A Nariman Point based company won an insurance claim of Rs 23.09 lakh with interest for a damaged diesel generator set (DG Set) in its captive power plant. The National Consumer Disputes Redressal Commission (NCDRC) set aside the state commission's order stating that it was "presumption" of the insurance firm that there was wilful mishandling that led to the damage. The interest amount at eight percent per annum stood at over Rs 25.86 lakhs. If the award money is not paid in three months, United India Assurance Co. Ltd., the insurance firm, will have to pay the amount with 12 percent interest per annum.
The order dated August 10, 2023 was passed by Justice Sudip Ahluwalia, presiding member and AVM J. Rajendra, AVSM VSM (Retd.), member of NCDRC. It was given on an appeal by DCW Ltd. against United India Assurance Ltd. DCW Ltd. had challenged the state order after its complaint was rejected on the ground that it could not prove deficiency on part of the insurance company.
DCW, a manufacturing company involved in the production of caustic soda, synthetic rutile, PVC et.c had purchased an ‘Industrial All Risk Policy’ from United. It was to insure the Captive Power Plant consisting of Six ‘DG sets’ of six megawatt capacity in its unit in Tamil Nadu. The sum assured was Rs 120 crore wherein plant and machinery was covered for Rs 95 crores. During the period of insurance, one of the DG Set in the captive power plant got damaged due to leakage in lube oil. UInited had contended before the state commission that when the lube oil started leaking, despite the alarm setting off, the DG Set was not turned off that led to its damage and that of other instruments. It was wilful negligence on part of DCW, it stated. State commission ruled that DCW could not prove deficiency in service against United. Unhappy, DCW sought Rs 54.34 lakh claim amount with interest and exemplary damages.
During the hearing, the national commission observed that DCW could corroborate its stand as per user manual of the functioning of DG sets and that there was no flaw in the way the DG sets were handled. It said that the manual also did not mandate any action if the lube oil pressure fell vis-a-vis safety of the operation. The commission added that besides the survey report, no independent evidence was brought on record to establish wilful negligence on part of the DCW. It added that it was an admitted position that the failure was "first of its kind". The commission said rejection of claim on the ground that there was wilful negligence was thus "arbitrary". It however, stated that since old parts had gone into the replacement basis, life of the engine was de-rated and assessed damage value was awarded as claim.
