LT FOODS – FirstFlash

In a significant legal victory for the food industry, the Supreme Court of India has upheld a lower court's decision in favor of Daawat Foods Ltd., a material subsidiary of LT Foods Limited, in a long-standing insurance claim dispute. The case, which dates back to a devastating fire incident in 2014, has finally reached its conclusion after a decade-long legal battle. The Supreme Court's ruling, announced on July 30, 2024, affirms the Madhya Pradesh High Court's order, directing Oriental Insurance Company to honor a substantial claim of Rs. 161.20 crore, along with 6% interest per annum from the date of the loss. This decision marks a significant milestone for Daawat Foods and sets a precedent for similar cases in the insurance sector. The case originated from a catastrophic fire that broke out in the early hours of June 7, 2014, at Daawat Foods's plant in the Industrial Area of Mandideep, Raisen District, Madhya Pradesh. The inferno resulted in the destruction of approximately 44,975 metric tons of paddy, valued at Rs. 182.22 crore, along with additional assets worth Rs. 7.50 crore. The total loss incurred by the company amounted to a staggering Rs. 189.72 crore. Despite having a Standard Fire and Special Perils Policy with Oriental Insurance Company, Daawat Foods faced unexpected hurdles when their claim was repudiated. The insurance provider based its decision on the report of the last surveyor/investigator, which suggested arson as the cause of the fire and cited the presence of excessive hydrocarbons in some samples. Undeterred by this setback, Daawat Foods initiated legal proceedings on June 26, 2016, filing a commercial suit against Oriental Insurance Company. The case made its way through the Indian judicial system, with the District Court of Raisen, Madhya Pradesh, initially ruling in favor of Daawat Foods on December 22, 2023. The court awarded a decree of Rs. 161.20 crore, along with 6% annual interest from the date of the incident. Oriental Insurance Company, dissatisfied with the verdict, appealed to the Madhya Pradesh High Court. However, on May 15, 2024, the High Court dismissed the insurance company's stay application, upholding the lower court's decision. This prompted Oriental Insurance to approach the Supreme Court, which has now disposed of the Special Leave Petition (SLP) by directing the insurance company to pay the commission/fee to the bank for the amount to be released as per the decree. Ashwani Arora, Managing Director & CEO of LT Foods, expressed his satisfaction with the Supreme Court's decision, stating, "We are deeply gratified by the Hon'ble Supreme Court's decision of disposing off the said SLP by directing Oriental Insurance Company to pay the commission/fee payable to the Bank for the amount which is to be released in terms of the decree to Daawat Foods Ltd. At LT Foods, we hold the highest respect for the judiciary and honour the Supreme Court's decision wholeheartedly." This ruling is not just a victory for Daawat Foods and LT Foods but also sends a strong message to the insurance industry about the importance of fair claim settlements. It underscores the need for thorough and unbiased investigations in cases of major incidents like fires, especially when substantial claims are involved. LT Foods Limited, the parent company of Daawat Foods, is a leading Indian-origin global FMCG company specializing in rice and rice-based food products. With a history spanning over 70 years, the company has established itself as a major player in the specialty rice market, with its flagship brands DAAWAT® and Royal® enjoying popularity in over 80 countries. The company has shown impressive growth, with a consolidated revenue of approximately Rs. 7,822 crore in FY'24 and a 5-year Revenue CAGR of 17%. LT Foods prides itself on its integrated "Farm to Fork" approach, supported by state-of-the-art processing units in India, the U.S., and Europe, and a robust global distribution network. As the dust settles on this prolonged legal battle, the focus now shifts to the implications of this verdict on the broader insurance landscape in India. Industry experts believe that this case could lead to more stringent guidelines for claim investigations and potentially influence how insurance companies handle large-scale industrial accident claims in the future. For Daawat Foods and LT Foods, this victory not only brings financial relief but also reinforces their commitment to upholding trust among stakeholders. As they move forward, the companies are expected to channel this positive outcome into further strengthening their market position and continuing their mission of delivering excellence in the global food industry.

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Supreme Court Upholds Verdict in Favor of Daawat Foods in Insurance Case