The Supreme Court remitted a matter to the NCDRC for fresh consideration, where United India Insurance Company was asked to pay over Rs 46 lakh for the loss suffered by the claimant company due to the collapse of the factory shed. The Apex Court noted that the Commission blindly acted upon the Insurance Company’s failure to deny assessment in the surveyor’s report produced by the claimant.

The Appeal before the Apex Court was filed by the United India Insurance Company under Section 23 of the Consumer Protection Act, 1986, against the judgment passed by the National Consumer Disputes Redressal Commission, New Delhi (NCDRC), in a Consumer Complaint filed by the respondent, viz., M/s. Park Leather Industries Ltd., Agra.

The Division Bench comprising Justice Sanjay Kumar and Justice Augustine George Masih observed, “In any event, it is patently clear that the NCDRC did not independently apply its mind to the quantification of the claim and blindly acted upon the alleged failure of the appellant to deny the assessment in the surveyor’s report produced by the respondent. This impression, as pointed out earlier, was unfounded and erroneous.”

Advocate A. K. De represented the Appellant while AOR Praveen Chaturvedi represented the Respondent.

Factual Background

In the subject complaint filed before the NCDRC under Section 21(a)(1) of the Consumer Protection Act, 1986, the Respondent stated that it had taken a comprehensive insurance policy from the appellant against fire and special perils and the policy was operative from May 30, 2005 to June 29, 2006. While so, due to heavy rainfall during the night of August 1, 2005, the factory shed of the respondent collapsed, causing damage to plant & machinery, stocks and buildings. In consequence, the respondent raised an insurance claim for ₹91,00,000. The appellant appointed a surveyor who quantified the loss suffered by the Respondent at ₹8,89,176.

The appellant repudiated the claim of the respondent, stating that the loss suffered was not due to the insured peril of ‘inundation’ and would, therefore, fall outside the purview of the policy. The Respondent approached the NCDRC, reiterating its claim for the loss suffered and stating that it had engaged an independent surveyor who had confirmed that the damage was caused by inundation and assessed the loss at ₹46,97,085. The NCDRC held that the appellant was liable to compensate the respondent under the insurance policy for the damage and loss suffered by it and directed the appellant to pay Rs 46,97,085 to the respondent.

Arguments

It was the case of the Appellant that the issue of the quantum of compensation had not been dealt with properly by the NCDRC.

Reasoning

The Bench noted that the NCDRC decided the quantum of compensation only on the premise that the appellant had not denied, in its written statement, the assessment made by the respondent’s surveyor. As per the Bench, the NCDRC completely lost sight of the fact that the aforestated figure of ₹46,97,085 was sourced from the surveyor’s report, which was produced by the respondent, for the first time, along with its rejoinder. Thus, the appellant could not have denied it in its written statement, which was filed earlier in point of time.

“Having noted that the surveyor appointed by the appellant had assessed the damage at a much lesser figure, i.e., ₹8,89,176/-, the NCDRC could not have assumed that the appellant had mutely accepted the enhanced estimation of ₹46,97,085/-, as per the unilateral assessment made by the surveyor appointed by the respondent. It is not in dispute that this assessment was undertaken by the respondent’s surveyor without putting the appellant on notice and without its participation”, it said.

The Bench thus held that the NCDRC should allow the parties to adduce evidence and then decide the amount that would be payable to the respondent under the insurance policy. Allowing the appeal, it ordered, “...the matter is remitted to the NCDRC for consideration afresh of the quantum of compensation that would be payable to the respondent under the subject insurance policy for the damage and loss suffered by the respondent due to the collapse of the factory shed on 01.08.2005. Given the antiquity of this case, we would request the NCDRC to give it priority and dispose of the same expeditiously.”

Cause Title: United India Insurance Co. Ltd. And Another v. M/s. Park Leather Industries Ltd (Neutral Citation: 2025 INSC 455)

Appearance:

Appellant: Advocates A. K. De, Ananya De, Chandni Sharma, Rebecca Dias, AOR Mr. Pramit Saxena

Respondent: AOR Praveen Chaturvedi

Click here to read/download Judgment


Supreme CourtJustice Sanjay KumarJustice Augustine George Masih

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.