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2018 Supreme(Del) 3148
IN THE HIGH COURT OF DELHI AT NEW DELHI
GITA MITTAL, C. HARI SHANKAR, JJ.
M/s Eternity Footwear Ltd. (Formerly known as Diamond Product Ltd.) – Appellant
Versus
M/s The Oriental Insurance Co. Ltd. – Respondent
FAO (OS) No. 95 of 2018, CM No. 24021 of 2018
Decided On : 31-05-2018
For the Appellants : Mr. Vineet Kumar, Mr. Dhruv Gupta.
Headnote:
Insurance - Arbitration - IRDA Regulations - [FIRE INSURANCE] - [MANUFACTURING OF FOOTWEAR] - [Regulation 9 (5) & (6) of the IRDA Regulations] - The court discussed the application of Regulation 9 (5) & (6) of the IRDA Regulations, which stipulates the insurer's obligation to offer settlement of the claim to the insured within 30 days and make payment within 7 days from the date of acceptance of the offer by the insured. The court upheld the decision of the learned Arbitral Tribunal in granting interest from the date of communication of consent by the insured to the offer made by the insurer.
Fact of the Case:
The appellant, engaged in the manufacture of footwear, purchased a fire insurance policy for its premises. After a fire incident, the appellant claimed losses and damages under various heads. The disputes were ultimately decided by an Arbitral Tribunal.
Finding of the Court:
The court dismissed the appeal, upholding the decision of the learned Single Judge, and rejected the appellant's claim for pre-award interest on the amount awarded by the Arbitral Tribunal, as no such claim had been agitated in the original petition filed by the appellant.
Issues: The issues included the maintainability of the appellant's claims, the validity of the consent letters, and the entitlement of the appellant to further amounts under various heads as claimed.
Ratio Decidendi: The court upheld the application of Regulation 9 (5) & (6) of the IRDA Regulations, which governs the insurer's obligation to offer settlement of the claim to the insured within 30 days and make payment within 7 days from the date of acceptance of the offer by the insured.
Final Decision: The court dismissed the appeal, upholding the decision of the learned Single Judge, and rejected the appellant's claim for pre-award interest on the amount awarded by the Arbitral Tribunal.
C. HARI SHANKAR, J.
1. Consequent to hearing arguments, we had, on 31st May, 2018, dismissed this appeal, for reasons to follow thereafter. This judgment records the reasons for our decision.
2. Though there is no real dispute on facts in the present case, a bare glance, thereat, is necessary.
3. The appellant was engaged in the manufacture of footwear, and had two manufacturing units, located at A-9, Mayapuri, Industrial Area, Phase-II, New Delhi and Himachal Pradesh. In respect of the premises at Kala-Amb, the appellant purchased a Standard Fire & Special Perils Policy, from the respondent, for the period 20th March, 2008 to 19th March, 2009. The policy covered loss or damages to various items, the details of which may be tabulated as under:-
Property Covered
Sum Insured
Raw Material, Semi-Finished & Finished stock
Rs. 6,00,00,000
Furniture, Fixtures & Fittings, ACs and Computers etc.
Rs. 25,00,000
Buildings
Rs. 11,00,00,000
Plant & Machinery
Rs. 10,00,00,000
Total
Rs. 27,25,00,000
4. On 14th December, 2008, a fire broke out in the Kala-Amb unit of the appellant, resulting in considerable damage. The appellant intimated the respondent, of the said mishap, on 15th December, 2008, whereupon the respondent appointed M/s Aditi Consultants Pvt. Ltd. as surveyor. The surveyor surveyed the damages and submitted a preliminary report to the respondent.
5. On 10th January, 2009, the appellant submitted, to the surveyor, a provisional claim of Rs. 13,21,56,318/- which was revised, on 10th August, 2009, to Rs. 12,02,31,749/-. In the interregnum, an interim payment of Rs. 2,50,00,000/- was made, by the respondent, to the appellant, on the recommendation of the surveyor in March, 2009.
6. On 18th March, 2008, the surveyor submitted a final report to the respondent, on the basis whereof, the respondent wrote to the appellant on 4th May, 2010, requiring the appellant to submit its letter of consent, to the assessment of the damages and loss suffered by it as Rs. 5,46,72,292/-. The appellant communicated its consent vide letter dated 5th May, 2010.
7. In July, 2010, the respondent appointed M/s Royal Associates, Kurukshetra to investigate into the loss and damages suffered by the appellant once again, resulting in submission, by M/s Royal Associates, of a report dated 14th August, 2010, to the respondent. On 1st September, 2010, the respondent requested for a fresh consent, by the appellant, to the damages as assessed by the surveyor and M/s Royal Associates, which was also provided by the appellant, vide communication dated 6th December, 2010.
8. It may be stated here, that the appellant has been contending, throughout, that the consent, granted by it, to the assessment of the damages sustained in the fire, by the surveyor or by M/s Royal Associates, was under pressure and duress, as, in the absence of the said consent, it would not have been able to recover any amount from the respondent. The learned Arbitral Tribunal, which ultimately adjudicated the disputes between the appellant and the respondent, has accepted this contention, and the respondent makes no cavil thereto.
9. Consequent to the grant of consent, by the appellant, vide the aforementioned letters dated 5th May, 2010 and 6th December, 2010, the respondent released, in favour of the appellant, the balance amount of Rs. 2,96,59,810/- after deducting some amount as premium.
10. The appellant, immediately thereupon, issued a letter of protest, dated 13th December, 2010, to the respondent, protesting against the manner in which the respondent, through its surveyor, had assessed the damages suffered by the appellant. The letter also invoked the arbitration clause contained in the agreement between the appellant and the respondent.
11. The disputes between appellant and respondent u
