Nectar Lifesciences Limited vs United India Insurance Company Limited and Another

K. Kannan, J.—The writ petition, an insured Company against loss due to fire, seeks for a direction that the insistence of the Insurance Company that the petitioner shall give a letter of full discharge before it receives the amount which has been determined as the actual loss caused to the insured is unreasonable and for release of the amount as already determined by the insurer. It is an admitted case where, consequent on a loss due to fire, the extent of loss was ascertained under a contract of insurance by the respondents and it was found that the loss was to the tune of Rs. 28,62,57,661/-. The petitioner had also been paid Rs. 20 crores and while making the request for payment of the remaining amount as determined by them, the complaint is that the Insurance Company is demanding a letter of full satisfaction which the petitioner does not want to give now for the present since, according to it, the loss is more and that it should have its remedy to work out its claim for the balance after receiving the amount which is assessed by the Insurance Company through its surveyor.

The response on behalf of the Insurance Company is twofold: (i) there is a clause for arbitration in the terms of the policy and for any dispute in relation to the quantum, the matter can be resolved only through the arbitral process; (ii) under the guidelines issued for assisting the disposal of claims, it is required that after the approval of the claim by the competent authority, the insured/claimant should be advised about the final amount of the claim which is approved and the amount shall be released only after obtaining the formality of full and final discharge from the insured/claimant. The relevant clauses found in the directions are reproduced as under:

4.3 After approval of the claim by the competent authority, the Insured/claimant should be advised of the final amount of claim approved, with details thereof.

4.4 Remaining formalities of obtaining full and final discharge and bank/financial institution''s discharge (where required) should be completed before release of the amount of claim.

The dispute that could go for arbitration in the very nature of things shall be only in respect of matters which are in dispute and the matters which are not in dispute, it need not go for arbitration. In the assessment of the insurer, the loss is Rs. 28.6 crores and odd to that extent, it musi be seen that there is no dispute. The release of the amount as determined is being held up only because as per the guidelines, it shall not be done without obtaining a full and final discharge receipt. Having regard to the fact that the claim has been assessed and the difference between the amount as claimed by the insured and the amount that is offered is huge and the amount offered constitutes only 30% of the amount claimed, I am of the view that interest of justice would be best served only if the admitted amount is directed to be issued to the petitioner. The amount that is already paid, shall be given due credit and the remaining amount as determined shall be paid without any further delay. It shall be processed and paid within a period of 3 weeks from the date of the receipt of the copy of the order. The Insurance Company shall not insist on a full discharge receipt. The amount shall be without prejudice to the right of the petitioner to prosecute the claim in the process which the contract of insurance makes possible.

The writ petition is disposed of on the above terms.