National Consumer Disputes Redressal
M/S. Khanna Polyrib Pvt. Ltd. vs New India Assurnce Co. Ltd. on 16 October, 2025
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW
DELHI
FIRST APPEAL NO. 272 OF 2015
(Against the Order dated 04/03/2015 in Complaint No. 33/2007 of the State
Commission Uttar Pradesh)
M/s Khanna Polyrib Pvt. Ltd. ... Appellant
Versus
New India Assurance Co. Ltd. & Anr. ... Respondents
FIRST APPEAL NO. 321 OF 2015
(Against the Order dated 04/03/2015 in Complaint No. 33/2007 of the State
Commission Uttar Pradesh)
WITH
IA/2737-2738/2015
(For stay, c/delay)
New India Assurance Co. Ltd. ... Appellant
Versus
M/s Khanna Polyrib Pvt. Ltd. ... Respondent
BEFORE:
HON'BLE MR. JUSTICE A.P. SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR RANDYA, MEMBER
For Khanna Polyrib Pvt. Ltd. : Mr. Lav Kumar Agrawal, Advocate
For New India Ass. Co. Ltd. : Mr. J.P.N. Shahi, Advocate
& Anr.
PRONOUNCED ON ; 16.10.2025
ORDER
1. These two appeals arise out of a common order passed by the SCDRC, Uttar Pradesh, Lucknow in CC/33/2007 decided on 04.03.2015. The complaint has been partly allowed in favour of the complainant, but the complainant is aggrieved by the low quantum awarded has therefore filed FA/272/2015 for enhancement of the claim. The Insurance Company is aggrieved by the entire H Fk/272 & 321/2015 Page 11 V' order and has prayed for setting aside the same in the appeal filed by it being FA/321/2015.
2. Both the appeals were entertained and the parties to the litigation are duly represented, Mr. Lav Kumar Agrawal for the complainant, M/s. Khanna Polyrib Private Limited and Mr. J. P. N. Shahi, learned counsel for the Insurance Company.
3. The complainant acquired a policy with a coverage of loss of plant, building, machinery and stocks, generator set in respect of a manufacturing unit set up for the production of Plastic Sheets in the Industrial area of Unnao, Uttar Pradesh. The policy is a Standard Fire and Special Perils Policy, the duration whereof was from 04.04.2005 to 03.04.2006. The insurance policy that is on record indicates the coverage for insurance for building to the tune of Rs. 15,50,000/-, for plant and machinery and accessories to the tune of Rs.88,02,000/- and for the generator set to the tune of Rs.7,35,000/-.
4. Fortunately on 17.09.2005, during the duration of the policy a fire took place in the unit, the same was intimated to the Insurance Company and a surveyor, Mr. Vinod Kumar Lamba was appointed to carry out the survey. The surveyor reached on the spot and commenced his survey on 18.09.2005 visiting the complainant's site on three occasions.
5. During the process, the complainant tendered his documents and the surveyor submitted his report on 26.06.2006, which is extracted herein under:
FA/272& 321/2015 Page I 2
'26.06 JG06 ~
Ref. No. 5926 A
The Sr. Eranch Manager .
the New lixha Ass. Co. I.tcl
0.0. 2C*2.' liirhana Road.
Kanpur. ' -
SUl>:- Suivl-v and A'-su'.-.uifiH Rcpuit.un Cl.»nue<f rii*.' » AJc AVs Khanna Polyrtbs (P) Ltd.. Akrampur Industrial Area, Unnap.
Under Pol. No. I'vt : >..l.mt< >>•>. :
Il INSURANCE PARTlCULAItS '
.») INSUKH.'S H/s Khanna f'ob.n'ilH <P> I td.
O:f : 2.^/ >68; Birhana Road. Kanpur
- Wo.'ks : Akrampur, Unnao
b; POLIC r NO. ' 420102/11/05/00007
C) PERIOD OF INSURANCE 04.04.2005 to03.<M.2006
d) SUM INSURED Total Sum Insured - 11052000.00 as under
Rs. 1550000.00 on bufidiltg
• Rs. 8802000.00 on Plant & Al/cs .
Rs.;700000.00 on Gen. Set^-^v "
e) Type of"Pol icy : <lt (fsT standard fire and'speciat perils policy
. . enclosed^------
THE SUBJECT mXtER ft •
The subject matter claim which wasipurchased and
installed in Feb. 2001. The specificaUOru^'the^piant are as under, g • 120 rnnTextruder with 'DICPAtotor reduction gear.boxT drive control panel. Temperature control paneljandrhopper loader^■ ■ ' J* . •-' f^drautfc Screen Changei^with adaptoriESgi-- ' * ' ,X • Sheet Die (Coat hangerttype)^350mmf^
- Additional • /SSsa' . • Calendar unit . 1
- ; Preheating and cooling unit • - • ■ .
- Guide Roller conveyor ' '
. - .Take off.utos • •
■- ' SSratCre c^^^aneLfor^Oie an jea^ndar unit •
to "<fe following invoice / proforma
- invoice. ..
Inv. No. 198 dt. 16.02.2001 of J.P. tod. •
' Proforma Inv. No. NIL dt. 09.01 .ZOOJ of J.P. Ind. Both the documents are enclosed at
. Annex • II and III respectively.
THE INCIDElQT
At about 8.30 to 9.00 PM on I71* Sept. 2005 'a> Date d Time of toss. :
b) Date of Deputation : ■ 18 Sept. 2005 .(8.09.2005 and'onwards on 3 occasions.
c) Date of Conducting Survey :
b) Date of Submission ot 20.07.2606 (Claim form enclosed at Apnex - 4) \ I FA/272& 321/2015 Page I 3 J R6f. No: 5926 71'• '-*■ ■: v ■ -'•n' • -2- f SURVEY DETAILS ic.uv.ivtfs. Uf-n^n ..^n«s«cr fa in. r.doecp nn^h . A.Q. on Ind^ris"^' V'2$ col'd-ctcd and Photcsrepht were infcen showing dan-eged «/c '• the repeirVin between" °1'1 rCp3':t !h' ,'CCC'V 7i.-itcc' '•« '"specs nnal!y '■lSilCd a<lcr rcp":f' ' •c:* «Wleicd-to chcch the M/c in a or..ing condition and ebo to check th? selvage. *, ? .{1nOt °U.t °; PJiacC "wencicn chat insured were reminded severe! times to .uomit the required documents vide our (otters di. I8.G9J005. 04 11 7005 • I8.O2.2CQ6 , 7O.O4.7OO6 mid 16.06.2006.
Although copies of all the letters were marked to.imurcrs e.lso. hewo'/cr. copies o:
alt aoove tetters can bo produced on demand.
Wow that the documents have been received , the (indings lutvo been compiled as THE INSURED & THEIR ACTIVITIES • TIs? assured M/$ Khanna Polyribs tPj Lid., arc^ciigagcd.in m.inufacu.ning of pL'.st:>' .-.sheets tor industriahpurchS'scs.,.the strength of the sheet is at-par-with metallic sheet. On top of its'strength and (dngivity these sheets are acid proof and rust proof ' hence are. in much demand^ for certain industries. Tlte extrusion plant wraFpurchaSed ajidjnstailed in Feb, 2.003. ■The construction of the? s(ied (where;the;p(ant (s installed)'confirms co class-1 by all standards , ax the walls are hjade of burnt.bdcks., set in cement mcrtetu'.haviiv' ' cement plastering on both;sides.,. The roof is made up of G.'l.*7 4.V: sheets on anole pertinsand trusses.' •,r • . .
The extrusion plant is grouleddn C-.C. ftooring. ' • INCIDENT LEADING TO FIRE AND^UtM ...
•v • • ,'?5? • As-reported a fire took place due to short circuiting . follcwed by sparking from light point near the plant andengulfed the whole unit in go time .* This is as per the claim form enclosed herewith at Annex 'd. Her? ft is net out of nlArp./r-gimtlnn thAUhe plant was lyinc closed at the time of fire Height because It was holiday on 17 Seo7rz5dx'l'"tA,>'*'>"*1 ' Tne incident of fire occurrence vras flashed in the local news papers the next. A copy of'paper cutting is also enclosed Annex 5.
i. . 't . • ' . ' METHODS'ADOPTED TO EXTINGUISH THE FIRE ,0q noticing the fire the guards and securities staff of the factory rushed w(th water buckets, extinguishers sand and mud to extinguish the fire. In the meantime they also informed the fire brigade authorities at Unnao and owners of the mill at Kanpur. • t Statement of two guards Sh. Suresh Oojpai and Sh. Ram Narcsh Yadav are enclosed herewith at Annex 6 ahd 7 respectively.■ In the meantime fire engines from Unnao fire brigade arrived at the spot end extinguished the fire , thus'saving a devastating loss which would have occurred otherwise. Fire brigades report is alto eiKloted herewith at Annex s.
\ L Cctutf, j
M/272 & 321/2015 Page I 4
. *1
Ref.-Ho.5926
26.06.2006
«
•L
description of oamagcs
■ J. 14 Nos. Calibrating rolls
2. 6iNes. Solenoid
3. Chiiiii'.g !'l?.:H t ' ' •
-i. .''ikv. Gear ilo.'".".
5. Control Panel
6. .Hearings ■ Al!
7. 6 Nos.' .Motors
6. V-Belts • All
9. Hydraulic Pipes - All •
10. Elect! icat items
iI.Oil Seals
12. wise hardware items
ASSESSMENT OF LOSS ■ *
Initially the insuredihad submitted estimated loss to the.tZne^f RsS38.85 Lacs asv detalled^nAnne^M' X JW ■ V'. . ' ' Each claimed •• Each claimed iterns^asjthorougfilyxjhecked items^was^thorouglity'checked for for qoantitlj^^ quantitlc^nd rates^an'd IterhsMhTch"
.
were not damaged or.wefe repairable at Negligible costf^ere disallowed. Finally the Insured submitted amount of loss far Rs.'2308688.00 as perAnnex r 10 enclosed. detalls'are on actuallbasls . .. These details'are actual'basls le'Money spent by the insured on repairs /.
replacement. ■g ■ ' The losses have been assessed and compiled asunder, after comparing the same with losses claimed,.. . /Hh*- ................
$1. No. description of toss' * .•'7" Claimed Amount 7} Avowed Amount ' " | • TWibrating Rotis • ■473240.00 7? J73240.{XH^' '2 • rsolenoid Valves ~ ........ 27219.00' "2. 27219.^} --
P'fL,!?S 28756.0' 12 28756.00]
IGearBox" *87436.00 ■' ~~ 87436.00*1
._i__________ _ __ 6350.00 ■ 6350.001
5 . | Welding Rods -.4132.00 ' NIL:j
435100
i »
I
f
3936.00
769<00 ____ ...........I
' c<- j
I
..... Control Panel I r * '""82650:00
... 82650.001 *
( 'Bearings'™' "'19377.00 50290.00 i
13776'.00
1415.00
. 2648.00
• 9131.00
739.00
(091.00
2118.0C
8 Motors 17862.00 326eO.OO
14818.00 |
FA/27. Contd. J, 5
* .• da..
Ro.f. No. 5926
26.06.2006
9 V-Bcfu •••'b•» IW**«
ioJb'.bo'......
ZilJ^oo
601.00
10__ Hydraunc Pipe ft fiulnc?-- 486.00
. bfftl.OO ' 84191(56
11 . Electrical Items • '• '
12 . ^ec* (RoundsTA^gTi^T)
ssta--
1'3 Steel ft MS Tubes •
issss.ofi' ~~ 15555.00
Toil Seals ~ 18474.06~ "________ NIL
14 t
18415.00"' I Ml5.00
15 \ jCfCM / Bolts ■/ Nuu' IIKM « awm
16 Misc Items '
987T00 2ZZ 9875^1 '
135021.00 U5021.00I
17.."' Repairs 250765.00 " 250705.00 h
1 Rotof$ Shafts / Pumps
18 Other Plant ft M/c Items 19225000 _____ 19225000
19 GasCyL. : 6742.06 ~ 6742.00"
3680.00 _____ 2000.00
20 • ' Freight ft Cartage • * -•*30429.00" .___ •NIL
21 InspectlonlFee • ________ 9637.00 ____ ._ 0.00
22 ' J.P; lrid:»M7c Parts_________ 13676'. Ob'_____ 13676.00
23 __ Ourawell Fuid Contioi (Parts) 11529.601. •__ 11529.00
24 . ~ M^eUJtutd Temp ControltUniftl » 30140.00.1^. • 301'40.001
25 7 ' Temp'Contpil Panels 'iil? 1726?746O ■ 172677.00
26 ' Rdpalrs^ggw
Repairs'Gharg
techno System!
27 f ■r■'Repairs
"7""T7
to AdVahc^ "
. to Advance*.'
Ct^rgwiPaid
T
rzss.oo"
V HblO.OO
2755.00
{ .■ ^Techno System^.7-'* .
Repairs Gharg^sigald to Sh.T/^Ti ZW1'8400 11984.00
28
Ambay Traders'L*. __ ;
' Civil Work Labour Charges ;. •1.3 .10350.00 j ■ ••It •• NIL
29 42285.00
Goodwill *•••
2158.00
r ' . ■
.I
'jo"" ' ' Estimates NIL j
a) Embossing Rolls < '4i''' '240000.00 .•«.•rt
: 105000.00, 10000.00
b) Painting Job , 35000.00: ■ NIL
' c)'Casting Job
'2708686.001 '"18T7399.00
------------------------ ;-------- ................... ' i^O 3^
BASIS OF ASSESSMENT .• ; • " . . A
. Ody tl,«e ■« «« \
2. "to,"c ,h"e '
were lying near (hr M/C/H thp -Hn44 w been.disallowed because
this structure has now beenJn 'JDTxlHHrh'a"" disallowed because
' 4.' Freight and cartag^moW? to .
these have not been found InsurecI d(sa|(owed because these
wS.' Inspection fee amounting.to R£' » ---------- -- • • « •
. are not payable under.the flre^licyT^^ 42285.00 ♦ 2158.00 have been
6. -Civil work. amounting to Rs. 1^50.00 o£/^eflC^aif2£^. t • 'disallowed because Itjtolgggyy "i^jfljoo.oo ha$ been disallowed' \l, FA/272& 321/2015 Page I 6 Ref. No. 5916 Tims total loss assetscr1 IAI71W» LESS DEPRECIATIpN The i>l.mt was purchased m feb. Mil, ami low 17 77 av 7 the M/c h 'I Veats Q 7 momhi, I lent p 'j(i\ deiKcclatlTm it rbaej/'l aM (J 10fc per year for 5 years.
Therefore
SOW 1817390.00 W.W 7.
LESS SALVAGE
Salvage consHtlng ol all allowed damaged iwru havln; cwmnrclal valfw sf SOOOO.OOonly. However the same may lx* collected (o' onward', dstex/ta' if 'avreff deem (It.
ADEQUACY OF SUM INSURED For computing adequacy of sum Insured (he quotation (or Ne-w M/c were sry /?•: (a find out NRV of the similar M/c.
NRV of Pan • I hU
Value • 16.32^ • -IX • 2X 7473804.60
Add NRV of Pan • ll ' <* <> I-1'
Value * 16.32% • 4% 12% 2850361.11
Total Value1 ' 10329166.00 »
Depreciation value (50%) S [ fe</$8J- «*»
-■s
(M/c Being 4 Yrs. 7. Months Old)
wnereas.a.i.
Whercas abovellnlt »»
S.I. on <»iw»c.v».«yis a • 8802000.00
Hence the M/c has (^^^adequate^lrijuTed.^ LU; 5/ <U
'•nuPUTATION OF NETT,PAYABLE .'.'i*
< »'."l~*--F ' ' .................................. ..... ' * Gross Loss Assessed . 41817399.00-
. 908699.00 - tva^
Less Depredation
. ' 50000.09 r. *
Less Salvasf /' ' 10000.00 ■ M' A •
WSMM •
XSeSSS rw *■> »--«•« **• **
« i iv ••••* - -- •it
This i eport Is issued without prejudice.
Ends. p
1. PolicyCopy - Annex-i
2. Purchase inv. Annex • ll
2. Proforma Inv. • Annex • HI
4. Claim Form • Annex - 4
5. News Paper Cutting • Annex - 5
6. Security Man's Statement Annex• --: • 6
7. : Security Man's statement Annex A«nex • 7
8. F.B. Report -Annex • 8
9. 1st Estimated Loss • Annex -
10. Final petails of Loss • Annex 0
11. NRV Quotation • PM '1 AffiC . ..
12. NRV Quotation • Part •11 ^,nex •'II VW '
13. Repairs / Replacement Ollis i . '.i K. Postal rrrripK
15. Photos
16. $/Fcc OHI (7INOO KK, UAUJAj FA/272& 321/2015 Page I 7 V1
6. The surveyor assessed a net amount of loss suffered by the complainant to the tune of Rs.8,48,700/-.
7. It seems that the complainant was not satisfied with the survey report and he therefore registered a complaint with the Insurance Company, who in turn appointed Mr. R. C. Bajpayee, Insurance Fraud Investigator to submit his report.
8. According to the complainant, the said investigator was not a qualified surveyor nor was he authorised to conduct any survey and he very casually reduced the rate of depreciation to 7.5% that was fixed by the surveyor @ 10% p. a. Mr. Agrawal submits that neither was there any basis for applying an annual depreciation of 10% nor was there any justification or any basis for the said percentage reduced to 7.5% by the investigator.
9. As a result of this reduction in the rate of depreciation, the amount reflected by the investigator was Rs. 10,65,478/-. Still the Insurance Company did not make any payments.
10. The claim set forth by the complainant before the Insurance Company was for Rs.38,85,000/-. It was also alleged by the complainant that he had taken a term loan from the Bank and he was regularly suffering losses as he had to pay interest on the loan amount to the tune of 16.25%. The loss had occurred on account of the fire and in spite of repeated requests, the claim was neither settled nor any payments made. It was the case of the Insurance Company that they were prepared to pay the amount as was calculated by the surveyor, but the same was not acceptable to the complainant, who filed CC/33/2007, FA/272& 321/2015 Page I 8 S' before the State Commission alleging deficiency in service on the part of the Insurance Company.
11. The Insurance Company dispatched a cheque dated 20.07.2007, to the complainant for a sum of Rs. 10,65,478/-, but the complainant returned back the same as the said amount was not acceptable as a settlement for the claim.
It was alleged by the complainant that there was no basis for the said calculation. This cheque had been dispatched after the filing of the complainant on 16.06.2007. However, in the complaint, the claim was raised is for Rs.23,08,688.25 paise, coupled with Rs.5,00,000/- as compensation for harassment and 18% interest on the said amount to the tune of Rs.5,62,865.54 paise and an additional amount of 18% interest on the said amount till the date of disposal of the complaint.
12. The Insurance Company resisted the complaint supporting the surveyor's report and further urged that the claim that was set forth before the Insurance Company was totally exaggerated. The complainant on its own undertook the expenses for the reinstatement of the losses which according to the complainant was only Rs. 19,28,688.25 paise.
13. During the pendency of the complaint an interim order was passed on 26.04.2013 for releasing the amount of Rs. 10,65,478/- to the complainant, subject to the decision of the case. The order passed is extracted herein under:
"6-04-2013 Both parties are present. Heard on the application for direction for payment of admitted amount of Rs.10,65,478/- on the part of the opposite party. Both parties agreed that the amount shall be paid and accepted in the account subject to decision of this case.
FA/272& 321/2015 Page I 9 Put up on the date already fixed i.e. 08-05-2013."
14. The complaint was ultimately allowed extending that benefit of the estimated amount by the surveyor to the tune of Rs. 18,17,399/-. It is in this background that the present appeals have been filed, one by the complainant claiming enhancement and the other by the Insurance Company for setting aside the impugned order.
15. Mr. Lav Kumar Agrawal has commenced his arguments urging that the report of the surveyor is erroneous in calculation and for that he has invited the attention of the Bench to the report of Mr. Vinod Kumar Lamba, the surveyor dated 26.06.2006 that has already been extracted hereinabove. Mr. Agrawal has at the outset stated that no assessment has been made with regard to the loss of the generator, which was clearly covered under the policy separately. He further submits that the items for assessment made for the machinery is incorrect, in as much as, the claims which have been disallowed from item nos. 1 to 7 in the report dated 26.06.2006 are incorrect. He submits that welding rods mentioned at item no. 2 and the embossing rolls mentioned at item no. 7 have been excluded only on the ground because they were lying near the machinery as spares. Mr. Agrawal submits that merely because the spares or the machinery accessories were lying near the machinery, the same do not stand excluded from the coverage under the policy.
16. He then submits that certain steel structures are stated to have been disallowed because it was installed later on.
17. He then submits that item no. 4 regarding freight and carriage has been erroneously excluded as they have not been found to be insured. He contends M/272 & 321/2015 Page 110 that a freight and carriage is the part of the cost incurred by the complainant for the installation of the machines and therefore the same cannot be excluded.
18. He has then urged that item no. 5 is the inspection fee that has been realised from the complainant and which ought to be refunded. He then submits that civil work related to a component of the building itself, in as much as, the civil work was required to be done for the installation of the machinery and consequently the same could not have been excluded.
19. He has then urged that the depreciation applied by the surveyor is 10% p. a.
for five years. He contends that there is no basis for the same, as a life of the machinery was admittedly of 25 to 30 years, whereas only 4 years and 7 months have passed bye.
20. He therefore submits that the computation made by the surveyor is erroneous and the Insurance Fraud Investigator, Mr. R. C. Bajpayee, who was appointed later on, simply reduced the percentage of deprecation from 10% to 7.5%, for which also there is no basis. The argument of Mr. Agrawal is that the policy was issued in respect of the goods that were admittedly known to have been existing for 5 years and therefore it was the insured value as on the date of renewal of the policy that was mentioned in the policy. It is that amount which is indemnifiable and there was no occasion for applying depreciation, in as much as, the value of the plant and machinery and the building on the renewal of the policy was a depreciated value, keeping in view their length of existence. Thus, further depreciation by the surveyor in the value of the goods insured F4/272& 321/2015 Page 111 was unjustified. He therefore submits that there was no basis or foundation for applying any depreciation on the materials that were lost.
21. Learned counsel for the Insurance Company, however refuted the submissions and urged that in spite of all this, the incident was not disputed and keeping in view the promises made under the policy a cheque of Rs. 10,65,478/- was tendered, which the complainant refused to receive. The complainant, however later on moved an application for release of the amount that was allowed on 26.04.2013 already quoted hereinabove. The said amount has therefore been received by the complainant under the interim orders of the State Commission dated 26.04.2013.
22. The issue therefore now is of quantum and the computation and calculations which according to the complainant have been incorrectly carried out by the surveyor and the Insurance Company has erroneously accepted the same which amounts to deficiency in service and unfairness in transaction.
23. At the outset, we may point out that an oral argument has been advanced with regard to the loss of generator as well. What we find is that the original complaint does not anywhere mentions the loss of generator. We have not been able to find out any claim being lodged for the loss of the generator and it for this reason that it seems that the Surveyors' report dated 26.06.2006, does not contain even a reference to the loss of the generator. Consequently, the oral arguments advanced by Mr. Agrawal cannot be sustained for such a loss, which was neither claimed nor has been specifically pleaded in the complaint. The surveyor's report also does not eventually mention any loss to FA/272& 321/2015 Page 112 . the generator and consequently the claim for any damage or loss to the generator cannot be countenanced.
24. Coming to the issue of Welding rods and spares lying near the machinery, it may be mentioned that the fire had occurred on a day when the unit was closed. It was not functional on that date. It is also not disputed that the items were lying beside the machines in the workshop itself. There is therefore every reason to presume that they have suffered losses, but merely because they were lying near the machine cannot be a ground to disallow the claim unless it is found to be fraudulent. In the instant case, there is no such allegation that the claim is not genuine. The fire did take place which remains undisputed. The damage to the Welding rods and to the Embossing rolls also remains undisputed. They have been excluded because they were simply lying near the machines as spares. We do not find any logic in the report of the surveyor to exclude these items. The welding rods have been assessed at Rs. 12,487/- and the amount of embossing rolls is Rs.2,40,000/-. These two amounts therefore deserve to be included in the loss assessed.
25. Coming to the issue of depreciation, it is evident that the plant was purchased in the year 2001 and the loss occurred on 17.09.2005. There cannot be any dispute about the age of the machines. The question is as to the rate of depreciation which was applied @ 10% p.a. by the surveyor. This rate was reduced to 7.5% by the Insurance Fraud Investigator, Mr. R. C. Bajpayee. The Insurance Company has given no reason for accepting the reduction, even if it is assumed that the investigator has also not given any basis for calculating the FA./272 & 321/2015 Page 113 depreciation @ 7.5%. It is evident that the investigator was appointed by the Insurance Company itself, who has recommended a depreciation of 7.5%.
26. The machinery has been insured and the insured amount as mentioned in the policy is for plant and machinery is Rs.88,02,000/-. The sum insured therefore covers the amount which has been claimed and it falls within the scope of the policy. What we find is that the complainant has indicated that the purchase value of the machinery in the year 2001 was Rs.66,47,264/-. This was supported by the invoice dated 16.02.2001. It is therefore not a case of under insurance. However, the value of the machines that were purchased for Rs.66,47,264/- would certainly reduce within five years of its installation. From that point of view, the depreciation is liable to be invoked, but the question is that the policy which was taken for the period in question was a renewed policy for a value of Rs.88,02,000/-. Acquiring a policy for a higher value or higher sum insured would not increase the value of the machinery that was admittedly purchased for Rs.66,45,264/- in 2001.
27. The surveyor while assessing the loss has recommended the reduction @ 10% and the investigator has reduced the same to 7.5%. The surveyor has calculated the loss of 50% of the valuation to the tune of Rs.9,08,699/- and the net loss has therefore been calculated after less salvage and excess clauses to the tune of Rs.8,48,700/-.
28. On a calculation as per the investigator on a deprecation of 7.5%, the amount comes to Rs. 11,35,874.37 paise. Reducing the amount of Rs.50,000/- as salvage and Rs. 10,000/- as less excess clause, this amount comes to F4/272 & 321/2015 Page 114 Rs. 10,75,874/-. This amount has already been paid under the interim orders of the State Commission on 26.04.2013.
29. As indicated above, we have found that the surveyor has unreasonably made deductions of the Welding rods as also the Embossing rolls that were also damaged in the fire. The total amount is Rs.2,52,487/-. The said material and spares, if @ 37.5% is deducted as per the investigator, would be Rs. 1,57,804/- . Apart from this certain other deductions have also been made, but we will not forensically examine the same as it is only the broad items that have been disallowed and have been noticed by us. Thus, apart from the sum of Rs. 10,75,874/- paid to the complainant, an additional sum of Rs. 1,57,804/- also deserves to be paid. Apart from this the complainant is also entitled to payment of interest on both the amounts which has not been awarded.
30. Interest on claims has to be awarded as held by the Apex Court that the failure to award interest, when there is a delay in payment, results in injustice. This matter was considered by the Apex Court in the case of LIC of India and Anr. versus S. Sindhu reported in (2006) 5 SCC 258 the provisions of the Interest Act, 1978. Following the aforesaid principle this Commission in the case of Soni Singh & Ors. Vs. M/s. Iffco Tokio Genera! Insurance Co. Ltd, FA/958/2023 decided on 29.08.2025, i n pa rag ra phs 12 to 16 has observed as under:
"12. We may point out that award of interest in consumer complaints of different varieties has been upheld and the Apex Court has gone to the extent of observing that failure to award FA/272& 321/2015 Page 115 interest, when there is a delay in payment, results in injustice and therefore interest should be awarded in all cases subject to of course the discretion to be exercised in these matters depending upon the facts of each case. This matter was considered by the Apex Court in the case of LIC of India and Anr. versus S. Sindhu reported in f2006) 5 SCC258S the provisions of the Interest Act, 1978, where in Paragraph No. 12 to 15 it was observed as under:
"12. Where a statute provides for payment of interest, such interest will have to be paid in accordance with the provisions of such statute. Admittedly there is no enactment, or rules made under any enactment, either relating to contracts in general or insurance in particular, which provides for payment of interest in regard to the amount payable under such a policy.
13. Let us now consider the provisions of the Interest Act, 1978 ("the Act" for short) which deals with payment of interest up to the date of suit/ciaim. The Act was enacted to consolidate and amend the law relating to the allowance of interest in certain cases. The objects and reasons state that the Act was enacted to prescribe the general law of interest in a comprehensive and precise manner, which becomes applicable in the absence of any contractual or statutory provision specifically dealing with interest. Sub section (1) of Section 3 of the Act provides that in any proceedings for the recovery of any debt or damages, or in FA/272& 321/2015 Page 116 any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say--
if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
if the proceedings do not relate to any such debt, then, from the date mentioned in that regard in a written notice given by the person entitled or the person making the claim to the person Hable that interest will be claimed, to the date of institution of the proceedings.
14. Sub-section (3) of Section 3 makes it dear that nothing in Section 3 shall apply in relation to any debt or damages upon which interest is payable as of right, by virtue of any agreement, or any debt or damages upon which payment of interest is barred, by virtue of an express agreement. Clause fa) of Section 2 of the Act defines "court" as including a tribunal and an arbitrator; clause (c) of Section 2 defines "debt" as any liability for an ascertained sum of money and includes a debt payable in kind but does not include a judgment debt; and clause (b) defines "current rate of interest". Sub-section (1) of Section 4 of the Act provides that notwithstanding anything contained in Section FA/272& 321/2015 Page 117 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law. Sub-section (2) of Section 4 provides that notwithstanding what is stated in Section 3 or Section 4(1) of the Act, in the cases of money deposited as security for performance of an obligation, interest is payable from the date of deposit; and in the case of money payable by virtue of a fiduciary relationship, money/property obtained/retained by fraud and money due as dower/maintenance, interest is payable from the date of cause of action. A claim for interest on the amounts of premium paid, from the respective dates of payment of premium to date of settlement of claim, does not find support from any of the provisions of the Act.
15. Even assuming that interest can be awarded on grounds of equity, it can be awarded only on the reduced sum to be quantified and paid from the date when it becomes due under the policy fthat is on the date of death of the assured) and not from any earlier date. We do not propose to examine the question as to whether interest can be awarded at all, on equitable grounds, in view of the enactment of the Interest Act, 1978 making a significant departure from the old Interest Act (32 of 1839). The present Act does not contain the following provision contained in the proviso to Section 1 of the old Act: "interest shall be payable in all cases in which it is now payable by law". How far the decisions of this Court in Satinder Singh v. Amrao Singh [(1961) 3 SCR 676 : AIR 1961 SC 908] and Hirachand Kothari v. State of Rajasthan [1985 Supp SCC17] FA/272& 321/2015 Page 118 and the decision of the Privy Council in Bengal Nagpur Rly. Co. Ltd. v. Ruttanji Ramji [(1937-38) 65IA 66: AIR 1938 PC 67] holding that interest can be awarded on equitable grounds, all rendered with reference to the said proviso to Section 1 of the old Interest Act (Act of1839), will be useful to interpret the provisions of the new Act (Act of1978) may require detailed examination in an appropriate case."
13. Learned counsel for the appellant has also relied on the decision of the Apex Court in the case of AlokShanker Pandey Vs. Union of India & Ors., (2007) 3 SCC 545, and prays for award of 12% interest.
14. We may point out that in insurance matters the IRDA Regulations regarding Protection of Policy Holders Interest, 2002 provides for payment of interest in case of delay beyond the stipulated 45 days after the settlement of the claim with the rate of interest payable @ 2% above the bank rate.
15. In matters of medical negligence the Apex Court in the case of Bairam Prasad versus Kuna! Saha reported in (2014) 1 SCC 384, observed that a rate of 6% would be reasonable and the observation made in paragraph 131 of the said decision is extracted herein under:
"131. Therefore, the National Commission in not awarding interest on the compensation amount from the date of filing of the original complaint up to the date ofpayment of entire FA/272& 321/2015 Page 119 * compensation by the appellant doctors and AMRI Hospital to the claimant is most unreasonable and the same is opposed to the provision of the Interest Act, 1978. Therefore, we are awardino the interest on the compensation that is determined by this Court in the appeal filed by the claimant at the rate of 6°/o per annum on the compensation awarded in these appeals from the date of complaint till the date of payment of compensation awarded by this Court. The justification made by the learned Senior Counsel on behalf of the appellant doctors and AMRI Hospital in not awardino interest on the compensation awarded by the National Commission is contrary to law laid down by this Court and also the provisions of the Interest Act, 1978. Hence, their submissions cannot be accepted as the same are wholly untenable in law and misplaced. Accordingly, the aforesaid point is answered in favour of the claimant."
16. The ratio of the above decisions therefore support the contention of the appellant for award of interest and we therefore accordingly allow this appeal in respect of the claim of interest, but we however, in the facts and circumstances of the present case, award interest @ 9% from the date of the submission of the claim i.e., 08.12.2018 till the date the actual payment made by the insurance company to the complainants/ appellants. "
31. The date of loss is 17.09.2005. The complaint was filed on 16.06.2007. The State Commission has awarded 8% interest from the date of the filing of the FA/272 & 321/2015 Page I 20 complaint. The amount paid under the interim orders of the State Commission dated 26.04.2013, is Rs. 10,65,478/- through a cheque dated 29.05.2013. The said amount shall carry 8% interest from the date of filing of the complaint referred to above, till the date of payment, i.e., 29.05.2013.
32. So far as, the balance of the amount referred to above, i.e., Rs.1,57,804/- shall also carry interest @ 8% from the date of complaint till the date of actual payment which shall be paid within two months. In the event of any default, the same shall carry an interest of 10%.
33. Accordingly FA/272/2015 is partly allowed modifying the awarded amount of Rs. 18,17,399/- to the extent indicated above. Since the impugned order of the State Commission has been modified to the said extent, FA/321/2015 also stands disposed off on the same terms.
Sd/-
( A.P. SAHI, J.) PRESIDENT Sd/-
Brahm/ VM /Court-1/CAV ( bharatkumar PANDYA)
MEMBER
FA/272& 321/2015 Page I 21