The insured did not check the damaged equipment, the insurance company is not responsible; NCDRC

The bench of National Commission including Justice C. Viswanath, Presiding Member and Ram Surat Ram Maurya, Member, has observed that according to the insurance policy, only stocks of dal and raw materials were insured, but the insured also wrongly declared the loss of machinery and buildings. The damage was caused to the machinery and the building and not to the stock of legumes and raw materials.

Commission found that, the insured failed to prove his claim. He was unable to show any fully damaged stock or explain how a huge amount of water can get inside the mill.

In this case, the plaintiff (respondent-1) was engaged in the operation of a dal mill. The insured obtained a standard fire and special risks insurance policy from the National Insurance Company Limited (the appellant). There was a strong storm with rain due to which the southern wall of the factory premises collapsed and the walls on the other two sides cracked. The machines, construction materials and raw materials kept in the mill became useless. The opposing parties maintained plaintiff’s request in abeyance to date. The complainant, who was in financial crisis, was mentally and physically harassed. The plaintiff’s dal factory was closed due to the above-mentioned incident and due to the delay in settling the claim by the opposing party, the burden of paying interest on the loan taken by the plaintiff was increasing day by day . Injured by the insurance company’s action, the plaintiff filed an appeal with the State Commission. The State Commission allowed the appeal and ordered the appellants to reimburse respondent-1’s loss with interest at 12% per annum.

Agreed by the decision of the State Commission of Uttar Pradesh, the appellants (insurance company) appealed to the State Commission under Section 19 of the Consumer Protection Act 1986.


The question to be examined before the National Commission was whether or not the insurance company is liable for the damage suffered by the plaintiff.

The Commission found that the State Commission did not record any finding that Respondent-1’s claim was proven from any documentary evidence or give any reason to disregard the surveyor’s report.

Commission relied on the case of Sri Venkateswara Syndicate Vs. Oriental Insurance Company Ltd., where SC argued that although the surveyor’s report is not sacrosanct but strong evidence is needed to disprove it.

Commission further relied on the case of Khatima Fibers Ltd. Vs. New India Insurance Company Ltd., where it was judged that in the absence of dishonesty and fault on the part surveyor, his report cannot be ignored. The Commission said the contested order of the State Commission is arbitrary and devoid of any reason.

The Commission noted that the insured alleged that an incident of heavy storm and rain occurred on 11.05.2007 and caused damage. The insured reported the incident to the insurer on 04.06.2007, to the local police on 08.06.2007 and to the non-commissioned officer of Sultanpur on 29.06.2009.

The bench said that, there is absolutely no explanation for this disproportionate delay in the transmission of information to the Insurer. The State Commission wrongly noted that the claim form was submitted on 11.05.2007 to the insurer while it was submitted on 05.06.2007 and that the claim form does not mention any date.

The Commission observed that, according to the surveyor, near the machinery part of the plant, there was no raw material storage. The adjuster visited the factory 23 to 24 days after the date of the incident. The insured could not show any fully damaged stock or explain how a huge amount of water can get inside the mill. The surveyor found no signs/markings of water accumulation on the walls.

The bench noted that, Complainant failed to verify the damaged equipment to the surveyor on site. The plaintiff produced no document showing how he got rid of the damaged materials.

After reviewing the insurance policy, the commission noted that only stocks of dal and raw materials were insured, but that the plaintiff also wrongly claimed the loss of machinery and buildings. The expert found that whatever damage was caused was to the machinery and the building and not to the stock of legumes and raw materials.

The bench said that, the plaintiff failed to prove his claim, in the complaint by any reliable evidence. He failed to refute various observations of the surveyor in his reports, showing that the whole claim was not genuine. In such a circumstance, the inadequacy of service on the part of the appellant is not proven. The Commission d’Etat’s order is perfectly illegal and subject to reversal.

The National Commission upheld the appeal and quashed the order of the Consumer Disputes Redress Commission of the State of Uttar Pradesh, Lucknow, dated 14.03.2016.

Case name: Director, National Insurance Co. Ltd. & 2 Gold. v. M/S. Agrahari Dal & Anr.

Case no: FIRST CALL NO. 479 OF 2016

Court: Judge C. Viswanath, Presiding Member and Ram Surat Ram Maurya, Member

Determined to: 1st June 2022

Click here to read/download the order