M/s Oswal Plastic Industries v. Manager, Legal Deptt N.A.I.C.O Ltd.
Summary
The National Consumer Disputes Redressal Commission (NCDRC) has modified an insurance company’s award to INR 12,60,000, upholding the Supreme Court’s decision. The insurance company was awarded INR 29,17,500, which is the reinstatement value plus interest at a 7% rate. The insurance company’s claim for INR 76,64,000 with interest was rejected by the State Consumer Disputes Redressal Commission of Punjab. The NCDRC, after accepting the appeal, changed the award to INR 12,60,000 with 7% interest and revoked the mandate to provide INR 1 lakh as compensation. The court observed that the insurance company could choose to replace or reinstate damaged property rather than reimburse the amount of loss or damage.
About the case
The National Consumer Disputes Redressal Commission later changed the award given to an insurer by the State Consumer Disputes Redressal Commission, Punjab, to INR 12,60,000. The Supreme Court has upheld this modification. Also changed from 9% to 7% was the interest rate.
The insured was entitled to the reinstatement value, not the depreciated value, according to a bench made up of Justices M.R. Shah and C.T. Ravikumar after they reviewed the insurance contract. In 2014, the State Commission issued a ruling, and until the actual payment, the insured was entitled to INR 29,17,500/, which is the reinstatement value plus interest at the rate of 7%.
As of July 2, 2009, M/s. Oswal Plastic Industries is the proud owner of the Standard Fire and Special Perils Policy. At the time the policy was in effect, on October 17, 2009, a fire broke out at the manufacturing premises. The material, stock, and machinery that were lost had a combined worth of INR 76,64,000. The loss was valued at INR 29,17,500 for reinstatement value and INR 12,60,000 for depreciation value, according to the insurance company’s surveyor. But the claim was rejected by the insurance provider.
A claim for INR 76,64,000 with interest was made in a complaint submitted to the State Consumer Disputes Redressal Commission of Punjab. The State Commission granted a total of INR 29,17,500 with 9% interest from the date of repudiation, along with a settlement of INR 1 lakh and INR 11,000 as litigation costs based on the report from the surveyor. In an appeal, the insurance provider went to the National Consumer Disputes Redressal Commission (NCDRC). With 7% interest, the sum awarded was changed to INR 12,60,000 by the NCDRC after accepting the appeal. Furthermore, it revoked the mandate to provide INR 1 lakh as compensation.
The relevant language, Section 2, language 9, states that the insurance carrier may choose to replace or reinstate damaged property rather than reimburse the amount of loss or damage. This is something the Court observed upon reading the clause. It noted that according to the insurance policy, the insurance company would be responsible for paying the amount necessary to reinstate or repair the property if it could be lawfully restored to its previous condition, if the insurance company is unable to do so due to municipal or other regulations.
In this instance, the property could not be restored or reinstated by the insurance company. Due process led the Court to determine that the insured should get the reinstatement value rather than the depreciated value.
