Page 55 - Insurance Times February 2023

Insurer liable to reimburse genuine cash in subsidence of the new structure, so the claim fell within
the exclusion clause of the policy.
payments
Sodhi Brothers, which later became a private limited com-
Sodhi Brothers, originally a limited liability partnership
pany, filed a complaint before the National Commission
(LLP), was allotted a hydroelectric project by the Himachal
contending that the actual loss was nearly Rs. 1.3 crore but
Pradesh State Electricity Board (HPSEB) under an agree-
it was incorrectly assessed at Rs. 38.46 lakh. The insurer
ment executed on April 11, 2007. The project was located
contested the case.
across River Bharal in Kangra district of Himachal Pradesh.
The National Commission observed that both the surveyors
Sodbi Brothers obtained finance from the State Bank of
had attributed the loss to landslide caused by abnormally
India for the project through a term loan of Rs. 22.6 crore.
heavy rains. The Commission noted that the surveyor had
It was covered by Oriental Insurance under a Standard Fire
recommended sanctioning Rs. 38.46 lakh towards settle-
& Special Perils Policy which covered the building super-
ment of the claim since the landslide was covered under
structure for Rs. 8.8 crore and the plant and machinery for
the policy.
Rs. 22.8 crore.
The Commission castigated the insurer for repudiating the
The project became operational on December 7, 2010. Due claim onthe false presumption of negligence in proper com-
to heavy rainfall on September 27, 2011, there was land- pression of concrete during construction. It held that the
slide in the area where the concrete saddle of the penstock claim would be payable under the terms of the policy.
had been constructed. As a result, the penstock pipe broke
On the quantum of the claim amount, the Commission noted
and water gushed out at high pressure. This caused dam-
that the surveyor had disregarded cash payment. It observed
age to the power house as well as to various sensitive equip-
that Sodhi Brothers was required to made payments in cash
ment.
considering the remote location of the project and lack of
The insurer was informed about the incident over the tele- banking facilities. But all payments were supported by cor-
phone the very same day. A written intimation was also responding tax deduction at source (TDS) payments as well
sent the next day. The insurer initially appointed a prelimi- as GST payments, which proved the legitimacy of the cash
nary surveyor and later a final surveyor. The final surveyor transactions. Hence, the Commission concluded that the
reported that the proximate cause of loss was a landslide, insurer would have to reimburse even the expenses incurred
which is covered under the insured perils. It recommended in cash.
settlement of the claim. However, the surveyor stated that
Accordingly, by its order of December 9, 2022, delivered by
the repairs and reinforcement cost was exaggerated and
Subhas Chandra for the Bench headed by C. Viswanath, the
recommended payment of about Rs. 38.46 lakh.
National Commission directed National Insurance to pay Rs.
The insurer repudiated the claim on the ground that loss 1.29 crore towards settlement of the claim. It granted a
had occurred due to carelessness in compression, resulting period of eight weeks for complying with the order.

The Insurance Times January 2023 49