2023 (8) TMI 463 - SC - Indian Laws

Computation of compensation and admissible loss to be compensated by Insurance company - breach by the appellant of the policy conditions - records were not maintained properly and accurately - records were not produced at the time of the survey - whatever records were produced were unsubstantiated - HELD THAT - Despite the second surveyors report dated 22.09.1995 quantifying the appellant s loss at ₹ 17,64,097/-, the respondent insurance company chose to repudiate the appellant s claim in its entirety, basing on the wholly unfounded assertion that the appellant had failed to maintain and provide proper records. This was also despite the clear finding of its earlier surveyors, M/s. Frank and Fair Investigators, that total loss was suffered by the appellant. Further, having attached great importance to the death certificate given by the MPEDA/State Fisheries Department in its policy and its prescribed claim procedure, the insurance company baldly brushed aside the Death Certificate dated 01.05.1995 furnished by the officials of the State Fisheries Department at Visakhapatnam. Merely because the contents thereof were not to its liking, the insurance company could not have ignored the same and swept it under the carpet. More so, as such certification was being made by impartial and independent bodies of significant stature and that, perhaps, was precisely the reason why the insurance company had attached such importance to it in its norms - Having undertaken to indemnify an insured against possible loss in specified situations, an insurance company is expected to make good on its promise in a bonafide and fair manner and not just care for and cater to its own profits. In effect, the action of the insurance company in refusing to act upon the Death Certificate dated 01.05.1995 issued by the Directorate of Fisheries, Visakhapatnam, cannot be countenanced. Admittedly, the appellant would be entitled to the lowest of the aforestated three valuations, viz., ₹ 75,87,750/-. As the respondent company would have already paid the appellant the amount quantified by the NCDRC in the impugned order, viz., ₹ 30,69,486.80, the appellant would be entitled to receive the balance amount of 45,18,263.20. The delay on the part of the insurance ₹ company in settling the appellant s claim fairly and in a timely manner warrants that it pays interest on the amount due and payable to the appellant in terms of this order - Though the appellant claims that bank deposit interest rates ranged between 12% to 13% during the financial year 1995-1996, we find from the RBI statement, relied upon in this regard, that the interest rate for the financial year 1994-95 was 11% and for the year 1996-97, it was between 11% to 13%. That being so, the interest rate fixed by the NCDRC, viz, 10% is held to be just and equitable. The sum of ₹.45,18,263.20 shall be remitted by the respondent insurance company to the appellant, with simple interest thereon @ 10% from the date of the complaint till the date of realization, within six weeks from today. Appeal disposed off.

Summary

Issues Involved:
1. Validity of the repudiation of the insurance claim by the respondent insurance company.
2. Method of quantification of the insurance amount payable to the appellant.
3. Interest rate applicable on the amount due to the appellant.

Summary of Judgment:

1. Validity of the Repudiation of the Insurance Claim:
The appellant, a registered partnership firm, undertook prawn cultivation and obtained insurance coverage from the respondent insurance company. Due to an outbreak of 'White Spot Disease', the appellant invoked the insurance policy. However, the insurance company repudiated the claim, citing improper maintenance and production of records. The NCDRC found the repudiation unjustifiable, noting that insurance coverage was provided after thorough inspection and satisfaction by senior officers of the insurance company. The NCDRC awarded the appellant a sum of Rs. 17,64,097/- with interest at 9% per annum.

2. Method of Quantification of the Insurance Amount:
The insurance policy provided three methods for computing the admissible loss:
- Input Cost Method: 80% of the value of inputs on the date of the loss.
- Unit Cost Method: Actual survival number multiplied by the unit cost of Rs. 150 per kilogram.
- Fortnightly Valuation Method: Maximum claim admissible scales up through the fortnights proportionately.

The NCDRC initially calculated the loss based on the survey report but accepted only parts of it, leading to an award of Rs. 30,69,486.80. The appellant disputed this amount, presenting higher figures based on the three methods. The Supreme Court found the appellant's computations accurate, determining the lowest admissible loss as Rs. 75,87,750/-. Since the insurance company had already paid Rs. 30,69,486.80, the appellant was entitled to the balance amount of Rs. 45,18,263.20.

3. Interest Rate Applicable:
The appellant claimed higher interest rates, but the Supreme Court upheld the NCDRC's decision of 10% simple interest, finding it just and equitable based on historical bank deposit rates.

Final Order:
The respondent insurance company is directed to remit the balance amount of Rs. 45,18,263.20 to the appellant, with simple interest at 10% from the date of the complaint until realization, within six weeks. The appeal is disposed of with parties bearing their own costs.