[Context not clear] SC directs Insurance Co to pay interest as per Arbitral Award

The Supreme Court on January 8, 2025, directed United India Insurance Co Ltd to pay interest as directed by the Arbitral Tribunal at the rate of 12% per annum with effect from March 6, 2010. The court noted it was on this date that the Arbitral Tribunal held the claims to be within time after excluding the time spent by the claimant in pursuing its remedy before the National Consumer Disputes Redressal Commission under Section 14 of the Limitation Act.

A bench of Justices Abhay S Oka and Manmohan modified Arbitral Award by directing the appellant insurance company to make the payment of the outstanding balance amount to the respondent-claimant, Bansal Wood Products Pvt Ltd within four weeks.

The present appeal was filed by the insurance company, challenging the judgment and order of February 2, 2023 passed by the High Court of Delhi. The High Court dismissed the appeal filed by the appellant-insurance company.

The appellant-insurance company submitted that the High Court and the Arbitral Tribunal failed to give any reason as to why the respondent-claimant was entitled to interest for the various periods of delay which were attributable to the respondent-claimant.

He stated that the Arbitral Tribunal and the High Court failed to appreciate that the respondent-claimant delayed the process of reference to arbitration by about four years between the period January 21, 2003 and December 1, 2006 as it was pursuing its consumer complaint before the National Consumer Disputes Redressal Commission during this period.

He further contender that even after reference to arbitration in December, 2006, the respondent-claimant delayed the arbitration proceedings and it was only on March 6, 2010 that the Arbitral Tribunal condoned the delay in making reference to arbitration by excluding the time spent by the respondent claimant in pursuing the remedy before the National Consumer Disputes Redressal Commission.

On the contrary, the counsel for respondent-claimant stated that as the appellant-insurance company failed to pay the insurance claim, the respondent-claimant was constrained to seek legal remedy, first by approaching National Consumer Disputes Redressal Commission and then by invoking the arbitration agreement between the parties.

He contended that the respondent-claimant approached the Consumer Commission on the basis of legal advice. He further stated that as the appellant-insurance company failed to perform its contractual obligation, it cannot refuse to pay interest for the delayed payment. He also submits that though the appellant insurance company raised the defence that the claim was barred by limitation, yet the Arbitral Tribunal decided the issue in favour of the respondent-claimant giving the benefit of Section 14 of the Limitation Act.

"Having heard the learned counsel for the parties, this court is of the view that in the peculiar facts and circumstance of the present case, the ends of justice would be met if the appellant-insurance company is directed to pay interest as directed by the Arbitral Tribunal at the rate 12% per annum with effect from March 6, 2010 as it was on this date that the Arbitral Tribunal held the claims to be within time after excluding the time spent by the respondent-claimant in pursuing its remedy before the National Consumer Disputes Redressal Commission under Section 14 of the Limitation Act," the bench said.

Disposing of the appeal, the court directed the appellant-insurance company to make the payment of the outstanding balance amount to the respondent-claimant within four weeks.

Case Title: United India Insurance Co Ltd Vs Bansal Wood Products Pvt Ltd