O.M.P. (COMM) 547/2020

Page 1 of 16

*

IN

THE

HIGH

COURT

OF

DELHI

AT

NEW

DELHI

Reserved on: 27^thOctober, 2021

Pronounced on: 08^thApril, 2022

+

O.M.P. (COMM) 547/2020 & I.As. 10708/2020, 3593/2021

NATIONAL INSURANCE COMPANY LIMITED

..... Petitioner

Through:

Mr.

Niraj

Singh

and

Mr.

Deepak Jaiswal, Advocates.

versus

DIGITAL WORLD & ANR.

..... Respondents

Through:

Mr. Naveen Kumar Chaudhary,

Advocate for Respondent No.1.

CORAM:

HON’BLE MR. JUSTICE SANJEEV NARULA

JUDGMENT

SANJEEV NARULA, J.:

1.

The present petition under Section 34 of the Arbitration and

Conciliation Act, 1996 [hereinafter referred to as “the Act”] arises out of an

arbitral award dated 14^thAugust, 2020 directing the Petitioner [hereinafter

referred to as “NIC”] to pay: (i) a sum of Rs. 3,11,94,796/- (which includes

principal amount of Rs. 1,93,47,430/-, plus simple interest awarded at Rs.

1,31,02,645/-, less Rs. 12,55,279/- paid under interim award dated 10^th

March, 2017) along with post-award interest @12% p.a. from 15^thAugust,

2020 till the date of payment, (ii) pre-award interest @ 11% p.a. for the

period from 1^stApril, 2014 to 14^thAugust, 2020, amounting to Rs.

1,31,02,645/-, and (iii) cost of Rs. 24,77,325/-.

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001259

O.M.P. (COMM) 547/2020

Page 2 of 16

2.

NIC impugns the grant of: (i) Claim No. 1 against loss to the building;

(ii) Claim No. 2 towards loss caused to the plant & machinery; (iii) Claim

No. 4 towards loss caused to stocks; (iv) Claim No. 7 awarding interest; and

(v) Claim No. 9 awarding cost.

3.

BRIEF FACTS:

3.1.

NIC is a Public Sector Undertaking (PSU) engaged in the business

of providing various general non-life insurance policies.

3.2.

Respondent No. 1– M/S. Digital World [hereinafter referred to as

“Digital”],

the

Claimant

in

the

Arbitration

–

is

a

sole

proprietorship of one Mr. Ashok Gupta, engaged in the business of

printing digital images on textile/cloth by heat transfer method

through computerized machines.

3.3.

Respondent No. 2 – Small Industries Development Bank of India

(SIDBI) – is a Public Sector Undertaking engaged in the business

of promoting, developing and financing in the Micro, Small and

Medium Enterprises (MSME) sector.¹It is, as such, only a pro-

forma party to the instant proceedings and is not represented

through any counsel.

3.4.

Digital obtained a Standard Fire and Special Perils Policy from

NIC for the period 30^thSeptember, 2011 to 29^thSeptember, 2012

insuring building, plant & machinery, furniture & fixtures, stock of

1 After the factory premises of the Claimant got gutted in fire, the entire work of the Claimant came to a

standstill and the Claimant became irregular in respect of the credit limits availed from the Respondent No.

2. Consequently, Respondent No. 2 initiated measures to recover their dues and also kept on charging

interest on the outstanding dues despite the fact that Claimant suffered losses on account of the fire. The

dues of the Respondent No. 2 were settled by a one-time settlement, in which the Claimant had to pay a

huge amount towards principal and interest accrued thereon and this was on account of the fact that the

Respondent No.1 delayed to settle the insurance amount.

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001259

O.M.P. (COMM) 547/2020

Page 3 of 16

fabrics, and stock in process, situated at D-21, Sector-6, Gautam

Budh Nagar, Noida.

3.5.

On 26^thSeptember, 2012 at about 14:00 hours, employees of

Digital heard a blast at the ground floor of the afore-noted

premises which resulted in fire and smoke.

3.6.

Upon receipt of intimation of the incident, NIC appointed a

Statutory Surveyor– M/s Rakesh Kapoor & Company [hereinafter

referred to as the “Surveyor”] to conduct survey and assess the

loss, as mandatorily required under Section 64UM of the Insurance

Act, 1938 [hereinafter referred to as the “Insurance Act”].

3.7.

After physical verification of the documents provided by Digital,

the Surveyor submitted its