Supreme Court upholds rejection of ₹2.4 crore fire insurance claim

The case concerns a dispute between an insurance company and a paper board manufacturer regarding the repudiation of a fire insurance claim of approximately Rs 2.4 crore, where the Supreme Court upheld the insurer's decision to reject the claim due to suspicions of fraud and lack of evidence for an accidental fire.

Who it concerns: Appellant: M/s. New India Assurance Company Ltd.; Respondent: M/s. Hemkund Duplex and Board Pvt. Ltd.; Bench: Justice Sanjay Kumar.

What the court decided

• The Supreme Court upheld the repudiation of the respondent's fire insurance claim by the appellant.
• The Court found that the facts weighed heavily against the respondent, including inconsistencies in loss claims and lack of evidence for an accidental cause.
• The Court noted that the preliminary surveyor and final surveyor identified manipulated books of accounts and doubtful circumstances surrounding the fire.
• The Court stayed the National Consumer Disputes Redressal Commission's (NCDRC) order directing payment, subject to the appellant depositing Rs 50,00,000 in a fixed deposit.

Also in the document

• The Court observed that the respondent changed its reported loss amount multiple times (from Rs 15 crore to Rs 7.31 crore).
• The Court noted that the fire brigade was informed one hour after the fire started, despite being only 6-7 kilometers away.
• The Court highlighted that the tin shed had been destroyed by a JCB prior to the fire, and there was no electric connection in the yard to cause a short circuit.
• The Court found that the respondent's loss minimization efforts were not bona fide, as employees were sprinkling water on the roof or ground rather than the fire.