Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCDRC) 403

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
J. Rajendra, Presiding Member, Anoop Kumar Mendiratta, Member
Shri Hira Industries – Appellant
Versus
United India Insurance Company Limited – Respondent
CONSUMER COMPLAINT NO. 1470 OF 2019

Advocates:
For the Appellants/Petitioners: Ishita Singh, Rajiv Sancheti, Sumbul Ismail, Khushi Singhal
For the Respondents: Animesh Sinha, Shubham Budhiraja, Ishita P., Varun Shankar

An insurance claim cannot be repudiated on mere suspicion of fraud or arson in the absence of cogent evidence. A surveyor's assessment of loss, if conducted professionally and without arbitrariness, should be upheld as the basis for indemnification.

Headnote:(A) Consumer Protection - Insurance Act, 1938 - Section 64(UM) - Fire Insurance - Claim Repudiation - Deficiency in service - Surveyor's role - A consumer forum cannot subject a surveyor's report to forensic examination unless the report is found to be based on adhocism or vitiated by arbitrariness. (Para 23)

(B) Principles of Fire Insurance - Liability of Insurer - Where loss is established due to fire and there is no cogent evidence to support an allegation of fraud or that the insured was the instigator, the cause of fire remains immaterial, and the claim for indemnity must be honored. (Paras 24, 26)

(C) Evidence - Burden of proof - Mere suspicion regarding the completeness of burning or the nature of debris, unsupported by evidence at the time of incident, is insufficient to justify repudiation of a claim. (Para 26)

Facts of the case:
The complainant filed a consumer complaint against an insurance company following the repudiation of a fire insurance claim for loss of stored agricultural stocks. The insurance company argued that the claim was fraudulent, alleging that the goods were not fully destroyed, the fire was intentional, and the debris samples indicated the presence of low-grade waste material rather than the insured stock. The complainant argued the fire was accidental, supported by emergency services reports, and requested the full claim amount.

Findings of Court:
The court observed that the insurance company failed to provide concrete evidence of fraud or deliberate ignition. While the surveyor's assessment of quantity and quality of stock based on forensic reports was accepted as reasonable under the relevant Insurance Act provisions, the grounds for total repudiation were found to be unsubstantiated. The court directed the insurer to pay the loss assessed by the surveyor with interest.

Issues: Whether the repudiation of the insurance claim based on allegations of fraud and staged fire was justified, and whether the surveyor's assessment of loss was appropriate.

Ratio Decidendi: The court held that in the absence of evidence proving the insured's culpability or fraud, an insurance company cannot repudiate a claim based on mere suspicion. Furthermore, a surveyor's assessment of loss is to be respected if it follows scientific methods and is not arbitrary.

Result: Complaint partly allowed; the insurance company is directed to pay the amount assessed by the surveyor with interest and litigation costs.

Table of Content
1. establishment of factual nexus regarding insurance coverage, warehouse possession, and the fire incident. (Para 1 , 2 , 3 , 4 , 5)
2. forensic validity of debris samples and survey findings for repudiation. (Para 6 , 7 , 9 , 10 , 19)
3. extent of collateral manager and bank liability in pledged goods. (Para 11 , 12 , 20 , 21)
4. scope of judicial review of surveyor reports and presumption of accidental fire against mere suspicion. (Para 23 , 24 , 25 , 26 , 27 , 28)
5. determination of loss assessment based on forensic quality analysis and final award. (Para 29 , 30 , 31 , 32)

Appearance at the time of arguments:-

For the Complainant : Ms. Ishita Singh, Mr. Rajiv Sancheti,

Ms. Sumbul Ismail and Ms. Khushi

Singhal, Advocates.

For the Opposite Parties : Mr. Animesh Sinha, Mr. Shubham

Budhiraja, Ms. Ishita P. Advocate for OP-1

Mr. Varun Shankar, Advocate for OP-2

JUSTICE ANOOP KUMAR MENDIRATTA, MEMBER

ORDER

1. Present complaint has been preferred by the complainant aggrieved against the repudiation of claim by OP-1 United India Insurance Company Ltd. vide letter dated 25.03.2019, in respect of loss of stock in a fire incident on 22.07.2018 amounting to Rs.3,89,86,650/- and seeks the following reliefs:-

“vi. Direct the Opposite Party(s), jointly or severally, to pay an amount of Rs.3,89,86,650/- (Rupees Three Crores Eighty Nine Lacs Eighty Six Thousand Six Hundred Fifty Only) towards the claim of the Complainant;

vii. Direct the Opposite Party(s), jointly or severally, to an interest at the rate of 18% per annum on the amount of the claim, with effect from the date of the accident, till the actual date of payment by the Opposite Party(s);

viii. Direct the Opposite Party(s), jointly or severally, to pay compensation of Rs.1,00,00,000/- (Rupees One Crore Only) to the Complainant for mental agony, harassment, discomfort and undue hardships caused to the Complainant as a result of the above acts and omissions on the part of the Opposite Party(s);

ix. Direct the Opposite Party(s), jointly or severally, to pay a sum of Rs.1,00,000/- (Rupees One Lakh Only) to the Complainant towards litigation costs;

x. Any other and further relief in favor of the Complainants as the Hon'ble Commission may deem fit and proper in the fact and circumstances of the case. In brief, M/s Shree Hira Industries (complainant) is a small scale proprietary firm engaged in manufacturing of cottonseed oil and cotton cake from cotton seed as well as purchasing and selling of the cotton bales.”

2. In brief, in 2015, complainant availed a loan facility from OP-3 (Axis Bank Ltd.) for an amount of Rs.2,00,00,000/- (Rupees Two Crores Only), against pledge of cotton seeds and cotton oil cake. Further, in December, 2017 the loan amount was enhanced to Rs.3,00,00,000/- (Rupees Three Crores Only) by pledging of cotton bales and a Facility-cum-Pledge Agreement dated 18.12.2017 was entered for the said purpose. It may be noticed that a Collateral Management Agreement (CMA) dated 21.03.2008 was also executed between OP No.2 (Star Agriwarehousing and Collateral Management Ltd.) and OP No.3 Axis Bank Ltd. for the security of pledged collaterals, which provided that OP 2 is an independent Service Provider and not an Agent of OP-3. OP-2 had a supervisory role over the goods pledged with OP-3 including duty of inspection and taking inventory.

3. Further, complainant entered into a lease agreement dated 31.10.2017 for storage of pledged goods in a warehouse owned by one Amit Kishore Pagariya (hereinafter referred to as the ‘warehouse’) situated at Plot No.33/1, Old No.104, New Survey No.29 (admeasuring 80x70 ft.), Agri Product Market Yart, Beed. After the lease deed was entered by the complainant with Amit Kishore Pagariya, he sub-leased the property to OP-2 vide agreement dated 31.10.2017, to facilitate the supervision of goods by OP-2, which manages the collaterals for OP-3 as per the Collateral Management Agreement dated 21.03.2008.

4. A Fire & Special Perils Policy was fur

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2026 Supreme(Online)(NCDRC) 403

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSIONJ. Rajendra, Presiding Member, Anoop Kumar Mendiratta, MemberShri Hira Industries – AppellantVersusUnited India Insurance Company Limited – RespondentCONSUMER COMPLAINT NO. 1470 OF 2019

An insurance claim cannot be repudiated on mere suspicion of fraud or arson in the absence of cogent evidence. A surveyor's assessment of loss, if conducted professionally and without arbitrariness, should be upheld as the basis for indemnification.

Cases Referred (2)

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
J. Rajendra, Presiding Member, Anoop Kumar Mendiratta, Member
Shri Hira Industries – Appellant
Versus
United India Insurance Company Limited – Respondent
CONSUMER COMPLAINT NO. 1470 OF 2019