M/S. ISNAR AQUA FARMS   (Appellant) Vs.  UNITED INDIA INSURANCE CO. LTD.  ( Respondent)

CIVIL APPEAL NO. 1077 OF 2013

(2JB, A.S. BOPANNA and SANJAY KUMAR JJ., delivered by SANJAY KUMAR, J.)

Facts: The present appeal is preferred against the order of the NCDRC whereby it accepted the estimation of the average body weight of each prawn by surveyors at 9.086 grams and their valuation of the total loss, based thereon, as ₹.30,69,486.80 due the loss caused to the cultivator owing to bacterial disease called ‘White Spot Disease’ along the east coast of Andhra Pradesh, which led to mass mortality of prawns in the area. The NCDRC however rejected the deductions from this amount proposed by these surveyors and assessed the appellant’s total loss as ₹.30,69,486.80. Simple interest was awarded thereon @ 10% per annum from the date of the complaint. Dissatisfied with the quantum of the amount and the interest awarded thereon, the appellant is again before this Court.

Issue: Whether the quantum of the amount and the interest awarded to the appellant by the NCDRC is just and reasonable?

Held: The court while disposing off the present appeal directed the insurance company to remit the sum of rupees 45,18,263.20 to the appellant, with simple interest thereon @ 10% from the date of the complaint till the date of realization, within six weeks from the date of this judgment, and held that, “Though the appellant claims that bank deposit interest rates ranged between 12% to 13% during the financial year 1995-1996, we find from the RBI statement, relied upon in this regard, that the interest rate for the financial year 1994-95 was 11% and for the year 1996-97, it was between 11% to 13%. That being so, the interest rate fixed by the NCDRC, viz, 10% is held to be just and equitable”

It was observed that, “in the context of the insured, uberrima fides, i.e., good faith, is the requirement in a contract of insurance, and that 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.”