Hindustan Ferro Alloys Ltd. vs Oriental Insurance Co. Ltd

-THE complainant, M/s. Hindustan Ferro Alloys Ltd. had taken out a Marine-cum-Erection Insurance Policy (all risks) in respect of the furnace to be installed at the complainant''s plant at C-30/33, U.P.S.I.D.C, Industrial Area, Distt. Hamirpur (U.P.). THE policy of insurance was effective for the period from 1st November, 1989 to 30th November, 1990 with two months testing period from 1st of October to 30th November, 1990. THE testing period was subsequently extended by agreement between the insured and the insurer by two months from 1.12.1990 to 30th January, 1991.

ACCORDING to the complainant there was a sudden accident on the 4th December, 1990 which caused severe damage to the furnace and other consequential damages with the result that the entire activity of production came to a standstill. The complainant has claimed a sum of Rs. 19.32 lakhs for (Damage to the furnace lining Rs. 10.30 lakhs + Other damages Rs. 9.02 lakhs), Rs. 5 lakhs for mental tension and harassment, loss of profit recurring losses and legal expenses. The respondent - Insurance Company appointed two surveyors one after another but the surveyors made no report because, according to the respondent the complainant did not furnish necessary data and papers to the surveyors. The respondent has refused to entertain the claim of the complainant under policy of Insurance because he has not furnished to them the cause of loss and damage. The Insurance Company has stated that "the claim form is blank in this respect."

According to the material on record, the first surveyor wrote to the complainant on 29th May, 1991 that this furnace suffered a number of breaks prior to 4th of December, 1990 viz. on 4th of August, 1990, 9th August, 1990, 27th of August, 1990, 20th September, 1990, 2nd October, 1990, 28th of October, 1990 and 23rd of November, 1990 but the same were not reported to the insurer. Again according to the surveyor, lower grade refractories were used initially in the fabrication of the furnace which failed very soon and the insured had to install upgraded refractories in the furnace subsequently. The surveyors had also asked for papers relating to the cost of the building, plant and machinery, other fixed assets etc. and the drawing blue print of the furnace acquired but these were not furnished, According to the respondent again vital information like furnace operation records especially the temperature levels obtained have not been furnished. Further, the erection and commissioning of furnace is reported to be a turn key contract and the respondent Insurance Company enquired if the contractor successfully carried out the performance test as per the prescribed parameters, In brief necessary intimation and papers have not been furnished by the complainant to the respondent - Insurance Company to enable surveyors to furnish their survey reports.

AT the hearing, the Counsel for the complainant was asked to explain the cause of the accident to the furnace on the 4th of December, 1990. All that he stated was that the lining of the furnace fell causing damage to the furnace and other consequential damage. When asked to explain whether any enquiry by any expert was conducted into the cause of accident and what led to the failure of the furnace, he was unable to reply Thus, at the very threshold of the hearing, the Counsel for the complainant was unable to establish that the respondent - Insurance Company had unreasonably and unjustifiably refused to consider a bona fide claim under the insurance policy. It was not considered necessary to go further into the details of this case. The complaint is dismissed as devoid of merit. The complainant shall pay a sum of Rs, 2,500/- as costs to the respondent - Insurance Company. Complaint dismissed.