IMPORTANT POINTS
(1) Insured has a duty to disclose and similarly it is duty of insurance company to disclose all material facts within their knowledge since obligation of good faith applies to both equally.
(2) It is not open to insurance company to ignore or fail to act upon a certificate or document that it had itself called for from independent and impartial authorities merely because it is averse to it or to its detriment.

JUDGMENT :

SANJAY KUMAR, J.

1. Being the second round of litigation before this Court, the issues that arise for consideration in this appeal fall within a narrow compass.

2. During the year 1994, the appellant, a registered partnership firm, undertook prawn cultivation in an extent of 100 acres, with a water-spread area of 68 acres, at Vakapadu Village in S. Rayavaram Mandal of erstwhile Visakhapatnam District. It obtained insurance coverage from the respondent Insurance Company for a period of five months from 7-10.09.1994 in relation to all the 37 ponds in its operation, covering 22,67,000 prawns, for a maximum insured value of Rs. 1,20,00,000/-. The appellant paid a total premium of Rs. 2,44,800/- along with sales tax of Rs. 12,240/- and was issued a ‘Brackish Water Prawn Insurance Policy’ by the respondent Insurance Company on 25.11.1994. At the time of insurance, the prawn larvae were stated to be at PL 20 stage and the date of their stocking in the ponds was 7-10.09.1994. The insurance policy indicated that the expected yield for 22,67,000 prawn larvae, in terms of weight, was 80.400 kgs. and the average body weight of the prawns, at full size, ranged from 11 grams to 33.5 grams each. The expected dates of harvesting were from 07.02.1995 to 11.02.1995. The policy provided that the insurance period would be split up into fortnights and each calendar month was to be treated as two fortnights, irrespective of the number of days in the month. The policy further stipulated that a loss due to any peril covered thereunder would be treated as a total loss if the loss percentage at any particular stage was equal to or exceeded 80% of the total population of the prawns in the pond and no claim would be admissible under the policy if the loss percentage in a pond due to any of the covered perils was below 80%. A separate table was appended to the policy, indicating the maximum liability, in terms of percentages of the sum insured, during the ten fortnights covered by the insurance policy.

3. While so, there was a major outbreak of a bacterial disease called ‘White Spot Disease’ along the east coast of Andhra Pradesh, which led to mass mortality of prawns in the area, including the appellant’s farm. This led to invocation of the insurance policy by the appellant. However, upon submission of a claim thereunder by the appellant and after two separate surveys were conducted at its own behest, the respondent insurance company repudiated the appellant’s claim in its entirety, under letter dated 15.07.1997. According to the insurance company, there was a breach by the appellant of the policy conditions, inasmuch as records were not maintained properly and accurately; records were not produced at the time of the survey; and whatever records were produced were unsubstantiated.

4. Aggrieved thereby, the appellant instituted Original Petition No. 55 of 1996 before the National Consumer Disputes Redressal Commission, New Delhi [for brevity ‘the NCDRC’]. The appellant prayed for a sum of Rs. 75,98,362/- towards the loss suffered by it along with interest thereon @ 24% per annum and compensation of Rs. 10,00,000/-. By common order dated 29.04.2004, the NCDRC disposed of the appellant’s Original Petition No. 55 of 1996 along with Original Petition No. 54 of 1996 filed against the respondent insurance company by one Mr. V.V. Rama Raju, a similarly situated prawn cultivator from Visakhapatnam, Andhra Pradesh. The NCDRC recorded a clear finding therein that the repudiation of the appellant’s claim by the respondent insurance company was unjustifiable. It was noted that insurance coverage was provided after thorough inspection of the appellant’s ponds by the senior officers of the insurance company on 25.11.1994, who were fully satisfied in all respects, and only thereafter, the policy was issued upon payment of the premium. The NCDRC therefore opined that it was totally unreasonable on the part of the insurance company to allege that the appellant was n