Terming the belated reassessment conducted by the Insurance Company through a second survey as arbitrary, the Supreme Court has sent a consumer complaint case back to the National Consumer Disputes Redressal Commission for adjudication upon the quantum of compensation.

The appeal before the Apex Court was filed under Section 23 of the Consumer Protection Act, 1986 (Act) against the impugned order passed by the National Consumer Disputes Redressal Commission, New Delhi (NCDRC) in a consumer case whereby the NCDRC dismissed the complaint filed by the Appellant.

The Division Bench of Justice B.V. Nagarathna and Justice Satish Chandra Sharma held, “However, the second survey report failed to counter or address the detailed and comprehensive observations made in the first survey report dated 06.09.2016, nor did it offer any explanation or new material facts that would warrant a reversal of the initial conclusion. This abrupt departure from the earlier findings, without explanation or justification, raises serious concerns about the reliability and objectivity of the second survey. In the absence of any substantive grounds to question the findings of the first survey, we find that the belated reassessment conducted by the Respondent is deemed arbitrary and without due basis.”

AOR Siddhartha Chowdhury represented the Appellant while AOR Amit Kumar Singh represented the Respondent.

Factual Background

The complainant-appellant is the owner of the premises situated at New Delhi, (Premises). The Premises had a basement, ground floor, first floor and second floor. The entire building was insured with the opposite party-respondent vide a House Holder Insurance Policy for Rs. 1.50 crore, which was valid for the period from March 13, 2016, to March 12, 2017. It was the case of the appellant that due to a heavy downpour, the Premises were severely flooded, resulting in extensive damage to the furniture, fittings, almirahs, books, and other belongings stored there. The Surveyor inspected the basement.

The Appellant received a letter from the Respondent formally repudiating the claim. The rejection was based on the ground that the damage to the building was caused by continuous seepage of water from the basement, which was not listed as a named peril under the insurance policy, therefore, the resulting loss or damage was not indemnifiable. Being aggrieved and dissatisfied by the dismissal of the Appellant’s claim, a Consumer Case was filed before the NCDRC. However, the said complaint was dismissed by the NCDRC, thereby giving rise to the appeal before the Apex Court.

Reasoning

On a perusal of the first survey report and certificates submitted by various technical experts, the Bench noted that the cause of damage to the insured premises was the flooding of water into the basement due to heavy rainfall in Delhi during the relevant period. The First Survey Report clearly attributed the damage to rainwater entering through the flooring following the downpour. This was further corroborated by two engineering firms, which confirmed that the flooding, and not seepage or structural failure, was the proximate cause of loss.

“Conversely, the certificate issued by Unique Consulting Engineers pertains solely to seepage affecting the structural elements of the building and is silent on the condition of the basement or the cause of damage in question. As such, this report does not assist in determining the cause of damage to the basement and therefore, as a result of such limitation, it cannot be relied upon for the present purpose”, the Bench said.

The Bench concluded that the damage to the insured premises was not caused by any inherent structural defect or seepage, but was instead a direct consequence of the unprecedented and heavy rainfall experienced during the relevant period, which led to flooding of water into the basement. It was further noticed that despite conducting a survey before, the Respondent proceeded to commission a second survey without furnishing any reasonable, cogent, or valid grounds justifying the necessity for a reassessment. Subsequently, the second survey report deviated from the reasons of the first survey report and curiously recorded that the damage to the premises was caused by seepage, rather than by flooding due to heavy downpour. Terming the second survey report as arbitrary, the Bench set aside the same.

Thus, setting aside the contrary findings, the Bench remanded the matter back to the NCDRC for the limited purpose of determining the appropriate quantum of compensation payable to the Appellant in accordance with the policy terms and applicable law.

Cause Title: Gopal Dikshit v. United India Insurance Company Ltd. (Neutral Citation: 2025 INSC 731)

Appearance:

Appellant: AOR Siddhartha Chowdhury

Respondent: AOR Amit Kumar Singh, Advocates K Enatoli Sema, Chubalemla Chang, Prang Newmai

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Justice BV NagarathnaChief Justice Satish Chandra Sharma

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.