It is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties; that good faith forbids either party from non-disclosure of the facts which the party knows; and that the insured has a duty to disclose and similarly it is the duty of the insurance company to disclose all material facts within their knowledge since the obligation of good faith applies to both equally. This obligation and duty would rest on both parties not only at the inception of the contract of insurance but throughout its existence and even thereafter. (Para 12)
It may be noted that despite the second surveyors report dated 22.09.1995 quantifying the appellant’s loss at Rs. 17,64,097/-, the respondent insurance company chose to repudiate the appellant’s claim in its entirety, basing on the wholly unfounded assertion that the appellant had failed to maintain and provide proper records. This was also despite the clear finding of its earlier surveyors, M/s. Frank and Fair Investigators, that total loss was suffered by the appellant. Further, having attached great importance to the death certificate given by the MPEDA/State Fisheries Department in its policy and its prescribed claim procedure, the insurance company baldly brushed aside the Death Certificate dated 01.05.1995 furnished by the officials of the State Fisheries Department at Visakhapatnam. Merely because the contents thereof were not to its liking, the insurance company could not have ignored the same and swept it under the carpet. More so, as such certification was being made by impartial and independent bodies of significant stature and that, perhaps, was precisely the reason why the insurance company had attached such importance to it in its norms. In any event, it is not open to an insurance company to ignore or fail to act upon a certificate or document that it had itself called for from independent and impartial authorities, subject to just exceptions, merely because it is averse to it or to its detriment. (Para 13)
Computations made by the appellant and recorded by the NCDRC in paragraph 21 of the order under challenge, viz, Rs. 75,98,361/-(as per Input Cost Method) and Rs. 75,87,750/-(as per Unit Cost Method) are found to be accurate, in terms of the figures mentioned in the Death Certificate dated 01.05.1995. As per the Fortnightly Valuation Method, the loss would work out to Rs. 79,20,000/-. Admittedly, the appellant would be entitled to the lowest of the aforestated three valuations, viz., Rs. 75,87,750/-. As the respondent company would have already paid the appellant the amount quantified by the NCDRC in the impugned order, viz., Rs. 30,69,486.80, the appellant would be entitled to receive the balance amount of Rs. 45,18,263.20. (Para 14)
SUPREME COURT OF INDIA
2023 STPL(Web) 149 SC
[2023 INSC 680]
M/S. Isnar Aqua Farms Vs. United India Insurance Co. Ltd.
Civil Appeal No. 1077 of 2013-Decided on 8-8-2023
https://stpllaw.in/wp-content/uploads/2023/08/2023-STPLWeb-149-SC.pdf
