Insurers must substantiate their claim settlements and cannot rely on acceptance of prior inadequate offers without fully disclosing material information.

1. Heard Mr. Navdeep Singh, Advocate, for the complainant and Mr. V.S. Chopra, Advocate, for the opposite party, through video conferencing.

2. Golden Terry Towels Pvt. Ltd. (the complainant) (hereinafter referred to as the Insured) filed aforementioned complaint, for directing United India Insurance Company Ltd. (the opposite party) (hereinafter referred to as the Insurer) to pay (i) Rs.1,48,59,691 as balance insurance claim, under Insurance Policy Nos. 112001/11/1578/2K, 112001/11/1579/2K and 112001/11/1326, (ii) interest at the rate of 18% per annum on the said amount, (iii) pendente lite interest, (iv) Rs.2,00,000 as compensation for mental agony and harassment, (v) Rs.20,000 as cost of litigation and (vi) any other relief, deems fit and proper in the circumstances of the case.

3. The facts as been stated in the complaint and emerged from the documents attached with the complaint are as follows:
(a) The Insured was a private limited company and engaged in the business of manufacture and trade of terry towels in its factory situated at village Jhattipur, G.T. Road, Panipat, Haryana. First phase, Section - I, i.e. two buildings, one housing weaving department and other housing finishing department were constructed in 1997. In this weaving department, second hand weaving machines and other allied machineries were installed. Second phase, i.e. one building was constructed in 1999-2000, in which new weaving machines were installed in 2000-2001. The Insurer was a Public Insurance Company and engaged in business of providing insurance services. The Insured used to obtain Standard Fire Policy from the Insurer of the stocks and machineries. The Insured obtained Standard Fire Policies, i.e. (i) Policy No. 112001/11/1578/2K, valid from 30.3.2001 to 29.3.2002, for a sum assured of Rs.1 crore, on stock of all kinds of yarn terry towels whilst stored, finished, unfinished in process in attached and detached godown in the factory construction 1st class. (ii) Policy No. 112001/11/1579/2K, valid from 30.3.2001 to 29.3.2002, for a sum assured of Rs.4.25 crore, on machineries and accessories whilst installed and lying in the factory and electric fitting used for manufacturing of terry towels construction 1st class. (iii) Policy No. 112001/11/1326, valid from 16.1.2002 to 15.1.2003, for a sum assured of Rs.1 crore, on stock of all kinds of yarn and / or terry towel whilst stored, finished or unfinished in process and godown in the factory construction 1st class.
(b) On 20.2.2002, at about 8.30 p.m., Raj Kishor, the operator working on machine No. 33 of Section - 1, noticed the fire in machine due to short circuit. Raj Kishor immediately rushed to cabin of Production Manager and informed him. By the time, they could reach the spot; the fire was spread to nearby machines. The workers tried to control the fire with the help of Fire extinguisher, water pipe etc. but the fire soon took serious nature. Nearest Fire Service Station was informed, from where fire tenders were sent on the spot, which could control and took about 40 minutes in extinguishing the fire. The incident was reported to Police Station Samalkha, on 21.2.2002, who later on recorded Panchnama.
(c) The Insured informed the Insurer about the fire incident, on which, the Insurer appointed M/s. Duggal Gupta & Associates, Surveyors, Chandigarh, for preliminary survey and assessment of the loss. M/s. Duggal Gupta & Associates inspected the spot and submitted his report dated 8.4.2002, finding that the fire was caused due to electric short circuit. Senior Divisional Manager and other officers of the Insurer also inspected the factory premises. The Insurer appointed Vinod Sharma, Surveyor and Loss Assessor, New Del