New Delhi, Oct. 26 (PTI): The Supreme Court has held that insurance companies would be liable to pay interest on delayed payment of the insured amount from the date the compensation was decided and not from that on which correspondence started.

“The important date to be decided in such circumstances is the date on which the quantum of compensation and to whom it should be paid is finally decided and not from the date on which correspondence ensued between the parties,” a bench of justices H.K. Sema and P.K. Balasubramanyan it said.

The directive came after the National Insurance Company challenged a consumer court order to pay interest at 6 per cent from December 1990 to June 1994 to a consumer for delayed payment.

In 1990, an export company had obtained five transit insurance policies for a consignment to Sudan. The consignment was found to be damaged after reaching there.

The company said that its foreign buyer, by a letter in March 1991, had vested the right, title and interest with it. The claim was settled in June 1994. But it demanded interest from 1990.

The court, however, said that though the communication started in 1991, the interest could only be paid from April 8, 1994, when the compensation was decided.