Supreme Court Directs Insurer To Pay Interest From March 6, 2010 After Arbitral Tribunal Excluded Time Spent In Consumer Forum

A bench of Justices Abhay S. Oka and Manmohan heard an appeal by United India Insurance challenging the Delhi High Court’s dismissal of its FAO(Comm.) No.76/2022 order, which had upheld an arbitral award favouring the claimant for non-payment of an insurance claim and interest. The primary issue before the Court concerned the entitlement to interest for periods of delay and the effect of exclusion of time spent pursuing remedies before the National Consumer Disputes Redressal Commission under Section 14 of the Limitation Act.

The Court allowed the appeal only to the limited extent of clarifying the date from which interest would run and directed payment of the outstanding sum with interest at 12% per annum from 06th March, 2010. The Court noted the insurer’s complaint 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," but concluded that, on the facts, equitable relief was warranted. The Court, in its reasoning, observed: "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 @ 12% per annum with effect from 06th March, 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 Court therefore modified the impugned judgment and award only to that extent and directed the insurer to pay the outstanding balance within four weeks.

Background

The dispute arose after the respondent-claimant alleged non-payment of an insurance claim by the appellant-insurer. The claimant initially pursued a consumer complaint before the National Consumer Disputes Redressal Commission between 21st January, 2003 and 1st December, 2006 and thereafter invoked an arbitration agreement in December 2006. The Arbitral Tribunal condoned delays and, on 06th March, 2010, excluded the time spent before the Consumer Commission under Section 14 of the Limitation Act, holding the claim within time and awarding interest at 12% per annum. The insurer challenged the award before the Delhi High Court, contending that delays attributable to the claimant disentitled it to interest; the High Court dismissed the insurer’s appeal. The insurer then filed the present Civil Appeal.

The insurer argued that both the Tribunal and the High Court "failed to give any reason" for awarding interest for periods allegedly attributable to the claimant and relied on limitation and delay grounds. The claimant submitted that it had been compelled to seek alternate remedies because the insurer failed to perform contractual obligations, approached the consumer forum on legal advice, and was entitled to interest once the Arbitral Tribunal applied Section 14 to exclude the period spent before the Consumer Commission. The Supreme Court evaluated these contentions and, applying the Arbitral Tribunal’s exclusion under Section 14, held that the equitable direction to award interest from 06th March, 2010 met the ends of justice. The impugned judgment and award were therefore varied only to specify the commencement date for interest and to order payment within four weeks; the appeal was otherwise disposed of with pending applications.

Case Details: Case No.: Civil Appeal 104 of 2025 Case Title: United India Insurance Co. Ltd. v. Bansal Wood Products Pvt. Ltd. Appearances: For the Petitioner(s): Learned counsel for the appellant-insurance company (name not indicated in judgment) For the Respondent(s): Learned counsel for the respondent-claimant (name not indicated in judgment)