NATIONAL INSURANCE COMPANY LIMITED Vs. DIGITAL WORLD
LAWS(DLH)-2022-4-8
HIGH COURT OF DELHI
Decided on April 08,2022

NATIONAL INSURANCE COMPANY LIMITED Appellant
VERSUS
Digital World Respondents


Referred Judgements :-

ORIENTAL INSURANCE CO. LTD. V. MITRA AND GHOSH PUBLISHER [REFERRED TO]
SIKKA PAPERS LIMITED VS. NATIONAL INSURANCE COMPANY LTD [REFERRED TO]
NEW INDIA ASSURANCE CO LTD VS. PROTECTION MANUFACTURERS PVT LTD [REFERRED TO]
HYDER CONSULTING (UK) LTD. VS. GOVERNOR, STATE OF ORISSA [REFERRED TO]


JUDGEMENT

SANJEEV NARULA, J. - (1.)The present petition under Sec. 34 of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as "the Act "] arises out of an arbitral award dtd. 14/8/2020 directing the Petitioner [hereinafter referred to as "NIC "] to pay: (i) a sum of Rs.3,11,94,796.00 (which includes principal amount of Rs.1,93,47,430.00, plus simple interest awarded at Rs.1,31,02,645.00, less Rs.12,55,279.00 paid under interim award dtd. 10/3/2017) along with post-award interest @12% p.a. from 15/8/2020 till the date of payment, (ii) pre-award interest @ 11% p.a. for the period from 1/4/2014 to 14/8/2020, amounting to Rs.1,31,02,645.00, and (iii) cost of Rs.24,77,325.00.
(2.)NIC impugns the grant of: (i) Claim No. 1 against loss to the building; (ii) Claim No. 2 towards loss caused to the plant and machinery; (iii) Claim No. 4 towards loss caused to stocks; (iv) Claim No. 7 awarding interest; and (v) Claim No. 9 awarding cost.
(3.)BRIEF FACTS:
3.1. NIC is a Public Sector Undertaking (PSU) engaged in the business of providing various general non-life insurance policies.

3.2. Respondent No. 1 - M/S. Digital World [hereinafter referred to as "Digital "], the Claimant in the Arbitration - is a sole proprietorship of one Mr. Ashok Gupta, engaged in the business of printing digital images on textile/cloth by heat transfer method through computerized machines.

3.3. Respondent No. 2 - Small Industries Development Bank of India (SIDBI) - is a Public Sector Undertaking engaged in the business of promoting, developing and financing in the Micro, Small and Medium Enterprises (MSME) sector. It is, as such, only a pro-forma party to the instant proceedings and is not represented through any counsel.

After the factory premises of the Claimant got gutted in fire, the entire work of the Claimant came to a standstill and the Claimant became irregular in respect of the credit limits availed from the Respondent No. 2. Consequently, Respondent No. 2 initiated measures to recover their dues and also kept on charging interest on the outstanding dues despite the fact that Claimant suffered losses on account of the fire. The dues of the Respondent No. 2 were settled by a one-time settlement, in which the Claimant had to pay a huge amount towards principal and interest accrued thereon and this was on account of the fact that the Respondent No.1 delayed to settle the insurance amount.

3.4. Digital obtained a Standard Fire and Special Perils Policy from NIC for the period 30/9/2011 to 29/9/2012 insuring building, plant and machinery, furniture and fixtures, stock of fabrics, and stock in process, situated at D-21, Sector-6, Gautam Budh Nagar, Noida.

3.5. On 26/9/2012 at about 14:00 hours, employees of Digital heard a blast at the ground floor of the afore-noted premises which resulted in fire and smoke.

3.6. Upon receipt of intimation of the incident, NIC appointed a Statutory Surveyor - M/s Rakesh Kapoor and Company [hereinafter referred to as the "Surveyor "] to conduct survey and assess the loss, as mandatorily required under Sec. 64UM of the Insurance Act, 1938 [hereinafter referred to as the "Insurance Act "].

3.7. After physical verification of the documents provided by Digital, the Surveyor submitted its detailed report and assessed net loss towards damage to the building, plant and machinery, furniture and fixture and stocks as Rs.12,55,279.00.

3.8. Aggrieved with this assessment, Digital filed a complaint before National Consumer Dispute Redressal Commission, New Delhi. During the course of adjudication of the said complaint, parties agreed to refer their disputes to arbitration, and a sole Arbitrator was appointed.

3.9. Before the Arbitral Tribunal, Digital made the following claims:

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