Aaradhya Disposals Industries LTD Thruogh Its Directro Sunil Maheshwari vs. United INDIA Insurance Co.LTD. Uiic Through Its Chief Grievance Redresal Officer

Held

The Court held that the writ petition was maintainable under Article 226 of the Constitution of India, despite the existence of an alternative remedy. The Court found patent illegality, arbitrariness, and malice on the part of the surveyor and the respondent insurance company, as evidenced by their conduct and correspondence. The Court noted that the surveyor's actions, including ignoring statutory forensic reports and shifting the burden of proof, were arbitrary and illegal. The repudiation letter was considered a classic example of arbitrary, unreasonable, and malafide administrative action by a state instrumentality, violating the petitioner's fundamental rights. The Court found that the respondent's internal communications acknowledged the sufficiency of documents for claim settlement, making the subsequent repudiation improper. The Court directed the respondent to reconsider the claim, pay the amount of Rs. 5.47 crores (as per the interim survey report) with interest from January 15, 2024, and to adjudicate and pay the remaining amount with interest from the date of repudiation. The Court emphasized that the extraordinary jurisdiction under Article 226 was required due to the classic case of arbitrariness by a state instrumentality.

Facts

The petitioner, Aaradhya Disposals Industries Ltd., obtained a fire insurance policy from the respondent, United India Insurance Co. Ltd., for the period December 6, 2022, to December 5, 2023, with a sum insured of Rs. 31.70 crores. On May 5, 2023, a fire caused extensive damage to the insured premises. The petitioner submitted claim documents. The appointed surveyor assessed the maximum probable gross loss at Rs. 5.47 crores, but the respondent repudiated the claim without assigning reasons. The petitioner argued that the surveyor's report and subsequent repudiation were arbitrary and malafide, ignoring crucial evidence like forensic reports that indicated an accidental electrical short circuit as the cause. The respondent contended that the petitioner had an alternative efficacious remedy under the law and the Consumer Protection Act, as no fundamental right was violated, there was no failure of natural justice, and the proceedings were not wholly without jurisdiction.

Key Issues

1. Whether the writ petition is maintainable before the High Court under Article 226 of the Constitution of India, despite the existence of an alternative efficacious remedy, given the alleged arbitrary and malafide actions of the respondent and its surveyor? 2. Whether the repudiation of the insurance claim by the respondent was arbitrary, unreasonable, and malafide, in violation of the principles of natural justice and the terms of the insurance policy? Petitioner's Arguments: The petitioner argued that the writ petition was maintainable because the respondent's actions constituted a failure of the principle of natural justice and were wholly without jurisdiction, citing the arbitrary and malafide nature of the repudiation. They contended that the surveyor ignored statutory forensic evidence and internal communications indicating the sufficiency of documents, leading to an unlawful rejection of a legitimate claim. Reliance was placed on judgments from the High Court of Calcutta, the High Court of Madhya Pradesh, and the Supreme Court in cases like HMR Constructions Private Limited, The West Bengal Power Development Corporation Ltd., M/S. Godrej Sara Lee Ltd., Neeta Vij, and Gurmel Singh. Respondent's Arguments: The respondent argued that the writ petition was not maintainable as the petitioner had an alternative efficacious remedy under the law and the Consumer Protection Act. They relied on the Supreme Court's judgment in M/s Radha Krishna Ind. v. State of Himachal, which outlines exceptions to the rule of alternate remedy, none of which were present in this case.