Oriental Insurance Co. Ltd. vs National Board and Paper Mill

T.S. Doabia, J.—Respondent-complainant preferred a petition before the J&K State Commission, constituted under the J&K Consumer

Protection Act. It was pleaded inter alia that a Boiler installed in the Mill namely, National Board and Paper Mill, Chohala, Tehsil R.S. Pura was

damaged on account of explosion. This explosion was stated to have occurred on 23.11.1992. It was pleaded that the risk was covered by

insurance policy which was valid for a period of one year beginning from 21.4.1992 to 20.4.1993. The damage which was claimed was to the

extent of Rs. 3,94,000/-. Interest at the rate of 18 per cent was also claimed. The claim as lodged by the respondent-complainant was found to be

not payable. The Commission however, was of the opinion that the claim as lodged by the complainant was sustainable. The claim stands allowed.

Interest has been allowed at the rate of 12 per cent per annum.

The stand taken by the Insurance Company was that the damage which was sustained by the boiler was not on account of explosion. It was

pleaded that only that damage which is caused by an explosion falls within the purview of the policy. It was pleaded that technical opinion was

obtained from a Surveyor M/s. K.D. Kohli & Co. It was inter alia pleaded-

(i) that after going through the material on the record and after due application of mind the conclusion is that the loss is not covered by the term

'Boiler explosion';

(ii) that the complainant failed to run the boiler as per the permitted conditions and as per the instruction contained in Factory Inspector's

directions. It was observed that the boiler was 25 years old and it was not supposed to be run on a higher pressure. It was observed that

somehow or the other there was fall in pressure and with a view to built up pressure the firing of the boiler was stepped up. It was on account of

this stepping up of the firing the mishap occurred; as the firing had gone beyond the permissible limits. For these observations and conclusions

reliance was placed on the report of M/s. K.D, Kohli & Co. This Surveyor had placed reliance on the statements of two workers of the

complainant namely, Nasib Singh and Madan Lal.

(iii) that the pressure of the boiler was not to exceed 75 Psi and this aspect of the matter was not taken note of.

In a nut-shell what was pleaded was that the damage to the boiler was not caused on account of explosion. Negligence was attributed. It was

pleaded that on account of the excessive pressure damage had occurred. The appellant-Company, therefore, refused to honour the claim.

Issue was examined by the State Commission. The fact that M/s. Miltal Marine and General Survey Agencies had assessed the loss at Rs.

3,94,000/- was taken note of. Placing reliance on the report of the Surveyor it was observed that the damage did occur on account if the

explosion. It was also observed that this Surveyor was appointed by the Insurance Company.

Reliance was not placed on the statement of K.D. Kohli as it was found that he was lacking in essential qualifications. He was found to be not

conversant with the subject inasmuch as he could not give the name of the Author who had written the book Turbina Engineering'. It was also

observed that the observations made by K.D. Kohli were Superficial. On the other hand the report as submitted by M/s. Mittal Marine and

General Survey Agencies was relied upon.

As indicated above the Commission has accepted the claim. A direction has been given to pay a sum of Rs. 3,94,000/-. Interest has also been

allowed. This is at the rate of 12 per cent per annum.

Before proceeding to take notice of the arguments put across by both the sides, it would be apt to notice the contents of the policy namely, 'Boiler

and Pressure Plant Insurance Policy'.

What was covered and what was the general exceptions indicated in the policy be noticed: ""Now this policy of insurance witnsseth that subject to

the terms, exceptions, exclusions, provisions, definitions, warranties and conditions contained herein or endorsed hereon, the Company will at its

own option by payment of reinstatement or repair indemnify the insured against-

(1) Damage (other than by fire) to the boilers and/or other pressure plant described in the Schedule.

(2) Damage (other than by fire) to surrounding property of the insured described in the Schedule of the property held by the insured in trust or on

commission or for which he is responsible.

The general exceptions are-

(1) Loss, damage and/or liability caused by or arising from or in consequence, directly or indirectly of fire (arising from explosion or collapse or

any other cause whatsoever) including extinguishment of a fire of clearance of debris and dismantling necessitated thereby smote, soot aggressive

substance, lighting, theft, collapse of building, subsidence, landslide, rockslide, water which escapes from containing apparatus, flood, inundation,

storm, tempest, earthquake, volcanic eruption or other acts of Cod impact of landborne, waterborne or airborne craft or other serial devices

and/or articles dropped therefrom.

(2) ***

(3) Accident loss damage and / or liability resulting from overload experiments or tests requiring the imposition of abnormal conditions.

(4) Gradually developing defects, cracks or partial fractures in am part not necessitating immediate stoppage although at some future time repair or

renewal of the parts effected may be necessary.

(5) Defect due to the wearing, away of the wasting of the material of a boiler or a pressure plant whether by leakage, corrosion or by the action of

the fuel or otherwise the grooving or the fracturing of any of the parts of a boiler or pressure plant or for deterioration generally or for the

development of cracks, blisters flaws or fractures, failure of joint within the range of steam or teed pipes or by bulging and deformation due to

overheating of tubes.

The evidence which has come on the record be also noticed.

Romesh Chander, attorney filed his affidavit. The fact that insurance policy was taken is adverted to in para 4 of the affidavit. The fact that the

boiler was got tested by the concerned Inspector is adverted to in para 5. In para 6, it was stated that on 22.11.1992 information was received

that some defect had occurred in the boiler. There was a cracking sound in the boiler. This was on account of explosion of tubes. It was also

stated that one R.K. Sehgal was appointed as a Surveyor. In the presence of the Surveyor the damaged boiler was opened. It was found that

there were no pin-holes in the tubes. At the same time it was found that most of the tubes were found to have been burnt, crushed and totally

damaged. Even the end plates which were about 1"" thick found to be disfigured and bent due to which tubes ends came off from the welding

portions. The fire bricks had come off and the joints had cracked. In Para 8 it was stated, ""All the above could not have happened unless there

was great pressure inside the boiler which caused explosion"".

PW V.K. Jaidka is the person who is associated with Surveyor M/s. K.D. Kohli & Co. This witness was examined. He had opined that the

damage was caused due to water starvation. It was also observed that 50% of the tubes had been blocked. The opinion expressed was that the

damage was caused on account of excessive fire and temperature. The fact that some of the tubes were blocked is apparent from photographs

which have been placed on the record. This witness has stated that the Inspector, who had inspected the boiler did not give them any written

direction. It was pointed out that the boiler in question was checked in August, 1992. The Surveyor who had opined that this loss was not caused

on account of explosion was cross-examined. He stated that he had given his report after examining the boiler. He also opined that the pipes of the

boiler had suddenly worn out and damage was caused on account of impurity of the water fed into it. This witness staled that he is a Mechanical

Engineer. He did say that he had conducted hundreds of surveys. He submitted that he prepared his report after proper examination. In the report

he makes mention of the statement of Nasib Singh and Madan Lal. His opinion was that the accident look place on account of firing which

increased the pressure and this pressure could have caused the incident.

An affidavit was also filed for and on behalf of the Insurance Company. This was basically with regard to the terms and conditions of the

insurance policy.

The Commission as indicated above did not place reliance on the report of the Surveyor V.K. Jaidka, but relied upon the report of M/s. Mittal

Marine and Survey Agency. This report deals with the sequence of events. The occurrence report reads as under:

As per the insured, the factory was working normally on 22.11.1992 when at 9 p.m. during the duty hours of Sh. Nasib Singh, boiler attendant

and Madan Lal noted that the steam pressure was going down. The machine attendant also came and informed that the pressure had come down.

The staff on duty increased the fire when a crackling sound was heard from within the boiler and water started leaking from the same. The process

came to a halt and the owners were informed on 23.11.1992, and the mill was closed. The second standby boiler which was otherwise fitted was

then fired after 2/3 days and production was resumed."" The observations made by this Surveyor in paragraph 9(f) are relevant and are being

reproduced below :

(f) the flanges were found to be badly leaking (Photo 22). This would not have happened unless considerable pressure of the flue masses, air/steam

mixture had been created inside the shell causing explosion or explosion like situation.

Further observations made in para 10 of the report also requires to be taken note of and read as under:

***

The above distortion was sudden and fortuitous in nature since the boiler had been working upto a point immediately before the captioned loss

/damage. The distortion in end plate could have happened due to increase in temperature due to water starvation. We find this to be in old boiler

wherein audio alarms (in case of water shortage) were not installed. The shortage of water coupled with increasing the burning rate of the husk

would have increased the temperature so as to distort the plates which resulted in the failure of the welds of so many tubes, causing massive

leakage. None of the above reasons fall into any of the policy exclusions. The episode was not restricted to isolated tubes but was manifested on

most tubes.

A perusal of the above would indicate that the Surveyor namely, R.K. Sehgal has not given a definite opinion as to whether the damage has

occurred on account of explosion or explosion like situation. The explosion like situation would not be covered by the term explosion. It has further

been observed in para 10 that shortage of water coupled with increasing the burning rate of the husk could have increased the temperature so as to

distort the plates which resulted in the failure of the welds of so many tubes, causing massive leakage. The question would arise as to whether in

this situation when the boiler was suffering from water starvation and at the same time there was increase in temperature by the excessive burning

of the husk, the damage could be said to be covered by the term explosion and whether the damage was caused on account of the fact that

workers finding that the pressure had got down, had increased the firing activity and this firing activity went beyond the prescribed limit of 75 Psi. It

be seen that the issue in question has not been considered, R.K. Sehgal, who is author of the report was not summoned. When the respondent-

complainant was placing reliance on this report then effort should have been made by the respondent-complainant to get R.K. Sehgal in the witness

box and in any case nothing deferred the Commission from seeking the presence of the author of the report so that he could be confronted with the

situation which may lead to a conclusion that this was not a damage caused by explosion.

When the author of the report R.K. Sehgal is not summoned, the question arises as to whether the damage was caused by explosion or there was

explosion like situation, the question would also arise as to whether it would be just and proper to place reliance on the report and grant prayer of

the complainant.

We are of the opinion that the State Commission has not examined the contents of para 9(f) which was been re-produced above. It has again

not examined the contents of para 10 of the report which talk about water starvation and thereafter excessive heat being generated on account of

husk being fed into the burning chamber. The fact that the tubes were blocked and were scaled was clearly projected to in the photographs on the

file. The State Commission did reject the report of Mr. laidka and gave some reasons but no reason as to why the report of R.K. Sehgal deserve

to be accepted, has been given. The opinion given by him has been taken as a gospel truth.

We are of the opinion that the issue requires deeper analysis. The matter is ccordingly remanded to the State Commission with a request that

presence of R.K. Sehgal, author of the report on which reliance was placed is secured. The appellant Insurance Company would bear his

expenses. These expenses, would be deposited. This witness should be examined and a specific finding should be recorded as to whether there

was water starvation and notwithstanding this excessive firing was done. The findings be also recorded vis-a-vis the nature of the tubes and the fact

that there was clogging would also be taken note of. Whether clogging had aggravated the damage and this trouble displayed some negligence on

the part of the complainant would also be examined.

As such, the judgment under appeal is set aside. The matter is remanded to the State Commission. Parties to appear before the State Commission

on 15.7.2002. The appellant Company would deposit the process fee and diet expenses for securing the presence of R.K. Sehgal. The requisite

amount would be deposited on the date of appearance and in any case this would be done within one week thereafter. R.K. Sehgal would be

examined as Commission's witness so that both the parties are able to cross-examine the witness. The amount deposited either with the State

Commission or with this Court, shall remain deposited, but will be deposited in Fixed Deposit account, payable to the party who so ever is

successful.

Appeal disposed of.