Challenge in this Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 (for short the 'Act') is to the order dated 01.03.2016 passed by the Punjab State Consumer Disputes Redressal Commission, Chandigarh in First Appeal bearing No. 887 of 2013. By the impugned order, the State Commission has set aside the order of the District Forum and allowed the Appeal preferred by the Complainant Company and directed New India Assurance Company Ltd. (hereinafter referred to as 'the Insurance Company') to pay an amount of Rs.10,89,717/- along with interest @ 9% p.a. from the date of filing of the Complaint till the date of realization together with costs of Rs.10,000/-. The brief facts as stated in the Complaint are that the Complainant Company took an Insurance Policy from 12.12.2011 to 11.12.2012 for its C.N.C. Machine for an insured sum of Rs.40,00,000/-. While so, on 17.10.2012 at about 11 a.m. abnormal noise started emanating from the spindle and the service engineer of M/s DMG Deckel Maho Gildemister (India) Pvt. Ltd. and the officials of the Insurance Company were informed. The engineer of the said Company who is the authorized manufacturer of the machine visited the premises on 20.10.2012 and observed in the presence of the surveyor that the spindle was damaged and recommended that the spindle had to be replaced. It was averred that the spindle is not repairable in India. M/s DMG Mori Seiki India sent the quotation for supply of the said spindle. It was averred that an amount of Rs.10,80,717/- was paid for the spindle and the claim was made to the Insurance Company on 21.11.2012. All the documents were given to the surveyor namely Mr. S.K. Mittal. Further information was also supplied vide letter dated 18.12.2012. Proportionate freight spent for the import of the spindle was also paid and the same was informed to the Insurance Company on 11.12.2012. The Company had written registered letters on 01.01.2013, 04.01.2013 and 24.01.2013 for settlement of the claim but the Insurance Company repudiated the same vide letter dated 24.01.2013 on the ground that the surveyor had not submitted his report. Hence the Complaint seeking direction to the Insurance Company to pay the following amounts:-
'1. Rs.11,81,717/- (Rs.10,89,717/- on account of cost of spindle + Rs.92,000/- on account of loss of production for 8 hrs x 20 days @ Rs.575/0 per hour).
2. Interest @ 12% p.a. w.e.f. 05.11.2012 till the date of payment of full amount of the claim;
3. Rs.50,000/- towards compensation due to mental pain, agony and harassment and deficiency in service and unfair trade practice;
4. Rs.10,000/- towards litigation costs.'
2. The Insurance Company filed their Written Version stating that the Complainant purchased the said machine for commercial purpose; that the alleged loss occurred due to wear and tear which is outside the scope of the policy as mentioned in Special Exclusion to Section 1; surveyor visited the premises on 20.10.2012 and submitted preliminary survey report dated 23.10.2012 and the damage to the machine was inspected in the presence of Mr. Vivek Abrol, Director and it was found during the joint inspection that the abnormal noise in the spindle was because of vibration in the tool box; the report dated 20.10.2012 of Sh. Gurdeep Singh clearly depicted the true facts and so the second report given by him cannot be relied upon and hence their repudiation is justified.
3. The District Forum based on the evidence adduced dismissed the Complaint. Aggrieved by the said order the Complainant preferred an Appeal before the State Commission which allowed the same observing as follows:-
'13. From perusal of Ex. C-3, Ex. C-8, Ex. C-20 and Ex. R-2, we are unable to find out any co-relation that the claim, which was repudiated on the ground of wear and tear of the machine was mentioned in any of these reports, whereas in the second report it is mentioned that as these motor spindles are sealed for life and not repairable in India. Thus, it is clear that when spindle as fitted in the machine is sealed for life and not repairable and then there is no question of finding out whether in this spindle there was a problem of wear and tear or there was some other problem.
14. It is noticed that complainant imported its machine from Germany and was installed in its premises. At the time of issuance of insurance cover to the extent of Rs.40 lacs on 12.12.2011, it was issued on the basis of its site visit in the factory premises. It was well within their right to refuse to insure the machine. If in their prudent mind, if it thought that insurance to be given for machine installed in the premises of the complainant was an old machine it could have refused to issue the insurance cover. Once it had inspected the machine installed at the site in the premises of the complainant and it cannot run away from its liability to pay the cost of spindle, which was replaced by the service providing company. M/s DMG Mori Seiki India in its two reports relating to service provided, nowhere, mentioned that abnormal noise from the spindle was due to wear and tear. In the second report dated 11.11.2012, it was a general observation that spindle could have been damaged due to accident but, we do not find any reference in the service provided report Ex. C-3 that the noise in spindle was due to wear and tear as assumed by the insurance company.
15. We are unable to determine how the insurance company was able to locate the fact that spindle noise occurred due to wear and tear as per Ex. C-20 general warranty of the machine was given for 12 months from the date of instalement. Since the replaced part was not repairable in India and it was in sealed condition and hence, it was to be replaced by buying a new part from the original supplier and was required to be imported from Germany through the service provider M/s DMG Mori Seiki India.
16. As such without opening the sealed spindle, it would be difficult for OPs company to plead that the parts became defective due to wear and tear. In view of the above observations, we find that at the initial stage the insurance companies are issuing policies and covering risks of the parties and are in the habit of pocketing insurance premium. Whenever a claim is lodged for reimbursement of any claim or for any damage the representatives of these insurance companies along with their surveyors have a tendency to repudiate the claim of the insured and hesitate to pass the benefits of the insurance by taking objections like in the instant case that the machine purchased by the complainant was for commercial purpose and does not fall within the purview of consumer. It is a well known fact that insurance cover is taken by an insured to cover the risks of the machine and any claim, which is required to be paid by the insurance company for reimbursement only by covering the risks of damage.'
4. Heard both the sides. The Learned Counsel drew our attention to the Surveyor Report in which the following observations have been made:-
'The said machine was installed/commission on 29.11.2002 and has been in service since then i.e. Ten years with passage of time bearing are supposed to have worn off and play has been developed.
In final service report #8400081211111637 dated 11.11.2012 has confirmed replacement of Motor Spindle. At the behest of insured, repairer has stated about crash, but initial report # 13076 dated 20.10.2012 is silent, copies of both reports are enclosed.
As per policy of insurance: Loss of damage caused by the following perils are specifically excluded from the scope of this policy.
'NORMAL WEAR AND TEAR AND CORROSION OF PARTS ARISING FROM USE AND CONTINUOUS OPERATION.'
In the Annexure A-1 and 8 Mr. Vivek Abrol has stated that there was crash with hard steel Block and Tool Holder – Spindle, he did not disclose the information of crash on 20.10.2012, nor produced damaged/crashed tool holder and Die Block for inspection.
Mr. Vivek Abrol was present on 20.10.2012 at the time of our inspection and he never disclosed about the accident between Tool Holder and die Block had happened on 17th October, 2012. After inspecting the Tool Holder Assy. – Spindle Motor Assembly with Mr. Vivek Abrol, he was apprised of our observation that loss is of normal wears and tear and he did not raise any objection.'
Mr. S.K. Mittal surveyor also assessed the loss for Rs.2,77,006/- after having applied 50% depreciation for 10 years, Excess clause 5% of claim amount and liability of the Insurance Company 60.840% as the property was under Insured.'
5. Learned Counsel vehemently contended that the second report of Gurdeep Singh Saini cannot be relied upon and that the alleged loss was only because of wear and tear which is outside the scope of the policy and that the machine was more than 10 years old and, therefore, the damage to the spindle is only because of wear and tear. Learned Counsel appearing for the Respondent argued that there was no objection filed to the second report that the contention of the Insurance Company that the damage is due to wear and tear cannot be taken into consideration as the machine was never opened by the Surveyor to establish that the loss was due to wear and tear. In fact the Service Engineer of the manufacturing company gave a report that the spindle was damaged and cannot be repaired in India and only has to be replaced by importing the relevant parts.
6. It is pertinent to mention that Mr. Gurdeep Singh Saini who has inspected the machine in his initial report dated 20.10.2012 observed that there was abnormal noise in the spindle; that the tool was shaking and there was lot of vibration by rotating the spindle with hand; that 2 no. pneumatic valves were malfunctioning and magazine door switch also not working and these items needs replacement; no where it is established by way of any documentary evidence that damage to the said spindle was due to wear and tear. It is relevant to reproduce the second service report dated 11.11.2012 of the manufacturing company which is reproduced below:-
'Service report 1) action taken 2) result.
1. Replacement of motor spindle.
2. During last visit it was observed that due to crash in machine the spindle was giving abnormal noise and there was play in the bearings, that even tool was shaking in spindle. As these motor spindles are sealed for life and not repairable in India. So customer purchased an exchange part spindle from DMG.
Defective spindle removed from machine and fitted the new spindle. All electrical, control and pneumatic connections done to new spindle. Set right the orientation of the spindle. Fitted back all the covers.
Checked the runout of the spindle on a mandrill, it was found to be 0.004mm at a length of 300mm and at 50mm it was found to be 0.001mm. The taper in a length of 300mm is found to be 0.002mm.
Run the spindle at various r.p.m.’s for around 1 hour and found working OK.
Advised customer to run the stabilization cycle for spindle before taking the machine in production.
Defective spindle packed in the same box. Customer to send back it to DMG India, Bangalore office.' (Emphasis Supplied).
7. It is also pertinent to reproduce the last report of Gurdeep Singh Saini dated 06.12.2012:-
Last month we have replaced the spindle in your machine, during replacement and during first visit for this problem, it was observed that there is too much of play in the spindle (even tool was shaking by hand) and very loud noise was coming from spindle even at lower rpm’s.
This type of things can happen only after a crash or heavy loads. Otherwise these spindles are having very long life and even if there is any wear and tear that is increasing gradually and not to that extent, in which your spindle was found.
With wear and tear mostly run out increases. And this much of play, that you can move the tool with hand, can’t because of simple wear and tear.
This much of play can occur only due to a crash.
So this a case of accident in machine. This type of noise and play in spindle we have never noticed due to wear and tear.' (Emphasis supplied).
8. It is significant to mention that the Surveyor has admitted in his report that he could not open the machine and, therefore, we do not see any substantial grounds to reject the observations made by the manufacturing company that the spindle was completely damaged. In fact in the afore-noted report it is clearly stated that the spindles are having a long life and that the damage is not because of simple wear and tear. The contention of the Learned Counsel for the Insurance Company that the machine was 10 years old and, therefore, the damage could be construed to be because of wear and tear is co
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mpletely unsustainable in the light of the fact that the said machine was inspected prior to the issuance of the Insurance Policy and it was very much in their knowledge that the subject machine was 10 years old and, therefore, raising the contention now at the belated stage after receipt of the claim that the machine is 10 years old and the damage to the spindle could be only because of the wear and tear cannot be accepted. Be that as it may, the general warranty of the machine was given for 12 months from the date of the installation and since the replaced part was not repairable in India and it was in a sealed condition and hence it was to be replaced by purchasing a new part from the original supplier and therefore it was required to be imported from Germany. 10. For all the afore-noted reasons, we do not see any illegality or infirmity in the order of the State Commission to exercise our limited jurisdiction as envisaged by the Hon’ble Supreme Court in Rubi (Chandra) Dutta Vs. United India Insurance Co. Ltd. (2011) 11 SCC 269. In the result this Revision Petition is dismissed with no order as to cost. Vide an order dated 04.07.2016 the operation of the impugned order was stayed subject to the deposit of the 50% of the amount awarded by the State Commission. Needless to add, this amount shall stand transferred to the Complainant Company with accrued interest and the same shall stand adjusted from the decretal amount.