r ■ °"cy wim Cholamandalam MS General Insurance Co.
11 ipV'tranSrf^?'1R°A RepOft !hat the ®bove faCtor wou,d have imP°sed Sg in U 01 'torei"al Out of the total of 1,45,871 hours operation as on the date of your noticing the damage, by chance, 1141115 hours of operations amounting to 97% is prior to the commencement of the IAR Policy issued by Cholamandalam MS General Insurance Co.
Lid.,. - .■ We also note: from your tetter dated 24tl1 Feb. 2010 that you have not felt any abnormality in the operation of the gear box. -Yet you did notice the tooth breakage only on 25/7/09 and it was also at the time of overhauling only. Therefore it is evident that the breakage has happened during any time of the operations prior to the commencement of the current'IAR Policy as it does not get clearly established to have occurred during the period of the current policy.
We also note from the observation of 8GGTS that the machine was running with the broken tooth before shutdown and that you were permitted to take the gear box into operation on this consideration.' • It has been discussed threadbare in the last meeting held in your* office on 19'h February, '2010, ' that support documents submitted by you up till now did not conclusively confirm occurrence of the loss during the subject policy period. Even ERDA report submitted by you does not provide the exact date of loss. Your contention for date of notice of loss to be considered as date of toss was incorrect and not acceptable.
We would like to reiterate that as a surveyors, we would be fair and assess the loss in a transparent manner within the scope of the policy which has an obligation on the Insured to establish the loss to fall within the terms and conditions of the policy.
In order to prove your said statement, we had reguested you to provide us with the data for such other disturbances in past 5 years which till date has not been shared with us These details would help the insurers to clearly study the pattern of outages of the Gas Turbine GT#1 but on the contrary jt has been stated as "matter is being stretched by demanding more and more information, which is remote in nature and has no relevance to the claim." ' check immediately and not ort 25(07/09 when the overhauling was taken up. Earlier such major overhaul was carried out in'the year 2003.
Page 26 of 49$|R I SIH DESAI 3. xSaSlZ nnanLnOtlCe^'^U?Cti°rilf19 08 831(1 3ear^ox at any time from 2003 till Lirtrinnfin, fino Yoc also have admitted that said gearbox is nooAnvAuifh fho ue.V6r' complefion of overhaul exercise and restarting the gearoox with the shaft having one tooth fractured and bpken.
We also note from the technical reports of ERDA that the failure of the tooth is due to fatigue caused by the continued gradual cydic loading.
Please appreciate that it is obligatory on the part of the Insured to substantiate his claim under terms of the policy terms. Already almost 8 months have passed and till date you are unable to justify your claim under coverage of the policy.
In view of this, we regret our inability to process the MB claim further as it was not admissible and tenable under the Policy Conditions.
Thanking you, Yoursfa'rthfully, SIRISH DESAI Practicing Chartered Engineer, "A" Category Surveyor and Loss Adjuster by IRDA for Fira, Engineering and Marine i Cargo SLA: 4626 Issued sihce 12-4-1984 and Valid till 12-4-2011.
Fellow of Indian Institute of Insurance Surveyors and Loss Assessors.
Government Approved Valuer, under,the Wealth Tax Act, 1957, No. Cat VII-54/1996 ' ■ . C.c. The ChoJamandalam MS General Insurance Co. Ltd., Commercial Claims Department "Dare House", 2nd Floor, Netaji Subhas Chandra'Bose Road, Chennai 600 001. C.C. The ChoJamandalam MS General Insurance Co. Ltd., Ahmedabad Regional Office, OptionZ, 2nd Floor, Near Hotel Bawarchi. Opp Hotel Next, Off C G Road, Ahmedabad - 380 009. C.C. Shri V. R. Dutta, Director-Technical, Unison Insurance Broking Services Pvt. Ltd., 206-213, 'Glacier*, Next to Pizza Inn, • Jetalpur Road, Vadbdara -390 005. Page 27 of 49
22. The complainant having noted the said communication responded to by their objections to the same requesting a relook into the matter keeping in view the reports referred to above and the same dated 28.05.2010 is extracted hereinunder:
X I GUJARAT INDUSTRIES POWER COMPANY LTD.
Ref; GIPCL/TS/GT-1/INSURANCB10/ TVO Date; 28.05.2010 Shri. Sirish Desai 15, Ajit Society, Bagglkhana Road, Near Polo Club, Vadodara 390 001.
Sub; MB Claim for the Damages to Tooth of the Load Gear Box of the 32 MW Gas Turbine No. 1 of the Power Station No. 1 under the Machinery Breakdown Section of the IAR Policy.
Dear Sir, We have received your letter dated 27.04.2010 and noted the contents therein.
We do not agree with your views and we standby our views as submitted to you. Interpretation of ERDA Report Conclusion :
It appears that you have mistaken to interpret the conclusion given in ERDA report. It is not as interpreted by you. It Is clearly concluded in the ERDA report that 'the gear box is designed for infinite fatigue life, even though it has failed. It 1$ conjectured that the sudden nucleation of the erack has occurred due to presence of supra-normal bending stress generated by torsional resonant modes in the gear box excited by toad transients due to mismatch between instantaneous Input and output load! demand due to external orfd disturbance. The above factor (mean sudden nucleation of the crack due to mismatch between Instantaneous input and output load demand due to external grid disturbance) would have imposed severe transient loading on the gear teeth along with excitation of torsional modes resulting In cyclic load conditions to prevail at the gear tooth roots."
Date of Notice of Loss to beconalderad as Data of Loss^ We still stick to our standkinatfclhe loss is noticed during the policy period of Cholamandalam and da^Wtofioewoss to be considered as date of loss. We firmly believe that the loss ^^fflgjMno^Cholamandalam policy in view of this and It is the practical appi^^ropp^ligw'G^^ industry since long.
L r: __________ . ' Page 28 of 49 2 of Loss > Oecum^ 0110^^1,^d SXSSZffi E c,,0lMaMalam a"d ■?"" >• U m?U tbat2here was maj°r exterrial grid disturbance on 21.06.09
- and sudden load throw off on 09.07.09, which is the incident occurred during the loa^gear boxP° and incident lead,n9t0 ths subject loss/damage to ERDA report also concludes possible cause of loss as sudden nucleation of the crack due to mismatch between instantaneous input and output load demand due to external grid disturbance.
Based on incident occurred (as referred above) and possible cause concluded by ERDA ■ it is very much established that there was incident occurred within the Cholamandalam policy causing subject damage to the LGB and hence the loss is admissible under Cholamandalam policy.
The details of said incident were submitted to 'you duly supported with supportings/evidences vide our letter dated 12.01.2010. We are sorry to say that but it is ■felt that to refuse admissibility, you are not giving importance to the same, not getting convinced with it and not considering the same as cause leading to damage.
Instead of accepting the fact Wiich is already on record and has occurred during Cholamandalam policy and settling the claim in fair way; you are searching for other reasons to avoid claim, which is really disappointing. We have already established the date/occurrence of toss within Cholamandalam policy and submitted necessary j supportings/evidences in support, which is very much sufficient for the purpose of admissibility and settlement of claim.
i Please also note that once we have established the cause and date of loss, it is immaterial that LGB has run for X hours during Cholamandalam policy and Y hours prior to Cholamandalam policy.
Functioning of Load Gear Box with broken tooth:
We re-iterate here that GIPCL after noticing the loss placed an order tor the new equipment, as advised by BHEL; but delivery of the same was time taking. Hence only to save LOP, after consulting BHEL and taking approval of insurer M/s. Cholamandalam MS General Insurance Co. Ltd., GIPCL refitted the damaged equipment after overhauling and operated it under close supervision till the replacement comes.
After refitting, Initially due to vibration problem, it was running at 28 MW instead of original 32 MW; but subsequently after trouble shooting GIPCL could run it at original 32 MW. This was only to save Bl Loss, which would have been huge otherwise. Instead of appreciating the efforts made by GIPCL, you are using the same as tool to avoid the claim, which is really disappointing.
. ...U. ;Page 29 of 49 3
We.also re-iterate here that the subject equipment is highly sophisticated and costly equipment and there is visible physical damage' observed to the equipment. You will also appreciate that no power plant will continue to run such damaged ecuipment just because rt was running vibration free.
Nobody can give assurance of safe running of such damaged equipment for the period it would have run if not damaged, not even insurer, as any mishap due to the prevailing damage can result into catastrophe damage anytime in future. Hence after detail inspection by BHEL, it was decided to place an order for new equipment.
Further there Is no exclusion under IAR policy regarding 'even if there is visible physical damage; but claim will not be tenable if machine is giving vibration free operation' ERDA report conclusion - Cyclic Loading:
We do not understand what you mean to say by stating that as per ERDA report failure of tooth is due to fatigue caused by cyclic loading. It appears that you have again mistaken to interpret ERDA finding.
ERDA report dearly condudes that the sudden nucleation of the crack has occurred due to presence of supra-hormal bending stress generated by torsional resonant modes In the gear box excited by load transients due to mismatch between instantaneous input and outout load demand due to external grid disturbance. The above factor (mean sudden nucleation of the crack due to mismatch between instantaneous Input and output load demand due to external grid disturbance) would have Imposed severe transient loading on the gear teeth along with excitation of torsional modes resulting in cyclic load conditions, to prevail at the gear tooth roots."
In view of all above, we request you to re-look into the matter sincerely once again and kindly accept the facts, which are already on record and occurred during Cholamandalam policy. Accordingly we also once again request you to recommend on account payment of Rs: 2 Crores without further delay, as already more than 9 months . have lapsed since the date of intimation of loss and damaged LG8 is now already replaced by new LGB.
Thanking you.
Yours faithfully, For Qitjprat Industries Power Co. Ud.
i
" ; ?' 1 i*
(K.S.N unshi)
Dy. Genera! Manager (TS)
L
1 /) J2.
Page 30 of 49
23. Requests were again made by the complainant on 21.07.2010 when the Insurance Company through their final repudiation letter dated 04.08.2010, reiterating their stand, was received by the complainant that is extracted hereinunder:
CholamancW^^ M _S;
x General insuiancej
vM*
BY RFAD
Our Ref: HO Chims/OS-lO/WAOOUOSl CJ -0S-20W
L
* M/s. Gujarat Indttjstries Power Company Ltd,
P.O. Petrociiemicals,
n'ist Vadodara - 391 346, Gujarat.
Te1.Ph.2W-2232768/22,3/9lS9.
Kind Attn: Mr.S.P.Dcsai.C.P.O.
Dear Sirs,
Rec: Your Claim for damage to tooth of G ear box cii 25-G? -2009Covered tinder LAR Policy PSP-090S9346-00(M)0 - Our Claim No.OIMOAVAOOS/SL Wo refer to your letter ref: GIPCL/TS/INSURANCE'10/1370 dated 21-07-2010 and would like to inform you that we had already sent our letter dated 27" April 2010 by RPAD to you communicating our stand on this claim.
Wft have analysed your claim in depth with particular reference u> the report an failure analysis bvthe Metallurgy section, Materials Technology Division of ERDA and also obtained a report fom sb independent Metallurgist in addition to the opinion from a Senior A Grade surveyor. U is w, .ta, to. you. Z>" SS;
the lengthy period of operation for r?8 of
As per Policy Exdusions
hy faulty or defective design materials or WO,"J deterioration, deformation or Ij^rtion or wearjmgJ^I reiterate that the claim docs not conic wider the 1 ' Thanking you, Yours truly, ^silttirofized Signatory. -------------------
» - of iriind w om <fonia through pwtwdon Page 31 of 49
24. Learned counsel for the complainant questioning the correctness of the reasons spelt out by the Insurance Company for denying the claim urges that the policy is a reinstatement policy and was issued continuously on previous occasions by other Insurance Companies also, and the present Insurance Company namely the Opposite Party had issued the insurance policy after a full scale pre-inspection. It was therefore well aware that the Gas Turbine Gear Box had been functioning for more than 16 years of operation and therefore the length of operation was fully known to the Insurance Company when the policy was extended. The test report from ERDA which was a report obtained from a competent Testing Agency could not be doubted nor any acceptable scientific opinion to contradict the same was available or led as evidence by the Insurance Company. The complainant has also brought in an opinion report of Mr. Milind Bhatawadekar of Eastern Alliance dated 06.04.2011 supporting the contention of the complainant. The conclusion drawn by Mr. Milind Bhatawadekar, a renowned expert in his report dated 06.04.2011 has stated as follows:
CONClUSfON Hatted on th*? lorf'OinH wo of I he upHihan ihdl <•> not only the t.i.nin |ltH aflSO C«> the Business intturiiptlon d.iun .nlsirtH (tut *ti thi* 11 • 11* it * • ti l*st*l tip*'* .*!****? i*l the power plant .anti («<> then .'iftain .-idrlition.tl shutdown ti .my toi irpl.ie vitvHl 4»< the hn* internals nrc nrhnlsslbk? undoi the Pohcy No rsr otwi oo hchl hv <he ■ ISSUCtl by the iMMirer* M/* C hel.iMS (itwhil InMimiu e I hiulnd. | IIU» opinion is iKISCCl on th*? (tociinwnh .iv.nl.thh- -•♦■<1 to thf «>t mil kiviwlr'iluc anti ability (it'll is without prejudice.
I for L'nstcrn Alliance (k______ Milind Bhbtnwodctltftr.^ V
25. Learned counsel then contends that the period within which this incident of the fracture of the tooth of the Gear Box in all probability had occurred was either on 21.06.2009 or on 01.07.2009 when the Gas Turbine had experienced the sudden load throwoff. This sudden load throwoff is of the same nature as indicated in the preliminary survey report and also in the report of ERDA. It is submitted that a prompt intimation was given as soon as this was discovered during the overhauling process by the Original Equipment Manufacturers. The contention therefore is that this incident might have occurred in the said period which was well within the coverage duration between 01.04.2009 and 31.03.2010.
26. Learned counsel further submitted that there is no breach of any operational instructions nor is there any breach of the terms and conditions of the policy and it is for the said reason that the Insurance Company has found a way out to deny the claim on the ground of the age of the machine.
27. It is urged that the machine has been operated in its normal way and it was running with the best capacity of production and hence there was no reason to either apprehend or infer or locate any loss extending to a period prior to the obtaining of the policy.Page 32 of 49
28. It is urged that the conclusion that the Turbine was subjected to rigorous operation of shocks, load fluctuations, frequency variations including full load throwoffs is a mere speculation and an excuse to deny the liability.
29. It is urged that the inference drawn that the breakage might have happened prior to the commencement of the policy is based on no positive evidence and the repudiation on the ground that the date of notice of loss cannot be taken as date of loss is totally misconceived and contrary to the settled legal principles on this issue. There is therefore a clear deficiency on the part of the Insurance Company for not indemnifying the claim for the loss. It is urged that the quotations received for the reinstatement of the said Gear Box from the same manufacturer was valued at Rs. 2,68,37,500/- that was indemnifiable.
30. Due to paucity of time, the arguments of the learned counsel for the complainant could not conclude today and since Mr. S. M. Tripathi, learned counsel for the Insurance Company prayed for an adjournment, let the matter be listed on 20.01.2026 at 2.00 pm."
4. Order dated 20.01.2026 passed by this Commission is reproduced below:
'Heard Mr. Surekha Raman, learned counsel for the complainant, who has concluded her submissions today pointing out to the observations made in the preliminary survey report to contend that there is no report of any wear and tear so as to construe any loss or attribute any such characteristic for computing the cause of damage to the teeth of the gear on account of wear and tear.
It is urged that the preliminary survey report does clearly indicate the cause and in the absence of any conclusions drawn about fatigue in the final surveyor's report, there cannot be an assumption of any abnormality in order to presume the occurrence of any loss due to wear and tear.
It is reiterated that the date of knowledge which is 26.07.2009 should be construed to be the date of loss which was covered under the policy and she has again invited the attention of the Bench towards the report of M/s. Metmech Engineers dated 18.03.2010, that of Rank Associates dated 26.03.2010 and that of Mr. Bhatawadekar of M/s. Eastern Alliance dated 06.04.2011 to substantiate her submissions. In essence the penultimate submissions are that the Insurance Company could not have denied the claim and the loss that has been suffered was clearly admissible in the facts and circumstances of the case. She submits that it is only the claim of material damage which has been made basis on the reports that are already on record and consequently the complaint deserves to be allowed.
Mr. Tripathi, learned counsel for the Insurance Company has advanced his submissions today contending that the contention of date of knowledge being the date of loss is absolutely incorrect and he has invited the attention of the bench to the communications with the surveyor and which according to him were not responded to by the complainants that establishes that the Gate of damage has not been ascertained or pin pointed and consequently there is not only a possibility, but probability of the damage having occurred much prior to the acquisition of the policy from the opposite party. He submits that the damage could have possibly happened during the period of the policy taken from the New India Assurance Company, but the complainant has failed to array the said Insurance Company in order to arrive at any such conclusion. This non-joinder of a necessary part therefore according to him also militates against the complainant's claim. He submits that on an assessment of the entire facts and the various reports, it is evident that the metallurgical reports do indicate that the damage could have been caused earlier and therefore in the absence of any such determinable date of damage no liability can be fixed on the Insurance Company. He has referred to the remarks, objections as well as the conclusions in the report by ERDA to urge that it does indicate Page 33 of 49 features of fatigue and consequently in the absence of any assessment of the date of damage, it would be not appropriate to fix any liability keeping in view the fact that the complainants themselves have not been able to disclose any such possible date.
He then has read out the technical assessment of the vibrations in the machine indicating the period as observed prior to the taking of the policy and thereafter. He submits that it is for this reason that several queries were raised by the surveyor which were not responded to by the complainant and consequently the policy cannot be interpreted to cover the risk prior to the date of commencement. He submits that if the loss and damage has occurred during which the period when there was a policy of New India Assurance Company then there is no such clause available under the current policy so as to connect and give it a retroactive effect for covering the damage occurred earlier. He therefore submits that in no case is there any damage established within the duration period of the current policy in question and consequently the loss has been rightly not assessed by the surveyor. He therefore submits that the prime contention with regard to the date of loss being the date of knowledge been not established, the complaint must fail and deserves to be dismissed."
5. The repudiation of the claim, and the representation made by the complainant thereafter, as re-produced supra, narrows down the controversy involved. The fundamental issue required to be considered is whether the date of "discovery" or "noticing" of the loss by the insured during the policy period can be deemed or taken to be the date of loss so as to entitle the insured to claim under the policy. Then there is a peripheral and supporting stand of the insurer that the damage caused is in fact due to latent defect, gradual deterioration, deformation or distortion or wear and tear which falls under the Exclusion clause A(1)(a)(i). There is no dispute that the turbine and the damaged gear-box was functioning at 100% capacity without indicating either externally or through any technical parameters that there was even a distant indication that there is any breakdown or fault in the functioning of the turbine or of the gear box in question.
As a matter of fact, the turbine was taken out for overhauling/maintenance after having run for nearly 52700 hours (or nearly 5 years) during which, as claimed by the complainant, the gear box had been functioning absolutely smoothly. In other words, there was no indication of any breakdown or damage till the time the gear box was examined along with the turbine overhauling. At the time of such examination i.e. on 25.07.2009, which date of course falls within the policy period, it was noticed that 1 out of the 70 teeth of the gear was broken and thus the gear box was damaged, which subsequently, was reinstated. However, during the period of nearly 8 months thereafter that the gear box was under the process of being reinstated/repaired, the same though "damaged" but yet technically certified to be functional was restarted/operationalised, Page 34 of 49 which smoothly continued to serve the purpose albeit initially only with 28MW instead of earlier 32MW load with which it used to operate.
6. However, the insured in light of the coverage under the Industrial All Risk policy, intimated the damage noticed or discovered during the inspection process to the insurer and thereafter the process of survey and assessment of the loss commenced. Mr. Sirish Desai, the Chartered Engineer and Surveyor, in his preliminary survey report opined that the cause of the damage is not known, the damage could be termed as accidental and provisionally advised the insurer for a provisional estimated loss of Rs.30 lakhs after considering the excess of Rs.5 lakh under the policy. However, as noted above, in the correspondence which ensued with the insured and in the final survey report, the opinion of the surveyor is unambiguous and crystal clear that for the purpose of coverage under the subject insurance policy, the date of loss is not the same thing or equal to the date of discovery or knowledge of the loss by the insured and that the date of loss and date of noticing the loss are not the same thing.
7. The policy coverage clause and the post-repudiation representation of the insured may again be extracted for a closure look:
POLICY COVERAGE CLAUSE „ .. » -- • »... . """ "cT,EX."~ »». .>«> •»'»?' m > *• ^"B=S=S! rsniace such orowity or any part Ihawof.Page 35 of 49
REPRESENTATION OF THE INSURED:1
Date of Notice of Loss to be conaldered as Date of Lpss,l We still SticX to our stand ttjat£the loss is noticed during the policy period of Cholamandalam and date of notice of loss to be considered as dale of loss. We firmly believe that the loss is admlsOloder Cholamandalam policy in view of this and it is j the practical approach adgp4®^®iJ3nce industry since long. i sx c ta« Wr Jrfthl ' theS pe"0<l hrthef in de,3i "
OWsmaxtaUnt and thus eate <X
'"SX chlXl^t K Choteraand3lam 3"d is
K-was submitted to you that there was major external grid disturbance on 21.06.09 J?\SU J1 °ad off on 09.07.09, which is the incident occurred during Cholamandalam policy and it is the incident leading to the subject loss/damage to the load gear box.
ERDA report also concludes possible cause of loss as sudden nucleation of the crack due to mismatch between instantaneous input and output load demand due to external grid disturbance.
( A ; Based on incident occurred (as referred above) and possible-cause concluded by ERDA j it is very much established that there was incident occurred within the Chotemandalam policy causing subject damage to the LGB and hence the loss is admissible under Cholamandalam policy.
The details of said incident were submitted to you duly supported with supportings/evidences vide our letter dated 12.01.2010, We are sorry to say that but it is ielt that to refuse admissibility, you are not giving importance to the same, not getting convinced with it and not considering the same as cause leading to damage.
Instead of accepting the fact which is atready on record and has occurred during Cholamandalam policy and settling the claim in fair way;.you are searching for other reasons to avoid claim, which is really disappointing. We have already established the date/occurrence of loss within Cholamandalam policy and submitted necessary supportings/evidences in support, which is very much sufficient for the purpose of
- admissibility and settlement of claim.Page 36 of 49
8. The primary insistence of the insured from the beginning was that irrespective of the date of actual breaking of the tooth or the damage of the tooth, which exact date is not established or establishable, the date of noticing or discovering the loss itself is the date of loss for the purposes of examining the coverage under the policy. Minute and careful reading of the coverage clause, as rightly submitted by Mr. Tripathi, makes us notice that for invoking the liability of the insurer under the coverage clause, the establishing by the insured and existence of the facts of (a) the property insured be accidentally physically be lost destroyed or damaged, (b) otherwise than by excluded cause (c) during the policy period, is the condition precedent. There is neither any ambiguity in this language nor any possibility for any interpretation or intent other than what is immediately understood by plain reading of the coverage clause. The insured peril causing the damage or loss if not established to have operated during the policy period, the coverage does not get triggered at all. In our opinion, therefore, there was no reason for the surveyor to accept the vehement contention of the insured that the "date of noticing of the loss is the date of loss" as articulated in the correspondence or by the learned counsel for the complainant. Though, with the support of the report of Mr. Bhatwadekar, it was also contended that such deeming of "the date of noticing the loss to be taken as the date of loss" is a practical approach adopted for long in the insurance industry, there is no cogent material brought on record to either establish such practice or to support the contention through any decided cases. Otherwise also we are unable to accept the contention because we find the same to be counter-intuitive and in clear contrast of the express and unambiguous language adopted in the coverage clause of the present insurance contract. The insurance, by its very nature, is intended to cover and in fact covers the risk of fortuitous and unforeseen events which happen or occur after the acceptance of the premium by the insurer and after inception of the policy and which takes place during the policy period specified in the policy. This is not only the clear language deployed in the present coverage clause, as rightly submitted by Mr. Tripathi, that is also the statutory requirement of section 64VB of the Insurance Act. In other words, the loss consequent to the peril which has operated before the date of the inception of the policy is not covered under the policy. Moreover, it was submitted by Mr. Tripathy that what has been canvassed by the complainant is not only not at all a Page 37 of 49 practice in the industry, but such deeming of "date of noticing/discovery of the loss to be the date of loss" is typically against all fundamental principles of law of insurance and is fraught with inherent moral hazards in as much as the "noticing of the loss during the policy period irrespective of the peril having operated and the loss having been suffered prior to the policy period" as against the "occurrence of the loss due to operation of the insured peril during the policy period", if accepted to be the requirement of indemnification under the policy, that would easily open the flood gates for claims for which the policy can arguably be obtained and the loss which took place prior to policy inception can conveniently be noticed thereafter. If accepted, the whole concept of the policy period and the payment of premium proportionate to such policy period (in the present case, coverage for peril operating during 12 months and no more) itself would be lost, and the risk effectively would get covered for a period longer than the policy period, which can never be the position acceptable under the contract of insurance as entered into between the parties. We also agree with Mr. Tripathi's submission that it is for the insured always to establish not only that the loss has occurred but also that the insured peril of "accident" also has taken place during and not beyond the policy period. We also agree with Mr. Tripathi that when the language in the contract of insurance is crystal clear, as is in the present case, no deviation therefrom is called for or permissible. Accordingly, we reject the fundamental contention on behalf of the complainant that the "date of noticing of the damage" is the "date of loss". The insured was required through appropriate technical and internal investigation reports to establish if not the exact cause and date, at least on the strength of the evidence of preponderance of probability, that the event resulting into accidental damage to the gear-box and the actual loss to the gear-box both took place most probably during the policy period and that equally there is no plausibility or possibility that it occurred before the inception of the policy or beyond the policy period. We find that no such serious attempt has been made by the complainant. We, on the basis of clear language in the coverage clause, and on the basis of fundamental principles of insurance, also find no merit in the contentions of the insured and observations of Mr. Bhatwadekar on page 4 of his report, that there is any onus on the insurer of proving that the date of noticing of the loss is not the date of loss for claiming under the policy. There is absolutely no Page 38 of 49 ambiguity in the language of the coverage clause of the policy and we are therefore unable to find any such onus on the insurer. The onus, on the contrary, is on the insured to establish the fact that the peril has operated and loss has occurred during the policy period. Mr. Tripathi also explained, with which we again agree, that what the insured is contending (date of discovery = date of loss) is what is generally available under specific policies which expressly provide for date of discovery of the past loss, if falling under the current policy period, to be the eligible event triggering the insurer's liability and consequent indemnity. Such policies, like fidelity guarantee policies, expressly provide for such "retroactive coverage" for pre-specified past periods. However, such retroactivity is neither provided in the current subject policy nor can it be brought in consideration under the cover of any unsubstantiated alleged industry practice by doing any violence to the unambiguous language of the coverage clause. 8.1 The Id. Counsel for the appellant has relied on this Commission's decision in CC No. 67 of 2011 dated 07.10.2024 in the case of Chambal Fertilisers and Chemical Ltd. v. M/s Iffco-Tokio General Insurance Co. Ltd to contend that the date of discovery of loss is the date of actual loss for the purposes of machinery breakdown policy as held therein. Having perused the decision, it is noticed that apart from the decision being based on peculiar, detailed and involved facts of that case, the primary dispute in that case was with regard to the coverage under section I and section II of the policy and exclusions under the policy. The claim under the Machinery Breakdown Policy was repudiated on the ground, inter alia, that there was no actual "break-down". The contention of the insured that the "date of discovery of the loss is the date of loss"
though has not been specifically and categorically evaluated therein, the complainant has relied on the Madras High Court decision of M. Sultan Pillai Vs. Union of India AIR 1963 Mad. 365 to canvass the said proposition. Having perused the said decision of Sultan Pillai, we notice that the same pertains to Section 30 of the Limitation Act and had no relation at all with any insurance matter and more particularly with regard to the period of insurance or whether at all the date of discovery of the loss can be construed or be deemed to be the date of operation of the peril or date of loss for the purposes of determining whether the loss is indemnifiable in light of the policy period during which the policy covered the risks. Moreover, the findings in that case are based on the Page 39 of 49 absence of any evidence establishing that the damage did not take place during the policy period. In our considered opinion, on the basis of preponderance of probability, we on facts of the present case, are convinced that the particular incident(s) causing the progressive damage and (b) resulting into the ultimate breaking of the tooth, both, took place much before the inception of the policy. And, that mere "discovery" of such events and of the loss took place on 25.07.2009. Moreover, in Chambal Fertilisers, it also does not appear that the insurers issuing the policy for the relevant periods of "discovery of loss" and the period of "operation of peril/actual loss" were different, and hence, it appears, not the fundamental coverage but only the issue as to for which policy period the claim was to be raised, was only under dispute. In the present case, admittedly, the present OP insurer was not the insurer during the period before 01.04.2009, and therefore, there are distinct and different insurers covering the periods of "actual damage", and the period of discovery. In that context, we also find force in Mr. Tripathi's submissions that the complaint suffers from the non-joinder of the pre-01.04.2009 insurer. Therefore, in our opinion, the said case, which came to be be decided on peculiar facts of that case, cannot come to the assistance of the complainant.
9. The complainant obtained the failure analysis report from ERDA which was forwarded to the surveyor under the cover of letter dated 19.11.2009 which, after due consideration, was responded to by the surveyor. As per the report of ERDA, the conclusions are reproduced above. Mr. Sirish Desai, the surveyor responded to the same and pointed out that the observations in the ERDA report indicate sudden transient load fluctuations causing the breakage of the tooth due to grid disturbances. However, at the same time, the ERDA test report conclusions have specifically not thrown any light on the date of the damage on the basis of any micro-structure analysis of the metal of the fractured gear tooth. It was also pointed out that the vibration spike between 08.03.2009 and 15.03.2009, which period is preceding the policy period, have also a vital role in the cause of damages. Under the heading "vibration" and "date of damage" of the Surveyor's communication, it was further pointed out that before the routine examination on 25.07.2009, there were absolutely no vibrations in the load gear box despite the broken piece of tooth before the dismantling for servicing. It was only after the opening of the load gear-box and after the same was re-operationalised even Page 40 of 49 with a broken tooth, that there were vibrations after the turbine was restarted postmaintenance. The insurer was categorically informed that "it is imperative that the date of damage be first established without fail for the claim to be tenable under the policy". In the opinion of the surveyor the loss must have occurred before the inception of the Cholamandalam policy i.e. during the currency of earlier New India Assurance policy. On the admissibility aspect, it was categorically also pointed out that as admitted by the insured that the date of loss cannot be pinned down, the justification for the claim under the policy with substantiating evidence is required. However, the insured in letter dated 12.01.2010 while continuing insisting on "date of discovery is the date of loss"
contention, also pointed to the Grid Disturbance on 21.06.2009 pointing the same to be the likely date of loss which fell in the policy period. The same was duly responded to by the Surveyor reiterating his position that equally there are such grid disturbances and vibration spikes between 08.03.2009 and 15.03.2009, thus ruling out the necessary conclusion that the "peril operated during the policy period". He also pointed out that had the inspection happened at 48000 hours as recommended by the OEM, the discovery would possibly have happened 6 months before, i.e. in January 2009, when the present policy was nowhere in picture. The insured disputing such inference or conclusions categorically pointed out vide letter dated 06.02.2010, that on 21.06.2009 there was severe grid disturbance, and referring to ERDA report, insisted that though the gear is designed for infinite fatigue life, severe transient load and mismatch due to grid disturbance could cause damage to the gear and hence 21.06.2009 could be the date of the damage. The copies of log-books evidencing the grid disturbance for 21.06.2009, 09.06.2009, 12.03.2009, 11.03.2009, and 12.03.2009 were also provided, followed by the communication dated 14.04.2010 that the grid disturbances on 21.06.2009 and load throwoff on 09.07.2009 are the incidents which being nearest to the date of discovery, must be taken to be the date of incident, which date being within the policy period, the loss is indemnifiable.The same was rejected by the Surveyor vide detailed letter dated 27.04.2010. He pointed out that (a) He visited the office again on 15.04.2010, but it was decided by the insured "not to provide any further information",
(b) Despite the grid disturbances as pointed out, the gear-box was not examined for any damage nor was there any deficient functioning of the gear-box (c) The 5 year Page 41 of 49 grid-disturbance data, so as to enable the examination of the extra-ordinary nature of the incidents on 21.06.2009, was denied as irrelevant (d) As per REDA report, the failure of the tooth is due to fatigue caused by continuous gradual cyclic loading. Then the repudiation based on the survey report as also on the basis of the further technical reports of M/s Metmech and M/s Rank Associates was resorted to by the insurer. M/s Rank Associates, on page 9 of their report, have opined that (a) the cause of the damage is due to initial fatigue damage leading to crack-nucleation and initiation (b) progressive growth of the crack (c) final, sudden fracture and (d) that the initiation of the crack and final fracture would have occurred long before the commencement of the policy (e) both from the date of occurrence and nature of damage, the subject claim does not come under the purview of the policy and the root cause of damage comes under exclusion clause A(i) of the policy. On the other hand, the complainant has filed affidavit and report of M/s Eastern Alliance. Mr. Bhatwadekar, in the said report, refuted and opined that the conclusions arrived at by the surveyor that the damage loss could have occurred before 01.04.2009 is not tenable in as much as it could equally have happened during the 116 days of the current policy operation, and, if the gear-box was smoothly working till 25.07.2009, most probably it happened only on 25.07.2009 when the turbine was tripped for major inspection. The stand of the insurer is against the principle of good faith. It is also reported that the exclusion clause A(i) is wrongly applied by the insurer as the proviso, "unless the damage by a cause not excluded in the policy ensues", being exclusion to the exclusion clause, has not at all been considered or noticed and that multiple possible events of exclusion have been mindlessly resorted to by the insurer. After pointing out various improbability or inconsistencies in the Survey Report and the report of M/s Rank Associates, the Bhatwadekar report draws conclusion that there is indeed possibility that the tooth was broken most likely on 25.07.2009, which possibility has not at all been considered by the Surveyor or insurer.
10. As can be seen, the insured has attempted to contend before the surveyor and the insurer that the vibration data indicate that there were major external grid disturbance on 21.06.09 and on 09.07.09 and that because the ERDA report concludes that the possible cause of loss was sudden nucleation of the crack due to mismatch Page 42 of 49 between the instantaneous input and output load demand due to external grid disturbance, and that such disturbances, which occurred during the policy period and hence the operation of insured peril falls within the policy period and hence the loss is indemnifiable. Such contention is countered in the Survey report by observing that similar vibration spikes were also observed on dates 09.03.09 and 15.03.09, which spikes fall in the period before the current policy period and that there is no technical report or evidence or preponderance that the damage did not take place on those dates because similar grid-disturbance and imbalance can be attached to those dates as well. In fact, to positively consider the probability of the incident of loss/breakage having taken place on these dates of spikes in vibrations of 21.06.09 and 09.07.09 during the policy period, the Surveyor asked for such spike data for past years which was declined by the complainant. When we notice that admittedly four vibration spikes were noticed during a small period of only four months of 09.03.09 to 09.07.09, the spike-data of the past years, so as to assess the preponderance of the loss having occurred only during the policy period (and not before its inception) as was claimed by the insured, was significantly relevant and the insured by failing to provide the same to the surveyor (or in the complaint) has, in conjunction with the other technical data as elaborated in the survey report, has, in our opinion, rightly led the surveyor to reject the contention. It has been further observed in the survey report that going by the period of operation of the gear-box during the current policy period which is only 3% of the time under the current policy period (141113 hours out of 145871 hours prior to the policy period), the simple statistical probability of the loss during the policy period was only 3%, and therefore mere existence of two spikes as per the vibration data during the policy period, which again going by the evident average of one spike per month, can not lead to the necessary conclusion even through the preponderance of probability that the damage took place on 21.06.09 or on 09.07.09 during the policy period. We agree with Mr. Tripathi that such contention does not establish that the loss took place during the policy period. The technical report of M/s Rank Associates also supports this view. Mr. Bhatwadekar in his report has pointed out the possibility, with which we agree, that it is likely that the tooth of the gear got severed during the policy period and may be even on 25.07.2009 when the turbine was intentionally tripped and severe and sudden load was Page 43 of 49 faced by the gear teeth. But such possibility alone, without the evidence of strong preponderance thereof, in our opinion, cannot attach the liability on the insurer as the burden of establishing the operation of the insured peril during the policy period resulting in the consequent damage is squarely on the insured. After having gone very minutely through the correspondence between the parties and the technical reports on record, including the report of Mr. Bhatwadekar, and the survey report itself, we are not able to conclude that the nucleation of crack formation and progressive enlargement or elongation of the crack and the consequence of severance of the tooth took place during the 116 days of the current policy period. The past vibration data, which could have thrown light on the past events of grid disturbances, and hence, the most likely causes of progression of crack, and the consequent damage, have been positively withheld. In any case, it was for the insured to have obtained a technical report which, on the basis of chemical and physical evaluation of the broken piece and the characteristics of the cracked surface, could have provided the most likely date of the severance. In absence thereof, we are unable to find fault with the statutory survey report which is based on transparent communications and sound reasoning and which is neither arbitrary nor does it draw any uncalled for or unsubstantiated conclusions.
11. We may only briefly deal with the ground in the repudiation based on the exclusion clause A(1 )(a)(i) wherein also we find force:
We dso note ftont your Utter dated 24.02-.0 « have operation of the gearbox and youinot^d b Sthe b^k ha$ hwCRed during overhaul as per normal routmes. lliemfore, n of operation As per Policy Exclusions A(lX»).
by faulty or defective design materials or • deterioration, deformation or ji^ortton Of'weamam •
12. We are conscious of the fact that while the burden to establish the coverage under the policy including the peril having operated and loss having been suffered during the policy lies on the insured, and that of establishing the operation of the Page 44 of 49 exclusion clause lies on the insurer, we are of the considered opinion that not only the insured has failed in discharging its own burden, the insurer has successfully discharged the burden of operation of the exclusion clause. If at all it can be concluded that the peril operated during the policy period or even that the date of notice of loss can be considered to be the date of loss, then also the loss is not indemnifiable under the policy because the loss though had occurred but had equally remained unnoticeable and latent, even through technical parameters of the gear-box's functioning, and which exhibited and revealed itself only though the discovery of the separated tooth during maintenance-examination after opening the gear-box, is definitely gradual and slow and thus in the nature of gradual deterioration and normal wear and tear due to repeated "load imbalance or mismatch". Of course, the external condition of load mismatch between the input and output load demand has been stated to be the root cause of nucleation of the crack. However, at the same time, the gradual exertion of "severe transient loading" due to multiple and continuous cyclic conditions of such mismatch of loads, which mismatches are not only evident on record to be, on an average, multiple during and before the inception of the policy, and averaging one per month, such mismatches are, in our opinion, also normally expected, during the normal functioning of the turbine gear-boxes and thus an expected and routine event for a turbine. Hence, the overall behaviour, fracture and ultimate separation of the tooth due to "severe transient loading on the gear tooth" which operated over a period of time which is more and most likely to be quite long, which ultimately resulted in the severance of the tooth, not due to a single but multiple successive events which applied minute stresses which cumulatively caused the severance. We are unable to find fault in the conclusion of M/s Rank Associates, M/s Metmech, the Surveyor or the insurer in this behalf because if not such exhibition of normal wear, tear and machine fatigue, then what at all would rightly get classified as "normal wear and tear" or gradual deterioration, or gradual deformation or distortion, though each of these terms imply a distinct dimension of wear and tear which essentially is a gradual and natural process which would distinguish a freshly operationalized machine from that which has been in use for some considerable time. The overall reading of the technical reports on record leads us to the conclusion that the insurer has rightly concluded that severance/breakage of the tooth of the gear box is the Page 45 of 49 ultimate outcome of the process of normal wear and tear undergone by the teeth of the gear box which resulted in the damage over a period of time resulting into ultimate severance of the tooth. Though in the rejoinder the complainant relied on OEM finding that the damage occurred due to ductile failure, we are unable to appreciate as to how such failure or prima facie finding would change the overall nature of damage as technically found. Hence the invocation of the exclusion clause by the insurer cannot be faulted which is also based on a technical findings relied upon by the surveyor and the insurer in this behalf:
m . --- ■■■■*- 'R*-* W I■ M ■ i ■ ■ ERDA report dearly condudes that the sudden nucleation of the crack has occurred due to presence of supra*hormal bending stress generated by torsional resonant modes in the gear,box excited by load transients due to mismatch between instantaneous input and output load demand due to external grid disturbance. The above factor (mean sudden nucleation of the crack due to mismatch between instantaneous input and output-load demand due to external grid disturbance) would have imposed severe transient loading on the gear teeth along with excitation of torsional modes resulting in cyclic load conditionsjo prevail at the gear tooth roots."
onclusions:
1) The gear has fulfilled the metallurgical properties expected.
2) The design of the gear is for prolonged and indefinite functioning of the gear for the given torque, RPM and life (Cycles).
3) The gear box has seen a total of 1, 45,871hours of operation. At the rated rotation speed of 300RPM.
4) Such a long operations has substantially created wear of the teeth and created mismatches on the surface.
5) Such mismatches will increase clearance between the mating gears and the forces would transform to partial impact force. This also would create stress concentration areas.
6) Such stress concentration areas would lead to failure (Fracture) of the part.
7) Therefore sufficiently functioned dynamic systems cannot any with stand minor shock loads (sudden engagement of the gear).
8) The gear has failed due to partially covered fatigue life and sudden engagement of the system.
•ei Page 46 of 49 ' The process of fatigue consists of three stages: .
I ' '
■ . • Initial fatigue damage leading to crack nucleation and crack initiation
• Progressive cyclic growth of a crack (crack propagation) until the remaining uncracked cross section of a port becomes too weak to sustain the loads imposed.
• .»,•»«. '♦ *
• Final, sudden fracture of the remaining cross.section.
• From the.foregoing analysis we are convinced.in our considered opinion that'the Initiation' of crack and the final fracture would have happened long before the • . . ...■ • commencement of the. Insurance Policy issued by Chofcmandaldm MS General Insurance Company Ltd. It is pertinent to note that M/s BHEL - GE Gas Turbine Services Pvt Ltd, • in the report 'since this machine was operating wthMken tooth before shutdown''.
fortif if es. our opinion that the damage to the gear tgoth should- have .happened before • ' • p * ' ' » *1 the commencement of the Insurance policy issued by- Cholamandalam MS General • * ■ ■ re * insurance Company* Ltd.'' t • •• * • 12.1 Mr. Bhatwadekar is right in his report that the insurer does not seem to have referred to or perhaps even considered the exclusion to the exclusion provided in the policy clause. As per the said provision, the the exclusion would not apply when "the damage by a cause not excluded in the policy ensues". This leads to the consideration of the point whether the separation of tooth is the consequence of wear and tear, as seems to be implied in the repudiation letter, or it is the other way round. As such, we on the basis of ERDA report itself conclude that "sudden nucleation of the crack due to load mismatch due to external grid disturbance" resulting ito cyclic load condition to prevail at the geartooth root", which progressively resulted into progression of the crack and severance. Inherent conditions of operation of the gear-box ultimately resulted in the severance. Therefore, in our opinion such progressive impact suffered by the Page 47 of 49 machine on account of functioning of the gear-box itself is the dimension of normal wear and tear and it is the breaking of the tooth which ensued as a consequence of the gradual process of wear and tear being inherent to the functioning.
13. It has also been contended on behalf of the complainant that the responsible officers of the insurance company had visited the plant location of the insured and fully apprised themselves of the condition of the plant, including the fact that the gear box was running for more than 16 years, and therefore, the insurer is not entitled to raise a plea either in the repudiation letter or before this Commission that the damage is caused on account of the machine fatigue or on account of normal wear and tear for the reason that the insurer had chosen to insure and had accordingly accepted the premium after knowing that a 16 year old gear box would definitely have undergone the alleged normal wear and tear for 16 years. We are not impressed with this contention for the simple reason that the pre-inspection visit by the officers of the insurance company or even a pre-policy issuance survey report ipso facto does not debar in law the insurance company from relying on the policy conditions which form inherent part of the policy which gets issued after such inspection. The witnessing of running of the plant by the officers of the insurance company, even it be so, in our opinion, is at best for the insurer to broadly and only preliminarily observe, in general and without any specificity, without there being any possibility of any technical analysis of the components of huge plant and machinery worth crores (Rs.791.91 crores) so as to impact or decide either the detailed risk analysis or decision with regard to exclusion from the coverage or with regard to imposing special condition, if any, as required on such mere broad physical observation during the plant visit. In any case, invocation of any condition expressly mentioned in the policy as issued by the insurer and as accepted by the insured cannot be faulted on a ground of a pre-visit by the insurance officers, particularly so, when neither a detailed technical examination by the insurer nor preparation of any such technical risk analysis report has been alleged or is evidenced. We find no valid ground for challenge to the repudiation or to the conclusions in the survey report.
14. Apart from this, though not categorically so referred to and relied upon by the surveyor or the insurer, we do wonder, particularly in view of the fact that the gear box has remained functional with full loading capacity of 32 MW, even after the severance of Page 48 of 49 one of the teeth, for nearly 8 months, whether the damage eventually exhibited by way of discovery of the severance of the tooth can at all fall under and satisfy the prerequisite policy condition of coverage, namely the damage occurring on account of accidental or physical loss, but we refrain from further examining the issue and the principles of construing as to what occurrence can validly muster the test of being "accidental physical" cause of damage and whether such cause gets established in the present case.
15. Be that as it may, in the result, we conclude that no insured peril is established by the insured to have operated during the policy period of 01.04.2009 till the discovery or noticing of the alleged damage. We also conclude that if at all any peril did operate during the policy period, the weight of evidence on record and preponderance of probability would require us to hold that the damage exhibited through severance of the tooth of the gear box is rightly considered hit by the exclusion clause A(1)(a)(i) of the policy. There is no evidence of any deficiency in service on the part of the insurer in repudiating the claim after relying upon the well-reasoned and technically sound survey report of the final surveyor Mr. Shirish Desai. Accordingly, the complaint is dismissed.
Sd/-
( A.P. SAHI, J.) PRESIDENT Sd/-
( BHARATKUMAR PANDYA)
aj/ MEMBER
Page 49 of 49