Page 55 - Insurance Times February 2024

Supreme Court directs insurer to pay the amount awarded to INR 12,60,000 with 7% interest. It
also set aside the direction to pay compensation of INR 1
reinstatement value of goods damaged lakh.

in fire instead of depreciated value
Issue before the Supreme Court
The Supreme Court has upheld an order of the State Whether in the facts and circumstances of the case and on
Consumer Disputes Redressal Commission, Punjab, which true interpretation of relevant clause of insurance policy, in
granted INR 29,17,500 to an insurer and was eventually case of damage of the plant and machinery due to fire, the
modified by the National Consumer Disputes Redressal complainant shall be entitled to the reinstatement value or
Commission to INR 12,60,000. The rate of interest was also the depreciated value?
modified from 9% to 7%.
Analysis by the Supreme Court
On perusal of the insurance policy a Bench comprising Justice
Upon reading the relevant clause, i.e. Section 2, Clause 9,
M.R. Shah and Justice C.T. Ravikumar decided that the
the Court noted that an option is given to the insurance
insured was entitled to the reinstatement value and not the
company to reinstate or replace property damaged or
depreciated value. It held that the insured was entitled to
destroyed instead of paying the amount of loss or damage.
INR 29,17,500/ being the reinstatement value with interest
It observed that as per the insurance policy, in case the
@ 7% from the date of order of the State Commission in
insurance company is unable to reinstate or repair because
2014, till the actual payment.
of some municipal or other regulations, it shall be liable to
Factual Background pay such sum as would be requisite to reinstate or repair
M/s. Oswal Plastic Industries obtained Standard Fire And such property if the same could be lawfully reinstated to its
Special Perils Policy with effect from 02.07.2009. Fire broke former condition. In the case at hand, the insurance
out in the factory premises on 17.10.2009, i.e., at the time company was unable to reinstate or repair the property. The
the policy was subsisting, resulting in loss of material, stock Court, thus, concluded that the insured is entitled to the
and machinery of the value of INR 76,64,000. The surveyor reinstatement value and not the depreciated value.
of the insurance company assessed the loss on reinstatement
Case details
value at INR 29,17,500 and on depreciated value at
M/s Oswal Plastic Industries v. Manager, Legal Deptt
12,60,000. However, the insurance company repudiated the
N.A.I.C.O Ltd.| 2023 LiveLaw (SC) 34 | CA 83 of 2023 | 13
claim. A complaint was filed before the State Consumer
Jan 2023 | Justice M.R. Shah and Justice C.T. Ravikumar
Disputes Redressal Commission, Punjab with a claim of INR
76,64,000 along with interest. On the basis of the surveyor Insurance Contract - Fire and Special Perils policy- Supreme
report, the State Commission awarded a sum of INR Court directs insurer to pay reinstatement value of the goods
29,17,500 with 9% interest from the date of repudiation, damaged and not the depreciated value, because as per the
along with a compensation of INR 1 lakh and INR 11,000 as policy, in case the insurance company is unable to reinstate
litigation expenses. The insurance company approached the or repair because of some municipal or other regulations, it
National Consumer Disputes Redressal Commission (NCDRC) shall be liable to pay such sum as would be requisite to
in appeal. The NCDRC allowed the appeal and modified reinstate or repair such property.

MoUs soon to bring non-network hosps under cashless plan

Insurance companies have asked different third party administrators (TPA) to talk to non-network hospitals for signing
MoUs with them to expedite ‘cashless everywhere’ scheme in Bengal. GM health of National Insurance, Kasturi
Sengupta, said that it has already shared the MoU format for non-network hospitals to TPAs. “We want do it fast,”
she added. NIC is the lead insurer in east for preferred providers’ network (PPN) and has the strongest network.
Sengupta pointed out that signing of MoU with non-network hospitals is important for taking them on board for the
scheme. “We will call meeting of all the stakeholders later this week. Last week was mostly holidays and the circular
came on Jan 24. So, stakeholders also need to understand modalities before giving any comment,” she added. There
are around 200 network hospitals in the city that already offer cashless facility, while the number of non-network is
around 225-250. Some of the big names not under cashless network includes Sri Aurobindo Seva Kendra, Bhagirathi
Neotia (Park Street) and Ramakrishna Mission Seva Prathisthan and Nightingale, among others.

50 February 2024 The Insurance Times