Summary
The insurer validly settled a fire-damaged rolling-mill claim on depreciated value after the insured failed to establish contractual reinstatement or supply essential supporting documents. The reinstatement memorandum formed part of the policy but became ineffective on the facts. The Court upheld 60% depreciation on the retained Rs.20.09 crore base and the Rs.7.88 crore settlement, allowing the insurer’s appeal, dismissing the insured’s appeals and the consumer complaint.
Issues
- Whether the reinstatement memorandum formed part of the policy and remained operative.
- Whether settlement on depreciated value with 60% depreciation was justified.
- Whether the insured could seek a higher base or full reinstatement value through new appellate arguments.
- Whether reassessment violated Regulation 9(3) or attracted contra proferentem.
Provisions considered
- Condition 6, Condition 9 and memorandum Special Provisions 1, 2 and 4(b), Fire insurance policy and Reinstatement Value ClauseReinstatement required contractual performance and supporting expenditure; inability or unwillingness to reinstate made the memorandum ineffective, permitting the ordinary loss-date valuation basis. (¶¶ 29, 31, 32, 33, 34, 35, 36, 37, 38, 57, 58, 59, 60)
- Regulation 9(3), IRDA (Protection of Policyholders’ Interests) Regulations, 2002The case-specific request for reassessment after material developments was not a request merely clarifying an incomplete original survey report, so the provision was not infringed. (¶¶ 76, 77, 80)
Held
- The insurer expressly pleaded that the reinstatement memorandum accompanied the policy and produced the complete policy; the replication did not deny this. The insured’s undertakings and extension requests also demonstrated that the memorandum formed part of the contract. (¶¶ 31, 32, 40, 41, 42, 48)
- The memorandum changed the valuation basis to replacement of property of the same kind or type, subject to its special conditions. It ceased to operate when the insured could not or would not reinstate. The claimed installation of a different 6 Hi mill, without the requested particulars, did not establish reinstatement of the damaged 20 Hi mill. Resort to the original depreciation basis was justified. (¶¶ 35, 36, 37, 38, 52, 53, 57, 58, 59, 60, 63, 66)
- The proposed Rs.28 crore base lacked invoices or reliable supporting material and conflicted with the insured’s earlier acceptance of a lower assessment. The expert-assessed Rs.20.09 crore base remained undisturbed; the insurer did not challenge that figure. The sum insured was not the depreciation base merely because it appeared in the policy. (¶¶ 61, 68, 70, 78)
- The earlier 32% depreciation calculation was qualified and preceded later developments and unanswered document requests. The insurer could seek reassessment in those circumstances, and the surveyors’ residual-life justification and supporting practice evidence sustained 60%. The adverse finding that seeking revision was unhealthy was set aside. (¶¶ 62, 63, 64, 65, 66, 67, 69, 70, 80)
- Reliance at final argument on Oswal Plastic Industries could not support an unpleaded reinstatement claim without the necessary factual foundation. The insured’s own appeal had accepted the depreciation basis; the relevant contractual setting also differed. (¶¶ 72, 73, 74, 75)
- Regulation 9(3) did not govern this reassessment request prompted by the later reinstatement claim and failure to produce documents, rather than mere incompleteness of the earlier report. No contractual ambiguity supported contra proferentem. This did not establish a general licence to obtain successive tailor-made survey reports. (¶¶ 76, 77, 79, 80)
- The insurer’s Rs.7.88 crore loss settlement after 60% depreciation was restored. Its appeal was allowed, the insured’s appeals dismissed, and the original consumer complaint dismissed without costs. (¶¶ 71, 81, 82)
Result
Insurer’s appeal allowed; NCDRC order set aside and Rs.7.88 crore settlement upheld. Insured’s appeals and original complaint dismissed; no costs.