A claim that fell from Rs 15 crore to Rs 7.31 crore sinks a fire insurance award in the Supreme Court

A Division Bench sets aside an NCDRC order against New India Assurance, holding the repudiation sustainable and faulting the commission for brushing aside two surveyors’ reports.

A fire loss that was described as Rs 15 crore to the media, Rs 10 crore to the insurer, Rs 8.45 crore in the claim form and finally Rs 7.31 crore did not survive scrutiny in the Supreme Court. On 21 September 2026, in M/s. New India Assurance Company Ltd. v. M/s. Hemkund Duplex and Board Pvt. Ltd., a Division Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva set aside an order of the National Consumer Disputes Redressal Commission that had held the insurer deficient in service, holding instead that the repudiation of the claim was clearly sustainable.

The fire and the two policies

The respondent held two fire insurance policies: one covering stock, and a separate policy covering buildings, plant and machinery. On 7 May 2009, at about 1.30 pm, a fire is stated to have broken out. A supervisor was said to be the first person to see it in the tin shed, and he informed the fire brigade and the police. A preliminary surveyor was appointed and carried out an inspection on 8 May 2009, the day after the fire. A final survey report was submitted on 13 March 2010.

The claim was built up in two parts. For stock, it came to Rs 7.70 crore — affected stock of Rs 9.50 crore, less saved stock of Rs 1.80 crore. For the building, it was Rs 0.75 crore. In all, the respondent claimed Rs 8.45 crore. The insurer repudiated, relying on Policy Condition Nos. 6 and 8, the latter dealing with a false declaration made in support of a claim.

The respondent took the repudiation to the National Consumer Disputes Redressal Commission in Consumer Complaint No. 66 of 2011, alleging deficiency in service on account of inordinate delay in settling the claim and seeking compensation with interest and other damages. By its order dated 19 November 2024, the NCDRC found in its favour and awarded compensation.

What the surveyors found

The Supreme Court’s reasoning rests heavily on material the NCDRC had set aside. The surveyor was highly critical of the respondent’s claims in his report. Among the matters recorded were a delay of one hour in informing the authorities, and the ruling out of a beedi or cigarette as the source of the fire — a finding that removes the most commonplace accidental explanation.

The shifting quantum was central. The loss was put at Rs 15 crore in what was said to the media, Rs 10 crore in what was reported to the insurer, Rs 8.45 crore in the claim form, and then reduced again to Rs 7.31 crore. A claim that contracts by half as it passes from press statement to formal assessment invites the question the surveyor asked: which of those figures, if any, reflected the loss.

The preliminary surveyor, R.C. Bajpai, set out his objections in a report dated 24 June 2009, and the Court reproduced their substance. He considered that a claimed eyewitness appeared to be fabricated. He found no electric connection or other possible cause for the origin of the fire. He ruled out an ignited beedi or cigarette because the yard was in an isolated place rarely visited by workers, mostly female labour was deployed there for sorting material, smoking was strictly prohibited inside the factory compound, and nobody was found smoking anywhere in the area.

The physical traces did not fit the claim either. There was no sign of heat or smoke on the tin sheets except at the back of the yard, which the surveyor read as confirming that either roughly a quarter of the area held no stacked material or that the stacking there was very low. There was no conductor by which the fire could have travelled to duplex bags stored twenty to twenty-five feet away without affecting the grass in between — and that grass was found fresh at the time of physical verification. He also observed that had 15,000 metric tons of paper burnt in the fire, the consequences would have been of an altogether different order.

One finding went to conduct rather than cause. From the video recording and the photographs taken during the fire-extinguishing operations, the surveyor concluded that the respondent’s loss-minimisation efforts were not bona fide: its employees were seen sprinkling water on the roof or on the ground outside the yard, but not on the fire itself.

The Court also recorded findings about the underlying records. There was no system of recording or weighing the waste paper at the time it was loaded on the conveyor, and the yield reported was described as imaginary. These, the Bench said, were false assertions made by the respondent to press its claim — which is precisely the territory Policy Condition No. 8 addresses.

Why the repudiation held

Against that background, the Court held that leaving aside the strong possibility that this was not an accidental fire, or at the very least not a fire that the respondent genuinely tried to put out, the repudiation of the claim on the ground that Policy Condition Nos. 6 and 8 stood violated was clearly sustainable.

The criticism of the commission below was specific rather than general. The NCDRC was not justified in brushing aside the findings recorded in the two surveyors’ reports, nor in holding, without basis, that there had been no delay on the part of the respondent in informing the fire station. There was equally no basis for the NCDRC to have given the respondent a clean chit and then proceeded, on that footing, to undertake its own assessment of the loss allegedly suffered.

The point of principle is a familiar one in insurance litigation but worth restating. A surveyor’s report is not conclusive, and a consumer forum is entitled to depart from it. But departing from two survey reports requires reasons engaging with what they found. Substituting an assessment of loss for the surveyors’ findings, without first displacing those findings on stated grounds, is not an exercise the appellate record could support.

What the commission did instead

The NCDRC had approached the matter as a complaint about delay. The respondent’s case was that the insurer was deficient in service on account of inordinate delay in settling the claim, and the commission awarded compensation on that footing, having first satisfied itself that the respondent had not delayed in informing the fire station.

The Supreme Court’s objection was to the order of reasoning rather than to the commission’s jurisdiction. A forum considering a repudiated fire claim has to decide first whether the repudiation was justified. Only if it was not does the question of delay in settlement, and compensation for it, arise at all. By giving the respondent a clean chit and then proceeding to assess the loss, the commission answered the second question without answering the first — and did so while leaving the adverse findings in two survey reports unaddressed.

That matters because of the evidential status of those reports. A surveyor’s report is not conclusive and a consumer forum may depart from it, but the departure has to be reasoned. Where a preliminary surveyor and a final surveyor both record findings on the origin of a fire, the conduct of loss-minimisation efforts, and the reliability of the claimant’s stock records, a forum that reaches the opposite conclusion must engage with those findings rather than set them aside without basis.

For insurers and claimants the practical reading is straightforward. Condition No. 8, dealing with a false declaration made in support of a claim, is not confined to a fabricated loss; it is engaged where the claim as presented cannot be reconciled with the claimant’s own records and its own earlier statements. A quantum that moves from Rs 15 crore to Rs 7.31 crore across a press statement, a report to the insurer, a claim form and a revision invites exactly the scrutiny the surveyor applied here.

The outcome also disposes of the respondent’s own appeal, which had sought more than the commission gave it. Once the repudiation was held sustainable, there was no award left to enhance, and Civil Appeal No. 11416 of 2025 fell with the order it was built on. The Rs 50 lakh the insurer had deposited in the course of the proceedings goes back to it with interest.

The timeline is itself part of the story. The fire was in May 2009; the preliminary survey report followed within weeks, in June 2009; the final survey report came in March 2010; the consumer complaint was filed in 2011; and the commission decided it in November 2024. By the time the matter reached the Supreme Court, the events being reconstructed were more than seventeen years old, and the only contemporaneous record of the scene was the surveyors’ work — which is part of why setting those reports aside without reasons was so consequential.

Nothing in the judgment suggests that a claimant must accept a surveyor’s figure. The respondent was entitled to challenge the reports, to lead material contradicting them, and to have that material weighed. What it could not do was have the reports passed over in silence while its own revised figures were adopted as the measure of loss.

Order

The Court set aside the order dated 19 November 2024 passed by the National Consumer Disputes Redressal Commission in Consumer Complaint No. 66 of 2011. In consequence, Civil Appeal No. 11416 of 2025, filed by the respondent, stood dismissed. The Registry was directed to return to the appellant insurer the suitor’s fund amount and the sum of Rs 50 lakh it had deposited, along with the interest accrued thereon, under proper acknowledgement and as per due procedure. In the circumstances, the parties were left to bear their own costs.