In this case of Saurashtra Chemicals Ltd (Presently known as Saurashtra Chemicals Division of Nirma Ltd.) vs National Insurance co. ltd, a civil appeal was filed by the Saurashtra chemical limited in the Supreme Court of India. They filed an appeal demanding compensation and the amount of insurance for the loss suffered by the Saurashtra chemicals. Saurashtra chemicals limited in the year 2006 was declared a sick unit and was shut down. Before the corporation was shut down there was some materials like coal and lignite present inside in the manufacturing unit, these materials were insured by the company with National Insurance Ltd. The sent a surveyor to survey the manufacturing unit and look what damaged was caused to the material, the surveyor gave the report to the company but the national insurance company denied to pay compensation to the Saurashtra chemicals, the reason for not paying compensation was that the insurance was against the fire and in the present case there was no fire caused and there was only damage caused to the coal kept inside the factory.
First, the appeal was filed by the Saurashtra chemical in the National Consumer Dispute Redressal Commission. But the complaint was Dismissed by NCDRC on the premise that there was breach of conditions incorporated in Clause 6(i) of the General Conditions of Policy. Under Clause 6(i) the intimation of loss and damage was required to be given in writing by way of notice within 15 days of the occurance thereof. It is an admitted case between the parties that intimation of loss/damage was given by the appellant to the respondent-insurer for the first time on 12.09.2006 and a claim for loss for a sum of Rs. 1.4 Crores to 1.5 Crores was made vide letter dated 14.09.2006. the respondent even cited the case of Galada chemicals where the compensation was not awarded but the apex court held that both the cases are different because that case related to marine insurance.
The Supreme Court of India held that appeal of Saurashtra Chemical is completely valid and allowed their appeal. The court held that the insurance company might not be liable to pay other amounts of compensation but the National Insurance Ltd is liable to pay Rs. 63,43,679/-, as assessed by the surveyor, to the appellant with interest @ 8% from the date of the filing of the claim of petition till date of payment.