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2025 Supreme(Online)(SCDRC) 31754
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sunita Yadav, President, Monika Malik, Member
Shambhu Dall Mill – Appellant
Versus
United India Insurance Co. Ltd. – Respondent
CONSUMER COMPLAINT NO. SC/23/CC/10/2007
For the Appellants/Petitioners: Garima Punjabi for Deepesh Joshi
For the Respondents: Mahavir Bhatnagar
An insurance claim can be validly repudiated if the insurer provides substantial evidence, such as forensic investigation results, that the claim is based on fraudulent documents (fake purchase bills) and manipulated stock statements, thereby violating the contract of insurance.
Headnote:(A) Consumer Protection Act, 1986 - Section 17(1)(a) - Insurance claim - Fraudulent documents - Repudiation of claim on grounds of fake bills - Burden of proof remains on complainant to establish the genuineness of purchase bills where surveyor investigation reports indicate fabrication of stocks for obtaining loans - Appointment of second investigator justified when initial survey fails to determine the cause of fire and identifies discrepancies in documentation. (Paras 10, 12, 19, 23, 24)
Facts of the case:
The complainant, a proprietary concern running a pulse processing mill, filed a claim for damages due to a fire. The insurance company repudiated the claim after an investigation revealed that several purchase bills were fake, the mill was non-operational at the time of the incident, and financial documentation was manipulated to inflate stock value for bank loans.
Findings of Court:
The Commission found that the investigator's report identified verifiable instances of forgery in purchase bills. The complainant failed to rebut these findings with cogent evidence or affidavits from the alleged suppliers.
Issues: Whether the insurance company was deficient in service by repudiating the claim, and whether the appointment of a second investigator was legally permissible.
Ratio Decidendi: An insurance company is justified in repudiating a claim if it uncovers systemic fraud, such as the preparation of fake purchase bills to inflate stocks, and the burden to prove the authenticity of contested documents rests with the complainant.
Result: Complaint dismissed.
| Table of Content |
|---|
| 1. summary of claim and allegations regarding deficiency in service. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. insurance company's defense regarding fraudulent bills and non-submission of documents. (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 3. framing of issues and arguments by respective sides. (Para 14 , 15 , 16 , 17) |
| 4. evidence analysis confirming fabrication of bills and lack of justification for insurance claims. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35) |
| 5. final ruling dismissing the complaint due to absence of merit. (Para 36 , 37) |
ORDER
M. P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BHOPAL
PLOT NO.76, ARERA HILLS, BHOPAL
CONSUMER COMPLAINT NO. 10 OF 2007
FILED ON 28.03.2007
DECIDED ON 16.10.2025
M/S SHRI SHAMBHOO DAL MILLS,
A PROPRIETORY CONCERN OF
DINESH CHAND GUPTA,
S/O LATE S. N. GUPTA,
R/O 2/115, SINGI GALI, AGRA (UP)
WITH HIS FACTORY SITUATED AT
335/1/2/2/ NEW AGRAWAL UDYOG NAGAR,
GRAM-PALDA, NEMAWAR ROAD, INDORE (M.P.) … COMPLAINANT.
Versus
THE UNITED INDIA INSURANCE CO.LTD.
THROUGH BRANCH MANAGER,
C.B.O.III, 104-105, RAJANI BHAWAN,
569, M.G.ROAD, INDORE (M.P.) … OPPOSITE PARTY
BEFORE:
HON’BLE JUSTICE SUNITA YADAV : PRESIDENT
HON’BLE DR. MONIKA MALIK : MEMBER
COUNSEL FOR PARTIES :
Ms. Garima Punjabi for Shri Deepesh Joshi, learned counsel for the complainant.
Shri Mahavir Bhatnagar, learned counsel for the opposite party.
O R D E R
(Passed On 16.10.2025)
Per sayJustice Sunita Yadav, President:
This complaint under Section 17 (1) (a) of the Consumer Protection Act, 1986 (for short ‘Act’) is filed by the complainant alleging deficiency in service against the opposite party-United India Insurance Co.Ltd.(hereinafter referred to as 'insurance company').
2. The case of the complainant is such that the complainant is a proprietary concern of Dinesh Chand Gupta, engaged in the business of Dall and pulses processing unit where the complainant was doing the processing work in his factory. The complainant had taken three different insurance policies from the opposite party-insurance company as under:
Ist Insurance Policy No.190302/11/02/00060 valid from 19.04.2002 to 18.04.2003.
Insured Building Worth Rs.40,00,000.00
Plant and Machines Rs.25,57,000.00
Office, Furniture & Fixtures Rs. 1,00,000.00
2nd Insurance Policy No.190302/11/02/00468 valid from 13.11.2002 to 12.11.2003.
Stocks worth Rs.40,00,000.00
3rd Insurance Policy No.190302/11/02/00330 valid from 23.08.2002 to 22.08.2003.
Stocks worth Rs.50,00,000.00
Thus in all the complainant had taken three policies worth Rs.1,56,57,000 after paying due premium to the opposite party-insurance company. On 20.02.2003 at about 6.30AM massive fire broke out in the factory premises. The complainant immediately called the Fire Brigade which came at about 7.15 AM and extinguished the fire in 2-3 hours. The complainant also immediately made a phone call to Development Officer of the insurance company Subhash Agrawal who in turn informed Surveyor Madhusudan Shyamsunder Agrawal and they came together at the factory site, took photographs and collect the bill books, cash book, stock registers and other books of accounts from the premises of the complainant which are still in the possession of the opposite party-insurance company.
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3. It is further stated in the complaint that the complainant made a written report with the opposite party-insurance company on 20.02.2003 and lodged a FIR with the police station-Bhanwar Kua, Indore who made panchnama on 21.02.2003 and it was initially observed that 1500 quintal chana dal was totally got burnt and 500 quintal chana dal was got damaged. There was loss to machines to the tune of Rs.15.00 lacs as most of the machines got burnt. The opposite party-insurance company appointed Surveyor Madhusudan Shyamsunder Agrawal who after initial physical verification and inspection issued letter dated 12.03.2003 to the complainant and called documents. The complainant as per requirements of the surveyor completed a
