M/S. KRISHNA FOOD & BAKING INDUSTRY P. LTD. versus M/S. NEW INDIA ASSURANCE CO. LTD. & ANR.

M/S. KRISHNA FOOD & BAKING INDUSTRY P. LTD. versus M/S. NEW INDIA ASSURANCE CO. LTD. & ANR.

The complainants (insured) were entitled to full insurance compensation for losses caused by terrorism and fire as covered by their policies. The National Commission erred in reducing compensation on grounds of spoilage and unsubstantiated pilferage. The bank, as policy assignee, may receive proceeds directly from insurer without instituting separate legal proceedings.

Parties
Appellant/complainant: M/S. Krishna Food & Baking Industry Pvt. Ltd.; Respondent/insurer: M/S. New India Assurance Co. Ltd.; Appellant/assignee/mortgagee: Canara Bank; Party/assignee: Grindlays Bank
Jurisdiction
India
Judgment Date
07 November 2008
Procedural Posture
Civil Appeal / Supreme Court of India – Final Judgment
Outcome
Appeals by Insurance Company dismissed; appeals by complainants and Canara Bank allowed to the stated extent.
Legal Topics
Assignment of Insurance Policy, Claim Under Fire and Terrorism Insurance, Entitlement of Assignee Bank, Compensation Assessment After Terrorist Attack, Jurisdiction Under Consumer Protection Act
Consumer Law Insurance Law Banking Law Assignment of Insurance Policy Claim Under Fire and Terrorism Insurance Entitlement of Assignee Bank Compensation Assessment After Terrorist Attack Jurisdiction Under Consumer Protection Act

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Parties

M/S. Krishna Food & Baking Industry Pvt. Ltd.

Appellant/complainant

M/S. New India Assurance Co. Ltd.

Respondent/insurer

Canara Bank

Appellant/assignee/mortgagee

Grindlays Bank

Party/assignee

Procedural Posture

Civil Appeal / Supreme Court of India – Final Judgment

Legal Issues

  1. 1 Whether the complainants (insured) established their entitlement to insurance claims under policies covering fire and terrorism?
  2. 2 Whether the National Commission was justified in reducing the insurance claim amounts on the ground that stocks and raw materials had become unfit for human consumption or had been pilfered?
  3. 3 Whether the bank, as assignee of insurance policies, is entitled to direct payment from the insurance company without a separate suit?

Ratio Decidendi

The complainants (insured) were entitled to full insurance compensation for losses caused by terrorism and fire as covered by their policies. The National Commission erred in reducing compensation on grounds of spoilage and unsubstantiated pilferage. The bank, as policy assignee, may receive proceeds directly from insurer without instituting separate legal proceedings.

Court Disposition

Appeals by Insurance Company dismissed; appeals by complainants and Canara Bank allowed to the stated extent.

Orders

  • Insurance Company to pay compensation to complainants for losses as assessed under policies, with 9% p.a. interest from date of complaint filing till payment.
  • In respect of stock under Policy No. 11319000249, full amount (Rs. 37,78,619) to be paid to complainants (as no bank appeal concerned this policy).