V. MAHESH Vs. NEW INDIA ASSURANCE COMPANY LTD.

JUDGEMENT

(1.) The present Consumer Complaint has been filed under Sec. 21 of the Consumer Protection Act, 1986 (for short "the Act") against the Opposite Parties seeking to direct the OPs:

(2.) Brief facts of the case, as per the complaint, are that the Complainant, Nagarjuna Oil Corporation Ltd. (NOCL) undertook the installation and commissioning of a 5.9 MMTPA petroleum refinery project at Thiruchopuram Village, Tamil Nadu. The project involved relocation of an existing 5.0 MMTPA Mobil refinery from Germany along with refurbishment and installation of new equipment. To cover risks during erection, testing and commissioning of the said project, the Complainant, through its insurance broker OP-2, obtained an Erection All Risks Insurance (EARI) Policy No. 710400/44/08/04/40000001 from OP-1 as the lead insurer, with OPs 3 to 6 as co-insurers. During pre placement negotiations, OP-2 informed the Complainant on 19/7/2007 that reinsurers were required to be informed of any cessation of work beyond four weeks and that continuation of cover during such cessation would require negotiation. After reinsurance discussions, OP-2 sought advance premium to bind reinsurance and advised that risk would commence from the date of such advice vide communication dtd. 13/5/2008. OP-1 agreed to act as lead insurer on 21/5/2008. Pursuant to which, the Complainant paid a deposit of Rs.1,00,00,000.00 on 4/6/2008. The co-insurance arrangement was confirmed on 29/7/2008 and a written quotation dtd. 27/8/2008 was issued, separating "Cover" from "Conditions" and referring to multiple endorsements, though placing an aggregate limit of indemnity of Rs.200.00crores for losses due to storm and flood under the "Conditions" sec. . The First EARI policy was reflected in a schedule signed on 24/12/2008 for the policy period from 10/12/2008 to 9/12/2011, with a Sum Insured of Rs.3,273.59 Crores and total premium of Rs.31,96,28,430.00 (exclusive of service tax), payable in eleven instalments. The Complainant alleged that although the policy was presented as an "œall risks" cover, a sub-limit of Rs.200.00 Cr was imposed for Storm, Cyclone, Flood and Inundation (STFI) risks, which substantially reduced the scope of coverage. Upon expiry of the original period, a short extension from 10/12/2011 to 9/3/2012 was granted on payment of additional premium.

(3.) On the intervening night of 30/31/12/2011, Tropical Cyclone "Thane" struck Cuddalore, causing extensive damage. Pursuant to orders of the District Collector, total cessation of work commenced from 1/1/2012. In view of the complete standstill, the Complainant sought "silent risk" cover for idle assets under a Standard Fire and Special Perils (SFSP) policy. However, OP-1 declined such cover and insisted that EARI cover be continued, representing that reinsurers would not support testing and commissioning if the project was shifted to SFSP cover. Relying on these representations and under pressure from lending banks, the Complainant sought a further 12-month extension by letter dtd. 23/2/2012 and paid Rs.9,37,14,941.00 (exclusive of service tax), whereupon OP-1 issued the second extension for the period from 10/3/2012 to 9/3/2013. Despite admitted total cessation of work and absence of any fixed date for recommencement, OP-1 continued to insist on continuation of EARI cover and collected further amounts between March 2013 and March 2015 aggregating to Rs.24,06,15,859,.00credited to its CD (advance premium deposit) account, without issuing contemporaneous duly stamped policy documents or endorsements except for an acknowledgement dtd. 10/9/2013.