NEW INDIA ASSURANCE COMPANY LTD. THROUGH ITS MANAGER versus M/S TATA STEEL LTD.

Citation: [2024] 5 S.C.R. 285 · Decided: 30-04-2024 · Supreme Court of India · Bench: SURYA KANT · Disposal: Disposed off

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Judgment (excerpt)

* Author
[2024] 5 S.C.R. 285 : 2024 INSC 356
New India Assurance Company Ltd. 
Through its Manager 
v. 
M/s Tata Steel Ltd.
(Civil Appeal No. 2759 of 2009)
30 April 2024
[Surya Kant and K.V. Viswanathan,* JJ.]
Issue for Consideration
A claim for 35.08 crores was filed by the insured after the ‘20 Hi Cold 
Rolling Mill’ was totally destroyed due to fire. Since running of the 
company was important, the Insured got a new 6 Hi Cold Rolling Mill 
installed in its unit and commenced production. Admittedly, based 
on the interim report of the surveyors, a sum of Rs.4,92,80,905/- 
was released in favour of the Insured by NIACL-insurer. Thereafter, 
the Insured gave consent for receiving Rs.20.95 Crores as net 
adjusted loss. However, the NIACL computed depreciation at 60% 
and settled the claim on 03.01.2003 stating the loss amount as 
Rs.7.88 Crores. The issues arising for consideration are as follows: 
(i) Was the Reinstatement Value Clause part of the policy; (ii) 
Was NIACL justified in computing loss on depreciation basis and 
fixing depreciation at 60%; (iii) Is the Insured justified in claiming 
reinstatement value by placing reliance on the judgment in Oswal 
Plastic Industries.
Headnotes
Insurance – Reinstatement value clause – Whether the 
memorandum consisting of the Reinstatement Value Clause 
was a part of the policy – The Insured contended that the 
memorandum containing the Reinstatement Value Clause was 
not part of the policy:
Held: The contention of the insured rejected – This is for the reason 
that before the NCDRC in the written statement filed by the NIACL it 
was specifically pleaded that copy of the fire policy was not attached 
with the Reinstatement Value Clause issued along with the policy, 
so the answering Respondent-insurer (NIACL) was filing the copy 
of the policy with complete terms and conditions and clauses along 
with the written statement – In the replication filed by the Insured, 
there was no denial of this averment. [Paras 31 and 32]
286
[2024] 5 S.C.R.
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Insurance – Computation of loss on depreciation basis – Was 
NIACL justified in computing loss on depreciation basis and 
fixing depreciation at 60%:
Held: It emerges clearly that under the main terms of the policy the 
company was to pay the Insured the value of the property at the 
time of happening of the destruction (except where NIACL opts to 
reinstate) – There was a special memorandum attached to the policy 
– That memorandum was the Reinstatement Value Clause which 
substituted the basis upon which the amount was payable from the 
value on the date of destruction to the cost of replacing or reinstating 
the property i.e. property of the same kind or type but not superior 
or more extensive than the insured property when new – However, 
as it transpires the said memorandum ceased to have any force 
since the Insured was unable and unwilling to replace or reinstate 
the property – Special Provision 4 (b) of the memorandum applied 
and rendered the Reinstatement Value Clause ineffective – Also, 
the Insured under Clause 6(b) of the conditions had an obligation to 
give NIACL all such further particulars, plans, specifications, books, 
vouchers and invoices with respect to the claim – It is sufficiently 
brought out that in spite of the surveyors writing to the Insured 
repeatedly (on 14.12.1998, 03.05.2002, 24.06.2002 and 07.08.2002), 
there was no information forthcoming from the Insured about the 
invoices as proof of the value of the damaged equipment and the 
cost of the new equipment – Instead, the insured originally undertook 
that they will reinstate the damaged property; received the on account 
payment of Rs.4,92,80,905/- and informed NIACL that they have 
placed order for repair of 20 Hi Cold Rolling Mill – Thereafter by their 
letter of 16.06.1999, the Insured sought assessment of net adjusted 
loss at Rs.20.95 Crores – The surveyors of NIACL kept asking for 
the basic and relevant particulars, the Insured without furnishing 
the same kept asking for the settlement of the money – NIACL 
did not completely repudiate the claim – NIACL cannot be faulted 
for resorting to depreciation method – NIACL was also justified in 
writing the letter of 12.11.2002 (to increase the depreciation to 60%) 
because after reviving the demand to reinstate the plant, the Insured 
failed to furnish the documents required and even admittedly the 
plant as allegedly reinstated was of 6 Hi Cold Rolling Plant and 
n

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