Insurance – In case of damage of the plant and machinery due to fire, whether the complainant entitled to reinstatement value or depreciated value under insurance policy – Appellant subscribed to a Fire & Perils policy – A fire broke out and the surveyor assessed the loss at Rs.29,17,500/- on reinstatement value and Rs.12,60,000/- on depreciated value – Insurance company despite the reports of the surveyor, repudiated the claim – State Commission relying on the surveyor report, awarded Rs.29,17,500/- with 9% interest from the date of repudiation observing entitlement on reinstatement value – NCDRC set aside the order of State Commission and awarded Rs.12,60,000/- along with 7% interest observing entitlement to depreciated value – On appeal, held: As per clause 9 of the insurance policy, the complainant shall be entitled to reinstatement value and not depreciated value – The report of the surveyor would be relevant to consider the sum required to reinstate or repair – NCDRC has mis-interpreted and mis-read the clause 9 – NCDRC erred in holding that insurance company is liable to pay depreciated value only – Order of the NCDRC set side – The order passed by the State Commission restored.
Allowing the appeal, the Court
HELD: 1. Considering second part of Clause 9 of the insurance policy, in case company is unable to reinstate or repair the property insured, the insurance company shall be liable to pay such sum as would be requisite to reinstate or repair such property if the same could lawfully be reinstated to its former condition. For the aforesaid purpose, the report of surveyor wound be relevant evidence to consider the sum required to reinstate or repair. Therefore, as per second part of Clause 9 of Section 2 of the policy, the complainant shall be entitled to the reinstatement value and not the depreciated value. The NCDRC has misinterpreted and mis-read the Clause 9. The NCDRC has seriously erred in observing and holding that the insurance company shall be liable to pay the depreciated value only and not the reinstatement value. The State Commission was absolutely justified in awarding the reinstatement value. The impugned judgment and order passed by the NCDRC awarding the depreciated value and not the reinstatement value is unsustainable. The impugned judgment and order passed by the NCDRC is hereby quashed and set aside. The order passed by the State Commission is hereby restored. The complainant shall be entitled to Rs. 29,17,500/- being the reinstatement value with interest @ 7% from the date of order of the State Commission. [Paras 5.2 and 6][990-C-G]
Canara Bank vs. United India Insurance Company Limited and Ors., 2020 (3) SCC 455 : [2020] 7 SCR 498 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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