National Insurance Co. Ltd. v. M/s Hareshwar Enterprises (P) Ltd.
Background
A fire in 1999 destroyed the factory, machinery, and stock of Hareshwar Enterprises, which held fire insurance policies from National Insurance Company. Though the insurer's own appointed surveyors assessed and reported the loss within about a year, the insurer neither paid nor rejected the claim, and instead appointed a private investigator nearly two years after the fire, further delaying matters. When the insured finally approached the National Consumer Disputes Redressal Commission (NCDRC) in 2003, the insurer argued the claim was time-barred and that the surveyor's report (rather than its investigator's figures) should not have been relied upon.
Decision Breakdown
The Supreme Court held the complaint was filed within the two-year limitation period because the insurer's own conduct, including its letter appointing an investigator in 2001 and subsequent correspondence, kept creating fresh triggers for the cause of action, so the clock did not run solely from the date of the fire. On merits, the Court held that the NCDRC was justified in relying on the surveyor's detailed, well-reasoned report (which is a statutorily recognised document) over the insurer's belated investigation report, since the insurer had unreasonably delayed before commissioning that investigation and the surveyor's assessment was thorough. The Court did, however, reduce the interest rate awarded by the NCDRC from 12% to 9% per annum as more commensurate with normal bank rates, and otherwise upheld the award.
Lesson Learnt
An insurance company cannot indefinitely delay settling or rejecting a claim and then try to use that same delay against the policyholder on limitation grounds; and once an insurer's own appointed surveyor gives a reasoned assessment, a later, slower investigation report will not automatically override it.