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Issue for consideration : Appellant, which undertook prawn cultivation,had obtained insurance coverage from respondent under a prawn insurancepolicy. Major outbreak of a bacterial disease called ‘White Spot Disease’ ledto mass mortality of the prawns in the appellant’s farm. The insurance claimsubmitted by appellant was repudiated by respondent-insurance company inits entirety, which was challenged before the National Consumer DisputesRedressal Commission (NCDRC); and, in this second round of litigation beforethis Court, the further issue was whether the claim amount and interest quantifiedby NCDRC was just and equitable.Insurance – Requirement of uberrima fi des:Held : Uberrima fi des, i.e., good faith, is the requirement in a contractof insurance – This obligation and duty would rest on both parties not only atthe inception of the contract of insurance but throughout its existence and eventhereafter – On facts, despite the second surveyors report dated 22.09.1995quantifying the appellant’s loss at `17,64,097/-, the respondent insurancecompany chose to repudiate the appellant’s claim in its entirety, basing on thewholly unfounded assertion that the appellant had failed to maintain and provideproper 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 bythe MPEDA/State Fisheries Department in its policy and its prescribed claimprocedure, the insurance company baldly brushed aside the Death Certificatedated 01.05.1995 furnished by the officials of the State Fisheries Department at Visakhapatnam – It is not open to an insurance company to ignore orfail to act upon a certificate or document that it had itself called for fromindependent and impartial authorities, subject to just exceptions, merelybecause it is averse to it or to its detriment – Having undertaken to indemnifyan insured against possible loss in specified situations, an insurance companyis expected to make good on its promise in a bonafide and fair manner andnot just care for and cater to its own profits. [Paras 12 and 13]Insurance – Computation of admissible loss – Methodology:Held : On facts, the insurance policy itself provided the method ofcomputation of the admissible loss –There were three ways of computingthe admissible loss (Input Cost Method; Unit Cost Method and FortnightlyValuation Method) – NCDRC had assessed the appellant’s total loss as`30,69,486.80 and awarded simple interest @ 10% p.a. – However, thevalues of loss worked out by the appellant were: `75,98,361/- (as per InputCost Method); `75,87,750/- (as per Unit Cost Method); and `79,20,000/-(as per Fortnightly Valuation Method) – Computations made by appellantare accurate – Appellant would be entitled to lowest of the aforestated threevaluations, viz., `75,87,750/- – Further, delay on part of insurance companyin settling the appellant’s claim fairly and in a timely manner warrants thatit pays interest on the amount due and payable to appellant – Interest ratefi xed by NCDRC, viz, 10% is just and equitable. [Paras 7, 8 and 14] |
