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2025 Supreme(Online)(NCDRC) 3290
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
A.P. Sahi, President, Bharatkumar Pandya, Member
S.B. Plywood Private Limited – Appellant
Versus
United India Insurance Co. Ltd. – Respondent
NC/CC/771/2017
For the Complainant:Mr. Kartikeya Singh, Advocate, Mr. Raktim Gogoi, Advocate
For the Opposite Party:Mr. Maibam N. Singh, Advocate
Insurance claims must be indemnified unless deliberate fault is proven; mere speculation does not suffice for repudiation.
Headnote:(A) Insurance contract - Fire insurance - Liability and coverage - The Complainant took out a fire insurance policy which was in effect at the time of the incident. Fire broke out due to short-circuit causing extensive damage. The Insurance Company repudiated the claim stating the cause was not accidental. The court found the repudiation unjustified as reliance on the Investigator's report was speculative without considering the Complainant's detailed explanations. (Paras 3-5, 34, 35)
(B) Burden of proof - The court reiterated the principle that the burden lies with the insurer to prove that the insured was responsible for the fire, failing which indemnification must be provided. (Para 12)
Facts of the case:
The Complainant took a fire insurance policy for Rs. 6.50 Crores. A fire incident occurred, leading to a loss assessed at Rs. 1,19,28,871. The Insurance Company denied the claim citing a non-accidental cause based on an Investigator's report. The Complainant argued that there was ample evidence supporting accidental ignition.
Findings of Court:
The court concluded that the repudiation was arbitrary as the Complainant's explanations were not properly considered, and upheld the claim for Rs. 1,19,28,871 with interest at 6% per annum.
Issues: Whether the repudiation of the insurance claim was justified, and if the fire was accidental or intentional.
Ratio Decidendi: It was held that for an insurer to repudiate a claim effectively, they must demonstrate a deliberate act by the insured, which was not proven in this case.
Result: Complaint allowed.
2ORDER
PER A.P. SAHL J„ PRESIDENT
The Complainant established a Plywood Manufacturing Unit in the year 2007-08. In relation to the present Complaint suffice would be to point out that for securing the Plant, Machinery and Stocks the Complainant took a Standard Fire and Special Perils Policy for an insured sum of Rs.6.50 Crores from the Opposite Party- United India Insurance Co. Ltd. (hereinafter referred to as the Insurance Company). The duration of the policy was from 17.01.2013 to 16.01.2014. Unfortunately, on 16.05.2013 a fire broke out in the early morning hours at about 3.00 a.m. and the Fire Brigade as well as the Police were duly informed. The firefighting tenders attended to it and doused the fire recording that the supposed reason of fire was a short-circuit. The Fire Station Samana, Patiala tendered Report No. 168 dated 24.06.2013 recording the same. A Police report was also lodged that stands entered in the General Diary (GD) on 17.05.2013 recording that the site was inspected when the matter was reported to the Police Outpost Gajewas. It was recorded that the fire had taken place due to an electric short-circuit in the Complainant Factory and there was loss of machinery, buildings, raw material and manufactured material reportedly of the value of Rs.3.00 to Rs.4.00 Crores. The GD Entry records that the incident had occurred suddenly and naturally on account of an electric short-circuit. The said Police report also records that no one else has been found to be at fault.
The Surveyor, namely, M/s Cunningham Lindsey International Insurance Surveyors and Loss Assessors Pvt. Ltd., was appointed by the Insurance Company on an intimation being given on the same day, who visited the spot. According to the pleadings that are now on record, the Insurance Company seems to have on the same day appointed M/s Truth Labs to investigate the same. The Investigator according to the Insurance Company tendered a Report on 18.10.2013. The Complainant alleges that such a report was neither in the knowledge of the Complainant nor was it shared with them. The Surveyor tendered a Final Report on 25.10.2014 recording that the cause of fire was an electric spark and the loss assessment was made to the tune of Rs. 1,19,28,871/-. This recommendation was without prejudice to the rights of the Insurers to assess the same subject to the terms and conditions of the policy.
It is evident from the Survey Report dated 25.10.2014 that the recommendations had been made without being intimated about the Report dated 18.10.2013 of the Investigator.
The Insurance Company seems to have dispatched the Investigation Report from the Forensic Agency to the Final Surveyor and the Surveyor responded to the same through his letter dated 06.03.2015 giving his suggestions. It appears that once again the Surveyor revised his opinion and on 05.08.2015 dispatched a letter to the Insurance Company stating therein that since the report of the Investigator confirms that the source of ignition was not accidental, the Insurance Company would not be liable.
However, in between the Insurance Company sent a notice to the Complainant on 11.03.2015 referring to the Investigation Report and calling for an explanation from the Complainant. The Complainant gave a reply on 23.03.2015 where-after they also dispatched clarifications on 14.06.2015 and 30.06.2015.
By this time, as noted above, the Insurance Company had received the second opinion of the Surveyor dated 05.08.2015 and accordingly the Insurance Company repudiated the claim on 05.11.2015.
The Complainant objected to the same through their representation dated 28.07.2016, followed by a reminder on 20.09.2016 but of no avail. Aggrieved, the present complaint was filed on 21.03.2017 alleging deficiency and unfairness in service.
The Insurance Company has filed its written version disputing the entire claim and supporting the repudiation dated 05.11.2015, to which a rejoinder has also been filed, and, the parties having exchanged their
