Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 21 September 2026

Case Overview

  • Parties: Appellant – M/s. New India Assurance Company Ltd (insurance company); Respondent – M/s. Hemkund Duplex and Board Pvt. Ltd (manufacturer of paper boards). The matter arose from Consumer Complaint No. 66 of 2011 before the National Consumer Disputes Redressal Commission (NCDRC), New Delhi.
  • Background: The respondent owned a factory at Najibabad with an open yard and three godowns (two pucca, one tin shed). It held two fire‑insurance policies with the appellant: a stock policy for ₹13,00,00,000 covering 30‑12‑2008 to 29‑12‑2009, and a building‑plant‑machinery policy for ₹14,00,00,000 covering 28‑02‑2009 to 27‑02‑2010.
  • Incident: On 07‑05‑2009 at about 13:30 hrs a fire broke out in the waste‑paper yard and tin shed. Supervisor Anil Kumar first noticed the fire and informed Vice‑President Gagandeep Singh, who attempted to call the fire brigade (101) without success and later contacted a colleague. The fire brigade arrived at 14:36 hrs, approximately one hour after the fire started.
  • Claim: The respondent claimed compensation of ₹7,31,31,096.78 with interest at 18 % per annum, alleging loss of waste‑paper stock and damage to the tin shed. The NCDRC, on 19‑11‑2024, directed the appellant to pay ₹2,40,00,000 plus ₹3,00,000 compensation for deficiency in service and ₹1,00,000 litigation costs, with interest provisions.
  • Surveyor Reports:
  • Preliminary Surveyor (R.C. Bajpai) – Report dated 24‑06‑2009 highlighted inconsistencies, suggested possible deliberate fire, and gave a tentative loss estimate of ₹56,46,681.
  • Investigative Agency (Royal Associates) – Report dated 02‑03‑2010 found the fire cause doubtful, noted the tin shed’s isolation, absence of electricity, prohibition of smoking, and lack of usable stock; recommended rejection of the claim.
  • Final Surveyor (Aditi Consultants Pvt. Ltd) – Report dated 13‑03‑2010 quantified net loss of waste paper at ₹34,59,189 and tin‑shed loss at ₹11,50,534, total loss ₹46,09,722, and concluded the respondent had inflated the claim and breached policy conditions.
  • Policy Conditions: Condition 6 required full, truthful disclosure of loss; Condition 8 prohibited fraudulent or false declarations. The appellant argued the respondent violated both.
  • Statutory Framework: Section 64UM(2) of the Insurance Act, 1938 mandates an approved surveyor’s report for claims ≥ ₹20,000, but the Supreme Court has held such reports are not conclusive and may be departed from. Relevant precedents cited include New India Assurance Co. Ltd. v. Pradeep Kumar (2009), Khatema Fibres Ltd. v. New India Assurance (2023), Sri Venkateswara Syndicate v. Oriental Insurance (2000), United India Insurance Co. Ltd. v. Roshan Lal Oil Mills (2009), New India Assurance Co. Ltd. v. Mudit Roadways (2024), Canara Bank v. United India Insurance (2020), and Orion Conmerx Pvt. Ltd. v. National Insurance Co. (2026).
  • Findings of the Court:
  • The surveyors’ reports collectively indicated serious doubts about the fire’s accidental nature, possible arson, and substantial bookkeeping irregularities (e.g., mismatched purchase bills, absence of stock registers, abnormal raw‑material‑to‑sales ratios).
  • The respondent’s statements (by Vice‑President Gagandeep Singh and General Manager Rajiv Aggarwal) that usable raw material was stored in the tin shed were contradicted by workers’ testimonies and the surveyors’ observations that only obsolete waste material was present.
  • The respondent failed to notify the fire brigade within the statutory 15‑day period and made false declarations, breaching Conditions 6 and 8 of the policies.
  • Consequently, the appellant’s repudiation of the claim was deemed legally sustainable.
  • The NCDRC’s dismissal of the surveyors’ reports and its quantification of loss far exceeding the surveyed amounts were held to be a miscarriage of justice.

Final Outcome

  • The Supreme Court allowed Civil Appeal No. 7221 of 2025, setting aside the NCDRC order dated 19‑11‑2024.
  • Civil Appeal No. 11416 of 2025 filed by the respondent was dismissed.
  • The ₹50,00,000 deposit placed by the appellant with the Registry was to be returned, together with accrued interest, under proper acknowledgment.
  • Both parties were ordered to bear their own costs.

Topics: Insurance Claim, Consumer Dispute