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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
A.P. Sahi, President and
Bharatkumar Pandya, Member
M/s. Panchsheel Organics Ltd. – Complainant
versus
Sr. Divisional Manager,
New India Assurance Co. Ltd. – Opp. Party
Consumer Complaint No.394 of 2014
Decided on 25.8.2025
Consumer Protection Act, 1986 – Section 21 [Consumer Protection Act, 2019 – Section 67] – Insurance – Standard Fire and Special Perils Policy – Loss caused due to fire in insured premises – Insurance claim repudiated by Opposite Party on the ground that fire loss allegedly occurred due to unauthorized welding activity and that complainant was not in possession of valid statutory licenses required for operation and for storage of flammable substances – No credible or corroborated evidence has been produced by opposite parties to substantiate allegation of welding activity on the date of incident – Final Surveyor’s conclusion is based solely on an alleged oral statement of an injured worker, which has neither been independently verified nor supported by any official investigation report, fire department finding, or police record – Absence of valid license on the date of incident as a sole ground cannot justify repudiation when there is no evidence of positive suspension of license or of positive embargo on production so as to constitute material change in conditions of insured property or conduct of business requiring intimation to Insurer to validly continue coverage under the policy – Given nature of business, it is reasonable to assume that chemical was stored only in limited quantities necessary for production of pharmaceutical goods – Repudiation of claim by Insurance Company is found to be arbitrary, unjustified, and constitutes clear deficiency in service and unfair trade practice – Amount assessed by Surveyor is not shown to be unreasonable – At the same time, absence of Health safety license, though may not justify or validate repudiation, it can result in indemnification only on non-standard basis having a reasonable impact on liability of Insurer – Insurer saddled with liability only of 75% of assessment made. (Paras 9, 9.1 and 9.2)
Result: Complaint partly allowed.
ORDER
Bharatkumar Pandya, Member.—Heard Mr. Ram N. Sharma, Advocate for the Complainants and Ms. JPN Shahi, Advocate, for Opposite Party. Since the earlier order 13.09.2023 had been pronounced by a learned Single Member of this Commission, the Opposite Party preferred an appeal before the Hon’ble Supreme Court. The Hon’ble Apex Court, vide its order dated 04.12.2024 in Civil Appeal No. 927 of 2024, set aside the said order dated 13.09.2023 and remanded the matter for fresh consideration by a duly constituted Division Bench. Accordingly, the present matter is now being heard and decided by this Division Bench.
2. The complaint relates to an insurance dispute. The complainant/insured had obtained a Standard Fire and Special Perils Policy for the period 04.12.2010 to 03.12.2011 from OP, The New India Assurance Co. Ltd. The sum assured under the two policies is one is of Rs.9 crore for on stocks of raw materials, goods, stock and another of Rs.5.5 crore for building, plant, machinery, furniture and fittings. On 10.06.2011, a fire broke out at the insured premises, intimation of which was given to OP on the same day. A preliminary spot surveyor/Loss Assessor, valuer, B.K. Agarwala & Associates, was appointed and submitted his report on 13.06.2011 (page No. 123) and Final surveyor, Mr. Rajiv Dausade, was appointed and submitted his final survey report dated 20.09.2012 (page No. 129). OP/Insurance Company, on the basis of the following conclusions of the final surveyor(s) and spot surveyor/investigator, repudiated the claim vide repudiation letter dated 30.01.2013 (page No. 16). The relevant conclusions of the surveyor/investigator are reproduced as under:—
“....that the cause of fire claimed by the insured as being due to incidental jamming of a bearing was incorrect; instead, welding operations at the rooftop without safety measures caused sparks to ignite highly inflammable ethyl acetate stored below; that the insured had no valid licence for production of such hazardous products; that the licence had been cancelled by the Assistant Director, Health & Safety, Indore Division, yet manufacturing continued without valid authorisation; that repairs were undertaken in hazardous areas without requisite approvals; and that no safety measures or expert supervision were in place, amounting to gross negligence and violation of Policy Conditions B-1 and B-3.”
2.1 The present consumer complaint filed on 29.09.2014, arises from alleged deficiency in service and unfair trade practices on the part of New India Assurance Co. Ltd. (“OP”). The complainant, a private limited company engaged in the manufacturing of bulk drugs since 1989, filed this complaint under Section 21(a)(i) of the Consumer Protection Act, 1986, seeking compensation by way of indemnification of loss of Rs.1,61,25,000 along with interest and costs due to deficiency in service by OP. The complainant had obtained two Standard Fire and Special Perils Insurance Policies (Policy Nos. 451300/11/10/11/00002333 &00002334) for the period 04.12.2010 to 03.12.2011, covering stock, building, plant & machinery, and furniture, with a total sum insured of Rs.14.5 crores, against which they paid a premium of Rs.2,93,213. On 10.06.2011, a fire broke out in the factory’s centrifuge machines during the processing of bulk drug topiramate, resulting in an explosion and substantial damage, for which the complainant immediately lodged a claim estimating a s of Rs.1,85,53,315 (Annexure C-3). The insurer deputed preliminary spot surveyor, Mr. B.K. Agrawala (visited on 10.06.2011), who inspected the site, took photographs, statements, and asked for documents via letters dated 18.06.2011 and 20.06.2011 (Annexures C-4 & C-5). Subsequently, on 17.06.2011, the insurer appointed Mr. Rajiv Dausage as the final surveyor, who visited the site and inspected loss. The complainant responded with a detailed claim on 08.07.2011 (Annexures C-6). OP respond on 14.07.2011 to the letter dated 08.07.2011(Annexure C-7). The
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