New Delhi, May 21, 2025:

In a significant decision that reaffirms the rights of corporate policyholders and the sanctity of insurance contracts, the National Consumer Disputes Redressal Commission (NCDRC) has ruled in favor of Goyal Energy & Steel Pvt. Ltd. in a dispute with The Oriental Insurance Company Ltd. over partial settlement of an insurance claim arising from fire damage.

The dispute stemmed from a fire incident on November 4, 2013, at Goyal Energy’s sponge iron plant in Raipur. The company held a specific insurance policy covering spontaneous combustion of sponge iron, with a sum insured of ₹9.5 crore. Though the final surveyor assessed the total loss at ₹1.01 crore, the insurer disbursed only ₹37.5 lakh, citing 58% underinsurance of stock based on the inclusion of unrelated materials like pig iron and billets.

Goyal Energy challenged this assessment, asserting that the policy specifically covered sponge iron alone and that its valuation was within the insured amount. The Chhattisgarh State Commission had earlier dismissed the complaint, accepting the insurer’s contention that a discharge voucher had been signed in full and final settlement.

However, the NCDRC overturned the State Commission’s ruling, holding that the deduction for underinsurance was erroneous and violated the express terms of the policy. The Commission found that the discharge voucher had been obtained under misrepresentation and could not constitute a valid waiver of the rightful claim.

In its judgment, the Commission cited precedents from the Supreme Court including National Insurance Co. Ltd. v. Boghara Polyfab and emphasized that acceptance of partial claim payments under pressure does not bar legal remedy.
The NCDRC directed Oriental Insurance to pay the balance amount of ₹58.86 lakh, with interest at 6% per annum from February 25, 2014, till the date of final payment. If delayed, interest will accrue at 10% annually.

This ruling serves as a landmark reminder to insurers about the necessity of fair claims processing and reinforces the jurisprudence around consumer rights in commercial insurance policies.

Counsel Appeared: Adv Anaand Shankar Jha