V.K. Jain ORDER
V.K. Jain, J. (Presiding Member)
1. Vide its letter dated 24.08.2005, Government of Andhra Pradesh awarded the work of Investigation, Design and Execution of Tunnel -1 & Tunnel - 2, including the Head Regulator at the entrance of portal of Tunnel - 1 of Srisailam Left Bank Canal Tunnel Scheme of AMR project from NSRSP Reservoir, to the complainant company, for an amount of Rs. 19,25,00,00,100/-. It was stated in the scope of work that since the alignment was passing through the Wild Life Sanctuary area, it might be preferable to execute the tunnel with Tunnel Boring Machines, but the tenderer could execute the project with any other alternative methods which were friendly to environment and ecology. The complainant obtained a Contractor's All Risks Insurance Policy from the OP, on 10.04.2006, for the period from 01.03.2006 to 28.02.2011 paying a sum of Rs. 1,85,040,000/- as the first installment of the premium. Before issuing the insurance policy, the insurer, vide its letter dated 28.01.2006, pointed out that the bifurcation of Rs. 1925 Crores as provided to the complainant included only the civil engineering and erection cost. It was further stated in the said letter that as for TBMs, they were arranging for the separate support for the material damage part. The insurer sought to know the separate value of each TBM, alongwith their configuration etc. No separate cover for the TBMs however was taken. The total premium including taxes was agreed at Rs. 1,85,040,000/-. The material damage under the above referred policy comprised the project sum insured of Rs. 14,60,34,48,276/- and escalation of Rs. 7,30,17,24,138/-, making an aggregate of Rs. 21,90,51,72,414/-. Vide general endorsement dated 25.08.2006, the project sum insured under the policy was agreed to be read as Rs. 19,25,00,00,000/-, and the total sum insured including escalation was agreed at Rs. 21,17,50,00,000/-.
2. There was some discussion between the parties as regards rescheduling of the aforesaid policy. Pursuant to the said discussion, Mr. Pradeep Singla of the complainant company sent an e-mail to Mr. Prashant Gupta of the OP stating therein that the total contract value of Rs. 1925 Crores included the cost of two Tunnels Boring Machines (TBMs), its support equipments and other plant and equipments. The cost of the TBMs and its support equipments was stated to be Rs. 469 Crores and the insurer was requested to confirm that the policy issued was comprehensive as far as coverage of all materials/materials and other utilities. The insurer was also requested to re-schedule the period of the policy. Vide e-mail dated 19.06.2007, Mr. Sujeet Mishra of the insurer informed Mr. Pradeep Singla of the complainant that the policy included erection cover of TBMs at the site during the construction phase.
3. Vide e-mail dated 11.07.2007, Mr. Pradeep Singla of the complainant company requested Mr. Prashant Gupta of the OP to provide premium computation inter-alia for confirmation of coverage of erection of two TBMs, for a period of three months under the same cover. Responding to the aforesaid e-mail on 13.07.2007, the insurer informed the complainant that erection of two TBMs shall be covered in the CPM, first loss policy itself.
4. Vide e-mail dated 14.11.2007, Mr. Pradeep Singla of the complainant informed the insurer that erection job of one of the TBMs shall commence from 19.11.2007. The insurer was requested to confirm the storage and erection risk of the two TBMs under the existing CAR policy. Vide e-mail dated 15.11.2007, the insurer confirmed that the storage and erection risk of two TBMs were covered under the existing CAR policy.
5. The case of the complainant is that the project site and the surrounding areas having been hit by heavy and incessant rains, it got completely sub-merged with water causing substantial damage to its property including the TBMs which were under erection at that time on the inlet of tunnel. The intimation of the loss having been given to the insurer, M/s. Cunningham Lindsey International Pvt. Ltd. were appointed as the surveyors for assessing the loss. The surveyors however informed the complainant that the existing CAR policy did not cover the TBMs since the cover for TBMs was granted only for a period of three months, which expired on 08.09.2009. The complainant however, maintained that the damage to the TBMs was covered under the existing CAR policy. Vide letter dated 06.05.2010, the insurer informed the complainant that the coverage of erection of two TBMs was available only for a period of three months and therefore, they had asked the surveyors to proceed with the assessment accordingly. Being aggrieved from the stand taken by the OP, as far as damage to the TBMs is concerned, the complainant has approached this Commission seeking payment of Rs. 118.2634 Crores alongwith interest @ 18% per annum besides punitive damages and the cost of litigation.
6. It is stated in the reply that the project value of Rs. 1925 Crores did not include the cost of TBMs and in fact the complainant was at liberty to execute the project without deployment of TBMs through an alternative environment friendly method. It is also pointed out that the contract between the complainant and the Government of Andhra Pradesh required the complainant to make its own arrangement as regards the machinery and special tools and plant required for the speedy and proper execution of the work. It is also pointed out that after execution of the work, the complainant was required to remove all the construction plant and temporary works as well as the unused materials from the site of the plant. Thus, according to the OP, the insured value of Rs. 1925 Crores represented only the value of the project to be executed by the complainant for the Government of Andhra Pradesh and did not include the TBMs employed by the complainant for execution of the work. It is also stated in the reply that vide e-mail dated 28.01.2006, they had already informed the complainant that it will have to take separate support for the TBMs. It is alleged that the conformation of coverage for the TBMs was made under a bona fide belief of the statement of the claimant that the value of the TBMs was included in Rs. 1925 Crores whereas in fact, the said value did not include the cost of the TBMs.
7. Section 1 of the insurance policy which pertains to reimbursement of the material damage, to the extent it is relevant, reads as under:
Section - I MATERIAL DAMAGE
The Company hereby agrees with the Insured (subject to the exclusions and conditions contained herein or endorsed hereon) that if, at any time during the period of insurance stated in the said Schedule, or during any further period of extension thereof, the property (except packing materials of any kind) or any part thereof described in the said Schedule be lost, damaged or destroyed by any cause, other than those specifically excluded hereunder, in a manner necessitating replacement or repair, the Company will pay or make good all such loss or damage upto an amount not exceeding in respect of each of the items specified in the Schedule the sum set opposite thereto and not exceeding in the whole the total sum insured hereby.
8. The schedule forming part of the insurance policy, to the extent it is relevant, reads as under:
A conjoint reading of the above referred extracts from the insurance policy would show that as far as the material damage was concerned, the insurance policy covered only the tunneling work which the complainant was to execute for Government of Andhra Pradesh at Srisailam in Mahabubnagar and the tools, plant equipment and machinery which the complainant was to use for the execution of the said work and which was not to form a part of the executed work, was not insured when the said policy was issued. As pointed out in the written version filed by the OP, as per the tender document, the contractor was required to arrange its own equipment and machinery necessary for the execution of the work and the constructional plant was required to be removed from the site after completion of the work. This is nobody's case that the TBMs were to form part of the work executed by the complainant and were to become the property of the Government of Andhra Pradesh, on completion of the work. The complainant, on completion of the work was required to remove the TBMs from the site of the project. In fact, it was not necessary for the complainant to erect the TBMs for executing the tunneling work awarded to it and it was at liberty to adopt an alternative method so long as the said method was environment and ecology friendly. Therefore, I have no hesitation in holding that as far as the policy when it was issued to the complainant is concerned, it did not cover the material damage to the TBMs which the complainant was to use at the site of the project for completing the work awarded to it.
9. The learned counsel for the insurer pointed out that as per All India Tariff on Contractor's Plant and Machinery Insurance applicable at the time of issue of the policy which is in the nature of a statutory rule issued by the Tariff Advisory Committee in exercise of the powers conferred upon it by the Insurance Act, 1938, wherever the SI on CPM equipments under the project requiring CAR insurance exceeded 5% of SI for CAR, such equipment was required to be rated under the CPM Tariff.
Section 64U of the Insurance Act, 1938 provides for establishment of a Committee to be called the Tariff Advisory Committee to control and regulate the rates, advantages, terms and conditions that may be offered by the insurers in respect of general insurance business.
Section 64UC (1) of the Insurance Act, 1938 to the extent it is relevant, reads as under:
64UC. Power of the Advisory Committee to regulate rates, advantages, etc.-
1. The Advisory Committee may, from time to time and to the extent it deems expedient, control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of any risk or of any class or category of risks, the rates, advantages, terms and conditions of which, in its opinion, it is proper to control and regulate, and any such rates, advantages, terms and conditions shall be binding on all insurers.
(4) The decisions of the Advisory Committee in pursuance of the provisions of this section shall be final.
(5) Where an insurer is guilty of breach of any rate, advantage, term or condition fixed by the Advisory Committee, he shall be deemed to have contravened the provisions of this Act".
Thus, the statutory tariff did not permit coverage of the TBMs under the CAR policy and an independent cover in respect of the said coverage was required to be taken at the time the policy came to be issued to the complainant. The letter of the insurer dated 28.01.2006, according to the learned counsel was in conformity with the aforesaid provision of the tariff, which the insurer was required to abide by. He however, was fair enough to concede that if such a coverage is made available under the policy issued by the insurer, the tariff will not come in the way of the insured seeking re-imbursement for the loss or damage to the insured equipment. However, if the original policy did not cover the TBMs but the insurer later on extended the coverage to them, it would be liable to reimburse the complainant for the loss or damage suffered by it provided of course that the coverage was available at the time the loss or damage actually happened.
10. Though while responding to the e-mail dated 02.06.2007 from the complainants, the OP confirmed that the policy included erection cover of the TBMs at the site during construction phase, the correspondence between the parties clearly shows that the insurance cover in respect of the TBMs was sought and accordingly made available to the complainant only for a period of three months from the commencement of the erection of the TBMs. In the e-mail dated 02.07.2007, Mr. Pradeep Singla of the complainant had re-iterated that the duration of the erection of the TBMs shall be about three months. Again, in his e-mail dated 11.07.2007, Mr. Pradeep Singla, in the context of the proposed re-structuring of the policy, sought confirmation of coverage of erection of TBMs for a period of three months, thereby clearly representing to the insurer that the erection of the TBMs would take only three months. If the intention of the parties was to cover the TBMs during the entire erection period, irrespective of the time taken to complete the erection, neither the duration of the erection would have been given as about three months in the e-mail dated 02.06.2007 nor the confirmation of coverage of erection of TBMs would have been sought for a limited period of three months, vide e-mail dated 11.07.2007. Since the confirmation of coverage of the erection of the TBMs was given on the basis of the representation of the complainant restricting the period of erection to three months, it would be difficult to say that the coverage of the erection of the TBMs was available even beyond a period of three months from the date on which the said erection commenced.
11. Having noticed that the time period mentioned in the e-mail dated 02.06.2007 for erection of the TBMs was "about three months" and that in civil works, it may not always be possible to strictly adhere to such a stipulation, I put it to the learned counsel for the insurer as to why the coverage of the TBMs should not be available during the entire erection period of the TBMs even if the said period was to stretch beyond three months.
In response, the learned counsel pointed out and rightly too that an insurance coverage cannot be available for a vague or indefinite period. In fact, an insurance policy may itself be held to be void if the period of insurance is found to be vague, indefinite or uncertain. My attention in this regard was drawn to the decision of the Hon'ble Supreme Court in Vikram Greentech India Limited & Anr. Vs. New India Assurance Company Limited MANU/SC/0519/2009 : (2009) 5 SCC 599 laying down the four essentials of a contract of insurance including the duration of the risk. It was also held by the Hon'ble Supreme Court that since the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.
12. It was pointed out by the learned senior counsel for the complainant that in none of the e-mails sent to the complainant, the insurer had restricted the coverage of the TBMs to the period of three months from the date of commencement of the construction. He submitted that had the intention been to restrict the insurance cover to three months from the date of commencement of the erection, the insurer would have specified that period while confirming the coverage of the TBMs. I however, find no merit in this contention. The coverage of TBMs was confirmed by the insurer pursuant to the e-mails sent by the complainant and the said e-mails clearly indicated that the complainant was seeking coverage of TBMs for a period of three months from the date of commencement of erection. Therefore, it was not necessary for the insurer to specify the period of coverage while issuing the aforesaid confirmation. It would also be pertinent to note here that the date of commencement of the construction was expressly conveyed by the complainant to the insurer. If the coverage of the TBMs was not intended to be restricted to three months, and was to be available throughout the policy period, there could be no occasion for the complainant to communicate the date of commencement of erection of the TBMs to the insurer. The aforesaid intimation, in my view, supports the case set out by the insurer in this regard.
13. It is an admitted position that the damage to the TBMs happened more than three months after its erection had commenced. Since the insurance cover in respect of the TBMs was available only for a period of three months from the date of commencement of their erection, the complainant cannot seek re-imbursement of its loss on account of damage to the TBMs, from the insurer. The complaint is therefore, liable to be dismissed.
14. For the reasons stated hereinabove, the complaint is hereby dismissed, with no order as to costs.
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