1. Fire insurance claim dispute — disagreement over the valuation of destroyed stock — claim filed before National Commission. (Para 2 , 3 )
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1999 Supreme(SC) 1135
SUPREME COURT OF INDIA
D.P.Wadhwa : S.Saghir Ahmad
Chengalrayan Co Operative Sugar Mills
Versus
Oriental Insurance Co.Limited
Case No. : 5463 of 1999
Date of Decision : 9/30/99
A claimant's self-declared value of assets in an invitation for insurance quotations can be used to determine compensation, overriding a surveyor's higher valuation. Additionally, interest on such claims should be awarded from the date of filing the claim.
Headnote:(A) Insurance Law - Fire Policy - Quantum of compensation - Claim for value of destroyed gunny bags - Appellant had invited quotations for a Fire Policy specifying the value of gunny bags as Rs. 12 lakhs - Surveyor recommended a higher amount of Rs. 41,13,127.87 - Where the claimant itself had indicated a specific value in the invitation for quotations, the forum is justified in not placing reliance on the surveyor's report for a higher amount. (Paras 2, 4, 5)
(B) Interest - Award of interest on insurance claim - Interest ought to be awarded from the date on which the claim was filed before the forum rather than from the date of the order. (Para 6)
Facts of the case:
The appellant sought insurance coverage for various stocks, including gunny bags, and in the invitation for quotations, specified the value of the gunny bags as Rs. 12 lakhs. A major fire destroyed the stock. Although the policy was issued after the fire, the claim was not repudiated. While other items were settled, a dispute arose regarding the quantum of compensation for the gunny bags. The surveyor recommended a significantly higher amount than the value initially declared by the appellant. The forum awarded Rs. 11,69,994.00 based on the respondent's offer.
Findings of Court:
The court upheld the forum's decision to ignore the surveyor's report because the appellant had previously declared the value of the gunny bags as Rs. 12 lakhs. However, it modified the order regarding the commencement date of the interest.
Issues: Whether the compensation for the destroyed stock should be based on the surveyor's report or the value declared by the appellant in the quotation invitation, and the appropriate date for the commencement of interest.
Ratio Decidendi: The court ruled that a self-declared value in an invitation for insurance quotations is a binding reference point, justifying the forum's rejection of a higher valuation by a surveyor. Furthermore, interest on such claims should accrue from the date of filing the claim before the forum.
Result: Appeal disposed of with directions to pay Rs. 11,69,994.00 with 18% interest per annum from the date of filing the claim before the forum till the date of actual payment.
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2. Whether the insurance claim should be settled based on the surveyor's valuation report or the value declared by the insured in the quotation request. (Para 1 , 4 )
3. The court found the insured's own declaration of value in the quotation request more reliable than the surveyor's report for determining the claim amount. (Para 4 , 5 )
4. A claimant's own prior declaration of asset value for insurance quotation purposes can override a surveyor's report in determining the quantum of compensation. (Para 4 , 5 )
5. Appeal disposed of — claim amount maintained — interest modified to run from the date of filing the claim before the National Commission. (Para 6 , 7 )
6. Can a surveyor's report be disregarded in favor of the insured's own declared value?
Yes, if the insured had previously indicated a specific value for the assets in a letter inviting quotations for the insurance policy, the court may rely on that declaration over the surveyor's report. (Para 4 , 5 )
7. From what date should interest be awarded on an insurance claim settled by the National Commission?
Interest may be awarded from the date on which the claim was filed before the National Commission until the date of actual payment. (Para 6 )
(1) THE main contention raised by learned counsel for the appellant is that the National Commission ought to have allowed the claim on the basis of the report of the Surveyor who had recommended payment of Rs. 41,13,127.87 for the value of the gunny bags destroyed in the fire.
(2) THE National Commission before which this question was raised, considered the evidence on record and ultimately recorded a finding that the appellant itself by its letter dated 19/12/1989 had invited quotation from various insurance companies for a Fire Policy setting out the details as under: "1 .Fire Policy Stock of Sugar 400 Lakhs Stock of gunnies 12 Lakhs Stock of Sulphur & Chemicals 6 Lakhs Stock of stores and spares 35 Lakhs Total value of Fire Policy 453 Lakhs"
(3) THE entire stock lying in the premises of the appellant was destroyed by a major fire accident which took place on 15/11/1990 and although the Policy had not till then been issued by the respondents, the claim raised by the appellant was not repudiated and the Policy was also issued in December, 1990. The appellant and the respondents mutually settled the claim so far as other items were concerned but they did not agree on the quantum of compensation for the stock of gunny bags and consequently, the appellant approached the National Commission which held that though there was no deficiency of service, the respondents were liable to pay Rs. 11,69,994.00 to the appellant as they themselves had made that offer by their letter dated 24/4/1992. The National Commission also allowed interest at the rate of 18 per cent from the date of its order provided the amount was not paid within two months.
(4) HAVING regard to the facts and circumstances of this case, we are not prepared to accept the contention of the appellants counsel that the claim should have been allowed in terms of the surveyors report. It is not disputed that the appellant itself by its letter dated 19/12/1989 had invited quotations for a Fire Policy and in that letter of invitation, it had mentioned the value of the Policy in which they had indicated the value of the gunny bags as Rs. 12 lakhs.
(5) IN this background, the National Commission was justified in not placing any reliance on the surveyors report. We fully endorse the view of the National Commission and reject the contention raised by the appellants counsel that the claim ought to have been allowed in terms of the surveyors report.
(6) WE, however, feel that the interest ought to have been awarded from the date on which the claim was filed before the National Commission. Consequently, while maintaining the order of the National Commission for payment of Rs. 11,69,994.00 to the appellant as value of Gunny Bags, we direct that this amount shall be paid within two months from today and that too, with interest at the rate of 18 per cent per annum from the date of filing of the claim before the National Commission till the date of actual payment.
(7) THE appeal is disposed of in the manner indicated above without any order as to costs.
