An
insurance company is expected to act in a bonafide and fair manner with its
client and not just care for and cater to its own profits, the Supreme Court
has said.
A
bench of justices A S Bopanna and Sanjay Kumar, in a verdict on a plea by an
insuree company, said it is the fundamental principle of insurance law that
utmost good faith must be observed by the contracting parties.
The
top court said it is the duty of the insured and the insurance company to
disclose all material facts within their knowledge.
"Having
undertaken to indemnify an insured against possible loss in specified
situations, an insurance company is expected to make good on its promise in a
bonafide and fair manner and not just care for and cater to its own
profits," the bench said.
The
observations came while deciding a plea by Isnar Aqua Farms against an order of
the National Consumer Disputes Redressal Commission (NCDRC) which directed the
insurance firm United India Insurance Co. Ltd to pay Rs 30.69 lakh to the firm
for loss in prawn cultivation.
The
apex court directed that a sum of Rs 45.18 lakh shall be remitted by the
insurance company to the firm, with simple interest of 10 per cent from the
date of the complaint till the date of realisation, within six weeks.