Insurance – Repudiation of Claim for loss due to floods on the ground of fraud
The plaintiff – company is the manufacturer of plastic components by injection and blow moulding. It had taken five insurance policies for the stock, machinery, building, furniture, fixtures and equipments against the risk of fire, storm, flood, etc and allied policies in its regular course of business.
On26.6.2002, the plaintiff’s factory suffered heavy losses since the entire premises were submerged under the flood water.
The Survey of the Insurer submitted the report on 30.10.2002 for 80% loss. However, the Insurer appointed another Investigator for the assessment report dated 14.2.2003. On the basis of second report, the claim was repudiated on 12.5.2003.
The plaintiff filed civil suit for Rs.92,07,739/- against the insurance policies of the appellant – Insurer. The trial Court, however, granted the claim for Rs.53,07,690/-. The first appeal Court, however, allowed the claim for Rs.62,00,000/-.
HELD that the surveyor’s report is not the last and final word. The allegation of fraud cannot be accepted to repudiate the claim only based on selected few findings in the surveyor’s report. The particulars and details of fraud must be pleaded and proved.
Without any valid proof of fraud, the Insurer is not entitled to rely on the general conditions of the policies to repudiate the claim.
The claim cannot be held to be fraudulent only because the Insurer finds it excessive. Mere exaggeration of an insurance claim will not itself be fraud.
The Insurer accepted both the surveyors’ reports but relied on selected few findings ignoring the conclusions in the reports to repudiate the claim on the ground of fraud.
Judgment dated 12.11.2024 of the High Court of Bombay in Second Appeal (ST) No.18815 of 2023 with Interim Application No.13483 of 2023 of United India Insurance Co. Ltd. Vs. Precious Plasto Packing Pvt Ltd.
