HC asks insurance firm to pay its due along with interest rate


Observing that there was no fraud committed on the part of the insured, the Bombay High Court has directed an insurance company to pay its due and pay a hefty compensation for delaying it. The company has been asked to pay insurance of over INR 9 lakh with an interest rate of six per cent per annum from the year 1988.

Justice MT Joshi of the Aurangabad bench passed the judgment while dismissing an appeal from the United India Insurance Co. Limited. Instead, the judge asked the company to pay INR 9.23 lakh to M/S Manisha Enterprise as a claim of a fire insurance policy. Further, the court directed the company to allot an interest rate of six percent per annum since the day (April 21, 1988) from which the showroom was completely gutted in fire.

Challenging the order of the session court, earlier, the insurance company alleged that the insurer had committed fraud as it bought additional insurance on the day the incident took place.


It is worth noting that in November 1987, the proprietor of Manisha Enterprises obtained a fire policy ‘B’ for a period between November 18, 1987 and November 17, 1988 and the risk was covered for INR 2 lakh.

Further, the proprietor’s relative also bought another insurance policy ‘A’ for a period of between April 21, 1988 and April 20, 1989 and covered a risk of INR 10 lakh. Incidentally, on the night of obtaining the second policy, the enterprise was damaged in fire and thereafter, it made a claim of INR 14-15 lakh. The risk firm sent a surveyor who assessed the lost worth being INR 11, 14, 415.

The insurance company covered a risk of INR 1.91 lakh with respect to the first policy and simply refrained from paying the claim of the subsequent policy.

Hence, Manisha Enterprises was compelled to file a suit before the HC which was ultimately ruled in its favor.

Ruling that the theory of fraud in the particular case is nothing but a concocted story the judge ruled “The plea of fraud is easy to make but very difficult to prove. Besides, it is akin to a charge of the criminal offence though it may have been made in civil proceedings. It is therefore the established principle of law that the said plea has to be proved beyond reasonable doubt”.