New India Assurance has been ordered by the apex consumer court to cough up a whopping Rs 1.45 crore (Rs 14.5 million) with 12 per cent interest from May 1, 2000 till date on payment to an export company whose stock of seafood -- which was insured -- was damaged by the Orissa super cyclone in October 1999.

"In our view, the insurance company illegally repudiated the claim," National Consumer Disputes Redressal Commission Presiding Member Justice M B Shah and Member Rajyalaksmi Rao said in their order.

The commission also directed the insurance company to pay litigation cost of Rs 10,000 to the complainant S K Exports.

S K Exports's seafood processing plant at Bhubaneshwar (Orissa) was insured with New India Assurance since 1995 under the fire policy with extra peril coverage.

The export company initially took policy covering the risks for Rs 1 crore (Rs 10 million) for which the premium paid was Rs 38,404. Subsequently, the insurance coverage was enhanced to Rs 2.7 crore (Rs 27 million) by paying an additional premium of Rs 18,818 on July 1, 1999. The policy was for the period between December 1998 to December 1999.

Following the cyclone on October 28, 1999, majority of prawn fish in the cold storage was spoilt as there was no power supply, S K Exports said. The executive engineer of the
electricity company also certified that there was no power supply between October 29, 1999 and November 7, 1999.

However, S K Export's claim was rejected by New India Assurance, saying the nature of loss comes under 'deterioration of stock' policy which the export company had not opted for.

However, S K Exports claimed that the special peril premium for the policy, which it paid for six years till the cyclone, also covered the deterioration of stock due to power failure.

The surveyors appointed by New India Assurance, in their report on October 20, 2001 observed that the loss to S K Exports due to cyclone was approximately Rs 1.45 crore.

The insurance company, in its arguments said the freezing plant of the complainant company was not damaged or destroyed by the cyclone.

The consumer court rejected this contention saying, "The cover note specifically provides that the insurance cover is for stock of prawn and other fishes kept at S K Export's cold storage. If the cold storage becomes non-functional because of non-supply of electricity, it cannot be said that there is no insurance coverage."